##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended October 3, 2009
 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
    
    04-3242254(State or other jurisdiction of
    
    (I.R.S. EmployerIncorporation or organization)
    
    Identification No.)138 Bartlett StreetMarlboro, Massachusetts
    
    01752(Address of Principal Executive
Offices)
    
    (Zip Code)
 (508) 357-2221
 þ o
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



EVERGREEN SOLAR, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 3, 2009
 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
    
    
    28Item 3.     Quantitative and Qualitative Disclosure About Market Risk
    
    
    43Item 4.     Controls and Procedures
    
    
    43Part II. Other Information
    
    
    44Item 1.     Legal Proceedings
    
    
    44Item 1A.     Risk Factors
    
    
    45Item 6.     Exhibits
    
    
    45Signatures
    
    
    46Exhibits:EX-10.1 Relationship Agreement among the Registrant, Evergreen Solar (China) Co., Ltd, Jiawei SolarChina Co. Ltd. and Jiawei Solar (Wuhan) Co., Ltd dated July 14, 2009EX-10.2 Manufacturing Services Agreement among the Registrant, Evergreen Solar (China) Co., Ltd, Jiawei SolarChina Co. Ltd. and Jiawei Solar (Wuhan) Co., Ltd dated July 14, 2009EX-10.3 Increase Registered Capital and Enlarge Shares Agreement between the Registrant and Hubei Science & Technology Investment Co., Ltd. ("HSTIC") dated July 24, 2009EX-10.4 Equity Transfer Agreement among the Registrant, HSTIC and various other parties dated July 24, 2009 and delivered September 22, 2009EX-10.5 Amendment made on August 5, 2009 to the Master Supply Agreement by and between the Registrant and Ralos Vertriebs GmbH, dated May 21, 2008EX-10.6 Amendment made on August 3, 2009 to the Master Supply Agreement by and between the Registrant and Wagner & Co Solartechnik GmbH, dated June 18, 2008EX-10.7 Amendment made on August 5, 2009 to the Master Supply Agreement by and between the Registrant and IBC Solar AG, dated July 14, 2008EX-31.1 Section 302 Certification of Chief Executive OfficerEX-31.2 Section 302 Certification of Chief Financial OfficerEX-32.1 Section 906 Certification of Chief Executive OfficerEX-32.2 Section 906 Certification of Chief Financial Officer




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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
March 2, 2009 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 completion of our Devens, Midland and Wuhan, China facilities and other potential
capacity expansions, and the timing of such facilities becoming fully operational and
meeting manufacturing capacity goals on schedule and within budget;
    
    the transition of our panel assembly to China from our manufacturing facility in
Devens, Massachusetts;
    
    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;
    
    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 our products, 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;
    
    revenue from customer contracts primarily denominated in Euros that are subject to
foreign currency exchange risks and the use of derivative financial instruments to manage
those risks;
    
    future plans for the Sovello AG joint venture (Sovello), including the need for
continued financial support from its shareholders to meet its liquidity needs and our
ability to obtain liquidity for our investment;
    
    our receipt or Sovellos receipt and retention of public grant awards and other funding
to support our expansion or Sovello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.
 1




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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 constitute
forward-looking statements and are made under the safe harbor provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Our actual results of operations and financial condition have varied and could in the
future vary significantly from those stated in any forward-looking statements. The factors
described in Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended
December 31, 2008, as amended, as updated in Part II, Item 1A in this Quarterly Report on Form
10-Q, among others, could cause actual results to differ materially from those contained in
forward-looking statements made in this Quarterly Report on Form 10-Q, in the documents
incorporated by reference into this Quarterly Report on Form 10-Q or presented elsewhere by our
management from time to time. Such factors, among others, could have a material adverse effect upon
our business, results of operations and financial condition. 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.
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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,
    
    
    October 3,2008
    
    
    2009(Adjusted)AssetsCurrent assets:Cash and cash equivalents
    
    $
    100,888
    
    
    $
    90,960Marketable securities
    
    
    76,621
    
    
    
    Accounts receivable, net of allowance for doubtful
accounts
    
    
    35,458
    
    
    
    63,796Due from Sovello AG
    
    
    1,949
    
    
    
    3,318Inventory
    
    
    23,500
    
    
    
    30,743Prepaid cost of inventory
    
    
    11,696
    
    
    
    19,302VAT receivable, net
    
    
    1,474
    
    
    
    1,601Other current assets
    
    
    7,684
    
    
    
    7,980Total current assets
    
    
    259,270
    
    
    
    217,700Investment in and advances to Sovello AG
    
    
    115,553
    
    
    
    50,000Restricted cash
    
    
    212
    
    
    
    3,138Deferred financing costs
    
    
    6,152
    
    
    
    5,115Loan receivable from silicon supplier
    
    
    41,757
    
    
    
    Prepaid cost of inventory
    
    
    172,193
    
    
    
    155,996Fixed assets, net
    
    
    406,191
    
    
    
    440,348Other assets
    
    
    3,579
    
    
    
    330Total assets
    
    $
    1,004,907
    
    
    $
    872,627Liabilities and stockholders equityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    62,652
    
    
    $
    25,951Due to Sovello AG
    
    
    22,840
    
    
    
    1,620Accrued employee compensation
    
    
    6,451
    
    
    
    5,646Accrued interest
    
    
    7,392
    
    
    
    3,277Accrued warranty
    
    
    1,182
    
    
    
