Annual and Transition Report (foreign Private Issuer) (20-f)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

(Mark One)

¨	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:

For the fiscal year ended December 31, 2014

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:

For the transition period from to

¨	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

Commission file number 001-33464

LDK Solar CO., Ltd.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Cayman Islands

(Jurisdiction of incorporation or organization)

Hi-Tech Industrial Park

Xinyu City

Jiangxi Province 338032

People’s Republic of China

(Address of principal executive offices)

Jack Lai

Chief Financial Officer

+1 (408) 245-0858 (Telephone)

+1 (408) 245-8802 (Facsimile)

1290 Oakmead Parkway, Suite 306

Sunnyvale, California 94085

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Securities Exchange Act.

Title of Each Class

Name of Each Exchange on which Registered

American depositary shares, each representing

one ordinary share of par value $0.10 each

New York Stock Exchange, Inc. (until March 31, 2014)

Securities registered or to be registered pursuant to Section 12(g) of the Securities Exchange Act. None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Securities Exchange Act. None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. 241,426,239 ordinary shares, par value $0.10 each.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No x

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) or the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant as required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Securities Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP x

International Financial Reporting Standards as issued

by the International Accounting Standards Board ¨

Other ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow: Item 17 ¨ Item 18 ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act). Yes ¨ No x

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act subsequent to the distribution of securities under a plan confirmed by a court. Yes x No ¨

Table of Contents


		Page
Certain Terms and Conventions		1
Exchange Rate Information		2
Forward-Looking Statements		3

	PART I
ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	5
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	5
ITEM 3.	KEY INFORMATION	5
	A. Selected Financial and Operating Data	5
	B. Capitalization and Indebtedness	9
	C. Reasons for the Offer and Use of Proceeds	9
	D. Risk Factors	9
ITEM 4.	INFORMATION ON THE COMPANY	45
	A. History and Development	45
	B. Business Overview	47
	C. Organizational Structure	65
	D. Property, Plants and Equipment	66
ITEM 4A.	UNRESOLVED STAFF COMMENTS	66
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	66
	A. Operating Results	66
	B. Liquidity and Capital Resources	92
	C. Research and Development, Patents and Licenses, Etc.	97
	D. Trend Information	98
	E. Off-Balance Sheet Arrangements	101
	F. Tabular Disclosure of Contractual Obligations	101
	G. Safe Harbor	102
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	102
	A. Directors and Senior Management	102
	B. Compensation of Directors and Officers	104
	C. Board Practices	105
	D. Employees	107
	E. Share Ownership	108
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	110
	A. Major Shareholders	110
	B. Related Party Transactions	110
	C. Interests of Experts and Counsel	113
ITEM 8.	FINANCIAL INFORMATION	113
	A. Consolidated Statements and Other Financial Information	113
	B. Significant Changes	114
ITEM 9.	THE OFFER AND LISTING	115
ITEM 10.	ADDITIONAL INFORMATION	115
	A. Share Capital	115
	B. Memorandum and Articles of Association	116
	C. Material Contracts	124
	D. Exchange Controls	124
	E. Taxation	124
	F. Dividends and Paying Agents	130
	G. Statement by Experts	130
	H. Documents on Display	130
	I. Subsidiary Information	131


		Page
ITEM 11.	QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK	131
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	133
	A. Debt Securities	133
	B. Warrants and Rights	133
	C. Other Securities	133
	D. American Depositary Shares	133

	PART II
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	144
ITEM 14.	MATERIAL MODIFICATIONS TO RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	144
	A. Material Modification to Instruments Defining Rights of Security Holders	144
	B. Material Modification to Rights of Registered Securities by Issuing or Modifying any Other Class of Securities	144
	C. Withdrawal or Substitution of a Material Amount of the Assets Securing any Registered Securities	144
	D. Change of Trustees or Paying Agents for any Registered Securities	144
	E. Use of Proceeds	145
ITEM 15.	CONTROLS AND PROCEDURES	145
ITEM 16.	RESERVED	148
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	148
ITEM 16B.	CODE OF ETHICS	148
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	148
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	149
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	149
ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	149
ITEM 16G.	CORPORATE GOVERNANCE	149
ITEM 16H.	MINE SAFETY DISCLOSURE	150

	PART III
ITEM 17.	FINANCIAL STATEMENTS	151
ITEM 18.	FINANCIAL STATEMENTS	151
ITEM 19.	EXHIBITS	151

Signature		154

Index to Consolidated Financial Statements		F-1

CERTAIN TERMS AND CONVENTIONS

We measure our wafer production capacity in megawatts, or MW, representing 1,000,000 watts, or in gigawatts, or GW, representing 1,000 MW, each a unit of power-generating capacity. For purposes of this annual report, we have assumed an average photovoltaic, or PV, conversion efficiency for our multicrystalline wafers and cells and modules using our multicrystalline wafers at a rate of 16.5% during the year 2012, 17.2% during the year 2013, 17.5% during the year 2014, and 17.9% since January 1, 2015. The conversion efficiency rate of a PV cell is the percentage of light energy from the sun that the cell converts into electrical energy. This conversion efficiency rate is estimated based on feedback from our selected customers and is highly dependent on the solar cell and module production processes of these customers. Based on this conversion efficiency rate, we have further assumed that, with respect to our wafers, each 156 by 156 millimeters, or mm, wafer we produce generates approximately 4.1 watts of power during the year 2012, 4.2 watts of power during the year 2013, 4.25 watts of power during the year 2014, and 4.35 watts of power since January 1, 2015.

We calculate our wafer production capacity as of any specific date based on the ingot production capacity and wafer slicing, or wafering, capacity of our equipment in operation as of that date on an annualized basis. We calculate our estimated aggregate installed annualized polysilicon production capacity by the end of any period based on the capacity of our polysilicon reactors planned to be in operation by the end of such period on an annualized basis.

For the purpose of this annual report, geographical references to “China,” “Chinese” and “PRC” are to the People’s Republic of China and do not include the Hong Kong Special Administrative Region, or Hong Kong, the Macau Special Administrative Region, or Macau, and Taiwan. References to “provinces” of China are to provinces or municipalities under direct administration of the Chinese central government and provincial-level autonomous regions of China.

For the purpose of this annual report, the total number of our shares issued and outstanding as of December 31, 2014 excludes 6,345,450 American depositary shares, or ADSs, each representing one ordinary share, par value $0.10 each, in our share capital, which were the subject of the prepaid forward contracts we entered into in connection with our issuance in April 2008 of the 4.75% convertible senior notes due April 2013, as they are regarded as issued but not outstanding because the relevant prepaid forward contracts have been terminated. As of the date of this annual report, an aggregate of 5,902,950 ordinary shares and an equivalent amount of ADSs representing such ordinary shares have been cancelled. The remaining 442,500 ordinary shares and ADSs are yet to be cancelled upon their return to the Company.

“LDK Solar” refers to LDK Solar CO., Ltd., a Cayman Islands company in provisional liquidation until April 21, 2015; “LDK Silicon” refers to LDK Silicon & Chemical Technology Co., Ltd., a Cayman Islands company and subsidiary of LDK Solar; “LDK Silicon Hong Kong” refers to LDK Silicon Holding Co., Limited, a Hong Kong company and subsidiary of LDK Silicon; and “we,” “us” or “our company” refers to LDK Solar and its subsidiaries.

“Rmb” or “Renminbi” refers to the legal currency of China; “$,” “dollars,” “US$” or “U.S. dollars” refers to the legal currency of the United States; “HK$” or “Hong Kong dollars” refers to the legal currency of Hong Kong; “euro” or “€” refers to the official currency of the eurozone, which currently consists of 19 of the 28 member states of the European Union.

We have sourced various solar industry data used in this annual report from independent solar energy industry research companies, such as PVinsights Co., Ltd., or PVinsights. We have assumed the correctness and truthfulness of such data, including projections and estimates, when we use them in this annual report.

We have rounded all the numbers in this annual report to their closest round numbers. Figures shown as totals in tables may not be arithmetic aggregations of the figures preceding them due to rounding.

EXCHANGE RATE INFORMATION

We conduct substantially all of our business operations in China with a substantial portion of our sales denominated in Renminbi, while a significant portion of our costs and expenses is denominated in U.S. dollars. We make periodic reports to our shareholders in U.S. dollars. For our operations whose functional currency is not the U.S. dollar, we translate assets and liabilities using exchange rates in effect at each period end and we use the average exchange rates of the period for the statement of operations. We make no representation that any amounts in Renminbi or U.S. dollars could be or could have been converted into each other at any particular rate or at all. The Chinese government imposes controls over its foreign exchange in part through regulation of the conversion between Renminbi and foreign currencies as we have disclosed in “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Company and Our Industry — Fluctuations in exchange rates could adversely affect our business” and “— Risks Relating to Business Operations in China — Changes in foreign exchange and foreign investment regulations in China may affect our ability to invest in China and the ability of our Chinese subsidiaries to pay dividends and service debts in foreign currencies” in this annual report.

The following table sets forth, for the periods indicated, noon buying rates for U.S. dollars in New York City for cable transfers in Renminbi as certified for customs purposes by the Federal Reserve Bank of New York, which are published weekly by the Federal Reserve Board:


	Noon Buying Rate
Period	Period End		Average		High		Low
	(Renminbi per $1.00)
2010		6.6000		6.7603		6.8330		6.0000
2011		6.2939		6.4475		6.6364		6.2939
2012		6.2301		6.2290		6.3879		6.2221
2013		6.0537		6.1412		6.2438		6.0537
2014		6.2046		6.1704		6.2591		6.0402
November		6.1429		6.1249		6.1249		6.1117
December		6.2046		6.1886		6.2256		6.1490
2015
January		6.2495		6.2181		6.2535		6.1870
February		6.2695		6.2518		6.2695		6.2399
March		6.1990		6.2386		6.2741		6.1955
April		6.2018		6.2010		6.2185		6.1927
May (through May 1)		6.2018		6.2018		6.2018		6.2018

Annual averages in the above table are calculated by averaging the noon buying rates on the last business day of each month during the year. Monthly averages are calculated by averaging the noon buying rates for all days during the month or the elapsed portion thereof.

On May 1, 2015, the noon buying rate for U.S. dollars in effect in New York City for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve Bank of New York was $1.00 = Rmb 6.2018.

FORWARD-LOOKING STATEMENTS

This annual report includes “forward-looking statements” within the meaning of, and intended to qualify for the safe harbor from liability established by, the United States Private Securities Litigation Reform Act of 1995. These statements, which are not statements of historical fact, may contain estimates, assumptions, projections and/or expectations regarding future events, which may or may not occur. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, especially with our current and on-going restructuring not only offshore China but also onshore China. Some of the risks are listed under “Item 3. Key Information — D. Risk Factors” and elsewhere in this annual report. In some cases, you can identify these forward-looking statements by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will,” “would,” or similar expressions, including their negatives. These forward-looking statements include, without limitation, statements relating to:

•

prospects of the implementation of our restructuring offshore China;

•

prospects of continued standstill and forbearance by our creditors onshore China with respect to their lendings to us over the years;

•

prospects of the restructuring of our indebtedness onshore China;

•

any dilutive effect of the convertible securities on our capital structure and the ADS trading price;

•

our goals and strategies;

•

impact and likely consequences of the current and on-going fluctuating PV market and overall global economic development on the PV market and on our businesses;

•

our future business development, results of operations and financial condition;

•

expected growth of and changes in the PV industry, solar power industry and renewable energy industry;

•

our ability to maintain and streamline our position as a leading vertically integrated manufacturer of PV products;

•

our ability to maintain a strong relationship with any particular supplier or customer;

•

effect of competition on demand for and price of our products;

•

determination of the fair value of our ordinary shares, ADSs, and equity-linked securities;

•

any government subsidies and economic incentives to us or to the PV industry;

•

Chinese governmental policies regarding foreign investments;

•

prospects of our capital market financings, including our debt re-financings; and

•

risks identified under “Item 3. Key Information — D. Risk Factors” in this annual report.

This annual report also contains data related to the solar power market in several countries, including China. This market data, including data from independent solar energy industry research companies, such as PVinsights, includes projections that are based on a number of assumptions. The solar power market may not grow at the rates projected by the market data, or at all. The failure of the market to grow at the projected rates may materially and adversely affect our business and the market price of our ADSs and equity-linked securities. In addition, the rapidly changing nature of the solar power market subjects any projections or estimates relating to the growth prospects or future condition of our market to significant uncertainties. If any one or more of the assumptions underlying the market data proves to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

We do not guarantee that the transactions and events described in the forward-looking statements will happen as described or that they will happen at all. You should read this annual report completely and with the understanding that actual future results may be materially different from what we expect. The forward-looking statements made in this annual report relate only to events as of the date on which the statements are made or, if obtained from third-party studies or reports, the date of the corresponding study or report. Since we operate in an emerging and evolving environment and new risk factors emerge from time to time, you should not rely upon forward-looking statements as predictions of future events. We undertake no obligation, beyond that required by law, to update any forward-looking statement, whether as a result of new information, future events or otherwise, to reflect events or circumstances after the date on which the statement is made, even though our situation will change in the future. Whether actual results will conform with our expectations and predictions is subject to a number of risks and uncertainties, many of which are beyond our control, and reflect future business decisions that are subject to change. All forward-looking statements contained in this annual report are qualified by reference to this cautionary statement.

PART I

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable, but see “Item 6. Directors, Senior Management and Employees — A. Directors and Senior Management” in this annual report.

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.

KEY INFORMATION

A.	SELECTED FINANCIAL AND OPERATING DATA

The following selected consolidated statement of operations data (other than ADS data) and selected consolidated statement of cash flow data for the years ended December 31, 2012, 2013 and 2014 and the selected consolidated balance sheet data as of December 31, 2013 and 2014 have been derived from our audited consolidated financial statements included elsewhere in this annual report. The selected consolidated statement of operations data (other than ADS data) and selected consolidated statements of cash flow data for the years ended December 31, 2010 and 2011 and the selected consolidated balance sheet data as of December 31, 2010, 2011 and 2012 are derived from our audited consolidated financial statements not included in this annual report. You should read the following selected consolidated financial data in conjunction with our consolidated financial statements and related notes and the information under “Item 5. Operating and Financial Review and Prospects” in this annual report. We have prepared our consolidated financial statements in accordance with generally accepted accounting principles, or GAAP, in the United States, or U.S. GAAP. Our historical results for any period are not necessarily indicative of results to be expected for any future period.

We were incorporated in the Cayman Islands on May 1, 2006 as the holding company for, and currently conduct our operations mainly through, subsidiaries in China, including Jiangxi LDK Solar Hi-Tech Co., Ltd., or Jiangxi LDK Solar, Jiangxi LDK PV Silicon Technology Co., Ltd., or Jiangxi LDK Silicon, LDK Solar Hi-Tech (Nanchang) Co., Ltd., or LDK Nanchang, and LDK Solar Hi-Tech (Xinyu) Co., Ltd., or LDK Xinyu.

The following table presents our selected consolidated statement of operations data for the periods specified.


	Year Ended December 31,
	2010			2011			2012			2013			2014
	($ in thousands, except per share, per ADS and share number data)
Consolidated Statement of Operations Data
Net sales		2,509,347			2,157,813			862,882			598,246			680,255
Inventory write-downs		(6,113	)		(305,175	)		(180,900	)		(70,707	)		20,812
Gross profit (loss) ⁽¹⁾		557,835			(39,661	)		(352,592	)		(226,350	)		(34,690	)
(Provision) reversal of provision for doubtful recoveries of prepayments to suppliers, trade accounts receivable and other assets		(3,872	)		(174,315	)		1,210			(188,264	)		6,092
Loss on write-down of assets held for sale to fair value less cost to sell		—			—			(74,178	)		—			—
Impairment loss on intangible assets		—			—			(25,255	)		—			—
Impairment loss on property, plant and equipment		—			—			(109,027	)		(756,239	)		—
Income (loss) from operations ⁽²⁾		434,917			(460,246	)		(807,749	)		(1,336,334	)		(159,173	)
Interest expense and amortization of debt issuance costs and debt discount (premium) ⁽³⁾		(95,012	)		(189,938	)		(258,971	)		(259,876	)		(328,898	)
Government subsidy		5,625			33,698			4,242			1,804			599
Gain on troubled debt restructuring		—			—			10,510			4,645			96,495
Earnings (loss) before income taxes		362,677			(604,813	)		(1,043,215	)		(1,608,142	)		(239,311	)

Net income (loss) ⁽⁴⁾		296,467			(608,954	)		(1,052,059	)		(1,637,211	)		(269,684	)

(Earnings) loss attributable to non-controlling interests		(5,670	)		(393	)		39,125			20,225			2,812
(Earnings) loss attributable to redeemable non-controlling interests		—			(11,522	)		41,963			6,918			—

Net income (loss) attributable to our shareholders		290,797			(620,869	)		(970,971	)		(1,610,068	)		(266,872	)
Accretion to redemption value of redeemable non-controlling interests		—			(34,590	)		(153,984	)		(33,077	)		—

Net income (loss) available to our shareholders ⁽⁴⁾		290,797			(655,459	)		(1,124,955	)		(1,643,145	)		(266,872	)

Earnings (loss) per ordinary share ⁽⁴⁾
Basic		2.32			(4.90	)		(8.62	)		(9.18	)		(1.36	)
Diluted		2.27			(4.90	)		(8.62	)		(9.18	)		(1.36	)
Earnings (loss) per ADS
Basic		2.32			(4.90	)		(8.62	)		(9.18	)		(1.36	)
Diluted		2.27			(4.90	)		(8.62	)		(9.18	)		(1.36	)
Ordinary shares used in computation (in thousands)
Basic		125,581			133,807			130,492			178,931			196,467
Diluted		136,568			133,807			130,492			178,931			196,467

(1)	Gross profit (loss) for the years ended December 31, 2010, 2011, 2012, 2013 and 2014 reflected $2,783,000, $1,881,000, $1,323,000, $1,531,000 and $1,460,000, respectively, of share-based compensation expense allocated to cost of goods sold.

(2)	Income (loss) from operations for the years ended December 31, 2010, 2011, 2012, 2013 and 2014 reflected $11,044,000, $9,927,000, $8,904,000, $7,470,000 and $8,622,000, respectively, of share-based compensation expense.

(3)	Interest expense for the years ended December 31, 2010, 2011, 2012, 2013 and 2014 included $19,278,000, $7,690,000, $2,161,000, $648,000 and $90,000, respectively, related to interest and the amortization of issuance costs and debt discount of our 2013 convertible notes.

(4)

Our Chinese subsidiary, Jiangxi LDK Solar, is entitled to a tax holiday of two-year full tax exemption followed by three-year 50% reduction in the income tax rate starting from 2006 under the then effective tax rules and regulations. Such tax holiday is grandfathered by the Chinese Enterprise Income Tax Law effective since January 1, 2008 and its relevant regulations. Without this tax holiday, our income tax expense would have increased and our net income and net income available to our shareholders would have been reduced by approximately $44,561,000 for the year ended December 31, 2010. Our basic earnings per share would have been reduced by $0.35 for the year ended December 31, 2010, and our diluted earnings per share would have been reduced by $0.33 for the year ended December 31, 2010.

(5)

Without the gain on troubled debt restructuring, our net loss and net loss available to our shareholders would have been increased by approximately $10,510,000, $4,645,000 and $96,495,000 for the years ended December 31, 2012, 2013 and 2014, respectively. Our basic loss per share and our diluted loss per share would have been increased by $0.08, $0.03, and $0.49 for the years ended December 31, 2012, 2013 and 2014, respectively.

The following table presents our selected consolidated balance sheet data as of the dates specified.


	As of December 31,
	2010		2011		2012			2013			2014
	($ in thousands)
Consolidated Balance Sheet Data
Cash and cash equivalents		202,127		244,072		98,283			29,973			17,926
Pledged bank deposits		503,721		565,062		167,185			116,531			76,970
Inventories		474,612		654,947		270,812			90,220			116,309
Trade accounts and bills receivable, net		384,265		491,407		162,210			75,297			86,852
Prepayments to suppliers, net		112,448		28,178		18,402			30,696			6,155
Total current assets		1,975,421		2,350,922		1,442,724			476,623			489,976
Property, plant and equipment, net		2,993,213		3,872,361		3,087,293			2,175,952			2,076,865
Deposits for purchases of property, plant and equipment and land use right		144,298		151,701		159,277			31,393			2,542
Inventories to be processed beyond one year		13,024		—		—			—			—
Prepayments to suppliers expected to be utilized beyond one year		14,318		11,153		7,978			—			—
Total assets		5,492,157		6,853,861		5,024,214			3,047,099			2,954,963
Short-term borrowings and current portion of long-term borrowings		1,501,588		2,032,023		2,391,327			2,525,427			2,839,331
Advance payments from customers, current portion		196,812		210,412		131,847			96,888			94,096
Convertible senior notes		355,445		—		23,779			1,616			1,616
Rmb-denominated US$-settled senior notes		—		—		—			267,601			—
Redeemable preferred shares		—		—		—			387,816			—
Total current liabilities		3,577,822		4,450,317		4,587,681			4,945,492			4,389,486
Long-term borrowings, excluding current portion		604,495		890,432		30,000			—			—
Advance payments from customers — non-current		148,022		121,740		43,700			18,384			6,462
Other payable due to customers		752		—		—			—			—
Convertible senior notes		34,658		23,733		—			—			703,371
Rmb-denominated US$-settled senior notes		—		258,827		259,513			—			—
Total liabilities		4,472,419		6,009,243		5,203,684			5,149,480			5,267,330
Redeemable non-controlling interests in the form of preferred shares		—		219,694		323,294			—			—
Ordinary shares		13,295		13,352		15,883			20,114			24,187
Non-controlling interests		498		15,008		(18,418	)		(36,996	)		130
Total equity (deficit)		1,019,738		624,924		(502,764	)		(2,102,381	)		(2,312,367	)

The following table sets forth our selected consolidated statement of cash flow data for the periods specified:


	As of December 31,
	2010			2011			2012			2013			2014
	($ in thousands)
Consolidated Statement of Cash flow Data
Net cash provided by (used in) operating activities		559,993			(286,968	)		39,916			(174,051	)		(125,146	)
Net cash used in investing activities		(929,118	)		(816,044	)		(57,602	)		(884	)		(86,748	)
Net cash provided by (used in) financing activities		180,388			1,138,499			(128,586	)		100,517			197,429

The following table sets forth our other selected financial and operating data for the periods specified.


	As of December 31,
	2010			2011			2012			2013			2014
Other Financial and Operating Data
Gross margin ⁽¹⁾		22.2	%		(1.8	)%		(40.9	)%		(37.8	)%		(5.1	)%
Operating margin ⁽¹⁾		17.3			(21.3	)		(93.6	)		(223.4	)		(23.4	)
Net margin ⁽¹⁾		11.8	%		(28.2	)%		(121.9	)%		(273.7	)%		(39.6	)%
Polysilicon production (in MT)		5,052			10,455			2,520			—			479
Average polysilicon selling price ($ per kilogram)		59.64			56.46			26.05			—			—
Wafers sold (in MW)		1,717.6			1,540.7			896.1			1,483.5			1,685.3
Average wafer selling price ($ per watt)		0.89			0.67			0.28			0.22			0.22
Modules sold (in MW)		346.1			551.0			371.3			257.3			312.5
Average module selling price ($ per watt)		1.83			1.31			0.74			0.6			0.6

(1)	Gross margin, operating margin and net margin represent gross profit (loss), income (loss) from operations and net income (loss), respectively, divided by net sales.

B.	CAPITALIZATION AND INDEBTEDNESS

Not applicable.

C.	REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

D.	RISK FACTORS

Investment in our securities including our ADSs, shares and equity-linked securities involves a high degree of risk. You should consider carefully the following risks and uncertainties, together with other information contained in this annual report, before you decide whether to buy or hold our securities.

Risks Relating to Our Company and Our Industry

We have recently completed an offshore restructuring pursuant to orders of the Cayman court; and we are faced with considerable challenges in the implementation of the restructuring transactions.

We went into provisional liquidation on February 27, 2014 when the Grand Court of the Cayman Islands, or the Cayman court, appointed joint provisional liquidators, or the JPLs, pursuant to a winding-up petition we filed with the Cayman court on February 21, 2014 on grounds of insolvency in anticipation of our inability to honor our payment obligations under the Rmb-denominated US$-settled 10% senior notes due 2014, or the 2014 senior notes, and our inability to honor the redemption rights of the holders of 240 million series A redeemable convertible preferred shares, par value $0.10 each, of LDK Silicon, or the LDK Silicon preferred shares. Provisional liquidation is a procedure available under the Cayman Islands law that we have used to protect our company from its creditors in order to allow our company an opportunity to reach a compromise or arrangement with its creditors. In collaboration with the JPLs, we prepared schemes of arrangement in the Cayman Islands and in Hong Kong, or our schemes of arrangement, which were eventually approved by our scheme creditors in the Cayman Islands and in Hong Kong and sanctioned respectively by the Cayman court on November 7, 2014 and by the High Court of Hong Kong, or the Hong Kong court, on November 18, 2014. Our schemes of arrangement became effective on December 10, 2014. You may find additional information under “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Provisional Liquidation” in this annual report.

In addition, in collaboration with the JPLs, we instituted a bankruptcy proceeding for LDK Solar under Chapter 15 of Title 11 of the United States Code, or the U.S. Bankruptcy Code, and proceedings relating to a prepackaged plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code for three of our United States subsidiaries. On November 21, 2014, the United States Bankruptcy Court for the District of Delaware, or the U.S. Bankruptcy Court, entered an order to recognize and enforce our Cayman scheme of arrangement relating to LDK Solar in the United States and the related Cayman court sanctioning order. On the same date, the U.S. Bankruptcy Court entered another order to confirm our prepackaged plan of reorganization in the Chapter 11 cases. The effective date of the prepackaged plan of reorganization occurred on December 10, 2014, in accordance with its terms. On February 18, 2015, the U.S. Bankruptcy Court entered final decrees to close our Chapter 15 bankruptcy proceeding and our Chapter 11 cases.

On April 21, 2015, the JPLs were discharged from their duties and the winding-up petition we filed on February 21, 2014 was dismissed pursuant to an order issued by the Cayman court on April 7, 2015.

Despite the completion of our multi-jurisdictional restructuring exercises, we will continue to face considerable challenges in our implementation of the restructuring transactions contemplated by our schemes of arrangement and in meeting the requirements of the restructuring transactions. For instance, because we were not able to cash out much of the claims of our scheme creditors, we agreed to issue convertible securities instead in accordance with the terms of our schemes of arrangement. This arrangement will not only continue to keep our indebtedness at a high level, it will also pose a significant threat in disrupting our capital structure from time to time as a result of the periodic conversions by our convertible holders and the dilution of our shareholding structure caused by such periodic conversions. As we have disclosed in “— Risks Relating to Our ADSs, Shares and Equity-linked Securities — The offshore restructuring transactions completed under our schemes of arrangement will cause significant dilution to the equity ownership of our shareholders, which may materially and adversely affect the market price of our ADSs and equity-linked securities” in this annual report, since quite a few of our convertible holders possess power to convert such convertible securities and cause a change of control in our shareholding structure, we are placed under a constant and significant threat that a change of control may occur as a result of the conversions by any such substantial convertible holder.

We are operating, and will continue to operate, with a significant working capital deficit; there exist substantial doubts and uncertainties as to our ability to continue as a going concern.

We had a working capital deficit (being our total consolidated current liabilities exceeding our total consolidated current assets) of $3,145.0 million, $4,468.9 million and $3,899.5 million as of December 31, 2012, 2013 and 2014, respectively. We also had a deficit in total equity of $2,102.4 million and $2,312.4 million as of December 31, 2013 and 2014, respectively. We incurred a net loss of $1,052.1 million, $1,637.2 million and $269.7 million in 2012, 2013 and 2014, respectively. As of December 31, 2014, we had cash and cash equivalents of $17.9 million, with the majority of our cash and cash equivalents held by our subsidiaries in China. In addition, as of December 31, 2014, our total liabilities amounted to $5,267.3 million, with outstanding short-term borrowings of $2,839.3 million and most of which were the obligations of our subsidiaries in China.

Although we have been released from many of the financial and other restrictions contained in the 2014 senior notes and the LDK Silicon preferred shares through the provisional liquidation, and although a significant amount of our indebtedness onshore China has been subject to a standstill and forbearance arrangement with our onshore creditors as we disclosed in the risk factor “— We have substantial existing indebtedness and may incur substantial additional indebtedness in the future, which could adversely affect our financial condition and our ability to generate sufficient cash to satisfy our outstanding and future debt obligations; and we may not be able to refinance our current borrowings on terms that are acceptable to us, or at all” below, there continue to exist substantial doubts and uncertainties about our ability to continue as a going concern. These doubts and uncertainties largely arise from our substantial existing indebtedness in China, in particular short-term indebtedness, and the necessity for us to incur substantial additional indebtedness in the future, whether to refinance our outstanding and future debt obligations or to fund our capital expenditure and working capital

requirements. As we conduct our principal business operations through our operating subsidiaries onshore China, virtually all of our onshore plants, properties, equipment and land use rights have been pledged to Chinese onshore creditors as collateral. The volatility and potential deterioration of the PV market conditions and the overall global economies have also added uncertainties regarding the sustainability of the PV industry and adverse impact on the demand for our products. These doubts and uncertainties may create concerns for our creditors, suppliers, customers and other counterparties, and cause them to make it more difficult for us to raise our financing, conduct our business and meet our debt and other obligations. Moreover, our consolidated financial statements do not include any adjustments that might result from the outcome of these doubts and uncertainties, and the adjustments could be substantial.

Although we have formulated a liquidity plan as summarized under “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Key Factors Affecting Our Results of Operations — Ability to seek additional financing for our operations and to execute our liquidity plan,” we cannot assure you that we will be able to successfully execute such liquidity plan. The amount of liquidity that we may need may be greater than we currently anticipate as a result of additional factors and events beyond our control, such as global economic slowdown, continued downturn in the global PV market, potential financial crises globally or in any region where we conduct a significant portion of our business, changes in the regulatory and business environments, including international trade-related sanctions, which may prevent us from operating normally or from effectively competing in the PV industry. All of these and other factors and occurrences may increase our cash requirements and make us unable to satisfy our liquidity requirements and we may, as a result, be unable to continue as a going concern.

We have substantial existing indebtedness and may incur substantial additional indebtedness in the future, which could adversely affect our financial condition and our ability to generate sufficient cash to satisfy our outstanding and future debt obligations; and we may not be able to refinance our current borrowings on terms that are acceptable to us, or at all.

We not only had a working capital deficit for the past years, we also had, and will continue to have, a substantial amount of indebtedness as we disclosed above. As of December 31, 2014, our total liabilities amounted to $5,267.3 million, with outstanding short-term borrowings of $2,839.3 million and no outstanding long-term borrowings. A significant amount of our indebtedness onshore China has been subject to a standstill and forbearance arrangement with our onshore creditors. Although we have not been servicing such forborne indebtedness onshore China, it has been existing as well as accruing interests on our books. We may, however, incur substantial additional indebtedness from time to time to support our operations. If we or our subsidiaries incur additional debt, the risks that we face as a result of our indebtedness and leverage could intensify. Our substantial existing debt and the incurrence of any additional debt could:

•

limit our ability to satisfy our obligations under our debt instruments, including our convertible securities;

•

increase our vulnerability to adverse general economic and industry conditions;

•

require us to dedicate a substantial portion of our cash flow from operations to servicing and repaying indebtedness, thereby reducing the availability of cash flow to fund our working capital, capital expenditures, dividend payments and other general corporate purposes;

•

limit our flexibility in planning for or reacting to changes in the businesses and the industries in which we operate;

•

place us at a competitive disadvantage compared to our competitors with less debt;

•

increase our exposure to interest rate fluctuations;

•

limit our ability to borrow additional funds and impose additional financial and other restrictions on us; and

•

increase the cost of additional financing.

