Welcome to the FuelCell Energy first quarter 2009 results conference call. Today's call is being recorded. At this time for opening remarks and introduction, I would like to turn the call over to Miss Lisa Lettieri, Vice President of Investor Relations.

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. Our earnings press release is posted on our website at www.fuelcellenergy.com and a replay of this call will be posted to our investors at 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 I'll turn the call over to Dan Brdar.

Thank you everyone for joining the call this morning. As you're aware, the world continues to be affected by serious global economic recession. Like most companies, we're also affected by this situation and are taking steps to manage through the downturn that we'll discuss later in this call. That said, where there is crisis, there can be great opportunities too; that is for companies ready to pursue them. We continue to take steps to position FuelCell Energy to capture the growing world wide demand for clean energy. Let's turn the call over to Joe Mahler, our Chief Financial Officer so he can discuss the financial moves we've made and I'll discuss what's going on in our markets before we take questions.

Good morning everyone. In the first quarter of 2009 product sales were almost double last year's first quarter and the cost ratio improved by 24% and was in line with our expectations. Total revenues were $21.7 million, a 45% increase over last year's first quarter. Product sales and revenue increased 94% to $19 million from $9.8 million in the year ago quarter. Revenues continue to improve due to the increased production of megawatt class power plants compared to the prior year. The company's product sales as of January 31, 2009 including long term service agreements was $70.9 million compared to $84.7 million as of January 31, 2008 and $87.6 million as of October 31, 2008. Research and development contract backlog was $23.1 million as of January 31 compared to $13.2 million at January 31, 2008. In January, the Department of Energy awarded the company Phase Two of the Megawatt class coal based solid oxide fuel cell contract, a $30.2 million contract of which $21 million will be funded by the Department of Energy. The contract extends through September 20, 2010. Research and development contract revenue was $2.7 million in the first quarter compared to $5.32 million in the first quarter of 2008. This was primarily due to the completion of several government programs in the second half of fiscal 2008 and the transition to the new DoE contract I just spoke about. First quarter net loss to common shareholders was $20.7 million or $0.30 per basic and diluted share compared to $18.7 million or $0.29 per basic and diluted share in the same period last year. Net loss increased as higher volumes of product sales and revenues resulted in increased operating losses, but at a slower rate as per unit production costs have declined. The product cost to revenue ratio…

The cash conservation actions that Joe discussed enabled us to push ahead with this year's most important initiatives while trimming expenses in other areas to address the fact that we're in a recession. We're being conservative with our cash and at the same time, we're managing the business to meet demand for alternative energy power production. As I said at the beginning of the call, the demand for our products is stronger than ever. Let's go over a few of the near term opportunities we believe will result in orders during 2009 sufficient to support our current 30 megawatt premier run rate. One of our key markets, our largest market right now is South Korea, a leader in proposing clean energy projects as a way to stimulate economic growth and create new high quality jobs. In fact, the government of South Korea made FuelCell deployment a top priority because they recognize stationary fuel cells ability to put 24/7 ultra clean efficient power where it's needed with a minimum of disruption to the surrounding neighborhood. Our manufacturing and distribution partner in Korea, POSCO Power completed its 50 megawatt capacity balance of plant manufacturing facility last fall, a significant investment that demonstrates its commitment to stationary fuel cells. The facility is now operational and POSCO is in the process of building their first units that will incorporate a fuel cell module from fuel cell energy. We're also working together to establish the Korean service operation to train POSCO's personnel to manufacture and service the balance of planned equipment. As a result of the continuing strong demand from Korea, we're currently in discussions with POSCO regarding their fuel cell module requirements for 2010 delivery. In Connecticut, the state implemented Project 150 designed to get the first 150 megawatts of clean renewable energy under…

(Operator Instructions) Your first call comes from Sanjay Shrestha – Lazard Capital Markets. Sanjay Shrestha – Lazard Capital Markets: What exactly changes their decision? Is this sort of like the early signs of benefit that we're going to start to see from the stimulus package because this is arguably shovel ready project or can you talk about that a bit more?

Your reaction is right on target. The State of Connecticut and others are looking at stimulus activity, look at the potential to bring stimulus to our State and one of the best opportunities to do that is to get some projects going that can be delivered near term. That creates job benefits plus creates job benefits for developing equipment also. The other piece of it also is, I think the Public Utility Commission looked at the legislative requirements and realized that the time frame to do another round of solicitation, they probably were not going to be able to get the 150 megawatts under contract by October, so that combined with the stimulus drove them to say, "Let's increase the awards in this round and just skip round four altogether." Sanjay Shrestha – Lazard Capital Markets: So in terms of actual 40 plus megawatts hitting the backlog, so we've still got to go all through the financing process and you know all the formalities before they hit the backlog so the likelihood of them hitting the backlog is at least a quarter or two away. Is that still fair?

