Company Records a Non-Cash Impairment Charge of $358 Million
Third Quarter Revenues, Cash Flow and Inventory Improve
ROCHESTER HILLS, Mich., May 10, 2010 (GLOBE NEWSWIRE) -- 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 of its fiscal year 2010. The results included a non-cash impairment charge of $358 million.
Total revenues for the third quarter of fiscal 2010 were $72 million, an increase of nearly ten percent from $66 million in the third quarter of fiscal 2009, and 36 percent from $53 million in the second quarter of fiscal 2010.
Net loss for the third quarter of fiscal 2010, was $385 million, or $9.10 per diluted share. Excluding the impairment charge, the quarter's net loss was $27 million, or $0.64 per diluted share. The company reported net income of $1 million, or $0.03 per diluted share, in the third quarter of fiscal 2009 and a net loss of $39 million, or $0.92 per diluted share, in the second quarter of fiscal 2010.
Total revenues for the nine months ending March 31, 2010 were $168 million compared to $265 million in the prior year. Net loss for the first nine months of fiscal 2010 was $436 million, or $10.30 per diluted share. Excluding cumulative impairment charges, the net loss was $76 million, or $1.81 per diluted share. In the prior year, the company reported net income of $26 million, or $0.61 per diluted share.
The third quarter's $358 million non-cash impairment charge included $321 million for property, plant and equipment and $37 million for goodwill and other intangible assets. Separately, there was a $10 million charge to Cost of Product and Project Sales related to factory underutilization during the third quarter.
Mark Morelli, ECD's President and Chief Executive Officer, said, "The impairment charge that we announced today is a reflection of changed market conditions. This accounting adjustment does not in any way impact asset use or usefulness, but reflects the delayed timing of anticipated revenue and profit from some of the company's long-lived assets. While the timing has been delayed compared to our original expectations, our new business plan is succeeding as revenue, cash flow and inventory all improved this quarter.
"We closed several large projects with high-quality, repeat customers and are now working on 3.4 megawatts of solar rooftop installations with ContourGlobal for Coca-Cola bottling in Italy. We continue to make progress elsewhere in Europe and are building a significant project pipeline in the United States. In addition to our backlog, we have built a qualified project pipeline that has grown to more than 200 megawatts."
Mr. Morelli concluded, "Despite today's impairment charge, we believe that our business is turning the corner and we are enhancing our competitive position. We believe we can improve our technology and reach a conversion efficiency of 20 percent. We have already achieved a laboratory-proven conversion efficiency of over 15 percent, and we are well along our detailed roadmap to deliver 12 percent efficiency while reducing our cost-per-watt to less than 95 cents in the near term. Our focus on cost reductions, continued progress implementing our project business model and improving market conditions will support our return to profitability."
Conference Call / Webcast Details
Management of Energy Conversion Devices will review these financial results on a conference call on Monday, May 10, 2010, 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 69695148. 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 www.energyconversiondevices.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 12, 2010, and can be accessed by dialing 800-642-1687 or 706-645-9291 (international), with conference ID number 69695148. The webcast will also be archived on the company's website.
About Energy Conversion Devices
Energy Conversion Devices is a leader in building-integrated and rooftop photovoltaics. The company manufactures, sells and installs thin-film solar laminates that convert sunlight to energy using proprietary technology. ECD's UNI-SOLAR® brand products are unique because of their flexibility, light weight, ease of installation, durability, and real-world efficiency. Through its Solar Integrated Technologies business, the company also designs, manufactures and installs rooftop photovoltaic systems which enable customers to transform unused space on the rooftop into a value-generating asset. In addition, ECD's Ovonic Materials Division is the pioneer in NiMH battery technology, and is developing low cost fuel cells, hydrogen production from bioreformation, and hydrogen storage technologies. For more information, please visit www.energyconversiondevices.com.
This release may contain forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. 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 maintain our customer relationships; the worldwide demand for electricity and the market for solar energy; the supply and price of components and raw materials for our products; our customers' ability to access the capital needed to finance the purchase of our products; and risks associated with integrating Solar Integrated Technologies, Inc. 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 Form 10-Q, could impact any forward-looking statements contained in this release.
