SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549

                             FORM 10-Q
(Mark One)
 X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

For the period ended                   DECEMBER 31, 1996
                     -----------------------------------

                                OR

      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

For the transition period from                       to

           Commission file number        1-8403

                         ENERGY CONVERSION DEVICES, INC.
      (Exact name of registrant as specified in its charter)

          DELAWARE                                            38-1749884
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

    1675 WEST MAPLE ROAD, TROY, MICHIGAN                            48084
-------------------------------------------------------------------------------
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code           (810) 280-1900
                                                  -----------------------------


Former name, former address and former fiscal year, if changed since last report

      Indicate by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant  was required to file such reports,  and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .

      As of January 31, 1997 there were  219,913  shares of Class A Common Stock
and 10,533,931 shares of Common Stock outstanding.

                        Page 1 of 21 Pages


                                 1

<PAGE>



                        PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                    Three Months EndedSix Months Ended
                                                           December 31,                    December 31,
                                                         1996         1995              1996           1995
<S>                                               <C>             <C>             <C>             <C> 
REVENUES
  Product sales                                   $   4,378,846   $  3,640,195    $   8,853,296   $  7,254,075
  Royalties                                             415,094        350,485          816,432        622,485
  Revenues from research and development
     agreements                                       1,312,112      2,447,775        2,025,550      4,798,434
  Revenues from license and other agreements          3,042,000      6,399,262        4,410,645     10,099,262
  Other                                                 430,540        329,207          650,530        663,724
                                                   ------------   ------------    -------------   ------------  
     TOTAL REVENUES                                   9,578,592     13,166,924       16,756,453     23,437,980

EXPENSES
  Cost of product sales                               4,691,175      3,623,623        9,681,904      7,314,543
  Cost of revenues from research and
     development agreements                           1,404,838      2,677,728        1,991,125      5,421,282
  Product research and development                    3,465,999      1,894,906        7,048,941      3,720,501
  Patent defense                                        716,799        753,073        1,156,545        753,073
  Patent                                                104,799         89,227          224,307        397,023
  Operating, general and administrative               1,604,999      1,351,380        3,236,043      2,781,744
                                                   ------------   ------------    -------------   ------------
     TOTAL EXPENSES                                  11,988,609     10,389,937       23,338,865     20,388,166
                                                   ------------   ------------    -------------   ------------

(LOSS)INCOME FROM OPERATIONS                         (2,410,017)     2,776,987       (6,582,412)     3,049,814

OTHER INCOME (EXPENSE)
  Interest expense                                      (77,454)      (121,060)        (183,994)      (232,895)
  Interest income                                       367,363         76,958          690,086        179,407
  Other nonoperating income (net)                       100,527         25,023          158,706         74,816
                                                   ------------   ------------    -------------   ------------
     TOTAL OTHER INCOME (EXPENSE)                       390,436        (19,079)         664,798         21,328
                                                   ------------   ------------    -------------   ------------

NET (LOSS) INCOME                                  $ (2,019,581)  $  2,757,908    $  (5,917,614)  $  3,071,142
                                                   ============   ============    =============   ============

NET (LOSS) INCOME PER COMMON SHARE
  AND COMMON EQUIVALENT SHARE                      $       (.19)  $        .29    $        (.55)  $        .33
                                                   ============   ============    =============   ============

NET (LOSS) INCOME PER COMMON SHARE
  ASSUMING FULL DILUTION                           $       (.19)  $        .29    $        (.55)  $        .33
                                                   ============   ============    =============   ============

</TABLE>

See notes to consolidated financial statements.



                                      2

<PAGE>



          ENERGY CONVERSION DEVICES, INC. and SUBSIDIARY

                    CONSOLIDATED BALANCE SHEETS

                              ASSETS

                                                 December 31,       June 30,
                                                    1996              1996
CURRENT ASSETS                                   (Unaudited)       (Audited)
   Cash, including cash equivalents of
      $20,233,000 at December 31, 1996
      and $23,769,000 at June 30, 1996          $ 20,861,964     $ 23,773,742
   Investments                                     1,957,453       10,327,352
   Accounts receivable (net of allowance for
      uncollectible accounts of $25,000 at
      December 31, 1996 and $29,000 at
      June 30, 1996)                              11,886,106        9,985,722
   Amounts due from related parties                2,885,239        2,901,509
   Inventories                                     3,689,023        3,275,135
   Prepaid expenses and other current assets       1,013,709          362,558

        TOTAL CURRENT ASSETS                      42,293,494       50,626,018


PROPERTY, PLANT AND EQUIPMENT
   Land and land improvements                        312,588          312,588
   Buildings and improvements                      3,650,298        3,595,009
   Machinery and other equipment                  18,570,436       17,249,435
   Capitalized lease equipment                     5,717,732        5,802,806
                                                ------------     ------------
                                                  28,251,054       26,959,838

   Less accumulated depreciation and
      amortization                               (22,006,769)     (21,260,424)
      TOTAL PROPERTY, PLANT AND EQUIPMENT          6,244,285        5,699,414

JOINT VENTURES
   United Solar Systems Corp.                         _                _
   GM Ovonic L.L.C.                                   _                _
   Sovlux  Co. Ltd.                                   _                _

OTHER ASSETS                                         784,293          804,007
                                                ------------     ------------

        TOTAL ASSETS                            $ 49,322,072     $ 57,129,439
                                                ============     ============




See notes to consolidated financial statements.


