Table of Contents
ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE L – Restructuring Charges (Continued)
In addition, as part of the restructuring, the Company will no longer be using its Wafer Lab equipment. This equipment, with a net book value of approximately $1,539,000, is currently classified as
Assets Held for Sale
and the Company is in negotiations with interested parties for the sale of this equipment at a
sale price of more than the net book value of this equipment.
Restructuring costs are expected to be between $2,500,000 to $3,000,000 for fiscal 2009.
NOTE M – Common Stock
Prior to September 30, 2005, ECD had three classes of stock as follows: Class A Convertible Common Stock, which was entitled to 25 votes per share; Class B Convertible Common Stock and Common Stock, each entitled to one vote per share.
On September 30, 2005, in accordance with the applicable agreement, 100% of the convertible stock (219,913 shares of Class A Convertible Stock and 430,000 shares of Class B Convertible Stock) were converted into Common Stock on a share-for-share basis.
In March 2006, ECD sold 8,050,000 shares of common stock in connection with a public offering, including an over-allotment option exercised by the underwriters, and received net proceeds of approximately $360,854,000. Of the 8,050,000 shares, 383,072 shares were sold by certain officers and directors for which ECD did not receive any proceeds other than the
aggregate option exercise price of approximately $4,668,000. Immediately following the completion of the offering, each of the directors and officers owned shares equal to or greater than the number of shares owned prior to the public offering.
In June 2008, in conjunction with the offering of the Convertible Senior Notes, ECD sold 1,460,500 shares of common stock in a public offering. This included the over-allotment option exercised by the underwriters. We received net proceeds of approximately $99,372,000.
As part of the agreement for the Convertible Senior Notes issued in June 2008, the Company also issued 3,444,975 shares as part of a “share-lending” arrangement with the underwriter. The purpose of the share-lending agreement is to facilitate transactions which allow the investors in the Convertible Senior Notes to hedge their investments in the
notes.
The underwriter received all proceeds from any sale of shares pursuant to the share lending agreement. The underwriter provided ECD collateral equal to the par value of the common stock. The shares must be returned to ECD no later than the maturity date of the Convertible Senior Notes. These shares are considered issued and outstanding and have all the rights of any
holder of the Company’s common stock. However, because the shares must be returned to the Company, the shares are not considered outstanding for the purposes of calculating earnings per share.
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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE M – Common Stock (Continued)
During the years ended June 30, 2008, 2007 and 2006, ECD issued 19,266, 6,425 and 1,440 shares of restricted Common Stock, respectively, as compensation to directors. ECD recorded compensation expense, based upon the fair market value of these shares at the date of issuance, for the years ended June 30, 2008, 2007 and 2006 of approximately $59,000,
$242,000 and $60,000, respectively, related to these restricted shares of Common Stock.
NOTE N – Stock Option Plans, Warrants and Other Rights to Purchase Stock
ECD has Common Stock reserved for issuance as follows:
|
Number of Shares
|
|
June 30, 2008
|
|
June 30, 2007
|
Stock options
|
|
1,692,968
|
|
|
|
2,568,747
|
|
Warrants
|
|
400,000
|
|
|
|
400,000
|
|
Convertible Investment Certificates
|
|
5,210
|
|
|
|
5,210
|
|
TOTAL RESERVED SHARES
|
|
2,098,178
|
|
|
|
2,973,957
|
|
Stock Plans
ECD has three stockholder-approved plans: the 1995 Non-Qualified Stock Option Plan (the “1995 Plan”) pursuant to which 2,000,000 shares were reserved for grants; the 2000 Non-Qualified Stock Option Plan (the “2000 Plan”) pursuant to which 3,000,000 shares were reserved for grants; and the 2006 Stock Incentive Plan (the “2006
Plan”) pursuant to which 1,000,000 shares are reserved for grants. ECD issues authorized but previously unissued shares upon the exercise of stock options, the granting of restricted stock (RSAs) and the redemption of restricted stock units (RSUs).
The 1995 Plan expired on January 26, 2005 and no additional grants will be made under this Plan. Effective November 14, 2006, the date ECD stockholders approved the 2006 Stock Incentive Plan, ECD will not grant any additional options under the 2000 Plan. There are still outstanding options under each of these plans.
The 2006 Plan authorizes the grant of stock options, including nonqualified and incentive options, stock appreciation rights, restricted stock awards, restricted stock units, performance shares and performance units to officers, other employees, nonemployee directors, consultants, advisors, independent contractors and agents of ECD and its subsidiaries. The
Committee will determine the period during which an option may be exercised and the terms relating to the exercise or cancellation of an option upon a termination of employment or service, but no option
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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE N – Stock Option Plans, Warrants and Other Rights to Purchase Stock (Continued)
shall fully vest in less than four years, with no more than 40% vesting in the first year following the award, no more than a total of 60% of the option vesting by the end of the second year following the award and no more than a total of 80% of the option vesting by the end of the third year following the award. Each option will be exercisable for no more than 10 years after its date
of grant, except that an incentive option granted to a participant owning more than 10% of ECD’s voting shares will be exercisable for no more than five years after its date of grant.
Total net stock-based compensation expense is attributable to the granting of and the remaining requisite service periods of stock options previously granted.
In June 2008, 30,000 shares of restricted stock awards issued to the Company’s CEO became fully vested in accordance with the terms and conditions of this award. This accelerated vesting resulted in an additional expense of $584,000.
