Energy Research Reports Third Quarter Results
2 September 1999
Energy Research Reports Third Quarter Results
DANBURY, Conn.--Sept. 2, 1999--and Reincorporation in Delaware
Energy Research Corporation (AMEX:ERC) today reported results for the third quarter of 1999.
The Company also reported that, at a Special Meeting of Shareholders held today, shareholders voted to change the Company's name to FuelCell Energy, Inc. Shareholders also approved an increase to the Company's authorized common stock from 8 million to 20 million shares and a proposal to change the Company's state of incorporation from New York to Delaware.
For the quarter ended July 31, 1999, the Company reported revenues of $4,416,000 compared with revenues of $5,537,000 for the same period in 1998. The Company reported a net loss of $386,000, or a loss of $0.09 per share, for the quarter, compared with a net loss of $349,000, or $0.08 per share, during the period ended July 31, 1998.
For the nine months ended July 31, 1999, ERC reported revenues of $16,488,000 compared with revenues of $16,056,000 during the same period in 1998. The Company had a net loss of $1,507,000, or $0.36 per share during the first nine months, compared with a net income of $6,000 during the first nine months of 1998.
The increased loss for the third quarter was attributable to higher costs associated with the commercialization of the Company's Direct FuelCell(TM) technology and costs associated with manufacturing process improvements. The loss also reflected preparation costs relating to the Company's name change and the change in incorporation from New York to Delaware.
Commenting on the results, Jerry Leitman, president and CEO, stated: "Our results during this past quarter, both financial and technological, reflect the increased pace of product development, further reinforcing the solid foundation upon which we expect to continue building this company."
Leitman continued by saying that the Company is focused on upcoming field trials that are planned for later this fall and next year. "The performance of our fuel cell stacks now in operation are a strong prelude to the upcoming demonstrations of our sub-megawatt and megawatt-class power plants during the next couple of years in the United States and Europe."
Results of Special Meeting of Shareholders
At a Special Meeting of Shareholders held today, Company shareholders were asked to change the Company's name to FuelCell Energy, Inc. to more accurately reflect the Company's emphasis on and leadership position in the commercialization of its Direct FuelCell(TM) technology. With the recently completed spin-off of Evercel, Inc., formerly a wholly-owned subsidiary, to the Company's shareholders, the Company's principal focus is the manufacture and marketing of fuel cells, rather than research and development of electrochemical technologies, fuel cells and batteries.
Increasing the number of authorized common shares will give the Company flexibility in growing its business in the future. While there is no specific plan for the issuance of additional shares of Common Stock, the Company believes that it should have sufficient authorized shares for issuance in connection with implementation of financings, mergers and acquisitions, employee benefit plans and other business purposes.
By changing the Company's incorporation from New York to Delaware (the "Reincorporation"), the Company will be able to take advantage of a more modern and flexible set of corporate law provisions.
The name change, increase in authorized common stock and the Reincorporation will be made effective on a date to be announced within the next several weeks. Following these changes, each outstanding share of the Company's Common Stock will be automatically converted into one share of Common Stock of FuelCell Energy, Inc. After the effective date of the changes, the Common Stock of FuelCell Energy, Inc. will be listed on the American Stock Exchange under the symbol "FCL".
Leitman added: "Approval of the three proposals put to a shareholder vote today strengthens our plan to commercialize ERC's Direct FuelCell(TM) technology. We can now move forward faster, and more effectively, toward a profitable future."
Important Accomplishments
Prior to the changes approved today, ERC achieved important accomplishments during the third quarter that position the company for future growth.
In August, the Company announced it had formed a partnership with the Advanced Technology Division of Bath Iron Works (BIW), a General Dynamics Company to develop an advanced carbonate-based fuel cell energy plant for defense marine applications. The Company expects this alliance to lead to the development of the first new power generation technology for surface ships since nuclear power was adopted for aircraft carriers, addressing the significant market for advanced marine power systems.
The Company has achieved other important technical accomplishments during the third quarter, including:
-- 11,000 hours of operation to date by sub-scale, commercial
design fuel cell stack.
-- Operation of sub-scale fuel cell stack on marine diesel fuel
-- 4600 hours of operation by a commercial design fuel cell
stack, grid-connected, generating over 775,000 kilowatt-hours
of electricity to date. The plant continues to provide power
for ERC's headquarters. The power plant availability has been
>95%.
-- The Company's European partner, MTU, a DaimlerChrysler
subsidiary, continued preparation for start-up of
its 250 kW "Hot Module" cogeneration power plant at Bielefeld,
Germany.
Energy Research Corporation is a world recognized leader in the field of high efficiency fuel cells for electric power generation. http://www.ercc.com or http://www.fuelcellenergy.com.
This press release contains forward-looking statements, including statements regarding the Company's plans and expectations regarding the development and commercialization of its fuel cell technology. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could cause such a difference include, without limitation, the risk that commercial field trials of the Company's products will not occur when anticipated, general risks associated with product development, manufacturing and introduction, changes in the utility regulatory environment, potential volatility of energy prices, rapid technological change, and competition, as well as other risks set forth in the Company's filings with the Securities and Exchange Commission. The forward-looking statements contained herein speak only as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based.
RESULTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
THREE MONTHS ENDED JULY 31,
1999 1998
---- ----
Revenues $ 4,416 $ 5,537
License fee income, net 85 53
Loss before income taxes $ (227) $ (512)
Net Loss $ (386) $ (349)
Basic and diluted Loss per share $ (0.09) $ (0.08)
Basic and diluted shares
outstanding 4,170,917 4,116,318
NINE MONTHS ENDED JULY 31,
1999 1998
----- ----
Revenues $ 16,488 $16,056
License fee income, net 146 649
Income (Loss) before
income taxes $ (1,307) $ 1
Net income (Loss) $ (1,507) $ 6
Basic earnings (Loss) per share $ (0.36) --
Basic shares outstanding 4,140,627 4,065,357
Diluted earnings (Loss) per share $ (0.36) --
Diluted shares outstanding 4,140,627 4,227,457
BALANCE SHEET
(In thousands)
(unaudited)
ASSETS
July 31, October 31,
1999 1998
---- ----
Current assets $10,855 $15,866
Property, plant & equipment,
Net 7,194 8,347
Other assets 2,425 2,630
----- -----
Total assets $20,474 $26,843
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LIABILITIES AND SHAREHOLDERS' EQUITY
July 31, October 31,
1999 1998
---- ----
Current liabilities $ 4,505 $ 5,632
Long-term debt 1,663 1,944
Other long-term liabilities 177 177
Minority interest 200 3,220
Shareholders' equity 13,929 15,870
------ ------
Total liabilities and
Shareholders' equity $20,474 $26,843
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