ENER Accretion Acquisition Corporation

- Company Reaches Profitability ROCHESTER HILLS, Mich., May 8 /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 third quarter and nine-month period ended March 31, 2008. Total consolidated revenues for the quarter were $70 million, up 24 percent from second quarter revenues of $56.4 million, and 155 percent higher than third quarter fiscal 2007 revenues of $27.4 million. Solar product sales were $64.9 million, a 31 percent sequential increase and a 193 percent increase over the prior-year quarter. Net income for the third quarter was $7.0 million, or $0.17 per share, compared to a net loss of $5.4 million, or $0.14 per share, in the second quarter of fiscal 2008, and a net loss of $6.9 million, or $0.17 per share, in the year-ago period. Third quarter results include preproduction costs of approximately $751,000 and restructuring charges of $2.4 million, representing $0.08 per share in the aggregate. Gross margin on product sales in the solar business was 30.7 percent in the third quarter, compared with 19.2 percent in the second quarter. The gross margin improvement was driven by better factory utilization and yield, and favorable customer/product mix. Mark Morelli, ECD's president and chief executive officer, commented, "I'm pleased to report that we've reached profitability, and we've done so through sustainable changes to our business. This is a key milestone in our company's history, and a testament to the commitment and hard work of our colleagues." United Solar Ovonic produced 21.6 MWs in the third quarter and 47.4 MWs for the first nine months of the fiscal year. The company confirmed its plans to expand and add 120MWs of additional nameplate capacity to its existing Greenville facilities. ECD will be able to internally fund this expansion through available funds and cash flow from operations. This previously announced expansion will increase the company's nameplate capacity to approximately 300MWs by the end of fiscal year 2010. "Our focused efforts are achieving tangible results. These include profitability driven by operational improvements, a substantial increase in sustainable gross margin, and $6 million in positive operating cash flow for the fiscal third quarter. Demand for our products continues to exceed available supply, and we are emphasizing take-or-pay agreements which give us better forward visibility, while ensuring supply to our strategic channel partners. These changes have strengthened our current financial position, positioned us for future profitable growth and give us the flexibility to internally fund our new 120MW expansion," added Mr. Morelli. Nine Months Results For the first nine months of fiscal 2008, total consolidated revenues were $173.5 million compared with $77.6 million for the first nine months of fiscal 2007, an increase of 124 percent. Solar product sales totaled $154.5 million in the first nine months of fiscal 2008, a 150 percent increase compared with $61.7 million last year. For the nine-month period, the company reported a net loss of $6 million, or $0.15 per share, compared with the previous nine month's net loss of $12.1 million, or $0.31 per share. Restructuring costs for the first nine months of fiscal 2008 were $7.5 million. Preproduction costs for the year-to-date period were $5.6 million. Fourth Quarter/Fiscal Year 2008 Updated Guidance Total consolidated revenues are expected to be between $73 and $78 million for the fiscal fourth quarter ending June 30, 2008 and between $246 and $251 million for fiscal 2008. Solar product sales for the fourth quarter are expected to be $68 to $73 million, and $222 to $227 million for fiscal 2008. For the fourth quarter, ECD expects it will maintain the 30 to 31 percent gross margin it achieved in the third quarter. Restructuring costs are expected to be between $2 to $3 million for the fourth quarter and $10 to $11 million for fiscal 2008. Preproduction costs are expected to be approximately $1.5 to $2 million for the fourth quarter and between $7 and $8 million for fiscal 2008. Conference Call / Webcast Details Management of Energy Conversion Devices will review these financial results on a conference call on Thursday, May 8, 2008 at 10:00 a.m. ET. The dial-in number for the live audio call is 877-858-2512 or 706-634-6076 (international) with conference ID number 44703161. 