Good morning, everyone and welcome to FuelCell Energy's first quarter results conference call. Delivering remarks today will be R. Daniel Brdar, Chairman and CEO and Joseph G. Mahler, Senior Vice President and CFO. The earnings press release is posted on our website at www.fuelcellenergy.com and a replay of this call will be posted two hours after its conclusion. The telephone numbers for the phone replay are listed in the press release. Before proceeding with the call, I'd like to remind everyone that this call is being recorded and that this presentation contains forward-looking statements, including the company's plans and expectations for the continuing development and commercialization of our FuelCell Technology. Listeners are directed to read the company's cautionary statement on forward-looking information and other risk factors in its filings with the U.S. Securities and Exchange Commission. Now, we'll turn the call over to Dan Brdar.

Thank you for joining us this morning. Clean energy is increasingly driving today's global economy. The recent increase press coverage of fuel cells highlights the growing recognition that clean, highly efficient base load power generation is a critical part of the solution. Around the world, policy makers and power producers are seeking clean, efficient distributed power to reduce pollution, enhance their energy independence and create green jobs. As the world's leading manufacturer of ultra-clean, highly-efficient fuel cells, FuelCell Energy has a unique first mover opportunity to capitalize on that demand. FuelCell Energy is the only manufacturer of commercial megawatt class fuel cells for base load generation. Our stationary fuel cells are proving themselves in diverse markets around the globe from Asia to North America, where they've generated hundreds of millions of kilowatt hours of electricity. Driven to find solutions that are available today, not tomorrow, power producers, businesses and governments are looking to fuel cells to address their clean energy needs. At the same time, our products are suddenly becoming more economical to manufacture. Our cost produced megawatt class fuel cells are now in production. These fuel cells are as versatile as ever operating on a variety of fuels, biogas as well as natural gas with the highest available electrical efficiency in their size category and with high operating availability. With momentum in our key markets and a robust growing project pipeline, policy initiatives and rebounding credit markets will help convert this pipeline into orders. I'll say more about our company and markets after Joe Mahler, our Chief Financial Officer reviews the financials for the quarter. Joe.

Thank you, Dan, and good morning, everyone. FuelCell energy reported total revenues for the first quarter of 2010 of $14.6 million compared to $21.7 million in the same period last year. Product sales and revenues in the first quarter were 12.8 million compared to 19 million in the prior year quarter. Overall product revenue was driven by the product's mixed changing from complete power plants in the prior year to primarily stacked modules in the current period. The company's product sales backlog including long-term service agreements totaled $84.1 million as of January 31, 2010 compared to $70.9 million as of January 31, 2009 and $90.7 million as of October 31, 2009. Product margins improved over the prior quarter by $4.7 million driven by sales of lower cost megawatt class modules. The product cost and revenue ratio improved 7% to 141 to 1 in the first quarter compared to 152 to 1 in the first quarter of 2009. The ratio was negatively impacted by commissioning related cost in South Korea and lower sales. Research and development contract revenue was 1.8 million compared to 2.7 million in the prior year quarter. Research and development revenue declined due to completion of the company's Vision 21 and Ship Service Fuel Cell contracts with the U.S. department of energy and the navy. The company's research and development backlog totaled $11.9 million as of January 31 compared to $23.1 million as of January 31, 2009 and 14.2 million as of October 31, 2009. The air products contract we announced this morning will add to that backlog. Net loss to common shareholders for the first quarter of 2010 of 15.4 million or $0.18 per basic and diluted shared improved 26% compared to the prior year quarter net loss to common shareholders of $20.7 million or $0.30 per…

Thank you, Joe. In 2009, FuelCell Energy achieved important milestones that position us solidly for future growth. During 2010, we'll build on our success, continued on our path to profitability by aggressively driving down costs and increasing order flow in our key markets. We're focused on converting our project pipeline in the backlog. Government initiatives in loosening credit markets are increasingly supporting these efforts. With our products generating clean energy and geographic markets like South Korea, California, Connecticut and Canada, we're beginning to expand in key vertical markets, grit support, gas distribution pipelines and biogas waste water applications. We'll expand geographically as well forging new partner relationships in Europe. During 2009, we succeeded in putting our new cost reduced megawatt class products into production. Since the commercialization of our megawatt class products, we reduced the unit cost of those products by more than 60% reflecting our steadily improving cost to revenue ratio. Our new 2.8 megawatt power plant is currently going through operational and third party certification testing and the first units will soon be deployed to customer sites. As production volume increases, further cost reduction will be achieved through expanded global sourcing, higher volume purchasing, more competition among suppliers and increased capacity utilization in our facilities. Last year, we received orders for more megawatts of products than in any prior year in our history. Nonetheless, tight credits and North America slowed financing for capital projects of all kinds, including power projects. We continue to see evidence of improvement in the availability in terms of commercial project financing. Multiple project finance entities are actively engaged with us, investing their time and money analyzing our projects and we're also working with our customers and distribution partners to help them secure commercial financing. Looking at our key markets, South Korea's low carbon…

Our first question is from the line of Burt Chao with Simmons and Company. Burt Chao – Simmons & Company: Thanks for taking the question, guys. Congratulations on the results and cost reduction.

