Energy Conversion Devices Announces First Quarter Operating Results
16 November 1999
Energy Conversion Devices Announces First Quarter Operating Results
TROY, Mich., Nov. 15 -- Energy Conversion Devices, Inc.
("ECD") today announced results of operations for the three
months ended September 30, 1999 as follows:
Three Months ended
September 30,
1999 1998
(in thousands)
Revenues $7,580 $6,178
Expenses 11,014 10,612
Net loss from operations (3,434) (4,434)
Equity interest in
United Solar's net loss* (560) (1,089)
Interest expense (99) (167)
Interest income 227 356
Other non-operating income - (net) 121 110
Net loss $(3,745) $(5,224)
Basic net loss per common share $(.28) $(.41)
* Generally Accepted Accounting Principles ("GAAP") require that the
Company recognize its investments in United Solar's ongoing operations as a
loss.
The Company had a net loss from operations in the three months ended
September 30, 1999, of $3,434,000 compared to a net loss from operations of
$4,434,000 for the three months ended September 30, 1998 -- an improvement of
$1,000,000. The improvement primarily relates to a $358,000 increase in
revenues from license and other agreements, a $538,000 improvement in
profitability from product development agreements, and a $645,000 lower loss
on product sales, partially offset by higher product development and research
($226,000) and operating, general and administrative expenses ($262,000). The
loss is primarily due to: (i) ongoing product development and continued market
development activities; (ii) losses related to electrode production; (iii)
ongoing protection of the Company's intellectual property; and (iv)
development costs of ECD's microelectronic non-volatile, thin-film
semiconductor devices (Ovonic Unified Memory). In addition to the Company's
improved operating performance, the performance of United Solar Systems Corp.
("United Solar") also improved significantly. In 1999 and 1998, the Company
incurred charges of $560,000 and $1,089,000, respectively, related to the
Company's share of United Solar's losses as required under GAAP.
Robert C. Stempel, Chairman of ECD, added, "The Company's hydrogen storage
technology is being recognized throughout the world by a number of major auto
and oil companies as an important technology for hydrogen-fueled
transportation systems."
Stanford R. Ovshinsky, ECD President and CEO, stated that the Company is
continuing its trend of increased revenues and reduction in total losses.
While commenting on the quarterly results, he noted, "Earlier this month, the
Company's Ovonyx joint venture announced an important new royalty-bearing
agreement with Lockheed Martin Space and Electronics Communications to
commercialize the Ovonyx non-volatile semiconductor technology in radiation-
hardened space and military applications." He further noted that the Company
is currently in negotiations not only in connection with its OUM technology
but also in all areas of its core Energy and Information businesses.
Notes to Operating Results
Three Months ended
September 30,
1999 1998
(in thousands)
REVENUES
Product sales $1,870 $967
Royalties 663 615
Revenues from product
development agreements 3,918 3,774
Revenues from license and
other agreements 400 42
Other 729 780
TOTAL REVENUES $7,580 $6,178
Product sales, consisting of positive and negative battery electrodes,
battery packs and machine building, increased 93% to $1,870,000 in the three
months ended September 30, 1999 from $967,000 in the three months ended
September 30, 1998. Sales of negative and positive electrodes decreased
$377,000, primarily due to one of the Company's principal negative electrode
licensees currently manufacturing its own electrode products as allowed under
its license from the Company. The Company has continued its development of
advanced electrode materials to be introduced to its customers. There were
battery pack sales of $553,000 and machine-building revenues of $727,000 in
1999 compared to no revenues for either one in 1998. The machine-building
revenues in 1999 were applicable to a contract to build large-area microwave
deposition equipment.
Royalties increased 8% from $615,000 in the three months ended September
30, 1998 to $663,000 in the three months ended September 30, 1999. While the
volume of NiMH batteries currently being sold has increased substantially, the
royalties the Company receives reflect increased production efficiencies of
its licensees which have resulted in lower prices as licensees move
aggressively to increase market share.
Revenues from product development agreements increased 4% from $3,773,000
in the three months ended September 30, 1998 to $3,918,000 in the three months
ended September 30, 1999. There were total increases in product development
agreements of $1,202,000 which were due to substantially increased revenues
from Shell Hydrogen related to the Company's proprietary hydrogen storage
technology ($313,000 in 1999 compared to none in 1998), the Department of
Energy ($439,000 in 1999 compared to $90,000 in 1998) and contracts with
National Institute of Standards and Technology (NIST) in the Company's battery
and optical memory technologies ($1,275,000 in 1999 compared to $998,000 in
1998). These increases in 1999 were partially offset by decreases in revenues
from a program with General Motors to develop batteries for electric and
hybrid electric vehicle applications ($1,003,000 in 1999 compared to
$1,924,000 in 1998) and from contracts with the Department of Energy and the
National Renewable Energy Laboratory in photovoltaic ($582,000 in 1999
compared to $718,000 in 1998).
Revenues from license and other agreements increased from $42,000 in the
three months ended September 30, 1998 to $400,000 in the three months ended
September 30, 1999, which consisted of revenues of $400,000 from Japan Storage
Battery Co., Ltd. ("Japan Storage").
In the three months ended September 30, 1999, the Company was informed by
one of its licensees, Japan Storage, that it had reached a certain level of
sales of its products and that the Company had earned an additional license
fee of $400,000 pursuant to certain terms contained in the previous license
agreement with Japan Storage. Mr. Ovshinsky noted that it was encouraging to
see this increased level of sales of products using the Company's technology.
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://www.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.