As of June 30, 2008, the total unrecognized compensation cost related to nonvested stock options, restricted stock awards and restricted stock units was as follows:
|
|
|
Weighted average period
to be recognized
|
Nonvested Stock Options
|
$
|
2,024,716
|
|
1.58 years
|
|
Nonvested Restricted Stock Awards
|
|
2,186,064
|
|
2.70 years
|
|
Nonvested Restricted Stock Units
|
|
184,100
|
|
3.00 years
|
|
|
$
|
4,394,880
|
|
|
|
Stock Options
A summary of the transactions during the fiscal years 2008, 2007 and 2006 with respect to ECD’s 1995, 2000 and 2006 Plans follows:
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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE N – Stock Option Plans, Warrants and Other Rights to Purchase Stock (Continued)
|
Shares
|
|
Weighted-Average Exercise Price
|
|
Aggregate Intrinsic Value
(1)
|
|
Weighted-Average
Contractual Life
Remaining in Years
|
Outstanding at June 30, 2005
|
2,268,635
|
|
|
|
$
|
19.23
|
|
|
|
$
|
7,520,259
|
|
|
|
|
|
6.15
|
|
|
Granted
|
36,748
|
|
|
|
$
|
43.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
(897,895
|
)
|
|
|
$
|
19.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired
|
(54,800
|
)
|
|
|
$
|
15.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
(3,425
|
)
|
|
|
$
|
12.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2006
|
1,349,263
|
|
|
|
$
|
19.63
|
|
|
|
$
|
22,935,128
|
|
|
|
|
|
6.10
|
|
|
Granted
|
15,000
|
|
|
|
$
|
32.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
(381,623
|
)
|
|
|
$
|
18.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired
|
(1,500
|
)
|
|
|
$
|
11.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
(14,300
|
)
|
|
|
$
|
26.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2007
|
966,840
|
|
|
|
$
|
20.05
|
|
|
|
$
|
10,901,717
|
|
|
|
|
|
4.86
|
|
|
Granted
|
149,000
|
|
|
|
$
|
31.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
(238,644
|
)
|
|
|
$
|
18.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired
|
(1,410
|
)
|
|
|
$
|
35.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
(1,200
|
)
|
|
|
$
|
50.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2008
|
874,586
|
|
|
|
$
|
22.33
|
|
|
|
$
|
44,875,113
|
|
|
|
|
|
5.20
|
|
|
(1)
|
The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option.
|
The table below sets forth stock options exercisable during the three years ended June 30, 2008, 2007 and 2006:
|
Shares
|
|
Weighted-Average Exercise Price
|
|
Aggregate Intrinsic Value
(1)
|
|
Weighted-Average
Contractual Life
Remaining in Years
|
Exercisable at June 30, 2006
|
1,013,245
|
|
|
|
$
|
19.86
|
|
|
|
$
|
16,789,349
|
|
|
|
|
|
5.44
|
|
|
Exercisable at June 30, 2007
|
858,542
|
|
|
|
$
|
19.48
|
|
|
|
$
|
9,923,559
|
|
|
|
|
|
4.46
|
|
|
Exercisable at June 30, 2008
|
711,110
|
|
|
|
$
|
20.08
|
|
|
|
$
|
38,085,251
|
|
|
|
|
|
4.26
|
|
|
(1)
|
The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option.
|
83
Table of Contents
ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE N – Stock Option Plans, Warrants and Other Rights to Purchase Stock (Continued)
The weighted average grant date fair value per option granted and the total intrinsic value of stock options exercised during the fiscal years ended June 30, 2008 and 2007 were as follows:
|
Year Ended June 30,
|
|
|
2008
|
|
2007
|
|
2006
|
|
Weighted average grant date fair value per option granted
|
$
|
19.19
|
|
$
|
22.03
|
|
$
|
29.61
|
|
Total intrinsic value of stock options exercised
|
$
|
13,843,891
|
|
$
|
13,730,024
|
|
$
|
17,857,237
|
|
Restricted Stock Awards
Restricted stock awards (“RSAs”) consist of shares of common stock of ECD issued at a price of $0. Upon issuance, RSAs become outstanding and have voting rights. The shares issued to employees are subject to forfeiture and to restrictions which limit the sale or transfer during the restriction period. The fair value of the RSAs is determined on the date
of grant based on the market price of ECD’s common stock and is recognized as compensation expense. The value of RSAs granted to employees is amortized over their three-year vesting period, while the value of RSAs granted to nonemployee directors is amortized over a two- to nine-year vesting period. Information concerning RSAs awarded under the 2006 Stock Incentive Plan during fiscal 2008, fiscal 2007 and fiscal 2006 is as follows:
|
Number of Shares
|
|
Weighted Average
Grant Date Fair Value
|
Outstanding at June 30, 2006
|
|
—
|
|
|
|
|
|
—
|
|
|
Awarded
|
|
23,352
|
|
|
|
|
$
|
35.92
|
|
|
Outstanding at June 30, 2007
|
|
23,352
|
|
|
|
|
$
|
35.92
|
|
|
Awarded
|
|
99,266
|
|
|
|
|
$
|
28.88
|
|
|
Released
|
|
(32,784
|
)
|
|
|
|
$
|
26.76
|
|
|
Outstanding at June 30, 2008
|
|
89,834
|
|
|
|
|
$
|
31.49
|
|
|
Restricted Stock Units
On June 30, 2008, the Compensation Committee of the Board of Directors approved the grant of 2,500 restricted stock units (RSUs) to Mark D. Morelli, the Company’s president and CEO. The RSUs settle on a one-for-one basis in shares of ECD common stock and vest on June 3, 2011,
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Table of Contents
ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE N – Stock Option Plans, Warrants and Other Rights to Purchase Stock (Continued)
subject to early vesting in accordance with the terms of the 2006 Stock Incentive Plan or the Executive Severance Plan, as applicable. The aggregate intrinsic value of the RSUs is $184,100.
The following is a summary of the transactions during the fiscal years ended June 30, 2008, 2007 and 2006 with respect to the Stock Option Agreements between ECD and Stanford R. Ovshinsky and Dr. Iris M. Ovshinsky dated November 18, 1993. Upon the death of Dr. Ovshinsky in August 2006, and pursuant to the terms of the Stock Option Agreements and the
Company’s stock option plans, options owned by Dr. Ovshinsky were transferred to her estate, of which Mr. Ovshinsky is the executor.
|
Shares
|
|
Weighted-Average Exercise Price
|
|
Aggregate Intrinsic Value
(1)
|
|
Weighted-Average Contractual Life Remaining in Years
|
Outstanding and exercisable
at June 30, 2005
|
|
870,731
|
|
|
|
$
|
14.99
|
|
|
|
$
|
6,439,038
|
|
|
|
|
(2
|
)
|
|
Exercised
|
|
(218,572
|
)
|
|
|
$
|
7.01
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding and exercisable
at June 30, 2006
|
|
652,159
|
|
|
|
$
|
17.66
|
|
|
|
$
|
12,241,480
|
|
|
|
|
(2
|
)
|
|
Exercised
|
|
(206,900
|
)
|
|
|
$
|
16.38
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding and exercisable
at June 30, 2007
|
|
445,259
|
|
|
|
$
|
18.25
|
|
|
|
$
|
5,595,637
|
|
|
|
|
(2
|
)
|
|
Exercised
|
|
(445,259
|
)
|
|
|
$
|
18.25
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding and exercisable
at June 30, 2008
|
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
(1)
|
The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option.
