ECD OVONICS REPORTS FISCAL YEAR 2005 OPERATING RESULTS
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UNITED SOLAR OVONIC SUBSIDIARY ACHIEVES
RECORD PRODUCT SALES AND PRODUCTION
ROCHESTER HILLS, Mich., Sept. 12, 2005 - Energy Conversion Devices, Inc. (ECD
Ovonics) (NASDAQ:ENER) today reported financial results for the fiscal year
ended June 30, 2005. The Company reported income from continuing operations of
$49.5 million on revenues of $156.6 million, compared to a loss from continuing
operations of $49.2 million on revenues of $66.3 million in fiscal year 2004. On
a per-share basis, the income was $1.70 (fully diluted) in 2005 compared to a
loss of $2.15 in 2004.
The table below summarizes the Company's operating results (in thousands, except
per-share amounts):
Year Ended June 30, Quarter Ended June 30,
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2005 2004 2005 2004
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Revenues
Product sales $ 51,944 $ 33,808 $ 15,626 $ 11,188
Royalties 5,332 2,522 1,586 478
Revenues from product development agreements 17,653 29,221 2,963 8,039
Revenues from license agreements 80,784 125 538 50
Other 857 580 195 108
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Total revenues 156,570 66,256 20,908 19,863
Expenses 113,187 114,792 28,142 30,511
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Income (loss) from operations 43,383 (48,536) (7,234) (10,648)
Other income (expense)
Interest income 1,400 714 805 79
Interest expense (777) (1,314) (235) (400)
Equity loss in joint ventures (100) (644) - -
Impairment loss in Rare Earth Ovonic - China (1,710) - - -
Distribution from joint venture 8,000 - - -
Gains on sales of investments - 364 - -
Other nonoperating income 91 224 14 49
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Total other income (expense) 6,904 (656) 584 (272)
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Net income (loss) from continuing operations
before income taxes and extraordinary item 50,287 (49,192) (6,650) (10,920)
Income taxes 825 - (19) -
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Net income (loss) from continuing operations
before extraordinary item 49,462 (49,192) (6,631) (10,920)
Discontinued operations, net of tax
benefit in 2005 (1,393) (2,230) (269) (538)
Extraordinary item, net of tax 2,263 - (3) -
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Net Income (loss) $ 50,332 $(51,422) $ (6,903) $(11,458)
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Basic net income (loss) per share
Continuing operations $ 1.80 $ (2.06) $ (.22) $ (.42)
Discontinued operations (.05) (.09) (.01) (.02)
Extraordinary item .08 - - -
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Basic net income (loss) per share $ 1.83 $ (2.15) $ (.23) $ (.44)
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Diluted net income (loss) per share
Continuing operations $ 1.67 $ (2.06) $ (.22) $ (.42)
Discontinued operations (.05) (.09) (.01) (.02)
Extraordinary item .08 - - -
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Diluted net income (loss) per share $ 1.70 $ (2.15) $ (.23) $ (.44)
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"A major contributor to the increased income and revenue for 2005 was $79.5
million in revenue from a license agreement," said Robert C. Stempel, Chairman
and CEO. "This one-time, noncash event is consistent with our business strategy
of monetizing our intellectual property, which is historically carried at zero
on our balance sheet."
For the year ended June 30, 2005, United Solar Ovonic sold 16.0MW ($50.8
million) of PV systems - an 84% increase over 2004 sales. Additionally, United
Solar Ovonic has a six-month order backlog valued at $51 million. In response to
growing demand for its UNI-SOLAR(R) products, United Solar Ovonic broke ground
for its second state-of-the-art solar module manufacturing plant in Auburn
Hills, Mich., to double its solar cell/module manufacturing capacity. Occupancy
of the new facility is scheduled for May 2006, and it is anticipated that the
plant will begin manufacturing products in the fall of 2006 following
optimization of the manufacturing equipment.
Cobasys, a joint venture between ECD Ovonics and Chevron, announced that it has
received battery pack purchase orders for hybrid vehicle applications from world
class automotive companies. These battery systems will be "plug and play"
integrated solutions manufactured and assembled at Cobasys' Springboro, Ohio,
facility to meet customer program timing. Cobasys also confirmed that it is in
the advanced stages of hybrid vehicle prototype development and testing for
several transportation and vehicle manufacturing companies located in North
America, Europe and Asia.
