Energy Conversion Devices Reports Financial Results for Second Quarter of Fiscal Year 2010

ROCHESTER HILLS, Mich., Feb. 9 /PRNewswire-FirstCall/ -- Energy Conversion Devices, Inc. (ECD) (Nasdaq: ENER), the leading global manufacturer of thin-film flexible solar laminate products for the building-integrated and commercial rooftop markets, today announced financial results for the second quarter of its fiscal year 2010.

Total consolidated revenues for the second quarter of fiscal 2010 were $52.9 million compared to $103.1 million in the second quarter of fiscal 2009 and $42.9 million in the first quarter of fiscal 2010.  For the second quarter, the company reported a net loss of $39.1 million, or $0.92 attributable to ECD shareholders per fully diluted share.  In the year-ago period, net income was $13.0 million, or $0.31 attributable to ECD shareholders per fully diluted share.  In the first quarter of fiscal 2010, the company reported a net loss of $11.8 million, or $0.28 attributable to ECD shareholders per fully diluted share.

For the six months ending December 31, 2009, total consolidated revenues were $95.9 million compared to $198.9 million in the prior year.  Net loss for the first six months of fiscal 2010 was $50.9 million, or $1.20 attributable to ECD shareholders per fully diluted share.  For the year-ago period, net income was $24.9 million, or $0.58 attributable to ECD shareholders per fully diluted share.

The second quarter net results were impacted by costs related to the integration of Solar Integrated Technologies and the company's recent reduction in workforce.  These costs included an inventory write off of $2.5 million charged to Cost of Product and Project Sales, asset impairments of $1.3 million, and restructuring expenses of $2.4 million.  In addition, there was a $7.4 million charge to Cost of Product and Project Sales related to factory underutilization.

Mark Morelli, ECD's President and Chief Executive Officer, said, "We made progress on our business model expansion in the second quarter.  Our new projects business is gaining traction as demonstrated by our recent announcements, including the new agreement with Enel Green Power of Italy that will be up to 25 megawatts.  Additionally, our new PowerTilt™ product is already seeing excellent customer interest even before our expected initial shipments this spring."

"We are also pleased with the progress we are making on our technology roadmap," added Mr. Morelli.  "We have a proven track record of developing new technologies and successfully bringing new products to market.  We are confident in our ability to achieve 12 percent laminate conversion efficiency and less than $0.95 cost per watt."

Mr. Morelli concluded, "We reduced our inventory balances, continued to restructure our company and are encouraged by the early results of the business initiatives undertaken in the second quarter.  We've signed more than 35 megawatts of new projects and agreements since the end of the quarter, and we expect to build on this momentum in the second half of the fiscal year."

Conference Call / Webcast Details

Management of Energy Conversion Devices will review these financial results on a conference call on Tuesday, February 9, 2010, at 10:00 a.m. EST.  The dial-in number for the live audio call is (877) 858-2512 or (706) 634-6076 (international) with conference ID number 53525895.  The conference call will be webcast live over the Internet and can be accessed in the Investor Relations – Conference Calls section of the company's website at www.energyconversiondevices.com.

An audio replay of the call will be available approximately two hours after the conclusion of the call.  The audio replay will remain available until 11:59 p.m., February 11, 2010, and can be accessed by dialing (800) 642-1687 or (706) 645-9291 (international) with conference ID number 53525895.  The webcast will also be archived on the company's website.

About Energy Conversion Devices

Energy Conversion Devices is a leader in building-integrated and rooftop photovoltaics.  The company manufactures, sells and installs thin-film solar laminates that convert sunlight to energy using proprietary technology.  ECD's UNI-SOLAR® brand products are unique because of their flexibility, light weight, ease of installation, durability, and real-world efficiency.  Through its Solar Integrated Technologies business, the company also designs, manufactures and installs rooftop photovoltaic systems which enable customers to transform unused space on the rooftop into a value-generating asset.  For more information, please visit www.energyconversiondevices.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.  Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future net sales or performance, capital expenditures, financing needs, plans or intentions relating to expansions, business trends and other information that is not historical information.  All forward-looking statements are based upon information available to us on the date of this release and are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from the results discussed in the forward-looking statements.  Risks that could cause such results to differ include: our ability to maintain our customer relationships; the worldwide demand for electricity and the market for solar energy; the supply and price of components and raw materials for our products; our customers' ability to access the capital needed to finance the purchase of our products; and risks associated with integrating Solar Integrated Technologies, Inc.  The risk factors identified in the ECD filings with the Securities and Exchange Commission, including the company's most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q, could impact any forward-looking statements contained in this release.