|
|
(2)
|
According to the terms of the Stock Option Agreements, the expiration date of the options was 12 months after termination of employment other than voluntary termination. Upon Mr. Ovshinsky’s retirement effective August 31, 2007, the shares owned by him were exercisable through August 31, 2008. The shares owned by the estate of
Dr. Ovshinsky were exercisable through August 16, 2008.
|
The following is a summary of the transactions during the fiscal years ended June 30, 2008, 2007 and 2006 with respect to the Stock Option Agreement between Robert C. Stempel and ECD entered into in January 1999:
85
Table of Contents
ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE N – Stock Option Plans, Warrants and Other Rights to Purchase Stock (Continued)
|
Shares
|
|
Weighted-Average Exercise Price
|
|
Aggregate Intrinsic Value
(1)
|
|
Weighted-Average Contractual Life Remaining in Years
|
Outstanding and exercisable
at June 30, 2005
|
|
300,000
|
|
|
|
$
|
10.688
|
|
|
|
$
|
3,507,600
|
|
|
|
3.55
|
|
|
|
Outstanding and exercisable
at June 30, 2006
|
|
300,000
|
|
|
|
$
|
10.688
|
|
|
|
$
|
7,722,600
|
|
|
|
2.55
|
|
|
|
Exercised
|
|
(120,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding and exercisable
at June 30, 2007
|
|
180,000
|
|
|
|
$
|
10.688
|
|
|
|
$
|
3,623,760
|
|
|
|
1.55
|
|
|
|
Exercised
|
|
(90,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding and exercisable
at June 30, 2008
|
|
90,000
|
|
|
|
$
|
10.688
|
|
|
|
$
|
5,665,680
|
|
|
|
0.54
|
|
|
|
(1)
|
The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option.
|
As of June 30, 2008 and June 30, 2007, there were 246,000 and 338,000, respectively, nonvested shares of restricted stock pursuant to a Restricted Stock Agreement dated January 19, 1999, and amended as of September 22, 2005, between Mr. Stempel and ECD with a weighted average grant date fair value of approximately $2,629,248 and $3,612,544,
respectively. The vesting schedule provides for quarterly vesting of 23,000 shares at the beginning of each quarter commencing July 1, 2006 through October 1, 2010 with 16,000 shares vesting on December 31, 2010.
Warrants
As of June 30, 2008 and 2007, ECD had outstanding a warrant for the purchase of 400,000 shares of Common Stock granted pursuant to a Common Stock Warrant Agreement entered into in March 2000. This warrant is exercisable on or prior to March 10, 2010 at $22.93 per share.
In connection with the sale of units in fiscal year 2004, ECD issued warrants to purchase 3,266,254 shares of Common Stock to three institutional investors and a warrant to purchase 90,481 shares of Common Stock to the placement agent. Each warrant gave the holder the right to purchase a share of ECD Common Stock for $13.96, if exercised on or prior to May 2,
2005, and for $16.03, if exercised at any time thereafter but prior to October 31, 2006. As a result of the exercise of the warrants by the warrantholders, ECD received $22,296,000 in fiscal 2006.
86
Table of Contents
ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE O – Income Taxes
In the first quarter of fiscal 2008, the Company adopted FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty for Income Taxes – an interpretation of FASB Statement No. 109.” FIN 48 prescribes a recognition threshold and measurement methodology for recording within the financial statements uncertain tax positions taken, or
expected to be taken, in tax returns. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure related to uncertain tax positions. The cumulative effect of implementing FIN 48 as of July 1, 2007 was zero. The Company has no unrecognized tax benefits at this time.
The Company files U.S. federal, state and foreign income tax returns. Due to its net operating loss carryforwards, federal income tax returns from fiscal 1993 forward are still subject to examination. In addition, open tax years related to various state and foreign jurisdictions remain subject to examination.
The Company accounts for income taxes using the asset and liability approach. Deferred income taxes are provided for the differences between the tax bases of assets or liabilities and their reported amounts in the financial statements. This method also requires the recognition of future tax benefits, such as net operating loss carryforwards, to the extent that
realization of such benefits is more likely than not.
The Company’s income taxes for the year are as follows:
|
June 30, 2008
|
|
|
|
|
|
Federal Income Tax
|
$
|
—
|
|
State Income Tax
|
|
—
|
|
Foreign Income Tax
|
|
155,901
|
|
Total Income Taxes
|
$
|
155,901
|
|
87
Table of Contents
ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE O – Income Taxes (Continued)
Temporary differences and carryforwards that give rise to deferred tax assets and (liabilities) are as follows:
|
June 30,
|
|
|
2008
|
|
2007
|
|
|
(in thousands)
|
|
Deferred tax asset:
|
|
|
|
|
|
|
Basis difference in intangibles
|
$
|
11,510
|
|
$
|
12,557
|
|
Equity losses in subsidiaries
|
|
—
|
|
|
4,107
|
|
NOL carryforwards
|
|
112,592
|
|
|
112,197
|
|
R&D credit carryforwards
|
|
170
|
|
|
211
|
|
AMT credit carryforwards
|
|
1,363
|
|
|
1,363
|
|
All other
|
|
8,870
|
|
|
4,637
|
|
|
|
134,505
|
|
|
135,072
|
|
Deferred tax liability:
|
|
|
|
|
|
|
Basis and depreciation differences of property
|
|
(5,462
|
)
|
|
(5,283
|
)
|
All other
|
|
(286
|
)
|
|
(218
|
)
|
Net deferred tax asset
|
|
128,757
|
|
|
129,571
|
|
Valuation allowance
|
|
(128,757
|
)
|
|
(129,571
|
)
|
Net deferred tax asset
|
$
|
—
|
|
$
|
—
|
|
The Company’s valuation allowance decreased by $814,000 in 2008 and increased by $16,897,000 in 2007. The changes in the valuation allowance are mainly due to net operating losses in 2007 and the expiration of net operating losses in 2008 and primarily comprise the difference between statutory and effective tax rates.
