##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 (Mark one)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 27, 2008
 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: 000-31687
 EVERGREEN SOLAR, INC.
  Delaware
(State or other jurisdiction of 
Incorporation or organization)
    
    04-3242254
(I.R.S. Employer
Identification No.)138 Bartlett Street 
Marlboro, Massachusetts
(Address of principal executive offices)
    
    01752
(Zip Code)
 (508) 357-2221
 þ o
  Large accelerated filer þAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



EVERGREEN SOLAR, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 27, 2008
  
 TABLE OF CONTENTS
 Forward Looking Statements
    
    
    1Part I. Financial Information
    
    
    3Item 1.
    
    Financial Statements
    
    
    3Condensed Consolidated Balance Sheets
    
    
    
    
    
    
    3Condensed Consolidated Statements of Operations
    
    
    
    
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    
    
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    
    
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3.
    
    Quantitative and Qualitative Disclosure About Market Risk
    
    
    33Item 4.
    
    Controls and Procedures
    
    
    34Part II. Other Information
    
    
    34Item 1.
    
    Legal Proceedings
    
    
    34Item 1A.
    
    Risk Factors
    
    
    34Item 6.
    
    Exhibits
    
    
    38Signatures
    
    
    39Exhibits:EX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO




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##### Table of Contents



FORWARD-LOOKING STATEMENTS
 This Quarterly Report on Form 10-Q , including Managements Discussion and Analysis of
Financial Condition and Results of Operations in Item 2 of this report and the documents
incorporated by reference herein, contain forward-looking statements that involve risks,
uncertainties and assumptions, including those discussed in Item 1A. Risk Factors of this Quarterly
Report on Form 10-Q and in Item 1A. Risk Factors of the Companys Annual Report on Form 10-K filed
with the SEC on February 27, 2008 and subsequently amended. If the risks or uncertainties ever
materialize or any of the assumptions prove incorrect, our results will differ from those expressed
or implied by such forward-looking statements and assumptions. All statements other than statements
of historical fact are statements that could be deemed forward-looking statements, including but
not limited to statements regarding:
 
    
    our future growth, revenue, earnings and gross margin improvement;
    
    the Devens facility expansion and other potential capacity expansions, and the timing of
such facilities becoming fully operational and meeting manufacturing capacity goals on
schedule and within budget;
    
    capital requirements to respond to competitive pressures and acquire complementary
businesses and necessary technologies;
    
    costs associated with research and development, building or improving manufacturing
facilities, general and administrative expenses and business growth;
    
    the demand and market for solar energy, shifts in our geographic product revenue mix, and
our position in the solar power market;
    
    the volume of photovoltaic solar panels we will produce;
    
    the making of strategic investments and expansion of strategic partnerships,
manufacturing operations and distribution networks; and the future benefit of these
activities;
    
    operating efficiency of manufacturing facilities, including increases in manufacturing
scale and technological improvements needed to continuously reduce the cost per watt to
manufacture our products;
    
    the sufficiency of our cash, cash equivalents and marketable securities; access to
capital markets to satisfy our anticipated cash requirements; and possible sales of
securities and our planned use of proceeds from such sales;
    
    revenue from customer contracts primarily denominated in Euros that are subject to
foreign currency exchange risks from and the use of derivative financial instruments to
manage those risks;
    
    future plans and benefits from the EverQ joint venture, including the expansion of
EverQs manufacturing capacity and its initial public offering;
    
    our receipt or EverQs receipt of public grant awards and other government funding to
support our expansion or EverQs expansion;
    
    our expectations regarding product performance and cost and technological competitiveness;
    
    our ability to obtain key raw materials, including silicon supply from our suppliers;
    
    the benefits of our proprietary technology and new manufacturing and other developments,
including our quad wafer furnace design and continued enhancements of our wafer, cell and
panel production technologies; and
    
    the payment of any cash dividends.
 1




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##### Table of Contents



These statements may be identified with such words as we expect, we believe, we
anticipate or similar indications of future expectations. These statements are neither promises
nor guarantees and involve risks and uncertainties, which could cause our actual results to differ
materially from such forward-looking statements. Such risks and uncertainties may include, among
other things, macroeconomic and geopolitical trends and events, the execution and performance of
contracts by distributors, suppliers and other partners, and other risks and uncertainties
described herein, including but not limited to the items discussed in Item 1A. Risk Factors in our
Annual Report on Form 10-K for the period ended December 31, 2007 filed on February 27, 2008 and
subsequently amended. We caution readers not to place undue reliance on any forward-looking
statements contained in this Quarterly Report, which speak only as of the date of this Quarterly
Report. We disclaim any obligation to update publicly or revise any such statements to reflect any
change in our expectations, or events, conditions, or circumstances on which any such statements
may be based, or that may affect the likelihood that actual results will differ from those set
forth in such forward-looking statements.
 2