Because the majority of our indebtedness is short-term indebtedness, we may suffer a near-term liquidity problem if we are unable to refinance these borrowings as they become due or if our onshore lenders decide to terminate their standstill and forbearance arrangements. As of December 31, 2012, 2013 and 2014, our outstanding short-term borrowings (including current portion of long-term borrowings) were $2,391.3 million, $2,525.4 million and $2,839.3 million, respectively, and our short-term borrowings (excluding the current portion of long-term borrowings) bore a weighted average interest rate of 6.05%, 6.03% and 5.50%, respectively. Generally, our short-term loans contain no specific renewal terms, although we have historically negotiated renewals of some of our loans shortly before they would mature. We cannot assure you that we will be able to renew our loans in the future as they mature or that our onshore lenders will indefinitely agree to standstill and forbear with respect to their significant credit exposure to us. If we are unable to obtain renewals of any future loans or sufficient alternative funding on reasonable terms, or if our lenders onshore China decide to terminate their standstill and forbearance arrangements with us, we will have to repay, and are not likely able to repay, these borrowings.

Our ability to generate sufficient cash to satisfy our outstanding and future debt and other obligations will depend upon our future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, many of which are beyond our control. Although we had positive operating cash flow of $39.9 million in the year ended December 31, 2012, we recorded negative operating cash flow of $174.1 million and $125.1 million, respectively, in the years ended December 31, 2013 and 2014. As such, we cannot assure you that we will have positive net cash flow from operating activities in the future. The Chinese banks and financial institutions may have concerns in continuing to provide or renew financing for our operations as a result of the threat of our leverage, especially given the fact that a significant portion of their lendings to us has remained unpaid and unserviced for a few years by now and will continue for an indeterminate period of time. The Chinese government may also pass measures to tighten credit available in the Chinese market. Further and future monetary tightening measures in China as well as other monetary, fiscal and industrial policy changes by the Chinese government could materially and adversely affect our cost and availability of financing, our liquidity and access to capital, and our ability to operate our business.

If we fail to comply with the undertakings and covenants under our loan agreements or obtain consents or waivers in respect of any breach of these undertakings and/or covenants, our financial condition, results of operations and business prospects may be materially and adversely affected.

Most of our long-term loan agreements and some of our short-term loan agreements between our Chinese operating subsidiaries and the various Chinese banks and financial institutions require the prior written consent of the lenders before we may undertake specified corporate actions or transactions, such as increasing debt financing, providing new guarantees, sale or disposal of major assets, pledge of assets, amending certain corporate registration records, and engaging in certain related-party transactions. Some of our loan agreements with commercial banks in China do not include any materiality threshold under these negative covenants. While we continue to negotiate with our Chinese commercial banks with a view to modifying the form loan agreements approved by their headquarters, we have been using a practice to bridge the timing gap between our operational needs and the banks’ internal procedures. When our operational needs require a financing with a short completion cycle, we would typically orally communicate with our lenders before each such corporate action or transaction and, to the extent the lenders could not provide the prior written consents as requested, would proceed with the corporate action or transaction with their prior oral consents, with the mutual understanding that such lenders would provide their written confirmations of consent as soon as they complete their internal procedures. Therefore, we have in such situations technically failed to comply with the requirements that we obtain prior written consents from our lenders before we undertake certain specified corporate actions or transactions. Most of our lenders have accepted our practice, have subsequently provided their written confirmations of consent in such situations, and have waived our past covenant breaches. But non-consenting lenders have the right to accelerate their loans in accordance with their loan agreements subject to our technical default although, to date, we have not received any notice of event of default or any notice to accelerate the maturity of any such loans

from these lenders. All our long-term borrowings repayable to non-consenting banks are classified as short-term borrowings and disclosed in our consolidated financial statements. We cannot assure you that we will succeed in obtaining consents or waivers in the future, or that our lenders will continue to accept this consent-and-waiver arrangement and grant us consents or waivers, or that our lenders will not impose additional operating and financial restrictions on us, and/or will not otherwise seek to modify the terms of our existing loan agreements in ways that are adverse to us.

Although the current consent-and-waiver procedures we have employed for our technical noncompliance under the current prevailing Chinese lending environment have not had any material adverse impact on our liquidity, we cannot assure you that we will not breach any material covenants or undertakings under our loan agreements and we will additionally be able to obtain consents or waivers from our lenders for such breaches. An event of default under our loan agreements may cause acceleration of the repayment of the indebtedness under the relevant loan agreements, which may in turn require us to repay the entire principal amounts, including interest accrued, of certain other existing indebtedness prior to their maturity under cross-default provisions in our existing loan agreements. If we are required to repay a significant portion or all of our existing indebtedness prior to their maturity or if we are unable to borrow additional amounts under existing credit facilities, we may lack sufficient financial resources to make these payments or to fund our other cash requirements. Our lenders may also resort to judicial proceedings to enforce their rights. For example, we had indebtedness in the aggregate principal amount of approximately Rmb 106.7 million outstanding under certain bank acceptance notes issued by a lender in Shanghai. In August 2012, the lender filed a lawsuit at a court in China with respect to amounts due under these bank acceptance notes. Under the auspices of the court, we reached a settlement with the lender. Pursuant to the court-mediated settlement agreement, we agreed to repay the lender all the outstanding principal together with interest before December 31, 2013 under an agreed schedule, although our financial difficulties have not made such repayments possible and, with subsequent renegotiations, the lender has agreed to standstill and forbear as our other creditors onshore China. As a part of the agreement, we were not construed as having committed any default or event of default under our financing arrangement with the lender. There is no assurance that we will be able to comply with the undertakings and covenants under our loan agreements or obtain consents or waivers in respect of any breach of these undertakings and/or covenants, and there could be disastrous consequences if we fail to comply, with our financial condition, results of operations and business prospects materially and adversely affected.

We require a significant amount of cash to fund our capital expenditure requirements and working capital needs; if we cannot obtain additional sources of liquidity when we need it, our growth prospects and future profitability may be materially and adversely affected.

As of December 31, 2014, we had an annualized production capacity of approximately 19,200 MT of polysilicon, 4.8 GW of solar wafers, 0.3 GW of solar cells and 1.1 GW of solar modules. Due to the uncertainties in the PV market, we not only suspended all of our expansion plans for solar wafers, solar cells and solar modules, including our announced investment to add a light-emitting diode, or LED, sapphire wafer manufacturing capability to our facilities in Nanchang City, Jiangxi Province, and investment to add silane gas production at our Mahong Plant, we have also disposed of all of our equity interest in LDK Solar Hi-Tech (Hefei) Co., Ltd., or LDK Hefei, to third-party investors in exchange for assumption of outstanding indebtedness and an additional cash consideration. LDK Hefei was one of our manufacturing bases for solar cells and solar modules. We will, however, need substantial funding to maintain and improve our PV production capacity and additional funding for the related working capital needs, as well as our research and development, or R&D, activities as we endeavor to be competitive on cost and technology.

We produce polysilicon in two plants, Xiacun Plant, located at Yushui Xiacun Industrial Park in Xinyu City, and Mahong Plant, located at Xinyu Hi-Tech Industrial Park. As of December 31, 2014, our total polysilicon annual production capacity was approximately 19,200 MT, representing contributions of approximately 1,200 MT from our Xiacun Plant and approximately 18,000 MT from our Mahong Plant. In early 2011, in order to

make our polysilicon production more efficient and to lower our production cost, we began to implement debottlenecking improvements by installing hydrochlorination facilities at both our Xiacun Plant and Mahong Plant, which would streamline our productions and further increase our aggregate annualized installed production capacity at our polysilicon plants. However, we have been significantly impacted by overcapacity and the reduced demand in the global PV market. According to PVinsights, solar-use polysilicon spot prices averaged between approximately $25 to $80 per kilogram in 2011, approximately $15 and $35 per kilogram in 2012, approximately $15 and $21 per kilogram in 2013, and approximately $19 and $24 per kilogram in 2014. As a result, we had to suspend the hydrochlorination installation process since the first quarter of 2012 and our polysilicon production since the third quarter of 2012 until January 2014 when we reconvened our hydrochlorination installation process at our Mahong Plant. Between July and December 2014, we turned on the first production line at our Mahong Plant with the existing silicon tetrachloride (SiCl₄ ), or STC, hot carbon rod reactors, or STC thermal converters in order to test-run our hydrochlorination facilities after their installation. Although hydrochlorination facilities have since December 2014 become the primary converter for STC into trichlorosilane (HSiCl₃ ), or TCS, and our STC thermal converters are operating as a supplemental system to support the hydrochlorination conversion, we have yet to resume the production of the second and third lines at the Mahong Plant and we need additional financing to further refine and improve our polysilicon production at Mahong Plant with the hydrochlorination facilities attached. Due to the decrease in estimated future market price for solar-grade polysilicon, the operation of the Xiacun Plant remains suspended and the uncertainty about its future service potential has caused us to constructively abandon the Xiacun Plant.

If we are unable to obtain funding in a timely manner or on commercially acceptable terms, or at all, our growth prospects and future profitability may be materially and adversely affected.

Reduction or elimination of government subsidies and economic incentives for the PV industry could cause demand and prices for our products to decline, thus adversely affecting our business prospects and results of operations.

Growth of the PV market, particularly for on-grid applications, depends largely on the availability and size of government subsidies and economic incentives granted by various governments. The cost of solar power now substantially exceeds the cost of conventional power provided by electric utility grids in most locations around the world. Various governments have used different policy initiatives to encourage or accelerate the development and adoption of solar power and other renewable energy sources. Renewable energy policies are in place in certain European Union member states, such as Germany and Italy, certain countries in Asia, including China, Japan and South Korea, certain states in Australia, and the United States. Examples of government-sponsored financial incentives include capital cost rebates, feed-in tariffs, tax credits, net metering and other incentives to end-users, distributors, system integrators and producers of PV products. These policies are intended to promote the use of solar power in both on-grid and off-grid applications and to reduce dependency on conventional forms of energy. On-grid applications refer to applications of PV products to systems that are connected to an electricity transmission grid and feed electricity generated into the electricity transmission grid, while off-grid applications refer to applications of PV products to systems that operate on a stand-alone basis to provide electricity independent of an electricity transmission grid.

However, since the global financial crisis in 2008 and as a result of the global economic slowdown, many governments have found themselves unable to continue to allocate significant financial resources to support the development of the PV industry. Governments have, in differing degrees, decided to reduce or eliminate their economic incentives for political, financial or other reasons, including in response to fiscal pressures currently affecting many developed and developing nations. Reductions in, or eliminations of, government subsidies and economic incentives before the PV industry reaches a sufficient scale to be cost-effective in a non-subsidized marketplace could reduce demand for our products and adversely affect our business prospects and results of operations. In addition, reductions in, or eliminations of, government subsidies and economic incentives may cause the prices for the PV products of our customers to decline and we may in turn face increased pressure to

reduce the sale price of our products. To the extent any price decline cannot be offset by further reduction of our costs, our profit margin will suffer. There can be no assurance regarding the magnitude or length of time of the effects on our financial condition and results of operations caused by these developments in the global PV market or by the general global economy.

Global supply of PV products may continue to exceed demand, which could cause prices for our products to remain depressed or decline, and we may develop excess production capacity and excess inventory.

Prices for our PV products are based on a variety of factors, including global prices for these products, supply and demand conditions, and the terms of our customer contracts, including sales volumes. Global spot prices for PV products have fluctuated significantly over the years. With the onset of the global financial crisis in 2008 and the subsequent global economic slowdown, we witnessed the fall and fluctuation of the solar-use polysilicon spot prices to an average between approximately $25 to $80 per kilogram in 2011, approximately $15 and $35 per kilogram in 2012, approximately $15 and $21 per kilogram in 2013, and approximately $19 and $24 per kilogram in 2014. Similarly, solar wafer prices fell to an average between approximately $0.28 to $1.02 per watt in 2011, approximately $0.21 and $0.36 per watt in 2012, approximately $0.20 and $0.25 per watt in 2013, and approximately $0.20 and $0.26 per watt in 2014. Solar module prices followed a similar pattern. Module prices fell to an average between approximately $0.75 and $1.80 per watt in 2011, approximately $0.54 and $1.40 per watt in 2012, approximately $0.54 and $1.00 per watt in 2013, and approximately $0.52 and $0.99 per watt in 2014. Before the current PV market conditions and overall global economy significantly improve, we expect there to be continued fluctuation and downward pressure on pricing along the solar power value chain in the next few years, despite the relative price stabilization in 2013 and 2014. While cost reductions across the supply chain, existing excess capacity, and industry improvements in operational efficiency and technology will drive companies in their capital expenditures, especially R&D, to maintain their competitive edge, some of the industry players may be subject to consolidation, liquidation or bankruptcy.

We typically maintain a certain level of inventory of raw materials and finished or semi-finished goods based on our projected market demands. Declining prices of PV products have had a negative impact on the net realizable value of our inventories and we have had to write down the carrying value of our inventories to the extent that they are greater than their net realizable value. For the years ended December 31, 2012, 2013 and 2014, we recognized inventory write-downs of $167.5 million, $70.7 million and $20.8 million, respectively, representing the amounts that the book value of our inventories exceeded their estimated net realizable values, primarily as a result of the decline in PV product selling prices. In addition, for the years ended December 31, 2012, 2013 and 2014, we recognized a provision (reversal of provision) for loss on firm purchase commitments of $10.7 million, $(0.8) million and nil, respectively, which was determined by applying a methodology similar to that used to make inventory write-down. If PV product prices decline in the future and we are unable to reduce our costs in line with the price decline, our gross margins will be adversely affected and we could be required to make additional inventory write-downs and provision for loss on firm purchase commitments. Furthermore, if the actual market demands fall short of our expectations, our excess inventory will adversely affect our working capital, in addition to making inventory write-downs, and further adversely affect our profitability.

We have experienced significant quarterly fluctuations in our results of operations, and therefore our quarterly results are not indicative of our annual results and should not be unduly relied upon.

We have historically generated substantially less revenue in the first quarter of the year than the other three quarters largely due to the holiday season in China as well as the downward adjustment in feed-in tariffs and subsidies at the beginning of each year. Our customers also tend to place orders with us in the first quarter of a calendar year when their budget year begins. In 2012, approximately 23.2%, 27.3%, 33.8% and 15.7% of our annual revenue was generated in the first, second, third and fourth quarters, respectively. In 2013, approximately 17.4%, 19.2%, 26.2% and 37.2% of our annual revenues were generated in the first, second, third and fourth

quarters, respectively. In 2014, approximately 23.1%, 20.2%, 21.4% and 35.2% of our annual revenues were generated in the first, second, third and fourth quarters, respectively. Our gross profit margins also tend to fluctuate from quarter to quarter largely due to fluctuations in the quarterly market prices of PV products we sell, our product mix during any quarter, and the timing differences in our ability to reduce manufacturing costs, our ability to procure low cost raw materials such as polysilicon, cells and other materials, and our ability to ramp up our in-house polysilicon and cell production. We anticipate that we will continue to experience significant fluctuations in revenues, cost of revenues and other results of operations from quarter to quarter during any year in the future. This quarterly fluctuation has adversely affected and is likely to continue to adversely affect our cash flow and working capital positions on a quarterly basis.

Failure to bring our polysilicon production facilities up to full capacity within budget and on schedule or to produce polysilicon that meets our quality standards and cost objectives could adversely affect our results of operations and our business strategies.

The industrial production of high-purity silicon involves highly complex technical and operational processes, and to establish and maintain these complex processes involve significant inherent risks. Currently we produce polysilicon in two plants, Xiacun Plant and Mahong Plant. As of December 31, 2014, our Xiacun Plant had an annualized installed production capacity of 1,200 MT, and our Mahong Plant had an annualized installed production capacity of 18,000 MT. With the onset of the deteriorating PV market conditions and overall global economic slowdown, we suspended our polysilicon production since the third quarter of 2012 until January 2014 when we reconvened our hydrochlorination installation process at the Mahong Plant. Between July and December 2014, we turned on the first production line at our Mahong Plant with the existing STC thermal converters in order to test-run our hydrochlorination facilities after their installation. Although hydrochlorination facilities have since December 2014 become the primary converter for STC into TCS, and our STC thermal converters are operating as a supplemental system to support the hydrochlorination conversion, we have yet to resume the production of the second and third lines at the Mahong Plant and we need additional financing to further refine and improve our polysilicon production at Mahong Plant with the hydrochlorination facilities attached. Due to the decrease in estimated future market price for solar-grade polysilicon, the operation of the Xiacun Plant remains suspended and the uncertainty about its future service potential has caused us to constructively abandon the Xiacun Plant. We produced approximately 2,520 MT, nil and 479 MT of polysilicon in 2012, 2013 and 2014.

Our ability to bring our polysilicon production facilities up to full capacity and to produce polysilicon that meets our quality standards and cost objectives is contingent upon various variables and subject to various risks and uncertainties, including:

•

our ability to raise additional funds to finance the improvement and maintenance of the polysilicon production and related facilities on reasonable terms, or at all;

•

our ability to import additional equipment at reasonable cost and on a timely basis, or at all;

•

our ability to significantly increase our STC-TCS conversion, including the completion of our debottlenecking improvements by installing hydrochlorination facilities;

•

the possibility of project delays, delays in equipment deliveries and cost overruns;

•

our ability to recruit and retain skilled employees, including technicians and managers at different levels; and

•

our ability to obtain and maintain the various required Chinese government approvals.

We cannot assure you that all of these contingencies and uncertainties will turn out in our favor. If we fail to re-start and ramp up our remaining polysilicon production facilities on time, fail to make our facilities operational up to their installed capacity, or fail to produce polysilicon that meets our quality standards, or if the

construction and ramp-up costs for our debottlenecking improvements significantly exceed our budget, our results of operations and our business strategies will be materially and adversely affected.

Unexpected equipment failures or accidents, including any accidental release of hazardous gases or materials, may lead to production curtailments or shutdowns, personal injuries, even deaths or damage to properties.

Our operations, especially polysilicon production and wafer manufacturing, use complex and potentially hazardous equipment, such as chemical vapor deposition, or CVD, reactors, STC thermal converters, hydrochlorination reactors, directional solidification system, or DSS, furnaces, squares and wire saws, that requires skill and experience for safe operation. Our production of polysilicon employs volatile materials and involves chemical reactions that are sensitive to temperature and pressure, and intricate and meticulous external controls are mandatory to maintain safe operation. For example, we use TCS as a key intermediary in producing polysilicon. TCS is a type of chlorosilane gas that, when purified, is highly combustible upon contact with air, making it potentially destructive and extremely dangerous if mishandled or used in uncontrolled circumstances. We could experience events such as equipment failures, explosions, or fires due to employee errors, equipment malfunctions, accidents, electric power or cooling water supply interruptions, natural disasters, or other disruptions. A catastrophic event at one of our plants could disrupt or destroy a significant portion of our production capacity, and we will not be able to restore the disrupted or destroyed capacity for a significant period of time, if at all. In addition, such an event could damage properties or cause personal injuries or even deaths not only within our own facilities but also to the communities surrounding our plants.

Our polysilicon operations also involve the use, handling, generation, processing, storage, transportation, and disposal of hazardous materials that may result in fires, explosions, spills, leakage, and other unexpected or dangerous accidents causing personal injuries or death, property damage, environmental damage, and business interruptions. For instance, we experienced an accident at our Xiacun Plant in July 2010 due to non-compliant handling of certain add-on equipment by a third-party contractor during the trial run of such add-on equipment installed by the third-party contractor. This accident resulted in very serious bodily injuries to one of our employees and one employee of the third-party contractor and a temporary shut-down of the production unit with the add-on equipment. We cannot assure that accidents at our plants due to machinery malfunctions or mishandling of hazardous materials or other reasons will not occur in the future or will not result in serious damage or even human death. Any event of these types could result in civil lawsuits or regulatory enforcement proceedings and significant liabilities. We maintain property insurance at our plants, but such coverage is limited and in any event does not extend to certain significant potential losses, including those from lost production. Damage from any of such events or disruptions could also harm our reputation in the industry and among our customers and potential customers. Any such event or disruption could have a material adverse effect on our business, results of operations, and financial condition.

Increases in electricity costs or shortage or interruption of electricity supply may adversely affect our operations.

We consume a significant amount of electricity in our operations, and we need a constant supply of electricity to maintain optimal production conditions. If the necessary level of electricity supply is not maintained, we may experience significant delays and disruptions in our production. With the rapid development of the Chinese economy, demand for electricity has continued to increase. There have been electricity supply shortages in various regions across China, especially during the summer peak season and in winter when the weather is inclement. Severe weather conditions have in the past gravely curtailed the electricity supply to our plants as a result of damage to some of the national grid lines in certain Chinese provinces, including Jiangxi Province. Consequently, we experienced delays in some of our shipments to customers and some of the shipments from our suppliers as a result of highway closures and power outages in various parts of China. There have been instances where high power-consuming industrial plants, like ours, were required by the government to temporarily reduce or suspend operations to alleviate burden on the power grid. Although we have installed

backup power transformer substations on site at our production facilities, we cannot assure you that there will not be interruptions or shortages in our electricity supply or that sufficient electricity will continue to be available to us in the future as our requirements grow. Shortages in electricity supply may disrupt our normal operations and adversely affect our profitability.

We historically enjoyed certain electricity usage subsidies from the local government in Xinyu City in support of our production. For the years ended December 31, 2012, 2013 and 2014, we incurred electricity costs of approximately $81.8 million, $31.2 million and $48.1 million, respectively, and recorded electricity subsidies of $18.9 million, nil and nil, respectively. As a result, we recorded a net electricity cost of approximately $62.9 million, $31.2 million and $48.1 million, respectively, for the same years. In May 2010, China’s State Council and various Chinese governmental agencies, including the National Development and Reform Commission of China, or NDRC, issued a series of notices and instructions designed to control energy consumption and environmental pollution. One of these initiatives aims to immediately terminate preferential electricity consumption policies adopted by local governments that may benefit high-energy-consuming and/or highly polluting enterprises in their jurisdictions, unless the local preferential electricity consumption policies have been duly approved by the designated Chinese central government agencies. The polysilicon industry has been included in the high-energy-consuming category under these central government notices. Our electricity subsidy arrangements were not approved by any Chinese central government agency and were terminated as of June 30, 2011. We have negotiated with the relevant local governments with respect to our electricity subsidies under these new governmental regulations and initiatives. In March 2013, the local Xinyu City government agreed to grant us certain preferential electricity rates in support of our production and we are continuing enjoying the preferential electricity rates in 2014. To date, we have not received any request from any relevant government authority to amend or terminate our electricity rate arrangement. However, we cannot assure you that we will be granted or continue to receive the same or similar benefits or in the future on the basis of the arrangement. Nor can we assure you that the local governments will not have to terminate or reduce the current rates that they have agreed to grant us as a result of these recent regulations and initiatives by the Chinese central government.

As our operations are energy-intensive and are highly dependent on continuous electricity supply, our results of operations will be materially and adversely affected if our electricity supply is interrupted or if our electricity costs significantly increase upon expiration, termination or adjustment of our subsidy arrangements with the local government.

Some of our long-term sales contracts with customers and some of our long-term supply contracts with equipment manufacturers and polysilicon feedstock suppliers may continue to be subject to renegotiation at terms less favorable to us, and the terms of such renegotiation may materially and adversely affect our operations and may result in costly and time-consuming litigation or other proceedings.

We have entered into long-term sales arrangements with some of our major customers. Pursuant to these arrangements, we have committed to supply them with specific quantities of polysilicon, wafers and/or modules over the next few years, with some of these agreements subject to periodic negotiations of prices. We have also entered into framework agreements with other customers under which the volume and price, as well as other terms, are determined on a quarterly or annual basis or through monthly purchase orders. Some of our customers prepay a part of their procurements pursuant to their contracts with us. Similarly, we have entered into long-term supply arrangements with some of our major equipment manufacturers and principal polysilicon feedstock suppliers. We have also entered into long-term polysilicon raw material supply arrangements with our customers. Pursuant to these arrangements, we have committed to purchase specific quantities of equipment, polysilicon feedstock and other supplies over the next few years, at prices reflective of the PV market conditions prevailing at the time of the entry into these arrangements. We have also entered into framework agreements with other equipment manufacturers, polysilicon feedstock suppliers and customers under which the volume and price, as well as other terms, are determined on a quarterly or annual basis or through monthly purchase orders. Some of our suppliers require us to prepay a part of the procurements pursuant to our contracts with them.

Since the global financial crisis in 2008 and as a result of the global economic slowdown, a number of our wafer customers have sought to terminate our sales contracts or request us to delay our shipments of wafers, while we have also sought to terminate the supply contracts or to delay the shipments to us with our suppliers. These renegotiations often focused on sales or supply quantity, price and delivery timetable. At times, we had to concede to terms that were less favorable to us, including returning all or part of the prepayments our customers made to us pursuant to the contracts. Some of our customers and suppliers have gone into bankruptcy or insolvency, subject to restructuring or dissolution. Any significant deviation from the contractual terms or our inability to negotiate or renegotiate acceptable quantity, price and delivery terms from time to time with our customers or suppliers, or any bankruptcy, dissolution or insolvency of our major suppliers, may disrupt our operations and materially and adversely affect our financial condition and results of operations.

We have also been involved in litigations or arbitrations arising out of these sales or supplier contract renegotiations resulting from various non-compliances with these contractual arrangements. Take Beijing Jingyuntong Technology Co., Ltd., or JYT Technology, for example. While we owned a minority equity interest in JYT Technology, this company has been a supplier of some of our DSS furnaces for solar ingot casting and some of our monocrystalline pullers. A dispute over the contractual arrangements and compliances brought both parties to arbitration proceedings in China. Although we fully paid for and took delivery of 119 DSS furnaces from JYT Technology pursuant to the equipment supply agreement, we sought to renegotiate with JYT Technology to postpone or reduce the remaining 461 DSS furnaces due to the deteriorating PV market conditions. JYT Technology, however, resisted our request and the China International Economic and Trade Arbitration Commission, in its arbitral award issued in December 2012, upheld the validity and effectiveness of the equipment supply contract and ruled that we must pay JYT Technology approximately Rmb 294 million as damages, plus an addition Rmb 3.4 million as the arbitral fees. We sold our equity interest in JYT Technology in September 2014 to settle the penalty payable to JYT Technology. These and additional dispute resolution proceedings have subjected and may continue to subject us to legal and other related costs that could be potentially expensive. These proceedings tend to distract our management from the day-to-day operations of our businesses. They also expose us to risks for which appropriate damages may not be awarded to or collectable by us. Any of these risks and factors could materially and adversely affect our business and financial condition.

We recognized an allowance for doubtful recoveries of $92.1 million, $139.5 million and $118.9 million, respectively, for trade accounts receivable as of December 31, 2012, 2013 and 2014, and recognized provision/(reversal of provision) for doubtful recoveries of $8.4 million, $3.2 million and $(0.3) million, respectively, for prepayments to suppliers during the years ended December 31, 2012, 2013 and 2014. Our claims for repayment of these amounts, or any other claims against our customers or suppliers to recover trade accounts receivable or prepayments would rank as unsecured claims, which would expose us to the credit risks of our customers or suppliers in the event of their insolvency or bankruptcy. Under such circumstances, our claims against the defaulting customers or suppliers would rank below those of secured creditors, which would undermine our chances of obtaining the return of our trade accounts receivable or advance payments. Accordingly, the failure of any of our new or existing customers or suppliers to meet their contractual obligations may have a material adverse effect on our financial condition, results of operations and liquidity.

We depend on a limited number of customers for a significant portion of product sales generally; changes in customer purchase amounts, terms or patterns may cause significant fluctuations or declines in our revenue.

Our customers are mostly solar cell and module manufacturers, solar farm developers, PV products distributors, and PV system integrators. Our largest customers as of December 31, 2014 in terms of goods and services sold (including cancellation revenue) included Solartech Energy Corporation, or Solartech, Itarion Solar, or Itarion, Oriental Sunrise New Energy Limited, or Oriental Sunrise, Hyundai Heavy Industries Co., Ltd., or Hyundai, and Brics Solar Limited, or Brics Solar,. During the years ended December 31, 2012, 2013 and 2014, our top five customers collectively accounted for approximately 22.8%, 21.8% and 30.9%, respectively, of our net sales. For the year ended December 31, 2012, Sumitomo Corporation, or Sumitomo, and Photovoltech NV-SA, or Photovoltech, contributed 7.5% and 5.9%, respectively, to our net sales; for the year ended December 31, 2013, Brics Solar and Gintech Energy Corporation, or Gintech contributed 5.9% and 4.6%, respectively, to our

net sales; and for the year ended December 31, 2014, Solartech and Itarion contributed 7.3% and 6.1%, respectively, to our net sales.

We expect to continue to rely on a relatively small number of customers for a significant portion of our net sales for the foreseeable future. We cannot assure you that any of our customers will continue to purchase significant quantities, if any, of PV products from us. Because of our reliance on a limited number of customers, any of the following events may cause material fluctuations or declines in our net sales and profits:

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reductions, delays or cancellations of purchase orders from one or more of our significant customers;

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loss of one or more of our significant customers and our failure to procure additional or replacement customers; and

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failure of any of our significant customers to make timely payments for our products.

Our customers may decide to develop capabilities to produce the PV products they currently buy from us, and in such case, our sales to these customers would be adversely affected. If we fail to develop or maintain our relationships with our current and potential customers, or if any of our major customers encounters financial or operational difficulties or reduces its purchases of our products, it may be difficult for us to find alternative customers on a timely basis and on commercially reasonable terms or at all. Some of our existing customers make prepayments to us, and if contracts are modified or terminated, these customers may ask for return of such prepayments. Any of these events may have an adverse effect on our revenue, profitability and cash flow.

Failure to secure sufficient quantities of polysilicon feedstock on commercially reasonable terms could adversely affect our business and results of operations.

In addition to polysilicon we produce ourselves, we source the remaining amount of solar-grade polysilicon feedstock from third parties, which is an essential raw material in manufacturing our solar wafers. We will continue to rely on third-party suppliers for some of our solar-grade polysilicon requirements until our in-house polysilicon production facilities reach their designed production capacity. Therefore, to such extent, our operations still continue to depend on our ability to procure sufficient quantities of solar-grade polysilicon on a timely basis and on commercially reasonable terms to supplement our in-house polysilicon production. Polysilicon is also an essential raw material for the semiconductor industry, which requires polysilicon of higher purity than that used in the solar industry. Spot prices of solar-use polysilicon have fluctuated widely over the years, with such spot prices between approximately $25 and $80 per kilogram in 2011, approximately $15 and $35 per kilogram in 2012, approximately $15 and $21 per kilogram in 2013, and approximately $19 and $24 per kilogram in 2014, each according to PVinsights. Most of our polysilicon supply agreements are subject to fluctuating market prices or price negotiations with our suppliers. In addition to price changes, suppliers may delay or default in their delivery obligations under the supply agreements. We cannot assure you that we will continue to be able to acquire polysilicon in sufficient quantities and on commercially reasonable terms or that we will be able to pass any increased costs of polysilicon to our customers. If we fail to do either, our business and profitability will be materially and adversely affected.