    2,091Total current liabilities
    
    
    100,517
    
    
    
    38,585Senior convertible notes, net of discount
    
    
    311,531
    
    
    
    320,262Loan payable
    
    
    
    
    
    
    14,115Deferred income taxes
    
    
    9,776
    
    
    
    2,400Total liabilities
    
    
    421,824
    
    
    
    375,362Commitments and Contingencies (Notes 7, 8 and 9)Stockholders equity:Common stock, $0.01 par value, 250,000,000 shares authorized,
164,874,850 and 207,845,548 shares issued and
outstanding at December 31, 2008 and October 3, 2009, respectively
    
    
    1,649
    
    
    
    2,078Additional paid-in capital
    
    
    803,491
    
    
    
    881,192Accumulated deficit
    
    
    (223,687
    )
    
    
    (390,759
    )Accumulated other comprehensive income
    
    
    1,630
    
    
    
    4,754Total stockholders equity
    
    
    583,083
    
    
    
    497,265Total liabilities and stockholders equity
    
    $
    1,004,907
    
    
    $
    872,627
  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 27,
    
    
    October 3,
    
    
    September 27,
    
    
    October 3,2008
    
    
    2009
    
    
    2008
    
    
    2009(Adjusted)
    
    
    
    
    
    
    (Adjusted)Product revenues
    
    $
    17,803
    
    
    $
    75,450
    
    
    $
    54,180
    
    
    $
    192,586Royalty and fee revenues
    
    
    4,264
    
    
    
    2,208
    
    
    
    13,590
    
    
    
    4,716Total revenues
    
    
    22,067
    
    
    
    77,658
    
    
    
    67,770
    
    
    
    197,302Cost of revenues
    
    
    20,820
    
    
    
    70,092
    
    
    
    50,914
    
    
    
    187,842Gross profit
    
    
    1,247
    
    
    
    7,566
    
    
    
    16,856
    
    
    
    9,460Operating expenses:Research and development
    
    
    5,541
    
    
    
    4,417
    
    
    
    16,371
    
    
    
    13,307Selling, general and administrative
    
    
    6,174
    
    
    
    5,872
    
    
    
    17,060
    
    
    
    18,990Write-off of loan receivable from silicon supplier
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,882Facility start-up
    
    
    8,956
    
    
    
    2,493
    
    
    
    20,948
    
    
    
    6,639Restructuring charges
    
    
    2,709
    
    
    
    777
    
    
    
    7,279
    
    
    
    3,394Total operating expenses
    
    
    23,380
    
    
    
    13,559
    
    
    
    61,658
    
    
    
    86,212Operating loss
    
    
    (22,133
    )
    
    
    (5,993
    )
    
    
    (44,802
    )
    
    
    (76,752
    )Other income (expense):Foreign exchange gains (losses), net
    
    
    (5,017
    )
    
    
    2,478
    
    
    
    (1,361
    )
    
    
    3,460Interest income
    
    
    4,242
    
    
    
    118
    
    
    
    10,004
    
    
    
    3,672Interest expense
    
    
    (3,295
    )
    
    
    (7,430
    )
    
    
    (3,657
    )
    
    
    (19,342
    )Other income (expense), net
    
    
    (4,070
    )
    
    
    (4,834
    )
    
    
    4,986
    
    
    
    (12,210
    )Loss before equity income (loss) from interest in Sovello AG,
impairment of equity investment and income tax benefit
    
    
    (26,203
    )
    
    
    (10,827
    )
    
    
    (39,816
    )
    
    
    (88,962
    )Equity income (loss) from interest in Sovello AG and
impairment of investment
    
    
    1,558
    
    
    
    (79,423
    )
    
    
    6,224
    
    
    
    (85,915
    )Income tax benefit
    
    
    
    
    
    
    (7,805
    )
    
    
    
    
    
    
    (7,805
    )Net loss
    
    $
    (24,645
    )
    
    $
    (82,445
    )
    
    $
    (33,592
    )
    
    $
    (167,072
    )Net loss per share (basic and diluted)
    
    $
    (0.19
    )
    
    $
    (0.40
    )
    
    $
    (0.28
    )
    
    $
    (0.92
    )Weighted average shares used in computing basic and diluted
net loss per share
    
    
    132,034
    
    
    
    204,790
    
    
    
    119,807
    
    
    
    182,250
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Evergreen Solar, Inc.
 
 Condensed Consolidated Statements of Cash Flows
 (in thousands)
 (unaudited)
 Year-to-Date Period EndedSeptember 27,
    
    
    October 3,2008
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (33,592
    )
    
    $
    (167,072
    )Adjustments to reconcile net loss to net cash used in operating activities:Imputed interest and accretion of bond premiums
    
    
    (1,708
    )
    
    
    (478
    )Accretion of capped call discount
    
    
    345
    
    
    
    Amortization of prepaid cost of inventory
    
    
    
    
    
    
    7,479Equity (income) loss from Sovello AG and impairment of investment
    
    
    (6,224
    )
    
    
    85,915Amortization of deferred debt financing costs
    
    
    515
    
    
    
    1,037Loss on loan receivable from silicon supplier
    
    
    
    
    
    
    43,882Depreciation expense
    
    
    10,274
    
    
    
    29,067Loss on disposal of fixed assets
    
    
    7,361
    
    
    
    Provision for warranty
    
    
    359
    
    
    
