17.02.03

17.2.2003: Meldung: ECD Second Quarter Fiscal 2003 Results

Energy Conversion Devices, Inc. (ECD) (Nasdaq: ENER - News) announced today its operating results for the second quarter ended December 31, 2002. Revenues were $18.5 million compared to $26.7 million in the second quarter last year, primarily due to the near completion of the first phase of three phases of contracts with Rare Earth Ovonic. The Company"s net loss was $5.8 million for the second quarter compared to a loss of $4.3 million in the same quarter last year. On a per-share basis, the loss was $.26 in the second quarter of Fiscal 2003 compared to a loss of $.20 in the same quarter last year.

"We are positioned to lead the hydrogen economy and have the products and technologies that make the "hydrogen loop" of clean, affordable renewable energy possible, starting with Ovonic nickel metal hydride batteries which are the enabling technology for the fast-growing hybrid electric vehicle market. Our leadership position as a driver of hydrogen technology has recently focused attention on our technologies and products from the White House to global television media. As my colleague Bob Stempel says: "We"re on our way"," said Stanford R. Ovshinsky, ECD President and CEO.

The financial results for the three months and six months ended December 31, 2002 and December 31, 2001 are shown in the following table:

Three Months Ended Six Months Ended
December 31, December 31,
2002 2001 2002 2001
(In thousands, except per-share amounts)
Revenues
Product Sales $4,512 $11,176 $9,847 $22,336
Royalties 370 416 899 1,024
Revenue from Product
Development Agreements 10,226 15,001 19,979 25,544
Revenue from License
Agreements 3,269 - 3,419 -
Other 101 152 188 299
Total Revenue 18,478 26,745 34,332 49,203

Expenses 22,514 31,747 44,756 58,102
Net Loss from Operations (4,036) (5,002) (10,424) (8,899)
Other Income (Expense)
Interest Income 1,050 1,369 2,090 2,726
Equity Loss in Joint Ventures (2,870) (1,038) (3,734) (1,811)
Other 77 354 636 902
Total Other Income (Expense) (1,743) 685 (1,008) 1,817

Net Loss Before Cumulative Effect
of Change in Accounting Principle (5,779) (4,317) (11,432) (7,082)

Cumulative Effect of Change in
Accounting Principle - - 2,216 -
Net Loss $(5,779) $(4,317) $(9,216) $(7,082)
Basic and Diluted Net Loss Per
Share Before Cumulative
Effect of Change in
Accounting Principle $(.26) $(.20) $(.52) $(.33)
Cumulative Effect of Change
in Accounting Principle $ - $ - $.10 $ -
Basic and Diluted Net Loss
Per Share $(.26) $(.20) $(.42) $(.33)



Notes to Financial Results:

These investments in our technologies have led to strategic alliances with major companies, including ChevronTexaco, Intel, General Electric and China"s Rare Earth High-Tech Co., Ltd. of Baotou Steel Company. In accordance with accounting principles generally accepted in the United States of America, the investments the Company makes in developing its technologies are expensed as research and development expense in the periods in which they are incurred and the value of these technologies are not carried as assets in the Company"s balance sheet.

The Company had revenues of $18,478,000 in the three months ended December 31, 2002 compared to $26,745,000 in the three months ended December 31, 2001.

The decrease in consolidated revenues primarily resulted from a reduction in product sales of $6,664,000 and a reduction in revenues from product development agreements of $4,775,000, partially offset by increased license and other agreements ($3,269,000 in 2002 versus zero in 2001).

Product sales, consisting of machine building and equipment sales, photovoltaic products and metal hydride materials, decreased 60% to $4,512,000 in the three months ended December 31, 2002 from $11,176,000 in the three months ended December 31, 2001. Machine-building and equipment sales revenues decreased 64% to $3,293,000 in 2002 from $9,214,000 in 2001, primarily due to Ovonic Battery"s contracts with Rare Earth Ovonic to provide battery-making equipment, the first phase of which is nearing completion ($2,922,000 in 2002 compared to $8,252,000 in 2001). All machine-building and equipment sales contracts are accounted for using percentage-of-completion accounting. Photovoltaic sales, which are sales of semi-finished products to an affiliate, Bekaert ECD Solar Systems, were $1,088,000 for 2002 and $1,469,000 for the three months ended December 31, 2001. Sales of metal hydride materials were $131,000 in 2002 compared to $409,000 in 2001. The Company currently has a product sales backlog of $15,175,000, of which $11,161,000 is expected to be recognized as revenues in Fiscal 2003.

