##### 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 3, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 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 o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




---



##### 



Evergreen Solar, Inc.
Quarterly Report on Form 10-Q
For the Quarter Ended April 3, 2010
 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
    
    
    31Item 4. Controls and Procedures
    
    
    32Part II. Other Information
    
    
    32Item 1. Legal Proceedings
    
    
    32Item 1A. Risk Factors
    
    
    33Item 5. Other Information
    
    
    36Item 6. Exhibits
    
    
    36Signatures
    
    
    37Exhibits:
    
    
    38Ex-10.1 Amendment to Master Supply Agreement dated March 26, 2010Ex-10.2 Guarantee from Ralos New Energies AG dated March 26, 2010Ex-10.3 Loan Agreement dated March 26, 2010Ex-10.4 Promissory Note made by Jiawei Solarchina Co., Ltd to the Registrant dated April 30, 2010Ex-10.5 Management Incentive PlanEx-10.6 Amendment effective on or about January 1, 2010 to Master Supply AgreementEx-10.7 Amendment effective on or about January 1, 2010 to Master Supply AgreementEx-31.1 Section 302 Certification of the Chief Executive OfficerEx-31.2 Section 302 Certification of the Chief Financial OfficerEx-32.1 Section 906 Certification of the Chief Executive OfficerEx-32.2 Section 906 Certification of the Chief Financial Officer




---



##### Table of Contents



PART I
 
 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 our Annual Report on Form 10-K
filed with the SEC on March 9, 2010. 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;
    
    our ability to reduce manufacturing costs in our Devens, Massachusetts
manufacturing facility and meet manufacturing cost targets in our Wuhan, China
manufacturing facility;
    
    the completion of our Midland, Michigan and Wuhan, China facilities and Jiaweis
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 and cash equivalents; 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 can 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;
    
    our receipt of public grant awards and other funding to support our expansion;
    
    our expectations regarding product performance and technological competitiveness;
    
    our ability to obtain key materials; and
    
    the benefits of our proprietary technology and new manufacturing and other
developments, including our quad wafer furnace and continued enhancements of our
wafer, cell and panel production technologies.
 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
 1




---



##### Table of Contents



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, 2009, 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




---



##### 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 3,2009
    
    
    2010AssetsCurrent assets:Cash and cash equivalents
    
    $
    112,368
    
    
    $
    57,479Accounts receivable, net of allowance for doubtful accounts
    
    
    53,295
    
    
    
    66,551Inventory
    
    
    34,890
    
    
    
    43,921Prepaid cost of inventory
    
    
    25,634
    
    
    
    28,575Other current assets
    
    
    11,451
    
    
    
    13,159Total current assets
    
    
    237,638
    
    
    
    209,685Restricted cash
    
    
    3,134
    
    
    
    9,909Deferred financing costs
    
    
    8,312
    
    
    
    7,697Loan receivable from Jiawei and related interest
    
    
    
    
    
    
    2,642Prepaid cost of inventory
    
    
    147,573
    
    
    
    138,338Fixed assets, net
    
    
    430,681
    
    
    
    429,007Other assets
    
    
    295
    
    
    
    298Total assets
    
    $
    827,633
    
    
    $
    797,576Liabilities and stockholders equityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    31,420
    
    
    $
    34,890Due to Sovello AG and related guarantees
    
    
    17,544
    
    
    
    8,752Accrued employee compensation
    
    
    7,287
    
    
    
    4,002Accrued interest
    
    
    7,004
    
    
    
    3,115Accrued warranty
    
    
    2,368
    
    
    
    2,736Total current liabilities
    
    
    65,623
    
    
    
    53,495Senior convertible notes, net of discount
    
    
    323,276
    
    
    
    326,398Loan and related interest payable
    
    
    34,152
    
    
    
    34,782Deferred income taxes
    
    
    5,396
    
    
    
    5,396Total liabilities
    
    
    428,447
    
    
    
    420,071Commitments and Contingencies (Note 9)Stockholders equity:Common stock, $0.01 par value, 450,000,000 shares authorized,
207,809,919 and 208,052,982 issued and outstanding at December 31, 2009
and April 3, 2010, respectively
    
    
    2,078
    
    
    
    2,081Additional paid-in capital
    
    
    1,028,233
    
    
    