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PART IFINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 Evergreen Solar, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(unaudited)
 December 31,
    
    
    September 27,2007
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    29,428
    
    
    $
    187,926Marketable securities
    
    
    70,275
    
    
    
    97,314Restricted cash
    
    
    41,000
    
    
    
    24,000Accounts receivable, net of allowances for doubtful accounts
    
    
    9,297
    
    
    
    12,184Grants receivable
    
    
    5,818
    
    
    
    1,661Inventory
    
    
    8,094
    
    
    
    12,326Prepaid cost of inventory
    
    
    
    
    
    
    8,866VAT receivable, net
    
    
    10,549
    
    
    
    1,330Other current assets
    
    
    7,729
    
    
    
    7,671Total current assets
    
    
    182,190
    
    
    
    353,278Investment in and advances to EverQ
    
    
    87,894
    
    
    
    113,155Restricted cash
    
    
    414
    
    
    
    219Deferred financing costs
    
    
    1,991
    
    
    
    7,842Loan receivable from silicon supplier
    
    
    21,904
    
    
    
    43,788Prepaid cost of inventory
    
    
    143,035
    
    
    
    161,612Fixed assets, net
    
    
    114,641
    
    
    
    339,209Other assets
    
    
    1,186
    
    
    
    2,654Total assets
    
    $
    553,255
    
    
    $
    1,021,757Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    57,005
    
    
    $
    41,792Accrued employee compensation
    
    
    4,875
    
    
    
    6,194Accrued interest
    
    
    1,969
    
    
    
    3,508Accrued warranty
    
    
    705
    
    
    
    976Other current liabilities
    
    
    5,408
    
    
    
    13,857Total current liabilities
    
    
    69,962
    
    
    
    66,327Subordinated convertible notes
    
    
    90,000
    
    
    
    Senior convertible notes
    
    
    
    
    
    
    373,750Deferred income taxes
    
    
    
    
    
    
    8,800Total liabilities
    
    
    159,962
    
    
    
    448,877Commitments and Contingencies (Notes 7, 8 and 9)Stockholders equity:Preferred stock, $0.01 par value, 27,227,668 shares authorized
    
    
    
    
    
    
    Common stock, $0.01 par value, 250,000,000 shares authorized,
102,252,965 and 164,791,114 issued and outstanding at December 31, 2007
and September 27, 2008, respectively
    
    
    1,023
    
    
    
    1,648Additional paid-in capital
    
    
    521,695
    
    
    
    735,235Accumulated deficit
    
    
    (136,280
    )
    
    
    (169,077
    )Accumulated other comprehensive income
    
    
    6,855
    
    
    
    5,074Total stockholders equity
    
    
    393,293
    
    
    
    572,880Total liabilities and stockholders equity
    
    $
    553,255
    
    
    $
    1,021,757
  3




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Evergreen Solar, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 Quarter ended
    
    
    Year-to-date Period EndedSeptember 29,
    
    
    September 27,
    
    
    September 29,
    
    
    September 27,2007
    
    
    2008
    
    
    2007
    
    
    2008Product revenues
    
    $
    15,383
    
    
    $
    17,803
    
    
    $
    41,417
    
    
    $
    54,180Royalty and fee revenues
    
    
    2,807
    
    
    
    4,264
    
    
    
    6,263
    
    
    
    13,590Total revenues
    
    
    18,190
    
    
    
    22,067
    
    
    
    47,680
    
    
    
    67,770Cost of revenues
    
    
    13,660
    
    
    
    20,820
    
    
    
    36,881
    
    
    
    50,914Gross profit
    
    
    4,530
    
    
    
    1,247
    
    
    
    10,799
    
    
    
    16,856Operating expenses:Research and development
    
    
    5,381
    
    
    
    5,541
    
    
    
    15,749
    
    
    
    16,371Selling, general and administrative
    
    
    5,079
    
    
    
    6,174
    
    
    
    15,355
    
    
    
    17,060Facility start-up and equipment write-offs
    
    
    358
    
    
    
    11,665
    
    
    
