ENER Accretion Acquisition Corporation

- Revenues Increase 73 Percent On Strong Solar Sales ROCHESTER HILLS, Mich., Nov. 8 /PRNewswire-FirstCall/ -- Energy Conversion Devices, Inc. (ECD) (NASDAQ:ENER), a leading global manufacturer of solar products, today reported financial results for the first quarter of fiscal 2008, ended September 30, 2007. Revenues in the first quarter of fiscal 2008 were $47.0 million, up 31 percent from prior-quarter revenues of $36.0 million and up 73 percent from $27.2 million in the first quarter of fiscal 2007. Revenues from the company's solar business represented 89 percent of total revenues, or $41.9 million, a 33 percent sequential increase, and a 76 percent increase over the prior-year quarter. The substantial increase in demand for UNI-SOLAR(R) laminates came from growing domestic orders, as well as strong international demand from customers in Italy and Germany. ECD reported a net loss for the period of $7.6 million, or $0.19 per share, compared to a net loss of $13.1 million, or $0.33 per share, in the fourth quarter of fiscal 2007, and $2.3 million, or $0.06 per share, in the year-ago period. First quarter results included $2.5 million, or $0.06 per share, of restructuring charges principally for costs associated with the company's management transition. Results in the quarter were also impacted by approximately $2.5 million, or $0.06 per share, of preproduction costs for the manufacturing lines and higher selling, general and administrative expenses to support growth in the solar business, as well as lower interest income. ECD ended the quarter with cash and short-term investments of approximately $156 million. Mark Morelli, ECD's new president and CEO, commented, "Since joining ECD as CEO in September, I have focused our organization on accelerating the growth and enhancing the profitability of our solar business. We are rapidly transitioning from an R&D orientation to a company with a performance-based culture that is expanding production capacity to meet increasing global demand for our solar laminates. Our primary near-term objective is to improve sales and operating efficiencies as we ramp up significant new production capacity. Our laminates continue to gain momentum in the marketplace as demonstrated by our growing pipeline of business. For example, our supply agreements and commitments for the second quarter of fiscal 2008 exceed our available capacity." Key Developments -- In September, Uni-Solar signed an 18-month agreement with EDF Energies Nouvelles (EDF EN), one of the world's largest renewable utilities, to supply up to 30 MW of thin-film PV laminates for large-scale installations on industrial and commercial buildings. -- Uni-Solar laminates will be installed on the roof of the General Motors facility in Fontana, California, one of the largest solar power installations in corporate use in the United States. This project is the second installation of Uni-Solar laminates for GM after the 1MW solar installation in Rancho Cucamonga, California. -- Uni-Solar currently has 58MW of annual production capacity, and is expected to be 148MW by the end of fiscal 2008. The first 30MW line at Uni-Solar's Greenville, Michigan facility went online November 1, one month ahead of schedule. -- Ovonyx, the company's joint venture, signed a technology and licensing agreement for phase-change memory with Hynix, one of the world's top-tier memory semiconductor suppliers offering DRAM and Flash memory chips. Sanjeev Kumar, ECD's chief financial officer, said, "We produced 10.4 MW and shipped 13.1MW in the quarter. The gross margin in our solar business was 18 percent in the quarter, including an approximately six percent adverse impact primarily related to the ramp up of Auburn Hills 2 and manufacturing- related issues at Auburn Hills 1. We have taken steps to resolve these issues. We are now starting to ramp our first Greenville facility and expect that it will impact our overall gross margins beginning the second quarter of fiscal year 2008. As we continue to implement production process changes that improve our yield and throughput, increase the dawn-to-dusk operating output of our laminates and reduce materials and labor cost, we continue to expect longer-term to achieve our 25 percent gross margin target in our Uni-Solar business." "Our restructuring program, for which we took additional charges of $2.5 million in the quarter, has taken more than $17 million of annualized costs out of Corporate Activities and our Ovonic Materials segment in the past few months. We are moving toward our goal of making Ovonic Materials self-funded, and the business is near breakeven. Since our highest priority is to invest in our growing solar business, we will now only invest in areas that have a clear near-term path to commercialization. Additionally, we have recently begun Phase 2 of our restructuring, focused principally on general and administrative expenses, and expect to aggressively reduce our costs in this area by the end of the fiscal year," Kumar added. Reiterating Full-Year Revenue Guidance; Targeting Sustainable Profitability in Fiscal Q4 The company reiterated