MEMC Electronic Materials (WFR)

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actual or contingent liabilities; the inability to predict the future success or market acceptance of SunEdison's products and services while part of MEMC; the highly competitive and rapidly evolving markets in which both SunEdison and MEMC compete; SunEdison's limited operating history and the fluctuation of its past operating results; SunEdison's reliance on the availability of project finance debt and equity capital and/or tax equity; and other risks described in MEMC's filings with the Securities and Exchange Commission. These forward-looking statements represent MEMC's judgment as of the date of this release. MEMC disclaims, however, any intent or obligation to update these forward-looking statements.

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MEMC’s net loss for the third quarter was $64.6 million, or $0.29 per share, including the restructuring and impairment charges discussed above, additional tax expense of $19.2 million for an unrecognized tax benefit and a negative impact relating to the decrease in the value of the Suntech warrants of $6.3 million.

During the third quarter, the company generated operating cash flow of $0.2 million, compared to $16.4 million in the 2009 second quarter. Capital expenditures for the third quarter totaled $53.1 million. MEMC ended the third quarter with cash and investments of $1.2 billion, and does not maintain any significant debt.

As reported in early September, the company shut down a large portion of its Pasadena, Texas polysilicon facility in the third quarter to repair damaged equipment. The equipment was repaired, the facility resumed operations and normal production levels were restored in September, as expected. The production ramp allowed the company to rebuild inventory before the end of the quarter to the levels seen prior to the equipment failure.

“Revenue grew by nearly 10% from the second quarter, despite the setback in Pasadena,” said Ahmad Chatila, MEMC’s President and Chief Executive Officer. “While it is disappointing that the issue in Pasadena prevented us from taking full advantage of available market demand in the third quarter, we are pleased that we were able to restart production and report revenue within our original guidance range, and above the midpoint of our revised range, while rebuilding our inventory so that we are positioned to respond to fourth quarter demand.”

“During the third quarter, semiconductor wafer demand continued to show improvement across all end markets and geographies, and factory utilization rates continued to improve. In the solar market, wafer demand also showed improvement compared to the second quarter.”

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The company is also negotiating an amendment to its long term solar wafer agreement with Gintech Energy Corporation, but has not yet reached a resolution on such amendment. The parties are discussing price reductions for future periods in exchange for greater volume commitments, with similar deferral mechanisms for Gintech as were agreed to with Suntech. There can be no assurance that such an amendment will be reached at all, or if one is reached, that such amendment will have similar terms to the Suntech amendment discussed above or that such terms will be favorable to the company.

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“MEMC’s strong financial position with $1.3 billion in cash and investments and essentially no debt enables us to provide our team with the technology, resources, and support needed to strengthen our competitive position for the long term. As I continue to assess our strengths and weaknesses from a fresh perspective, I will focus on additional opportunities to improve our cost structure, enhance our product portfolio and drive innovation and entrepreneurial thinking throughout the company,” concluded Chatila.

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Mr. Chatila stated, “I am excited to be joining MEMC Electronic Materials. MEMC has long been viewed as an innovator in the wafer industry and has a rich history going back to the time when the integrated circuit was first developed. In recent years MEMC has broadened its product portfolio, strengthened its financial position and has become a strong global supplier to two important markets. MEMC’s customer base continues to expand, and the company is well positioned to continue to deliver value in markets that will grow well into the future. I look forward to working with the team at MEMC and building on the company’s leadership role by delivering even greater value for all stakeholders.”

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Certain matters discussed in this news release are forward-looking statements, including that our fourth quarter 2008 revenues will be approximately $400 to 425 million, with gross margin of approximately 46% plus or minus one percentage point, and operating expenses of approximately $27 million. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include market demand for semiconductors and silicon wafers, as well as polysilicon; changes in the pricing environment for both silicon wafers and polysilicon; general economic conditions; inventory levels of our customers; utilization of manufacturing capacity; good working order of our manufacturing facilities; supply chain difficulties or problems; interruption of production; delays in capacity expansion; customer acceptance of our new products; our ability to reduce manufacturing and operating costs; assumptions underlying management’s financial estimates; actions by competitors, customers and suppliers; changes in product specifications and manufacturing processes; changes in financial market conditions; changes in the composition of worldwide taxable income; the impact of competitive products and technologies; changes in interest and currency exchange rates and other risks described in the company’s filings with the Securities and Exchange Commission. These forward-looking statements represent the company’s judgment as of the date of this release. The company disclaims, however, any intent or obligation to update these forward-looking statements.

