Good day, everyone, and welcome to the First Solar second quarter 2009 earnings conference call. This call is being webcast live on the Investors section of First Solar's web site at www.firstsolar.com. At this time, all participants are in a listen only mode. As a reminder, today's call is being recorded. I would now like to turn the call over to Mr. Larry Polizzotto, Vice President of Investor Relations for First Solar. Mr. Polizzotto, you may begin.

Thank you, Teresa. Good afternoon, everyone, and thank you for joining us for First Solar's fiscal second quarter 2009 conference call. Today after the market closed, the company issued a press release announcing its second quarter 2009 financial results. If you did not receive a copy of the press release, you can obtain one from the Investor Section of First Solar's website at firstsolar.com. In addition, First Solar has posted the second quarter presentation for this call, key quarter statistics and historical data and financial operating performance on our website, on the IR website. We will be discussing the second quarter presentation during this call and webcast. An audio replay of the conference call will also be available approximately two hours after the conclusion of this call. The audio replay will remain available until Tuesday, August 4, 2009, 11:59 PM Eastern Daylight Time, and can be accessed by dialing 888-203-1112 if you are calling from the United States or 719-457-0820 if you are calling from outside the United States, and then by entering conference ID 6443641. A replay of the webcast will be available approximately two hours after the conclusion of this call and remain available for 90 calendar days. Investors may access the webcast on the Investor section of the company's website at firstsolar.com. If you are a subscriber of FactSet or Thomson One, you can obtain a written transcript within two hours. With me today are Mike Ahearn, Chief Executive Officer, Jens Meyerhoff, Chief Financial Officer, and Bruce Sohn, President of First Solar. Mike will begin with an overview of the company's second quarter achievements followed by a market and business update. Jens will then provide you with a second quarter 2009 operational and financial results and provide an update to our 2009 guidance. We will then open…

Thank you, Larry, and thank you for joining our Q2 2009 earnings call. We had another strong quarter in Q2. Revenues were $525.9 million that drove net income of $180.6 million in turn driving diluted earnings per share of $2.11. Operationally, production was 290 megawatts, that is up 32% quarter over quarter. Malaysia plants I and II operated at full production for the full quarter and plants three and four by the end of the quarter were operating at full production as well. Efficiency was 10.9% on average, that is up slightly over the prior quarter. Our annualized capacity per line increased to 51.7 megawatts. That is up 5% quarter over quarter driven by the small efficiency increase I mentioned and also improvements in our line throughput. Our manufacturing costs came in at $0.87 per watt for the quarter, that is down 6.5% quarter over quarter driven primarily by the Malaysian ramp and also bill of material cost reduction. In terms of the market, we previously announced a new manufacturing facility with EDF EN to develop French market, I will talk some more about that here in a few minutes, and then our pipeline execution in California has continued on plan. So let me turn from that now to the market update and I will just start by making some general comments. If you think back to the end of 2008, early 2009, we saw the market constraints really in the project finance side where things pretty much came to a standstill. So everybody remembers that pretty well. And that combined with seasonality essentially dried up throughput and allowed for very limited visibility. Across Q2, we see that liquidity constraint migrating to some extent into the customer base, and so by that I mean, on one hand you have extended…

Thank you, Mike, and good afternoon. Moving to the next slide, net sales for the second quarter were 525.9 million, an increase of 26% over the first quarter of 2009. The increase was driven by greater volumes as Malaysia substantially completed its production ramp. Line throughput improved and by recognition of 26.6 million of deferred Q1 revenues related to the Lieberose project discussed on our Q1 earnings call. These factors were partially offset by the previously announced Q1 price reductions. The blended euro exchange rate was $1.39, flat quarter over quarter. Let me provide you with some additional comments on the Lieberose project. Revenue recognition was triggered by the closing of the project's third-party debt financing in the second quarter. First Solar only holds subordinated debt in the capital structure of it today and the expiration of any right to the project equity. Year to date, we have recognized $84 million of revenues representing approximately 80% of the total project revenue. The project is currently being marketed for our customer Juwi. We produced 290 megawatts during the second quarter as seen on the following slide resulting in an annual run rate of 51.7 megawatts, up 5% over the first quarter as line throughput improved and Malaysia plants I, II, III and IV were at full production by the end of the second quarter. This brings our existing total capacity to 1.2 gigawatts per year. Of the next slide, you see how the cost per watt. Cost per watt produced in the second quarter was $0.87, down $0.06 or 6.5% sequentially as we continue to realize the benefit from increased production in low cost locations, higher line throughput and lower material costs. Cost per watt produced is expected to decline at a more moderate pace in the second half of 2009…

