##### 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 July 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
(State or other jurisdiction of 
Incorporation or organization)
    
    04-3242254
(I.R.S. Employer
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




---



##### 



EVERGREEN SOLAR, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JULY 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
    
    
    26Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    41Item 4. Controls and Procedures
    
    
    42Part II. Other Information
    
    
    42Item 1. Legal Proceedings
    
    
    42Item 1A. Risk Factors
    
    
    43Item 4. Submission of Matters to a Vote of Security Holders
    
    
    43Item 6. Exhibits
    
    
    44Signatures
    
    
    45Exhibits:EX-10.2 Letter Agreement between the Registrant, Renewable Energy Corporation ASA and Q-Cells SE, and Deutsche Bank, dated April 9, 2009EX-10.3 Frame Agreement between the Registrant, Jiawei Solar (Wuhan) Co. and the Wuhan Donghu New Technology Development Zone Management Committee dated April 30, 2009EX-10.4 Amendment made on June 26, 2009 to the Master Supply Agreement by and between the Registrant and Ralos Vertriebs GmbH, dated May 21, 2008EX-10.5 Amendment made on June 15, 2009 to the Master Supply Agreement by and between the Registrant and Wagner & Co Solartechnik GmbH, dated June 18, 2008EX-10.6 Amendment made on June 26, 2009 to the Master Supply Agreement by and between the Registrant and IBC Solar AG, dated July 14, 2008EX-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 302EX-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 302EX-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 906EX-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




---



##### 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 and Midland facilities, 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 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




---



##### 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 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




---



##### 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,
    
    
    July 4,2008
    
    
    2009(Adjusted)AssetsCurrent assets:Cash and cash equivalents
    
    $
    100,888
    
    
    $
    83,474Marketable securities
    
    
    76,621
    
    
    
    2,674Accounts receivable, net of allowance for doubtful accounts
    
    
    35,458
    
    
    
    61,559Due from Sovello AG
    
    
    1,949
    
    
    
    3,306Inventory
    
    
    23,500
    
    
    
    29,524Prepaid cost of inventory
    
    
    11,696
    
    
    
    16,176VAT receivable, net
    
    
    1,474
    
    
    
    1,495Other current assets
    
    
    7,684
    
    
    
    7,892Total current assets
    
    
    259,270
    
    
    
    206,100Investment in and advances to Sovello AG
    
    
    115,553
    
    
    
    122,984Restricted cash
    
    
    212
    
    
    
    3,128Deferred financing costs
    
    
    6,152
    
    
    
    5,460Loan receivable from silicon supplier
    
    
    41,757
    
    
    
    Prepaid cost of inventory
    
    
    172,193
    
    
    
    160,480Fixed assets, net
    
    
    406,191
    
    
    
    442,634Other assets
    
    
    3,579
    
    
    
    366Total assets
    
    $
    1,004,907
    
    
    $
    941,152Liabilities and stockholders equityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    62,652
    
    
    $
    22,732Due to Sovello AG
    
    
    22,840
    
    
    
    1,802Accrued employee compensation
    
    
    6,451
    
    
    
    5,861Accrued interest
    
    
    7,392
    
    
    
    7,024Accrued warranty
    
    
    1,182
    
    
    
    1,765Total current liabilities
    
    
    100,517
    
    
    
    39,184Senior convertible notes, net of discount
    
    
    311,531
    
    
    
    317,267Deferred income taxes
    
    
    9,776
    
    
    
    9,496Total liabilities
    
    
    421,824
    
    
    
    365,947Commitments and Contingencies (Notes 7, 8 and 9)Stockholders equity:Common stock, $0.01 par value, 250,000,000 shares authorized,
164,874,850 and 208,277,378 shares issued and outstanding at
December 31, 2008
and July 4, 2009, respectively
    
    
    1,649
    
    
    
    2,083Additional paid-in capital
    
    
    803,491
    
    
    
    879,496Accumulated deficit
    
    
    (223,687
    )
    
    
    (308,314
    )Accumulated other comprehensive income (loss)
    
    
    1,630
    
    
    
    1,940Total stockholders equity
    
    
    583,083
    
    
    
    575,205Total liabilities and stockholders equity
    
    $
    1,004,907
    
    
    $
    941,152
  3




---



##### Table of Contents



Evergreen Solar, Inc.

Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 Quarter Ended
    
    
    Year-to-Date Period EndedJune 28,
    
    
    July 4,
    
    
    June 28,
    
    
    July 4,2008
    
    
    2009
    
    
    2008
    
    
    2009Product revenues
    
    $
    18,118
    
    
    $
    62,697
    
    
    $
    36,377
    
    
    $
    117,136Royalty and fee revenues
    
    
    4,638
    
    
    
    1,141
    
    
    
    9,326
    
    
    
    2,508Total revenues
    
    
    22,756
    
    
    
    63,838
    
    
    
    45,703
    
    
    
    119,644Cost of revenues
    
    
    14,863
    
    
    
    62,628
    
    
    
    30,094
    
    
    
    117,750Gross profit
    
    
    7,893
    
    
    
    1,210
    
    
    
    15,609
    
    
    
    1,894Operating expenses:Research and development
    
    
    5,887
    
    
    
    4,444
    
    
    
    10,830
    
    
    
    8,890Selling, general and administrative
    
    
    5,894
    
    
    
    6,742
    
    
    
    10,886
    
    
    
    13,118Write-off of loan receivable from silicon supplier
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,882Facility start-up
    
    
    8,573
    
    
    
    687
    
    
    
    11,992
    
    
    
    4,146Restructuring charges
    
    
    2,708
    
    
    
    825
    
    
    
    4,570
    
    
    
    2,617Total operating expenses
    
    
    23,062
    
    
    
    12,698
    
    
    
    38,278
    
    
    
    72,653Operating loss
    
    
    (15,169
    )
    
    
    (11,488
    )
    
    
    (22,669
    )
    
    
    (70,759
    )Other income (expense):Foreign exchange gains (losses), net
    
    
    (158
    )
    
    
    1,681
    
    
    
    3,656
    
    
    
    982Interest income
    
    
    2,735
    
    
    
    1,341
    
    
    
    5,762
    
    
    
    3,554Interest expense
    
    
    (46
    )
    
    
    (6,532
    )
    
    
    (362
    )
    
    
    (11,912
    )Other income (expense), net
    
    
    2,531
    
    
    
    (3,510
    )
    
    
    9,056
    
    
    
    (7,376
    )Loss before equity income (loss) from interest in
Sovello AG
    
    
    (12,638
    )
    
    
    (14,998
    )
    
    
    (13,613
    )
    
    
    (78,135
    )Equity income (loss) from interest in Sovello AG
    
    
    3,716
    
    
    
    (5,340
    )
    
    
    4,666
    
    
    
    (6,492
    )Net loss
    
    $
    (8,922
    )
    
    $
    (20,338
    )
    
    $
    (8,947
    )
    
    $
    (84,627
    )Net loss per share (basic and diluted)
    
    $
    (0.08
    )
    
    $
    (0.11
    )
    
    $
    (0.08
    )
    
    $
    (0.49
    )Weighted average shares used in computing basic and
diluted
net loss per share
    
    
    118,327
    
    
    
    180,745
    
    
    
    113,625
    
    
    
    171,163
  4




---



##### Table of Contents



Evergreen Solar, Inc.


Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 Year-to-Date Period EndedJune 28,
    
    
    July 4,2008
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (8,947
    )
    
    $
    (84,627
    )Adjustments to reconcile net loss to net cash used in operating activities:Imputed interest and accretion of bond premiums
    
    
    (994
    )
    
    
    (478
    )Amortization of prepaid cost of inventory
    
    
    234
    
    
    
    5,770Equity (income) loss from Sovello AG
    
    
    (4,666
    )
    
    
    6,492Amortization of deferred debt financing costs
    
    
    147
    
    
    
    691Loss on loan receivable from silicon supplier
    
    
    
    
    
    
    43,882Depreciation expense
    
    
    8,577
    
    
    
    18,484Loss on disposal of fixed assets
    
    
    1,943
    
    
    
    Provision for warranty
    
    
    182
    
    
    
    606Amortization of debt discount
    
    
    
    
    
    
    5,736Compensation expense associated with employee equity awards
    
    
    3,398
    
    
    
    3,668Changes in operating assets and liabilities:Accounts receivable
    
    
    164
    
    
    
