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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended June 30, 2011
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  To
 Commission File Number 1-8403
 ENERGY CONVERSION DEVICES, INC.
  Delaware
    
    38-1749884(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer Identification No.)3800 Lapeer Road, Auburn Hills, Michigan
    
    48326(Address of principal executive offices)
    
    (Zip Code)
 (248) 475-0100
  Title of Each Class
    
    Name of each Exchange on which registeredCommon Stock, $.01 par value per share
    
    NASDAQ Global Select Market
 None
 
 o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
  DOCUMENTS INCORPORATED BY REFERENCE




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TABLE OF CONTENTS
ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
FORM 10-K
FISCAL YEAR ENDED JUNE 30, 2011
 PART IItem 1: Business
    
    
    1Item 1A: Risk Factors
    
    
    8Item 1B: Unresolved Staff Comments
    
    
    22Item 2: Properties
    
    
    22Item 3: Legal Proceedings
    
    
    23Item 4: Removed and Reserved
    
    
    23PART IIItem 5: Market for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
    
    
    24Item 6: Selected Financial Data
    
    
    26Item 7: Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    27Item 7A: Quantitative and Qualitative Disclosures about Market Risk
    
    
    43Item 8: Financial Statements and Supplementary Data
    
    
    44Item 9: Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    89Item 9A: Controls and Procedures
    
    
    89Item 9B: Other Information
    
    
    91PART IIIItem 10: Directors, Executive Officers and Corporate Governance
    
    
    92Item 11: Executive Compensation
    
    
    92Item 12: Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    92Item 13: Certain Relationships and Related Transactions, and Director
Independence
    
    
    93Item 14: Principal Accounting Fees and Services
    
    
    93PART IVItem 15: Exhibits, Financial Statement Schedules
    
    
    94Schedule II - Valuation and Qualifying Accounts
    
    
    97Signatures
    
    
    98EX-21.1EX-23.1EX-31.1EX-31.2EX-32
  i




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PART I
Energy Conversion Devices, Inc. and Subsidiaries
 
 Item 1 : Business
 In this Report, we use the terms Company, ECD, we, us and our, unless otherwise
indicated or the context otherwise requires, to refer to Energy Conversion Devices, Inc. and its
consolidated subsidiaries. Certain disclosures included in this Report constitute forward-looking
statements that are subject to risks and uncertainties. See Item 1A, Risk Factors, and Item 7,
Managements Discussion and Analysis of Financial Condition and Results of Operations 
Forward-Looking Statements.
 Overview
 UNI-SOLAR ®
  Our Business Segments
  United Solar Ovonic
 UNI-SOLAR®
  1




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UNI-SOLAR ®
     2




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Ovonic Materials
  3




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Advanced Battery Technology
    Licensing
   Materials Manufacturing
  4




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Emerging Technologies
  Ovonic Solid Hydrogen Storage Technologies
  Ovonic Metal Hydride Fuel Cell Technologies
  Ovonic Bioreformation Technologies
  Ovonyx
  5




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Our Technology and Intellectual Property
  Research and Development Expenditures
  Patents and Intellectual Property
  Competition
  6




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Our Employees
  Available Information
  7




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Item 1A: Risk Factors
 Our success depends significantly on our ability through technology improvements to reduce the cost
and improve the conversion efficiency of our solar laminates and otherwise to continue to develop
and market new and innovative products. There can be no assurance that such efforts will be
successful or the capital spending required will be available.
   The continuing global economic, capital markets and credit disruptions, including sovereign debt
issues, pose risks for our business segments .
   8




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The decline in polysilicon prices, and the increase in the global capacity of PV products, is
causing downward pressure on the prices of our products, resulting in lower revenues and earnings.
  We have instituted demand-creation initiatives that are extending our business model and subjecting
us to additional business and financial risks .
  In response to market conditions, we have instituted capital expenditure and cost-reduction
initiatives that are impacting our financial performance and our cash resources and will continue
to do so in the future.
  Volatility in customer demand in the solar industry could affect future levels of sales and
profitability and limit our ability to predict such levels; if we are unable to balance our
production levels with customer demand, our business and financial results will be materially
adversely impacted.
  9




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We face intense competition from other companies producing solar energy and other renewable energy products.
    10




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Our customers increasingly need financing to purchase our products, which exposes us to additional
business and credit risks.
  We have a history of losses and our future profitability is uncertain; the failure to maintain
sustainable profitability could have a material adverse effect on our business, results of
operations, financial condition and cash flows.
  
    
    continuously improve our manufacturing operations, whether domestically or
internationally;
    
    service our debt obligations;
    
    develop our distribution network;
    
    continue to research and develop our products and manufacturing technologies;
    
    implement our demand creation initiatives;
    
    implement internal systems and infrastructure to support our growth; and
    
    retain key members of management and other personnel, and hire additional personnel.
  11




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As a result of our outstanding convertible notes, we are highly leveraged. Our indebtedness, along
with our other contractual commitments, could adversely affect our business, financial condition
and results of operations, as well as our ability to meet any of our payment obligations.
Additionally, if we are unable to generate sufficient cash flow to meet our payment obligations
when they become due, we will need to refinance or restructure our payment obligations or pursue
other alternatives, which may include seeking protection under federal bankruptcy laws.
  
    
    making it more difficult for us to meet our payment and other obligations;
    
    resulting in an event of default if we and our subsidiaries fail to comply with
covenants contained in our debt agreements, which could result in such debt becoming
immediately due and payable;
    
    reducing the availability of our cash flow to fund working capital, capital
expenditures, acquisitions and other general corporate purposes, and limiting our ability
to obtain additional financing for these purposes;
    
    limiting our flexibility in planning for, or reacting to, and increasing our
vulnerability to, changes in our business, the industry in which we operate and the
general economy;
    
    making it difficult to attract additional investment capital or to consummate other
transactions to fund our Technology Roadmap; and
    
    placing us at a competitive disadvantage compared to our competitors that have less
debt or are less leveraged.
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If we do not maintain compliance with NASDAQ Global Select Market continued listing requirements,
our common stock may be delisted and we may be required to repurchase or refinance our convertible
notes. Delisting may decrease our stock price and make it harder for our
stockholders to trade our stock and would have a material adverse effect on our liquidity and
potentially result in a default if we are required to repurchase our convertible senior notes
before their current maturity in June 2013.
  We may incur future restructuring charges and long-lived asset impairment losses.
  Significant warranty and product liability claims could adversely affect our business and results
of operations.
  13




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We have international operations, which we are expanding, that are vulnerable to risks associated with doing business in foreign countries.
  
    
    the potential that we may be forced to forfeit, voluntarily or involuntarily, foreign
assets due to economic or political instability in the countries in which we choose to
locate our manufacturing facilities;
    
    the potential that the debt crisis in certain European countries and financial
restructuring efforts may cause the value of the Euro to further deteriorate and reduce
the purchasing power of European customers;
    
    difficult and expensive compliance with the commercial and legal requirements of
international markets;
    
    difficulty in interpreting and enforcing contracts governed by foreign law, which may
be subject to multiple, conflicting and changing laws, regulations and tax systems;
    
    inability to obtain, maintain or enforce intellectual property rights;
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
    
    encountering trade barriers such as export requirements, tariffs, currency exchange
controls, taxes and other restrictions and expenses, which could affect the competitive
pricing of our solar laminates and reduce our market share in some countries;
    
    being subjected to additional withholding taxes or other tax on our foreign income or
tariffs and other restrictions on foreign trade and investment, including currency
exchange controls;
    
    being subjected to fluctuations in exchange rates which may affect product demand and
our profitability in U.S. dollars to the extent the price of our solar laminates and cost
of raw materials, labor and equipment is denominated in a foreign currency;
    
    limitations on dividends or restrictions against repatriation of earnings;
    
    difficulty in recruiting and retaining individuals skilled in international business
operations;
    
    increased costs associated with maintaining international marketing efforts; and
    
    potentially adverse tax consequences associated with our permanent establishment of
operations in more countries.
  Demand for our products is affected by existing regulations concerning the electrical utility
industry; changes to such regulations may present technical, regulatory and economic barriers to
the purchase and use of solar power products, which may significantly reduce demand for our
products.
    15




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We receive a significant portion of our revenues from a small number of customers.
  The reduction or elimination of government incentives related to solar power could cause our
revenues to decline.
  The expansion of our business into new markets, such as residential, may increase our exposure to
certain risks, including class action claims.
  We have focused our business strategy on, and invested significant financial resources in, the BIPV
segment of the PV market and there is no guarantee that the demand for BIPV systems will develop as
we anticipate.
  16




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We may be unable to obtain key raw materials that meet our quality, quantity and cost
requirements.
   If we lose key personnel or are unable to attract and retain qualified personnel to maintain and
expand our business, financial condition, results of operations and prospects could be adversely
affected.
  We may become subject to legal or regulatory proceedings which may reach unfavorable resolutions.
  17




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We are subject to a variety of federal, state and local laws, rules and regulations related to the
discharge or disposal of toxic, volatile or other hazardous chemicals that may expose us to
liability and other compliance risks.
   Our success depends in part upon our ability to protect our intellectual property and our
proprietary technology including our trade secrets and other confidential information.
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We may be involved in lawsuits to protect or enforce our patents, which could be expensive and time
consuming.
     Third parties may own or control patents or patent applications that are infringed by our products
or technologies.
  19




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Compliance with environmental regulations can be expensive, and noncompliance with these
regulations may require us to pay substantial fines, suspend production or cease operations.
    20




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We have entered into joint ventures and licensing agreements to develop and commercialize products
based on our technologies and we must manage such joint ventures and licensing agreements
successfully.
  Our government product development and research contracts may be terminated by unilateral
government action, or we may be unsuccessful in obtaining new government contracts to replace those
that have been terminated or completed.
  Our ability to utilize certain carryover tax attributes could be substantially limited if we
experience an ownership change under the Internal Revenue Code, which may adversely affect our
results of operations and financial condition .
  21




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Item 1B : Unresolved Staff Comments
  
 Item 2 : Properties
   Property Location
    
    Own or LeaseCorporate Headquarters, Auburn Hills, Michigan
    
    LeaseOvonic Materials SegmentRochester Hills, Michigan
     Troy, Michigan
    
    Lease
LeaseUnited Solar Ovonic SegmentAuburn Hills, Michigan (2 facilities)
     Greenville, Michigan (2 facilities)
     Tijuana, Mexico
     Los Angeles, California
     Mainz, Germany
     LaSalle, Ontario
    
    Lease
Own
Lease
Lease
Lease
Lease
  22




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Item 3 : Legal Proceedings
  
 Item 4 : Removed and Reserved
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PART II
 
 Item 5 : Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
   For the year ended June 30,2011
    
    
    2010High
    
    
    Low
    
    
    High
    
    
    Low(in dollars per share)First Quarter (July  September)
    
    $
    5.80
    
    
    $
    3.76
    
    
    $
    15.55
    
    
    $
    10.32Second Quarter (October  December)
    
    
    5.38
    
    
    
    4.20
    
    
    
    13.26
    
    
    
    9.92Third Quarter (January  March)
    
    
    5.08
    
    
    
    1.88
    
    
    
    12.55
    
    
    
    7.16Fourth Quarter (April  June)
    
    
    2.34
    
    
    
    1.05
    
    
    
    7.77
    
    
    
    4.10
 Dividends
  Stock Price Performance Graph
  24




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COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
 
 
 *
    
    $100 invested on 6/30/06 in stock or index, including reinvestment of dividends.
Fiscal year ending June 30. 6/30/2006
    
    
    6/30/2007
    
    
    6/30/2008
    
    
    6/30/2009
    
    
    6/30/2010
    
    
    6/30/2011Energy Conversion Devices, Inc.
    
