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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-Q

ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended June 28, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                             to


Commission file number: 001-34133

GT Solar International, Inc.(Exact name of registrant as specified in its charter)

Delaware

03-0606749(State of Incorporation)

(I.R.S. Employer Identification No.)243 Daniel Webster HighwayMerrimack, New Hampshire

03054(Address of principal executive offices)

(Zip Code)


Registrant's
telephone number, including area code:(603) 883-5200

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a small reporting
company. See definition of "large accelerated filer," "accelerated filer" and "small reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer o

Non-accelerated filer ý (Do not check if a smaller reporting company)

Smaller reporting company o


Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes o    No ý

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

As of August 20, 2008, the Company had 142,389,994 shares of common stock,
par value $0.01 per share, outstanding.



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Table of Contents

GT SOLAR INTERNAITONAL, INC. AND SUBSIDIARIES  QUARTERLY REPORT ON FORM 10-Q  FOR THE QUARTERLY PERIOD ENDED JUNE 28, 2008        Table of Contents



PagePART I. FINANCIAL INFORMATIONItem 1.

Condensed Consolidated Financial Statements (unaudited):Condensed Consolidated Balance Sheets as of June 28, 2008 and March 31, 2008


3Condensed Consolidated Statements of Operations for the three months ended June 28, 2008 and June 30, 2007


4Condensed Consolidated Statements of Cash Flows for the three months ended June 28, 2008 and June 30, 2007


5Notes to Condensed Consolidated Financial Statements


6Item 2.

Management's Discussion and Analysis of Financial Condition and Results of
Operations


19Item 3.

Quantitative and Qualitative Disclosures about Market Risk


28Item 4.

Controls and Procedures


29PART II. OTHER
INFORMATIONItem 1.

Legal Proceedings


30Item 1A.

Risk Factors


30Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds


31Item 3.

Defaults Upon Senior Securities


32Item 4.

Submission of Matters to a Vote of Security Holders


32Item 5.

Other Information


32Item 6.

Exhibits


32EX-3.1Certificate of IncorporationEX-3.2By-lawsEX-31.1Section 302 Certification of CEOEX-31.2Section 302 Certification of CFOEX-32.1Section 906 Certification of CEOEX-32.2Section 906 Certification of CFO


2

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Table of Contents

PART IFINANCIAL INFORMATION

Item 1Condensed Consolidated Financial Statements

GT Solar International, Inc. and Subsidiaries        Condensed Consolidated Balance Sheets        (In thousands)        (Unaudited)

June 28,
2008
ProForma
(Note 15)

June 28,
2008

March 31,
2008AssetsCurrent assets:Cash and cash equivalents

$
22,209

$
112,209

$
54,839Restricted cash


132,507


132,507


164,028Accounts receivable, net


38,369


38,369


62,407Inventories


63,918


63,918


37,518Deferred costs


143,601


143,601


105,154Advances on inventory purchases


120,959


120,959


77,635Deferred income taxes


48,641


48,641


29,684Prepaid expenses and other current assets


5,766


5,766


6,625Total current assets


575,970


665,970


537,890Property, plant and equipment, net


13,915


13,915


10,433Other assets


78


78


74Intangible assets, net


8,232


8,232


9,024Goodwill


43,190


43,190


43,190Total assets

$
641,385

$
731,385

$
600,611Liabilities and stockholders' equityCurrent liabilities:Accounts payable

$
49,969

$
49,969

$
37,992Accrued expenses


12,722


12,722


16,725Customer deposits


307,252


307,252


263,628Deferred revenue


234,782


234,782


164,190Accrued income taxes


22,780


22,780


22,316Total current liabilities


627,505


627,505


504,851Deferred income taxes


3,076


3,076


3,380Other non-current liabilities


1,004


1,004


739Total liabilities


631,585


631,585


508,970Commitments and contingencies (Note 9)








Stockholders' equity:Common stock, $0.01 par value, 500,000 shares authorized; 142,390 and 142,375 shares issued and outstanding as of June 28, 2008 and March 31, 2008 respectively
(Note 14)


1,424


1,424


1,424Additional paid-in capital


3,087


77,129


73,817Accumulated other comprehensive income


5,289


5,289


5,584Retained earnings





15,958


10,816Total stockholders' equity


9,800


99,800


91,641Total liabilities and stockholders' equity

$
641,385

$
731,385

$
600,611


See
accompanying notes to these condensed consolidated financial statements.

3

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Table of Contents

GT Solar International, Inc. and Subsidiaries        Condensed Consolidated Statements of Operations        (In thousands, except per share data)        (Unaudited)

Three Months
Ended
June 28, 2008

Three Months
Ended
June 30, 2007Revenue

$
57,082

$
15,356Cost of revenue


32,785


10,034Gross profit


24,297


5,322Operating expenses:Research and development


3,816


1,084Selling and marketing


3,784


2,917General and administrative


7,775


4,423Amortization of intangible assets


792


702Total operating expenses


16,167


9,126Income (loss) from operations


8,130


(3,804
)Other income (expense):Interest income (expense), net


1,828


1,042Other expense, net


(1,443
)

(1,082
)Income (loss) before income taxes


8,515


(3,844
)Provision for income taxes


3,373


1,183Net income (loss)

$
5,142

$
(5,027
)Income (loss) per shareBasic

$
0.04

$
(0.04
)Diluted

$
0.03

$
(0.04
)Average number of common shares outstanding used for basic earnings per share


142,290


142,290Dilutive common stock options and awards


5,430


Average number of common shares outstanding plus dilutive common stock options and awards


147,720


142,290Outstanding common stock options and awards having no dilutive effect





3,099


See
accompanying notes to these condensed consolidated financial statements.

4

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Table of Contents

GT Solar International, Inc. and Subsidiaries        Condensed Consolidated Statements of Cash Flows        (In thousands)        (Unaudited)

Three Months
Ended
June 28, 2008

Three Months
Ended
June 30, 2007Operating activities:Net income (loss)

$
5,142

$
(5,027
)Adjustments to reconcile net income (loss) to net cash provided by operating activities:Amortization expense


792


701Depreciation expense


327


199Deferred income taxes


(19,261
)

(3,630
)Stock-based compensation expense


3,311


511Changes in operating assets and liabilities:Restricted cash


31,521


(15,752
)Accounts receivable


24,039


1,589Inventories


(26,400
)

(2,579
)Deferred costs


(38,448
)

(15,400
)Advances on inventory purchases


(43,324
)

(16,398
)Notes receivable





832Prepaid expenses and other current assets


859


(245
)Accounts payable and accrued expenses


7,975


1,294Customer deposits


43,623


60,728Deferred revenue


70,592


28,937Accrued income taxes


463


455Other non-current liabilities


(107
)

15Net cash provided by operating activities


61,104


36,230Investing activities:Purchase of property, plant and equipment


(3,809
)

(460
)Increase in other assets


(3
)

(280
)Net cash used in investing activities


(3,812
)

(740
)Financing activities:Payment of note payable





(15,934
)Net cash used in financing activities





(15,934
)Effect of foreign exchange rates on cash


78


(4
)Increase in cash and cash equivalents


57,370


19,552Cash and cash equivalents at beginning of period


54,839


74,059Cash and cash equivalents at end of period

$
112,209

$
93,611


See
accompanying notes to these condensed consolidated financial statements.

5

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Table of Contents

GT Solar International, Inc. and Subsidiaries        Notes to Condensed Consolidated Financial Statements        June 28, 2008(In thousands, except share and per share data)

1. Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

GT Solar International, Inc. and its subsidiaries (the "Company") provides specialized manufacturing equipment and services essential
for the production or photovoltaic, or PV, wafers, cells and modules and polysilicon. The Company's principal products are directional solidification systems, or DSS units, and chemical vapor
deposition, or CVD, reactors and related equipment. DSS units are specialized furnaces used to melt polysilicon and cast multicrystalline ingots from which solar wafers are made. CVD reactors are used
to react gases at high temperatures and pressures to produce polysilicon, the key raw material used in solar cells.

The
Company operates through two segments: PV business and polysilicon business. The PV business manufactures and sells DSS units, wafer cleaning and etch systems, slurry recovery
systems, cell testing and sorting equipment and tabber/stringer machines, as well as related parts and services. The Company sells PV products separately and as part of premium "turnkey solutions,"
where the Company bundles equipment, including third party equipment, with design and integration expertise. The Company's polysilicon business sells CVD reactors and related equipment that facilitate
the entry of new participants into the polysilicon industry.

