Good day, everyone, and welcome to the First Solar Fourth Quarter and Year-End 2010 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Larry Polizzotto, Vice President of Investor Relations for First Solar, Inc. Mr. Polizzotto, you may begin.

Good afternoon, everyone, and thank you for joining us for First Solar's Fourth Quarter 2010 Conference Call. Today after the market closed, the company issued a press release announcing our fourth quarter and full year financial results for 2010 and our guidance update for 2011. If you did not receive a copy of the press release, you can obtain one from the Investors section of First Solar's website at www.firstsolar.com. In addition, First Solar has posted the presentation for this call, as well as key quarterly statistics and historical data on financial and operating performance on our IR website. We will be discussing the presentation during this call and webcast. An audio replay of this call will also be available approximately two hours after the conclusion of the call. The replay will remain available until Tuesday, March 1, 2011, at 7:30 p.m. Eastern time and can be accessed by dialing (888) 203-1112 if you're calling within the United States, or (719) 457-0820 if you're calling from outside the United States and entering the replay pass code 8382775. A replay of the webcast will be available on the Investors section of First Solar's website approximately two hours after the conclusion of the call and remain available for approximately 90 calendar days. If you're a subscriber of FactSet or Thomson One, you could obtain a written transcript from them. With me today are Rob Gillette, Chief Executive Officer; Tk Kallenbach, Executive Vice President of Marketing and Product Management; Jens Meyerhoff, President of the Utility Systems Business Group; and James Zhu, Chief Accounting Officer and Interim Chief Financial Officer. Rob will present an overview of the company's fourth quarter and 2010 results and give you an update on the market and business. James will review the fourth quarter financial results and update guidance…

Great. Thanks, Larry, and welcome to our Q4 earnings call. Thanks for joining us today. Let me start by saying that 2010 was a good year, and we exceeded the 2010 EPS guidance we set a year ago despite the many market uncertainties we faced. The strong results demonstrate the capability of our low-cost technology and PV systems solutions, the diversification of our markets and the strength of our systems pipeline, as well as some really good execution in the operations. For 2010, our net sales of $2.6 billion were up 24% year-over-year. Fourth quarter net sales is $610 million, increased 24% over the third quarter of 2010 primarily because the prior quarter included completed contract revenue recognition for the 60-megawatt Sarnia project and Q4 was impacted by our decision to divert some volumes to extradite the Module replacement program. Our fourth quarter net income was $156 million or 25.6% of net sales, resulting in diluted EPS of $1.80. Diluted EPS for 2010 was $7.68 which exceeded our guidance. Return on net assets was 19.5% on a four-quarter-rolling basis, representing an EVA of over 7% or 200 basis points above our target. Our cash and marketable securities balance of $1.1 billion increased $117 million sequentially. Our Q4 production was 395 megawatts, up 27% versus prior year and 13% quarter-over-quarter. The sequential increase was driven by a higher line throughput, improved conversion efficiency and six additional days of production due to our adoption of a calendar year for financial reporting. The annual capacity per line increased by 3 megawatts quarter-over-quarter to 62.6-megawatt per line. Across all production lines, this adds 138 megawatts to our current and planned annual capacity. Our conversion efficiency was 11.6% which is up a half a percentage point year-over-year. Both conversion efficiency and capacity per line benefited…

Thank you, Rob. Good afternoon. Let me start with Page 18. First Solar delivered solid financial results in 2010. Net sales grew 24% year-over-year to approximately $2.6 billion. Operating margin was 29.2% and fully diluted earnings per share came in at $7.68, above the guidance range we provided in December of 2009 and also above our data [ph] guidance from our third quarter 2010 earnings call. We achieved a return on net assets of 19.5%, exceeding our weighted average cost of capital by 7%. Moving on to net sales. During the fourth quarter, demand met our expectations with continued strength in our Module business. Net sales for the fourth quarter were $609.8 million, down $188.1 million or 24% compared to the third quarter of 2010. The decrease was primarily driven by the lower systems revenue recognition. For example, Sarnia Phase 2 revenue recognition occurred in the third quarter. Additionally, ASP declines due to mix, [indiscernible] implementation, 2011 pricing in December. And as Rob mentioned earlier, we delivered the strong volumes to expedite the Module replacement programs. These impacts were partially offsetted by positive effects of increased sales volume, conversion efficiency improvements, and foreign exchange. Our EPC revenue mix declined from 28% of total net sales in the third quarter to 5% net sales in the fourth quarter. The blended exchange rate in the fourth quarter increased 1.5% sequentially to $1.33 per euro while the spot rate increased to 6% to $1.36 per euro. However, the stronger euro added a net sales by only about 1% but we were heavily hedged in line with our long-term strategy. We produced 395 megawatts during the fourth quarter, up 13% compared to the prior quarter. The increase was driven in part by a 5% improvement in the line throughput to 62.6 megawatts per year…

