##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended July 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
(State or other jurisdiction of 
Incorporation or organization)
    
    04-3242254
(I.R.S. Employer
Identification No.)
 138 Bartlett Street 
Marlboro, Massachusetts
(Address of Principal Executive Offices)
    
    01752
(Zip Code)
 (508) 357-2221
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    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 July 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
    
    
    25Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    36Item 4. Controls and Procedures
    
    
    37Part II. Other Information
    
    
    37Item 1. Legal Proceedings
    
    
    37Item 1A. Risk Factors
    
    
    38Item 6. Exhibits
    
    
    38Signatures
    
    
    39Exhibits:EX-10.2EX-10.3EX-31.1EX-31.2EX-32.1EX-32.2




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##### 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 regarding managements expectations, beliefs,
strategies, goals, outlook and other non-historical matters. Forward-looking statements 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. They may often 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. 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 and improve yields in our Devens,
Massachusetts manufacturing facility and meet initial manufacturing cost and yield
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 or to restructure our outstanding indebtedness; and possible sales or exchanges 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, pricing and market for our products, shifts in our geographic product revenue mix,
and our position in the solar power market;
    
    the volume of solar wafers, cells and 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 our 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 government sponsored financing or 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 processes and other
developments, including advances in our quad wafer furnace, the industry standard size
wafer furnaces we are developing and other continued enhancements of our wafer, cell
and panel production technologies.
 1




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##### Table of Contents



There are numerous risk and uncertainties which could cause our actual results to differ
materially from such forward-looking statements, including, for example:
 
    
    unexpected materials shortages or price increases;
    
    the uncertainty involved in forecasting the cost benefits from new technologies, new
operational strategies and operational scaling;
    
    the possibility that the Company may be unable to fund future manufacturing expansions;
    
    the complexity of forecasting product pricing and customer demand in a volatile and uncertain market for the
Companys products; and
    
    the default that would occur under our outstanding indebtedness if we are delisted  from Nasdaq,
which would cause our indebtedness to become immediately due and payable.
 These and additional risks and uncertainties 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
our Quarterly Report on Form 10-Q, for the quarter ended April 3, 2010, among others could cause
forward looking statements to be incorrect and may have a material adverse effect upon our
business, results of operations and financial condition. Forward-looking statements speak only as
of the date they are made and the Company undertakes no obligation to update any such statements.
 2




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Evergreen Solar, Inc.
 
 Condensed Consolidated Balance Sheets
 (in thousands, except share data)
 (unaudited)
 December 31,
    
    
    July 3,2009
    
    
    2010AssetsCurrent assets:Cash and cash equivalents
    
    $
    112,368
    
    
    $
    115,421Accounts receivable, net of allowance for doubtful accounts
    
    
    53,295
    
    
    
    53,732Inventory
    
    
    34,890
    
    
    
    46,936Prepaid cost of inventory
    
    
    25,634
    
    
    
    31,000Other current assets
    
    
    11,451
    
    
    
    14,837Total current assets
    
    
    237,638
    
    
    
    261,926Restricted cash
    
    
    3,134
    
    
    
    11,145Deferred financing costs
    
    
    8,312
    
    
    
    10,945Loan receivable from Jiawei and related interest
    
    
    
    
    
    
    13,028Prepaid cost of inventory
    
    
    147,573
    
    
    
    128,867Fixed assets, net
    
    
    430,681
    
    
    
    427,520Other assets
    
    
    295
    
    
    
    301Total assets
    
    $
    827,633
    
    
    $
    853,732Liabilities and stockholders equityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    31,420
    
    
    $
    37,360Due to Sovello AG and related guarantees
    
    
    17,544
    
    
    
    Accrued employee compensation
    
    
    7,287
    
    
    
    4,392Accrued interest
    
    
    7,004
    
    
    
    8,501Accrued warranty
    
    
    2,368
    
    
    
    3,109Total current liabilities
    
    
    65,623
    
    
    
    53,362Convertible notes, net of discount
    
    
    323,276
    
    
    
    384,729Loan and related interest payable
    
    
    34,152
    
    
    
    35,650Deferred income taxes
    
    
    5,396
    
    
    
    5,396Total liabilities
    
    
    428,447
    
    
    
