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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, 2010
 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.)2956 Waterview Drive, Rochester Hills, Michigan
    
    48309(Address of principal executive offices)
    
    (Zip Code)
 (248) 293-0440
 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
(Do not check if a smaller reporting company)
    
    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, 2010
 PART IItem 1: Business
    
    
    2Item 1A: Risk Factors
    
    
    9Item 1B: Unresolved Staff Comments
    
    
    24Item 2: Properties
    
    
    25Item 3: Legal Proceedings
    
    
    25Item 4: Removed and Reserved
    
    
    25PART IIItem 5: Market for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
    
    
    26Item 6: Selected Financial Data
    
    
    28Item 7: Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    29Item 7A: Quantitative and Qualitative Disclosures about Market Risk
    
    
    46Item 8: Financial Statements and Supplementary Data
    
    
    47Item 9: Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
    
    
    96Item 9A: Controls and Procedures
    
    
    96Item 9B: Other Information
    
    
    99PART IIIItem 10: Directors, Executive Officers and Corporate Governance
    
    
    100Item 11: Executive Compensation
    
    
    100Item 12: Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
    
    
    100Item 13: Certain Relationships and Related Transactions,
and Director Independence
    
    
    101Item 14: Principal Accounting Fees and Services
    
    
    101PART IVItem 15: Exhibits, Financial Statement Schedules
    
    
    102SCHEDULE II  Valuation and Qualifying Accounts
    
    
    107SIGNATURES
    
    
    108EX-21.1EX-23.1EX-31.1EX-31.2EX-32
  1




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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
  Our Business Segments
  United Solar Ovonic
   2




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3




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4




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Ovonic Materials
  NiMH Batteries
    Licensing
  5




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Materials Manufacturing
   Emerging Technologies
  Ovonic Solid Hydrogen Storage Technologies
  6




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Ovonic Metal Hydride Fuel Cell Technologies
  Ovonic Bio Reformation Technologies
  Ovonyx
    Our Technology and Intellectual Property
  7




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Research and Development Expenditures
  Patents and Intellectual Property
  Competition
    8




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Our Employees
  Available Information
  
 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.
   9




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The continuing global economic, capital markets and credit disruptions pose risks for our business
segments.
   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.
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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.
   We have acquired SIT to extend our business model and enhance our competitiveness, but we face
integration and other related risks arising from this acquisition that could expose us to liability
or cause us not to achieve these benefits.
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We face intense competition from other companies producing solar energy and other renewable energy
products.
    Our customers increasingly need financing to purchase our products, which exposes us to
additional business and credit risks.
 12




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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, which may include project financing and
strategic acquisitions;
    
    implement internal systems and infrastructure to support our growth; and
    
    retain key members of management and other personnel, and hire additional personnel.
  We may incur future restructuring charges and long-lived asset impairment losses.
  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;
    
    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;
    
    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.
  14




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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.
    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.
  15




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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.
  We may be unable to obtain key raw materials that meet our quality, quantity and cost requirements.
   16




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Significant warranty and product liability claims could adversely affect our business and results
of operations.
    The conversion rate of our outstanding convertible debt is dependent upon the trading price of our
common stock and thus the dilutive impact of the future converted shares cannot be predicted.
  17




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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.
  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.
   18




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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.
   19




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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.
   20




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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.
    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.
  21




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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.
  The credit facility entered into by our subsidiaries, United Solar Ovonic Corporation and United
Solar Ovonic LLC, contains covenant restrictions that may limit our ability to operate our
business.
  
    
    incur additional debt or issue guarantees;
    
    create liens;
    
    make certain investments;
    
    enter into transactions with our affiliates;
    
    sell certain assets;
    
    make certain restricted payments; declare or pay dividends or make other distributions
to stockholders; and
    
    merge or consolidate with any person.
  22




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Our ability to utilize our net operating loss carryforwards 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.
   We have a significant amount of debt outstanding. 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.
  
    
    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;
    
    subjecting us to the risk of increased sensitivity to interest rate increases on our
indebtedness with variable interest rates, including borrowings under our credit facility;
    
    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; and
    
    placing us at a competitive disadvantage compared to our competitors that have less
debt or are less leveraged.
  23




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We may be unable to remediate our material weakness related to the accuracy of the adjustment to
value inventory at actual cost.
  
 Item 1B : Unresolved Staff Comments
  24




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Item 2 : Properties
   Own or LeaseProperty LocationCorporate Headquarters, Rochester Hills, Michigan
    
    LeaseOvonic Materials SegmentRochester Hills, Michigan
    
    LeaseTroy, Michigan
    
    LeaseUnited Solar Ovonic SegmentAuburn Hills, Michigan (2 facilities)
    
    LeaseGreenville, Michigan (2 facilities)
    
    LeaseTijuana, Mexico
    
    LeaseLos Angeles, California
    
    LeaseMainz, Germany
    
    Lease
  
 Item 3 : Legal Proceedings
  
 Item 4 : Removed and Reserved
 25




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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 30,2010
    
    
    2009High
    
    
    Low
    
    
    High
    
    
    Low(in dollars per share)First Quarter (July  September)
    
    $
    15.55
    
    
    $
    10.32
    
    
    $
    79.38
    
    
    $
    53.05Second Quarter (October  December)
    
    
    13.26
    
    
    
    9.92
    
    
    
    61.77
    
    
    
    18.50Third Quarter (January  March)
    
    
    12.55
    
    
    
    7.16
    
    
    
    29.38
    
    
    
    13.23Fourth Quarter (April  June)
    
    
    7.77
    
    
    
    4.10
    
    
    
    20.51
    
    
    
    13.37
 Dividends
  Stock Price Performance Graph
  26




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COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
 
 6/30/2005
    
    
    6/30/2006
    
    
    6/30/2007
    
    
    6/30/2008
    
    
    6/30/2009
    
    
    6/30/2010Energy Conversion Devices, Inc.
    
    
    100.00
    
    
    
    162.78
    
    
    
    137.71
    
    
    
    329.04
    
    
    
    63.23
    
    
    
    18.32NASDAQ Composite
    
    
    100.00
    
    
    
    107.08
    
    
    
    130.99
    
    
    
    114.02
    
    
    
    90.79
    
    
    
    105.54NASDAQ Clean Edge Green Energy
    
    
    100.00
    
    
    
    118.12
    
    
    
    153.69
    
    
    
    178.30
    
    
    
    100.37
    
    
    
    97.67
  27




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Item 6 : Selected Financial Data
  Year Ended June 30,2010
    
    
    2009(1)
    
    
    2008
    
    
    2007
    
    
    2006(in thousands, except per share data)Consolidated Statements of OperationsTotal Revenues
    
    $
    254,416
    
    
    $
    316,293
    
    
    $
    255,861
    
    
    $
    113,567
    
    
    $
    102,419Impairment loss
    
    
    359,228
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restructuring charges
    
    
    4,736
    
    
    
    2,231
    
    
    
    9,396
    
    
    
    
    
    
    
    Net (loss) income from continuing
operations before discontinued
operations
    
    
    (456,009
    )
    
    
    8,547
    
    
    
    3,853
    
    
    
    (25,231
    )
    
    
    (18,910
    )Discontinued operations, net of tax
benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    314Net (loss) income
    
    $
    (456,009
    )
    
    $
    8,547
    
    
    $
    3,853
    
    
    $
    (25,231
    )
    
    $
    (18,596
    )(Loss) earnings per shareContinuing operations
    
    $
    (10.72
    )
    
    $
    0.20
    
    
    $
    0.10
    
    
    $
    (0.64
    )
    
    $
    (0.58
    )Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01$
    (10.72
    )
    
    $
    0.20
    
    
    $
    0.10
    
    
    $
    (0.64
    )
    
    $
    (0.57
    )Diluted (loss) earnings per shareContinuing operations
    
    $
    (10.72
    )
    
    $
    0.20
    
    
    $
    0.09
    
    
    $
    (0.64
    )
    
    $
    (0.58
    )Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01$
    (10.72
    )
    
    $
    0.20
    
    
    $
    0.09
    
    
    $
    (0.64
    )
    
    $
    (0.57
    )Consolidated Balance SheetsTotal Assets
    
    $
    688,321
    
    
    $
    1,076,097
    
    
    $
    1,041,967
    
    
    $
    600,679
    
    
    $
    596,342Long-Term Obligations
    
    
    263,950
    
    
    
    269,386
    
    
    
    342,055
    
    
    
    25,796
    
    
    
    25,594
 
 (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. 28




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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 93% and 96% of
our total revenue in the fiscal years ended June 30, 2010 and 2009, respectively. Our
United Solar Ovonic segment generated an operating loss of $418.0 million and operating
income of $44.4 million in the fiscal years ended June 30, 2010 and 2009, 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.
    