    
    
                    ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                        (In thousands, except per share data)
    
                                      Three Months Ended     Six Months Ended
                                         December 31,          December 31,
                                      ------------------    -----------------
                                      2009      2008 (1)    2009     2008 (1)
                                    -------     --------   ------    --------
    Revenues                           
      Product and project sales     $47,195     $97,987   $83,905   $188,788
      Royalties                       2,254       1,543     4,213      2,888
      Revenues from product
       development agreements         3,007       3,077     6,998      6,348
      License and other revenues        456         500       740        848
                                     ------     -------    ------    -------
        Total Revenues               52,912     103,107    95,856    198,872
    Expenses 
      Cost of product and project
       sales                         58,381      63,649    86,214    124,628
      Cost of revenues from Product
       development agreements         2,394       2,342     5,675      4,523
      Product development and
       research                       3,130       1,954     5,375      4,144
      Preproduction costs                 -       1,831        10      3,808
      Selling, general and
       administrative                17,220      17,277    33,422     31,428
      Net loss (gain) on disposal of
       property, plant and equipment    291        (38)     1,265        246
      Impairment loss                 1,253           -     1,253          -
      Restructuring charges           2,445         191     3,122        435
                                     ------      ------   -------    -------
        Total Expenses               85,114      87,206   136,336    169,212
                                   --------      ------   -------    -------
    Operating (Loss) Income        (32,202)      15,901  (40,480)     29,660
    Other Income (Expense)    
      Interest income                   264       1,467       556      4,071
      Interest expense              (6,837)     (4,030)  (13,800)    (7,594)
      Distribution from joint
       venture                            -           -     1,309          -
      Other nonoperating expense,
       net                            (981)        (77)      (76)    (1,002)
                                    -------     -------  --------    -------
        Total Other Income
         (Expense)                  (7,554)     (2,640)  (12,011)    (4,525)
                                   --------     -------  --------    -------
    (Loss) Income before Income 
     Taxes and Equity Loss         (39,756)      13,261  (52,491)     25,135
      Income tax (benefit)
       expense                        (985)         216   (1,900)        273
                                   --------      ------  --------     ------
    (Loss) Income before Equity
     Loss                          (38,771)      13,045  (50,591)     24,862
      Equity loss                     (313)           -     (333)          -
                                   --------      ------  --------     ------
    Net (Loss) Income              (39,084)      13,045  (50,924)     24,862
    Net Loss Attributable to 
     Noncontrolling Interest           (79)           -     (153)          -
                                  ---------     ------- ---------    -------
    Net (Loss) Income Attributable
     to ECD Shareholders          $(39,005)     $13,045 $(50,771)    $24,862
                                  =========      ====== =========    =======
    (Loss) Earnings Per Share,
     Attributable to ECD
     Shareholders                   $(0.92)       $0.31   $(1.20)      $0.59
                                    =======       =====   =======      =====
    Diluted (Loss) Earnings Per
     Share, Attributable to ECD      
     Shareholders                   $(0.92)       $0.31   $(1.20)      $0.58
                                    =======      ======   =======     ======
    Basic weighted shares
     outstanding                     42,299      42,274    42,299     42,248
    Diluted shares outstanding       42,299      42,650    42,299     42,915
    
    (1) As adjusted due to the implementation of FASB ASC 470-20
    
    
                      ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
                                CONSOLIDATED BALANCE SHEETS
                                      (in thousands)
    
    
                                                  December 31,       June 30,
                                                      2009            2009(1)
                                                  -------------      --------
                                                   (Unaudited)
    ASSETS
    Current Assets:
      Cash and cash equivalents                         $90,656       $56,379
      Short-term investments                            114,388       245,182
      Accounts receivable, net                           59,823        69,382
      Inventories, net                                  120,824        74,266
      Other current assets                                8,367         4,897
                                                        -------       -------
    Total Current Assets                                394,058       450,106
    
