Energy Conversion Devices Announces Operating Results for the
Third Quarter
TROY, Mich., May 15 Energy Conversion Devices, Inc. (ECD)
announced today its operating results for the three and nine
months ended March 31, 2001. Revenues increased 137% to $17,722,000 compared
to $7,477,000 in the third quarter last year. The Company's net loss was
$4,272,000 compared to $3,315,000 the same quarter last year. On a per-share
basis, the loss was $.22 in 2001 compared to a loss of $.24 in 2000.
Revenues increased 97% to $42,944,000 in the nine months ended March 31,
2001 compared to $21,827,000 in the nine months ended March 31, 2000. The
Company's net loss was $6,733,000 in the nine months ended March 31, 2001
compared to $11,350,000 in the nine months ended March 31, 2000. On a
per-share basis, the loss was $.35 in 2001 compared to a loss of $.84 in 2000.
The increase in revenues for the three- and nine-month periods was
principally due to revenues from product development agreements with the
Texaco Ovonic joint ventures and Ovonic Media, machine-building contracts for
Rare Earth Ovonic and Bekaert ECD Solar Systems joint ventures and the
inclusion of the financial results of United Solar Systems in ECD's
consolidated financial statements effective April 11, 2000.
Commenting on the quarter, Stanford R. Ovshinsky, President and CEO, and
Robert C. Stempel, Chairman, said, "While we had a higher loss in the third
quarter compared to the same quarter a year ago, it was primarily due to a
$1,000,000 decrease in license fees. The loss for the nine months is
substantially lower than the nine months a year ago. The current quarter loss
of $4,272,000 compared to the loss of $716,000 in the prior quarter which
ended December 31, 2000 is primarily due to a $2,500,000 decrease in license
fees and an increase in self-funded NiMH battery market and product
development for the emerging hybrid vehicle market." They added that the
strategic alliances formed over the last year resulted in funding
commercialization efforts of our other projects, reducing the need for
internal funding.
The financial results for the third quarter and nine months are shown in
the following table:
Financial Results:
Three Months Ended Nine Months Ended
March 31, March 31,
2001 2000 2001 2000
(In thousands, except per-share amounts)
Revenues
Product sales $4,573 $690 $7,254 $2,824
Product sales to related parties 2,781 100 7,060 1,213
Total product sales 7,354 790 14,314 4,037
Royalties 730 796 2,404 2,534
Revenues from product development
agreements 1,546 1,632 5,057 7,533
Revenues from product development
agreements with related parties 7,699 87 17,050 96
Total revenues from product
development agreements 9,245 1,719 22,107 7,629
Revenues from license agreements - 1,000 2,800 3,178
Other 54 209 217 327
Other revenues from related parties 339 2,963 1,102 4,122
Total other revenues 393 3,172 1,319 4,449
Total revenues 17,722 7,477 42,944 21,827
Expenses 22,702 10,545 53,056 32,080
Net loss from operations (4,980) (3,068) (10,112) (10,253)
Other income (expense)
Interest income 1,477 367 4,664 786
Equity loss in joint ventures (741) (658) (1,544) (1,956)
Other (28) 44 259 73
Total other income (expense) 708 (247) 3,379 (1,097)
Net Loss $(4,272) $(3,315) $(6,733) $(11,350)
Basic Net Loss Per Common Share $(. 22) $(. 24) $(. 35) $(. 84)
Notes to Financial Results:
The Company had a net loss in the three months ended March 31, 2001 of
$4,272,000 compared to a net loss of $3,315,000 for the three months ended
March 31, 2000 -- an increased loss of $957,000. The primary factors
contributing to the increased loss were the $1,000,000 decrease in license
fees and a decrease of $2,779,000 in other revenues. Other factors
contributing to the change in profitability were a decrease in revenues from
royalties ($66,000), higher patent and patent defense expenses ($468,000),
higher interest expenses ($96,000), a $37,000 profit on product sales compared
to a $1,146,000 loss last year, an improvement in the net cost of product
development ($1,103,000), and an increase in the interest income ($1,110,000).
Product sales increased 831% to $7,354,000 in the three months ended
March 31, 2001 from $790,000 in the three months ended March 31, 2000.
Machine-building revenues increased to $5,205,000 in 2001 compared to $325,000
in 2000. The machine-building revenues in 2001 were applicable to contracts
to build production equipment for Bekaert ECD Solar Systems having 25MW of
annual capacity and for production equipment for the manufacture of NiMH
batteries for the Rare Earth Ovonic joint ventures. Photovoltaic sales were
$1,586,000 in 2001 versus zero in 2000 (United Solar financial statements were
consolidated effective April 11, 2000). Battery pack sales increased to
$407,000 in 2001 versus $360,000 in 2000.
The net cost of product development to the Company decreased by $1,103,000
despite more than double the expenditures for the development of products to
$12,464,000 compared to $6,041,000 in the same quarter the previous year.