The
accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not
include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying financial statements
contain all adjustments consisting of normal recurring accruals necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The results for the
three months ended
June 28, 2008 are not necessarily indicative of the results to be expected for the fiscal year ending March 28, 2009 or for any other interim period or for any future year. The
accompanying financial statements should be read in conjunction with the consolidated financial statements and footnotes included in the Company's Prospectus dated July 23, 2008 and filed
pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Securities Act") with the Securities and Exchange Commission on July 24, 2008 (the "Prospectus").

The
condensed consolidated balance sheet as of March 31, 2008 has been derived from the audited financial statements as of that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete financial statements.

Effective
April 1, 2008 the Company elected to change its reporting period to be based on a 52 week year that ends on the Saturday closest to March 31 which in
certain years results in a 53 week fiscal year. The Company's quarterly reporting will include 13 week periods, unless otherwise noted. The fiscal year ending March 31, 2010 will
have 53 weeks with the extra week occurring in the fourth quarter of that year. The three month period ended June 28, 2008 includes two fewer days than a 13 week period as a
result of transitioning to the new reporting period. The Company will continue to use the terms quarterly, monthly, and annual in describing its financial results.

On
July 29, 2008, the Company completed its initial public offering of common stock of certain of its stockholders.

6

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Table of Contents

GT Solar International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

June 28, 2008

(In thousands, except share and per share data)

1. Significant Accounting Policies (Continued)

Significant Accounting Policies

The Company's significant accounting policies are disclosed in its audited financial statements for the year ended March 31,
2008, included in the Prospectus dated July 23, 2008 and have not changed materially as of June 28, 2008.

Reclassifications

Certain reclassifications have been made to prior year financial statements to conform to the current year presentation.

Recently Adopted Accounting Policies

In September 2006, the FASB issued SFAS No. 157,Fair Value Measurements("SFAS
No. 157"), which defines fair value, establishes a framework in generally accepted accounting principles for measuring fair value and expands disclosures about fair value measurements. This
standard only applies when other standards require or permit the fair value measurement of assets and liabilities. It does not increase the use of fair value measurement. SFAS No. 157 is
effective for fiscal years beginning after November 15, 2007, except as it relates to nonrecurring fair value measurements of nonfinancial assets and liabilities for which the standard is
effective for fiscal years beginning after November 15, 2008. The adoption of SFAS No. 157 with respect to financial assets and liabilities effective April 1, 2008 did not have a
significant effect on the Company's consolidated results of operations or financial position (see Note 4, Fair Value of Financial Instruments, to the Condensed Consolidated Financial Statements
for additional information). In addition, the Company is currently evaluating the impact of SFAS No. 157 for measuring nonfinancial assets and liabilities will have on its financial position
and results of operations.

In
February 2007, the Financial Accounting Standards Board ("FASB") released SFAS No. 159,The Fair Value Option for Financial Assets and Financial
Liability("SFAS No. 159"). SFAS No. 159 allows entities to measure many financial instruments and certain other items at their fair value. The Company elected
not to change the accounting for its financial instruments and therefore the adoption of SFAS No. 159 effective April 1, 2008 did not have a material impact on its financial position and
results of operations.

In
June 2007, the EITF issued EITF Issue No. 07-03,Accounting for Advance Payments for Goods or Services to Be Used in Future Research and
Development Activities("EITF Issue No. 07-03"). EITF Issue No. 07-03 addresses the diversity which exists with respect to the accounting
for the nonrefundable portion of a payment made by a research and development entity for future research and development activities. Under EITF Issue No. 07-03 an entity would defer
and capitalize nonrefundable advance payments made for research and development activities until the related goods are delivered or the related services are performed. The Company's adoption of EITF
Issue No. 07-03 as of April 1, 2008 did not have a material impact on its financial position or results of operations.

7

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GT Solar International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

June 28, 2008

(In thousands, except share and per share data)

2. Recently Issued Accounting Pronouncements

In May 2008, the FASB issued SFAS No. 162 ("SFAS No. 162"),The Hierarchy of Generally Accepted Accounting Principles,SFAS
No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements that are presented in conformity with
generally accepted accounting principles. SFAS No. 162 becomes effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU
Section 411, "The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles." The Company does not expect that the adoption of SFAS No. 162 will have a
material impact on its financial statements.

In
December 2007, the FASB issued SFAS No. 141R,Business Combinations("SFAS No. 141R"). This pronouncement establishes
principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest
in the acquiree and the goodwill acquired in the business combination or a gain from a bargain purchase, and also establishes disclosure requirements to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. SFAS No. 141R becomes effective for business combinations entered into during fiscal years beginning on or after
December 31, 2008 and thereafter and does not have any impact on business combinations prior to such date.

In
December 2007, the FASB issued SFAS No. 160,Non-controlling Interests in Consolidated Financial Statementsan Amendment of APB
No. 51("SFAS No. 160"). This pronouncement requires non-controlling interests (previously referred to as minority interests) to be reported as a
component of equity, which changes the accounting for transactions with non-controlling interest holders. SFAS No. 160 becomes effective for fiscal years
beginning on or after December 31, 2008 and interim periods therein. The Company does not expect that the adoption of SFAS No. 160 will have a material impact on its financial
statements.

In
March 2008, the FASB issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities("SFAS
No. 161"). SFAS No. 161 changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how
and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. SFAS No. 161 is effective for fiscal years and interim periods
beginning after November 15, 2008. Since SFAS No. 161 only addresses disclosure requirements, the adoption of SFAS No. 161 will have no impact on our combined results of operation
or combined financial position.

3. Fair Value of Financial Instruments

The Company's financial instruments are recorded at amounts that reflect the Company's estimate of their fair values. SFAS No. 157,Fair Value
Measurement,provides a hierarchal disclosure framework associated with the level of subjectivity used in measuring assets and liabilities at fair value. The three levels
defined by the SFAS No. 157 hierarchy are as follows:



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GT Solar International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

June 28, 2008

(In thousands, except share and per share data)

3. Fair Value of Financial Instruments (Continued)



The
following table provides the assets and liabilities carried at fair value measured on a recurring basis at June 28, 2008:

Fair Value Measurements UsingTotal
Carrying
Value(Level 1)

(Level 2)

(Level 3)Cash Equivalents




$
113,888





Foreign Exchange Forward Contracts Assets

$
4,856




$
4,856





The
Company's counterparties to forward foreign exchange transactions are major financial institutions with an investment grade or better credit rating. These forward
foreign exchange contracts are measured at fair value using a valuation which represents a good faith estimate of the mid-market value of the position, based on estimated or actual bids
and offers for the positions.

4. Inventories

Inventories consist of the following:

June 28,
2008

March 31,
2008Raw materials

$
30,583

$
17,729Work-in-process


3,151


10,128Finished goods


30,184


9,661$
63,918

$
37,518


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Table of Contents

GT Solar International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

June 28, 2008

(In thousands, except share and per share data)

5. Fixed Assets

Property, plant and equipment consists of the following:

June 28,
2008

March 31,
2008Land

$
1,074

$
1,074Land improvements


326


326Building


6,730


4,285Leasehold improvements


407


407Manufacturing equipment


2,474


1,806Computer equipment


1,244


1,153Software


3,193


2,590Furniture and fixtures


458


45615,906


12,097Less accumulated depreciation


(1,991
)

(1,664
)$
13,915

$
10,433


Depreciation
expense for the three months ended June 28, 2008 and June 30, 2007 was approximately $327 and $199, respectively.