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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data) |
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Three Months Ended March 31, |
Nine Months Ended March 31, |
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| 2010 | 2009 (1) | 2010 | 2009 (1) | |
| Revenues | ||||
| Product and project sales | $ 65,076 | $ 60,190 | $ 148,981 | $ 248,978 |
| Royalties | 1,919 | 1,477 | 6,132 | 4,365 |
| Revenues from product development agreements | 2,580 | 3,967 | 9,578 | 10,316 |
| License and other revenues | 2,831 | 372 | 3,571 | 1,220 |
| Total Revenues | 72,406 | 66,006 | 168,262 | 264,879 |
| Expenses | ||||
| Cost of product and project sales | 68,982 | 42,719 | 155,196 | 167,347 |
| Cost of revenues from product development agreements | 1,949 | 2,451 | 7,624 | 6,974 |
| Product development and research | 3,442 | 2,424 | 8,817 | 6,568 |
| Preproduction costs | 72 | 1,325 | 82 | 5,133 |
| Selling, general and administrative | 16,730 | 12,314 | 50,152 | 43,742 |
| Net loss on disposal of property, plant and equipment | 31 | 677 | 1,296 | 1,086 |
| Impairment loss | 357,975 | -- | 359,228 | -- |
| Restructuring charges | 338 | 139 | 3,460 | 574 |
| Total Expenses | 449,519 | 62,049 | 585,855 | 231,424 |
| Operating (Loss) Income | (377,113) | 3,957 | (417,593) | 33,455 |
| Other Income (Expense) | ||||
| Interest income | 404 | 712 | 960 | 4,783 |
| Interest expense | (6,970) | (2,310) | (20,770) | (9,904) |
| Distribution from joint venture | -- | -- | 1,309 | -- |
| Other nonoperating expense, net | (1,257) | (552) | (1,333) | (1,392) |
| Total Other Income (Expense) | (7,823) | (2,150) | (19,834) | (6,513) |
| (Loss) Income before Income Taxes and Equity Income (Loss) | (384,936) | 1,807 | (437,427) | 26,942 |
| Income tax (benefit) expense | (55) | 549 | (1,955) | 822 |
| (Loss) Income before Equity Income (Loss) | (384,881) | 1,258 | (435,472) | 26,120 |
| Equity income (loss) | 148 | -- | (185) | -- |
| Net (Loss) Income | (384,733) | 1,258 | (435,657) | 26,120 |
| Net Income (Loss) Attributable to Noncontrolling Interest | 113 | -- | (40) | -- |
| Net (Loss) Income Attributable to ECD Shareholders | $ (384,846) | $ 1,258 | $ (435,617) | $ 26,120 |
| (Loss) Earnings Per Share, Attributable to ECD Shareholders | $ (9.10) | $ 0.03 | $ (10.30) | $ 0.62 |
| Diluted (Loss) Earnings Per Share, Attributable to ECD Shareholders | $ (9.10) | $ 0.03 | $ (10.30) | $ 0.61 |
| Basic weighted shares outstanding | 42,307 | 42,303 | 42,307 | 42,266 |
| Diluted shares outstanding | 42,307 | 42,392 | 42,307 | 42,821 |
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(1) As adjusted due to the implementation of FASB ASC 470-20 (See Note 1). |
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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) |
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| March 31, 2010 |
June 30, 2009 (1) |
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| (Unaudited) | ||
| ASSETS | ||
| Current Assets: | ||
| Cash and cash equivalents | $58,244 | $56,379 |
| Short-term investments | 127,242 | 245,182 |
| Accounts receivable, net | 67,472 | 69,382 |
| Inventories, net | 94,416 | 74,266 |
| Other current assets | 21,575 | 4,897 |
| Total Current Assets | 368,949 | 450,106 |
| Property, Plant and Equipment, net | 297,237 | 614,330 |
| Other Assets: | ||
| Restricted cash | 8,073 | -- |
| Lease receivable, net | 11,316 | -- |
| Other assets | 11,877 | 11,661 |
| Total Other Assets | 31,266 | 11,661 |
| Total Assets | $697,452 | $1,076,097 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current Liabilities: | ||
| Accounts payable and accrued expenses | $43,476 | $50,238 |
| Current portion of warranty liability | 13,432 | 5,917 |
| Other current liabilities | 6,122 | 3,506 |
| Total Current Liabilities | 63,030 | 59,661 |
| Long-Term Liabilities: | ||
| Convertible senior notes | 258,944 | 247,974 |
| Capital lease obligations | 20,596 | 21,412 |