    
    100.00
    
    
    
    84.60
    
    
    
    202.14
    
    
    
    38.84
    
    
    
    11.25
    
    
    
    3.24NASDAQ Composite
    
    
    100.00
    
    
    
    122.33
    
    
    
    108.31
    
    
    
    86.75
    
    
    
    100.42
    
    
    
    132.75NASDAQ Clean Edge Green Energy
    
    
    100.00
    
    
    
    129.77
    
    
    
    158.48
    
    
    
    88.64
    
    
    
    85.17
    
    
    
    93.87
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Item 6 : Selected Financial Data
  June 30,2011
    
    
    2010(1)
    
    
    2009(1)(2)
    
    
    2008
    
    
    2007(thousands, except per share data)Consolidated Statements of OperationsTotal Revenues
    
    $
    232,546
    
    
    $
    254,416
    
    
    $
    316,293
    
    
    $
    255,861
    
    
    $
    113,567Impairment loss
    
    $
    228,831
    
    
    $
    359,228
    
    
    
    
    
    
    
    
    
    
    
    Restructuring charges
    
    $
    6,700
    
    
    $
    4,736
    
    
    $
    2,231
    
    
    $
    9,396
    
    
    
    Net (loss) income
    
    $
    (306,417
    )
    
    $
    (457,175
    )
    
    $
    7,839
    
    
    $
    3,853
    
    
    $
    (25,231
    )(Loss) earnings per share
    
    $
    (6.40
    )
    
    $
    (10.75
    )
    
    $
    0.19
    
    
    $
    0.10
    
    
    $
    (0.64
    )Diluted (loss) earnings per share
    
    $
    (6.40
    )
    
    $
    (10.75
    )
    
    $
    0.18
    
    
    $
    0.09
    
    
    $
    (0.64
    )Consolidated Balance SheetsTotal Assets
    
    $
    388,478
    
    
    $
    691,947
    
    
    $
    1,076,097
    
    
    $
    1,041,967
    
    
    $
    600,679Long-Term Obligations
    
    $
    251,244
    
    
    $
    263,950
    
    
    $
    269,386
    
    
    $
    342,055
    
    
    $
    25,796
 
 (1)
    
    As adjusted due to the implementation of accounting guidance for own-share lending
arrangements. See Note 1, Nature of Operations, Basis of Presentation and Summary of
Significant Accounting Policies, to our Notes to the Consolidated Financial Statements.(2)
    
    As adjusted due to the implementation of accounting guidance for convertible debt instruments
that may be settled in cash upon conversion. See Note 1, Nature of Operations, Basis of
Presentation and Summary of Significant Accounting Policies, to our Notes to the Consolidated
Financial Statements. 
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Item 7:
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
  Overview
   
    
    Our consolidated financial results are driven primarily by the performance of our
United Solar Ovonic segment. Our United Solar Ovonic segment accounted for 95% and 93% of
our total revenue in the fiscal years ended June 30, 2011 and 2010, respectively. Our
United Solar Ovonic segment generated an operating loss of $269.4 million and $418.0
million in the fiscal years ended June 30, 2011 and 2010, respectively. Given the size of
this segment relative to our other business activities, our overall success in the
foreseeable future will be aligned primarily with the performance of our United Solar
Ovonic segment and subject to the risks of that business. Additionally, we announced in
July 2011 that we are seeking a strategic sale of OBC, which comprises substantially all
of the business of our Ovonic Materials segment (see below). If we successfully
consummate a strategic sale, of which there can be no assurance, then our consolidated
financial results will be driven exclusively by the performance of our United Solar Ovonic
business activities.
    
    Global economic, capital markets and credit disruptions have significantly impacted
current market conditions in the solar market and created uncertainty that is
substantially impacting our United Solar Ovonic solar business.We believe that there
remains strong interest in alternative energy in general and solar in particular, but
existing global political and financial conditions are significantly disrupting key solar
markets. Our United Solar Ovonic segment has been significantly impacted by these
disruptions as reflected by the substantial decline in our solar shipments, revenues and
income during the fiscal third and fourth quarters, principally due to our concentration
in two of these markets  Italy and France. While we believe that these markets will
return as attractive markets for us, albeit with different dynamics, and other markets are
emerging, including the North American market, we have undertaken several initiatives to
improve our business to respond to the near-term disruptions and better position our
Company for the future. These initiatives include restructuring to better align our cost
structure to our expected near-term run rates and strategic priorities, including a
substantial transition of our management leadership; enhancing our focus on our technology
roadmap to improve the conversion efficiency and reduce the cost of our solar products;
adjusting our sales focus in Europe to better balance direct project sales to our existing
channel partners and other leading building materials companies; expanding our sales focus
in North America and emerging markets, particularly with building materials companies, and solar integrators and distributors; and introducing new
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products and programs that leverage the unique characteristics of our products (e.g.,
lightweight, flexible and easy to install/integrate) (see below).
    
    We are focusing our business model on our core channel strategy and introducing new
products and programs that leverage the unique characteristics of our products, and
de-emphasizing our project execution activities, to enhance profitability.We believe
that we are the only commercial scale manufacturer of lightweight flexible photovoltaic
products and that the unique characteristics of our products (e.g., lightweight, flexible
and easy to install/integrate) provide us a significant competitive advantage for certain
applications that can lead to improved revenues and profitability. We have developed
business relationships, particularly in key markets in Europe, with building materials
manufacturers who value these unique characteristics and have core competencies to
leverage these characteristics in delivering integrated solar solutions to their
customers. We have extended this approach in North America and are also developing
business relationships with large commercial roofing installers, who likewise value our
product differentiation. Additionally, we are introducing new products and programs that
leverage the unique characteristics of our products and substantially expand our
addressable markets. For example, we have introduced our PowerShingle product for the
residential market and have begun selling our PowerTilt product for the building-applied
commercial rooftop market. We are also introducing our Open Solar initiative to unlock
innovation and substantially reduce system costs for highly integrated solar solutions for
the rooftop market and adjacent applications (such as landfills), as well as consumer
applications. At the same time, we are de-emphasizing our project execution activities,
which we had developed over the last several years in response to prior market conditions
that temporarily favored larger systems. During fiscal 2011, project execution activities
constituted $65.8 million of revenues, representing 28% of our consolidated revenues. We
believe that there will continue to be large, direct project sale opportunities for our
products, and we are competitively positioned to originate these opportunities based on
our world-class rooftop expertise, which has been derived in part by our considerable
project execution experience. However, we also believe that project execution in most
cases can be handled more effectively by our channel partners and growing number of local,
qualified installers. We, therefore, intend to focus our core rooftop competencies to
secure product sales opportunities, including providing applications engineering and
design support to our customers to facilitate rooftop installations rather than turnkey
systems sales.
    
    We are aggressively reducing costs to improve our overall competitiveness. We are
focused on reducing the cost per watt of our solar products through various initiatives,
including material cost reductions, product enhancements, manufacturing and quality
improvements, and execution of our Technology Roadmap to increase the conversion
efficiency of our solar products. In August 2010, we announced a plan to realign our
solar manufacturing capacity in our United Solar Ovonic segment among our existing
facilities as part of our overall cost-reduction activities. As part of this plan, we
shifted certain final assembly operations from our Auburn Hills, Michigan campus to our
Tijuana, Mexico facility and relocated our corporate headquarters from Rochester Hills to
our Auburn Hills location. In May 2011, we initiated a comprehensive cost- reduction
program that included functional consolidations and organizational realignment addressing
all levels of the organization. We recognized restructuring expenses in connection with
these activities, as detailed elsewhere, and may incur additional restructuring expenses
as we pursue further cost-reduction activities in the future. Additionally, due to market
conditions that are impairing current demand for our solar
products (see above), we are moderating production of our solar products. We are
recognizing under-absorption of fixed overhead costs, and associated period costs, as a
result of these production adjustments that substantially increase our production cost per
watt and may recognize similar costs in the future if we do not sustainably operate our
facilities at productive capacity.
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
    
    We are seeking the strategic sale of OBC, which comprises substantially our entire
Ovonic Materials segment, in order to focus on our United Solar Ovonic business
activities.We have developed proprietary technologies in our Ovonic Materials segment
that we believe have value, including technologies for advanced NiMH and Li-Ion batteries.
The development activities for these technologies have been substantially balanced with
external sources of revenues, such as royalties and development agreements (principally
government contracts), to align our development commercialization efforts at sustainable
levels. We continually evaluate commercialization opportunities and strategic
alternatives to maximize value for these technologies, which may include licenses, joint
ventures and sales. Accordingly, in July 2011, we announced that we are seeking the
strategic sale of OBC, which comprises substantially our entire Ovonic Materials segment.
We expect to account for OBC in the future as Discontinued Operations while the sale
process continues in accordance with GAAP, effectively eliminating OBCs financial
performance from our consolidated financial results and consolidating our remaining
activities into a single business segment.
 Key Indicators of Financial Condition and Operating Performance
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Results of Operations
   Revenues
    
    
    Operating Income (Loss)2011
    
    
    2010
    
    
    2009
    
    
    2011
    
    
    2010
    
    
    2009(1)(in thousands)United Solar Ovonic
    
    $
    221,899
    
    
    $
    237,437
    
    
    $
    302,758
    
    
    $
    (269,449
    )
    
    $
    (418,001
    )
    
    $
    44,447Ovonic Materials
    
    
    10,593
    
    
    
    16,810
    
    
    
    13,317
    
    
    
    4,273
    
    
    
    8,666
    
    
    
    3,912Corporate and Other
    
    
    54
    
    
    
    169
    
    
    
    218
    
    
    
    (22,891
    )
    
    
    (25,766
    )
    
    
    (27,763
    )Consolidated
    
    $
    232,546
    
    
    $
    254,416
    
    
    $
    316,293
    
    
    $
    (288,067
    )
    
    $
    (435,101
    )
    
    $
    20,596
 
 (1)
    
    As adjusted due to the implementation of accounting guidance for convertible debt
instruments that may be settled in cash upon conversion. See Note 1, Nature of Operations,
Basis of Presentation, and Summary of Significant Accounting Policies, to our Notes to the
Consolidated Financial Statements for additional information. Year Ended June 30, 2011 Compared to Year Ended June 30, 2010
 United Solar Ovonic Segment
 Year Ended June 30,2011
    
    
    2010(in thousands)REVENUESProduct sales
    
    $
    154,284
    
    
    $
    197,554System sales
    
    
    65,832
    
    
    
    29,781Revenues from product development agreements
    
    
    1,619
    
    
    
    9,895License and other revenues
    
    
    164
    
    
    
    207TOTAL REVENUES
    
    
    221,899
    
    
    
    237,437EXPENSESCost of product sales
    
    
    144,600
    
    
    
    201,087Cost of system sales
    
    
    65,280
    
    
    
    33,087Cost of revenues from product development agreements
    
    
    599
    
    
    
    8,184Product development and research
    
    
    6,697
    
    
    
    7,900Preproduction costs
    
    
    397
    
    
    
    305Selling, general and administrative
    
    
    42,238
    
    
    