                                 3

<PAGE>



          ENERGY CONVERSION DEVICES, INC. and SUBSIDIARY

                    CONSOLIDATED BALANCE SHEETS

               LIABILITIES AND STOCKHOLDERS' EQUITY

                                                December 31,      June 30,
                                                   1996             1996
                                                (Unaudited)       (Audited)
CURRENT LIABILITIES
   Accounts payable and accrued expenses        $   3,612,667    $   3,911,122
   Salaries, wages and amounts withheld
      from employees                                1,048,631        1,175,102
   Deferred revenues under business
      agreements                                      293,000          711,894
   Current installments on capitalized lease
      obligations and short-term debt               1,458,536        1,302,973
                                                -------------    -------------
      TOTAL CURRENT LIABILITIES                     6,412,834        7,101,091

CAPITALIZED LEASE OBLIGATIONS                         980,538        1,853,728

DEFERRED GAIN                                         455,021          686,351

NON-REFUNDABLE ADVANCE ROYALTIES                    3,617,385        3,754,229
                                                -------------    -------------
      TOTAL LIABILITIES                            11,465,778       13,395,399

STOCKHOLDERS' EQUITY
   Capital Stock
      Class A Convertible Common Stock,
        par value $0.01 per share:
        Authorized - 500,000 shares
        Issued and outstanding - 219,913
          shares                                        2,199            2,199
   Common Stock, par value $0.01 per share:
        Authorized - 15,000,000 shares
        Issued and outstanding - 10,523,539
        shares at December 31, 1996 and
        10,489,591 shares at June 30, 1996            105,235          104,896
   Additional paid-in capital                     201,278,164      200,757,697
   Accumulated deficit                           (163,048,366)    (157,130,752)
   Treasury stock at cost - 28,000 shares            (480,938)
                                                -------------    -------------
      TOTAL STOCKHOLDERS' EQUITY                   37,856,294       43,734,040
                                                -------------    -------------
      TOTAL LIABILITIES & STOCKHOLDERS' EQUITY  $  49,322,072    $  57,129,439
                                                =============    =============

See notes to consolidated financial statements.

                                 4

<PAGE>



          ENERGY CONVERSION DEVICES, INC. and SUBSIDIARY

               CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Unaudited)

                                                 Six Months Ended December 31,
                                                       1996          1995
OPERATING ACTIVITIES:
  Net (loss)income                                 $(5,917,614)    $ 3,071,142
  Adjustments to reconcile net (loss) income
    to net cash provided by (used in)
    operating activities:
      Depreciation and amortization                    865,998         589,323
      Creditable royalties                            (136,844)        (18,000)
      Employee stock options                           226,500         226,500
      Stock issued for services rendered                77,719           2,397
      Amortization of deferred gain                    (22,998)        (31,330)
  Changes in working capital:
      Accounts receivable and amounts due
        from related parties                        (1,884,114)     (7,435,923)
      Inventories                                     (413,888)       (547,645)
      Prepaid expenses and other current assets       (631,437)       (877,717)
      Accounts payable and accrued expenses           (424,926)        (28,113)
      Deferred revenues under business agreements     (418,894)        778,132
                                                   -----------     -----------
    NET CASH PROVIDED BY (USED IN) OPERATIONS       (8,680,498)     (4,271,234)

INVESTING ACTIVITIES:
  Purchases of capital equipment (net)              (1,619,201)     (1,109,257)
  Sales of investments                               8,369,899
                                                   -----------     -----------
  NET CASH PROVIDED BY (USED IN) INVESTING
    ACTIVITIES                                       6,750,698      (1,109,257)

FINANCING ACTIVITIES:
  Purchase of treasury stock                          (480,938)
  Proceeds from exercise of stock options and
     warrants                                          216,587       1,970,459
  Proceeds from capital lease transaction              167,161
  Principal payments under short-term debt and
    capitalized lease obligations                     (717,627)       (728,539)
                                                   -----------     -----------

  NET CASH (USED IN) PROVIDED BY FINANCING
    ACTIVITIES                                        (981,978)      1,409,081

NET (DECREASE) IN CASH & CASH EQUIVALENTS           (2,911,778)     (3,971,410)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD    23,773,742       6,259,451
                                                   -----------     -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD         $20,861,964     $ 2,288,041
                                                   ===========     ===========

See notes to consolidated financial statements.


                                 5

<PAGE>



          ENERGY CONVERSION DEVICES, INC. and SUBSIDIARY

               CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Unaudited)

                                                        Six Months Ended
                                                          December 31,
                                                        1996        1995

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

    Cash paid for interest                           $ 183,994   $ 232,895





                                 6

<PAGE>



  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - DECEMBER 31, 1996

NOTE A - Basis of Presentation

      Information  for the three months and six months  ended  December 31, 1996
and 1995 is  unaudited  but  includes all  adjustments  which Energy  Conversion
Devices,  Inc. ("ECD") considers  necessary for a fair presentation of financial
condition, cash flows and results of operations.

      In accordance  with the  instructions  for the completion of the Quarterly
Report on Form 10-Q, certain  information and footnotes necessary to comply with
Generally  Accepted  Accounting  Principles  ("GAAP")  have  been  condensed  or
omitted.  These financial  statements  should be read in conjunction  with ECD's
1996 Annual Report on Form 10-K,  which  contains a summary of ECD's  accounting
principles and other footnote information.

