##### 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 April 4, 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 APRIL 4, 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
    
    
    24Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    35Item 4. Controls and Procedures
    
    
    35Part II. Other Information
    
    
    36Item 1. Legal Proceedings
    
    
    36Item 1A. Risk Factors
    
    
    36Item 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
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 facility, our expected expansion in Wuhan, China 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 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 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;
    
    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 and benefits from the Sovello AG joint venture, including the expansion of
Sovellos manufacturing capacity and our ability to obtain liquidity for our investment
through an initial public offering of Sovello shares or otherwise;
    
    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; 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 including, among other things,
macroeconomic and geopolitical trends and events, the execution and performance of contracts by
distributors, suppliers and other partners, 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.
 2




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##### Table of Contents



PART IFINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Evergreen Solar, Inc.
 
 Condensed Consolidated Balance Sheets
(in thousands, except share data)
(unaudited)
 December 31,
    
    
    April 4,2008
    
    
    2009(Adjusted)AssetsCurrent assets:Cash and cash equivalents
    
    $
    100,888
    
    
    $
    56,868Marketable securities
    
    
    76,621
    
    
    
    2,684Accounts receivable, net of allowance for doubtful accounts
    
    
    35,458
    
    
    
    47,470Due from Sovello AG
    
    
    1,949
    
    
    
    2,370Inventory
    
    
    23,500
    
    
    
    29,771Prepaid cost of inventory
    
    
    11,696
    
    
    
    13,903VAT receivable, net
    
    
    1,474
    
    
    
    1,716Other current assets
    
    
    7,684
    
    
    
    7,851Total current assets
    
    
    259,270
    
    
    
    162,633Investment in and advances to Sovello AG
    
    
    115,553
    
    
    
    124,086Restricted cash
    
    
    212
    
    
    
    206Deferred financing costs
    
    
    6,152
    
    
    
    5,806Loan receivable from silicon supplier
    
    
    41,757
    
    
    
    Prepaid cost of inventory
    
    
    172,193
    
    
    
    165,251Fixed assets, net
    
    
    406,191
    
    
    
    440,808Other assets
    
    
    3,579
    
    
    
    400Total assets
    
    $
    1,004,907
    
    
    $
    899,190Liabilities and stockholders equityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    62,652
    
    
    $
    45,245Due to Sovello AG
    
    
    22,840
    
    
    
    3,529Accrued employee compensation
    
    
    6,451
    
    
    
    3,801Accrued interest
    
    
    7,392
    
    
    
    3,236Accrued warranty
    
    
    1,182
    
    
    
    1,452Total current liabilities
    
    
    100,517
    
    
    
    57,263Senior convertible notes, net of discount
    
    
    311,531
    
    
    
    314,376Deferred income taxes
    
    
    9,776
    
    
    
    9,416Total liabilities
    
    
    421,824
    
    
    
    381,055Commitments and Contingencies (Notes 7, 8 and 9)Stockholders equity:Common stock, $0.01 par value, 250,000,000 shares authorized,
164,874,850 and 164,952,098 issued and outstanding at
December 31, 2008
and April 4, 2009, respectively
    
    
    1,649
    
    
    
    1,650Additional paid-in capital
    
    
    803,491
    
    
    
    805,510Accumulated deficit
    
    
    (223,687
    )
    
    
    (287,976
    )Accumulated other comprehensive income (loss)
    
    
    1,630
    
    
    
    (1,049
    )Total stockholders equity
    
    
    583,083
    
    
    
    518,135Total liabilities and stockholders equity
    
    $
    1,004,907
    
    
    $
    899,190
  3




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Evergreen Solar, Inc.
 
 Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 Quarter EndedMarch 29,
    
    
    April 4,2008
    
    
    2009Product revenues
    
    $
    18,259
    
    
    $
    54,439Royalty and fee revenues
    
    
    4,688
    
    
    
    1,367Total revenues
    
    
    22,947
    
    
    
    55,806Cost of revenues
    
    
    15,231
    
    
    
    55,122Gross profit
    
    
    7,716
    
    
    
    684Operating expenses:Research and development
    
    
    4,943
    
    
    
    4,446Selling, general and administrative
    
    
    4,992
    
    
    
    6,376Write-off of loan receivable from silicon supplier
    
    
    
    
    
    
    43,882Facility start-up
    
    
    3,419
    
    
    
    3,459Restructuring charges
    
    
    1,862
    
    
    
    1,792Total operating expenses
    
    
    15,216
    
    
    