    40,421Loss on disposal of property, plant and equipment
    
    
    205
    
    
    
    1,153Impairment loss
    
    
    228,831
    
    
    
    359,228Restructuring charges
    
    
    2,501
    
    
    
    4,073TOTAL EXPENSES
    
    
    491,348
    
    
    
    655,438OPERATING (LOSS) INCOME
    
    $
    (269,449
    )
    
    $
    (418,001
    )
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Ovonic Materials Segment
 Year Ended June 30,2011
    
    
    2010(in thousands)REVENUESProduct sales
    
    $
    407
    
    
    $
    2,897Royalties
    
    
    8,069
    
    
    
    7,984Revenues from product development agreements
    
    
    754
    
    
    
    1,870License and other revenues
    
    
    1,363
    
    
    
    4,059TOTAL REVENUES
    
    
    10,593
    
    
    
    16,810EXPENSESCost of product sales
    
    
    366
    
    
    
    2,423Cost of revenues from product development agreements
    
    
    408
    
    
    
    1,215Product development and research
    
    
    3,561
    
    
    
    3,447Selling, general and administrative expenses
    
    
    1,985
    
    
    
    1,059TOTAL EXPENSES
    
    
    6,320
    
    
    
    8,144OPERATING INCOME
    
    $
    4,273
    
    
    $
    8,666
    32




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##### Table of Contents



Corporate and Other
  Other Income (Expense)
  Income Taxes
  33




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##### Table of Contents



Year Ended June 30, 2010 Compared to Year Ended June 30, 2009
 United Solar Ovonic Segment
 Year Ended June 30,2010
    
    
    2009(in thousands)REVENUESProduct sales
    
    $
    197,554
    
    
    $
    292,402System sales
    
    
    29,781
    
    
    
    Revenues from product development agreements
    
    
    9,895
    
    
    
    10,356License and other revenues
    
    
    207
    
    
    
    TOTAL REVENUES
    
    
    237,437
    
    
    
    302,758EXPENSESCost of product sales
    
    
    201,087
    
    
    
    206,047Cost of system sales
    
    
    33,087
    
    
    
    Cost of revenues from product development agreements
    
    
    8,184
    
    
    
    7,414Product development and research
    
    
    7,900
    
    
    
    5,412Preproduction costs
    
    
    305
    
    
    
    5,409Selling, general and administrative
    
    
    40,421
    
    
    
    31,397Loss on disposal of property, plant and equipment
    
    
    1,153
    
    
    
    979Impairment loss
    
    
    359,228
    
    
    
    Restructuring charges
    
    
    4,073
    
    
    
    1,653TOTAL EXPENSES
    
    
    655,438
    
    
    
    258,311OPERATING (LOSS) INCOME
    
    $
    (418,001
    )
    
    $
    44,447
     34




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##### Table of Contents



35




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##### Table of Contents



Ovonic Materials Segment
 Year Ended June 30,2010
    
    
    2009(in thousands)REVENUESProduct sales
    
    $
    2,897
    
    
    $
    2,590Royalties
    
    
    7,984
    
    
    
    6,355Revenues from product development agreements
    
    
    1,870
    
    
    
    3,053License and other revenues
    
    
    4,059
    
    
    
    1,319TOTAL REVENUES
    
    
    16,810
    
    
    
    13,317EXPENSESCost of product sales
    
    
    2,423
    
    
    
    2,581Cost of revenues from product development agreements
    
    
    1,215
    
    
    
    2,093Product development and research
    
    
    3,447
    
    
    
    3,574Selling, general and administrative expenses
    
    
    1,059
    
    
    
    1,157TOTAL EXPENSES
    
    
    8,144
    
    
    
    9,405OPERATING INCOME
    
    $
    8,666
    
    
    $
    3,912
    Corporate and Other
  Other Income (Expense)
  36




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##### Table of Contents



Income Taxes
  Liquidity and Capital Resources
  Cash Flows
 Year Ended June 30, 2011 Compared to Year Ended June 30, 2010
    Cash Flows
 Year Ended June 30, 2010 Compared to Year Ended June 30, 2009
   37




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Short-term Borrowings
  Convertible Senior Notes
    38




---



##### Table of Contents



Off-Balance Sheet Arrangements
  Contractual Obligations
  Payments Due by PeriodLess than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    year
    
    
    1-3 years
    
    
    3-5 years
    
    
    years(in thousands)Convertible senior notes
    
    $
    263,153
    
    
    $
    
    
    
    $
    263,153
    
    
    $
    
    
    
    $
    Structured financing
    
    
    11,657
    
    
    
    630
    
    
    
    1,339
    
    
    
    1,438
    
    
    
    8,250Capital lease obligations
    
    
    20,296
    
    
    
    1,278
    
    
    
    3,058
    
    
    
    3,662
    
    
    
    12,298Interest on convertible
senior notes, structured
financing, and capital
lease obligations
    
    
    31,748
    
    
    
    9,977
    
    
    
    11,280
    
    
    
    2,964
    
    
    
    7,527Operating leases
    
    
    24,272
    
    
    
    5,307
    
    
    
    7,740
    
    
    
    6,622
    
    
    
    4,603Purchase obligations
    
    
    58,009
    
    
    
    35,119
    
    
    
    12,845
    
    
    
    8,272
    
    
    
    1,773Total
    
    $
    409,135
    
    
    $
    52,311
    
    
    $
    299,415
    
    
    $
    22,958
    
    
    $
    34,451
  Significant Accounting Policies and Critical Accounting Estimates
  39




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##### Table of Contents



Inventory Reserves
  Warranty Reserve
    Allowance for Uncollectible Accounts
  Accounting for Business Combinations
  Valuation of Long-Lived Assets
  40




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##### Table of Contents



Share-Based Compensation
    Impact of Recent Accounting Pronouncements
  Forward-Looking Statements
   
    
    the worldwide credit markets including sufficiency and availability of credit financing
for solar projects and for our customers;
 41




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##### Table of Contents




    
    the impact of the current lack of credit financing capacity on our customers ability
to meet their obligations to ECD and its subsidiaries;
    
    the worldwide demand for electricity and the market for renewable energy, including
solar energy;
    
    the ability or inability of conventional fossil fuel-based generation technologies to
meet the worldwide demand for electricity;
    
    government subsidies and policies supporting renewable energy, including solar energy;
    
    our expenses, sources of sales and international sales and operations;
    
    our ability to achieve expense reductions and anticipated levels of one-time costs,
including restructuring charges;
    
    potential inability to repay or restructure our outstanding indebtedness;
    
    future pricing of, and demand for, our solar laminates;
    
    the performance, features, costs, and benefits of our solar laminates and plans for the
enhancement of solar laminates;
    
    our ability to maintain high standards of quality in our product;
    
    the supply and price of components and raw materials;
    
    our ability to execute on our Technology Roadmap in a timely and cost-effective manner;
    
    our ability to retain our current key executives, integrate new key executives and
attract and retain other skilled managerial, engineering, sales and marketing personnel;
    
    the viability of our intellectual property and our continued investment in research and
development;
    
    our ability to divest non-core assets and businesses;
    
    payments and other obligations resulting from the unfavorable resolution of legal
proceedings;
    
    changes in, or the failure to comply with, government regulations and environmental,
health and safety requirements;
    
    interest rate fluctuations and both our and our end-users ability to secure financing
on commercially reasonable terms or at all;
    
    general economic and business conditions, including those influenced by international
and geopolitical events; and
    
    our ability to generate internal cash flow or arrange external financing for our
anticipated capital expenditures and Technology Roadmap.
  42




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##### Table of Contents



Item 7A : Quantitative and Qualitative Disclosures about Market Risk
  Interest Rate Risk
   Foreign Exchange Risk
    43




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##### Table of Contents



Item 8 : Financial Statements and Supplementary Data
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Internal ControlIntegrated Framework
  
 44




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##### Table of Contents



ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 Year Ended June 30,2011
    
    
    2010(1)
    
    
    2009(1)RevenuesProduct sales
    
    $
    154,691
    
    
    $
    200,451
    
    
    $
    294,992System sales
    
    
    65,832
    
    
    
    29,781
    
    
    
    Royalties
    
    
    8,070
    
    
    
    7,984
    
    
    
    6,355Revenues from product development agreements
    
    
    2,373
    
    
    
    11,765
    
    
    
    13,409License and other revenues
    
    
    1,580
    
    
    
    4,435
    
    
    
    1,537Total Revenues
    
    
    232,546
    
    
    
    254,416
    
    
    
    316,293ExpensesCost of product sales
    
    
    144,966
    
    
    
    203,510
    
    
    
    208,375Cost of system sales
    
    
    65,280
    
    
    
    33,087
    
    
    
    Cost of revenues from product development agreements
    
    
    1,007
    
    
    
    9,399
    
    
    
    9,507Product development and research
    
    
    10,258
    
    
    
    11,347
    
    
    
    8,986Preproduction costs
    
    
    397
    
    
    
    305
    
    
    
    5,409Selling, general and administrative
    
    
    63,079
    
    
    
    66,797
    
    
    
    58,902Net loss on disposal of property, plant and equipment
    
    
    95
    
    
    
    1,108
    
    
    
    2,287Impairment loss
    
    
    228,831
    
    
    
    359,228
    
    
    
    Restructuring charges
    
    
    6,700
    
    
    
    4,736
    
    
    
    2,231Total Expenses
    
    
    520,613
    
    
    
    689,517
    
    
    
    295,697Operating (Loss) Income
    
    
    (288,067
    )
    
    
    (435,101
    )
    
    
    20,596Other Income (Expense)Interest income
    
    
    2,603
    
    
    
    1,331
    
    
    
    5,226Interest expense
    
    
    (25,404
    )
    
    
    (28,676
    )
    
    
    (15,390
    )Gain on debt extinguishment
    
    
    3,327
    
    
    
    4,294
    
    
    
    Distribution from joint venture
    
    
    
    
    
    
    1,309
    
    
    
    Other nonoperating income (expense), net
    
    
    1,609
    
    
    
    (2,321
    )
    
    
    (1,118
    )Total Other Income (Expense)
    
    
    (17,865
    )
    
    
    (24,063
    )
    
    
    (11,282
    )(Loss) Income before Income Taxes and Equity Loss
    
    
    (305,932
    )
    
    
    (459,164
    )
    
    
    9,314Income tax expense (benefit)
    
    
    394
    
    
    
    (2,248
    )
    
    
    1,475(Loss) Income before Equity Loss
    
    
    (306,326
    )
    
    
    (456,916
    )
    
    
    7,839Equity loss
    
    
    (91
    )
    
    
    (259
    )
    
    
    Net (Loss) Income
    
    
    (306,417
    )
    
    
    (457,175
    )
    
    
    7,839Net Loss Attributable to Noncontrolling Interest
    
    
    (345
    )
    
    
    (113
    )
    
    
    Net (Loss) Income Attributable to ECD Stockholders
    
    $
    (306,072
    )
    
    $
    (457,062
    )
    
    $
    7,839(Loss) Earnings Per Share, Attributable to ECD Stockholders
    
    $
    (6.40
    )
    
    $
    (10.75
    )
    
    $
    0.19Diluted (Loss) Earnings Per Share, Attributable to ECD
Stockholders
    
    $
    (6.40
    )
    
    $
    (10.75
    )
    
    $
    0.18
 
 (1)
    
    As adjusted due to implementation of FASB ASC 470-20 (See Note 1).  45




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##### Table of Contents



ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
(in thousands)
 June 30,2011
    