    962Amortization of debt discount
    
    
    2,461
    
    
    
    8,731Compensation expense associated with employee equity awards
    
    
    5,343
    
    
    
    5,253Changes in operating assets and liabilities:Accounts receivable
    
    
    (2,887
    )
    
    
    (29,707
    )Grants receivable
    
    
    17,678
    
    
    
    Inventory
    
    
    (4,232
    )
    
    
    (7,243
    )Prepaid cost of inventory
    
    
    (26,268
    )
    
    
    (427
    )Other current assets
    
    
    9,357
    
    
    
    (2,427
    )Accounts payable
    
    
    (12,883
    )
    
    
    (20,953
    )Accrued expenses
    
    
    3,714
    
    
    
    (5,206
    )Interest payable, net
    
    
    (1,852
    )
    
    
    2,045Deferred income taxes
    
    
    
    
    
    
    (7,805
    )Other
    
    
    (1,040
    )
    
    
    2,904Net cash used in operating activities
    
    
    (33,279
    )
    
    
    (54,043
    )Cash flows from investing activities:Purchases of fixed assets and deposits on fixed assets under construction
    
    
    (250,793
    )
    
    
    (101,331
    )(Increase) decrease in restricted cash
    
    
    17,178
    
    
    
    (2,914
    )Increase in Sovello AG loan
    
    
    (18,174
    )
    
    
    (11,750
    )Capital Contribution to Sovello AG
    
    
    
    
    
    
    (2,917
    )Increase in other loans
    
    
    (22,164
    )
    
    
    Purchases of marketable securities
    
    
    (88,520
    )
    
    
    Proceeds from sale and maturity of marketable securities
    
    
    61,809
    
    
    
    76,716Net cash used in investing activities
    
    
    (300,664
    )
    
    
    (42,196
    )Cash flows from financing activities:Proceeds from issuances of common stock, net of offering costs
    
    
    166,726
    
    
    
    72,387Proceeds from China government loan
    
    
    
    
    
    
    13,592Proceeds from the issuance of senior convertible debt, net of offering costs
    
    
    363,983
    
    
    
    Payment for capped call up-front premium
    
    
    (39,543
    )
    
    
    Proceeds from the share lending arrangement
    
    
    3Proceeds from exercise of stock options and shares purchased under Employee Stock Purchase Plan
    
    
    1,272
    
    
    
    332Net cash provided by financing activities
    
    
    492,441
    
    
    
    86,311Net increase (decrease) in cash and cash equivalents
    
    
    158,498
    
    
    
    (9,928
    )Cash and cash equivalents at beginning of period
    
    
    29,428
    
    
    
    100,888Cash and cash equivalents at end of period
    
    $
    187,926
    
    
    $
    90,960
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Evergreen Solar, Inc.
 
 Notes to Condensed Consolidated Financial Statements  (unaudited)
 1. Basis of Presentation
   Investments
   Liquidity and Management Plans
  6




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
    
    the need to maintain the Devens facility at a minimum of 75% capacity, or 30 MW per
quarter, and stabilization of panel pricing at about $2.00 to $2.25 per watt, with sales made to creditworthy customers;
    
    higher than planned manufacturing costs and failing to achieve expected Devens
operating metrics, with any delays in our plan to transition panel assembly to China
resulting in continued higher costs that could impair business operations;
    
    continued significant fluctuation of the Euro against the U.S. dollar, as a
substantial portion of the contracted sales are denominated in Euros;
    
    the ability of Jiawei to execute against its plans to meet our required timetables; and
    
    increased funding requirements for Sovello to complete its third manufacturing
facility and achieve its planned manufacturing cost and operating metrics, to provide
Sovello with additional liquidity, if needed, or to potentially address the loss of
any prior or expected government grant funding for Sovello (see Note 6).
  
    
    continually monitoring operating results against expectations and, if required, further
restricting operating costs and capital spending if events warrant;
    
    if market conditions allow, possibly accessing the capital markets to meet liquidity
and capital expenditure requirements; and
    
    negotiating with a number of banks to secure a borrowing base line of credit, without a
minimum cash requirement as is required with our current line of credit, supported by the
expected significant increase in our accounts receivable, inventory and overall working
capital and possibly hedging exposure to fluctuations in the U.S. dollar / Euro exchange
rate to limit any adverse exposure; but there can be no assurance that hedges can be put in
place at terms acceptable to us or that such hedging activities will be effective.
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2. Accounting Change
 Debt Conversion and Other
 Debt Conversion and Other
 As of December 31, 2008Effect ofBalance Sheet Category
    
    As Reported
    
    As Adjusted
    
    ChangeOther current assets
    
    $
    5,723
    
    
    $
    7,684
    
    
    $
    1,961Deferred financing costs
    
    
    7,494
    
    
    
    6,152
    
    
    
    (1,342
    )Fixed assets, net
    
    
    403,664
    
    
    
    406,191
    
    
    
    2,527Senior convertible notes
    
    
    373,750
    
    
    
    373,750
    
    
    
    Debt discount
    
    
    
    
    
    
    (62,219
    )
    
    
    (62,219
    )Deferred income taxes
    
    
    7,815
    
    
    
    9,776
    
    
    
    1,961Additional paid-in capital
    
    
    737,615
    
    
    
    803,491
    
    
    
    65,876Accumulated deficit
    
    
    (221,215
    )
    
    
    (223,687
    )
    
