Energy Conversion: modeFinance Credit Report

If you want to know more, ASKMORE TM

modeFinance’s credit report.

Almost every day millions of peoplearound the world are wondering the realcreditworthiness of the companies withwhich they are in business. Every daythese questions remain unanswered.modeFinance

TM

now aims to answer thesequestions in a simple, complete andimmediate way.

ASKMORETM

is the modeFinanceTM

product which gives the chance toevaluate the credit risk for every companyfrom all around the world.

ASKMORETM plans 3 types of reports:

s-peek Basic Plus

ASKMORETM

Basic:This report includes modeFinance TM

’ sMORE Credit Ratings and MORE CreditLimit to help you in the decision making.It covers all essential information includingfinancial statements of the last three yearsand descriptive information including tradedescription and sector analysis.This report type is ideally suited fordecisions on transactions with each levelof credit risk.

modeFinanceTM HeadquarterBuilding A - AREA Science ParkPadriciano 99 - 34149 Trieste - ItalyPh.: +39 040 375 5337Fax: +39 040 375 [email protected]

askMORETM is a registered mark of modeFinanceTM

ENERGY CONVERSIONDEVICES INCTuesday, 14 February 2012

MORE Credit Rating

key

D C CC CCC B BB BBB A AA AAA

MORE Credit Rating

key

D C CC CCC B BB BBB A AA AAAnot

available

non return extremlypathological

pathological highdanger

weak sufficient adequate good very

strongextremely

strong

Company name ENERGY CONVERSION DEVICES INC

Identification number

Country United States of America

ZIP code and city 48309 - ROCHESTER HILLS

Address 2956, Waterview Drive

+1 248 293 0440

www.energyconversiondevices.com

Legal form

Account Consolidated

Incorporation date 1960

NACE 2 Sector 2611 - Manufacture of electronic components

Listed

Status Active

MORE Credit limit Not eligible for credit on the base of the available informations

30/06/2011 30/06/2010 30/06/2009

Turnover (th e) 160,898 207,331 223,782

Rating CC B BBB

Probability of default 42.00% 3.80% 0.40%

Confidence Level 100% 100% 100%

Solvency ratios

Leverage ratio 14.23 1.29 0.46

Total asset/Total liabilties 1.07 1.77 3.18

Liquidity ratios

Current Ratio 3.79 4.58 7.54

Quick Ratio 2.82 3.78 6.30

Profitability and economic equili-

brium ratios

Return on investement ROI (%) -72.21 -62.21 2.30

Return on equity ROE (%) -1,199.97 -151.48 1.06

Asset turnover 0.60 0.37 0.29

Interest paid weight -0.09 -0.07 0.62

Gross Profit/Operating revenue 0.17 0.16 0.42

Interest Coverage ratios

EBIT interest coverage ratio -11.21 -15.02 1.34

Analysis and trend of financial

strength


MORE Credit Rating

key


modeFinance TM srlVAT number [email protected]

Area Science Park,Padriciano 99. 34149 Trieste, ItalyTel. +39 040 3755337Fax +39 040 3756741

Sector Analysis

Company Healthy Balanced Vulnerable Risky

Solvency ratios

Leverage ratio 14.23 0.49 1.58 3.04 -1.91

Total asset/Total liabilties 1.07 3.03 1.62 1.23 0.89

Liquidity ratios

Current Ratio 3.79 2.62 1.70 1.26 0.78

Quick Ratio 2.82 2.06 1.26 0.91 0.45

Profitability and economic equilibrium ratios

Return on investement ROI (%) -72.21 8.93 4.19 0.31 -22.12

Return on equity ROE (%) -1,199.97 10.15 6.10 -5.06 -92.50

Asset turnover 0.60 1.02 1.15 1.10 2.47

Interest paid weight -0.09 0.01 0.12 0.08 -0.07

Gross Profit/Operating revenue 0.17 0.34 0.22 0.15 0.02

Interest Coverage ratios

EBIT interest coverage ratio -11.21 87.68 5.51 0.10 -8.02

Cash Conversion Cycle (days)

Days Sales Of Inventory (DIO) 108 45 44 43 42

Days Sales Outstanding (DSO) 61 67 68 58 32

Days Payable Outstanding (DPO) 0 30 39 48 50

Cash Conversion Cycle (DIO + DSO - DPO) 169 73 71 64 37

Numer of analyzed companies - 114 196 59 7

(Average) Rating CC A BBB B CC

The sector has been chosen according to:

international companies in the sector NACE 2 2611 with financial data of year 2011.