    59,955Operating loss
    
    
    (7,500
    )
    
    
    (59,271
    )Other income (expense):Foreign exchange gains (losses), net
    
    
    3,814
    
    
    
    (699
    )Interest income
    
    
    3,027
    
    
    
    2,213Interest expense
    
    
    (316
    )
    
    
    (5,380
    )Other income (expense), net
    
    
    6,525
    
    
    
    (3,866
    )Loss before equity income (loss) from interest in Sovello AG
    
    
    (975
    )
    
    
    (63,137
    )Equity income (loss) from interest in Sovello AG
    
    
    950
    
    
    
    (1,152
    )Net loss
    
    $
    (25
    )
    
    $
    (64,289
    )Net loss per share (basic and diluted)
    
    $
    (0.00
    )
    
    $
    (0.40
    )Weighted average shares used in computing basic and diluted
net loss per share
    
    
    108,816
    
    
    
    161,888
  4




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Evergreen Solar, Inc.
 
 Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 Quarter EndedMarch 29,
    
    
    April 4,2008
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (25
    )
    
    $
    (64,289
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation expense
    
    
    2,519
    
    
    
    8,467Loss on loan receivable from silicon supplier
    
    
    
    
    
    
    43,882Loss on disposal of fixed assets
    
    
    1,862
    
    
    
    Equity (income) loss from Sovello AG
    
    
    (950
    )
    
    
    1,152Amortization of deferred debt financing costs
    
    
    111
    
    
    
    346Amortization of debt discount
    
    
    
    
    
    
    2,844Imputed interest and accretion of bond premiums
    
    
    (536
    )
    
    
    (478
    )Compensation expense associated with employee equity awards
    
    
    1,533
    
    
    
    1,719Provision for warranty
    
    
    92
    
    
    
    279Changes in operating assets and liabilities:Accounts receivable
    
    
    (3,765
    )
    
    
    (12,433
    )Grants receivable
    
    
    5,345
    
    
    
    Inventory
    
    
    2,930
    
    
    
    (6,271
    )Prepaid cost of inventory
    
    
    (12,001
    )
    
    
    3,196Other current assets
    
    
    (2,089
    )
    
    
    (2,447
    )Accounts payable
    
    
    (8,332
    )
    
    
    (18,527
    )Accrued expenses
    
    
    24
    
    
    
    (6,265
    )Interest payable
    
    
    (1,779
    )
    
    
    (2,654
    )Other
    
    
    (3,050
    )
    
    
    4,018Net cash used in operating activities
    
    
    (18,111
    )
    
    
    (47,461
    )Cash flows from investing activities:Purchases of fixed assets and deposits on fixed assets under construction
    
    
    (61,994
    )
    
    
    (59,051
    )Decrease in restricted cash
    
    
    414
    
    
    
    Increase in Sovello AG loan
    
    
    
    
    
    
    (11,750
    )Increase in other loans
    
    
    (22,164
    )
    
    
    Purchases of marketable securities
    
    
    (1,501
    )
    
    
    Proceeds from sale and maturity of marketable securities
    
    
    46,721
    
    
    
    74,051Net cash provided by (used in) investing activities
    
    
    (38,524
    )
    
    
    3,250Cash flows from financing activities:Proceeds from issuances of common stock, net of offering costs
    
    
    166,862
    
    
    
    Proceeds from exercise of stock options and shares purchased under Employee
Stock Purchase Plan
    
    
    666
    
    
    
    191Net cash provided by financing activities
    
    
    167,528
    
    
    
    191aaaaNet increase (decrease) in cash and cash equivalents
    
    
    110,893
    
    
    
    (44,020
    )Cash and cash equivalents at beginning of period
    
    
    29,428
    
    
    
    100,888Cash and cash equivalents at end of period
    
    $
    140,321
    
    
    $
    56,868
  5




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




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
    
    possible delays in the completion of our Devens plant, budget
overruns or failure to meet expected production levels;
    
    selling less than approximately 90 MW to 110 MW of Devens
manufactured product at an average selling price of $2.50 to
$3.00 per watt to credit worthy customers;
    
    higher than planned manufacturing costs and failing to achieve
expected Devens operating metrics, with any delays in our plan
to scale capacity resulting in increased costs that could
impair business operations;
    
    further weakening of the Euro against the U.S. dollar, as a
substantial portion of the contracted sales are denominated in
Euros; and
    
    increased funding requirements for Sovello to complete its
third manufacturing facility and achieve its planned
manufacturing cost and operating metrics, or to potentially
address the loss of any prior or expected government grant
funding for Sovello.
  