"ECD Ovonics is well positioned to capitalize upon the current government and
consumer focus on new sources of energy," Stempel said. "We're extremely pleased
with the pace of production and shipments at United Solar Ovonic. In the fourth
quarter, we manufactured a record level 5.7MW of products with a sales value of
$18 million and we're now running essentially at our rated production capacity
of 25MW."
"At the same time, Cobasys' success in winning purchase orders for its
proprietary NiMH battery system solutions for the automotive markets is another
big plus for our business," continued Stempel. "Cobasys' ongoing work in hybrid
vehicle prototype development will hopefully lead to more opportunities down the
road."
Revenues in the quarter ended June 30, 2005 increased by $1.0 million compared
to the same quarter in 2004 while expenses decreased by $2.4 million, thereby
reducing the operating loss by $3.4 million and reflecting the impact of the
Company's restructuring and cost-reduction efforts. Sales of PV products by
United Solar Ovonic increased to $14.1 million in the 2005 quarter compared to
$9.3 million in the 2004 quarter, an increase of 50%. At the same time, United
Solar Ovonic's gross profit improved $4.9 million to $2.4 million in the 2005
quarter compared to a gross loss of $2.5 million last year. The improvement
reflects improved factory utilization in the 2005 quarter and significantly
reduced variable costs.
ECD Ovonics went from a net loss from continuing operations of $49.2 million in
fiscal 2004 to a net income from continuing operations of $49.5 million in the
same period of 2005. Primary contributors to the change in net income were as
follows:
o United Solar Ovonic had a gross profit of $4.4 million in 2005
versus a gross loss of $6.3 million last year.
o For the fiscal year 2005, net income was favorably impacted by a
one-time noncash revenue of $79.5 million realized by the Company for
the additional rights licensed to Cobasys and by an $8.0 million
distribution from Cobasys to partially reimburse the Company for
legal expenses in connection with the patent
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litigation resolution in July 2004. The license revenue was in the
form of an option (exercised in May 2005) granted by Chevron to the
Company to purchase 4,376,633 shares of common stock at a price of
$4.55 per share.
o In December 2004, the Company received $2.3 million, net of taxes, in
connection with the transfer of Chevron's interest in Ovonic Hydrogen,
which the Company recognized as an extraordinary item (gain) in fiscal
year 2005.
o Partially offsetting the above, ECD Ovonics had $2.7 million in
expenses in fiscal year 2005 related to Sarbanes-Oxley compliance, an
increase of $2.2 million over 2004.
Additional information about the Company and its consolidated financial results
can be found in the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 2005, which will be filed with the Securities and Exchange
Commission and available on the Company's website on or about September 13,
2005.
ECD Ovonics will hold a conference call on Monday, September 12, 2005 at 4:45
p.m. (Eastern Time) to discuss operating results for its fourth quarter and
fiscal year 2005. To access the conference call, please call (877) 858-2512 or
(706) 634-1291. A live webcast of the conference call will be available online
at http://www.ovonic.com/investor or through the Company's website at
www.ovonic.com. A replay of the call will be available approximately one hour
after the conclusion of the call through September 15, 2005, at (800) 642-1687
or (706) 645-9291. Callers should use conference ID #9319027 to access the
conference call and the replay.
About ECD Ovonics:
ECD Ovonics 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 its proprietary, enabling technologies in the fields of
energy and information leading to new products and production processes based on
amorphous, disordered and related materials. ECD Ovonics' proprietary advanced
information technologies include Ovonic phase-change electrical memory, Ovonic
phase-change optical memory and the Ovonic Threshold Switch. The Company's
portfolio of alternative energy solutions includes Ovonic thin-film amorphous
solar cells, modules, panels and systems for generating solar electric power;
Ovonic NiMH batteries; Ovonic 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; and Ovonic fuel cell technology. ECD Ovonics 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
Ovonics holds the basic patents in its fields. More information on ECD Ovonics
is available on www.ovonic.com.
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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.
Contacts:
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Stephan Zumsteg, Vice President and CFO Bruce MacDonald
Ghazaleh Koefod, Investor Relations Liebler!MacDonald
Energy Conversion Devices, Inc. 248.233.8062
248.293.0440