MORE Credit Rating

key




Sector Analysis - Graphs


MORE Credit Rating

key




Balance Sheet

BALANCE SHEET (th e) 30/06/2011 30/06/2010 30/06/2009

Accounting practice Local GAAP Local GAAP Local GAAP

Exchange rate USD - EUR 0.6919 0.81493 0.70751

Total assets 268,787 563,888 761,354

Fixed assets 83,795 275,662 442,897

Intangible fixed assets - 0 0

Tangible fixed assets 63,153 245,340 434,647

Other fixed assets 20,642 30,323 8,250

Current assets 184,992 288,226 318,456

Stocks 47,394 50,114 52,544

Debtors 27,090 58,692 49,089

Other current assets 110,508 179,420 216,823

Cash & cash equivalent 90,428 157,224 213,359

Shareholders funds 17,648 245,895 521,685

Capital 369 396 324

Other shareholders funds 17,279 245,499 521,361

Total liabilities 251,139 317,993 239,669

Non current liabilities 202,362 255,007 197,458

Long term debt 173,835 215,101 190,594

Other non-current liabilities 28,527 39,906 6,864

Current liabilities 48,777 62,986 42,211

Loans 0 0 0

Creditors 0 0 0

Other current liabilities 48,777 62,986 42,211

Total shareh. funds & liab. 268,787 563,888 761,354

NET DEBT (th e) 30/06/2011 30/06/2010 30/06/2009

Short term debts 0 0 0

Long term debt 173,835 215,101 190,594

Cash & cash equivalent 90,428 157,224 213,359

Net debt 83,408 57,877 -22,764

30/06/2011 30/06/2010 30/06/2009

Working capital - - -

Net Current Assets 136,215 225,240 276,245

30/06/2011 30/06/2010 30/06/2009

Days Sales Of Inventory (DIO) 108 88 86

Days Sales Outstanding (DSO) 61 103 80

Days Payable Outstanding (DPO) 0 0 0

Cash Conversion Cycle (DIO + DSO - DPO) 169 191 166


MORE Credit Rating

key




Income Statement

INCOME STATEMENT (th e) 30/06/2011 30/06/2010 30/06/2009

Accounting practice Local GAAP Local GAAP Local GAAP

Exchange rate USD - EUR 0.6919 0.81493 0.70751

Sales 160,898 207,331 223,782

Revenues growth (%) -22.4 -7.4 -

Other revenues +/- variation in inventories and contract in progress + Fixed assets

own construction capitalized0 0 0

Operating revenue / turnover 160,898 207,331 223,782

Total operating costs 357,909 558,409 209,210

Costs growth (%) -36 167 -

Service costs - - -

Material costs - - -

Costs of employees - - -

EBITDA -26,198 -31,677 38,348

Depreciation 170,813 319,400 23,776

EBIT -197,011 -351,078 14,572

Financial P/L -14,663 -23,109 -7,982

Financial revenue 1,801 2,151 3,697

Financial expenses 16,464 25,260 11,680

Interest paid 17,577 23,369 10,889

P/L before tax -211,674 -374,187 6,590

Extr. and other P/L 176 -119 0

Extr. and other revenue - - -

Extr. and other expenses - - -

P/L before tax + Extr. and other P/L -211,498 -374,305 6,590

Taxation 273 -1,832 1,044

P/L for period -211,771 -372,474 5,546

30/06/2011 30/06/2010 30/06/2009

Costs of Good Sold 133,680 173,815 130,379

Gross Profit 27,218 33,516 93,403

Other Operating Expenses 224,229 384,594 78,831

30/06/2011 30/06/2010 30/06/2009

Cash flow -40,958 -53,073 29,322

Added value - - -

30/06/2011 30/06/2010 30/06/2009

Number of employees 1,300 1,500 1,800


MORE Credit Rating

key




Evolutions and trends


MORE Credit Rating

key




Qualitative information

Full overview Energy Conversion Devices, Inc. (ECD) is a publicly quoted company that produces and commercializes materials,

products, and production processes for the alternative energy generation, energy storage, and information tech-

nology markets. The company was founded in 1960 by Stanford Ovshinsky and has its registered head office in