    
    (2,472
    )
  3. Cash and Marketable Securities
   8




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UnrealizedAmortized
    
    
    Gains
    
    
    FairCost
    
    
    (Losses)
    
    
    ValueGovernment Obligations
    
    $
    9,997
    
    
    $
    3
    
    
    $
    10,000Commercial paper
    
    
    44,852
    
    
    
    24
    
    
    
    44,876Corporate bonds
    
    
    21,746
    
    
    
    (1
    )
    
    
    21,745Marketable Securities
    
    $
    76,595
    
    
    $
    26
    
    
    $
    76,621
 4. Inventory
  December 31,
    
    
    October 3,2008
    
    
    2009Raw materials
    
    $
    17,928
    
    
    $
    19,805Work-in-process
    
    
    3,910
    
    
    
    6,770Finished goods
    
    
    1,662
    
    
    
    4,168$
    23,500
    
    
    $
    30,743Prepaid cost of inventory
    
    $
    183,889
    
    
    $
    175,298Less: current portion
    
    
    11,696
    
    
    
    19,302Non-current portion
    
    $
    172,193
    
    
    $
    155,996
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5. Fixed Assets
  Useful
    
    December 31,
    
    
    October 3,Life
    
    2008
    
    
    2009(Adjusted)Land
    
    
    
    $
    119
    
    
    $
    119Building
    
    40 years
    
    
    97,957
    
    
    
    206,236Laboratory and manufacturing equipment
    
    3-7 years
    
    
    182,109
    
    
    
    279,536Computer and office equipment
    
    3-7 years
    
    
    4,594
    
    
    
    6,110Leasehold improvements
    
    Lesser of 15 to 20
    
    16,413
        
    
    16,418years or lease termAssets under construction
    
    
    
    
    175,880
    
    
    
    30,104477,072
    
    
    
    538,523Less: Accumulated depreciation
    
    
    
    
    (70,881
    )
    
    
    (98,175
    )$
    406,191
    
    
    $
    440,348
     6. Investment in Sovello
 Equity Method and Joint Ventures
  10




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Quarter Ended
    
    
    Year-to-Date Period EndedSeptember 27,
    
    
    October 3,
    
    
    September 27,
    
    
    October 3,2008
    
    
    2009
    
    
    2008
    
    
    2009Revenue
    
    $
    84,123
    
    
    $
    43,260
    
    
    $
    258,369
    
    
    $
    89,969Cost of goods sold
    
    
    65,421
    
    
    
    52,723
    
    
    
    201,886
    
    
    
    100,595Other expenses
    
    
    13,781
    
    
    
    19,668
    
    
    
    37,563
    
    
    
    38,985Net income (loss)
    
    
    4,921
    
    
    
    (29,131
    )
    
    
    18,920
    
    
    
    (49,611
    )
 December 31,
    
    
    October 3,2008
    
    
    2009Current assets
    
    $
    241,871
    
    
    $
    183,249Non-current assets
    
    
    408,347
    
    
    
    448,876Current liabilities
    
    
    181,550
    
    
    
    447,312Non-current liabilities
    
    
    318,627
    
    
    
    78,691
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Evergreen Solar Loans to Sovello
  Impairment
    7. Long-Term Debt
 Convertible Subordinated Notes
  12




---



##### Table of Contents



Senior Convertible Notes
 Capped Call
 Debt
Conversion and Other
 Earnings Per Share Debt Debt Conversion and Other
 Debt Conversion and Other Debt Conversion and Other
 Capped Call
  13




---



##### Table of Contents



Distinguishing Liability from Equity Derivative and Hedging Derivatives
and Hedging
   Common Stock Lending Agreement
 Loan Payable
    14




---



##### Table of Contents



8. Line of Credit
      9. Commitments and Contingencies
 Potential Litigation with Lehman Brothers.
   15




---



##### Table of Contents



Noise Noncompliance Proceedings for the Devens Manufacturing Facility.
    Product Warranty
    Year-to-Date Period EndedSeptember 27,
    
    
    October 3,2008
    
    
    2009Balance at beginning of period
    
    $
    705
    
    
    $
    1,182Warranty costs accrued
    
    
    359
    
    
    
    962Warranty costs incurred
    
    
    (88
    )
    
    
    (53
    )Balance at end of period
    
    $
    976
    
    
    $
    2,091
 Sovello Debt Guarantees
  16




---



##### Table of Contents



Investment in Sovello)
   10. Fair Value Measurements
 Value Measurements and Disclosures
      17




---



##### Table of Contents



December 31, 2008UsingUsing Significant
    
    SignificantQuoted Prices in
    
    Other Observable
    
    UnobservableTotal Carrying
    
    Active Markets
    
    Inputs
    
    InputsValue
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Money markets
    
    $
    65,599
    
    
    $
    65,599
    
    
    $
    
    
    
    $
    Government obligation
    
    
    10,000
    
    
    
    
    
    
    
    10,000
    
    
    
    Marketable securities
    
    
    66,621
    
    
    
    
    
    
    
    66,621
    
    
    
    
 October 3, 2009UsingUsing Significant
    
    SignificantQuoted Prices in
    
    Other Observable
    
    UnobservableTotal Carrying
    
    Active Markets
    
    Inputs
    
    InputsValue
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Money markets
    
    $
    23,006
    
    
    $
    23,006
    
    
    $
    
    
    
    $
    Term deposit
    
    
    13,056
    
    
    
    13,056
    
    
    