[Operator Instructions] And our first question will come from Smitti Srethapramote with Morgan Stanley.

Just a quick question on your line upgrades. Now that you have recently converted all your lines to, upgrade all your lines to 11.6% conversion efficiencies, I was wondering what you plan to do next move it up to the 12% level?

Smitti, it's Rob. We're going to continue to execute on the projects and plans that we have in place of roughly 0.5 per year. So I think as we discussed, I think Q3, when we've made some modification and changes, it's something that because of the number of lines and the way we execute it, we'll make progress on and then it may level out in a given quarter and then continue to make progress. So we'll continue to invest in that and it's still is our plan to drive the 0.5 per year.

And we'll now go to our next question that will come from Satya Kumar with Crédit Suisse. Satya Kumar - Crédit Suisse AG: I was wondering if you could give any additional color on the non-driven European volumes, just given the risk in Italy and the potential for a cap in France. I was wondering if you could give any granularity in the megawatt exposure you might have to these two other European market, but you could have on Slide 14?

Yes, it's Rob again. I would say that obviously there's been a considerable amount of change. I'll give you some framework for us. We talked about a gigawatt in each outside of Germany is the estimate. And it's estimate based on everything we know. We expect to ship about 10% to 15% of our Module production to France in 2011. And as it relates to Italy, I think that we're planning to do 15 to 20, develop our megawatt ships to Italy. So we spent a lot of time there and continue to work with and going see the markets and trying to see what we can do to make it sustainable and transparent overtime and it's been interesting.

We'll now go to our next question from Rob Stone with Cowen and Company.

My question has to do with India. It looks like rapidly increasing market opportunity. But how will you address local content requirements?

It's one of the things that we're working on and considering in the future. And really it's, actually recently, Tk visited in India. He's here with us so he can have a few comments as well. But for us, it's more determining the market and what the opportunities are and then considering what the best way is to maximize value for First Solar and our customers. So we're open to different ways to do that with partnerships and through our own efforts. So, Tk if you want to add to that?

Sure, Rob. It's Tk. When the National Solar Mission first came out last year, it had some discussion around local content requirements. And our position, and we encourage the folks in India and the government officials to think about local content requirements further down the road. So our position then was that at some point, local content you want to encourage but you don't want to encourage it very early on in the marketplace. So initially, they exempted quite a bit of local content requirements in order to evaluate a number of technologies. And if you're familiar with the marketplace in India, there are a number of smaller utility scale kind of 5-megawatt projects as part of the National Solar Mission and there are three or four very active state programs, again, that are encouraging a number of, if I would call them, smaller utility scale projects. And so, so far, they've allowed the local content requirements to not be met so they can investigate technologies like ours which are not available for production in India today. Our belief is that potentially, it's three or four years down the road. After the market is established, they may re-engage in that discussion. But at that point, the market has been validated and the market will tend to pull in the technology that makes the most sense for installation in India. And I think we're fine with that particular policy position.

And we'll now take a question from Dan Ries with Collins, Stewart brokerage firm.

I wondered if you could -- it seems like you've changed the wording a bit for the 400 megawatts plus or minus. Has there been -- it seems like your more firm in the 400 at this point rather than the range that you gave back in December. Can you just discuss the factors that led to that shift if I'm correct, if that is a minor shift?

