ECD Announces Significantly Improved Operating Results

Revenues up 123% and net loss was $0.04 compared to $0.32 for 2000.

Published: 14-Feb-2001

TROY, Mich., Feb. 14 /PRNewswire/ -- Energy Conversion Devices, Inc. (ECD) (Nasdaq: ENER) announced today a significant improvement in its operating results for the three and six months ended December 31, 2000. Revenues increased 123% to $15,088,000 compared to $6,770,000 in the second quarter last year. Similarly, the Company's net loss of $716,000 was a $3,574,000 improvement compared to the same quarter last year. On a per-share basis, the loss was $.04 in 2000 compared to a loss of $.32 in 1999.

Revenues increased 76% to $25,222,000 compared to $14,350,000 in the six months ended December 31, 1999. The Company's net loss of $2,461,000 was a $5,575,000 improvement compared to the same six months ended December 31, 1999. On a per-share basis, the loss was $.13 in 2000 compared to a loss of $.60 in 1999.

In a joint statement, Stanford R. Ovshinsky, President and CEO, and Robert C. Stempel, Chairman, said, "We are very pleased with the improved operating results for the second quarter. This is our second consecutive quarter of significantly improved results. Our long-standing strategy to invest in our technologies has led to historic new strategic alliances. With the recent addition of several marketing positions, our strategy now is to focus on manufacturing and sales." They further added that the improved performance is a direct result of a fundamental restructuring of the Company. Strategic alliances formed over the last year resulted in funding the commercialization efforts of ECD's products, thus improving operations and reducing the need for internal funding.

Ovshinsky and Stempel noted that activities of the Texaco Ovonic Fuel Cell and Texaco Ovonic Hydrogen Storage Systems joint ventures are proceeding according to plan. In November 2000, Michigan Economic Development Corporation offered the 100th Michigan Economic Growth Authority (MEGA) tax credit to ECD in connection with the new Rochester Hills, Mich., facility for the fuel cell and hydrogen joint ventures. Significant progress has been made in connection with making the facility available for occupancy by the two ventures.

In addition, they noted that work on the recently announced joint development agreement between Ovonyx and STMicroelectronics is underway.

The financial results for the second quarter and six months are shown in the following table:

    Financial Results:

                               Three Months Ended      Six Months Ended
                                   December 31,           December 31,
                                2000         1999      2000         1999
                               (In thousands, except per-share amounts)
    Revenues
      Product Sales           $3,769       $1,377    $6,961       $3,247
      Royalties                  798        1,075     1,673        1,738
      Revenue from Product
       Development Agreements  7,768        1,992    12,862        5,910
      Revenue from License
       Agreements              2,500        1,778     2,800        2,178
      Other                      253          548       926        1,277
    Total Revenue             15,088        6,770    25,222       14,350

    Expenses                  17,126       10,521    30,353       21,535
    Net Loss from Operations  (2,038)      (3,751)   (5,131)      (7,185)
    Other Income (Expense)
      Interest Income          1,633          192     3,187          419
      Equity Loss in
       Joint Ventures           (597)        (738)     (804)      (1,298)
      Other                      286            7       287           28

                               1,322         (539)    2,670         (851)

    Net Loss                   $(716)     $(4,290)  $(2,461)     $(8,036)
    Basic Net Loss Per
     Common Share              $(.04)       $(.32)    $(.13)       $(.60)

Notes to Financial Results:

The Company had a net loss in the three months ended December 31, 2000 of $716,000 compared to a net loss of $4,290,000 for the three months ended December 31, 1999. The most significant factor contributing to the improved operating results was an increase in the amount of funding from ECD's joint venture partners for the company's product and production development efforts related to the commercialization of ECD's products. Also contributing to the improved operating results was an increase in license fees, lower loss on product sales, an increase in interest income, and a decrease in equity losses from joint ventures, partially offset by higher expenses.

Product sales increased 174% to $3,769,000 in the three months ended December 31, 2000 from $1,377,000 in the three months ended December 31, 1999. Photovoltaic sales were $1,588,000 in 2000 versus zero in 1999 (United Solar financial statements were consolidated effective April 11, 2000). Machine- building revenues increased to $1,851,000 in 2000 compared to $395,000 in 1999. The machine-building revenues in 2000 were applicable to contracts to build production equipment for Bekaert ECD Solar Systems having 25MW of annual capacity and for production equipment for the manufacture of NiMH batteries for the Rare Earth Ovonic joint ventures. Sales of negative and positive electrodes decreased $472,000, 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. Because most battery pack orders are being filled through GM Ovonic, the Company's battery pack sales decreased to $271,000 in 2000 versus $452,000 in 1999.