Thank you, gentlemen. (Operator instructions) And we will take our first question from Steven Milunovich with Merrill Lynch. Steven Milunovich – Merrill Lynch: Thank you, good afternoon. Jens, could you talk a bit more about the receivables situation, you have gone from obviously very low receivable days to something much higher, but pretty normal for most companies. Does this reflect the extended cash realization cycle that Mike alluded to, could you maybe talk a bit more about the write off you took and what do you see in the second half with the economy perhaps bottoming, do you think your receivable days go up much from here, or what are your expectations?

So I mean I would say I would say number one was the balance obviously we presented to you, the Q2 balance. We collected subsequently over 100 million against that balance just to give you an indication of the continued cash flows. The core driver obviously for the AR balances I related to in my discussion is the change of our payment terms from 10 to 45 days, so that is now fully reflected in our AR balance. So we would not necessarily foresee any significant further increase other than continued growth in revenue to drive the AR balance up. As it relates to the specific AR reserve we booked, we booked the reserve based on our assessment that collectability of that amount is unlikely at this point in time. Obviously we cannot discuss to which customer that relates specifically, but we felt it was prudent to take that provision based on the data presented to us. So I think the cash realization cycles that Mike talked about generally I think do port an overall liquidity constraint into the overall market system and channel. I think at the same point in time I think Mike alluded to that generally the banking system and the lending environment is gradually improving and that is not only true for Germany but also we have to see first evidence of more project finance for example in other parts of Europe was extended ten years, and also some first signs even in the US market to gradually improving. So I think generally I think the overall liquidity situation, the market will be a function of continued improvement of the landing situation and the ability of the channel to turn inventory and drive installations, and I think Mike gave a good overview with respect to how we are trying to support and aid those cash realization cycles.

We will take our next question from Satya Kumar with Credit Suisse. Satya Kumar – Credit Suisse: Yes, hi. Thanks, Jens and Mike, for taking my question. The question on the pricing, it seems like embedded margin guidance, operating margin guidance we have in the second half is about 25%. It seems like you are keeping an option to lower the price to somewhere between 1.15 to 1.30 euros depending on the exchange rate, at least at the low end that should be very competitive with silicon, is that the right way to think about it? And how do you define or determine what is the best in class crystalline silicon module pricing? Thanks.

Okay. So I mean obviously we have our own data and we spend obviously a lot of time I suspect talking to our customers, understand the situation in the channel. And based on these parameters, we try to effectively triangulate. We are participating in some of the projects realizations more closely I think the Turner project is a good example where we had quite a good degree of transparency of the overall economics. All these factors drive essentially into the rebate program that Mike described and allow us I think to set the pricing levels that we believe drives sell through and drive competitive position for our customers.

We will take our next question from Timothy Arcuri with Citi. Timothy Arcuri – Citi: Hi, two things. First of all, you know if you kind of look at the guidance for the back half of the year, you know it is obviously building into fairly (inaudible) compression in your margins, and I'm wondering is there kind of any reason to believe why is that sort of margin level you know would not kind of be superimposed into 2010, i.e. if the market conditions do not improve and if pricing doesn't get better, since you are not really expanding capacity much, would you really be able to cut your cost meaningfully such that margin would go back up entering 2010? And then also, Jens, I wanted to see how – you previously said that if you offer one customer a pricing discount, that it is very tough to not offer everybody that discount, so I am wondering how you plan on kind of keeping that discounting program localized within Germany? Thanks.