6. Warranty

The Company's polysilicon products are sold with a standard warranty for a period not exceeding twenty-four months from delivery. The Company's PV products are generally sold
with a standard warranty for a period equal to the shorter of (i) twelve months from the date of acceptance by the customer or (ii) fifteen months from the date of shipment. A provision
for estimated future costs related to warranty expense is recorded when products are shipped and accepted by the customer. The following table presents warranty activities:

Three Months
Ended
June 28, 2008Product warranty liability, beginning of the period

$
1,957Accruals for new warranties issued


447Payments under warranty


(334
)Product warranty liability, end of period

$
2,070


7. Income Taxes

The tax provision for the three months ended June 28, 2008 and June 30, 2007 represent Federal, state and foreign income taxes. The Company's effective tax rate was 39.6%
and 30.8% for the three months ended June 28, 2008 and June 30, 2007, respectively. In the quarter ended June 30, 2007, the effective tax included the reversal of a prior
valuation allowance against the deferred tax assets of $3,047. The Company reviews its expected annual effective income tax rates and makes changes on a quarterly basis as necessary

10

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Table of Contents

GT Solar International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

June 28, 2008

(In thousands, except share and per share data)

7. Income Taxes (Continued)

based
on certain factors such as changes in forecasted annual operating income; changes to the valuation allowance for net deferred tax assets; changes to actual or forecasted permanent book to tax
differences; impacts from future tax settlements with state, federal or foreign tax authorities; and impacts from tax law changes. Due to the volatility of these factors, the Company's consolidated
effective income tax rate can change significantly on a quarterly basis.

In
June 2006, the FASB issued FIN 48 which clarifies the accounting for uncertainty in income taxes by prescribing a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation also provides guidance on derecognition, classification, interest
and penalties, accounting in interim
periods, and disclosure. The Company adopted the provisions of FIN 48 on April 1, 2007. The Company recognized no increase in tax liabilities as a result of the implementation of
FIN 48.

The
Company recognizes accrued interest and penalties on unrecognized tax benefits in income tax expense. The Company did not have any unrecognized tax benefits as of March 31,
2008 and June 28, 2008. As a result, the Company did not recognize interest expense, and additionally, did not record any penalties during the three months ended June 28, 2008.

8. Contingencies

Beginning on August 1, 2008, a series of putative securities class action lawsuits were commenced in the United States District Court for the District of New Hampshire, alleging
that the Company, certain of its officers and directors, the underwriters and others violated various sections of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended. The complaints allege that the Registration Statement for our July 2008 initial public offering contained material misstatements and omissions regarding our business relationship with LDK
Solar, Ltd., one of the Company's customers. The lawsuits seek unspecified compensatory damages plus rescission, interest and attorneys' fees. The Court has entered orders providing that these
cases may be consolidated for all purposes and setting deadlines for any objections thereto. The Company intends to defend these claims vigorously.

The
ultimate outcome of any litigation is uncertain, and either favorable or unfavorable outcomes could have a material negative impact on the Company's results of operations,
consolidated balance sheets and cash flows, due to defense costs, diversion of management resources and other factors.

The
Company is subject to various other routine legal proceedings and claims incidental to its business. The Company believes the ultimate result from these actions will not have a
material adverse effect on the Company's financial position, results of operations or cash flows.

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GT Solar International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

June 28, 2008

(In thousands, except share and per share data)

9. Share-Based Payments

Stock-based compensation expense recognized for the three months ended June 28, 2008 and June 30, 2007 was as follows:

Three Months EndedJune 28, 2008

June 30, 2007Cost of revenues

$
101

$
31Research and development


140


69Selling and marketing


29


54General and administrative


3,041


357Total

$
3,311

$
511


The
following presents additional detail in connection with the Company's share-based payment activities:

Stock Option Plan

Activities under the Company's stock option plan for the three months ended June 28, 2008 were as follows:

Options OutstandingShares
Available
for Grant

Number
of Shares

Weighted Average
Exercise PriceBalance March 31, 2008


4,177


6,533

$
3.86Options granted





Options exercised





Options canceled/expired


7


(7
)
$
1.66Balance June 28, 2008


4,184


6,526

$
3.86


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Table of Contents

GT Solar International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

June 28, 2008

(In thousands, except share and per share data)

9. Share-Based Payments (Continued)

The following summarizes information regarding outstanding and exercisable stock options as of June 28, 2008 (estimated intrinsic value based on initial public offering price):

Stock Options Outstanding

Stock Options ExercisableExercise
Price

Number

Weighted-Average
Remaining Life
(in years)

Intrinsic
Value

Number

Weighted-Average
Exercise Price

Intrinsic
Value$
1.66


2,921


8.03

$
43,348


1,434

$
1.66

$
21,281$
5.64


3,605


9.49


39,150








6,526




$
82,498


1,434

$
1.66

$
21,281


The
Company accounts for equity instruments issued in accordance with SFAS No. 123, Emerging Issues Task Force Issue No. 96-18, Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or
in Conjunction with Selling Goods or Servicesand FASB
Interpretation No. 28,Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans. Accordingly, the Company will be
required to measure the fair value of the equity instrument at each reporting period prior to vesting and finally at the vesting date of the equity instruments. Stock based compensation recognized
with respect to equity instruments issued to employees for the three months ended June 28, 2008 and June 30, 2007 was $647 and $191, respectively, and stock compensation to
non-employees for the three months ended June 28, 2008 and June 30, 2007 was $2,506 and $217, respectively.

As
of June 28, 2008, the Company had unrecorded deferred stock-based compensation expense related to stock options of approximately $15,349 after estimated forfeitures, which will
be recognized over an estimated weighted-average remaining requisite service period of 3.15 years.

There
were no stock options granted during the three months ended June 28, 2008 and June 30, 2007.

Restricted Stock

The Company grants restricted stock to certain employees. Restricted stock is common stock that may not be sold, encumbered or disposed
of, and that may be forfeited in the event of certain terminations of employment prior to the restricted period set by the compensation committee. A holder of restricted stock generally has all of the
rights of a stockholder, unless the compensation committee determines otherwise. The fair value of restricted stock are based on the market price of the Company's stock on the date of grant and are
recorded as compensation expense ratably over the service period, generally three to four years. Compensation expense recognized with respect to restricted stock for the three months ended
June 28, 2008 was $30. There was no compensation expense related to restricted stock for the three months ended June 30, 2007.

13

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Table of Contents

GT Solar International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

June 28, 2008

(In thousands, except share and per share data)

9. Share-Based Payments (Continued)

A
summary of restricted stock activity for the three months ended June 28, 2008 is as follows:

Non-vested
Number of
Restricted
Shares

Weighted
Average
Grant-Date
Fair ValueBalance at March 31, 2008


85

$
5.64Granted


Vested


Forfeited


Balance at June 28, 2008


85

$
5.64


As
of June 28, 2008, the Company had unrecorded deferred stock-based compensation expense related to restricted stock of approximately $421 after estimated forfeitures, which will
be recognized over an estimated weighted-average remaining requisite service period of 3.5 years.

GT Solar Holdings, LLC Shares

In conjunction with the January 1, 2006 acquisition of the Company by GT Solar Holdings, LLC, certain classes of shares
of GT Solar Holdings, LLC were issued to key employees of the Company, a portion of which were subject to continuing employment vesting over three- and four-year periods. As a
result of these ownership interests, these employees are entitled to participate in distributions from GT Solar Holdings, LLC. The Company has recorded compensation expense related to these
ownership interests in the amount of $40 and $103 for the three months ended June 28, 2008 and June 30, 2007, respectively. The remaining unamortized compensation expense related to
these shares is approximately $243 as of June 28, 2008.

10. Earning Per Share

Basic earnings per share ("EPS") is computed based only on the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the
weighted average number of common shares and, when dilutive, the weighted average number of potential common shares outstanding during the period, as determined using the treasury stock method.
Potential common shares consist of common stock issuable upon the exercise of outstanding stock options and nonvested restricted common stock. Because the Company reported a net loss in the three
months ended June 30, 2007, all potential common shares have been excluded from the computation of the dilutive net loss per share because the effect would have been anti-dilutive.

14

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Table of Contents

GT Solar International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

June 28, 2008

(In thousands, except share and per share data)

11. Accumulated Derivative Gains or Losses

The following table summarizes activity in accumulated other comprehensive income (loss) related to derivatives classified as cash flow hedges held by the Company during the three months
ended June 28, 2008 and June 30, 2007:

Three Months EndedJune 28, 2008

June 30, 2007Balance at beginning of period

$
5,557

$
(18
)Net gain on changes in fair value of derivatives, net of tax effect


(372
)

78Balance at end of period

$
5,185

$
60


Substantially
all of the accumulated gain (loss) will be reclassified into earnings over the next twelve months.