    358
    
    
    
    28,227Total operating expenses
    
    
    10,818
    
    
    
    23,380
    
    
    
    31,462
    
    
    
    61,658Operating loss
    
    
    (6,288
    )
    
    
    (22,133
    )
    
    
    (20,663
    )
    
    
    (44,802
    )Other income (expense):Foreign exchange gains (losses), net
    
    
    (133
    )
    
    
    (5,017
    )
    
    
    611
    
    
    
    (1,361
    )Interest income
    
    
    3,268
    
    
    
    4,242
    
    
    
    6,678
    
    
    
    10,004Interest expense
    
    
    (914
    )
    
    
    (2,500
    )
    
    
    (2,750
    )
    
    
    (2,862
    )Other income (expense), net
    
    
    2,221
    
    
    
    (3,275
    )
    
    
    4,539
    
    
    
    5,781Loss before equity income (loss)
    
    
    (4,067
    )
    
    
    (25,408
    )
    
    
    (16,124
    )
    
    
    (39,021
    )Equity income (loss) from interest in EverQ
    
    
    404
    
    
    
    1,558
    
    
    
    (1,266
    )
    
    
    6,224Net loss
    
    $
    (3,663
    )
    
    $
    (23,850
    )
    
    $
    (17,390
    )
    
    $
    (32,797
    )Net loss per share (basic and diluted)
    
    $
    (0.04
    )
    
    $
    (0.18
    )
    
    $
    (0.21
    )
    
    $
    (0.27
    )Weighted average shares used in computing basic and
diluted net loss per share
    
    
    98,343
    
    
    
    132,034
    
    
    
    82,692
    
    
    
    119,807
  4




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Evergreen Solar, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 Year-to-date Period EndedSeptember 29,
    
    
    September 27,2007
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (17,390
    )
    
    $
    (32,797
    )Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation expense
    
    
    5,341
    
    
    
    15,692Loss on disposal of fixed assets
    
    
    
    
    
    
    1,943Equity (income) loss from EverQ
    
    
    1,266
    
    
    
    (6,224
    )Amortization of deferred debt financing costs
    
    
    333
    
    
    
    589Imputed interest and accretion of bond premiums
    
    
    (525
    )
    
    
    (1,708
    )Accretion of capped call discount
    
    
    
    
    
    
    345Compensation expense associated with employee equity awards
    
    
    4,877
    
    
    
    5,343Provision for warranty
    
    
    
    
    
    
    359Changes in operating assets and liabilities:Accounts receivable
    
    
    9,371
    
    
    
    (2,887
    )Grants receivable
    
    
    
    
    
    
    17,678Inventory
    
    
    (2,739
    )
    
    
    (4,232
    )Prepaid cost of inventory
    
    
    (12,776
    )
    
    
    (26,268
    )Interest receivable
    
    
    (191
    )
    
    
    117Other current assets
    
    
    (4,393
    )
    
    
    9,357Accounts payable
    
    
    7,375
    
    
    
    (12,883
    )Interest payable
    
    
    984
    
    
    
    (260
    )Other current liabilities
    
    
    3,706
    
    
    
    3,714Other
    
    
    
    
    
    
    (1,157
    )Net cash used in operating activities
    
    
    (4,761
    )
    
    
    (33,279
    )Cash flows from investing activities:Purchases of fixed assets and deposits on fixed assets under construction
    
    
    (20,679
    )
    
    
    (250,793
    )Decrease (increase) in restricted cash
    
    
    (41,000
    )
    
    
    17,178Increase in EverQ loan
    
    
    
    
    
    
    (18,174
    )Increase in loan receivable from silicon supplier
    
    
    
    
    
    
    (22,164
    )Purchases of marketable securities
    
    
    (67,000
    )
    
    
    (88,520
    )Proceeds from sale and maturity of marketable securities
    
    
    51,475
    
    
    
    61,809Net cash used in investing activities
    
    
    (77,204
    )
    
    
    (300,664
    )Cash flows from financing activities:Proceeds from the issuance of common stock, net of offering costs
    
    
    170,743
    
    
    
    166,726Proceeds from the issuance of senior convertible debt, net of offering costs
    
    
    
    
    
    
    363,983Payment for capped call up-front premium
    
    
    
    
    
    
    (39,543
    )Proceeds from share lending arrangement
    
    
    
    
    
    
    3Proceeds from exercise of stock options and warrants, and
shares purchased under Employee Stock Purchase Plan
    