    479,137Commitments and Contingencies (Note 9)Stockholders equity:Common stock, $0.01 par value, 450,000,000 shares authorized,
207,809,919 and 208,057,080 issued and outstanding
at December 31, 2009 and July 3, 2010, respectively
    
    
    2,078
    
    
    
    2,081Additional paid-in capital
    
    
    1,028,233
    
    
    
    1,030,824Accumulated deficit
    
    
    (631,119
    )
    
    
    (658,395
    )Accumulated other comprehensive income (loss)
    
    
    (6
    )
    
    
    85Total stockholders equity
    
    
    399,186
    
    
    
    374,595Total liabilities and stockholders equity
    
    $
    827,633
    
    
    $
    853,732
  3




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Evergreen Solar, Inc.
 
 Condensed Consolidated Statements of Operations
 (in thousands, except per share data)
 (unaudited)
 Quarter Ended
    
    
    Year-to-Date Period EndedJuly, 4
    
    
    July 3,
    
    
    July, 4
    
    
    July 3,2009
    
    
    2010
    
    
    2009
    
    
    2010Product revenues
    
    $
    62,697
    
    
    $
    81,117
    
    
    $
    117,136
    
    
    $
    159,590Royalty and fee revenues
    
    
    1,141
    
    
    
    3,411
    
    
    
    2,508
    
    
    
    3,411Total revenues
    
    
    63,838
    
    
    
    84,528
    
    
    
    119,644
    
    
    
    163,001Cost of revenues
    
    
    62,628
    
    
    
    77,292
    
    
    
    117,750
    
    
    
    149,716Gross profit
    
    
    1,210
    
    
    
    7,236
    
    
    
    1,894
    
    
    
    13,285Operating expenses:Research and development
    
    
    4,444
    
    
    
    5,241
    
    
    
    8,890
    
    
    
    9,977Selling, general and administrative
    
    
    6,742
    
    
    
    7,349
    
    
    
    13,118
    
    
    
    15,041Write-off of loan receivable from silicon supplier
    
    
    
    
    
    
    
    
    
    
    43,882
    
    
    
    Facility start-up
    
    
    687
    
    
    
    5,242
    
    
    
    4,146
    
    
    
    8,972Restructuring charges
    
    
    825
    
    
    
    4,874
    
    
    
    2,617
    
    
    
    8,855Total operating expenses
    
    
    12,698
    
    
    
    22,706
    
    
    
    72,653
    
    
    
    42,845Operating loss
    
    
    (11,488
    )
    
    
    (15,470
    )
    
    
    (70,759
    )
    
    
    (29,560
    )Other income (expense):Foreign exchange gains (losses), net
    
    
    1,681
    
    
    
    (6,935
    )
    
    
    982
    
    
    
    (9,179
    )Interest income
    
    
    1,341
    
    
    
    1,093
    
    
    
    3,554
    
    
    
    1,232Interest expense
    
    
    (6,785
    )
    
    
    (10,030
    )
    
    
    (12,418
    )
    
    
    (17,773
    )Gain on early extinguishment of debt
    
    
    
    
    
    
    24,777
    
    
    
    
    
    
    
    24,777Other income (expense), net
    
    
    (3,763
    )
    
    
    8,905
    
    
    
    (7,882
    )
    
    
    (943
    )Loss before equity loss from interest in Sovello AG
and gain on reversal of impairment of equity
investment
    
    
    (15,251
    )
    
    
    (6,565
    )
    
    
    (78,641
    )
    
    
    (30,503
    )Equity loss from interest in Sovello AG
    
    
    (5,340
    )
    
    
    
    
    
    
    (6,492
    )
    
    
    Gain on reversal of impairment of equity investment
    
    
    
    
    
    
    3,227
    
    
    
    
    
    
    
    3,227Net loss
    
    $
    (20,591
    )
    
    $
    (3,338
    )
    
    $
    (85,133
    )
    
    $
    (27,276
    )Net loss per share (basic and diluted)
    
    $
    (0.11
    )
    
    $
    (0.02
    )
    
    $
    (0.50
    )
    
    $
    (0.13
    )Weighted average shares used in computing basic and
diluted net loss per share
    
    
    180,745
    
    
    
    205,453
    
    
    
    171,163
    
    
    
    205,291
  4




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Evergreen Solar, Inc.
 