12. Comprehensive Income (Loss)

The following table summarizes other comprehensive income (loss) during the three months ended June 28, 2008 and June 30, 2007:

Three Months EndedJune 28, 2008

June 30, 2007Net income (loss)

$
5,142

$
(5,027
)Net gains (losses) on derivative instruments designated as cash flow hedges, net of tax effects


(372
)

78Foreign currency translation adjustment


77


Comprehensive income (loss)

$
4,847

$
(4,949
)


13. Segment Information

During the year ended March 31, 2008, the Company began reporting its results in two segments: the PV business and Polysilicon business.

The
Company evaluates performance and allocates resources based on revenues and operating income (loss). Operating income (loss) for each segment includes selling, general and
administrative expenses directly attributable to the segment including the amortization of acquired intangible assets. Corporate services include non-allocable overhead costs, including
human resources, legal, finance, general and administrative and corporate marketing expenses. Corporate services assets include deferred tax assets, cash and cash equivalents and other
non-allocated assets.

15

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Table of Contents

GT Solar International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

June 28, 2008

(In thousands, except share and per share data)

13. Segment Information (Continued)

Financial
information for the Company's business segments is as follows:

PV
Business

Polysilicon
Business

Corporate
Services

TotalThree months ended June 28, 2008Revenue

$
57,082

$


$


$
57,082Gross profit


23,862


435




$
24,297Depreciation and amortization


793


102


224

$
1,119Income (loss) from operations

$
18,908

$
(4,164
)
$
(6,614
)
$
8,130Three months ended June 30, 2007Revenue

$
15,356

$


$


$
15,356Gross profit


5,322







$
5,322Depreciation and amortization


701





199

$
900Income (loss) from operations

$
1,547

$
(1,159
)
$
(4,192
)
$
(3,804
)AssetsJune 28, 2008

$
334,109

$
230,582

$
166,694

$
731,385March 31, 2008

$
281,303

$
230,865

$
88,443

$
600,611


The
following table presents net sales by geographic region, which is based on the destination of the shipments:

Three Months EndedJune 28,
2008

June 30,
2007Asia

$
43,878

$
13,707Europe


6,945


1,214North America


6,259


435Net Sales

$
57,082

$
15,356


A
summary of long-lived assets, consisting of net property and equipment and intangible assets, by geographical region is as follows (in thousands):

June 28,
2008

March 31,
2008United States

$
22,052

$
19,371Asia


95


86Total

$
22,147

$
19,457


16

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Table of Contents

GT Solar International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

June 28, 2008

(In thousands, except share and per share data)

14. Subsequent Events

Stock Split

The financial statements give retroactive effect to a July 23, 2008 increase in the number of authorized shares of common stock
from 10,000,000 to 500,000,000 and a
17-for-one stock split of the Company's common stock in connection with the Company's initial public offering.

Preferred Stock

In connection with the Company's initial public offering, the Company filed an amended and restated certificate of incorporation that
permits the board of directors, from time to time, to direct the issuance of up to 10,000,000 shares of preferred stock in series and may, at the time of issuance, determine the rights, preferences
and limitations of each series.

New Senior Credit Facility

On July 29, 2008, the Company entered into a senior credit agreement with Bank of America, N.A., as sole administrative and
collateral agent, and a syndicate of financial institutions. The senior credit agreement provides for a three-year revolving senior credit facility in an aggregate principal amount of up
to $90,000, which is available for the borrowing of revolving loans and the issuance of standby letters of credit; provided that the aggregate principal amount of revolving loans shall not exceed
$50,000 at any time. The senior credit facility includes a sub limit of $25,000 for swingline loans. The senior credit facility will mature on July 29, 2011. The aggregate amount of borrowings
and outstanding standby letters of credit under the senior credit facility may not exceed a borrowing base equal to Adjusted EBITDA multiplied by 3.0 plus unrestricted cash on hand.

The
senior credit facility is guaranteed by all of our existing and future direct and indirect domestic subsidiaries. Obligations under the senior credit facility are secured by a
first-priority lien on substantially all of the Company's tangible and intangible assets and by a pledge of the capital stock of all of our domestic subsidiaries and 65% of the capital stock of our
foreign subsidiaries owned directly by the Company or one of its domestic subsidiaries. The senior credit facility may be increased by an aggregate amount of up to $100,000, with additional
commitments from the lenders under the senior credit facility or from new financial institutions, if no default or event of default exists. The Company may exercise its option to increase the
commitments not more than three times, and each increase will be in a minimum aggregate principal amount of $10,000 and integral multiples of $5,000 in excess thereof.

Borrowings
under the senior credit facility bear interest at a floating rate equal to, at the Company's option, LIBOR plus 2.25% per annum or a base rate plus 1.25% per annum. The base
rate is defined as the higher of the Bank of America prime rate, or the federal funds rate plus 0.50%. The Company pays a commitment fee to the lenders equal to 0.50% per annum on the actual daily
unused portions of
the senior credit facility and letter of credit fees equal to 2.25% per annum on the maximum amount available to be drawn under each standby letter of credit.

The
senior credit facility contains customary covenants, which among other things limit the Company's ability to: incur indebtedness; make investments; engage in mergers and other
fundamental changes; sell or otherwise dispose of property or assets; pay dividends and other restricted payments; enter

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Table of Contents

GT Solar International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

June 28, 2008

(In thousands, except share and per share data)

14. Subsequent Events (Continued)

into
transactions with affiliates; use proceeds to purchase or carry margin stock or extend credit to others; make subordinated debt payments; make certain changes to the terms of material
indebtedness; and other covenants customary for such a facility. The senior credit facility contains financial covenants that require the Company to meet certain financial tests, including a maximum
consolidated net leverage ratio and a minimum consolidated fixed charge coverage ratio, calculated on a consolidated basis for each consecutive four fiscal quarter period.

Common Stock Dividend

On June 30, 2008, the Company declared a dividend of $90,000 to the stockholders of record as of June 30, 2008 that was
subsequently paid on August 1, 2008 (see Note 15, Pro Forma Information).

New Cash-Collateralized Letter of Credit Facility

On July 29, 2008, the Company entered into a letter of credit agreement with Bank of America, N.A., as sole administrative and
collateral agent, and a syndicate of financial institutions. The letter of credit agreement provides for a three-year cash-collateralized letter of credit facility in an
aggregate principal amount of up to $150,000, which is available for the issuance of cash-collateralized standby letters of credit. The letter of credit facility may be increased by an
aggregate amount of up to $50,000, with additional commitments from the lenders under the letter of credit facility or from new financial institutions, if no default or event of default exists under
the letter of credit facility. The Company may exercise its option to increase the commitments not more than three times, and each increase will be in a minimum aggregate principal amount of $10,000
and integral multiples of $5,000 in excess thereof. The Company pays letter of credit fees equal to 0.25% per annum on the maximum amount available to be drawn under each standby letter of credit.

The
letter of credit facility is secured by an equal amount of cash pledged and delivered by the Company to the administrative agent for the benefit of all lenders. The letter of credit
facility contains customary covenants, which among other things limit the Company's ability to incur liens on the cash collateral; engage in mergers or other fundamental changes; sell or otherwise
dispose of the registrant's or its subsidiaries' assets; use proceeds to purchase or carry margin stock or extend credit to others; and other covenants customary for such a facility.

15. Pro Forma Information

On June 30, 2008, the Company declared a dividend of $90,000 to the stockholders of record as of June 30, 2008 that was subsequently paid on August 1, 2008. The pro
forma balance sheet information includes an adjustment to reflect a decrease in cash of $90,000 and a corresponding decrease in additional paid in capital and retained earnings as though the payment
of that dividend had occurred as of June 28, 2008.

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Table of Contents

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report on Form 10-Q contains "forward-looking statements" that involve risks
and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking
statements. The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are often identified by the use of words such as, but not
limited to, "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "will," "plan," "target," "continue," and similar expressions or variations intended to identify
forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to
management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from
future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those
discussed in the section titled "Risk Factors" included in our Prospectus dated July 23, 2008 filed pursuant to Rule 424(b) under the Securities Act with the Securities and Exchange
Commission on July 24, 2008. Furthermore, such forward-looking statements speak only as of the date of this report. We undertake no obligation to update any forward-looking statements to
reflect events or circumstances after the date of such statements.

