Energy Conversion Devices Announces Q2 Operating Results
17 February 1999
Energy Conversion Devices Announces Second Quarter Operating Results
TROY, Mich., Feb. 17 -- Energy Conversion Devices, Inc.
("ECD") today announced operating results for the three months
and six months ended December 31, 1998 as follows:
Three Months Ended Six Months Ended
December 31, December 31,
1998 1997 1998 1997
(In thousands) (In thousands)
Revenues $11,869 $8,748 $18,047 $15,209
Expenses $11,529 $12,377 $22,141 $23,311
Net income (loss)
from operations $340 $(3,629) $(4,094) $(8,102)
Other income $1,326 $122 $536 $298
Net income (loss) $1,666 $(3,507) $(3,558) $(7,804)
Basic Net income (loss)
per common share $.13 $(.32) $(.28) $(.72)
The Company had consolidated revenues for the second quarter ended
December 31, 1998 of $11,869,000 compared with $8,748,000 in the second
quarter in the year earlier period. Net income was $1,666,000, or $.13 basic
net income per share, and included a $1,970,000 gain (recognition of an
additional $1,000,000 gain has been deferred pending completion of certain
contract terms) on the sale of Ovonic Battery common stock and a $4,400,000
license fee from Sanyo Electric Co., Ltd. ("Sanyo"), partially offset by a
$1,027,000 expense related to the Company's $2,500,000 cash investment in
United Solar Systems Corp. ("United Solar") as required under generally
accepted accounting principles, regardless of the true value of the
investment. The Company's investment in United Solar provides funding for new
opportunities in the worldwide photovoltaic market served by United Solar's
products which offer unique advantages to the satellite and telecommunications
industries. In the quarter ended December 31, 1997, the Company had a net
loss of $3,507,000, or $.32 basic net loss per share.
For the first six months of the 1999 fiscal year, revenues were
$18,047,000 compared to $15,209,000 for the same period last year. The net
loss for the six months of fiscal 1999 was $3,558,000, or $.28 basic net loss
per share, compared to a net loss of $7,804,000 for the year earlier period,
or $.72 basic net loss per share.
Stanford R. Ovshinsky, ECD president and chief executive officer, said,
"Profitability for the second quarter is welcomed. Acceptance of our
technologies has led to increased license fees and royalties. Continued
improvements of our operating results is a top priority in 1999."
Robert C. Stempel, ECD chairman, said, "The Company's profitability for
the second quarter is the result of our expanded license and cooperative joint
venture agreement with Sanyo. While we continue to develop new license
agreements, our operating plan also calls for further cost reductions and
improvements in manufacturing efficiency. The results of these actions should
be apparent in the coming year."
Notes to Operating Results
Three Months Ended Six Months Ended
December 31, December 31,
1998 1997 1998 1997
(In thousands) (In thousands)
REVENUES
Product sales $1,041 $2,669 $2,008 $5,243
Royalties 617 757 1,232 1,095
Revenues from product
development agreements 4,829 4,120 8,602 6,911
Revenues from license and
other agreements 4,442 359 4,484 417
Other 940 843 1,721 1,543
TOTAL REVENUES $11,869 $8,748 $18,047 $15,209
Product sales decreased compared to the same periods in 1997 primarily due
to the decision by one of the Company's principal customers to currently
manufacture its own electrode products. In order to expand its capacity with
the installation of new equipment, the Company also temporarily suspended
operations in its positive powder manufacturing facility.
Royalties decreased in the three months ended December 31, 1998 primarily
due to the fact that the 1997 period included an adjustment for additional
royalties from NiMH battery sales in Japan due to the basic patent issued in
Japan in 1997. Royalties increased in the six months ended December 31, 1998
primarily due to higher battery royalties resulting from the issuance of a
basic patent in Japan in 1997. The widespread acceptance of NiMH batteries
has led to large volume production which continues to increase significantly,
resulting in lower unit sales price that has affected royalties received by
the company.
Revenues from product development agreements increased in both the three-
and six-month periods by 17% and 24%, respectively, due primarily to increased
revenues from a program with General Motors Corporation to develop second and
third generation Ovonic NiMH batteries for electric and hybrid electric
vehicle applications. Revenues from product development agreements for ECD's
optical memory and photovoltaic technologies were also significantly higher
for both periods.
Revenues from license and other agreements in the three months and six
months ended December 31, 1998 increased to $4,442,000 and $4,484,000,
respectively, from $359,000 and $417,000, respectively, in the same periods in
1997 due to the license fee in 1998 from Sanyo.
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
of 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.