    
    2010(1)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    27,769
    
    
    $
    79,158Short-term investments
    
    
    102,926
    
    
    
    113,771Accounts receivable, net
    
    
    39,153
    
    
    
    72,021Inventories, net
    
    
    68,499
    
    
    
    61,495Other current assets
    
    
    29,022
    
    
    
    27,237Total Current Assets
    
    
    267,369
    
    
    
    353,682Property, Plant and Equipment, net
    
    
    91,275
    
    
    
    301,056Other Assets:Restricted cash
    
    
    10,009
    
    
    
    11,749Lease receivable, net
    
    
    10,094
    
    
    
    10,854Other assets
    
    
    9,731
    
    
    
    14,606Total Other Assets
    
    
    29,834
    
    
    
    37,209Total Assets
    
    $
    388,478
    
    
    $
    691,947LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable and accrued expenses
    
    $
    46,958
    
    
    $
    56,035Current portion of warranty liability
    
    
    13,642
    
    
    
    12,125Other current liabilities
    
    
    9,897
    
    
    
    9,130Total Current Liabilities
    
    
    70,497
    
    
    
    77,290Long-Term Liabilities:Convertible senior notes
    
    
    232,226
    
    
    
    243,654Capital lease obligations
    
    
    19,018
    
    
    
    20,296Warranty liability
    
    
    24,338
    
    
    
    29,210Other liabilities
    
    
    17,350
    
    
    
    19,872Total Long-Term Liabilities
    
    
    292,932
    
    
    
    313,032Commitments and Contingencies (Note 16)Stockholders EquityCommon stock, $0.01 par value, 150
million shares authorized,
53,311,152 and
48,554,812 issued at
June 30, 2011 and
2010, respectively
    
    
    533
    
    
    
    486Additional paid-in capital
    
    
    1,106,961
    
    
    
    1,079,910Treasury stock
    
    
    (798
    )
    
    
    (700
    )Accumulated deficit
    
    
    (1,080,460
    )
    
    
    (774,388
    )Accumulated other comprehensive loss, net
    
    
    (729
    )
    
    
    (3,570
    )Total ECD stockholders equity
    
    
    25,507
    
    
    
    301,738Accumulated deficit  noncontrolling interest
    
    
    (458
    )
    
    
    (113
    )Total Stockholders Equity
    
    
    25,049
    
    
    
    301,625Total Liabilities and Stockholders Equity
    
    $
    388,478
    
    
    $
    691,947
 
 (1)
    
    As adjusted due to implementation of FASB ASC 470-20 (See Note 1).  46




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##### Table of Contents



ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Year Ended June 30,2011
    
    
    2010(1)
    
    
    2009(1)Cash flows from operating activities:Net (loss) income
    
    $
    (306,417
    )
    
    $
    (457,175
    )
    
    $
    7,839Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities:Impairment loss
    
    
    228,829
    
    
    
    359,228
    
    
    
    Depreciation and amortization
    
    
    18,045
    
    
    
    32,708
    
    
    
    33,605Amortization of debt discount and deferred financing fees
    
    
    16,547
    
    
    
    17,157
    
    
    
    15,380Share-based compensation
    
    
    5,342
    
    
    
    4,428
    
    
    
    5,273Gain on debt extinguishment
    
    
    (3,327
    )
    
    
    (4,294
    )
    
    
    Other-than-temporary impairment of investment
    
    
    
    
    
    
    
    
    
    
    1,002Net loss on disposal of property, plant and equipment
    
    
    95
    
    
    
    1,258
    
    
    
    2,287Equity loss
    
    
    91
    
    
    
    259
    
    
    
    Other
    
    
    
    
    
    
    (180
    )
    
    
    (597
    )Changes in operating assets and liabilities, net of foreign exchange:Accounts receivable
    
    
    33,783
    
    
    
    (8,538
    )
    
    
    (17,376
    )Inventories
    
    
    (4,097
    )
    
    
    35,283
    
    
    
    (43,054
    )Other assets
    
    
    (5,855
    )
    
    
    (8,634
    )
    
    
    (7,054
    )Accounts payable and accrued expenses
    
    
    (5,810
    )
    
    
    (7,201
    )
    
    
    13,714Other liabilities
    
    
    (1,376
    )
    
    
    1,525
    
    
    
    70Net cash (used in) provided by operating activities
    
    
    (24,150
    )
    
    
    (34,176
    )
    
    
    11,089Cash flows from investing activities:Purchases of property, plant and equipment
    
    
    (38,418
    )
    
    
    (31,992
    )
    
    
    (242,257
    )Acquisition of business, net of cash acquired
    
    
    
    
    
    
    (2,088
    )
    
    
    Investment in joint venture
    
    
    
    
    
    
    
    
    
    
    (1,000
    )Purchases of investments
    
    
    (87,316
    )
    
    
    (102,657
    )
    
    
    (203,355
    )Proceeds from maturity and sale of investments
    
    
    94,469
    
    
    
    231,880
    
    
    
    6,150Proceeds from sale of property, plant and equipment
    
    
    219
    
    
    
    48
    
    
    
    Development loans
    
    
    7,177
    
    
    
    (14,155
    )
    
    
    Restricted cash
    
    
    1,740
    
    
    
    (10,186
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    (22,129
    )
    
    
    70,850
    
    
    
    (440,462
    )Cash flows from financing activities:Principal payments under capitalized lease obligations and other debt
    
    
    (1,610
    )
    
    
    (1,549
    )
    
    
    (1,054
    )Repayment of revolving credit facility
    
    
    
    
    
    
    (5,705
    )
    
    
    Repayment of convertible notes
    
    
    
    
    
    
    (8,000
    )
    
    
    Increase in long-term customer deposits
    
    
    
    
    
    
    
    
    
    
    Proceeds from sale of stock and share-based compensation, net of
expenses
    
    
    
    
    
    
    
    
    
    
    1,966Net cash (used in) provided by financing activities
    
    
    (1,610
    )
    
    
    (15,254
    )
    
    
    912Effect of exchange rate changes on cash and cash equivalents
    
    
    (3,500
    )
    
    
    1,359
    
    
    
    348Net increase (decrease) in cash and cash equivalents
    
    
    (51,389
    )
    
    
    22,779
    
    
    
    (428,113
    )Cash and cash equivalents at beginning of period
    
    
    79,158
    
    
    
    56,379
    
    
    
    484,492Cash and cash equivalents at end of period
    
    $
    27,769
    
    
    $
    79,158
    
    
    $
    56,379
 
 (1)
    
    As adjusted due to implementation of FASB ASC 470-20 (See Note 1).  47




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##### Table of Contents



ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
AND COMPREHENSIVE INCOME (LOSS)
 (in thousands)
 Treasury Stock
    
    
    
    
    
    
    
    
    
    
    AccumulatedCommon Stock


    
    
    Additional
    
    
    Number
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    TotalNumber
    
    
    
    
    
    
    Paid In
    
    
    of
    
    
    
    
    
    
    Accumulated
    
    
    Noncontrolling
    
    
    Comprehensive
    
    
    Stockholdersof Shares
    
    
    Amount
    
    
    Capital
    
    
    Shares
    
    
    Amount
    
    
    Deficit
    
    
    Interest
    
    
    Income (Loss)
    
    
    EquityBalance at June 30, 2008
    
    
    45,575
    
    
    $
    456
    
    
    $
    969,421
    
    
    
    (11
    )
    
    $
    (700
    )
    
    $
    (325,165
    )
    
    $
    
    
    
    $
    (2,100
    )
    
    $
    641,912Net income(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,839
    
    
    
    
    
    
    
    
    
    
    
    7,839Unrealized gain on
investments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,292
    
    
    
    2,292Foreign currency
translation losses, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,622
    )
    
    
    (1,622
    )Unrealized losses on
derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (66
    )
    
    
    (66
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,443Equity component from
issuance of convertible
debt(1)
    
    
    
    
    
    
    
    
    
    
    84,630
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84,630Share-based compensation
expense, net of shares
issued
    
    
    180
    
    
    
    2
    
    
    
    7,168
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,170Equity offering expenses
    
    
    
    
    
    
    
    
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14
    )Balance at June 30, 2009
    
    
    45,755
    
    
    
    458
    
    
    
    1,061,205
    
    
    
    (11
    )
    
    
    (700
    )
    
    
    (317,326
    )
    
    
    
    
    
    
    (1,496
    )
    
    
    742,141Net loss(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (457,062
    )
    
    
    
    
    
    
    
    
    
    
    (457,062
    )Unrealized losses on
investments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (469
    )
    
    
    (469
    )Foreign currency
translation losses, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,554
    )
    
    
    (1,554
    )Unrealized losses on
derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51
    )
    
    
    (51
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (459,136
    )Noncontrolling interest
loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (113
    )
    
    
    
    
    
    
    (113
    )Common stock issued in
connection with
convertible debt exchange
    
    
    2,771
    
    
    
    28
    
    
    
    14,277
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,305Share-based compensation
expense, net of shares
issued
    
    
    29
    
    
    
    
    
    
    
    4,428
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,428Stock repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance
at June 30, 2010
    
    
    48,555
    
    
    
    486
    
    
    
    1,079,910
    
    
    
    (15
    )
    
    
    (700
    )
    
    
    (774,388
    )
    
    
    (113
    )
    
    
    (3,570
    )
    
    
    301,625Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (306,072
    )
    
    
    
    
    
    
    
    
    
    
    (306,072
    )Unrealized gains on
investments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    564
    
    
    
    564Foreign currency
translation gains, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,513
    
    
    
    2,513Unrealized loss on
derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (236
    )
    
    
    (236
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (303,231
    )Noncontrolling interest loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (345
    )
    
    
    
    
    
    
    (345
    )Common stock issued in
connection with convertible
debt exchange
    
    
    4,711
    
    
    
    47
    
    
    
    21,709
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,756Share-based compensation
expense, net of shares
issued
    
    
    45
    
    
    
    
    
    
    
    5,342
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,342Stock repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29
    )
    
    
    (98
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (98
    )Balance
at June 30, 2011
    
    
    53,311
    
    
    $
    533
    
    
    $
    1,106,961
    
    
    
    (44
    )
    
    $
    (798
    )
    
    $
    (1,080,460
    )
    
    $
    (458
    )
    
    $
    (729
    )
    
    $
    25,049
 
 (1)
    
    As adjusted due to implementation of FASB ASC 470-20 (See Note 1).  48




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Nature of Operations, Basis of Presentation and Summary of Significant Accounting
Policies
 Nature of Operations
   Basis of Presentation
     49




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Summary of Significant Accounting Policies
 Use of Estimates
  Foreign Currency Translation
  Product Sales
     50




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  System Sales
   Royalties
  Business Agreements
    51




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Other Operating Revenues
  Deferred Revenues
  Product Development, Patents and Technology
  Preproduction Costs
  52




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Other Nonoperating Income (Expense)
  Cash and Cash Equivalents
  Restricted Cash
    Investments
  53




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Accounts Receivable
  Inventories
  Property, Plant, and Equipment
  YearsBuildings and improvements*
    
    1 to 33Machinery and other equipment
    
    3 to 12.5Assets under capitalized leases
    
    3 to 20
 
 *
    
    Includes leasehold improvements which are amortized
over the shorter of the balance of the lease term or the
life of the improvement, ranging from one to 20 years.     54




