Friday, May 23, 2008

12 years old little girl broke off her arm to save her classmates in the earthquake

My dear friends, is my blog for China's solar energy industry, and I did not plan to talk about other issues here. But since the 8.0 magnitude earthquake hit Wenchuan China, all Chinese people have been following the rescue operation progress, and hundreds of thousand people went to join the rescue and disaster relief operation, the whole nation is moved by lots of heart-broken stories, and I would like to share such stories here with you.

Chinese governemnt agencies, companies, and individuals are donating to help the victims, but 11,367,929 people have to leave their home and stay in the temporary living areas, the death toll is 55,740, and 292,481 people are injured, and 24,960 people are missing by May 23rd 12 am. Especially many children lost their parents, and many senior citizens lost their sons and daughters. These victims need our help, and I hope you may forward the earthquake information to your friends, and I hope you may pray for them, and help them in anyway if possible.

Now I would like to tell you a story about the earthquake.

Lexiao Bai is a 12 years old girl, and in the earthquake when she tried to run out of their classroom, her arm was clamped by the door of their classroom. In order to let her classmates behind her get out of the classroom, she pulled her arm to get her arm broken off. Her classmates are saved, but she lost a arm forever.

Suntech Reports First Quarter 2008 Financial Results

SAN FRANCISCO and WUXI, China, May 22 /Xinhua-PRNewswire/ -- SuntechPower Holdings Co., Ltd. (NYSE: STP), one of the world's leading manufacturers of photovoltaic (PV) cells and modules, today announced first quarter 2008 financial results.

First Quarter 2008 Highlights(1)
-- First quarter 2008 total net revenues grew 76.1% year-over-year to $434.5 million.
-- Consolidated gross margin increased to 22.2% for the first quarter 2008 compared to 19.0% for the first quarter of 2007. Non-GAAP(2) gross margin reached 22.5 % for the first quarter 2008, compared with 19.9% for the first quarter 2007.
-- Net income for the first quarter 2008 was $55.8 million or $0.33 per diluted American Depository Share (ADS). On a non-GAAP basis, Suntech's net income for the first quarter 2008 was $60.6 million or $0.35 per diluted ADS. Each ADS represents one ordinary share.
-- Suntech's PV cell production capacity was 540MW at the end of the first quarter of 2008. The Company is on track to reach 1GW PV cell production capacity by the end of 2008.

"We executed extremely well during the first quarter, despite the impact of the snowstorm, to deliver stronger than expected growth in net revenues and solid financial results," said Dr. Zhengrong Shi, Suntech's Chairman and CEO. "A vigorous demand environment in the major solar markets in Germany and Spain as well as in the emerging markets including South Korea and Italy drove strong pricing during the quarter. We expect demand to remain robust through 2008 and are virtually sold out for the full year."

Commenting on Suntech's silicon outlook, Dr. Shi said, "During the first quarter we leveraged the funds raised through our convertible senior notes offering to enhance our long term cost competitiveness with new and expanded polysilicon supply agreements and strategic investment in key suppliers. Our ability to secure reasonably priced silicon reflects our competitive strengths with respect to our leading market position, financial strength, and close relationships with upstream suppliers. We are confident that this improved silicon outlook will help us to achieve ourgoal of providing grid parity solar solutions."

"During the first quarter, we continued to hire impressive talent incurrent and developing international markets including Germany, Spain, France, Greece, Italy, South Korea and Australia. This will lay the infrastructure for the continued rapid growth in our business, and provide the flexibility to respond to changing market dynamics. We are confident that our strategy of developing a broad portfolio of superior quality solar products, world-class manufacturing facilities and techniques, deep sales channels and improving cost efficiencies will differentiate Suntech as a clear leader in the solar industry," concluded Dr. Shi.

