Sanjay Shrestha – Lazard Capital Markets
After you de-ramp more what is going to be the expected output from Marlboro going forward and what is the expected output for EverQ after the EverQ 3 ramp up starts in third quarter of 2008?
Richard M. Feldt: We are taking Marlboro down to 2.5, 3 megawatts next couple quarters and then under a megawatt next year. We want Marlboro to just be a pilot operation. We wanted it all along. It is expensive. What we are doing is positive for the company. I know in the short term because of having such low volumes, margins degrade but margins are great on a pilot factory that produces only a couple megawatts. It is not relevant even though everyone focuses on it. We have talked about that for years. We are setting ourselves up to have a good and effective cost structure in Marlboro to run efficient pilot operations and the right cost structure to run an efficient commercial factory in Devens.
Jonathan Hoopes (ThinkEquity Partners): How quickly do you plan on selling your new factory production?
Richard M. Feldt: My belief is in both personal dialog with them as well as talking to our sales force that our customers have confidence now that if we are willing to take contracts for 2010 and 2011 for new factories they would sign them. We are not willing to, until we are farther along, and so we have chosen the site, we have sized it, we are thinking in terms of 250 megawatts Phase I and then another 250 Phase II but we want to have a real plan in place not just an Excel spreadsheet. We are inhibiting that. We could take more orders and announce more orders but we will not do that until our plan is more solid around the expansion. We are beginning Devens I. We just opened the doors a few days ago, just got our Certificate of Occupancy a few weeks ago and we are still early in Devens I, Devens II to be taking contracts for the next factory.
Jonathan Hoopes (ThinkEquity Partners): What currency are your contracts denominated in or does it matter?
Michael El-Hillow: The currency on these take or pay contracts the majority of these companies and contracts are in Europe and so they are priced in Euro.
Michael Horwitz (Stanford Group Company): Since you are accelerating a lot of your plans and will get some data out of Devens in a few months are people coming to you and trying to negotiate with you on any licensing agreements for String Ribbon or are you prepared to have those conversations right now given that silicon still remains tight?
Richard M. Feldt: Regarding licensing, it is still early for us to comment on that. Once Devens is up and going and we have a good existence proof, we would entertain those discussions but right now we are not. The same thing would be for metallurgical. There is nothing going on in the metallurgical front. On the license front, we will just have to wait and see.
Mark W. Bachman (Pacific Crest Securities): As you exit 2009 do you expect to be producing more than 40 megawatts a quarter for both Devens I and Devens II?
Richard M. Feldt: We expect to be able to run Devens I at 20 megawatts per quarter, not the first quarter, the second quarter. They are close in the first quarter and then likewise by the middle of the year, have Devens II up and running in a 20 megawatts so the combined output would be 40. We have already assumed that we are going to get the yields that we expect to get with the improved performance out of Quad. We expect we are getting cell efficiency of 15.5. Right now the production numbers that we are talking about we think are good numbers but it is too early for us to be playing upside to them. We are just starting the factory so it is too early to talk about upsides to things that we have just begun to build.
Mark W. Bachman (Pacific Crest Securities): How the quarterly numbers are going to look, whether or not if fourth quarter could be so back end weighted there it looks like people are going to have to pull forth their numbers of second quarter assume a faster ramp because if you are not going to produce more than 40 megawatts in third and fourth quarter of next year?
Michael El-Hillow: We have told the marketplace that we will be at about 125 to 135 megawatts next year. Devens I should be approaching full capacity in the first quarter, Devens II starting but Devens II, you can not think of it as a separate factory because it is an extension of the first factory. The ramp up at Devens II could be sharper than Devens I but it is not back end loaded. If the second, third and fourth quarters of next year can be in the 35 to 40 megawatt range, we are going to make our goal. It is not a back end loaded kind of thing at all.
Robert W. Stone (Cowen & Co.): You said that the take or pay deals you have signed cover 100% of the Devens output from 2010 onward but it is less than 100% in the meantime. Is that because you have other non-contract obligations in the meantime or you just did not want to sign contracts for all the volume until you were sure that the factory was fully ramped?
Richard M. Feldt: We would be happy if on average we were at 60% or 70% for Devens I and II after we got up and going. We are beyond that now so we have opportunities to work here in Massachusetts with various utilities. We do not want to be in a position where we have nothing to offer anybody for the next few years. So, no we want to have some dry power. I will reluctantly sell everything out now for next year. I do not want to do that, I want to have some capacity going into the year so I can work with the utilities, I can see a new integrator or distributor. So, the answer is we could sell everything out now if we chose to, we do not choose to do that. We will have to get most of it sold out.
Robert W. Stone (Cowen & Co.): Can you characterize the rate at which the volume under these contracts is expected to ramp over the next several years?
Michael El-Hillow: They start slowly in 2008 and 2009 and then they go up rapidly in 10, 11 and 12.
Vishal Shah (Lehman Brothers): If some of the contracts that you have signed are just for the US market and if your customers were deciding to move supply to the European markets where prices are higher, do you renegotiate on these contracts or are these fixed only for the US market or are they free to sell any way they want to?
Richard M. Feldt: No, they are not free. We have prices negotiated for Europe and prices negotiated for North America. We have expected volumes for each region and if there are to be changes, those are to be negotiated.
Vishal Shah (Lehman Brothers): The most recent contract with IBC Solar, was it for the US market or for the European market?
Richard M. Feldt: Mostly European.
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