Polysilicon production requires significant capital investments, and there are only a limited number of polysilicon producers in the world. These polysilicon producers provide polysilicon feedstock not only to the solar industry but also to the semiconductor industry. Historically, we have experienced delays or defaults by some of our polysilicon suppliers in delivering supplies to us. Material or prolonged delays or defaults in polysilicon supply could adversely affect our production and delivery schedule and harm our reputation. Our suppliers of raw materials and equipment, particularly virgin polysilicon suppliers, require us to make prepayments from time to time. We make these prepayments, without receiving any collateral, in order to secure a stable supply of solar-use polysilicon. As of December 31, 2012, 2013 and 2014, our prepayments to polysilicon suppliers amounted to $15.4 million, $14.4 million and $3.6 million, respectively. Before our in-house polysilicon production facilities reach their designed production capacity, if we fail to develop or maintain our relationships with polysilicon suppliers, if any of our major suppliers fails or becomes unwilling to deliver the polysilicon we have ordered on time or at all, or if any of them encounters difficulties in its production or shipment of polysilicon feedstock to us, whether due to natural disasters, labor unrest, adverse global economic

conditions, or any other reason, it may be difficult for us to find alternative sources on a timely basis and on commercially reasonable terms or at all. If any such defaulting supplier fails to return our prepayments, our cash flow would be adversely affected.

If we are not able to manage our growth and development effectively, our results of operations may be adversely affected.

We have expanded our business operations significantly over the years. Although we have adjusted our expansion plan in light of the global economic conditions from time to time, the success of our business model will depend upon, among other factors, the general economic environment for the PV industry, our ability to adjust our businesses promptly in accordance with market conditions, our R&D efforts and results, the quality and marketability of our products, our ability to maintain and expand our relationships with customers, suppliers and other third parties, the improvement of our operational and financial systems, enhancement of our internal procedures and controls, increase in our production capacity and output, and effective recruitment, training and retention of managers, technicians, engineers and skilled employees. The provisional liquidation we underwent was resultant from misjudging the industry and its prospects. We cannot assure that the current global PV market and prospects will support our existing production capacity or that our current and planned operations, personnel, systems, internal procedures and controls will be adequate to support our growth or objectives. Neither can we ensure that we will be able to expand or reduce our production capacity, nimbly or at all, in order to compete in our industry. If we are unable to manage our growth or development effectively, we may not be able to take advantage of market opportunities, successfully execute our business strategies, or respond to the competitive economic and industrial environment and pressures, and our business, results of operations and financial condition may be adversely affected.

Our customers may not prepay for their orders under agreed contractual terms, resulting in longer accounts receivable turnover cycles.

We have in the past required our customers to prepay a portion of the purchase price of their orders. These prepayment arrangements with our customers have historically allowed us to rely less on borrowings to cover our working capital cash needs. Since the global financial crisis in 2008, with deteriorating PV market conditions and overall global economic slowdown, this practice has become less sustainable and, as a result, we have agreed either to reduce the contractual prepayments or to accept payments upon delivery of our goods. Advance payments from customers decreased from $175.5 million as of December 31, 2012 to $115.3 million as of December 31, 2013 and $100.6 million as of December 31, 2014. Our accounts and bills receivable decreased from $162.2 million as of December 31, 2012 to $75.3 million as of December 31, 2013 and $86.9 million as of December 31, 2014. Our expansion into PV down-stream businesses such as solar cells and modules in recent years has not only increased our working capital needs, but also extended our overall accounts receivable turnover time. Our module customers typically require longer payment terms as compared to our wafer customers. In addition, our down-stream businesses such as solar farm projects also tend to increase our inventory turnover days. As a result, our vertically integrated business model has caused, and may continue to cause, our working capital needs to significantly increase with longer accounts receivable turnover cycles and, if we fail to raise more cash on a timely basis, or at all, under such circumstances, our business operations may be materially and adversely affected.

Our operations in China are subject to various governmental approvals, registrations, and reviews, and our failure to obtain necessary approvals, maintain necessary registrations, or pass necessary reviews on a timely basis, or at all, could materially and adversely affect our business, results of operations and financial condition.

Business operations of our scale require approvals by, and registrations with, various Chinese governmental authorities in charge of, for example, land, buildings, urban planning, quality regulation, safety, business operations and commercial activities, customs, taxation, environmental protection, and foreign exchange administration. We are required to maintain or renew, from time to time, our existing registrations or obtain

additional approvals, which we cannot assure that we will be able to do at all times. We are required to apply for necessary approvals from the NDRC authorities in order to keep our operations and production capacities in compliance with the Chinese regulation. The Chinese government has since 2010 issued various notices proclaiming that polysilicon production capacity in China has reached excessive levels. The State Council and various Chinese government agencies, including NDRC, issued a series of notices and instructions in May 2010 in an effort to control energy consumption and environmental pollution, in which the polysilicon industry was identified in both the over-capacity and the high-energy-consuming categories. In December 2010, a number of Chinese government agencies, including NDRC, issued a circular along with the Conditions of Entry into the Polysilicon Industry, setting forth criteria and restrictions for entry into the polysilicon industry, pursuant to which any new construction of polysilicon production plant or reconstruction or expansion of existing polysilicon production plants requires approval from the relevant national investment administration authorities. Existing polysilicon projects, including ours, according to such circular, would be subject to periodic reviews by the Ministry of Industry and Information Technology authorities in China. If we are not able to obtain or renew the necessary approvals on a timely basis, or at all, we may be required to stop using facilities in excess of our approved capacity, otherwise subject our facilities to use restrictions, or suspend or terminate our on-going projects. Should that happen, our operations, prospects and profitability may be materially and adversely affected.

We operate in a competitive market against players who may enjoy greater resources, and we may not be able to compete successfully.

The PV manufacturing market is highly competitive. Many of our current and potential competitors have a longer operating history, better name recognition, greater resources, better quality and innovative expertise, larger customer base, better access to raw materials and equipment, better vertically integrated platform, better management skills and efficiencies, and greater economies of scale than we do. A number of our customers and suppliers are also our competitors. The key barriers to enter our industry at present consist of availability of financing and development of technological know-how. If these barriers disappear or become more easily surmountable, new competitors may successfully and more easily enter our industry, resulting in loss of our market share and increased price competition.

We have expanded our international business operations, and our failure or inexperience in these new endeavors could adversely affect our business expansion strategies and harm our reputation.

We have expanded our business operations outside China. Although we have had some international business operations ever since our inception, they were historically concentrated in international sales and procurement of raw materials. In recent years, in addition to the development of solar farm projects overseas, our international business expansion also took the form of direct acquisitions of existing businesses. Although we do not have any immediate plans to engage in additional acquisitions of the kind, we may do so when the market conditions permit, and we may meanwhile undertake various other strategic alternatives, such as strategic alliances and joint ventures with other players in the PV industry.

As we engage in and expand our operations outside China, these international operations expose us to a number of related risks and uncertainties, including:

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difficulty with staffing and managing overseas operations;

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fluctuations in currency exchange rates;

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increased costs associated with developing and maintaining marketing and distribution presence in various countries;

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providing customer service and support in these markets;

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our ability to manage multiple sales channels effectively as we expand our sales channels beyond distributors to include direct sales as well as sales to system integrators, end-users and installers;

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difficulties and costs relating to compliance with the different commercial, legal and regulatory requirements of the overseas markets in which we offer our products and services;

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failure to develop appropriate risk management and internal control structures tailored for overseas operations;

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inability to obtain, maintain or enforce intellectual property rights;

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unanticipated changes in prevailing economic conditions and regulatory requirements; and

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trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses, that could increase the prices of our products and services and make us less competitive in some countries.

Our international operations have suffered tremendously, falling far short of our objective of achieving synergistic integration and enhanced efficiencies. While Solar Power, Inc., a California company, or SPI, engaged in engineering, procurement and construction, or EPC, services for solar projects that we acquired in March 2011 continues in its operations, our majority ownership in SPI has been significantly diluted to approximately 23.5% as of the date of this annual report. Sunways AG, a German PV company that we acquired in April 2012, filed for preliminary insolvency proceedings in Germany in March 2014 and entered into formal insolvency proceedings in April 2014. In order to support Sunways’ operations in difficulty, we issued certain support letters, and provided various support, to Sunways prior to its insolvency proceedings. In its insolvency proceedings in Germany and during our provisional liquidation, we had to settle claims by Sunways based on such support letters partially in cash and partially with our convertible securities. We have learned our lesson the hard way. In order to make acquisitions and strategic alternatives synergistic and favorable to our overall business operations, integration and pro-active global management will be crucial to our success as a vertically integrated global PV player. As a significant portion of our operations will continue to be located in China, unless we are able to effectively manage the global integration and other risks relating to international operations, these acquisitions could instead impair our ability to expand our business in China and abroad. Accordingly, our results of operations may be materially and adversely affected, and our business operations and vertical integrations may be materially hampered.

We compete with alternative solar and other renewable energy technologies, and we may not be able to compete successfully.

We have been focused on crystalline silicon solar technologies, and compete with alternative solar technologies. The PV industry is characterized by evolving technologies and standards. These technological evolutions and developments place increasing demands on the improvement of our products such as higher PV efficiency and larger and thinner wafers. Some companies have spent significant resources in R&D of proprietary solar technologies that may eventually produce PV products at costs similar to, or lower than, those of crystalline silicon PV products without compromising product quality. For example, some companies are developing or currently producing PV products based on thin-film PV materials, which require significantly less polysilicon to produce than our crystalline silicon PV products. These alternative PV products may cost less than those based on crystalline technologies while achieving a competitive level of conversion efficiency. The solar technologies in general also compete with other renewable energy technologies, such as biomass, hydroelectric, wind, and geothermal technologies, as well as nuclear power technologies, in addition to conventional power generation, for, among other things, government subsidies, market share, and public acceptance and support. If prices for conventional and other renewable energy sources decline, or if these sources enjoy greater policy support than solar power, the solar power industry could suffer and our business and results of operations may be adversely affected.

We also compete with alternative polysilicon technology, and we may not be able to compete successfully.

Although the vast majority of polysilicon produced in the world utilizes the CVD process, or the modified Siemens process, which consumes a large amount of electricity, several alternative crystalline silicon-based

production processes have been developed that may significantly reduce power consumption and other production costs. For example, some of our competitors currently use, or are constructing facilities that use, the fluidized bed reactor, or FBR, method for producing polysilicon. Some have developed a polysilicon technology called the “vapor-to-liquid deposition” process. Others are developing the ability to produce upgraded metallurgical grade silicon as a low-cost alternative to solar-grade polysilicon produced through modified Siemens process. Further developments in competing polysilicon production technologies may result in lower manufacturing costs or higher product performance than those achieved from the Siemens processes, including the modified Siemens process that we currently employ. As a result, we may need to invest significant resources in R&D to maintain our market position, keep pace with technological advances in the PV industry and effectively compete in the future. Our failure to further refine and enhance our products or to keep pace with evolving technologies and industry standards could cause our products and production facilities to become uncompetitive or obsolete, which could in turn reduce our market share and cause our net sales and profits to decline.

We rely on a limited number of suppliers for our production equipment and consumables, and failure or delay by any of them in delivering equipment or consumables to us could adversely affect our production.

We rely on a limited number of equipment suppliers in and outside China for all of our principal manufacturing equipment and spare parts, including our CVD reactors, STC thermal converters, hydrochlorination reactors, multicrystalline DSS furnaces, monocrystalline pullers, squarers that we use to cut ingots into smaller blocks, wafering wire saws that we use to slice these blocks into wafers, our solar cell manufacturing equipment, and solar module manufacturing equipment. In addition, we rely on a limited number of suppliers for the consumables, such as crucibles and slurry, that we use in our wafer production. These suppliers have provided most of our current equipment and spare parts, and we will also rely on them for a substantial portion of the principal manufacturing equipment and spare parts for our future development. If we fail to develop or maintain our relationships with these and other equipment or consumables suppliers, or should any of our major equipment or consumables suppliers encounter difficulties in the manufacturing or shipment of its equipment or consumables to us, including financial difficulties or natural disasters, or otherwise fail to supply equipment or consumables according to our requirements, it will be difficult for us to find alternative providers for the equipment or consumables we need on a timely basis and on commercially reasonable terms, if at all. We also rely on our suppliers for the routine maintenance, check-up, and repair with respect to some of our equipment. In the event that our equipment malfunctions or fails to function due to lack of support, or our equipment or crucibles lead to defective or substandard products, our business, financial condition and results of operations could be adversely affected.

If we are unable to fulfill our customer orders or other commitments to customers on a timely basis, we may lose customers, our reputation may be damaged, and we may incur economic losses for breach of contracts.

We have from time to time experienced delays in fulfilling purchase orders from some of our customers due to fluctuations in our production output as we ramp up our production capacity, fluctuations in general market demand for our products due to the global or regional economic conditions, disruptions to our delivery of products due to extraordinary weather conditions, and various other factors. We often enter into contractual commitments with our customers in connection with our sales. Our ability to meet our contractual commitments to our customers depends significantly on the successful and timely implementation of our production schedule. We have been subject to various claims, replacement requirements and even legal proceedings in our solar farm projects and EPC services, mostly for defective modules we sourced in such projects and services. If we are unable to fulfill our customer orders or other commitments to customers on a timely basis, we may lose our customers and our reputation may be damaged. Moreover, our contracts with our customers sometimes provide for specified monetary damages or penalties for non-delivery or failure to meet delivery schedules or product specifications. If any of our customers invokes these clauses against us, we may need to defend ourselves against the relevant claims, which could be time-consuming and expensive. We may be found liable under these clauses and be required to pay damages, which could adversely affect our business, financial condition and results of operations.

Product defects could result in increased costs, damage to our reputation, loss of revenues and market share.

Our products may contain defects that originate in our less-than-perfect production process or that are not detected until they have been shipped, installed or otherwise incorporated into PV products of our customers. In 2012, 2013 and 2014, we recorded inventory write-downs of $13.4 million, nil and nil, respectively, related to defects identified in our products. In the ordinary course of our business, we also encounter periodic sales returns due to non-conformity with customers’ specifications or product defects. In most of the cases, we are required to replace our products promptly. Some of our customers have, however, escalated their claims to legal or arbitration proceedings often due to the delay or ineffectiveness in our responses across different jurisdictions. Product defects and the possibility of product defects could cause significant damage to our market reputation and reduce our product sales and market share. If we cannot successfully maintain consistency and quality throughout our production process, this will result in substandard quality or performance of our products. If we deliver products with defects, or if there is a perception that our products are of substandard quality, we may incur substantially increased costs associated with replacements of products, our credibility and market reputation will be harmed, and sales of our PV products may be adversely affected.

We are exposed to various risks related to legal proceedings, international trade sanctions, or claims or allegations in press articles or market reports, which could adversely affect our business operations, financial condition and reputation, and may cause loss of business.

We and/or our directors and officers have been, and in the future may continue to be, involved in allegations, litigation or legal or administrative proceedings, including those related to alleged violations of securities laws. Litigation in general can be expensive, lengthy and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. Regardless of the merits, responding to these matters and defending against litigation can be time consuming and costly, and may result in us incurring substantial legal and administrative expenses, as well as divert the attention of our management. Any such allegations, lawsuits or proceedings could have a material adverse effect on our business operations. Further, unfavorable outcomes from these claims or lawsuits could adversely affect our business, results of operations, or financial condition.

In October and November 2011, upon the petition of SolarWorld Industries America, a U.S.-based manufacturer of PV products, the U.S. International Trade Commission, or the ITC, and the U.S. Department of Commerce, or the DOC, respectively, commenced anti-dumping and countervailing duty investigations on crystalline silicon PV cells, whether or not assembled into modules, imported from China. The DOC and the ITC made affirmative final determinations in the investigations, and the DOC published anti-dumping and countervailing duty orders in December 2012. Our products from China within the scope of these orders are currently subject to an anti-dumping duty deposit rate of 13.94% and a countervailing duty deposit rate of 15.24%. Appeals of these determinations are currently pending at the U.S. Court of International Trade. The rates at which duties will be assessed and payable are subject to ongoing administrative reviews that are expected to conclude in July 2015 and may differ from the announced deposit rates. In December 2013, SolarWorld Industries America filed its second petition regarding imports of other crystalline silicon PV products from China and Taiwan. In January 2014, the DOC and the ITC commenced anti-dumping duty investigations of imports of these products from China and Taiwan and a countervailing duty investigation of imports of these products from China. The DOC and the ITC made affirmative final determinations in the investigations, and the DOC published anti-dumping and countervailing duty orders in February 2015. Our products from China within the scope of these second orders are currently subject to an anti-dumping duty deposit rate of 30.06% and a countervailing duty deposit rate of 38.43%. Appeals of these determinations are currently pending at the U.S. Court of International Trade. The rates at which duties will be assessed and payable are subject to administrative reviews that are expected to commence in February 2016 and may differ from the announced deposit rates.

In September and November 2012, respectively, the European Union, or the EU, initiated an anti-dumping investigation and an anti-subsidy investigation concerning crystalline silicon PV modules and key components

(i.e., cells and wafers) originating in China. We were selected by the European Commission, or the EC, as a “sampled” company in the investigations. In December 2013, the EU published anti-dumping and countervailing measures on crystalline silicon PV modules and cells originating in or consigned from China. EU imports of our cells and modules became subject to a combined anti-dumping and countervailing duty of 58.2%. However, under the terms of an undertaking entered into with the EC by various Chinese PV companies, including us, this combined duty is not payable so long as certain conditions, including a minimum import price and a volume ceiling, are met and until the measures expire or the EC withdraws the undertaking.

In addition to the PV products that we have sold directly to the U.S. and EU markets, we have also supplied polysilicon and other components to other China-based PV product manufacturers who export their PV products to the U.S. and EU markets. In addition to affecting our direct sales, any anti-dumping and/or countervailing duty imposed by the U.S. and/or EU authorities may indirectly affect us through its impact on such China-based PV product manufacturers, and may have a material adverse effect on our business prospects, financial condition and results of operations. As we have significantly relied on international customers for our products since our inception, any similar or other trade-related investigations and proceedings as well as any similar or other resultant anti-dumping and/or countervailing duty imposed by jurisdictions where we have directly or indirectly sold significant quantities of our PV products may result in a material adverse effect on our business prospects, financial condition and results of operations.

Our business depends on the continued services of our executive officers, key personnel and a skilled labor force, and our business may be severely disrupted if we lose their services.

Our continued operations depend, to a significant extent, on the continued services of our executive officers and key personnel and our ability to attract, train and retain technicians and a skilled labor force for our business. Xiaofeng Peng, our founder and former chairman, has resigned from all of our directorship and management positions in 2014, although we have retained Mr. Peng as a senior consultant and, in recognition of his many contributions to our company since its founding, we have also named Mr. Peng the Chairman Emeritus for our company. We do not maintain key-man life insurance on any of our executive officers and key personnel. If one or more of our executive officers and key personnel are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all. As a result, our business may be materially disrupted and we may have to incur additional expenses in order to recruit and retain new personnel. In addition, if any of our executives joins a competitor or forms a competing company, we may lose some of our customers. Each of our executive officers and key personnel has entered into an employment agreement with us that contains confidentiality and non-competition provisions. However, if any dispute arises between our executive officers or key personnel and us, we cannot assure you, in light of uncertainties associated with the Chinese legal system, that these agreements could be enforced in China where most of our executive officers and key personnel reside and hold most of their assets.

Recruiting and retaining capable technicians, particularly those with expertise in the PV industry, are vital to our success. Our principal operations are located at Xinyu City of Jiangxi Province, a relatively less developed region compared to coastal cities in China. Our location adds difficulties to our recruiting efforts. In addition, there exists substantial competition for qualified technicians in the PV industry, and there can be no assurance that we will be able to attract or retain technicians. Neither can we assure you that we will be able to recruit, train and retain skilled workers. We face additional difficulties in staffing our overseas operations and any new business operations that we may enter into. If we fail to attract and retain qualified employees, our business and prospects may be materially and adversely affected.

The interests of our substantial shareholders may not be aligned with the interests of our other shareholders.

Prior to April 1, 2015, we had three substantial shareholders, without taking into account any securities that any shareholder has the right to acquire within 60 days after the date of this annual report through the exercise of any option, warrant or right, especially the convertible securities we have issued in the provisional liquidation.

As of April 30, 2015, Mr. Peng, our founder and former chairman, currently beneficially owned, through LDK New Energy Holding Limited, his wholly owned British Virgin Islands company, or LDK New Energy, 48,053,953 of our shares, representing approximately 18.4% of our outstanding share capital. Mr. Kin-Ming Cheng currently beneficially owns, through Fulai Investments Limited, his wholly owned British Virgin Islands company, or Fulai Investments, 42,000,000 of our shares, representing approximately 16.1% of our outstanding share capital. Heng Rui Xin Energy (HK) Co., Limited, or HRX, a Hong Kong company invested by privately owned and Chinese state-owned funds, owns 25,307,497 of our shares, representing approximately 9.7% of our outstanding share capital. HRX has also provided funding facilities to us for our provisional liquidation and for our working capital requirements, which may entitle HRX to additional securities convertible into our shares.

Due to the issuance by us of convertible securities as a consequence of our offshore restructuring and especially the availability of using VWAP to calculate their conversion price, if we take into account equity securities that any holder has the right to acquire within 60 days after the date of this annual report through the exercise of any option, warrant or right, our shareholding structure is already changing and could be significantly different going forward given the relatively low trading prices of our ADSs at present. You should carefully follow and review the various statements on Schedules 13D and 13G filed by persons with the SEC to report their acquisitions of our equity interests from time to time. We are subject to a present, constant and significant risk of a change of control from time to time. Any significant holder of our convertible securities, whether due to its previous substantial position in our 2014 senior notes or in our LDK Silicon preferred shares, could decide to change the control in our company through its conversion into our equity securities. Although our convertible securities issued in our offshore restructuring contain some restrictions on the amount of conversions on an annual and quarterly basis, such restrictions will all disappear by April 1, 2016.

Under such circumstances, each of the significant or potentially significant shareholders may have substantial control over our business, including decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, election of directors, dividend policy and other significant corporate actions. They may take actions that are not in the best interest of our company or our other shareholders and securities holders.

We may be adversely affected by volatility in the solar energy market and industry, which is at an early stage of development and is subject to many factors which are beyond our control, and therefore our revenues may be volatile.

We are affected by solar energy market and industry trends as well as macro-economic factors. The PV market in general is at an early stage of development and the extent of acceptance of PV technology and products is uncertain. Market data on the PV industry are not as readily available as that on other more established industries where trends can be assessed more reliably from data gathered over a longer period of time. As a result, the average selling price and the market demand for PV products are highly volatile and subject to many factors which are beyond our control, including:

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the extent of commercial adoption and application of PV technology;

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cost-effectiveness, performance and reliability of PV technology and products compared to conventional and other renewable energy sources and products;

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availability of government subsidies and economic incentives to support the development of the PV industry;

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success of, or increased government support for, other alternative energy generation technologies, such as fuel cells, wind power, hydroelectric power and biomass energy;

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success of solar technologies other than crystalline silicon;

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fluctuations in economic and market conditions that affect the financing and viability of renewable energy sources, such as increases or decreases in the prices of oil and other fossil fuels;

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deregulation of the electric power industry and the broader energy industry; and

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levels of capital expenditures by end-users of PV products, which tend to decrease when economic growth slows.

If the average selling price or demand for PV products decrease dramatically, we may not be able to grow our business or generate sufficient revenues to sustain our profitability. For example, partially due to the global financial crisis in 2008 and the deteriorating PV market conditions coupled with the overall global economic slowdown, we incurred a net loss of $1,052.1 million, $1,637.2 million and $269.7 million, respectively, for the years ended December 31, 2012, 2013 and 2014. In addition, the prices of PV products have declined since 2010 due primarily to lower prices of polysilicon and increased manufacturing capacity for PV products. Any negative market and industry trends could materially and adversely affect our business, financial condition and results of operations. We cannot assure you that we will not generate net losses or no greater amounts of net losses going forward due to numerous factors beyond our control, including the external global economic environment, the well-being of the PV industry, and our internal productivity and other operational conditions.

Our strategy includes alliances, joint ventures, acquisitions and dispositions of assets, and restructuring of our business operations; our failure to successfully implement this strategy could have a material adverse effect on our business.

As part of our strategy and subject to market conditions, we may enter into strategic acquisitions and investments and establish strategic alliances with third parties in the PV industry if suitable opportunities arise. We may acquire or invest in technologies, businesses or assets that are strategically important to our business operations or that we believe will complement our business strategies, such as investments in new technologies. We may also make strategic dispositions of our assets or restructure our business operations, as we have been doing in recent years to raise financing, cut losses or otherwise. Any strategic acquisition, investment and alliance with third parties could subject us to a number of risks, including risks associated with the assimilation of new different operations, technologies and personnel, any unforeseen or hidden liabilities, the inability to generate sufficient revenue and income to offset the costs and expenses of acquisitions, the potential loss of, or harm to, our relationships with employees, customers and suppliers as a result of integration of new businesses, and a reduction or loss of control of operations that are material to our business. Moreover, strategic acquisitions, investments and alliances may divert our cash flow from servicing our debts and making necessary capital expenditures and subject us to impairment losses on our acquisitions and investments in equity securities and risks of non-performance by counterparties, which may in turn lead to monetary losses that may materially and adversely affect our business. An acquisition could also expose us to different and unfamiliar legal regimes, regulatory requirements and market conditions, related litigation and other proceedings, unknown liabilities and other unforeseen risks. Difficulties encountered with respect to the acquisitions, investments, or alliances or in the process of integration could have an adverse effect on our ability to manage our overall business. Any failure to integrate any acquired businesses or joint ventures into our operations successfully and any material liabilities or potential liabilities of any acquired businesses or joint ventures that are not identified by us during our due diligence process for such acquisitions or investments could materially and adversely affect our business and financial condition.

We are subject to the management report and auditor attestation report requirements of Section 404 of the Sarbanes-Oxley Act; if we fail to maintain an effective system of internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud.

As a public company, we are subject to the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. Section 404 of the Sarbanes-Oxley Act and the related rules of the Securities and Exchange Commission, or the SEC, require that we evaluate the effectiveness, as of the end of each fiscal year, of our internal control over financial reporting and include in our annual report on Form 20-F for each fiscal year (i) a report of our management on our internal control over financial reporting that contains, among other things, management’s assessment of the effectiveness of our internal control over financial reporting as of the end of the most recent

fiscal year, including a statement on whether or not internal control over financial reporting is effective and (ii) the opinion of our independent registered public accounting firm, either unqualified or adverse, as to whether we maintained, in all material respects, effective internal control over financial reporting as of the end of such fiscal year. Such management report and auditor opinion for the fiscal year ended December 31, 2014 are contained in “Item 15. Controls and Procedures — Management’s Annual Report on Internal Control over Financial Reporting” and “— Attestation Report of Independent Registered Public Accounting Firm” in this annual report. Our management and auditors are not permitted to conclude that our internal control over financial reporting is effective if there are one or more “material weaknesses” in our internal control over financial reporting, as defined in rules of the SEC and the U.S. Public Company Accounting Oversight Board, or PCAOB. For the year ended December 31, 2014, our management has identified two material weaknesses, as disclosed in the management annual report referenced above. We cannot assure you that our internal control over financial reporting will continue to be effective or that any additional significant deficiencies or material weaknesses in our internal control over financial reporting will not be identified in the future. Moreover, if we continue to fail to maintain the adequacy of our internal control, we may not be able to conclude that we have effective internal control over financial reporting for as long as our failure. Sustained failure or non-compliance in our internal control over financial reporting will have a material adverse impact on the disclosures we make to the investing public and result in serious damage to our reputation and credibility. Even if we do conclude that our internal control over financial reporting is effective, our independent registered public accounting firm may still issue a report that is qualified or adverse if it is not satisfied with our internal control. Furthermore, effective internal control over financial reporting is necessary for us to produce reliable financial reports and is important to help us to manage the company effectively and prevent fraud. We have incurred, and will continue to incur, significant costs and have used, and will continue to use, significant management and other resources in order to comply with Section 404 of the Sarbanes-Oxley Act.

Our independent registered public accounting firm’s audit documentation related to their audit report included in this annual report may be located in China. The PCAOB currently cannot inspect audit documentation located in China and, as such, you may be deprived of the benefits of such inspection.

Our independent registered public accounting firm has issued the audit report included in this annual report. As auditors of companies that are traded publicly in the United States and a firm registered with the PCAOB, our audit firm is required by the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the applicable laws of the United States and professional standards. Our operations, however, are principally conducted in China, a jurisdiction where the PCAOB is currently unable to conduct inspections or review audit documentation without the approval of the Chinese authorities. Accordingly, any audit documentation located in China related to our audit firm’s report included in our filings with the SEC is not currently inspected by the PCAOB.

Inspections conducted by the PCAOB outside China have identified deficiencies in those firms’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The inability to conduct inspections in China, however, prevents the PCAOB from regularly evaluating audit documentation located in China and its related quality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections.

The inability of the PCAOB to conduct inspections in China makes it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to audits outside China that are subject to the PCAOB inspections. Investors may lose confidence in our reported financial information and procedures and the quality of our financial statements.

Our independent registered public accounting firm may be temporarily suspended from practicing before the SEC, if it is unable to continue to satisfy SEC investigation requests in the future, which could result in financial statements being determined to not be in compliance with the requirements of the Securities Exchange Act.

In late 2012, the SEC commenced administrative proceedings under Rule 102(e) of its Rules of Practice and also under the Sarbanes-Oxley Act against the Chinese affiliates of five global accounting firms, including our independent registered public accounting firm. The Rule 102(e) proceedings initiated by the SEC relate to these firms’ failure to produce documents, including audit work papers, at the request of the SEC pursuant to Section 106 of the Sarbanes-Oxley Act, as the auditors located in China are not in a position lawfully to produce documents directly to the SEC because of restrictions under the Chinese law and specific directives issued by the CSRC. Substantially all of our operations are inside China. Certain of our audit firm’s audit documentation related to its audit reports included in this annual report are located in China, and certain audit procedures are taken place within China’s borders. As we have disclosed previously in this annual report, the PCAOB is currently unable to conduct inspections in China or review audit documentation located within China without the approval of Chinese authorities.

In January 2014, an SEC administrative law judge issued an initial decision to censure these accounting firms and suspend the Chinese member firms of four of the five firms, including our audit firm, from practicing before the SEC for a period of six months. In February 2014, these China-based accounting firms appealed to the SEC against this decision. In February 2015, the four China-based accounting firms reached a settlement with the SEC over the dispute in relation to access to such accounting firms’ audit documents. As part of the settlement, each of the Chinese member firms of “Big Four” accounting firms agreed to settlement terms that include a censure, undertakings to make a payment to the SEC, procedures and undertakings as to future requests for documents by the SEC and possible additional proceedings and remedies should those undertakings not be adhered to. Although the ability of these firms to continue to service all their respective clients is not affected by the settlement, the settlement requires the firms to follow detailed procedures to seek to provide the SEC with access to Chinese firms’ audit documents via the CSRC. If the firms do not follow these procedures, the SEC could impose penalties such as suspensions, or it could restart the administrative proceedings.

Our independent registered public accounting firm currently relies on its Chinese member firm for assistance in completing the audit work associated with our operations in China. If the settlement terms are not adhered to, Chinese member firms of the four accounting firms may be suspended from practicing before the SEC, which could result in our financial statements being determined to not be in compliance with the requirements of the Securities Exchange Act of 1934, as amended, or the Securities Exchange Act. If our independent registered public accounting firm is denied temporarily or permanently the ability to practice before the SEC and we are unable to find another registered public accounting firm on a timely basis to audit and issue an opinion on our financial statements, our financial statements could be determined not to be in compliance with the requirements of the Securities Exchange Act. Moreover, a delinquency in our filings with the SEC could adversely harm our reputation and have other material adverse effects on our results of operations and financial condition.