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IN WITNESS WHEREOF, the undersigned parties have signed this Agreement.

Separation Agreement and General Release

Mr. Sean Hunkler and MEMC Electronic Materials, Inc.

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With regard to the appointment of Marshall Turner, Marren remarked, “Marshall is the ideal person to move the company forward during our CEO search. His extensive understanding of the industry coupled with his knowledge of our customers, his experience in leading a business with high-volume manufacturing operations, and his board experience with multiple companies will help ensure a smooth transition.”

Mr. Turner, who has been a director of the company since April 2007, brings significant management and board experience to his position as interim CEO, including his most recent role as Chief Executive Officer of Toppan Photomasks, formerly known as Dupont Photomasks. Mr. Turner is also currently a member of the board of directors of Xilinx, Inc., and the Alliance Bernstein Funds.

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Using an estimated effective cash tax rate of 15%, non-GAAP net income for the third quarter of 2008, excluding the non-cash effects of the quarterly valuation of the Suntech warrants, was $195.8 million and non-GAAP diluted EPS, excluding warrants, was $0.86 per share. See non-GAAP reconciliation information at the end of this press release following the financial statement tables. GAAP net income for the third quarter, using a GAAP tax rate of 17.2%, was $182.8 million or $0.80 per share, which includes a $0.04 per share non-cash impact relating to a decrease in the valuation of the Suntech warrants. The third quarter book tax rate includes a $38.2 million favorable impact associated with the closure of the previously disclosed IRS examination of the 2004-2005 tax years. Both GAAP and Non-GAAP EPS figures include $5.8 million of other than temporary impairments of long-term investments ($0.02 per share) due to the company’s holdings of certain Lehman Brothers Holdings, Inc. bonds and Sigma SIV bonds.

During the third quarter, the company generated operating cash flow of $115.3 million, or 21.1% of sales, compared to $205.0 million, or 38.6% of sales, in the 2008 second quarter. Capital expenditures for the third quarter totaled $73.1 million, or 13.4% of sales. Free cash flow (operating cash flow minus capital expenditures) was $42.2 million or 7.7% of sales. The company’s operating and free cash flows were reduced by $65 million based on the company’s election to further fund its U.S. pension plan and increase its after tax return on cash. MEMC ended the third quarter with cash and investments of $1.4 billion, compared to $1.5 billion at the end of the 2008 second quarter. The company did not maintain any significant debt in either period.

“MEMC grew sales by 3% sequentially, 15% year-over-year, and increased inventory by approximately $7 million, in spite of nearly three weeks of production impact due to hurricanes alone,” said Nabeel Gareeb, MEMC’s chief executive officer. “On the margin front, we posted gross and operating margins close to 50% and over 40%, respectively, even after absorbing the Pasadena shutdown, clean-up and start-up costs, the impact of underutilized facilities, lower wafer pricing, lower spot polysilicon sales volumes in the third quarter and a charge associated with the potential shortfall to a purchase obligation.”

“Although we are disappointed that hurricanes prevented us from achieving our original targets in the third quarter, we are proud of the resolve and determination exhibited by our employees and suppliers in rapidly ramping back to pre-hurricane levels.”

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These targets would represent 2008 sales growth of 20%-25% and non-GAAP EPS growth (excluding the Suntech warrants) of 23%-33% compared to 2007,” concluded Gareeb.

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“Regarding our polysilicon expansion, we are currently targeting to achieve mechanical completion of Unit 4 (silane unit) in our Pasadena facility before the end of the second quarter, as well as additional polysilicon reactor capacity in the third quarter. This combination will mark the mechanical completion of our 8,000 metric tons of capacity which was originally targeted for the end of 2008. Depending on the output ramp of the different units, this improved installation schedule may allow us to make good progress toward achieving our annual financial targets in the second half of 2008. We will provide more specific guidance at our semi-annual update in July,” concluded Gareeb.