    
    
    
    
    
 Valuation Techniques
  11. Stockholders Equity
   18




---



##### Table of Contents



Common Stock Lending Agreement
   12. Comprehensive Income (Loss)
  Quarter Ended
    
    
    Year-to-Date Period EndedSeptember 27,
    
    
    October 3,
    
    
    September 27,
    
    
    October 3,2008
    
    
    2009
    
    
    2008
    
    
    2009Net loss
    
    $
    (24,645
    )
    
    $
    (82,445
    )
    
    $
    (33,592
    )
    
    $
    (167,072
    )Other comprehensive income (loss):Unrealized loss on marketable securities
    
    
    (205
    )
    
    
    (8
    )
    
    
    (208
    )
    
    
    (26
    )Cumulative translation adjustments
    
    
    (5,836
    )
    
    
    2,822
    
    
    
    (1,573
    )
    
    
    3,150Total comprehensive loss
    
    $
    (30,686
    )
    
    $
    (79,631
    )
    
    $
    (35,373
    )
    
    $
    (163,948
    )
 13. Stock Based Compensation
 Stock Compensation
 19




---



##### Table of Contents



Quarter Ended
    
    
    Year-to-Date Period EndedSeptember 27,
    
    
    October 3,
    
    
    September 27,
    
    
    October 3,2008
    
    
    2009
    
    
    2008
    
    
    2009Cost of revenue
    
    $
    306
    
    
    $
    332
    
    
    $
    782
    
    
    $
    1,502Research and development expenses
    
    
    392
    
    
    
    345
    
    
    
    1,115
    
    
    
    1,111Selling, general and administrative expenses
    
    
    945
    
    
    
    762
    
    
    
    2,677
    
    
    
    2,477Facility start-up
    
    
    302
    
    
    
    146
    
    
    
    769
    
    
    
    163$
    1,945
    
    
    $
    1,585
    
    
    $
    5,343
    
    
    $
    5,253
  Stock Incentive Plan
   Weighted-AverageShares
    
    
    Exercise Price(in thousands)Outstanding at January 1, 2009
    
    
    3,688
    
    
    $
    4.65Granted
    
    
    871
    
    
    
    2.24Exercised
    
    
    (27
    )
    
    
    1.81Forfeited
    
    
    (260
    )
    
    
    3.59Outstanding at October 3, 2009
    
    
    4,272
    
    
    $
    4.24
  20




---



##### 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)$  1.32
    
    $
    1.60
    
    
    
    27
    
    
    
    3.76
    
    
    $
    1.53
    
    
    
    27
    
    
    $
    1.531.61
    
    
    1.61
    
    
    
    1,638
    
    
    
    4.19
    
    
    
    1.61
    
    
    
    1,638
    
    
    
    1.611.68
    
    
    2.17
    
    
    
    322
    
    
    
    3.85
    
    
    
    2.01
    
    
    
    322
    
    
    
    2.012.24
    
    
    2.24
    
    
    
    706
    
    
    
    9.66
    
    
    
    2.24
    
    
    
    
    
    
    
    2.29
    
    
    4.70
    
    
    
    461
    
    
    
    4.60
    
    
    
    3.23
    
    
    
    461
    
    
    
    3.235.00
    
    
    7.30
    
    
    
    459
    
    
    
    5.22
    
    
    
    7.00
    
    
    
    459
    
    
    
    7.007.59
    
    
    13.97
    
    
    
    283
    
    
    
    5.86
    
    
    
    9.91
    
    
    
    271
    
    
    
    9.9014.00
    
    
    14.00
    
    
    
    35
    
    
    
    1.08
    
    
    
    14.00
    
    
    
    35
    
    
    
    14.0015.09
    
    
    15.09
    
    
    
    325
    
    
    
    6.39
    
    
    
    15.09
    
    
    
    251
    
    
    
    15.0919.00
    
    
    19.00
    
    
    
    16
    
    
    
    1.08
    
    
    
    19.00
    
    
    
    16
    
    
    
    19.004,272
    
    
    
    5.46
    
    
    $
    4.24
    
    
    
    3,480
    
    
    $
    4.39
   Year-to-datePeriod EndedOctober 3, 2009Expected options term (years)
    
    
    4.5 - 9.25Risk-free interest rate
    
    
    1.31% - 2.08
    %Expected dividend yield
    
    NoneVolatility
    
    
    102% - 127
    %
  21




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##### Table of Contents



Weighted-AverageGrant DateShares
    
    
    Fair Value(in thousands)Outstanding at January 1, 2009
    
    
    3,132
    
    
    $
    10.94Granted
    
    
    853
    
    
    
    1.93Vested
    
    
    (418
    )
    
    
    1.77Forfeited
    
    
    (620
    )
    
    
    8.40Outstanding at October 3, 2009
    
    
    2,947
    
    
    $
    10.17
   14. Write-off of Loan Receivable from Silicon Supplier
  22




---



##### Table of Contents



15. Facility Start-up Costs
  16. Restructuring Charges
  17. Income Taxes
 Income Ta
   23




---



##### Table of Contents



18. Net Loss per Common Share
 Earning Per Share
  24




---



##### Table of Contents



19. Geographical and Customer Concentration Information
  Quarter EndedSeptember 27,
    
    
    October 3,2008
    
    
    2009By geography:United States
    
    
    57
    %
    
    
    24
    %Germany
    
    
    27
    %
    
    
    64
    %Korea
    
    
    10
    %
    
    
    2
    %All other
    
    
    6
    %
    
    
    10
    %100
    %
    
    
    100
    %By customer:Wagner & Co. Solartechnik GmbH
    
    
    2
    %
    
    
    27
    %IBC Solar AG
    
    
    2
    %
    
    
    20
    %Donauer Solartechnik Vertriebs GmbH
    
    
    
    
    
    
    10
    %SunPower Corporation (formerly PowerLight)
    
    
    23
    %
    
    
    Solar City
    
    
    16
    %
    
    
    7
    %Woojin Electric Machinery Co. Ltd.
    