The financial disclosure in interactive data we are required to provide on SEC’s electronic filing system and our own website involve special and technical processing and processes, and may expose us to unintended additional risks and liabilities.

We provide financial disclosure in interactive data format on SEC’s electronic filing system and post them on our corporate website in connection with our annual report on Form 20-F as required by the SEC rules and regulations. In compliance with such requirements, we use the eXtensible Business Reporting Language, or XBRL, and the taxonomy or standard list of tags in XBRL format developed for financial reporting in interactive format consistent with U.S. GAAP and SEC rules and regulations. The XBRL list of tags contains descriptive labels, definitions, authoritative references to U.S. GAAP and the SEC rules and regulations where applicable,

and other elements, all of which aim to provide the contextual information necessary for interactive data to be recognized and processed by software. As required by the SEC rules and regulations, we are required to post our interactive data for at least 12 months on our corporate website on the same day we file our annual report on Form 20-F.

When we apply XBRL taxonomy or data tags to our consolidated financial statements and the notes and schedules, we are initially guided by the software in tagging information contained in our financial statements with the appropriate tags in the standard list. Each element in the standard list of tags has a standard label. We typically match the standard labels to each caption in our consolidated financial statements and notes and schedules. To the extent we have flexibility in how to report our financial information under U.S. GAAP in our consolidated financial statements and notes and schedules, we may decide to use a non-standard financial statement line item that is not included in the standard list of tags. In this situation, we will create a company-specific element, called an extension. Similarly, when we identify a difference between some elements associated with the standard label and those associated with our financial reporting item, we may change, or extend, the standard label when we tag such financial disclosure. Due to the complexity and technicality in tagging our consolidated financial statements and the notes and schedules, we have outsourced the tagging process to a third party specialist, with the data tagging subject to our review and approval.

As financial statements in interactive data format are intended to be processed by software applications, the unprocessed data are not readable by humans. You will need viewers to convert or render the interactive data file to human readable format. Some viewers are similar to Web browsers used to read HTML files. You will also need software to process interactive data so as to automate and facilitate access to and analysis of the tagged data. We cannot assure you of the availability of any applications in existence or under development that may provide the functionality that you require for your purposes. XBRL is an open standard that defines or tags data using standard definitions. These tags are supposed to establish a consistent structure of identity and context, capable of being recognized and processed by a variety of different software applications. We understand that XBRL was developed and is currently supported by XBRL International, and that software applications, such as databases, financial reporting systems, and spreadsheets, recognize and process tagged financial information. You should also note that the XBRL standard will not remain static and is subject to updating, and the list of newer tags may differ significantly from the old or existing list. Such new developments will not only affect our tagging process going forward, but also your use of our tagged financial disclosure.

We are subject to liabilities under the federal securities laws with respect to our interactive data files submitted to, or filed with, the SEC. The interactive data files in this annual report will entail the same liability as our regular filings under the antifraud provisions of the Securities Act of 1933, as amended, or the Securities Act, and/or the Securities Exchange Act. In addition, if we fail to provide the required financial disclosure in interactive data format on SEC’s electronic filing system or post such interactive data our own corporate website each on the date so required, we will not be regarded as current with our reports under the Securities Exchange Act and, as a result, will not be eligible to use the short registration statement forms, such as Form F-3, and will not be deemed to have available adequate current public information for purposes of the resale exemption safe harbor provided by Rule 144 under the Securities Act.

Fluctuations in exchange rates could adversely affect our business.

As of December 31, 2014, our sales were primarily denominated in U.S. dollars, Renminbi and pound sterling. Our costs and capital expenditures are largely denominated in Renminbi. Therefore, fluctuations in currency exchange rates could have a material adverse effect on our financial condition and results of operations. Fluctuations in exchange rates, particularly among the U.S. dollar, Renminbi and pound sterling, affect our gross and net profit margins and could result in foreign exchange and operating losses.

The functional currency of our principal operating subsidiaries, which are located in China, is the Renminbi. To the extent these subsidiaries hold assets denominated in U.S. dollars or any other foreign currency, any

appreciation of Renminbi against the U.S. dollar and/or such foreign currency could result in a charge to our statements of operations and a reduction in the value of their U.S. dollar-denominated and/or foreign currency-denominated assets. Similarly, a depreciation of Renminbi against the U.S. dollar or any foreign currency could reduce the U.S. dollar or foreign currency equivalent amounts of our financial results.

We incurred a net foreign currency exchange loss of $6.4 million, $20.7 million and $3.6 million during the years ended December 31, 2012, 2013 and 2014, respectively. We cannot predict the impact of future exchange rate fluctuations on our results of operations and may incur additional net foreign currency losses in the future. During 2011, we entered into certain foreign exchange forward contracts to reduce the effect of our foreign exchange exposure up to 2014, and have not entered into any other or additional foreign exchange forward contracts. However, we cannot assure you that these types of hedging activities or our omission of hedging activities will be effective in managing our foreign exchange risk exposure.

Compliance with environmental and safety regulations is expensive, and noncompliance may result in adverse publicity and potentially significant monetary damages and fines or suspension of our business operations.

The majority of our business operations are located in China, and we are required to comply with all Chinese national and local regulations regarding the protection of the environment and the safety of operations. Our overseas subsidiaries are required to comply with national, federal and local regulations regarding the environmental protection and operational safety for their businesses in their respective jurisdictions. Compliance with environmental and safety regulation is expensive. The Chinese government is adopting more stringent environmental protection and operational safety regulations and the costs of complying with these regulations are expected to increase. See “Item 4. Information on the Company — B. Business Overview — Regulatory Framework — Environmental Regulations” and “— Production Safety and Environment” for more detailed information. Although we have obtained all of the necessary approvals and permits for our production facilities currently existing or under construction, we cannot assure you that we will be able to comply with all applicable environmental protection and operational safety requirements, and obtain all of the required governmental approvals and permits that may be or may become applicable to us on a timely basis, or at all, or will be able to complete all our registrations and filings with the government, in time for all of our projects currently under construction or our future projects. The relevant governmental authorities may impose on us fines for any non-compliance, set deadlines for rectification, and order us to cease construction or production if we fail to comply with their requirements.

For each of our PV production facilities in China, we are required to conduct an environmental impact assessment, obtain approval of the assessment before commencing construction and complete an examination and obtain an environmental acceptance approval before we begin production. We must also periodically renew the various environmental acceptance approvals that we have obtained to be able to continue our business operations. Our polysilicon production facilities, in particular, use, generate, store, dispose of, and discharge toxic, volatile and otherwise hazardous chemicals and wastes. We are therefore subject to licensing requirements, regulations and periodic monitoring by local environmental protection authorities regarding the use, storage, transportation and disposal of such hazardous chemicals and the disposal of other wastes we generate. Discharge of waste water from our production facilities is an example, for which we must file reports with and obtain discharge permits from the relevant Chinese government authorities.

We are also subject to the periodic production safety examinations and reviews in order to obtain or renew our operational safety permits. As we disclosed in the risk factor entitled “— Unexpected equipment failures or accidents, including any accidental release of hazardous gases or materials, may lead to production curtailments or shutdowns, personal injuries, even deaths or damage to properties,” our operations, especially wafer manufacturing and polysilicon production, use complex and potentially hazardous equipment, such as CVD reactors, STC thermal converters, and hydrochlorination reactors, DSS furnaces, squarers and wire saws, that requires skill and experience for safe operation. We also use and discharge toxic, volatile and otherwise hazardous chemicals in our polysilicon production processes, for which we must register with the relevant

authorities and obtain the relevant safety permits before we may use such hazardous chemicals in our production processes, including a permit for the storage and use of hazardous chemicals and a permit for the use of atmospheric pressure containers. Although we have obtained all the necessary operational safety permits for our current operations, we will not be able to renew such operational safety permits, or obtain them for projects under construction, if we fail to comply with present or future safety regulations in China. Our failure may subject us to substantial fines or damages or the suspension of our production operations, which may harm our reputation and could negatively affect our results of operations and financial condition.

We have limited insurance coverage and may incur losses resulting from product liability claims or business interruptions.

We are exposed to risks associated with product liability claims in the event that the use of our PV products results in injury. Due to our limited historical experience, we are unable to predict whether product liability claims will be brought against us in the future or to predict the effect of any resulting adverse publicity on our business. The successful assertion of product liability claims against us could result in potentially significant monetary damages and require us to make significant payments. Moreover, we only carry limited product liability insurance coverage and may not have adequate resources to satisfy a judgment in the event of a successful claim against us. We do not carry any business interruption insurance. Based on the insurance products available in China, even if we decide to take out business interruption coverage, such insurance as currently available offers limited coverage compared to that offered in many other jurisdictions. Any business disruption, industrial accident or natural disaster could result in substantial losses and diversion of our resources.

Failure to protect our intellectual property rights, know-how and technology may undermine our competitive position.

We have developed various production process-related know-how and technologies in the production of polysilicon, ingots, wafers, cells and modules. Know-how and technologies of this type play a critical role in our quality control and cost reduction. In addition, we have on-going R&D programs with a view to continually developing techniques and processes that will improve our production efficiency and product quality. Our intellectual property and proprietary rights arising out of these R&D programs will be crucial in maintaining our competitive edge in the PV industry. We currently have 121 issued patents, and 104 patent applications pending globally. In addition, we also have two registered copyrights and three registered trademarks in China. We rely primarily on patent, trademark, trade secret, copyright law and contractual arrangements with employees to protect our intellectual property and proprietary rights. Nevertheless, these afford only limited protection, and the actions that we may take to protect our intellectual property and proprietary rights may not be adequate. Our failure to protect our production process related know-how and technologies and/or our intellectual property and proprietary rights may undermine our competitive position. Third parties may infringe or misappropriate our proprietary technologies or other intellectual property and proprietary rights. Policing unauthorized use of proprietary technology can be difficult and expensive. Also, litigation, which can be costly and divert management attention and other resources away from our business, may be necessary to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of our proprietary rights. We cannot assure you that the outcome of such potential litigation will be in our favor or that we will be able to effectively enforce any remedies available to us. An adverse determination in any such litigation or failure to enforce our remedies will impair our intellectual property and proprietary rights and may harm our business, prospects and reputation.

We may be exposed to intellectual property infringement, misappropriation or other claims by third parties and an adverse determination could result in us paying significant damages.

Our success depends on our ability to use and develop our technology and know-how, to produce our polysilicon, ingots, wafers, cells and modules and to sell our polysilicon, ingots, wafers, cells and modules without infringing the intellectual property or other rights of third parties. We may be subject to litigation involving claims of patent infringement or violation of intellectual property rights of third parties. For example,

in June 2008, an objection was filed against Jiangxi LDK Solar regarding its trademark “LDK.” The initial decision of the applicable trademark authority on this objection was granted in our favor in November 2010 and the final judgment was granted in our favor in May 2012. The validity and scope of claims relating to PV technology patents involve complex scientific, legal and factual questions and analyses and, therefore, may be highly uncertain. The defense and prosecution of intellectual property suits, patent opposition proceedings, trademark disputes and related legal and administrative proceedings can be both costly and time consuming and may significantly divert our resources and the attention of our technical and management personnel. An adverse ruling in any such litigation or proceedings could subject us to significant liability to third parties, require us to seek licenses from third parties, to pay ongoing royalties, or to redesign our products, or subject us to injunctions prohibiting the production and sale of our products or the use of our technologies. Protracted litigation could also result in our customers or potential customers deferring or limiting their purchase or use of our products until resolution of such dispute.

We have granted, and may continue to grant, stock options under our stock incentive plans and our net income could be adversely affected.

We adopted a stock incentive plan in 2006 and another in 2013. As of the date of this annual report, we have outstanding stock options under these plans with respect to 7,870,437 shares, all of which were granted to our directors and employees at the time of the grant. During the past few years, as a result of the significant decreases in our share prices, we and some of our optionees agreed to cancel some of the previously granted, but not yet vested, stock options and to replace them with newly granted options with similar terms at lower exercise prices. According to Accounting Standards Codification, or ASC, Topic 718, “Share-Based Payment,” issued by the Financial Accounting Standards Board, or FASB, we are required to recognize share-based compensation as compensation expense in the statement of operations based on the fair value of equity awards on the date of the grant, with the compensation expense recognized over the period in which the recipient is required to provide service in exchange for the equity award. For the years ended December 31, 2012, 2013 and 2014, our non-cash share-based compensation expenses amounted to $8.9 million, $7.5 million and $8.6 million, respectively, with respect to share options granted to our employees. The additional expenses associated with share-based compensation may reduce the attractiveness of issuing stock options under our stock incentive plans. However, if we do not grant stock options or we reduce the number of stock options that we grant, we may not be able to attract and retain key personnel and skilled labor force. If we grant more stock options to attract and retain key personnel and skilled labor force, the expenses associated with share-based compensation may adversely affect our net income.

Most of our production, storage, administrative and R&D facilities are located in close proximity to one another in Xinyu City of Jiangxi Province; and any damage or disruption at these facilities would have a material adverse effect on our business, financial condition and results of operations.

Most of our production, storage, administrative and R&D facilities are located in close proximity to one another in Xinyu City of Jiangxi Province in China. A natural disaster, such as fire, floods, typhoons, earthquakes, severe snow storms or other unanticipated catastrophic events, including power interruptions, telecommunications failures, equipment failures, explosions, fires, break-ins, terrorist acts or war, could significantly disrupt our production and business operations. If any of our production facilities or material equipment were to experience any significant damage or downtime, or if any of our storage, administrative and R&D facilities were to suffer any material damage or disruption, we may be unable to meet our production targets and our business would be adversely affected. Moreover, as we have disclosed in the risk factor entitled “— We have limited insurance coverage and may incur losses resulting from product liability claims or business interruptions,” we do not carry any business interruption insurance. Even if we decide to take out business interruption coverage, such insurance available in China offers limited coverage, which may be insufficient to cover the damage or disruption at these facilities. Any such business disruption or natural disaster could result in substantial losses and diversion of our resources, and have a material adverse effect on our business, financial condition and results of operations.

Dividends, if any, and the interest and principal payments on intercompany loans or advances paid by our subsidiaries constitute an important source for us to fund our cash and financing requirements, and any limitation on the ability of our Chinese subsidiaries to pay dividends or repay intercompany loans or advances to us could have a material adverse effect on our ability to conduct our business.

LDK Solar is a holding company with no material operations. We conduct our operations mainly through our Chinese subsidiaries. In addition to financings conducted by LDK Solar, dividends, if any, and the interest and principal payments on intercompany loans or advances from our subsidiaries constitute an important source for LDK Solar, as a holding company, to satisfy its obligations and to pay any dividends LDK Solar may declare. The ability of our subsidiaries to pay dividends and make payments on intercompany loans or advances to their shareholders is subject to, among other things, distributable earnings, reserve funds, cash flow conditions, restrictions contained in the articles of association of our subsidiaries, applicable laws and regulations, and restrictions contained in the debt instruments or agreements of such subsidiaries. In addition, if any of our subsidiaries raises capital by issuing equity securities to third parties, the dividends declared and paid with respect to such equity securities would not be available to LDK Solar.

We incurred a significant amount of indebtedness onshore China and an overwhelming portion of such onshore indebtedness remain unserviced subject to a standstill and forbearance arrangement with our Chinese lenders. It is unforeseeable that our Chinese operating subsidiaries will be able to upstream any net profit for our declaration and distribution of dividends at any time at all. In addition, Chinese laws and regulations permit payment of dividends only out of accumulated profits as determined in accordance with Chinese accounting standards and regulations, and such profits differ from profits determined in accordance with U.S. GAAP in certain significant respects, including the use of different bases of recognition of revenue and expenses. Our Chinese subsidiaries are also required to set aside a portion of their after-tax profits according to Chinese accounting standards and regulations to fund certain reserves that are not distributable as cash dividends. In practice, our Chinese subsidiaries are also required to obtain a required tax clearance with the local tax bureau and complete the corresponding foreign exchange procedures before paying any dividends. In addition, under the Chinese Enterprise Income Tax Law, or the EIT Law, and its implementing regulations, Chinese income tax at the rate of 10% is applicable to dividends payable by Chinese enterprises to “non-resident enterprises” (enterprises that do not have an establishment or place of business in China or that have such an establishment or place of business in China but for which the relevant dividend income is not effectively connected with such establishment or place of business), subject to any exemption or lower withholding tax rate as may be contained in any income tax treaty or agreement between China and the jurisdictions of incorporation of such “non-resident enterprises.” According to the Arrangement between Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income, subject to the confirmation of the in-charge local tax authority, dividends paid by a foreign-invested enterprise in China to its direct holding company in Hong Kong will be subject to the withholding tax at a rate of no more than 5%, if the direct holding company in Hong Kong is the “beneficial owner” and owns directly at least 25% the equity interest of the foreign-invested enterprise. The Chinese State Administration of Taxation subsequently provided guidance for determining whether a resident of a contracting jurisdiction is the “beneficial owner” of an item of income under China’s tax treaties and tax arrangements. According to the interpretation of the Chinese State Administration of Taxation, a beneficial owner generally must be engaged in substantive business activities. An agent or conduit company will not be regarded as a beneficial owner and, therefore, will not qualify for such treaty benefits. A conduit company normally refers to a company set up for the purpose of avoiding or reducing taxes or transferring or accumulating profits. Thus, dividends payable to us by our subsidiaries in China, if any, will be subject to a 10% income tax if we are considered a “non-resident enterprise” under the EIT Law. Although some of our Chinese operations are held through Hong Kong entities, such as LDK Solar International Company Limited and LDK Silicon Hong Kong, we are uncertain as to whether and the extent to which these Hong Kong companies meet the beneficial ownership requirements and are eligible for the benefits under this Hong Kong-mainland China double taxation avoidance arrangement when they receive dividends from their subsidiaries in China. We cannot assure you how long it will take to apply for such benefits

and, if and when we apply, whether we will be successful in our applications. Neither can we assure you that we will have sufficient cash flow from dividends or repayments on intercompany loans or advances from our Chinese subsidiaries to pay any dividend we may declare.

Furthermore, although we currently do not have any offshore shareholder loans to our Chinese subsidiaries that are foreign invested companies, we may resort to such offshore lending in the future, rather than equity contribution, to our Chinese subsidiaries to finance their operations. In such events, the market interest rates that our Chinese subsidiaries can pay with respect to offshore loans generally may not exceed comparable interest rates in the international finance markets. Under the EIT Law, our Chinese subsidiaries are also required to pay a 10% (or 7% if the interest is paid to a Hong Kong resident under certain circumstances) withholding tax on our behalf on the interest paid under any shareholder loan. Prior to payment of interest and principal on any such shareholder loan, the Chinese subsidiaries (as foreign-invested enterprises in China) must present evidence of payment of the withholding tax on the interest payable on any such shareholder loan and evidence of registration with the Chinese State Administration of Foreign Exchange, or SAFE, authorities as well as any other documents that the SAFE authorities may require. You may find additional information under “Item 10. Additional Information — E. Taxation — People’s Republic of China Taxation” in this annual report.

Risks Relating to Business Operations in China

Changes in Chinese political and economic policies and conditions could adversely affect our business and prospects.

China has been, and will continue to be, our primary production base and currently most of our assets are located in China. While the Chinese government has been pursuing economic reforms to transform its economy from a planned economy to a market-oriented economy since 1978, a significant part of the Chinese economy is still being operated under various controls of the Chinese government. By imposing industrial policies and other economic measures, such as control of foreign exchange, taxation and foreign investment, the Chinese government exerts considerable direct and indirect influence on the development of the Chinese economy. Many of the economic reforms carried out by the Chinese government are unprecedented or experimental and are expected to be refined and improved over time. Recently, the Chinese government has been contemplating and introducing in-depth structural reforms in China in order to further transition the Chinese economy into a market economy. Political, economic and social factors may also lead to further adjustments of the Chinese reform measures, including its fiscal and monetary policies. This reform and adjustment process may not necessarily have a positive effect on our operations and our future business development. Our business, prospects and results of operations may be materially and adversely affected by changes in Chinese economic and social conditions and by changes in the policies of the Chinese government, such as measures to control inflation, changes in the rates or method of taxation, changes in government spending, and the imposition or lifting of restrictions on currency conversion.

Changes in foreign exchange and foreign investment regulations in China may affect our ability to invest in China and the ability of our Chinese subsidiaries to pay dividends and service debts in foreign currencies.

The Renminbi is not a freely convertible currency at present. Although the Chinese government has recently been trying to internationalize the Renminbi, it continues to regulate conversion between Renminbi and foreign currencies. Changes in Chinese laws and regulations on foreign exchange may result in uncertainties in our financing and operating plans in China. Over the years, China has significantly reduced the government’s control over routine foreign exchange transactions under current accounts, including trade and service related foreign exchange transactions, payment of dividends and service of foreign debts. In accordance with the existing foreign exchange regulations in China, our Chinese subsidiaries may, within the scope of current account transactions, pay dividends and service debts in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. However, there can be no assurance that the current Chinese foreign exchange policies with respect to debt service and payment of dividends in foreign currencies will continue in the future. Changes in Chinese foreign exchange policies may have a negative impact on our ability to service our foreign

currency-denominated indebtedness and to distribute dividends to our shareholders in foreign currencies since LDK Solar, as a Cayman Islands holding company, rely on our operating subsidiaries in China to convert their Renminbi cash flow to service such foreign debt and to make such dividend payments. Foreign exchange transactions by our Chinese subsidiaries under the capital account continue to be subject to significant foreign exchange controls. In particular, foreign exchange transactions involving foreign direct investment, foreign debts and outbound investment in securities and derivatives are subject to limitations and require approvals from the relevant SAFE authorities. We have the choice, as permitted by the Chinese foreign investment regulations, to invest our net proceeds from our various offerings in the form of registered capital or a shareholder loan into our Chinese subsidiaries to finance our operations in China. Our choice of investment is affected by the different treatments under the relevant Chinese regulations with respect to capital-account and current-account foreign exchange transactions in China. For example, our transfer of funds to our subsidiaries in China is subject to approval of Chinese governmental authorities in case of an increase in registered capital, or subject to registration with Chinese governmental authorities in case of a shareholder loan. These and other limitations on the flow of funds between us and our Chinese subsidiaries could restrict our ability to act in response to changing market conditions and limit our flexibility in the management of our cash flow and financings.

On the other hand, as the Chinese government is striving to internationalize the Renminbi, aiming to make it a trading, investment and reserve currency, we may not necessarily benefit from such efforts in our operations. The quantitative easing initiatives made by various central banks or similar institutions in the past have only made it more difficult for us to manage our foreign exchange risks. Were the Renminbi to become freely convertible, it may undergo unprecedented fluctuations under the market forces of supply and demand, and we may have to devote significantly more human and other resources in managing our assets, finances and cash flow denominated in Renminbi and in foreign currencies. We may, as a result, be confronted with more uncertainties in our financing and business operations, and we cannot assure that our financial condition, results of operations and business prospects will not be adversely affected by such efforts of the Chinese government to internationalize its currency, the Renminbi.

The uncertain legal environment in China could have a negative impact on our business and prospects and also limit the legal protections available to you.

Our principal operating subsidiaries, Jiangxi LDK Solar, Jiangxi LDK Silicon and LDK Nanchang, are foreign-invested enterprises in China and are subject to laws and regulations applicable to foreign investments in China in general and laws and regulations applicable to wholly foreign-owned enterprises and sino-foreign joint venture enterprises in particular. The Chinese legal system is a civil law system based on written statutes. Unlike the common law system, the civil law system is a system in which decided legal cases have little precedential value. When the Chinese government started its economic reform in 1978, it began to formulate and promulgate a comprehensive system of laws and regulations to provide general guidance on economic and business practices in China and to regulate foreign investments. China has made significant progress in the promulgation of laws and regulations dealing with economic matters such as corporate organization and governance, foreign investment, commerce, taxation and trade. However, the promulgation of new laws, changes in existing laws and abrogation of local regulations by national laws may have a negative impact on our business and prospects. In addition, as these laws, regulations and legal requirements are relatively recent and because of the limited volume of published cases and their non-binding nature, the interpretation and enforcement of these laws, regulations and legal requirements involve significant uncertainties. These uncertainties could limit the legal protections available to foreign investors, including you.

We may be treated as a Chinese resident enterprise for income tax purposes, which may subject us to Chinese income tax on our worldwide income.

Under the EIT Law and its implementation rules, enterprises established outside mainland China whose “de facto management bodies” are located in mainland China are considered “Chinese resident enterprises for income tax purposes.” The implementation rules define the term “de facto management body” as a management body that exercises material and overall management control over the business, personnel, accounts and properties of

an enterprise. We hold our shareholders’ meetings and most of our board meetings outside mainland China and keep our register of shareholders outside mainland China. However, most of our directors and members of our senior management are currently based inside mainland China and we keep our books of account inside mainland China. The Chinese tax authorities may consider these circumstances relevant in determining whether we are a Chinese resident enterprise for income tax purposes. Although we have not been notified by any Chinese tax authorities that we are a Chinese resident enterprise under the Chinese tax law, and although it is unclear whether we have a “de facto management body” located in mainland China for Chinese tax purposes, we intend to take the position that we are not such a Chinese resident enterprise. We cannot assure you however that the Chinese tax authorities will agree with our position. If we are deemed a Chinese resident enterprise for income tax purposes, we will be subject to, among other things, the Chinese enterprise income tax at the rate of 25% on our worldwide income excluding, however, the dividend income we receive from our Chinese subsidiaries. If we are treated as a Chinese resident enterprise under the Chinese tax law, we could face significant adverse tax consequences, which could adversely affect the value of our shares and ADSs.

Our business, financial condition and results of operations could be adversely affected by Chinese labor laws and regulations.

The Chinese labor laws and regulations have a direct impact on our business operations. The Labor Contract Law of China, together with its implementation rules and regulations, aims at providing employees with greater protection in their employment relationships. For example, the labor contract law requires employers to enter into written contracts with their employees, and if an employer fails to enter into a written contract with an employee within one month of the commencement of the employment, the employer is required to pay to the employee double salary for the noncompliance period for up to one year. This labor law also calls for open-ended employment contracts rather than fixed-term contracts under specified circumstances. The law further prohibits an employer from entering into a one-year or shorter-term contract with an employee if it constitutes the third consecutive renewal of the employment contract unless it is so requested by the employee. As a result of this more labor-friendly legislation, our discretion in the hiring and termination process has been significantly curtailed, which could in turn affect our overall labor costs and our ability to adjust our labor needs in response to market changes. Our business, financial condition and results of operations could therefore be adversely affected by these Chinese labor laws and regulations.

Chinese regulations relating to the establishment of offshore special purpose companies by Chinese residents may subject our Chinese resident shareholders to personal liability and limit our ability to acquire Chinese companies or to inject capital into our Chinese subsidiaries, limit our Chinese subsidiaries’ ability to distribute profits to us, or otherwise materially and adversely affect us.

The SAFE rules and regulations require Chinese residents, both legal and natural persons, to register with the relevant SAFE authorities before they establish or take control of any company outside China for the purpose of acquiring any asset of or equity interest in Chinese companies and raising funds overseas. SAFE refers to such companies outside China as “offshore special purpose companies” in its notice. In addition, SAFE also requires any Chinese resident that is the shareholder of an offshore special purpose company to amend its SAFE registration with respect to the offshore special purpose company in connection with any increase or decrease of capital, transfer of shares, merger, division, equity investment or creation of any security interest over any assets located in China. If any Chinese shareholder of an offshore special purpose company fails to make the required SAFE registration and amendment, the Chinese subsidiaries of that offshore special purpose company may be prohibited from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to the offshore special purpose company. Moreover, failure to comply with such SAFE registration and amendment requirements could result in liabilities under the Chinese law for evasion of applicable foreign exchange restrictions. Our current beneficial owners who are Chinese residents have completed registration with the relevant SAFE authorities as required under the above-mentioned SAFE notice except for updating the registration with SAFE in connection with any change of their equity interests in us from time to time and the change of the assets and liabilities of our company as a result of any equity or debt offerings by us from time to

time. The failure of these beneficial owners to amend their SAFE registrations in a timely manner pursuant to the SAFE notice or the failure of our other future beneficial owners who are Chinese residents to comply with the SAFE registration requirements may subject such beneficial owners to fines and legal sanctions, and may also result in restrictions on our Chinese subsidiaries in their abilities to distribute profits to us, or may otherwise materially and adversely interfere with our business.

All employee participants in our existing stock incentive plans who are Chinese citizens may be required to register with SAFE. We may also face regulatory uncertainties that could restrict our ability to adopt or use stock option for our directors and employees under Chinese laws.

In March 2007, SAFE issued the Operating Procedures on Administration of Foreign Exchange Regarding Participation by Chinese Individuals in Employee Stock Ownership Plan and Stock Option Plan of Overseas Listed Companies, or the Stock Option Rule. It is not clear whether the Stock Option Rule covers any type of equity compensation plans or incentive plans which provide for the grant of ordinary share options or authorize the grant of restricted share awards. For plans so covered that are adopted by an overseas listed company, the Stock Option Rule requires the employee participants in those plans who are Chinese nationals to register with the relevant SAFE authorities within 10 days of the commencement of each quarter. In addition, the Stock Option Rule also requires the employee participants who are Chinese nationals to follow a series of requirements on making necessary applications for foreign exchange purchase quotas, opening special bank accounts and filings with the SAFE authorities before they exercise their stock options.

Although we have assisted our employees in their registration with the SAFE authorities in connection with our stock incentive plans according to the Stock Option Rule, failure to comply with such provisions may subject us and the participants of our stock incentive plans who are Chinese nationals to monetary fines and other legal sanctions. Although, to date, we have not received any notice from any SAFE authorities regarding any legal sanctions applicable to us or our employees, we cannot assure you that we or our Chinese employees will not fail to comply with such provisions in the future or that any such failure will not prevent us from further granting options under our stock incentive plans to our employees, which could adversely affect our business operations as a result.

Risks Relating to Our ADSs, Shares and Equity-linked Securities

The market price of our ADSs has been and may continue to be volatile, which could cause the value of your investments to decline.

Our ADSs were listed on the New York Stock Exchange, or the NYSE, since our SEC-registered initial public offering SEC in June 2007 until March 31, 2014 when the staff of NYSE Regulation Inc. commenced proceedings to delist our ADSs from the NYSE. On September 22, 2014, NYSE Regulation, Inc. Board of Directors’ Committee for Review affirmed the delisting decision of the staff of NYSE Regulation, Inc. subsequent to a hearing with the Committee for Review. Our ADSs have been quoted on the OTC Pink Limited Information initially under the symbol “LDKSY” since the NYSE suspended the trading of our ADSs on February 21, 2014 and under the symbol “LDKYQ” since October 30, 2014.

The market price of our ADSs experienced, and may continue to experience, significant volatility. For the period from June 1, 2007 (commencement of trading of our ADSs on the NYSE) to February 21, 2014 (suspension by the NYSE of the trading of our ADSs on the NYSE), the closing price of our ADSs on the NYSE ranged from a high of $73.95 per ADS to a low of $0.71 per ADS. Since our ADSs have been quoted on the OTC market, their closing price has ranged from a high of $0.89 per ADS to a low of $0.07 per ADS up to the date of this annual report.

