(Mark One) | ||
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2010. | ||
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
Date of event requiring this shell company report | ||
For the transition period from to |
Title of Each Class
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Name of Each Exchange on Which Registered
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Common shares with no par value
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The NASDAQ Stock Market LLC
(The NASDAQ Global Market) |
Large accelerated
filer
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Accelerated filer þ | Non-accelerated filer o |
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| CSI, we, us, our company and our are to Canadian Solar Inc., its predecessor entities and its consolidated subsidiaries; | |
| $, US$ and U.S. dollars are to the legal currency of the United States; | |
| RMB and Renminbi are to the legal currency of China; | |
| C$ are to the legal currency of Canada; | |
| and Euro are to the legal currency of the European Economic and Monetary Union; and | |
| China and the PRC are to the Peoples Republic of China, excluding, for the purposes of this annual report on Form 20-F, Taiwan and the special administrative regions of Hong Kong and Macau. |
| our expectations regarding the worldwide demand for electricity and the market for solar power; | |
| our beliefs regarding the importance of environmentally friendly power generation; | |
| our expectations regarding governmental support for solar power; | |
| our beliefs regarding the future shortage or availability of high-purity silicon; | |
| our beliefs regarding our ability to resolve our disputes with suppliers with respect to our long-term supply agreements; | |
| our beliefs regarding the rate at which solar power technologies will be adopted and the continued growth of the solar power industry; | |
| our beliefs regarding the competitiveness of our solar module products; | |
| our expectations with respect to increased revenue growth and improved profitability; | |
| our expectations regarding the benefits to be derived from our supply chain management and vertical integration manufacturing strategy; |
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| our beliefs and expectations regarding the use of upgraded metallurgical grade silicon materials, or UMG-Si, and solar power products made of this material; | |
| our ability to continue developing our in-house solar components production capabilities and our expectations regarding the timing and production capacity of our internal manufacturing programs; | |
| our ability to secure adequate silicon and solar wafers and cells to support our solar module production; | |
| our beliefs regarding the effects of environmental regulation; | |
| our beliefs regarding the changing competitive environment in the solar power industry; | |
| our future business development, results of operations and financial condition; and | |
| competition from other manufacturers of solar power products and conventional energy suppliers. |
ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. | KEY INFORMATION |
A. | Selected Financial Data |
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Year Ended December 31, | ||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||
(In thousands of US$, except share and per share data, and operating data and percentages) | ||||||||||||||||||||
Statement of operations data:
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Net revenues
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$ | 68,212 | $ | 302,798 | $ | 705,006 | $ | 630,961 | $ | 1,495,509 | ||||||||||
Net income (loss)
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(9,430 | ) | (175 | ) | (7,534 | ) | 22,646 | 50,569 | ||||||||||||
Earnings (loss) per share, basic
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(0.50 | ) | (0.01 | ) | (0.24 | ) | 0.61 | 1.18 | ||||||||||||
Shares used in computation, basic
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18,986,498 | 27,283,305 | 31,566,503 | 37,137,004 | 42,839,356 | |||||||||||||||
Earnings (loss) per share, diluted
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(0.50 | ) | (0.01 | ) | (0.24 | ) | 0.60 | 1.16 | ||||||||||||
Shares used in computation, diluted
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18,986,498 | 27,283,305 | 31,566,503 | 37,727,138 | 43,678,208 | |||||||||||||||
Other financial data:
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Gross margin
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18.1 | % | 7.9 | % | 10.1 | % | 12.4 | % | 15.3 | % | ||||||||||
Operating margin
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1.6 | % | (0.6 | )% | 3.4 | % | 1.0 | % | 8.0 | % | ||||||||||
Net margin
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(13.8 | )% | (0.1 | )% | (1.1 | )% | 3.6 | % | 3.4 | % | ||||||||||
Selected operating data:
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Products sold (in MW)
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Standard solar modules
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14.7 | 83.4 | 166.5 | 296.6 | 779.1 | |||||||||||||||
Solar system kits
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| | | 0.6 | 24.4 | |||||||||||||||
Total
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14.7 | 83.4 | 166.5 | 297.2 | 803.5 | |||||||||||||||
Average selling price (in $ per watt)
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Standard solar modules
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3.97 | 3.75 | 4.23 | 2.13 | 1.80 | |||||||||||||||
Solar system kits
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| | | 3.36 | 3.21 | |||||||||||||||
Balance Sheet Data:
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Total assets
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129,634 | 277,622 | 570,654 | 1,038,703 | 1,423,367 | |||||||||||||||
Net assets
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112,904 | 134,501 | 332,254 | 466,001 | 534,984 | |||||||||||||||
Long-term debt
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| 17,866 | 45,357 | 29,290 | 69,458 | |||||||||||||||
Convertible notes
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| 59,885 | 830 | 866 | 906 | |||||||||||||||
Capital stock
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97,302 | 97,454 | 395,154 | 500,322 | 501,146 | |||||||||||||||
Number of shares
outstanding
(1)
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27,270,000 | 27,320,389 | 35,686,313 | (1) | 42,745,360 | (1) | 42,893,044 | (1) |
(1) | Excluding 58,250, 29,125 and nil restricted shares, which were subject to restrictions on voting and dividend rights and transferability, as of December 31, 2008, 2009 and 2010, respectively. |
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Renminbi per U.S. Dollar Exchange Rate (1) | ||||||||||||||||
Period
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Period
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End | Average (2) | Low | High | ||||||||||||
(RMB per $1.00) | ||||||||||||||||
2006
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7.8041 | 7.9579 | 8.0702 | 7.8041 | ||||||||||||
2007
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7.2946 | 7.6058 | 7.8127 | 7.2946 | ||||||||||||
2008
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6.8225 | 6.9477 | 7.2946 | 6.7800 | ||||||||||||
2009
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6.8259 | 6.8307 | 6.8470 | 6.8176 | ||||||||||||
2010
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6.6000 | 6.7603 | 6.8330 | 6.6000 | ||||||||||||
November
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6.6670 | 6.6538 | 6.6892 | 6.6330 | ||||||||||||
December
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6.6000 | 6.6497 | 6.6745 | 6.6000 | ||||||||||||
2011
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January
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6.6017 | 6.5964 | 6.6364 | 6.5809 | ||||||||||||
February
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6.5713 | 6.5761 | 6.5965 | 6.5520 | ||||||||||||
March
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6.5483 | 6.5645 | 6.5743 | 6.5483 | ||||||||||||
April
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6.4900 | 6.5267 | 6.5477 | 6.4900 | ||||||||||||
May (through May 13)
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6.4977 | 6.4939 | 6.4986 | 6.4915 |
(1) | For December 2009 and prior periods, the exchange rate refers to the noon buying rate as reported by the Federal Reserve Bank of New York. For January 2010 and later periods, the exchange rate refers to the exchange rate as set forth in the H.10 statistical release of the Federal Reserve Board. | |
(2) | Annual averages are calculated from month-end rates. Monthly averages are calculated using the average of the daily rates during the relevant period. |
B. | Capitalization and Indebtedness |
C. | Reasons for the Offer and Use of Proceeds |
D. | Risk Factors |
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| the cost-effectiveness, performance and reliability of solar power products compared to conventional and other renewable energy sources and products; | |
| the availability of government subsidies and incentives to support the development of the solar power industry; | |
| the cost and availability of capital, including long-term debt and tax equity, for solar projects; | |
| the success of other alternative energy technologies, such as wind power, hydroelectric power, geothermal power and biomass fuel; | |
| fluctuations in economic and market conditions that affect the viability of conventional and other renewable energy sources, such as increases or decreases in the prices of oil and other fossil fuels; | |
| capital expenditures by end users of solar power products, which tend to decrease when the economy slows; and | |
| the lack of favorable regulation for solar power within the electric power industry and broader energy industry. |
| difficulties staffing and managing overseas operations; | |
| fluctuations in foreign currency exchange rates; | |
| the increased cost of understanding local markets and trends and developing and maintaining an effective marketing and distributing presence in various countries; |
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| the difficulty of providing customer service and support in various countries; | |
| the difficulty of managing our sales channels effectively as we expand beyond distributors to include direct sales to systems integrators, end users and installers; | |
| the difficulties and costs of complying with the different commercial, legal and regulatory requirements in the overseas market in which we offer our products; | |
| our failure to develop appropriate risk management and internal control structures tailored to overseas operations; | |
| our inability to obtain, maintain or enforce intellectual property rights; | |
| unanticipated changes in prevailing economic conditions and regulatory requirements; and | |
| trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses, which could increase the prices of our products and make us less competitive in some countries. |
| the average selling prices of our solar modules, solar system kits and products; | |
| the rate and cost at which we are able to expand our internal manufacturing capacity; | |
| the availability and price of solar cells and wafers from our suppliers and toll manufacturers; | |
| the availability and price of raw materials, particularly high-purity silicon; | |
| changes in government incentive programs and regulations, particularly in our key and target markets; | |
| the unpredictable volume and timing of customer orders; | |
| the loss of one or more key customers or the significant reduction or postponement of orders; | |
| availability of financing for on-grid and off-grid solar power applications; | |
| acquisition and investment costs; | |
| geopolitical turmoil and natural disasters within any of the countries in which we operate or sell products; | |
| foreign currency fluctuations, particularly in the Euro, U.S. dollar and RMB; | |
| our ability to establish and expand customer relationships; |
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| changes in our manufacturing costs; | |
| the timing of new products or technology introduced or announced by our competitors; | |
| increases or decreases in electricity rates due to changes in fossil fuel prices or other factors; | |
| allowances for doubtful accounts and advances to suppliers; | |
| inventory write-downs; and | |
| loss on firm purchase commitments under long-term supply agreements. |
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| our future financial condition, results of operations and cash flows; | |
| general market conditions for financing activities by manufacturers of photovoltaic and related products; and | |
| economic, political and other conditions in the PRC and elsewhere. |
| the need to raise significant additional funds to purchase raw materials and to build additional manufacturing facilities, which we may be unable to obtain on commercially reasonable terms or at all; | |
| delays and cost overruns as a result of a number of factors, many of which are beyond our control, including delays in equipment delivery by vendors; | |
| delays or denial of required approvals by relevant government authorities; | |
| diversion of significant management attention and other resources; and | |
| failure to execute our expansion plan effectively. |
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| reduced, delayed or cancelled orders from one or more of our significant customers; | |
| the loss of one or more of our significant customers; | |
| a significant customers failure to pay for our products on time; and | |
| a significant customers financial problems or insolvency. |
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| announcements of technological or competitive developments; | |
| regulatory developments in our target markets affecting us, our customers or our competitors; |
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| actual or anticipated fluctuations in our quarterly operating results; | |
| changes in financial estimates by securities research analysts; | |
| changes in the economic performance or market valuations of other solar power companies; | |
| the departure of executive officers and key research personnel; | |
| patent litigation and other intellectual property disputes; | |
| litigation and other disputes with our long-term suppliers; | |
| fluctuations in the exchange rates between the U.S. dollar, the Euro and the RMB; | |
| SEC investigations or private securities litigation; | |
| the release or expiration of lock-up or other transfer restrictions on our outstanding common shares; and | |
| sales or anticipated sales of additional common shares. |
| Our board of directors has the authority, without approval from the shareholders, to issue an unlimited number of preferred shares in one or more series. Our board of directors may establish the number of shares to be included in each such series and may fix the designations, preferences, powers and other rights of the shares of a series of preferred shares. |
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| Our board of directors is entitled to fix and may change the number of directors within the minimum and maximum number of directors provided for in our articles. Our board of directors may appoint one or more additional directors to hold office for a term expiring no later than the close of the next annual meeting of shareholders, subject to the limitation that the total number of directors so appointed may not exceed one-third of the number of directors elected at the previous annual meeting of shareholders. |
ITEM 4. | INFORMATION ON THE COMPANY |
A. | History and Development of the Company |
| CSI Solartronics (Changshu) Co. Ltd., or CSI Solartronics, incorporated in November 2001, which has operations located in Changshu, China, where we conduct sales of solar modules; |
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| CSI Solar Manufacture Inc., or CSI Suzhou Manufacturing, incorporated in January 2005, which has operations located in Suzhou, China, where we manufacture primarily standard solar modules; | |
| CSI Solar Technologies Inc., or CSI Technologies, incorporated in August 2003, which has operations located in Changshu, China, where we conduct solar module product development; | |
| Canadian Solar Manufacturing (Luoyang) Inc. (formerly known as CSI Central Power Co. Ltd.), or CSI Luoyang Manufacturing, incorporated in February 2006, which has operations located in Luoyang, China, where we manufacture solar module products, solar ingots and solar wafers; | |
| CSI Cells Co. Ltd., or CSI Cells, incorporated in August 2006, which has operations located in Suzhou, China, where we manufacture solar cells; | |
| Canadian Solar Manufacturing (Changshu) Inc. (formerly known as Changshu CSI Advanced Solar Inc.), or CSI Changshu Manufacturing, incorporated in August 2006, which has operations located in Changshu, China, where we manufacture solar modules; | |
| CSI Solar Power (China) Inc., or CSI China Holdings, incorporated in July 2009, which has operations in Suzhou, China and serves as our holding company in China; | |
| CSI Solar New Energy (Suzhou) Co. Ltd., or CSI New Energy, incorporated in December 2005, which was acquired by CSI China Holdings in March 2010; through which we will manufacture solar cells in Suzhou; | |
| Canadian Solar Solutions Inc., or CSSI, incorporated in Ontario, Canada in June 2009, through which we conduct marketing and sales activities in Canada. We also have a number of non-wholly owned subsidiaries under CSSI, all of which were incorporated in Ontario, Canada in November 2009, through which we conduct project development activities in Canada; | |
| Canadian Solar (USA) Inc., incorporated in Delaware in June 2007, through which we carry out marketing and sales activities in the United States; | |
| Canadian Solar Japan, K.K., or CSI Japan, incorporated in Japan as a wholly owned subsidiary in June 2009, through which we conduct marketing and sales activities in Japan; between December 2009 and May 2010, we sold an aggregate of 28% of the outstanding capital stock of CSI Japan to two Japanese companies; in August 2010, we increased our capital contribution in CSI Japan. We currently hold 91.4% of CSI Japan; | |