88
Table of Contents
ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE O – Income Taxes (Continued)
At June 30, 2008, the Company’s remaining net tax operating loss carryforwards and tax credit carryforwards expire as follows:
|
Net Tax Operating
Loss Carryforward
|
|
R&D Credit
Carryforward
|
2009
|
|
$
|
11,923,000
|
|
|
|
$
|
30,000
|
|
|
2010
|
|
|
9,313,000
|
|
|
|
|
15,000
|
|
|
2011
|
|
|
6,854,000
|
|
|
|
|
40,000
|
|
|
2012
|
|
|
26,121,000
|
|
|
|
|
14,000
|
|
|
2013
|
|
|
12,447,000
|
|
|
|
|
29,000
|
|
|
2014
|
|
|
7,219,000
|
|
|
|
|
42,000
|
|
|
2015
|
|
|
—
|
|
|
|
|
—
|
|
|
2016
|
|
|
—
|
|
|
|
|
—
|
|
|
2017
|
|
|
—
|
|
|
|
|
—
|
|
|
2018
|
|
|
6,825,000
|
|
|
|
|
—
|
|
|
2019
|
|
|
993,000
|
|
|
|
|
—
|
|
|
2020
|
|
|
10,170,000
|
|
|
|
|
—
|
|
|
2021
|
|
|
4,674,000
|
|
|
|
|
—
|
|
|
2022
|
|
|
22,599,000
|
|
|
|
|
—
|
|
|
2023
|
|
|
36,846,000
|
|
|
|
|
—
|
|
|
2024
|
|
|
67,627,000
|
|
|
|
|
—
|
|
|
2025
|
|
|
—
|
|
|
|
|
—
|
|
|
2026
|
|
|
46,979,000
|
|
|
|
|
—
|
|
|
2027
|
|
|
47,877,000
|
|
|
|
|
—
|
|
|
2028
|
|
|
12,686,000
|
|
|
|
|
—
|
|
|
Total
|
|
$
|
331,153,000
|
|
|
|
$
|
170,000
|
|
|
In addition, the Company has $1,363,000 in Alternative Minimum Tax Credit carryforward that does not expire.
Due to the history of losses and uncertainties, the Company has determined that it is more likely than not that the deferred tax assets will not be recovered through future taxable income. As a result, a valuation reserve has been provided to fully offset deferred tax assets.
89
Table of Contents
ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE P – Business Segments
Effective April 1, 2007, we organized our business into two operating business segments, United Solar Ovonic (including ECD’s previous Production Technology and Machine Building Division) and Ovonic Materials (including ECD’s previous business activities, but excluding Production Technology and Machine Division and Corporate Activities, and Ovonic
Battery’s previous business activities). In addition to these two operating segments, there are certain Corporate Activities, including our investments in our two joint ventures, Cobasys LLC and Ovonyx, Inc., which are not allocated to the above segments.
|
Financial Data
(in thousands)
|
|
United
Solar Ovonic
|
|
Ovonic
Materials
|
|
Corporate
Activities
|
|
Consolidating
Entries
|
|
Consolidated
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2008
|
$
|
239,398
|
|
$
|
16,066
|
|
$
|
1,039
|
|
$
|
(642
|
)
|
$
|
255,861
|
|
Year ended June 30, 2007
|
|
98,363
|
|
|
14,635
|
|
|
1,147
|
|
|
(578
|
)
|
|
113,567
|
|
Year ended June 30, 2006
|
|
87,508
|
|
|
13,451
|
|
|
1,920
|
|
|
(460
|
)
|
|
102,419
|
|
Income (Loss) from Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2008
|
$
|
31,644
|
|
$
|
899
|
|
$
|
(36,816
|
)
|
$
|
212
|
|
$
|
(4,061
|
)
|
Year ended June 30, 2007
|
|
1,962
|
|
|
(13,706
|
)
|
|
(28,769
|
)
|
|
(1,989
|
)
|
|
(42,502
|
)
|
Year ended June 30, 2006
|
|
8,187
|
|
|
(14,819
|
)
|
|
(19,798
|
)
|
|
(791
|
)
|
|
(27,221
|
)
|
Depreciation and Amortization Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2008
|
$
|
20,862
|
|
$
|
330
|
|
$
|
925
|
|
$
|
(200
|
)
|
$
|
21,917
|
|
Year ended June 30, 2007
|
|
10,007
|
|
|
1,478
|
|
|
764
|
|
|
(79
|
)
|
|
12,170
|
|
Year ended June 30, 2006
|
|
5,556
|
|
|
1,429
|
|
|
643
|
|
|
—
|
|
|
7,628
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2008
|
$
|
116,743
|
|
$
|
—
|
|
$
|
590
|
|
$
|
2
|
|
$
|
117,335
|
|
Year ended June 30, 2007
|
|
188,991
|
|
|
440
|
|
|
245
|
|
|
(2,116
|
)
|
|
187,560
|
|
Year ended June 30, 2006
|
|
83,730
|
|
|
1,063
|
|
|
1,236
|
|
|
(848
|
)
|
|
85,181
|
|
Identifiable Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2008
|
$
|
552,618
|
|
$
|
8,469
|
|
$
|
506,284
|
|
$
|
(25,404
|
)
|
$
|
1,041,967
|
|
Year ended June 30, 2007
|
|
404,905
|
|
|
9,383
|
|
|
211,996
|
|
|
(25,605
|
)
|
|
600,679
|
|
Year ended June 30, 2006
|
|
180,217
|
|
|
8,078
|
|
|
460,645
|
|
|
(52,598
|
)
|
|
596,342
|
|
90
Table of Contents
ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE P – Business Segments (Continued)
The following table presents revenues by country based on the location of the customer:
|
Year Ended June 30,
|
|
|
2008
|
|
2007
|
|
2006
|
|
United States
|
$
|
119,424,375
|
|
$
|
52,531,109
|
|
$
|
47,007,251
|
|
Germany
|
|
39,011,959
|
|
|
32,407,135
|
|
|
35,429,666
|
|
France
|
|
32,660,694
|
|
|
381,190
|
|
|
1,066
|
|
Italy
|
|
25,757,956
|
|
|
12,893,260
|
|
|
1,616,256
|
|
South Korea
|
|
17,645,916
|
|
|
102,769
|
|
|
—
|
|
Hong Kong
|
|
6,086,519
|
|
|
3,662,536
|
|
|
2,125,724
|
|
Japan
|
|
5,395,596
|
|
|
3,824,357
|
|
|
4,700,483
|
|
China
|
|
1,693,021
|
|
|
1,889,041
|
|
|
1,507,898
|
|
Other Countries
|
|
8,184,930
|
|
|
5,875,466
|
|
|
10,031,132
|
|
|
$
|
255,860,966
|
|
$
|
113,566,863
|
|
$
|
102,419,476
|
|
The composition of the Company’s property, plant and equipment, net of accumulated depreciation, is principally in the United States as of June 30, 2008, 2007 and 2006.