    1,030,474Accumulated deficit
    
    
    (631,119
    )
    
    
    (655,057
    )Accumulated other comprehensive income (loss)
    
    
    (6
    )
    
    
    7Total stockholders equity
    
    
    399,186
    
    
    
    377,505Total liabilities and stockholders equity
    
    $
    827,633
    
    
    $
    797,576
  3




---



##### Table of Contents



Evergreen Solar, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 Quarter EndedApril 4,
    
    
    April 3,2009
    
    
    2010Product revenues
    
    $
    54,439
    
    
    $
    78,473Royalty and fee revenues
    
    
    1,367
    
    
    
    Total revenues
    
    
    55,806
    
    
    
    78,473Cost of revenues
    
    
    55,122
    
    
    
    72,424Gross profit
    
    
    684
    
    
    
    6,049Operating expenses:Research and development
    
    
    4,446
    
    
    
    4,736Selling, general and administrative
    
    
    6,376
    
    
    
    7,692Write-off of loan receivable from silicon supplier
    
    
    43,882
    
    
    
    Facility start-up
    
    
    3,459
    
    
    
    3,730Restructuring charges
    
    
    1,792
    
    
    
    3,981Total operating expenses
    
    
    59,955
    
    
    
    20,139Operating loss
    
    
    (59,271
    )
    
    
    (14,090
    )Other income (expense):Foreign exchange gains (losses), net
    
    
    (699
    )
    
    
    (2,244
    )Interest income
    
    
    2,213
    
    
    
    139Interest expense
    
    
    (5,633
    )
    
    
    (7,743
    )Other income (expense), net
    
    
    (4,119
    )
    
    
    (9,848
    )Loss before equity loss from interest in Sovello AG
    
    
    (63,390
    )
    
    
    (23,938
    )Equity loss from interest in Sovello AG
    
    
    (1,152
    )
    
    
    Net loss
    
    $
    (64,542
    )
    
    $
    (23,938
    )Net loss per share (basic and diluted)
    
    $
    (0.40
    )
    
    $
    (0.12
    )Weighted average shares used in computing basic and diluted net loss per share
    
    
    161,888
    
    
    
    205,133
  4




---



##### Table of Contents



Evergreen Solar, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 Quarter EndedApril 4,
    
    
    April 3,2009
    
    
    2010Cash flows from operating activities:Net loss
    
    $
    (64,542
    )
    
    $
    (23,938
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation expense
    
    
    8,467
    
    
    
    14,813Imputed interest and accretion of bond premiums
    
    
    (478
    )
    
    
    Amortization of prepaid cost of inventory
    
    
    
    
    
    
    3,686Equity loss from Sovello AG
    
    
    1,152
    
    
    
    Amortization of deferred debt financing costs
    
    
    599
    
    
    
    614Loss on loan receivable from silicon supplier
    
    
    43,882
    
    
    
    Provision for warranty
    
    
    279
    
    
    
    393Amortization of debt discount
    
    
    2,844
    
    
    
    3,122Compensation expense associated with employee equity awards
    
    
    1,719
    
    
    
    1,222Changes in operating assets and liabilities:Accounts receivable
    
    
    (12,433
    )
    
    
    (13,256
    )Inventory
    
    
    (6,271
    )
    
    
    (9,031
    )Prepaid cost of inventory
    
    
    3,196
    
    
    
    3,567Other current assets
    
    
    (2,447
    )
    
    
    (1,708
    )Accounts payable and accrued expenses
    
    
    (24,792
    )
    
    
    177Interest payable
    
    
    (2,654
    )
    
    
    (3,192
    )Other
    
    
    4,018
    
    
    
    10Net cash used in operating activities
    
    
    (47,461
    )
    
    
    (23,521
    )Cash flows from investing activities:Purchases of fixed assets and deposits on fixed assets under construction
    
    
    (59,051
    )
    
    
    (13,803
    )Proceeds from the disposal of fixed assets
    
    
    
    
    
    
    22Increase in restricted cash
    
    
    
    
    
    
    (6,788
    )Increase in Sovello AG loan
    
    
    (11,750
    )
    
    
    Payment associated with Sovello AG guarantee
    
    
    
    
    
    
    (8,075
    )Increase in other loans
    
    
    
    
    
    
    (2,641
    )Proceeds from sale and maturity of marketable securities
    
    
    74,051
    
    
    