The 43 megawatts, 27 is in this current round. There is about 16 that's in round two, and those are actually pretty far along in the negotiation process so we would expect to see the first 16 near term and then the 27 that were announce yesterday will probably take another quarter to get that wrapped up. Sanjay Shrestha – Lazard Capital Markets: In terms of the cash flow situation, obviously it sounds like for the next three quarters cash flow is going to be down pretty dramatically. I think it's the working capital benefit, cost reduction and can you walk us through that a bit more so there is a level of comfort there given the environment we're in.

The cash flow, what we've done is we want to maintain our 30 megawatt production rate. If we can get order flow to marry up to that 30 megawatt run rate, we believe that we can get to this target of $35 million to $45 million. We've done, like you just said, we've done working capital adjustments, we've done some cost reduction. We've cut the 401-K plan. We think the combination of that, but it really narrows down to a very simple thing. We just need to keep putting order flow into the system and then we should be able to manage our cash pretty well, and we have very good visibility as to what that order flow is. Sanjay Shrestha – Lazard Capital Markets: I just want to make sure I'm reading this right, so you already burned $30 million, so really we're talking about another $5 million to $15 million, sort of talking about that whole taking cost out, benefit finally materializing in capacity utilization and the path to profit being a lot more clear for you than it's ever been. So it's basically all the things you've done sort of coming to benefit.

Exactly. So its all those things. We've affected all of those things. They are all happening and what we need now is similar to this announcement in Connecticut is, let's get stimulus moving a little bit. Let's get a little bit of confidence in the market places and we thing the order flow comes.

Your next question comes from John Quealy – Cannacord Adams. John Quealy – Cannacord Adams: Could you talk about the visibility of cash receipts, maybe give us a sense of the number of contracts that were delayed this quarter and then just kind of walk us through the milestone payment process.

The contracts that we would put into that category that we were expecting would include several contracts that are coming out of California that are very far along. These would be municipal based water contracts. We believe we are very close on those contracts and we would expect those to close. The other ones are the 16 megawatts around two. We see those contracts continuing to work to closure. We have not seen anybody pulling back. The message is clear to us that people want to move. These customers want to move FuelCells. We do see a little bit of hedging in the economy. People are looking at their capital requirements two and three times over, so I think a little bit of momentum just will kind of relieve the bottleneck and we'll see these orders come through So I think there's 16 megawatts in Connecticut that we're focused on and there's probably 3 to 5 in California right now that we're focused on immediately, and then following that you would have the round three work we're going to do. Obviously the news that came out today, and then you have backing all of that up, you have the Korean order which time wise, we got our 2009 order from the Koreans last April, and we would expect similar time frame for their 2010 order and we see all indications being positive coming out of Korea right now. John Quealy – Cannacord Adams: You talked about the stimulus spending, but maybe talk about if you're seeing any impact from that yet on an RFP activity, etc.

We are actually. One of the things that we went through in the last couple of weeks is we were working with some folks in the administration who are looking for a list of shovel ready projects, so we have several that are pretty far along that we put in. Because what people that are handing out the stimulus dollars are looking for, is they need to get the money out and they want to be able to show an immediate impact with what they're doing. So they are actually, I think the stimulus dollars are really going to play a role in helping take some of the uncertainty out of some of the customers that we see in terms of delaying their spending. And we're also seeing in terms of just direct order flow from the government to us; the recently announced order for the solid oxide program and the order we announced for 29 Palms, and we think there will be more orders particularly on the DoD side that we're going to see hopefully in the near term here as a result of stimulus dollars.

Your next question comes from Robert Stone – Cowen & Company. Robert Stone – Cowen & Company: It sounds like there are a lot of things potentially coming. Do you think you could finish the year with backlog back up to prior levels or how are you feeling about order intake versus shipments this year.

I think we could definitely finish with backlog back up to prior levels, and we would hope to do better than that. Robert Stone – Cowen & Company: I wonder if you could just go through, I didn't quite catch it, you described the trend in cost to revenue reduction, and I thought you said it would stay level for several quarters, and then improve from Q3 but there's only two more quarters to get to Q3 if you could just walk through the sequence on that one more time please.