Rochester Hills, Michigan in the United States. Energy Conversion Devices is a world leader in the synthesis of new

materials and the development of advanced production technology and innovative alternative energy products and

solutions. The company’s portfolio of alternative energy solutions and proprietary information processing techno-

logies features advances in solar electric power generation, NiMH (nickel - metal hydride battery) batteries and

fuel cell, solid hydride storage and phase - change memory technologies. ECD designs and builds manufacturing

machinery that incorporates its proprietary production processes, maintains ongoing research and development

programs to continually improve its products, and develops new applications for its technologies. Energy Conver-

sion Devices further has two strong business segments: United Solar Ovonic and Ovonic Materials. United Solar

Ovonic manufactures and sells solar modules based on proprietary thin - film triple junction amorphous silicon

technology. Its solar panels are flexible, lightweight and rugged as well as generates up to 20 percent more electri-

city than conventional crystalline products. Ovonic Materials segment includes royalty - bearing consumer battery

business, the manufacture of nickel hydroxide materials used in NiMH batteries, and the R&D (research and deve-

lopment) programs with near - term commercial opportunities of ECD. In addition to the two segments, Energy

Conversion Devices has two joint ventures: Ovonyx, Inc. and Cobasys LLC. Ovonyx, Inc. was formed to commer-

cialize ECD’s proprietary phase - change semiconductor memory technology - OUM (Ovonic Unified Memory) or

PRAM (parameter random access memory). Cobasys LLC was formed to commercialize ECD’s proprietary NiMH

technology to provide advanced energy storage systems and solutions for transportation and stationary markets.

Energy Conversion Devices operates in the United States, Germany, China, Japan and Italy, among others.

History Founded by Stanford Ovshinsky.

Primary business line Engaged in the production and distribution of materials, products, and production processes for the alternative

energy generation, energy storage, and information technology markets.

Secondary business line Not available.

Main activity Manufacturing.

Secondary activity Not available.

Main products and services Not available.

Size estimate A world leader in the synthesis of new materials and the development of advanced production technology and

innovative alternative energy products and solutions.

Strategy, organization and policy Not available.

Strategic alliances Not available.

Membership of a network Not available.

Main brand names Not available.

Main domestic country United States Of America.


MORE Credit Rating

key




Main foreign countries or regions Germany; China; Japan; Italy.

Main production sites United States of America.

Main distribution sites Not available.

Main sales representation sites Not available.

Main customers Alternative energy generation, energy storage, and information technology markets; Transportation and stationary

markets.

Auditor/Advisor/Bank

name type address

GRANT THORNTON LLP Auditor -

Computershare Investor Services Transfer Agent -

Board

name date of birth nationality function

Mr Stephen Rabinowitz - - Independent Chairman of the Board

Mr Jay Brian Knoll 17/05/1963 - Executive Vice President, Chief Restructuring Officer, Director

Mr Joseph A Avila - - Independent Director

Mr Alan E Barton - - Independent Director

Mr Robert I Frey - - Independent Director

Mr Julian Hawkins - - President, Chief Executive Officer, Director

Mr William J Ketelhut 15/10/1952 United States Independent Director

Mr George A Schreiber - - Independent Director


MORE Credit Rating

key




Sharehoders (the first twenty shareholders ordered by Direct %))