    
    1,720
    
    
    
    1,272Net cash provided by financing activities
    
    
    172,463
    
    
    
    492,441Net increase in cash and cash equivalents
    
    
    90,498
    
    
    
    158,498Cash and cash equivalents at beginning of period
    
    
    6,828
    
    
    
    29,428Cash and cash equivalents at end of period
    
    $
    97,326
    
    
    $
    187,926Supplemental cash flow information:Non-cash cost of prepaid inventory
    
    
    119,914
    
    
    
    
  5




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##### Table of Contents



Evergreen Solar, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
 1. Basis of Presentation
       6




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##### Table of Contents



2. Net Loss per Common Share
  Note 11
 3. Cash and Marketable Securities
    7




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##### Table of Contents



December 31,
    
    
    Septeber 27,2007
    
    
    2008Cash
    
    $
    23,362
    
    
    $
    5,287Money market funds
    
    
    1,908
    
    
    
    176,498Certificates of deposits
    
    
    1,161
    
    
    
    148Commercial paper
    
    
    2,997
    
    
    
    5,993Subtotal cash and cash equivalents
    
    
    29,428
    
    
    
    187,926Asset backed securities
    
    
    2,982
    
    
    
    Commercial paper
    
    
    41,490
    
    
    
    74,422Corporate bonds
    
    
    25,803
    
    
    
    22,892Subtotal marketable securities
    
    
    70,275
    
    
    
    97,314Total cash, cash equivalents and
marketable securities
    
    $
    99,703
    
    
    $
    285,240
 4. Inventory
  December 31,
    
    
    September 27,2007
    
    
    2008Raw materials
    
    $
    6,468
    
    
    $
    9,676Work-in-process
    
    
    1,014
    
    
    
    2,313Finished goods
    
    
    612
    
    
    
    337$
    8,094
    
    
    $
    12,326Prepaid cost of inventory
    
    $
    143,035
    
    
    $
    170,478Less: current portion
    
    
    
    
    
    
    8,866Noncurrent portion
    
    $
    143,035
    
    
    $
    161,612
   8




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##### Table of Contents



5. Fixed Assets
  Useful

    
    December 31,
    
    
    September 27,Life

    
    2007
    
    
    2008Land
    
    
    
    
    
    $
    
    
    
    $
    119Building
    
    40 years
    
    
    
    
    
    
    75,575Laboratory and manufacturing
equipment
    
    3-7 years
    
    
    53,323
    
    
    
    148,435Computer and office equipment
    
    3-7 years
    
    
    1,320
    
    
    
    4,211Leasehold improvements
    
    Lesser of 15 to 20 years or lease term

    
    
    13,592
    
    
    
    16,413Assets under construction
    
    
    
    
    
    
    67,125
    
    
    
    130,393135,360
    
    
    
    375,146Less: Accumulated depreciation
    
    
    
    
    
    
    (20,719
    )
    
    
    (35,937
    )$
    114,641
    
    
    $
    339,209
    6. Investment in EverQ
   9




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##### Table of Contents



Quarter Ended
    
    
    Year-To-Date Period EndedSeptember 29,
    
    
    September 27,
    
    
    September 29,
    
    
    September 27,2007
    
    
    2008
    
    
    2007
    
    
    2008Revenue
    
    $
    47,525
    
    
    $
    84,123
    
    
    $
    106,426
    
    
    $
    258,369Cost of goods sold
    
    
    41,412
    
    
    
    65,421
    
    
    
    92,555
    
    
    
    201,886Other expenses
    
    
    4,900
    
    
    
    13,781
    
    
    
    17,667
    
    
    
    37,563Net income (loss)
    
    
    1,213
    
    
    
    4,921
    
    
    
    (3,796
    )
    
    
    18,920
 December 31,
    
    
    September 27,2007
    
    
    2008Current assets
    
    $
    205,460
    
    
    $
    223,948Non-current assets
    
    
    350,155
    
    
    
    393,927Current liabilities
    
    
    141,068
    
    
    
    164,896Non-current
liabilities
    
    
    282,293
    
    
    
    302,343
  Evergreen Solar Loans to EverQ
  Date of Loan
    
    Principal (EUR)
    
    Principal (USD)
    
    Interest Rate
    
    Date DueJanuary 25, 2007
    
    
    30,000,000
    
    $
    43,788,000
    
    
    
    5.43
    %
    
    December 31, 2009June 26, 2008
    


    
    $
    18,174,000
    
    
    