    Net cash provided by (used in) investing activities
    
    
    3,250
    
    
    
    (31,285
    )Cash flows from financing activities:Payment associated with share increase
    
    
    
    
    
    
    (144
    )Proceeds from exercise of stock options and shares purchased under Employee
Stock Purchase Plan
    
    
    191
    
    
    
    61Net cash provided by (used in) financing activities
    
    
    191
    
    
    
    (83
    )Net decrease in cash and cash equivalents
    
    
    (44,020
    )
    
    
    (54,889
    )Cash and cash equivalents at beginning of period
    
    
    100,888
    
    
    
    112,368Cash and cash equivalents at end of period
    
    $
    56,868
    
    
    $
    57,479
  5




---



##### Table of Contents



Evergreen Solar, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
 1. Basis of Presentation
     Sovello Joint Venture
 Investments 
Equity Method and Joint Ventures
 6




---



##### Table of Contents



Liquidity Risk and Management Plans
   
    
    the assumption that there should be sufficient market demand to sell the expected
production from Devens and China at continually declining selling prices. The Company
expects to continue to moderate its production levels depending on changes in market
demands during the year;
    
    significant delays in the Companys plan to transition panel assembly to China
resulting in continued higher costs relative to its competition that could impair business
operations;
    
    continued significant fluctuation of the Euro against the U.S. dollar, as a
substantial portion of the Companys contracted sales are denominated in Euros; and
    
    the ability of Jiawei to execute against its plans to meet the Companys required
timetables.
   2. Accounting Change
 Debt
 7




---



##### Table of Contents



Balance Sheet Category
    
    As Reported
    
    As Adjusted
    
    Effect of ChangeOther current assets
    
    $
    11,670
    
    
    $
    11,451
    
    
    $
    (219
    )Deferred financing costs
    
    
    4,769
    
    
    
    8,312
    
    
    
    3,543Deferred income taxes
    
    
    5,615
    
    
    
    5,396
    
    
    
    (219
    )Additional paid-in
capital
    
    
    882,466
    
    
    
    1,028,233
    
    
    
    145,767Accumulated deficit
    
    
    (488,895
    )
    
    
    (631,119
    )
    
    
    (142,224
    )
  3. Cash and Cash Equivalents
  4. Inventory
  December 31,
    
    
    April 3,2009
    
    
    2010Raw materials
    
    $
    18,327
    
    
    $
    26,445Work-in-process
    
    
    7,643
    
    
    
    11,286Finished goods
    
    
    8,920
    
    
    
    6,190$
    34,890
    
    
    $
    43,921Prepaid cost of inventory
    
    $
    173,207
    
    
    $
    166,913Less: current portion
    
    
    25,634
    
    
    
    28,575Noncurrent portion
    
    $
    147,573
    
    
    $
    138,338
  5. Investment in Sovello AG
 Equity Method and Joint Ventures
 8




---



##### Table of Contents



6. Fixed Assets
  Useful
    
    
    December 31,
    
    
    April 3,Life
    
    
    2009
    
    
    2010Land
    
    
    
    
    
    $
    119
    
    
    $
    119Buildings
    
    40 years
    
    
    208,909
    
    
    
    211,301Laboratory and manufacturing
equipment
    
    3-7 years
    
    
    257,186
    
    
    
    258,860Computer and office equipment
    
    3-7 years
    
    
    5,890
    
    
    
    5,945Leasehold improvements
    
    Lesser of 15 to 20 years or lease term
    
    
    16,418
    
    
    
    16,418Assets under construction
    
    
    
    
    
    
    34,297
    
    
    
    43,473522,819
    
    
    
    536,116Less: Accumulated depreciation
    
    
    
    
    
    
    (92,138
    )
    
    
    (107,109
    )$
    430,681
    
    
    $
    429,007
   9




---



##### Table of Contents



7. Loan Receivable from Jiawei
  8. Debt
 Senior Convertible Notes
 Capped Call
 Debt
  10




---



##### Table of Contents



Debt
 Debt
 Capped Call
  Distinguishing Liability from Equity Derivative and Hedging Derivatives
and Hedging
    11




---



##### Table of Contents



Common Stock Lending Agreement
 Loan Payable
    Convertible Senior Secured Notes
     12