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Capitalized Interest
  Warranty Reserve
   Asset Retirement Obligations
  Income Taxes
   55




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Derivative Instruments
 Derivatives and Hedging
 Recent Accounting Pronouncements Not Yet Adopted
   Recently Adopted Accounting Pronouncements
 Disclosures
About the Credit Quality of Financing Receivables and the Allowance for Credit Losses Receivables
 Consolidations
 56




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Revenue Recognition (Topic 605):
Multiple-Deliverable Revenue Arrangements  a Consensus of the FASB Emerging Issues Task Force
 Accounting for Own-Share Lending
Arrangements in Contemplation of Convertible Debt Issuance or Other Financing
 Debt with
Conversion and Other Options
 57




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Consolidated Statement of Operationsfor the Year Ended June 30, 2010As PreviouslyReported
    
    
    ASC 470-20
    
    
    As Reported(in thousands, except per share amounts)Interest expense
    
    $
    (27,510
    )
    
    $
    (1,166
    )
    
    $
    (28,676
    )Total Other Income (Expense)
    
    
    (22,897
    )
    
    
    (1,166
    )
    
    
    (24,063
    )Loss before Income Taxes
and Equity Loss
    
    
    (457,998
    )
    
    
    (1,166
    )
    
    
    (459,164
    )Loss before Equity Loss
    
    
    (455,750
    )
    
    
    (1,166
    )
    
    
    (456,916
    )Net Loss
    
    
    (456,009
    )
    
    
    (1,166
    )
    
    
    (457,175
    )Net loss attributable to
ECD Stockholders
    
    
    (455,896
    )
    
    
    (1,166
    )
    
    
    (457,062
    )Loss per share
    
    
    (10.72
    )
    
    
    (0.03
    )
    
    
    (10.75
    )Diluted loss per share
    
    
    (10.72
    )
    
    
    (0.03
    )
    
    
    (10.75
    )
 Consolidated Balance Sheet as ofJune 30, 2010As PreviouslyReported
    
    
    ASC 470-20
    
    
    As Reported(in thousands)Other assets
    
    $
    10,980
    
    
    $
    3,626
    
    
    $
    14,606Total assets
    
    
    688,321
    
    
    
    3,626
    
    
    
    691,947Additional paid-in capital
    
    
    1,074,410
    
    
    
    5,500
    
    
    
    1,079,910Accumulated deficit
    
    
    (772,514
    )
    
    
    (1,874
    )
    
    
    (774,388
    )Total ECD stockholders equity
    
    
    298,112
    
    
    
    3,626
    
    
    
    301,738Total stockholders equity
    
    
    297,999
    
    
    
    3,626
    
    
    
    301,625Total liabilities and stockholders equity
    
    
    688,321
    
    
    
    3,626
    
    
    
    691,947
 Consolidated Statement of Cash Flowsfor the Year Ended June 30, 2010As PreviouslyReported
    
    
    ASC 470-20
    
    
    As Reported(in thousands)Net loss
    
    $
    (456,009
    )
    
    $
    (1,166
    )
    
    $
    (457,175
    )Amortization of debt
discount and deferred
financing fees
    
    
    15,991
    
    
    
    1,166
    
    
    
    17,157
 58




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Consolidated Statement of Operations for theYear Ended June 30, 2009As PreviouslyReported
    
    
    ASC 470-20
    
    
    As Reported(in thousands, except per share amounts)Cost of product sales
    
    $
    208,285
    
    
    $
    90
    
    
    $
    208,375Total Expense
    
    
    295,607
    
    
    
    90
    
    
    
    295,697Operating income
    
    
    20,686
    
    
    
    (90
    )
    
    
    20,596Interest expense
    
    
    (10,863
    )
    
    
    (4,527
    )
    
    
    (15,390
    )Total other expense
    
    
    (6,755
    )
    
    
    (4,527
    )
    
    
    (11,282
    )Net income before income taxes
    
    
    13,931
    
    
    
    (4,617
    )
    
    
    9,314Net income
    
    
    12,456
    
    
    
    (4,617
    )
    
    
    7,839Earnings per share
    
    
    0.29
    
    
    
    (0.10
    )
    
    
    0.19Diluted earnings per share
    
    
    0.29
    
    
    
    (0.11
    )
    
    
    0.18
 Consolidated Statement of Cash Flows for theYear Ended June 30, 2009As PreviouslyReported
    
    
    ASC 470-20
    
    
    As Reported(in thousands)Net income
    
    $
    12,456
    
    
    $
    (4,617
    )
    
    $
    7,839Depreciation and amortization
    
    
    33,515
    
    
    
    90
    
    
    
    33,605Amortization of debt discount
and deferred financing fees
    
    
    
    
    
    
    15,380
    
    
    
    15,380
 Business Combinations
 Note 2  Liquidity and Continued Listing Requirements
  59




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     60




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3  Earnings (Loss) Per Share
  Net Income (Loss)Attributable to ECD
    
    
    
    
    
    EarningsStockholders
    
    Shares
    
    (Loss) Per(Numerator)
    
    (Denominator)
    
    Share(in thousands, except per share amounts)Year Ended June 30, 2011Basic and Diluted
    
    $
    (306,072
    )
    
    
    47,827
    
    
    $
    (6.40
    )Year Ended June 30, 2010Basic and Diluted(1)
    
    $
    (457,062
    )
    
    
    42,533
    
    
    $
    (10.75
    )Year Ended June 30, 2009Basic(1)
    
    $
    7,839
    
    
    
    42,277
    
    
    $
    0.19Effect of dilutive securities:Stock warrants
    
    
    
    
    
    
    133
    
    
    
    Stock options
    
    
    
    
    
    
    301
    
    
    
    (0.01
    )Diluted(1)
    
    $
    7,839
    
    
    
    42,711
    
    
    $
    0.18
 
 (1)
    
    As adjusted due to the implementation of FASB 470-20.    61




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Year Ended June 30,2011
    
    2010
    
    2009(in thousands)Share-based payment arrangements
    
    
    1,451
    
    
    
    1,089
    
    
    160
 Note 4  Supplemental Cash Flow Information
  Year Ended June 30,2011
    
    
    2010
    
    
    2009(in thousands)Supplemental disclosures:Cash paid for interest, including capitalized interest
    
    $
    10,661
    
    
    $
    11,833
    
    
    $
    11,605Cash paid for income taxes
    
    
    548
    
    
    
    342
    
    
    
    809Increase (decrease) in accounts payable for capital expenditures
    
    
    (10,094
    )
    
    
    6,989
    
    
    
    (4,439
    )Non-cash transactions:Auction rate securities rights
    
    
    
    
    
    
    
    
    
    
    3,938
 Note 5  Acquisition
   Purchase Price Allocation
  62




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands)Cash
    
    $
    9,180Accounts receivable
    
    
    9,962Inventory
    
    
    24,031Other current assets
    
    
    2,372Long-term receivables
    
    
    11,769Property, plant and equipment
    
    
    2,030Other long-term assets
    
    
    2,010Identifiable intangible assets
    
    
    2,780Goodwill
    
    
    35,299Warranty liability
    
    
    (38,548
    )Current liabilities
    
    
    (27,293
    )Long-term liabilities
    
    
    (21,913
    )Total net assets acquired
    
    $
    11,679
   Year EndedJune 30,2010(1)
    
    
    2009(1)(in thousands)Actual AmountsRevenues
    
    $
    43,916
    
    
    
    N/ANet loss attributable to ECD stockholders
    
    
    (57,821
    )
    
    
    N/APro Forma InformationRevenues
    
    $
    259,310
    
    
    $
    358,154Net (loss) income attributable to ECD
stockholders
    
    
    (460,729
    )
    
    
    (42,843
    )(Loss) earnings per share
    
    
    (10.83
    )
    
    
    (1.01
    )Diluted (loss) earnings per share
    
    
    (10.83
    )
    
    
    (1.00
    )
 
 (1)
    
    As adjusted due to the implementation of FASB ASC 470-20.  Goodwill
  63




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (in thousands)Balance at June 30, 2009
    
    $
    SIT acquisition
    
    
    35,299Foreign currency impact
    
    
    54Impairment loss
    
    
    (35,353
    )Balance at June 30, 2010
    
    $
    
  Intangible Assets
    June 30, 2010Gross
    
    
    Accumulated
    
    
    ImpairmentValue
    
    
    Amortization
    
    
    Loss
    
    
    Net Value(in thousands)Customer contracts
    
    $
    842
    
    
    $
    (379
    )
    
    $
    (463
    )
    
    $
    Proprietary
processes
    
    
    190
    
    
    
    (13
    )
    
    
    (177
    )
    
    
    Order backlog
    
    
    276
    
    
    
    (129
    )
    
    
    (147
    )
    
    
    Total
    
    $
    1,308
    
    
    $
    (521
    )
    
    $
    (787
    )
    
    $
    
 Note 6  Investments
 Short-Term Investments
  64




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Amortized
    
    
    Gross Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(in thousands)June 30, 2011Corporate bonds
    
    $
    102,730
    
    
    $
    223
    
    
    $
    (1,028
    )
    
    $
    101,925U.S. government securities
    
    
    1,001
    
    
    
    
    
    
    
    
    
    
    
    1,001$
    103,731
    
    
    $
    223
    
    
    $
    (1,028
    )
    
    $
    102,926June 30, 2010Corporate bonds
    
    $
    89,935
    
    
    $
    5
    
    
    $
    (1,377
    )
    
    $
    88,563U.S. government securities
    
    
    11,001
    
    
    
    4
    
    
    
    
    
    
    
    11,005Auction rate certificates
    
    
    14,200
    
    
    
    
    
    
    
    (1,731
    )
    
    
    12,469Auction rate securities rights
    
    
    
    
    
    
    1,734
    
    
    
    
    
    
    
    1,734$
    115,136
    
    
    $
    1,743
    
    
    $
    (3,108
    )
    
    $
    113,771
  June 30,2011
    
    
    2010Amortized
    
    
    Market
    
    
    Amortized
    
    
    MarketCost
    
    
    value
    
    
    Cost
    
    
    Value(in thousands)Due in less than one year
    
    $
    68,091
    
    
    $
    67,260
    
    
    $
    38,586
    
    
    $
    39,189Due after one year
through five years
    
    
    35,640
    
    
    
    35,666
    
    
    
    76,550
    
    
    
    74,582$
    103,731
    
    
    $
    102,926
    
    
    $
    115,136
    
    
    $
    113,771
  65




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7  Accounts Receivable
  June 30,2011
    
    
    2010(in thousands)BilledTrade
    
    $
    33,715
    
    
    $
    62,796Related parties
    
    
    
    
    
    
    269Other
    
    
    198
    
    
    
    1,433Subtotal
    
    
    33,913
    
    
    
    64,498UnbilledRoyalties under license agreements
    
    
    4,646
    
    
    
    4,557Government contracts
    
    
    208
    
    
    
    1,179Government grants
    
    
    2,480
    
    
    
    1,866Related parties
    
    
    2
    
    
    
    24Other
    
    
    1,838
    
    
    
    1,660Subtotal
    
    
    9,174
    
    
    
    9,286Less allowance for uncollectible accounts
    
    
    (3,934
    )
    
    
    (1,763
    )$
    39,153
    
    
    $
    72,021
  Note 8  Sales-Type Lease Receivables
   June 30, 2011(in thousands)Total minimum lease payments receivable
    
