Evergreen Solar, Inc. (NasdaqCM: ESLR), a manufacturer of String Ribbon® solar power products with its proprietary, low-cost silicon wafer technology, today announced audited financial results for the fourth quarter ended December 31, 2010.

Revenues for the fourth quarter of 2010 were $89.3 million, up 3.2% sequentially compared to third quarter revenues of $86.5 million. Average selling price for the fourth quarter of 2010 was $1.90 per watt, down approximately 6% from $2.02 per watt recorded in the third quarter of 2010.

Gross margin for the fourth quarter of 2010 was -84% compared to 7.5% in the third quarter of 2010. The decrease in gross margin resulted primarily from the write-down of prepaid inventory resulting from the decision to close the Devens manufacturing facility and the countervailing duties assessed on the Company’s imported aluminum frames, as previously disclosed.

Operating loss for the fourth quarter of 2010 was $399.1 million, compared to $22.7 million for the third quarter of 2010. Operating loss in the fourth quarter of 2010 increased sequentially from the third quarter due mainly to the inventory write-down and the impairment of long-lived assets totaling $377.5 million in connection with the Company’s decision to close its Devens manufacturing facility. Operating loss for the third quarter of 2010 included a $6.4 million charge relating to the write-off of a receivable associated with a Korean customer and a decrease in royalty revenue, offset by a decrease in manufacturing costs.

Net loss for the fourth quarter of 2010 was $411.0 million compared to $27.2 million in the third quarter of 2010. Net loss for the fourth quarter includes the aforementioned write-down and impairment charges of $377.5 million. Net loss for the third quarter of 2010 included the previously disclosed charge to accounts receivable and foreign exchange gains of $6.3 million.

Cash and cash equivalents as of December 31, 2010 was $68.4 million, including restricted cash of $6.8 million.

Michael El-Hillow, President and Chief Executive Officer commented, “The decision to close the Devens facility was the direct result of rapid and dramatic changes in the underlying market that have taken place since the facility first began operations. We believe we are now better positioned to facilitate a rapid transition to a strategic supplier of low cost multi-crystalline silicon wafers by virtue of our proprietary wafer technology.” He added, “Our Devens employees exceeded many of management’s expectations and for this, they have our deepest appreciation.”

Mr. El-Hillow concluded by sharing his views about the opportunities in Evergreen Solar’s future. “Today, we are focusing all of our energies and resources in delivering an industry standard size and high performance low cost wafer. We believe this is the best strategic direction for the Company as we leverage our proprietary manufacturing and product technology to produce String Ribbon™ wafers at a total silicon and non-silicon cost of about $0.25 per watt in 2013. We are encouraged by the early feedback received from companies that have been sampling our industry standard size wafers. Pilot line production up to 25 megawatts should be on-line in China toward the end of this year. In-depth negotiations to obtain significant financing for expansion and customer support for our industry standard wafer are attracting very strong interest and we are expecting to have more details to share on our progress by early summer.”

Conference Call Information

Management will conduct a conference call at 8:30 a.m. (ET) tomorrow, Thursday, March 10, 2011. The call can be accessed by dialing 800-930-1344 or 913-981-5556 (International) prior to the start of the call and refer to confirmation code 5786731. The call will be webcast live over the Internet and can be accessed by logging on to the "Investors" section of Evergreen Solar's website, www.evergreensolar.com prior to the event. For those unable to join the live conference call, a webcast replay will be available on the “Investors” page of the website until Friday, March 25, 2011 at 5:00 p.m. (ET).

About Evergreen Solar, Inc.

Evergreen Solar, Inc. develops, manufactures and markets String Ribbon solar power products using its proprietary, low-cost silicon wafer technology. The Company's patented wafer manufacturing technology uses significantly less polysilicon than conventional processes. Evergreen Solar's products provide reliable and environmentally clean electric power for residential and commercial applications globally. For more information about the Company, please visit www.evergreensolar.com. Evergreen Solar and String Ribbon are registered trademarks of Evergreen Solar, Inc.