| Canadian Solar EMEA GmbH, (formerly known as Canadian Solar (Deutschland) GmbH), incorporated in Germany in August 2009, through which we conduct marketing and sales activities in Europe; | |
| CSI Project Consulting GmbH, or CSI Germany Projects, incorporated in Germany in 2009, a 70% owned subsidiary through which we invested in CVB Solar GmbH, a German solar power project. In January 2011, CSI Germany Projects sold all of its interest in CVB Solar GmbH to its joint venture partner; | |
| Canadian Solar Manufacturing (Ontario) Inc., or CSI Ontario Manufacturing, incorporated in Ontario, Canada in June 2010, through which we conduct our solar module manufacturing activities in Canada; | |
| Canadian Solar (Australia) Pty Ltd., incorporated in New South Wales, Australia in February 2011, though which we provide sales support services in Australia; and | |
| Canadian Solar International Limited, incorporated in Hong Kong in March 2011, through which we carry out sales and marketing activities. |
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B. | Business Overview |
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Years Ended December 31, | ||||||||||||||||||||||||
2008 | 2009 | 2010 | ||||||||||||||||||||||
Total Net
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Total Net
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Total Net
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Region
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Revenues | % | Revenues | % | Revenues | % | ||||||||||||||||||
(In thousands of US$, except for percentages) | ||||||||||||||||||||||||
Europe
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631,147 | 89.5 | 523,087 | 82.9 | 1,193,449 | 79.8 | ||||||||||||||||||
Asia and others
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41,571 | 5.9 | 70,966 | 11.3 | 186,366 | 12.5 | ||||||||||||||||||
America
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32,288 | 4.6 | 36,908 | 5.8 | 115,694 | 7.7 | ||||||||||||||||||
Total net revenues
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705,006 | 100 | 630,961 | 100 | 1,495,509 | 100 | ||||||||||||||||||
| Germany. The renewable energy laws in Germany require electricity transmission grid operators to connect various renewable energy sources to their electricity transmission grids and to purchase all electricity generated by such sources at guaranteed feed-in tariffs, or FIT. Additional regulatory support measures include investment cost subsidies, low-interest loans and tax relief to end users of renewable energy. | |
Germanys renewable energy policy has had a strong solar power focus, which contributed to Germanys surpassing Japan in 2004 as the leading solar power market in terms of annual megawatt growth. According to SolarBuzz, the German market grew by 100% in 2010, from 3.87 GW at the end of 2009 to 7.74 GW at the end of 2010. This outcome took place, notwithstanding the fact that at the beginning of 2010, the FIT dropped by 9%. Our products are used in large, ground-mounted solar power fields, commercial rooftops and residential rooftops. The FIT in Germany for 2010 was 0.243 per kWh and 0.284 per kWh for ground-mounted systems and between 0.248 and 0.391 per kWh for rooftop systems. The German FIT was reduced by 9-10% at the end of 2010, and will be reduced again by approximately 9-10% at the end of 2011, depending on system size and type. In addition to scheduled reductions, Germany implemented a two-step FIT decline for roof-top and greenfield systems, which were to be enacted in July and October 2010. The two step reduction decreased the FITs for roof-top systems by 13% on July 1, 2010 and an additional 3% reduction from October 2010. Furthermore, the annual FIT will decrease more quickly than the base of 9% per year if annual installations exceed 3.5 GW. This means that solar system tariffs and solar system prices will likely fall more quickly than previously anticipated. In 2011, the German FIT is expected to be between 0.198 per kWh and 0.221 per kWh for ground-mounted systems and between 0.196 and 0.287 per kWh for rooftop systems. | ||
| Spain. According to SolarBuzz, the Spanish market installed 378 MW in 2010, up from 98 MW in 2009. In Spain, the FIT for solar power energy is fully guaranteed for the first 25 years of system operation and 80% thereafter. The 2010 market segmentation for power and application surface was 17 MW as roof mounted of £ 20 kW; 126 MW as roof mounted of >20 kW and £ 20 MW; and 232 MW ground mounted of £ 10 MW. The Spanish FIT for applications of less than 100 kWh was initially 0.4404 per kWh for the first 25 years of system operation and 0.3523 per kWh thereafter for systems installed until September 2008. The current Spanish FIT is between 0.259/kWh and 0.340/kWh, depending on the system size, type and quarterly digressions. Funding for the national PV |
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program during 2010 was regulated by Royal Decree RD1578/2008. The quarterly quota calls allocate awards and modify FIT rates according to fulfillment of quota. The Renewable Energy Plan (PER 2012-2020) reduced significantly the renewable energy content planned for 2020 from previous plans. Further cuts in the PV target plan are expected in 2011 to about 7 GW PV capacity by 2020, down from the previously 8.5 GW in the NREAP. |
| Czech Republic. According to SolarBuzz, the Czech Republic market increased approximately 242% from 397 MW in 2009 to 1,420 MW in 2010, which includes about 0.5 MW off-grid installations. The countrys initial legal basis for establishing FIT rates for electricity from renewable energy sources was set by the Renewable Energy Law on August 1, 2005. The respective remuneration rates became effective on January 1, 2006. The PV funding scheme in the Czech Republic is based on two alternative funding mechanisms, a FIT system and a green bonus scheme. The FITs (and green premium rates) for the next calendar year are determined by the Energy Regulatory Office in November each year. The FIT rate for existing installations increases each year typically between 2% and 4%, depending on the consumer price index. There is no fixed annual reduction of tariffs for newly installed systems. In 2010, PV systems connected to the grid during the year received 12.25 CZK/kWh (0.463/kWh) if their nominal power was up to 30 kW and 12.15 CZK/kWh (0.459/kWh) if their nominal power was above 30 kW. As with the FITs, the green bonus rates are also paid over a 20-year duration, and the tariffs for already existing systems are adjusted annually. The green bonus remuneration has also depended on the system size from 2009. In 2010, installations of up to 30 kW built in the same year were remunerated at 11.28 CZK/kWh (0.427/kWh); systems above 30 kW were paid at 11.18 CZK/kWh (0.423/kWh). In March 2010, the government enacted a law that allowed a reduction of the incentive tariffs for newly installed systems to exceed 5% per year. In addition, it implemented a third system size category. PV systems of up to 30 kW connected in 2011 are being remunerated at 7.50 CZK/kWh (0.298/kWh), installations of above 30 kW and up to 100 kW receive 5.90 CZK (0.235/kWh), and PV systems above 100 kW receive a rate of 5.5 CZK/kWh (0.219/kWh). Due to the substantial reduction of funding options in 2011, the Czech PV market is now projected to fall well below 0.5 GW. After March 2011, it is expected to be dominated by roof or BIPV installations of up to 30 kW. | |
| Italy. According to SolarBuzz, the Italian solar market grew by 386% from 770 MW in 2009 to reach 3,740 MW at the end of 2010. This number comprises 2.5 MW off-grid installations. At the end of 2010, the Italian FIT for systems range from 0.346 per kWh, for larger ground-mounted systems, to 0.440 per kWh for smaller BIPV systems, a relatively modest decline from the previous years rates. Furthermore, system owners may also benefit from self-consumption with a reduced electrical bill. The Italian market saw an enormous boost in large installations in 2009 and 2010 and the Italian government is expected to implement much lower FIT in order to control the market growth. In 2011, the Italian FIT is expected to be approximately 0.28 to 0.44 per kWh in the first half of the year, and to decline further in the second half year. | |
| United States. According to SolarBuzz, the US market almost doubled to 949 MW in 2010 from 485 MW in 2009, while its share in the global market slightly decreased to 5% in 2010 from 6% in 2009. Over 10 states in the U.S. offer significant incentives, with California offering the most preferential incentives. In January 2006, the California Public Utilities Commission enacted the California Solar Initiative, a $2.9 billion program that subsidizes solar power systems by $2.80 per watt. Due to excessive demand, this subsidy was reduced to $2.50 per watt. Combined with federal tax credits for solar power usage, the subsidy may account for as much as 50% of the cost of a solar power system. The program will last until 2016 and is expected to dramatically increase the use of solar power for on-grid applications in California. Incentives in other US states include state renewable energy credits, capital subsidies and in some states, such as Vermont, FIT. Many states and various federal departments are also subject to renewable energy portfolio standards that mandate minimum percentages of renewable energy production by utilities. By the end of 2010, 29 states and Washington DC currently have enacted mandatory RPS policies while seven states had voluntary renewable goals. Finally, the U.S. federal government passed several renewable energy provisions totaling more than $70 billion in the American Recovery and Reinvestment Act, including a 30% investment tax credit, |
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accelerated five-year system depreciation and an expansion of Department of Energy loan guarantees. These provisions were further expanded in 2010 to include a cash grant in lieu of the investment tax credit and were uncapped with respect to system size (the previous maximum rebate was $2,000) to allow larger organizations such as utilities to take advantage of the tax credit or cash in-lieu of the grant for large scale projects. The constrained appetite for tax equity may limit the effectiveness of some of these provisions, such as accelerated depreciation. |
| China. According to SolarBuzz, the Chinese market witnessed a 155% growth in installations in 2010 to 532 MW, up from 208 MW in 2009. Chinas Renewable Energy Law, which went into effect on January 1, 2006, authorizes the relevant authorities to set favorable prices for the purchase of on-grid electricity generated by solar power and provides other financial incentives for the development of renewable energy projects. Chinas top-level controlling agency on energy policy has been the governments central planning agency, the NDRC, with the ancillary National Energy Administration specifically focusing on energy supply and production. The National Energy Commission, a new ministerial level regulatory organization headed by Premier Wen, was established in January 2010 to oversee all energy related sectors in China. | |
On March 23, 2009, Chinas Ministry of Finance promulgated the Interim Measures for Administration of Government Subsidy Funds for Application of Solar Photovoltaic Technology in Building Construction, or Interim Measures, to support the development of solar PV technology in China. Local governments are encouraged to issue and implement supporting policies. Under the Interim Measures, a subsidy, which is set at RMB20 per watt, peaked in 2009, which covers solar PV technology integrated into building construction. The Interim Measures do not apply to projects completed before March 23, 2009, the promulgation date of the Interim Measures. | ||
China finances its off-grid solar installations through the now-completed township program and the current village program. The five-year plan from 2006 to 2010 was targeted to provide electricity to 29,000 villages, mainly in western China. The Ministry of Housing and Urban-Rural Development (formerly, the Ministry of Construction) has promulgated directives encouraging the development and use of solar power in urban and rural areas. Various local authorities have also introduced initiatives to encourage the adoption of renewable energy, including solar power. | ||
We believe that we are well positioned to take advantage of growth opportunities in the Chinese solar power market, which has the potential to become one of the fastest growing markets for solar power. In addition to project approvals of 640 MW under the Golden Sun Program and 91 MW in the Solar Rooftop Program in 2009, programs like Renewable Energy Applications in Buildings and National Green Energy Demonstration County are re-enforcing the project pipeline. | ||
Beginning in March 2009, several policy initiatives were announced, including open bidding for a 20-year operating license for a 10 MW solar power plant project in Gansu Province of China and the Golden Sun program, which subsidizes the capital expenses of solar projects by approximately $2.00 per watt. A number of provincial incentives were announced as well. However, the central government has not approved a definitive implementation scheme or any of the provincial schemes. | ||
The 2010 Golden Sun project list was released in November 2010 with 120 new projects totaling 272 MW. The Golden Sun program will approve another 320MW of rooftop PV projects in 2011, and the total new installation, including rooftop and ground-mounted projects, in 2011 will be approximately 500-700MW based on the estimates by the China Photovoltaic Society. The subsidies provided by the government will cover 50% of the total PV project cost. | ||
| Canada. According to SolarBuzz, the Canadian market in 2010 was dominated by installations in the Province of Ontario, emanating from the now defunct Renewable Energy Standard Offer Program (RESOP) and the newer FIT policy inaugurated in 2009. In all, Ontario accounted for more than 90% of the installed PV capacity in the country in 2010 with 170 MW of solar PV installations. Of this, utility-scale RESOP installations represented approximately 150 MW of installed capacity with the remainder coming from small-scale systems driven by Ontarios FIT. |
35
Ontario market growth in 2010 was a remnant of RESOP, a program that offered renewable energy projects up to 10 MW a guaranteed tariff of C$0.42/kWh for 20 years. The program closed in May 2008 due to overwhelming uptake and projects in the pipeline were frozen until May 2009 when Ontario passed the Green Energy Act and with it a new FIT program. Both programs are administered by the Ontario Power Authority, or OPA, which is responsible for setting rates, regulations, and monitoring all FIT activity. The proposed price for solar power under the Ontario FIT program ranges from C$0.443 to C$0.80 per kWh depending on the system size and type. We and our partners have applied for and received 176 MW of contract offers for open field solar power generation projects. We may obtain additional contract offers in 2011. Initial designs of these projects are being completed and the projects are being processed through the permitting stage. | ||
| Japan. According to SolarBuzz, the Japanese market grew from 477 MW in 2009 to 960 MW in 2010, as a result of the nationwide residential incentive program and the introduction of a Japanese version of a FIT in 2009. The Japanese government has announced a long-term goal of increasing installed solar power capacity by between 20 and 55 times, which would require 28 GW or more of solar power capacity by 2020. Japan is a signatory to the Kyoto Protocol, which requires it to reduce greenhouse gas emissions by 6% from the 1990 baseline level by 2012 and by 20% by 2020. Japan currently funds a number of programs supporting domestic solar power installations and has announced a plan to begin installing solar power systems on federal buildings through 2012. As Japan will not likely reach its renewable energy (including solar) targets, Japan is increasing its incentives for solar power installations. To refuel the declining domestic market, the federal government brought back the nationwide residential subsidy in 2009. The residential program was re-launched in January 2009 under a FY2008 supplemental budget of ¥9 billion. For FY2010, the residential incentive program had a funding of ¥40.15 billion to cover about 150,000 projects and the application period was open between April and December 2010. The residential program provides a subsidy of ¥70 per watt, and to promote further cost reduction, this subsidy is only applicable to a PV system with a total installed cost of less than ¥650 per watt. Besides the upfront cash incentives, the federal government crafted a Net FIT policy, requiring electric power utilities to buy excess electricity generated by PV systems at a premium rate. Residential PV owners, for example, were paid for 10 years a rate of ¥48/kWh, compared to the average of ¥24/kWh under the previous net billing arrangement. For FY2010, the government kept the net FIT rates at the 2009 level (¥48/kWh for residential and ¥24/kWh for non-residential). | |
| Australia. According to SolarBuzz, in 2010, the Australian market grew from 79MW in 2009 to 265MW in 2010, representing a growth rate of more than 360%. The largest state market by far in 2010 was New South Wales, which saw over 150 MW in PV installations, mostly due to its FIT program. Queensland also saw a significant amount of capacity installed during 2010, again due to its FIT program. The on-grid residential segment continued to dominate the market as the largest customer group. The main federal incentive active during 2010 was the Solar Credits program, which provided a renewable energy credit multiplier for the first 1.5 kW of small-scale renewable energy systems. The result of the program was an upfront rebate of between AUD4,000 and AUD6,200 for 1.5 kW systems depending on location. The Solar Credits program was the successor of the Solar Homes and Communities Program (SHCP), which offered an AUD8 per watt rebate on the first 1,000W of a solar PV system. The SHCP was cancelled in June 2009 but continued to impact 2010 market size due to the significant backlog of installations. The Solar Credits Program is part of the Renewable Energy Target, which is set to ensure that Australia will generate 45,000 GWh (20%) of its energy from renewable sources by 2020. Due to the uncertain nature of federal incentive programs, the states/territories have launched their own programs to drive PV demand. The programs that drive the vast majority of systems are FITs. These FITs mainly affected the residential segment as each program has different eligibility requirements that work to minimize system sizes or specify directly that the rates are only accessible by residential customers. Along with changes to programs affecting small-scale residential systems, the past year also brought news of funding changes for utility-scale projects. The biggest news came in January 2011 and concerned the Solar Flagships program. The Australia government revised its Solar Flagships program, which was originally scheduled to install 150 MW of |
