Profile: Energy Conversion Devices Inc (ENER.O)

Energy Conversion Devices, Inc. (ECD), through its subsidiaries, commercializes materials, products and production processes for the alternative energy generation (primarily solar energy), energy storage and information technology markets. The Company designs, manufactures and sells photovoltaic (PV) products, known as PV or solar laminates that generate renewable energy by converting sunlight into electricity. ECD’s products are particularly suitable for rooftop and building integrated photovoltaic (BIPV) applications, which are its target markets. Solar laminate sales represent more than 92% of the Company’s revenues. The Company also receives fees and royalties from licensees of its nickel metal hydride (NiMH) battery technology, and sells nickel hydroxide used in NiMH batteries. ECD operates through two business segments: United Solar Ovonic and Ovonic Materials. In August 2009, ECD acquired Solar Integrated Technologies Inc. (SIT). SIT designs, manufactures and installs BIPV roofing systems for non-residential customers.

United Solar Ovonic

The Company’s United Solar Ovonic segment designs, manufactures and sells PV laminates that generate renewable energy by converting sunlight into electricity. This business, which ECD conducts through its wholly owned subsidiary, United Solar Ovonic LLC (USO), is based principally on the Company’s technologies for thin-film amorphous silicon PV laminates and roll-to-roll manufacturing. The acquisition of SIT will expand ECD’s sales activities to include design, development and installation of rooftop and BIPV systems and applications, as well as enhance its field engineering and technical support activities.

ECD’s PV laminates possess several attributes that make them suitable for both rooftop and building integrated applications, including ability to be integrated with roofing materials, light weight, resistance to wind uplift, no roof penetration, impact resistance and ease of installation. The Company sells its PV laminates principally for commercial and industrial roofing applications. ECD sells most of its laminates to commercial roofing materials manufacturers, builders and building contractors, and solar power installers/integrators who incorporate its PV laminates into their products for commercial sale and then handle all aspects of the consumer relationship, including marketing, sales and service. The Company has also developed similar relationships with residential roofing material manufacturers, who are developing applications to sell its laminates through their distributions and installation channels for the residential market.

As of June 30, 2009, the Company had 150 megawatts of nameplate manufacturing capacity. It has an additional 28 megawatts of nameplate manufacturing capacity attributable to its Auburn Hills 1 facility, which is offline as ECD consolidated certain of the production operations from this facility into its Auburn Hills 2 facility. The Company’s customers include EDF En Developpement, Solardis-Soprasolar, Alwitra Flachdach Systeme GmbH, Advanced Green Technologies, Inc. (a unit of Advanced Roofing, Inc.), Marcegaglia Taranto S.p.A., Derbigum Suisse Sarl and Centrosolar AG.

The United Solar Ovonic segment is headquartered in Auburn Hills, Michigan, and has manufacturing facilities in Auburn Hills and Greenville, Michigan and Tijuana, Mexico. ECD maintains sales offices in France, Germany, Italy, Spain and the United States. In addition, the Company has established a joint venture, United Solar Ovonic Jinneng Limited, to manufacture solar products in China for sale in the Chinese market using solar cells purchased from, and technology licensed by, USO. As of June 30, 2009, ECD owned 25% of the joint venture, with the option to increase its ownership to 51% in certain circumstances, and Tianjin Jinneng Investment Co. owned the remainder of the joint venture.

Ovonic Materials

The Company’s Ovonic Materials segment invents, designs and develops materials and products based on ECD’s materials science technology. The Company is focused on commercializing this technology internally and through third-party relationships, such as licenses and joint ventures. ECD is commercializing its NiMH materials and consumer battery technology through this segment. The Company is also engaged in pre-commercialization activities for its technologies. NiMH batteries are rechargeable energy storage solutions. They are adaptable to a range of consumer, transportation and stationary applications. The Company commercializes its NiMH battery technology principally through third-party licensing arrangements with NiMH battery manufacturers worldwide. ECD also sells positive electrode nickel hydroxide materials for use in NiMH batteries.

The Company conducts its NiMH battery technology licensing and materials manufacturing activities through its subsidiary, Ovonic Battery Company, Inc., in which ECD has a 91.4% equity interest and the balance is owned by Honda Motor Company, Ltd. (3.2%), Sanoh Industrial Co., Ltd. (3.2%) and Sanyo (2.2%). Subsequent to the fiscal year ended June 30, 2009 (fiscal 2009), the Company completed the sale of its interest in Cobasys LLC, its former joint venture, through which ECD also commercialized its NiMH battery technology. The Company has licensed its NiMH battery technology to NiMH battery manufacturers, principally for consumer and transportation applications, on a royalty-bearing, non-exclusive basis. Royalties from Sanyo for consumer and transportation applications represented 36% of the Company’s revenues in the Ovonic Materials segment during fiscal 2009.

ECD produces positive electrode nickel hydroxide materials for use in NiMH batteries, which it sells to licensees of its NiMH battery technology. Sales to Gold Peak Industries (Holdings) Limited represented 100% of ECD’s NiMH materials product sales in the Ovonic Materials segment, and 18% of its total revenues in this segment during fiscal 2009. ECD conducts its manufacturing operations at an automated facility in Troy, Michigan. The Company’s research and development activities have generated new technologies, which it is seeking to bring to full-scale commercialization. These technologies are Ovonic solid hydrogen storage technologies, Ovonic metal hydride fuel cell technologies and Ovonic biofuel reformation technologies. Its solid hydrogen storage solutions have benefits over conventional gaseous and liquid storage solutions, including improved volumetric density and safety due to its technology’s low-pressure refilling and storage capabilities. The Company is manufacturing and selling pre-production volumes of portable hydrogen canisters in its Rochester Hills, Michigan facility.

The Company’s Ovonic metal hydride fuel cell technology provides a lower-cost solution in comparison to conventional proton exchange membrane (PEM) fuel cells, which require platinum catalysts. ECD’s Ovonic reformation technology produces high-purity hydrogen in a process from multiple renewable biofuel and biomass sources, and without the generation of carbon dioxide gas. The Company’s Ovonyx, Inc. (Ovonyx) joint venture is commercializing its Ovonic Universal Memory (OUM) technology through licensing and product development arrangements. OUM is a type of non-volatile memory that can replace conventional non-volatile or FLASH memory in applications requiring retention of stored data when power is turned off, including cell phones, personal digital assistants (PDAs), digital cameras and microelectronics. As of June 30, 2009, the Company owned a 39.3% interest in Ovonyx. Ovonyx has entered into royalty-bearing, non-exclusive license agreements with Intel Corporation, Samsung Electronics Co., Ltd., Elpida Memory, Inc., STMicroelectronics N.V., BAE Systems, Hynix Semiconductor, Inc. and Numonyx B.V., to produce OUM products. Under most of these agreements, Ovonyx is also participating in joint development programs to assist in the commercialization of OUM phase-change memory products.

The Company competes with Sharp Corporation, Q-Cells AG, Evergreen Solar, Inc., Kyocera Corporation, Sanyo Electric Co., Ltd. (Sanyo), SunPower Corp., Mitsubishi Electric Corporation, Yingli Solar, Trina Solar Limited, Suntech Power Holdings Co., Ltd. and First Solar, Inc.