ECD Announces First Quarter Operating Results
13 November 1997
ECD Announces First Quarter Operating Results
TROY, Mich., Nov. 13 --Energy Conversion Devices, Inc.
("ECD") announced today its operating results for the three
months ended September 30, 1997 as follows:
Three Months ended
September 30,
1997 1996
(in thousands)
REVENUES $6,460 $7,178
EXPENSES $10,933 $11,350
Net Loss from Operations $(4,473) $(4,172)
Other Income - Net 176 274
NET LOSS $(4,297) $(3,898)
NET LOSS PER COMMON SHARE
AND COMMON EQUIVALENT SHARE $(.40) $(.36)
The increased loss primarily results from a $1,246,000 one-time license
fee from Canon in the prior year quarter, partially offset by a narrowing of
losses on product sales in the current quarter. License fees are non-
recurring and based upon developing new business relationships.
The loss in the quarter ended September 30, 1997 resulted from the
continued investment of funds for the development of the Company's products
and the associated operating, general and administrative expenses, as well as
business development expenses.
Additional details of financial results can be found in the section
entitled Notes to Operating Results.
Stanford R. Ovshinsky, President and CEO, and Robert C. Stempel, Chairman,
commented on a number of significant recent developments in ECD's three core
businesses: Ovonic nickel metal hydride ("NiMH") batteries, photovoltaic
technology and information technology.
Ovonic NiMH Batteries
ECD announced, on October 9, 1997, that its subsidiary, Ovonic Battery
Company, Inc. ("Ovonic Battery") received a three-year contract awarded by the
National Institute of Standards and Technology ("NIST") under the Advanced
Technology Program ("ATP") to develop the next generation of high energy
density NiMH batteries using low-cost magnesium-based hydrogen storage
materials. The total cost of this 36-month cost-share program is $18.9
million, of which Ovonic Battery and its team members, including Manufacturing
Sciences Corporation, Oak Ridge National Laboratory, Colorado School of Mines
and Iowa State University, will receive $8.2 million in federal funds. The
balance is to be provided by the recipients with in-kind contributions.
Ovonic Battery will receive approximately $5 million in cash during the course
of this program. NiMH batteries are being manufactured and marketed
throughout the world by battery manufacturers under agreements with ECD/Ovonic
Battery.
Directly related to the previously announced "Family of Batteries" project
is the multi-year, multi-task program with General Motors for
advanced batteries for electric vehicles and hybrid electric vehicle
applications. This program is of significant value to the Company, intended
to provide next and future-generation NiMH batteries which will be
manufactured by GM Ovonic L.L.C. ("GM Ovonic"), the joint manufacturing
venture between Ovonic Battery and General Motors.
On October 23, 1997, a 4-passenger, prototype electric vehicle, Solectria
Sunrise, traveled from Boston to New York City (216 miles) on a single charge
at normal highway speeds. This trip was coordinated by the New York Academy
of Sciences and sponsored by the Society of Automotive Engineers and the
Institute of Electronic and Electrical Engineers to demonstrate the state of
the technology in electric vehicles, drive motors and controllers and
batteries. The vehicle was powered with a 30Kwh Ovonic NiMH battery pack.
On November 12, 1997, the Chevrolet division of General Motors delivered
the first S-10 EV pickup truck powered by GM Ovonic NiMH batteries to Southern
California Edison. On November 13, trucks were delivered to Detroit Edison
and Georgia Power. The GM Ovonic batteries provide more than two times the
driving range on a single charge compared to lead-acid batteries. Chevrolet
will be delivering additional S-10 EV pickup trucks equipped with GM Ovonic
NiMH batteries to other utility companies and fleet operations across the
United States in mid-December 1997. There will be a total of 30 S-10 EVs in
this nationwide field test of advanced NiMH batteries. This field test will
be followed by the production availability of S-10 EVs with GM Ovonic NiMH
batteries in the first half of 1998. Sometime during the current model year,
General Motors will start offering the GM Ovonic NiMH batteries for its EV1.