36
utility-scale solar PV and 250 MW of CSP plants by 2016. As well, every region intends to have a PV specific FIT or net-metering policy in 2010. |
| Sales contracts to distributors and project customers. Since late 2007, we have been entering into annual sales and/or distribution agreements with most of our key customers. We typically use either letters of credit or wire money transfers prior to shipping to secure payment. Since late 2008, we have often provided short-term credit sales ranging from 21 to 45 days. To some customers, we provide medium-term credit sales from 30 to 120 days. We actively use credit insurance coverage for credit sales. | |
| OEM/tolling manufacturing arrangements. Under these arrangements, we purchase silicon wafers and solar cells from customers, and then sell solar module products back to the same customers, who then sell those products under their own brands. In addition, we have been using our own solar cells or cells that we purchase to make modules for a limited number of strategic customers who brand the finished solar module products with their own labels. Since 2009, this has been the primary OEM arrangement. | |
| Solar System Kits. In 2010, we commenced sale of solar system kits. Solar systems kits are packaged, pre-specified components required for a third party to construct a system on behalf of the end buyer. A variety of systems kits were sold in Japan and Ontario in 2010. In 2010, the sale of solar systems kits reached 24.4 MW. |
37
38
| price; | |
| the ability to deliver products to customers on time and in the required volumes; | |
| product quality and associated service issues; | |
| name-plate power and other performance parameters of the module, such as power tolerances; | |
| value-added services such as system design and installation; | |
| value-added features such as those that make a module easier or cheaper to install; | |
| additional system components such a mounting systems, delivered as a package or bundle; | |
| brand equity and any good reputation resulting from the above items, including the willingness of banks to finance projects using a particular module supplier; | |
| customer relationships and distribution channels; and | |
| the aesthetic appearance of solar module products. |
39
40
41
42
43
44
C. | Organizational Structure |
D. | Property, Plant and Equipment |
| CSI Changshu Manufacturing rents approximately 31,119 square meters in Changshu, including 13,889 square meters for manufacturing facilities under a lease effective from June 1, 2010 to May 31, 2011, 17,230 square meters for manufacturing facilities under a lease effective from April 1, 2010 to March 31, 2013, 8,670 square meters for warehouse under a lease effective from February 2, 2010 to February 1, 2012, and 1765 square meters for warehouse under a lease effective from December 10, 2010 to December 9, 2011. | |
| CSI Luoyang Manufacturing holds the land use rights certificate for approximately 35,345 square meters of land in Luoyang (Phase I), on which we have constructed a manufacturing facility for module manufacturing and an office building. The floor area of all workshops and office buildings in Phase I is approximately 6,761 square meters. The property ownership certificate was granted in June 2008. In |
45
2008, CSI Luoyang Manufacturing obtained the land use rights for approximately 79,685 square meters of adjacent land (Phase II), on which we are currently constructing wafer manufacturing facilities. The floor area of Phase II is 30,071 square meters. We expect to receive the property ownership certificate upon passing the required inspection after the completion of construction. |
| CSI Cells holds the land use rights certificate for approximately 65,661 square meters of land in Suzhou. We completed the construction of our first solar cell manufacturing facilities on this site in the first quarter of 2007. The Phase I manufacturing facility has a 14,077 square meter workshop and office building, for which we obtained the property ownership certificate. The Phase II cell manufacturing facilities, with 28,917 square meters of workshop space, were completed in 2009. We expect to receive the property ownership certificate upon passing the required inspection. We are currently constructing Phase III cell manufacturing facilities with a total floor area of approximately 21,448 square meters. | |
| CSI Changshu Manufacturing holds the land use rights certificate for approximately 40,000 square meters of land in Changshu, on which we have built a module manufacturing facility of approximately 23,671 square meters. Production in this facility began in April 2008. We also constructed a canteen and a dormitory for employees in September 2010 with a total floor area of 11,283 square meters. The property ownership certificate was granted in March 2011. | |
| CSI Changshu Manufacturing also holds a land use rights certificate for approximately 180,000 square meters of land in Changshu, on which we have built two module manufacturing facilities, three warehouses and other buildings with a total floor area of approximately 62,093 square meters (Phase I). Production in this facility began in August 2008 and the central warehouses construction was completed in April 2010. Phase I occupies 78,320 square meters of land. We are currently constructing Phase II manufacturing facilities with an additional warehouse and three other buildings. The total floor area of approximates 46,507 square meters. Phase II will be completed in the first half of 2011, occupying 22,442 square meters of land. Phase III manufacturing facilities on the remaining land are still in the design and planning stage. | |
| CSI New Energy holds a land use rights certificate for approximately 10,000 square meters of land in Suzhou. | |
| CSI Ontario Manufacturing has leased approximately 14,851 square meters of manufacturing facilities in Guelph, Ontario, Canada for a term of 10 years commencing August 1, 2010. We will also lease an additional warehouse of 7,912 square meters and an office building of 570 square meters on the same premises. Completion of the manufacturing facilities, warehouse and office building space is expected to be completed in July 2011. |
ITEM 4A. | UNRESOLVED STAFF COMMENTS |
ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
A. | Operating Results |
| government subsidies and the availability of financing for solar projects; | |
| industry and seasonal demand; |
46
| product pricing; | |
| the cost of solar cells and wafers and silicon raw materials relative to the selling prices of modules and the impact of certain of our long-term purchase commitments; and | |
| foreign exchange. |
47
48
| solar cells; | |
| silicon wafers; | |
| high purity and solar grade silicon materials; | |
| materials used in solar cell production, such as metallic pastes; | |
| installation components in solar system kits, such as inverters and racking systems; | |
| other materials for the production of solar modules such as glass, aluminum frames, EVA (ethylene vinyl acetate, an encapsulant used to seal the module), junction boxes and polymer back sheets; | |
| production labor, including salaries and benefits for manufacturing personnel; | |
| warranty costs; | |
| overhead, including utilities, production equipment maintenance, share-based compensation expenses for options granted to employees in our manufacturing department and other support expenses associated with the manufacture of our solar power products; | |
| depreciation and amortization of manufacturing equipment and facilities, which are increasing as we expand our manufacturing capabilities; | |
| inventory write-downs; and | |
| loss on firm purchase commitments under long-term supply agreements. |
49
50
51
Years Ended December 31, | ||||||||||||||||||||||||
2008 | 2009 | 2010 | ||||||||||||||||||||||
(In thousands of US$, except for percentages) | ||||||||||||||||||||||||
Share-based compensation expenses included in:
|
||||||||||||||||||||||||
Cost of revenues
|
$ | 350 | 3.8 | % | $ | 412 | 7.6 | % | $ | 231 | 6.0 | % | ||||||||||||
Selling expenses
|
1,060 | 11.7 | 733 | 13.5 | 509 | 13.1 | ||||||||||||||||||
General and administrative expenses
|
7,306 | 80.3 | 3,772 | 69.4 | 2,873 | 74.1 | ||||||||||||||||||
Research and development expenses
|
386 | 4.2 | 519 | 9.5 | 264 | 6.8 | ||||||||||||||||||
Total share-based compensation expenses
|
$ | 9,102 | 100.0 | % | $ | 5,436 | 100.0 | % | $ | 3,877 | 100.0 | % | ||||||||||||
52
53
54
55
56
57
58
Years Ended December 31,
2008
2009
2010
(In thousands of US$, except percentages)
705,006
100.0%
630,961
100.0%
1,495,509
100.0%
633,998
89.9%
552,856
87.6%
1,266,737
84.7%
71,008
10.1%
78,105
12.4%
228,772
15.3%
10,608
1.5%
22,089
3.5%
47,109
3.2%
34,510
4.9%
46,324
7.3%
54,520
3.6%
1,825
0.3%
3,180
0.5%
6,843
0.5%
46,943
6.7%
71,593
11.3%
108,472
7.3%
24,065
3.4%
6,512
1.0%
120,300
8.0%
(12,201
)
(1.7)%
(9,459
)
(1.5)%
(22,164
)
(1.5)%
3,531
0.5%
5,084
0.8%
6,936
0.5%
14,455
2.1%
9,870
1.6%
1,657
0.1%
2,429
0.3%
(10,170
)
(1.5)%
1,788
0.3%
(2,853
)
(0.2)%
(19,989
)
(2.8)%
7,681
1.2%
(36,294
)
(2.4)%
2,120
0.3%%
21,476
3.4%
67,582
4.5%
(9,654
)
(1.4)%
1,302
0.2%
(16,754
)
(1.1)%
(7,534
)
(1.1)%
22,778
3.6%
50,828
3.4%
132
259
(7,534
)
(1.1)%
22,646
3.6%
50,569
3.4%
59
Table of Contents
60
Table of Contents
61
Table of Contents
B.
Liquidity
and Capital Resources
62
Table of Contents
Years Ended December 31,
2008
2009
2010
(In thousands of US$)
$
3,193
$
50,915
$
(58,487
)
(125,762
)
(234,568
)
(133,989
)
201,356
228,173
312,629
77,994
44,450
128,541
37,667
115,661
160,111
115,661
160,111
288,652
63
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64
Table of Contents
C.
Research
and Development
improving the conversion efficiency of solar cells and
developing new cell structures and technologies for high
conversion efficiency;
developing modules with improved design and assembly methods
employing metal wrap-through cells. Such modules will employ
conductive adhesives on a metal foil back-sheet instead of
employing conventional soldering techniques on a plastic
back-sheet;
improving manufacturing yield and reliability of solar modules
and reducing manufacturing costs;
developing modules with improved power conversion devices
integrated into the construction of the module including a
variety of micro-inverters and
DC-to-DC
power converters;
testing, data tracing and analysis for module performance and
reliability;
designing and developing more efficient specialty solar modules
and products to meet customer requirements;
developing new methods and equipment for analysis and quality
control of incoming materials (such as polysilicon, wafers and
cells);
developing new technologies in ingot growth and
characterization, wafering, cell processing and module
manufacturing that make use of low-cost alternative silicon
materials such as solar grade silicon; and
improving the wafer quality and production yield for both
conventional wafer and
e-wafer
processing.
High efficiency cells.
Our ESE and metal
wrap-through cells, which we have begun commercializing as well
as future research and development on N-type, heterojunction
intrinsic thin-layer and other high efficiency cell designs. On
a test basis, we have produced an N-type bi-facial cell;
however, we do not
65
Table of Contents
plan to commercially produce this product until a later date.
Such cell structures are believed to lower the overall cost of
manufacturing solar modules and making the resulting modules
cheaper to install. Higher-powered modules might also command a
modest premium.
Solar grade silicon materials technologies and high
efficiency cell technologies.
We began the mass
production of solar grade silicon crystalline modules, namely
e-Modules,
in April 2008, and have been working on improving new
technologies in ingot, wafer, cell and module manufacturing
using solar grade silicon. With our continuous efforts to
optimize solar grade silicon material preparation, ingot growth,
wafering and cell processing, we anticipate additional increases
in our solar grade silicon cell efficiency, and expect that with
our new solar grade silicon cell design, our solar grade silicon
cell could reach conversion efficiency close to that of
conventional multi-crystalline cells.
Solar module manufacturing technologies.
With
the opening of our Center for Photovoltaic Testing and
Reliability Analysis, we intend to focus on developing
state-of-the-art
testing and diagnostic techniques that improve solar module
production yield, efficiency, performance and durability.
Product development of specialty solar modules and
products.
We are expanding our product
development capabilities for specialty solar modules and
products to position ourselves for the expected growth in this
area of the solar power market. For example, we are
collaborating with a research institute in China to develop a
concentrator module technology and a glass curtain wall company
based in China to develop BIPV technology. In 2008, we completed
a BIPV project in our Luoyang plant. We also supplied BIPV
modules and other BIPV related design elements for a project for
the Beijing Olympic Games.
Power system integration and solar application
products.
We recently began to explore power
system integration products and expanded our research and
development efforts in solar application products. We plan to
hire additional engineering staff and increase investment in
these areas.
D.
Trend
Information
E.
Off
Balance Sheet Arrangements
66
Table of Contents
F.
Tabular
Disclosure of Contractual Obligations
Payment Due by Period
Less Than
More Than
Total
1 Year
1-3 Years
3-5 Years
5 Years
(In thousands of US$)
540,520
540,520
8,945
8,945
11,382
2,558
2,892
2,279
3,653
3,366,588
336,459
1,343,452
1,621,674
65,003
1,420
60
120
120
1,120
69,458
30,199
39,259
11,691
4,103
5,825
1,763
4,010,004
892,645
1,382,488
1,665,095
69,776
(1)
Interest rates range from 0% to 5.81% per annum for short-term
debt.
(2)
Includes commitments to purchase production equipment of
$46.3 million and commitments to purchase solar cells,
wafers and silicon raw materials of $3,320.3 million.
(3)
Assumes redemption of $1.0 million aggregate principal
amount of 6.0% convertible senior notes due on December 15,
2017, and assumes none of the convertible senior notes will be
converted into ordinary shares prior to their scheduled due date
in December 2017. The holders of our convertible senior notes
may require us to repurchase the convertible senior notes as
early as December 2012. This amount also includes interest
payable until December 2017.
(4)
The other long-term borrowings mainly consist of the following
items: commercial loans with Agricultural Bank of China of
$24.2 million; secured commercial loans with Bank of
Communication of $22.6 million; and commercial loans with
Export and Import Bank of Nanjing of $22.6 million.
(5)
Interest rates range from 4.50% to 6.22% per annum for long-term
borrowings.
G.
Safe
Harbor
67
Table of Contents
our expectations regarding the worldwide supply and demand for
solar power products and the market demand for our products;
our beliefs regarding the importance of environmentally friendly
power generation;
our expectations regarding governmental support for solar power;
our beliefs regarding the fluctuation in availability of
silicon, solar wafers and solar cells;
our beliefs regarding our ability to resolve our disputes with
suppliers with respect to our long-term supply agreements;
our beliefs regarding the continued growth of the solar power
industry;
our beliefs regarding the competitiveness of our solar module
products;
our expectations with respect to increased revenue growth and
improved profitability;
our expectations regarding the benefits to be derived from our
supply chain management and vertical integration manufacturing
strategy;
our beliefs and expectations regarding the use of UMG-Si and
solar power products made of this material;
our ability to continue developing our in-house solar components
production capabilities and our expectations regarding the
timing and production capacity of our internal manufacturing
programs;
our ability to secure adequate silicon and solar cells to
support our solar module production;
our beliefs regarding the effects of environmental regulation;
our beliefs regarding the changing competitive landscape in the
solar power industry;
our future business development, results of operations and
financial condition; and
competition from other manufacturers of solar power products and
conventional energy suppliers.
68
Table of Contents
74
75
ITEM 6.
DIRECTORS,
SENIOR MANAGEMENT AND EMPLOYEES
A.
Directors
and Senior Management
47
Chairman of the Board, President and Chief Executive Officer
69
Lead Independent Director
64
Independent Director
44
Independent Director
43
Chief Financial Officer, Compliance Officer
55
Vice President, Global Operations
47
Vice President, Global Sales and Marketing
38
General Counsel and Corporate Secretary
53
President, European Sales
55
Vice President, Purchase and Planning
68
Vice President, Ingot and Wafer Division
*
Arthur Chien resigned as Chief Financial Officer in October 2010
and resigned from the Company and the board of directors in
December 2010. The size of our board of directors was reduced
from five to four members.
69
Table of Contents
70
Table of Contents
71
Table of Contents
convening shareholder meetings and reporting to shareholders at
such meetings;
declaring dividends and authorizing other distributions to
shareholders;
appointing officers and determining the term of office of
officers;
exercising the borrowing powers of our company and mortgaging
the property of our company; and
approving the issuance of shares.
B.
Compensation
of Directors and Executive Officers
options to purchase our common shares, and
restricted shares, which are non-transferable common shares
without voting or dividend rights.