    Global economic, capital markets and credit disruptions have significantly impacted
current market conditions in the solar market and created uncertainty, but we believe that
credit market conditions will continue to improve.We also believe that a strong interest
in alternative energy in general and solar in particular remains, but global financial
constraints experienced during 2010 impacted the funding of solar projects that otherwise
have strong strategic rationale and/or financial returns. Our
business has also been adversely impacted by related weakness in the
construction market, because we have historically focused on
building-integrated PV through our building materials channel, which
in turn relies on new roof and re-roof sales. Current macroeconomic
conditions, including the global economic crisis, are adversely impacting our customers,
including some customers who are unable to fully comply with take-or-pay agreements, and,
as a result, our revenues and net income are likewise adversely impacted. We are working
with our customers to preserve relationships and maximize long-term value by, among other
things, reallocating product shipments to other customers and pursuing other remedies
(including contract renegotiations), as appropriate on a case-by-case basis. We also
continue to be encouraged by the opportunities for large scale restructuring of the energy
infrastructure to increase emphasis on renewable energy, such as our solar laminates.
Countries around the world are demonstrating support for the adoption of solar energy
through renewable portfolio standards and feed-in tariffs.
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We are also responding to these market conditions by
transforming our business model and enhancing our competitiveness as
described below
    
    We are expanding our business by continuing to enhance
our focus on our projects business to supplement our channel strategy,
and introducing new product applications to expand our addressable
markets to include residential and building-applied solutions.
During fiscal year 2010, in response to market conditions that
impaired demand for our products through our existing channels to
market, we transformed our business model to include projects
activities, including direct sales on large projects and turnkey
systems. These project sales allow us to compete more effectively for
large-scale projects by providing a sophisticated, turnkey solution
that addresses  the key elements of these projects, including site control, financing (which we
typically arrange through third parties), and energy offtake and
project execution. Additionally, during fiscal year 2010, we extended
our product reach, announcing a new residential product through a
joint development relationship and our new PowerTilt solution
for the building-applied market. We did not previously significantly
participate in these markets, and we believe that there are considerable
opportunities to leverage our product differentiation in these markets
(including low impact and lightweight) to generate sales.
    
    We are increasing production in our United Solar Ovonic segment and reducing costs to
respond to improve our overall competitiveness.  During fiscal 2010, we transformed our
business model to include projects activities (as described above) and moderated our
production in response to market conditions that impaired demand for our products
through our existing channels to market. Our cost per watt increased during the fiscal
year as a result of the reduced production, primarily due to unabsorbed overhead costs.
We are now re-ramping production based on traction with our new business model and
improving market conditions. We expect to see reduced cost per watt from better factory
utilization. We are at the same aggressively focusing on various cost per watt reductions. For example, during fiscal year 2011, we will introduce materials
savings and
enhancements to our laminates, resulting from manufacturing and
quality improvements.
As a result, we expect to substantially reduce our cost per watt during fiscal year 2011.
We  will further lower product cost per watt, and increase conversion efficiency, through
our Technology Roadmap.
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
    
    We are operating our Ovonic Materials segment profitably and are continuing to realize
value from our technology portfolio.We have developed proprietary technologies in our
Ovonic Materials segment that we believe have value, including technologies for advanced
NiMH batteries, solid hydrogen storage, metal hydride fuel cells, and bio reformation.
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 are continually evaluating commercialization opportunities and strategic
alternatives to maximize value for these technologies, which may include licenses, joint
ventures, and sales. We completed the disposition of our Cobasys joint venture interest,
but retained certain technology and royalty rights, including regaining exclusive
stationary NiMH rights, subject to preexisting agreements.
 Key Indicators of Financial Condition and Operating Performance
  31




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Results of Operations
   Revenues
    
    
    Operating Income (Loss)2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009(1)
    
    
    2008(in thousands)United Solar Ovonic
    
    $
    237,437
    
    
    $
    302,758
    
    
    $
    239,398
    
    
    $
    (418,001
    )
    
    $
    44,447
    
    
    $
    31,644Ovonic Materials
    
    
    16,810
    
    
    
    13,317
    
    
    
    16,066
    
    
    
    8,666
    
    
    
    3,912
    
    
    
    899Corporate and Other
    
    
    169
    
    
    
    218
    
    
    
    397
    
    
    
    (25,766
    )
    
    
    (27,763
    )
    
    
    (36,604
    )Consolidated
    
    $
    254,416
    
    
    $
    316,293
    
    
    $
    255,861
    
    
    $
    (435,101
    )
    
    $
    20,596
    
    
    $
    (4,061
    )
 
 (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. 32




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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
     33




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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)
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Income Taxes
  Year Ended June 30, 2009 Compared to Year Ended June 30, 2008
 United Solar Ovonic Segment
 Year Ended June 30,2009
    
    
    2008(in thousands)REVENUESProduct sales
    
    $
    292,402
    
    
    $
    231,519Revenues from product development agreements
    
    
    10,356
    
    
    
    7,879License and other operating revenues
    
    
    
    
    
    
    TOTAL REVENUES
    
    
    302,758
    
    
    
    239,398EXPENSESCost of product sales
    
    
    206,047
    
    
    
    169,015Cost of revenues from product development agreements
    
    
    7,414
    
    
    
    4,938Product development and research
    
    
    5,412
    
    
    
    3,650Preproduction costs
    
    
    5,409
    
    
    
    6,920Selling, general and administrative
    
    
    31,397
    
    
    
    21,935Loss on disposal of property, plant and equipment
    
    
    979
    
    
    
    1,296Restructuring charges
    
    
    1,653
    
    
    
    TOTAL EXPENSES
    
    
    258,311
    
    
    
    207,754OPERATING INCOME
    
    $
    44,447
    
    
    $
    31,644
   36




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37




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##### Table of Contents



Ovonic Materials Segment
 Year Ended June 30,2009
    
    
    2008(in thousands)REVENUESProduct sales
    
    $
    2,590
    
    
    $
    5,690Royalties
    
    
    6,355
    
    
    
    5,306Revenues from product development agreements
    
    
    3,053
    
    
    
    3,560License and other revenues
    
    
    1,319
    
    
    
    1,510TOTAL REVENUES
    
    
    13,317
    
    
    
    16,066EXPENSESCost of product sales
    
    
    2,581
    
    
    
    5,374Cost of revenues from product development agreements
    
    
    2,093
    
    
    
    2,318Product development and research
    
    
    3,574
    
    
    
    6,256Selling, general and administrative
    
    
    1,157
    
    
    
    1,219TOTAL EXPENSES
    
    
    9,405
    
    
    
    15,167OPERATING INCOME (LOSS)
    
    $
    3,912
    
    
    $
    899
    Year Ended June 30,2009
    
    
    2008(in thousands)RoyaltiesTransportation  NiMH Battery
    
    $
    3,304
    
    
    $
    2,086Consumer  NiMH Battery
    
    
    2,779
    
    
    
    2,985Ovonyx
    
    
    40
    
    
    
    64Other
    
    
    232
    
    
    
    171Total Royalties
    
    $
    6,355
    
    
    $
    5,306
   38




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##### Table of Contents



Corporate and Other
 Year Ended June 30,2009
    
    
    2008(in thousands)TOTAL REVENUES
    
    $
    218
    
    
    $
    397EXPENSESSelling, general and administrative
    
    
    26,096
    
    
    
    27,605Net loss on disposal of property, plant and equipment
    
    
    1,307
    
    
    
    Restructuring charges
    
    
    578
    
    
    
    9,396TOTAL EXPENSES
    
    
    27,981
    
    
    
    37,001OPERATING LOSS
    
    $
    (27,763
    )
    
    $
    (36,604
    )
     Other Income (Expense)
  Income Taxes
  39




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##### Table of Contents



Liquidity and Capital Resources
    Cash Flows
 Year Ended June 30, 2010 Compared to Year Ended June 30, 2009
    Year Ended June 30, 2009 Compared to Year Ended June 30, 2008
  40




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##### Table of Contents



Short-term Borrowings
  Convertible Senior Notes
   41




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##### 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
    
    $
    293,250
    
    
    $
    
    
    
    $
    293,250
    
    
    $
    
    
    
    $
    Structured financing
    
    
    12,260
    
    
    
    604
    
    
    
    1,286
    
    
    
    1,386
    
    
    
    8,984Capital lease obligations
    
    
    21,413
    
    
    
    1,117
    
    
    
    2,689
    
    
    
    3,573
    
    
    
    14,034Interest on convertible
senior notes, structured
financing, and capital
lease obligations
    
    
    44,912
    
    
    
    11,010
    
    
    
    21,616
    
    
    
    3,366
    
    
    
    8,920Operating leases
    
    
    17,990
    
    
    
    5,246
    
    
    
    7,149
    
    
    
    5,595
    
    
    
    Purchase obligations
    
    
    98,663
    
    
    
    16,368
    
    
    
    70,894
    
    
    
    11,401
    
    
    
    Total
    
    $
    488,488
    
    
    $
    34,345
    
    
    $
    396,884
    
    
    $
    25,321
    
    
    $
    31,938
  Significant Accounting Policies and Critical Accounting Estimates
   Inventory Reserves
  42




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##### Table of Contents



Warranty Reserve
   Allowance for Uncollectible Accounts
  Accounting for Business Combinations
  Valuation of Long-Lived Assets
  43