      The consolidated  financial statements include the accounts of ECD and its
93.5%- owned  subsidiary  Ovonic Battery Company,  Inc. ("Ovonic  Battery"),  a
company  formed to develop and  commercialize  ECD's Ovonic nickel metal hydride
("NiMH")  battery  technology  (collectively  the "Company").  Due to cumulative
losses  incurred  by Ovonic  Battery,  no  minority  interest is recorded in the
consolidated financial statements.

     ECD also has three  investments  accounted  for by the equity  method:  (i)
United Solar Systems Corp. ("United Solar") (49.98%),  ECD's photovoltaic (solar
energy) joint venture with Canon Inc. of Japan  ("Canon");  (ii) Sovlux Co. Ltd.
("Sovlux") (50%), ECD's Russian joint venture with State Research and Production
Enterprise  Kvant  ("Kvant")  and the Russian  Ministry of Atomic Energy and its
various enterprises ("MINATOM"); and (iii) GM Ovonic L.L.C. ("GM Ovonic") (40%),
Ovonic  Battery's  joint  venture  with  General Motors Corporation ("General
Motors") to manufacture and sell the Company's proprietary
NiMH batteries for electric vehicle applications worldwide.

      The Company's investments in its joint ventures,  United Solar, Sovlux and
GM  Ovonic,  are  recorded  at zero.  The  Company  will  continue  to carry its
investment  in each of these joint  ventures  at zero until the venture  becomes
profitable,  at which time the Company will start to recognize  over a period of
years its share,  if any, of the then equity of each of the  ventures,  and will
recognize its share of each venture's  profits or losses on the equity method of
accounting.

      Upon consolidation,  all intercompany  accounts and transactions have been
eliminated.

      Certain items for the three months and six months ended  December 31, 1995
have been reclassified to be consistent with the  classification of items in the
three months and six months ended December 31, 1996.


                                 7

<PAGE>



      In preparing financial  statements in conformity with GAAP,  management is
required to make estimates and  assumptions  that affect the reported  amount of
assets and liabilities  and the disclosure of contingent  assets and liabilities
at the date of the  financial  statements  and revenues and expenses  during the
reported period.  Actual results could differ from those estimates.  The Company
is impacted by other factors such as the continued receipt of contracts from the
U.S.  government,  its ability to protect and maintain the proprietary nature of
its  technology,  its  continued  product  and  technological  advances  and the
strength and ability of the Company's  licensees  and joint venture  partners to
commercialize the Company's products and technologies.

United Solar

      In 1990,  ECD and Canon  entered into a joint  venture  agreement  for the
formation of United  Solar.  The  agreement  provided that United Solar would be
owned  49.98% by ECD,  49.98%  by  Canon,  with the  balance  held by Mrs.  Haru
Reischauer,  a  member  of the  Board  of  Directors  of  ECD.  ECD's  principal
contribution  to United  Solar was a license in the field of  photovoltaics.  In
return for its  contributions,  ECD received  49.98%  equity  interest in United
Solar.  In return for its 49.98%  equity  interest  in United  Solar,  Canon has
invested over $50,000,000 in United Solar.

      In 1992, a memorandum of understanding was signed by Canon and ECD stating
that  should  United  Solar  require  additional  funding  beyond what Canon has
already  agreed to invest,  Canon would assist  United Solar in finding means of
raising  funds,  which  would not result in the  dilution  of ECD's  interest in
United  Solar,  to  continue  the  expansion  of United  Solar's  operations  to
profitability.

      The following sets forth certain selected  financial data regarding United
Solar that are derived from United Solar's unaudited financial statements.

<TABLE>
<CAPTION>
                              UNITED SOLAR STATEMENTS OF OPERATIONS

                                              Three Months Ended           Six Months Ended
                                                 December 31,                December 31,
                                              1996          1995          1996          1995
                                          (Unaudited)   (Unaudited)    (Unaudited)   (Unaudited)

<S>                                      <C>            <C>            <C>           <C>        
Revenues*                                $  1,528,946   $ 1,446,680    $ 2,601,989   $ 2,994,053
  Operating Expenses
    Cost of product sales                   1,771,038     1,640,431      3,289,384     3,400,949
    Research and development                  792,388       542,419      1,458,951     1,026,919
    General and administrative                367,389       361,313        908,764       842,844
    Sales and marketing                       438,537       475,079        787,986       816,865
                                         ------------   -----------    -----------   -----------  
       Total                                3,369,352     3,019,242      6,445,085     6,087,577

  Other Income (Expense)                       15,391        30,750         89,763        48,235
                                         ------------   -----------    -----------   ----------- 
  Net Loss                               $ (1,825,015)  $(1,541,812)   $(3,753,333)  $(3,045,289)

  * Includes product sales and revenues earned under research contracts.

</TABLE>

                                 8

<PAGE>



                            UNITED SOLAR BALANCE SHEETS

                                                December 31,       June 30,
                                                   1996              1996
                                                (Unaudited)      (Unaudited)
 Current Assets:
    Cash and cash equivalents                   $  1,272,524     $  1,481,480
    Accounts receivable - Trade                      532,507          395,551
    Accounts receivable - NREL                       217,723          217,810
    Accounts receivable - Stockholders               534,169           70,190
    Inventory                                      3,048,191        2,257,458
    Other current assets                             290,685          332,002
                                                ------------     ------------ 
       Total Current Assets                        5,895,799        4,754,491

 Property, Plant and Equipment (Net)              13,461,135       11,276,455
 Other Assets                                        234,998          216,730
                                                ------------     ------------
       Total Assets                             $ 19,591,932     $ 16,247,676
                                                ============     ============