    (27,458
    )Grants receivable
    
    
    10,000
    
    
    
    Inventory
    
    
    413
    
    
    
    (6,024
    )Prepaid cost of inventory
    
    
    (22,953
    )
    
    
    (76
    )Other current assets
    
    
    1,636
    
    
    
    (2,647
    )Accounts payable
    
    
    (13,590
    )
    
    
    (26,577
    )Accrued expenses
    
    
    2,014
    
    
    
    (6,206
    )Interest payable
    
    
    (1,784
    )
    
    
    632Other
    
    
    (4,118
    )
    
    
    2,872Net cash used in operating activities
    
    
    (28,344
    )
    
    
    (65,260
    )Cash flows from investing activities:Purchases of fixed assets and deposits on fixed assets under construction
    
    
    (165,652
    )
    
    
    (84,581
    )(Increase) decrease in restricted cash
    
    
    17,178
    
    
    
    (2,914
    )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
    
    
    52,806
    
    
    
    74,051Net cash used in investing activities
    
    
    (119,333
    )
    
    
    (25,194
    )Cash flows from financing activities:Proceeds
from issuances of common stock, net of offering costs
    
    
    166,726
    
    
    
    72,835Proceeds
from exercise of stock options and shares purchased under  Employee
Stock Purchase Plan
    
    
    1,157
    
    
    
    205Net cash provided by financing activities
    
    
    167,883
    
    
    
    73,040Net increase (decrease) in cash and cash equivalents
    
    
    20,206
    
    
    
    (17,414
    )Cash and cash equivalents at beginning of period
    
    
    29,428
    
    
    
    100,888Cash and cash equivalents at end of period
    
    $
    49,634
    
    
    $
    83,474
  5




---



##### Table of Contents



Evergreen Solar, Inc.

Notes to Condensed Consolidated Financial Statements
(unaudited)
 1. Basis of Presentation
      Liquidity and Management Plans
   6




---



##### 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
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;
    
    continued significant fluctuation 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, 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;
    
    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




---



##### Table of Contents



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
   8




---



##### Table of Contents



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
    
    
    $
    8
    
    
    $
    2,674Marketable Securities
    
    $
    2,666
    
    
    $
    8
    
    
    $
    2,674
 4. Inventory
  December 31,
    
    
    July 4,2008
    
    
    2009Raw materials
    
    $
    17,928
    
    
    $
    18,589Work-in-process
    
    
    3,910
    
    
    
    5,088Finished goods
    
    
    1,662
    
    
    
    5,847$
    23,500
    
    
    $
    29,524Prepaid cost of inventory
    
    $
    183,889
    
    
    $
    176,656Less: current portion
    
    
    11,696
    
    
    
    16,176Non-current portion
    
    $
    172,193
    
    
    $
    160,480
   9




---



##### Table of Contents



5. Fixed Assets
  Useful
    
    December 31,
    
    
    July 4,Life
    
    2008
    
    
    2009(Adjusted)Land
    
    
    
    $
    119
    
    
    $
    119Building
    
    40 years
    
    
    97,957
    
    
    
    177,451Laboratory and manufacturing equipment
    
    3-7 years
    
    
    182,109
    
    
    
    276,081Computer and office equipment
    
    3-7 years
    
    
    4,594
    
    
    
    5,444Leasehold improvements
    
    Lesser of 15 to 20
    
    
    16,413
    
    
    
    16,418years or lease termAssets under construction
    
    
    
    
    175,880
    
    
    
    54,716477,072
    
    
    
    530,229Less: Accumulated depreciation
    
    
    
    
    (70,881
    )
    
    
    (87,595
    )$
    406,191
    
    
    $
    442,634
     6. Investment in Sovello
  10




---



##### Table of Contents



Quarter Ended
    
    Year-to-Date EndedJune 28,
    
    July 4,
    
    June 28,
    
    July 4,2008
    
    2009
    
    2008
    
    2009Revenue
    
    $
    91,972
    
    
    $
    13,199
    
    
    $
    174,246
    
    
    $
    46,709Cost of goods sold
    
    
    69,598
    
    
    
    22,835
    
    
    
    136,465
    
    
    
    47,872Other expenses
    
    
    12,355
    
    
    
    7,208
    
    
    