You may find additional information on the historical high and low closing prices of our ADSs under “Item 9. The Offer and Listing — A. Offer and Listing Details — 4. Information Regarding the Price History of the Stock” and “— C. Markets” in this annual report. Numerous factors, including many over which we have no control, may have a significant impact on the market price of our ADSs, including, among other things:

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prospects of the implementation of our restructuring offshore China;

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prospects of continued standstill and forbearance by our creditors onshore China with respect to their lendings to us over the years;

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prospects of the restructuring of our indebtedness onshore China;

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dilutive effect of the convertible securities we have issued for the offshore restructuring on our capital structure, including potential change of control from time to time;

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formulation and implementation of our goals and strategies;

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impact and likely consequences of the current and on-going fluctuating PV market and overall global economic development on the PV market and on our businesses;

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announcements of technological or competitive developments in the PV industry, solar power industry and renewable energy industry;

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regulatory developments in our target markets affecting us, our customers or our competitors;

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announcements regarding patent litigation or the issuance of patents to us or our competitors;

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announcements of studies and reports relating to the PV efficiencies of our products or those of our competitors;

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our future business development, results of operations and financial condition, including actual or anticipated fluctuations in our quarterly operating results;

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changes in financial estimates or other comments by securities analysts relating to us, our competitors or our industry in general;

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release or expiry of lock-up or other transfer restrictions on our outstanding ordinary shares, ADSs and equity-linked securities, such as our convertible securities;

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a breach or default, or the perception of a possible breach or default, under our existing loan agreements, credit facilities or other debt instruments;

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announcements by other companies in our industry relating to their operations, strategic initiatives, financial condition or performance or relating to our industry in general;

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announcements of acquisitions or consolidations involving industry competitors or industry suppliers or customers;

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changes in the market valuations of other PV technology companies;

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determination of the fair value of our ordinary shares, ADSs, and equity-linked securities;

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addition or departure of our executive officers and key personnel;

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any government subsidies and economic incentives to us or to the PV industry;

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sales or perceived sales of additional ordinary shares, ADSs or equity-linked securities by us or our shareholders and securities holders, including the conversion of their convertible securities;

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pledges or perceived pledges of ordinary shares, ADSs or equity-linked securities by our shareholders and other securities holders, and the foreclosure or perceived foreclosure of such security interests, whether or not potentially resulting in a change of control; and

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impact and development of any lawsuit or legal proceedings, currently pending or threatened, or that may be instituted in the future.

In addition, the stock market in recent years has experienced extreme price and trading volume fluctuations that often have been unrelated or disproportionate to the operating performance of individual companies. These broad market fluctuations may adversely affect the price of our ADS and equity-linked securities, regardless of our operating performance. The OTC market is a relatively illiquid market as compared to the NYSE, and will not be able to accommodate sales or purchases of any significant amount of our ADSs in any particular trading day. Furthermore, the trading price of our ADSs on the OTC market could be significantly affected by an otherwise relatively insignificant fluctuation of supply and demand relating to our ADSs. These factors, among others, could significantly depress the trading price of our ADSs and equity-linked securities.

The offshore restructuring transactions completed under our schemes of arrangement will cause significant dilution to the equity ownership of our shareholders, which may materially and adversely affect the market price of our ADSs and equity-linked securities.

Because of the limited funding available to the scheme creditors to choose the cash-out option, the restructuring transactions we completed pursuant to our schemes of arrangement have to offer significant amount of equity securities and convertible securities in exchange and satisfaction of claims of our scheme creditors. The issuances of such scale will necessarily cause material dilution of the equity holdings of our shareholders at any relevant time. You should read the information set forth under “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Provisional Liquidation” in this annual report for additional information. Because we are not issuing these equity securities or convertible securities for cash in the restructuring transactions, we will not receive any proceeds from these issuances. In addition, as our exit funding arrangements with HRX contain warrants and convertible securities, the issuance of our equity securities pursuant to such instruments may further dilute our shareholders at any relevant time. Such dilution may impose significant risks on us and our shareholders and may cause the value of our shares, ADSs and equity-linked securities to significantly decrease, including the possibility of being reduced to zero. Since quite a few of our convertible holders possess power to convert their convertible securities and cause a change of control in our shareholding structure, whether due to its previous substantial position in our 2014 senior notes or in our LDK Silicon preferred shares, we are placed under a present, constant and significant threat that a change of control may occur as a result from time to time.

As we have disclosed in our various submissions of periodic reports on Form 6-K, you should understand that, depending on the volume-weighted average price, or VWAP, at any relevant time that our convertible holders will use for the conversion of their convertible securities, the dilutive effect due to an otherwise insignificant amount of conversions could be significant. In addition, although our convertible securities issued in our offshore restructuring contain some conversion volume restrictions on an annual and quarterly basis, such restrictions will end on March 31, 2016. The potential dilution on the equity interest of our shareholders may significantly increase at any time subsequent to March 31, 2016, and the trading prices of our shares, ADSs and equity-linked securities, including the convertible securities under our schemes of arrangement, will be subject to significant downward pressure.

We may not be able to pay any dividends on our shares and ADSs.

Under the Cayman Islands law, we may only pay dividends out of our profits or our share premium account subject to our ability to service our debts as they fall due in the ordinary course of our business. Our ability to pay dividends will therefore depend on our ability to generate sufficient profits. We cannot give any assurance that we will declare dividends of any amount, at any rate or at all. We have not paid any dividend in the past. Future dividends, if any, will be at the discretion of our board of directors and will depend upon our future operations and earnings, capital expenditure requirements, general financial condition, legal and contractual restrictions and other factors that our board of directors may deem relevant. Because LDK Solar is a holding company, it relies principally on dividends, if any, paid by our subsidiaries to fund its dividend payments, if any, to our shareholders, including you, and any limitation on the ability of our Chinese subsidiaries to pay dividends to LDK Solar could have a material adverse effect on its ability to pay dividends to you. You should refer to the

section entitled “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Dividend Distribution Policy” in this annual report for additional information regarding our current dividend policy.

Our future financings, through sales of our ADSs, shares or equity-linked securities in the public market, may cause a dilution in your shareholding, cause the price of our ADSs to decline, or place restrictions on our operations.

We may require additional funding to meet our working capital or capital expenditure requirements or in connection with our acquisitions, strategic collaborations or other transactions in the future. If we raise such funding through issuance of new equity or equity-linked securities, it may cause a dilution in the percentage ownership of our then existing shareholders. The offshore restructuring transactions have already required us to issue a significant amount of equity and convertible securities in exchange for the claims of our various creditors, as we have disclosed in the risk factor entitled “— The offshore restructuring transactions completed under our schemes of arrangement will cause significant dilution to the equity ownership of our shareholders, which may materially and adversely affect the market price of our ADSs and equity-linked securities” above. Sales of a substantial number of ADSs or other equity-linked securities in the public market could depress the market price of our ADSs, and impair our ability to raise capital through the sale of additional equity or equity-linked securities. We cannot predict the effect that future sales of our ADSs or other equity-linked securities would have on the market price of our ADSs.

Alternatively, if we decide to meet our funding requirements by way of additional debt financing, to the extent we could do so in compliance with the various covenants and other restrictions contained in our existing financing arrangements, we may cause additional restrictions placed on us through such debt financing arrangements, which may:

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limit our ability to pay dividends or require us to seek consents before we pay dividends;

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increase our vulnerability to general adverse economic and industry conditions;

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limit our ability to pursue our business strategies;

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require us to dedicate a substantial portion of our cash flow from operations to service our debt, thereby reducing the availability of our cash flow to fund capital expenditure, working capital requirements and other general corporate needs; and

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limit our flexibility in planning for, or reacting to, changes in our business and/or our industry.

Sales by our existing shareholders of our ADSs, shares or equity-linked securities in the public market, or the perception that these sales could occur, could cause the market price of our ADSs to decline. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any financial institutions, or the availability of these securities for future sale, will have on the market price of our ADSs. The price of our ADSs may decline as a result.

Holders of ADSs have fewer rights than shareholders and must act through the depositary to exercise those rights.

Holders of ADSs do not have the same rights as our shareholders and may only exercise the voting rights with respect to the underlying shares in accordance with the provisions of the deposit agreement. Upon receipt of voting instructions from ADS holders, the depositary will endeavor to vote the underlying shares in accordance with these instructions. Otherwise, ADS holders will not be able to exercise their right to vote unless they withdraw the shares underlying their ADSs and vote such shares directly. Under our currently effective articles of association, as amended and restated, the minimum notice period required to convene a general meeting is 10 clear days. When a general meeting is convened, ADS holders may not receive sufficient notice of a shareholders’ meeting to permit such holders to withdraw their shares to allow them to cast their vote with

respect to any specific matter. If requested in writing by us, the depositary will mail a notice of such a meeting to ADS holders. In addition, the depositary and its agents may not be able to send voting instructions to ADS holders or carry out ADS holders’ voting instructions in a timely manner. Furthermore, the depositary and its agents will not be responsible for any failure to carry out any instruction to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, you may not be able to exercise your right to vote and you may lack recourse if the ADSs are not voted as you have requested. In addition, in your capacity as an ADS holder, you will not be able to call a general meeting of our shareholders.

You may be subject to limitations on transfers of ADSs.

The ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deem it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement or our articles of association, or for any other reason.

You may not receive distributions on shares or any value for them if it is unlawful or impractical to make them available to you.

Subject to the terms and conditions of the deposit agreement, the depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the ADS custodian receives on shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holder of ADSs, in which case it may determine not to make such a distribution. Neither we nor the depositary has any obligation to register ADSs, shares, rights or other securities subject to such distribution under U.S. securities laws. Neither we nor the depositary has any obligation to take any other action to permit the distribution of ADSs, shares, rights or anything else to holders of ADSs. This means that you may not receive the distribution we make on our shares or any value for the distribution if it is unlawful or impractical for us to make it available to you. These restrictions may have a material adverse effect on the value of your ADSs.

You may not be able to participate in rights offerings or elect to receive stock dividends and may experience dilution of your holdings, and the sale, deposit, cancellation and transfer of our ADSs issued after exercise of rights may be restricted.

If we offer our shareholders any rights to subscribe for additional shares or any other rights, the depositary may make these rights available to you after consultation with us. We cannot make rights available to you in the United States unless we register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. In addition, under the deposit agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from registration under the Securities Act with respect to all holders of ADSs, or are registered by us under the provisions of the Securities Act. We can give no assurance that we will be able to establish an exemption from the registration requirements under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have any such registration statement declared effective. Accordingly, you may be unable to participate in our rights offerings and may experience dilution of your holdings as a result. The depositary may allow rights that are not distributed or sold to lapse. In that case, you will receive no value for them. In addition, U.S. securities laws may restrict the sale, deposit, cancellation and transfer of ADSs issued after exercise of rights.

Anti-takeover provisions of our articles of association could prevent a change in control even if such takeover is beneficial to our shareholders.

Our articles of association contain provisions that could delay, defer or prevent a change in control of our company that could be beneficial to our shareholders. These provisions could also discourage proxy contests and make it more difficult for you and other shareholders to elect directors and take other corporate actions. As a result, these provisions could limit the price that investors are willing to pay in the future for our ADSs. These provisions might also discourage a potential acquisition proposal or tender offer, even if the acquisition proposal or tender offer is at a price above the then current market price of our ADSs. These provisions provide that our board of directors has authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption (subject to approval of our shareholders if so required under our articles of association) and liquidation preferences, any or all of which may be greater than the rights associated with our shares, in the form of ADSs or otherwise. Our board of directors may decide to issue such preferred shares quickly with terms calculated to delay or prevent a change in control of our company or make the removal of our management more difficult. If our board of directors decides to issue such preferred shares, the price of our ADSs may fall and the voting and other rights of holders of our shares and ADSs may be materially and adversely affected.

We are a Cayman Islands company and, because judicial precedent regarding the rights of shareholders is more limited under the Cayman Islands law than that under the U.S. law, ADS holders may have less protection for their shareholder rights than such holders would under the U.S. law.

We are a Cayman Islands company and our corporate affairs are governed by our memorandum and articles of association, as amended, the Cayman Islands companies law and the common law of the Cayman Islands. The rights of our shareholders to take action against our directors, actions that may be taken by our minority shareholders and the fiduciary responsibilities of our directors to us under the Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedents in the Cayman Islands as well as those from the English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under the Cayman Islands law are not as clearly established as they are under statutes or judicial precedents in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. In addition, some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. Furthermore, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

In addition, most of our directors and officers are nationals and residents of countries other than the United States. Substantially all of our assets and a substantial portion of the assets of these persons are located outside the United States. The Cayman Islands courts are also unlikely:

•

to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and

•

to impose liabilities against us, in original actions brought in the Cayman Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.

There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will generally recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. As a result of all of these limitations, our shareholders and holders of ADSs may have more difficulty in protecting their interests in the face of actions taken by our management, board of directors or controlling shareholders than they would as shareholders of a public company incorporated and existing under the laws of a jurisdiction in the United States.

You may have difficulty enforcing judgments obtained against us.

As disclosed in this annual report, we are a Cayman Islands company and substantially all of our assets are located outside the United States. Most of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons are located outside the United States. In addition, substantially all of our current operations are conducted in China. As a result, it may be difficult for you to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors. It may also be difficult for you to effect service of process within the United States upon our directors or officers. Furthermore, there is uncertainty as to whether the courts of the Cayman Islands or China would recognize or enforce judgments of U.S. courts against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any of its states. It is also uncertain whether such Cayman Islands or Chinese courts would be competent to hear original actions brought in the Cayman Islands or China against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any of its states.

ITEM 4.

INFORMATION ON THE COMPANY

A.	HISTORY AND DEVELOPMENT

Our legal and commercial name is LDK Solar CO., Ltd. We were incorporated in the Cayman Islands on May 1, 2006 as a holding company and conduct our operations mainly through subsidiaries in China. In June 2007, we completed our SEC-registered initial public offering of our ADSs and listed our ADSs on the NYSE. On March 31, 2014, the staff of NYSE Regulation Inc. commenced proceedings to delist our ADSs from the NYSE. On September 22, 2014, NYSE Regulation, Inc. Board of Directors’ Committee for Review affirmed the delisting decision. Our ADSs have been quoted on the OTC Pink Limited Information initially under the symbol “LDKSY” since the suspension of trading of our ADSs on the NYSE on February 21, 2014 and under the symbol “LDKYQ” since October 30, 2014.

We established Jiangxi LDK Solar on July 5, 2005 to commence the construction of our solar wafer production facilities. LDK Solar was established to acquire Jiangxi LDK Solar prior to, and for the purpose of, our initial public offering.

We established two wholly owned Chinese subsidiaries, Jiangxi LDK Silicon and Jiangxi LDK Solar Polysilicon Co., Ltd., or Jiangxi LDK Polysilicon, in July and October 2007, respectively, both in Jiangxi Province, China, to engage in polysilicon manufacturing business. We subsequently reorganized our polysilicon business structure so that the two Chinese polysilicon manufacturers became wholly owned subsidiaries of LDK Silicon Hong Kong, which is wholly owned by LDK Silicon. On June 3, 2011, pursuant to a subscription agreement dated as of December 30, 2010, China Development Bank International Holdings Limited, or CDBI, as assignee of CDB Capital China Development Bank Capital Corporation Ltd., each a wholly owned subsidiary of China Development Bank Corporation, or CDB, and investment funds affiliated with China Construction Bank Corporation and Bank of China Limited subscribed for 240 million LDK Silicon preferred shares, which represented, on an as-if-converted basis, approximately 18.46% of the aggregate issued and outstanding share capital of LDK Silicon on a fully diluted basis as of the date of the investment. The claims under the LDK Silicon preferred shares were exchanged into our equity securities and convertible securities in the offshore restructuring.

In March 2011, we acquired a 71% interest in SPI, a California-based solar power EPC company. SPI’s shares are listed and traded on the OTCBB market. As of the date of this annual report, we hold approximately 23.5% of the equity interest in SPI due to dilution by additional equity interests issued by SPI since March 2011.

In April 2012, we acquired a 71% interest in Sunways AG, a German-based PV company with its shares listed on the Frankfurt Stock Exchange. Sunways filed for preliminary insolvency proceedings in Germany on

March 21, 2014 and entered into formal insolvency proceedings on April 28, 2014. We issued certain support letters to Sunways prior to its insolvency proceedings and claims of Sunways under such support letters were settled partially in cash and partially with our convertible securities in the offshore restructuring.

In February 2014, we filed with the Cayman court a winding-up petition on grounds of insolvency in anticipation of our inability to honor our payment obligations under the 2014 senior notes and our inability to honor the redemption rights of the holders of the LDK Silicon preferred shares. The Cayman court appointed Eleanor Fisher and Tammy Fu, each of Zolfo Cooper (Cayman) Limited, as joint provisional liquidators, or the JPLs, on February 27, 2014 and placed us into provisional liquidation under the laws of the Cayman Islands. In collaboration with the JPLs, we undertook a multi-jurisdictional restructuring exercise, which included:

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schemes of arrangement in the Cayman Islands relating to LDK Solar and LDK Silicon, eventually approved by their classes of scheme creditors and sanctioned by the Cayman court on November 7, 2014;

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schemes of arrangement in Hong Kong relating to LDK Solar, LDK Silicon and LDK Silicon Hong Kong, eventually approved by their classes of scheme creditors and sanctioned by the Hong Kong court on November 18, 2014;

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proceedings relating to a prepackaged plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code for three of our United States subsidiaries, LDK Solar USA, Inc., LDK Solar Tech USA, Inc. and LDK Solar Systems, Inc., eventually confirmed by the U.S. Bankruptcy Court on November 21, 2014; and

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a bankruptcy proceeding for LDK Solar under Chapter 15 of the U.S. Bankruptcy Code, with respect to which the U.S. Bankruptcy Court entered an order on November 21, 2014 to recognize and enforce our Cayman Islands scheme of arrangement relating to LDK Solar in the United States and the related Cayman court sanctioning order.

Our schemes of arrangement and the prepackaged plan of reorganization became effective on December 10, 2014. On February 18, 2015, the U.S. Bankruptcy Court entered final decrees to close our Chapter 11 cases and our Chapter 15 bankruptcy proceeding. On April 21, 2015, the Cayman court discharged the JPLs from their duties and dismissed the winding-up petition we filed on February 21, 2014 pursuant to a Cayman court order of April 7, 2015. You may find additional information under “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Provisional Liquidation” in this annual report.

In September 2014, our ADSs were delisted from the NYSE following a delisting decision and a subsequent hearing by the NYSE authorities. Our ADSs are currently quoted on the OTC Pink Limited Information initially under the symbol “LDKSY” since the suspension of trading of our ADSs on the NYSE on February 21, 2014 and under the symbol “LDKYQ” since October 30, 2014.

Mr. Peng, our founder and former chairman, currently beneficially owns, through LDK New Energy, 48,053,953 of our shares, representing approximately 18.4% of our outstanding share capital as of the date of this annual report. Mr. Cheng currently beneficially owns, through Fulai Investments, 42,000,000 of our shares, representing approximately 16.1% of our outstanding share capital as of the date of this annual report. HRX currently owns 25,307,497 of our shares, representing approximately 9.7% of our outstanding share capital as of the date of this annual report. HRX is entitled to exercise certain options for additional securities convertible into our shares as set forth in the various funding facilities HRX provided to us for our provisional liquidation and for our working capital needs. Significant holders of our convertible securities, whether due to their previous substantial positions in our 2014 senior notes or in our LDK Silicon preferred shares, may become our significant or controlling shareholders as a result of their conversions.

Under our memorandum of association, the purpose of our company is unrestricted. Our current registered office is at c/o Offshore Incorporations Limited, Floor 4, Willow House, Cricket Square, P.O. Box 2804, Grand

Cayman KY1-1112, Cayman Islands. Our principal executive offices are located at Hi-Tech Industrial Park, Xinyu City, Jiangxi Province 338032, People’s Republic of China, and our telephone number is (86 790) 686-0171. Our website is www.ldksolar.com. Information contained on our website is not a part of this annual report.

See “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Capital Expenditures” for information on our capital expenditures.

B.	BUSINESS OVERVIEW

Polysilicon. We commenced production and sale of polysilicon in the third quarter of 2009. As of December 31, 2014 and March 31, 2015, our two polysilicon plants, Mahong Plant and Xiacun Plant, located near our wafer production facilities, had an aggregate installed annualized polysilicon production capacity of approximately 19,200 MT. We use a modified Siemens process as the basis for our polysilicon production, employ advanced production facilities at our polysilicon plants, and are able to produce polysilicon that meets the premium quality requirements of international PV and electronics industries. While all of the polysilicon we currently produce is solar-grade, our Mahong Plant is capable of producing electronic-grade polysilicon in accordance with international industry standards and practice, representing approximately 90% of our aggregate polysilicon production capacity. With the onset of the deteriorating PV market conditions and overall global economic slowdown since 2008, we suspended our polysilicon production since the third quarter of 2012 until January 2014 when we reconvened our hydrochlorination installation process at the Mahong Plant. Between July and December 2014, we turned on the first production line at our Mahong Plant with the existing STC thermal converters in order to test-run our hydrochlorination facilities after their installation. Although hydrochlorination facilities have since December 2014 become the primary converter for STC into TCS, and our STC thermal converters are operating as a supplemental system to support the hydrochlorination conversion, we have yet to resume the production of the second and third lines at the Mahong Plant and we need additional financing to further refine and improve our polysilicon production at Mahong Plant with the hydrochlorination facilities attached. Due to the decrease in estimated future market price for solar-grade polysilicon, the operation of the Xiacun Plant remains suspended and the uncertainty about its future service potential has caused us to constructively abandon the Xiacun Plant. We consume a significant portion of our polysilicon output in our wafer production. For the year ended December 31, 2012, 2013 and 2014, we produced approximately 2,520 MT, nil and 479 MT of polysilicon, and consumed approximately 69.6%, nil and 99.5% of our total polysilicon production, with the rest sold to independent third-party customers.

Solar Wafers. We manufacture solar wafers in our wafer production facilities in Xinyu City Hi-Tech Industrial Park in Jiangxi Province, China. We produce multicrystalline and monocrystalline solar wafers and sell them globally to manufacturers of solar cells and solar modules. We used to also provide wafering services, producing wafers for customers who provide polysilicon materials to us. As of December 31, 2014 and March 31, 2015, we had an annualized solar wafer production capacity of approximately 4.8 GW. For the years ended December 31, 2012, 2013 and 2014, we produced approximately 1.0 GW, 1.4 GW and 1.8 GW of solar wafers, respectively, and consumed approximately 10.1%, 3.8% and 6.7%, respectively, of our total solar wafer production in our in-house production of solar cells, with the rest sold to independent third-party customers. For the three months ended March 31, 2015, we produced approximately 0.3GW of solar wafers, and consumed approximately 7.1% of our total solar wafer production in our in-house production of solar cells, with the rest sold to independent third-party customers. Although our solar wafer production has remained on-going, we substantially reduced our solar wafer production volume since the third quarter of 2012, primarily due to the decreased market demand and depressed market prices of PV products. We have gradually increased our wafer

production in 2013. However, the decrease in estimated future market price for wafers and over-capacity in certain of our production facilities have raised uncertainty about the future service potential and caused us to constructively abandon certain production machinery and equipment, facilities and uncompleted production plants related to our wafer business.

Solar Cells. We commenced solar cell production in the third quarter of 2010. We produce solar cells in our production facilities in Xinyu City Hi-Tech Industrial Park in Jiangxi Province, China. As of December 31, 2014 and March 31, 2015, we had an annualized solar cell production capacity of approximately 0.3 GW. For the years ended December 31, 2012, 2013 and 2014, we produced approximately 162.1 MW, 80.6 MW and 160.3 MW of solar cells, respectively, and consumed approximately 43.4%, 100.0% and 84.8%, respectively, of our total solar cell production in our in-house production of solar modules, with the rest sold to independent third-party customers. For the three months ended March 31, 2015, we produced approximately 36.4 MW of solar cells, and consumed approximately 59.2% of our total solar cell production in our in-house production of solar modules, with the rest sold to independent third-party customers. Our in-house made solar cells constituted approximately 71.2% of our production requirements in our in-house production of solar modules during the years ended December 31, 2012, 2013 and 2014, and we had to outsource the remainder requirements from third party suppliers. Although our solar cell production has remained on-going, we have substantially reduced our solar cell production volume since the third quarter of 2012 primarily due to decreased market demand and the depressed market prices of PV products. We also disposed in April 2013 of our solar cell facilities in Hefei City, Anhui Province.

Solar Modules. We commenced solar module production in 2010, and we also provide solar module processing services to customers. We produce solar modules in our production facilities in Nanchang City of Jiangxi Province, China. As of December 31, 2014 and March 31, 2015, we had an annualized solar module production capacity of approximately 1.1 GW. Our modules have been certified in various European countries and the U.S. For the years ended December 31, 2012, 2013 and 2014, we produced approximately 191.6 MW, 261.6 MW and 283.6 MW of solar modules, respectively, and consumed approximately 13.2%, 9.5% and 6.8%, respectively, of our total solar module production in our solar farm projects, with the rest sold to independent third-party customers. For the three months ended March 31, 2015, we produced approximately 36.3 MW of solar modules, and consumed approximately 4.6% of our total solar module production in our solar farm projects, with the rest sold to independent third-party customers. Although our solar module production has remained on-going, we substantially reduced our solar module production volume since the third quarter of 2012 primarily due to decreased market demand and the depressed market prices of PV products. We disposed of our solar module facilities in Hefei City, Anhui Province in 2013 and our solar module facilities in Suzhou City, Jiangsu Province in 2014.

Solar Farm Projects. We design and develop solar farm projects in China, Europe and the U.S. We develop these projects with the intent to sell them to third parties upon completion of their development. We also provide EPC services for solar farm projects. We typically sell our solar farm projects prior to, and contingent upon, the completion of such projects. We have financed our solar farm projects with bank financings.

Our production facilities are primarily located in Xinyu City, Jiangxi Province, with our cell and module production facilities in Nanchang City, Jiangxi Province, China.

Our principal PV product customers, in terms of net sales for the year ended December 31, 2014, include Solartech, Itarion, Oriental Sunrise, Hyundai and Brics Solar.

Competitive Strengths

We believe that we have the following principal competitive strengths:

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Large-scale production. We are one of the largest manufacturers of PV products in terms of capacity and production. Leveraging our scale and market position, we have been able to improve our cost

structure by procuring raw materials and advanced production equipment on favorable terms. Our cost structure has also been enhanced by our vertically integrated business model, China-based manufacturing facilities and R&D, and the economies of scale of our operations. By producing all of our products in China, we have been able to benefit from low-cost labor, land, ancillary equipment and facilities, consumables and utilities.

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Vertical integration. We are a vertically integrated PV product manufacturer with production capabilities at each step of the supply chain from polysilicon to solar farm projects. While historically our strength was in the solar wafer business, we have expanded our business to meet the PV industry’s requirements for solar materials, polysilicon, wafers, modules, systems, projects and solutions. Depending on market conditions, we have the flexibility to buy and sell PV products along the value chain to maximize our revenue and profit. Our expanded capability to address different market requirements as a result of our vertical integration also contributes to the diversification of our customer base.

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Leading PV product manufacturer. We are a leading producer of PV products globally in terms of capacity and production. Our leading manufacturing scale and product quality have enabled us to establish a strong brand name in our industry, to expand our global footprint quickly and to cross-sell our products as we optimize our vertical integration strategies.

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Operational excellence with technological innovation. We have made significant investment in R&D and as a result significantly improved the efficiency of our overall operations. We have developed technologies to reduce our production costs at each step of the production process, which include recycling more polysilicon, producing larger ingots, recovering more slurry, increasing production yield and more efficient usage of utilities and consumables. We have also invested significant resources in developing newer wafer products that may lead to higher cell conversion efficiency and in designing more efficient solar modules.

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Diversified customer base. We have established long-term relationships with key players in the PV industry. Our current customer base consists of some of the major international players in the PV sector. Our revenues are also diversified geographically around the world. During the year ended December 31, 2014, we sold our PV products to over 300 customers in over 30 countries or regions.

Our Strategy

We intend to pursue the following strategies:

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Reorganize our capital structure. In addition to the offshore restructuring we implemented in 2014, we are also investigating the possibility of engaging our creditors onshore China with a view to restructuring our overall indebtedness in China for our future growth. A significant amount of our indebtedness onshore China has been subject to a standstill and forbearance arrangement with our onshore creditors. Although we have not been servicing such forborne indebtedness onshore China, it has been existing as well as accruing interests on our books. We have conducted a few initial discussions with our Chinese banks, lenders and other creditors although it remains difficult to find a mutually agreeable and viable restructuring solution. Despite the uncertainty and difficulty, we will continue our endeavor in an effort to realign our capital structure to better fit our current financial condition and prospects and to improve our liquidity position and increase our cash flow.

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Implement our liquidity plan. With a less-than-optimal PV market and significant uncertainties regarding the sustainability of the PV market, our results of operations have been adversely affected in recent years by, among other things, (i) continued decline in the average selling price across the chain of PV products, (ii) global PV manufacturing capacity exceeding global demand, and (iii) international trade-related investigations and proceedings initiated in certain European jurisdictions and anti-dumping and/or countervailing tariffs imposed by the U.S. government. In order to improve our viability under such circumstances, in addition to some of the significant measures we have taken, we

have been further evaluating our financial condition and results of operations, as well as considering available options, especially our liquidity plan as disclosed in “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Working Capital Deficit” in this annual report. We believe that, by effectively implementing our liquidity plan, coupled with our offshore restructuring, we should be able to more effectively deal with our current financial condition and prospects and to improve our liquidity position and increase our cash flow.

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Continue to reduce our production costs. We have developed proprietary manufacturing processes to reduce our costs and increase our operational efficiency in our overall production processes. We plan to continue to devote reasonable R&D resources to enhance our technological capabilities in order to reduce manufacturing costs, improve production yield and pursue technological innovation. We are currently undertaking debottlenecking initiatives to convert more STC into TCS through hydrochlorination in an effort to lower our polysilicon production cost and boost our polysilicon production capacity. Other cost-saving measures we are implementing include acquiring high-pressure steam from a co-located steam generation plant under construction and applying an advanced coating technology to lower the electricity consumption of our CVD reactors. We are committed to further reducing our per-unit cost by further optimizing our vertical integration and each of its value chains. In addition, we will strive to enhance our operational excellence, localize feedstock and consumable sources, and reduce energy consumption in order to become more cost competitive.

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Develop and commercialize innovative technologies. We plan to continue to develop and commercialize innovative technologies. We currently have a number of on-going R&D programs with a view to developing techniques and processes that will improve our conversion efficiency and product quality or lower production cost. We have 121 issued patents, and 104 patent applications pending globally. We have implemented and intend to continue to implement these and other patents and patent applications to further improve our polysilicon production, silicon recycling, wafer production processes, solar cell structures, module designs, and efficiency of our production equipment. We expect to continue to develop, procure and commercialize technologies that have significant potential applications and may provide significant competitive advantages to us.

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Continue to enhance our vertical integration. We will continue to streamline our vertical integration to strengthen our competitive position. We currently produce polysilicon, solar wafers, cells and modules in-house, and also develop solar farm projects and provide related EPC services. In addition to building up weaker links in our solar value chain in line with the PV market development and prospects, we will continue to strengthen more profitable links in the value chain to capture such opportunities in the market. As a vertically integrated PV company, we will be able to provide our customers with a range of services and products while at the same time giving us better control of the time to market, costs, supply and quality of the products we manufacture.

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Further expand our customer base and increase our brand recognition. We plan to further expand our customer base and increase our brand recognition by increasing our sales and marketing efforts in countries such as the U.S., China, Europe and other countries and regions. We will continue to increase our brand recognition by delivering quality PV products and services. We intend to continue to analyze the opportunities in China, Europe, and the United States to build out our PV teams and to enable us to promote our branded PV products.

Our Products and Services

We are a leading vertically integrated manufacturer of PV products. While our historical strength was in the solar wafer business, we have expanded our business to meet the PV industry’s requirements for polysilicon, wafers, cells, modules, systems, power projects and solutions. While we continue our vertical integration at each step of our PV product value chain to the extent feasible, our revenue also includes significant portions of sales of our solar wafers and modules. We also sell a number of ancillary products, including liquid chlorine and caustic soda.