 Current Liabilities:
    Short-term bank debt                        $ 11,000,000     $ 14,375,565
    Accounts payable - Trade and Stockholders      1,558,229        1,363,044
    Accrued expenses and other                       575,155          297,186
                                                ------------     ------------
       Total Current Liabilities                  13,133,384       16,035,795
       Total Stockholders' Equity                  6,458,548          211,881
                                                ------------     ------------
        Total Liabilities and Stockholders'
           Equity                               $ 19,591,932     $ 16,247,676
                                                ============     ============

Sovlux

      In 1990, ECD established  Sovlux, a joint venture with Kvant in Russia, to
manufacture  photovoltaic  and battery  products  and  systems in the  countries
comprising the former  U.S.S.R.  and sell them  worldwide  (except for Japan and
India).  In July  1996,  MINATOM  agreed to become an equity  partner in Sovlux.
Sovlux is owned 50% by ECD and 50% by Kvant and MINATOM.  In 1990, Kvant entered
into  machine-building  contracts with ECD for the  construction of photovoltaic
manufacturing  equipment  and  battery  equipment.  Kvant  paid  ECD a total  of
$10,450,000  for these  machine-building  contracts.  At June 30, 1993,  ECD had
completed these machines and shipped them to Kvant.

      The  joint  venture   arrangements  provide  that  Kvant  contribute  such
equipment  in an installed  and  operational  condition to the joint  venture in
exchange for its 50% interest. ECD's contribution to the venture consists solely
of the technology necessary to support Sovlux's  operations.  No tangible assets
have  been  contributed  to  Sovlux  by ECD.  Through  December  31,  1996,  the
activities  related to Sovlux  have been  limited  to  facility  preparation  at
certain Kvant facilities from which Sovlux will operate, the cost of which Kvant
has also  assumed as part of its  commitment  to the  venture,  the  training of
employees and other pre-production activities.

      There are no financial  statements available for Sovlux since the December
31, 1993 unaudited financial statements set forth in ECD's Annual Report on Form
10-K for the year ended June 30, 1995, as amended.


                                 9

<PAGE>



GM Ovonic

      In June 1994, Ovonic Battery and General Motors formed a joint venture for
the  manufacture  and marketing of Ovonic NiMH batteries for electric  vehicles.
General  Motors has a 60% interest and Ovonic Battery has a 40% interest in this
joint venture. Ovonic Battery has contributed  intellectual property,  licenses,
production processes, know-how, personnel and engineering services pertaining to
Ovonic  NiMH  battery   technology  to  the  joint  venture.   General   Motors'
contribution  consists of operating  capital,  plant,  equipment and  management
personnel necessary for the volume production of batteries.

      GM Ovonic  is  currently  manufacturing  production-intent  batteries,  is
conducting  production  scale-up  engineering  activities  and is installing the
equipment  necessary for the initial low volume production of battery packs at a
manufacturing plant in Troy, Michigan.

      Financial statements of GM Ovonic for the three- and six-month periods
ended December 31, 1996 are currently not available.

Accounts Receivable

      The  following tabulation shows the component elements of accounts
receivable from long-term contracts and other programs:

                                                  December 31,       June 30,
                                                     1996              1996
                                                  (Unaudited)       (Audited)
      U.S. Government:
        Amounts billed                            $   526,497    $   743,482
        Unbilled                                      532,908        453,394
                                                  -----------    -----------
           Total                                    1,059,405      1,196,876
                                                  -----------    -----------

      Commercial Customers:
        Amounts billed                              3,208,958*     2,768,736*
        Unbilled
           - due per contracts                      8,840,209**    7,062,239**
           - other                                  1,522,514      1,222,173
                                                  -----------    -----------
           Total                                   13,571,681     11,053,148
                                                  -----------    -----------

      Other                                           166,604        666,412
      Allowance for Uncollectible Accounts            (26,345)       (29,205)
                                                  -----------    -----------
           TOTAL                                  $14,771,345    $12,887,231
                                                  ===========    ===========

        Includes related-party (principally GM Ovonic) amounts of $1,399,366 and
        $1,041,445, respectively. Includes related-party (principally GM Ovonic)
        amounts of $1,485,873 and $1,860,064, respectively.

      Unbilled   receivables  from  commercial   customers   represent  revenues
recognized  for the present  value of license  payments to be received in future
periods.  They also include revenues recognized on the  percentage-of-completion
method of accounting  related to  machine-building  contracts and amounts earned
under certain contracts, which amounts were billed subsequently.

      Certain  contracts  with the U.S.  government  require a retention that is
paid upon  completion of audit of the  Company's  indirect  rates.  There are no
material  retentions  at  December  31,  1996 and June 30,  1996.  Certain  U.S.
government  contracts remain subject to audit.  Management does not believe that
adjustments  which may result from an audit  would be material to the  financial
position or results of operations of the Company.

Inventories

      Inventories of raw  materials,  work in process and finished goods for the
manufacture of negative electrodes,  battery packs and other products,  together
with supplies,  are valued at the lower of cost (moving average) or market. Cost
elements  included in inventory are  materials,  direct labor and  manufacturing
overhead.  Cost of sales are removed  from  inventory  based on actual  costs of
items shipped to customers.