Sales to SIT represented 23%, 11% and 21% of our product sales in the United Solar segment in the fiscal years ended June 30, 2008, 2007 and 2006, respectively. For the year ended June 30, 2008, sales to Advanced Green Technologies, Inc. (a unit of Advanced Roofing, Inc.) represented 12% of our product sales in the United Solar segment. Biohaus PV Handels
GmbH represented 14% of our product sales in this segment for each of the fiscal years ended June 30, 2007 and 2006. Amounts due from SIT represented 20% and 10% of the accounts receivable in this segment at June 30, 2008 and 2007, respectively. Amounts due from Advanced Green Technologies represented 10% of the accounts receivable in this segment at June 30, 2008.
91
Table of Contents
ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE Q – Quarterly Financial Data (Unaudited)
(In thousands, except for per-share amounts)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total Year
|
|
Year Ended June 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
47,042
|
|
$
|
56,449
|
|
$
|
69,982
|
|
$
|
82,388
|
|
$
|
255,861
|
|
Operating income (loss)
|
$
|
(9,953
|
)
|
$
|
(7,457
|
)
|
$
|
5,572
|
|
$
|
7,777
|
|
$
|
(4,061
|
)
|
Net income (loss)
|
$
|
(7,567
|
)
|
$
|
(5,426
|
)
|
$
|
6,974
|
|
$
|
9,872
|
|
$
|
3,853
|
|
Basic net income (loss) per share
|
$
|
(.19
|
)
|
$
|
(.14
|
)
|
$
|
.17
|
|
$
|
.24
|
|
$
|
.10
|
|
Diluted net income (loss) per share
|
$
|
(.19
|
)
|
$
|
(.14
|
)
|
$
|
.17
|
|
$
|
.24
|
|
$
|
.09
|
|
Year Ended June 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
27,182
|
|
$
|
22,947
|
|
$
|
27,429
|
|
$
|
36,009
|
|
$
|
113,567
|
|
Operating loss
|
$
|
(7,344
|
)
|
$
|
(7,876
|
)
|
$
|
(10,980
|
)
|
$
|
(16,302
|
)
|
$
|
(42,502
|
)
|
Net loss
|
$
|
(2,302
|
)
|
$
|
(2,913
|
)
|
$
|
(6,871
|
)
|
$
|
(13,145
|
)
|
$
|
(25,231
|
)
|
Basic net loss per share
|
$
|
(.06
|
)
|
$
|
(.07
|
)
|
$
|
(.17
|
)
|
$
|
(.33
|
)
|
$
|
(.64
|
)
|
Diluted net loss per share
|
$
|
(.06
|
)
|
$
|
(.07
|
)
|
$
|
(.17
|
)
|
$
|
(.33
|
)
|
$
|
(.64
|
)
|
NOTE R – Litigation
Cobasys
. On September 10, 2007, CTV issued a notice of dispute and filed claims in arbitration against ECD and OBC relating to our Cobasys joint venture. CTV’s original arbitration claim seeks damages and injunctive and other relief and alleges that ECD and OBC breached and anticipatorily repudiated obligations to provide
certain funding to Cobasys under the Amended and Restated Operating Agreement dated as of December 2, 2004 among us, OBC and CTV (the "Operating Agreement"), which governs Cobasys. CTV subsequently filed a supplemental notice of dispute amending its claims to assert that ECD and OBC had dishonored CTV's preferred interest in Cobasys and that OBC had breached its obligation to use diligent efforts to approve a 2008 annual budget for Cobasys. We and OBC have denied CTV’s
allegations and filed a counterclaim, seeking damages and injunctive and other relief on the ground that CTV has been acting unilaterally and in violation of the Operating Agreement and applicable Michigan law in regard to the funding and spending provisions of the Agreement.
We and OBC dispute and have been vigorously defending the claims asserted by CTV and have pursued our counterclaim. In our view, the Operating Agreement is clear that we and OBC have no present obligation to provide funding to Cobasys; OBC is not in default of the Operating Agreement; any future funding obligation would arise only upon unanimous approval by
Cobasys’ members, OBC and CTV, of (i) a 2008 budget and operating plan for Cobasys, and (ii) agreed
92
Table of Contents
ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE R – Litigation (Continued)
capital contributions by the members; and CTV has no right unilaterally to provide funding or to authorize spending by Cobasys without an approved 2008 budget and operating plan, or otherwise as approved by OBC. In our view, the Operating Agreement is also clear that we and OBC have not dishonored CTV’s preferred interests; OBC has an unqualified right to refuse
to sell its interests in Cobasys on terms that it does not consider appropriate; and OBC may determine in its discretion whether to approve any sale of Cobasys or sale of CTV’s interests in Cobasys.
The members of Cobasys have not approved a 2008 business plan and budget, and CTV and OBC have not been able to agree on a solution to Cobasys’ business issues or whether Cobasys should continue as a going concern if it cannot be sold in the near future. Cobasys had losses of approximately $74 million and obtained funding of approximately $84 million in 2007,
and in January 2008 Cobasys management forecast losses of approximately $82-86 million and funding requirements of approximately $92-94 million for 2008. Until September 2007, CTV historically funded Cobasys’ loss-generating operations through the purchase of preferred interests. From October 2007 through January 2008, CTV declined to purchase preferred interests and funded Cobasys in a manner that in OBC’s view violated the Operating Agreement and applicable Michigan
law. Since February 2008, Cobasys has received funding support from a customer in the form of a loan for capital equipment purchases and a price increase on products sold to the customer. While Cobasys has been receiving this funding support from its customer, Cobasys management has not sought any funding from the members of Cobasys. There is no assurance that this customer funding support will continue on these or other terms or otherwise be sufficient to permit Cobasys to continue
as a going concern.
