Inventory level leads to temporary suspension of company's
manufacturing operations Continuation of strategic restructuring
requires rationalization of existing cost structure Beginning
discussions with representatives of certain holders of company's
outstanding convertible notes Postpones quarterly financial results
conference call
Energy Conversion Devices, Inc. (ECD) (Nasdaq:ENER), a leading
global provider of flexible, lightweight solar laminates and
systems for the building-integrated and commercial rooftop market,
today announced several actions to further management's
restructuring of the business in response to the dynamic and
challenging solar market conditions. First, the company has
temporarily suspended all manufacturing operations as an inventory
control measure. Second, ECD continues to execute on its
restructuring plan focusing on reducing cost, expanding addressable
markets and enhancing its technology. Finally, management has begun
discussions with representatives of certain holders of the
company's outstanding Senior Convertible Notes due 2013. In light
of these actions, ECD will postpone its quarterly financial results
conference call until further notice. The company has provided
preliminary operating results and cash holdings as stated
below.
Manufacturing Suspended to Manage Inventory
The company announced today that it will temporarily idle its
manufacturing facilities as an inventory management measure. As a
result of this temporary suspension, approximately 400
manufacturing associates will be furloughed. The affected
associates are located across the company's Michigan, Mexico and
Ontario manufacturing facilities.
ECD will continue to serve its customers through its direct
sales force and its global network of solar integrators and
building materials suppliers. The company expects to resume
production in its manufacturing facilities as soon as possible once
the existing inventory has been sold and market conditions warrant.
The company can return to normal production levels within 60
days.
Restructuring Plan
Begun in May of 2011, ECD has embarked on a strategic corporate
restructuring in which every aspect of the company's strategy is
being reassessed in light of the near-term disruptions in the solar
industry. Among other efforts, the focus of this restructuring is
to reduce cost, expand addressable markets through globalization
and Open Solar™, and enhance the core solar technology by executing
the technology roadmap. To those ends, the company has taken and is
taking several significant steps.
To reduce cost and manage cash, ECD took personnel and other
actions in June 2011 with an estimated annualized cash savings of
$20 million. In addition, the company will further reduce its
workforce by approximately 500 full-time associates by the end of
the calendar year.
The company is starting to get traction in its efforts to enter
new geographic markets. ECD has recently completed shipments to
Brazil, South Korea, India, the Caribbean and China. Solar sales to
customers outside of Europe and North America now account for about
40% of total shipments in the quarter, compared to 4% in the prior
year's first quarter.
ECD's Open Solar initiative is designed to foster innovation
around the unique UNI-SOLAR® technology through collaboration with
third parties. Examples of Open Solar partners include Marcegaglia,
one of Europe's largest steel producers, and GP Solar, a Hong
Kong-based manufacturer of solar-powered rechargeable battery
technology. Other products that are part of the Open Solar
initiative include military products and consumer goods.
Consistent with the technology roadmap previously announced by
the company, ECD is committed to enhancing its core thin-film solar
technology by commercializing its patented Nano-Crystalline™
technology. Upgrades to existing capital equipment are underway at
its Greenville, Michigan plant and the retrofitted line is expected
to begin pre-production testing and optimization in mid-2012. With
the successful implementation of this new technology, ECD expects
to improve its products' sunlight-to-electricity conversion
efficiency by up to 50%. This will provide the benefit of
increasing marketability of the products with added value to
customers, while significantly reducing ECD's production costs.
Preliminary Operating Results
For the first quarter of fiscal year 2012 ended September 30,
2011, the company expects to report total revenue of approximately
$22 million. This compares to consolidated revenue of $65 million
in the first fiscal quarter of 2011. In the first quarter, ECD's
United Solar subsidiary shipped 11 megawatts (MW) of its unique
UNI-SOLAR brand solar products in the face of sharp price declines
and excess module supply across the industry.
As of September 30, 2011, the company held $130.2 million of
cash, cash-equivalents, restricted cash and short-term investments,
a reduction of $10.5 million during the quarter.
"These operating results highlight the challenges facing us and
the solar industry today," said Jay Knoll, ECD's Interim President.
"With reductions in incentives in our core European markets and a
volatile credit market, solar projects are having tremendous
difficulty closing. These factors combined with a flood of cheap
modules from foreign manufacturers have created an environment
where very few projects are getting completed without
self-financing and steep discounts. The economics of this
environment require us to rethink our approach to the sales process
and rationalize our cost structure, both of which are currently
underway."