Company Overview

GT Solar International, Inc. and its subsidiaries (referred to herein collectively as "we", "us", and "our") are a provider of
specialized manufacturing equipment and services essential for the production of photovoltaic, or PV, wafers, cells and modules and polysilicon. Our principal products are directional solidification
systems, or DSS units, and chemical vapor deposition, or CVD, reactors and related equipment. DSS units are specialized furnaces used to melt polysilicon and cast multicrystalline ingots from which
solar wafers are made. CVD reactors are used to react gases at high temperatures and pressures to produce polysilicon, the key raw material used in solar cells. Our customers include several of the
world's largest solar companies as well as companies in the chemical industry. The use of our products requires substantial technical know-how and most of our customers rely on us to
design and optimize their production processes as well as train their employees in the use of our equipment. We operated through two segments: our PV business and our polysilicon business.

Our
PV business manufactures and sells DSS units, wafer cleaning and etch systems, slurry recovery systems, cell testing and sorting equipment, and tabber/stringer machines, as well as
related parts and consumables. We sell our products separately and as part of "turnkey solutions," where we bundle equipment, including third party equipment, with design and integration expertise.

Our
polysilicon business offers CVD reactors and related equipment. In 2005, we made a strategic decision to develop the equipment and expertise necessary to facilitate the entry of new
participants into the polysilicon industry.

Our
business was founded in 1994. Effective January 1, 2006, our business was acquired by GT Solar Holdings, LLC, a newly formed company controlled by GFI Energy
Ventures LLC, a private equity investment firm focused on the energy sector and Oaktree Capital Management, L.P., a global alternative and non-traditional investment manager.
We refer to this transaction as the "Acquisition."

Effective
April 1, 2008 we elected to change our reporting period to be based on a 52 week year that ends on the Saturday closest to March 31 which in certain years
results in a 53 week fiscal year. Our quarterly reporting will include 13 week periods, unless otherwise noted. The three month period ended June 28, 2008 includes two fewer days
than a 13 week period as a result of transitioning to the new reporting period. We will continue to use the terms quarterly, monthly, and annual in describing our financial results.

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Table of Contents

On
July 29, 2008, we completed an initial public offering of common stock by certain of our stockholders.

Order Backlog

Our order backlog consists of signed purchase orders or other written contractual commitments. The table below sets forth our order
backlog as of June 28, 2008 and March 31, 2008 by product category:

As of
June 28, 2008

As of
March 31, 2008Product Category

Amount

% of
Backlog

Amount

% of
Backlog(dollars in millions)PV business

$
598


47
%
$
648


50
%Polysilicon business


664


53
%

659


50
%Total

$
1,262


100
%
$
1,307


100
%


Our
order backlog as of June 28, 2008, included deferred revenue of $234.8 million, representing equipment that had been shipped to customers but not yet recognized as
revenue. In addition, $744.6 million of our order backlog as of June 28, 2008 was attributed to three customers. We generally would expect to deliver the solar products included in our order backlog
over a period ranging from six to twelve months and the polysilicon products included in our order backlog over a period ranging from
twelve to eighteen months, although portions of the related revenue are expected to be recognized over a longer period. We expect to convert approximately 43% of our order backlog as of
June 28, 2008 to revenue by March 31, 2009. Order backlog as of any particular date should not be relied upon as indicative of our revenues for any future period and we have only
recently begun to track our order backlog on a consistent basis.

Factors Affecting Our Results of Operations

Demand for our products and services is driven by end-user demand for solar power. Key drivers of the growing demand for
solar power include increasing scarcity and rising prices of conventional energy sources, the desire for energy security/energy independence to counter perceived geopolitical supply risks surrounding
fossil fuels, environmental pollution from fossil fuels and the resulting tightening of emission controls, the increasingly competitive cost of energy from renewable energy sources, government
incentive programs for the development of solar energy making solar energy more cost competitive and changing consumer preferences towards renewable energy sources.

In
addition, our results of operations are affected by a number of external factors including the availability of polysilicon in the market, availability of raw materials, foreign
exchange rates, interest rates, commodity prices (particularly steel and graphite prices) and macro economic, political, regulatory and legal conditions in the markets in which we conduct business
(including China).

Our
quarterly results of operations are affected by a number of factors including, among other things, the size of new contracts and when we are able to recognize the related revenue
(especially with respect to our polysilicon products), delays in customer acceptances of our products and our rate of progress in the fulfillment of our obligations under our contracts. Our quarterly
results have fluctuated significantly in the past and we expect that our quarterly results will continue to fluctuate significantly in the future.

20

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Table of Contents

Results of Operations

The following tables set forth the results of operations as a percentage of revenue for the three months ended June 28, 2008 and
June 30, 2007:

Three Months EndedJune 28,
2008

June 30,
2007Statement of Operations Data:*Revenue


100
%

100
%Cost of revenue


57


65Gross profit


43


35Research and development


7


7Selling and marketing


7


19General and administrative


14


29Amortization of intangible assets


1


5Income (loss) from operations


14


(25
)Interest income (expense), net


4


7Other expense, net


(3
)

(7
)Income (loss) before income taxes


15


(25
)Provision for income taxes


6


8Net income (loss)


9
%

(33
)%


---

Three Months Ended June 28, 2008 Compared to Three Months Ended June 30, 2007.

Revenue.The following table sets forth total revenue and revenue by product category for the three months ended
June 28, 2008 and June 30, 2007:

Three Months EndedProduct Category

June 28, 2008

June 30, 2007

Change

% Change(dollars in thousands)PV equipment

$
54,375

$
14,476

$
39,899PV services, parts and other


2,707


880


1,827Total PV business revenue

$
57,082

$
15,356

$
41,726


272
%


Our
total revenue increased 272% from $15.4 million for the three months ended June 30, 2007 to $57.1 million for the three months ended June 28, 2008.
Specifically, our revenue from PV equipment sales increased 275% from $14.5 million for the three months ended June 30, 2007 to $54.4 million for the three months ended
June 28, 2008. This increase is substantially attributed to growth in revenue under our DSS contracts.

During
the three months ended June 28, 2008, our revenue from DSS sales were $50.9 million as compared to $14.3 million in the same quarter last year. Of the
increase in our DSS unit sales, approximately $35.9 million related to our recently introduced DSS 450 unit. Sales of other GT Solar equipment accounted for $3.4 million of our revenue
for the three months ended June 28, 2008. Revenue from other customer equipment sales can fluctuate based upon specific customer requirements. Revenue from PV services, parts and other
increased 212% from $0.9 million for the three months ended June 30, 2007 to $2.7 million for the three months ended June 28, 2008. This increase was commensurate with our
overall revenue growth.

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Table of Contents

Revenue
from turnkey contracts accounted for none of our revenue for the three months ended June 28, 2008 or June 30, 2007. Turnkey revenue is recorded only after final
production line acceptance and therefore is periodic in nature.

Additionally,
we did not recognize any revenue from our CVD reactors or converters in the three months ended June 28, 2008 and June 30, 2007. Our polysilicon business
commenced in April 2006. As of June 28, 2008, we had fully delivered CVD reactors to two customers and we will recognize revenue related to these orders when pre-established reactor
output performance criteria has been met and final acceptance by the respective customer has been confirmed.

In
both the three months ended June 28, 2008 and three months ended June 30, 2007, a substantial percentage of our revenue resulted from sales to a small number of
customers. Three of our customers accounted for 74% of our revenue for the three months ended June 28, 2008 and two customers accounted for 79% of our revenue for the three months ended
June 30, 2007. No other customer accounted for more than 10% of our revenue during the respective periods.

Cost of Revenue and Gross Profit.The following table sets forth total cost of revenue and gross profit (loss) for the three months ended June 28, 2008 and
June 30, 2007:

Three Months EndedJune 28, 2008

June 30, 2007

Change

% Change(dollars in thousands)Cost of revenuePV business

$
33,220

$
10,034

$
23,186Polysilicon business


(435
)




(435
)Total

$
32,785

$
10,034

$
22,751


227
%Gross profit (loss)PV business

$
23,862

$
5,322

$
18,540Polysilicon business


435





435Total

$
24,297

$
5,322

$
18,975


357
%


Cost
of revenue increased $22.8 million, or 227%, to $32.8 million for the three months ended June 28, 2008 compared to $10.0 million for the three months
ended June 30, 2007. Gross profit increased $19.0 million, or 357%, to $24.3 million for the three months ended June 28, 2008 compared to gross profit of
$5.3 million for the three months ended June 30, 2007. These increases were largely the result of increased PV business revenue in the three months ended June 28, 2008 compared to
the three months ended June 30, 2007.