No, I think you're maybe interpreting a little into workflow here, right? So generally, we're keeping flexibility in that pipeline of thing as we reiterate here today. There's large projects that are pretty much sharp already that have either started or in the process of starting construction. We're building the BoS content up in a way that we have variability with respect to how fast and how many megawatts we can deploy on those projects. So that flexibility remains. I think one comment we did make in the script today is, that obviously, as we move throughout the year, that flexibility for the year can decline and which is much more of a mathematical function of how much time you have left to install how many megawatts. But for the time being right now, we have the flexibility. But at the same point in time, we generally see a strong global demand environment and time will tell whether we have to deploy that flexibility to its fullest although we can move some of those volumes into 2012.

We'll now hear from Mark Wienkes with Goldman Sachs.

Just following-up on that. Could you give us maybe in megawatt terms how much flexibility you have through the first part of '11?

I think the flexibility is more focus on the second half of '11 because as we mentioned, we're focused on satisfying the strong demand in Europe in the first half. So it's really geared towards the second half what I would call as is ramping then [indiscernible] possible right in the mix as well, which is another large utility scale project here in southwestern United States. So I think in the past, we stated [ph] detects that flexibility can go up into the 700-megawatt range. And so I think we're preserving that optionality and again, we're well prepared towards any form of market fluctuations in the latter half of 2011, should those occur.

And Vishal Shah has our next question from Barclays.

I just wanted to clarify here, your guidance on a quarterly basis for operating income and net sales has changed from the December conference call. I was wondering what drove the reduction in the first quarter, especially for operating income?

So we don't guide through the quarter. I jumped on this one here. If you look at the profile that we presented, I think for the first quarter, I think, or the guidance we're providing today is actually quite consistent with the profile. However, we've got a little more precise on the profile for the first quarter today because of the average consensus to some degree ignoring the shape of that profile and having a shown higher numbers.

We'll now take a question from Sanjay Shrestha with Lazard Capital.

It seems like '11 is a pretty strong year for the industry and for you guys as well. My question is really more about two part question. One is, what sort of a pricing dynamics are you guys seeing in the U.S. market with the continuously depressed price of natural gas? And second part of the question is how do you guys sort of see the industry dynamics unfold into 2012 with you having the flexibility of folks not having that flexibility from a pipeline standpoint?

I'll go ahead and make some comments and then Jens can chime in on the U.S. market and where, as you know, [indiscernible]. Considering to develop our pipeline and putting on PPAs and other things that we've mentioned in the body of the presentation, that they're moving from the $0.14 to $0.16 range that we have today to in future type applications, the $0.10 to $0.12 which is our objective over time to be able to sell, and we believe that eventually [ph] peaking great parity. I think the issues related to the Europe and the feed-in-tariff will cause some rush to demand again like we saw in 2010. So that's why we believe that 2011 first half will be very strong and then, the issue is, probably, it will be your pressure in the market in the second half. And then the stabilization, what we do is, we've talked to all the officials and regulatory body and our customers and what we push for is the transparency for the future and we support the declining feed-in-tariff's, but we want to make sure that we have visibility as we plan our production and make our strategy and planning in the future. So that, I think, 2012 in terms of the market in Europe, we'll unfold better as the year progresses and we get past the July timeframe and we know what's going to happen with some of the feed-in-tariffs. So I think that's why we continue to, and I mentioned, we're going to invest in growth in new markets and new regions and set aside significant resource and energy to do that. And make sure that we have continuing diversity in our pipeline and demand. So that I'll let Jens make some comments too about the North American market.

I think if you look at the U.S. market right now, what we see is as it relates to signing new PPAs on the power side, as you go into the outer years of the market, it certainly become a lot more competitive. And generally, bidding activities are moving closer and closer to the grid parity goals as they should and as we described in our strategy. I would say that in the near term, that there's a big focus on the customer side as it relates to profit realization and execution track record and ability to hit aggressive schedules. So the utilities want to realize the generation capacity in order to get closer to their RPS goals on a true generation side. So we are seeing that ability has value in the markets, but overall it's a competitive market. I think the industry, overall, sees obviously that the U.S. is the fastest-growing, highest volume market for the next couple of years. It is not the fast-turns business as we see in Europe, unless you have a significant pipeline that become increasingly difficult to participate in that growth.