The following table sets forth our installed annual production capacity as of December 31, 2014 and March 31, 2015.


		Installed Annual Capacity
Product	Location	December 31, 2014		March 31, 2015
Polysilicon	Mahong Plant, Xinyu City; Jiangxi Province		18,000 MT		18,000 MT
	Xiacun Plant, Xinyu City; Jiangxi Province		1,200 MT		1,200 MT
Wafer	Xinyu City, Jiangxi Province		4.8 GW		4.8 GW
Cell	Xinyu City, Jiangxi Province		0.3 GW		0.3 GW
Module	Nanchang City, Jiangxi Province		1.1 GW		1.1 GW

In April 2013, we sold all our equity interest in LDK Hefei to an affiliate of the local Hefei City government, which reduced our annualized solar cell and module production capacities to approximately 0.3 GW and 1.1 GW, respectively. We also disposed of our solar module facilities in Suzhou City, Jiangsu Province in 2014.

Polysilicon production

We commenced the construction of our polysilicon production facility in Xinyu City, Jiangxi Province, China in August 2007, and commenced production in the third quarter of 2009 initially at our Xiacun Plant and subsequently at our Mahong Plant. Polysilicon is a raw material used to manufacture solar wafers. We currently produce polysilicon for the PV industry that meets the needs of both monocrystalline and multicrystalline silicon-based PV applications. We produce polysilicon in rods, broken into chunks, which we use as feedstock in our solar wafer manufacturing or sell to other PV product manufacturers, who further process it into ingots, wafers, cells, and modules for PV applications. Our polysilicon is ready for use and requires no further finishing at our customers’ sites. In terms of purity, our polysilicon has, on average, nine N’s, meaning containing a silicon content of at least 99.9999999%.

We leverage a modified Siemens process as the basis for our polysilicon production, employ advanced production facilities at our polysilicon plants, and are able to produce polysilicon that meets the premium quality requirements of international PV and electronics industries. All of the polysilicon we currently produce is solar-grade. Based on tests we have conducted, our Mahong Plant is capable of producing electronic-grade polysilicon in accordance with international industry standards and practice, representing approximately 90% of our polysilicon production capacity as of December 31, 2014. The international industry standards and practice with regard to “electronic-grade” polysilicon focus on impurities levels and their composition as well as physical properties, rather than silicon purity alone. Our Mahong Plant is designed and equipped with advanced production facilities capable of producing electronic-grade polysilicon in terms of purity, but as our current focus is on solar-use polysilicon production, we have yet to create the requisite clean handling environment that would enable us to supply electronic-grade polysilicon to the electronics industry. We do not have any current plan to produce and supply electronic-grade polysilicon to the electronics industry unless we have a strong business case with favorable market conditions.

We commenced polysilicon production at our Xiacun Plant and made our first shipment of polysilicon in the third quarter of 2009. In January 2010, our Mahong Plant entered into production with its first production train. As of December 31, 2014 and March 31, 2015, we had a total annualized installed polysilicon production capacity of approximately 19,200 MT. Due to the decreased market demand and depressed market prices of PV products, we suspended our polysilicon production since the third quarter of 2012 until January 2014 when we reconvened our hydrochlorination installation process at the Mahong Plant. We went through a major debottlenecking process at both Mahong Plant and Xiacun Plant as we disclosed in “— Debottlenecking” below. We have engaged Fluor Corporation and its affiliates to provide general engineering, procurement, construction and management services for our Mahong Plant. Between July and December 2014, we turned on the first

production line at our Mahong Plant with the existing STC thermal converters in order to test-run our hydrochlorination facilities after their installation. Although hydrochlorination facilities have since December 2014 become the primary converter for STC into TCS, and our STC thermal converters are operating as a supplemental system to support the hydrochlorination conversion, we have yet to resume the production of the second and third lines at the Mahong Plant and we need additional financing to further refine and improve our polysilicon production at Mahong Plant with the hydrochlorination facilities attached. We consume a significant portion of our polysilicon output in our wafer production. For the year ended December 31, 2012, 2013 and 2014, we produced approximately 2,520 MT, nil and 479 MT of polysilicon, and consumed approximately 69.6%, nil and 99.5% of our total polysilicon production for our down-stream wafer production, with the rest sold to independent third-party customers.

Due to the decrease in estimated future market price for solar-grade polysilicon, the operation of the Xiacun Plant remains suspended and the uncertainty about its future service potential has caused us to constructively abandon the Xiacun Plant.

Debottlenecking. When a constraint in one procedure of our large polysilicon production facility restricts or limits the overall production flow, a “bottleneck” develops that lowers the capacity, or otherwise limits the functionality, of some other procedures or the entire manufacturing system. The removal of such constraints, or “debottlenecking,” becomes necessary to enhance the production capacity of the entire system. The main bottleneck in our polysilicon production was STC-TCS conversion. Because our STC thermal converters were insufficient to recycle all of our STC into TCS largely due to their failure to perform up to their design capabilities and, therefore, we had to rely on external parties to off-take some excess STC and purchase additional TCS from external suppliers to support our production. Before we could complete this debottlenecking to increase the STC-TCS conversion and reduce our costs in our polysilicon production, we had to suspend our polysilicon production since the third quarter of 2012 largely due to the decreased market demand and depressed market prices of PV products. Financial difficulties that arose in 2012 and exacerbated through 2013 prevented us from carrying out these debottlenecking initiatives until January 2014 when we reconvened our hydrochlorination installation process at our Mahong Plant. Between July and December 2014, we turned on one of the three production lines at our Mahong Plant with the existing STC thermal conversion system, and started to test-run our initial hydrochlorination facilities installed on the production line. In December 2014, we completed the installation of hydrochlorination facilities at our Mahong Plant and they have now become the primary conversion system for STC into TCS, and our STC thermal converters operate now as a supplemental system to support the hydrochlorination conversion. We have yet to resume the production of the second and third lines at the Mahong Plant, and due to the decrease in estimated future market price for solar-grade polysilicon, the operation of the Xiacun Plant remains suspended.

In addition, we also endeavor to streamline secondary bottlenecks in our polysilicon production process from time to time upon our discovery, which include our tank storage, nitrogen, hydrogen, demineralized water, cooling water, waste water treatment and process venting/scrubbing systems, that complement our polysilicon production. These secondary debottlenecking initiatives are an on-going process and remain an integral part of our polysilicon production.

We leverage a modified Siemens process, a non-proprietary technology generally used in the polysilicon industry, as the basis for our polysilicon production process, which centers on closed-loop gas recycle and recovery systems. The following chart illustrates our closed-loop polysilicon production process:

LOGO

Our polysilicon production process starts with mixing hydrogen chloride, a common acid, or HCl, with a bed of metallurgical-grade silicon powder in a CVD reactor, which produces TCS. TCS is then purified through distillation to remove the main byproduct, STC, and other byproducts and impurities. Next, the purified TCS gas is fed into CVD reactors, or “Siemens reactors” as generally referred to in the industry, containing seed polysilicon rods, which are thin filaments made of high-purity silicon. In a hydrogen environment at high temperatures, TCS decomposes or disintegrates, and deposits or attaches additional silicon onto the seed polysilicon rods, therefore “growing” the rods. When the rods eventually grow to desired diameters, they are harvested from the CVD reactors and moved to a clean area for further processing. The grown-up rods are broken into chunks and sorted, packaged, and shipped to our wafer section or to our polysilicon customers.

Both the metallurgical-grade silicon chlorination and TCS decomposition reactions generate STC as a byproduct, which is fed back into the TCS production process for re-use as a production input, and hence recycled in what is known as a closed-loop process. The STC generated from both the metallurgical-grade silicon chlorination and the TCS decomposition is fed through STC thermal converters, where it undergoes a hydrogenation reaction with hydrogen, resulting in TCS and HCl. This TCS, mixed with unreacted STC, is further redirected back to the TCS distillation procedure as preparation for TCS decomposition through the closed loop. Over the years, in order for us to maintain production levels at or near our desired capacity, our thermal hydrogenation procedure is insufficient to convert more STC into TCS and, therefore, we have to rely on third parties to offtake some excess STC and purchase some additional TCS from external suppliers. As a part of our efforts to convert more STC into TCS, we have constructed hydrochlorination facilities in our debottlenecking initiatives, initially to run in parallel with our existing STC thermal converters and eventually to become the primary conversion system, with the STC thermal converters as a supplemental system to support the hydrochlorination conversion. Hydrochlorination is an efficient STC-TCS conversion process, during which STC

reacts with silicon and hydrogen, also resulting in TCS and HCl. The HCl created in the CVD reactors, the STC thermal converters, and the hydrochlorination procedure is also recycled and re-used in the metallurgical-grade silicon chlorination reaction. The closed-loop system enables a high degree of TCS, STC, HCl, and hydrogen utilization throughout the production process, thereby enhancing raw material conversion efficiency, reducing waste output, and lessening environmental impact.

System Control. Our entire polysilicon production process is controlled by an advanced computerized control system. All the pipes, valves, CVD reactors, STC thermal convertors, hydrochlorination systems, and other critical components are monitored by electronic sensors. Data from these sensors are transmitted to our polysilicon central control room in real time, rigorously monitored, analyzed, and acted upon by rotating shifts of our engineers 24 hours a day, seven days a week. As part of our standard procedure, our engineers adjust the level of production activities remotely. In the event a security incident arises, our engineers are able to shut down the various systems in the polysilicon production or discrete parts of the various systems remotely. Our advanced control system improves our polysilicon production capacity and safety while reducing staff-related operating expenses. Our polysilicon production process, including production, cleaning, packaging, and transportation, conforms to applicable international standards for solar-use PV products, and our comprehensive waste management system is compliant with environmental protection standards of China.

Our Xiacun Plant occupies approximately 0.6 million square meters and is located in Yushui Xiacun Industrial Park in Xinyu City, approximately 15 kilometers away from our facilities at Xinyu Hi-Tech Industrial Park. Our Mahong Plant occupies a site area of approximately 2.5 million square meters and is located next to our primary facilities in the Xinyu Hi-Tech Industrial Park.

As of December 31, 2014, we had installed the following equipment in our polysilicon production plants:

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67 CVD reactors;

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32 STC thermal converters;

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two hydrochlorination systems; and

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other ancillary polysilicon production equipment.

Wafer production

We manufacture solar wafers in our wafer production facilities in Xinyu City Hi-Tech Industrial Park in Jiangxi Province, China. Wafer production constituted our original core competence since our inception in 2006. We currently produce and sell solar wafers in the size of 156 by 156 mm, and with thicknesses of 180 or 190 microns. In addition to our multicrystalline wafer products, we also manufacture monocrystalline wafers. As of December 31, 2014 and March 31, 2015, we had an annualized wafer production capacity of approximately 4.8 GW.

We used to also provide wafering services to both monocrystalline and multicrystalline solar cell and module manufacturers, who provide us with their own silicon materials, such as polysilicon feedstock and ingots. We process this feedstock to produce ingots. We then slice these ingots and the ingots provided by our customers into wafers to be delivered back to our customers. We charge a fee based on the number of wafers processed and the type of materials we receive. In addition, we also sell silicon materials, which include ingots and polysilicon scraps. We did not provide any wafering service during 2012 and 2014.

For the years ended December 31, 2012, 2013 and 2014, we produced approximately 1.0 GW, 1.4 GW and 1.8 GW of solar wafers, respectively, and consumed approximately 10.1%, 3.8% and 6.7%, respectively, of our total solar wafer production in our in-house production of solar cells, with the rest sold to independent third-party customers. For the three months ended March 31, 2015, we produced approximately 0.3 GW of solar wafers, and consumed approximately 7.1% of our total solar wafer production in our in-house production of solar cells, with the rest sold to independent third-party customers.

Production of wafers can be divided into two main steps:

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Production of Polysilicon Ingot. We prepare our polysilicon feedstock with de-ionized water in etching stations. The prepared polysilicon feedstock is then placed in crucibles and each crucible is loaded into our DSS furnaces for melting and crystallization. Polysilicon ingots formed during the crystallization process are then cut into smaller blocks with a squarer, in a process known as squaring. Our polysilicon ingots are currently approximately 525 kilograms and 750 kilograms in weight and 840 by 840 mm or 1,000 by 1,000 mm in width and 320 mm in height. We have been engaged in R&D efforts in collaboration with DSS furnace manufacturers to increase the number of wafers that can be produced per standard ingot. The casting process for monocrystalline wafers is generally more expensive than that for multicrystalline wafers with similar dimensions. However, monocrystalline wafers are generally more efficient than multicrystalline wafers because the increased conductivity of electrons in monocrystalline silicon yields higher energy conversion rates than multicrystalline silicon.

•

Wafering. After inspection, the polysilicon blocks are cropped and prepared for slicing. Then the polysilicon blocks are sliced into wafers by wire saws. We then wash and dry the wafers at our wafer cleaning stations for final inspection, packaging and delivery.

Illustrated below is a diagram of our multicrystalline and monocrystalline ingot production and wafering process:

LOGO

Our wafer manufacturing facilities occupy a site area of approximately 3.4 million square meters in Xinyu Hi-Tech Industrial Park of the high-tech development zone of Xinyu City. Our multicrystalline and monocrystalline wafer manufacturing operations are housed in four plants in the Xinyu Hi-Tech Industrial Park.

As of December 31, 2014, we had the following multicrystalline and monocrystalline wafer manufacturing equipment in operation:

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538 DSS furnaces used for multicrystalline ingot production;

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329 sets of pullers used for monocrystalline ingot production;

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87 squarers used to cut ingots into blocks;

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384 wire saws used to slice blocks into wafers;

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three slurry recovery systems; and

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other supplemental or ancillary facilities.

We have been improving our technologies and expertise to optimize the mix of polysilicon feedstock of different grades and to ensure and improve our wafer yields. We use wire saws rather than band saws in our squaring. This enables us to reduce silicon material loss in the squaring processes, or kerf loss. We use automatic wafer cleaning and sorting equipment to improve sorting efficiency and reduce breakage.

We recover some of the polysilicon slurry generated in the wafering, wafer cleaning and sorting process. Through additional R&D, we endeavor to recycle and re-use as many of our production consumables as possible. This is not only a cost reduction measure, but also an important part of our program of conducting environmentally friendly operations.

Cell production

We commenced our solar cell production in the third quarter of 2010. We produce solar cells in our production facilities in Xinyu City Hi-Tech Industrial Park in Jiangxi Province, China. As of December 31, 2014 and March 31, 2015, we had an annualized solar cell production capacity of approximately 0.3 GW, subsequent to our disposition in April 2013 of our solar cell production facilities in Hefei City of Anhui Province with an aggregate annualized solar cell production capacity of approximately 1.4 GW.

For the years ended December 31, 2012, 2013 and 2014, we produced approximately 162.1 MW, 80.6 MW and 160.3 MW of solar cells, respectively, and consumed approximately 43.4%, 100.0% and 84.8%, respectively, of our total solar cell production in our in-house production of solar modules, with the rest sold to independent third-party customers. We also outsource a significant amount of our cell requirements from third party suppliers. For the three months ended March 31, 2015, we produced approximately 36.4 MW of solar cells, and consumed approximately 59.2% of our total solar cell production in our in-house production of solar modules, with the rest sold to independent third-party customers.

Our solar cell manufacturing facilities occupy a site area of approximately 0.8 million square meters in Xinyu Hi-Tech Industrial Park in Xinyu City.

Module production

We commenced solar module production in 2010. We produce solar modules in our production facilities in Nanchang City of Jiangxi Province, China. We also provide solar module processing services to customers. As of December 31, 2014 and March 31, 2015, we had an annualized solar module production capacity of approximately 1.1 GW, subsequent to our disposition in April 2013 of our solar module production facilities in Hefei City of Anhui Province with an aggregate annualized solar module production capacity of approximately 0.3 GW.

For the years ended December 31, 2012, 2013 and 2014, we produced approximately 191.6 MW, 261.6 MW and 283.6 MW of solar modules, respectively, and consumed approximately 13.2%, 9.5% and 6.8%, respectively, of our total solar module production in our solar farm projects, with the rest sold to independent third-party customers. For the three months ended March 31, 2015, we produced approximately 36.3 MW of solar modules, and consumed approximately 4.6% of our total solar module production in our solar farm projects, with the rest sold to independent third-party customers.

Our modules have been certified in various European countries and the U.S. We sell our modules under our own brand name and also on an OEM basis for our customers. Our solar module warranty period lasts for 20 to 25 years. As a result, we bear the risk of warranty claims long after we have sold our products and recognized revenues.

Our solar module manufacturing facilities occupy a site area of approximately 0.5 million square meters in Nanchang Hi-Tech Industrial Development Zone of Nanchang City, Jiangxi Province, China.

Solar farm project development and related EPC

We design and develop solar farm projects in China, Europe and the U.S. and may enter additional markets. We also provide EPC services for solar farm projects. We develop solar farm projects and provide related EPC services in the U.S. and Europe through our affiliate, SPI, a California-based solar power EPC company, of which we currently own approximately 23.5% in equity interest. We develop solar farm projects with the intent to sell them to third parties upon completion of their construction. We have financed our solar farm projects with bank financings. For example, in 2014, we sold Taojiang LDK, a solar farm project.

We expect our solar farm projects to be sold after their completion. We may establish additional similar project companies from time to time in these and other jurisdictions.

Quality Control

We adhere to a strict system of quality control over our operations, from the sourcing of raw materials to production and delivery. We have quality-control measures in place at each stage of our production process to closely monitor the quality of our production and to ensure that our products meet all our internal benchmarks and customers’ specifications. In addition, we have established a quality documentation system for all purchasing, production and sales units and implemented procedures for constant improvement and flaw prevention.

Our senior management team is actively involved in setting quality control policies and monitoring our quality control performance. However, it is impossible to avoid product defects. As we have disclosed in “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Company and Our Industry — Product defects could result in increased costs, damage to our reputation, loss of revenues and market share” in this annual report, we encounter periodic sales returns, claims and legal actions in our ordinary course of business due to improper cleaning, non-conformity with customers’ specifications or product defects.

As of December 31, 2014, we had a core quality management unit consisting of 793 persons overseeing our quality control processes, audits and engineering. In addition, this unit runs the testing procedures at the quality-control checkpoints during the production process of polysilicon, ingots, wafers, cells and modules.

We purchase raw materials from trusted suppliers on our approved vendor list whenever possible and only those suppliers that pass our assessment are admitted to our approved vendor list. Raw materials are inspected by our quality management unit. Raw materials which fail to pass our incoming inspection are returned to the suppliers. At each stage of the production process, we conduct tests to ensure quality and compliance with all our internal production benchmarks. Following completion of the production process, our products are inspected and tested thoroughly in the form of an output quality check to ensure that all customers’ specifications are met before our products are delivered to customers.

We have implemented an ISO9001 Quality Assurance system at our production facilities. Our quality assurance and quality control procedures, together with our corporate standards established for the quality checks exercised by our quality management unit, are compliant with ISO9001 requirements as well as our own internal quality guidelines. We initially obtained the ISO9001 Quality Assurance Certification in March 2010, and received an extension in January 2013, which is effective through January 2016.

Customers, Sales and Marketing

Our principal customers include Solartech, Itarion, Oriental Sunrise, Hyundai and Brics Solar in terms of net sales for the year ended December 31, 2014. For the years ended December 31, 2012, 2013 and 2014, we derived approximately 31.9%, 48.9% and 51.8%, respectively, of our net sales from sales to PV customers in China and approximately 68.1%, 51.1% and 48.2%, respectively, from exports. During the years ended December 31, 2012, 2013 and 2014, our top five customers collectively accounted for approximately 22.8%, 21.8% and 30.9%, respectively, of our net sales. For the year ended December 31, 2012, Sumitomo and Photovoltech contributed 7.5% and 5.9%, respectively, of our net sales. For the year ended December 31, 2013, Brics Solar and Gintech contributed 5.9% and 4.6%, respectively, of our net sales. For the year ended December 31, 2014, Solartech and Itarion contributed 7.3% and 6.1%, respectively, of our net sales. No single customer contributed more than 10% of our net sales in 2012, 2013 or 2014. We intend to continue to enhance and broaden our revenue and customer base to target other leading global PV manufacturers and customers.

We have written agreements with some of our customers, with our sales to such customers subject to periodic purchase orders. Our customers typically make an advance payment representing a portion of the contract value to us. The global financial crisis in 2008 and the overall global economic slowdown have caused a number of our customers to request us to delay our shipments of PV products or to re-negotiate the contract price. As a result, over the years, we have amended and/or supplemented many of our long-term supply contracts

entered into with our customers in prior years. These amendments and supplements generally provide for postponement of deliveries, adjustment to pricing on a prospective basis by reference to the current market, adjustment to the ratio between supply of polysilicon feedstock and delivery of solar wafers or other PV products, and changes from one PV product to another. Any significant deviation from the contract terms on our customers’ part or our inability to negotiate or renegotiate acceptable quantities, prices and delivery terms from time to time with our customers may disrupt our operations and materially and adversely affect our financial condition and results of operations. In recent years, we have entered into contracts to cancel certain long-term supply contracts with our customers. We recognized contract cancellation revenue from these contracts to the extent any payment has been received or is reasonably assured. For the years ended December 31, 2012, 2013 and 2014, contract cancellation revenue recognized was $92.2 million, $11.2 million and $58.7 million, respectively.

Our net sales generated from the various geographic regions during the years ended December 31, 2012, 2013 and 2014 as a percentage of our net sales has experienced some significant changes. Based on the immediate destination of our goods shipped, our sales in mainland China as a percentage of our total sales increased from 31.9% in the year ended December 31, 2012 to 48.9% in the year ended December 31, 2013, and further increased to 51.8% in the year ended December 31, 2014. Our net sales to Asia Pacific excluding mainland China increased from 25.7% in the year ended December 31, 2012 to 27.0% in the year ended December 31, 2013, and further increased to 24.2% in the year ended December 31, 2014. Our net sales to Europe decreased from 33.7% in the year ended December 31, 2012 to 16.6% in the year ended December 31, 2013, and further decreased to 14.2% in the year ended December 31, 2014. Our net sales to North America decreased from 8.7% in the year ended December 31, 2012 to 7.6% in the year ended December 31, 2013, and further decreased to 9.8% in the year ended December 31, 2014.

Suppliers

Production inputs

We use raw materials and consumables including metallurgical-grade silicon feedstock, TCS, virgin polysilicon, recyclable polysilicon, cells, consumables and other materials to produce our PV products, including polysilicon, wafers, cells and modules. Production inputs also include ancillary materials, fuel, electricity and other utilities.

Since 2009 when we started to produce polysilicon, we have sourced some of our virgin polysilicon feedstock from our in-house production. As we suspended our polysilicon production since the third quarter of 2012 due to the decreased market demand and depressed market prices of PV products, we have sourced our polysilicon feedstock from outside sources. As we gradually resume our polysilicon production in line with market conditions, we expect again to rely increasingly on our in-house supply of polysilicon feedstock to meet our solar-grade silicon needs. But we will continue to source polysilicon feedstock from the spot market or other sources from time to time depending on the price and our requirements. We have written agreements with some of our polysilicon feedstock suppliers. In addition, we have sourced significant amounts of polysilicon feedstock from suppliers in the spot markets without any prior written agreements. For the years ended December 31, 2012, 2013 and 2014, polysilicon feedstock comprised approximately 37.1%, 39.4% and 42.9% of our wafer costs of goods sold (excluding inventory write-downs and loss on firm purchase commitments), respectively.

From time to time, we may have to make prepayments to our virgin polysilicon and other production input suppliers in order to secure a stable supply of our virgin polysilicon feedstock and other materials. We make these prepayments without receiving any collateral. As of December 31, 2012, 2013 and 2014, our prepayments to such production input suppliers amounted to $26.4 million, $30.7 million and $6.2 million, respectively.

To the extent our in-house cell production cannot meet the demand of our module production, we purchase the short-fall from third parties for use in our module production. For the years ended December 31, 2012, 2013

and 2014, cells purchased from third parties comprised approximately 11.5%, 34.1% and 26.7% of our module cost of goods sold, respectively, and 3.3%, 7.8% and 6.6% of our total cost of goods sold. We purchase cells from cell manufacturers including Guangdong Aiko Solar Energy Technology Co., Ltd., Jiansu Shunfeng Photovoltaic Technology Co., Ltd. and Jilin Qingda New Energy Power Co., Ltd. Jiangsu Shunfeng Photovoltaic Technology Co., Ltd. is an affiliate of Shunfeng Photovoltaic International Limited, or Shunfeng, an affiliate of Fulai Investments, our shareholder controlled by Mr. Cheng. Depending on our in-house cell production capacity and our in-house module capacity and requirements from time to time, we may continue to source cell supplies from third parties.

We use consumables in our production including slurry, sawing wires, crucibles and other materials. We source most of our consumables from suppliers in China, including Jiangxi Sinoma New Materials Co., Ltd., or Jiangxi Sinoma, a Xinyu-based crucibles manufacturer, in which we own 33.5% of equity interest as of the date of this annual report. In the year ended December 31, 2012, we transferred 100% equity interest in GE ER MU LDK Solar Power Co., Ltd., or LDK GRM, to Jiangxi Sinoma for a consideration of approximately $25.5 million.

Equipment

We source our key manufacturing equipment mostly from leading international and domestic manufacturers. GT Advanced Technologies Incorporated, formerly know as GT Solar, or GT Advanced Technologies, has provided most of our DSS furnaces, CVD reactors and STC thermal converters. JYT Technology has also provided some of our DSS furnaces. All of our DSS furnaces are equipped with safety kits that limit potential damage in the event of an accident. M.S.A. Apparatus Construction for Chemical Equipment Ltd. is a supplier of some of our CVD reactors and STC thermal converters. JYT Technology has provided all of our current monocrystalline pullers. Meyer Burger and Applied Materials have provided all of our squarers and wire saws. We have purchased our cell manufacturing equipment from Applied Materials and others. We have procured our principal hydrochlorination equipment from such manufacturers as Jiangsu Sunpower Technology Co., Ltd., Zhangjiagang Furui Special Equipment Co., Ltd. and others. We also purchase ancillary equipment from these and other manufacturers.

In an effort to reduce our overall costs, we closely monitor the development of the PV equipment manufacturing industry in China. To the extent such locally made equipment meets our quality requirements and also presents a significant pricing advantage to us, we will also selectively source our equipment locally.

Competition

The PV market is highly competitive and rapidly evolving. Over the years, the number of new entrants in the PV market has rapidly increased due to the growth of actual and forecasted demand for PV products, and existing PV companies have also engaged in aggressive expansion programs. The global financial crisis in 2008 and the overall global economic slowdown have, however, frustrated many such initiatives. Desperate for survival under such circumstances, PV companies have significantly increased their competitive pricing pressure for PV products, and caused a significant overall reduction of profit margin, with many players losing market share and/or their sustainability. We have also suffered tremendously during this difficult time, which resulted in our provisional liquidation.

As a vertically integrated manufacturer of PV products, we compete with other integrated PV companies as well as with specialized manufacturers of polysilicon, solar wafers and modules, and developers of PV projects. In recent years, many technology companies, which have historically not manufactured PV products, have also been developing PV capabilities in-house. Some of our current and potential competitors may have a longer operating history, wider name recognition, greater resources, larger customer base, better access to low-cost raw materials and greater economies of scale than us.

We believe that the key competitive factors in the PV market include:

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cost competitiveness and price;

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product quality;

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economies of scale;

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advanced technology and manufacturing processes;

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strong global distribution channels and customer relationships;

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reputation for consistency and excellence; and

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brand recognition.

Some companies have spent significant resources in the R&D of proprietary solar technologies that may eventually produce PV products at costs lower than those of ours without compromising product quality. For example, there are polysilicon producers that are developing silicon production technologies that may lead to significantly lower cost to produce solar-grade polysilicon of similar purity and quality as ours. There are also manufacturers who are developing or currently producing PV products based on thin-film PV materials, which require significantly less polysilicon to produce than our solar products. These alternative PV products may cost less than those based on multicrystalline or monocrystalline technologies while achieving the same or better level of conversion efficiency.

The PV industry in general also competes with other sources of renewable energy and conventional power generation.

Property

We both own and lease properties for our operations. When we state that we own certain properties in China, we own the relevant improvements with the underlying land use rights. In China, with very few exceptions, industrial land is owned by the state.

Owned property

We own the land use rights related to our production facilities, including our polysilicon, wafer, cell and module production facilities, located in Xinyu City and Nanchang City, Jiangxi Province, China. As of the date of this annual report, we own land use rights for a total site area of approximately 6,949,422 square meters for an original term of 50 years, renewable upon its expiration. As of the date of this annual report, we have obtained property ownership certificates relating to our plants in Xinyu City, Jiangxi Province, China with a gross floor area of approximately 918,213 square meters. We occupy our owned properties for purposes of production, R&D and as our headquarters office and employee living quarters.

Although we have obtained land use rights certificates and property ownership certificates for properties underlying a majority of our production facilities, as of the date of this annual report, we are still in the process of acquiring the land use right certificates and property ownership certificates underlying certain of our polysilicon production facilities and wafer production facilities. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Company and Our Industry — Our operations in China are subject to various governmental approvals, registrations, and reviews, and our failure to obtain necessary approvals, maintain necessary registrations, or pass necessary reviews on a timely basis, or at all, could materially and adversely affect our business, results of operations and financial condition” in this annual report.

Leased property

We currently have leasehold interests in 2,860 square feet of office space in Sunnyvale, California, leased from an independent third party, with its current lease term to expire in August 2015.

Insurance

We maintain property insurance coverage on our facilities, production equipment and inventory in stock, which amounted to approximately $480.7 million as of December 31, 2014. We do not have insurance coverage

on other assets of ours, such as products in transit, interruption of business or product liabilities. We consider our insurance coverage to be adequate to cover all normal risks associated with our operations in accordance with industry standards and practices in China.

We have purchased director and officer liability insurance for our directors and officers.

Production Safety and Environment

We maintain environmentally responsible standards across our company. We are committed to building and operating safe and environmentally friendly PV production facilities. We are in compliance with all applicable production safety and environmental protection laws and regulations in China, and our PV production processes conform to the relevant international standards. We emphasize production safety and endeavor to operate our manufacturing facilities in an environmentally responsible manner, and our comprehensive waste management system is compliant with national environmental protection standards.

Safety

Our plants, workstations and various facilities have been designed to maintain a safe working environment. We have engaged Fluor Corporation and its affiliates to provide general engineering, procurement, construction and management services for our Mahong Plant. We have designated a health, safety and environmental, or HSE, department in each of our plants and facilities, with a corporate HSE department that reports directly to our senior management. We have adopted a set of production safety procedures that we require our employees to follow and we provide related training to our employees. Our team leaders are regularly required to confirm production safety and our managers are accountable for any failure to observe our safety procedures. Incidents are reported according to Chinese laws and regulations, and investigations are carried out to determine the root causes and to recommend improvements. To enforce our safety procedures, we have formulated an award and penalty system, awarding those who consistently follow safety procedures and penalizing those who fail to do so.