---



##### Table of Contents



Letters of Credit
  9. Commitments and Contingencies
 Potential Litigation with Lehman Brothers.
   Noise Noncompliance Proceedings for the Devens Manufacturing Facility.
   Product Warranty
  13




---



##### Table of Contents



April 4,
    
    
    April 3,2009
    
    
    2010Balance at beginning of period
    
    $
    1,182
    
    
    $
    2,368Warranty costs accrued
    
    
    279
    
    
    
    393Warranty costs incurred
    
    
    (9
    )
    
    
    (25
    )Balance at end of period
    
    $
    1,452
    
    
    $
    2,736
 10. Fair Value Measurements
 Fair Value Measurements and Disclosures
 Valuation Hierarchy
 Fair Value Measurements and Disclosures
      14




---



##### Table of Contents



December 31, 2009Quoted Prices
    
    Using Significant
    
    Using Significantin Active
    
    Other Observable
    
    UnobservableTotal Carrying
    
    Markets
    
    Inputs
    
    InputsValue
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Money markets
    
    $
    20,007
    
    
    $
    20,007
    
    
    $
    
    
    
    $
    April 3, 2010Quoted Prices
    
    Using Significant
    
    Using Significantin Active
    
    Other Observable
    
    UnobservableTotal Carrying
    
    Markets
    
    Inputs
    
    InputsValue
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Money markets
    
    $
    7,508
    
    
    $
    7,508
    
    
    $
    
    
    
    $
    
 Valuation Techniques
  11. Stockholders Equity
    15




---



##### Table of Contents



Common Stock Lending Agreement
   Debt
   12. Comprehensive Income (Loss)
 16




---



##### Table of Contents



April 4,
    
    
    April 3,2009
    
    
    2010(Adjusted)Net loss
    
    $
    (64,542
    )
    
    $
    (23,938
    )Other comprehensive income (loss):Unrealized loss on marketable securities
    
    
    (8
    )
    
    
    Cumulative translation adjustments
    
    
    (2,671
    )
    
    
    13Total comprehensive loss
    
    $
    (67,221
    )
    
    $
    (23,925
    )
 13. Stock Based Compensation
  April 4,
    
    
    April 3,2009
    
    
    2010Cost of revenue
    
    $
    333
    
    
    $
    215Research and development expenses
    
    
    393
    
    
    
    218Selling, general and administrative expenses
    
    
    783
    
    
    
    637Facility start-up
    
    
    210
    
    
    
    152$
    1,719
    
    
    $
    1,222
  Stock Incentive Plans
  17




---



##### Table of Contents



Weighted-AverageShares
    
    Exercise Price(in thousands)Outstanding at January 1, 2010
    
    
    4,096
    
    
    $
    4.20Granted
    
    
    250
    
    
    
    1.23Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (59
    )
    
    
    2.76Outstanding at April 3, 2010
    
    
    4,287
    
    
    $
    4.05
  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)$ 1.19
    
    $
    1.60
    
    
    
    277
    
    
    
    9.28
    
    
    $
    1.26
    
    
    
    27
    
    
    $
    1.531.61
    
    
    1.61
    
    
    
    1,638
    
    
    
    3.69
    
    
    
    1.61
    
    
    
    1,638
    
    
    
    1.611.68
    
    
    2.10
    
    
    
    299
    
    
    
    3.63
    
    
    
    2.00
    
    
    
    299
    
    
    
    2.002.24
    
    
    2.24
    
    
    
    701
    
    
    
    9.16
    
    
    
    2.24
    
    
    
    169
    
    
    
    2.242.32
    
    
    7.30
    
    
    
    743
    
    
    
    4.42
    
    
    
    5.58
    
    
    
    743
    
    
    
    5.587.59
    
    
    12.65
    
    
    
    275
    
    
    
    5.35
    
    
    
    9.80
    
    
    
    275
    
    
    
    9.8013.97
    
    
    13.97
    
    
    
    8
    
    
    
    5.82
    
    
    
    13.97
    
    
    
    8
    
    
    
    13.9714.00
    
    
    14.00
    
    
    
    35
    
    
    
    0.58
    
    
    
    14.00
    
    
    
    35
    
    
    
    14.0015.09
    
    
    15.09
    
    
    
    295
    
    
    
    5.90
    
    
    
    15.09
    
    
    
    295
    
    
    