Gross
profit as a percentage of revenue, or gross margin, increased to 43% for the three months ended June 28, 2008 from 35% for the three months ended June 30, 2007. Gross
margin increased primarily due to the higher gross margins on our recently introduced DSS units. During fiscal year March 28, 2009, we anticipate our revenue will include higher revenue from
other equipment sales, turnkey projects and polysilicon reactors that are expected to slightly reduce overall gross margins during the remaining fiscal year.

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Table of Contents

Research and Development.The following table sets forth total research and development expenses for the three months ended June 28, 2008 and
June 30, 2007:

Three Months EndedJune 28, 2008

June 30, 2007

Change

% Change(dollars in thousands)Research and developmentPV business

$
1,456

$
490

$
966Polysilicon business


2,360


594


1,766Total

$
3,816

$
1,084

$
2,732


252
%


Research
and development expenses were $3.8 million for the three months ended June 28, 2008, compared to $1.1 million for the three months ended June 30,
2007, an increase of 252%. The increase was a result of increased labor and material spending associated with the development of new Polysilicon business products, particularly our CVD reactor
technology, as well as costs associated with the development of our next-generation DSS product.

Selling and Marketing.The following table sets forth total selling and marketing expenses for the three months ended June 28, 2008 and June 30,
2007:

Three Months EndedJune 28, 2008

June 30, 2007

Change

% Change(dollars in thousands)Selling and marketingPV business

$
2,239

$
2,353

$
(114
)Polysilicon business


1,545


564


981Total

$
3,784

$
2,917

$
867


30
%


Selling
and marketing expenses increased 30% from $2.9 million for the three months ended June 30, 2007 to $3.8 million for the three months ended June 28,
2008. Selling expenses do not directly correlate to increases in revenue since sales commissions are paid on bookings in both our PV and Polysilicon business rather than when revenue is recognized.

General and Administrative.The following table sets forth total general and administrative expenses for the three months ended June 28, 2008 and
June 30, 2007:

Three Months EndedJune 28, 2008

June 30, 2007

Change

% Change(dollars in thousands)General and administrativePV business

$
7,170

$
4,423

$
2,747Polysilicon business


605





605Total

$
7,775

$
4,423

$
3,352


76
%


General
and administrative expenses increased 76% to $7.8 million for the three months ended June 28, 2008 from $4.4 million for the three months ended
June 30, 2007. The increase was the result of increases in stock-based compensation that fluctuates with the fair value of our common stock of $2.7 million and additional staffing to
provide the infrastructure necessary to support our continued growth.

Amortization of Intangible Assets.Amortization expense attributed to intangible assets increased to $0.8 million for the three months ended June 28,
2008 from $0.7 million for the three months ended

23

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Table of Contents

June 30,
2007. The increase reflects additional intangible assets acquired during the fiscal year ended March 31, 2008.

Interest Income and Expense, net.We typically invest our excess cash in exchange traded money market mutual funds. During the three months ended June 28,
2008, we recorded $1.5 million of interest income and a credit related to the interest component of foreign exchange forward contracts in interest expense of $0.3 million. During the
three months ended June 30, 2007, we recorded interest income of $1.4 million and interest expense of $0.4 million relating to the expensing of deferred debt costs in connection
with the repayment of the $15.0 million notes payable in April 2007.

Other Expense, net.During the three months ended June 28, 2008 and June 30, 2007, other expense was $1.4 million and $1.1 million,
respectively, primarily related to our initial public offering which was completed on July 29, 2008.

Provision for Income Taxes.Our effective income tax expense rate was 39.6% in the three months ended June 28, 2008 and 30.8% in the three months ended
June 30, 2007. In the quarter ended June 30, 2007, the effective tax included the reversal of a prior valuation allowance against the deferred tax assets of $3,047.

Net Income.As a result of the foregoing factors, for the three months ended June 28, 2008, we recorded
net income of $5.1 million compared to a net loss of $(5.0) million for the three months ended June 30, 2007.

Liquidity and Capital Resources

Overview

Our cash balances increased by $57.4 million during the first three months of fiscal 2009, from $54.8 million as of
March 31, 2008 to $112.2 million as of June 28, 2008. During the same period of fiscal 2007, the cash balance increased by $19.6 million, from $74.1 million as of
March 31, 2007 to $93.6 million as of June 30, 2007. We manage our cash inflows through the use of customer deposits and milestone billings that allow us in turn to meet our cash
outflow requirements, which primarily consist of vendor payments and prepayments for contract related costs (raw material and components costs) and payroll and overhead costs as we perform on our
customer contracts. The following discussion of the changes in our cash balance refers to the various sections of our Condensed Consolidated Statements of Cash Flows, which appears in Item 1 of
this quarterly report on Form 10-Q.

Cash Flows from Operating Activities

We generated $61.1 million of cash from operations during the first three months ended June 28, 2008 compared to
$36.2 million for the same period last year. The increase is primarily related to improved profitability, the timing of our deferred revenue and customer deposits offset in part by an increase
in deferred costs and advances to our vendors to secure adequate supply of inventory to fund our continued growth and expansion.

The
increase in customer deposits of $43.6 million for the three months ended June 28, 2008 as compared to $60.7 million for the three months ended June 30,
2007 corresponds with the overall increase in our order backlog, as we require deposits under our contractual arrangements with our customers. The increases in deferred costs of $38.4 million
correspond to the increase in deferred revenue of $70.6 million for the three months ended June 28, 2008, as compared to $15.4 million of deferred costs and $28.9 million
of deferred revenue on for the three months ended June 30, 2007. We generally collect customer deposits of approximately 10% to 30% of the value of the contract when the
order received. The cash payments are initially classified as customer deposits, and then reclassified to deferred revenue when equipment has been shipped or services have been provided, but revenue
has not yet been recognized.

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Table of Contents

In
connection with customer deposits, customers may require us to provide a standby letter of credit, or standby LOC, as security for their deposit. During the period from April 2006 to
September 2007 we used a senior secured revolving credit facility that provided for up to $70.0 million in borrowings and standby letters of credit. Although we had not borrowed any amounts
under the old senior credit facility, we used the old senior credit facility to issue standby letters of credit against customer deposits. On September 24, 2007, we elected to terminate this
old senior credit facility. Since September 24, 2007 we have been issuing standby letters of credit on a cash collateralized basis. This cash collateral is classified as restricted cash in the
consolidated balance sheets and increased by $31.5 million for the first three months of the current fiscal year, as compared to a decrease in restricted cash of $15.8 million for the
comparable period last year.

The
practice of using cash to collateralized our standby LOCs has had a negative impact on the working capital available to us. Since terminating the old senior credit facility, we have
been able to meet our working capital requirements through our cash flow from operations. On July 29, 2008, we entered into a new senior credit facility and a new letter of credit facility, in
each case with a syndicate of financial institutions. (See "New Senior Credit Facility" and "New Cash-Collateralized Letter of Credit Facility" below.)

Cash Flows from Investing Activities

We outsource a significant portion of our manufacturing and therefore, we require minimal capital expenditures to meet our production
demands. Our capital expenditures for the three months ended June 28, 2008 and June 30, 2007, were approximately $3.8 million and $0.5 million, respectively, that were used
primarily for improving our business information systems and improving our principal facility. We expect total capital expenditures in the fiscal year ending March 31, 2009 to be approximately
$16.8 million, consisting primarily of improvements to our business information systems and expansion of our facilities both in New Hampshire and Montana.

Cash Flows from Financing Activities

During the three months ended June 30, 2007, we used $15.9 million of cash for financing activities to repay our senior
secured exchangeable promissory note.

As
of June 28, 2008, we had $134.5 million of standby LOCs outstanding secured by restricted cash. Generally, a letter of credit expires upon shipment to the customer which
in turn reduces the restricted cash by a similar amount.

We
believe that cash generated from operations together with our existing cash and customer deposits and our new senior credit facility (see below) will be sufficient to satisfy working
capital requirements, commitments for capital expenditures, and other cash requirements for the foreseeable future, including at least the next twelve months.

