Energy Conversion Devices Announces Year-End Operating Results
29 September 1998
Energy Conversion Devices Announces Year-End Operating Results
TROY, Mich., Sept. 28 -- Energy Conversion Devices, Inc.
("ECD") today announced results for the fiscal year ended
June 30, 1998. For the 1998 fiscal year, ECD recorded a loss of $16.7 million
on revenues of $31.6 million compared with a loss of $18 million on revenues
of $29.6 recorded in 1997. The net loss, excluding revenues from license and
other agreements, which are non-recurring, was reduced from $23.8 million for
the year ended June 30, 1997 to $18.4 million for the year ended June 30,
1998.
"We are pleased to report that we have reduced the loss on a year-to-year
basis due to increased revenues from product development activities and have
an increasing revenue stream from royalty arrangements," said Stanford R.
Ovshinsky, President and CEO. "As products incorporating our core
technologies continue their entry into the worldwide marketplace, it will be
increasingly important to enhance our operating cash flows and resources, hold
the line on expenses and build manufacturing infrastructure for the future,"
he added.
"We're optimistic about our technology and pipeline products," said Robert
C. Stempel, ECD Chairman. "Commercialization is what it's all about, and we
are now exerting all the energies we can to encourage and support our
marketing partners and many licensees to speed up time to market. We have
begun to shift the focus of capital expenditure spending from product
development to manufacturing, particularly with our patented photovoltaic and
battery technologies. Near term, we see good growth of royalty revenue from
sales of information storage technology products and in the telecommunications
area," he concluded.
ECD has the enabling proprietary core technologies in the important fields
of energy generation (flexible, thin-film photovoltaic/solar power products),
energy storage (nickel metal-hydride (NiMH) batteries), and information
storage and retrieval (phase change optical and electrical memories/rewritable
computer CDs and DVDs).
In energy generation, applications include solar roofing shingles,
distributed power, battery charging, remote/village power, consumer products
and telecommunications. Through its joint venture with Canon Inc., United
Solar Systems Corp., ECD has been producing solar shingles that are gaining in
popularity as well as other photovoltaic products which have been described as
a major breakthrough by the U.S. Government. And in telecommunications,
Ovshinsky noted that there is a significant market opportunity in the Low
Earth Orbit satellite space segment for ECD's photovoltaic products, which are
durable, flexible and offer superior energy-producing performance at high
temperatures.
In the energy storage area, all significant manufacturers of consumer NiMH
batteries are manufacturing products under license from ECD. NiMH batteries
have been selected as the battery of choice and are now being introduced as
the power source for electric vehicles, such as bicycles, scooters, cars and
trucks. Ovshinsky said the technology has made important strides in recent
years noting that, through the company's GM Ovonic joint venture with General
Motors Corporation (GM), NiMH batteries are now in the Chevrolet S10 electric
truck and will soon be the battery pack of choice for the EV1, GM's electric
car. In August 1998, Ovonic Energy Products, Inc., a wholly owned subsidiary
of GM Ovonic, opened a plant in Kettering (Dayton), Ohio to produce advanced
batteries commercially for sale to the EV industry. Mr. Ovshinsky also noted
that the NiMH battery has been received well in the booming bicycle and
scooter markets of Asia and Europe.
Commenting on the Company's information technology field, Ovshinsky added
that ECD's high-capacity phase-change optical memory technology has become the
technology of choice for rewritable digital versatile disks (DVD-RAM), which
facilitate both recording and playback, and can store seven times more data
than CD-ROMs. Industry analysts have predicted that DVD-RAM media and drives,
which have come on the market during the Summer of 1998, are expected to
replace the VCR and CD-ROM.
ECD is a leader in the synthesis of new materials and the development of
advanced production technology and innovative products. It has pioneered and
developed enabling technologies leading to new products and production
processes based on amorphous, disordered and related materials, with an
emphasis on alternative energy and advanced information technologies. ECD's
web site address is http://ovonic.com.
The financial results for the fiscal year are shown in the following
table:
Financial Results:
Year Ended June 30,
1998 1997
(in thousands)
Revenues
Product sales $9,858 $14,897
Royalties 2,486 1,394
Revenue from product development
agreements 15,311 5,739
Revenues from license agreements 1,701 5,829
Other 2,201 1,719
Total Revenues $31,557 $29,578
Expenses $48,402 $48,606
Net loss from Operations (16,845) (19,028)
Other Income -- Net 180 1,073
Net (Loss) $(16,665) $(17,955)
Basic Net (Loss) Per
Common Share $(1.50) $(1.67)
Notes to Financial Results:
Royalties increased 78% due to the issuance in Japan of the basic NiMH
battery patent in August 1997, causing NiMH battery sales in Japan to be
royalty bearing, and due to higher sales of NiMH batteries worldwide. While
the volume of NiMH batteries being sold were higher, the royalties the Company
received were adversely affected by lower sales prices and unfavorable
exchange rates with the Japanese yen. In addition, the Company experienced
lower levels of royalties from ECD's optical memory technology in 1998 as
licensees prepared to introduce new types of ECD's phase-change rewritable
products.
Revenues from product development agreements increased 167% due to
substantially increased revenues from a multi-year, multi-task, multi-million
dollar program with General Motors to develop batteries for electric and
hybrid electric vehicle applications ($6,995,000 in 1998 compared to $151,000
in 1997) and from contracts with National Institute of Standards and
Technology in the Company's battery and optical memory technologies
($1,797,000 in 1998 compared to $706,000 in 1997). Revenues from product
development agreements and research and development for ECD's photovoltaic
technology increased 84%.
Product sales consisting of positive and negative battery electrodes,
battery packs and machine building, decreased 34% from $14,897,000 in the year
ended June 30, 1997 to $9,858,000 in the year ended June 30, 1998. Sales of
negative and positive electrodes decreased $1,537,000, due to GM Ovonic's
ramp-up of positive electrode production, lower negative electrode prices and
lower shipments to its primary customer because of current economic conditions
in Asia. Battery pack sales decreased 82% to $414,000 from $2,333,000 as GM
Ovonic, formerly the Company's principal battery pack customer, began its own
production of battery packs. Revenues from machine building were $148,000 in
the year ended June 30, 1998 down from $1,732,000 in the year ended June 30,
1997, principally due to completion of the machine building projects for GM
Ovonic.
Other revenues increased to $2,201,000 in 1998 from $1,719,000 in 1997
primarily due to increased work performed for licensees of Ovonic Battery,
partially offset by certain adjustments in 1998 to reflect a reduction in the
estimate of revenues.
The loss for 1998 is primarily due to (i) expensed costs of ongoing
battery product development and continued market penetration; (ii) losses
related to optimization of electrode production and performance; (iii) ongoing
protection of the Company's technologies and patents; (iv) expenses of
additional technical, manufacturing and engineering support for GM Ovonic in
furtherance of initial NiMH battery production and ongoing technical
assistance to other customers and (v) development of new proprietary multi-
state electrical memory.
This release may contain forward-looking statements within the meaning of
the Safe Harbor Provisions of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are based on assumptions which ECD, as
the date of this release, believes to be reasonable and appropriate. ECD
cautions, however, that the actual facts and conditions that may exist in the
future could vary materially from the assumed facts and conditions upon which
such forward-looking statements are based.