Since February 15, 2008 the arbitration has been suspended pursuant to an interim settlement agreement among us, OBC and CTV in order to pursue the potential sale of Cobasys to a third party. Sale negotiations have been ongoing during which the parties to the arbitration have repeatedly amended the interim settlement agreement to extend the deadline for timely
consummation of the sale. There is no assurance that the sale will be completed by September 8, 2008, the current deadline, and, if not completed, that the parties will again extend the interim settlement agreement.
International Acquisitions Services, Inc. (“IAS”), Innovative Transportation Systems AG (“ITS”) and Neville Chamberlain filed suit against Energy Conversion Devices, Inc. (“ECD”) in Nassau County, New York on October 11, 2007, claiming, among other things, that ECD made fraudulent statements relating to the supply of battery
products to ITS, an entity created to manufacture and sell an electric delivery vehicle known as the InnoVan. Chamberlain, a sophisticated investor, invested in ITS through IAS. ECD also invested in ITS. The IAS matter was resolved in June 2008 with a payment of $925,000 made to IAS. This payment was funded equally by ECD, Chevron and General Motors.
93
Table of Contents
Item 9
:
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Not applicable.
Item 9A
:
|
Controls and Procedures
|
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer have concluded that these disclosure controls and procedures were effective.
Report of Management on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of the assets, (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial
statements.
Internal control over financial reporting includes the controls themselves, monitoring and internal auditing practices and actions taken to correct deficiencies as identified. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2008. Management based this assessment on criteria for effective internal control over financial reporting described in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Management’s assessment included an evaluation of the design of the Company’s internal control over financial reporting and testing of the operational effectiveness of its internal control over financial reporting. Management reviewed the results of its assessment with the Audit Committee of the Company’s Board of Directors.
94
Table of Contents
Based on this assessment, management determined that, as of June 30, 2008, the Company maintained effective internal control over financial reporting. Grant Thornton LLP, an independent registered public accounting firm, who audited and reported on the consolidated financial statements of the Company included in this report, has issued an attestation report on the
effectiveness of the Company’s internal control over financial reporting.
Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal control over financial reporting that occurred during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders
Energy Conversion Devices, Inc.
We have audited Energy Conversion Devices, Inc. (a Delaware Corporation) and subsidiaries’ (the Company) internal control over financial reporting as of June 30, 2008, based on criteria established in
Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
95
Table of Contents
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion,
Energy Conversion Devices, Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of June 30, 2008, based on criteria established in
Internal Control—Integrated Framework
issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Energy Conversion Devices, Inc. and subsidiaries as of June 30, 2008 and 2007, and the related consolidated statements of operations, stockholders’ equity, cash flows and financial statement schedule for each of the three
years in the period ended June 30, 2008 and our report dated August 25, 2008 expressed an unqualified opinion.
/s/ GRANT THORNTON LLP
Southfield, Michigan
August 25, 2008
Item 9B
:
|
Other Information
|
Not applicable.
96
Table of Contents
PART III
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required by Part III is omitted from this Report on Form 10-K and is hereby incorporated by reference from the Registrant’s definitive Proxy Statement for its Annual Meeting of Stockholders to be held on November 18, 2008 (the “2008 Proxy Statement”) pursuant to Regulation 14A of the Securities Exchange Act of 1934, as
amended, which will be filed not later than 120 days after the end of the fiscal year covered by this Report.
Item 10
:
|
Directors, Executive Officers and Corporate Governance
|
The information contained in the sections entitled “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” included in our 2008 Proxy Statement is incorporated herein by reference.
The information regarding our Audit Committee, including the members of our Audit Committee and audit committee financial experts, set forth in the section entitled “Corporate Governance and Board Matters” contained in our 2008 Proxy Statement is incorporated herein by reference.
The charters of our Audit Committee, Compensation Committee, Corporate Governance and Nominating Committee, and Finance Committee are available in the “Investor Relations – Corporate Governance” section of our website at
www.ovonic.com
and are available to any stockholder upon
request to the Corporate Secretary. The information on our website is not incorporated by reference in this Annual Report on Form 10-K.
We have adopted a Code of Business Conduct and Ethics that applies to all employees, including our chief executive officer and chief financial officer, and directors. A copy of the Code of Business Conduct and Ethics is available in the “Investor Relations – Corporate Governance” section of our website at
www.ovonic.com
.
Item 11
:
|
Executive Compensation
|
The information required by this item will be included under “Compensation of Directors,” “Director Compensation Table,” “Compensation Discussion and Analysis,” “Compensation Committee Interlocks and Insider Participation,” and “Executive Compensation Tables,” in the 2008 Proxy Statement and is incorporated
herein by reference.
97
Table of Contents
Item 12
:
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Equity Compensation Plan Information
The following table provides certain information as of June 30, 2008 with respect to our equity compensation plans.
|
|
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
|
|
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
|
|
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
|
Plan Category
|
|
|
(a)
|
|
|
|
(b)
|
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
877,086
|
(1)
|
|
|
$
|
22.27
|
(2)
|
|
|
725,882
|
|
|
Equity compensation plans not approved by security holders
|
|
|
90,000
|
(3)
|
|
|
$
|
10.69
|
|
|
|
—
|
|
|
|
|
|
967,086
|
|
|
|
$
|
21.19
|
|
|
|
725,882
|
|
|
(1)
|
Includes 2,500 shares issuable upon vesting of restricted stock units (RSUs) that we granted under the 2006 Stock Incentive Plan. The remaining balance consists of outstanding stock option grants.
|
(2)
|
The weighted average exercise price does not take into account the shares issuable upon vesting of outstanding RSUs, which have no exercise price.
|
(3)
|
On January 15, 1999, we entered into a stock option agreement with Robert C. Stempel, pursuant to which he was granted an option to purchase 300,000 shares of ECD Common Stock at $10.688 per share. The option is not subject to any vesting requirement and may be exercised from time to time until the expiration of the option on January 15, 2009.