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Certain matters discussed in this news release are forward-looking statements, including that the company now anticipates that revenue for the first quarter of 2008 will be approximately $500 million, with gross margin of approximately 52% and operating expenses of approximately $42 million; that maintenance on one of the existing units will be completed in the coming week; that we can recover our production rates and utilization in the second quarter, which should enable our revenues and margins to improve significantly during the second quarter; and that our next phase of expansion should allow us the opportunity to recover most of the revenue in the second half of the year. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include market demand for wafers and semiconductors as well as polysilicon; customer acceptance of our new products; utilization of manufacturing capacity; our ability to reduce manufacturing and operating costs; inventory levels of our customers; changes in the pricing environment for both silicon wafers and polysilicon; supply chain difficulties or problems; interruption of production; delays in capacity expansion; assumptions underlying management’s financial estimates; general economic conditions; actions by competitors, customers and suppliers; changes in product specifications and manufacturing processes; changes in financial market conditions; changes in the composition of worldwide taxable income; the impact of competitive products and technologies; changes in interest and currency exchange rates and other risks described in the company’s filings with the Securities and Exchange Commission. These forward-looking statements represent the company’s judgment as of the date of this release. The company disclaims, however, any intent or obligation to update these forward-looking statements.

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A replay of the conference call will be available from approximately 11:00 a.m. ET on September 4, 2007, until 4:00 p.m. ET on September 11, 2007. To access the replay, please dial (402) 220-3469 at any time during that period. A replay will also be available until 11:59 p.m. ET on September 10, 2007 on the company’s web site at www.memc.com.

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Certain matters discussed in this news release are forward-looking statements, including our expectation that third quarter 2007 sales are targeted to be approximately $500 million; that margins are targeted to increase by approximately 100 basis points from the second quarter, with operating expenses of approximately $39 million; that for the full year 2007 we are targeting revenue of over $1.95 billion; that we are targeting non-GAAP EPS for 2007 based on a cash tax rate of 15% and no change in the value of the Suntech warrants to be a little over $3.30; that we are targeting to achieve over 15,000 metric tons of annualized polysilicon capacity by the end of the decade depending upon customer needs; and that we are targeting to achieve over 700,000 wafers per month of 300mm wafering capacity by the end of the decade depending upon customer needs. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include market demand for wafers and semiconductors as well as polysilicon; customer acceptance of our new products; utilization of manufacturing capacity; our ability to reduce manufacturing and operating costs; inventory levels of our customers; changes in the pricing environment for both silicon wafers and polysilicon; supply chain difficulties or problems; assumptions underlying management’s financial estimates; general economic conditions; actions by competitors, customers and suppliers; changes in product specifications and manufacturing processes; changes in financial market conditions; changes in the composition of worldwide taxable income; the impact of competitive products and technologies; changes in interest and currency exchange rates and other risks described in the company’s filings with the Securities and Exchange Commission. These forward-looking statements represent the company’s judgment as of the date of this release. The company disclaims, however, any intent or obligation to update these forward-looking statements.

-tables to follow-

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Commenting on the company’s performance, Nabeel Gareeb, MEMC’s Chief Executive Officer said, “We are pleased to have grown revenue by almost 5% over the previous quarter, despite some semiconductor application areas being weaker than anticipated. Solar demand, however, remained healthy.”

“In addition to revenue growth in the first quarter,” continued Gareeb, “the company continued to improve margins, generate high levels of free cash flow, and further improve its already strong balance sheet. Cash and short-term investments grew by 43% over the previous quarter to over $838 million, while total debt remained flat at $35 million.”

“During the quarter, the company commenced its first shipments of solar wafers. This marks an important milestone for MEMC as we introduce this new product line given our 50 years of experience in making wafers.”

Should we achieve the above targets, MEMC will achieve compound annual non-GAAP EPS growth in Phase II of approximately 30% or more. Combined with the accomplished results of Phase I, that would represent a compound annual growth rate in non-GAAP EPS of over 30% for almost a decade.”

“We have demonstrated strong results through the first half of this decade, through good markets and bad. Our financial, technological and strategic positioning continues to strengthen, and we are excited about our prospects as we anticipate Phase II of MEMC’s evolution during the second half of this decade and beyond,” concluded Gareeb. See non-GAAP reconciliation information at the end of this press release following the financial statement tables.