Recent Business Highlights

Products and Projects
-- Suntech established a 4MW module supply agreement with Enerray, an Italian designer, developer and manager of photovoltaic systems. The Suntech modules will be installed by Enerray in PV systems for the roof tops of large Italian industrial complexes.
-- Subsequent to the close of the quarter, Suntech signed an agreement with Hanau Energies SAS to supply a 4.5MW building integrated PV system (BIPV) to a farm located in Alsace, France. The project will be one of the largest BIPV installations ever built and will employ Suntech's 'Just Roof' modules to form complete weather proof roofs on five agricultural warehouses.

Global Offices and Acquisitions
-- Suntech Australia was opened in April 2008 to focus on sales and business development in Australia, New Zealand and the Pacific Islands.
-- Suntech recently closed an acquisition of KSL-Kuttler Automation Systems GmbH ("KSL-Kuttler"), a leading manufacturer of automation systems for the Printed Circuit Board (PCB) industry. KSL-Kuttler will design, develop and supply primarily automation equipment employed in Suntech's manufacturing process. KSL-Kuttler will continue to manufacture and supply equipment for the PCB industry.

Silicon Procurement and Investment
-- Suntech announced the second phase of a strategic cooperative agreement with Nitol Solar, an independent polysilicon producer. Suntech will acquire a minority interest in Nitol Solar for a total consideration of up to $100 million. In addition, in an amendment to the original 7-year silicon supply contract, Nitol Solar has agreed to substantially increase the aggregate committed volumes to be supplied between 2009 and 2015.
-- An eight-year polysilicon supply agreement was established with DC Chemical Co. Ltd. to supply Suntech polysilicon with a total value of approximately $631 million from 2009 to 2016.
-- Suntech strengthened its relationship with Hoku Scientific, Inc. through an investment of approximately $20 million in a private placement offering, which included an amendment to the existing supply agreement that accelerated the delivery time and increased volume to be delivered under the agreement.

-- On March 17, 2008, Suntech completed an offering of $575 million of 3.00% Convertible Senior Notes due 2013. In the first quarter of 2008, Suntech leveraged the funds to improve long-term silicon prospects with new and expanded polysilicon supply agreements with Nitol Solar, DC Chemical and Hoku Materials and strategic investments in Nitol Solar and Hoku. Suntech expects to continue utilizing these funds to secure long term supply of favorably priced silicon to support future development.

Industry Recognition
-- Suntech was named Frost & Sullivan's 2008 Solar Energy Development Company of the Year in recognition of unparalleled excellence in design and delivery of high-quality PV cells and modules and customization of energy solutions catering to a global client base.

First Quarter 2008 Results
Net Revenues Gross Profit Gross
(in $ % of Net (in $ Margin
millions) Revenues millions) (%)
Standard PV Modules $432.9 99.6% $98.2 22.7%
- Wafer to Modules 414.7 95.4% 96.6 23.3%
- Cell to Modules 18.2 4.2% 1.6 8.5%
Others 1.6 0.4% (0.3) (16.6%)
Total Net Revenues $434.5 100% $97.9 22.5%

Total net revenues for the first quarter of 2008 were $434.5 million, representing an increase of 76.1% from the corresponding period in 2007.

Non-GAAP gross profit for the first quarter of 2008 was $97.9 million, an increase of 98.9% year-over-year. Non-GAAP gross margin for the Company's core wafer-to-module business was 23.3% and non-GAAP consolidated gross margin was 22.5%. The gross margin increased from the fourth quarter of 2007 primarily due to an increase in the average selling price driven by strong demand for Suntech's solar products, which was partly offset by increased silicon wafer costs.

Non-GAAP operating expenses in the first quarter of 2008 totaled $31.0 million or 7.1% of total net revenues. Operating expenses increased from the fourth quarter of 2007 primarily due to an increase in expenses associated with the expansion of Suntech's global sales network, marketing associated expenses, bank service charges due to increased financing costs and bank commission charges in China, and bad debt provision on certain long-aging receivables.