    $
    17,002Less: Unearned income
    
    
    (6,005
    )Net investment in sales-type leases
    
    $
    10,997
 66




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Fiscal Year
    
    (in thousands)2012
    
    $
    1,0132013
    
    
    1,0342014
    
    
    1,0542015
    
    
    1,0752016
    
    
    1,096Thereafter
    
    
    11,571$
    16,843
 Note 9  Inventories
  June 30,2011
    
    
    2010(in thousands)Finished products
    
    $
    40,429
    
    
    $
    27,690Work in process
    
    
    17,578
    
    
    
    13,905Raw materials
    
    
    10,492
    
    
    
    19,900$
    68,499
    
    
    $
    61,495
  Note 10  Property, Plant and Equipment, Net
  June 30,2011
    
    
    2010(in thousands)Machinery and equipment
    
    $
    41,143
    
    
    $
    187,546Machinery and equipment  under capital leases
    
    
    261
    
    
    
    305Buildings and improvements
    
    
    15,892
    
    
    
    36,175Buildings under capital leases
    
    
    9,146
    
    
    
    16,880Land
    
    
    1,260
    
    
    
    1,260Construction in progress
    
    
    40,101
    
    
    
    122,276Subtotal
    
    
    107,803
    
    
    
    364,442Less accumulated depreciation and amortization
    
    
    (16,528
    )
    
    
    (63,386
    )Total
    
    $
    91,275
    
    
    $
    301,056
  67




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Note 11  Investments in Affiliates
 Ovonyx, Inc.
    United Solar Ovonic Jinneng Limited
  68




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Note 12  Liabilities
 Warranty Liability
  (in thousands)Liability at June 30, 2010
    
    $
    41,335Warranty expense
    
    
    4,322Warranty claims
    
    
    (9,210
    )Foreign currency impact
    
    
    1,533Liability at June 30, 2011
    
    $
    37,980
 Government Contracts, Reserves and Liabilities
  Other Long-Term Liabilities
  June 30,2011
    
    
    2010(in thousands)Structured financing
    
    $
    12,140
    
    
    $
    12,929Long-term retirement
    
    
    1,420
    
    
    
    1,663Customer deposits
    
    
    
    
    
    
    120Deferred patent license fees
    
    
    2,381
    
    
    
    3,333Deferred revenue and royalties
    
    
    297
    
    
    
    297Rent payable
    
    
    826
    
    
    
    1,145Other
    
    
    286
    
    
    
    385$
    17,350
    
    
    $
    19,872
  Long-Term Retirement
  69




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Note 13  Employee Benefit Plans
  Note 14  Derivative and Hedging Activities
    Note 15  Long-Term Debt
 Lines of Credit
   70




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Convertible Senior Notes
    Accounting for Own-Share Lending
Arrangements in Contemplation of Convertible Debt Issuance or Other Financing
  June 30,
    
    
    June 30,2011
    
    
    2010(in thousands)Outstanding principal
    
    $
    263,153
    
    
    $
    293,250Less: unamortized discount
    
    
    30,927
    
    
    
    49,596Net carrying amount
    
    $
    232,226
    
    
    $
    243,654
 71




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year Ended June 30,2011
    
    
    2010(in thousands)Contractual interest
    
    $
    8,337
    
    
    $
    9,043Amortization of discount
    
    
    14,228
    
    
    
    18,680Amortization of debt issue costs
    
    
    2,318
    
    
    
    2,878Gross interest expense recognized
    
    $
    24,883
    
    
    $
    30,601
   Structured Financing
  Convertible Notes
  72




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year
    
    Long-Term Debt
    
    
    Capital Lease Obligations
    
    
    Total(in thousands)2012
    
    $
    630
    
    
    $
    1,278
    
    
    $
    1,9082013
    
    
    263,809
    
    
    
    1,411
    
    
    
    265,2202014
    
    
    683
    
    
    
    1,647
    
    
    
    2,3302015
    
    
    704
    
    
    
    1,926
    
    
    
    2,6302016
    
    
    734
    
    
    
    1,736
    
    
    
    2,470Thereafter
    
    
    8,250
    
    
    
    12,298
    
    
    
    20,548Total
    
    $
    274,810
    
    
    $
    20,296
    
    
    $
    295,106
 Note 16  Commitments and Contingencies
 Operating Leases
   (in thousands)2012
    
    $
    5,3072013
    
    
    4,1682014
    
    
    3,5722015
    
    
    3,2722016
    
    
    3,350Thereafter
    
    
    4,60324,272Less sublease income
    
    
    (146
    )Net future minimum payments
    
    $
    24,126
 Note 17  Impairment Loss
   73




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Note 18  Royalties, Nonrefundable Advance Royalties and License Agreements
    Note 19  Restructuring Charges
  74




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Employee-Related
    
    
    OtherExpenses
    
    
    Expenses
    
    
    Total(in thousands)Balance June 30, 2009
    
    $
    840
    
    
    $
    
    
    
    $
    840Liability assumed in SIT acquisition
    
    
    122
    
    
    
    
    
    
    
    122Charges
    
    
    4,527
    
    
    
    209
    
    
    
    4,736Utilization or payment
    
    
    (2,178
    )
    
    
    (209
    )
    
    
    (2,387
    )Balance June 30, 2010
    
    $
    3,311
    
    
    $
    
    
    
    $
    3,311Charges
    
    
    6,431
    
    
    
    269
    
    
    
    6,700Utilization or payment
    
    
    (4,880
    )
    
    
    (269
    )
    
    
    (5,149
    )Currency Translation
    
    
    (14
    )
    
    
    
    
    
    
    (14
    )Balance June 30, 2011
    
    $
    4,848
    
    
    $
    
    
    
    $
    4,848
  Note 20  Share-Based Compensation
    Number of SharesJune 30, 2011
    
    
    June 30, 2010Stock options
    
    
    519,699
    
    
    
    864,849Restricted stock units
    
    
    4,978,010
    
    
    
    598,396Convertible Investment Certificates
    
    
    5,094
    
    
    
    5,210Total shares authorized
    
    
    5,502,803
    
    
    
    1,468,455
 75




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Stock Options
    2010
    
    
    2009Estimated fair value
    
    $
    9.24
    
    
    $
    35.43AssumptionsDividend Yield
    
    
    0
    %
    
    
    0
    %Volatility %
    
    
    73.47
    %
    
    
    65.04
    %Risk-Free Interest Rate
    
    
    3.13
    %
    
    
    2.95
    %Expected Life
    
    7.26 years
    
    7.03 years
  76




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 AggregateWeighted-
    
    
    IntrinsicAverage
    
    
    Value(1)Shares
    
    
    Exercise Price
    
    
    (in thousands)Outstanding at June
30, 2008
    
    
    964,586
    
    
    $
    21.24
    
    
    $
    50,541Granted
    
    
    94,870
    
    
    $
    56.00Exercised
    
    
    (158,166
    )
    
    $
    12.52
    
    
    $
    6,817Expired
    
    
    (3,190
    )
    
    $
    23.63Forfeited
    
    
    (3,596
    )
    
    $
    54.14Outstanding at June
30, 2009
    
    
    894,504
    
    
    $
    26.33
    
    
    $
    387Granted
    
    
    19,500
    
    
    $
    12.98Exercised
    
    
    
    
    
    
    Expired
    
    
    (37,151
    )
    
    $
    36.38Forfeited
    
    
    (12,004
    )
    
    $
    65.09Outstanding at June
30, 2010
    
    
    864,849
    
    
    $
    25.06
    
    
    $
    Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Expired
    
    
    (320,380
    )
    
    $
    22.84Forfeited
    
    
    (24,770
    )
    
    $
    24.56Outstanding at June
30, 2011
    
    
    519,699
    
    
    $
    26.45
    
    
    $
    
 
 (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.  Weighted-
    
    
    
    
    
    
    Weighted-AverageAverage
    
    
    Aggregate
    
    
    Contractual LifeExercise
    
    
    Intrinsic
    
    
    RemainingShares
    
    
    Price
    
    
    Value(1)
    
    
    in Years(in thousands)Exercisable at June 30, 2011
    
    
    487,595
    
    
    $
    24.89
    
    
    $
    
    
    
    
    2.17Exercisable at June 30, 2010
    
    
    726,944
    
    
    $
    22.75
    
    
    $
    
    
    
    
    2.80Exercisable at June 30, 2009
    
    
    709,074
    
    
    $
    21.85
    
    
    $
    376
    
    
    
    3.58
 
 (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.  Restricted Stock Awards
  77




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  WeightedAverageNumber of
    
    
    Grant DateShares
    
    
    Fair ValueNonvested at June 30, 2008
    
    
    89,834
    
    
    $
    31.49Awarded
    
    
    26,500
    
    
    $
    43.03Vested
    
    
    
    
    
    
    Forfeited
    
    
    (5,568
    )
    
    $
    35.92Released from restriction
    
    
    (13,348
    )
    
    
    33.46Nonvested at June 30, 2009
    
    
    97,418
    
    
    $
    34.10Awarded
    
    
    13,290
    
    
    $
    9.58Vested
    
    
    
    
    
    
    Forfeited
    
    
    (525
    )
    
    $
    9.58Released from restriction
    
    
    (8,515
    )
    
    $
    32.76Nonvested at June 30, 2010
    
    
    101,668
    
    
    $
    31.14Awarded
    
    
    VestedForfeited
    
    
    (3,380
    )
    
    $
    20.23Released from restriction
    
    
    (55,805
    )
    
    $
    29.64Nonvested at June 30, 2011
    
    
    42,483
    
    
    $
    33.96
  Restricted Stock Units
  78




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Weighted-AverageNumber of
    
    
    Grant DateShares
    
    
    Fair ValueNonvested at June 30, 2008
    
    
    2,500
    
    
    $
    73.64Awarded
    
    
    208,428
    
    
    $
    52.70Vested
    
    
    (760
    )
    
    $
    76.74Forfeited
    
    
    (5,700
    )
    
    $
    60.49Nonvested at June 30, 2009
    
    
    204,468
    
    
    $
    52.63Awarded
    
    
    289,524
    
    
    $
    11.07Vested
    
    
    
    
    
    
    Forfeited
    
    
    (73,372
    )
    
    $
    39.78Exchanged
    
    
    (95,234
    )
    
    $
    52.36Released from restriction
    
    
    (15,764
    )
    
    $
    20.13Nonvested at June 30, 2010
    
    
    309,622
    
    
    $
    18.57Awarded
    
    
    1,803,754
    
    
    $
    3.95VestedForfeited
    
    
    (206,319
    )
    
    $
    10.35Released from restriction
    
    
    (53,100
    )
    
    $
    10.21Nonvested at June 30, 2011
    
    
    1,853,957
    
    
    $
    5.49
  Warrants
  Note 21  Fair Value Measurements
   79




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
    
    Level 1  Quoted prices in active markets for identical assets or liabilities
    
    Level 2  Valuations based on quoted prices in markets that are not active,
quoted prices for similar assets or liabilities or all other inputs that are
observable
    
    Level 3  Unobservable inputs for which there is little or no market data which
require the Company to develop its own assumptions
    As of June 30, 2011Fair Value Measurements atReporting Date UsingTotal FairValue andCarrying ValueLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    on our Balance Sheet(in thousands)Investments in corporate bonds
    
    $
    87,426
    
    
    $
    14,499
    
    
    
    
    
    
    $
    101,925Investments in U.S. government
securities
    
    
    
    
    
    
    1,001
    
    
    
    
    
