Energy Conversion Devices announces 1st Qtr Results

source: Press Release 2001.11.14

Rochester Hills, Mich., Nov. 14, 2001 Energy Conversion Devices, Inc. (ECD) (NASDAQ:ENER) announced today its operating results for
the first quarter ended September 30, 2001. Revenues increased 122% to $22,459,000 compared to $10,134,000 in the first quarter last year.
The Company’s net loss was $2,765,000 compared to $1,745,000 in the same quarter last year. On a per-share basis, the loss was $.13 in
2001 compared to a loss of $.09 in 2000.

Commenting on the results, Stanford R. Ovshinsky, President and CEO, and Robert C. Stempel, Chairman, said, “The increase in net loss of
$1,020,000 was anticipated as we positioned ourselves for future growth with the relocation of our headquarter operations to a more efficient
building featuring advanced state-of-the-art laboratory and product development facilities for ECD. United Solar and Bekaert ECD Solar
Systems began the relocation to their new facility in Auburn Hills, MI, the site of the new 25MW production machine currently under construction,
incurring increased operating expenses which contributed to the loss.” They further noted, “We are making steady progress in all areas of our
work, including strengthening our intellectual property portfolio. The combination of our new strategic alliances and our game-changing
technologies and products will allow us to move forward with the commercialization of our products.”

The financial results for the first quarter are shown in the following table

Notes to Financial Results:

We have continued to make investments to further advance our technologies which have led to historic new strategic alliances. According to generally accepted
accounting principles as practiced in the United States (GAAP), we were required to report these investments as losses.

The Company had a net loss of $2,765,000 on revenues of $22,459,000 in the three months ended September 30, 2001 compared to a net loss of $1,745,000 on
revenues of $10,134,000 for the three months ended September 30, 2000. The $1,020,000 increase in the net loss resulted primarily from higher cost of patent
defense and the maintenance of core competency in manufacture of materials in the Ovonic Battery segment and higher costs at the United Solar segment related to
its move to its Auburn Hills facility, together with costs at United Solar associated with its expansion in connection with the 25MW production capacity scheduled to
be on line in 2002.

The increased loss resulted from an $837,000 decrease for the ECD segment (operating loss of $458,000 in 2001 versus operating income of $379,000 in 2000)
and an increased operating loss of $872,000 for United Solar (operating loss of $1,050,000 in 2001 versus operating loss of $178,000 in 2000), partially offset by
a $1,558,000 improvement for Ovonic Battery (operating loss of $2,006,000 in 2001 versus operating loss of $3,564,000 in 2000).

The increase in revenues primarily resulted from higher revenues from product sales ($7,968,000) and product development agreements ($5,450,000), partially
offset by lower royalties ($267,000) and license and other agreements (zero in 2001 and $300,000 in 2000). Revenues from the ECD segment increased to
$19,811,000 in 2001 from $5,920,000 in 2000 due to increased revenues from product development agreements of $2,968,000, primarily resulting from the
advanced product development agreements with Texaco Ovonic Hydrogen Systems LLC and Texaco Ovonic Fuel Cell Company LLC and due to
machine-building sales to Bekaert ECD Solar Systems LLC to build manufacturing equipment to make solar panels capable of producing 25MW of electrical power on an annual basis. The $9,548,000 increase in Ovonic Battery’s revenues was primarily due to higher machine-building sales to Rare Earth Ovonic ($8,412,000 in 2001 versus $884,000 in 2000), increased revenues from product development agreements ($3,611,000 in 2001 versus $794,000 in 2000), as work was begun on the advanced product development agreement for Texaco Ovonic Battery Systems LLC, and decreased revenues from license and other agreements (zero in 2001 versus $300,000 in 2000). United Solar’s 2001 revenues decreased to $1,648,000 in 2001 versus $2,251,000 in 2000.

Product sales, consisting of machine building, photovoltaic products, metal hydride materials and battery packs, increased 250% to $11,160,000 in the three months ended September 30, 2001 from $3,192,000 in the three months ended September 30, 2000. Machine-building revenues increased 511% to $9,553,000 in 2001 from $1,563,000 in 2000. The increase in machine-building revenues in 2001 relate primarily to Ovonic Battery’s contracts with Rare Earth Ovonic to provide battery-making equipment ($8,412,000 in 2001 compared to $884,000 in 2000) and ECD’s contract with Bekaert ECD Solar Systems to design and build equipment making solar panels capable of producing annually 25MW of electrical power ($1,141,000 in 2001 compared to $538,000 in 2000). All
machine-building 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 $1,381,000 for 2000 and $1,230,000 for 2001. Sales of metal hydride materials were $202,000 in 2001 compared to $70,000 in 2000. The Company currently has a product sales backlog of $39,733,000, $32,983,000 of which is expected to be recognized as revenues in Fiscal 2002.

Royalties decreased 30% to $609,000 in the three months ended September 30, 2001 from $876,000 in the three months ended September 30, 2000. The
royalties the Company receives continue to 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 107% to $10,543,000 in the three months ended September 30, 2001 from $5,093,000 in the three
months ended September 30, 2000. The increase was primarily a result of agreements with Texaco Ovonic Hydrogen Systems ($3,298,000 for 2001 compared to
$1,440,000 for 2000), Texaco Ovonic Fuel Cell ($1,936,000 for 2001 compared to $897,000 for 2000) and Texaco Ovonic Battery Systems ($3,064,000 for
2001 compared to zero in 2000) for advanced product development services, all of which began in Fiscal 2001. Partially offsetting these increases were the
completion of programs with National Institute of Standards and Technology, which advanced the Company’s hydrogen storage and optical memory technologies
($112,000 in 2001 versus $660,000 in 2000), contracts with Ovonic Media, LLC, the joint venture and strategic alliance between General Electric and ECD,
($406,000 in 2001 versus $667,000 in 2000) and Partnership for a New Generation of Vehicles (zero in 2001 versus $71,000 in 2000).

Revenues from license and other agreements decreased to zero in the three months ended September 30, 2001 from $300,000 in the three months ended
September 30, 2000. The 2000 license fees included $250,000 from BYD Battery Co., Ltd. and $50,000 from SANIK 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 $147,000 in the three months ended September 30, 2001 from $673,000 in the three months ended September 30, 2000.
This decrease was due to decreases in Texaco Ovonic Battery Systems (zero in 2001 versus $335,000 in 2000) and Bekaert ECD Solar Systems ($3,000 in 2001
versus $193,000 in 2000). Revenues from Texaco Ovonic Battery Systems were lower due to reduced activity during the transition from GM Ovonic to Texaco
Ovonic Battery Systems. Revenues from Bekaert ECD Solar Systems were lower due to lower management fees in 2001.

ECD will hold a conference call on Friday, November 16, 2001 at 2:00 pm EST to discuss its first quarter results. Individuals wishing to participate in the
conference should call 1-877-858-2512. A live webcast of the conference call will be available online at http://videonewswire.com/OVONIC/111601/ or through
the Company’s web site at www.ovonic.com. The call will be archived on ECD’s web site for 10 days. A telephone recording of the call will be available through
November 21, 2001 by dialing 1-800-642-1687. Use the conference ID# 2424768 to access the recorded call.

ECD is the 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
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 feed stock 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 web site address is http://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:
Stephan Zumsteg, Vice President and Chief Financial Officer
Ghazaleh Koefod
Energy Conversion Devices, Inc.
248-293-0440