Royalties decreased 11% to $370,000 in the three months ended December 31, 2002 from $416,000 in the three months ended December 31, 2001. Royalties related to batteries for propulsion applications increased in the current quarter, but were more than offset by lower royalties for consumer applications reflecting increased production efficiencies of the Company"s licensees and a small reduction in the number of batteries sold by the Company"s licensees.

Revenues from product development agreements decreased 32% to $10,226,000 in the three months ended December 31, 2002 from $15,001,000 in the three months ended December 31, 2001, primarily due to lower revenues under advanced product development agreements with Texaco Ovonic Battery Systems ($2,754,000 for 2002 compared to $5,099,000 in 2001) and lower revenues from Texaco Ovonic Hydrogen Systems ($3,270,000 for 2002 compared to $4,998,000 for 2001), Texaco Ovonic Fuel Cell ($1,922,000 for 2002 compared to $2,483,000 for 2001), and General Motors (zero for 2002 versus $780,000 for 2001); reduced activity related to Ovonic Media ($272,000 in 2002 versus $435,000 in 2001); and the completion of programs with the National Institute of Standards and Technology (NIST) and the Department of Energy (DOE), which advanced the Company"s hydrogen storage and optical memory technologies (zero in 2002 versus $205,000 in 2001). Increased product development revenues for United Solar ($515,000 in 2002 compared to $126,000 in 2001) partially offset the decreases.

Revenues from license and other agreements increased to $3,269,000 in the three months ended December 31, 2002 from zero in the three months ended December 31, 2001. In December 2002, United Solar issued to Canon Inc. a notice whereby United Solar granted Canon rights to manufacture in two countries of their choice in Southeast Asia, excluding India and the People"s Republic of China. This notice was issued in satisfaction of the outstanding obligation ($2,500,000 plus accrued interest of $769,000) due Canon in connection with a previous loan made to United Solar by Canon. United Solar recorded the satisfaction of the loan from Canon ($3,269,000) as revenue from license agreements in its statement of operations for the three months ended December 31, 2002. Revenues from license and other agreements depend on a small number of new business arrangements, are sporadic and vary dramatically from period to period.

Other revenues are primarily related to personnel, facilities and miscellaneous administrative and laboratory services provided to some of the Company"s joint ventures. Other revenues decreased to $101,000 in the three months ended December 31, 2002 from $152,000 in the three months ended December 31, 2001. This decrease was due to reductions in revenues from Ovonyx, Inc.

The Company had a net loss of $5,779,000 on revenues of $18,478,000 in the three months ended December 31, 2002 compared to a net loss of $4,317,000 on revenues of $26,745,000 for the three months ended December 31, 2001. The Company had a $3,269,000 increase in license fees, a $539,000 reduction in patent expense and a decrease of $345,000 in general and administrative expense (net) that were more than offset by a $1,832,000 increase in equity loss in joint ventures, a decrease in margins on product sales of $1,669,000, an increase of $1,420,000 in the net cost of product development, a $319,000 reduction in interest income due to lower interest rates and a $105,000 reduction of other nonoperating income.

Revenues were $34.3 million for the six months ended December 31, 2002 compared to $49.2 million for the six months ended December 31, 2001, primarily due to the near completion of the first phase of three phases of contracts with Rare Earth Ovonic. The Company"s net loss was $9.2 million for the six months ended December 31, 2002 compared to a loss of $7.1 million in the same period last year. On a per-share basis, the loss was $.42 compared to a loss of $.33 in the same period last year.

For the six months ended December 31, 2002, the decrease in consolidated revenues primarily resulted from a reduction in product sales of $12,489,000 and a reduction in revenues from product development agreements of $5,565,000, partially offset by increased license and other agreements ($3,419,000 in 2002 versus zero in 2001).