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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;
    
    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;
 44




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##### Table of Contents




    
    government subsidies and policies supporting renewable energy, including solar energy;
    
    our expenses, sources of sales and international sales and operations;
    
    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 expand our manufacturing capacity 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;
    
    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
    
    ability to generate internal cash flow or arrange external financing for our
anticipated capital expenditures and Technology Roadmap.
  45




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##### Table of Contents



Item 7A : Quantitative and Qualitative Disclosures about Market Risk
  Interest Rate Risk
   Foreign Exchange Risk
    46




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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
  
 47




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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 30,2010
    
    
    2009(1)
    
    
    2008RevenuesProduct sales
    
    $
    200,451
    
    
    $
    294,992
    
    
    $
    237,191System sales
    
    
    29,781
    
    
    
    
    
    
    
    Royalties
    
    
    7,984
    
    
    
    6,355
    
    
    
    5,306Revenues from product development agreements
    
    
    11,765
    
    
    
    13,409
    
    
    
    11,440License and other revenues
    
    
    4,435
    
    
    
    1,537
    
    
    
    1,924Total Revenues
    
    
    254,416
    
    
    
    316,293
    
    
    
    255,861ExpensesCost of product sales
    
    
    203,510
    
    
    
    208,375
    
    
    
    174,075Cost of system sales
    
    
    33,087
    
    
    
    
    
    
    
    Cost of revenues from product development agreements
    
    
    9,399
    
    
    
    9,507
    
    
    
    7,257Product development and research
    
    
    11,347
    
    
    
    8,986
    
    
    
    9,906Preproduction costs
    
    
    305
    
    
    
    5,409
    
    
    
    6,920Selling, general and administrative
    
    
    66,797
    
    
    
    58,902
    
    
    
    51,252Net loss on disposal of property, plant and equipment
    
    
    1,108
    
    
    
    2,287
    
    
    
    1,116Impairment loss
    
    
    359,228
    
    
    
    
    
    
    
    Restructuring charges
    
    
    4,736
    
    
    
    2,231
    
    
    
    9,396Total Expenses
    
    
    689,517
    
    
    
    295,697
    
    
    
    259,922Operating (Loss) Income
    
    
    (435,101
    )
    
    
    20,596
    
    
    
    (4,061
    )Other Income (Expense)Interest income
    
    
    1,331
    
    
    
    5,226
    
    
    
    7,019Interest expense
    
    
    (27,510
    )
    
    
    (14,682
    )
    
    
    (165
    )Gain on debt extinguishment
    
    
    4,294
    
    
    
    
    
    
    
    Distribution from joint venture
    
    
    1,309
    
    
    
    
    
    
    
    Other nonoperating income (expense), net
    
    
    (2,321
    )
    
    
    (1,118
    )
    
    
    1,216Total Other Income (Expense)
    
    
    (22,897
    )
    
    
    (10,574
    )
    
    
    8,070(Loss) Income before Income Taxes and Equity Loss
    
    
    (457,998
    )
    
    
    10,022
    
    
    
    4,009Income tax (benefit) expense
    
    
    (2,248
    )
    
    
    1,475
    
    
    
    156(Loss) Income before Equity Loss
    
    
    (455,750
    )
    
    
    8,547
    
    
    
    3,853Equity loss
    
    
    (259
    )
    
    
    
    
    
    
    Net (Loss) Income
    
    
    (456,009
    )
    
    
    8,547
    
    
    
    3,853Net Loss Attributable to Noncontrolling Interest
    
    
    (113
    )
    
    
    
    
    
    
    Net (Loss) Income Attributable to ECD Shareholders
    
    $
    (455,896
    )
    
    $
    8,547
    
    
    $
    3,853(Loss) Earnings Per Share, Attributable to ECD Shareholders
    
    $
    (10.72
    )
    
    $
    0.20
    
    
    $
    0.10Diluted (Loss) Earnings Per Share, Attributable to ECD
Shareholders
    
    $
    (10.72
    )
    
    $
    0.20
    
    
    $
    0.09
 
 (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
 
 CONSOLIDATED BALANCE SHEETS  (in thousands)
 June 30,2010
    
    
    2009(1)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    79,158
    
    
    $
    56,379Short-term investments
    
    
    113,771
    
    
    
    245,182Accounts receivable, net
    
    
    72,021
    
    
    
    69,382Inventories, net
    
    
    61,495
    
    
    
    74,266Other current assets
    
    
    27,237
    
    
    
    4,897Total Current Assets
    
    
    353,682
    
    
    
    450,106Property, Plant and Equipment, net
    
    
    301,056
    
    
    
    614,330Other Assets:Restricted cash
    
    
    11,749
    
    
    
    Lease receivable, net
    
    
    10,854
    
    
    
    Other assets
    
    
    10,980
    
    
    
    11,661Total Other Assets
    
    
    33,583
    
    
    
    11,661Total Assets
    
    $
    688,321
    
    
    $
    1,076,097LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable and accrued expenses
    
    $
    56,035
    
    
    $
    50,238Current portion of warranty liability
    
    
    12,125
    
    
    
    5,917Other current liabilities
    
    
    9,130
    
    
    
    3,506Total Current Liabilities
    
    
    77,290
    
    
    
    59,661Long-Term Liabilities:Convertible senior notes
    
    
    243,654
    
    
    
    247,974Capital lease obligations
    
    
    20,296
    
    
    
    21,412Warranty liability
    
    
    29,210
    
    
    
    Other liabilities
    
    
    19,872
    
    
    
    9,701Total Long-Term Liabilities
    
    
    313,032
    
    
    
    279,087Commitments and Contingencies (Note 15)Stockholders EquityCommon stock, $0.01 par value,
100 million shares authorized,
48,554,812 and
45,754,652 issued at
June 30, 2010 and
2009, respectively
    
    
    486
    
    
    
    458Additional paid-in capital
    
    
    1,074,410
    
    
    
    1,055,705Treasury stock
    
    
    (700
    )
    
    
    (700
    )Accumulated deficit
    
    
    (772,514
    )
    
    
    (316,618
    )Accumulated other comprehensive loss, net
    
    
    (3,570
    )
    
    
    (1,496
    )Total ECD stockholders equity
    
    
    298,112
    
    
    
    737,349Accumulated deficit  noncontrolling interest
    
    
    (113
    )
    
    
    Total Stockholders Equity
    
    
    297,999
    
    
    
    737,349Total Liabilities and Stockholders Equity
    
    $
    688,321
    
    
    $
    1,076,097
 
 (1)
    
    As adjusted due to implementation of FASB ASC 470-20 (See Note 1).  49




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS  (in thousands)
 Year Ended June 30,2010
    
    
    2009(1)
    
    
    2008Cash flows from operating activities:Net (loss) income
    
    $
    (456,009
    )
    
    $
    8,547
    
    
    $
    3,853Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities:Impairment loss
    
    
    359,228
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    32,708
    
    
    
    33,605
    
    
    
    21,917Amortization of debt discount and deferred financing fees
    
    
    15,991
    
    
    
    14,672
    
    
    
    Share-based compensation
    
    
    4,428
    
    
    
    5,273
    
    
    
    2,010Gain on debt extinguishment
    
    
    (4,294
    )
    
    
    
    
    
    
    Other-than-temporary impairment of investment
    
    
    
    
    
    
    1,002
    
    
    
    Net loss on disposal of property, plant and equipment
    
    
    1,258
    
    
    
    2,287
    
    
    
    1,116Equity loss
    
    
    259
    
    
    
    
    
    
    
    Other
    
    
    (180
    )
    
    
    (597
    )
    
    
    1,649Changes in operating assets and liabilities, net of foreign exchange:Accounts receivable
    
    
    (8,538
    )
    
    
    (17,376
    )
    
    
    (16,947
    )Inventories
    
    
    35,283
    
    
    
    (43,054
    )
    
    
    7,582Other assets
    
    
    (8,634
    )
    
    
    (7,054
    )
    
    
    (1,168
    )Accounts payable and accrued expenses
    
    
    (7,201
    )
    
    
    13,714
    
    
    
    8,298Other liabilities
    
    
    1,525
    
    
    
    70
    
    
    
    200Net cash (used in) provided by operating activities
    
    
    (34,176
    )
    
    
    11,089
    
    
    
    28,510Cash flows from investing activities:Purchases of property, plant and equipment
    
    
    (31,992
    )
    
    
    (242,257
    )
    
    
    (117,335
    )Acquisition of business, net of cash acquired
    
    
    (2,088
    )
    
    
    
    
    
    
    Investment in joint venture
    
    
    
    
    
    
    (1,000
    )
    
    
    Purchases of investments
    
    
    (102,657
    )
    
    
    (203,355
    )
    
    
    (62,250
    )Proceeds from maturities of investments
    
    
    202,209
    
    
    
    3,400
    
    
    
    22,591Proceeds from sale of investments
    
    
    29,671
    
    
    
    2,750
    
    
    
