Energy Conversion Devices Announces Q3 Operating Results
16 May 2000
Energy Conversion Devices Announces Third Quarter Operating Results
TROY, Mich., May 15 Energy Conversion Devices, Inc.
("ECD") today announced results for the three- and nine-months
ended March 31, 2000. Losses reported below are due primarily to the
Company's continuing investments in programs to commercialize its various
technologies that were essential to the creation of historic new business
agreements with Texaco, General Electric, Intel, Baotou Steel/China and
Bekaert. For the third quarter ended March 31, 2000, the Company recorded a
net loss of $3,315,000 on revenues of $7,477,000 compared to net loss of
$4,972,000 on revenues of $7,320,000 in the third quarter last year. For the
nine months ended March 31, 2000, the Company recorded a net loss of
$11,350,000 on revenues of $21,827,000 compared to a net loss of $8,530,000 on
revenues of $25,449,000 in the same period in 1999.
Stanford R. Ovshinsky, president and CEO, and Robert C. Stempel, Chairman,
in a joint statement, said: "The agreements entered into were made possible by
the Company's investments in technology which have created enabling
intellectual property, products and production processes. These agreements
will result in a historic transformation of the Company and its core
businesses in energy and information, positioning it for growth to address
opportunities in the global economy."
These recent new business agreements, which will bring the Company's cash
reserves to approximately $90 million, will also have a significant positive
impact on future cash flows. They include:
* A strategic alliance with Texaco beginning with the purchase of 20
percent equity in ECD for $67.3 million. The companies also have agreed to
establish joint ventures, to be funded by Texaco, for the continued
development and commercialization of advanced energy technologies, initially
in the fields of ECD's proprietary Ovonic Solid Hydrogen Storage System(TM)
and the Ovonic Regenerative Fuel Cell(TM).
* The new joint venture finalized with Bekaert to expand United Solar's
manufacturing capacity fivefold with the construction of the 25-megawatt
annual capacity plant to be designed and built by ECD and the initiation of a
worldwide sales and marketing program for Uni-Solar(R) photovoltaic products.
The $84 million investment by Bekaert includes approximately $50 million for
the purchase of production equipment from ECD and will allow United Solar to
accelerate the market penetration of United Solar's unique lightweight,
flexible, and rugged solar products to address the rapidly expanding
photovoltaic markets.
* A strategic alliance formed with General Electric, the first activity
of which resulted in the creation of a new joint venture, Ovonic Media, LLC.
ECD received a multi-million dollar contract from Ovonic Media to design,
develop, demonstrate and commercialize ECD's proprietary continuous web roll-
to-roll technology for the ultra-high-speed manufacture of optical media
products, primarily rewritable digital versatile disks (DVDs).
* Ovonyx, ECD's joint venture with Mr. Tyler Lowrey to commercialize
ECD's proprietary Ovonic Unified Memory technology (OUM), formed a strategic
alliance with Intel. The alliance includes an investment by Intel in Ovonyx,
the granting of a non-exclusive royalty-bearing license to Intel and a joint
development program utilizing Intel's wafer fabrication facilities. In
addition to being nonvolatile, OUM memory technology will enable significantly
faster write and erase speeds and higher cycling endurance than conventional
memories to replace such memory types as Flash, SRAM and DRAM.
Other important developments include:
* Ovonic Battery's receipt of all necessary government approvals and
official start of the first in a series of nickel metal hydride (NiMH)
projects in China. These projects, first announced in August 1999, with Rare
Earth High-Tech Co., Ltd. of Baotou Steel Company, Inner Mongolia, China, have
potential revenue to Ovonic Battery in excess of $100 million, the first phase
of which is valued at $25.2 million and marks the Company's entry into the
vast Chinese markets.
* The completion of the construction of a new high-speed deposition
machine designed and built by ECD for Southwall Technologies to supply product
for the fast-growing anti-reflective film market for cathode ray tubes (CRTs)
and liquid crystal displays (LCDs).
* ECD/Ovonic Battery development of a new monoblock battery which is a
compact design for high-voltage (36-42 volt) automotive electrical systems for
future gasoline-powered automobiles. This new battery can address a wide
range of product applications including hybrid electric vehicles, electric
vehicles and fuel cell electric vehicles. It was featured in several of the
Advanced Hybrid Technology Demonstration Vehicles shown at the recent North
American International Auto Show.
* The start of our successful electric bus demonstration program in the
City of Rome, Italy, where an Ovonic NiMH battery pack replaced an existing
lead acid battery, providing three times the range on a single charge. This
permits continuous operation over an entire shift, eliminating expensive
downtime and labor costs.
* The Company's focus on developing production technology was highlighted
by the achievement of ISO 9002 Quality Certification for Ovonic Battery's
electrode manufacturing facilities.
A summary of the Company's operating results follows:
Three Months Ended Nine Months Ended
March 31, March 31,
2000 1999 2000 1999
(In thousands) (In thousands)
Product sales $790 $1,123 $4,037 $3,131
Royalties 796 716 2,534 1,948
Revenues from product
development agreements 1,719 4,118 7,629 12,742
Revenues from license
and other agreements 1,000 232 3,178 4,716
Other 3,172 1,131 4,449 2,912
Total revenues 7,477 7,320 21,827 25,449
Expenses 10,545 11,600 32,080 33,740
Net loss from
operations (3,068) (4,280) (10,253) (8,291)
Gain on sale of Ovonic
Battery Company Stock -- -- -- 1,970
Equity interest in
United Solar's net loss (658) (992) (1,956) (3,108)
Other non-operating
income - (net) 411 300 859 899
Net loss $(3,315) $(4,972) $(11,350) $(8,530)
Basic net loss per
common share $(.24) $(.38) $(.84) $(.66)
* A portion of the loss was also attributable to ECD's continued
investments in United Solar. GAAP requires that ECD recognize as a loss its
share of the losses of United Solar's ongoing operation regardless of the
value of the investment. With the completion of the Bekaert transaction, the
ECD advances have been repaid and no future ECD investment is anticipated.
Losses related to product and business development, electrode production and
the ongoing protection of the Company's intellectual property also contributed
to the 2000 losses.
* The increase in product sales in the nine months was primarily due to
an increase in machine-building revenues applicable to the contract to build a
high-speed deposition machine for Southwall Technologies. The decrease in
product sales for the current quarter was due primarily to decreased sales of
electrodes.
* The reduction in the three month and in the nine month periods in
revenues from product development agreements primarily relates to the
successful conclusion of programs with GM to develop batteries for electric
and hybrid electric applications and with the National Institute of Standards
and Technology for the development of a new low-cost manufacturing system for
DVDs based on ECD's proprietary phase-change optical memory technology which
led to the new agreement with General Electric.
* Revenue from license and other agreements for the three- and nine-month
periods included $1,000,000 from Sanyo, which had previously been deferred
from an October 1998 agreement.
* The increase in other revenues in the three month and in the nine month
periods due to revenues from Ovonyx of $2,521,000 related to previous expenses
paid by ECD on behalf of Ovonyx.