We may experience accidents from time to time at our plants and facilities, as we have disclosed in “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Company and Our Industry — Unexpected equipment failures or accidents, including any accidental release of hazardous gases or materials, may lead to production curtailments or shutdowns, personal injuries, even deaths or damage to properties” in this annual report. As the accident we experienced at our Xiacun Plant in July 2010, such accidents could result in serious bodily injuries to our employees and third-party contractors and shut-down of our facilities. Our management has subsequently taken various remedial and precautionary measures in order to minimize the chance of occurrence of other or similar events in the future. The measures include reiterating the workplace safety guidelines in our employee’s manual and introducing additional safety-related best practices to heighten the safety awareness of our employees and to improve our workplace safety environment. We have also engaged an external advisory firm to perform procedures on our internal control over HSE affairs. As part of the ongoing internal control review process, we endeavor to further enhance our internal controls. We have also extended oversight over certain procedures handled by contractors, including their equipment safety certification and installation application. We also require our employees who operate special equipment to undergo the necessary training before they are allowed to operate such equipment. We conduct regular mandatory maintenance on our equipment to ensure proper and safe working conditions. Despite these measures, we will not be able to assure that accidents will not occur or will not result in serious bodily injuries and property damage. Any such event or disruption could have a material adverse effect on our business, results of operations, and financial condition.

Environment

We have undertaken various measures to reduce pollution and the impact of our manufacturing process on the environment. These measures include monitoring and controlling solid waste, waste water, exhaust fumes and

noise. Our advanced closed-loop polysilicon production process also significantly reduces pollution. We believe that we are currently in compliance with all environmental laws and regulations applicable to our operations in China.

Solid waste. We send hazardous solid waste from our production process to licensed hazardous waste disposal companies for further handling, and send harmless solid waste to the common landfill in Xinyu City.

Waste water. We chemically treat the various types of waste water to harmless levels before discharging it to our dedicated sewage network. We currently have 10 on-site waste water treatment stations with an aggregate of 28,100-cubic-meter daily treatment capacity.

Exhaust fumes. We chemically treat the various types of exhaust fumes to harmless levels before discharging them into the atmosphere.

Noise. We have installed various shock-absorption and sound-reduction devices to lower the noise impact of our production on the environment and neighborhood.

We currently have a team of 103 personnel who are experienced and trained in HSE matters and are in charge of formulating and implementing our HSE measures, of whom 24 hold “Licenses for Safety Management in Hazardous Chemical Enterprises” and 18 are “State-Certified Safety Engineers.” The Chinese safety and environmental protection authorities regularly inspect our plants and facilities on both announced and unannounced bases, and we have not received any citations relating to HSE measures. As we have disclosed in “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Company and Our Industry — Compliance with environmental and safety regulations is expensive, and noncompliance may result in adverse publicity and potentially significant monetary damages and fines or suspension of our business operations,” we cannot assure you that we will be able to comply with all applicable environmental protection and operational safety requirements, and obtain all of the required governmental approvals and permits that may be or may become applicable to us on a timely basis, or at all. The relevant governmental authorities may impose on us fines for any non-compliance, set deadlines for rectification, and order us to cease construction or production if we fail to comply with their requirements.

Regulatory Framework

This section sets forth a summary of the most significant regulations and requirements that affect our business activities in China or our shareholders’ right to receive dividends and other distributions from us.

Renewable energy law and government directives

In February 2005, China enacted its Renewable Energy Law, which became effective on January 1, 2006 and was amended on April 1, 2010. The Renewable Energy Law sets forth national policies to encourage and support the development and use of solar energy and other non-fossil fuel renewable energy and their on-grid application. It authorizes the relevant government authorities to set favorable prices for the purchase of electricity generated by solar and other renewable power generation systems.

The law also encourages the installation and use of solar-powered water-heating systems, solar-powered heating and cooling systems and other solar energy utilization systems. It expressly contemplates and permits financial incentives, such as national funding, preferential loans and tax preferences for the development of renewable energy projects. In January 2006, NDRC promulgated two implementation directives with respect to the Renewable Energy Law. These directives set forth specific measures relating to pricing of electricity generated by solar and other renewal power generation systems and sharing by all utility end-users of certain costs incurred by solar and other renewable power generation systems. The directives further provide specific allocations of administrative and supervisory powers and responsibilities among various relevant government agencies at the national and provincial levels and stipulate relevant responsibilities among electricity grid companies and power generation companies with a view to the implementation of the Renewable Energy Law.

The Chinese Ministry of Housing and Urban-Rural Development, formerly the Chinese Ministry of Construction, issued a directive in June 2005 to encourage the use of solar energy in residential and commercial buildings and the increased application of solar energy in townships in China. Because China is consuming more and more energy as its economy expands and the related industrial pollution is threatening the environment and livelihood of the nation, the Chinese State Council promulgated a directive in July 2005 with specific measures to conserve energy resources.

In December 2006, NDRC issued a notice to announce the Chinese government’s support of the development of renewable energy resources in China, including solar power. The government appropriated an aggregate of $330 million in equivalent Renminbi as a grant to support various renewable energy projects, including commercialization of wafer and ingot production at our company.

In September 2009, the Chinese government issued the notice on curbing excessive capacity and redundant construction in industries in China. The government listed the polysilicon production capacity as excessive in China, and put forward guidelines relating to the capacity, land usage or power consumption for newly constructed polysilicon projects. The government also prohibit any lending by financial institutions or financing through capital markets by such new polysilicon projects without approval from the relevant governmental agencies including NDRC.

In December 2010, the Ministry of Industry and Information Technology, NDRC and the Ministry of Environmental Protection jointly issued a circular entitled the Conditions of Entry to Polysilicon Industry to curb excessive capacity and redundant construction in the Chinese polysilicon industry. The circular was abolished and replaced by the Guideline for PV Manufacturing Industry in September 2013, which sets forth several requirements for PV manufacturing enterprises and projects regarding production capacity, product process, energy consumption, environment protection, and quality control. New polysilicon projects, extension projects and existing polysilicon projects must meet the requirements provided in the guideline.

The “Twelfth Five Year Plan for the Solar Power PV Industry” promulgated by the Ministry of Industry and Information Technology on February 24, 2012 set the following goals to achieve by 2015: reaching an annualized capacity of 50,000 MT for leading polysilicon companies; reaching an annualized production capacity of over 10,000 MT for large polysilicon companies; reaching an annualized production capacity of 5 GW for leading solar module companies; reaching an annualized production capacity of over 1 GW for large solar module companies; reaching annual revenue of over Rmb 100 billion by one PV company; reaching annual revenue of over Rmb 50 billion by three to five PV companies; reaching annual revenue of over Rmb 1 billion by three to four PV equipment companies. The plan also urges the PV industry to increase its conversion efficiency rate and reduce production costs.

Environmental regulations

We are subject to a variety of governmental regulations related to the storage, use and disposal of hazardous materials. The major environmental regulations applicable to us include the Chinese Environmental Protection Law, the Chinese Law on the Prevention and Control of Water Pollution, the Chinese Implementation Rules of the Law on the Prevention and Control of Water Pollution, the Chinese Law on the Prevention and Control of Air Pollution, the Chinese Law on the Prevention and Control of Solid Waste Pollution and the Chinese Law on the Prevention and Control of Noise Pollution. We believe that we are in compliance with the relevant environmental regulations in all material aspects.

Restriction on foreign investments

The principal regulation governing foreign ownership of solar power businesses in China is the revised Foreign Investment Industrial Guidance Catalog, effective as of April 10, 2015 and subject to amendment and supplement by the government from time to time. Under this guidance currently in force, our solar cell production business and solar farm projects fall within the category of industries in which foreign investment is encouraged.

Tax

The Chinese enterprise income tax is calculated based on the taxable income determined under the Chinese tax laws and regulations. The EIT Law imposes a unified income tax rate of 25% on all domestic enterprises and foreign-invested enterprises unless they qualify for preferential tax treatments under certain limited exceptions.

Pursuant to the Chinese Provisional Regulation on the Value Added Tax, or VAT, and its implementation rules, any entity or individual engaged in the sale of goods, provision of specified services and importation of goods in China is generally required to pay VAT at the rate of 17.0% of the gross sales proceeds, less any creditable VAT already paid or borne by such entity or individual. When an entity exports goods from China, the exporter may be entitled to a refund of a portion or all of the VAT paid by the entity. Our imported raw materials used for manufacturing PV products subject to export, to the extent they are placed in government-sanctioned bonded warehouses, are exempt from import VAT.

Foreign currency exchange

See “Item 10. Additional Information — D. Exchange Controls” in this annual report.

Dividend distribution

The principal regulations governing distribution of dividends by foreign-invested enterprises in China, such as our Chinese subsidiaries, include:

•

Company Law of 1993, as amended;

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Wholly Foreign-invested Enterprise Law of 1986, as amended;

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Wholly Foreign-invested Enterprise Law Implementation Rules of 1990, as amended;

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Equity Joint Venture Enterprise Law of 1979, as amended; and

•

Equity Joint Venture Enterprise Law Implementation Rules of 1983, as amended.

Under the current regulatory regime in China, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with the Chinese accounting standards and regulations. After making up for any deficit in prior years pursuant to the Chinese laws, a wholly foreign-owned enterprise in China, such as Jiangxi LDK Solar, Jiangxi LDK Silicon and Jiangxi LDK Polysilicon, is required to set aside at least 10% of its after-tax profit calculated in accordance with the Chinese accounting standards and regulations each year as its statutory general reserves until the cumulative amount of such reserves reaches 50% of its registered capital. These reserves are not distributable as cash dividends. A wholly foreign-owned enterprise is also required to allocate a certain percentage of its after-tax profit calculated in accordance with the Chinese accounting standards and regulations each year as its employee welfare and bonus fund, and its board of directors has the discretion to determine the percentage of the after-tax profits for such employee welfare and bonus fund, which is likewise not distributable to its equity owners except in the event of a liquidation. A sino-foreign joint venture enterprise, such as LDK Nanchang, is required to set aside a certain percentage of its after-tax profit calculated in accordance with the Chinese accounting standards and regulations each year for its statutory general reserves, employee welfare and bonus fund and enterprise development fund in accordance with the requirements of relevant Chinese laws and its articles of associations. The board of directors of a sino-foreign joint venture enterprise has the discretion to determine the respective percentages of its after-tax profits for its statutory general reserves, employee welfare and bonus fund and enterprise development fund, which are not distributable to its equity owners except in the event of a liquidation.

C.	ORGANIZATIONAL STRUCTURE

The following chart sets forth our simplified corporate structure as of the date of this annual report:

LOGO

In the ordinary course of our solar farm project development business, we have established, and may continue to establish, from time to time, jointly controlled entities, project partnerships or subsidiary companies in and outside China for the purpose of developing and selling these projects. We intend to sell these projects by disposing of our interests in these joint ventures, partnerships or subsidiary companies to third parties.

As of the date of this annual report, Mr. Peng, our founder and former chairman, beneficially owns, through LDK New Energy, 48,053,953 of our shares, representing approximately 18.4% of our outstanding share capital as of the date of this annual report. Mr. Cheng currently beneficially owns, through Fulai Investments, 42,000,000 of our shares, representing approximately 16.1% of our outstanding share capital as of the date of this annual report. HRX currently owns 25,307,497 of our shares, representing approximately 9.7% of our outstanding share capital as of the date of this annual report. HRX is entitled to exercise certain options for additional securities convertible into our shares as set forth in the various funding facilities HRX provided to us for our provisional liquidation and for our working capital needs. Significant holders of our convertible securities, whether due to their previous substantial positions in our 2014 senior notes or in our LDK Silicon preferred shares, may become our significant or controlling shareholders as a result of their conversions.

D.	PROPERTY, PLANTS AND EQUIPMENT

For information regarding our material property, plant and equipment, see “— B. Business Overview — Suppliers — Equipment” and “— Property” in this annual report.

ITEM 4A.

UNRESOLVED STAFF COMMENTS

None.

ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A.	OPERATING RESULTS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled “Item 3. Key Information — A. Selected Financial and Operating Data” and our audited consolidated financial statements included in this annual report beginning on page F-1. The following discussion and analysis contain forward-looking statements that involve risks and uncertainties as we have disclosed in the section entitled “Forward-Looking Statements” in this annual report. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information — D. Risk Factors” and elsewhere in this annual report.

Overview

We are a leading vertically integrated manufacturer of PV products. While our historical strength was in the solar wafer business, we have expanded our business to meet the PV industry’s requirements for polysilicon, wafers, cells, modules, systems, power projects and solutions. While we continue our vertical integration of our PV product value chain to the extent feasible, our revenue also includes significant portions of sales of our solar wafers and modules.

The PV market is highly competitive and volatile. Currently, China’s major solar manufacturers, including us, substantially rely on both exports and domestic demand. The reduced market demand for PV products in these markets has resulted in substantial oversupply. In addition, we and many of our competitors engaged in aggressive expansion programs during the past several years. As a result, competition has increased and the industry has experienced price reductions, which have materially and adversely affected our business operations and financial condition. Due to limited customer orders and depressed market prices with the global economic slowdown, we have substantially reduced our production volumes and have suspended the operations of certain of our plants.

In February 2014, we filed with the Cayman court a winding-up petition on grounds of insolvency and the Cayman court appointed the JPLs on February 27, 2014 and placed us into provisional liquidation under the laws of the Cayman Islands. In collaboration with the JPLs, we undertook a multi-jurisdictional restructuring exercise, which included schemes of arrangement in the Cayman Islands, schemes of arrangement in Hong Kong, a prepackaged plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code, and a bankruptcy proceeding for LDK Solar under Chapter 15 of the U.S. Bankruptcy Code. Our schemes of arrangement and the prepackaged plan of reorganization became effective on December 10, 2014, and the U.S. Bankruptcy Court closed our Chapter 11 cases and our Chapter 15 bankruptcy proceeding on February 18, 2015. On April 21, 2015, pursuant to a Cayman court decree, the JPLs were discharged from their duties and our winding-up petition was dismissed. See “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Provisional Liquidation” in this annual report for additional information.

Polysilicon. We commenced production and sale of polysilicon in the third quarter of 2009. As of December 31, 2014 and March 31, 2015, we had an aggregate installed annualized polysilicon production capacity of approximately 19,200 MT. All of the polysilicon we currently produce is solar-grade. We consume a significant portion of our polysilicon output in our wafer production. For the year ended December 31, 2012, we produced approximately 2,520 MT of polysilicon, and consumed approximately 69.6% of our total polysilicon production, with the rest sold to independent third-party customers. We suspended our polysilicon production since the third quarter of 2012 primarily due to the decreased market demand and depressed market prices of PV products until July 2014 when we restarted one of the three production lines at our Mahong Plant with the existing STC thermal converters. We test-ran our hydrochlorination facilities installed on such polysilicon production line at Mahong Plant in September 2014 and completed the installation of all of our hydrochlorination facilities at the Mahong Plant in December 2014. Hydrochlorination facilities have become the primary converter for STC into TCS at our Mahong Plant and the STC thermal converters operate now as a supplemental system to support the hydrochlorination conversion. You may find additional information about our debottlenecking efforts in “— Debottlenecking” above. As a result, we resumed our polysilicon operation in Mahong Plant at the end of 2014. For the year ended December 31, 2014, we produced approximately 479 MT of polysilicon, and consumed approximately 99.5% of our total polysilicon production, with the rest sold to independent third-party customers.

Solar Wafers. We produce multicrystalline and monocrystalline solar wafers and sell them globally to manufacturers of solar cells and solar modules. We used to also provide wafering services, producing wafers for customers who provide polysilicon materials to us. As of December 31, 2014 and March 31, 2015, we had an annualized solar wafer production capacity of approximately 4.8 GW. For the years ended December 31, 2012, 2013 and 2014, we produced approximately 1.0 GW, 1.4 GW and 1.8 GW of solar wafers, respectively, and consumed approximately 10.1%, 3.8% and 6.7%, respectively, of our total solar wafer production in our in-house production of solar cells, with the rest sold to independent third-party customers. For the three months ended March 31, 2015, we produced approximately 0.3 GW of solar wafers, and consumed approximately 7.1% of our total solar wafer production in our in-house production of solar cells, with the rest sold to independent third-party customers. Although our solar wafer production has remained on-going, we substantially reduced our solar wafer production volume since the third quarter of 2012, primarily due to the decreased market demand and depressed market prices of PV products. We have gradually increased our wafer production in 2013. However, the decrease in estimated future market price for wafers and over-capacity in certain of our production facilities have raised uncertainty about the future service potential and caused us to constructively abandon certain production machinery and equipment, facilities and uncompleted production plants related to our wafer business.

Solar Cells. We commenced solar cell production in the third quarter of 2010. As of December 31, 2014 and March 31, 2015, we had an annualized solar cell production capacity of approximately 0.3 GW. For the years ended December 31, 2012, 2013 and 2014, we produced approximately 162.1 MW, 80.6 MW and 160.3 MW of solar cells, respectively, and consumed approximately 43.4%, 100.0% and 84.8%, respectively, of our total solar

cell production in our in-house production of solar modules, with the rest sold to independent third-party customers. For the three months ended March 15, 2015, we produced approximately 36.4 MW of solar cells and consumed approximately 59.2% of our total solar cell production in our in-house production of solar modules, with the rest sold to independent third-party customers. Our in-house made solar cells constituted approximately 71.2% of our production requirements in our in-house production of solar modules during the three years ended December 31, 2014, and we had to outsource the remainder requirements from third party suppliers. Although our solar cell production has remained on-going, we have substantially reduced our solar cell production volume since the third quarter of 2012 primarily due to decreased market demand and the depressed market prices of PV products. We also disposed in April 2013 of our solar cell facilities in Hefei City, Anhui Province.

Solar Modules. We commenced solar module production in 2010, and we also provide solar module processing services to customers. As of December 31, 2014 and March 31, 2015, we had an annualized solar module production capacity of approximately 1.1 GW. For the years ended December 31, 2012, 2013 and 2014, we produced approximately 191.6 MW, 261.6 MW and 283.6 MW of solar modules, respectively, and consumed approximately 13.2%, 9.5% and 6.8%, respectively, of our total solar module production in our solar farm projects, with the rest sold to independent third-party customers. For the three months ended March 31, 2015, we produced approximately 36.3 MW of solar modules and consumed approximately 4.6% of our total solar module production in our solar farm projects, with the rest sold to independent third-party customers. Although our solar module production has remained on-going, we substantially reduced our solar module production volume since the third quarter of 2012 primarily due to decreased market demand and the depressed market prices of PV products. We disposed of our solar module facilities in Hefei City, Anhui Province in 2013 and our solar module facilities in Suzhou City, Jiangsu Province in 2014.

Our production facilities are primarily located in Xinyu City, Jiangxi Province, with our cell and module production facilities in Nanchang City, Jiangxi Province, China.

Our principal PV product customers, in terms of net sales for the year ended December 31, 2014, include Solartech, Itarion, Oriental Sunrise, Hyundai and Brics Solar.

Provisional Liquidation

In February 2014, we filed with the Cayman court a winding-up petition on grounds of insolvency. The Cayman court appointed the JPLs on February 27, 2014 and placed us into provisional liquidation under the laws of the Cayman Islands. In collaboration with the JPLs, we undertook a multi-jurisdictional restructuring exercise, which included:

•

schemes of arrangement in the Cayman Islands relating to LDK Solar and LDK Silicon, eventually approved by their classes of scheme creditors and sanctioned by the Cayman court on November 7, 2014;

•

a bankruptcy proceeding for LDK Solar under Chapter 15 of the U.S. Bankruptcy Code, with respect to which the U.S. Bankruptcy Court entered an order on November 21, 2014 to recognize and enforce our

Cayman Islands scheme of arrangement relating to LDK Solar in the United States and the related Cayman court sanctioning order.

Our schemes of arrangement and the prepackaged plan of reorganization became effective on December 10, 2014. On February 18, 2015, the U.S. Bankruptcy Court entered final decrees to close our Chapter 11 cases and our Chapter 15 bankruptcy proceeding. On April 21, 2015, pursuant to an order of the Cayman court issued on April 7, 2015, the JPLs were discharged from their duties and our winding-up petition filed on February 21, 2014 was dismissed.

The following is a summary of certain terms of the restructuring transactions contemplated in, and dependent upon the effectiveness and completion of, our schemes of arrangement:

Treatment of 2014 Senior Notes Claims. The aggregate 2014 senior notes claims amounted to the aggregate principal amount of the 2014 senior notes, plus (i) accrued interest at the interest rate of the 2014 senior notes through June 3, 2013 and (ii) accrued interest at 5.535% per annum from June 4, 2013 until December 17, 2014.

The difference of interest between the interest rate of 10% of the 2014 senior notes and the interest rate of 5.535% for our convertible securities relating to such 2014 senior notes during the period between June 4, 2013 and December 17, 2014 was waived upon completion of our restructuring transactions.

Each holder of a 2014 senior notes claim could choose to:

•

cash-out its outstanding 2014 senior notes claim, but only to the extent that we determined that we had the necessary funds (which amount might be zero), and/or

•

exchange its outstanding 2014 senior notes claim into our shares and our convertible securities.

We eventually determined, however, that we had no cash available to pay such cash-out option amount. As a result, holders of the 2014 senior notes claims received on December 17, 2014 (i) our shares at $1.586 per share for between 8.736% to 15% (as elected by each holder) of their respective 2014 senior notes claims, subject to a lock-up until December 31, 2014, and (ii) an initial aggregate principal amount of $264,458,500 of our convertible securities at a coupon rate of 5.535% per annum for the remaining portions of their respective 2014 senior notes claims with such coupon payments payable semi-annually in arrears (a) through payment in cash if elected by us or (b) if we elect not to pay cash, by adding the interest installment to the then outstanding principal amount of the convertible securities or by issuing our equity securities at the option of holders. The convertible securities will mature on December 31, 2018 and are convertible into our equity at a VWAP-based conversion price subject to a volume limit prior to April 1, 2016 and without any such volume limit from April 1, 2016.

Treatment of LDK Silicon Preferred Shares Claims. The aggregate LDK Silicon preferred shares claims amounted to the aggregate purchase price of the LDK Silicon preferred shares, plus (i) accrued internal rate of return through June 3, 2013, less dividends received, and (ii) accrued interest at 5.535% per annum from June 4, 2013 until December 17, 2014.

The difference of interest between the internal rate of return of 23% of the LDK Silicon preferred shares and the interest rate of 5.535% for our convertible securities relating to such LDK Silicon preferred shares during the period between June 4, 2013 and December 17, 2014 was waived upon completion of our restructuring transactions.

Each holder of a LDK Silicon preferred shares claim could choose to:

•

cash-out its outstanding LDK Silicon preferred shares claim, but only to the extent that we determined that we had the necessary funds (which amount might be zero), and/or

•

exchange its outstanding LDK Silicon preferred shares claim into our shares and our convertible securities.

We eventually determined, however, that we had no cash available to pay such cash-out option amount. As a result, holders of the LDK Silicon preferred shares claims received on December 17, 2014 (i) our shares at $1.586 per share for between 8.736% to 15% (as elected by each holder) of their respective LDK Silicon

preferred shares claims, subject to a lock-up until December 31, 2014, and (ii) an initial aggregate principal amount of $358,743,400 of our convertible securities at a coupon rate of 5.535% per annum for the remaining portions of their respective LDK Silicon preferred shares claims with such coupon payments payable semi-annually in arrears (a) through payment in cash if elected by us or (b) if we elect not to pay cash, by adding the interest installment to the then outstanding principal amount of the convertible securities or by issuing our equity securities at the option of holders. The convertible securities will mature on June 3, 2016, subject to extension and/or payment with our equity securities at a VWAP-based conversion price at the option of holders of at least two thirds (²⁄₃) in aggregate principal amount of the convertible securities. The convertible securities are convertible into our equity at a VWAP-based conversion price subject to a volume limit prior to April 1, 2016 and without any such volume limit from April 1, 2016. The convertible securities have the benefit of a pledge by LDK Solar of all of its equity in LDK Silicon, a pledge by LDK Solar of 24% of its equity in Jiangxi LDK Solar, a guarantee by LDK Silicon, and a guarantee by Mr. Peng.

Treatment of Other Claims. Our schemes of arrangement provided that we should treat other offshore claims in a similar fashion as we would treat the 2014 senior notes claims. As we agreed with our scheme creditors, including holders of the 2014 senior notes claims and holders of the LDK Silicon preferred shares claims, under the schemes of arrangement, we honored the cash-out options elected by holders of the other claims even though our JPLs had determined in accordance with the schemes of arrangement that we did not have sufficient cash to provide cash distributions to holders of the 2014 senior notes claims or holders of the LDK Silicon preferred shares claims. In accordance with the procedure agreed under the schemes of arrangement for the determination and adjudication of other claims, holders of the other claims admitted by our scheme supervisors pursuant to our schemes of arrangement received (i) a cash payment of $0.05 per $1.00 of their claims on April 27, 2015, (ii) our shares at $1.586 per share for a portion of their claims on May 5, 2015, and/or (iii) our convertible securities of the same series that we issued to holders of 2014 senior notes claims with identical terms except for a shorter initial interest payment period (commencing on May 5, 2015) due to the later issue date in respect of such convertible securities, with an aggregate principal amount of $2,723,800 on May 5, 2015.

As a part of our provisional liquidation and permitted by our schemes of arrangement, we, certain of our affiliates and the JPLs entered into a settlement and compromise agreement in October 2014 with Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft, a company incorporated in Germany, or Munich Re, and its affiliate, Great Lakes Reinsurance (UK) plc, a company incorporated in England and Wales, in connection with a court judgment by Santa Clara County Superior Court in California relating to certain premium payment damages for an insurance policy we took out from the Munich Re affiliate in January 2010 for our solar modules. We completed the cash and non-cash settlement as agreed among the parties on December 17, 2014.

Pursuant to the terms of our schemes of arrangement, which became effective on December 10, 2014, the closing for the restructuring of the 2014 senior notes claims and the LDK Silicon preferred shares claims, as well as the settlement with Munich Re and affiliate, occurred on December 17, 2014, and the closing for the restructuring of the other claims, as contemplated in our schemes of arrangement, occurred on April 27, 2015 for cash settlement and on May 5, 2015 for non-cash settlement.

Key Factors Affecting Our Results of Operations

The following are key factors that affect our financial condition and results of operations. They are important for understanding our business and financial condition:

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ability to seek additional financing for our operations and to execute our liquidity plan;

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demand for our PV products, including government incentives to promote the usage of solar energy;

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the pricing of our PV products;

•

mix of our PV products;

•

our manufacturing and raw material costs;

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our production capacity and its utilization;

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threat and/or imposition of international trade sanctions;

•

ability to implement our schemes of arrangement; and

•

ability to restructure our liabilities onshore China.

Ability to seek additional financing for our operations and to execute our liquidity plan

As of December 31, 2014, our total liabilities amounted to $5,267.3 million, including outstanding short-term borrowings (including current portion of long-term borrowings) of $2,839.3 million and no outstanding long-term borrowings (excluding current portion); and our total cash and cash equivalents amounted to $17.9 million. In light of the deteriorating market conditions for the PV industry coupled with the global economic slowdown, it is critical for us to be able to access additional financing for our continuing operations and to execute our liquidity plan as more fully described in “— B. Liquidity and Capital Resources — Working Capital Deficit” in this annual report. If we fail to successfully execute this liquidity plan or if the plan fails to adequately meet our liquidity requirements, we may not be able to continue as a going concern.

Demand for our PV products

Our business and revenue growth are, in part, a function of the market demand for our PV products. The PV market remains at a relatively early stage of development and it is uncertain whether solar energy will be widely adopted. Demand for PV products has grown significantly over the past decade, although the global solar power industry experienced a significant volatility in demand and a significant surplus in supply since the global financial crisis in 2008 and the rapid slide in petroleum and natural gas prices, which rendered solar energy less cost competitive and less attractive as an alternative source of energy. The solar market has since remained uncertain and volatile calling into question the sustainability of the PV market and the market demand for our products.

Demand for PV products is driven, in part, by government incentives that make the economic cost of solar power competitive compared to that of traditional forms of electricity generation. To the extent that government incentives decrease, demand for our PV products and our sales and profits may be harmed. Historically, government incentives in certain jurisdictions, including various European countries, have represented an important factor in the market demand for PV products. However, many of these countries have reduced, and are expected to further reduce, such government incentives. Reductions in government incentives, especially those in our target markets, could cause demand for our products and our revenues to decline, and have a material adverse effect on our business, financial condition, results of operations and prospects.

Pricing of our PV products

PV products, including polysilicon, wafers, cells and modules, systems and solutions, are priced based on a variety of factors, including our costs, global PV market prices, supply and demand conditions, and the terms of our customer contracts. We price our PV products on a per-piece and per-watt basis. Prices for PV products that we price on a per-watt basis have fluctuated significantly. While sale prices for PV products are immediately affected by market prices, the costs of our PV products typically do not adjust with the same immediacy; and therefore any sudden drop in PV products sale prices will inevitably affect our gross margin. We expect prices for PV products to remain depressed for as long as the global economic slowdown continues. If we are unable to lower our costs in line with the depressed pricing environment, whether through more cost-effective manufacturing of feedstock, larger ingots or thinner wafers, or through technological advances, our profitability and financial condition would be adversely affected.

Mix of our PV products

As a vertically integrated manufacturer of PV products, we sell polysilicon, wafer, module and PV projects to the market, to the extent we do not consume internally in the production of down-stream PV products. While polysilicon cost represents a significant portion of our wafer manufacturing costs and we endeavor to leverage our in-house polysilicon supply to further optimize our wafer cost structure, we have sold, and may continue to sell, polysilicon directly to third-party customers to the extent commercially sensible rather than consuming all of it in-house. In such endeavors, we compete with other polysilicon manufacturers, and we had to suspend our polysilicon production since the third quarter of 2012 until July 2014 largely due to our inability to further lower our polysilicon cost base as compared to our competition. We also offer wafer and module processing services to our customers who provide us with polysilicon and cells, respectively. We consume substantially all of our cells internally in our production of modules for, and sale of modules to, third-party customers, although we disposed of a significant portion of our solar cell and module production capacity in Hefei City of Anhui Province in 2013 due to weak market demand for PV products. We further disposed of our solar module facilities in Suzhou City, Jiangsu Province in 2014. With our solar farm business, our revenues and margins will also be affected since we can only recognize revenues from solar farm projects once the project is sold or when certain criteria have been met. We also offer related EPC services which carry significantly lower gross margins compared to our historical performance. As the product mix changes, our revenues, gross margins and operating margins may change.

Our manufacturing and raw material costs

Our cost of goods sold consists primarily of the costs of polysilicon feedstock, consumables, materials for cells, modules and projects, other manufacturing costs and depreciation. Historically, polysilicon costs represented the majority of our overall cost of goods sold. For the years ended December 31, 2012, 2013 and 2014, our costs of polysilicon feedstock consumed for our wafer production accounted for approximately 37.1%, 38.7% and 42.9%, respectively, of our wafer cost of goods sold (excluding inventory write-downs and loss on firm purchase commitments). Although we meant to develop our in-house polysilicon production capability to reduce our overall manufacturing costs, global polysilicon price has dropped so significantly over the years that our original intention has been partially frustrated, as we have additionally disclosed in “Item 3. Key Information — D. Risk Factors — Risks Relating to Business Operations in China — Global supply of PV products may continue to exceed demand, which could cause prices for our products to remain depressed or decline, and we may develop excess production capacity and excess inventory” in this annual report. We also procure external cells for our production of solar modules which contributed to our costs of goods sold. Although we endeavor to reduce our manufacturing costs, through increased production scale, improved production yield, using automatic sorting equipment to reduce wafer breakage, and more skilled manufacturing personnel following their initial learning curve, there still exists much for us to improve in light of the competitive pricing pressure in the market. Effective cost-reduction measures in our polysilicon, wafers, cells and modules production have become critical to our financial condition and results of operations. If we fail to continue to reduce our manufacturing costs, our profitability and competitiveness will be adversely affected.