72
Table of Contents
Common
Common
Common
Common
Shares
Shares
Shares
Shares
Exercise
Underlying
Underlying
Underlying
Underlying
Price
Options
Options
Options
Options
(US$ per
Granted
Exercised
Forfeited
Outstanding
Share)
Date of Grant
Date of Expiration
20,000
20,000
3.18
March 12, 2009
March 11, 2019
25,000
25,000
11.33
August 27, 2010
August 26, 2020
46,600
(1)
46,600
15.00
(3)
August 8, 2006
August 7, 2016
23,300
(2)
23,300
9.88
July 1, 2007
June 30, 2017
23,300
(2)
23,300
41.75
(4)
June 26, 2008
June 25, 2018
23,300
(2)
23,300
13.75
(4)
June 29, 2009
June 28, 2019
23,300
(2)
23,300
12.09
(4)
September 20, 2010
September 19, 2020
46,600
(2)
25,000
21,600
15.00
(3)
August 8, 2006
August 7, 2016
23,300
(2)
23,300
9.88
(4)
July 1, 2007
June 30, 2017
23,300
(2)
23,300
41.75
(4)
June 26, 2008
June 25, 2018
23,300
(2)
23,300
13.75
(4)
June 29, 2009
June 28, 2019
23,300
(2)
23,300
12.09
(4)
September 20, 2010
September 19, 2020
73
Table of Contents
Common
Common
Common
Common
Shares
Shares
Shares
Shares
Exercise
Underlying
Underlying
Underlying
Underlying
Price
Options
Options
Options
Options
(US$ per
Granted
Exercised
Forfeited
Outstanding
Share)
Date of Grant
Date of Expiration
23,300
(2)
23,300
7.36
(4)
September 24, 2007
September 23, 2017
23,300
(2)
23,300
41.75
(4)
June 26, 2008
June 25, 2018
23,300
(2)
23,300
13.75
(4)
June 29, 2009
June 28, 2019
23,300
(2)
23,300
12.09
(4)
September 20, 2010
September 19, 2020
46,600
(1)
46,600
4.29
August 6, 2006
August 7, 2016
23,300
(2)
23,300
9.88
July 1, 2007
June 30, 2017
46,600
34,950
11,650
7.36
September 24, 2007
September, 23, 2017
20,000
5,000
15,000
3.18
March 12, 2009
March 11, 2019
15,000
15,000
11.33
August 27, 2010
August, 26, 2020
569,300
158,150
41,650
369,500
100,000
100,000
15.19
October 8, 2010
October 7, 2020
23,300
(2)
23,300
7.36
September 24, 2007
September 23, 2017
23,300
(2)
23,300
41.75
June 26, 2008
June 25, 2018
80,000
80,000
9.37
May 23, 2009
May 22, 2019
15,000
15,000
11.33
August 27, 2010
August 26, 2010
116,500
116,500
2.12
May 30, 2006
May 29, 2016
20,000
20,000
3.18
March 12, 2009
March 11, 2019
12,000
12,000
11.33
August 27, 2010
August 26, 2020
89,705
44,853
44,852
2.12
May 30, 2006
May 29, 2016
12,000
12,000
3.18
March 12, 2009
March 11, 2019
12,000
12,000
11.33
August 27, 2010
August 26, 2020
64,075
48,056
16,019
2.12
May 30, 2006
May 29, 2016
12,000
12,000
3.18
March 12, 2009
March 11, 2019
12,000
12,000
11.33
August 27, 2010
August 26, 2020
46,600
34,950
11,650
12.10
March 1, 2007
February 28, 2017
11,652
(5)
11,652
7.36
September 24, 2007
September 23, 2017
12,000
3,000
9,000
3.18
March 12, 2009
March 11, 2019
40,000
40,000
16.10
November 8, 2009
November 7, 2019
15,000
15,000
11.33
August 27, 2010
August 26, 2020
36,000
6,000
30,000
3.18
March 12, 2009
March 11, 2019
12,000
12,000
11.33
August 27, 2010
August 26, 2020
765,132
171,811
593,321
520,755
233,265
121,160
166,330
2.12
May 30, 2006
May 29, 2016
23,300
5,825
17,475
4.29
May 30, 2006
May 29, 2016
102,870
41,623
14,795
46,452
4.29
May 30, 2006
May 29, 2016
2,330
(6)
2,330
4.29
May 30, 2006
May 29, 2016
51,260
47,765
3,495
4.29
June 30, 2006
June 29, 2016
64,075
34,056
30,019
4.29
July 17, 2006
July 16, 2016
46,600
46,600
4.29
July 28, 2006
July 27, 2016
58,250
14,563
43,687
12.00
(8)
August 8, 2006
August 7, 2016
11,650
5,079
1,747
4,824
12.00
(8)
August 31, 2006
August 30, 2016
33,300
11,650
21,650
12.10
March 1, 2007
February 28, 2017
6,990
1,748
5,242
12.10
March 1, 2007
February 28, 2017
52,280
5,413
41,867
5,000
8.21
August 17, 2007
August 16, 2017
27,556
22,724
4,832
7.36
September 24, 2007
September 23, 2017
Table of Contents
Common
Common
Common
Common
Shares
Shares
Shares
Shares
Exercise
Underlying
Underlying
Underlying
Underlying
Price
Options
Options
Options
Options
(US$ per
Granted
Exercised
Forfeited
Outstanding
Share)
Date of Grant
Date of Expiration
170,145
68,943
49,332
51,870
7.36
September 24, 2007
September 23, 2017
36,136
5,500
30,636
19.55
February 28, 2008
February 27, 2018
10,000
10,000
20.67
March 31, 2008
March 30, 2018
18,000
18,000
20.67
March 31, 2008
March 30, 2018
30,000
30,000
46.28
June 26, 2008
June 25, 2018
30,000
12,500
17,500
27.88
August 7, 2008
August 6, 2018
308,200
39,500
97,050
171,650
3.18
March 12, 2009
March 11, 2019
6,000
6,000
3.18
March 12, 2009
March 11, 2019
20,000
2,500
17,500
5.26
March 30, 2009
March 29, 2019
59,400
750
5,650
53,000
9.37
May 23, 2009
May 22, 2019
10,000
10,000
11.58
May 31, 2009
May 30, 2019
30,800
8,800
22,000
15.18
August 6, 2009
August 5, 2019
42,600
2,800
39,800
16.10
November 8, 2009
November 7, 2019
420,600
79,200
341,400
11.33
August 27, 2010
August 26, 2020
12,000
12,000
11.33
August 27, 2010
August 26, 2020
236,000
9,500
226,500
15.24
November 14, 2010
November 13, 2020
32,900
32,900
13.99
March 5, 2011
March 4, 2021
2,473,997
537,734
517,100
1,419,163
11,650
11,650
15.00
(3)
April 13, 2007
April 12, 2017
11,650
11,650
3,820,079
867,695
558,750
2,393,634
(1)
Vest in two equal installments, the first upon the date of grant
and the second upon the first year anniversary of the grant date
so long as the director remains in service.
(2)
All vest immediately upon the date of grant.
(3)
The initial public offering price of the common shares.
(4)
Exercise price equal to the average of the trading prices of the
common shares for the 20 trading days preceding the date of
grant.
(5)
Vest one year after the grant date.
(6)
Vesting accelerated on termination.
(7)
The wife of Dr. Qu, our founder, chairman, president and
chief executive officer.
(8)
80% of the initial public offering price of the common shares.
(9)
Resigned as Chief Financial Officer in October 2010 and from the
Board of Directors in December 31, 2010
Table of Contents
Restricted
Restricted
Shares
Shares
Granted
Exercised
Date of Grant
Expiration
233,000
May 30, 2006
May 29, 2016
23,300
23,300
May 30, 2006
May 29, 2016
18,640
18,640
May 30, 2006
May 29, 2016
274,940
41,940
44,270
40,490
May 30, 2006
May 29, 2016
116,500
(4)
July 28, 2006
July 27,2016
160,770
40,490
11,650
11,650
May 30, 2006
May 29, 2016
2,330
(1)
2,330
May 30, 2006
May 29, 2016
116,500
(2)
116,500
June 30, 2006
June 29, 2016
130,480
130,480
566,190
212,910
(1)
Also vest on accelerated termination.
(2)
Vest over a two-year period from the date of grant.
(3)
The wife of Dr. Qu, our founder, chairman and chief
executive officer.
(4)
Vest over a four-year period from the date of grant.
C.
Board
Practices
76
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selecting our independent auditors and pre-approving all
auditing and non-auditing services permitted to be performed by
our independent auditors;
reviewing with our independent auditors any audit problems or
difficulties and managements responses;
reviewing and approving all proposed related-party transactions,
as defined in Item 404 of
Regulation S-K
under the Securities Act;
discussing the annual audited financial statements with
management and our independent auditors;
reviewing major issues as to the adequacy of our internal
controls and any special audit steps adopted in light of
material control deficiencies;
annually reviewing and reassessing the adequacy of our audit
committee charter;
such other matters that are specifically delegated to our audit
committee by our board of directors from time to time;
meeting separately and periodically with management and our
internal and independent auditors; and
reporting regularly to the full board of directors.
reviewing and approving corporate goals and objectives relevant
to the compensation of our chief executive officer, evaluating
the performance of our chief executive officer in light of those
goals and objectives, and setting the compensation level of our
chief executive officer based on this evaluation;
reviewing and approving the compensation arrangements for our
other executive officers and our directors; and
overseeing and periodically reviewing the operation of our
employee benefits plans, including bonus, incentive
compensation, stock option, pension and welfare plans.
77
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identifying and recommending to the board nominees for election
or re-election to the board, or for appointment to fill any
vacancy;
reviewing annually with the board the current composition of the
board in light of the characteristics of independence, age,
skills, experience and availability of service to us;
identifying and recommending to the board the directors to serve
as members of the boards committees;
advising the board periodically with respect to significant
developments in the law and practice of corporate governance as
well as our compliance with applicable laws and regulations, and
making recommendations to the board on all matters of corporate
governance and on any corrective action to be taken; and
monitoring compliance with our code of business conduct and
ethics, including reviewing the adequacy and effectiveness of
our procedures to ensure proper compliance.
78
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communicate or have any dealings with our customers or suppliers
that would be likely to harm the our business relationship with
them;
provide services, whether as a director, officer, employee,
independent contractor or otherwise, to a competitor or acquire
or hold any interest in, whether as a shareholder, partner or
otherwise, in a competitor provided that the executive officer
may hold up to 5% of the outstanding shares or other securities
of a competitor that is listed on a securities exchange or
recognized securities market; and
approach solicit, whether by offer of employment or otherwise,
the services of any of our employees.
79
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As of December 31, 2010
Number of Employees
Percentage of Total
8,048
92%
487
5%
135
2%
63
1%
8,733
100%
each of our directors and executive officers; and
each person known to us to own beneficially more than 5% of our
common shares.
80
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Shares Beneficially
Owned
(1)
%
13,040,000
30.0
%
116,500
*
114,800
*
93,200
*
*
43,300
*
359,500
*
22,019
*
24,650
*
50,852
*
12,000
*
42,675
*
13,919,496
31.8
%
3,683,600
8.5
%
3,573,200
8.2
%
*
The person beneficially owns less than 1% of our outstanding
shares.
(1)
Beneficial ownership is determined in accordance with
Rule 13d-3
of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, and includes voting or
investment power with respect to the securities.
(2)
The business address of our directors and executive officers is
199 Lushan Road, Suzhou New District, Suzhou, Jiangsu 215129,
Peoples Republic of China. Unless otherwise stated below,
all shares beneficially owned by directors and officers represent
(3)
Includes 10,000 common shares issuable upon exercise of options
held by Mr. Qu.
(4)
Includes 116,500 common shares issuable upon exercise of options
held by Mr. McDermott.
(5)
Includes 114,800 common shares issuable upon exercise of options
held by Mr. Johansson.
(6)
Includes 93,200 common shares issuable upon exercise of options
held by Mr. Potter.
(7)
Includes 43,300 common shares issuable upon exercise of options
held by Mr. Zhuang.
(8)
Includes 126,500 common shares issuable upon exercise of options
held by Mr. Spanoudakis.
(9)
Includes 22,019 common shares issuable upon exercise of options
held by Mr. Li.
(10)
Includes 24,650 common shares issuable upon exercise of options
held by Ms. Xi Klein.
(11)
Includes 50,852 common shares issuable upon exercise of options
held by Mr. Wang.
(12)
Includes 12,000 common shares issuable upon exercise of options
held by Ms. Zhou.
(13)
Resigned as Chief Financial Officer in October 2010 and from the
board of directors in December 2010.
(14)
Represents 3,683,600 common shares of our Company held by
Columbia Wanger Asset Management, LLC, as reported on Schedule
13G filed by Columbia Wanger Asset Management, LLC on
February 10, 2011. The percentage of beneficial ownership
was calculated based on the total number of our common
81
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shares as of March 31, 2011. The principal business address
of Columbia Wanger Asset Management, LLC is 227 West Monroe
Street, Suite 3000, Chicago, IL 60606.
(15)
Represents 3,573,200 common shares of our Company held by SAM
Sustainable Asset Management AG, as reported on Schedule 13G
filed by SAM Sustainable Asset Management AG on
February 14, 2011. The percentage of beneficial ownership
was calculated based on the total number of our common shares as
of March 31, 2011. The principal business address of SAM
Sustainable Asset Management AG is Josefstrasse 218, 8005
Zurich, Switzerland.
ITEM 7.
MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A.
Major
Shareholders
B.
Related
Party Transactions
C.
Interests
of Experts and Counsel
ITEM 8.
FINANCIAL
INFORMATION
A.
Consolidated
Statements and Other Financial Information
82
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83
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84
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B.
Significant
Changes
85
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ITEM 9.
THE
OFFER AND LISTING
A.
Offering
and Listing Details
Trading Price
High
Low
US$
US$
16.73
9.43
31.44
6.50
51.80
3.11
30.51
3.00
33.68
8.99
7.49
3.00
16.45
5.44
19.91
9.21
30.51
13.66
33.68
18.41
26.26
8.99
16.35
9.28
17.63
12.11
16.79
10.20
16.75
13.00
14.20
12.11
15.28
12.46
16.79
13.51
14.79
10.20
11.47
9.37
10.77
9.32
B.
Plan
of Distribution
C.
Markets
D.
Selling
Shareholders
E.
Dilution
86
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F.
Expenses
of the Issue
ITEM 10.
ADDITIONAL
INFORMATION
A.
Share
Capital
B.
Memorandum
and Articles of Association
C.
Material
Contracts
D.
Exchange
Controls
E.
Taxation
87
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88
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banks;
certain financial institutions;
insurance companies;
regulated investment companies;
real estate investment trusts;
broker dealers;
traders that elect to mark to market;
U.S. expatriates;
tax-exempt entities;
persons liable for alternative minimum tax;
persons holding a common share as part of a straddle, hedging,
conversion or integrated transaction;
persons that actually or constructively own 10% or more of the
total combined voting power of all classes of our voting stock;
persons who acquired common shares pursuant to the exercise of
any employee share option or otherwise as compensation; or
partnerships or other pass-through entities, or persons holding
common shares through such entities.
an individual who is a citizen or resident of the United States;
a corporation (or other entity taxable as a corporation for
U.S. federal income tax purposes) created or organized in
the United States or under the laws of the United States, any
State thereof or the District of Columbia;
an estate, the income of which is subject to U.S. federal
income taxation regardless of its source; or
a trust that (1) is subject to the primary supervision of a
court within the United States and the control of one or more
U.S. persons for all substantial decisions or (2) has
a valid election in effect under applicable U.S. Treasury
regulations to be treated as a U.S. person.
89
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90
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at least 75% of its gross income for such year is passive
income; or
at least 50% of the value of its assets (based on an average of
the quarterly values of the assets) during such year is
attributable to assets that produce passive income or are held
for the production of passive income.
the excess distribution or recognized gain will be allocated
ratably over your holding period for the common shares;
the amount allocated to the current taxable year, and any
taxable years in your holding period prior to the first taxable
year in which we were a PFIC, will be treated as ordinary
income; and
the amount allocated to each other taxable year will be subject
to the highest tax rate in effect for individuals or
corporations, as applicable, for each such year and the interest
charge generally applicable to underpayments of tax will be
imposed on the resulting tax attributable to each such year.