So I mean I would say – so first of all I think, as Mike alluded, there is not enough transparency in the market I think to project any type of current levels beyond multiple quarters particularly probably not in 2010. So I think we probably need to essentially assess on a quarter by quarter basis and that is probably the main reason why we start to move over towards the rebate program. If we felt that pricing levels will be depressed on a long term basis, and then that would possibly result in just adjusting your contract prices period. But now that that essentially means that margins as a result of the 2009 margin guidance essentially flows straight into 2010. Now that is completely a function, A, of our ability to lower cost, B, what pricing levels do we find? What is the mix with respect to market segments that we are operating in, how much systems business we will be driving and how will foreign exchange rate behave? So as we all know, those are essentially the key parameters. I think it'll probably be a little bit premature for just to assume capacity expansions are at a lesser pace in 2010. Therefore your cost reduction roadmap stalled. So that is certainly not how we're thinking about it. With respect to the rebate program, every customer is eligible for the rebate program provided they are selling the modules into the German market and driving a module installation in the German market. That may be more applicable to some than others.

We will take our next question from Stephen O'Rourke with Deutsche Bank. Stephen O'Rourke – Deutsche Bank: Thank you. Good afternoon and my apologies for kind of beating a dead horse here though. When you think about crystalline silicon module prices and what you have seen, how they have changed, how they continue to change, do you have a benchmark now that you can use to drive sell through?

I think we have established a benchmark I think how we're thinking about the rebate in the near-term. The rebate is structured in a way that it gets revisited on a quarterly basis but we have established a benchmark. So now how scientific and how exactly precise the benchmark is, Steve, I think we will get feedback out of the market against this but we believe it will be very competitive.

We will go next to Vishal Shah with Barclays Capital. Vishal Shah – Barclays Capital: Yes. Thanks for taking my question. Mike, can you talk about what your expectations are for the size of the German market this year and some of the other markets out there, you know where do you think growth is going to come from in the second half? Thank you.

Yes, I think it is – I think the visibility there is kind of limited for us, Vishal. I mean what we're focusing on is our core markets, so if you think about the free field and the German roof top in Germany, basically our expectations are that we will sell our clients volumes, we just kind of wrapped our heads around what are those issues and where do they impact, and how do we execute this rebate program. Broader than that, I don't have, two gigawatts has been kind of the thinking range for some time now, plus or minus. And if the market recovers in the second half like it could, it doesn't seem out of line at all. I think there is a lot of variables out there obviously. So the other part of your question was what beyond Germany, some of the other markets. I don't remember the rest of that, Vishal? Vishal Shah – Barclays Capital: What are your expectations for shipments to the systems business in the second half, are you looking at – still looking at to 10you’re your volumes going to the systems business?

We haven't really changed, Vishal, the bottom of that range.

We will take our next question from Rob Stone with Cowen and Company. Rob Stone – Cowen and Company: I had a related question on systems which is how much did that contribute to the second quarter revenue? Was there something besides the Lieberose deferred revenue?

No. there were really no – nothing of material mention expected systems revenues in the second quarter.

We will take our next question from Mark Bachman with Pacific Crest Securities. Mark Bachman – Pacific Crest Securities: Hi gentlemen. Nice results here today. Talk to us more about the rebate program and I think a little bit more in detail? It seems like you know when we talk to your customers, they are openly talking about wanting price reductions and clearly you're willing to deal here but it sounds like your rebate program, at least from the comments I got is only payable when the modules are installed. So two parts here, one did I interpret your comments correctly that the rebate is only applicable here if modules are installed? And then two, Jens, you're really meticulous you’re your calculation, can you help us here frame the magnitude of the gross margin decline in the second half of the year?

I mean number one is I think you heard right. Installation, proof of insulation through our end of life registration process is a prerequisite to drive rebate eligibility and obviously one soft process behind this is that we like to have utmost transparency with respect to not only our inventory situation but the inventory situation of the channel. We want to see that these rebate effectively drive sell through, right, so this is not about just what happens between First Solar and its customer, but also does it help to sell through for our customer, does it drive inventory turns right, and so forth. We maintain overall that we will consider a healthy channel inventory level and don't overbuild channel inventories as we move through the year. So now I think you're going to see I think disclosure in our 10-Q that roughly quantifies an estimated $40 million to $60 million out of this rebate program and so that is roughly a current assessment you will see in that disclosure.

We will take our next question from Stephen Chin with UBS. Stephen Chin – UBS Securities: Thanks. Jens, how should we think about the ending of this rebate program? It sounds like the only way to prevent new pricing from these rebates from becoming permanent is to assume that crystalline channel prices will actually increase? A modeling question, how should we think about modeling gross margins in the second half of the year, should we model third quarter as having a bigger impact or should be fourth quarter? Thanks.