The director of manufacturing for General Motors Advanced Technology Vehicles
said recently that General Motors is committed to using Ovonic NiMH technology
in its 1998 electric vehicles.
Photovoltaic Technology
The Company recently received a two-year contract awarded by the
Department of Energy via the State of Florida to ECD for work on
photovoltaics. This program will concentrate on the development of technology
for photovoltaic metal roofs. The total cost of this 24-month contract is
$3.8 million, of which ECD will receive $1.9 million in cash.
Information Technology
The Company recently received a two-year multi-million dollar contract to
support development of a new, low-cost manufacturing system for DVD (digital
versatile disks), a high-storage-capacity optical memory product that is based
on ECD's proprietary Ovonic phase-change technology. The new disks will be
fully compatible with current DVD standards. Manufacturing throughput for the
new disks is expected to be greater than conventionally-manufactured disks and
at a considerably lower cost.
The contract was awarded by the U.S. Commerce Department through the
NIST's ATP, and the new manufacturing system will be used to produce both pre-
recorded DVD-ROM media and phase-change rewritable DVD-RAM media. ECD
originated phase change technology, which is the standard selected for use by
the DVD Forum a group of leading DVD product manufacturers for rewritable DVD-
RAM media. The total cost of this 24-month cost-share program is $5.9
million, of which ECD will receive approximately $2 million in cash.
The Company also received a four-year contract awarded by NIST for the
further development of the aforementioned optical memory (phase-change)
products. The total cost of this 48-month program is $5.8 million, of which
ECD will receive $2.7 million in cash.
Notes to Operating Results
Three Months Ended
September 30,
1997 1996
REVENUES (in thousands)
Product sales:
Negative and positive electrodes $2,317 $2,482
Battery packs 164 925
Machine building 93 1,067
Total 2,574 4,474
Royalties 338 401
Revenue from research and
development agreements 2,849 755
Revenues from license agreements -- 1,327
Other 699 221
TOTAL REVENUES $6,460 $7,178
Product sales, consisting of battery electrodes, battery packs and machine
building, decreased 42% in the quarter ended September 30, 1997 compared to
the same quarter in the previous year, principally due to the completion of
manufacturing equipment purchased by United Solar, reduced level of machine
building for GM Ovonic and reduced sales of battery packs as GM Ovonic ramped
up its production.
Royalties decreased 16% from $401,000 in the three months ended September
30, 1996 to $338,000 in the three months ended September 30, 1997 because of
reduced levels of royalties from ECD's optical memory technology in fiscal
1998, partially due to lower selling prices and unfavorable exchange rates.
The increase in revenues from business agreements to $2,849,000 in the
three months ended September 30, 1997 from $755,000 in the three months ended
September 30, 1996 was due to substantially increased revenues from a multi-
year, multi-task program with General Motors to develop batteries for electric
and hybrid electric battery applications ($1,035,000 in the quarter ended
September 30, 1997) and from the United States Advanced Battery Consortium
($730,000 in the quarter ended September 30, 1997).
Revenues from license agreements were $1,327,000 in the three months ended
September 30, 1996 while there were no revenues from license agreements in the
three months ended September 30, 1997. In the three months ended September
30, 1996, ECD and Ovonic Battery entered into a royalty-bearing battery
license agreement with Canon Inc. ("Canon") granting Canon
nonexclusive rights to manufacture and market Ovonic NiMH batteries for
certain applications. The Company is actively engaged in implementing its
strategy to form strategic alliances to further commercialize its products.
While revenues from license agreements are non-recurring, the Company is
negotiating with a number of companies which are expected to provide
additional license fees to the Company in the future.
ECD is a leader in the synthesis of new materials and the development of
advanced production technology and innovative products. ECD has pioneered the
development of products and production technology based on amorphous,
disordered and related materials, with an emphasis on alternative energy and
advanced information technologies. ECD's web site is http://ovonic.com.
SOURCE Energy Conversion Devices, Inc.