To enhance this call, we have also posted a set of PowerPoint slides, which we will reference during this call on the Events and Presentations page of our Investor Relations website. In the same location, we have posted a supplemental data sheet, detailing some of our historical metrics. On Slide 2 of our PowerPoint presentation, you will find our Safe Harbor language.Our prepared remarks will run approximately 25 minutes and then we will take questions. With that, I'd like to turn over the call to Tom Werner, CEO of SunPower who will begin on Slide 3. Tom? Thomas H. Werner Thanks, Bob, and thank you for joining us today. On today's call, we will review our Q1 operational performance, update you on our Q -- our 2012 strategy, detail our first quarter financials and outlook for the balance of the year. Please turn to Slide 4. Overall for the quarter, we executed well, leveraging our downstream channels to mitigate the impact of challenging industry conditions. Our North American utility business outperformed and offset the price pressure in the rooftop business. We also executed on our technology roadmap during the quarter as we started volume production of our Gen 3 solar cell technology and met our manufacturing step reduction targets for the quarter. We also made the strategic decision to consolidate our Philippine fabs to lower our expenses. With a conservative capital structure, flexible balance sheet and the continued support of Total, we are well-positioned to successfully manage the business through this industry transition. Before discussing the details of the quarter, I want to remind everyone, we have resegmented our business into a regional geographic split, which better aligns our business with our local market focus. Revenue and gross margin for the quarter were better than our plan as our North American utility business outperformed. In North America, our 250-megawatt California Valley Solar Ranch project remains on track, and we are confident that we will meet our September milestones. As of the end of Q1, we had installed more than 35 megawatts at CVSR.
We also continue to monetize our pipeline as evidenced by our announcement yesterday on the sale of our 25-megawatt McHenry Solar Project to K Road Power, an independent power producer. The project will create up to 144 local jobs with power generated being sold to the Modesto Irrigation District under a 25-year PPA. We continue to see significant momentum in our U.S. residential lease program as we nearly doubled the number of leases signed in Q1 versus Q4. We are on track with our integration of Tenesol, and we see significant opportunities for the second half of 2012 in South Africa, as well as in the off-grid business.In Asia Pacific, Japan remains our largest market where we shipped record volumes during the quarter. Our high efficiency panels are extremely well-suited for this market. We increased our lead in efficiency by starting production of our world record 21% efficient modules utilizing Gen 3 cell technology. These new products once again took the standard for the industry. Last month, we announced a strategic decision to consolidate our Philippines manufacturing footprint. This decision will drive supply chain efficiency, lower expenses and reduce cost per watt by at least $0.02 this year. We met our accelerated cost targets for the quarter, and we are confident in achieving our 2012 goal of $0.86 per watt or better on an efficiency adjusted basis by the end of 2012. Our step reduction initiative is on track, with 2 lines at Fab 2 running the new process. Initial yields and efficiency are at or ahead of plan, and we expect all 12 lines in Fab 2 to be running on the new process by the end of this year. Finally, we retired $199 million in convertible debt in Q1 and carefully managed our working capital resources. Moving on to Slide 5. As we mentioned last quarter, we are well-positioned to succeed as the solar industry moves closer to competing with traditional generation. We are focusing on 4 key strategic drivers: Our unique differentiated global go-to-market strategy, expanding our technology leadership position in cell and systems, accelerating our cost reduction roadmap and prudently managing our balance sheet and liquidity. Now let me provide specifics on each driver. Read the rest of this transcript for free on seekingalpha.com