Revenues from commercial product development agreements, which relate primarily to joint ventures established for the commercialization of ECD's products, increased 290% to $7,768,000 in the three months ended December 31, 2000 from $1,992,000 in the three months ended December 31, 1999. There were total increases in product development agreements of $6,757,000 which were due to development programs in 2000 for Texaco Ovonic Fuel Cell Company ($2,320,000), Texaco Ovonic Hydrogen Systems ($3,132,000), Ovonic Media ($775,000), and United Solar contracts with Department of Energy (DOE) and Solar Design Associates ($185,000), partially offset by decreases resulting from the successful completion of the Shell Hydrogen program ($0 in 2000 compared to $375,000 in 1999) and National Institute of Standards and Technology in the Company's battery and hydrogen technologies ($206,000 in 2000 compared to $715,000 in 1999).

Revenues from license and other agreements increased to $2,500,000 in the three months ended December 31, 2000 from $1,778,000 in the three months ended December 31, 1999. The 2000 revenues resulted from a license to Inner Mongolia Rare Earth Ovonic Metal Hydride Co., one of the three Rare Earth Ovonic joint ventures. Royalties decreased 26% to $798,000 in the three months ended December 31, 2000 from $1,075,000 in the three months ended December 31, 1999, primarily due to a change in estimate in the 1999 period which resulted in high 1999 revenues.

Other revenues decreased by $295,000 to $253,000 in the three months ended December 31, 2000 from $548,000 in the three months ended December 31, 1999, primarily due to the transfer of certain ECD employees to Ovonyx.

The Company had a net loss in the six months ended December 31, 2000 of $2,461,000 compared to a net loss of $8,036,000 for the six months ended December 31, 1999. The most significant factor contributing to the improved operating results was an increase in the amount of funding from ECD's joint venture partners for the company's product and production development efforts related to the commercialization of ECD's products. Also contributing to the improved operating results was an increase in license fees, a lower loss on product sales, an increase in interest income and an improvement in equity losses from joint ventures, partially offset by higher expenses.

Product sales increased 114% to $6,961,000 in the six months ended December 31, 2000 from $3,247,000 in the six months ended December 31, 1999. Photovoltaic sales were $2,970,000 in 2000 versus zero in 1999 (United Solar financial statements were consolidated effective April 11, 2000). Machine- building revenues increased to $3,414,000 in 2000 compared to $1,123,000 in 1999. The machine-building revenues in 2000 were applicable to contracts to build production equipment for Bekaert ECD Solar Systems having 25MW of annual capacity and for production equipment for the manufacture of NiMH batteries for the Rare Earth Ovonic joint ventures. Sales of negative and positive electrodes decreased $992,000, primarily due to one of the Company's principle negative electrode licensees currently manufacturing its own electrode products as allowed under its license from the Company. Because most battery pack orders are being filled through GM Ovonic, the Company's battery pack sales decreased to $449,000 in 2000 versus $1,005,000 in 1999.

Revenues from commercial product development agreements, which relate primarily to joint ventures established for the commercialization of ECD's products, increased 118% to $12,862,000 in the six months ended December 31, 2000 from $5,910,000 in the six months ended December 31, 1999. There were total increases in product development agreements of $10,363,000 which were due to development programs in 2000 for Texaco Ovonic Fuel Cell Company ($3,217,000), Texaco Ovonic Hydrogen Systems ($4,572,000), Ovonic Media ($1,442,000), and United Solar contracts with DOE and Solar Design Associates ($861,000), partially offset by the successful conclusion of programs with General Motors to develop batteries for electric and hybrid electric vehicle applications ($0 in 2000 compared to $1,002,000 in 1999), the Shell Hydrogen program ($0 in 2000 compared to $688,000 in 1999) and decreases in programs with DOE and National Renewable Energy Laboratory ($467,000 in 2000 compared to $874,000 in 1999) and National Institute of Standards and Technology in the Company's battery and hydrogen technologies ($789,000 in 2000 compared to $1,589,000 in 1999).

Revenues from license and other agreements increased to $2,800,000 in the six months ended December 31, 2000 from $2,178,000 in the six months ended December 31, 1999. The 2000 revenues consisted of agreements with three Chinese companies (BYD Battery Co., SANIK Battery Co., Ltd. and Rare Earth High Tech). Royalties decreased 4% to $1,673,000 in the six months ended December 31, 2000 from $1,738,000 in the six months ended December 31, 1999, primarily due to decreased royalties from battery technologies.

Other revenues decreased by $351,000 to $926,000 in the six months ended December 31, 2000 from $1,277,000 in the six months ended December 31, 1999, primarily due to the transfer of certain ECD employees to Ovonyx.

ECD and its network of business partners and licensees are manufacturing cutting-edge products in three rapidly growing global markets: energy generation, energy storage and information technology. ECD designs and builds manufacturing machinery that incorporates its proprietary production processes, maintains ongoing research and development programs to continually improve its products and develops new applications for its 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.

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