    15.0919.00
    
    
    19.00
    
    
    
    16
    
    
    
    0.58
    
    
    
    19.00
    
    
    
    16
    
    
    
    19.004,287
    
    
    
    5.29
    
    
    $
    4.05
    
    
    
    3,505
    
    
    $
    4.52
   18




---



##### Table of Contents



Expected options term (years)
    
    
    9.0Risk-free interest rate
    

    3.80% - 3.91%Expected dividend yield
    
    NoneVolatility
    
    
    104
    %
   Weighted-AverageGrant DateShares
    
    Fair Value(in thousands)Outstanding at January 1, 2010
    
    
    2,841
    
    
    $
    10.39Granted
    
    
    218
    
    
    
    1.27Vested
    
    
    (400
    )
    
    
    1.19Forfeited
    
    
    (41
    )
    
    
    6.72Outstanding at April 3, 2010
    
    
    2,618
    
    
    $
    11.09
  19




---



##### Table of Contents



14. Write-off of Loan Receivable from Silicon Supplier
  15. Facility Start-up Costs
  16. Restructuring Charges
   17. Income Taxes
 20




---



##### Table of Contents



18. Net Loss per Common Share
 Earning Per Share
  19. Geographical and Customer Concentration Information
  21




---



##### Table of Contents



April 4,
    
    April 3,2009
    
    2010By geography:United States
    
    
    21
    %
    
    
    14
    %Germany
    
    
    46
    %
    
    
    79
    %Italy
    
    
    28
    %
    
    
    All other
    
    
    5
    %
    
    
    7
    %100
    %
    
    
    100
    %By customer:Wagner & Co. Solartechnik GmbH
    
    
    14
    %
    
    
    32
    %IBC Solar AG
    
    
    14
    %
    
    
    26
    %Donauer Solartechnik Vertriebs GmbH
    
    
    
    
    
    
    14
    %Itochu Corporation
    
    
    28
    %
    
    
    Ralos Vertriebs GmbH
    
    
    11
    %
    
    
    All other
    
    
    33
    %
    
    
    28
    %100
    %
    
    
    100
    %
  December 31,
    
    April 3,2009
    
    2010% of accounts receivableIBC Solar AG
    
    
    
    
    
    
    29
    %Ralos Vertriebs GmbH
    
    
    29
    %
    
    
    19
    %Wagner & Co. Solartechnik GmbH
    
    
    3
    %
    
    
    17
    %Sun & Kim Co., Ltd.
    
    
    12
    %
    
    
    10
    %Solar City
    
    
    12
    %
    
    
    1
    %Top 5 customers
    
    
    67
    %
    
    
    82
    %
 20. Related Party Transactions
   22




---



##### Table of Contents



21. Recent Accounting Pronouncements
 Revenue Recognition Fair Value Measurements and Disclosures
 Debt
 Fair Value Measurements and Disclosures
 Subsequent Events
 23




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Executive Overview
       24




---



##### 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;
    
    we have invested $17 million in cash and equipment in the Wuhan wafer manufacturing
operation to date. 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 is expected to be approximately 100 MW. Factory construction has
begun and the parties expect that wafer, cell and panel production will begin in mid-2010;
and
    
    the parties intend to expand production capacity of our respective manufacturing
operations to approximately 500 MW by 2012, the timing and extent of any potential
expansion will be determined in 2010.
   25




---



##### Table of Contents



Critical Accounting Policies and Estimates
  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
 26




---



##### Table of Contents



Other income (expense), net
 Equity loss from interest in Sovello AG.
 Comparison of Quarters Ended April 4, 2009 and April 3, 2010
 Revenues
   April 4,
    
    April 3,2009
    
    2010By geography:United States
    
    
    21
    %
    
    
    14
    %Germany
    
    
    46
    %
    
    
    79
    %Italy
    
    
    28
    %
    
    
    All other
    
    
    5
    %
    
    
    7
    %100
    %
    
    
    100
    %By customer:Wagner & Co. Solartechnik GmbH
    
    
    14
    %
    
    
    32
    %IBC Solar AG
    
    
    14
    %
    
    
    26
    %Donauer Solartechnik Vertriebs GmbH
    
    
    
    
    