    115,038Proceeds from sale of property, plant and equipment
    
    
    48
    
    
    
    
    
    
    
    288Development loans
    
    
    (14,155
    )
    
    
    
    
    
    
    Increase in restricted cash
    
    
    (10,186
    )
    
    
    
    
    
    
    Net cash provided by (used in) investing activities
    
    
    70,850
    
    
    
    (440,462
    )
    
    
    (41,668
    )Cash flows from financing activities:Proceeds from convertible senior notes
    
    
    
    
    
    
    
    
    
    
    306,762Payments for deferred financing costs
    
    
    
    
    
    
    
    
    
    
    (1,258
    )Proceeds from common stock issuance
    
    
    
    
    
    
    
    
    
    
    98,998Principal payments under capitalized lease obligations and other debt
    
    
    (1,549
    )
    
    
    (1,054
    )
    
    
    (1,144
    )Repayment of revolving credit facility
    
    
    (5,705
    )
    
    
    
    
    
    
    Repayment of convertible notes
    
    
    (8,000
    )
    
    
    
    
    
    
    Increase in long-term customer deposits
    
    
    
    
    
    
    
    
    
    
    680Decrease in restricted investments
    
    
    
    
    
    
    
    
    
    
    (273
    )Proceeds from sale of stock and share-based compensation, net of
expenses
    
    
    
    
    
    
    1,966
    
    
    
    13,482Net cash (used in) provided by financing activities
    
    
    (15,254
    )
    
    
    912
    
    
    
    417,247Effect of exchange rate changes on cash and cash equivalents
    
    
    1,359
    
    
    
    348
    
    
    
    (367
    )Net increase (decrease) in cash and cash equivalents
    
    
    22,779
    
    
    
    (428,113
    )
    
    
    403,722Cash and cash equivalents at beginning of period
    
    
    56,379
    
    
    
    484,492
    
    
    
    80,770Cash and cash equivalents at end of period
    
    $
    79,158
    
    
    $
    56,379
    
    
    $
    484,492
 
 (1)
    
    As adjusted due to implementation of FASB ASC 470-20 (See Note 1).  50




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##### Table of Contents



ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY  AND COMPREHENSIVE INCOME (LOSS)  (in thousands)
 Common Stock
    
    
    
    
    
    
    Treasury StockAccumulated OtherAdditional Paid In
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Noncontrolling
    
    
    Comprehensive
    
    
    Total ShareholdersNumber of Shares
    
    
    Amount
    
    
    Capital
    
    
    Number of Shares
    
    
    Amount
    
    
    Accumulated Deficit
    
    
    Interest
    
    
    Income (Loss)
    
    
    EquityBalance at June 30, 2007
    
    
    39,797
    
    
    $
    398
    
    
    $
    854,161
    
    
    
    
    
    
    $
    
    
    
    $
    (329,018
    )
    
    $
    
    
    
    $
    (33
    )
    
    $
    525,508Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,853
    
    
    
    
    
    
    
    
    
    
    
    3,853Unrealized losses on
investments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,210
    )
    
    
    (2,210
    )Foreign currency
translation gains, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77
    
    
    
    77Unrealized gains on
derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66
    
    
    
    66Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,786Share-based
compensation expense,
net of shares issued
    
    
    873
    
    
    
    9
    
    
    
    16,311
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,320Stock repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    (700
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (700
    )Equity offering (net of
expenses $6.2 million)
    
    
    4,905
    
    
    
    49
    
    
    
    98,949
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98,998Balance at June 30, 2008
    
    
    45,575
    
    
    
    456
    
    
    
    969,421
    
    
    
    (11
    )
    
    
    (700
    )
    
    
    (325,165
    )
    
    
    
    
    
    
    (2,100
    )
    
    
    641,912Net income(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,547
    
    
    
    
    
    
    
    
    
    
    
    8,547Unrealized 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,151Equity component from
issuance of
convertible
debt(1)
    
    
    
    
    
    
    
    
    
    
    79,130
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,130Share-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
    
    
    
    1,055,705
    
    
    
    (11
    )
    
    
    (700
    )
    
    
    (316,618
    )
    
    
    
    
    
    
    (1,496
    )
    
    
    737,349Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (455,896
    )
    
    
    
    
    
    
    
    
    
    
    (455,896
    )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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (457,970
    )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
    
    
    $
    1,074,410
    
    
    
    (15
    )
    
    $
    (700
    )
    
    $
    (772,514
    )
    
    $
    (113
    )
    
    $
    (3,570
    )
    
    $
    297,999
 
 (1)
    
    As adjusted due to implementation of FASB ASC 470-20 (See Note 1).  51




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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
     52




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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
     53




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  System Sales
   Royalties
  Business Agreements
   54




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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
  55




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Preproduction Costs
  Other Nonoperating Income (Expense)
  Cash and Cash Equivalents
  Restricted Cash
   Investments
  56




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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.    57




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Capitalized Interest
  Warranty Reserve
   Asset Retirement Obligations
  Income Taxes
  58




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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
 Consolidations
 Accounting for
Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing
 59




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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
 Recently Adopted Accounting Pronouncements
 Subsequent
Events (Topic 855)  Amendments to Certain Recognition and Disclosure Requirements
 Fair Value
Measurements and Disclosures (Topic 820)  Improving Disclosures about Fair Value
 60




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Fair Value
Measurements and Disclosures (Topic 820)  Measuring Liabilities at Fair Value
 Investments  Equity
Method and Joint Ventures
 Contracts in
Entitys Own Equity Derivatives
and Hedging.
 Earnings Per Share
 61




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Business
Combinations
 Collaborative
Arrangements
 Consolidation,
 Debt with
Conversion and Other Options
 62




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##### Table of Contents



ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Consolidated Statements of Operationsfor the Year Ended June 30, 2009As PreviouslyReported
    
    
    ASC 470-20
    
    
    As Reported(in thousands)Cost of product sales
    
    $
    208,285
    
    
    $
    90
    
    
    $
    208,375Total expenses
    
    
    295,607
    
    
    
    90
    
    
    
    295,697Operating income
    
    
    20,686
    
    
    
    (90
    )
    
    
    20,596Interest expense
    
    
    (10,863
    )
    
    
    (3,819
    )
    
    
    (14,682
    )Total other expense
    
    
    (6,755
    )
    
    
    (3,819
    )
    
    
    (10,574
    )Net income before income taxes
    
    
    13,931
    
    
    
    (3,909
    )
    
    
    10,022Net income
    
    
    12,456
    
    
    
    (3,909
    )
    
    
    8,547Earnings per share
    
    
    0.29
    
    
    
    (0.09
    )
    
    
    0.20Diluted earnings per share
    
    
    0.29
    
    
    
    (0.09
    )
    
    
    0.20Consolidated Balance Sheets as of June 30, 2009As PreviouslyReported(1)
    
    
    ASC 470-20
    
    
    As Reported(in thousands)Property, plant and equipment, net
    
    $
    605,742
    
    
    $
    8,588
    
    
    $
    614,330Other assets
    
    
    13,330
    
    
    
    (1,669
    )
    
    
    11,661Total assets
    
    
    1,069,178
    
    
    
    6,919
    
    
    
    1,076,097Accounts payable and accrued expenses
    
    
    50,264
    
    
    
    (26
    )
    
    
    50,238Total current liabilities
    
    
    59,687
    
    
    
    (26
    )
    
    
    59,661Convertible senior notes
    
    
    316,250
    
    
    
    (68,276
    )
    
    
    247,974Total long-term liabilities
    
    
    347,363
    
    
    
    (68,276
    )
    
    
    279,087Additional paid-in capital
    
    
    976,575
    
    
    
    79,130
    
    
    
    1,055,705Accumulated deficit
    
    
    (312,709
    )
    
    
    (3,909
    )
    
    
    (316,618
    )Total stockholders equity
    
    
    662,128
    
    
    
    75,221
    
    
    
    737,349Total liabilities and stockholders equity
    
    
    1,069,178
    
    
    
    6,919
    
    
    
    1,076,097
 
 (1)
    
    The balance as previously reported for Accounts payable and accrued expenses
above also includes (in thousands) Salaries, wages and amounts withheld from employees of
$3,243, Amounts due under incentive plans of $694, and excludes Warranty liability of
$5,917. Consolidated Statement of Cash Flows as ofJune 30, 2009As PreviouslyReported
    
    
    ASC 470-20
    
    
    As Reported(in thousands)Net income
    
    $
    12,456
    
    
    $
    (3,909
    )
    
    $
    8,547Depreciation and amortization
    
    
    33,515
    
    
    
    90
    
    
    
    33,605Amortization of debt
discount and deferred
financing fees
    
    
    
    
    
    
    14,672
    
    
    
    14,672Other assets
    
    
    3,799
    
    
    
    (10,853
    )
    
    
    (7,054
    )
 63




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 2  Earnings (Loss) Per Share
  Net Income(Loss)Attributableto ECD
    
    
    
    
    
    
    EarningsShareholders
    
    
    Shares
    
    
    (Loss) Per(Numerator)
    