                                10

<PAGE>



      Inventories (principally those of Ovonic Battery) are as follows:

                                   December 31, 1996      June 30, 1996
                                       (Unaudited)          (Audited)

           Finished products           $  282,409          $  263,525
           Work in process              1,894,837           1,902,396
           Raw materials                1,473,134           1,075,401
           Supplies                        38,643              33,813
                                       ----------          ----------
                                       $3,689,023          $3,275,135
                                       ==========          ==========

Product Sales

      Product sales include negative electrodes, battery packs and machine-
building.  Revenues related to machine-building contracts are recognized on the
percentage-of-completion method of accounting using the costs incurred to date
as a percentage of the total expected costs. All other product sales are
recognized when the product is shipped.

Royalties

      Most license  agreements provide for the Company to receive royalties from
the sale of products  which  utilize the  licensed  technology.  Typically,  the
royalties  are  incremental  to and  distinct  from  the  license  fee  and  are
recognized  as revenue  upon the sale of the  respective  licensed  product.  In
several  instances,  the Company has received cash  payments for  non-refundable
advance royalty payments which are creditable against future royalties under the
licenses.  Advance  royalty  payments are deferred and recognized in revenues as
the  creditable  sales occur,  the  underlying  agreement  expires,  or when the
Company  has  demonstrable   evidence  that  no  additional  royalties  will  be
creditable and, accordingly, the earnings process is completed.

Business Agreements

      A substantial  portion of revenues are derived through business agreements
seeking to  develop  and/or  commercialize  products  based  upon the  Company's
proprietary technologies. Such agreements are of two types.

      The first type of agreement relates to licensing the Company's proprietary
technology.  Licensing activities are tailored to provide each licensee with the
right to use the Company's technology, most of which is patented, for a specific
product  application  or, in some  instances,  for  further  exploration  of new
product  applications  for  such  technologies.  The  terms  of  such  licenses,
accordingly,  are tailored to address a number of circumstances  relating to the
use of such technology  which have been  negotiated  between the Company and the
licensee.  Such terms generally address whether the license will be exclusive or
nonexclusive,   whether  the  licensee  is  limited  to  very  narrowly  defined
applications or to broader-based  product  manufacture or sale of products using
such technologies,  whether the license will provide royalties for products sold
which

                                11

<PAGE>



employ such licensed technology and how such royalties will be measured, as well
as  other  factors  specific  to each  negotiated  arrangement.  In some  cases,
licenses  relate  directly  to  research  and  development  that the Company has
undertaken pursuant to research and development agreements; in other cases, they
relate to product  development  and  commercialization  efforts of the licensee;
other agreements combine the efforts of the Company with those of the licensee.

      License agreement fees are generally recognized as revenue at the time the
agreements are  consummated, which is the completion-of-the-earnings process.
Typically,  such fees are  non-refundable, do not obligate the Company to incur
any future  costs or  require  future  performance  by the  Company  and are not
related to future  production or earnings of the licensee.  License fees payable
in installments  are recorded at the present value of the amounts to be received
taking into account the collectibility of the license fee. In some instances, a
portion of such license fees is contingent  upon the  commencement of production
or other uncertainties.  In these cases, license fee revenues are not recognized
until commencement of production or the resolution of uncertainties.

      In the second type of agreement,  the Company conducts  specified research
and   development   projects   related  to  one  of  its  principal   technology
specializations  for an  agreed-upon  fee  ("R&D  Agreements").  Some  of  these
projects have stipulated  performance  criteria and deliverables  whereas others
require "best efforts" with no specified performance criteria. Revenues from R&D
Agreements  that  contain  specific  performance  criteria are  recognized  on a
percentage-of-completion  basis which matches the contract revenues to the costs
incurred on a project based on the  relationship  of costs incurred to estimated
total project costs.  Revenue from R&D  Agreements,  where there are no specific
performance  terms,  are recognized in amounts equal to the amounts  expended on
the programs.  Generally,  the agreed-upon  fees for R&D Agreements  contemplate
reimbursing the Company for costs considered  associated with project activities
including  expenses  for  direct  product  development  and  research,  patents,
operating,  general and administrative  expenses and depreciation.  Accordingly,
expenses  related  to R&D  Agreements  are  recorded  as cost of  revenues  from
business agreements.

Other Operating Revenues

      Other  operating  revenues  consist  principally  of  third-party  service
revenue realized by certain of the Company's service departments,  including the
Production  Technology  and Machine  Building  Division  and Central  Analytical
Laboratory.

Other Non-operating Income

      Other  non-operating  income-net  consists of rental  income and gains and
losses on sale of fixed assets.



                                  12
<PAGE>


NOTE B - Product Sales, Royalties and Revenues from R&D Agreements and
         License and Other Agreements

      The Company has business  agreements  with third  parties for which sales,
royalties  and other  revenues  are  included in the  consolidated  statement of
operations. A summary of revenue from such agreements follows:

                                           Six Months Ended December 31,
                                                1996           1995
Product Sales:
   Negative electrodes                      $ 5,459,371    $ 2,624,289
   Battery packs                              2,080,856        477,969
   Machine building                           1,313,069      4,151,817
                                            -----------    -----------

                                            $ 8,853,296    $ 7,254,075
                                            ===========    ===========

Royalties:
   Battery Technology                       $   612,359    $   600,942
   Optical Memory                               204,073         21,543
                                            -----------    -----------

                                            $   816,432    $   622,485
                                            ===========    ===========
Revenues from R&D Agreements:
   Photovoltaics                            $   544,031    $ 1,373,938
   Battery technology (principally USABC)       569,648      2,514,474
   Microelectronics                             463,406        487,056
   Hydrogen                                     340,721        337,714
   Other                                        107,744         85,252
                                            -----------    -----------
                                            $ 2,025,550    $ 4,798,434
                                            ===========    ===========