VANGUARD GROUP, INC. THE via its funds Rating: -

Country ISO code US Operating revenue (MIL $) 2,018

NACE Rev. 2, Core code - Total Assets (MIL $) 1,830

Direct % - Number of Employees 9,500

Total % 4.58 Information date 2011/09

Address: Not available

BLACKROCK, INC. via its funds Rating: BBB






DIMENSIONAL FUND ADVISORS LP via its funds Rating: A

Country ISO code US Operating revenue (MIL $) 37


Direct % - Number of Employees 260



GUGGENHEIM CAPITAL, LLC via its funds Rating: -


NACE Rev. 2, Core code - Total Assets (MIL $) -




WINTON CAPITAL MANAGEMENT LIMITED via its funds Rating: AA

Country ISO code GB Operating revenue (MIL $) 441

NACE Rev. 2, Core code - Total Assets (MIL $) 255




WATER STREET CAPITAL, INC. via its funds Rating: -






VALINOR MANAGEMENT, LLC via its funds Rating: -

Country ISO code US Operating revenue (MIL $) -


Direct % - Number of Employees -




MORE Credit Rating

key




ROYAL BANK OF CANADA RBC via its funds Rating: -

Country ISO code CA Operating revenue (MIL $) 24,174





CREDIT SUISSE GROUP AG via its funds Rating: -

Country ISO code CH Operating revenue (MIL $) 32,087

NACE Rev. 2, Core code - Total Assets (MIL $) 1,098,345




D. E. SHAW & CO., L.P. via its funds Rating: -






GOLDMAN SACHS GROUP, INC via its funds Rating: -






AQR CAPITAL MANAGEMENT LLC via its funds Rating: -






BARCLAYS PLC via its funds Rating: -

Country ISO code GB Operating revenue (MIL $) 48,607

NACE Rev. 2, Core code - Total Assets (MIL $) 2,332,039




SUSQUEHANNA INTL GROUP via its funds Rating: -







MORE Credit Rating

key




GOVERNMENT OF NORWAY via its funds Rating: -

Country ISO code NO Operating revenue (MIL $) -





INVESCO LTD. via its funds Rating: BB

Country ISO code BM Operating revenue (MIL $) 3,528





BANK OF NEW YORK MELLON CORPORATION via its funds Rating: -






GEODE CAPITAL MANAGEMENT, LLC via its funds Rating: -






WELLINGTON MANAGEMENT CO L.L.P via its funds Rating: -






RENAISSANCE TECHNOLOGIES LLC via its funds Rating: -







MORE Credit Rating

key




Subsidiaries (the first twenty subsidiaries ordered by Direct %)

OVONIC BATTERY COMPANY, INC. Rating: -



Direct % MO Number of Employees 138

Total % - Information date 2011/10

OVONIC FUEL CELL COMPANY LLC Rating: -





OVONIC HYDROGEN SYSTEMS LLC Rating: -





SOLAR INTEGRATED TECHNOLOGIES, INC. Rating: -





UNITED SOLAR OVONIC CORPORATION Rating: -





UNITED SOLAR OVONIC LLC Rating: -



Direct % MO Number of Employees 1,100


SOVLAKS Rating: -

Country ISO code RU Operating revenue (MIL $) 0


Direct % 50.00 Number of Employees 2


SOVLAKS - BATAREYA Rating: D

Country ISO code RU Operating revenue (MIL $) 0


Direct % 50.00 Number of Employees 22



MORE Credit Rating

key




ASKMORE rating guide

General vision A credit rating is an opinion of the general creditworthiness of an obligor (issuer rating), or the creditworthiness of

an obligor in respect of a specific debt security, or other financial obligation (issue rating), based on relevant risk

factors.

The Multi Objective Rating Evaluation (MORE) model is essentially used to assess the level of distress of industrial

companies by using data included in financial statements.

The basic idea of the model is to analyze a set of financial and economic ratios in a predictive corporate bankruptcy

model with the purpose of creating a fundamental credit rating model for each industrial sector. Results of the

model are obtained by applying newly developed numerical methodologies, drawing together financial theory,

data mining and engineering design methodologies. The heart of MORE is a multi dimensional and multi objective

algorithm that produces a classification of each company, by taking into account any attributes (such as sector and

country) characterizing a firm.

The model gives the opportunity to assign a rating to a company even without considering a complete data analysis

and allows to process quality information. It induces a better understanding of a company’s strength and weakness

thanks to sophisticated data mining tools and taking into account the analyst knowledge.

The MORE rating vision is to look at the fundamental economics of the company. The main idea is to evaluate the

rating observing every aspect of the economical and financial behavior of the company: better is the equilibrium

between the different aspects, better will be the final rating.

This is done studying, evaluating and aggregating the most important sections of the financial and economic

behavior of a company such as: profitability, liquidity, solvency, interest coverage and efficiency.


MORE Credit Rating

key




Rating scale

Rating class Rating macro class Assessment

AAA

Healthy

The company’s capacity to meet its financial commitments is extremely strong. The company shows an excellent

economic and financial flow and fund equilibrium.

AAThe company has very strong creditworthiness. It also has a good capital structure and economic and financial

equilibrium. Difference from AAA is slight.

AThe company has a high solvency. The company is however more susceptible to the adverse effects of changes in

circumstances and economic conditions than companies in higher rated categories.

BBB

Balanced

Capital structure and economic equilibrium are considered adequate. The company’s capacity to meet its financial

commitments could be affected by serious unfavourable events.

BBA company rated BB is more vulnerable than companies rated BBB. Furthermore the company faces major ongoing

uncertainties or exposure to adverse business, financial, or economic conditions.