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In the meantime, consistent with past practice, the company has provided an updated one page summary of known changes to date, compared to the last information provided on April 26, 2006 to reflect the company’s current understanding of its 2005 and first quarter of 2006 financial statements.

In summary, the adjustments to EPS for 2005 from the previously reported results on April 26, 2006 amount to a $0.02 change due to operations and a $0.32 change due to taxes, for a total reduction to EPS of $0.34. The downward adjustments to EPS for the first quarter of 2006 from the previously reported results on April 26, 2006 are less than one half of one cent ($0.5 million), primarily associated with professional fees for the 2005 restatement activities.

All results for the second quarter of 2006 are reported consistent with changes implemented for 2005 and the first quarter of 2006.

These updated results follow the 2006 second quarter results set forth immediately after the narrative text of this press release. The updated results also include a brief summary of the reasons behind any updated numbers. More detailed explanations of these updated numbers will be set forth in the company’s Form 10-Qs for the first three quarters of 2005 and Form 10-K for 2005 when those documents are filed with the SEC.

The preliminary results for the first and second quarters of 2006 are subject to review by the company’s independent registered public accountants before filing on Form 10-Q and the preliminary results for the 2005 quarters and year are subject to audit by the company's independent registered public accountants. The company is continuing its work to finalize its restated Form 10-Qs for the first two quarters of 2005 and its third quarter Form 10-Q which must be completed before the filing of the 2005 Form 10-K. Information contained herein is therefore subject to change.

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“The pricing environment continued to improve during the quarter due to increased volumes, high utilization rates, and a polysilicon supply chain that continues to be constrained,” said Nabeel Gareeb, MEMC’s chief executive officer. “As a result, MEMC set new financial records in several categories including revenue, gross margin and operating profit. We also signed a $1.6 billion letter of intent to supply solar wafers over an 8 year period to a leading solar cell manufacturer. We are looking forward to finalizing the agreement and to start providing wafers to the fast growing solar market in the second half of this year.”

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Capital expenditures for the quarter totaled $32.2 million. As expected, capital expenditures were down over the first two quarters of this year as the company completed preparations for the 300 mm startup in Taiwan. Capital expenditures for the full year are still expected to be 15% of sales or less. Operating cash flow for the quarter was $75.1 million, or 26.1% of sales. Free cash flow (operating cash flow minus capital expenditures) was $42.8 million or 14.9% of sales. Total debt decreased by approximately $7 million as the company continued to pay down its debt with available cash. Cash balances increased by over $42 million in the quarter.

Commenting on the company’s performance, Nabeel Gareeb, MEMC’s Chief Executive Officer, said: “We are pleased to have grown our revenue by approximately 5%. Wafer unit volumes continued to show strong growth as the semiconductor industry finished up its first full quarter following the inventory adjustment period. In this quarter, we were also able to overcome several million dollars of operational cost impacts associated with the hurricanes and higher R&D expenses associated with SOI equipment installation.”

“The third quarter also saw several significant highlights, including our announcement that we had begun 300mm production in Taiwan, expanding our presence in one of the fastest growing regions in the world. In addition, MEMC was added to the S&P MidCap 400 Index, we won a favorable appellate ruling in a US patent infringement case against SUMCO, and had our patents for 200mm and larger diameters upheld against SUMCO’s objections in the European PTO.”

“During the quarter, polysilicon sales to the solar market were above a $100 million annual run rate. We expect that the solar market will continue to grow faster than the semiconductor market for the foreseeable future. While our focus remains on the supply of wafers to the semiconductor market, sales to the solar market provide further exposure to a very fast-growing market.”

“MEMC continues to generate strong free cash flow and continues to further strengthen its balance sheet. We have the opportunity to serve a second, fast-growing market in the solar industry, and are poised to capitalize on positive long-term trends in our core wafer business. Our financial and technological position is strong, and we are well positioned for the future.”

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changes in currency exchange rates and other risks described in the Company’s filings with the Securities and Exchange Commission, including the Company’s 2004 Form 10-K. These forward-looking statements represent the Company’s judgment as of the date of this release. The Company disclaims, however, any intent or obligation to update these forward-looking statements.

-tables to follow-