    
    
    1,001Investments in money market funds
    
    
    9,733
    
    
    
    
    
    
    
    
    
    
    
    9,733
 As of June 30, 2010Fair Value Measurements atReporting Date UsingTotal FairValue andCarrying ValueLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    on our Balance Sheet(in thousands)Auction rate certificates
    
    
    
    
    
    
    
    
    
    $
    12,469
    
    
    $
    12,469Auction rate securities rights
    
    
    
    
    
    
    
    
    
    
    1,734
    
    
    
    1,734Investments in corporate bonds
    
    $
    84,378
    
    
    $
    4,185
    
    
    
    
    
    
    
    88,563Investments in U.S. government
securities
    
    
    
    
    
    
    11,005
    
    
    
    
    
    
    
    11,005Investments in money market funds
    
    
    59,375
    
    
    
    
    
    
    
    
    
    
    
    59,375
 80




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Auction RateAuction Rate
    
    
    SecuritiesCertificates
    
    
    Rights(in thousands)Balance at July 1, 2010
    
    $
    12,469
    
    
    $
    1,734Redeemed by UBS
    
    
    (14,200
    )
    
    
    Net gain (loss) recognized in earnings
    
    
    1,731
    
    
    
    (1,734
    )Balance at June 30, 2011
    
    $
    
    
    
    $
    
    As of June 30, 2011
    
    
    As of June 30, 2010Level 3(in thousands)Property, plant and equipment, net
    
    $
    86,709
    
    
    $
    296,007Goodwill
    
    
    
    
    
    
    Intangible assets, net
    
    
    
    
    
    
    
 Note 22  Income Taxes
   June 30, 2011
    
    
    June 30, 2010(in thousands)Federal Income Tax
    
    $
    (11
    )
    
    $
    (2,598
    )State Income Tax
    
    
    31
    
    
    
    (44
    )Foreign Income Tax
    
    
    374
    
    
    
    394Total Income Taxes
    
    $
    394
    
    
    $
    (2,248
    )
 81




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Statutory rate (benefit)
    
    
    (34.00
    %)State taxes
    
    
    0.01
    %Permanent adjustments
    
    
    0.98
    %Foreign taxes
    
    
    0.12
    %Change-in-valuation allowance
    
    
    33.02
    %Effective rate
    
    
    0.13
    %
  June 30,2011
    
    
    2010(in thousands)Deferred tax asset:Basis difference in intangibles
    
    $
    9,405
    
    
    $
    9,885U.S. NOL carryforwards
    
    
    169,610
    
    
    
    138,849Foreign NOL carryfowards
    
    
    7,261
    
    
    
    R&D credit carryforwards
    
    
    6,337
    
    
    
    8,021AMT credit carryforwards
    
    
    875
    
    
    
    1,968Capital loss
    
    
    
    
    
    
    663Warranty reserve
    
    
    6,455
    
    
    
    11,470Basis and depreciation differences of property
    
    
    178,015
    
    
    
    109,800Employee stock options
    
    
    12,237
    
    
    
    10,655All other
    
    
    23,545
    
    
    
    23,861413,740
    
    
    
    315,172Deferred tax liability:Convertible debt
    
    
    (10,515
    )
    
    
    (16,862
    )All other
    
    
    (76
    )
    
    
    (544
    )Net deferred tax asset
    
    
    403,149
    
    
    
    297,766Valuation allowance
    
    
    (403,149
    )
    
    
    (296,681
    )Net deferred tax asset
    
    $
    
    
    
    $
    1,085
  Compensation  Stock Compensation
 82




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   U.S. Net TaxOperating Loss
    
    
    U.S. R&D CreditCarryforward
    
    
    Carryforward(in thousands)2012
    
    $
    21,183
    
    
    $
    7202013
    
    
    
    
    
    
    2014
    
    
    
    
    
    
    2015
    
    
    
    
    
    
    2016
    
    
    
    
    
    
    2017
    
    
    
    
    
    
    2018
    
    
    19,272
    
    
    
    5632019
    
    
    8,212
    
    
    
    1,2672020
    
    
    10,170
    
    
    
    9872021
    
    
    4,674
    
    
    
    1642022
    
    
    24,353
    
    
    
    2023
    
    
    36,846
    
    
    
    2024
    
    
    71,840
    
    
    
    4632025
    
    
    9,394
    
    
    
    4152026
    
    
    64,629
    
    
    
    5692027
    
    
    58,117
    
    
    
    6382028
    
    
    9,248
    
    
    
    5512029
    
    
    83,175
    
    
    
    2030
    
    
    77,737
    
    
    
    Total
    
    $
    498,850
    
    
    $
    6,337
    83




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Note 23  Tax Benefits Preservation Plan
    Note 24  Variable Interest Entity
   84




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       85




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Note 25  Business Segments
   UnitedSolar
    
    
    Ovonic
    
    
    CorporateOvonic
    
    
    Materials
    
    
    and Other
    
    
    Total(in thousands)Year Ended June 30, 2011Revenues
    
    $
    221,899
    
    
    $
    10,593
    
    
    $
    54
    
    
    $
    232,546Depreciation and
amortization
    
    
    17,407
    
    
    
    272
    
    
    
    366
    
    
    
    18,045Operating (loss) income
    
    
    (269,449
    )
    
    
    4,273
    
    
    
    (22,891
    )
    
    
    (288,067
    )Year Ended June 30, 2010Revenues
    
    
    237,437
    
    
    
    16,810
    
    
    
    169
    
    
    
    254,416Depreciation and
amortization
    
    
    31,557
    
    
    
    239
    
    
    
    912
    
    
    
    32,708Operating (loss) income
    
    
    (418,001
    )
    
    
    8,666
    
    
    
    (25,766
    )
    
    
    (435,101
    )Year Ended June 30, 2009Revenues
    
    
    302,758
    
    
    
    13,317
    
    
    
    218
    
    
    
    316,293Depreciation and
amortization
    
    
    32,557
    
    
    
    296
    
    
    
    752
    
    
    
    33,605Operating income (loss)
    
    
    44,447
    
    
    
    3,912
    
    
    
    (27,763
    )
    
    
    20,596As of June 30, 2011Capital expenditures
    
    
    38,418
    
    
    
    
    
    
    
    
    
    
    
    38,418Total assets
    
    
    257,459
    
    
    
    5,824
    
    
    
    125,195
    
    
    
    388,478As of June 30, 2010Capital expenditures
    
    
    31,992
    
    
    
    
    
    
    
    
    
    
    
    31,992Total assets
    
    
    530,554
    
    
    
    6,442
    
    
    
    154,951
    
    
    
    691,947
 86




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year Ended June 302011
    
    
    2010
    
    
    2009(in thousands)Italy
    
    $
    112,875
    
    
    $
    94,976
    
    
    $
    66,859United States
    
    
    57,241
    
    
    
    40,473
    
    
    
    82,564France
    
    
    19,456
    
    
    
    27,344
    
    
    
    69,282Germany
    
    
    18,973
    
    
    
    22,860
    
    
    
    60,254Japan
    
    
    7,698
    
    
    
    10,159
    
    
    
    6,244China
    
    
    4,657
    
    
    
    6,497
    
    
    
    3,770Saudi Arabia
    
    
    2,767
    
    
    
    
    
    
    
    Spain
    
    
    1,779
    
    
    
    29,493
    
    
    
    1,694Canada
    
    
    1,301
    
    
    
    
    
    
    
    12South Korea
    
    
    1,098
    
    
    
    1,876
    
    
    
    6,410Austria
    
    
    1,083
    
    
    
    505
    
    
    
    517Belgium
    
    
    442
    
    
    
    18,420
    
    
    
    Switzerland
    
    
    50
    
    
    
    513
    
    
    
    16,704Other Countries
    
    
    3,126
    
    
    
    1,300
    
    
    
    1,983$
    232,546
    
    
    $
    254,416
    
    
    $
    316,293
   Year Ended June 30,Significant Customer
    
    Segment
    
    
    2011
    
    
    2010
    
    
    2009Affiliates of the Winch
Energy Group
    
    United Solar Ovonic
    
    
    15
    %
    
    
    
    
    
    
    Enel Green Power
    
    United Solar Ovonic
    
    
    *
    
    
    
    20
    %
    
    
    EDF En Development
    
    United Solar Ovonic
    
    
    *
    
    
    
    *
    
    
    
    12
    %
 
 *
    
    denotes less than 10% during the period Note 26  Litigation
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##### Table of Contents



ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Note 27  Selected Quarterly Financial Data (Unaudited)
 First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Total(in thousands, except for per share amounts)Year ended June 30, 2011Revenues
    
    $
    68,397
    
    
    $
    69,547
    
    
    $
    21,494
    
    
    $
    73,108
    
    
    $
    232,546Operating (Loss)
    
    
    (8,025
    )
    
    
    (3,579
    )
    
    
    (239,327
    )
    
    
    (37,136
    )
    
    
    (288,067
    )Net (Loss) Attributable to ECD Stockholders
    
    
    (13,456
    )
    
    
    (7,513
    )
    
    
    (243,103
    )
    
    
    (42,000
    )
    
    
    (306,072
    )(Loss) Per Share, Attributable to ECD Stockholders
    
    
    (0.29
    )
    
    
    (0.16
    )
    
    
    (4.88
    )
    
    
    (.84
    )
    
    
    (6.40
    )Diluted (Loss) Per Share, Attributable to ECD Stockholders
    
    
    (0.29
    )
    
    
    (0.16
    )
    
    
    (4.88
    )
    
    
    (.84
    )
    
    
    (6.40
    )Year ended June 30, 2010Revenues
    
    $
    42,944
    
    
    $
    52,912
    
    
    $
    72,406
    
    
    $
    86,154
    
    
    $
    254,416Operating (Loss)
    
    
    (8,278
    )
    
    
    (32,202
    )
    
    
    (377,113
    )
    
    
    (17,508
    )
    
    
    (435,101
    )Net (Loss) Attributable to ECD Stockholders(1)
    
    
    (11,973
    )
    
    
    (39,212
    )
    
    
    (385,076
    )
    
    
    (20,801
    )
    
    
    (457,062
    )(Loss) Per Share, Attributable to ECD Stockholders(1)
    
    
    (0.28
    )
    
    
    (0.93
    )
    
    
    (9.10
    )
    
    
    (0.49
    )
    
    
    (10.75
    )Diluted (Loss) Per Share, Attributable to ECD
Stockholders(1)
    
    
    (0.28
    )
    
    
    (0.93
    )
    
    
    (9.10
    )
    
    
    (0.49
    )
    
    
    (10.75
    )
 
 (1)
    
    As adjusted due to the implementation of FASB ASC 470-20 (see Note 1). Note 28  Subsequent Events  Discontinued Operations
  88




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Item 9:
    
    Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
  
 Item 9A : Controls and Procedures
  Report of Management on Internal Control over Financial Reporting
   Internal ControlIntegrated Framework
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Changes in Internal Control over Financial Reporting
   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal ControlIntegrated Framework
    90




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Internal ControlIntegrated Framework issued by COSO
  
 
 Item 9B : Other Information
  91




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PART III
 DOCUMENTS INCORPORATED BY REFERENCE
  
 Item 10 : Directors, Executive Officers and Corporate Governance
   www.energyconversiondevices.com
 www.energyconversiondevices.com
 
 Item 11 : Executive Compensation
  
 Item 12:Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
   92




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Item 13 : Certain Relationships and Related Transactions, and Director Independence
  