    23,782
    
    
    
    19,317Net income (loss)
    
    
    10,019
    
    
    
    (16,844
    )
    
    
    13,999
    
    
    
    (20,480
    )
 December 31,
    
    July 4,2008
    
    2009Current assets
    
    $
    241,871
    
    
    $
    228,424Non-current assets
    
    
    408,347
    
    
    
    446,724Current liabilities
    
    
    181,550
    
    
    
    236,439Non-current liabilities
    
    
    318,627
    
    
    
    308,732
      11




---



##### Table of Contents



Evergreen Solar Loans to Sovello
  Date of Loan
    
    Principal (EUR)
    
    Principal (USD)
    
    Interest Rate
    
    Original Date DueJanuary 25, 2007
    
    
    30,000,000
    
    
    $
    41,994,000
    
    
    
    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
    %
    
    December 31, 2009 *
 
 *
    
    Per agreement between Sovellos shareholders and Sovellos bank, the loans and interest thereon
will not be
repaid until the earlier of the completion of an initial public offering or other liquidity event
generating
sufficient cash to repay the loans. 7. Long-Term Debt
 Subordinated Convertible Notes
  12




---



##### Table of Contents



Senior Convertible Notes
 Capped Call
    Capped Call
  13




---



##### Table of Contents



Common Stock Lending Agreement
 8. Line of Credit
     14




---



##### Table of Contents



9. Commitments and Contingencies
 Potential Litigation with Lehman Brothers.
  Noise Noncompliance Proceedings for the Devens Manufacturing Facility.
   
    
    reduction of Devens facility noise to a specified night-time noise level by July
27, 2009 (which was achieved) and to a more stringent night-time noise level by August 17, 2009;
    
    performance of weekly monitoring and reporting on attenuation efforts through
September 18, 2009;
    
    implementation, by specified dates, of attenuation controls specified in the
Resolution and use of all diligent efforts to accelerate the implementation of
those specified controls;
    
    demonstration of compliance with the most stringent applicable noise regulation
standard on or before September 15, 2009 while operating the Devens facility at
full operating levels to simulate a worst case noise scenario, including various
transient noise sources; and
    
    once compliance has been achieved, maintaining permanent monitoring at the
Devens facility and on the nearest abutting property to the Devens facility, with
monthly reporting to be provided to the DEC.
  15




---



##### Table of Contents



Product Warranty
    Year-to-Date Period EndedJune 28,
    
    
    July 4,2008
    
    
    2009Balance at beginning of period
    
    $
    705
    
    
    $
    1,182Warranty costs accrued
    
    
    182
    
    
    
    606Warranty costs incurred
    
    
    
    
    
    
    (23
    )Balance at end of period
    
    $
    887
    
    
    $
    1,765
 Sovello Debt Guarantees
 Investment in
Sovello)
   16




---



##### Table of Contents



10. Fair Value Measurements
      17




---



##### Table of Contents



December 31, 2008Using Significant
    
    Using 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
    
    
    
    
 July 4, 2009Quoted Prices
    
    Using Significant
    
    Using SignificantTotal
    
    in Active
    
    Other Observable
    
    UnobservableCarrying
    
    Markets
    
    Inputs
    
    InputsValue
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Money markets
    
    $
    45,764
    
    
    $
    45,764
    
    
    $
    
    
    
    $
    Marketable Securities
    
    
    2,674
    
    
    
    
    
    
    
    2,674
    
    
    
    
 Valuation Techniques
  11. Stockholders Equity
   18




---



##### Table of Contents



Common Stock Lending Agreement
   12. Comprehensive Income (Loss)
  Quarter Ended
    
    
    Year-to-Date Period EndedJune 28,
    
    
    July 4,
    
    
    June 28,
    
    
    July 4,2008
    
    
    2009
    
    
    2008
    
    
    2009Net loss
    
    $
    (8,922
    )
    
    $
    (20,338
    )
    
    $
    (8,947
    )
    
    $
    (84,627
    )Other comprehensive loss:Unrealized loss on marketable
securities
    
    
    (69
    )
    
    
    (10
    )
    
    
    (3
    )
    
    
    (18
    )Cumulative translation adjustments
    
    
    150
    
    
    
    2,999
    
    
    
    4,263
    
    
    
