ENER Accretion Acquisition Corporation

- Operating Profitability Achieved in Second Half, Solar Gross Margin Sustained at 30+ Percent ROCHESTER HILLS, Mich., Aug. 28 /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 fourth quarter and fiscal year ended June 30, 2008. Total consolidated revenues for the quarter were $82.4 million, up 18 percent from third quarter revenues of $70.0 million, and 129 percent higher than fourth quarter fiscal 2007 revenues of $36.0 million. Solar product sales were $77 million, a 19 percent sequential increase and a 161 percent increase over the prior-year quarter. Net income for the fourth quarter was $9.9 million, or $0.24 per share, compared to net income of $7.0 million, or $0.17 per share, in the third quarter of fiscal 2008, and a net loss of $13.1 million, or $0.33 per share, in the year-ago period. Gross margin on product sales in the solar business was 33.5 percent in the fourth quarter, compared with 30.7 percent in the third quarter. United Solar Ovonic produced 26.2 MWs in the fourth quarter and 73.6 MWs for the fiscal year. As of June 30, 2008, the solar product sales pipeline was $1.8 billion, as compared to $1.2 billion at the end of the fiscal third quarter. Mark Morelli, ECD's president and chief executive officer, said, "During fiscal 2008, we focused on operational excellence, and successfully built a strong foundation for sustained long-term growth. For example, fourth quarter solar gross margin improved to 33.5 percent compared with 15.8 percent last year. SG&A as a percent of revenue in the fourth quarter declined to 16.9 percent from 30.8 percent a year ago. As a result, we achieved profitability from operations for the second half of fiscal 2008." Mr. Morelli added, "Fiscal 2008 marked a major transition in ECD's history, as the company generated positive operating cash flow of $28.5 million during the year, a significant improvement from the negative $21.8 million in fiscal 2007. We also completed an important capital raise that will allow us to fund our expansion to 1GW of capacity by the end of fiscal 2012. The selection of UNI-SOLAR to power the world's largest rooftop solar installation validates our continued success at selling UNI-SOLAR's differentiated value proposition into new and expanding markets and distribution channels in the rooftop and building-integrated PV markets. I am confident that our growth and momentum will continue into fiscal 2009 and beyond." Fiscal Year Results For fiscal 2008, total consolidated revenues were $255.9 million compared with $113.6 million for fiscal 2007, an increase of 125 percent. Solar product sales totaled $231.5 million in fiscal 2008, a 154 percent increase compared with $91.2 million last year. For fiscal 2008, the company reported net income of $3.9 million, or $0.10 per share, compared to a net loss of $25.2 million, or $0.64 per share in fiscal 2007. The company's cash, cash equivalents, and short-term investments totaled approximately $500 million at the end of the fiscal year, reflecting the net proceeds of $405 million from the issuance of the company's convertible senior notes and common stock in June 2008. Common shares outstanding at June 30, 2008 were 45,575,554, however, as the company loaned 3,444,975 shares of its common stock to Credit Suisse International, pursuant to a share lending agreement, the shares used for the calculation of shares outstanding for the full year were 40,231,379 for basic and 41,137,849 for diluted shares. First Quarter and Fiscal Year 2009 Guidance Total consolidated revenues are expected to be between $95 and $98 million for the fiscal first quarter ending September 30, 2008, and between $455 and $485 million for fiscal 2009. Solar product sales for the first quarter are expected to be $89 to $91 million and $430 to $450 million for fiscal 2009. For the first quarter, gross margin is expected to be about 31 percent, and between 33 and 35 percent for the second half of the fiscal year. Restructuring costs are expected to be between $1.7 and $2.0 million for the first quarter and $2.5 to $3.0 million for fiscal 2009. Preproduction costs are expected to be between $1.5 and $1.9 million for the first quarter and between $7.0 and $9.0 million for fiscal 2009. Conference Call / Webcast Details Management of Energy Conversion Devices will review these financial results on a conference call on Thursday, August 28, 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 60981223. 