Separately, ECD's Ovonic Battery Company (OBC) subsidiary
generated $2.3 million in the quarter in combined royalties and
license fees from its proprietary nickel-metal-hydride (NiMH)
rechargeable battery technology. ECD announced in July that it
intended to divest OBC in a closed-bid auction and is currently
proceeding with this sales process.
Strategic Discussions
ECD believes that a successful repositioning of its United Solar
business will require refinancing or restructuring of its
outstanding Senior Convertible Notes due 2013. ECD intends to
invest the proceeds from the sale of OBC in its United Solar
business to support funding of its technology roadmap and Open
Solar initiatives. ECD is considering a range of strategies to
attract additional investment that may be required and has retained
the financial advisory firm of AlixPartners to assist it in
evaluating such strategies.
In connection with the foregoing, ECD has begun discussions with
representatives of an informal group of holders of ECD's
outstanding Senior Convertible Notes due 2013, regarding its
repositioning efforts to explore the group's interest in
restructuring the notes.
Quarterly Conference Call Postponed
In light of these restructuring actions and the ongoing
strategic discussions referenced above, the company has decided to
postpone its conference call previously scheduled to take place
tomorrow, November 9. ECD will not file its Quarterly Report
on Form 10-Q for the fiscal period ended September 30, 2011, by the
deadline for such filing and intends to file a Form 12b-25 with the
Securities and Exchange Commission. The company expects to
file its Quarterly Report on Form 10-Q within the grace period
prescribed by Rule 12b-25 under the Securities Exchange Act of
1934, as amended.
About Energy Conversion Devices
Energy Conversion Devices (ECD) (Nasdaq:ENER) has a renowned 51
year history since its formation in Detroit, Michigan and has been
a pioneer in materials science and renewable energy technology
development. The company has been awarded over 500 U.S. patents and
international counterparts for its achievements. ECD's United Solar
wholly owned subsidiary has been a global leader in
building-integrated and rooftop photovoltaics for over 25 years.
The company manufactures, sells and installs thin-film solar
laminates that convert sunlight to clean, renewable energy using
proprietary technology. UNI-SOLAR® brand products are unique
because of their flexibility, light weight, ease of installation,
durability, and real-world energy production. ECD's technology
portfolio also includes the Ovonic Battery Company, the inventor
and worldwide licensor of nickel-metal-hydride battery technology
and the developer of proprietary advanced lithium-ion cathode
materials, along with other emerging energy storage technologies.
ECD's Ovonyx joint venture is the inventor and worldwide licensor
of phase change memory (PCM) technology. For more information,
please visit ECD on the web at energyconversiondevices.com and on
Facebook, and follow ECD on Twitter @ECD_ENER.
Safe Harbor Statement
This release may contain forward-looking statements within the
meaning of the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements do
not constitute guarantees of future performance. Forward-looking
statements include statements concerning our plans, objectives,
goals, strategies, future events, future net sales or performance,
capital expenditures, financing needs, restructuring, plans or
intentions relating to expansions, business trends and other
information that is not historical information. All
forward-looking statements are based upon information available to
us on the date of this release and are subject to risks,
uncertainties and other factors, many of which are outside of our
control, that could cause actual results to differ materially from
the results discussed in the forward-looking statements. Risks
that could cause such results to differ include: our ability to
maintain our customer relationships and establish new
relationships; the worldwide market for solar energy systems;
changes to government incentives related to solar energy; our
customers' ability to access capital to finance the purchase of our
products; our ability to achieve expense reductions and levels of
one-time costs, including restructuring charges; our ability to
meet all the terms and conditions of our debt obligations; and our
ability through technology improvements to reduce cost and improve
the conversion efficiency of our solar products. 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. Except as required by law, Energy Conversion Devices,
Inc. assumes no responsibility to update any forward-looking
statements contained herein.
CONTACT: Michael E. Schostak
Director of Business Development & Communications
Energy Conversion Devices, Inc.
+1 (248) 299-6063
investor.relations@energyconversiondevices.com
Steven Blow
Eisbrenner Public Relations
+1 (248) 303-1067
sblow@eisbrenner.com
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