License and Other Agreements:
   Battery                                  $ 4,330,000    $ 9,349,262
   Microelectronics                              80,645        750,000
                                            -----------    -----------
                                            $ 4,410,645    $10,099,262
                                            ===========    ===========

NOTE C - Non-Refundable Advance Royalties

      At December 31 and June 30,  1996,  the Company  deferred  recognition  of
revenues  relating to non-refundable  advance royalty  payments.  Non-refundable
advance royalties consist of the following:

                                       December 31, 1996     June 30, 1996

       Battery                              $1,704,991        $1,704,991
       Optical Memory                        1,912,394         2,049,238
                                            ----------        ----------
                                            $3,617,385        $3,754,229
                                            ==========        ==========

                                     13

<PAGE>


NOTE D - Net Income (Loss) Per Share

      The  Company  uses the  treasury  stock  method to  calculate  primary and
fully-diluted  earnings  per share.  Common stock  equivalents  consist of stock
options and warrants.  Weighted average number of shares outstanding and primary
earnings per share for the three  months and six months ended December 31, 1996
and 1995 are computed as follows:

<TABLE>
<CAPTION>
                                               Three Months Ended             Six Months Ended
                                                  December 31,                   December 31,
                                               1996           1995           1996           1995
                                               ----           ----           ----           ----
                                                   (Unaudited)                   (Unaudited)
  
   <S>                                     <C>            <C>             <C>            <C>
   Weighted average number of shares
      outstanding                           10,696,383     8,491,958      10,697,399      8,434,276
   Pro Forma weighted average shares for
      Common Stock Equivalents                  --         1,442,871          --          1,395,018
                                            ----------    ----------      ----------     ----------

      AVERAGE NUMBER OF SHARES
        OUTSTANDING AND EQUIVALENTS         10,696,383     9,934,829      10,697,399      9,828,294
                                            ==========    ==========      ==========     ==========

   Net income (loss) as reported           $(2,019,581)   $2,757,908     $(5,917,614)    $3,071,142
   Effect of application of modified
      treasury stock method                     --           125,410           --           181,818
                                           -----------    ----------     -----------     ----------
      Adjusted net (loss) income           $(2,019,581)   $2,883,318     $(5,917,614)    $3,252,960
                                           ===========    ==========     ===========     ==========

      NET (LOSS) INCOME PER SHARE          $      (.19)   $      .29     $      (.55)    $      .33
                                           ===========    ==========     ===========     ==========


      Primary  and fully  diluted  net (loss)  income per share are the same for
each of these periods.

</TABLE>


                                14

<PAGE>



Item 2. Management's Discussion and Analysis of Financial Condition and Results 
        of Operations

                       Results of Operations

Three Months Ended December 31, 1996 Compared to Three Months Ended
December 31, 1995

      The Company had net loss for the three months  ended  December 31, 1996 of
$2,020,000  compared  to net income of  $2,758,000  for the three  months  ended
December 31, 1995.  The loss is  primarily  due to (i) startup and  expansion of
negative  electrode  production  equipment  and battery  pack  production;  (ii)
additional technical, manufacturing and engineering support for GM Ovonic; (iii)
ongoing  electric vehicle battery research and development with reduced revenues
from  funded  programs;  and  (iv)  ongoing  defense  of the  Company's  battery
technology patents.

      Product sales, consisting of battery electrodes, battery packs and machine
building,  increased 20% in the quarter ended  December 31, 1996 compared to the
same quarter in the previous year due to increased  sales of battery  electrodes
and battery packs.  Battery  electrode and battery pack sales  increased 133% to
$4,112,000  in the December  1996 quarter from  $1,762,000  in the December 1995
quarter.  Revenues  from  machine-building  were $265,000 in the December 1996
quarter,  down from $1,878,000 in the same period last year,  principally due to
the  completion  of  photovoltaic  manufacturing  equipment  purchased by United
Solar.

      Royalties increased 19% to $415,000 in the three months ended December 31,
1996 from $350,000 in the three months ended  December 31, 1995 primarily due to
higher levels of royalties from ECD's optical memory technology in 1996.

      The 46% decrease in revenues from business  agreements  from $2,448,000 in
the three months ended December 31, 1995 to $1,312,000 in the three months ended
December 31, 1996 was due to  substantially  reduced  revenues  ($474,000 in the
December 1996 quarter  compared to $1,063,000 in the December 1995 quarter) from
the United States Advanced Battery  Consortium  ("USABC").  In December 1996, GM
Ovonic received  notification that USABC had approved funding for an $8,000,000,
15-month  program  between  Ovonic  Battery and GM Ovonic to reduce the costs of
manufacturing NiMH electric vehicle batteries.

      Revenues from license and other  agreements  decreased 52% from $6,399,000
in the three months ended  December 31, 1995 to  $3,042,000  in the three months
ended December 31, 1996. 1995 revenues  included license fees of $6,024,000 from
Asia Pacific  Investment Co., Ltd.  ("APIC").  In December 1996,  Ovonic Battery
signed an agreement with Sanoh Industrial Co., Ltd. ("Sanoh") to form a European
joint   venture   to   manufacture   and  sell   Ovonic   NiMH   batteries   for
electrically-powered  two- and three-wheeled vehicles. Ovonic Battery, 45% owner
in the  joint  venture,  will  provide  the  necessary  licenses  and  technical
know-how. Sanoh, 55% owner in the joint venture, will provide the necessary

                                15

<PAGE>



funding for the operations and capital expenses.  Ovonic Battery, in addition to
its 45%  equity,  will  receive  total  payments of up to  $5,000,000,  of which
$2,000,000  is recorded as license  fees at December  31,  1996.  The  agreement
provides  for other  interested  companies  to invest  in the joint  venture  as
additional shareholders.