    
    10
    %
    
    
    All other
    
    
    47
    %
    
    
    36
    %100
    %
    
    
    100
    %
 Year-to-Date Period EndedSeptember 27,
    
    
    October 3,2008
    
    
    2009By geography:United States
    
    
    53
    %
    
    
    23
    %Germany
    
    
    26
    %
    
    
    54
    %Spain
    
    
    12
    %
    
    
    All other
    
    
    9
    %
    
    
    23
    %100
    %
    
    
    100
    %By customer:IBC Solar AG
    
    
    1
    %
    
    
    19
    %Wagner & Co. Solartechnik GmbH
    
    
    1
    %
    
    
    17
    %SunPower Corporation (formerly PowerLight)
    
    
    43
    %
    
    
    Ralos Vertriebs GmbH
    
    
    17
    %
    
    
    11
    %S.A.G. Solarstrom Vertriebs GmbH
    
    
    10
    %
    
    
    All other
    
    
    28
    %
    
    
    53
    %100
    %
    
    
    100
    %
  25




---



##### Table of Contents



December 31,
    
    October 3,2008
    
    2009% of accounts receivableIBC Solar AG
    
    
    6
    %
    
    
    24
    %Ralos Vertriebs GmbH
    
    
    13
    %
    
    
    22
    %Sun & Kim Co., Ltd.
    
    
    
    
    
    
    12
    %Solar City
    
    
    14
    %
    
    
    5
    %SunPower Corporation
(formerly PowerLight)
    
    
    20
    %
    
    
    Top 5 Customers
    
    
    64
    %
    
    
    74
    %
 20. Related Party Transactions
   21. Recent Accounting Pronouncements
 Earning Per Share
 Financial Instruments Fair
Value Measurements and Disclosures
 26




---



##### Table of Contents



Fair Value Measurements and Disclosures
 Debt and Equity
 Subsequent Events
   Debt
 27




---



##### Table of Contents



22. Subsequent Events
 Subsequent Event
  
 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
   28




---



##### Table of Contents




    
    We will manufacture String Ribbon wafers using our state-of-the-art Quad furnaces at a
leased facility being built by Jiawei in Wuhan, China on Jiaweis campus.
    
    Jiawei will convert the String Ribbon wafers into Evergreen Solar-branded panels on a
contract manufacturing basis.
    
    We will reimburse Jiawei for its cell and panel conversion costs, plus a contract
manufacturing fee. The actual price paid to Jiawei will be negotiated annually.
    
    Evergreen Solar will invest $17 million in cash and equipment in the Wuhan String Ribbon
operation. HSTIC has provided us $33 million of 7.5% financing, which we must repay no
later than July 2014. Jiawei will make a similar investment for its cell and panel
operations with the support of HSTIC.
    
    Initial capacity will be approximately 100 MW. Factory construction has begun and the
parties expect that wafer, cell and panel production will begin in the spring of 2010.
    
    The parties intend to expand production capacity of their respective manufacturing
operations to approximately 500 MW by 2012, the timing and extent of any potential
expansion will be determined in 2010.
   29




---



##### Table of Contents




    
    the need to maintain the Devens facility at
a minimum of 75% capacity, or 30 MW per
quarter, and stabilization of panel pricing
at about $2.00 to $2.25 per watt, with
sales made to creditworthy customers;
    
    higher than planned manufacturing costs and
failing to achieve expected Devens
operating metrics, with any delays in our
plan to transition panel assembly to China
resulting in continued higher costs that
could impair business operations;
    
    continued significant fluctuation of the
Euro against the U.S. dollar, as a
substantial portion of the contracted sales
are denominated in Euros;
    
    the ability of Jiawei to execute against
its plans to meet our required timetables; and
    
    increased funding requirements for Sovello
to complete its third manufacturing
facility and achieve its planned
manufacturing cost and operating metrics,
to provide Sovello with additional
liquidity, if needed, or to potentially
address the loss of any prior or expected
government grant funding for Sovello (see
Note 6 of our condensed consolidated
financial statements).
  
    
    continually monitoring our operating results against expectations and, if required,
further restricting operating costs and capital spending if events warrant;
    
    if market conditions allow, possibly accessing the capital markets to meet liquidity
and capital expenditure requirements; and
    
    negotiating with a number of banks to secure a borrowing base line of credit, without a
minimum cash requirement as is required with our current line of credit, supported by the
expected significant increase in our accounts receivable, inventory and overall working
capital and possibly hedging our exposure to fluctuations in the U.S. dollar / Euro exchange
rate to limit any adverse exposure; but there can be no assurance that hedges can be put in
place at terms acceptable to us or that such hedging activities will be effective.
  30




---



##### Table of Contents



Critical Accounting Policies and Estimates
  Accounting for Sovello AG
 Investments
   Revenue Recognition and Allowance for Doubtful Accounts
  31




