ESLR Evergreen Solar, Inc. (MM)

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