    6.71
    %
    
    December 31, 2009
 7. Long-Term Debt
 Subordinated Convertible Notes
  10




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Senior Convertible Notes
 Capped Call
    Capped Call
   11




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##### Table of Contents



Common Stock Lending Agreement
 8. Line of Credit
  9. Guarantor Arrangements
  Product Warranty
  Balance at December 31, 2007
    
    $
    705Warranty costs accrued
    
    
    359Warranty costs incurred
    
    
    (88
    )Balance at September 27, 2008
    
    $
    976
 EverQ Debt Guarantee
  12




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10. Fair Value Measurements
    Valuation Hierarchy
       13




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Fair Value Measurements
Quarter Ended September 27, 2008
 Quoted Prices in
    
    Using Significant Other
    
    Using SignificantActive Markets
    
    Observable Inputs
    
    Unobservable InputsTotal Carrying Value
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Money markets
    
    $
    176,498
    
    
    $
    176,498
    
    
    $
    
    
    
    $
    Certificate of deposit
    
    
    148
    
    
    
    148
    
    
    
    
    
    
    
    Commercial paper
    
    
    5,993
    
    
    
    
    
    
    
    5,993
    
    
    
    Marketable securities
    
    
    97,314
    
    
    
    
    
    
    
    97,314
    
    
    
    
 Valuation Techniques
  11. Stockholders Equity
    14




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Common Stock Lending Agreement
   12. Comprehensive Income (Loss)
  Quarter Ended
    
    
    Year-To-Date Period EndedSeptember 29,
    
    
    September 27,
    
    
    September 29,
    
    
    September 27,2007
    
    
    2008
    
    
    2007
    
    
    2008Net loss
    
    $
    (3,663
    )
    
    $
    (23,850
    )
    
    $
    (17,390
    )
    
    $
    (32,797
    )Other comprehensive income (loss):Unrealized gain (loss) on marketable securities
    
    
    23
    
    
    
    (205
    )
    
    
    27
    
    
    
    (208
    )Cumulative translation adjustments
    
    
    3,458
    
    
    
    (5,836
    )
    
    
    3,980
    
    
    
    (1,573
    )Total comprehensive loss
    
    $
    (182
    )
    
    $
    (29,891
    )
    
    $
    (13,383
    )
    
    $
    (34,578
    )
 15




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##### Table of Contents



13. Stock Based Compensation
  Quarter Ended
    
    
    Year-to-Date Period EndedSeptember 29,
    
    
    September 27,
    
    
    September 29,
    
    
    September 27,2007
    
    
    2008
    
    
    2007
    
    
    2008Cost of revenue
    
    $
    214
    
    
    $
    306
    
    
    $
    558
    
    
    $
    782Research and development expenses
    
    
    411
    
    
    
    392
    
    
    
    1,184
    
    
    
    1,115Selling, general and administrative expenses
    
    
    1,086
    
    
    
    945
    
    
    
    3,135
    
    
    
    2,677Facility start-up
    
    
    
    
    
    
    302
    
    
    
    
    
    
    
    769$
    1,711
    
    
    $
    1,945
    
    
    $
    4,877
    
    
    $
    5,343
 Stock Incentive Plan
   Weighted-AverageShares
    
    
    Exercise Price(in thousands)Outstanding at January 1, 2008
    
    
    4,185
    
    
    $
    4.43Granted
    
    
    
    
    
    
    Exercised
    
    
    434
    
    
    
    2.36Forfeited
    
    
    23
    
    
    
    5.69Outstanding at September 27, 2008
    
    
    3,728
    
    
    $
    4.67
 16




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##### Table of Contents



Options Outstanding
    
    Options ExercisableWeightedAverage
    
    Weighted
    
    
    
    
    
    WeightedRange of
    
    
    
    
    
    Remaining
    
    Average
    
    
    
    
    
    AverageExercise
    
    Number
    
    Contractual
    
    Exercise
    
    Number
    
    ExercisePrices
    
    Outstanding
    
    Life (Years)
    
    Price
    
    Exercisable
    
    Price(in thousands)
    
    
    
    
    
    
    
    
    
    (in thousands)$
    0.87
    
    $
    1.60
    
    
    37
    
    
    
    4.48
    
    
    $
    1.49
    
    
    
    37
    
    
    $
    1.491.61
    
    
    1.61
    
    
    1,638
    
    
    
    5.20
    
    
    
    1.61
    
    
    
    1,638
    
    
    