    
    14
    %Itochu Corporation
    
    
    28
    %
    
    
    Ralos Vertriebs GmbH
    
    
    11
    %
    
    
    All other
    
    
    33
    %
    
    
    28
    %100
    %
    
    
    100
    %
 Cost of product revenues and gross margin
 27




---



##### Table of Contents



Research and development expenses
 Selling, general and administrative expenses
 Write-off of loan receivable from silicon supplier.
 Facility start-up.
 Restructuring charges
 28




---



##### Table of Contents



Other income (expense) net.
 Equity loss from interest in Sovello AG.
 Net loss.
 Liquidity and Capital Resources
    29




---



##### Table of Contents



Sovello AG Debt Guarantees and Undertakings
  Convertible Senior Secured Notes Offering
   30




---



##### Table of Contents



Liquidity Risk and Uncertainty
   
    
    the assumption that there should be sufficient market demand to sell the expected
production from Devens and China at continually declining selling prices. We expect to
continue to moderate our production levels depending on changes in market demands during
the year;
    
    significant delays in our plan to transition panel assembly to China resulting in
continued higher costs relative to our competition 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; and
    
    the ability of Jiawei to execute against its plans to meet our required timetables.
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
  Foreign Currency Exchange Rate Risk
  31




---



##### Table of Contents



Item 4. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
  Internal Control Over Financial Reporting
  
 PART IIOTHER INFORMATION
 
 Item 1. Legal Proceedings
  Litigation with Barclays and Lehman Brothers.
  32




---



##### Table of Contents



Noise Noncompliance Proceedings for our Devens Manufacturing Facility.
    
 Item 1A. Risk Factors.
 In addition to the factors included below and 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, 2009 as filed on March 9, 2010 which 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.
 Our substantial leverage could adversely affect our ability to fulfill our obligations under our
outstanding convertible senior notes and secured notes and may place us at a competitive
disadvantage in our industry.
  33




---



##### Table of Contents




    
    we are required to use a substantial portion of our cash flow from operations to pay
principal and interest on our debt, thereby reducing the availability of our cash flow to
fund working capital, capital expenditures, product development efforts, acquisitions,
investments and strategic alliances and other general corporate requirements as well as
making it more difficult for us to make payments on the Secured Notes;
    
    our substantial leverage increases our vulnerability to economic downturns and adverse
competitive and industry conditions and could place us at a competitive disadvantage
compared to those of our competitors that have less debt or are less leveraged;
    
    our debt service obligations could limit our flexibility in planning for, or reacting
to, changes in our business and our industry and could limit our ability to pursue other
business opportunities, borrow more money for operations or capital in the future and
implement our business strategies;
    
    our level of debt and the covenants within our debt instruments may restrict us from
raising additional financing on satisfactory terms to fund working capital, capital
expenditures, product development efforts, strategic acquisitions, investments and
alliances, and other general corporate requirements; and
    
    covenants in our debt instruments may limit our ability to pay dividends, issue new or
additional debt or make other restricted payments and investments.
    Servicing our debt, including our convertible notes, requires a significant amount of cash and our
ability to generate cash may be affected by factors beyond our control.
  34




---



##### Table of Contents




    
    incur additional indebtedness and issue certain preferred stock;
    
    create liens;
    
    make certain restricted payments;
    
    make investments;
    
    sell assets; and
    
    effect a consolidation or merger.
 The fundamental change purchase feature of the Senior Notes and the Secured Notes may delay or
prevent an otherwise beneficial attempt to take over our company.
  We face commercial risks associated with our proposed expansion in China based on our
subcontracting relationship with Jiawei.
  Our Agreements with HSTIC and Jiawei subject us to risk of loss of control or ownership of our
operations in Wuhan, China if we are not successful in running our operations.
  35




---



##### Table of Contents



Our operations in China are subject to significant political and economic uncertainties over which
we have little or no control and may be unable to alter our business practice in time to avoid
adverse impacts on our business.
   Changes in the value of the Chinese yuan could impact the cost of our operation in Wuhan, China.
  
 Item 5. Other Information.
  