Thank you. Burt Chao – Simmons & Company: First quick question, the product mix shifted to this quarter because you were selling your component as opposed to full systems, because of the growth of the POSCO orders. Going forward, what's a good way for us to think about the model that, from the standpoint of modeling revenue, is it going to be pretty consistent? I mean is there a forecast you can provide about mixed, or is it kind of going to be lumpy, depending on when those orders are actually going to realized, out of backlog?

It's going to be a little bit lumpy, but what you're going to see is we're currently in environment where because of the impact, particularly last year the credit crisis, was coming through the P&L in terms of what we're making, shows there's a hole in terms of the order flow of that we had last year for North America. Because remember, our lead time to produce equipment is about 10 months. We're seeing the credit markets improve and as we are progressing through things like the DOE loan guarantee, you'll see the mix more balanced as we start to add U.S. order flow. And then eventually, European order flow as well back into the mix. What you're seeing right now and you'll see also probably for the next quarter is a bit of an unbalance towards what we're making for POSCO, but we would expect longer term mix start to move to a 50-50 kind of mix. Burt Chao – Simmons & Company: Okay. Great. And then also on the cost ratio, despite the charges you have to take with the commissioning, absent those charges, can you provide kind of what that number might have been, absent, the one time charges?

Let me break down – this is Joe Mahler. Let me break down the cost ratio for you. There's really the product cost side. Product cost included the commissioning cost that they include warranty cost. And then below that line is actually service costs that come through, so we support service costs. As I've said in past quarters, service costs right now is supporting our end of life stacks, the three year stacks that are coming through the cycle. We expect to continue to do that in 2011, a little bit of 2012. That probably adds somewhere in the 20 plus cost, 20 plus basis points to the cost ratio. And then you have in this quarter, the commissioning costs and the commissioning costs probably added somewhere in a 10 to 13 point range. Burt Chao – Simmons & Company: Okay.

That's what it's looking like. Obviously, volume would help us too. I tried to talk to volume in the beginning of the call, so if you added a little bit of volume to the equation that would move the cost ratio. So, I think in the last quarter we talked about where are we trying to get to by the end of the year? We are trying to get to the 120 to 130, range. We think some volume will take care of that. Burt Chao – Simmons & Company: Right. Okay. And then – But to get to a – okay. And then that is on target and if you get to the 120, 130 range and you kind of stay on target to get that positive EBITDA by 2011.

Yeah. I mean you need volume to get there. Burt Chao – Simmons & Company: Yeah.

So you just need to push. We're very clearly, now, the units that we're manufacturing can be profitable. We're on the track. We need volume. You can really just jump on the model if you get volume in here and then you can get to this, the profitability targets. In the 10-K, we talked around 100 megawatts of throughput and this company is profitable. Burt Chao – Simmons & Company: Okay. Great. And then one last quick question. With natural gas prices, initiative, except for the shale prices, U.S. natural gas prices, depending on who you ask, at least in the short-term are going to be somewhat in this kind of depressed level that we're looking at. For other traditional renewal energies like wind and solar, that's obviously a big impediment, if you are looking at a great parity type scenario, how you guys think about traditional energy and traditional energy prices in relation to the adoption of FuelCells, given that it's not wide spread commercial option just yet, but you're getting to a point where more people are going to be thinking about it in just pure dollars and cents?

Well, there's two pieces to that. One is because we now have a much more abundant supply than we thought we would get a couple of years ago. What has happened is, the volatility that we have seen in past years seems to be quieting down and volatility seems tends to be an issue with commercial industrial customers, because they're not good at predicting what the long-term pricing looks like, so it's a risk they figure they have to manage somehow if they want to distribute generation. That concern seems to be disappearing because everybody's becoming increasingly convinced, that because there's a surplus of supply, prices are going to remain low for an extended period of time which is a good thing. What it does in the near term, is it actually reduces the cost of electricity for generation from our units. So the gap that existed previously between us and other sources actually becomes compressed, because you don't see the utilities out there rapidly dropping their pricing because most of them have long-term supply agreements. It takes quite a while for them to show up. So what we're seeing is customers are now looking at our projects, running on natural gas, see a more attractive economic proposition just because of what's happened to gas pricing over the last year. So I think it's actually, interesting for us from a competitive standpoint. Because when we look at our pipeline, much of our pipe line, particularly in places like California was overwhelmingly dominated by biogas a year ago. We're now seeing a return of lot of interest on natural gas-based projects as well. So we're seeing more balance in terms of those two types of applications because of the abundance and pricing of gas. Burt Chao – Simmons & Company: Okay. Great. Thanks so much, guys and again congratulations.