    1.611.68
    
    
    2.40
    
    
    483
    
    
    
    5.14
    
    
    
    2.12
    
    
    
    483
    
    
    
    2.122.45
    
    
    4.70
    
    
    374
    
    
    
    5.55
    
    
    
    3.59
    
    
    
    323
    
    
    
    3.455.00
    
    
    7.30
    
    
    504
    
    
    
    6.24
    
    
    
    6.93
    
    
    
    392
    
    
    
    6.907.59
    
    
    13.39
    
    
    299
    
    
    
    6.56
    
    
    
    9.69
    
    
    
    252
    
    
    
    9.7913.97
    
    
    13.97
    
    
    7
    
    
    
    7.33
    
    
    
    13.97
    
    
    
    4
    
    
    
    13.9714.00
    
    
    14.00
    
    
    35
    
    
    
    2.10
    
    
    
    14.00
    
    
    
    35
    
    
    
    14.0015.09
    
    
    15.09
    
    
    335
    
    
    
    7.41
    
    
    
    15.09
    
    
    
    167
    
    
    
    15.0919.00
    
    
    19.00
    
    
    16
    
    
    
    2.10
    
    
    
    19.00
    
    
    
    16
    
    
    
    19.003,728
    
    
    
    5.63
    
    
    $
    4.67
    
    
    
    3,347
    
    
    $
    3.99
    17




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##### Table of Contents



Weighted-AverageGrant DateShares
    
    
    Fair Value(in thousands)Outstanding at January 1, 2008
    
    
    2,837
    
    
    $
    11.02Granted
    
    
    678
    
    
    
    9.35Vested
    
    
    248
    
    
    
    9.95Forfeited
    
    
    45
    
    
    
    10.23Outstanding at September 27, 2008
    
    
    3,222
    
    
    $
    10.76
    14. Facility Start-up Costs and Equipment Write-offs
  15. Income Taxes
  18




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##### Table of Contents



16. Geographical and Customer Concentration of Revenue Information
  Year-to-Date Period EndedSeptember 29,
    
    
    September 27,2007
    
    
    2008By geography:United States
    
    
    83
    %
    
    
    53
    %Germany
    
    
    1
    %
    
    
    26
    %Spain
    
    
    1
    %
    
    
    12
    %Korea
    
    
    13
    %
    
    
    4
    %Others
    
    
    2
    %
    
    
    5
    %100
    %
    
    
    100
    %By customer:SunPower Corporation
    
    
    22
    %
    
    
    43
    %Ralos Vertriebs GmbH
    
    
    1
    %
    
    
    17
    %S.A.G. Solarstrom Vertriebs GmbH
    
    
    
    
    
    
    10
    %Woojin Electric Machinery Co. Ltd.
    
    
    13
    %
    
    
    4
    %AEE Solar
    
    
    10
    %
    
    
    SunEdison
    
    
    18
    %
    
    
    groSolar
    
    
    14
    %
    
    
    2
    %All other
    
    
    22
    %
    
    
    24
    %100
    %
    
    
    100
    %
 17. Related Party Transactions
  19




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##### Table of Contents



18. Recent Accounting Pronouncements
     20




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##### Table of Contents



Goodwill and Other Intangible Assets
     21




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion should be read in conjunction with the condensed consolidated financial
statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q and
the consolidated financial statements and related notes thereto and Managements Discussion and
Analysis of Financial Condition and Results of Operations in our most recent Annual Report on Form
10-K, as amended.
 Executive Overview
 TM
       22




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Critical Accounting Policies and Estimates
  Accounting for EverQ
    Revenue Recognition and Allowance for Doubtful Accounts
  23




---



##### Table of Contents



Warranty
  Stock-based Compensation
   Note 13
 24




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##### Table of Contents



Cash and cash equivalents
  Inventory
  Impairment of Long-lived Assets
  Income Taxes
  Results of Operations
 Description of Our Revenues, Costs and Expenses
 Revenues.
 Cost of revenues.
 25




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##### Table of Contents



Research and development expenses.
 Selling, general and administrative expenses.
 Facility start-up and equipment write-offs.
 Other income (expense), net.
 Equity income (loss) from interest in EverQ.
 Comparison of Quarters Ended September 27, 2008 and September 29, 2007
 Revenues .
  26




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##### Table of Contents



Quarter EndedSeptember 29,
    
    September 27,2007
    
    2008By geography:United States
    
    
    86
    %
    
    
    57
    %Germany
    
    
    
    
    
    
    27
    %Korea
    
    
    11
    %
    
    
    10
    %Others
    
    
    3
    %
    
    
    6
    %100
    %
    
    
    100
    %By customer:SunPower Corporation
    
    
    25
    %
    
    
    23
    %Solar City
    
    
    
    
    
    
    16
    %Woojin Electric Machinery Co. Ltd.
    