---



##### Table of Contents



Warranty
   Stock-based Compensation
 Stock Compensation
 32




---



##### Table of Contents



Inventory
  Impairment of Long-lived Assets
  Income Taxes
  33




---



##### Table of Contents



Results of Operations
 Description of Our Revenues, Costs and Expenses
 Revenues .
 Cost of revenues .
 Research and development expenses .
 Selling, general and administrative expenses .
 Facility start-up.
 Restructuring charges .
 Other income (expense), net .
 Equity income (loss) from interest in Sovello AG and impairment of investment.
 Comparison of Quarters Ended October 3, 2009 and September 27, 2008
 Revenues .
 34




---



##### Table of Contents



Quarter EndedSeptember 27,
    
    
    October 3,2008
    
    
    2009By geography:United States
    
    
    57
    %
    
    
    24
    %Germany
    
    
    27
    %
    
    
    64
    %Korea
    
    
    10
    %
    
    
    2
    %All other
    
    
    6
    %
    
    
    10
    %100
    %
    
    
    100
    %By customer:Wagner & Co. Solartechnik GmbH
    
    
    2
    %
    
    
    27
    %IBC Solar AG
    
    
    2
    %
    
    
    20
    %Donauer Solartechnik Vertriebs GmbH
    
    
    
    
    
    
    10
    %SunPower Corporation (formerly
PowerLight)
    
    
    23
    %
    
    
    Solar City
    
    
    16
    %
    
    
    7
    %Woojin Electric Machinery Co. Ltd.
    
    
    10
    %
    
    
    All other
    
    
    47
    %
    
    
    36
    %100
    %
    
    
    100
    %
 Cost of product revenues and gross margins .
 Research and development expenses.
 35




---



##### Table of Contents



Selling, general and administrative expenses.
 Facility start-up costs.
 Restructuring charges.
 Other
income (expense), net .
 Equity income (loss) from interest in Sovello AG and impairment of investment.
 36




---



##### Table of Contents



Net
Loss.
 Comparison of Year-to-Date Periods Ended October 3, 2009 and September 27, 2008
 Revenues .
   Year-to-Date Period EndedSeptember 27,
    
    
    October 3,2008
    
    
    2009By geography:United States
    
    
    53
    %
    
    
    23
    %Germany
    
    
    26
    %
    
    
    54
    %Spain
    
    
    12
    %
    
    
    All other
    
    
    9
    %
    
    
    23
    %100
    %
    
    
    100
    %By customer:IBC Solar AG
    
    
    1
    %
    
    
    19
    %Wagner & Co. Solartechnik GmbH
    
    
    1
    %
    
    
    17
    %SunPower Corporation (formerly
PowerLight)
    
    
    43
    %
    
    
    Ralos Vertriebs GmbH
    
    
    17
    %
    
    
    11
    %S.A.G. Solarstrom Vertriebs GmbH
    
    
    10
    %
    
    
    All other
    
    
    28
    %
    
    
    53
    %100
    %
    
    
    100
    %
 Cost of product revenues and gross margins .
 37




---



##### Table of Contents



Research and development expenses.
 Selling, general and administrative expenses.
 Write-off of loan receivable from silicon supplier .
 Facility start-up costs.
 Restructuring charges.
 38




---



##### Table of Contents



Other income (expense), net .
 Equity income (loss) from interest in Sovello AG and impairment of investment.
  Net Loss.
 Liquidity and Capital Resources
   39




---



##### Table of Contents



Write-off of loan receivable from silicon supplier
   Sovello Debt Guarantee and Undertaking
  40




---



##### Table of Contents



Evergreen Solar Loans to Sovello
   41




---



##### Table of Contents



Liquidity Risk and Uncertainty
    
    
    the need to maintain the Devens facility at
a minimum of 75% capacity, or 30 MW per
quarter, and stabilization of panel pricing
at about $2.00 to $2.25 per watt, with
sales made to creditworthy customers;
    
    higher than planned manufacturing costs and
failing to achieve expected Devens
operating metrics, with any delays in our
plan to transition panel assembly to China
resulting in continued higher costs that
could impair business operations;
    
    continued significant fluctuation of the
Euro against the U.S. dollar, as a
substantial portion of the contracted sales
are denominated in Euros;
    
    the ability of Jiawei to execute against its plans to meet our required timetables; and
    
    increased funding requirements for Sovello
to complete its third manufacturing
facility and achieve its planned
manufacturing cost and operating metrics,
to provide Sovello with additional
liquidity, if needed, or to potentially
address the loss of any prior or expected
government grant funding for Sovello (see
Note 6 of our condensed consolidated
financial statements).
  
    
    continually monitoring our operating results against expectations and, if required,
further restricting operating costs and capital spending if events warrant;
    
    if market conditions allow, possibly accessing the capital markets to meet liquidity
and capital expenditure requirements; and
 42




---



##### Table of Contents




    
    negotiating with a number of banks to secure a borrowing base line of credit, without a
minimum cash requirement as is required with our current line of credit, supported by the
expected significant increase in our accounts receivable, inventory and overall working
capital and possibly hedging our exposure to fluctuations in the U.S. dollar / Euro exchange
rate to limit any adverse exposure; but there can be no assurance that hedges can be put in
place at terms acceptable to us or that such hedging activities will be effective.
  
 Item 3.
    