    
    (Denominator)
    
    
    Share(in thousands, except per share amounts)Year Ended June 30, 2010Basic and Diluted
    
    $
    (455,896
    )
    
    
    42,533
    
    
    $
    (10.72
    )Year Ended June 30, 2009Basic
    
    $
    8,547
    
    
    
    42,277
    
    
    $
    0.20Effect of dilutive securities:Stock warrants
    
    
    
    
    
    
    133
    
    
    
    Stock options
    
    
    
    
    
    
    301
    
    
    
    Diluted
    
    $
    8,547
    
    
    
    42,711
    
    
    $
    0.20Year Ended June 30, 2008Basic
    
    $
    3,853
    
    
    
    40,231
    
    
    $
    0.10Effect of dilutive securities:Stock warrants
    
    
    
    
    
    
    127
    
    
    
    Stock options
    
    
    
    
    
    
    780
    
    
    
    (0.01
    )Diluted
    
    $
    3,853
    
    
    
    41,138
    
    
    $
    0.09
    64




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Year Ended June 30,2010
    
    
    2009
    
    
    2008(in thousands)Share-based payment arrangements
    
    
    1,089
    
    
    
    160
    
    
    
    
 Note 3  Supplemental Cash Flow Information
  Year Ended June 30,2010
    
    
    2009
    
    
    2008(in thousands)Supplemental disclosures:Cash paid for interest, including capitalized interest
    
    $
    11,833
    
    
    $
    11,605
    
    
    $
    2,842Cash paid for income taxes
    
    
    342
    
    
    
    809
    
    
    
    65Increase (decrease) in accounts payable for capital expenditures
    
    
    6,989
    
    
    
    (4,439
    )
    
    
    Non-cash transactions:Auction rate securities rights
    
    
    
    
    
    
    3,938
    
    
    
    Capital lease obligations incurred to finance capital equipment
    
    
    
    
    
    
    
    
    
    
    362
 Note 4  Acquisition
  65




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


Purchase Price Allocation
  (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
   66




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


Year EndedJune 30,2010
    
    
    2009(in thousands)Actual AmountsRevenues
    
    $
    43,916
    
    
    
    N/ANet loss attributable to ECD shareholders
    
    
    (57,821
    )
    
    
    N/APro Forma InformationRevenues
    
    $
    259,310
    
    
    $
    358,154Net (loss) income attributable to ECD
shareholders
    
    
    (459,563
    )
    
    
    (42,135
    )(Loss) earnings per share
    
    
    (10.80
    )
    
    
    (1.00
    )Diluted (loss) earnings per share
    
    
    (10.80
    )
    
    
    (1.00
    )
  Goodwill
  (in thousands)Balance at June 30, 2009
    
    $
    SIT acquisition
    
    
    35,299Foreign currency impact
    
    
    54Impairment loss
    
    
    (35,353
    )Balance at June 30, 2010
    
    $
    
  67




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 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 5  Investments
 Short-Term Investments
  Amortized
    
    
    Gross Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(in thousands)June 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
    )
    
    $
    113,771June 30, 2009Corporate bonds
    
    $
    23,047
    
    
    $
    
    
    
    $
    (1,037
    )
    
    $
    22,010U.S. Government securities
    
    
    188,902
    
    
    
    148
    
    
    
    (10
    )
    
    
    189,040Auction rate certificates
    
    
    34,250
    
    
    
    
    
    
    
    (4,056
    )
    
    
    30,194Auction rate securities rights
    
    
    
    
    
    
    3,938
    
    
    
    
    
    
    
    3,938$
    246,199
    
    
    $
    4,086
    
    
    $
    (5,103
    )
    
    $
    245,182
 68




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  June 30,2010
    
    
    2009Amortized
    
    
    Market
    
    
    Amortized
    
    
    MarketCost
    
    
    value
    
    
    Cost
    
    
    Value(in thousands)Due in less than one year
    
    $
    38,586
    
    
    $
    39,189
    
    
    $
    211,949
    
    
    $
    211,050Due after one year
through five years
    
    
    76,550
    
    
    
    74,582
    
    
    
    34,250
    
    
    
    34,132$
    115,136
    
    
    $
    113,771
    
    
    $
    246,199
    
    
    $
    245,182
      69




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Note 6  Accounts Receivable
  June 30,2010
    
    
    2009(in thousands)BilledTrade
    
    $
    62,796
    
    
    $
    65,313Related parties
    
    
    269
    
    
    
    271Other
    
    
    1,433
    
    
    
    160Subtotal
    
    
    64,498
    
    
    
    65,744UnbilledRoyalties under license agreements
    
    
    4,557
    
    
    
    4,372Government contracts
    
    
    1,179
    
    
    
    2,174Government grants
    
    
    1,866
    
    
    
    593Related parties
    
    
    24
    
    
    
    37Other
    
    
    1,660
    
    
    
    943Subtotal
    
    
    9,286
    
    
    
    8,119Less allowance for uncollectible accounts
    
    
    (1,763
    )
    
    
    (4,481
    )$
    72,021
    
    
    $
    69,382
  Note 7  Sales-Type Lease Receivables
  70




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  June 30, 2010(in thousands)Total minimum lease payments receivable
    
    $
    17,852Less: Unearned income
    
    
    (6,069
    )Net investment in sales-type leases
    
    $
    11,783
  Fiscal Year
    
    (in thousands)2011
    
    $
    9942012
    
    
    1,0132013
    
    
    1,0342014
    
    
    1,0542015
    
    
    1,075Thereafter
    
    
    12,668$
    17,838
 Note 8
 Inventories
  June 30,2010
    
    
    2009(in thousands)Finished products
    
    $
    27,690
    
    
    $
    41,167Work in process
    
    
    13,905
    
    
    
    19,247Raw materials
    
    
    19,900
    
    
    
    13,852$
    61,495
    
    
    $
    74,266
  71




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 9  Property, Plant and Equipment, Net
  June 30,2010
    
    
    2009(in thousands)Machinery and equipment
    
    $
    187,546
    
    
    $
    346,885Machinery and equipment  under capital leases
    
    
    305
    
    
    
    339Buildings and improvements
    
    
    43,062
    
    
    
    85,015Buildings and improvements  under capital leases
    
    
    9,993
    
    
    
    25,900Land
    
    
    1,260
    
    
    
    1,526Construction in progress
    
    
    122,276
    
    
    
    252,394Subtotal
    
    
    364,442
    
    
    
    712,059Less accumulated depreciation and amortization
    
    
    (63,386
    )
    
    
    (97,729
    )Total
    
    $
    301,056
    
    
    $
    614,330
   Note 10  Investments in Affiliates
 Ovonyx, Inc.
   72




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  United Solar Ovonic Jinneng Limited
  Note
11  Liabilities
 Warranty Liability
  (in thousands)Liability at June 30, 2009
    
    $
    5,917Liability assumed in SIT acquisition
    
    
    38,548Warranty expense
    
    
    4,036Warranty claims
    
    
    (5,546
    )Foreign currency impact
    
    
    (1,620
    )Liability at June 30, 2010
    
    $
    41,335
 Government Contracts, Reserves and Liabilities
  73




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


Other Long-Term Liabilities
  June 30,2010
    
    
    2009(in thousands)Structured financing
    
    $
    12,929
    
    
    $
    Long-term retirement
    
    
    1,663
    
    
    
    1,894Customer deposits
    
    
    120
    
    
    
    1,940Deferred patent license fees
    
    
    3,333
    
    
    
    4,286Deferred revenue and royalties
    
    
    297
    
    
    
    321Rent payable
    
    
    1,145
    
    
    
    884Other
    
    
    385
    
    
    
    376$
    19,872
    
    
    $
    9,701
  Long-Term Retirement
  Note 12  Employee Benefit Plans
  Note 13  Derivative and Hedging Activities
  74




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Note
14  Long-Term Debt
 Lines of Credit
     Convertible Senior Notes
  75




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      June 30,
    
    
    June 30,2010
    
    
    2009(in thousands)Outstanding principal
    
    $
    293,250
    
    
    $
    316,250Less: unamortized discount
    
    
    49,596
    
    
    
    68,276Net carrying amount
    
    $
    243,654
    
    
    $
    247,974
 76




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year Ended June 30,2010
    
    
    2009(in thousands)Contractual interest
    
    $
    9,043
    
    
    $
    9,461Amortization of discount
    
    
    18,680
    
    
    
    13,644Amortization of debt issue costs
    
    
    1,712
    
    
    
    1,028Gross interest expense recognized
    
    $
    29,435
    
    
    $
    24,133
 Structured Financing
  Convertible Notes
   Year
    
    Long-Term Debt
    
    
    Capital Lease Obligations
    
    
    Total(in thousands)2011
    
    $
    604
    
    
    $
    1,117
    
    
    $
    1,7212012
    
    
    630
    
    
    
    1,278
    
    
    
    1,9082013
    
    
    293,906
    
    
    
    1,411
    
    
    
    295,3172014
    
    
    683
    
    
    
    1,647
    
    
    