 Item 6. Exhibits
  36




---



##### Table of Contents



SIGNATURES
  EVERGREEN SOLAR, INC.Date: May 13, 2010
    /s/ Michael El-HillowMichael El-HillowChief Financial Officer and Secretary
(Principal Financial Officer) 37




---



##### Table of Contents



Exhibits Index
 Number
    
    Description
    
    Incorporation by Reference3.1
    
    Third Amended and Restated Certificate of
Incorporation
    
    Exhibit 3.2 to the
Registrants Registration
Statement on Form S-1/A,
filed on October 3, 20003.2
    
    Certificate of the Powers, Designations,
Preferences and Rights of the Series A
Convertible Preferred Stock of the
Registrant
    
    Exhibit 4.4 to the
Registrants Registration
Statement on Form S-8,
dated June 9, 20033.3
    
    Certificate of Amendment of Third Amended
and Restated Certificate of Incorporation
    
    Exhibit 3.1 to the
Registrants Current
Report on Form 8-K, dated
December 9, 2009, and
filed on December 14,
20093.4
    
    Second Amended and Restated By-laws
    
    Exhibit 3.4 to the
Registrants Registration
Statement on Form S-1/A,
filed on October 3, 20003.5
    
    Amendment No. 1 to Second Amended and
Restated By-laws
    
    Exhibit 3.1 to the
Registrants Current
Report on Form 8-K, dated
February 4, 2009 and
filed on February 5, 20094.1
    
    Indenture between the Registrant and U.S.
Bank National Association, as Trustee,
dated as of July 2, 2008
    
    Exhibit 4.1 to the
Registrants Current
Report on Form 8-K, dated
July 2, 2008 and filed on
July 7, 20084.2
    
    First Supplemental Indenture between the
Registrant and U.S. Bank National
Association, as Trustee, dated as of July
2, 2008
    
    Exhibit 4.2 to the
Registrants Current
Report on Form 8-K, dated
July 2, 2008 and filed on
July 7, 20084.3
    
    Form of 4% Senior Convertible Note due 2013
    
    Exhibit 4.2 to the
Registrants Current
Report on Form 8-K, dated
July 2, 2008 and filed on
July 7, 20084.4
    
    Indenture, by and among the Registrant,
the Guarantors and U.S. Bank National
Association, as Trustee, dated as of April
26, 2010
    
    Exhibit 4.1 to the
Registrants Current
Report on Form 8-K, dated
April 21, 2010 and filed
on April 27, 20104.5
    
    Pledge and Security Agreement, dated as of
April 26, 2010, by and among the
Registrant, the Guarantors and U.S. Bank
National Association, as Collateral Agent
    
    Exhibit 4.2 to the
Registrants Current
Report on Form 8-K, dated
April 21, 2010 and filed
on April 27, 20104.6
    
    Collateral Trust Agreement, dated as of
April 26, 2010, by and among the
Registrant, the Guarantors and U.S. Bank
National Association, as Collateral Agent
    
    Exhibit 4.3 to the
Registrants Current
Report on Form 8-K, dated
April 21, 2010 and filed
on April 27, 20104.7
    
    Form of 13% Convertible Senior Secured
Note due 2015
    
    Exhibit 4.1 to the
Registrants Current
Report on Form 8-K, dated
April 21, 2010 and filed
on April 27, 201010.1
    
    Amendment to Master Supply Agreement
between the Registrant and Ralos Vertriebs
GmbH dated March 26, 2010
    
    *10.2
    
    Guarantee from Ralos New Energies AG dated
March 26, 2010
    
    *
 38




---



##### Table of Contents



Number
    
    Description
    
    Incorporation by Reference10.3
    
    Loan Agreement between Evergreen Solar
(China) Co. and Jiawei Solar (Wuhan) Co.,
Ltd. dated March 26, 2010
    
    *10.4
    
    Promissory Note made by Jiawei Solarchina
Co., Ltd to the Registrant dated April 30,
2010
    
    *10.5§
    
    Management Incentive Plan
    
    *10.6†
    
    Amendment effective on or about
January 1, 2010 to Master Supply Agreement by and
between the Registrant and IBC Solar AG, dated July 14, 2008
    
    *10.7†
    
    Amendment effective on or about
January 1, 2010 to Master Supply Agreement by and
between the Registrant and Wagner & Co Solartechnik GmbH, dated
June 18, 2008
    
    *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
2002
    
    *31.2
    
    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
    
    *32.1
    
    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
2002
    
    *32.2
    
    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.§
    
    Indicates a management contract or compensatory plan, contract or arrangement.*
    
    Not applicable (filed herewith) 39