its prior revenue guidance provided at the end of the fiscal fourth quarter. Fiscal year 2008 consolidated revenues are expected to be in the range of $220 million to $245 million, of which Uni-Solar's fiscal 2008 product sales are expected to be $205 million to $225 million. Preproduction costs for the year are expected to be between $6 million and $9 million and restructuring costs for 2008 are expected to be between $3 million and $5 million. Fiscal second quarter total consolidated revenues are expected to be $50 million to $55 million, of which solar product sales are expected to be $45 to $49 million. Gross margins on solar product sales for the second fiscal quarter are expected to be approximately 15 to 16 percent, reflecting the ramp up of the company's first Greenville facility. The company also expects restructuring charges of $2.0 to $2.5 million and preproduction costs of approximately $2 to $3 million in the quarter. Gross margins in the Uni-Solar business are expected to approach 21 percent to 23 percent in the fourth quarter fiscal 2008, at which time the company expects to reach sustainable profitability. Morelli concluded, "Our compelling solar products and strong sales momentum position ECD well for profitable growth. We are placing significant focus on improving operating efficiencies, and are already achieving important progress. During the quarter, we launched a new laminate that delivers six percent greater conversion efficiency, an improvement that both increases our effective capacity and favorably impacts income. We are instilling operational excellence across the company and are focused on improving product and manufacturing efficiencies that will enable us to reach sustainable profitability in the fourth fiscal quarter and deliver steadily increasing value for shareholders. I am encouraged by our opportunities and our progress." Conference Call / Webcast Details Management of Energy Conversion Devices will host a conference call today at 10:00 a.m. EST to review the financial results. The dial-in number for the live audio call is 877-858-2512 or 706-634-1291 (international) with conference ID number 22023805. 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 http://www.ovonic.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., November 9, 2007, and can be accessed by dialing (800) 642-1687 or (706) 645-9291 (international), with conference ID number 22023805. The webcast will also be archived on the company's website. About Energy Conversion Devices Energy Conversion Devices, Inc. (NASDAQ:ENER) manufactures and sells thin-film solar laminates that convert sunlight to energy. Distributed globally under the UNI-SOLAR(R) brand, the company's products are based on proprietary technology and offer superior cost-effective solutions for roofing applications because they are lightweight, durable, flexible, can be integrated directly with building materials, and generate more energy in real- world conditions. ECD pioneers other alternative technologies, including a new type of nonvolatile digital memory technology that is significantly faster and less expensive, ideal for use in a variety of applications, including cell phones, digital cameras and personal computers. For more information on our company, please visit http://www.ovonic.com/. This release may contain forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on assumptions which ECD, as of the date of this release, believes to be reasonable and appropriate. ECD cautions, however, that the actual facts and conditions that may exist in the future could vary materially from the assumed facts and conditions upon which such forward-looking statements are based. 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 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended September 30, 2007 2006 (Unaudited) Revenues Product Sales $42,467 $22,858 Royalties 1,015 664 Revenues from Product Development Agreements 2,877 3,105 Revenues from License and Other Agreements 683 555 Total Revenues 47,042 27,182 Expenses Cost of Product Sales 35,069 18,010 Cost of Revenues from Product Development Agreements 1,709 2,014 Product Development and Research 3,462 4,741 Preproduction Costs 2,545 354 Operating, General and Administrative (including patents) 11,694 9,407 Restructuring Charges 2,516 - Total Expenses 56,995 34,526 Loss from Operations (9,953) (7,344) Interest and Other Income (Expense), Net 2,392 5,042 Net Loss Before Income Taxes (7,561) (2,302) Income Taxes 6 - Net Loss $(7,567) $(2,302) Basic Net Loss Per Share $(.19) $(.06) Diluted Net Loss Per Share $(.19) $(.06) Shares used in calculation of net loss per share: Basic 39,838 39,070 Diluted 39,838 39,070 Non-GAAP Financial Measures To supplement its financial statements presented in accordance with Generally Accepted Accounting Principles (GAAP), ECD uses the following measures as defined by the Securities and Exchange Commission as non-GAAP measures: Three Months Ended September 30, 2007 2006 (in thousands) Net Loss $(7,567) $(2,302) Add: -- Preproduction Costs 2,545 354 -- Restructuring Charges 2,516 - Net Loss as Adjusted (non-GAAP) $(2,506) $(1,948) Net Loss (basic and fully diluted) per share as reported $(.19) $(.06) Net Loss (basic and fully diluted) per share as adjusted (non-GAAP) $(.06) $(.05) ENERGY CONVERSION DEVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands) Three Months Ended Year Ended September 30,2007 June 30, 2007 (Unaudited) ASSETS Cash and cash equivalents $71,699 $80,770 Short-term investments 84,274 125,004 Restricted Investments 5,594 - Accounts receivable (net) 44,890 36,498 Inventories 34,258 38,692 Assets held for sale 1,539 1,524 Property, plant and equipment (net) 337,313 311,369 Other 7,887 6,822 TOTAL ASSETS $587,454 $600,679 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and other liabilities $35,785 $42,940 Long-term liabilities 32,315 32,232 TOTAL LIABILITIES 68,100 75,172 STOCKHOLDERS' EQUITY 519,354 525,507 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $587,454 $600,679 ENERGY CONVERSION DEVICES, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CASH FLOWS (In Thousands) Three Months Ended September 30, 2007 2006 Unaudited) OPERATING ACTIVITIES: Net loss $(7,567) $(2,302) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3,693 1,982 Bad debt expense 250 1,051 Restructuring charge 664 - Amortization of premium (discount) on investments (1) 534 Stock and stock options issued for services rendered 268 603 Other (208) 147 Changes in working capital (11,908) (2,034) NET CASH USED IN OPERATING ACTIVITIES (14,809) (19) INVESTING ACTIVITIES: Purchases of property, plant and equipment (including construction in progress) (net) (30,118) (26,472) Purchase (proceeds from sale) of investments 34,979 (75,370) NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 4,861 (101,842) NET CASH PROVIDED BY FINANCING ACTIVITIES 758 226 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 119 33 NET CASH FLOW (9,071) (101,602) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 80,770 164,962 CASH AND CASH EQUIVALENTS AT END OF PERIOD $71,699 $63,360 ENERGY CONVERSION DEVICES, INC. AND SUBSIDIARIES SEGMENT REVENUE AND OPERATING INCOME/(LOSS) (In Thousands) September 30, September 30, 2007 2006 2007 2006 (Unaudited) Revenues Income (Loss) from Operations United Solar Ovonic $41,887 $23,860 $(468) $1,487 Ovonic Materials 5,092 3,241 (700) (3,908) Corporate Activities 169 243 (8,833) (4,392) Consolidating Entries (106) (162) 48 (531) Consolidated $47,042 $27,182 $(9,953) $(7,344) Segment Operations - United Solar Ovonic (In Thousands) Quarterly Periods Ended Fiscal Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Year 2007 2007 2007 2006 2006 2007 (Unaudited) PV Product Sales $39,870 $29,467 $22,143 $17,445 $22,127 $91,182 Megawatts Produced 10.4 10.7 8.8 6.8 6.2 32.5 Megawatts Shipped 13.1 10.2 7.4 5.3 6.5 29.4 Cost of Product Sales $32,622 $24,798 $18,303 $15,029 $16,966 $75,096 Gross Margin $7,248 $4,669 $3,840 $2,416 $5,161 $16,086 Gross Margin % 18.18% 15.84% 17.34% 13.85% 23.32% 17.64% Other Revenues: Research & Development $2,017 $2,000 $1,696 $1,748 $1,730 $7,174 Other Operating Revenues $1 $2 $1 $3 $7 Other Revenues Total $2,017 $2,001 $1,698 $1,749 $1,733 $7,181 Other Expenses: Research & Development $2,275 $1,865 $1,945 $1,451 $1,398 $6,659 Preproduction $2,545 $2,019 $491 $750 $354 $3,614 Operating, Selling, General and Administrative Expenses $4,913 $3,693 $2,584 $1,100 $3,655 $11,032 Total Expenses $9,733 $7,577 $5,020 $3,301 $5,407 $21,305 Income (Loss) from Operations $(468) $(907) $518 $864 $1,487 $1,962 Segment Operations - Ovonic Materials (In Thousands) Quarterly Periods Ended Fiscal Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Year 2007 2007 2007 2006 2006 2007 (Unaudited) Product Sales $2,615 $1,817 $1,062 $1,222 $731 $4,832 Cost of Product Sales $2,568 $1,992 $1,098 $925 $651 $4,666 Other Revenues: Royalties $1,015 $925 $770 $964 $664 $3,323 Research & Development $860 $1,185 $1,193 $1,014 $1,388 $4,780 Licenses $513 $313 $238 $238 $258 $1,047 Other Operating Revenues $89 $133 $178 $142 $200 $653 Other Revenues Total $2,477 $2,556 $2,379 $2,358 $2,510 $9,803 Other Expenses: Research & Development $2,915 $4,501 $5,740 $5,180 $5,369 $20,790 Operating, General and Administrative Expenses $309 $628 $789 $339 $1,129 $2,885 Total Expenses $3,224 $5,129 $6,529 $5,519 $6,498 $23,675 Loss from Operations $(700) $(2,748) $(4,186) $(2,864) $(3,908) $(13,706) Segment Operations - Corporate Activities (In Thousands) Quarterly Periods Ended Fiscal Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Year 2007 2007 2007 2006 2006 2007 (Unaudited) Other Operating Revenues $169 $257 $291 $356 $243 $1,147 Other Expenses: Restructuring $2,516 $5,385 $- $- $- $5,385 Operating, General and Administrative Expenses $6,486 $7,113 $7,088 $5,695 $4,635 $24,531 Total Expenses $9,002 $12,498 $7,088 $5,695 $4,635 $29,916 Loss from Operations $(8,833) $(12,241) $(6,797) $(5,339) $(4,392) $(28,769) DATASOURCE: Energy Conversion Devices, Inc. CONTACT: Investors, David Pasquale of The Ruth Group, +1-917-921-8031; or Media, Brad Wilks or Mac McNeer of Sard Verbinnen & Co., +1-312-895-4700, all for Energy Conversion Devices, Inc. Web site: http://www.ovonic.com/

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