    2,3302015
    
    
    704
    
    
    
    1,926
    
    
    
    2,630Thereafter
    
    
    8,983
    
    
    
    14,034
    
    
    
    23,017Total
    
    $
    305,510
    
    
    $
    21,413
    
    
    $
    326,923
 Note 15  Commitments and Contingencies
 Operating Leases
  77




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   (in thousands)2011
    
    $
    5,2462012
    
    
    3,8012013
    
    
    3,3482014
    
    
    2,9662015
    
    
    2,629Thereafter
    
    
    Total
    
    $
    17,990
 Note 16  Impairment Loss
     78




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 17  Royalties, Nonrefundable Advance Royalties and License Agreements
    Note 18  Restructuring Charges
   Employee-RelatedExpenses
    
    
    Other Expenses
    
    
    Total(in thousands)Balance July 1, 2008
    
    $
    1,086
    
    
    $
    159
    
    
    $
    1,245Charges
    
    
    986
    
    
    
    1,245
    
    
    
    2,231Utilization or payment
    
    
    (1,232
    )
    
    
    (1,404
    )
    
    
    (2,636
    )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
    
    
    $
    
    
    
    $
    3,311
  79




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note
19  Share-Based Compensation
    Number of SharesJune 30, 2010
    
    
    June 30, 2009Stock options
    
    
    1,463,245
    
    
    
    1,508,204Warrants
    
    
    
    
    
    
    400,000Convertible Investment Certificates
    
    
    5,210
    
    
    
    5,210Total shares authorized
    
    
    1,468,455
    
    
    
    1,913,414
 Stock Options
   80




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2010
    
    
    2009
    
    
    2008Estimated fair value
    
    $
    9.24
    
    
    $
    35.43
    
    
    $
    19.19AssumptionsDividend Yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Volatility %
    
    
    73.47
    %
    
    
    65.04
    %
    
    
    61.40
    %Risk-Free Interest Rate
    
    
    3.13
    %
    
    
    2.95
    %
    
    
    4.02
    %Expected Life
    
    7.26 years
    
    7.03 years
    
    6.47 years
  AggregateWeighted

    
    
    Intrinsic-Average
    
    
    Value (1)Shares
    
    
    Exercise Price
    
    
    (in thousands)Outstanding at June
30, 2007
    
    
    1,146,840
    
    
    $
    18.58
    
    
    $
    14,525Granted
    
    
    149,000
    
    
    
    31.19Exercised
    
    
    (328,644
    )
    
    
    16.30
    
    
    
    13,844Expired
    
    
    (1,410
    )
    
    
    35.13Forfeited
    
    
    (1,200
    )
    
    
    50.16Outstanding 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
    
    
    $
    
 
 (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. 81




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Weighted-
    
    
    
    
    
    
    Weighted-AverageAverage
    
    
    Aggregate
    
    
    Contractual LifeExercise
    
    
    Intrinsic
    
    
    RemainingShares
    
    
    Price
    
    
    Value (1)
    
    
    in Years(in thousands)Exercisable at June 30, 2010
    
    
    726,944
    
    
    $
    22.75
    
    
    $
    
    
    
    
    2.80Exercisable at June 30, 2009
    
    
    709,074
    
    
    
    21.85
    
    
    
    376
    
    
    
    3.58Exercisable at June 30, 2008
    
    
    801,110
    
    
    
    19.02
    
    
    
    43,751
    
    
    
    3.84
 
 (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
  82




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  WeightedAverageNumber of
    
    
    Grant DateShares
    
    
    Fair ValueNonvested at June 30, 2007
    
    
    23,352
    
    
    $
    35.92Awarded
    
    
    99,266
    
    
    
    28.88Vested
    
    
    
    
    
    
    Released from restriction
    
    
    (32,784
    )
    
    
    26.76Nonvested 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
    
    
    $
    31.14
  Restricted Stock Units RSUs
  83




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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, 2007
    
    
    
    
    
    $
    Awarded
    
    
    2,500
    
    
    
    73.64Vested
    
    
    
    
    
    
    Nonvested 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
    
    
    
    18.57
  Warrants
  Note 20  Fair Value Measurements
   84




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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
     85




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  As of June 30, 2010Total Fair ValueFair Value Measurements at
    
    
    and Carrying ValueReporting Date Using
    
    
    on our BalanceLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    Sheet(in thousands)Auction rate certificates
    
    
    
    
    
    
    
    
    
    $
    12,469
    
    
    $
    12,469Auction rate securities rights
    
    
    
    
    
    
    
    
    
    
    1,734
    
    
    
    1,734Investments in corporate bonds
    
    $
    88,563
    
    
    
    
    
    
    
    
    
    
    
    88,563Investments in U.S. government
securities
    
    
    11,005
    
    
    
    
    
    
    
    
    
    
    
    11,005Investments in money market funds
    
    
    59,375
    
    
    
    
    
    
    
    
    
    
    
    59,375
 As of June 30, 2009Total Fair ValueFair Value Measurements at
    
    
    and Carrying ValueReporting Date Using
    
    
    on our BalanceLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    Sheet(in thousands)Auction rate certificates
    
    
    
    
    
    
    
    
    
    $
    30,194
    
    
    $
    30,194Auction rate securities rights
    
    
    
    
    
    
    
    
    
    
    3,938
    
    
    
    3,938Investments in corporate bonds
    
    $
    22,010
    
    
    
    
    
    
    
    
    
    
    
    22,010Investments in U.S. government
securities
    
    
    189,040
    
    
    
    
    
    
    
    
    
    
    
    189,040Investments in money market funds
    
    
    45,411
    
    
    
    
    
    
    
    
    
    
    
    45,411
  Auction Rate
    
    
    Auction RateCertificates
    
    
    Securities Rights(in thousands)Balance at July 1, 2009
    
    $
    30,194
    
    
    $
    3,938Redeemed by UBS
    
    
    (20,050
    )
    
    
    Net gain (loss) recognized in earnings
    
    
    2,325
    
    
    
    (2,204
    )Balance at June 30, 2010
    
    $
    12,469
    
    
    $
    1,734The amount of total gains or losses for
the period included in earnings
attributable to the change in unrealized
gains or losses relating to assets still
held at June 30, 2010
    
    $
    219
 86




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Level 3(in thousands)Property, plant and equipment, net
    
    $
    296,007Goodwill
    
    
    Intangible assets, net
    
    
    
 Note 21  Income Taxes
   June 30, 2010
    
    
    June 30, 2009(in thousands)Federal Income Tax
    
    $
    (2,598
    )
    
    $
    858State Income Tax
    
    
    (44
    )
    
    
    266Foreign Income Tax
    
    
    394
    
    
    
    351Total Income Taxes
    
    $
    (2,248
    )
    
    $
    1,475
  87




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  June 30,2010
    
    
    2009(in thousands)Deferred tax assets:Basis difference in intangibles
    
    $
    9,885
    
    
    $
    10,464Net Operating Loss (NOL) carryforwards
    
    
    138,849
    
    
    
    95,539Research & Development (R&D) credit
carryforwards
    
    
    8,021
    
    
    
    812Alternative Minimum Tax (AMT) credit
carryforwards
    
    
    1,968
    
    
    
    2,222Capital losses
    
    
    663
    
    
    
    Warranty reserve
    
    
    11,470
    
    
    
    Basis and depreciation differences of property
    
    
    109,800
    
    
    
    Employee stock options
    
    
    10,655
    
    
    
    All other
    
    
    23,861
    
    
    
    24,654315,172
    
    
    
    133,691Deferred tax liabilities:Basis and depreciation differences of property
    
    
    
    
    
    
    (2,424
    )Convertible debt
    
    
    (16,862
    )
    
    
    All other
    
    
    (544
    )
    
    
    (732
    )Net deferred tax asset
    
    
    297,766
    
    
    
    130,535Valuation allowance
    
    
    (296,681
    )
    
    
    (130,535
    )Net deferred tax asset
    
    $
    1,085
    
    
    $
    
  Compensation  Stock Compensation
 88




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  NOL Carryforward
    
    
    R&D Credit Carryforward(in thousands)2011
    
    $
    
    
    
    $
    402012
    
    
    16,511
    
    
    
    142013
    
    
    19,272
    
    
    
    292014
    
    
    
    
    
    
    422015
    
    
    
    
    
    
    2016
    
    
    
    
    
    
    2017
    
    
    
    
    
    
    2018
    
    
    
    
    
    
    2019
    
    
    8,212
    
    
    
    2020
    
    
    10,170
    
    
    
    2021
    
    
    4,674
    
    
    
    2022
    
    
    24,353
    
    
    
    2023
    
    
    36,846
    
    
    
    2024
    
    
    71,840
    
    
    
    2025
    
    
    9,394
    
    
    
    2026
    
    
    64,629
    
    
    
    2027
    
    
    58,117
    
    
    
    6722028
    
    
    9,248
    
    
    
    2029
    
    
    8,701
    
    
    
    7,2242030
    
    
    66,412
    
    
    