What happens is that the gross margin profitable units really start in production late in the third quarter so the impact that you'll see coming through the financial statements really occurs in the fourth quarter. But the actual production begins in the third quarter. So you could see a little bit of transition in the third quarter, but you should see the real impact in the fourth quarter. Robert Stone – Cowen & Company: In terms of the shipment mix on the full fiscal year of megawatt class versus sub megawatt class, would you care to take a swing at that?

Let me tell you more of what's in our backlog and the primary units that are in backlog right now are the two megawatt plants are the biggest amount. There's about 12 megawatts of those that are in our backlog. There's a little over 2.5 megawatts of 2.4 megawatts of one megawatt plants and then the remainder are FuelCell modules. So that's really the mix at this point. Robert Stone – Cowen & Company: So it's not so much a shift from sub megawatt to multi as it is to the production of the new design, the higher capacity stack?

Exactly. Once we work off our inventory of the older megawatt design, and you move to push the new design through production, it becomes pretty straight forward. Robert Stone – Cowen & Company: What do you see in terms of an impact on pricing from the steep falling in natural gas prices? Is that helping your customer returns analysis any and how are prices trending?

I think what it does first and foremost is it relieves some of the uncertainty of customers making decisions because it's pretty clear I think to most people that are looking at it that we're going to see relatively lower fuel prices compared to recent history in quite awhile. So what I think was scaring people more than anything else at one point in time was volatility. Now with just the current economic conditions it looks like fuel prices are going to remain depressed. That just raises the comfort level of the customer about looking at moving forward. We would hope over time to be able to start to capture some of that end price as we start to see customers' confidence that they can lock up a long term supplier, but for now it's really just relieving some of the concerns customers are having just in terms of placing orders. Robert Stone – Cowen & Company: With respect to shovel ready, I noticed you have shovel ready in round three approvals and then orders, do you think that round three business could actually be booked and shipped before the end of fiscal 2010? Is that the thought on shovel rate or does some of it carry over till later?

Our hope would be to have it booked and shipped and installed in2010.

Your next question comes from Brian Gamble – Simmons & Company. Brian Gamble – Simmons & Company: Booked, shipped and installed in 2010 would be impressive. I hope that comes to fruition. I know that depends on a lot of other counter parties beside yourself, so I hope that they can continue to appreciate the timing of this and continue to move down that path. On the cash flow, could you give us an indication of what the cash burn would have been this quarter if the orders that you had expected to come through came through. I know you went through what they were, but could your quantify that?

Cash would have been in that range, $15 million to $20 million range that we did on a quarterly basis. It would have been right there. Understand the play in the payment, we had a large milestone payment that delayed, literally came in the next day after the quarter, and then other than the delay in what we think in the contract closure process, it would have looked like a very normal quarter. Brian Gamble – Simmons & Company: Just trying to get to a normalized quarter run rate, so if you did $18 million for Q1, and you're talking about your range for the full year, that kind of gets you to almost a single digit type of number going forward on a normalized basis?

That's exactly right. Brian Gamble – Simmons & Company: The April time period for the final decision, I just with an original draft and a revised draft and then a finalized date that's not too far away, what is your hope that that actually sticks in April versus getting pushed into early summer?

My hope is they would actually hit a date for a change. They're getting pretty late in the process and the hearings that surrounded these projects have already happened so it seems unlikely that there's going to be a long delay. I wouldn't be surprised if the date by a week or two because what happens is the docket at the PUC gets forwarded and they just don't always get to every item. But they seem to actually want to get this thing wrapped up and move on to the next round of what they're going to do in the RPS program, and they do have to have these things done and supposedly under contract based on the directive from legislation for October. So they don't have a lot of time to push this stuff out. Brian Gamble – Simmons & Company: I think the release actually said it was supposed to be done by October 1, 2008. Was that a misprint and it's actually '09 as you're speaking.

The original was October of '08 and they're just getting a lot of pressure to get things done from the legislature.

Your next question comes from Walter Nasdeo – Ardour Capital. Walter Nasdeo – Ardour Capital: I'd like to get some clarity on the assembly plant and when it's up and running and the implications for both revenue recognition and margin improvement as they start assembling everything over there.

The only thing they're assembling is the balance of plant equipment so that facility is now operational. They're putting together their first unit and the way we did this was, we basically bought the parts and sent them to them, and they're going to assemble that balance of plant in their new facility, and they will eventually transition to buying that equipment themselves. What they get from us is a completed FuelCell module from our factory in Torrington. So the order that we will get from POSCO and part of the order that we have now is for just those FuelCell modules which looks very much like our traditional orders. We get a down payment we get progress payments and a payment at shipment. In terms of how it looks coming to our books is not going to look a lot different because the balance of plant scope really just transitions to POSCO and the module represents about two-thirds of the cost of the power plant. Walter Nasdeo – Ardour Capital: And that will be up and running by the end of this year then.