Non-GAAP income from operations for the first quarter of 2008 was $66.9 million, an increase of 86.5% year-over-year. Non-GAAP operating margin was 15.4%.

Net interest expense was $4.0 million in the first quarter of 2008 compared to net interest income of $1.1 million in the fourth quarter of 2007. The sequential increase in net interest expenses was primarily due to an increase in the short-term borrowing balance to facilitate daily operations, a decrease in interest income resulting from the reduction of the interest rate by the U.S. Federal Reserve Bank, and an increase in average borrowing costs due to the worsening global credit market.

Foreign currency exchange gain was $2.9 million in the first quarter of 2008 compared to a foreign currency exchange loss of $3.7 million in the fourth quarter of 2007. The foreign currency exchange gain in the first quarter of 2008 was primarily due to the appreciation of the Euro against the USD coupled with an increase in Euro-denominated sales.

Non-GAAP net income for the first quarter of 2008 was $60.6 million, an increase of 85.2% year-over-year, or $0.35 per non-GAAP diluted ADS.

On a GAAP basis, for the first quarter of 2008 gross profit was $96.4 million, an increase of 105.2% year-over-year. Gross margin for the core wafer to module business was 23.0% and consolidated gross margin was 22.2% for the first quarter of 2008.

On a GAAP basis, operating expenses for the first quarter of 2008 were $34.6 million or 8.0% of total net revenues. Income from operations was $61.8 million for the first quarter of 2008, an increase of 116.7% year-over-year. Operating margin was 14.2%. Net income was $55.8 million, an increase of 113.8% year-over-year, or $0.33 per diluted ADS.

In the first quarter of 2008, capital expenditures, which were primarily related to production capacity expansion and the construction of Suntech's new production facilities, totaled $63.2 million and depreciation and amortization expenses totaled $7.7 million.

As of March 31, 2008, Suntech had cash and cash equivalents of $1.0 billion, compared to $521.0 million as of December 31, 2007. The increase was primarily due to the completion of a $575 million convertible notes offering in March 2008. Inventory totaled $178.3 million as of March 31,2008 compared to $176.2 million as of December 31, 2007.

Business Outlook

Based on current operating conditions, Suntech expects revenues for the second quarter of 2008 to be in the range of $430 million to $440 million. Suntech expects minimal revenue contribution from KSL-Kuttler in the second quarter of 2008. Non-GAAP consolidated gross margin in the second quarterof 2008 is expected to be relatively consistent with the first quarter of2008.

For the full year 2008, Suntech reiterates its expectation for total PV module shipments of 530MW and revenues in the range of $1.9 billion to $2.1 billion. Within 2008, Suntech believes that approximately 40% of this will be achieved in the first half of 2008 and 60% in the second half of 2008. Suntech expects that greater quantities of reasonably priced silicon will become increasingly available from mid-2008. Suntech targets to reach 1GW of installed PV cell production capacity by year-end 2008.

Senior Management Hires

Mr. Boxun Zhang has been promoted to Director of Business and Financial Analysis, reporting directly to Chief Financial Officer Ms. Amy Yi Zhang. Mr. Zhang joined in Suntech in February 2006 as Financial Controller. He previously worked for Credit Suisse and was an underwriter for Suntech's IPO in December 2005. Earlier, Mr. Zhang was a Senior Auditor and Senior Consultant with PricewaterhouseCoopers. Mr. Zhang received an MBA degree from Cass Business School in London, UK.

Mr. Andrew Wang joined Suntech to assume Mr. Zhang's former role as Corporate Financial Controller. Mr. Wang brings over 15 years of experiencein accounting and finance primarily with multinational companies operating in China. Key career experiences include increasing levels of managerial responsibility beginning at Deloitte Touche Tohmatsu Shanghai CPA, Avery Dennison Corporation, and most recently at OTIS China (Holding) Ltd. as leader of accounting, internal controls and Sarbanes-Oxley compliance. Mr.Wang holds an MBA from Washington University in St. Louis, Missouri, USA.