    Total
    
    $
    408,379
    
    
    $
    8,021
     89




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Note 22  Tax Benefits Preservation Plan
    90




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 23  Variable Interest Entity
    91




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 24  Business Segments
   UnitedSolar
    
    Ovonic
    
    CorporateOvonic
    
    Materials
    
    and Other
    
    Total(in thousands)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
    )
    
    
    20,596Year Ended June 30, 2008Revenues
    
    
    239,398
    
    
    
    16,066
    
    
    
    397
    
    
    
    255,861Depreciation and
amortization
    
    
    20,862
    
    
    
    330
    
    
    
    725
    
    
    
    21,917Operating income (loss)
    
    
    31,644
    
    
    
    899
    
    
    
    (36,604
    )
    
    
    (4,061
    )As of June 30, 2010Capital expenditures
    
    
    31,992
    
    
    
    
    
    
    
    
    
    
    
    31,992Total assets
    
    
    530,554
    
    
    
    6,442
    
    
    
    151,325
    
    
    
    688,321As of June 30, 2009Capital expenditures
    
    
    242,094
    
    
    
    
    
    
    
    163
    
    
    
    242,257Total assets
    
    
    793,344
    
    
    
    6,329
    
    
    
    276,424
    
    
    
    1,076,097
 92




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year Ended June 30,2010
    
    
    2009
    
    
    2008(in thousands)Italy
    
    $
    94,976
    
    
    $
    66,859
    
    
    $
    25,758United States
    
    
    40,473
    
    
    
    82,564
    
    
    
    119,424Spain
    
    
    29,493
    
    
    
    1,694
    
    
    
    2,850France
    
    
    27,344
    
    
    
    69,282
    
    
    
    32,661Germany
    
    
    22,860
    
    
    
    60,254
    
    
    
    39,012Belgium
    
    
    18,420
    
    
    
    
    
    
    
    Japan
    
    
    10,159
    
    
    
    6,244
    
    
    
    5,396China
    
    
    3,462
    
    
    
    406
    
    
    
    1,693Hong Kong
    
    
    3,035
    
    
    
    3,364
    
    
    
    6,087South Korea
    
    
    1,876
    
    
    
    6,410
    
    
    
    17,646Switzerland
    
    
    513
    
    
    
    16,704
    
    
    
    Other Countries
    
    
    1,805
    
    
    
    2,512
    
    
    
    5,334$
    254,416
    
    
    $
    316,293
    
    
    $
    255,861
   Year Ended June 30,Significant Customer
    
    Segment
    
    
    2010
    
    
    2009
    
    
    2008Enel Green Power
    
    United Solar Ovonic
    
    
    20
    %
    
    
    
    
    
    
    EDF En Development
    
    United Solar Ovonic
    
    
    *
    
    
    
    12
    %
    
    
    *Solar Integrated Technologies**
    
    United Solar Ovonic
    
    
    
    
    
    
    *
    
    
    
    21
    %Advanced Green Technologies
    
    United Solar Ovonic
    
    
    *
    
    
    
    *
    
    
    
    11
    %
 
 *
    
    denotes less than 10% during the period**
    
    acquired by the Company on August 19, 2009 Note 25  Litigation
 Cobasys
  93




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      94




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 26  Selected Quarterly Financial Data (Unaudited)
 First Quarter
    
    Second Quarter
    
    Third Quarter
    
    Fourth Quarter
    
    Total(in thousands, except for per share amounts)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 Shareholders
    
    
    (11,766
    )
    
    
    (39,005
    )
    
    
    (384,846
    )
    
    
    (20,279
    )
    
    
    (455,896
    )(Loss) Per Share, Attributable to ECD Shareholders
    
    
    (0.28
    )
    
    
    (0.92
    )
    
    
    (9.10
    )
    
    
    (0.48
    )
    
    
    (10.72
    )Diluted (Loss) Per Share, Attributable to ECD Shareholders
    
    
    (0.28
    )
    
    
    (0.92
    )
    
    
    (9.10
    )
    
    
    (0.48
    )
    
    
    (10.72
    )Year ended June 30, 2009Revenues
    
    $
    95,765
    
    
    $
    103,107
    
    
    $
    66,006
    
    
    $
    51,415
    
    
    $
    316,293Operating Income (Loss)
    
    
    13,760
    
    
    
    15,901
    
    
    
    3,957
    
    
    
    (13,022
    )
    
    
    20,596Net Income (Loss) Attributable to ECD Shareholders
    
    
    11,817
    
    
    
    13,045
    
    
    
    1,258
    
    
    
    (17,573
    )
    
    
    8,547Income (Loss) Per Share, Attributable to ECD Shareholders
    
    
    0.28
    
    
    
    0.31
    
    
    
    0.03
    
    
    
    (0.42
    )
    
    
    0.20Diluted Income (Loss) Per Share, Attributable to ECD
Shareholders
    
    
    0.27
    
    
    
    0.31
    
    
    
    0.03
    
    
    
    (0.41
    )
    
    
    0.20
 95




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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
    96




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##### Table of Contents




    
    The Company utilizes a standard cost model to record inventory movements and
periodically adjusts its inventory to actual costs. The control ensuring the accuracy
of the adjustment to value inventory at actual cost in the financial statements did not
operate effectively. The failure of this control results in a reasonable possibility
that a material misstatement of the annual or interim financial statements will not be
prevented or detected.
 Changes in Internal Control over Financial Reporting
  Remediation Plan for Material Weakness in Inventory
  
    
    Simplification of the accounting for standard cost and cost variances.
    
    Automation of the calculation in the general ledger, to the largest extent possible.
    
    More thorough review by management of results of the valuation adjustment.
  Report of Independent Registered Public Accounting Firm
 
 Internal ControlIntegrated Framework
 97




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98




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Internal ControlIntegrated Framework
  
 
 Item 9B : Other Information
  99




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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
   100




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Item 13 : Certain Relationships and Related Transactions, and Director Independence
  
 Item 14 : Principal Accounting Fees and Services
  101




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PART IV
 
 Item 15 : Exhibits, Financial Statement Schedules
 Page(a) 1. Financial StatementsReport of Independent Registered Accounting Firm
    
    
    47Consolidated Statements of Operations
    
    
    48Consolidated Balance Sheets
    
    
    49Consolidated Statements of Cash Flows
    
    
    50Consolidated Statements of Stockholders Equity and Comprehensive Income
    
    
    512. Financial Statement Schedules:Schedule II  Valuation and Qualifying Accounts
    
    
    107
   Reference3.1
    
    Restated Certificate of Incorporation filed September 29, 1967
    
    (a)3.2
    
    Certificate of Amendment to Certificate of Incorporation filed
March 25, 1999 extending voting rights of the Companys Class A Common
Stock, increasing the authorized capital stock of the Companys Common
Stock to 20,930,000 shares, and authorizing 430,000 shares of Class B
Common Stock
    
    (b)3.3
    
    Certificate of Amendment to Certificate of Incorporation filed
March 18, 2004, increasing the number of authorized shares from
30,000,000 to 50,000,000
    
    (c)3.4
    
    Certificate of Amendment to Certificate of Incorporation filed
December 8, 2006, increasing the number of authorized shares from
50,000,000 to 100,000,000
    
    (d)3.5
    
    Amended and Restated Certificate of Incorporation filed January 8, 2008
    
    (e)3.6
    
    Bylaws in effect as of October 11, 2007
    
    (f)4.1
    
    Form of Indenture, dated June 24, 2008, between Energy Conversion
Devices, Inc. and The Bank of New York Trust Company, N.A. as Trustee
    
    (g)
 102




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##### Table of Contents



Reference4.2
    
    Form of First Supplemental Indenture dated June 24, 2008, between
Energy Conversion Devices, Inc. and The Bank of New York Trust
Company, N.A., as Trustee
    
    (g)4.3
    
    Indenture, dated June 24, 2008, between Energy Conversion Devices,
Inc. and The Bank of New York Trust Company, N.A. as Trustee
    
    (h)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
    
    (h)10.1
    
    Energy Conversion Devices, Inc. 1995 Non-Qualified Stock Option Plan
    
    (i)10.2
    
    Energy Conversion Devices, Inc. 2000 Non-Qualified Stock Option Plan
    
    (j)10.3
    
    Restricted Stock Agreement and Stock Option Agreement dated as of
January 15, 1999 between the Company and Robert C. Stempel
    
    (k)10.4
    
    Amended and Restated Operating Agreement of Cobasys LLC dated as of
December 2, 2004 by and between ChevronTexaco Technology Ventures
LLC and Ovonic Battery Company, Inc.
    