    
    Property, Plant and Equipment, net                  613,310       614,330
    
    
    Other Assets:
      Restricted cash                                     1,738             -
      Goodwill                                           35,371             -
      Intangible assets, net                              2,176             -
      Lease receivable, net                              11,438             -
      Other assets                                       12,234        11,661
                                                         ------        ------
    Total Other Assets                                   62,957        11,661
                                                         ------        ------
    
    
    Total Assets                                     $1,070,325    $1,076,097
                                                     ==========    ==========
    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities:
      Accounts payable and accrued expenses             $34,348       $50,238
      Current portion of warranty liability              12,070         5,917
      Other current liabilities                           6,621         3,506
                                                         ------        ------
    Total Current Liabilities                            53,039        59,661
    
    
    Long-Term Liabilities:
      Convertible senior notes                          255,172       247,974
      Capital lease obligations                          20,878        21,412
      Warranty liability                                 31,072             -
      Other liabilities                                  21,913         9,701
                                                        -------       -------
    Total Long-Term Liabilities                         329,035       279,087
    
    
    Commitments and Contingencies (Note 10)
    
    Stockholders' Equity
      Common stock, $0.01 par value, 100 million shares
       authorized, 45,755,412 and 45,754,652 issued at
       December 31, 2009 and June 30,2009, respectively     458           458
      Additional paid-in capital                      1,057,971     1,055,705
      Treasury stock                                      (700)         (700)
      Accumulated deficit                             (367,389)     (316,618)
      Accumulated other comprehensive loss, net         (1,936)       (1,496)
                                                     ----------    ----------
      Total ECD stockholders' equity                    688,404       737,349
    Accumulated deficit – noncontrolling interest         (153)             -
                                                     ----------    ----------
    Total Stockholders' Equity                          688,251       737,349
                                                     ----------    ----------
    Total Liabilities and Stockholders' Equity       $1,070,325    $1,076,097
                                                     ==========    ==========
    
    (1) As adjusted due to the implementation of FASB ASC 470-20
    
    
                  ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                                   (in thousands)
    
    
                                                          Six Months Ended 
                                                            December 31,
                                                     ------------------------
                                                          2009       2008 (1)
                                                      ---------      --------
    Cash flows from operating activities:
      Net (loss) income                              $(50,924)        $24,862
      Adjustments to reconcile net (loss) income
       to net cash (used in) provided by operating
       activities:
         Depreciation and amortization                  18,300         15,035
         Amortization of debt discount and deferred
          financing fees                                 7,815          7,244
         Share-based compensation                        2,266          3,475
         Other-than-temporary impairment of investment       -          1,002
         Net loss on disposal of property, plant
          and equipment                                  1,265            420
         Impairment loss                                 1,253              -
         Equity loss                                       333              -
         Other                                               -          4,212
      Changes in operating assets and liabilities,
       net of foreign exchange:
         Accounts receivable                             4,632       (18,928)
         Inventories                                  (22,430)       (12,798)
         Other assets                                  (1,773)        (2,176)
         Accounts payable and accrued expenses        (21,348)         15,161
         Other liabilities                                 502          (337)
                                                      --------        -------
           Net cash (used in) provided by Operating
            activities                                (60,109)         37,172
    
    Cash flows from investing activities:
      Purchases of property, plant and equipment      (18,759)      (103,247)
      Acquisition of business, net of cash acquired    (2,088)              -
      Proceeds from maturities of investments          120,119          2,700
      Proceeds from sale of investments                  9,921              -
                                                       -------      ---------
           Net cash provided by (used in)
            investing activities                       109,193      (100,547)
    
    Cash flows from financing activities:
      Principal payments under capitalized lease
       obligations and other debt                        (734)          (517)
      Repayment of revolving credit facility           (5,705)              -
      Repayment of convertible notes                   (8,000)              -
      Proceeds from sale of stock and
       share-based compensation, net of expenses             -          1,640
                                                      --------          -----
           Net cash (used in) provided by
            financing activities                      (14,439)          1,123
     
    Effect of exchange rate changes on cash and
     cash equivalents                                    (368)            324
    Net increase (decrease) in cash and
     cash equivalents                                   34,277       (61,928)
    Cash and cash equivalents at beginning of
     period                                             56,379        484,492
                                                       -------       --------
    Cash and cash equivalents at end of period         $90,656       $422,564
    
    (1) As adjusted due to the implementation of FASB ASC 470-20

SOURCE Energy Conversion Devices, Inc.



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