    
    11
    %
    
    
    10
    %AEE Solar
    
    
    10
    %
    
    
    1
    %SunEdison
    
    
    14
    %
    
    
    groSolar
    
    
    17
    %
    
    
    4
    %All other
    
    
    23
    %
    
    
    46
    %100
    %
    
    
    100
    %
 Cost of product revenues and gross margins .
  Research and development expenses.
 Selling, general and administrative expenses.
 27




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##### Table of Contents



Facility start-up and equipment write-offs.
 Other income (expense), net .
 Equity income from interest in EverQ.
 Net Loss.
 Comparison of Year-To-Date Periods Ended September 27, 2008 and September 29, 2007
 Revenues .
 28




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##### Table of Contents



Year-to-Date Period EndedSeptember 29,
    
    
    September 27,2007
    
    
    2008By geography:United States
    
    
    83
    %
    
    
    53
    %Germany
    
    
    1
    %
    
    
    26
    %Spain
    
    
    1
    %
    
    
    12
    %Korea
    
    
    13
    %
    
    
    4
    %Others
    
    
    2
    %
    
    
    5
    %100
    %
    
    
    100
    %By customer:SunPower Corporation
    
    
    22
    %
    
    
    43
    %Ralos Vertriebs GmbH
    
    
    1
    %
    
    
    17
    %S.A.G. Solarstrom Vertriebs GmbH
    
    
    
    
    
    
    10
    %Woojin Electric Machinery Co. Ltd.
    
    
    13
    %
    
    
    4
    %AEE Solar
    
    
    10
    %
    
    
    SunEdison
    
    
    18
    %
    
    
    groSolar
    
    
    14
    %
    
    
    2
    %All other
    
    
    22
    %
    
    
    24
    %100
    %
    
    
    100
    %
 Cost of product revenues and gross margins .
 Research and development expenses.
 29




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##### Table of Contents



Selling, general and administrative expenses.
 Facility start-up and equipment write-offs.
 Other income (expense), net .
 Equity income (loss) from interest in EverQ.
 Net Loss.
 Liquidity and Capital Resources
  30




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31




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##### Table of Contents



EverQ Debt Guarantee
  Contractual Obligations
  32




---



##### Table of Contents



Total
    
    
    Less thanYears
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    After 5 YearsNon-cancelable operating leases
    
    $
    6,029
    
    
    $
    2,573
    
    
    $
    3,214
    
    
    $
    242
    
    
    $
    Maturity of Senior Convertible
Debt
    
    
    373,750
    
    
    
    
    
    
    
    
    
    
    
    373,750
    
    
    
    Interest expense associated with
Senior Convertible Debt
    
    
    75,144
    
    
    
    15,344
    
    
    
    44,850
    
    
    
    14,950
    
    
    
    Capital expenditure obligations
    
    
    122,586
    
    
    
    122,586
    
    
    
    
    
    
    
    
    
    
    
    Raw materials purchase
commitments
    
    
    814,515
    
    
    
    84,968
    
    
    
    316,816
    
    
    
    230,469
    
    
    
    182,262Total contractual cash
obligations
    
    $
    1,392,024
    
    
    $
    225,471
    
    
    $
    364,880
    
    
    $
    619,411
    
    
    $
    182,262
  
 Item 3. Quantitative and Qualitative Disclosure About Market Risk
 Interest Rate Risk
  Foreign Currency Exchange Rate Risk
      33




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##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Internal Control over Financial Reporting
  
 PART IIOTHER INFORMATION
 
 Item 1. Legal Proceedings
   
 Item 1A. Risk Factors
 Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2007 as
filed on February 27, 2008 and subsequently amended describes some of the risks and uncertainties
associated with our business. Additional risks and uncertainties that may adversely impact our
business, financial condition, results of operations, cash flows and future results are described below.
Other factors may also exist that we cannot anticipate or that we currently do not consider to be significant based on currently
available information. These other factors that are not disclosed below or in our most recent
Annual Report on Form 10-K also have the potential to materially affect our business, financial
condition, results of operations, cash flows and future results.
 If our suppliers fail to deliver polysilicon sufficient to meet our needs or we are unable to
otherwise obtain the polysilicon we need to meet our production targets, our revenue growth, gross
margins and profitability would be adversely affected.
 34