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., May 10, 2008, and can be accessed by dialing (800) 642-1687 or (706) 645-9291 (international), with conference ID number 44703161. The webcast will also be archived on the company's website. About Energy Conversion Devices Energy Conversion Devices, Inc. (ECD) (NASDAQ:ENER) is the leader in building integrated and commercial rooftop photovoltaics, one of the fastest growing segments of the solar power industry. The company manufactures and sells thin-film solar laminates that convert sunlight to energy using proprietary technology. ECD's UNI-SOLAR(R) brand products are unique because of their flexibility, light weight, ease of installation, durability, and real-world efficiency. ECD also pioneers other alternative technologies, including a new type of nonvolatile digital memory technology that is significantly faster, less expensive, and ideal for use in a variety of applications including cell phones, digital cameras and personal computers. For more information, please visit http://www.ovonic.com/. This release contains 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 achieve sustainable profitability; our ability to maintain our customer relationships; our ability to expand our manufacturing capacity in a timely and cost-effective manner; the worldwide demand for electricity and the market for solar energy; the supply and price of components and raw materials for our products; and the resolution of pending legal disputes. 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) (Unaudited) Three Months Ended Nine Months Ended March 31, March 31, 2008 2007 2008 2007 Revenues Product Sales $65,366 $23,206 $159,391 $64,731 Royalties 1,537 769 4,044 2,397 Revenue from Product Development Agreements 2,691 2,887 8,490 8,750 Revenue from License Agreements 264 238 1,015 734 Other 124 329 533 947 Total Revenues 69,982 27,429 173,473 77,559 Expenses Cost of Product Sales 45,296 19,787 122,109 54,122 Cost of Revenues from Product Development Agreements 1,863 2,012 5,391 5,726 Product Development and Research 1,653 5,671 7,698 15,338 Preproduction Costs 751 491 5,575 1,595 Operating, Selling, General and Administrative (Net) (Including Patents) 12,461 10,448 37,082 26,977 Restructuring Charges 2,386 - 7,457 - Total Expenses 64,410 38,409 185,312 103,758 Income (Loss) from Operations 5,572 (10,980) (11,839) (26,199) Total Other Income 1,439 4,109 5,914 14,113 Net Income (Loss) before Income Taxes 7,011 (6,871) (5,925) (12,086) Income Taxes 37 - 94 - Net Income (Loss) $6,974 $(6,871) $(6,019) $(12,086) Basic Net Income (Loss) Per Share $.17 $(.17) $(.15) $(.31) Diluted Net Income (Loss) Per Share $.17 $(.17) $(.15) $(.31) Shares Used In Calculation of Net Loss Per Share Basic 40,317 39,517 40,100 39,295 Diluted 40,719 39,517 40,100 39,295 Non-GAAP Financial Measures To supplement its financial statements presented in accordance with Generally Accepted Accounting Principles (GAAP) ECD uses the following measures (unaudited) as defined by the Securities and Exchange Commission as non-GAAP measures: Three Months Ended Nine Months Ended March 31, March 31, 2008 2007 2008 2007 (In Thousands Except Per Share Data) Net Income (Loss) $6,974 $(6,871) $(6,019) $(12,086) Add: - Preproduction Costs 751 491 5,575 1,595 - Restructuring Charges 2,386 - 7,457 - Net Income (Loss) as Adjusted (Non-GAAP) $10,111 $(6,380) $7,013 $(10,491) Net Income (Loss) (Basic and Fully Diluted) Per Share as Reported $.17 $(.17) $(.15) $(.31) Net Income (Loss) (Basic and Fully Diluted) Per Share as Adjusted (Non-GAAP) $.25 $(.16) $.17 $(.27) ENERGY CONVERSION DEVICES INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands) March 31, 2008 June 30, 2007 (Unaudited) ASSETS Cash and Cash Equivalents $80,690 $80,770 Restricted Investments 5,659 - Short-Term Investments 14,963 125,004 Accounts Receivable (Net) 44,204 36,498 Inventories 32,232 38,692 Assets Held for Sale 1,539 1,524 Property, Plant and Equipment (Net) 384,583 311,369 Other 41,274 6,822 TOTAL ASSETS $605,144 $600,679 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Other Liabilities $47,166 $42,940 Long-Term Liabilities 31,499 32,232 TOTAL LIABILITIES 78,665 75,172 STOCKHOLDERS' EQUITY 526,479 525,507 