    328Total comprehensive loss
    
    $
    (8,841
    )
    
    $
    (17,349
    )
    
    $
    (4,687
    )
    
    $
    (84,317
    )
 19




---



##### Table of Contents



13. Stock Based Compensation
  Quarter Ended
    
    
    Year-to-Date Period EndedJune 28,
    
    
    July 4,
    
    
    June 28,
    
    
    July 4,2008
    
    
    2009
    
    
    2008
    
    
    2009Cost of revenue
    
    $
    229
    
    
    $
    635
    
    
    $
    476
    
    
    $
    1,170Research and development expenses
    
    
    381
    
    
    
    373
    
    
    
    723
    
    
    
    766Selling, general and
administrative expenses
    
    
    1,003
    
    
    
    932
    
    
    
    1,732
    
    
    
    1,715Facility start-up
    
    
    252
    
    
    
    10
    
    
    
    467
    
    
    
    17$
    1,865
    
    
    $
    1,950
    
    
    $
    3,398
    
    
    $
    3,668
  Stock Incentive Plan
   Weighted-AverageShares
    
    
    Exercise Price(in thousands)Outstanding at January 1, 2009
    
    
    3,688
    
    
    $
    4.65Granted
    
    
    871
    
    
    
    2.24Exercised
    
    
    (27
    )
    
    
    1.81Forfeited
    
    
    (86
    )
    
    
    4.52Outstanding at July 4, 2009
    
    
    4,446
    
    
    $
    4.19
 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
    
    
    
    28
    
    
    
    4.01
    
    
    $
    1.53
    
    
    
    28
    
    
    $
    1.531.61
    
    
    
    1.61
    
    
    
    1,638
    
    
    
    4.44
    
    
    
    1.61
    
    
    
    1,638
    
    
    
    1.611.68
    
    
    
    2.17
    
    
    
    322
    
    
    
    4.10
    
    
    
    2.01
    
    
    
    322
    
    
    
    2.012.24
    
    
    
    2.24
    
    
    
    868
    
    
    
    9.91
    
    
    
    2.24
    
    
    
    
    
    
    
    2.29
    
    
    
    4.70
    
    
    
    461
    
    
    
    4.85
    
    
    
    3.23
    
    
    
    461
    
    
    
    3.235.00
    
    
    
    7.30
    
    
    
    459
    
    
    
    5.47
    
    
    
    7.00
    
    
    
    454
    
    
    
    7.017.59
    
    
    
    13.97
    
    
    
    284
    
    
    
    6.11
    
    
    
    9.93
    
    
    
    254
    
    
    
    10.0214.00
    
    
    
    14.00
    
    
    
    35
    
    
    
    1.33
    
    
    
    14.00
    
    
    
    35
    
    
    
    14.0015.09
    
    
    
    15.09
    
    
    
    335
    
    
    
    6.64
    
    
    
    15.09
    
    
    
    251
    
    
    
    15.0919.00
    
    
    
    19.00
    
    
    
    16
    
    
    
    1.33
    
    
    
    19.00
    
    
    
    16
    
    
    
    19.004,446
    
    
    
    5.87
    
    
    $
    4.19
    
    
    
    3,459
    
    
    $
    4.37
   Quarter and Year-to-datePeriods EndedJuly 4, 2009Expected options term (years)
    
    4.5  9.25Risk-free interest rate
    

1.31%  2.08%Expected dividend yield
    
    NoneVolatility
    
    129%  144%
  21




---



##### Table of Contents



Weighted-AverageGrant DateShares
    
    
    Fair Value(in thousands)Outstanding at January 1, 2009
    
    
    3,132
    
    
    $
    10.94Granted
    
    
    821
    
    
    
    1.93Vested
    
    
    (333
    )
    
    
    1.69Forfeited
    
    
    (79
    )
    
    
    10.20Outstanding at July 4, 2009
    
    
    3,541
    
    
    $
    9.74
   14. Write-off of Loan Receivable from Silicon Supplier
  22




---



##### Table of Contents



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




---



##### Table of Contents



18. Net Loss per Common Share
   19. Geographical and Customer Concentration Information
  Quarter EndedJune 28,
    
    July 4,2008
    
    2009By geography:United States
    
    
    53
    %
    
    
    24
    %Germany
    
    
    10
    %
    
    
    50
    %Spain
    
    
    27
    %
    
    
    Korea
    
    
    3
    %
    
    
    15
    %All other
    
    
    7
    %
    
    
    11
    %100
    %
    
    
    100
    %By customer:IBC Solar AG
    
    
    