 Condensed Consolidated Statements of Cash Flows
 (in thousands)
 (unaudited)
 Year-to-Date Period EndedJuly 4,
    
    
    July 3,2009
    
    
    2010Cash flows from operating activities:Net loss
    
    $
    (85,133
    )
    
    $
    (27,276
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation expense
    
    
    18,484
    
    
    
    29,898Gain on early extinguishment of debt
    
    
    
    
    
    
    (24,777
    )Imputed interest and accretion of bond premiums
    
    
    (478
    )
    
    
    Amortization of prepaid cost of inventory
    
    
    5,770
    
    
    
    6,622Equity loss from Sovello AG
    
    
    6,492
    
    
    
    Amortization of deferred debt financing costs
    
    
    1,197
    
    
    
    1,290Loss on loan receivable from silicon supplier
    
    
    43,882
    
    
    
    Loss on disposal of fixed assets
    
    
    
    
    
    
    494Provision for warranty
    
    
    606
    
    
    
    798Amortization of debt discount
    
    
    5,736
    
    
    
    5,459Compensation expense associated with employee equity awards
    
    
    3,668
    
    
    
    2,218Changes in operating assets and liabilities:Accounts receivable
    
    
    (27,458
    )
    
    
    (437
    )Inventory
    
    
    (6,024
    )
    
    
    (12,046
    )Prepaid cost of inventory
    
    
    (76
    )
    
    
    7,677Other current assets
    
    
    (2,428
    )
    
    
    (3,386
    )Accounts payable and accrued expenses
    
    
    (32,783
    )
    
    
    (1,442
    )Interest payable
    
    
    632
    
    
    
    2,392Other
    
    
    2,653
    
    
    
    57Net cash used in operating activities
    
    
    (65,260
    )
    
    
    (12,459
    )Cash flows from investing activities:Purchases of fixed assets and deposits on fixed assets under construction
    
    
    (84,581
    )
    
    
    (25,050
    )Proceeds from the disposal of fixed assets
    
    
    
    
    
    
    62Increase in restricted cash
    
    
    (2,914
    )
    
    
    (8,016
    )Increase in Sovello AG loan
    
    
    (11,750
    )
    
    
    Payment associated with sale of Sovello AG and associated guarantee
    
    
    
    
    
    
    (14,804
    )Increase in other loans
    
    
    
    
    
    
    (12,800
    )Proceeds from sale and maturity of marketable securities
    
    
    74,051
    
    
    
    Net cash used in investing activities
    
    
    (25,194
    )
    
    
    (60,608
    )Cash flows from financing activities:Proceeds from the issuance of convertible secured debt, net of offering
costs
    
    
    
    
    
    
    158,557Early redemption of senior convertible debt, net of redemption costs
    
    
    
    
    
    
    (82,354
    )Payment associated with share increase
    
    
    
    
    
    
    (144
    )Proceeds from the issuance of common stock, net of offering costs
    
    
    72,835
    
    
    
    Proceeds from exercise of stock options and shares purchased under EmployeeStock Purchase Plan
    
    
    205
    
    
    
    61Net cash provided by financing activities
    
    
    73,040
    
    
    
    76,120Net increase (decrease) in cash and cash equivalents
    
    
    (17,414
    )
    
    
    3,053Cash and cash equivalents at beginning of period
    
    
    100,888
    
    
    
    112,368Cash and cash equivalents at end of period
    
    $
    83,474
    
    
    $
    115,421
  5




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




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##### Table of Contents



Investments  Equity Method and Joint Ventures
 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 Devens 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;
    
    the ability of our Chinese subcontract cell and panel manufacturer,
Jiawei Solar (Wuhan) Co., Ltd., to execute against its plans to meet the Companys required
timetables; and
    
    longer-term liquidity risk related to the repayment of its outstanding indebtedness if
it is not repurchased by the Company or converted into the Companys common stock in accordance with its terms prior to
maturity.
   7




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##### Table of Contents



2. Accounting Change
 Debt
  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,
    
    
    July 3,2009
    
    
    2010Raw materials
    
    $
    18,327
    
    
    $
    28,380Work-in-process
    
    
    7,643
    
    
    
    12,330Finished goods
    
    
    8,920
    
    
    