      Also,  in  December,  1996  Ovonic  Battery  signed an  agreement  with LG
Chemical Ltd. ("LG  Chemical") of the Republic of Korea to manufacture  and sell
consumer NiMH  batteries.  Ovonic  Battery will receive total  payments of up to
$5,000,000,  of which  $1,000,000  is recorded as license  fees at December  31,
1996.  In  addition,  the Company  will  receive  running  royalties  under this
agreement.

      The  increase  in other  revenues  was due to  increased  billings  in the
quarter  ended  December 31, 1996 for  miscellaneous  work  performed for Ovonic
Battery licensees.

      The decrease in cost of revenues from business agreements and the increase
in product  development and research  expense in the three months ended December
31, 1996  compared to the three months ended  December 31, 1995 was  principally
due to ongoing  electric vehicle battery and other research and development with
reduced revenues from funded research and development programs.

      The increase in cost of product sales from  $3,624,000 in the three months
ended  December 31, 1995 to  $4,691,000  in the three months ended  December 31,
1996 was  principally  due to the startup and  expansion  of negative  electrode
production equipment and battery pack production.

      The  increase in patent  expenses  from  $89,000 in the three months ended
December 31, 1995 to $105,000 in the three  months  ended  December 31, 1996 was
primarily due to higher patent and  maintenance  costs in 1996.  Patent  defense
expenses  for 1996 and 1995 were  incurred  in  connection  with the defense and
prosecution of litigation with respect to Ovonic Battery's United States patents
covering its proprietary technology for NiMH batteries.

      The  increase in  operating,  general  and  administrative  expenses  from
$1,351,000  in the three months ended  December  31, 1995 to  $1,605,000  in the
three  months  ended   December  31,  1996  was   primarily   due  to  increased
administrative  expenses in 1996,  including salaries,  depreciation expense and
rents.

      The change  from  other  expense  of  $19,000  in the three  months  ended
December 31, 1995 to other income of $390,000 in the three months ended December
31, 1996 was due principally to increased interest income in 1996.




                                16

<PAGE>



Six Months Ended December 31, 1996 Compared to Six Months Ended
December 31, 1995

      The Company  had net loss for the six months  ended  December  31, 1996 of
$5,918,000  compared  to net  income  of  $3,071,000  for the six  months  ended
December 31, 1995.  The loss is  primarily  due to (i) startup and  expansion of
negative  electrode  production  equipment  and battery  pack  production;  (ii)
additional technical, manufacturing and engineering support for GM Ovonic; (iii)
ongoing  electric vehicle battery research and development with reduced revenues
from  funded  programs;  and  (iv)  ongoing  defense  of the  Company's  battery
technology patents.

      Product sales, consisting of battery electrodes, battery packs and machine
building,  increased  22% in the six months ended  December 31, 1996 compared to
the six  months  ended  December  31,  1995 due to  increased  sales of  battery
electrodes and battery packs. Battery electrode and battery pack sales increased
143% to $7,540,000 in the six months ended December 31, 1996 from  $3,102,000 in
the six months ended  December 31, 1995.  Revenues  from  machine-building  were
$1,313,000 in the six months ended December 31, 1996 down from $4,152,000 in the
six months  ended  December  31,  1995,  principally  due to the  completion  of
photovoltaic manufacturing equipment purchased by United Solar.

      Royalties  increased 31% to $816,000 in the six months ended  December 31,
1996 from  $622,000 in the six months ended  December 31, 1995  primarily due to
higher levels of royalties from ECD's optical memory technology in 1996.

      The 58% decrease in revenues from business  agreements  from $4,798,000 in
the six months  ended  December 31, 1995 to  $2,026,000  in the six months ended
December 31, 1996 was due to substantially  reduced  revenues  ($569,000 in 1996
compared to $2,172,000 in 1995) from USABC.

      Revenues from license and other agreements  decreased 56% from $10,099,000
in the six months ended  December 31, 1995 to $4,411,000 in the six months ended
December 31, 1996. 1995 revenues  included  license fees of $8,849,000 from APIC
and Sanoh.  In the six months ended  December 31, 1996,  ECD and Ovonic  Battery
entered into a battery license agreement with Canon granting Canon  nonexclusive
rights to manufacture and market Ovonic NiMH batteries for certain applications.
The Company recognized license fee revenue of $1,246,000 in connection with this
agreement and will receive running royalties.

      The decrease in cost of revenues from business agreements and the increase
in product development and research expense in the six months ended December 31,
1996 compared to the six months ended December 31, 1995 was  principally  due to
ongoing electric vehicle battery and other research and development with reduced
revenues from funded R&D Agreements.


                                17

<PAGE>



      The  increase  in cost of product  sales to  $9,682,000  in the six months
ended  December 31, 1996 from  $7,315,000  in the six months ended  December 31,
1995 was  principally  due to the startup and  expansion  of negative  electrode
production equipment and battery pack production.

      The  decrease in patent  expenses  from  $397,000 in the six months  ended
December  31,  1995 to $224,000 in the six months  ended  December  31, 1996 was
primarily  due to lower patent and  maintenance  costs in 1996.  Patent  defense
expenses  for 1996 and 1995 were  incurred  in  connection  with the defense and
prosecution of litigation with respect to Ovonic Battery's United States patents
covering its proprietary technology for NiMH batteries.