I mean I would say I mean essentially you probably got to carry =– again it is a completely a function right of how pricing of polycrystalline modules have developed, very much a function. So if we assume that pricing remains on a declining slope and those prices right will be driven forward into perpetuity, yes, then I think over time, there could be a likelihood that those rebate prices will become ultimately permanent prices. Right now the program in itself has a limit to itself with respect to the overall time duration. But at the same point, the end goal here right is to drive through put sales through installation, provide project economics and provide competitiveness of our customers. I think every analyst apparently I think have subscribed detailed model on crystalline silicon prices. They have seen most of the parameters out there that would help you to model I think these types of price declines for the respective quarter based on your assumptions of what is happening to polycrystalline products.

We will take our next question from Jesse Pichel with Piper Jaffray. Jesse Pichel – Piper Jaffray: Congratulations on the strong results. For the purposes of determining the magnitude of the rebate, can you give us an idea for Q2, the percentage of revenues for the ground versus roof, and the percentage to sales in the various markets around the world, in particular Germany? Thank you.

I mean generally I think the mix on our rooftop versus free field has been anywhere from 40- 60, 40 rooftop, 60 free field to 50-50 in the ballpark. I recently I think recently we have seen more especially right now as the Lieberose project learning more towards the higher free field content. I mean I think if you look at the geographical breakdown and we talked about 5% to 10% of our sales going into the North American systems business, and I think with respect to Europe versus the rest of the world, I think we're probably somewhere in the like for Germany and like 60– 60 to 70% range overall volumes.

We will take our next question from Chris Blansett with JP Morgan. Chris Blansett – JP Morgan: Hi guys. Two questions, two simple questions here. There's a lot of expectations this year that we're going to get quite a lot of installations in Germany. I want to make sure what your thoughts are more recently on the political environment and what your thought are for subsidies there next year, Germany will be the primary factor for pricing?

Yes. I think the German government has been committed to the EEG and to the continuation of the feed in tariff program. So we don't assume a change in that regardless of the outcome on the elections. The anticipated – the range of installation volumes in Germany this year don't seem to us as out of the range of political expectations where issues were created. So we're assuming at least at this point that that program continues to operate on a multiyear basis and Germany will continue to be a very important strong market.

We will go to Kelly Dougherty with Macquarie. Kelly Dougherty – Macquarie: Hi, thanks. Just want to switch gears here and should we assume that the mini factory concept that you recently announced in France is something that we could see more of and have you been able to copy smart so that you can have attractive economics at about hundred megawatts?

Well, I wouldn't read – I wouldn't read that much, I wouldn't read too far into it. I think that what you could assume is that we are interested in building more capacity to meet incremental growth in demand. There are markets we are investing, it could be a factory or it could be some other level can serve as a catalyst to the formation of the implementation of these market programs. And particularly where we think the long-term fundamental nature of the market is attractive, we will try to do what we can, subject to our own operating model and financial constraint that catalyze the market. So in France it worked out that that was the injection, we got very comfortable with the two line factories is an initial step there and the economics worked to our standard. So we will just have to see going forward, I think we're pretty flexible as we look at these issues.

We will go next to Gordon Johnson with Hapoalim Securities. Gordon Johnson – Hapoalim Securities: Thanks for taking my question. The first question is how are you guys going to execute on the OptiSolar deal with so little cash left? Are you guys looking to raise money? And then looking at I guess this rebate program and what people expect with respect to some of the I guess Asian module prices, the expectation is they could move an additional 30% lower by the end of this year from today's prices. How can you be confident in the guidance given that that rebate program is open-ended? Thank you.

Well, let me just say that guidance is just that. It is guidance. I mean it is our best view as we sit today. Our intent is to defend our position in these core markets and we do what we have to do to drive throughput really at the plant level. So we are the cost leader in the industry by a wide margin and we're going to do what we have to do. Conversely you know we are trying not to overreact here, so I think we are at the right balance to do what we need to do in Germany. I don't quite understand the question on Opti, I mean we are sitting on a net cash position that is very strong at this point. The projects as they are built are not going to be on our balance sheet, that is not – that has never been the intent. Those are financed through an increasingly improving project finance market but that is still being riddled with short term issues and uncertainties. So it is right that we have to go work the project finance aspects of this, but other than that I think we are where we expected and wanted to be with respect to Opti.