Thank you.

Thank you.

Thank you, sir. Our next question is from the line of Sanjay Shrestha of Lazard Capital Markets. Sanjay Shrestha – Lazard Capital Markets: Great. Thank you. Good morning, guys. A lot of great progress and a lot of different fun, first question on this, sort of the hybrid power plant, 60 plus percent electrical efficiency, I mean those are some pretty amazing numbers. Can you talk about what sort of reception are you guys seeing and how big could that translate into, as like your sales pipeline because even the best combined gas turbine doesn't even get nearly close to that?

Essentially, potentially a real game changer for us and for part of the industry that we're really working here for a couple of reasons. One is you got gas distribution networks all over the world. And it's a product that could be applied in any of those marketplaces, so it really is a global opportunity. The other significant piece of this is it actually allows the gas distribution companies to enter the power generation market, which they couldn't do otherwise, because, here they're actually putting a power generator on their own facilities to improve the operability of the gas distribution system. So getting the report out in terms of how this first unit is operated. Certainly been a driver for what Enbridge has been doing, working for the government, because they see the value will bring to their system. And I think that will just drive more adoption in the marketplace. Sanjay Shrestha – Lazard Capital Markets: I think you guess did mention a number as a potential opportunity in Ontario. I am sorry, I didn't quite get that. What was that number again as to how big in a 43 megawatt or something like that?

There's 47 megawatts that Enbridge has submitted to the Canadian government in their Toronto facility. There's actually more megawatts than that, that's available in their system, but they've identified the first 47 that they're using as an opportunity to actually get some of the stimulus dollars from the Canadian budget and actually address some of their needs in their gas distribution system. Sanjay Shrestha – Lazard Capital Markets: I have one follow up question to that, because I think – so what kind of the electricity price is sort of assumed in that sort of the proposal if you would? And then we can kind of back out as to, based on the efficiency and assumption on the price of gas what the system clearing price for you guys could be?

In terms of the dollars for kilowatt or.. Sanjay Shrestha – Lazard Capital Markets: But either, dollars per kilowatt or dollars per kilowatt hour. We can get to either once we have one.

All right. You are going to see this look similar in terms of what are pricing in the marketplace, its going to be in the $3,000 to $3,400 a kilowatt? Sanjay Shrestha – Lazard Capital Markets: Okay. Perfect. So a couple more follow-ups if I may. So in terms of this phase I for DOE for Connecticut, it's about time. So when you talk about phase II. What exactly does that entail? Do you need to have an equity sponsor for the 20% of the sort of the funding before you get into phase II or help us understand that as to how does that whole process evolve? Because once you get that, I mean DOE stop I mean it would make the project even that much more attractive and the returns even goes up a lot?

Yes. I would agree. What phase II involves is you need an independent engineering report. Sanjay Shrestha – Lazard Capital Markets: Okay.

You need an environmental assessment of the project. And you need a credit rating for the project. You don't have to have the equity pieces lined up to do that. It's really – they structured this in two pieces, so that the participants weren't spending dollars to get independent engineering assessments and environmental reports until they knew they were actually going to have a chance of success. So the next couple of weeks, we'll be submitting for the projects that have met the phase I approval that engineering assessment, environmental assessment and credit rating. And then after that, they'll make a decision, they've indicated within 60 to 90 days. They've been pretty good at keeping their schedule. And at that point, you sit down and negotiate a term sheet with them. Sanjay Shrestha – Lazard Capital Markets: Okay. One last question to you guys. In that backlog, you said there is lumpiness going forward. What would be the mix of system versus stack in that backlog number that you guys have provided. Maybe it's more for Joe?

Sanjay, in the current backlog? Sanjay Shrestha – Lazard Capital Markets: Yeah. Yes.

Yeah. Most of it at this point would be modules. Sanjay Shrestha – Lazard Capital Markets: Okay.

Okay. Sanjay Shrestha – Lazard Capital Markets: Okay.

And the modules are all related to POSCO. Sanjay Shrestha – Lazard Capital Markets: Terrific. Thanks a lot, guys.