91
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92
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F.
Dividends
and Paying Agents
G.
Statement
by Experts
H.
Documents
on Display
93
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I.
Subsidiary
Information
ITEM 11.
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
94
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ITEM 12.
DESCRIPTION
OF SECURITIES OTHER THAN EQUITY SECURITIES
ITEM 13.
DEFAULTS,
DIVIDEND ARREARAGES AND DELINQUENCIES
ITEM 14.
MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
ITEM 15.
CONTROLS
AND PROCEDURES
95
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96
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The control designed to ensure that all revenue recognition
criteria were met prior to recognizing revenue did not operate
effectively.
An appropriate control was not designed to ensure that estimated
sales returns were recorded.
There is lack of control procedures to ensure that long-term
purchase commitments are evaluated and appropriately accounted
for in the appropriate accounting period.
The control designed to ensure that significant subsequent
events were properly identified, analyzed and appropriately
recorded in the Companys consolidated financial
statements, did not operate effectively.
Hired additional credit control personnel and revised the
standard operating procedures related to customer credit
assessment and revenue recognition;
Established a sales return reserve policy to account for any
non-routine sales returns after period end;
Improved internal communication protocols for timely recording
and disclosure of financial transactions; and
Reviewed and revised the current checklists used to ensure
adequate controls to capture possible material accounting
adjustments subsequent to the balance sheet date to the date of
reporting.
ITEM 16.
NONE
ITEM 16A.
AUDIT
COMMITTEE FINANCIAL EXPERT
ITEM 16B.
CODE
OF ETHICS
97
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ITEM 16C.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
For the Years Ended December 31,
2008
2009
2010
1,925,862
1,420,000
2,384,000
47,484
69,344
(1)
Audit fees means the aggregate fees billed for
professional services rendered by our principal auditors for the
audit of our annual financial statements and assurance and
related services. In 2008, these were mainly for the review of
financial statements and offering documents in connection with
our follow-on public offering of common shares in July 2008. In
2009 and 2010, these were mainly for the review and audit of
financial statements. The increase of fees in 2010 was mainly
related to audit committee investigation for the SEC subpoena.
(2)
Audit-related fees represents aggregate fees billed
for professional services rendered by our principal auditors for
consultations and related services.
ITEM 16D.
EXEMPTIONS
FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
ITEM 16E.
PURCHASES
OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS
ITEM 16F.
CHANGE
IN REGISTRANTS CERTIFYING ACCOUNTANT
ITEM 16G.
CORPORATE
GOVERNANCE
ITEM 17.
FINANCIAL
STATEMENTS
ITEM 18.
FINANCIAL
STATEMENTS
98
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ITEM 19.
EXHIBITS
Exhibit
1
.1
Amended Articles of Continuance (incorporated by reference to
Exhibit 3.2 of our registration statement on
Form F-1
(File
No. 333-138144),
as amended, initially filed with the SEC on October 23,
2006)
2
.2
Indenture, dated as of December 10, 2007, between Canadian
Solar Inc. and The Bank of New York, as trustee, including the
form of 6.0% Convertible Senior Notes due 2017
(incorporated by reference to Exhibit 4.2 of our
registration statement on
Form F-3
(File
No. 333-149497),
as amended, initially filed with the SEC on March 3, 2008)
4
.1
Form of Director Indemnity Agreement (incorporated by reference
to Exhibit 4.1 of our annual report on
Form 20-F
for the year ended December 31, 2008 (File
No. 001-33107),
as amended, initially filed with the SEC on June 8, 2009)
4
.2
English translation of Supplementary Agreement between Jiangsu
Zhongneng Polysilicon Technology Development Co., Ltd., CSI
Cells Co., Ltd., Changshu CSI Advanced Solar Inc. and CSI
Central Solar Power Co., Ltd., dated May 22, 2009,
supplementing the original Polysilicon Supply Contract dated
August 20, 2008 and the original Solar Wafer Supply
Contract dated August 20, 2008 (incorporated by reference
to Exhibit 4.3 of our annual report on
Form 20-F
for the year ended December 31, 2008 (File
No. 001-33107),
as amended, initially filed with the SEC on June 8, 2009)
4
.3
English translation of Long-term
(10-Year)
Multi-crystalline Wafer Supply Contract between CSI Cells Co.,
Ltd. and Jiangxi LDK Solar Hi-Tech Co., Ltd., dated
June 27, 2008 (incorporated by reference to
Exhibit 4.8 of Amendment No. 1 on
Form 20-F/A
to our annual report on
Form 20-F
for the year ended December 31, 2008 (File
No. 001-33107),
filed with the SEC on October 14, 2009)
4
.4
English translation of Long-term
(10-Year)
Multi-crystalline Wafer Supply Contract between CSI Solar Power
Inc. and Jiangxi LDK Solar Hi-Tech Co., Ltd., dated
June 27, 2008 (incorporated by reference to
Exhibit 4.9 of Amendment No. 1 on
Form 20-F/A
to our annual report on
Form 20-F
for the year ended December 31, 2008 (File
No. 001-33107),
filed with the SEC on October 14, 2009)
4
.5*
Amended and Restated Share Incentive Plan of the Registrant,
dated September 20, 2010
4
.6
Employment Agreement between Canadian Solar Inc. and the
Dr. Shawn Qu (incorporated by reference to
Exhibit 10.2 of our registration statement on
Form F-1
(File
No. 333-138144),
as amended, initially filed with the SEC on October 23,
2006)
4
.7*
Form of Employment Agreement between Canadian Solar Inc. and its
executive officers
4
.8*
English translation of 3rd Supplementary Agreement to the
Multi-crystalline Solar Wafer Supply Contract, dated November
24, 2010, among CSI Cells Co., Ltd., Jiangsu Zhongneng
Polysilicon Technology Development Co., Ltd., GCL (Nanjing)
Solar Energy Technology Company Limited, Jiangsu GCL Silicon
Material Technology Development Co., Ltd., Changzhou GCL
Photovoltaic Technology Co., Ltd. and Suzhou GCL Photovoltaic
Technology Co., Ltd.
4
.9*
English translation of 4th Supplementary Agreement to the
Multi-crystalline Solar Wafer Supply Contract, dated December
31, 2010, between CSI Cells Co., Ltd. and Suzhou GCL
Photovoltaic Technology Co., Ltd.
8
.1*
List of Subsidiaries
12
.1*
CEO Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
12
.2*
CFO Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
13
.1*
CEO Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
13
.2*
CFO Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
23
.1*
Consent of Deloitte Touché Tohmatsu CPA Ltd.
*
Filed herewith
Confidential treatment has been requested with respect to
portions of these exhibits and such confidential treatment
portions have been deleted and replaced with ****
and filed separately with the Securities and Exchange Commission
pursuant to
Rule 24b-2
under the Exchange Act
99
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By:
Title: Chairman, President and Chief
Executive
Officer
100
Table of Contents
F-2
F-3
F-5
F-6
F-7
F-9
F-38
F-1
Table of Contents
May 17, 2011
F-2
Table of Contents
December 31,
December 31,
2009
2010
(In U.S. dollars, except share and per share data)
160,110,887
288,651,701
179,389,811
187,594,816
151,549,471
169,657,473
1,355,760
164,313,448
272,096,575
39,494,689
42,296,999
17,264,319
27,320,901
2,182,677
41,865,170
43,508,018
753,987,795
1,034,664,920
217,135,540
330,459,978
10,909,778
16,725,349
35,209,654
13,946,324
12,535,450
13,377,894
3,000,000
4,100,628
5,671,159
1,824,158
8,521,341
1,038,703,003
1,423,366,965
F-3
Table of Contents
F-4
Table of Contents
Years Ended December 31,
2008
2009
2010
(In U.S. dollars, except share and per share data)
705,006,356
630,961,165
1,495,509,056
633,998,620
552,856,159
1,266,737,444
71,007,736
78,105,006
228,771,612
10,607,562
22,088,657
47,109,261
34,510,263
46,323,959
54,519,646
1,824,753
3,180,372
6,843,216
46,942,578
71,592,988
108,472,123
24,065,158
6,512,018
120,299,489
(12,201,293
)
(9,458,983
)
(22,164,363
)
3,530,957
5,084,227
6,935,560
14,454,814
9,870,333
1,656,928
2,429,524
(10,170,118
)
(19,989,123
)
7,680,503
(36,291,898
)
1,788,036
(2,853,403
)
2,119,919
21,476,134
67,582,313
(9,653,780
)
1,302,065
(16,753,917
)
(7,533,861
)
22,778,199
50,828,396
132,315
259,477
(7,533,861
)
22,645,884
50,568,919
$
(0.24
)
$
0.61
$
1.18
31,566,503
37,137,004
42,839,356
$
(0.24
)
$
0.60
$
1.16
31,566,503
37,727,138
43,678,208
F-5
Table of Contents
Retained
Accumulated
Additional
Earnings
Other
Non-
Total
Common
Paid-in
(Accumulated
Comprehensive
Controlling
Total
Comprehensive
Shares
Capital
Deficit)
Income
Interest
Equity
Income
Number
$
$
$
$
$
$
$
(In U.S. dollars, except share and per share data)
27,320,389
97,454,214
34,636,199
(3,570,175
)
5,980,542
134,500,780
9,102,002
9,102,002
3,966,841
182,550,305
(110,443,505
)
72,106,800
3,500,000
110,659,864
110,659,864
2,552,082
2,552,082
566,190
391,143
1,937,330
1,937,330
(7,533,861
)
(7,533,861
)
(7,533,861
)
8,928,984
8,928,984
8,928,984
35,744,563
395,153,795
(66,705,304
)
(11,104,036
)
14,909,526
332,253,981
1,395,123
5,436,350
5,436,350
6,900,000
102,811,343
102,811,343
1,682,869
1,682,869
129,922
674,424
674,424
9,173
9,173
143,292
143,292
22,645,884
132,315
22,778,199
22,778,199
211,773
211,773
211,773
42,774,485
500,322,431
(61,268,954
)
11,541,848
15,121,299
284,780
466,001,404
22,989,972
3,876,671
3,876,671
118,559
823,560
823,560
145,128
145,128
50,568,919
259,477
50,828,396
50,828,396
13,340,645
(31,327
)
13,309,318
13,309,318
42,893,044
501,145,991
(57,392,283
)
62,110,767
28,461,944
658,058
534,984,477
64,137,714
F-6
Table of Contents
Years Ended December 31,
2008
2009
2010
(In U.S. dollars)
(7,533,861
)
22,778,199
50,828,396
9,282,276
20,508,383
31,266,181
5,126,852
174,292
194,243
(14,454,814
)
(9,870,333
)
(1,656,928
)
2,853,403
7,445,028
18,076,416
3,046,100
23,784,578
12,478,944
2,101,124
13,822,818
1,562,002
1,179,446
35,638
39,816
(2,429,524
)
9,102,002
5,436,350
3,876,671
10,170,118
(39,994,140
)
(83,970,843
)
(103,637,355
)
2,126,297
(116,463,362
)
(5,704,039
)
(1,347,828
)
(2,671,677
)
(21,981,216
)
(1,828,277
)
(33,572,770
)
6,751,157
2,227,991
(5,826,029
)
783,021
(16,899,415
)
(6,424,395
)
19,261,749
62,855,936
18,096,208
423,800
104,588,587
(96,011,517
)
2,369,498
9,065,342
10,979,862
1,367,209
65,703
5,120,313
(119,706
)
166,900
2,163,515
6,893,681
6,051,483
14,259,880
1,893,489
8,452,665
18,875,491
(10,508,489
)
258,520
(454,803
)
6,425,348
2,001,086
755,414
(982,236
)
(10,834,919
)
(5,179,877
)
7,825,523
17,367,159
1,337,319
3,192,698
50,915,490
(58,487,119
)
F-7
Table of Contents
Years Ended December 31,
2008
2009
2010
(In U.S. dollars)
(17,950,833
)
(158,622,411
)
(987,019
)
(3,000,000
)
(4,100,084
)
(1,503,531
)
148,898
2,524,541
(104,817, 010
)
(72,214,660
)
(134,314,791
)
6,322
220,027
291,846
(125,761,521
)
(234,568,230
)
(133,988,954
)
234,096,606
481,721,660
917,514,400
(169,919,741
)
(371,676,212
)
(695,513,690
)
24,964,230
14,633,000
89,659,607
9,173
145,128
(381,900
)
112,752,500
103,349,924
(2,092,636
)
(538,581
)
1,937,330
674,424
823,560
201,356,389
228,173,388
312,629,005
(793,765
)
(70,682
)
8,387,882
77,993,801
44,449,966
128,540,814
37,667,120
115,660,921
160,110,887
115,660,921
160,110,887
288,651,701
11,103,634
10,729,375
21,211,228
2,683,014
4,367,772
13,635,216
2,345,557
17,339,148
18,943,086
22,199,024
72,106,800
F-8
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
1.
ORGANIZATION
AND PRINCIPAL ACTIVITIES
2.
SUMMARY
OF PRINCIPAL ACCOUNTING POLICIES
(a)
Basis
of presentation
(b)
Basis
of consolidation
(c)
Use of
estimates
(d)
Cash
and cash equivalents
(e)
Advances
to suppliers
F-9
Table of Contents
At December 31,
At December 31,
2009
2010
$
$
20,768,495
18,004,235
7,951,591
7,549,800
11,716,080
9,054,708
8,640,609
9,663,744
(f)
Inventories
F-10
Table of Contents
(g)
Property,
plant and equipment
20 years
Over the shorter of the lease term or their estimated useful
lives
5-10 years
5 years
5 years
(h)
Prepaid
land use right
(i)
Long-term
investment
(j)
Investments
in affiliates
F-11
Table of Contents
(k)
Impairment
of long-lived assets
(l)
Income
taxes
(m)
Revenue
recognition
F-12
Table of Contents
(n)
Cost
of revenues
(o)
Shipping
and handling costs
(p)
Research
and development
(q)
Advertising
expenses
(r)
Warranty
cost
(s)
Foreign
currency translation
F-13
Table of Contents
(t)
Foreign
currency risk
(u)
Concentration
of credit risk
(v)
Fair
value of derivatives and financial instruments
F-14
Table of Contents
(w)
Earnings
per Share
(x)
Share-based
compensation
(y)
Recently
issued accounting pronouncements
3.
ALLOWANCE
FOR DOUBTFUL RECEIVABLES
2008
2009
2010
$
$
$
376,178
5,605,983
18,029,440
5,218,944
16,536,592
(10,082,718
)
(19,000
)
(4,113,307
)
29,861
172
9,314
5,605,983
18,029,440
7,956,036
F-15
Table of Contents
2008
2009
2010
$
$
$
2,341,685
10,985,195
2,226,084
8,641,316
10,239,858
(2,205,848
)
115,601
2,194
370,337
2,341,685
10,985,195
19,389,542
4.
INVENTORIES
At December 31,
At December 31,
2009
2010
$
$
53,711,941
93,900,586
22,806,716
50,094,707
87,794,791
128,101,282
164,313,448
272,096,575
5.
PROPERTY,
PLANT AND EQUIPMENT, NET
At December 31,
At December 31,
2009
2010
$
$
63,340,108
67,962,404
3,226,741
3,293,248
136,755,699
213,220,584
7,563,437
14,086,113
1,325,384
2,252,790
212,211,369
300,815,139
(31,862,352
)
(64,257,989
)
180,349,017
236,557,150
36,786,523
93,902,828
217,135,540
330,459,978
F-16
Table of Contents
6.