Yes. I mean I would say, if you look at the current pipeline out in front that drives near term execution and capital requirement, we have been in the market with respect to marketing the project to investors. Some of these investors are investors that (inaudible) and will finance off their balance sheet. For other projects, we have been talking to more the traditional tax equity financial investor segment, and at this point in time, I think we see good traction and we see a healthy amount of activity in the financing of the project as they are outlined in front of us.

We will take our next question from Daniel Ries with Collins Stewart. Daniel Ries – Collins Stewart: Hi. Looking at the CapEx year-to-date of something like 145 million, you would have – to reach the guidance you would have 125 to 175 more to go. If Perrysburg is launched, is only a one line facility, do you have ongoing CapEx for Malaysia III and IV, are those complete, and are there other projects out there that require CapEx?

No. I don't think – I mean for Malaysia not all CapEx has yet gone out on the numbers. Then we have got the Perrysburg expansion, which can spend slightly further than I would say just a one production line, there is that infrastructure investment that is happening there too. There is R&D related investment, there is IT related investments as well that make up the total sum.

We will go next to Colin Rusch with ThinkEquity. Colin Rusch – ThinkEquity: Good afternoon. Mike, I wanted to follow up on your questions at the investor day and today about buyers being able to sort of pull the trigger. Can you talk in a little bit more detail about what the concerns are besides pricing and return and is there any risk to moving volumes in the second half?

Yes, I mean I think it is fair to say that project equity investors in the European markets have been delaying commitments to see if the price reductions that were exhibited in Q2 are a trend and whether they can enter at more attractive IRR points. I don't think there is a – I think that is true in isolated cases. I think there are already cases where equity investors have and will invest early, but I just think any time you have turmoil and uncertainty; it is going to cause people to defer decisions. And I think on the credit side, it could just have a slower, more deliberate careful process in terms of the underwriting process of these loans, and those are mainly the factors that flow throughput. I think price, where does price becomes an issue for us or a constraint, our customers could lose projects, new projects or suffer reduced channel sales in the rooftop market, because crystalline silicon prices is available at more attractive rates at the system level, and so that is another factor. It is difficult to – it is very difficult to separate all these out and start assigning volumes and percentages to them, but that is in general, the mix.

Yes. And I think there is a natural balance here with respect to – you can wait out in the feed-in tariff based market so long because the feed-in tariff in itself right will re-adjust which is resetting the economy. So there is to some degree I think over reaching this point now where the project realization was those waiting out for better price starts to become I think a little bit of a conflict. And I think with respect to risk of moving volumes from the second half; I think, yes, there are risks I think we outlined. I think some of them deal with – there is a fairly significant amount of volume if you think about how the overall markets expectations lays out between the first half and second half volumes, which requires a lot of execution capabilities throughout the distribution channel in order to drive that amount of installation. We laid out the liquidity in the overall system as the liquidity adequate financing cycles occurring fast enough in order to drive the throughput. I think those are probably the risk I think we should also be all cognizant of.

And our final question today will come from Sam Dubinsky with Oppenheimer. Sam Dubinsky – Oppenheimer: Hi guys. Just wondering given the recent price cuts, the rebate, can you just discuss what the project orders are in different geographic regions, levered and unlevered?

I mean I would say I mean I think the IRRs I think remain in all markets I think quite attractive I would say in the German market. I mean generally some of those waiting as we just discussed and it has probably started to put some upward pressure with respect to the return that equity investors are expecting saying that some of this depends also I think on the size of the project, the location and the quality of the project. But I would say generally probably equity return expectation have moved upwards. I think I would save at least in the 100, 150 basis points range in some of the European markets that we see. Some now Europe obviously still produces – I mean Germany I think is talking high single digits type return requirements. I think if you go outside of Germany, Italy, France, I think you're talking – you're talking return requirements that are double digits, that are in the low to mid-teens.

Thank you, ladies and gentlemen. This will conclude today's conference call. We thank you for your participation.