Thank you. Our next question in queue is from the line of Meghan Moreland of Ardour Capital. Meghan Moreland – Ardour Capital: Good morning.

Good morning. Meghan Moreland – Ardour Capital: I was under the impression that most of the cost related to the commissioning in South Korea where were already absorbed in the fourth quarter. But obviously, some has leaked into this quarter. You mentioned it was all done. Is that for sure or are we also going to see some of these costs leaking into the second quarter?

No. It's all behind us. It – what you've got is the units actually went into operation last quarter and these are just trailing costs that come through. If you think about having to replace, for example, some of the electrical components, some are longer lead items, so that time they order, installed and there's a billing cycle behind that. So it's just trailing costs. That's all it is. Meghan Moreland – Ardour Capital: So we can such as see an improvement in growth margin in the same quarter over the first quarter?

Yes. You would. Meghan Moreland – Ardour Capital: Okay. And I don’t know if you already mentioned that but can you give us an update on the ASP per megawatt, now that we're moving from whole systems to modules to stacks?

Well, the modules represent about two thirds of the cost of our large power plant. ASP in the marketplace for a large power plant is about $3,000 a kilowatt sometimes a little bit more depending on marketplace. So the modules really represent about two thirds of that ASP. Meghan Moreland – Ardour Capital: And then could you just give some color on yesterday's announcement regarding PG&E and SCE in California trying to have FuelCells for utility cells?

Yeah. We've actually been working with the utilities for quite awhile is part of helping them assist, where the utility fit in the generation mix. So there have been several projects they've been identified at a whole variety of sites where the utilities would own the units at a customer site. They're typically using colleges and universities as the host because they typically also have a good steam load for combined heat and power applications. The utilities have submitted their proposals to the public utility commission. And I think what we saw in some of the proceedings is there was some objection to some of the costs the utilities were adding as part of their own contingency that significantly increased the cost of some of those. So what we saw was really a split decision between Michael Peavey, the head of the Public Utility Commission and the administrative law judge. And they're working through how to they address that, I suspect before it's offend and they will have the utilities takes some other contingency out in order for these projects to move forward. But for us, it's a good sign because we've been working with them for awhile to get them to understand the benefit the FuelCells can bring to their system and it looks like they're increasingly convinced it's really worth them getting some units in, understanding first hand how they operate as part of their own assessment of – where to FuelCells fit in their product mix. Meghan Moreland – Ardour Capital: So they were essentially adding their $4 million per megawatt and additional cost? Over your approximately $3 million per megawatt figure for the whole system?

They added quite a bit. Utilities are not paid to take risks. So their view is this is something we've never done before. We want a lot of contingency. I think they're also planning a fair amount of activity around it in terms of media and press events and just sort of public information disclosure, which I think adds to their numbers as well. Meghan Moreland – Ardour Capital: Okay. Then the 27 megawatts that have passed the first round of the DOE loan guarantee program. That's something you're pushing forward on your own it seems like. Once you get approval is that something you're going to kind of spin off to another developer or is this something you're going to go forward with and develop on your own?

It's really a mix. The projects have other partners that are involved with them and once we understand with the final terms surrounding the – those products look like, because you have to negotiate a term sheet. We may turn them over to our partners, we may do them ourselves. It's really the function of what’s the level of loan guarantee is provide it. Meghan Moreland – Ardour Capital: And what's been the hold up here. Obviously, financing has been difficult. But also I don't think any PPAs have been signed for any of the projects. Has that been the catch 22, getting the PPAs signed? Why has that not been signed? Because it's been over a year since a lot these were originally approved.

The PPAs for all the projects are signed. Meghan Moreland – Ardour Capital: They are.

Are truly complete, ready to go looking for financing. The delay really has just been the delay in credit markets in general. And on the DOE side, it's taken awhile largely because they have just been inundated with project requests. So people that are looking topics that loan guarantee program. Meghan Moreland – Ardour Capital: Okay. Then just lastly, the announcements regarding the ERG is obviously very positive. But this has still been the relatively small segment for you. Can you give us any kind of color on where this is going to go this year or if this is really going to get you on your way, the announcement of the efficiencies?

Well, I think it's important in terms of raising the visibility of it. But if you're looking what’s – what we are active in the pipeline, you've got four projects in the Connecticut activity that total probably close to 20 megawatts. That are all the same product design a FuelCell coupled with a turboexpander. You've got Enbridge perceiving 47 megawatt on their own system with the Canadian government. And you've got – other utilities that Enbridge is working with to help educate them about the product as well. So it's looking like its becoming increasingly a pretty significant part of the pipeline that we've got. So getting the results of this out and published was something that both we and Enbridge thought was pretty important at this point in time. Meghan Moreland – Ardour Capital: Thank you.