They're currently up and running. Walter Nasdeo – Ardour Capital: I mean at full capacity.

Full capacity is a function of how quickly they close orders, how comfortable they are getting the thing wrapped up into what level. Walter Nasdeo – Ardour Capital: What's going on in Europe?

In Europe we are in discussions with our partner MTU looking at where we're going to go. As many of you people know, our arrangement with them ends in December of this year so we're looking at what our options are to try to develop that market a lot more aggressively than it has been because we think it's a market that is just really ripe for the deployment of FuelCells. I suspect that in time we're probably going to do is look to bring on some other partners over there to help stimulate some competition and we've certainly had some pretty significant companies with European exposure that agree with us that there's an opportunity waiting to be exploited. Walter Nasdeo – Ardour Capital: Just briefly, I know we've beaten up Connecticut quite a bit here, but just for my own clarification, 27.3, these are all FuelCell Energy projects? Those megawatts are all allocated to you?

Yes. Walter Nasdeo – Ardour Capital: We've gone through this with Connecticut a number of times where you've been awarded something and then modifications had to come in because somebody else had hurt feelings and what not. Are we pretty confident that this is not going to occur again?

If you remember, in the earlier rounds where awards got scaled back. What got scaled back was a recommendation from the clean energy fund by the Public Utility Commission. This is the Public Utility Commission themselves revising the award upward for us. So this seems pretty likely to actually go to fruition as it was announce yesterday.

Your next question comes from John Roy – Janney Montgomery. John Roy – Janney Montgomery: How much capital would it take to go to the next level of production? I know you're running at 30 and could you give us maybe a couple of steps ahead, because it looks like in 2010 you're going to need more obviously than 30.

We're currently operating at 50 megawatts capacity. The run rate is 30 megawatts, capacity is at 50 megawatts. There's a two step move we can make. One step would be to go to 70 megawatts of capacity. It takes reasonably low capital somewhere in the $4 million to $7 million range, and then the next move would be approximately 150 megawatts and to get to that level would be somewhere $35 million to $45 million including that $4 million to $7 million. So that's the steps that we have planned for and that we are just awaiting order flow to make that decision. John Roy – Janney Montgomery: And you're running at 30 now, so to run it at 50 is it just more shifts or what would it take to go from 30 to 50.

Bring more people in and operating the shifts. John Roy – Janney Montgomery: So obviously not a lot of capital to do that.

There's no capital. John Roy – Janney Montgomery: Would this approval of round three or increase in round three, do you think that's going to push the round two guys to get off their butts and sign something?

We're actually seeing the round two stuff pretty far along so while it always helps to have stuff pressuring in terms of when you might get your unit, a couple of the projects are actually very far along in the process to get wrapped up and turn into an order here, so it's getting that last little push, that's the big thing. John Roy – Janney Montgomery: And then once you get that directly, it would move into backlog.

Correct.

Your next question comes from Jeff Osborne – Thomas Weisel Partners. Jeff Osborne – Thomas Weisel Partners: I was wondering if you could address I think in round two there's a clear view biomass facility that was being debated about whether to move forward with that or if they're possibly retendering that process?

As far as I know that project hasn't been officially cancelled but it seems to be having a lot of issues in terms of getting financing completed particularly in the current environment that's certainly gotten worse. I think that's part of what has motivated the PUC to increase the awards in this round because they're seeing that there's a real likelihood of some attrition on some of the biomass activities. But as far as I know, nothing's been formally announced about that project dropping out. Jeff Osborne – Thomas Weisel Partners: I believe a couple of quarters ago there was a 3.1 megawatt facility with Lindy in California that was pulled out of the backlog. You mentioned a pipeline of 3 to 5. Is part of that pipeline the older Lindy facility?

No. That project is in the works with getting reassigned to someone else. When we talked about 3 to 5 it does not included the Lindy activities. Jeff Osborne – Thomas Weisel Partners: Could you mention, you gave the one megawatt and above two backlog, could you just comment on what the total megawatts are in backlog currently, and also what was shipped.

25.3 megawatts in backlog and in the quarter we actually shipped 7.2 megawatts.

That concludes our question and answer session. I'd like to turn thing back to our speakers for closing remarks.

Thank you everyone for joining us on today's call. On behalf of the management team, we look forward to speaking to you again next quarter.