Three Months Ended
March 31,
2001 2000
Cost of revenues from product
development agreements $9,108,000 $1,816,000
Product development and research 3,356,000 4,225,000
Total cost of product development 12,464,000 6,041,000
Revenues from product development
agreements 9,245,000 1,719,000
Net cost of product development $3,219,000 $4,322,000
Revenues from product development agreements, which relate primarily to
joint ventures established for the development and commercialization of ECD's
technologies, increased 438% to $9,245,000 in the three months ended March 31,
2001 from $1,719,000 in the three months ended March 31, 2000. There were
total increases in product development agreements of $8,419,000 which were due
to development programs in 2001 for Texaco Ovonic Fuel Cell Company
($2,936,000), Texaco Ovonic Hydrogen Systems ($3,888,000), Ovonic Media
($347,000), and United Solar contracts with Department of Energy (DOE)
($365,000), partially offset by decreases in revenues from programs with the
National Institute of Standards and Technology in the Company's battery and
hydrogen technologies ($205,000 in 2001 compared to $909,000 in 2000) as these
programs are completed.
Revenues from license and other agreements were zero in the three months
ended March 31, 2001 compared to $1,000,000 in the three months ended
March 31, 2000. The 2000 revenues resulted from a license to Sanyo Electric
Company. Royalties decreased 8% to $730,000 in the three months ended
March 31, 2001 from $796,000 in the three months ended March 31, 2000,
primarily due to a change in estimate in the 2000 period which resulted in
higher 2000 revenues.
Other revenues decreased by $2,779,000 to $393,000 in the three months
ended March 31, 2001 from $3,172,000 in the three months ended March 31, 2000,
primarily due to lower revenues from Ovonyx.
The Company had a net loss in the nine months ended March 31, 2001 of
$6,733,000 compared to a net loss of $11,350,000 for the nine months ended
March 31, 2000 -- an improvement of $4,617,000. The most significant factor
contributing to the lower losses was the increase in the amount of funding
from our joint venture partners for our product and production technology
development efforts related to the commercialization of our products. Despite
the more than $10,000,000 increase in expenditures, the net cost of product
development to the Company decreased by $3,881,000 because of the funding
provided by our joint venture partners.
Nine Months Ended
March 31,
2001 2000
Cost of revenues from product
development agreements $21,090,000 $7,714,000
Product development and research 8,784,000 11,563,000
Total cost of product development 29,874,000 19,277,000
Revenues from product development
agreements 22,107,000 7,629,000
Net cost of product development $7,767,000 $11,648,000
Also contributing to the nine-month operating results were a profit of
$17,000 in the nine months ended March 31, 2001 on product sales compared to a
loss of $2,537,000 in 2000, a $3,878,000 increase in interest income and a
$412,000 improvement in equity losses from joint ventures, partially offset by
a $130,000 decrease in revenues from royalties, higher patent and patent
defense expenses ($1,590,000) and higher operating, general and administrative
expenses ($1,066,000) in the nine months ended March 31, 2001.
Product sales increased 255% to $14,314,000 in the nine months ended
March 31, 2001 from $4,038,000 in the nine months ended March 31, 2000.
Machine-building revenues increased to $8,619,000 in 2001 compared to
$1,448,000 in 2000. The machine-building revenues in 2001 were applicable to
contracts to build production equipment for Bekaert ECD Solar Systems having
25MW of annual capacity and for production equipment for the manufacture of
NiMH batteries for the Rare Earth Ovonic joint ventures. Photovoltaic sales
were $4,556,000 in 2001 versus zero in 2000 (United Solar financial statements
were consolidated effective April 11, 2000). Sales of negative and positive
electrodes decreased $941,000, primarily due to one of the Company's principal
negative electrode licensees currently manufacturing its own electrode
products as allowed under its license from the Company. Because most battery
pack orders are being filled through GM Ovonic, the Company's battery pack
sales decreased to $855,000 in 2001 versus $1,365,000 in 2000.
Revenues from product development agreements, which relate primarily to
joint ventures established for the development and commercialization of ECD's
technologies, increased 190% to $22,107,000 in the nine months ended March 31,
2001 from $7,629,000 in the nine months ended March 31, 2000. There were
total increases in product development agreements of $18,234,000 which were
due to development programs in 2001 for Texaco Ovonic Fuel Cell Company
($6,153,000), Texaco Ovonic Hydrogen Systems ($8,461,000), Ovonic Media
($1,789,000), and United Solar contracts with DOE ($1,226,000), partially
offset by the completion of programs with General Motors to develop batteries
for electric and hybrid electric vehicle applications ($0 in 2001 compared to
$1,002,000 in 2000), the Shell Hydrogen program ($0 in 2001 compared to
$750,000 in 2000) and decreases in revenues from programs with DOE and
National Renewable Energy Laboratory ($770,000 in 2001 compared to $1,103,000
in 2000) and National Institute of Standards and Technology in the Company's
battery and hydrogen technologies ($1,411,000 in 2001 compared to $3,054,000
in 2000).
Revenues from license and other agreements decreased to $2,800,000 in the
nine months ended March 31, 2001 from $3,178,000 in the nine months ended
March 31, 2000. The 2001 revenues consisted of agreements with three Chinese
companies (BYD Battery Co., SANIK Battery Co., Ltd. and Rare Earth High Tech).
The 2000 revenues included a $1,778,000 license fee from Toshiba Battery,
$1,000,000 from Sanyo and $400,000 from Japan Storage. Royalties decreased 5%
to $2,404,000 in the nine months ended March 31, 2001 from $2,534,000 in the
nine months ended March 31, 2000, primarily due to decreased royalties from
battery licensees.
Other revenues decreased by $3,130,000 to $1,319,000 in the nine months
ended March 31, 2001 from $4,449,000 in the nine months ended March 31, 2000,
primarily due to lower revenues from Ovonyx.