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., September 1, 2008, and can be accessed by dialing (800) 642-1687 or (706) 645-9291 (international), with conference ID number 60981223. 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) Quarter Ended Year Ended June 30, June 30, 2008 2007 2008 2007 Revenues Product Sales $77,800 $31,284 $237,191 $96,014 Royalties 1,262 926 5,306 3,323 Revenue from Product Development Agreements 2,950 3,184 11,440 11,934 Revenue from License Agreements 238 313 1,253 1,047 Other 138 302 671 1,249 Total Revenues 82,388 36,009 255,861 113,567 Expenses Cost of Product Sales 51,966 27,119 174,075 81,241 Cost of Revenues from Product Development Agreements 1,865 2,146 7,257 7,685 Product Development and Research Expenses 2,207 4,220 9,905 19,745 Preproduction Costs 1,346 2,019 6,920 3,614 Selling, General and Administrative (Net) (Including Patents) 15,287(1) 11,422(2) 52,369(1) 38,399(2) Restructuring Charges 1,940 5,385 9,396 5,385 Total Expenses 74,611 52,311 259,922 156,069 Income (Loss) from Operations 7,777 (16,302) (4,061) (42,502) Other Income (Expense) Interest Income 981 3,168 7,019 17,543 Other (99) (2) (165) (2) Other Nonoperating Income (Expense) 1,274 (9) 1,216 (270) Total Other Income 2,156 3,157 8,070 17,271 Net Income (Loss) before Income Taxes 9,933 (13,145) 4,009 (25,231) Income Taxes 61 - 156 - Net Income (Loss) $9,872 $(13,145) $3,853 $(25,231) Basic Net Income (Loss) Per Share $.24 $(.33) $.10 $(.64) Diluted Net Income (Loss) Per Share $.24 $(.33) $.09 $(.64) Shares Used in Calculation of Net Income(Loss) Per Share(3): Basic 40,666 39,655 40,231 39,389 Diluted 41,525 39,655 41,138 39,389 (1) Includes net loss on disposal of property, plant and equipment of $1,330 for the fourth quarter and $1,116 for the full year (2) Includes net loss on disposal of property, plant and equipment of $318 for both periods (3) Excludes for 2008 the effect of the 3.4 million shares loaned pursuant to the share lending agreement. 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: Quarter Ended Year Ended June 30, June 30, 2008 2007 2008 2007 (In Thousands Except Per Share Data) Net Income (Loss) $9,872 $(13,145) $3,853 $(25,231) Add: - Preproduction Costs 1,346 2,019 6,920 3,614 - Restructuring Charges 1,940 5,385 9,396 5,385 Net Income (Loss) as Adjusted (Non-GAAP) $13,158 $(5,741) $20,169 $(16,232) Net Income (Loss) (Basic) Per Share as Reported $.24 $(.33) $.10 $(.64) Net Income (Loss) (Diluted) Per Share as Reported $.24 $(.33) $.09 $(.64) Net Income (Loss) (Basic) Per Share as Adjusted (Non-GAAP) $.32 $(.14) $.50 $(.41) Net Income (Loss) (Diluted) Per Share as Adjusted (Non-GAAP) $.32 $(.14) $.49 $(.41) ENERGY CONVERSION DEVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands) Year Ended June 30, 2008 2007 ASSETS Cash and Cash Equivalents $484,492 $80,770 Short-Term Investments 14,989 125,004 Accounts Receivable (Net) 53,525 36,498 Inventories 31,337 38,692 Assets Held for Sale 1,539 1,524 Property, Plant and Equipment (Net) 404,119 311,369 Other 51,966 6,822 TOTAL ASSETS $1,041,967 $600,679 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Other Current Liabilities $52,103 $42,940 Long-Term Liabilities 347,952 32,232 TOTAL LIABILITIES 400,055 75,172 STOCKHOLDERS' EQUITY 641,912 525,507 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,041,967 $600,679 ENERGY CONVERSION DEVICES, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CASH FLOWS (In Thousands) Year Ended June 30, 2008 2007 OPERATING ACTIVITIES: Net (Income)Loss $3,853 $(25,231) Adjustments to Reconcile Net Income(Loss) to Net Cash Used In Operating Activities: Depreciation and Amortization 21,917 12,170 Bad Debt 868 10 Amortization of Premium (Discount) on Investments 1 529 Allowance for Slow-Moving Inventory 2,920 1,348 Restructuring Charge 2,165 107 Stock and Stock Options Issued for Services Rendered 2,010 1,763 Other 989 (1,123) Changes in Working Capital (6,213) (11,387) NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 28,510 (21,814) INVESTING ACTIVITIES: Purchases of Property, Plant and Equipment (Including Construction in Progress) (Net) (117,047) (186,988) Proceeds from Sale of