Energy Conversion Devices Announces Third Quarter Operating Results
17 May 1999
Energy Conversion Devices Announces Third Quarter Operating Results
TROY, Mich., May 14 -- Energy Conversion Devices, Inc. ("ECD"
or the "Company") today announced operating results for the
three months and nine months ended March 31, 1999 as follows:
Three Months Ended Nine Months Ended
March 31, March 31,
1999 1998 1999 1998
(In thousands) (In thousands)
Revenues $ 7,320 $ 8,983 $25,449 $24,192
Expenses $11,600 $12,791 $33,740 $36,102
Net loss from
operations $(4,280) $(3,808) $(8,291) $(11,910)
Other income
(expense) $ (692) $ 29 $ (239) $ 327
Net loss $(4,972) $(3,779) $(8,530) $(11,583)
Basic Net loss per
common share $ (.38) $ (.35) $ (.66) $ (1.07)
The Company had consolidated revenues for the third quarter ended March
31, 1999 of $7,320,000 compared with $8,983,000 in the third quarter in the
year earlier period. Net loss was $4,972,000, or $.38 basic net loss per
share, versus a net loss of $3,779,000, or $.35 basic net loss per share, in
the same period last year. The loss for the quarter was due mainly to ongoing
product development and included a $992,000 expense related to the Company's
cash investments 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 rapidly-growing
satellite and telecommunications industries. In the quarter ended March 31,
1998, the Company had a net loss of $3,779,000, or $.35 basic net loss per
share. Net loss from operations was $4,280,000 for the third quarter ended
March 31, 1999 compared to a net loss from operations of $3,808,000 for the
third quarter ended March 31, 1998.
During the third quarter ECD announced major licensing agreements in both
the information technologies and energy storage segments. In March, the
Company granted a nonexclusive license to Ricoh Company Limited of Tokyo
("Ricoh"), the world's largest manufacturer of rewritable compact disks. The
royalty-bearing license covers all past and future phase-change optical memory
products produced by Ricoh, ECD's 13th licensee to date.
The second agreement announced during the quarter is a royalty-bearing,
non-exclusive license agreement with Japan Storage Battery Co., Ltd. ("JSB"),
a Japanese battery manufacturing company, to manufacture consumer hydride
batteries and industrial hydride batteries in certain parts of the world.
For the first nine months of the 1999 fiscal year, revenues were
$25,449,000 compared to $24,192,000 for the same period last year. The net
loss for the first nine months of fiscal 1999 was $8,530,000, or $.66 basic
net loss per share, compared to a net loss of $11,583,000, or $1.07 basic net
loss per share, for the year earlier period. Net loss from operations was
$8,291,000 for the nine months ended March 31, 1999 compared to a net loss
from operations of $11,910,000 for the nine months ended March 31, 1998.
These losses are primarily product development and research costs that are the
investments that enable the Company to enter into license and joint venture
agreements.
Stanford R. Ovshinsky, ECD president and chief executive officer, noted
that "During the quarter, the Company formed a joint venture with Tyler
Lowrey, a world-recognized authority in semiconductor memory technology and
former vice chairman and chief technology officer of Micron Technology. The
joint venture, Ovonyx, is now engaged in negotiations with new strategic
partners for financing to commercialize ECD's Ovonic Unified Memory product, a
unique thin-film nonvolatile solid-state memory." Also during the quarter,
Kenneth Baker, former vice president in charge of General Motors global
research and development activities, joined ECD as vice chairman and chief
operating officer. Mr. Ovshinsky noted, "Ken's background in electric
vehicles and renewable energy makes him an ideal addition to the ECD
management team."
Robert C. Stempel, chairman of ECD, said, "ECD continues to develop new
license agreements and other alliances to commercialize the Company's
products. In addition to the licensing agreements with Ricoh and JSB, we
recently announced a joint venture with EV Global Motors Company and Unique
Mobility, Inc. to manufacture and sell battery-electric, hybrid-electric and
fuel cell electric vehicles for world markets. The joint venture's first
product will be a van that can be configured as either a 2-passenger cargo van
or a 6-passenger commuter van and will be powered by ECD's Ovonic nickel metal
hydride batteries."
Notes to Operating Results
Three Months Ended Nine Months Ended
March 31, March 31,
1999 1998 1999 1998
(In thousands) (In thousands)
REVENUES
Product sales $1,123 $2,863 $3,131 $8,106
Royalties 716 730 1,948 1,825
Revenues from
product development
agreements 4,118 3,892 12,742 10,803
Revenues from
license and
other agreements 232 642 4,716 1,059
Other 1,131 856 2,912 2,399
TOTAL REVENUES $ 7,320 $8,983 $25,449 $24,192
Product sales decreased compared to the same periods in 1998 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 for
advance electrode manufacturing 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 March 31, 1999 primarily due
to the fact that the 1998 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 nine months ended March 31, 1999
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 nine-month periods by 6% and 18%, respectively, due primarily to increased
revenues from contracts with the National Institute of Standards and
Technology in the Company's battery and phase-change optical memory
technologies and a program with General Motors to develop second- and third-
generation Ovonic NiMH batteries for electric and hybrid electric vehicle
applications. Revenues from product development agreements for ECD's
photovoltaic technologies were also significantly higher for both periods.
Revenues from license and other agreements in the three months and nine
months ended March 31, 1999 were $232,000 and $4,716,000, respectively, from
$642,000 and $1,059,000, respectively, in the same periods in 1998. The
significant increase in the 1999 nine-month period results from a new license
with Sanyo Electric Co. Ltd., the world's largest NiMH battery manufacturer.
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.