    6,226$
    34,890
    
    
    $
    46,936Prepaid cost of inventory
    
    $
    173,207
    
    
    $
    159,867Less: current portion
    
    
    25,634
    
    
    
    31,000Noncurrent portion
    
    $
    147,573
    
    
    $
    128,867
  8




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##### Table of Contents



5. Investment in and Sale of Sovello AG
 Equity Method and Joint Ventures
   6. Fixed Assets
  Useful
    
    December 31,
    
    
    July 3,Life
    
    2009
    
    
    2010Land
    
    
    
    $
    119
    
    
    $
    119Buildings
    
    40 years
    
    
    208,909
    
    
    
    208,462Laboratory and manufacturing
equipment
    
    3-7 years
    
    
    257,186
    
    
    
    270,872Computer and office equipment
    
    3-7 years
    
    
    5,890
    
    
    
    5,918Leasehold improvements
    
    Lesser of 15 to 20 years or lease term
    
    
    16,418
    
    
    
    16,418Assets under construction
    
    
    
    
    34,297
    
    
    
    47,737522,819
    
    
    
    549,526Less: Accumulated depreciation
    
    
    
    
    (92,138
    )
    
    
    (122,006
    )$
    430,681
    
    
    $
    427,520
  9




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##### Table of Contents



7. Loan Receivable from Jiawei
  8. Debt
  December 31,
    
    
    July 3,2009
    
    
    2010Senior convertible notes, net of discount
    
    $
    323,276
    
    
    $
    219,729Convertible senior secured notes
    
    
    
    
    
    
    165,000Total convertible notes, net of discount
    
    $
    323,276
    
    
    $
    384,729
 Senior Convertible Notes
  10




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Capped Call Convertible Senior Secured Notes
 Debt Debt
  Capped Call
   11




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Distinguishing Liability from Equity Derivative and Hedging Derivatives and Hedging
    Common Stock Lending Agreement
 Convertible Senior Secured Notes
    12




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Debt Debt
 Loan Payable
    Letters of Credit
  13




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##### Table of Contents



9. Commitments and Contingencies
 Potential Litigation with Lehman Brothers.
   Noise Noncompliance Proceedings for the Devens Manufacturing Facility.
  Product Warranty
   14




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##### Table of Contents



Year-to-Date Period EndedJuly 4,
    
    
    July 3,2009
    
    
    2010Balance at beginning of period
    
    $
    1,182
    
    
    $
    2,368Warranty costs accrued
    
    
    606
    
    
    
    799Warranty costs incurred
    
    
    (23
    )
    
    
    (58
    )Balance at end of period
    
    $
    1,765
    
    
    $
    3,109
 10. Fair Value Measurements
 Fair Value Measurements and Disclosures
 Valuation Hierarchy
 Fair Value Measurements and Disclosures
     15




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December 31, 2009Quoted Prices
    
    
    Using Significant
    
    
    Using SignificantTotal
    
    
    in Active
    
    
    Other Observable
    
    
    UnobservableCarrying
    
    
    Markets
    
    
    Inputs
    
    
    InputsValue
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Money markets
    
    $
    20,007
    
    
    $
    20,007
    
    
    $
    
    
    
    $
    
 July 3, 2010Quoted Prices
    
    
    Using Significant
    
    
    Using SignificantTotal
    
    
    in Active
    
    
    Other Observable
    
    
    UnobservableCarrying
    
    
    Markets
    
    
    Inputs
    
    
    InputsValue
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Money markets
    
    $
    61,198
    
    
    $
    61,198
    
    
    $
    
    
    
    $
    
 Valuation Techniques
  11. Stockholders Equity
   16




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Common Stock Lending Agreement
   Debt
   17




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##### Table of Contents



12. Comprehensive Income (Loss)
  Quarter Ended
    
    
    Year-to-Date Period EndedJuly 4,
    
    
    July 3,
    
    
    July 4,
    
    
    July 3,2009
    
    
    2010
    
    
    2009
    
    
    2010Net loss
    
    $
    (20,591
    )
    
    $
    (3,338
    )
    
    $
    (85,133
    )
    
    $
    (27,276
    )Other comprehensive income (loss):Unrealized loss on marketable securities
    
    
    (10
    )
    
    
    
    
    
    
    (18
    )
    
    
    Cumulative translation adjustments
    
    
    2,999
    
    
    