FAIR
VALUE MEASUREMENT
Fair Value Measurements at Reporting Date Using
Quoted Prices
Total Fair
in Active
Significant
Value and
Markets for
Other
Significant
Carrying
Identical
Observable
Unobservable
Value on the
Assets
Inputs
Inputs
Balance Sheet
(Level 1)
(Level 2)
(Level 3)
$
523,462
$
$
523,462
$
$
523,462
$
523,462
Fair Value Measurements at Reporting Date Using
Quoted Prices
Total Fair
in Active
Significant
Value and
Markets for
Other
Significant
Carrying
Identical
Observable
Unobservable
Value on the
Assets
Inputs
Inputs
Balance Sheet
(Level 1)
(Level 2)
(Level 3)
$
2,182,677
$
$
2,182,677
$
$
2,182,677
$
2,182,677
$
1,062,179
$
$
1,062,179
$
$
1,389,983
$
$
1,389,983
$
$
2,452,162
$
2,452,162
F-17
Table of Contents
At December 31, 2009
At December 31, 2010
Carrying Value
Fair Value
Carrying Value
Fair Value
$
866,000
$
1,458,502
$
905,816
$
924,363
Fair Values of Derivatives Liability
At December 31, 2010
At December 31, 2009
Balance Sheet Location
Fair Value
Balance Sheet Location
Fair Value
Foreign currency derivative liabilities
$
1,062,179
Foreign currency derivative liabilities
$
Foreign currency derivative liabilities
$
1,389,983
Foreign currency derivative liabilities
$
523,462
$
2,452,162
$
523,462
F-18
Table of Contents
Location of
Amount of Gain (Loss) Recognized in Income on Derivatives
Gain (Loss) Recognized
Year Ended December 31
in Income on Derivatives
2008
2009
2010
Gain on foreign currency derivatives
$
13,616,794
$
4,783,240
$
6,636,821
Gain on foreign currency derivatives
838,020
5,087,093
(4,979,893
)
$
14,454,814
$
9,870,333
$
1,656,928
7.
INVESTMENTS
IN AFFILIATES
At December 31,
2009
2010
Carrying
Ownership
Carrying
Ownership
Value
Percentage
Value
Percentage
$
(%)
$
(%)
1,509,808
50
%
659,030
15
%
674,956
15
%
512,578
35
%
528,486
35
%
2,929,020
40
%
2,957,909
40
%
4,100,628
5,671,159
F-19
Table of Contents
8.
BANK
BORROWING
At December 31,
At December 31,
2009
2010
$
$
280,992,349
609,978,254
211,595,078
489,380,618
40,107,071
51,139,457
251,702,149
540,520,075
29,290,200
69,458,179
280,992,349
609,978,254
a)
Short-term
At December 31,
At December 31,
2009
2010
$
$
37,012,750
37,749,000
2,912,634
60,813,374
84,381,806
5,764,876
10,251,570
53,286,488
2,929,020
73,988,040
91,910,854
239,975,284
14,645,100
6,039,857
30,000,000
25,461,971
15,099,600
251,702,149
540,520,075
F-20
Table of Contents
b)
Long-term
At December 31,
At December 31,
2009
2010
$
$
10,983,825
9,059,783
18,306,375
60,398,396
29,290,200
69,458,179
F-21
Table of Contents
51,139,457
19,629,497
10,569,722
39,258,960
120,597,636
(51,139,457
)
$
69,458,179
c)
Interest
expense
Years Ended December 31
2008
2009
2010
$
$
$
1,188,135
1,306,686
1,686,262
12,201,293
9,458,983
22,164,363
13,389,428
10,765,669
23,850,625
9.
SHORT-TERM
NOTES PAYABLE
F-22
Table of Contents
10.
ACCRUED
WARRANTY COSTS
2008
2009
2010
$
$
$
3,878,755
10,846,719
16,899,522
6,978,411
6,199,240
14,707,513
(10,447
)
(146,437
)
(382,129
)
10,846,719
16,899,522
31,224,906
11.
CONVERTIBLE
NOTES
F-23
Table of Contents
At December 31,
At December 31,
2009
2010
$
$
156,848
156,848
1,000,000
1,000,000
134,000
94,184
866,000
905,816
12.
RESTRICTED
NET ASSETS
F-24
Table of Contents
13.
INCOME
TAXES
Years Ended December 31,
2008
2009
2010
$
$
$
(31,376,639
)
(8,876,370
)
18,354,204
33,496,558
30,352,504
49,228,109
2,119,919
21,476,134
67.582,313
9,268,794
4,790,780
9,563,915
2,837,939
5,608,127
13,793,997
12,106,733
10,398,907
23.357.912
571,861
(3,213,987
)
(848,566
)
(3,024,814
)
(8,486,985
)
(5,755,429
)
(2,452,953
)
(11,700,972
)
(6,603,995
)
9,840,655
1,576,793
8,715,349
(186,875
)
(2,878,858
)
8,038,568
9,653,780
(1,302,065
)
16,753,917
F-25
Table of Contents
25%
Exempted for 2008 and 2009 and 12.5% for 2010, 2011 and 2012
(half reduction on 25%)
Exempted for 2008 and 12.5% for 2009, 2010 and 2011 (half
reduction on 25%)
Exempted for 2008 and 12.5% for 2009, 2010 and 2011 (half
reduction on 25%)
Exempted for 2008 and 2009 and 12.5% for 2010, 2011 and 2012
(half reduction on 25%)
At December 31,
At December 31,
2009
2010
$
$
8,703,830
10,704,916
2,001,086
755,414
10,704,916
11,460,330
F-26
Table of Contents
At December 31,
At December 31,
2009
2010
$
$
5,126,058
9,083,240
4,604,892
3,239,612
3,414,898
1,849,697
2,989,772
3,358,735
2,903,356
5,829,316
1,727,852
1,986,063
2,901,339
3,834,258
2,134,867
2,285,344
25,803,034
31,466,265
(2,194,062
)
(2,082,609
)
23,608,972
29,383,656
12,699,194
12,658,307
10,909,778
16,725,349
23,608,972
29,383,656
274,521
274,521
274,521
F-27
Table of Contents
At December 31,
Expiration
2010
Year
$
1,739,120
2015
2,897,652
2015
2,532,251
2030
10,482,080
2015
737,671
2030
70,823
2030
18,459,597
Years Ended December 31,
2008
2009
2010
$
$
$
34
%
33
%
31
%
384
%
0
%
0
%
220
%
31
%
3
%
(249
)%
(64
)%
(8
)%
(176
)%
(16
)%
(3
)%
372
%
9
%
1
%
(161
)%
(8
)%
(2
)%
10
%
2
%
31
%
(1
)%
1
%
455
%
(6
)%
25
%
Years Ended December 31,
2008
2009
2010
$
$
$
5,281,258
13,702,582
5,561,168
0.17
0.37
0.13
0.17
0.36
0.13
F-28
Table of Contents
14.
EARNINGS
PER SHARE
Years Ended December 31,
2008
2009
2010
$
$
$
$
(7,533,861
)
$
22,645,884
$
50,568,919
31,566,503
37,137,004
42,839,356
590,134
838,852
31,566,503
37,727,138
43,678,208
$
(0.24
)
$
0.61
$
1.18
$
(0.24
)
$
0.60
$
1.16
Years Ended December 31,
2008
2009
2010
$
$
$
50,607
50,607
50,607
740,326
597,842
426,716
790,933
648,449
477,323
15.
RELATED
PARTY BALANCES AND TRANSACTIONS
F-29
Table of Contents
16.
FIRM
PURCHASE COMMITMENTS
$
44,865,970
22,562,516
22,383,516
22,204,515
87,028,054
$
199,044,571
17.
COMMITMENTS
AND CONTINGENCIES
a)
Operating
lease commitments
F-30
Table of Contents
$
2,558,139
1,577,155
1,314,379
1,208,597
4,723,375
11,381,645
b)
Property,
plant and equipment purchase commitments
c)
Supply
purchase commitments
$
290,139,332
657,387,689
686,064,378
685,885,378
935,789,021
65,002,539
3,320,268,337
d)
Contingencies
F-31
Table of Contents
F-32
Table of Contents
18.
SEGMENT
INFORMATION
Years Ended December 31,
2008
2009
2010
$
$
$
427,656,269
272,744,921
623,375,655
188,133,256
62,109,973
251,777,174
10,445,389
151,342,770
102,194,745
12,122,345
185,170,195
4,912,021
24,767,310
30,930,744
631,146,935
523,087,319
1,193,448,513
25,356,557
25,915,331
45,482,615
14,697,754
1,885,530
32,667,658
1,516,420
43,165,242
108,216,158
41,570,731
70,966,103
186,366,431
32,288,690
36,907,743
115,694,112
705,006,356
630,961,165
1,495,509,056
19.
MAJOR
CUSTOMERS
Years Ended December 31
2008
2009
2010
$
$
$
103,620,514
122,904,506
164,522,394
10,445,389
151,342,770
96,025,973
88,628,315
3,409,460
12,858,411
76,660,435
4,436,180
50,637,781
F-33
Table of Contents
20.
EMPLOYEE
BENEFIT PLANS
21.
SHARE
OPTIONS
F-34
Table of Contents
2008
2009
2010
5.14%
~
5.95%
4.67%
~
5.72%
4.25%
~
4.75%
n/a
n/a
n/a
78%
~
79%
81%
~
84%
80%
~
84%
8%
3.56%
~
5.24%
2.89%
~
3.36%
3.27
~
3.70
5.40
~
6.20
5.00
Weighted
Weighted
Average
Average
Remaining
Number
Exercise
Contract
Aggregate
of Options
Price
Terms
Intrinsic Value
$
$
1,964,007
9.34
956,500
12.76
(118,559
)
6.95
(184,282
)
7.72
2,617,666
10.79
8 years
10,148,844
2,457,313
10.74
8 years
9,787,824
1,246,994
10.08
7 years
6,810,766
F-35
Table of Contents
Weighted Average
Number of
Grant-Date
Shares
Fair Value
$
29,125
14.12
29,125
14.12
22.
INVESTMENT
INCOME (LOSS)
Years Ended December 31,
2008
2009
2010
$
$
$
1,788,036
210,312
(63,715
)
(3,000,000
)
1,788,036
(2,853,403
)
F-36
Table of Contents
Place and
Attributable
Date
Equity
PRC
November 23, 2001
100%
Developing solar power project
PRC
August 8, 2003
100%
Research and developing solar modules
PRC
January 7, 2005
100%
Production of solar modules
PRC
February 24, 2006
100%
Manufacture of solar modules, ingots and wafers
PRC
August 1, 2006
100%
Production of solar modules
PRC
August 23, 2006
100%
Manufacture of solar cells
USA
June 8, 2007
100%
Sale of solar modules
Germany
May 26, 2009
70%
Developing solar power project
Germany
May 26, 2009
70%
Developing solar power project
Japan
June 21, 2009
91.4%
Sales and marketing modules in Japan
Canada
June 22, 2009
100%
Developing solar power project
PRC
July 7, 2009
100%
Planned investment holding
Germany
August 21, 2009
100%
Planned sales agency of solar modules
China
February 9, 2010
100%
Production of solar modules
Canada
June 30, 2010
100%
Production of solar modules
*
On January 5, 2011, all the shares of CVB Solar GmbH held
by CSI was sold to Solmotion GmbH.