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New Senior Credit Facility

On July 29, 2008, we entered into a senior credit agreement with Bank of America, N.A., as sole administrative and collateral
agent, and a syndicate of financial institutions. The senior credit agreement provides for a three-year revolving senior credit facility in an aggregate principal amount of up to
$90.0 million, which is available for the borrowing of revolving loans and the issuance of standby LOCs; provided that the aggregate principal amount of revolving loans shall not exceed
$50.0 million at any time. The senior credit facility includes a sub limit of $25.0 million for swingline loans. The senior credit facility will mature on July 29, 2011. The
aggregate amount of borrowings and outstanding standby LOCs under the senior credit facility may not exceed a borrowing base equal to Adjusted EBITDA multiplied by 3.0 plus unrestricted cash on hand.
The senior credit facility is guaranteed by all of our existing and future direct and indirect domestic subsidiaries. Obligations under the senior credit facility are secured by a first-priority lien
on substantially all of the tangible and intangible assets and by a pledge of the capital stock of all of our domestic subsidiaries and 65% of the capital stock of our foreign subsidiaries owned
directly by us or one of our domestic subsidiaries.

The
senior credit facility may be increased by an aggregate amount of up to $100.0 million, with additional commitments from the lenders under the senior credit facility or from
new financial institutions, if no default or event of default exists. We may exercise our option to increase the commitments not more than three times, and each increase will be in a minimum aggregate
principal amount of $10.0 million and integral multiples of $5.0 million in excess thereof.

Borrowings
under the senior credit facility bear interest at a floating rate equal to, at our option, LIBOR plus 2.25% per annum or a base rate plus 1.25% per annum. The base rate is
defined as the higher of the Bank of America prime rate, or the federal funds rate plus 0.50%. We pay a commitment fee to the lenders equal to 0.50% per annum on the actual daily unused portions of
the senior credit facility and letter of credit fees equal to 2.25% per annum on the maximum amount available to be drawn under each standby LOC.

The
senior credit facility contains customary covenants, which, among other things, limit our ability to: incur indebtedness; make investments; engage in mergers and other fundamental
changes; sell or otherwise dispose of property or assets; pay dividends and other restricted payments; enter into transactions with affiliates; enter into burdensome agreements; use proceeds to
purchase or carry margin stock or extend credit to others; make subordinated debt payments; make certain changes to the terms of material indebtedness; and other covenants customary for such a
facility. The senior credit facility contains financial covenants that require us to meet certain financial tests, including a maximum consolidated net leverage ratio and a minimum consolidated fixed
charge coverage ratio, calculated on a consolidated basis for each consecutive four fiscal quarter period.

New Cash-Collateralized Letter of Credit Facility

On July 29, 2008, we also entered into a letter of credit agreement with Bank of America, N.A., as sole administrative and
collateral agent, and a syndicate of financial institutions. The letter of credit agreement provides for a three-year cash-collateralized letter of credit facility in an
aggregate principal amount of up to $150.0 million, which is available for the issuance of cash-collateralized standby LOCs. The letter of credit facility may be increased by an
aggregate amount of up to $50.0 million, at our election, with additional commitments from the lenders under the letter of credit facility or from new financial institutions, if no default or
event of default exists under the letter of credit facility. We may exercise the option to increase the commitments not more than three times, and each increase will be in a minimum aggregate
principal amount of $10.0 million and integral multiples of $5.0 million in excess thereof. We pay letter of credit fees equal to 0.25% per annum on the maximum amount available to be
drawn under each standby letter of credit.

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The
letter of credit facility is secured by an equal amount of cash pledged and delivered by us to the administrative agent for the benefit of all lenders. The letter of credit facility
contains customary covenants, which among other things limit our ability to: incur liens on the cash collateral; engage in mergers or other fundamental changes; sell or otherwise dispose of the
registrant's or its subsidiaries' assets; use proceeds to purchase or carry margin stock or extend credit to others; and other covenants customary for such a facility.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as
structured finance or special purpose entities, that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited
purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

As
of June 28, 2008, we had approximately $134.5 million of standby letters of credit outstanding representing primarily performance guarantees issued against customer
deposits. These letters of credit as of June 28, 2008 have not been included in the consolidated financial statements included herein and are secured by restricted cash.

Contractual Obligations

As of June 28, 2008, our contractual obligations by fiscal year for operating were as follows:

Total

Remainder
of 2009

2010

2011

2012

2013

2014 and
thereafter(dollars in thousands)Operating leases (a)

$
672

$
216

$
227

$
135

$
93








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Recent Accounting Pronouncements

In May 2008, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS")
No. 162, "The Hierarchy of Generally Accepted Accounting Principles." SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in
the preparation of financial statements that are presented in conformity with generally accepted accounting principles. SFAS No. 162 becomes effective 60 days following the SEC's
approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles." We do not
expect that the adoption of SFAS No. 162 will have a material impact on our financial statements.

In
September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements," which defines fair value, establishes a framework in generally accepted accounting principles for
measuring fair value and expands disclosures about fair value measurements. This standard only applies when other standards require or permit the fair value measurement of assets and liabilities. It
does not increase the use of fair value measurement. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, except as it relates to nonrecurring fair value
measurements of nonfinancial assets and liabilities for which the standard is effective for fiscal years beginning after November 15, 2008. The adoption of SFAS No. 157 with respect to
financial assets and liabilities effective April 1, 2008 did not have a significant effect on our consolidated results of operations or financial position. In addition, we are currently
evaluating the impact

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of
SFAS No. 157 for measuring nonfinancial assets and liabilities will have on our financial position and results of operations.

In
February 2007, the FASB released SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liability("SFAS
No. 159"). SFAS No. 159 allows entities to measure many financial instruments and certain other items at their fair value. We elected not to change the accounting for our financial
instruments and therefore the adoption of SFAS No. 159 effective April 1, 2008 did not have a material impact on our financial position and results of operations.

In
June 2007, the Emerging Issues Task Force issued EITF Issue No. 07-03,Accounting for Advance Payments for Goods or Services to Be Used in
Future Research and Development Activities("EITF Issue No. 07-03"). EITF Issue No. 07-03 addresses the diversity which exists with
respect to the accounting for the nonrefundable portion of a payment made by a research and development entity for future research and development activities. Under EITF Issue
No. 07-03 an entity would defer and capitalize nonrefundable advance payments made for research and development activities until the related goods are delivered or the related
services are performed. EITF Issue No. 07-03 is effective for fiscal years beginning after December 15, 2007 and interim periods within those years. We adopted EITF Issue
No. 07-03 effective April 1, 2008 with no material impact on our financial position or results of operations.

In
December 2007, the FASB issued SFAS No. 141R, "Business Combinations," or SFAS No. 141R. This pronouncement establishes principles and requirements for how the acquirer
recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired in the
business combination or a gain from a bargain purchase, and also establishes disclosure requirements to enable users of the financial statements to evaluate the nature and financial effects of the
business combination. SFAS No. 141R becomes effective for business combinations entered into during fiscal years beginning on or after December 31, 2008 and thereafter and does not have
any impact on business combinations prior to such date.

In
December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in Consolidated Financial Statementsan Amendment of APB No. 51," or SFAS
No. 160. This pronouncement requires non-controlling interests (previously referred to as minority interests) to be reported as a component of equity, which changes the accounting
for transactions with non-controlling interest holders. SFAS No. 160 becomes effective for fiscal years beginning on or after December 31, 2008 and interim periods therein.
We have not yet completed our evaluation of the impact of SFAS No. 160.

In
March 2008, the FASB, issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities. SFAS No. 161
changes the disclosure requirements for derivative instruments and hedging activities. SFAS No. 161 is effective for fiscal years and interim periods beginning after November 15, 2008.
Since SFAS No. 161 only addresses disclosure requirements, the adoption of SFAS No. 161 will have no impact on our consolidated results of operation or consolidated financial position.

Critical Accounting Policies and Estimates

For the three months ended June 28, 2008, there were no changes to our critical accounting policies as identified in our
consolidated financial statements for the year ended March 31, 2008 included in our Prospectus dated July 23, 2008 filed pursuant to Rule 424(b) under the Securities Act with the
Securities and Exchange Commission on July 24, 2008.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk



Although our reporting currency is the U.S. dollar and almost all of our sales contracts are currently denominated in U.S. dollars, we
may incur costs in the local currency of one or more of the countries in

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which
we operate. In addition, we maintain our cash balances primarily in the U.S. dollar. However, from time to time, we will maintain cash balances in currencies other than the U.S. dollar. As a
result, we may be subject to currency translation risk. Exchange rates between a number of currencies and U.S. dollars have fluctuated significantly over the last few years and future exchange rate
fluctuations may occur.