    
    
    
    21
    %SunPower Corporation (formerly PowerLight)
    
    
    52
    %
    
    
    Ralos Vertriebs GmbH
    
    
    24
    %
    
    
    17
    %All other
    
    
    24
    %
    
    
    62
    %100
    %
    
    
    100
    %
 24




---



##### Table of Contents



December 31,
    
    July 4,2008
    
    2009% of accounts receivableRalos Vertriebs GmbH
    
    
    13
    %
    
    
    27
    %IBC Solar AG
    
    
    
    
    
    
    20
    %Solar City
    
    
    14
    %
    
    
    3
    %SunPower Corporation (formerly PowerLight)
    
    
    20
    %
    
    
    Top 5 Customers
    
    
    64
    %
    
    
    67
    %
 20. Related Party Transactions
   21. Recent Accounting Pronouncements
   25




---



##### Table of Contents



" 
 " 
 22. Subsequent Events
  
 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.
 26




---



##### Table of Contents



Executive Overview
 TM
      TM
  27




---



##### 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 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 will provide 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.
       28




---



##### 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
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;
    
    continued significant fluctuation 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, 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;
    
    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
  29




---



##### Table of Contents



Revenue Recognition and Allowance for Doubtful Accounts
    Warranty
   30




---



##### Table of Contents



Stock-based Compensation
    Cash and cash equivalents
  Inventory
  31




---



##### Table of Contents



Impairment of Long-lived Assets
  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 .
 32




---



##### Table of Contents



Facility start-up.
 Restructuring charges .
 Other income (expense), net .
 Equity income (loss) from interest in Sovello AG.
 Comparison of Quarters Ended July 4, 2009 and June 28, 2008
 Revenues .
  33




---



##### Table of Contents



Quarter EndedJune 28,
    
    July 4,2008
    
    2009By geography:United States
    
    
    53
    %
    
    
    24
    %Germany
    
    
    10
    %
    
    
    50
    %Spain
    
    
    27
    %
    
    
    Korea
    
    
    3
    %
    
    
    15
    %All other
    
    
    7
    %
    
    
    11
    %100
    %
    
    
    100
    %By customer:IBC Solar AG
    
    
    
    
    
    
    21
    %SunPower Corporation (formerly PowerLight)
    
    
    52
    %
    
    
    Ralos Vertriebs GmbH
    
    
    24
    %
    
    
    17
    %All other
    
    
    24
    %
    
    
    62
    %100
    %
    
    
    100
    %
 Cost of product revenues and gross margins .
 Research and development expenses.
 Selling, general and administrative expenses.
 34




---



##### Table of Contents



Facility start-up costs.
 Restructuring charges.
 Other income (expense), net .
 Equity income (loss) from interest in Sovello AG.
 Net Loss.
 Comparison of Year-to-Date Periods Ended July 4, 2009 and June 28, 2008
 Revenues .
 35




---



##### Table of Contents



Year-to-Date Period EndedJune 28,
    
    July 4,2008
    
    2009By geography:United States
    
    
    51
    %
    
    
    23
    %Germany
    
    
    25
    %
    
    
    48
    %Spain
    
    
    18
    %
    
    
    Italy
    
    
    3
    %
    
    
    13
    %All other
    
    
    3
    %
    
    
    16
    %100
    %
    
    
    100
    %By customer:IBC Solar AG
    
    
    
    
    
    
    18
    %Itochu Corporation
    
    
    
    
    
    
    13
    %Wagner & Co. Solartechnik GmbH
    
    
    
    
    
    
    10
    %SunPower Corporation (formerly PowerLight)
    
    
    52
    %
    
    
    Ralos Vertriebs GmbH
    
    
    20
    %
    
    
    14
    %S.A.G. Solarstrom Vertriebs GmbH
    
    
    10
    %
    
    
    All other
    
    
    18
    %
    
    
    45
    %100
    %
    
    
    100
    %
 Cost of product revenues and gross margins .
 Research and development expenses.
 36