    78
    
    
    
    328
    
    
    
    91Total comprehensive loss
    
    $
    (17,602
    )
    
    $
    (3,260
    )
    
    $
    (84,823
    )
    
    $
    (27,185
    )
 13. Stock Based Compensation
  Quarter Ended
    
    
    Year-to-Date Period EndedJuly 4,
    
    
    July 3,
    
    
    July 4,
    
    
    July 3,2009
    
    
    2010
    
    
    2009
    
    
    2010Cost of revenue
    
    $
    635
    
    
    $
    194
    
    
    $
    1,170
    
    
    $
    409Research and development expenses
    
    
    373
    
    
    
    160
    
    
    
    766
    
    
    
    378Selling, general and
administrative expenses
    
    
    932
    
    
    
    494
    
    
    
    1,715
    
    
    
    1,131Facility start-up
    
    
    10
    
    
    
    148
    
    
    
    17
    
    
    
    300$
    1,950
    
    
    $
    996
    
    
    $
    3,668
    
    
    $
    2,218
  Stock Incentive Plans
  18




---



##### Table of Contents



Weighted-AverageShares
    
    
    Exercise Price(in thousands)Outstanding at January 1, 2010
    
    
    4,096
    
    
    $
    4.20Granted
    
    
    250
    
    
    
    1.23Exercised
    
    
    Forfeited
    
    
    (125
    )
    
    
    3.32Outstanding at July 3, 2010
    
    
    4,221
    
    
    $
    4.05
  Options Outstanding
    
    
    Options ExcercisableWeighted Average
    
    
    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
    
    
    
    269
    
    
    
    9.20
    
    
    $
    1.25
    
    
    
    19
    
    
    $
    1.521.61
    
    
    1.61
    
    
    
    1,638
    
    
    
    3.44
    
    
    
    1.61
    
    
    
    1,638
    
    
    
    1.611.68
    
    
    2.10
    
    
    
    289
    
    
    
    3.38
    
    
    
    2.00
    
    
    
    289
    
    
    
    2.002.24
    
    
    2.24
    
    
    
    694
    
    
    
    8.91
    
    
    
    2.24
    
    
    
    175
    
    
    
    2.242.32
    
    
    7.30
    
    
    
    702
    
    
    
    4.25
    
    
    
    5.62
    
    
    
    702
    
    
    
    5.627.59
    
    
    12.65
    
    
    
    275
    
    
    
    5.10
    
    
    
    9.80
    
    
    
    275
    
    
    
    9.8013.97
    
    
    13.97
    
    
    
    8
    
    
    
    5.57
    
    
    
    13.97
    
    
    
    8
    
    
    
    13.9714.00
    
    
    14.00
    
    
    
    35
    
    
    
    0.33
    
    
    
    14.00
    
    
    
    35
    
    
    
    14.0015.09
    
    
    15.09
    
    
    
    295
    
    
    
    5.65
    
    
    
    15.09
    
    
    
    295
    
    
    
    15.0919.00
    
    
    19.00
    
    
    
    16
    
    
    
    0.33
    
    
    
    19.00
    
    
    
    16
    
    
    
    19.004,221
    
    
    
    5.07
    
    
    $
    4.05
    
    
    
    3,452
    
    
    $
    4.53
   19




---



##### 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
    
    
    254
    
    
    
    1.22Vested
    
    
    (434
    )
    
    
    1.18Forfeited
    
    
    (73
    )
    
    
    6.62Outstanding at July 3, 2010
    
    
    2,588
    
    
    $
    11.14
  20




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##### Table of Contents



14. Write-off of Loan Receivable from Silicon Supplier
  15. Facility Start-up Costs
  16. Restructuring Charges
   21




---



##### Table of Contents



17. Income Taxes
   18. Net Loss per Common Share
 Earning Per Share
 19. Geographical and Customer Concentration Information
  22




---



##### Table of Contents



Quarter EndedJuly 4,
    
    
    July 3,2009
    
    
    2010By geography:United States
    
    
    24
    %
    
    
    16
    %Germany
    
    
    50
    %
    
    
    60
    %Czech Republic
    
    
    
    
    