 Item 14 : Principal Accounting Fees and Services
  93




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PART IV
 
 Item 15 : Exhibits, Financial Statement Schedules
  Page1. Financial Statements:Report of Independent Registered Accounting Firm
    
    44Consolidated Statements of Operations
    
    45Consolidated Balance Sheets
    
    46Consolidated Statements of Cash Flows
    
    47Consolidated Statements of Stockholders Equity and Comprehensive Income
    
    482. Financial Statement Schedules:Schedule II  Valuation and Qualifying Accounts
    
    97
 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. Exhibits3.1
    
    Amended and Restated Certificate of Incorporation filed January 8, 2008 (filed with the Registrants Proxy Statement dated October 29,
2007 and incorporated herein by reference)3.2
    
    Certificate of Amendment to Certificate of Incorporation filed on December 16, 2010, increasing the number of authorized shares from
100,000,000 to 150,000,000 (filed with the Registrants Proxy Statement dated November 1, 2010 and incorporated herein by reference)3.3
    
    Bylaws in effect as of October 11, 2007 (incorporated by reference to exhibit 3.1 to the Registrants Form 8-K dated October 17, 2007)4.1
    
    Form of Indenture between Energy Conversion Devices, Inc. and The Bank of New York Trust Company, N.A. as Trustee (incorporated by
reference to exhibit 4.1 to the Registrants Form 8-K dated June 19, 2008)4.2
    
    Form of First Supplemental Indenture between Energy Conversion Devices, Inc. and The Bank of New York Trust Company, N.A., as Trustee
(incorporated by reference to exhibit 4.2 to the Registrants Form 8-K dated June 19, 2008)4.3
    
    Indenture, dated June 24, 2008, between Energy Conversion Devices, Inc. and The Bank of New York Trust Company, N.A. as Trustee
(incorporated by reference to exhibit 4.3 to the Registrants Annual Report on Form 10-K for the fiscal year ended June 30, 2008)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 (incorporated by reference to exhibit 4.4 to the Registrants Annual Report on Form 10-K for the fiscal year ended June 30, 2008)10.1
    
    Energy Conversion Devices, Inc. 1995 Non-Qualified Stock Option Plan (incorporated by reference to exhibit 10.77 to the Registrants
Annual Report on Form 10-K for the fiscal year ended June 30, 1995)
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##### Table of Contents



10.2
    
    Energy Conversion Devices, Inc. 2000 Non-Qualified Stock Option Plan (filed as exhibit A to the Registrants Proxy Statement dated January
19, 2001 and incorporated herein by reference)10.3
    
    Energy Conversion Devices, Inc. 2006 Stock Incentive Plan (filed as exhibit A to the Registrants Proxy Statement dated October 12, 2006
and incorporated herein by reference10.4
    
    Energy Conversion Devices, Inc. Executive Severance Plan effective July 24, 2007 (incorporated by reference to exhibit 10.1 to the
Registrants Current Report on Form 8-K dated July 30, 2007)10.5
    
    Form of Severance Plan Participation Agreement (incorporated by reference to exhibit 10.2 to the Registrants Current Report on Form 8-K
dated July 30, 2007)10.6
    
    Form of Stock Option Agreement (incorporated by reference to exhibit 10.4 to the Registrants Current Report on Form 8-K dated July 30,
2007)10.7
    
    Form of Restricted Stock Agreement (incorporated by reference to exhibit 10.5 to the Registrants Current Report on Form 8-K dated July
30, 2007)10.8
    
    Letter Agreement dated August 23, 2007 among Stanford R. Ovshinsky, Energy Conversion Devices, Inc. and Ovonic Battery Company
(incorporated by reference to exhibit 10.1 to the Registrants Current Report on Form 8-K dated August 27, 2007)10.9
    
    Share-lending Agreement dated as of June 18, 2008 among Energy Conversion Devices, Inc. and Credit Suisse International and Credit Suisse
Securities (USA) LLC (incorporated by reference to exhibit 10.1 to the Registrants Form 8-K dated June 19, 2008)10.10
    
    Form of Restricted Stock Unit (incorporated by reference to exhibit 10.19 to the Registrants Annual Report on Form 10-K for the fiscal
year ended June 30, 2008)10.11
    
    Amendment No. 1 to 2006 Stock Incentive Plan (incorporated by reference to exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q
for the quarter ended September 30, 2008)10.12
    
    Form of Performance Share Award Agreement pursuant to the Energy Conversion Devices, Inc. 2006 Stock Incentive Plan, as amended
(incorporated by reference to exhibit 10.3 to the Registrants Quarterly Report on Form 10-Q for the quarter ended September 30, 2008)10.13
    
    Form of Restricted Stock Unit Award Agreement (incorporated by reference to exhibit 10.1 to the Registrants Quarterly Report on Form 10-Q
for the quarter ended September 30, 2008)10.14
    
    Amended Executive Severance Plan (incorporated by reference to exhibit 10.4 to the Registrants Quarterly Report on Form 10-Q for the
quarter ended September 30, 2008)10.15
    
    Agreement and Plan of Merger entered into by Energy Conversion Devices, Inc. and Solar Integrated Technologies dated July 21, 2009
(incorporated by reference to exhibit 10.25 to the Registrants Annual Report on Form 10-K for the fiscal year ended June 30, 2009)10.16
    
    Energy Conversion Devices, Inc. 2010 Omnibus Incentive Compensation Plan (incorporated by reference to exhibit 10.1 to the Registrants
Current Report on Form 8-K dated January 12, 2011)
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##### Table of Contents



10.17
    
    Form of Performance Unit Award Agreement pursuant to the Energy Conversion Devices, Inc. 2010 Omnibus Incentive Compensation Plan
(incorporated by reference to exhibit 10.2 to the Registrants Current Report on Form 8-K dated January 12, 2011)10.18
    
    Form of Restricted Stock Unit Award Agreement pursuant to the Energy Conversion Devices, Inc. 2010 Omnibus Incentive Compensation Plan
(incorporated by reference to exhibit 10.3 to the Registrants Current Report on Form 8-K dated January 12, 2011)10.19
    
    Form of Director Restricted Stock Unit Award Agreement pursuant to the Energy Conversion Devices, Inc. 2010 Omnibus Incentive Compensation
Plan (incorporated by reference to exhibit 10.4 to the Registrants Current Report on Form 8-K dated January 12, 2011)10.20
    
    Separation Agreement dated as of May 6, 2011 between Energy Conversion Devices, Inc. and Mark D. Morelli (incorporated by reference to
exhibit 10.1 to the Registrants Current Report on Form 8-K dated May 10, 2011)10.21
    
    Senior Management Retention Plan dated May 4, 2011 (incorporated by reference to exhibit 10.2 to the Registrants Current Report on Form
8-K dated May 10, 2011)10.22
    
    Form of Participant Agreement for Senior Management Retention Plan (incorporated by reference to exhibit 10.3 to the Registrants Current
Report on Form 8-K dated May 10, 2011)10.23
    
    Transition Agreement dated as of June 29, 2011 between Energy Conversion Devices, Inc. and Subhendu Guha (incorporated by reference to
exhibit 10.1 to the Registrants Current Report on Form 8-K dated July 6, 2011)21.1
    
    List of all direct and indirect subsidiaries of the Company23.1
    
    Consent of Independent Registered Public Accounting Firm, Grant Thornton LLP31.1
    
    Certificate of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certificate of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    Certifications of Principal 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
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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
 
 Schedule II  Valuation and Qualifying Accounts
 AdditionsBalance at
    
    
    Charged to
    
    
    Charged
    
    
    
    
    
    
    Balance atBeginning of
    
    
    Costs and
    
    
    to Other
    
    
    
    
    
    
    End ofPeriod
    
    
    Expenses
    
    
    Accounts
    
    
    Deductions
    
    
    Period(in thousands)June 30, 2011Allowance for uncollectible accounts
    
    $
    1,763
    
    
    $
    2,171
    
    
    $
    
    
    
    $
    
    
    
    $
    3,934Reserve for losses on government
contracts
    
    
    952
    
    
    
    
    
    
    
    
    
    
    
    (371
    )
    
    
    581Reserve for inventory obsolescence
    
    
    15,882
    
    
    
    1,074
    
    
    
    
    
    
    
    (5,126
    )
    
    
    11,830Reserve for warranty
    
    
    41,335
    
    
    
    4,322
    
    
    
    
    
    
    
    (7,677
    )
    
    
    37,980Valuation allowance for deferred taxes
    
    
    296,681
    
    
    
    106,468
    
    
    
    
    
    
    
    
    
    
    
    403,149June 30, 2010Allowance for uncollectible accounts
    
    $
    4,481
    
    
    $
    462
    
    
    $
    
    
    
    $
    (3,180
    )
    
    $
    1,763Reserve for losses on government
contracts
    
    
    1,761
    
    
    
    
    
    
    
    
    
    
    
    (809
    )
    
    
    952Reserve for inventory obsolescence
    
    
    12,901
    
    
    
    11,721
    
    
    
    3,267
    (a)
    
    
    (12,007
    )
    
    
    15,882Reserve for warranty
    
    
    5,917
    
    
    
    4,036
    
    
    
    38,548
    (a)
    
    
    (7,166
    )
    
    
    41,335Valuation allowance for deferred taxes
    
    
    130,535
    
    
    
    150,811
    
    
    
    16,420
    (a)
    
    
    (1,085
    )
    
    
    296,681June 30, 2009Allowance for uncollectible accounts
    
    $
    825
    
    
    $
    3,692
    
    
    $
    
    
    
    $
    (36
    )
    
    $
    4,481Reserve for losses on government
contracts
    
    
    1,851
    
    
    
    
    
    
    
    
    
    
    
    (90
    )
    
    
    1,761Reserve for inventory obsolescence
    
    
    4,790
    
    
    
    8,111
    
    
    
    
    
    
    
    
    
    
    
    12,901Reserve for warranty
    
    
    1,499
    
    
    
    5,680
    
    
    
    
    
    
    
    (1,262
    )
    
    
    5,917Valuation allowance for deferred taxes
    
    
    128,757
    
    
    
    4,934
    
    
    
    
    
    
    
    (3,156
    )
    
    
    130,535
 
 (a)
    
    Addition related to balances assumed in the SIT acquisition and was charged to goodwill. 97




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SIGNATURES
  ENERGY CONVERSION DEVICES, INC.August 25, 2011
    By:
    /s/ Jay B. KnollJay B. KnollInterim President (Principal Executive Officer) /s/ Jay B. Knoll

Jay B. Knoll
    
    Interim President
(Principal Executive
Officer)
    
    August 25, 2011/s/ William C. Andrews

William C. Andrews
    
    Chief Financial
Officer (Principal 
Financial and
Accounting Officer)
    
    August 25, 2011/s/ Joseph A. Avila

Joseph A. Avila
    
    Director
    
    August 25, 2011/s/ Alan E. Barton

Alan E. Barton
    
    Director
    
    August 25, 2011/s/ Robert I. Frey

Robert I. Frey
    
    Director
    
    August 25, 2011/s/ William J. Ketelhut

William J. Ketelhut
    
    Director
    
    August 25, 2011/s/ Stephen Rabinowitz

Stephen Rabinowitz
    
    Director
    
    August 25, 2011/s/ George A. Schreiber, Jr.

George A. Schreiber, Jr.
    
    Director
    
    August 25, 2011
 98