---



##### Table of Contents



Selling, general and administrative expenses.
 Write-off of loan receivable from silicon supplier .
 Facility start-up costs.
 Restructuring charges.
 Other income (expense), net .
 37




---



##### Table of Contents



Equity income (loss) from interest in Sovello.
 Net Loss.
 Liquidity and Capital Resources
   Write-off of loan receivable from silicon supplier
 38




---



##### Table of Contents



Sovello Debt Guarantee and Undertaking
     Evergreen Solar Loans to Sovello
  39




---



##### Table of Contents



Date of Loan
    
    Principal (EUR)
    
    Principal (USD)
    
    Interest Rate
    
    Original Date DueJanuary 25, 2007
    
    
    30,000,000
    
    
    $
    41,994,000
    
    
    
    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
    %
    
    December 31, 2009 *
 
 *
    
    Per agreement between Sovellos shareholders and Sovellos bank, the loans and interest thereon
will not be
repaid until the earlier of the completion of an initial public offering or other liquidity event
generating
sufficient cash to repay the loans. 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
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;
    
    continued significant fluctuation 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, 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).
 40




---



##### Table of Contents




    
    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.
  
 Item 3. Quantitative and Qualitative Disclosure About Market Risk
 Interest Rate Risk
  Foreign Currency Exchange Rate Risk
     41




---



##### 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.
   Noise Noncompliance Proceedings for our Devens Manufacturing Facility.
  42




---



##### Table of Contents




    
    reduction of Devens facility noise to a specified night-time noise level by July
27, 2009 (which was achieved) and to a more stringent night-time noise level by August 17, 2009;
    
    performance of weekly monitoring and reporting on attenuation efforts through
September 18, 2009;
    
    implementation, by specified dates, of attenuation controls specified in the
Resolution and use of all diligent efforts to accelerate the implementation of
those specified controls;
    
    demonstration of compliance with the most stringent applicable noise regulation
standard on or before September 15, 2009 while operating the Devens facility at
full operating levels to simulate a worst case noise scenario, including various
transient noise sources; and
    
    once compliance has been achieved, maintaining permanent monitoring at the
Devens facility and on the nearest abutting property to the Devens facility, with
monthly reporting to be provided to the DEC.
  
 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, 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, describes some of the risks and uncertainties
associated with our business. 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 in our most recent Annual Report
on Form 10-K and Quarterly Report on Form 10-Q 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
  43




---



##### Table of Contents



Item 6. Exhibits
  44




---



##### Table of Contents



SIGNATURES
  EVERGREEN SOLAR, INC.Date: August 12, 2009
    /s/ Michael El-HillowMichael El-HillowChief Financial Officer and Secretary

(Principal Financial Officer) 45




---



##### 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
    
    Guarantee of the Registrant made to Deutsche Bank et al, dated
April 15, 2009 (Incorporated herein by reference to Exhibit 10.1 to
the Registrants Current Report on Form 8-K dated July 15, 2009 and
filed on July 17, 2009).10.2
    
    Letter Agreement between the Registrant, Renewable Energy
Corporation ASA and Q-Cells SE, and Deutsche Bank, dated April 9,
2009.10.3
    
    Frame Agreement between the Registrant, Jiawei Solar (Wuhan) Co.
and the Wuhan Donghu New Technology Development Zone Management
Committee dated April 30, 2009.10.4
    
    Amendment made on June 26, 2009 to the Master Supply Agreement by
and between the Registrant and Ralos Vertriebs GmbH, dated May 21,
200810.5
    
    Amendment made on June 15, 2009 to the Master Supply Agreement by
and between the Registrant and Wagner & Co Solartechnik GmbH, dated
June 18, 200810.6
    
    Amendment made on June 26, 2009 to the Master Supply Agreement by
and between the Registrant and IBC Solar AG, dated July 14, 200810.7
    
    Form of Amended and Restated Change of Control Severance Agreement
between the Registrant and Lawrence E. Felton (Incorporated herein
by reference to the Registrants standard form executive change of
control severance agreement included as Exhibit 10.40 to the
Registrants Annual Report on Form 10-K for the period ended
December 31, 2008 as filed on March 5, 2009)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
 
 

Confidential treatment requested as to certain portions
 46