B

Vulnerable

The company presents vulnerable signals with regards to its fundamentals. Adverse business, financial, or economic

conditions will be likely to impair the company’s capacity or willingness to meet its financial commitments.

CCC

A company rated CCC has a dangerous disequilibrium on the capital structure and on its economic and financial

fundamentals. Adverse market events and an inadequate management could affect with high probability the

company’s solvency.

CC

Risky

The company shows signals of high vulnerability. In the event of adverse market and economic conditions, the

company’s strong disequilibrium could increase.

CThe company shows considerable pathological situations. The company’s capacity to meet its financial

commitments is very low.

D The company has not any longer the capacity to meet its financial commitments.


MORE Credit Rating

key




Fundamental Credit Rating Ratios

Analysis area Ratio Assessment

Solvency ratios

Leverage ratioThis measures the level of total liabilities of the company in comparison

with equity.

Assets to debtThis indicates company’s solvency. The company shows a level of deficit

when the value of this ratio is under one unit.

Financial ratios Fixed Assets coverage ratioThis is calculated only for holdings. It measures the capital structure i.e.

whether a company covers the fixed assets with long term capital.

Liquidity ratios

Current ratioThis measures whether a company has sufficient short-term assets to cover

its short-term liabilities.

Quick ratioThis compares current liabilities only to those assets that can be readily

turned into cash.

Profitability and economic ratios

Return on Investement(ROI)This measures the profitability of company investments without regard to

the way the investment is financed.

Return on Equity(ROE) This measures the profitability of the equity.

Asset turnover

This indicates the investments turnover with regards to sales. The level

assumed from the ratio depends on the sector in which the company

operates.

Profit margin This indicates the profitability of sales.

Interest coverage ratio Interest Paid coverage

This indicate the ability of the company to cover interest expenses through

the economic margins (Gross profit and EBIT) and through the cash flow

from operating activities.


MORE Credit Rating

key




MORE Credit Limit, Probability of default and Confidence Level

MORE Credit Limit MORE Credit limit is the estimation of the amount of maximum credit that is possible to assign on a commercial

relationship with the analyzed company with an outlook of one year.

modeFinance used the following values associated with the company analyzed while computing the credit limit:

• Size;

• Years in Business;

• Average number of suppliers;

• Liquidity of the company and the comparison with its sector;

• The funds dedicated to be paid to suppliers;

• The likelihood that a company may pay its debts in the next 12 months (MORE Ratings).

The credit limit in this report is merely a suggested value of commercial credit limit calculated on the basis of annual

public data. This value should be reviewed by paying attention to the Confidence Level value and by using other

information such as other business information, news... etc; and private information such as the relationship with

client, history of payments, guarantees and the knowledge of the sector.

Probability of default e Confidence

Level

In addition to the MORE Rating, modeFinance also estimates the probability of default and provides a level of

confidence. The probability of default is the degree of certainty (in quantitative terms) that the company will go

into default.

As the probability of default is strongly affected by the economic climate that the company is operating in,

companies in the same MORE class will not necessarily have the same probability of default.

The MORE model can produce a MORE rating even if there is missing data by using an associated confidence level:

Confidence =

∑Available Information∑

Total Information

The level of confidence does not indicate financial confidence in the company. It is a reflection of the variations in

availability of financial data across Europe due to filing regulations and suggests the degree of financial detail the

MORE rating is able to take into account for each company.

For companies with fully populated records a confidence level of 100% would be applied: companies where no

financial data is provided, 0%. This puts the MORE rating in a context for the user and aids interpretation.


MORE Credit Rating

key




Notes and disclaimer

NOTES modeFinance has based the present analysis on the company available financial statements, coming from one or

more of the following sources: local providers, Commercial Register (Companies House), websites, modeFinance’s

database etc.

DISCLAIMER All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any

form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of

the publisher modeFinance. The facts of this report are believed to be correct at the time of publication but cannot

be guaranteed. Please note that the findings, conclusions and recommendations that modeFinance delivers will

be based on information gathered in good faith from both primary and secondary sources, whose accuracy we

are not always in a position to guarantee. As such modeFinance can accept no liability whatever for actions taken

based on any information that may subsequently prove to be incorrect.

Contacts

Company modeFinance

Products MORE rating

Where AREA Science Park

34149 Trieste, via Padriciano 99 - ITALY

Info [email protected]

web www.modefinance.com

Phone +39 040 3755337

Energy Conversion: modeFinance Credit Report

Documents

Transcript of Energy Conversion: modeFinance Credit Report