Product sales, consisting of machine building and equipment sales, photovoltaic products and metal hydride materials, decreased 56% to $9,847,000 in the six months ended December 31, 2002 from $22,336,000 in the six months ended December 31, 2001. Machine-building and equipment sales revenues decreased 63% to $7,016,000 in 2002 from $18,768,000 in 2001, primarily due to Ovonic Battery"s contracts with Rare Earth Ovonic to provide battery-making equipment, the first phase of which is nearing completion ($6,505,000 in 2002 compared to $16,664,000 in 2001). All machine-building and equipment sales contracts are accounted for using percentage-of-completion accounting. Photovoltaic sales, which are sales of semi-finished products to an affiliate, Bekaert ECD Solar Systems, were $2,361,000 for 2002 and $2,698,000 for 2001. Sales of metal hydride materials were $383,000 in 2002 compared to $612,000 in 2001. The Company currently has a product sales backlog of $15,175,000, of which $11,161,000 is expected to be recognized as revenues in Fiscal 2003.

Royalties decreased 12% to $899,000 in the six months ended December 31, 2002 from $1,024,000 in the six months ended December 31, 2001. Royalties related to batteries for propulsion applications increased in the current period, but were more than offset by lower royalties for consumer applications reflecting increased production efficiencies of the Company"s licensees and a small reduction in the number of batteries sold by our licensees.

Revenues from product development agreements decreased 22% to $19,979,000 in the six months ended December 31, 2002 from $25,544,000 in the six months ended December 31, 2001, primarily due to reduced battery activities under advanced product development agreements with Texaco Ovonic Battery Systems ($5,465,000 for 2002 compared to $8,228,000 in 2001); reduced activity related to Ovonic Media ($605,000 in 2002 versus $842,000 in 2001); and the completion of programs with the NIST and the DOE, which advanced the Company"s hydrogen storage and optical memory technologies (zero in 2002 versus $481,000 in 2001). In addition, there was a decrease in revenues from Texaco Ovonic Hydrogen Systems ($6,744,000 for 2002 compared to $8,296,000 for 2001) and Texaco Ovonic Fuel Cell ($3,942,000 for 2002 compared to $4,419,000 for 2001). Increased product development revenues for United Solar ($972,000 in 2002 compared to $469,000 in 2001) partially offset the decrease.

Revenues from license and other agreements increased to $3,419,000 in the six months ended December 31, 2002, from zero in the six months ended December 31, 2001. In December 2002, United Solar issued to Canon a notice whereby United Solar granted Canon rights to manufacture in two countries of their choice in Southeast Asia, excluding India and People"s Republic of China. This notice was issued in satisfaction of the outstanding obligation ($2,500,000 plus accrued interest) due Canon in connection with a previous loan made to United Solar by Canon. United Solar recorded the satisfaction of the loan from Canon ($3,269,000) as revenue from license agreement in its statement of operations for the six months ended December 31, 2002. License fees were also received from licenses to Henan Huanyu Power Source Co., Ltd., Guangdong Shida Battery Co., Ltd. and TWD Battery Co., Ltd. Revenues from license and other agreements depend on a small number of new business arrangements, are sporadic and vary dramatically from period to period.

Other revenues are primarily related to personnel, facilities and miscellaneous administrative and laboratory services provided to some of the Company"s joint ventures. Other revenues decreased to $188,000 in the six months ended December 31, 2002 from $299,000 in the six months ended December 31, 2001. This decrease was due to reductions in revenues from Ovonyx.

The Company had a net loss of $9,216,000 on revenues of $34,332,000 in the six months ended December 31, 2002 compared to a net loss of $7,082,000 on revenues of $49,203,000 for the six months ended December 31, 2001. The Company had increased license fees of $3,419,000 and a reduced patent expenses of $979,000 that were more than offset by a decrease in margin on product sales of $1,610,000, an increase of $3,430,000 in the net cost of product development, an increase of $647,000 in general and administrative expense (net), a $635,000 reduction in interest income due to lower interest rates, increased equity losses of $1,923,000 and a $310,000 reduction of other nonoperating income. In addition, the Company recognized income of $2,216,000 attributable to the cumulative effect of a change in accounting principle.

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 141, "Business Combinations," and SFAS 142, "Goodwill and Other Intangible Assets." SFAS 141 required the Company to recognize, at the adoption of SFAS 142, the unamortized negative goodwill of $2,216,000 (a favorable benefit) as the cumulative effect of a change in accounting principle in the Company"s statements of operations on July 1, 2002.