We
enter into foreign exchange forward contracts that qualify as cash flow hedges under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," to hedge
portions of our anticipated foreign currency denominated inventory purchases. These contracts typically expire within 12 months. Consistent with the nature of the economic hedges provided by
these foreign exchange forward contracts, increases or decreases in their fair values would be effectively offset by corresponding decreases or increases in the U.S. dollar value of our future foreign
currency denominated inventory purchases (i.e., "hedged items"). The information provided below relates only to the hedging instruments and does not represent the corresponding changes in the
underlying hedged items.

Currently,
our largest foreign currency exposure is the Euro and to a lesser degree the Swiss Franc, primarily from foreign currency denominated purchases of third party equipment from
vendors located in Europe. Relative to our foreign currency exposures existing at June 28, 2008, a 10% appreciation of the Euro against the U.S. dollar would result in an increase in the fair
value of $11.1 million of these derivative financial instruments. Conversely, a 10% appreciation of the U.S. dollar against the Euro would result in a decrease in the fair value of
$11.1 million of these instruments.

Item 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of
our disclosure controls and procedures as of June 28, 2008. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's
management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the
cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 28, 2008, our Chief Executive Officer and
Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

We have implemented new company-wide enterprise resource planning software. As of May 5, 2008 we have completed the
conversion to this new platform in our business locations other than at our Shanghai location. As a result, certain changes have been made to our internal controls, which management believes will
strengthen our internal control structure. There have been no other significant changes in our internal controls or other factors during the fiscal quarter ended June 28, 2008 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.    Legal Proceedings

Beginning on August 1, 2008, a series of putative securities class action lawsuits were commenced in the United States District
Court for the District of New Hampshire, alleging that we, certain of our officers and directors, the underwriters and others violated various sections of the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended. The complaints allege that the Registration Statement for our July 2008 initial public offering contained material misstatements and omissions
regarding our business relationship with LDK Solar, Ltd., one of our customers. The lawsuits seek unspecified compensatory damages plus rescission, interest and attorneys' fees. The Court has
entered orders providing that these cases may be consolidated for all purposes and setting deadlines for any objections thereto. We intend to defend these claims vigorously.

The
ultimate outcome of any litigation is uncertain, and either favorable or unfavorable outcomes could have a material negative impact on our results of operations, consolidated balance
sheets and cash flows, due to defense costs, diversion of management resources and other factors.

We
are subject to various other routine legal proceedings and claims incidental to our business. We believe the ultimate result from these actions will not have a material adverse effect
on our financial position, results of operations or cash flows.

Item 1A.    Risk Factors

In addition to the other information set forth in this quarterly report on Form 10-Q, you should carefully consider
the risk factors discussed under the caption "Risk Factors" in our Prospectus dated July 23, 2008 (the "Prospectus") filed pursuant to Rule 424(b) under the Securities Act with the
Securities and Exchange Commission on July 24, 2008. Except as set
forth below, there have been no material changes to the risk factors previously disclosed under the caption "Risk Factors" in the Prospectus.

We may be subject to securities class action lawsuits that could adversely affect our business. This litigation, and potential similar or related litigation, could result in
substantial damages and may divert management's time and attention from our business.

Beginning on August 1, 2008, a series of putative securities class action lawsuits were commenced in the United States District
Court for the District of New Hampshire, alleging that we, certain of our officers and directors, the underwriters and others violated various sections of the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended. The complaints allege that the Registration Statement for our July 2008 initial public offering contained material misstatements and omissions
regarding our business relationship with LDK Solar, Ltd., one of our customers. The lawsuits seek unspecified compensatory damages plus rescission, interest and attorneys' fees. The Court has
entered orders providing that these cases may be consolidated for all purposes and setting deadlines for any objections thereto.

We
intend to defend these claims vigorously. Nonetheless, the lawsuits discussed above may result in costly and protracted litigation, which may require significant commitment of our
financial and management resources and time. The ultimate outcome of any litigation is uncertain and could result in substantial damages. Either favorable or unfavorable outcomes could have a material
negative impact on our financial condition or results of operations, due to defense costs, diversion of management resources and other factors. In addition, we may in the future be the target of
securities class action lawsuits similar to those described above.

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Our actual operating results may differ significantly from our guidance.

From time to time, we release guidance in our quarterly earnings releases, quarterly earnings conference call, or otherwise, regarding
our future performance that represent our management's estimates as of the date of release. This guidance, which includes forward-looking statements, is based on projections prepared by our
management. These projections are not prepared with a view toward compliance with published guidelines of the American Institute of Certified Public Accountants, and neither our registered public
accountants nor any other independent expert or outside
party compiles or examines the projections and, accordingly, no such person expresses any opinion or any other form of assurance with respect thereto.

Projections
are based upon a number of assumptions and estimates that, while presented with numerical specificity, are inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are beyond our control and are based upon specific assumptions with respect to future business decisions, some of which will change. We
generally state possible outcomes as high and low ranges which are intended to provide a sensitivity analysis as variables are changed but are not intended to represent that actual results could not
fall outside of the suggested ranges. The principal reason that we release guidance is to provide a basis for our management to discuss our business outlook with analysts and investors. We do not
accept any responsibility for any projections or reports published by any such persons.

Guidance
is necessarily speculative in nature, and it can be expected that some or all of the assumptions of the guidance furnished by us will not materialize or will vary significantly
from actual results. Accordingly, our guidance is only an estimate of what management believes is realizable as of the date of release. Actual results will vary from our guidance and the variations
may be material. In light of the foregoing, investors are urged not to rely upon, or otherwise consider, our guidance in making an investment decision in respect of our common stock.

Any
failure to successfully implement our operating strategy or the occurrence of any of the events or circumstances set forth in our "Risk Factors" in the Prospectus for our initial
public offering and in this quarterly report on Form 10-Q could result in the actual operating results being different from our guidance, and such differences may be adverse and
material.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

Use of Proceeds

On
July 29, 2008, we completed an initial public offering of shares of our common stock. The SEC declared the Registration Statement for our initial public offering (File
No. 333-142383) effective on July 23, 2008. Pursuant to the Registration Statement, we registered the sale of a total of 34,845,000 shares of common stock to be sold by one
selling stockholder, including 4,545,000 shares of common stock to be sold by the selling stockholder pursuant to an underwriters over-allotment option. On July 29, 2008, the
30,300,000 shares of common stock offered by the selling stockholder were sold to the underwriters and issued to the public at for an aggregate
offering price of $499,950,000. We did not receive any proceeds from the sale of common stock by the selling stockholder. The managing underwriters for the initial public offering were Credit Suisse
Securities (USA) LLC and UBS Securities LLC.

We
paid the expenses of the initial public offering, other than underwriting discounts and commissions. Our expenses for the offering were approximately $4.0 million. The proceeds
of the initial public offering were paid to GT Solar Holdings, LLC, a holder of more than 10% of our common stock. GT Solar Holdings, LLC used the net proceeds it received in connection
with the initial public offering to make a distribution to its shareholders, including our Chief Executive Officer and two investment funds managed by GFI Energy Ventures LLC ("GFI") and
Oaktree Capital Management, L.P. Two of our directors are partners of GFI.

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Item 3.    Defaults Upon Senior Securities

None

Item 4.    Submission of Matter to a Vote of Security Holders

None

Item 5.    Other Information

None

Item 6.    Exhibits

3.1

Amended and Restated Certificate of Incorporation of the Registrant.3.2

Amended and Restated By-laws of the Registrant.31.1

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13a-14(a)/15d- 14(a), by Chief Executive Officer.31.2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13a-14(a)/15d-14(a), by Chief Financial Officer.32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer.32.2

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Financial Officer.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

GT Solar International, Inc.By:

/s/THOMAS M. ZARRELLAThomas M. ZarrellaDate: August 27, 2008



President and Chief Executive Officer
(Principal Executive Officer)By:

/s/ROBERT W. WOODBURY, JR.Robert W. Woodbury, Jr.Date: August 27, 2008



Chief Financial Officer
(Principal Financial Officer)


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