And I would add, one of the values of the North American pipeline is, is its multiyear dynamic. While It doesn't develop super quickly, it's got a nice multiyear dynamic. But in addition to what both Rob and Jens said, one of the things maybe you can expect from us, we're going to continue to diversify our marketplace. So if you look at Page 14 and we extend that out into 2012 and '13, our intent is to continue to diversify globally and have more of these kind of markets so that if there are situations where one goes up and one goes down, there is a diversity protection in the overall market system.

We'll now hear from Steven Milunovich with Bank of America Merrill Lynch.

On the guidance call you talked about this 500 megawatts of core, unaccounted for modules that you expect to sell in Europe and various places. How do you feel about placing those today? In particular, is your view on the pricing of those modules any different than it was a few months ago?

Well, I think from the guidance call, we were continuing to see the demand for the Module be steady. So as we've look at the overall economics of the feed-in-tariff discussions in France and Italy and in Germany have changed over the last eight weeks. It's fundamentally, those are the still markets that are quite viable to the kind of the economics that we're looking at in the first half. Should Germany make another decrease in midyear, we'd see that to be more of the tightening of the economics. But fundamentally, as we look at it, you saw the announcements on some of the India volume which is a new location for us, it obviously helped it. A part of what we're doing for the small amount of volume that we don't have currently completely contracted throughout the entire year, we're looking at the where we would place that in new markets to make those go, and it's a very small percentage at this point. It's way out of Q4.

Keep in mind, Steve, when we said we have high confidence in 2011 here.

And I think that part of it is unchanged.

We'll now hear from Stephen Chin with UBS.

Just a follow-up on the operating margin question. The new 2011 operating guidance looks like it's up a few basis points versus the prior guidance. Is there a trend that makes you more comfortable to raise that margin guidance lately? Is there maybe a step-function improvement in the cost per watt as we go through 2011 that may happen?

Yes, Steve, this is James. We have a high confidence in terms of the operating margin in that we continue to drive efficiencies [indiscernible] cost per watt. At the same time, we try to supply our market and our price is set to drive sell through, so we have a flexibility in the pipeline especially in our captive pipeline in the U.S. that Jens, Rob and Tk pointed out in terms of flexibility that we have, so yes.

Steve, just to add, I would say to couple of points. On the systems side, our pricing is based on the established economics in the PPAs and we know that. We transitioned into from planning to do EPC on some of the projects in China to having a partner do the EPC. So there's a mix effect to that. It's another piece of the equation. And then having better understanding, clarity another quarter into the process about the demand stream and the competitive situation, so we feel pretty good about being able to provide that guidance.

And we continue to have a resilience in there.

Tim Arcuri with Citi has the next question.

I had a question on share. You before stated that your sort of longer-term goals, 30% global share. And there was another company just tonight that basically is indicating that between 21 and 25 gigawatts worth of modules were shipped into the market this year, which would put your share sort of 7% to 10%. So you're sort of running a way behind that goal and chasing a market that's growing much faster. So I'm wondering how you think about that share goal as it relates to what your share was in 2010 and whether what looks like it's going to be this year?

It's Rob. I would say that we get that as a goal, so an aspiration. I would tell you, too, that there's certain pieces of the market that are not accessible to all. So we define the market a little bit differently when we show you the total analyst forecast as an average. You see the numbers and one thing we all know is that it's hard to be accurate in terms of forecasting this market. So there are certain aspects of the marketplace that we believe are realistic markets for First Solar to serve for all kinds of reasons, and we think that we can continue to grow our share position and grow the business. So we're really focused on growing the entire market and then participating in that growth.

We'll now hear from Ramesh Misra with Brigantine Advisors.

My question is regards to your production costs across the various geographies. Is it safe to assume that all the new plants that are coming up will have generally similar production cost or will there be a difference?

It's Rob. What we do is, we take a look at all of the costs, both raw material, labor and the mix of the plants and facilities that we have. So when we plan the cost reduction roadmap, we consider all those different elements in terms of our plan. So we still have the objective to be between $0.52 and $0.60 by 2014, and we think we're making good progress to that end with the improvements in efficiency in Q4 and a $0.02 gain from Q3 to Q4. And as well as the 11% reduction year-over-year. So that's still our plan, and it includes the mix that we have.

Our next question will come from Stuart Bush with RBC Capital Markets.