    
    17
    %Korea
    
    
    15
    %
    
    
    All other
    
    
    11
    %
    
    
    7
    %100
    %
    
    
    100
    %By customer:IBC Solar AG
    
    
    21
    %
    
    
    23
    %NWT Computer
    
    
    
    
    
    
    17
    %Donauer Solartechnik Vertriebs
GmbH
    
    
    4
    %
    
    
    15
    %Wagner & Co. Solartechnik GmbH
    
    
    6
    %
    
    
    13
    %Ralos Vertriebs GmbH
    
    
    17
    %
    
    
    All other
    
    
    52
    %
    
    
    32
    %100
    %
    
    
    100
    %
 Year-to-Date Period EndedJuly 4,
    
    
    July 3,2009
    
    
    2010By geography:United States
    
    
    23
    %
    
    
    15
    %Germany
    
    
    48
    %
    
    
    69
    %Italy
    
    
    13
    %
    
    
    All other
    
    
    16
    %
    
    
    16
    %100
    %
    
    
    100
    %By customer:IBC Solar AG
    
    
    18
    %
    
    
    24
    %Wagner & Co. Solartechnik GmbH
    
    
    10
    %
    
    
    22
    %Donauer Solartechnik Vertriebs GmbH
    
    
    2
    %
    
    
    15
    %Itochu Corporation
    
    
    13
    %
    
    
    Ralos Vertriebs GmbH
    
    
    14
    %
    
    
    All other
    
    
    43
    %
    
    
    39
    %100
    %
    
    
    100
    %
 23




---



##### Table of Contents



December 31,
    
    
    July 3,% of accounts receivable
    
    2009
    
    
    2010Ralos Vertriebs GmbH
    
    
    29
    %
    
    
    19
    %IBC Solar AG
    
    
    
    
    
    
    16
    %Wagner & Co.
Solartechnik GmbH
    
    
    3
    %
    
    
    14
    %Sun & Kim Co., Ltd.
    
    
    12
    %
    
    
    12
    %Solar City
    
    
    12
    %
    
    
    Top 5 customers
    
    
    67
    %
    
    
    70
    %
 20. Related Party Transactions
     21.
    
    Recent Accounting Pronouncements
 Revenue Recognition
 24




---



##### Table of Contents



Fair Value Measurements and
Disclosures
 Fair Value Measurements and Disclosures
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Executive Overview
 ®
   25




---



##### Table of Contents




    
    in July 2010, we began manufacturing String Ribbon wafers using our state-of-the-art
Quad furnaces at a leased facility in Wuhan, China on Jiaweis campus;
    
    Jiawei has begun converting String Ribbon wafers into Evergreen Solar®-branded panels on
a contract manufacturing basis;
    
    we are reimbursing 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 approximately $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
 26




---



##### Table of Contents



than July 2014. Jiawei has made a similar investment to start up its
cell and panel operations with the support of HSTIC;
    
    initial capacity is expected to be approximately 100 MW; and
    
    we and Jiawei intend to expand production capacity of our respective manufacturing
operations to approximately 500 MW by 2012, and expect to determine the timing and extent
of any potential expansion in 2010.
  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
 27




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##### Table of Contents



Facility start-up.
 Restructuring charges
 Other income (expense), net
 Equity loss from interest in Sovello AG.
 Comparison of Quarters Ended July 3, 2010 and July 4, 2009
 Revenues
  28




---



##### Table of Contents



Quarter EndedJuly 4,
    
    
    July 3,2009
    
    
    2010By geography:United States
    
    
    24
    %
    
    
    16
    %Germany
    
    
    50
    %
    
    
    60
    %Czech Republic
    
    
    
    
    
    
    17
    %Korea
    
    
    15
    %
    
    
    All other
    
    
    11
    %
    
    
    7
    %100
    %
    
    
    100
    %By customer:IBC Solar AG
    
    
    21
    %
    
    
    23
    %NWT Computer
    
    
    
    
    
    
    17
    %Donauer Solartechnik Vertriebs
GmbH
    
    
    4
    %
    
    
    15
    %Wagner & Co. Solartechnik GmbH
    
    
    6
    %
    
    
    13
    %Ralos Vertriebs GmbH
    
    
    17
    %
    
    
    All other
    
    
    52
    %
    
    
    32
    %100
    %
    
    
    100
    %
 Cost of product revenues and gross margin
  Research and development expenses
 Selling, general and administrative expenses
 Write-off of loan receivable from silicon supplier.
 29