Safe Harbor Statement

This press release includes statements regarding expectations, beliefs, strategies, goals, outlook and other non-historical matters. Any such statements are forward-looking statements made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include but are not limited to statements about preliminary financial results, the timing of the shutdown of the Company’s Devens facility, the size of any non-cash charges and the estimated cash costs associated with a shutdown. These forward-looking statements are neither promises nor guarantees and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the Company’s current expectations. Factors that could cause or contribute to such differences include, but are not limited to potentially higher than expected costs associated with the shutdown of the Company’s Devens facility; the significant additional work required to develop and commercialize our industry standard size and high performance low cost String Ribbon wafer; technological challenges and factors beyond our control, such as silicon pricing, that impact our ability to achieve our wafer cost target of $0.25 per watt in 2013; the difficulty we face in raising funding for our pilot production line operation and the significant further funding required to accomplish our commercial manufacturing expansion; our potential inability to supply the significant volumes of wafers required in the near-term for potential customers and partners to qualify our new industry standard size String Ribbon wafers; and the uncertainty for the entire PV solar industry in light of significant worldwide capacity expansions which may exceed worldwide demand for PV solar products as a result of various factors including potential significant reductions in subsidies in key markets like Germany. Further details regarding these and other important risk factors can be found in the Company’s public filings with the SEC ( www.sec.gov), including its Form 10-K for the fiscal year ended December 31, 2010 and its Registration Statement on Form S-4 (as amended) originally filed on December 6, 2010. Forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to update any forward-looking statements, except as may be required by law.
Evergreen Solar, Inc. (Nasdaq: ESLR)
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
     
 
Quarter Ended Year-to-Date Period Ended
December 31, December 31,
2009 2010 2009 2010
 
Product revenues $ 74,526 $ 88,766 $ 267,112 $ 334,382
Royalty and fee revenues   20     495     4,736     4,403  
Total revenues 74,546 89,261 271,848 338,785
 
Cost of revenues 65,642 89,704 253,484 319,429
Impairment of prepaid inventory   -     74,544     -     74,544  
Total cost of revenues   65,642     164,248     253,484     393,973  
Gross profit (loss)   8,904     (74,987 )   18,364     (55,188 )
 
Operating expenses:
Research and development 4,751 4,375 18,058 19,453
Selling, general and administrative 7,270 7,782 26,260 36,495
Write-off of loan receivable from silicon supplier - - 43,882 -
Equipment write-offs 6,008 410 6,008 410
Facility start-up 3,468 3,965 10,107 18,446
Impairment of long-lived assets - 302,979 - 302,979
Restructuring charges   8,546     4,563     11,940     18,343  
Total operating expenses   30,043     324,074     116,255     396,126  
 
Operating loss (21,139 ) (399,061 ) (97,891 ) (451,314 )
 
Other income (expense):
Foreign exchange gains (losses), net (810 ) (974 ) 2,650 (3,819 )
Interest income 1,056 381 4,728 1,993
Interest expense (7,891 ) (11,299 ) (27,992 ) (40,301 )
Gain on early extinguishment of debt   -     -     -     24,777  
Other income (expense), net   (7,645 )   (11,892 )   (20,614 )   (17,350 )
Loss before equity loss from interest in Sovello AG, (impairment) recovery of equity investment, and income tax benefit
 
(28,784 ) (410,953 ) (118,505 ) (468,664 )
Equity loss from interest in Sovello AG (13,546 ) - (29,748 ) -
Impairment and other charges associated with equity investment in Sovello AG
(56,344 ) - (126,057 ) -
Recovery of impairment charges associated with Sovello AG - - - 3,227
Income tax benefit   (285 )   -     (8,090 )   -  
Net loss $ (98,389 ) $ (410,953 ) $ (266,220 ) $ (465,437 )
 
Net loss per share (basic and diluted) $ (2.88 ) $ (11.99 ) $ (8.51 ) $ (13.59 )
 
Weighted average shares used in computing basic and diluted net loss per share
34,153 34,269 31,297 34,237
Evergreen Solar, Inc. (Nasdaq: ESLR)
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
   
 
 
December 31,
2009 2010
Assets
Current assets:
Cash and cash equivalents $ 112,368 $ 61,574
Accounts receivable, net of allowances for doubtful accounts 53,295 76,484
Inventory 34,890 54,941
Prepaid cost of inventory 25,634 13,093
Other current assets   11,451     11,092  
Total current assets 237,638 217,184
 