Mr. Stempel retired as the Company’s CEO on August 31, 2007.
|
Item 13
:
|
Certain Relationships and Related Transactions, and Director Independence
|
The information concerning certain relationships and related transactions will be included under “Transactions with Related Persons” and “Corporate Governance and Board Matters – Determination of Independence of Board Members” in the 2008 Proxy Statement and is incorporated herein by reference.
Item 14
:
|
Principal Accountant Fees and Services
|
The information required by this item will be included under “Independent Registered Public Accounting Firm Fees” in the 2008 Proxy Statement and is incorporated herein by reference.
98
Table of Contents
PART IV
Item 15
:
|
Exhibits and Financial Statement Schedules
|
|
(a)
|
1.
|
Financial Statements:
|
The following is included in Part II, Item 8:
|
Reports of Independent Registered Public Accounting Firm
|
49,
94
|
|
2.
|
Financial Statement Schedules:
|
|
Schedule II – Valuation and Qualifying Accounts
|
103
|
Other financial statements and financial statement schedules are omitted (1) because of the absence of the conditions under which they are required or (2) because the information called for is shown in the financial statements and notes thereto.
|
3.
|
Exhibits (including those incorporated by reference)
|
Page or
Reference
3.1
|
|
Restated Certificate of Incorporation filed September 29, 1967
|
|
(a)
|
3.2
|
|
Certificate of Amendment to Certificate of Incorporation filed March 25, 1999 extending voting rights of the Company’s Class A Common Stock, increasing the authorized capital stock of the Company’s Common Stock to 20,930,000 shares, and authorizing 430,000 shares of Class B Common Stock
|
|
(b)
|
3.3
|
|
Certificate of Amendment to Certificate of Incorporation filed March 18, 2004, increasing the number of authorized shares from 30,000,000 to 50,000,000
|
|
(c)
|
3.4
|
|
Certificate of Amendment to Certificate of Incorporation filed December 8, 2006, increasing the number of authorized shares from 50,000,000 to 100,000,000
|
|
(d)
|
3.5
|
|
Amended and Restated Certificate of Incorporation January 8, 2008
|
|
(e)
|
3.6
|
|
Bylaws in effect as of October 11, 2007
|
|
(f)
|
4.1
|
|
Form of Indenture, dated June 24, 2008, between Energy Conversion Devices, Inc. and The Bank of New York Trust Company, N.A. as Trustee
|
|
(g)
|
99
4.2
|
|
Form of First Supplemental Indenture dated June 24, 2008, between Energy Conversion Devices, Inc. and The Bank of New York Trust Company, N.A., as Trustee
|
|
(g)
|
4.3
|
|
Indenture, dated June 24, 2008, between Energy Conversion Devices, Inc. and The Bank of New York Trust Company, N.A., as Trustee
|
|
105
|
4.4
|
|
First Supplemental Indenture dated June 24, 2008, between Energy Conversion Devices, Inc. and The Bank of New York Trust Company, N.A., as Trustee
|
|
181
|
10.1
|
|
Energy Conversion Devices, Inc. 1995 Non-Qualified Stock Option Plan
|
|
(h)
|
10.2
|
|
Energy Conversion Devices, Inc. 2000 Non-Qualified Stock Option Plan
|
|
(i)
|
10.3
|
|
Restricted Stock Agreement and Stock Option Agreement dated as of January 15, 1999 between the Company and Robert C. Stempel
|
|
(j)
|
10.4
|
|
Amended and Restated Operating Agreement of Cobasys LLC dated as of December 2, 2004 by and between ChevronTexaco Technology Ventures, LLC and Ovonic Battery Company, Inc.
|
|
(k)
|
10.5
|
|
Severance agreement as of June 5, 2006 by and between Sanjeev Kumar and the Company
|
|
(l)
|
10.6
|
|
Severance agreement as of June 5, 2006 by and between Jay B. Knoll and the Company
|
|
(m)
|
10.7
|
|
Energy Conversion Devices, Inc. 2006 Stock Incentive Plan
|
|
(n)
|
10.8
|
|
Energy Conversion Devices, Inc. Executive Severance Plan effective July 24, 2007
|
|
(o)
|
10.9
|
|
Form of Severance Plan Participation Agreement
|
|
(p)
|
10.10
|
|
Energy Conversion Devices, Inc. Annual Incentive Plan
|
|
(q)
|
10.11
|
|
Form of Stock Option Agreement
|
|
(r)
|
10.12
|
|
Form of Restricted Stock Agreement
|
|
(s)
|
10.13
|
|
Offer Letter dated July 25, 2007 between Energy Conversion Devices, Inc. and Mark D. Morelli
|
|
(t)
|
10.14
|
|
Letter Agreement dated August 23, 2007 among Stanford R. Ovshinsky, Energy Conversion Devices, Inc. and Ovonic Battery Company
|
|
(u)
|
10.15
|
|
Letter Agreement dated August 31, 2007 between Robert C. Stempel and Energy Conversion Devices, Inc.
|
|
(v)
|
10.16
|
|
Revised Separation Agreement with executive officer effective December 31, 2007
|
|
(w)
|
100
10.17
|
|
Revised Separation Agreement with executive officer effective December 31, 2007
|
|
(x)
|
10.18
|
|
Share Lending Agreement dated as of June 18, 2008 among Energy Conversion Devices, Inc. and Credit Suisse International and Credit Suisse Securities (USA) LLC
|
|
(g)
|
10.19
|
|
Form of Restricted Stock Unit
|
|
235
|
21.1
|
|
List of all direct and indirect subsidiaries of the Company
|
|
244
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm, Grant Thornton LLP
|
|
245
|
31.1
|
|
Certificate of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
246
|
31.2
|
|
Certificate of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
247
|
32
|
|
Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
248
|
Notes to Exhibit List
(a)
|
Filed as Exhibit 2-A to the Company’s Form 8-A and incorporated herein by reference.
|
|
(b)
|
Filed as Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1999 and incorporated herein by reference.
|
|
(c)
|
Filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference.
|
|
(d)
|
Filed with the Company’s Proxy Statement dated October 12, 2006 and incorporated herein by reference.
|
|
(e)
|
Filed with the Company’s Proxy Statement dated October 29, 2007 and incorporated herein by reference.
|
|
(f)
|
Filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated October 17, 2007 and incorporated herein by reference.