If I compare your guidance today versus your guidance in December, it looks like some of the upside in the operating income is partly driven by $15 million to $20 million less in start up expense and a 1% lower average range for the tax rate. Can you discuss what you changed your assumptions there?

Sure. Stuart, this is James again. We're basically, we're really looking at, as we pointed out with visibility and really, the uplifting in terms of operating income is really where we're seeing the benefit of the volume increase also, the better pricing that we're seeing there in the European markets because that we're able to actually move some of the volumes in a better pricing and the customers. And secondly, we actually benefit from an FX as well. So as I pointed out earlier, we continue to drive efficiency from the cost per watt down and that will contribute to the increase in operating margins. So all those together, I think, that those budgets really the key elements to the why we actually have the increase in the operating income.

Maybe to add, James, the change in the start up costs is a combination of the acceleration of a plant. So those costs are -- the couple of million dollars that are being reclassified in this guidance from start up into cost of goods sold to the earlier production starts. And the other part of the start up relates to the delays on the French plant.

That's right. Remember that as [indiscernible] most of the volumes hedged. So and we have locked-in a lot of good economic stuff and those kinds of things.

We'll now take our next question from Jed Dorsheimer from Canaccord.

Can you just talk a little bit more about your approach to project development outside of North America and of course, the project in China?

So outside of North America, I think we're much more focused on mid- to late-stage developed assets. So we've taken an approach especially in Europe right now where there's a pretty broad market where developers that are easily, financially strained or might not have the working capital for project execution that are seeking partners. So we're seeking quite a view of those opportunities. Out of those opportunities, the one that fit our risk appetite and project profile, those are the ones we're acquiring. Generally, you should think of that effort as a fairly fast-turning business. These are projects that generally should be realized within a nine-, 12-month timeframe. So if we look at Italian assets, for example, we are keenly focused that we acquire any of those and realize them, that they are realizable in 2011. Now as we go beyond that effort and you look at markets like China, I will not necessarily describe ourselves as a developer in China. I think in China, we're bringing our core competency of being a system provider having EPC capability, having design know-how and obviously, a very low cost panel technology to partner with local developers.

And I think -- This is Tk, I would add to the China piece of that. Because of the way that you do development in China, in order to apply and get a pre-feasibility study and feasibility study approved which is typically what we think of as project development, you have to be a state-owned enterprise. As we one of the companies there. And so for instance the project that we're doing in Ordos, one of the pieces of value that China Guangdong Nuclear brings is they are a state enterprise that has the ability to work with us and get the bulk of those feasibility studies approved. So that's our intent, long term in China, to work with a state-owned enterprise, just like we're doing with China Guangdong Nuclear.

We'll now take our final question with Colin Rusch with ThinkEquity.

Can you just give us an update on the cost of capital efforts that you've guys have been engaged in diversity of sources that you're looking at for financing [indiscernible] projects and the trend lines in terms of the actual cost as you look into 2011, 2012?

I think you've got to look at the cost of capital geographically. I would say, if you think about the project finance markets for PV solar in the United States for example, that is still in infancy. And with that, we continued to see further rationalization and more aggressive bids as it relates to the weighted average cost of capital on the projects. That comes from an increased interest and understanding of the extremely favorable payback profile of the solar investment in the U.S. at more and more capital competing. So fairly few shovel-ready projects. If you're thinking about the U.S. on the debt side, as the U.S. commercial debt market is opening out to project finance with longer terms and a step-by-step gradually in terms that are more comparable to Europe, so that's gradually getting there while not yet quite at the same volume. So as you know, we're executing a multi-pronged strategy between commercial debt financing. We're working on rating on some of the large projects for bond offerings and obviously, we're very engaged with the DOE in both of their programs. If you look in Europe, in Europe I would tell you that overall, the capital costs are gradually increasing. Here we're generally seeing a much more mature market. So the continued de-risking of the assets has less leverage as compared to the U.S. And at the same point in time, obviously, there's upward pressure on the yield curve in the outer years that we're financing along those assets. So we have seen increase in interest grades. If you just look at KfW [KfW Bankengruppe] lending rates, for example, in Germany, that has risen slightly over 100 basis points over the past couple of months.

Ladies and gentlemen, that's all the time we have for questions today. And that does conclude today's conference call. We thank you for your participation.