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##### Table of Contents



Litigation to recover shares of our common stock loaned to Lehman Brothers could be expensive,
time-consuming and ultimately unsuccessful.
  In light of economic uncertainty and extremely difficult credit markets, our expansion plans may be
delayed and we may not be able to fulfill customer contracts for shipments in 2011 and beyond.
  35




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##### Table of Contents



The significant amount and the structure of our recent offering of senior convertible notes could
adversely affect our business, financial condition and results of operations.
  
    
    requiring us to use a substantial portion of our cash flow from operations to service
our indebtedness, which would reduce our cash flow available for working capital, capital
expenditures, development projects and other general corporate purposes;
    
    limiting our flexibility in planning for or reacting to, and increasing our
vulnerability to, changes in our business, the industry in which we operate and the general
economy; and
    
    placing us at a competitive disadvantage compared to our competitors who have less debt
or are less leveraged.
    Our recent customer contracts for our products will result in a significant portion of our sales of
Evergreen Solar manufactured products being concentrated among a limited number of customers in the
remainder of 2008 and in 2009.
   Fluctuations in currency exchange rates could adversely affect our business as well as result in
foreign currency exchange losses.
  36




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##### Table of Contents



Our ability to use net operating loss carryforwards may be subject to limitation.
  Compliance with environmental regulations can be expensive, and noncompliance with these
regulations may result in potentially significant monetary damages and penalties and adverse
publicity.
  Provisions of our senior convertible notes could also discourage an acquisition of us by a third
party.
  37




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Item 6. Exhibits
 Number
    
    Description3.1 (1)
    
    Third Amended and Restated Certificate of Incorporation (Exhibit 3.2)3.2 (1)
    
    Second Amended and Restated By-laws (Exhibit 3.4)3.3 (2)
    
    Certificate of Amendment of Third Amended and Restated Certificate of Incorporation (Exhibit 3.1)3.4 (3)
    
    Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock of the Company (Exhibit 4.4)3.5 (4)
    
    Certificate of Designations of Rights, Preferences and Privileges of Series B Preferred Stock of the Company (Exhibit 3.4)4.1 (5)
    
    Indenture between the Company and U.S. Bank National Association, as Trustee, dated as of July 2, 2008 (Exhibit 4.1)4.2 (5)
    
    First Supplemental Indenture between the Company and U.S. Bank National Association, as Trustee, dated as of July 2, 2008 (Exhibit 4.2)4.3 (5)
    
    Form of 4% Senior Convertible Note due 2013 (Exhibit 4.2)31.1
    
    Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of the Chief Executive Officer pursuant to Rule 13a-14(d) and Rule 15d-14(d) of the Securities Exchange Act of 1934, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of the Chief Financial Officer pursuant to Rule 13a-14(d) and Rule 15d-14(d) of the Securities Exchange Act of 1934, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    Indicates a management contract or compensatory plan, contract or arrangement.(1)
    
    Incorporated herein by reference to the exhibits to the Companys Registration Statement on
Form S-1/A, filed on October 3, 2000. The number given in parenthesis indicates the
corresponding exhibit number in such Form S-1/A.(2)
    
    Incorporated herein by reference to the exhibits to the Companys Current Report on Form 8-K
dated June 18, 2008 and filed on June 23, 2008. The number given in parenthesis indicates the
corresponding exhibit number in such Form 8-K.(3)
    
    Incorporated herein by reference to the exhibits to the Companys Registration Statement on
Form S-8 dated June 9, 2003. The number given in parenthesis indicates the corresponding
exhibit number in such Form S-8.(4)
    
    Incorporated herein by reference to the exhibits to the Companys Registration Statement on
Form S-3 dated May 16, 2007. The number given in parenthesis indicates the corresponding
exhibit number in such Form S-3.(5)
    
    Incorporated herein by reference to the exhibits to the Companys Current Report on Form 8-K
dated July 2, 2008 and filed on July 7, 2008. The number given in parenthesis indicates the
corresponding exhibit number in such Form 8-K. 38




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SIGNATURES
  EVERGREEN SOLAR, INC.Date: November 5, 2008/s/ Michael El-HillowMichael El-HillowChief Financial Officer and Secretary
(Principal Financial Officer) 39