|
|
(g)
|
Filed as Exhibits 4.1, 4.2 and 10.18 to the Company’s Current Report on Form 8-K dated June 19, 2008 and incorporated herein by reference.
|
|
(h)
|
Filed as Exhibit 10.77 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1995 and incorporated herein by reference.
|
|
(i)
|
Filed as Exhibit A to the Company’s Proxy Notice and Statement dated January 19, 2001 and incorporated herein by reference.
|
|
(j)
|
Filed as Exhibits B, C and D, respectively, to the Company’s Proxy Notice and Statement dated February 23, 1999 and incorporated herein by reference.
|
|
101
Table of Contents
(k)
|
Filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated December 7, 2004 and incorporated herein by reference.
|
|
(l)
|
Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 5, 2006 and incorporated herein by reference.
|
|
(m)
|
Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 and incorporated herein by reference.
|
|
(n)
|
Filed as Exhibit A to the Company’s Proxy Statement dated October 12, 2006 and incorporated herein by reference.
|
|
(o)
|
Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated July 30, 2007 and incorporated herein by reference.
|
|
(p)
|
Filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated July 30, 2007 and incorporated herein by reference.
|
|
(q)
|
Filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K dated July 30, 2007 and incorporated herein by reference.
|
|
(r)
|
Filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K dated July 30, 2007 and incorporated herein by reference.
|
|
(s)
|
Filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K dated July 30, 2007 and incorporated herein by reference.
|
|
(t)
|
Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 3, 2007 and incorporated herein by reference.
|
|
(u)
|
Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 27, 2007 and incorporated herein by reference.
|
|
(v)
|
Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 31, 2007 and incorporated herein by reference.
|
|
(w)
|
Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference.
|
|
(x)
|
Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference.
|
|
102
Table of Contents
ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
Schedule II – Valuation and Qualifying Accounts
|
|
|
Additions
|
|
|
|
Description
|
|
Balance at Beginning of Period
|
|
Charged to Costs and Expenses
|
|
Charged to Other Accounts
|
|
Deductions
|
|
Balance at
End of
Period
|
Allowance for Uncollectible Accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended June 30, 2008
|
|
$
|
538,000
|
|
|
$
|
868,093
|
|
|
$
|
5,822
|
|
|
$
|
(586,915
|
)
|
|
$
|
825,000
|
|
Year Ended June 30, 2007
|
|
|
691,000
|
|
|
|
9,817
|
|
|
|
56,781
|
|
|
|
(219,598
|
)
|
|
|
538,000
|
|
Year Ended June 30, 2006
|
|
|
412,000
|
|
|
|
289,767
|
|
|
|
10,063
|
|
|
|
(20,830
|
)*
|
|
|
691,000
|
|
Reserve for Losses on Government Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended June 30, 2008
|
|
$
|
1,899,170
|
|
|
$
|
158,197
|
|
|
|
|
|
|
$
|
(206,169
|
)
|
|
$
|
1,851,198
|
|
Year Ended June 30, 2007
|
|
|
2,342,961
|
|
|
|
134,356
|
|
|
|
|
|
|
|
(578,147
|
)
|
|
|
1,899,170
|
|
Year Ended June 30, 2006
|
|
|
2,294,098
|
|
|
|
621,770
|
|
|
|
|
|
|
|
(572,907
|
)**
|
|
|
2,342,961
|
|
Reserve for Warranty:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended June 30, 2008
|
|
$
|
1,325,452
|
|
|
$
|
390,765
|
|
|
|
|
|
|
$
|
(216,934
|
)
|
|
$
|
1,499,283
|
|
Year Ended June 30, 2007
|
|
|
1,835,136
|
|
|
|
(291,764
|
)
|
|
|
|
|
|
|
(217,920
|
)
|
|
|
1,325,452
|
|
Year Ended June 30, 2006
|
|
|
1,635,532
|
|
|
|
382,980
|
|
|
|
|
|
|
|
(183,376
|
)
|
|
|
1,835,136
|
|
Reserve for Inventory Obsolescence:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended June 30, 2008
|
|
$
|
1,870,161
|
|
|
$
|
3,058,477
|
|
|
|
|
|
|
$
|
(138,889
|
)
|
|
$
|
4,789,749
|
|
Year Ended June 30, 2007
|
|
|
1,163,833
|
|
|
|
1,348,361
|
|
|
|
|
|
|
|
(642,033
|
)
|
|
|
1,870,161
|
|
Year Ended June 30, 2006
|
|
|
418,995
|
|
|
|
1,518,284
|
|
|
|
|
|
|
|
(773,446
|
)
|
|
|
1,163,833
|
|
|
*
|
Represents partial write-off of uncollectible accounts.
|
|
**
|
Represents change in accounting estimate.
|
103
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
|
|
August 28, 2008
|
By: /S/ Mark D. Morelli
Mark D. Morelli
President and Chief Executive Officer
|
/s/ Mark D. Morelli
|
|
President, Chief Executive Officer and
|
|
August 28, 2008
|
Mark D. Morelli
|
|
Director (Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Sanjeev Kumar
|
|
Vice President and Chief Financial Officer
|
|
August 28, 2008
|
Sanjeev Kumar
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Joseph Avila
|
|
Director
|
|
August 28, 2008
|
Joseph Avila
|
|
|
|
|
|
|
|
|
|
/s/ Christopher Belden
|
|
Director
|
|
August 28, 2008
|
Christopher Belden
|
|
|
|
|
|
|
|
|
|
/s/ Robert I. Frey
|
|
Director
|
|
August 28, 2008
|
Robert I. Frey
|
|
|
|
|
|
|
|
|
|
/s/ William J. Ketelhut
|
|
Director
|
|
August 28, 2008
|
William J. Ketelhut
|
|
|
|
|
|
|
|
|
|
/s/ Florence I. Metz
|
|
Director
|
|
August 28, 2008
|
Florence I. Metz
|
|
|
|
|
|
|
|
|
|
/s/ Stephen Rabinowitz
|
|
Director
|
|
August 28, 2008
|
Stephen Rabinowitz
|
|
|
|
|
|
|
|
|
|
/s/ George A. Schreiber, Jr.
|
|
Director
|
|
August 28, 2008
|
George A. Schreiber, Jr.
|
|
|
|
|
104