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $605,144 $600,679 ENERGY CONVERSION DEVICES INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Nine Months Ended March 31, 2008 2007 OPERATING ACTIVITIES: Net Loss $(6,019) $(12,086) Adjustments to Reconcile Net Loss to Net Cash Provided By (Used In) Operating Activities: Depreciation and Amortization 15,059 8,258 Bad Debt and Other Expenses 734 (55) Amortization of Premium (Discount) on Investments - (146) Allowance for Slow-Moving Inventory 1,793 1,421 Restructuring Charge 1,019 - Stock and Stock Options Issued for Services Rendered 1,506 1,455 Other (359) (1,478) Changes in Working Capital (1,064) 1,299 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 12,669 (1,332) INVESTING ACTIVITIES: Increase in Restricted Investment (5,659) - Purchases of Property, Plant and Equipment (Including Construction in Progress) (Net) (88,375) (139,420) Proceeds from Sale of Investments 75,379 21,504 Payment to Ovonyx - (200) NET CASH USED IN INVESTING ACTIVITIES (18,655) (118,116) NET CASH PROVIDED BY FINANCING ACTIVITIES 5,971 8,308 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (65) (18) NET CASH FLOW (80) (111,158) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 80,770 164,962 CASH AND CASH EQUIVALENTS AT END OF PERIOD $80,690 $53,804 ENERGY CONVERSION DEVICES INC. AND SUBSIDIARIES SEGMENT REVENUE AND OPERATING INCOME/(LOSS) (In Thousands) (Unaudited) Three Months Ended March 31, 2008 2007 2008 2007 Revenues Income (Loss) from Operations United Solar Ovonic $66,736 $23,841 $13,735 $518 Ovonic Materials 3,178 3,442 940 (4,185) Corporate Activities 253 291 (9,175) (6,796) Consolidating Entries (185) (145) 72 (517) Consolidated $69,982 $27,429 $5,572 $(10,980) Nine Months Ended March 31, 2008 2007 2008 2007 Revenues Income (Loss) from Operations United Solar Ovonic $160,343 $66,895 $15,352 $2,870 Ovonic Materials 12,840 10,263 639 (10,957) Corporate Activities 797 890 (27,983) (16,527) Consolidating Entries (507) (489) 154 (1,585) Consolidated $173,473 $77,559 $(11,838) $(26,199) Segment Operations - United Solar Ovonic (In Thousands) (Unaudited) Three Months Ended Nine Months Ended March 31, March 31, 2008 2007 2008 2007 PV Product Sales $64,941 $22,143 $154,538 $61,715 Megawatts Produced 21.6 8.8 47.4 21.8 Megawatts Shipped 21.5 7.4 51.4 19.2 Cost of Product Sales $45,021 $18,303 $117,846 $50,298 Gross Margin $19,920 $3,840 $36,692 $11,417 Gross Margin % 30.7% 17.3% 23.7% 18.5% Other Revenues: Research and Development $1,795 $1,696 $5,805 $5,174 Other Operating Revenues - 2 - 6 Other Revenues Total 1,795 1,698 5,805 5,180 Total Revenues 66,736 23,841 160,343 66,895 Other Expenses: Research and Development 1,943 1,945 6,314 4,793 Preproduction 751 491 5,574 1,595 Operating, Selling, General and Administrative Expenses 5,286 2,584 15,257 7,339 Total Other Expenses 7,980 5,020 27,145 13,727 Income from Operations $13,735 $518 $15,352 $2,870 Segment Operations - Ovonic Materials (In Thousands) (Unaudited) Three Months Ended Nine Months Ended March 31, March 31, 2008 2007 2008 2007 Product Sales $425 $1,063 $4,872 $3,016 Cost of Product Sales 356 1,098 4,519 2,674 Other Revenues: Royalties 1,537 769 4,044 2,397 Research and Development 896 1,194 2,684 3,596 Licenses 264 238 1,015 734 Other Operating Revenues 56 178 225 520 Other Revenues Total 2,753 2,379 7,968 7,247 Total Revenues 3,178 3,442 12,840 10,263 Other Expenses: Research and Development 1,573 5,740 6,776 16,289 Operating, General and Administrative Expenses 309 789 906 2,257 Total Other Expenses 1,882 6,529 7,682 18,546 Income (Loss) from Operations $940 $(4,185) $639 $(10,957) Segment Operations - Corporate Activities (In Thousands) (Unaudited) Three Months Ended Nine Months Ended March 31, March 31, 2008 2007 2008 2007 Other Operating Revenues $253 $291 $797 $890 Other Expenses: Restructuring 2,386 - 7,457 - Operating, General and Administrative Expenses 7,042 7,087 21,323 17,417 Total Expenses 9,428 7,087 28,780 17,417 Loss from Operations $(9,175) $(6,796) $(27,983) $(16,527) DATASOURCE: Energy Conversion Devices, Inc. CONTACT: Mark Trinske, Vice President, Investor Relations & Corporate Communications, Energy Conversion Devices, Inc., +1-248-299-6063 Web site: http://www.ovonic.com/

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