    Quantitative and Qualitative Disclosure About Market Risk
 Interest Rate Risk
  Foreign Currency Exchange Rate Risk
     
 Item 4.
    
    Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  43




---



##### Table of Contents



Internal Control over Financial Reporting
  
 PART IIOTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  Litigation with Barclays and Lehman Brothers.
   Noise Noncompliance Proceedings for our Devens Manufacturing Facility.
    44




---



##### Table of Contents



Item 1A.
    
    Risk Factors
 Item 1A, In addition to the factors discussed elsewhere in this report, including the financial statements and related notes, you should consider carefully the risks and uncertainties described
in the section entitled Risk Factors, in our Annual Report on Form 10-K for the year ended
December 31, 2008 as filed on March 2, 2009 and subsequently amended, together with Item 1A, Risk
Factors, of our Quarterly Report on Form 10-Q for the period ended April 4, 2009, as filed on May
11, 2009, which both describe risks and uncertainties which could materially adversely affect our
business, financial condition, results of operations, cash flows and future results. While these
are the risks and uncertainties we believe are most important, you should bear in mind that factors
may also exist that we cannot anticipate or that we currently do not consider to be significant.
These other factors also have the potential to materially affect our business, financial condition,
results of operations, cash flows and future results.
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
  
 Item 6.
    
    Exhibits
 Exhibits are as set forth in the section entitled Exhibits Index which follows the section
entitled Signatures in this Quarterly Report on Form 10-Q.
 45




---



##### Table of Contents



SIGNATURES
  EVERGREEN SOLAR, INC.Date: November 10, 2009
    /s/ Michael El-HillowMichael El-HillowChief Financial Officer and Secretary
(Principal Financial Officer) 46




---



##### Table of Contents



EXHIBITS INDEX
 Number
    
    Description3.1
    
    Third Amended and Restated Certificate of Incorporation
(Incorporated herein by reference to Exhibit 3.2 to the
Registrants Registration Statement on Form S-1/A, filed on October
3, 2000)3.2
    
    Second Amended and Restated By-laws (Incorporated herein by
reference to Exhibit 3.4 to the Registrants Registration Statement
on Form S-1/A, filed on October 3, 2000)3.3
    
    Amendment No. 1 to the Seconded Amended and Restated By-laws
(Incorporated herein by reference to Exhibit 3.1 to the
Registrants Current Report on Form 8-K, dated February 4, 2009 and
filed on February 5, 2009)3.4
    
    Certificate of Amendment of Third Amended and Restated Certificate
of Incorporation (Incorporated herein by reference to Exhibit 3.1
to the Registrants Current Report on Form 8-K dated June 18, 2008
and filed on June 23, 2008)3.5
    
    Certificate of the Powers, Designations, Preferences and Rights of
the Series A Convertible Preferred Stock of the Registrant
(Incorporated herein by reference to the Exhibit 4.4 to the
Registrants Registration Statement on Form S-8 dated June 9,
2003.)3.6
    
    Certificate of Designations of Rights, Preferences and Privileges of Series B Preferred Stock
of the Registrant (Incorporated herein by reference to Exhibit 3.4 to the Registrants Registration
Statement on Form S-3 dated May 16, 2007.)4.1
    
    Indenture between the Registrant and U.S. Bank National
Association, as Trustee, dated as of July 2, 2008 (Incorporated
herein by reference to Exhibit 4.1 to the Registrants Current
Report on Form 8-K dated July 2, 2008 and filed on July 7, 2008.)4.2
    
    First Supplemental Indenture between the Registrant and U.S. Bank
National Association, as Trustee, dated as of July 2, 2008
(Incorporated herein by reference to Exhibit 4.2 to the
Registrants Current Report on Form 8-K dated July 2, 2008 and
filed on July 7, 2008.)4.3
    
    Form of 4% Senior Convertible Note due 2013 (Incorporated herein by
reference to Exhibit 4.2 to the Registrants Current Report on Form
8-K dated July 2, 2008 and filed on July 7, 2008.)10.1
    
    Relationship Agreement among the Registrant, Evergreen Solar
(China) Co., Ltd, Jiawei SolarChina Co. Ltd. and Jiawei Solar
(Wuhan) Co., Ltd dated July 14, 200910.2
    
    Manufacturing Services Agreement among the Registrant, Evergreen
Solar (China) Co., Ltd, Jiawei SolarChina Co. Ltd. and Jiawei Solar
(Wuhan) Co., Ltd dated July 14, 200910.3
    
    Increase Registered Capital and Enlarge Shares Agreement between
the Registrant and Hubei Science & Technology Investment Co., Ltd.
(HSTIC) dated July 24, 2009.10.4
    
    Equity Transfer Agreement among the Registrant, HSTIC and various
other parties dated July 24, 2009 and delivered September 22, 200910.5
    
    Amendment made on August 5, 2009 to the Master Supply Agreement by
and between the Registrant and Ralos Vertriebs GmbH, dated May 21,
200810.6
    
    Amendment made on August 3, 2009 to the Master Supply Agreement by
and between the Registrant and Wagner & Co Solartechnik GmbH, dated
June 18, 200810.7
    
    Amendment made on August 5, 2009 to the Master Supply Agreement by
and between the Registrant and IBC Solar AG, dated July 14, 200831.1
    
    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 2002
 47




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##### Table of Contents



Number
    
    Description32.1
    
    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
 
 

Confidential treatment requested as to certain portions
 48