Thank you, ma'am. Our next question is from the line of John Quealy of Canaccord Adams. Mark Sigal – Canaccord Adams: Hi, good morning, guys. This is Mark Sigal for John. I was wondering if you could just expand upon some your comment, you talked about regarding new European partnership moving forward and what the time table might look like there?

What we've found is to find good partners takes time and takes awhile for the parties to get know each other to actually spend time, working together seeing our units and seeing our factory. We're in discussion is actually now with multiple players. This is one of the things that we want to make sure that we pick the right partner, because if you look at what we've done for example, with POSCO, it's an indication of if you get the right partner, it can drive a lot of business for us. Timing is really a function of how quickly we can get some of our potential partners to move. They are tending to be larger companies they are going to move slowly and they have do a lot of due diligence. And their approval process tends to be lengthy. But we're optimistic that as we get little bit further here in the year. We're going to have certainly one and hopefully multiple pretty good European partners lined up. Mark Sigal – Canaccord Adams: Okay. Great. And then just turning to the Connecticut megawatts that are not included in the DOE loan program process? What's your expectations there perhaps from a commercial financing standpoint of timing there is? Are you still targeting something in fiscal '10 to develop or is that more fiscal '11?

Yeah. We continue to work the commercial financing side. Getting the loan guarantee is certainly a very good thing. We continue to work the process on it. We fully expect to get these projects financed. We're seeing some projects in the commercial financing markets. We're starting to see some players out of wind and solar. As those markets decline a little bit get very interested in the fuel cell markets. So we're hoping later in the year 2010, our initial focus is really on loan guarantee. We do have a parallel process, we would expect over the next several months to move those forward. Mark Sigal – Canaccord Adams: Okay. Great. My last question is, how do we think about commissioning costs, I guess moving forward? Will those be lumpy or perhaps more linear just for modeling purposes. How do we think of that?

Well, what we've seen herein the last couple of quarters really is a one-time event. It represented basically getting multiple units conditioned at the same time that actually had some unique challenges, because we had basically a new product in country with new partners they hadn't seen before. And we had some issues with some of the electrical equipment that surrounded the fuel cell. So what we've seen here the last couple of quarters is not something that we expect to see repeated going forward. Mark Sigal – Canaccord Adams: All right. That's very helpful. Thanks a lot.

Okay.

Thank you. Our final question is from the line of John Roy of Janney Montgomery Scott. John Roy – Janney Montgomery Scott: Guys, can you hear me?

Yes. We can. John Roy – Janney Montgomery Scott: So really, I mean you've answered a lot of questions and things are going pretty well. I guess the real question, what we're trying to assess is that when you look at the preponderance of the opportunities. What do you think is going to be the bulk of your business for 2010, in terms of the actual numbers? And what is really going to be the thrust? What's going to make it get going?

Well, I think the markets in general are going to get going as we experience some of this project financing reaching fruition. We've seen it in terms of what's happening in California. We've certainly seen it in Connecticut. As we get through either the loan guarantee process or the commercial financing. The pipeline there that's ready to move forward is looking increasingly like one that's eager to move. So we really want to just get through the last of this credit issue that seems to be lingering I think longer than everybody would like. Because the projects themselves are actually pretty far along, in terms of their state of development and the customers' ability to move forward. John Roy – Janney Montgomery Scott: Dan, once you get approval, I guess the next question is how long until you would start seeing possible changes in either your production capacity or plans based on those or actual numbers? Because I know obviously it takes a long time for these things to get out the door.

Yeah. I mean our delivery cycle is about 10 months or so. Once we see – things going into backlog and as we get good visibility into those. We'll adjust the production run rate to respond to that. Because if you look at some markets like California, for example, they're actually time bound based under the self generation incentive program, on when they actually have to have their units in and operational. So we're going to let the market drive what that production rate needs to be. John Roy – Janney Montgomery Scott: And if I remember correctly, you can ramp up fairly quick. If you need to do capacity without a whole lot of CapEx?.

We can. In fact, there's actually capacity there that can do up to 70 megawatts. So for us, it's really just a matter of bringing people on to ramp the capacity up. John Roy – Janney Montgomery Scott: Great. Good going, guys.

Thank you very much.

Thank you. I'm showing no further questions in queue at this time.

Well, I want to thank everybody for joining us. And we look forward to speaking with you again next quarter to update you on how we're doing in the marketplace. Thank you, everyone.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may now disconnect. Everyone have a good afternoon. Thank you.