    
    continually monitoring operating results against expectations and, if required, further
restricting operating costs and capital spending if events warrant;
    
    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; and
    
    negotiating with a number of banks to secure a borrowing base line of credit, without a
minimum cash requirement, as is the case with our current line of credit, supported by the expected
significant increase in our accounts receivable, inventory and overall working capital.
  2. Accounting Change
   7




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As of December 31, 2008Balance Sheet Category
    
    As Reported
    
    
    As Adjusted
    
    
    Effect of 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
    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
  Amortized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    ValueCorporate bonds
    
    $
    2,666
    
    
    $
    18
    
    
    $
    2,684Marketable Securities
    
    $
    2,666
    
    
    $
    18
    
    
    $
    2,684
 4. Inventory
 8




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December 31,
    
    
    April 4,2008
    
    
    2009Raw materials
    
    $
    17,928
    
    
    $
    18,146Work-in-process
    
    
    3,910
    
    
    
    7,285Finished goods
    
    
    1,662
    
    
    
    4,340$
    23,500
    
    
    $
    29,771Prepaid cost of inventory
    
    $
    183,889
    
    
    $
    179,154Less: current portion
    
    
    11,696
    
    
    
    13,903Non-current portion
    
    $
    172,193
    
    
    $
    165,251
   9




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5. Fixed Assets
  Useful
    
    
    December 31,
    
    
    April 4,Life
    
    
    2008
    
    
    2009Land
    
    
    
    
    
    $
    119
    
    
    $
    119Building
    
    40 years
    
    
    97,957
    
    
    
    198,412Laboratory and manufacturing equipment
    
    3-7 years
    
    
    182,109
    
    
    
    278,068Computer and office equipment
    
    3-7 years
    
    
    4,594
    
    
    
    5,363Leasehold improvements
    
    Lesser of 15 to 20
    
    
    16,413
    
    
    
    16,413years or lease termAssets under construction
    
    
    
    
    
    
    175,880
    
    
    
    20,007477,072
    
    
    
    518,382Less: Accumulated depreciation and
fixed asset write-offs
    
    
    
    
    
    
    (70,881
    )
    
    
    (77,574
    )$
    406,191
    
    
    $
    440,808
     6. Investment in Sovello
   10




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Quarter EndedMarch, 29,
    
    April 4,2008
    
    
    2009Revenue
    
    $
    82,274
    
    
    $
    33,510Cost of goods sold
    
    
    66,867
    
    
    
    25,037Other expenses
    
    
    11,427
    
    
    
    12,109Net income (loss)
    
    
    3,980
    
    
    
    (3,636
    )
 December 31,
    
    April 4,2008
    
    
    2009Current assets
    
    $
    241,871
    
    
    $
    242,499Non-current assets
    
    
    408,347
    
    
    
    422,635Current liabilities
    
    
    181,550
    
    
    
    240,655Non-current liabilities
    
    
    318,627
    
    
    
    283,150
      Evergreen Solar Loans to Sovello
 11




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##### Table of Contents



Date of Loan
    
    Principal (EUR)
    
    Principal (USD)
    
    Interest Rate
    
    Original Date DueJanuary 25, 2007
    
    
    30,000,000
    
    
    $
    40,479,000
    
    
    
    5.43
    %
    
    December 31, 2009 *June 26, 2008
    
    
    
    
    
    $
    18,174,000
    
    
    
    6.71
    %
    
    December 31, 2009 *December 22, 2008
    
    
    
    
    
    $
    10,650,000
    
    
    
    6.00
    %
    
    June 30, 2010 *March 30, 2009
    
    
    
    
    
    $
    6,700,000
    
    
    
    7.00
    %
    
    June 30, 2009 *
 
 *
    
    Due upon the earlier of the completion of an initial public
offering or other liquidity event generating sufficient cash to repay the loan. 7. Long-Term Debt
 Subordinated Convertible Notes
  Senior Convertible Notes
 Capped Call
  12




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Capped Call
    13




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Common Stock Lending Agreement
 8. Line of Credit
     9. Guarantor Arrangements
  Product Warranty
   14




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Quarter EndedMarch 29,
    
    
    April 4,2008
    
    
    2009Balance at beginning of period
    
    $
    705
    
    
    $
    1,182Warranty costs accrued
    
    
    92
    
    
    
    279Warranty costs incurred
    
    
    
    
    