Investments 75,379 113,975 Payment to Ovonyx - (200) NET CASH USED IN INVESTING ACTIVITIES (41,668) (73,213) NET CASH PROVIDED BY FINANCING ACTIVITIES 417,247(1) 11,016 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (368) (181) NET CASH FLOW 403,721 (84,192) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 80,770 164,962 CASH AND CASH EQUIVALENTS AT END OF PERIOD $484,491 $80,770 (1) Primarily $405 million capital raise in June 2008. ENERGY CONVERSION DEVICES, INC. AND SUBSIDIARIES SEGMENT REVENUE AND OPERATING INCOME/(LOSS) (In Thousands) Quarter Ended June 30, 2008 2007 2008 2007 Revenues Income (Loss) from Operations United Solar Ovonic $79,055 $31,468 $16,292 $(908) Ovonic Materials(1) 3,226 4,372 260 (2,749) Corporate Activities(2) 242 257 (8,833) (12,242) Consolidating Entries (135) (88) 58 (403) Consolidated $82,388 $36,009 $7,777 $(16,302) Year Ended June 30, 2008 2007 2008 2007 Revenues Income (Loss) from Operations United Solar Ovonic $239,398 $98,363 $31,644 $1,962 Ovonic Materials(1) 16,066 14,635 899 (13,706) Corporate Activities(2) 1,039 1,147 (36,816) (28,769) Consolidating Entries (642) (578) 212 (1,989) Consolidated $255,861 $113,567 $(4,061) $(42,502) (1) Excludes discontinued operations. (2) Revenues consist primarily of services, facilities and miscellaneous administrative and laboratory and machine shop services provided to certain affiliates; expense primarily includes corporate operations, including facilities, human resources, legal, finance, information technology, business development, purchasing and restructuring. The loss from operations includes restructuring costs of $5.4 million in fiscal 2007 for the first phase of the Company's restructuring plan and $9.4 million in fiscal 2008. Segment Operations - United Solar Ovonic (In Thousands) Three Months Ended Year Ended June 30, June 30, 2008 2007 2008 2007 PV Product Sales $76,981 $29,467 $231,519 $91,182 Megawatts Produced 26.2 10.7 73.6 32.5 Megawatts Shipped 25.7 10.1 77.1 29.3 Cost of Product Sales $51,169 $24,798 $169,015 $75,096 Gross Margin $25,812 $4,669 $62,504 $16,086 Gross Margin % 33.5% 15.8% 27.0% 17.6% Other Revenues: Research and Development $2,074 $2,000 $7,879 $7,174 Other Operating Revenues - 1 - 7 Other Revenues Total 2,074 2,001 7,879 7,181 Total Revenues 79,055 31,468 239,398 98,363 Other Expenses: Cost of Revenues from Product Development Agreements 1,347 1,002 4,938 2,922 Product Development and Research Expenses 927 864 3,650 3,737 Preproduction 1,346 2,019 6,920 3,614 Selling, General and Administrative Expenses 7,974(1) 3,693(2) 23,231(1) 11,032(2) Total Other Expenses 11,594 7,578 38,739 21,305 Income (Loss) from Operations $16,292 $(908) $31,644 $1,962 (1) Includes net loss on disposal of property, plant and equipment of $1,296 for both periods. (2) Includes net loss on disposal of property, plant and equipment of $319 for both periods. Segment Operations - Ovonic Materials (In Thousands) Three Months Ended Year Ended June 30, June 30, 2008 2007 2008 2007 Product Sales $818 $1,816 $5,690 $4,832 Cost of Product Sales 855 1,992 5,374 4,666 Other Revenues: Royalties 1,262 926 5,306 3,323 Research and Development 876 1,184 3,560 4,780 Licenses 238 313 1,253 1,047 Other Operating Revenues 32 133 257 653 Other Revenues Total 2,408 2,556 10,376 9,803 Total Revenues 3,226 4,372 16,066 14,635 Other Expenses: Cost of Revenues from Product Development Agreements 518 1,144 2,318 4,783 Product Development and Research Expenses 1,280 3,357 6,256 16,007 Operating, General and Administrative Expenses 313 628 1,219 2,885 Total Other Expenses 2,111 5,129 9,793 23,675 Income (Loss) from Operations $260 $(2,749) $899 $(13,706) Segment Operations - Corporate Activities (In Thousands) Three Months Ended Year Ended June 30, June 30, 2008 2007 2008 2007 Other Operating Revenues $242 $257 $1,039 $1,147 Other Expenses: Restructuring 1,939 5,385 9,396 5,385 Operating, General and Administrative Expenses 7,136 7,114 28,459 24,531 Total Expenses 9,075 12,499 37,855 29,916 Loss from Operations $(8,833) $(12,242) $(36,816) $(28,769) DATASOURCE: Energy Conversion Devices, Inc. CONTACT: Mark Trinske, Vice President, Investor Relations & Communications of Energy Conversion Devices, Inc., +1-248-299-6063 Web site: http://www.ovonic.com/

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