Energy Conversion Devices Announces Q1 Operating Results
16 November 1998
Energy Conversion Devices Announces First Quarter Operating Results
TROY, Mich., Nov. 13 -- Energy Conversion Devices, Inc. (ECD)
today announced results of operations for the three months
ended September 30, 1998 as follows:
Three Months ended
September 30,
1998 1997
(in thousands)
Revenues $6,178 $6,461
Expenses $10,612 $10,933
Net loss from operations $(4,434) $(4,472)
Other income (expense) (790)* 175
Net loss $(5,224) $(4,297)
Basic Net loss per common
share $(.41) $(.40)
* Other expense in the three months ended September 30, 1998 includes a
$1,089,000 expense related to ECD's $2,500,000 investment in United Solar
Systems Corp. (United Solar). Under Generally Accepted Accounting Principles,
the Company must adjust its investment for its share of the net earnings or
losses of United Solar for each reporting period until the Company's
investment is reduced to zero or exceeds $2,500,000.
The loss from operations is primarily due to: (1) costs of ongoing battery
product development and continued market development; (2) losses related to
electrode production as the Company optimized its product performance; (3)
expenses of additional technical, manufacturing and engineering support for GM
Ovonic, L.L.C. (GM Ovonic), the Company's manufacturing joint venture with
General Motors Corporation (General Motors), in furtherance of initial nickel
metal hydride (NiMH) battery production and ongoing technical assistance to
other customers; and (4) development costs of the multi-state electrical
memory.
Operating results exclude revenues from the recent agreement with Sanyo
Electric Co., Ltd. (Sanyo) of Osaka, Japan. On October 28, 1998, Ovonic
Battery Company, Inc. (Ovonic Battery) entered into a cooperative venture
agreement and a patent license with Sanyo. The license agreement provides for
an up-front payment and royalties on NiMH batteries for two- and three-wheel
vehicles in Japan and China for worldwide sale, other-use large NiMH batteries
in Japan and NiMH batteries for four or more wheel vehicles manufactured in
Japan for domestic and export sale. Sanyo is also purchasing a minority
common share position in Ovonic Battery.
"We are very pleased with our recent cooperative venture and patent
license agreement with Sanyo. This, together with other strategic growth
initiatives, will provide value creation opportunities for our shareholders,"
said Stanford R. Ovshinsky, ECD President and CEO. He added that, with the
issuance of the basic patents for NiMH batteries and phase-change optical
memory in Japan, various other agreements are under discussion.
Royalties, substantially all of which relate to batteries, increased 82%
from $338,000 in the three months ended September 30, 1997 to $615,000 in the
three months ended September 30, 1998 due to the issuance in Japan of a basic
NiMH battery patent in August, 1997 to Ovonic Battery, causing NiMH battery
sales in Japan to be royalty bearing, and also due to higher sales of NiMH
batteries worldwide.
Revenues from product development agreements increased 35% from $2,790,000
in the three months ended September 30, 1997 to $3,773,000 in the three months
ended September 30, 1998 due to substantially increased revenues from a
program with General Motors to develop batteries for electric and hybrid
electric vehicle applications ($1,924,000 in 1998 compared to $1,035,000 in
1997), from contracts with National Institute of Standards and Technology in
the Company's battery and optical memory technologies ($998,000 in 1998
compared to $143,000 in 1997), and contracts with National Renewable Energy
Laboratory in photovoltaics ($718,000 in 1998 compared to $75,000 in 1997).
These increases in 1998 were partially offset by decreases in revenues from
United States Advanced Battery Consortium ($730,000 in 1997 compared to none
in 1998) and decreases in revenues from other technologies.
Product sales consisting of positive and negative battery electrodes,
battery packs and machine building, decreased 62% to $967,000 in the three
months ended September 30, 1998 from $2,574,000 in the three months ended
September 30, 1997. Sales of negative and positive electrodes decreased
$1,350,000, primarily due to lower negative electrode prices and lower
shipments to its primary customer. There were no battery pack sales in 1998
compared to $164,000 in 1997 as GM Ovonic, formerly the Company's principal
battery pack customer, began its own production of battery packs. There were
no machine-building revenues in 1998 compared to $93,000 in 1997, principally
due to completion of the machine-building projects for GM Ovonic.
Other revenues increased by $81,000 from $699,000 in the three months
ended September 30, 1997 to $780,000 in the three months ended September 30,
1998 primarily due to increased billings for work performed for licensees of
Ovonic Battery.
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.
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.