    
    (9
    )Balance at end of period
    
    $
    797
    
    
    $
    1,452
 Sovello Debt Guarantees
 Investment in Sovello)
   10. Fair Value Measurements
    15




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##### 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
    
    
    
    
 April 4, 2009Quoted Prices
    
    Using Significant
    
    Using Significantin Active
    
    Other Observable
    
    UnobservableTotal Carrying
    
    Markets
    
    Inputs
    
    InputsValue
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Government Obligation
    
    $
    28,368
    
    
    $
    
    
    
    $
    28,368
    
    
    $
    Marketable Securities
    
    
    2,684
    
    
    
    
    
    
    
    2,684
    
    
    
    
 Valuation Techniques
  11. Stockholders Equity
  16




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Common Stock Lending Agreement
   12. Comprehensive Income (Loss)
  Quarter EndedMarch 29,
    
    
    April 4,2008
    
    
    2009Net loss
    
    $
    (25
    )
    
    $
    (64,289
    )Other comprehensive income (loss):Unrealized gain (loss) on marketable securities
    
    
    66
    
    
    
    (8
    )Cumulative translation adjustments
    
    
    4,113
    
    
    
    (2,671
    )Total comprehensive income (loss)
    
    $
    4,154
    
    
    $
    (66,968
    )
 13.
    
    Stock Based Compensation
 17




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##### Table of Contents



Quarter EndedMarch 29,
    
    
    April 4,2008
    
    
    2009Cost of revenue
    
    $
    247
    
    
    $
    333Research and development expenses
    
    
    342
    
    
    
    393Selling, general and administrative expenses
    
    
    729
    
    
    
    783Facility start-up
    
    
    215
    
    
    
    210$
    1,533
    
    
    $
    1,719
  Stock Incentive Plan
   Weighted-AverageShares
    
    
    Exercise Price(in thousands)Outstanding at January 1, 2009
    
    
    3,688
    
    
    $
    4.65Granted
    
    
    
    
    
    
    Exercised
    
    
    (20
    )
    
    
    1.76Forfeited
    
    
    (34
    )
    
    
    4.94Outstanding at April 4, 2009
    
    
    3,634
    
    
    $
    4.66
  18




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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)$1.32
    
    $
    1.60
    
    
    
    28
    
    
    
    4.26
    
    
    $
    1.53
    
    
    
    28
    
    
    $
    1.531.61
    
    
    1.61
    
    
    
    1,638
    
    
    
    4.68
    
    
    
    1.61
    
    
    
    1,638
    
    
    
    1.611.68
    
    
    2.40
    
    
    
    472
    
    
    
    4.63
    
    
    
    2.12
    
    
    
    472
    
    
    
    2.122.49
    
    
    5.27
    
    
    
    367
    
    
    
    4.92
    
    
    
    3.67
    
    
    
    365
    
    
    
    3.675.44
    
    
    7.30
    
    
    
    458
    
    
    
    5.83
    
    
    
    7.07
    
    
    
    446
    
    
    
    7.097.59
    
    
    13.39
    
    
    
    278
    
    
    
    6.35
    
    
    
    9.83
    
    
    
    249
    
    
    
    9.9313.97
    
    
    13.97
    
    
    
    7
    
    
    
    6.82
    
    
    
    13.97
    
    
    
    6
    
    
    
    13.9714.00
    
    
    14.00
    
    
    
    35
    
    
    
    1.58
    
    
    
    14.00
    
    
    
    35
    
    
    
    14.0015.09
    
    
    15.09
    
    
    
    335
    
    
    
    6.89
    
    
    
    15.09
    
    
    
    251
    
    
    
    15.0919.00
    
    
    19.00
    
    
    
    16
    
    
    
    1.58
    
    
    
    19.00
    
    
    
    16
    
    
    
    19.003,634
    
    
    
    5.13
    
    
    $
    4.66
    
    
    
    3,506
    
    
    $
    4.37
    19




---



##### Table of Contents



Weighted-AverageGrant DateShares
    
    
    Fair Value(in thousands)Outstanding at January 1, 2009
    
    
    3,132
    
    
    $
    10.94Granted
    
    
    19
    
    
    
    4.58Vested
    
    
    (287
    )
    
    
    1.61Forfeited
    
    
    (45
    )
    
    
    9.42Outstanding at April 4, 2009
    
    
    2,819
    
    
    $
    11.87
   14. Write-off of Loan Receivable from Silicon Supplier
  15. Facility Start-up Costs
  20