| Warranty liability | 28,633 | -- |
| Other liabilities | 21,197 | 9,701 |
| Total Long-Term Liabilities | 329,370 | 279,087 |
| Commitments and Contingencies | ||
| Stockholders' Equity | ||
| Common stock, $0.01 par value, 100 million shares authorized, 45,774,386 and 45,754,652 issued at March 31, 2010 and June 30,2009, respectively | 458 | 458 |
| Additional paid-in capital | 1,059,145 | 1,055,705 |
| Treasury stock | (700) | (700) |
| Accumulated deficit | (752,235) | (316,618) |
| Accumulated other comprehensive loss, net | (1,576) | (1,496) |
| Total ECD stockholders' equity | 305,092 | 737,349 |
| Accumulated deficit – noncontrolling interest | (40) | -- |
| Total Stockholders' Equity | 305,052 | 737,349 |
| Total Liabilities and Stockholders' Equity | $697,452 | $1,076,097 |
| (1) As adjusted due to the implementation of FASB ASC 470-20 (See Note 1). | ||
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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) |
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Nine Months Ended March 31, |
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| 2010 | 2009 (1) | |
| Cash flows from operating activities: | ||
| Net (loss) income | $(435,657) | $ 26,120 |
| Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||
| Impairment loss | 359,228 | -- |
| Depreciation and amortization | 27,302 | 23,695 |
| Amortization of debt discount and deferred financing fees | 11,927 | 10,958 |
| Share-based compensation | 3,440 | 4,885 |
| Other-than-temporary impairment of investment | -- | 969 |
| Net loss on disposal of property, plant and equipment | 1,296 | 1,086 |
| Equity loss | 185 | -- |
| Other | -- | 6,482 |
| Changes in operating assets and liabilities, net of foreign exchange: | ||
| Accounts receivable | (3,417) | (13,084) |
| Inventories | 3,328 | (35,058) |
| Other assets | (14,285) | (9,040) |
| Accounts payable and accrued expenses | (17,492) | 17,584 |
| Other liabilities | (579) | (876) |
| Net cash (used in) provided by operating activities | (64,724) | 33,721 |
| Cash flows from investing activities: | ||
| Purchases of property, plant and equipment | (26,904) | (193,508) |
| Acquisition of business, net of cash acquired | (2,088) | -- |
| Purchases of investments | (68,089) | (68,357) |
| Proceeds from maturities of investments | 174,644 | 2,700 |
| Proceeds from sale of investments | 10,120 | -- |
| Increase in restricted cash | (6,510) | -- |
| Net cash provided by (used in) investing activities | 81,173 | (259,165) |
| Cash flows from financing activities: | ||
| Principal payments under capitalized lease obligations and other debt | (1,131) | (787) |
| Repayment of revolving credit facility | (5,705) | -- |
| Repayment of convertible notes | (8,000) | -- |
| Proceeds from sale of stock and share-based compensation, net of expenses | -- | 1,966 |
| Net cash (used in) provided by financing activities | (14,836) | 1,179 |
| Effect of exchange rate changes on cash and cash equivalents | 252 | (51) |
| Net increase (decrease) in cash and cash equivalents | 1,865 | (224,316) |
| Cash and cash equivalents at beginning of period | 56,379 | 484,492 |
| Cash and cash equivalents at end of period | $ 58,244 | $ 260,176 |
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(1) As adjusted due to the implementation of FASB ASC 470-20 (See Note 1). |
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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES RECONCILIATION OF GAAP MEASURES to NON-GAAP MEASURES (Unaudited) (In thousands, except per share data) |
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Three Months Ended March 31, 2010 |
Nine Months Ended March 31, 2010 |
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| Net Loss | EPS | Net Loss | EPS | |
| Net Loss Attributable to ECD Shareholders | $ (384,846) | $ (9.10) | $ (435,617) | $ (10.30) |
| Less: Impairment Loss | 357,975 | 8.46 | 359,228 | 8.49 |
| Net Loss Attributable to ECD Shareholders | $ (26,871) | $ (0.64) | $ (76,389) | $ (1.81) |