ECD Announces Second Quarter Operating Results
17 February 1998
ECD Announces Second Quarter Operating Results
TROY, Mich., Feb. 17 -- Energy Conversion Devices, Inc.
("ECD") announced today its operating results for the three
months and six months ended December 31, 1997 as follows:
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
(in thousands) (in thousands)
REVENUES $8,748 $9,579 $15,209 $16,756
EXPENSES $12,377 $11,989 $23,311 $23,339
NET LOSS FROM OPERATIONS $(3,629) $(2,410) $(8,102) (6,583)
OTHER INCOME - NET 122 390 298 665
NET LOSS $ (3,507) $(2,020) $(7,804) $(5,918)
NET LOSS PER COMMON
SHARE $(.32) $(.19) $(.72) $(.55)
The three-months ended December 31, 1997 was the third consecutive quarter
of decreasing operating losses. This improved performance primarily relates
to increasing revenues from product development agreements.
The losses for 1997, when compared to the same periods in the prior year,
increased primarily as a result of a $2,700,000 and $4,026,000 decrease in
"one-time" license fees for the three- and six-month 1997 periods
respectively. License fees are based upon developing new business
relationships, an ongoing process. The net loss without license fees for the
three- and six-months ended December 31, 1997 decreased from $5,020,000 in the
prior year to $3,807,000 (three months) and from $10,244,000 to $8,104,000
(six months).
The losses in the 1997 periods resulted from the continued significant
investment of funds for the development of the Company's products and
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.
Recent developments include the following:
Ovonic NiMH Batteries
* February 10, 1998 - EV Global Motors ("EVG") and ECD announced a
strategic alliance in an effort to hasten light electric vehicles to market.
Ex-Chrysler Corp. chairman Lee Iacocca and ECD chairman Robert C. Stempel
announced plans to work together in the rapidly expanding electric vehicle
("EV") market. In making the announcement, the new business teammates said
their companies' strategic relationship includes:
* cooperating in further development and commercialization of light
EV's using EVG vehicles and ECD energy storage technologies; and
* jointly investigating the use of photovoltaic (solar power)
recharging stations, an area in which ECD and its United Solar Systems Corp.
affiliate already play an active role.
* January 4, 1998 - Ovonic NiMH batteries, the enabling technology for EV
and hybrid electric vehicles (HEV), were featured at the North American
International Auto Show as part of General Motors (GM) Advanced Technology
Vehicles presentation to the worldwide media at the preview opening.
Important product announcements from GM included the introduction of GM Ovonic
NiMH batteries in the production EV1 and S-10 pick-up trucks this year and
production HEVs by 2001. GM Ovonic NiMH batteries are manufactured by the GM
Ovonic L.L.C. joint venture between Ovonic Battery and GM.
* December 23, 1997 - The litigation brought by Matsushita Industrial
Company, Ltd. ("MBI") against ECD is the U.S. District Court for the district
of Delaware was successfully concluded. On December 23, 1997, the Judge
issued the Final Order and Opinion giving ECD and Ovonic Battery precisely the
results they had sought, with the sole exception of denying the request for
attorneys' fees. This follows the recent issuance of the important basic
Ovonic Battery patent for NiMH batteries by the Japanese Patent Office in
Tokyo, Japan.
* December 12, 1997 - ECD announced at the annual Electric Vehicle
Symposium ("EVS-14") in Florida that Ovonic Battery and Sanoh Industrial Co.,
Ltd. ("Sanoh") of Japan established Sanoh Ovonic Power Systems Corporation
("Sanoh Ovonic"), a joint venture for the manufacture and sale of Ovonic NiMH
batteries for electrically-powered two- and three-wheeled vehicles, in
accordance with a previously-announced agreement. At EVS-14, the Ovonic NiMH
technology was the battery of choice for 37 of the 40 vehicles demonstrated.
Sanoh Ovonic will begin launching a market development program under
which two- and three-wheel vehicle manufacturers in Europe will participate in
field test programs. Sanoh Ovonic has aggressive plans for mass production of
a family of Ovonic NiMH batteries to serve the European market and will begin
the planning and engineering of a manufacturing facility to be located in
Europe. Sanoh is currently producing NiMH batteries for two- and three-
wheeled vehicles at its plant in Koga, Japan under a license from Ovonic
Battery.
* November 13, 1997 - ECD and Ovonic Battery announced that the first
Chevrolet S-10 electric pickup trucks equipped with an advanced NiMH battery
pack manufactured by GM Ovonic were delivered to Southern California Edison,
Detroit Edison and Georgia Power.
Photovoltaic Technology
* United Solar's product sales for the calendar year ended December 31,
1997 more than doubled when compared with 1996. The 1997 product sales
included approximately $1.5 million in sales of the award winning PV shingle
systems in the latter part of the year.
* United Solar's thin-film amorphous silicon alloy solar panels are
generating intense interest for space applications. While satellites have
long used crystalline silicon or gallium arsenide solar cells to generate
power, these cells are expensive, fragile and significantly heavier than our
thin-film cells. NASA has confirmed high total area efficiency of 12 percent
for United Solar cells under the AM-0 solar illumination present in space.
This achievement has generated intense interest in using United Solar cells in
a number of space-based applications that many telecommunication companies
believe are crucial to satisfy the demand for more communication bandwidth.
Information Technology
* Work is underway on two recently-awarded contracts from the Department
of Commerce Advanced Technology Program to develop roll-to-roll manufacturing
technology for digital versatile disks (DVDs) and new optical disk storage
technologies.
Notes to Operating Results
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
(in thousands) (in thousands)
REVENUES
Product sales:
Negative and
positive electrodes $2,576 $2,978 $4,892 $5,459
Battery packs 38 1,155 203 2,081
Machine building 55 246 148 1,313
Total Product sales 2,669 4,379 5,243 8,853
Royalties 757 415 1,095 816
Revenues from research and
development agreements 4,164 1,354 7,013 2,110
Revenues from license and
other agreements 300 3,000 300 4,326
Other 858 431 1,558 651
TOTAL REVENUES $8,748 $9,579 $15,209 $16,756
Product sales decreased compared to the same periods in the previous year
primarily due to lower electrode sales prices, reduced sales of battery packs
as GM Ovonic ramps up its production and completion of machine building
projects for GM Ovonic.
Royalties increased in both periods primarily due to higher battery
royalties resulting from the recently-issued basic patent in Japan recognizing
the fundamentals that make NiMH batteries commercially feasible. The volume
of NiMH batteries being sold is increasing substantially, but these increases
are partially offset by lower sales prices and unfavorable exchange rates with
the Japanese yen.
The increase in revenues from research and development agreements in the
three months and six months ended December 31, 1997 from the same periods in
the prior year was due to substantially increased revenues from a new multi-
year, multi-task product development program with GM to develop batteries for
EV and HEV applications ($1,719,000 in the quarter ended December 1997 and
$2,754,000 in the six months ended December 1997) and from a contract with the
United States Advanced Battery Consortium ($681,000 in the quarter ended
December 31, 1997 and $1,411,000 in the six months ended December 31, 1997).
Revenues from development agreements for the Company's optical memory and
photovoltaic technologies were also significantly higher.
Revenues from license and other agreements in the three months and six
months ended December 31, 1996 included license fees of $2,000,000 from Sanoh
and $1,000,000 from LG Chemical, Ltd. in connection with license agreements
with those companies. The six months ended December 31, 1996 also included
license fees of $1,246,000 from Canon. 1997 revenues of $300,000 relate to a
technology transfer agreement with Sovlux and the Chepetsk Mechanical Plant in
Russia.
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.