Restricted cash 3,134 6,810
Deferred financing costs 8,312 9,527
Loan receivable from Jiawei and related interest - 13,615
Prepaid cost of inventory 147,573 60,483
Fixed assets, net 430,681 116,546
Other assets   295     305  
 
Total assets $ 827,633   $ 424,470  
 
Liabilities and stockholders' equity (deficit)
Current liabilities:
Accounts payable and accrued expenses $ 31,420 $ 39,559
Due to Sovello AG and related guarantees 17,544 -
Accrued employee compensation 7,287 4,718
Accrued interest 7,004 9,157
Accrued warranty   2,368     3,921  
Total current liabilities 65,623 57,355
 
Convertible notes, net of discount 323,276 389,083
Loan and related interest payable 34,152 37,957
Deferred income taxes   5,396     1,204  
Total liabilities 428,447 485,599
Commitments and contingencies
 
Stockholders' equity (deficit):
Common stock, $0.01 par value, 120,000,000 shares authorized,
34,634,987 and 34,787,413 shares issued and outstanding
at December 31, 2009 and December 31, 2010, respectively 346 348
Additional paid-in capital 1,029,965 1,034,699
Accumulated deficit (631,119 ) (1,096,556 )
Accumulated other comprehensive income (loss)   (6 )   380  
Total stockholders' equity (deficit)   399,186     (61,129 )
 
Total liabilities and stockholders' equity (deficit) $ 827,633   $ 424,470  
Evergreen Solar, Inc. (Nasdaq: ESLR)
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
   
 
Year-to-Date Period Ended
December 31,
2009 2010
 
Cash flows from operating activities:
Net loss $ (266,220 ) $ (465,437 )
 
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense 46,086 63,048
Impairment of long-lived assets and prepaid inventory - 370,816
Gain on early extinguishment of debt - (24,777 )
Imputed interest and accretion of bond premiums (478 ) -
Bad debt expense 45 6,389
Amortization of prepaid cost of inventory 11,240 12,721
Equity loss from Sovello AG and impairment of investment 155,805 -
Amortization of deferred debt financing costs 2,394 2,696
Loss on loan receivable from silicon supplier 43,882 -
Loss on disposal of fixed assets 5,719 750
Provision for warranty 1,335 1,682
Amortization of debt discount 11,744 9,813
Provision for deferred income taxes (8,090 ) -
Compensation expense associated with employee equity awards 6,669 4,326
Changes in operating assets and liabilities:
Accounts receivable (19,170 ) (29,548 )
Inventory and related prepaid cost of inventory (13,487 ) (6,726 )
Other current assets (4,986 ) (3,833 )
Accounts payable and accrued expenses (22,019 ) 6,486
Interest payable 6,253 4,209
Other   6,184     (488 )
Net cash used in operating activities   (37,094 )   (47,873 )
 
Cash flows from investing activities:
Purchases of fixed assets and deposits on fixed assets under construction (110,820 ) (47,955 )
Proceeds from the disposal of fixed assets 503 150
(Increase) decrease in restricted cash (2,914 ) (3,667 )
Increase in Sovello AG loan (11,750 ) -
Capital contribution to Sovello AG (8,914 ) -
Payments associated with Sovello AG - (14,804 )
Increase in other loans - (12,800 )
Proceeds from sale and maturity of marketable securities   76,716     -  
Net cash used in investing activities   (57,179 )   (79,076 )
 
Cash flows from financing activities:
Proceeds from the issuance of convertible secured debt, net of offering costs - 158,557
Early 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 72,421 -
Proceeds from China government loan 33,000 -
Proceeds from exercise of stock options and shares purchased under EmployeeStock Purchase Plan   332     96  
Net cash provided by financing activities   105,753     76,155  
Net increase (decrease) in cash and cash equivalents 11,480 (50,794 )
Cash and cash equivalents at beginning of period   100,888     112,368  
Cash and cash equivalents at end of period $ 112,368   $ 61,574  

Copyright Business Wire 2010

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