---



##### Table of Contents



Facility start-up.
 Restructuring charges
  Other income (expense) net.
 Equity loss from interest in Sovello AG.
 30




---



##### Table of Contents



Gain on reversal of impairment of equity investments
 Net loss.
 Comparison of Year-to-Date Periods Ended July 3, 2010 and July 4, 2009
 Revenues
  31




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##### Table of Contents



Year-to-Date Period EndedJuly 4,
    
    
    July 3,2009
    
    
    2010By geography:United States
    
    
    23
    %
    
    
    15
    %Germany
    
    
    48
    %
    
    
    69
    %Italy
    
    
    13
    %
    
    
    All other
    
    
    16
    %
    
    
    16
    %100
    %
    
    
    100
    %By customer:IBC Solar AG
    
    
    18
    %
    
    
    24
    %Wagner & Co. Solartechnik GmbH
    
    
    10
    %
    
    
    22
    %Donauer Solartechnik Vertriebs GmbH
    
    
    2
    %
    
    
    15
    %Itochu Corporation
    
    
    13
    %
    
    
    Ralos Vertriebs GmbH
    
    
    14
    %
    
    
    All other
    
    
    43
    %
    
    
    39
    %100
    %
    
    
    100
    %
 Cost of product revenues and gross margin
  Research and development expenses
 Selling, general and administrative expenses
 32




---



##### Table of Contents



Write-off of loan receivable from silicon supplier.
 Facility start-up.
 Restructuring charges
  Other income (expense) net.
 33




---



##### Table of Contents



Equity loss from interest in Sovello AG.
 Gain on reversal of impairment of equity investments
 Net loss.
 Liquidity and Capital Resources
    34




---



##### Table of Contents



Sovello AG Debt Guarantees and Undertakings
  Convertible Senior Secured Notes Offering
    35




---



##### 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 Devens 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;
    
    the ability of Jiawei to execute against its plans to meet our required timetables; and
    
    longer-term liquidity risk related to the repayment of its outstanding indebtedness if
it is not repurchased by the Company or converted into our common stock in accordance with its terms prior to
maturity.
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
  Foreign Currency Exchange Rate Risk
  36




---



##### 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
  37




---



##### 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, you should consider carefully the risks and uncertainties described in the sections entitled Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2009, as filed on March
9, 2010 and our Quarterly Report on Form 10-Q for the quarter ended April 3, 2010, as filed on May
13, 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.
 If we fail to regain compliance with the listing requirements of The Nasdaq Global Market
and Nasdaq delists our common stock, the market liquidity and price of our common stock will
 likely decline and such delisting will permit the holders of our Senior Notes and Secured
Notes to require us to repurchase their notes, which we likely would be unable to do.
    The issuance of equity or debt securities under our shelf registration statement could have a
negative impact on the price of our common stock.
  
 Item 6. Exhibits
  38




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##### Table of Contents



SIGNATURES
  EVERGREEN SOLAR, INC.Date: August 11, 2010
    /s/ Michael El-HillowMichael El-HillowChief Financial Officer and Secretary
(Principal Financial Officer) 39




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##### Table of Contents



Exhibits Index
 Number
    
    Description
    
    Incorporation by Reference10.1
    
    Promissory Note made by Jiawei Solarchina
Co., Ltd to the Registrant dated April 30,
2010
    
    Exhibit 10.4 to the
Registrants Quarterly
Report on Form 10-Q for the
period ended April 3,
2010, filed on May 13,
201010.2
    
    Lease Contract between the
Evergreen Solar (China) Co., Ltd. and
Jiawei Solar (Wuhan) Co., Ltd. signed on
May 14, 2010
    
    *10.3
    
    First Amendment to Ground Lease between
the Registrant and Massachusetts
Development Finance Agency dated as of
June 10, 2010
    
    *10.4§
    
    Management Incentive Plan adopted on April 28, 2010
    
    Exhibit 10.5 to the
Registrants Quarterly
Report on Form 10-Q for the
period ended April 3,
2010, filed on May 13,
201031.1
    
    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
    
    *
 
 §
    
    Indicates a management contract or compensatory plan, contract or arrangement.*
    
    Not applicable (filed herewith) E-1