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##### Table of Contents



16. Restructuring Charges
  17.
    
    Income Taxes
    18. Net Loss per Common Share
   21




---



##### Table of Contents



19. Geographical and Customer Concentration of Revenue Information
  Quarter EndedMarch 29,
    
    April 4,2008
    
    2009By geography:United States
    
    
    50
    %
    
    
    21
    %Germany
    
    
    49
    %
    
    
    46
    %Italy
    
    
    
    
    
    
    28
    %All other
    
    
    1
    %
    
    
    5
    %100
    %
    
    
    100
    %By customer:Itochu Corporation
    
    
    
    
    
    
    28
    %IBC Solar AG
    
    
    
    
    
    
    14
    %Wagner & Co. Solartechnik GmbH
    
    
    
    
    
    
    14
    %SunPower Corporation (formerly PowerLight)
    
    
    52
    %
    
    
    Ralos Vertiebs GmbH
    
    
    17
    %
    
    
    11
    %S.A.G. Solarstrom Vertriebs GmbH
    
    
    17
    %
    
    
    All other
    
    
    14
    %
    
    
    33
    %100
    %
    
    
    100
    %
 20. Related Party Transactions
   22




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##### Table of Contents



21. Recent Accounting Pronouncements
     23




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##### 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
  
   TM
   24




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##### Table of Contents




    
    We will manufacture String Ribbon wafers using our state of the art Quad wafer
furnaces at a leased facility being built in Wuhan, China on Jiaweis campus.
    
    Jiawei will process String Ribbon wafers into Evergreen Solar-branded panels on a
subcontract basis.
    
    We will reimburse Jiawei for its cell and panel conversion costs, plus a
subcontractor fee. The actual price paid to Jiawei will be negotiated annually.
    
    The Wuhan government will provide, or coordinate with other Chinese governmental
agencies, various incentives, including guarantees necessary to obtain third-party bank or
other financing.
    
    Initial capacity is expected to be approximately 100 MW and the parties intend to
expand production capacity to approximately 500 MW by 2012, the timing and extent of which
will be determined in 2010.
        
    
    possible delays in the completion of our Devens plant, budget
overruns or failure to meet expected production levels;
    
    selling less than approximately 90 MW to 110 MW of Devens
manufactured product at an average selling price of $2.50 to $3.00
per watt to credit worthy customers;
    
    higher than planned manufacturing costs and failing to achieve
expected Devens operating metrics, with any delays in our plan to
scale capacity resulting in increased costs that could impair
business operations;
 25




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##### Table of Contents




    
    further weakening of the Euro against the U.S. dollar, as a
substantial portion of the contracted sales are denominated in
Euros; and
    
    increased funding requirements for Sovello to complete its third
manufacturing facility and achieve its planned manufacturing cost
and operating metrics, or to potentially address the loss of any
prior or expected government grant funding for Sovello.
  
    
    continually monitoring our operating results against expectations and, if required,
further restricting operating costs and capital spending if events warrant;
    
    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; and
    
    negotiating with a number of banks to secure a borrowing base line of credit, without a
minimum cash requirement, as is the case with our current line of credit, supported by the expected
significant increase in our accounts receivable, inventory and overall working capital.
  Critical Accounting Policies and Estimates
  Accounting for Sovello AG
   26




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##### Table of Contents



Revenue Recognition and Allowance for Doubtful Accounts
    Warranty
   Stock-based Compensation
  27




---



##### Table of Contents



Cash and cash equivalents
  Inventory
  Impairment of Long-lived Assets
  28




---



##### Table of Contents



Income Taxes
  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.
 29




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##### Table of Contents



Comparison of Quarters Ended April 4, 2009 and March 29, 2008
 Revenues .
   Quarter EndedMarch 29,
    
    April 4,2008
    
    2009By geography:United States
    
    
    50
    %
    
    
    21
    %Germany
    
    
    49
    %
    
    
    46
    %Italy
    
    
    
    
    
    
    28
    %All other
    
    
    1
    %
    
    
    5
    %100
    %
    
    
    100
    %By customer:Itochu Corporation
    
    
    
    
    
    
    28
    %IBC Solar AG
    
    
    
    
    
    
    14
    %Wagner & Co. Solartechnik GmbH
    
    
    
    
    
    
    14
    %SunPower Corporation (formerly PowerLight)
    