F-37
Table of Contents
F-38
Table of Contents
Information of Parent Company
Balance Sheets
F-39
Table of Contents
Information of Parent Company
Statements of Operations
Years Ended December 31
2008
2009
2010
(In U.S. dollars, except share and per share data)
624,574,503
602,999,324
1,248,400,119
624,628,119
591,746,362
1,201,713,356
(53,616
)
11,252,962
46,686,763
4,455,132
8,510,250
10,057,347
19,553,100
17,258,546
13,355,609
622,383
664,102
792,509
24,630,615
26,432,898
24,205,465
(24,684,231
)
(15,179,936
)
22,481,298
(4,400,736
)
(140,314
)
(296,678
)
3,557,683
2,153,462
933,372
(3,000,000
)
2,429,524
(10,170,118
)
1,888,000
4,281,909
830,602
(31,379,878
)
(8,884,879
)
20,948,594
(9,840,655
)
(1,576,793
)
(9,956,513
)
33,686,672
33,107,556
39,576,838
(7,533,861
)
22,645,884
50,568,919
F-40
Table of Contents
Information of Parent Company
Statements of Cash Flows
Years Ended December 31,
2008
2009
2010
(In U.S. dollars)
(7,533,861
)
22,645,884
50,568,919
757
5,450
5,888
4,880,241
8,208,800
(7,327,386
)
3,000,000
1,179,446
35,638
39,816
(33,686,672
)
(33,107,556
)
(39,576,838
)
9,102,002
5,436,350
3,876,671
(2,429,524
)
10,170,118
(2,361,759
)
(29,306,391
)
2,140,423
8,430,376
(105,141,401
)
37,753,416
(40,246,289
)
(9,102,961
)
(16,299,621
)
(6,074,708
)
(7,248,785
)
2,752,935
224,152
(327,630
)
(4,195,539
)
(5,786,798
)
(2,411,261
)
6,026,101
3,937,109
(1,483,914
)
1,713,862
130,350
22,314,717
139,080,262
(23,827,298
)
6,069,954
5,618,662
11,874,837
(100,189
)
3,900,397
10,848,840
6,425,348
2,001,087
755,415
2,068,575
(3,213,988
)
392,598
(25,462,491
)
7,223,781
31,063,737
F-41
Table of Contents
Information of Parent Company
Statements of Operations
Years Ended December 31,
2008
2009
2010
$
$
$
(In U.S. dollars)
(150,000
)
(31,476,334
)
(93,600,000
)
(74,120,415
)
(45,851,545
)
(3,000,000
)
(22,174
)
(3,497
)
(1,172
)
(96,622,174
)
(74,273,912
)
(77,329,051
)
30,000,000
(30,000,000
)
(381,900
)
112,752,500
103,349,924
(2,092,636
)
(538,581
)
1,937,330
674,424
823,560
112,215,294
103,485,767
823,560
747,321
210,504
13,340,647
(9,122,050
)
36,646,140
(32,101,107
)
22,411,660
13,289,610
49,935,750
13,289,610
49,935,750
17,834,643
(2,601,581
)
(104,676
)
(296,678
)
(1,680,672
)
(5,204,641
)
72,106,800
F-42
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/s/ Shawn (Xiaohua) Qu | ||||
President and Chief Executive Officer | ||||
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1. | EMPLOYMENT |
The Company shall employ the Employee, and the Employee shall serve the Company, as its [___________________________________________________] (the Employment ) on the terms and conditions of this Agreement. |
2. | TERM OF EMPLOYMENT |
The Employment shall commence on [_________________________, _____] (the Effective Date ) and continue until terminated in accordance with this Agreement. |
3. | DUTIES AND RESPONSIBILITIES |
(a) | Duties and Responsibilities . The Employee shall have the duties and responsibilities set out in Schedule A and such other duties and responsibilities consistent with the Employment as may be assigned to him/her by the board of the directors of the Company (the Board ) or by those officers of the Company to whom the Employee reports. |
(b) | Reporting . In carrying out his/her duties and responsibilities, the Employee shall report to those officers of the Company set out in Schedule A . |
(c) | Full Time Service . The Employee shall devote all of his/her time, attention and skills to the business and affairs of the Company and shall not, without the prior written consent of the Board, engage in or otherwise be concerned with any other business or occupation or become a director, officer or employee of any other person other than the Company and its subsidiaries. |
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(d) | Company Policies . The Employee shall comply with the terms and conditions of this Agreement, the charter documents of the Company and the guidelines, policies and procedures of the Company approved from time to time by the Board. The Employee acknowledges that his/her failure to do so shall constitute grounds for the Company to terminate the Employment for Cause. |
4. | LOCATION OF EMPLOYMENT |
(a) | Location . The Employees location of Employment is [_______________________]. |
(b) | Travel/Secondment . The Employee acknowledges that, in carrying out his/her duties and responsibilities, he/she may be required to travel frequently to places other than his/her location of employment and may be seconded for reasonable periods of time to other places where the Company and its subsidiaries carry on business. |
5. | COMPENSATION AND EXPENSES |
(a) | Base Salary . The Company shall pay the Employee a base salary. The initial amount and timing of payment of the Employees base salary is set out in Schedule B . The Company shall review and may adjust the Employees base salary annually. |
(b) | Employee Bonus Plan . The Employee shall be eligible to participate in the employee bonus plan of the Company (the Employee Bonus Plan) and, if the Employee is in the Employment at the end of a calendar year, to receive a performance bonus for the calendar year of up to [___]% of the Employees annual base salary for the calendar year. Any performance bonus to which the Employee is entitled for a calendar year shall be paid to the Employee within thirty (30) days after the release of the audited financial statements of the Company for the calendar year. |
The Employee acknowledges that his/her entitlement to receive a performance bonus under the Employee Bonus Plan for any year is subject to the achievement of base and personal, departmental and company-wide objectives/targets established by the Company for the year and is subject to the discretion of the Board or a designated committee of the Board. |
(c) | Stock Option Plan . The Employee shall be eligible to participate in the share incentive plan of the Company (the Stock Option Plan ) and to receive stock options thereunder. |
The Employee acknowledges that any grant of options under the Stock Option Plan is subject to the discretion of the Board or a designated committee of the Board and that all grants of options under the Stock Option Plan are subject to the terms and conditions of the applicable grant and the Stock Option Plan. |
(d) | Standard Employee Benefit Plans . Subject to the eligibility requirements and the other terms and conditions thereof, the Employee shall be eligible to participate in all standard employee benefit plans of the Company, including any retirement plan, life or disability insurance plan, medical, dental or other health insurance plan and short or long-term disability plan. |
(e) | Additional Benefits . The Employee shall be entitled to the additional benefits set out in Schedule C . |
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(f) | Vacation . The Employee shall be entitled to [_______] weeks paid vacation per year (pro rated for part years). |
The Employee shall take his vacation at a time or times reasonable for each of the Company and the Employee in the circumstances. Any unused vacation time from one year may not be carried over into the following year without the consent of the Company. |
(g) | Employment Expenses . The Employee shall be entitled to be reimbursed in accordance with the guidelines, policies and procedures of the Company for all reasonable out-of-pocket expenses properly incurred by him/her in the course of the Employment. |
(h) | Deductions . All amounts paid and benefits provided by the Company to the Employee under the Agreement are subject to such withholdings and deductions as may be required by law. |
6. | TERMINATION OF EMPLOYMENT |
(a) | Death. The Employment shall terminate on the death of the Employee. |
(b) | By the Company . The Company may terminate the Employment for Cause, at any time, without notice. |
Cause means that the Employee has: |
(1) | committed a felony or indictable offence or an act of fraud, misappropriation or embezzlement; | ||
(2) | been negligent or acted dishonestly to the detriment of the Company; | ||
(3) | engaged in actions amounting to misconduct; or | ||
(4) | failed to perform his/her duties and responsibilities under this Agreement and such failure continues after the Employee is afforded a reasonable opportunity to cure such failure. |
The Company may terminate the Employment for any reason other than Cause, at any time, by giving written notice of termination to the Employee. |
(c) | By the Employee . The Employee may terminate the Employment for any reason, at any time, by giving 60 days written notice of termination to the Company. |
7. | PAYMENT ON TERMINATION OF EMPLOYMENT |
(a) | Termination by the Company for Cause . If the Company terminates the Employment for Cause, the Company shall pay to the Employee, within thirty (30) days following the date of termination of the Employment, a lump sum amount equal to the aggregate of any base salary earned but not received, and any vacation days accrued but not taken, by the Employee before the date of termination of the Employment. |
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The Employee shall not be entitled to receive any other payment or benefit from the Company in respect of the termination of the Employment. |
(b) | Termination by the Company for Disability . If the Company terminates the Employment for Disability: |
(1) | the Company shall pay to the Employee, within thirty (30) days following the date of termination of the Employment, a lump sum amount equal to the aggregate of: |
(i) | any base salary earned but not received by the Employee before the date of termination of the Employment, | ||
(ii) | any vacation days accrued but not taken by the Employee before the date of termination of the Employment, and | ||
(iii) | any bonus earned by but not paid to the Employee for any year preceding the year in which the date of termination of the Employment occurs; and |
(2) | subject to the Employee complying with Sections 8, 9 and 10 and executing a release in the Companys customary form, |
(i) | the Company shall continue to pay, in accordance with Companys normal payroll practices, the Employees base salary for a period of six (6) months following the date of termination of the Employment; provided that the aggregate amount payable to the Employee pursuant to this Section 7(b)(2)(i) shall be reduced by the amount of any payment in lieu of notice or other severance payment which the Employee may be entitled to receive at law or pursuant to Company policy with respect to the termination of the Employment, with such reduction being applied to the first payments otherwise payable; and |
(ii) | the Employee shall be entitled: |
(A) | to receive the disability benefits, if any, to which he/she may be entitled in respect of the Disability under any disability plan of the Company; and | ||
(B) | to continue to receive the other benefits, if any, to which he/she is entitled to receive under Sections 5(d) and (e) at the date of termination of the Employment for a period of six (6) months following the date of termination of the Employment. |
The Employee shall not be entitled to receive any other payment or benefit from the Company in respect of the termination of the Employment. |
Disability means any physical or mental illness or condition of the Employee that is reasonably expected to continue for at least six (6) months and interfere materially with his/her ability to carry out his/her duties and responsibilities of the Employment. |
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(c) | Termination by the Company for any Reason other than Cause or Disability . If the Company terminates the Employment for any reason other than Cause or Disability: |
(1) | the Company shall pay to the Employee, within thirty (30) days following the date of termination of the Employment, a lump sum amount equal to the aggregate of: |
(i) | any base salary earned but not received by the Employee for the period preceding the date of termination of the Employment, |
(ii) | any vacation days accrued but not taken by the Employee before the date of termination of the Employment, and |
(iii) | any bonus earned by but not paid to the Employee for any year preceding the year in which the date of termination of the Employment occurs; and |
(2) | subject to the Employees complying with Sections 8, 9 and 10 and executing a release in the Companys customary form, |
(i) | the Company shall continue to pay, in accordance with Companys normal payroll practices, the Employees base salary for a period of six (6) months following the date of termination of the Employment; provided that the aggregate amount payable to the Employee pursuant to this Section 7(c)(2)(i) shall be reduced by the amount of any payment in lieu of notice or other severance payment which the Employee may be entitled to receive at law or pursuant to Company policy with respect to the termination of the Employment, with such reduction being applied to the first payments otherwise payable; and | ||
(ii) | the Employee shall continue to be entitled to receive the benefits, if any, to which he/she is entitled to receive under Sections 5(d) and (e) at the date of termination of the Employment for a period of six (6) months following the date of termination of the Employment. |
The Employee shall not be entitled to receive any other payment or benefit from the Company in respect of the termination of the Employment. |
(d) | Termination by the Employee for Good Reason . If the Employee terminates the Employment for Good Reason: |
(1) | the Company shall pay to the Employee, within thirty (30) days following the date of termination of the Employment, a lump sum amount equal to the aggregate of: |
(i) | any base salary earned by but not paid to the Employee for the period preceding the date of termination of the Employment, | ||
(ii) | any vacation days accrued but not taken by the Employee before the date of termination of the Employment, and |
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(iii) | any bonus earned by but not paid to the Employee for any year preceding the year in which the date of termination of the Employment occurs; and |
(2) | subject to the Employees complying with Sections 8, 9 and 10 and executing a release in the Companys customary form, |
(i) | the Company shall continue to pay, in accordance with Companys normal payroll practices, the Employees base salary for a period of six (6) months following the date of termination of the Employment; provided that the aggregate amount payable to the Employee pursuant to this Section 7(d)(2)(i) shall be reduced by the amount of any payment in lieu of notice or other severance payment which the Employee may be entitled to receive at law or pursuant to Company policy with respect to the termination of the Employment, with such reduction being applied to the first payments otherwise payable; and | ||
(ii) | the Employee shall continue to be entitled to receive the benefits, if any, to which he/she is entitled to receive under Sections 5(d) and (e) at the date of termination of the Employment for a period of six (6) months following the date of termination of the Employment. |
The Employee shall not be entitled to receive any other payment from the Company in respect of the termination of the Employment. |
Good Reason means any material reduction in the Employees titles, duties and responsibilities or any material reduction in the Employees base salary, which continues for more than thirty (30) days after the Employee has given written notice to the Company that the Employee believes in good faith that an event constituting Good Reason has occurred; provided that such notice is given within ninety (90) days after such event occurs. For clarity, a change of supervision which does not result in a reduction in the Employees titles, duties or responsibilities does not constitute a material reduction. |
(e) | Termination by the Employee for any Reason other than Good Reason . If the Employee terminates the Employment for any reason other than Good Reason, the Company shall pay to the Employee, within thirty (30) days following the date of termination of the Employment, a lump sum amount equal to the aggregate of any base salary earned but not received, and any vacation days accrued but not taken, by the Employee before the date of termination of the Employment. |
The Employee shall not be entitled to receive any other payment or benefit from the Company in respect of the termination of the Employment. |
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8. | CONFIDENTIAL INFORMATION |
(a) | Acknowledgments . The Employee acknowledges that: |
(1) | during the Employment, he/she may have access to commercially sensitive information that is not in the public domain concerning the business and affairs of the Company, including trade secrets and information concerning the finances, employees, technology, processes, facilities, products, suppliers, customers and markets of the Company and its subsidiaries (the Confidential Information ); | ||
(2) | the Confidential Information is confidential; and | ||
(3) | the Confidential Information and all materials containing the Confidential Information are the property of the Company and its subsidiaries or their customers or suppliers. |
(b) | No Disclosure or Use . During and after the Employment, the Employee shall not directly or indirectly disclose or use any of the Confidential Information except as required in the performance of the Employees duties and responsibilities in connection with the Employment, or as required pursuant to applicable law. |
(c) | Return . On the termination of the Employment, the Employee shall return the Confidential Information and all materials containing the Confidential Information to the Company. |
9. | INVENTIONS |
(a) | Acknowledgement . The Employee acknowledges that the Company engages in research and development activities in connection with its business and that, as an essential part of the Employment, the Employee is expected to make new contributions to and create inventions of value for the Company. |
(b) | Inventions . The Employee shall disclose in confidence to the Company all inventions, improvements, designs, original works of authorship, formulas, processes, compositions of matter, computer software programs, databases, mask works and trade secrets (collectively, the Inventions ), which the Employee may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the Employment. |
The Employee acknowledges and agrees that all Inventions shall be the sole and exclusive property of the Company and the Employee hereby assigns all of his/her right, title and interest in and to any and all of the Inventions to the Company and its successor in interest without further consideration. |
During and after the termination of the Employment, the Employee shall, at the request of the Company, assist the Company to the fullest extent possible to obtain for the Company and enforce patents, copyrights, mask work rights, trade secret rights and other legal protection for the Inventions, including executing any documents that the Company may reasonably request for such purpose. The Employee appoints the Secretary of the Company as the Employees attorney-in-fact to execute such documents on behalf of the Employee. The Company shall compensate the Employee |
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at a reasonable hourly rate for the time spent, and reimburse the Employee for the reasonable expenses incurred, by him/her in providing such assistance after the termination of the Employment. |
(c) | Copyrightable Works . The Employee acknowledges and agrees that all copyrightable works prepared by the Employee within the scope of and during the Employment are works for hire and that the Company will be considered the author thereof. |
10. | NON-COMPETITION |
During, and within one year after the termination of, the Employment: |
(a) | the Employee shall not directly or indirectly communicate or have any other dealings with the customers or suppliers of the Company that would be likely to harm the business relationship between the Company and its customers or suppliers; | ||
(b) | unless agreed to in writing by the Company, the Employee shall not directly or indirectly: |
(1) | provide services, whether as a director, officer, employee, independent contractor or otherwise, to a Competitor; or | ||
(2) | acquire or hold any interest in, whether as a shareholder, partner or otherwise, any Competitor; provided that nothing in this Section 10(b)(2) shall preclude the Employee from holding up to 5% of the outstanding shares or other securities of a Competitor that is listed on any securities exchange or recognized securities market; and |
(c) | unless agreed to in writing by the Company, directly or indirectly solicit, whether by offer of employment or otherwise, the services of any employee of the Company. |
Competitor means a person that directly or indirectly carries on business in any jurisdiction where the Company or any of its subsidiaries carries on business if that person or any subsidiary or division of that person generates more than 10% of its revenues from solar power products and services similar to those provided by the Company. |
The provisions of this Section 10 shall be separate and severable, enforceable independently of each other, and independently of any other provision of this Agreement. |
The Employee acknowledges and agrees that the provisions of this Section 10 are fair and reasonable. |
If any of the provisions of this Section 10 are determined to be invalid under applicable law but would be valid if some part of them was deleted or the period or area of application reduced, such provisions shall apply with such modification as may be necessary to make them valid. |
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11. | GENERAL |
(a) | Section 409A . If and to the extent that Section 409A ( Section 409A ) of the United States Internal Revenue Code of 1986, as amended (the Code ) applies to this Agreement, this Agreement shall be interpreted in accordance with, and incorporate the terms and conditions required by, Section 409A and the provisions of Schedule D shall apply. |
(b) | Notice . Any notice or other communication to be given pursuant to this Agreement shall be in writing and shall be effective if delivered personally or sent by electronic transmission as follows: |
|
if to the Company:
Canadian Solar Inc. [_______________] [_______________] [_______________] Attention: [_______________] Email: [_______________] |
|
|
||
|
if to the Employee:
[_______________] [_______________] [_______________] Email: [_______________] |
or to such other address as a party may from time to time advise. Any such notice or other communication (including a change of address) shall be deemed to have been given when received. |
(c) | Entire Agreement . This Agreement constitutes the entire agreement and understanding between the Employee and the Company regarding the Employment and supersedes all prior or contemporaneous oral or written agreements concerning such subject matter. The Employee acknowledges that he/she has not entered into this Agreement in reliance upon any representation, warranty or undertaking which is not set forth in this Agreement. |
(d) | Amendment . Any amendment to this Agreement must be in writing and signed by the Employee and the Company. |
(e) | Governing Law; Consent to Jurisdiction . This Agreement shall be governed by and construed in accordance with the laws of [_____________] without regard to its conflicts of laws provisions. |
The parties irrevocably submit to the exclusive jurisdiction of the [_________________] courts over any suit, action or proceeding arising out of or relating to this Agreement. |
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To the fullest extent they may effectively do so under applicable law, the parties irrevocably waive and agree not to assert, by way of motion, as a defence or otherwise, any claim that they are not subject to the jurisdiction of the [______________] courts, any objection that they may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in the [_____________] courts and any claim that any such suit, action or proceeding brought in the [_____________] courts has been brought in an inconvenient forum. |
(f) | Interpretation . The following rules of interpretation apply to this Agreement unless the context requires otherwise: |
(1) | the singular includes the plural and conversely; | ||
(2) | a gender includes all genders; | ||
(3) | where a word or phrase is defined, its other grammatical forms have a corresponding meaning; | ||
(4) | a reference to a person includes an individual, a trust, a corporation, an unincorporated body and any other entity; | ||
(5) | a reference to a Section is to a Section of this Agreement; | ||
(6) | a reference to a party includes the partys legal representatives, successors and permitted assigns; | ||
(7) | mentioning anything after include, includes or including does not limit what else might be included; and | ||
(8) | time is of the essence. |
(a) | Medical Plan . The Company shall pay the reasonable cost of membership for the Employee, the Employees spouse and the Employees dependent children who are not over 21 years of age in a medical plan with such reputable medical expense insurance provider as the Company shall decide from time to time. |
(b) | [_________________________]. |
(a) | the Company reserves the right (without any obligation to do so or to indemnify the Employee for failure to do so): |
(1) | to adopt such amendments to this Agreement or such other policies and procedures (including amendments, policies and procedures with retroactive effect) as it determines to be necessary or appropriate to preserve the intended tax treatment of the benefits provided by this Agreement, to preserve the economic benefits of this Agreement and to avoid less favorable accounting or tax consequences for the Company; and/or | ||
(2) | to take such other actions it determines to be necessary or appropriate to exempt the amounts payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder, |
provided that nothing in this Agreement shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A from the Employee or any other individual to the Company or any of its affiliates, employees or agents; and |
(b) | notwithstanding anything herein to the contrary: |
(1) | no termination or other similar payments and benefits hereunder shall be payable unless the termination of the Employment constitutes a separation from service within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations (the Regulations ); | ||
(2) | if the Employee is deemed at the time of the Employees separation from service to be a specified employee for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of any termination or other similar payments and benefits to which the Employee may be entitled hereunder (after taking into account all exclusions applicable to such payments or benefits under Section 409A) is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of such payments and benefits shall not be provided to the Employee prior to the earlier of: |
(i) | the expiration of the six-month period measured from the date of the Employees separation from service, and | ||
(ii) | the date of the Employees death; |
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provided that upon the earlier of such dates, all payments and benefits deferred pursuant to this Section 11(b)(ii) shall be paid in a lump sum to the Employee, and any remaining payments and benefits due hereunder shall be provided as otherwise specified herein; | |||
(3) | the determination of whether the Employee is a specified employee as of the time of the Employees separation from service shall be made by the Company in accordance with the terms of Section 409A (including Section 1.409A-1(i) of the Regulations and any successor provision thereto); | ||
(4) | to the extent that any installment payments under this Agreement are deemed to constitute nonqualified deferred compensation within the meaning of Section 409A for purposes of Section 409A (including for purposes of Section 1.409A-2(b)(2)(iii) of the Regulations), each such payment shall be treated as a separate and distinct payment; | ||
(5) | to the extent that any reimbursements or corresponding in-kind benefits provided to the Employee under this Agreement are deemed to constitute deferred compensation under Section 409A, such reimbursements or benefits shall be provided reasonably promptly, but in no event later than December 31 of the year following the year in which the expense was incurred, and in any event in accordance with Section 1.409A-3(i)(1)(iv) of the Regulations; and | ||
(6) | the amount of any such payments or expense reimbursements in one calendar year shall not affect the payments or expense reimbursements in any other calendar year, other than an arrangement providing for the reimbursement of medical expenses referred to in Section 105(b) of the Code, and the Employees right to such payments or reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit. |
Party A: | CSI Cells Co., Ltd. | |
Party B: | Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. | |
Party C: |
GCL (Nanjing) Solar Energy Technology Company Limited
Jiangsu GCL Silicon Material Technology Development Co., Ltd. Changzhou GCL Photovoltaic Technology Co., Ltd. |
|
Party D: | Suzhou GCL Photovoltaic Technology Co., Ltd. |
1. | Both Party A and Party B have executed the solar wafer supply contract (buyers contract no.: CSI-ZN80818-B), its supplementary agreement (buyers contract no.: CSI07-09-P0066) and its supplementary agreement to solar wafer supply contract (contract no.: CSI-ZN100323). Both parties agree that Party A shall purchase certain quantity of wafers from Party B and Party B shall supply certain quantity of wafers to Party A. | |
2. | The four parties, Parties A, B, C and D, executed the 2nd supplementary agreement to solar wafer supply contract (2nd Supplementary Agreement, contract no. CSI-ZN100810). All the contracts and agreements mentioned in these clauses 1 and 2 hereinabove are collectively known as Original Contracts. | |
3. | Parties C and D were added to become the parties to the Original Contracts pursuant to the 2nd Supplementary Agreement, and, together with Party B, become the Sellers of the Original Contracts with respect to the wafer business. |
1
1. | With effect from the date of signing this supplementary agreement, Parties B and C shall withdraw themselves from being the Sellers to the Original Contracts and shall transfer all of their rights and obligations (including the prepayment already made) under the Original Contracts to Party D. Party D replaces Parties B and C and become the only Seller under the Original Contracts and enjoys the rights and bears the obligations pursuant to the Original Contracts. Parties B and C shall not bear the sellers liabilities and obligations under the Original Contracts and shall not enjoy the sellers rights thereunder. | |
2. | Party D undertakes, acknowledges and understands the contents of the Original Contracts and all the provisions of its annexes/schedules, and agrees to accept the bindings of all the contents of the contracts and its annexes/schedules. Performance of the Sellers obligations under the Original Contracts by Party D to Party A shall be regarded as the performance of the Sellers obligations to the Buyer in the Original Contracts. | |
3. | In consideration that Party D accepts the transfer and becomes the Seller of the Original Contracts, each party agrees that Parties B and C shall no longer bear any joint and several guarantee liability hereunder and, simultaneously, that all the liabilities and obligations of Parties B and C under the Original Contracts since the execution of this agreement shall be totally removed. | |
4. | Pursuant to the agreement, Party A shall perform the liabilities and obligations under the Original Contracts to Party D; in event that Party breaches the contract, Party D shall have the right to make claims against Party As breach liabilities pursuant to the Original Contracts. | |
5. | Party Ds specified bank account is : Agricultural Bank of China, Suzhou New District branch, account 547601040022886. | |
6. | Since October 1, 2010 and until December 31, 2010, Party A shall, at least five days before the delivery of each batch of products, pay the purchase amount of those delivery in full to Party Ds specified bank account through telegraphic transfer. | |
7. | Each party undertakes that this supplementary agreement consists of the amendments to the agreed contents of Original Contracts. Where this supplementary agreement is not consistent with the Original Contracts, this supplementary agreement shall prevail. Both Buyer and Seller shall perform the portions not mended in this supplemental agreement pursuant to the Original Contracts. Each party shall strictly perform the obligations and bear the liabilities pursuant to the Original Contracts and this supplementary agreement. | |
6. | This agreement is executed in twelve copies. Each party shall hold two copies. Each copy shall have the same legal effect after it is signed and affixed with company chops. |
2
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Party A: CSI Cells Co., Ltd.
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Party B: Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd.
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[Chop is affixed]
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[Chop is affixed] | |
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Signing Representative: /s/
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Signing Representative: /s/ | |
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Signing Date: November 24, 2010
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Signing Date: November 24, 2010 | |
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Party C: GCL (Nanjing) Solar Energy Technology
Company Limited
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Party D: Suzhou GCL Photovoltaic Technology Co., Ltd.
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[Chop is affixed]
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[Chop is affixed] | |
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Signing Representative:
|
Signing Representative: | |
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Signing Date: November 24, 2010
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Signing Date: November 24, 2010 | |
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Jiangsu GCL Silicon Material Technology
Development Co., Ltd.
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[Chop is affixed]
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Signing Representative:
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Signing Date: November 24, 2010
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Changzhou GCL Photovoltaic Technology Co., Ltd.
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[Chop is affixed]
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||
Signing Representative:
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||
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Signing Date: November 24, 2010
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3
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Agreement No.: CSI-ZN101231
Signing Place: Suzhou Signing Date: December 31, 2010 |
1. | Product Details and Settlement of Purchase Prices: | |
1.1 | Products and Purchase Prices |
1
January | February | March | April | May | June | July | August | September | October | November | December | Total | ||||||||||||||||||||||||||||||||||||||||
Multi-crystalline wafers (in 10,000 pieces)
|
[****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | |||||||||||||||||||||||||||||||||||||||
Tax-included unit price (RMB/piece)
|
[****]* | |||||||||||||||||||||||||||||||||||||||||||||||||||
Equivalent to (megawatt)
|
[****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | |||||||||||||||||||||||||||||||||||||||
Amount (in RMB10,000)
|
[****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* | [****]* |
Remarks: | The above tax-included unit price is based on the value-added tax rate of 17%. If the value-added tax rate is adjusted, the tax-included unit price shall be adjusted accordingly. |
2012 | 2013 | 2014 | 2015 | Total | ||||||||||||||||
Multi-crystalline wafers
(in 10,000 pieces)
|
[****]* | [****]* | [****]* | [****]* | [****]* | |||||||||||||||
Equivalent to (megawatt)
|
[****]* | [****]* | [****]* | [****]* | [****]* |
Remarks: | ||
(1) | The above tax-included unit price is based on the value-added tax rate of 17%. If the value-added tax rate is adjusted, the tax-included unit price shall be adjusted accordingly. | |
(2) | In December of each year, both parties shall determine the monthly supply quantity for the next year according to the market situation. If agreement cannot be reach by December 31 of the current year, the monthly supply quantity of the next year shall be the quantity not less than the originally determined quantity. |
* | This portion of the 4th Supplementary Agreement to Multi-Crystalline Solar Wafer Supply Contract has been omitted and filed separately with the Securities and Exchange Commission, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. |
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1.2 | The Seller agrees, starting from April 2011, if the Seller starts to produce 156 mono-crystalline wafers, the Seller undertakes to supply the wafers to the Buyer as the prime customer at preferential prices with priority. | |
1.3 | Payment of Purchase Price: |
2. | Offset of Prepayment: | |
2.1 | The prepayment stated in the Original Contracts and this supplementary agreement has the meaning of prepayment under the Contract Law of Peoples Republic of China. | |
2.2 | Both Buyer and Seller agree that in consideration that the Buyer paid the prepayment pursuant to Original Contracts, the prepayment to be further paid by the Buyer for 2011 shall be RMB[****]* (RMB[****]*), which shall be paid to the Seller in full through telegraphic transfer before January 15, 2011. | |
2.3 | Pursuant to the Original Contracts, the Buyer paid RMB[****]* to the Seller as prepayment. Both parties unanimously agree that such prepayment will be transferred to be the prepayment for 2012 by the end of 2011. | |
2.4 | The time to offset the prepayments paid by the Buyer pursuant to the Original Contracts and this supplementary agreement shall be as follows: in 2011, the offset shall be based on RMB[****]* per piece, the total offset amount shall be RMB[****]*. The prepayments for years from 2012 to 2015 shall be with referenced to the format in 2011, which is: prepay at the end of the prior year the amount of current year purchase quantity at RMB[****]* per piece and offset the same amount in the current year. That is, the prepayments of RMB[****]* shall be made at the end of 2011, RMB[****]* at the end of 2012, RMB[****]* at the end of 2013 and RMB[****]* at the end of 2014. | |
3. | Both Buyer and Seller undertake that this supplementary agreement consists of the amendments to agreed contents of the Original Contracts. Where this supplementary agreement is not consistent with the Original Contracts, this supplementary agreement shall prevail. Both Buyer and Seller shall perform the portions not mended in this supplemental agreement pursuant to the Original Contracts. Each party shall strictly perform the obligations and bear the liabilities pursuant to the Original Contracts and this supplementary agreement. |
* | This portion of the 4th Supplementary Agreement to Multi-Crystalline Solar Wafer Supply Contract has been omitted and filed separately with the Securities and Exchange Commission, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. |
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4. | The Buyer undertakes that since and including 2012, the quantity that the Buyer purchases from the Seller as set forth in Schedule 2 shall not be lower than 50% of the wafer production (in megawatt) publicly announced by its listed company (CSIQ) in the current year. Otherwise, the Seller has the right to request the Buyer to adjust the Schedule 2 being the wafer quantity to be purchased by the Buyer in the current year. | |
5. | The Buyer undertakes that within three years from the date of executing this agreement, the total capacity (in megawatt) of the wafer projects already put into operation or already commenced operation by the Buyer and its affiliated companies (meaning the onshore wholly-owned subsidiaries held by Canadian Solar Inc.) shall not exceed 1GW. Otherwise, the Seller has the right to request the Buyer to stop investing into the new wafer projects and its construction. If the Buyer does not stop such actions, the Seller has the right to: (1) upon formal notification and after six month of grace period, temporarily not to supply wafers to the Buyer pursuant to the Original Contracts and this supplementary agreement until the Buyer stops the above actions; the prepayments paid by the Buyer shall become the liquidated damages which shall be paid by the Buyer to the Seller and shall not be returned, or (2) terminate the Original Contracts and this agreement; upon termination, the prepayments paid by the Buyer pursuant to the Original Contracts and this supplementary agreement shall become the liquidated damages which shall be paid by the Buyer to the Seller and shall not be returned. | |
6. | If the Seller cannot perform the delivery obligations in the current year pursuant to clause 1 of the contact within the term of the contract, the Buyer has the right to request the Seller to compensate the Buyers damages at the rate of RMB[****]* per piece. If the Buyer cannot perform the purchase obligations in the current year pursuant to clause 1 of the contact within the term of the contract, the Seller has the right to request the Buyer to compensate the Sellers damages at the rate of RMB[****]* per piece. The maximum compensation claimed shall be RMB[****]*. | |
7. | Both parties unanimously agree that in events of any non-performance of the Original Contracts and this agreement caused by the natural disasters, wars or financial crisis, both parties shall have the right to request for consultations on the Original Contracts and this agreement. | |
8. | Both Buyer and Seller unanimously confirm that the representatives signing this supplementary agreement has obtained a sufficient authorization. This contract shall become effective when both parties affix of the chops and sign this contract by the authorized signatories. Where this supplementary agreement is not consistent with the Original Contracts, this supplementary agreement shall prevail. Other contents [not mentioned herein] shall be performed pursuant to the Original Contracts. | |
9. | Every page of this supplementary agreement shall be initialed by the authorized signatures or affixed with the chops partially. | |
10. | Without both parties unanimous agreement, no party can unilaterally terminate or amend this agreement. | |
11. | This contract is signed in four copies. Each of the Buyer and the Seller shall keep two copies. Each copy shall have the same legal effect. |
* | This portion of the 4th Supplementary Agreement to Multi-Crystalline Solar Wafer Supply Contract has been omitted and filed separately with the Securities and Exchange Commission, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. |
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Seller: Suzhou GCL Photovoltaic Technology Co., Ltd. (Chop)
[Chop is affixed] Signature of legal representatives or authorized representative: |
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/s/ | |||||
Buyer: CSI Cells Co., Ltd. (Chop)
[Chop is affixed] Signature of legal representatives or authorized representative: |
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/s/ | |||||
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By:
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/s/ Shawn (Xiaohua) Qu | |||||
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Name: | Shawn (Xiaohua) Qu | |||||
Title: | Chief Executive Officer |
By:
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/s/ Weiwen Chen | |||||
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Name: | Weiwen Chen | |||||
Title: | Chief Financial Officer |
By:
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/s/ Shawn (Xiaohua) Qu | |||||
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Name: | Shawn (Xiaohua) Qu | |||||
Title: | Chief Executive Officer |
By:
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/s/ Weiwen Chen | |||||
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Name: | Weiwen Chen | |||||
Title: | Chief Financial Officer |