    (l)10.5
    
    Energy Conversion Devices, Inc. 2006 Stock Incentive Plan
    
    (m)10.6
    
    Energy Conversion Devices, Inc. Executive Severance Plan effective
July 24, 2007
    
    (n)10.7
    
    Form of Severance Plan Participation Agreement
    
    (o)10.8
    
    Energy Conversion Devices, Inc. Annual Incentive Plan
    
    (p)10.9
    
    Form of Stock Option Agreement
    
    (q)10.10
    
    Form of Restricted Stock Agreement
    
    (r)10.11
    
    Offer Letter dated July 25, 2007 between Energy Conversion Devices,
Inc. and Mark D. Morelli
    
    (s)10.12
    
    Letter Agreement dated August 23, 2007 among Stanford R. Ovshinsky,
Energy Conversion Devices, Inc. and Ovonic Battery Company
    
    (t)10.13
    
    Letter Agreement dated August 31, 2007 between Robert C. Stempel
and Energy Conversion Devices, Inc.
    
    (u)10.14
    
    Revised Separation Agreement with executive officer effective
December 31, 2007
    
    (v)
 103




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##### Table of Contents



Reference10.15
    
    Revised Separation Agreement with executive officer
effective March 31, 2008
    
    (w)10.16
    
    Share Lending Agreement dated as of June 18, 2008 among
Energy Conversion Devices, Inc. and Credit Suisse
International and Credit Suisse Securities (USA) LLC
    
    (g)10.17
    
    Form of Restricted Stock Unit
    
    (x)10.18
    
    Offer Letter dated July 16, 2008 between Energy Conversion
Devices, Inc. and Harry W. Zike
    
    (y)10.19
    
    Revised Separation Agreement with Executive Officer
effective August 31, 2008 (portions of the agreement have
been omitted pursuant to a request for confidential
treatment under Rule 24b-2)
    
    (z)10.20
    
    Amendment No. 1 to 2006 Stock Incentive Plan
    
    (aa)10.21
    
    Form of Performance Share Award Agreement pursuant to the
Energy Conversion Devices, Inc. 2006 Stock Incentive Plan,
as amended
    
    (bb)10.22
    
    Amended Executive Severance Plan
    
    (cc)10.23
    
    Form of Restricted Stock Unit Award Agreement
    
    (dd)10.24
    
    Termination Agreement dated as of July 13, 2009 by and
among Ovonic Battery Company, Inc., Energy Conversion
Devices, Inc. and Chevron Technology Ventures LLC
    
    (ee)10.25
    
    Agreement and Plan of Merger entered into by Energy
Conversion Devices, Inc. and Solar Integrated Technologies
dated July 21, 2009
    
    (ff)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 Chief Executive Officer and Chief
Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
 Notes to Exhibit List
 (a)
    
    Filed as Exhibit 2-A to the Companys Form 8-A and incorporated herein by reference.(b)
    
    Filed as Exhibit 3.3 to the Companys Annual Report on Form 10-K for the fiscal year ended
June 30, 1999 and incorporated herein by reference.
 104




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(c)
    
    Filed as Exhibit 3.1 to the Companys Quarterly Report on Form 10-Q for the quarter ended
March 31, 2004 and incorporated herein by reference.(d)
    
    Filed with the Companys Proxy Statement dated October 12, 2006 and incorporated herein by
reference.(e)
    
    Filed with the Companys Proxy Statement dated October 29, 2007 and incorporated herein by
reference.(f)
    
    Filed as Exhibit 3.1 to the Companys Current Report on Form 8-K dated October 17, 2007 and
incorporated herein by reference.(g)
    
    Filed as Exhibits 4.1, 4.2 and 10.18 to the Companys Current Report on Form 8-K dated
June 19, 2008 and incorporated herein by reference.(h)
    
    Filed as Exhibits 4.3 and 4.4 to the Companys Annual Report on Form 10-K for the fiscal year
ended June 30, 2008(i)
    
    Filed as Exhibit 10.77 to the Companys Annual Report on Form 10-K for the fiscal year ended
June 30, 1995 and incorporated herein by reference.(j)
    
    Filed as Exhibit A to the Companys Proxy Notice and Statement dated January 19, 2001 and
incorporated herein by reference.(k)
    
    Filed as Exhibits B, C and D, respectively, to the Companys Proxy Notice and Statement dated
February 23, 1999 and incorporated herein by reference.(l)
    
    Filed as Exhibit 10.2 to the Companys Current Report on Form 8-K dated December 7, 2004 and
incorporated herein by reference.(m)
    
    Filed as Exhibit A to the Companys Proxy Statement dated October 12, 2006 and incorporated
herein by reference.(n)
    
    Filed as Exhibit 10.1 to the Companys Current Report on Form 8-K dated July 30, 2007 and
incorporated herein by reference.(o)
    
    Filed as Exhibit 10.2 to the Companys Current Report on Form 8-K dated July 30, 2007 and
incorporated herein by reference.(p)
    
    Filed as Exhibit 10.3 to the Companys Current Report on Form 8-K dated July 30, 2007 and
incorporated herein by reference.(q)
    
    Filed as Exhibit 10.4 to the Companys Current Report on Form 8-K dated July 30, 2007 and
incorporated herein by reference.(r)
    
    Filed as Exhibit 10.5 to the Companys Current Report on Form 8-K dated July 30, 2007 and
incorporated herein by reference.(s)
    
    Filed as Exhibit 10.1 to the Companys Current Report on Form 8-K dated August 3, 2007 and
incorporated herein by reference.(t)
    
    Filed as Exhibit 10.1 to the Companys Current Report on Form 8-K dated August 27, 2007 and
incorporated herein by reference.(u)
    
    Filed as Exhibit 10.1 to the Companys Current Report on Form 8-K dated August 31, 2007 and
incorporated herein by reference.
 105




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##### Table of Contents



(v)
    
    Filed as Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the quarter ended
March 31, 2008 and incorporated herein by reference.(w)
    
    Filed as Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q for the quarter ended
March 31, 2008 and incorporated herein by reference.(x)
    
    Filed as Exhibit 10.19 to the Companys Annual Report on Form 10-K for the fiscal year ended
June 30, 2008.(y)
    
    Filed as Exhibit 10.1 to the Companys Current Report on Form 8-K dated September 2, 2008 and
incorporated herein by reference.(z)
    
    Filed as Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2008 and incorporated herein by reference(aa)
    
    Filed as Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2008 and incorporated herein by reference.(bb)
    
    Filed as Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2008 and incorporated herein by reference.(cc)
    
    Filed as Exhibit 10.4 to the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2008 and incorporated herein by reference.(dd)
    
    Filed as Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the quarter ended
December 31, 2008 and incorporated herein by reference(ee)
    
    Filed as Exhibit 10.1 to the Companys Current Report on Form 8-K dated July 14, 2009 and
incorporated herein by reference.(ff)
    
    Filed as Exhibit 10.25 to the
Companys Annual Report on Form 10-K
for the fiscal year ended June 30, 2009.
 106




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ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES
 
 
 Schedule II  Valuation and Qualifying Accounts
 AdditionsBalance at
    
    
    Charged to Costs
    
    
    Charged to Other
    
    
    
    
    
    
    Balance at End ofBeginning of Period
    
    
    and Expenses
    
    
    Accounts
    
    
    Deductions
    
    
    Period(in thousands)June 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
    )
    
    
    130,535June 30, 2008Allowance for uncollectible accounts
    
    
    538
    
    
    
    868
    
    
    
    6
    
    
    
    (587
    )
    
    
    825Reserve for losses on government
contracts
    
    
    1,899
    
    
    
    158
    
    
    
    
    
    
    
    (206
    )
    
    
    1,851Reserve for inventory obsolescence
    
    
    1,870
    
    
    
    3,059
    
    
    
    
    
    
    
    (139
    )
    
    
    4,790Reserve for warranty
    
    
    1,325
    
    
    
    391
    
    
    
    
    
    
    
    (217
    )
    
    
    1,499Valuation allowance for deferred taxes
    
    
    129,571
    
    
    
    4,934
    
    
    
    
    
    
    
    (5,748
    )
    
    
    128,757
 
 (a)
    
    Addition related to balances assumed in the SIT acquisition and was charged to goodwill. 107




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##### Table of Contents



SIGNATURES
  ENERGY CONVERSION DEVICES, INC.August 31, 2010
    By:
    /S/ Mark D. MorelliMark D. MorelliPresident and Chief Executive Officer /s/ Mark D. Morelli

Mark D. Morelli
    
    President, Chief
Executive Officer
and Director
(Principal Executive
Officer)
    
    August 31, 2010/s/ William C. Andrews

William C. Andrews
    
    Chief Financial
Officer 
(Principal
Financial and
Accounting Officer)
    
    August 31, 2010/s/ Joseph A. Avila
    
    Director
    
    August 31, 2010Joseph A. Avila/s/ Alan E. Barton
    
    Director
    
    August 31, 2010Alan E. Barton/s/ Christopher P. Belden
    
    Director
    
    August 31, 2010Christopher P. Belden/s/ Robert I. Frey
    
    Director
    
    August 31, 2010Robert I. Frey/s/ William J. Ketelhut
    
    Director
    
    August 31, 2010William J. Ketelhut/s/ Stephen Rabinowitz
    
    Director
    
    August 31, 2010Stephen Rabinowitz/s/ George A. Schreiber, Jr.
    
    Director
    
    August 31, 2010George A. Schreiber, Jr.
 108