    
    52
    %
    
    
    Ralos Vertiebs GmbH
    
    
    17
    %
    
    
    11
    %S.A.G. Solarstrom Vertriebs GmbH
    
    
    17
    %
    
    
    All other
    
    
    14
    %
    
    
    33
    %100
    %
    
    
    100
    %
 Cost of product revenues and gross margins .
 30




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##### 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.
 Other income (expense), net .
 31




---



##### Table of Contents



Equity income (loss) from interest in Sovello.
 Net Loss.
 Liquidity and Capital Resources
   Write-off of loan receivable from silicon supplier
 32




---



##### Table of Contents



Sovello Debt Guarantee and Undertaking
     Evergreen Solar Loans to Sovello
  33




---



##### Table of Contents



Date of Loan
    
    Principal (EUR)
    
    Principal (USD)
    
    Interest Rate
    
    Original Date DueJanuary 25, 2007
    
    30,000,000
    
    $
    40,479,000
    
    
    
    5.43
    %
    
    December 31, 2009 *June 26, 2008
    
                 
    
    $
    18,174,000
    
    
    
    6.71
    %
    
    December 31, 2009 *December 22, 2008
    
                 
    
    $
    10,650,000
    
    
    
    6.00
    %
    
    June 30, 2010 *March 30, 2009
    
                 
    
    $
    6,700,000
    
    
    
    7.00
    %
    
    June 30, 2009 *
 
 *
    
    Due upon the earlier of the completion of an initial public offering or other liquidity event
generating sufficient cash to repay the loan. Liquidity Risk and Uncertainty
     
    
    possible delays in the completion of our Devens plant, budget
overruns or failure to meet expected production levels;
    
    selling less than approximately 90 MW to 110 MW of Devens
manufactured product at an average selling price of $2.50 to $3.00
per watt to credit worthy customers;
    
    higher than planned manufacturing costs and failing to achieve
expected Devens operating metrics, with any delays in our plan to
scale capacity resulting in increased costs that could impair
business operations;
    
    further weakening of the Euro against the U.S. dollar, as a
substantial portion of the contracted sales are denominated in
Euros; and
    
    increased funding requirements for Sovello to complete its third
manufacturing facility and achieve its planned manufacturing cost
and operating metrics, or to potentially address the loss of any
prior or expected government grant funding for Sovello.
  
    
    continually monitoring our operating results against expectations and, if required,
further restricting operating costs and capital spending if events warrant;
    
    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; and
    
    negotiating with a number of banks to secure a borrowing base line of credit, without a
minimum cash requirement, as is the case with our current line of credit, supported by the expected
significant increase in our accounts receivable, inventory and overall working capital.
 34




---



##### Table of Contents



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
  35




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##### Table of Contents



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, 2008 as
filed on March 2, 2009 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.
 We may fail to consummate our proposed expansion in Wuhan, China and establish a manufacturing
relationship with Jiawei Solar (Wuhan) Co.
  36




---



##### Table of Contents



We face
particular commercial, jurisdictional and legal risks associated with
our proposed expansion in China.
    Our growing international operations and customer base require us to comply with complex,
multi-national income, value-added and other tax rules, our accruals for which may be insufficient.
  37




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##### Table of Contents



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)
    
    Amendment No. 1 to the Seconded Amended and Restated By-laws (Exhibit 3.1)3.4 (3)
    
    Certificate of Amendment of Third Amended and Restated Certificate of
Incorporation (Exhibit 3.1)3.5 (4)
    
    Certificate of the Powers, Designations, Preferences and Rights of the
Series A Convertible Preferred Stock of the Company (Exhibit 4.4)3.6 (5)
    
    Certificate of Designations of Rights, Preferences and Privileges of
Series B Preferred Stock of the Company (Exhibit 3.4)4.1 (6)
    
    Indenture between the Company and U.S. Bank National Association, as
Trustee, dated as of July 2, 2008 (Exhibit 4.1)4.2 (6)
    
    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 (6)
    
    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
 
 *
    
    Material agreements disclosed on Form 8-K during the Registrants fiscal quarter ending July 4,
2009 will be filed with the Registrants Form 10-Q for the fiscal quarter ending July 4, 2009 as
required pursuant to the instructions to Item 601 of Regulation SK.(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 Registrants Current Report on Form
8-K, dated February 4, 2009 and filed on February 5, 2009. 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 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.(4)
    
    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.(5)
    
    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.(6)
    
    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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##### Table of Contents



SIGNATURES
  EVERGREEN SOLAR, INC.Date:
May 11, 2009/s/ Michael El-HillowMichael El-HillowChief Financial Officer and Secretary(Principal Financial Officer)
 39