      The  increase  in  operating,   general  and  administrative  expenses  to
$3,236,000 in the six months ended December 31, 1996 from  $2,782,000 in the six
months ended  December 31, 1995 was  primarily  due to increased  administrative
expenses in 1996, including salaries, depreciation and rents.

      The change from other income of $21,000 in the six months  ended  December
31, 1995  compared to other income of $665,000 in the six months ended  December
31, 1996 was due principally to increased interest income in 1996.

                  Liquidity and Capital Resources

      As of December 31, 1996, the Company had  unrestricted  consolidated  cash
and cash equivalents,  which consist of investments  maturing in three months or
less, of approximately  $20,862,000, a decrease of approximately $2,912,000 from
June 30, 1996.  As of December 31, 1996,  the Company had  consolidated  working
capital of  approximately  $35,881,000,  compared  with a  consolidated  working
capital  of  $43,525,000  as of June 30,  1996.  Investments,  which  consist of
commercial paper maturing in four to six months, decreased $8,370,000 in the six
months ended December 31, 1996.

      During the six months ended  December 31, 1996,  approximately  $8,680,000
cash  was  used  in  operations.   The  difference   between  the  net  loss  of
approximately $5,818,000 and the net cash used in operations was principally due
to revenues from  agreements in the six months ended  December 31, 1996 pursuant
to which certain payments will be received at a later date. In addition,  during
this period  approximately  $1,619,000 of machinery and equipment were purchased
or constructed  for the expansion of Ovonic  Battery's  manufacturing  capacity.
During  the next 12  months,  Ovonic  Battery  plans to  purchase  approximately
$5,000,000  of  machinery  and  equipment.   The  machinery  and  equipment  are
principally for expansion of Ovonic Battery's manufacturing capacity.

      Some business  agreements related to R&D agreements have been entered into
by the Company with U.S.  government  agencies and with  industry to develop the
Company's products and production technology. The technology developed, together
with the applicable patents, are generally owned by the Company.  Generally, the
agreed-upon

                                18

<PAGE>



fees for these  R&D  Agreements  reimburse  the  Company  for its  direct  costs
associated  with  these  projects,  together  with a portion of  indirect  costs
(patents, operating, general and administrative expenses and depreciation).

      The Company has entered into a third-party leasing arrangement with Finova
Capital Corporation  ("Finova"),  formerly Financing for Science  International,
which provides lease financing for certain equipment used by the Company.  As of
December 31, 1996, the Company had financed equipment having an acquisition cost
of $8,600,000 under this  arrangement.  The Company's leases with Finova provide
for a term of five years. The required lease payments over this period equal the
acquisition cost of the leased  equipment plus an interest  factor.  The Company
has agreed to purchase certain  equipment leased from Finova upon the expiration
of the applicable  leases for 10% of its acquisition  cost. For other equipment,
the Company has an option to purchase  the  equipment  for its then market value
(but no less than 10% nor more than 20% of its  acquisition  cost).  The Company
has an option to purchase  certain other leased equipment upon the expiration of
the applicable leases for its then fair market value.

      While certain  programs have limited terms,  the equipment  being utilized
for these programs has  alternative  future uses for other programs if, in fact,
the programs are not continued beyond their respective terms.



                                19

<PAGE>



                    PART II - OTHER INFORMATION


Item 4. Submission of Matters to a Vote of Security Holders

      At the Annual Meeting of  Stockholders  of the Company held on January 16,
1997 (the "Meeting"),  the following directors were elected for the ensuing year
and until their successors shall be duly elected and qualified:

                                     For             Withheld

        Stanford R. Ovshinsky     15,065,334         138,238
        Iris M. Ovshinsky         15,050,390         153,182
        Robert C. Stempel         15,067,996         135,576
        Nancy M. Bacon            15,067,996         135,576
        Umberto Colombo           14,860,526         343,046
        Jack T. Conway            14,858,036         345,536
        Hellmut Fritzsche         15,051,546         152,026
        Joichi Ito                15,068,096         135,476
        Walter J. McCarthy, Jr.   15,051,396         152,176
        Florence I. Metz          15,052,886         150,686
        Haru Reischauer           14,857,781         345,791
        Nathan J. Robfogel        15,052,846         150,726
        Stanley K. Stynes         15,052,846         150,726

      Also approved at the Meeting was the  appointment of Deloitte & Touche LLP
as  independent  accountants  for the fiscal  year  ending  June 30,  1997 (with
15,072,544 For; 70,920 Against; and 60,108 Abstentions).

Item 6. Exhibits and Reports on Form 8-K

      A.   Exhibits

           Exhibit 27.    Financial Data Schedule (Edgar version)

      B.   Reports on Form 8-K

           None.


                                20

<PAGE>



                            SIGNATURES

      Pursuant to the  requirements of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                              Energy Conversion Devices, Inc.
                              (Registrant)



                          By: /s/ Kenneth A. Pullis
                              Kenneth A. Pullis
Date: February 14, 1997       Controller (Principal Accounting Officer)





                          By: /s/ Nancy M. Bacon
                              Nancy M. Bacon
Date: February 14, 1997       Senior Vice President




                          By: /s/ Stanford R. Ovshinsky
                              Stanford R. Ovshinsky
Date: February 14, 1997       President and Chief Executive Officer




                                21

<PAGE>