While the Company is seeking to expand and strengthen its joint ventures with the participation of new equity investors, it anticipates that future results from operations will be affected due to the Company"s funding, from time to time, of certain of its joint venture operations. The Company expects that its financial results will be affected by the following circumstances:

Bekaert ECD Solar Systems/United Solar -- Bekaert has advised the Company that Bekaert, in order to focus on its core businesses, will not provide any additional funds to Bekaert ECD Solar Systems/United Solar beyond March 31, 2003. ECD is in discussions with potential new equity investors who will advance our unique, proprietary thin-film technology represented by our new 30MW manufacturing facility to meet the joint ventures" future cash requirements, as well as discussing restructuring of the joint ventures. ECD is prepared, under the appropriate terms, to provide 100% of Bekaert ECD Solar Systems/United Solar"s funding requirements after March 31, 2003, until new equity investors are brought into the joint ventures. Historically, as a consequence of ECD"s 81% ownership of United Solar and United Solar"s 40% membership interest in Bekaert ECD Solar Systems, the Company"s financial results have included approximately 50% of the combined operating results of these entities. The Company will reflect up to 100% of the operating results when it funds 100% of the cash requirements until new equity investors are brought into the joint ventures.

Texaco Ovonic Fuel Cell Company LLC (ECD"s joint venture with ChevronTexaco Corp.) -- While Texaco Ovonic Fuel Cell has successfully demonstrated the concept of the Ovonic(TM) regenerative fuel cell and received a patent covering its Ovonic(TM) Instant Startup Fuel Cell, ChevronTexaco has advised the Company that it does not have funds in its budget to fund the venture"s activities after December 31, 2002. The Company and ChevronTexaco are currently in discussions regarding the venture"s operations and its business strategy to involve additional joint venture partners to fund and expand the venture"s operations. In the interim, the Company plans, under acceptable terms, to fund the venture.

Ovonic Media, LLC, the joint venture formed in March 2000 between GE Plastics and ECD, is the first activity resulting from our strategic alliance with General Electric. Ovonic Media was formed to commercialize ECD"s process for high-volume manufacture of rewritable DVDs using GE"s advanced film product. Ovonic Media has successfully met its various milestones. GE is evaluating the current market situation to determine next steps and has informed the Company that additional funding after January 3, 2003 is suspended. GE and ECD are in discussions as to how to position the joint venture in order to meet the needs of the marketplace and to expand the joint venture"s operations, including the possibility of new equity investors and strategic partners to fund the joint venture"s operations. In the interim, ECD will fund the joint venture, under acceptable terms, until GE resumes funding, or until new partners who will provide funding, marketing and distribution are brought into the venture. The other activities of the strategic alliance are continuing on schedule.

These matters have not affected the results of operations for the periods ended December 31, 2002.

ECD will hold a conference call on Tuesday, February 18 at 1:00 p.m. ET to discuss its second quarter fiscal 2003 results. Access to the call may be obtained by calling 1-877-858-2512. A replay will be available through February 24, 2003, at 1-800- 642-1687. Callers should use conference ID# 8287574 to access the replay. A live webcast of the conference call will be available online at http://www.videonewswire.com/OVONIC/021803/ or through the Company"s website at www.ovonic.com . ECD"s financial results on Form 10-Q for the three and six months ended December 31, 2002 will also be available on the Company"s website on or around February 14, 2003.

ECD is the leader in the synthesis of new materials and the development of advanced production technology and innovative products. It has invented, pioneered and developed enabling technologies leading to new products and production processes based on amorphous, disordered and related materials, with an emphasis on advanced information technologies and alternative energy, including photovoltaics, fuel cells, hydride batteries and hydride storage materials capable of storing hydrogen in the solid state for use as a feedstock for fuel cells or internal combustion engines or as an enhancement or replacement for any type of hydrocarbon fuel. 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 holds the basic patents in its fields. ECD"s website 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.

Energy Conversion Devices (ECD Ovonics)
2956 Waterview Drive
Rochester Hills, Michigan 48309
Tel. 248-293-0440
Fax. 248-844-1214
Toll Free US 1-800-528-0617
Investor Relations investor.relations@ovonic.com
Webmasterwebmaster@ovonic.com
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