Our production capacity and its utilization

Demand for our PV products has fluctuated widely over the years, and has remained lukewarm since the global financial crisis in 2008 coupled with the subsequent global economic slowdown. Although we have reduced our expansion plan, suspended our polysilicon production since the third quarter of 2012, and substantially reduced our solar wafer, cell and module production volume since the third quarter of 2012, including disposing of solar cell and module production base in Hefei City of Anhui Province, each in light of the global economic slowdown over the past years, there still exists an excess in the overall PV production capacity globally, and especially in China. We further disposed of our solar module facilities in Suzhou City, Jiangsu Province in 2014. Under such uncertain and unstable market conditions for PV products, if we fail or encounter significant impediments in our efforts to match our production capacity with market demand for our products, or if the global economic conditions remain depressed or experience any further downturn and we fail to successfully utilize our manufacturing capacity, we will either be unable to increase our sales and profits and capture additional market share, or unable to generate revenue, profit and cash flow from our substantial capital

expenditures and be faced with excess production capacities, and our financial condition and results of operations will be adversely affected.

Threat and/or imposition of international trade sanctions

In recent years, there have been anti-dumping and countervailing duty investigations in the U.S., the European Union, and other jurisdictions on crystalline silicon PV cells imported from China. We not only sell our PV products directly to the U.S., European and other markets, we also supply polysilicon and other components to other China-based PV product manufacturers who export their PV products to the U.S., European and other markets. As we have significantly relied on international customers for our products since our inception, any such threat or imposition of international trade investigations, proceedings and/or sanctions involving jurisdictions where we have directly or indirectly sold significant quantities of our PV products may result in a material adverse effect on our business prospects, financial condition and results of operations.

Ability to implement our schemes of arrangement

We have only recently emerged from the provisional liquidation, and have an obligation to fully implement our schemes of arrangement. As we were not able to cash out much of the claims of our scheme creditors, we issued convertible securities instead in accordance with the terms of our schemes of arrangement. Our capital structure will not only continue to be plagued by our high leverage, including our accumulated and not-yet-restructured indebtedness onshore China, but also be subject to a significant threat from time to time that periodic conversions by our convertible holders will significantly and materially dilute our shareholding structure and cause a change of control. As a result, our ability to manage our business and financial operations is likely to be affected by the different interests, and the changes in such interests, of our controlling investors from time to time.

Ability to restructure our liabilities onshore China

We have substantial existing indebtedness and may have to incur significantly more indebtedness in the future to support our operations. A substantial portion of our indebtedness resides in China as incurred by our operating subsidiaries in China, including a significant amount of such onshore indebtedness currently subject to a standstill and forbearance arrangement with our onshore creditors. Although we have not been servicing such forborne indebtedness onshore China, it has been existing as well as accruing interests on our books. We will need to explore and engage our creditors in China in an effort to restructure our onshore China liabilities in a mutually agreed manner. The success or failure of such capital restructuring in China will materially impact our prospects, financial condition, results of operations and the uncertainties of our going-concern in the foreseeable future.

Net Sales

We derive revenue primarily from the sale of our PV products, provision of related services and EPC services. We sell our wafers to cell and module producers, and we sell our modules to developers, distributors and system integrators. We provide processing services to customers who supply silicon materials and/or multicrystalline or monocrystalline ingots to us for processing into wafers. In addition, we sell polysilicon and silicon materials, which include ingots as well as silicon scraps. We also provide EPC services to solar farm projects in China, Europe and the U.S. The revenue from sale of wafers also includes the contract cancellation revenue from termination of certain wafer supply agreements. For the years ended December 31, 2012, 2013 and 2014, approximately 40.0%, 55.3% and 64.1%, respectively, of our net sales were generated from sales of wafers. Sales of modules accounted for 32.0%, 25.7% and 27.8%, respectively, of our net sales during the years ended December 31, 2012, 2013 and 2014. Revenue from processing services and silicon materials accounted for 0.1%, nil and nil, respectively, of our net sales during the year ended December 31, 2012, 2013 and 2014. For the years ended December 31, 2012, 2013 and 2014, revenue from EPC services accounted for approximately 8.5%, 7.1% and 4.1%, respectively, of our total net sales. We expect that sales of solar wafers will continue to account for a significant portion of our net sales for the foreseeable future. We also expect our solar farm projects and related EPC business to remain stable as a proportion of our net sales as we continue to develop our solar farm projects to the extent market conditions permit.

During the years ended December 31, 2012, 2013 and 2014, our net sales by product or service were as follows:


	Year Ended December 31,
	2012				2013				2014
Product/Service	Net Sales		% of Total		Net Sales		% of Total		Net Sales		% of Total
	($ in millions)				($ in millions)				($ in millions)
Wafers		344.8		40.0		331.0		55.3		435.9		64.1
Including contract cancellation revenue		92.2		10.7		11.2		1.9		58.7		8.6
Modules		276.2		32.0		153.7		25.7		188.8		27.8
Processing of PV products for others		1.1		0.1		—		—		—		—
Silicon and other materials		93.2		10.8		36.0		6.0		17.7		2.6
EPC services		73.5		8.5		42.6		7.1		27.9		4.1
Others		74.1		8.6		34.9		5.9		10.0		1.4

Total net sales		862.9		100.0		598.2		100.0		680.3		100.0

Our net sales are affected by our unit sales volume, average selling prices and product mix. We currently make most of our sales to customers through non-exclusive, short-term purchase order arrangements. Increased sales on a long-term contract rather than spot market basis are likely to lead to a reduction in average selling prices. We have entered into long-term sales arrangements with some of our major customers, including Solartech, Itarion, Oriental Sunrise, Hyundai and Brics Solar. Pursuant to these arrangements we have committed to supply each of them with specific quantities of wafers over the next few years, with some subject to periodic negotiations on prices. For the years ended December 31, 2012, 2013 and 2014, our top five customers accounted for 22.8%, 21.8% and 30.9%, respectively, of our net sales; with Sumitomo and Photovoltech contributing approximately 7.5% and 5.9%, respectively, of our net sales for the year ended December 31, 2012, Brics Solar and Gintech contributing approximately 5.9% and 4.6%, respectively, of our net sales for the year ended December 31, 2013, and Solartech and Itarion contributing approximately 7.3% and 6.1%, respectively, of our net sales for the year ended December 31, 2014.

We currently have four geographic markets where our customers are located:

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Europe;

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China;

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Asia Pacific excluding China; and

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North America.

During the years ended December 31, 2012, 2013 and 2014, our net sales generated from these geographic regions were as follows:


	Year Ended December 31,
	2012				2013				2014
Product/Service	Net Sales		% of Total		Net Sales		% of Total		Net Sales		% of Total
	($ in millions)				($ in millions)				($ in millions)
Europe		290,671		33.7		99,043		16.6		96,568		14.2
China		275,625		31.9		292,694		48.9		352,403		51.8
Asia Pacific excluding China		221,940		25.7		161,254		27.0		164,293		24.2
North America		74,646		8.7		45,255		7.5		66,991		9.8

Net sales		862,882		100.0		598,246		100.0		680,255		100.0

We determine the geographical market of our net sales based on the immediate destination of our goods shipped. We will periodically adjust our geographic market classification on the basis of our sales as our management determines from time to time to be appropriate in reflecting our operations.

Cost of Goods Sold

Our cost of goods sold consists primarily of:

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feedstock for manufacturing polysilicon, including metallurgical-grade silicon feedstock and chemicals;

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polysilicon feedstock, including solar-grade virgin polysilicon, polysilicon ingots, polysilicon powder, scraps, recyclable polysilicon and various feedstock for polysilicon production (with the costs determined using the weighted average method);

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materials for manufacturing wafers, including slurry, crucibles, sawing wires, packaging materials and other auxiliary materials;

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materials for manufacturing cells and modules;

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cells purchased from third parties;

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materials for solar farm projects;

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depreciation and amortization of property, plant, equipment and land use rights;

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factory overhead, including maintenance of production equipment and other support expenses associated with the manufacturing of our solar wafers, modules and ingots;

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utilities, net of government subsidies;

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direct labor, including salaries and benefits of personnel directly involved in manufacturing activities;

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share-based compensation attributable to our manufacturing personnel;

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provisions for inventory write-downs due to product defects or decline in market prices for our inventories;

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provisions for losses on firm purchase commitments; and

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warranty expenses related to our solar module business.

During the years ended December 31, 2012, 2013 and 2014, our cost of goods sold by product or service was as follows:


	Year Ended December 31,
	2012				2013				2014
Product/Service	Cost of Goods Sold		% of Total		Cost of Goods Sold		% of Total		Cost of Goods Sold		% of Total
	($ in millions)				($ in millions)				($ in millions)
Wafers		463.6		38.1		359.0		43.5		407.0		56.9
Modules		353.4		29.1		187.8		22.8		175.3		24.5
Processing of PV products on behalf of others		1.1		0.1		—		—		—		0.0
Silicon and other materials		251.0		20.7		187.7		22.8		102.0		14.3
EPC services		66.2		5.4		45.4		5.5		20.8		2.9
Others		80.2		6.6		44.7		5.4		9.8		1.4

Total cost of goods sold		1,215.5		100.0		824.6		100.0		714.9		100.0

Depreciation and amortization of property, plant and equipment and land use rights will also constitute a significant part of our cost of goods sold.

Operating Expenses

Our operating expenses include selling expenses, general and administrative expenses, R&D expenses, loss for write-down of assets held for sale to fair value less cost to sell, impairment loss on intangible assets and impairment loss on property, plant and equipment. We expect our operating expenses to decrease as we have been endeavoring to right-size our production output and operating activities in order to build a sustainable capacity with a responsive scale to match our customers’ demand. We have also established a plan to control and reduce our operating expenses on an on-going basis.

Selling expenses

Selling expenses consist primarily of salaries and benefits for sales personnel, including share-based compensation attributable to our sales personnel, transportation costs and marketing expenses.

General and administrative expenses

General and administrative expenses consist primarily of salaries, bonuses and benefits for our administrative and management personnel, consulting and professional service fees, expenses related to our provisional liquidation, insurance premiums, travel and related costs of our administrative and management personnel, and costs of maintaining our information technology systems. General and administrative expenses also include the share-based compensation attributable to our directors, administrative and management personnel and service providers and in 2012, 2013 and 2014, included provisions for doubtful recoveries of accounts receivable and prepayments to our suppliers. We expect our general and administrative expenses to decrease as we have been right-sizing our operating activities and have established a plan to control and reduce our operating expenses on an on-going basis.

Research and development expenses

R&D expenses primarily relate to raw materials used in our R&D activities, R&D personnel costs, and other costs related to the design, development, testing and enhancement of our products and processes. R&D expenses also include the share-based compensation attributable to our R&D personnel. Our R&D expenses also include costs incurred in connection with our joint R&D programs with Shanghai Jiaotong University and Nanchang University. We expense R&D costs as incurred.

Because of the recent challenging market conditions, we have been controlling our R&D expenses to mainly focus on those R&D activities that will bring immediate benefit to our products and operations. But we expect our R&D expenses to increase in the future as we intend to devote more resources toward improving our manufacturing processes and optimizing our polysilicon use in the production of our PV products and as we continue to research new innovations and technologies in PV production.

Loss for write-down of assets held for sale to fair value less cost to sell

Loss for write-down of assets held for sales to fair value less cost to sell related to the assets classified as held for sale of LDK Hefei.

Impairment loss on intangible assets

Impairment loss on intangible assets represents an impairment loss related to trademarks and customer relationships, the estimated fair value of which we determined to be less than the carrying value.

Impairment loss on property, plant and equipment

Impairment loss on property, plant and equipment primarily represents impairment loss provided on certain production machinery and equipment, facilities and uncompleted production plants that have been constructively abandoned because no future service potential exists.

Share-based Compensation Expenses

For the years ended December 31, 2012, 2013 and 2014, we recorded share-based compensation expenses of approximately $8.9 million, $7.5 million and $8.6 million, respectively. We allocated these share-based compensation expenses for the years ended December 31, 2012, 2013 and 2014 as follows:

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approximately $1.3 million, $1.5 million and $1.5 million, respectively, to our cost of goods sold;

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approximately $0.2 million, $0.2 million and $0.1 million, respectively, to our selling expenses;

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approximately $6.7 million, $4.9 million and $6.3 million, respectively, to our general and administrative expenses; and

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approximately $0.7 million, $0.8 million and $0.7 million, respectively, to our R&D expenses.

We made the above allocations on the basis of the job functions of grantees to whom we granted the stock options. As of December 31, 2012, 2013 and 2014, there was unrecognized compensation cost in the aggregate of $25.6 million, $17.1 million and $7.5 million, respectively, relating to non-vested stock options. We expect to recognize this stock option compensation cost over the remaining vesting period of the related options. We will incur additional share-based compensation expenses in 2015 and future periods due to amortization of the unrecognized cost as of December 31, 2014 as well as any additional stock option grants after December 31, 2014.

Other Income and Expenses

Our other income and expenses consist mainly of interest income, interest expense, net foreign currency exchange gain/(loss), equity in income (loss) for associates and a jointly-controlled entity, government subsidies, gain from deconsolidation of former subsidiaries and gain on restructuring of payables and offshore debts.

Interest income or expense

Our interest income represents interests on our cash balances.

Our interest expense consists primarily of interest expenses with respect to our short-term and long-term borrowings from banks, interest expense of 2014 senior notes and LDK Silicon preferred shares, tradable debt securities, and amortization of debt issuance costs and debt discount, less interest expenses capitalized to the extent they relate to our capital expenditures. Our interest income and expense also include our gain or loss on interest rate swap contracts. We have entered into two interest rate swap contracts in 2011 that remain effective in 2014, and have not entered into any other or additional interest rate swap contracts.

Foreign currency exchange gain/(loss), net

Our foreign currency exchange gain/(loss), net, is derived from our net exchange gains and losses on our monetary assets and liabilities denominated in foreign currencies as well as our foreign exchange forward contracts during the relevant period.

Government subsidy

Government subsidy represents grants and payments by the Chinese government to support the PV industry and our R&D efforts. Some of the government subsidies are calculated on the basis of our tax payments, including income tax, if any, value-added tax and stamp duty tax.

Government subsidy to compensate our R&D expenses is recorded as a reduction of R&D expenses. Government subsidy to compensate our electricity costs or production costs is recorded as a reduction of cost of goods sold. Government subsidy not associated with expenses is recognized as income. Subsidies for the acquisition of equipment are recorded as a liability until earned and then offset against the related capital assets. Subsidies for obtaining the rights to use land are recorded as a liability until earned and then amortized over the land use right periods as a reduction of the amortization charges of the related land use rights.

Gain on troubled debt restructuring

We have entered into various agreements with our suppliers to restructure our payables or debts. Under these agreements, the suppliers agreed to give fixed discounts and we agreed to settle the outstanding payables (after discounts) according to a pre-determined payment schedule or through an asset transfer. In 2014, we also restructured our 2014 senior notes and LDK Silicon preferred shares and payables due to other offshore creditors by way of a provisional liquidation. We partially settled these offshore debts with a combined consideration of our equity securities, convertible securities and cash. We recognized gain on troubled debt restructuring for these transactions after analyzing the total future cash payments and fair value of assets transferred or equity interest according to ASC 470-60.

Taxation

Under the current laws of the Cayman Islands, we are not subject to any income or capital gains tax. Additionally, dividend payments made by us are not subject to any withholding tax in the Cayman Islands.

Under the Chinese tax law, dividend payments to foreign investors made by foreign-invested enterprises such as our Chinese subsidiaries, Jiangxi LDK Solar, Jiangxi LDK Silicon and Jiangxi LDK Polysilicon, are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty or agreement with China that provides for a different withholding arrangement. The Cayman Islands, where we are incorporated, does not have such a tax treaty or agreement with China. In addition, under the EIT Law, enterprises established under the laws of jurisdictions outside China with their “de facto management bodies” located within China may be considered Chinese resident enterprises and therefore subject to Chinese enterprise income tax at the rate of 25% as to their worldwide income. Under the implementation regulations issued by the State Council relating to the new tax law, “de facto management body” is defined as the body that has material and overall management control over the business, personnel, accounts and properties of an enterprise. In April 2009, the Chinese State Administration of Taxation promulgated a circular to clarify the definition of “de facto management body” for enterprises incorporated overseas with controlling shareholders being Chinese enterprises. Therefore, it remains unclear how the tax authorities will treat an overseas enterprise invested or controlled by another overseas enterprise and ultimately controlled by Chinese individual residents as is in our case. We are currently not treated as a Chinese resident enterprise by the relevant tax authorities. Since substantially all of our management is currently based in China and may remain in China in the future, we may be considered a “resident enterprise” for the Chinese tax purposes, in which case, we will be subject to the uniform 25% enterprise income tax as to our global income.

We recognize deferred income tax assets and liabilities for temporary differences between financial statement and income tax bases of assets and liabilities. Valuation allowances are provided against the carrying amount of our deferred income tax assets on our financial statements when our management cannot conclude that it is more likely than not that some portion or all of the deferred income tax assets will be realized.

Critical Accounting Policies

We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect:

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the reported amounts of our assets and liabilities;

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the disclosure of our contingent assets and liabilities at the end of each reporting period; and

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the reported amounts of revenues and expenses during each reporting period.

We continually evaluate these estimates based on our own experience, knowledge and assessment of current business and other conditions, our expectations regarding the future based on available information and reasonable assumptions, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application. When reading our consolidated financial statements, you should consider:

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our selection of critical accounting policies;

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the judgment and other uncertainties affecting the application of such policies; and

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the sensitivity of reported results to changes in conditions and assumptions.

We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our consolidated financial statements:

Our ability to continue as a going concern

When assessing our ability to continue as a going concern, our management must make judgments and estimates about various aspects of our business, including the following:

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plans to raise new funds, restructure our debt and reorganize our capital structure;

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the timing and amount of cash flow from operating activities;

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the marketability of assets to be disposed of and the timing and amount of related cash proceeds to be used to repay our indebtedness;

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plans to reduce and delay our expenditures;

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our ability to comply with the various debt covenants; and

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the present and future regulatory, business, credit and competitive environment in which we operate.

These factors individually and collectively will have a significant effect on our financial condition and results of operations and on our ability to generate sufficient cash to repay our indebtedness as it becomes due.

Troubled debt restructuring

We have entered into various agreements with our suppliers to restructure our payables or debts. We have also restructured our 2014 senior notes and LDK Silicon preferred shares in 2014 through a provisional liquidation. A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider. If a troubled debt restructuring involves a partial settlement by transferring assets or granting an equity interest, the carrying amount of the debt will be first reduced by the total fair value of those assets transferred or equity interest granted. We do not recognize a gain on a restructured debt involving indeterminate future cash payments as long as the maximum total future cash payments may exceed the carrying amount of the debt. If the total future cash payments specified by the new terms of a debt, including both payments designated as interest and those designated as face amount, are less than the carrying amount of the debt, we reduce the carrying amount to an amount equal to the total future cash payments specified by the new terms and recognize a gain on restructuring of the debt equal to the amount of the reduction. Legal fees and other direct costs related to the troubled debt restructuring are reported within cash flows from financing activities in the consolidated statements of cash flows.

Depreciation and amortization

Our long-lived assets include property, plant and equipment, and land use rights. We amortize our long-lived assets using the straight-line method over the estimated useful lives of the assets, taking into account the

assets’ estimated residual values. We estimate the useful lives and residual values at the time we acquire the assets based on our management’s knowledge of the useful lives of similar assets and replacement costs of similar assets having been used for the same useful lives respectively in the market, and taking into account anticipated technological or other changes. On this basis, we have estimated the useful lives of our buildings to be 20 to 33 years, our plants and machinery to be 10 to 15 years, our furniture and office equipment to be five years and our motor vehicles to be six years. For land use rights, we amortize them over their estimated useful lives of 49.5 to 50 years. We review the estimated useful life and residual value for each of our long-lived assets on a regular basis. If technological changes are to occur more rapidly than anticipated, we may shorten the useful lives or lower the residual value assigned to these assets, which will result in the recognition of increased depreciation and amortization expense in future periods.

In early 2014, we restarted our installation of the hydrochlorination facilities at the Mahong polysilicon plant after obtaining a specific loan for the installation work. Prior to the completion of the installation of the hydrochlorination facilities, our production at Mahong polysilicon plant was under the “STC thermal converter” technique. After the completion of the installation of the hydrochlorination facilities, management reassessed the useful life of the polysilicon plant by considering the technical upgrade, the current condition of the polysilicon plant and external and internal expert opinions. As a result, we revised the original useful life of the polysilicon plant from 10 years to 15 years.

Impairment of long-lived assets

We evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable, such as change of business plan, obsolescence, and continuous operating or cash flow losses associated with the use of a long-lived asset or group of assets. We assess recoverability of assets by comparing the carrying amount of an asset or group of assets to the estimated undiscounted future cash flow expected to be generated by the asset or asset group. In determining estimates of future cash flow, we have to exercise significant judgment in terms of projection of future cash flow and assumptions including average selling prices, shipments and gross profit margin. If the carrying amount of an asset or asset group exceeds its estimated future undiscounted cash flow, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds its fair value. We estimate the fair value of an asset or asset group based on the best information available, including prices for similar assets and, in the absence of observable market prices, the result of using a present value technique to estimate the fair value of the asset.

For the year ended December 31, 2012, 2013 and 2014, we recorded impairment loss on property, plant and equipment of $109.0 million, $756.2 million and nil, respectively.

Realization of inventory

Our inventories are stated at the lower of cost or market. Market value does not exceed the net realizable value of the inventory, which is the estimated selling price of our inventory in the ordinary course of business, less reasonably predicable costs of completion and disposal. We routinely evaluate the net realizable value of our inventories in light of market conditions and recognize inventory write-downs when considered necessary. The evaluation takes into consideration a number of factors including historical and forecasted consumption of our raw materials, our sales contracts for finished goods on hand, marketability of our inventories, anticipated change in market selling price, risk of obsolescence of our inventories due to change in technology or change in physical properties over time and other factors. Also, the price of polysilicon materials is subject to fluctuation based on global supply and demand, which may have an impact on our ability to recover our inventories costs. During the years ended December 31, 2012, 2013 and 2014, total inventory write-downs were $180.9 million, $70.7 million and $20.8 million, respectively. Our inventory write-downs during these years were to adjust the carrying value of certain inventories to market values to take into account the rapid market selling price decline for PV products. Such write-downs negatively impacted our gross profit (loss) and income (loss) from operations. There have been no significant recoveries in inventories beyond amounts that were previously written down.

Firm purchase commitments

Prior to 2009, due to an industry-wide shortage of high purity polysilicon coupled with a growing demand for PV modules, in order to ensure the adequate supply of polysilicon amid increasing polysilicon prices, we entered into several fixed price supply contracts under which the polysilicon feedstock would be supplied to us from 2009 to 2016. However, since 2009, the polysilicon price has decreased significantly as a result of increased polysilicon manufacturing capacity and the pressure from the decreasing average selling price of PV products. As a result, we recognized provisions for loss on firm purchase commitments of $10.7 million, $(0.8) million and nil under these fixed price polysilicon supply contracts for the years ended December 31, 2012, 2013 and 2014, respectively. The provision was determined by applying the lower of cost or market, a methodology similar to that used with respect to inventory. Given the uncertainty about future polysilicon prices, this loss may or may not be recovered and further losses on the write-down of any outstanding purchase commitments may be recorded in future periods.

Provision for doubtful recoveries on prepayment to suppliers

We make short-term and long-term prepayments to our suppliers of raw materials and equipment from time to time in order to secure stable supply of polysilicon feedstock and production equipment. Consistent with industry practices, we make such prepayments without any collateral. We continuously make assessments on the creditworthiness of these suppliers, primarily based on their historical track records to honor their contractual commitments to us. If there is any indication that the creditworthiness of a supplier is deteriorating, as evidenced by the supplier’s failure to deliver to us the ordered polysilicon feedstock or equipment and repay our prepayments in accordance with the terms of our contract, we will assess and determine the amount of provision for doubtful recoveries required on the prepayments we made with reference to any available internal and external information in respect of financial condition of that supplier. Based on such assessment, we made provision/(reversal of provision) for doubtful recoveries totaling $8.4 million, $3.2 million and $(0.3) million, respectively, during the years ended December 31, 2012, 2013 and 2014 against the prepayments we made to certain suppliers.

Loss on write down of assets held for sale

Due to the critical market challenges, we may from time to time determine to sell or dispose of our assets or subsidiaries in our non-core business. Non-current assets or subsidiaries for disposal are classified as held for sale when their carrying amount will principally be recovered through a sales transaction rather than through continued use and a sales transaction is highly probable. Assets held for sale are recorded at the lower of carrying value and fair value less cost to sell and classified as current assets. A loss will be recognized for any initial or subsequent write-down to fair-value less cost to sell. In April 2013, we sold all our equity interest in LDK Hefei to third-party investors. We determined that the carrying value of assets classified as held for sale was lower than its fair value less cost to sell. Therefore, a loss was recognized for write-down to fair value less cost to sell, amounting to $74.2 million for the year ended December 31, 2012.

Share-based compensation

We adopted our 2006 stock incentive plan in July 2006 and our 2013 stock incentive plan in July 2013. We have outstanding options granted to our officers, directors and employees to purchase an aggregate of 7,870,437 shares as of the date of this annual report. For a description of our stock options granted, including the exercise prices and vesting periods, see “Item 6. Directors, Senior Management and Employees — E. Share Ownership — Stock Incentive Plans” in this annual report. We recognize share-based compensation as compensation expense in our statement of operations based on the fair value of equity awards on the date of the grant, with the compensation expense recognized over the period in which the recipient is required to provide service in exchange for the equity award. A fair value-based method is used for measuring the compensation expense related to share-based compensation. Our stock option compensation charges may change based on changes in our actual forfeitures. We record compensation expense for the fair value of the options at the grant date. We then amortize share-based compensation expenses over the vesting periods of the related options. The fair value of the shares underlying the options we have granted has been based on the closing price of our ADSs for the trading day prior to the respective grant dates.

Recently Issued Accounting Standards

In May 2014, the FASB issued Accounting Standards Update, or ASU, No. 2014-09 regarding ASC Topic No. 606, Revenue from Contracts with Customers. The standard provides principles for recognizing revenue for the transfer of promised goods or services to customers with the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance is effective in the first quarter of fiscal 2018 using either of two methods: (i) retrospective to each prior reporting period presented with the option to elect certain practical expedients as defined within the guidance; or (ii) retrospective with the cumulative effect of initially applying the guidance recognized at the date of initial application and proving certain additional disclosures as defined pursuant to the guidance. Early adoption is not permitted. We are currently evaluating the accounting, transition and disclosure requirements of the standard and cannot currently estimate the financial impact of adoption.

In August 2014, FASB issued ASU No. 2014-15, Presentation of Financial Statements — Going Concern; Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this update provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. The guidance is effective for each annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted but not required.

In January 2015, the FASB issued ASU No. 2015-01, Income Statement — Extraordinary and Unusual Items (Subtopic 225-20), which eliminates the concept of reporting for extraordinary items. ASU 2015-01 is effective for the fiscal year ending December 31, 2016 and for interim periods each thereafter. We are currently evaluating the impact of this standard on our consolidated financial statements.

On February 18, 2015, the FASB issued ASU No. 2015-02, Consolidation, which reduces the number of consolidation models and simplifies the current standard. Entities may no longer need to consolidate a legal entity in certain circumstances based solely on their fee arrangements when certain criteria are met. ASU 2015-02 reduces the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity. ASU 2015-02 is effective for the fiscal year ending December 31, 2015 and thereafter. We believe that adoption of this ASU is not expected to have a material impact on our consolidated financial statements.

Segments Operations

Since 2011, we have two reportable operating segments:

•

Polysilicon segment, which involves the production and sales of polysilicon; and

•

Other PV products segment, which involves the manufacture and sales of monocrystalline and multicrystalline solar wafers, manufacture and sales of PV cells and PV modules and processing services, and the development of power plant projects.

The two segments are evaluated regularly by our chief executive officer to decide how to allocate resources and to assess performance. We do no allocate operating expenses by segment. See “— Results of Operations” for a discussion of period-to-period comparison among the segments.

Results of Operations

We were incorporated in the Cayman Islands and all of our principal operating subsidiaries were incorporated and operate their businesses in China.

Year ended December 31, 2014 compared with year ended December 31, 2013


	Year Ended December 31,
	2013						2014
	($ in thousands)			(% of Net Sales)			($ in thousands)			(% of Net Sales)
Net sales:
Wafers		331,023			55.3			435,911			64.1
Including contract cancellation revenue		11,193			1.9			58,713			8.6
Modules		153,703			25.7			188,825			27.8
Processing of PV products for others		—			—			—			—
Silicon and other materials		35,995			6.0			17,738			2.6
EPC services		42,629			7.1			27,923			4.1
Others		34,896			5.9			9,858			1.4

Total net sales		598,246			100.0			680,255			100.0
Cost of goods sold:
Wafers		(358,974	)		(60.0	)		(406,966	)		(59.8	)
Modules		(187,801	)		(31.4	)		(175,276	)		(25.8	)
Processing of PV products for others		—			—			—			—
Silicon and other materials		(187,693	)		(31.3	)		(102,006	)		(15.0	)
EPC services		(45,398	)		(7.6	)		(20,839	)		(3.1	)
Others		(44,730	)		(7.5	)		(9,858	)		(1.4	)

Total costs of goods sold		(824,596	)		(137.8	)		(714,945	)		(105.1	)

Gross loss		(226,350	)		(37.8	)		(34,690	)		(5.1	)
Selling expenses		(18,737	)		(3.1	)		(14,742	)		(2.2	)
General and administrative expenses		(317,541	)		(53.1	)		(92,972	)		(13.7	)
Research and development expenses		(17,467	)		(2.9	)		(16,769	)		(2.5	)
Loss on write-down of assets held for sale to fair value less cost to sell		—			—			—			—
Impairment loss on intangible assets		—			—			—			—
Impairment loss on property, plant and equipment		(756,239	)		(126.5	)		—			—

Total operating expenses		(1,109,984	)		(185.6	)		(124,483	)		(18.3	)

Loss from operations		(1,336,334	)		(223.4	)		(159,173	)		(23.4	)
Other income (expenses):
Interest income		5,295			0.9			3,781			0.6
Interest expense and amortization of debt issuance costs and debt discount		(259,876	)		(43.4	)		(328,898	)		(48.3	)
Foreign currency exchange loss, net		(20,680	)		(3.5	)		(3,604	)		(0.5	)
Government subsidy		1,804			0.3			599			0.1
Gain on restructuring of payables		4,645			0.8			96,495			14.2
Equity in (loss)/gain for associates and a jointly-controlled entity		(8,057	)		(1.3	)		226			0.0
Others, net		7,748			1.3			2,178			0.3
Gain/(Loss) on deconsolidation of former subsidiaries		(2,687	)		(0.5	)		118,315			17.4
Gain on changes in equity interests in an associate		—			—			19,873			2.9
Gain on sale of available-for-sale equity security		—			—			10,897			1.6

Loss before income taxes		(1,608,142	)		(268.8	)		(239,311	)		(35.2	)
Income tax expense		(29,069	)		(4.9	)		(30,373	)		(4.5	)

Net loss		(1,637,211	)		(273.7	)		(269,684	)		(39.6	)
(Earnings) Loss attributable to non-controlling interests		20,225			3.4			2,812			(0.4	)
(Earnings) Loss attributable to redeemable non-controlling interests		6,918			1.2			0			0

Net loss attributable to our shareholders		(1,610,068	)		(269.1	)		(266,872	)		(39.2	)
Accretion to redemption value of redeemable non-controlling interests		(33,077	)		(5.5	)		—			—

Net loss available to our shareholders		(1,643,145	)		(274.5	)		(266,872	)		(39.2	)

Net sales. For the year ended December 31, 2014, our net sales were $680.3 million, representing a increase of $82.1 million, as compared to our net sales of $598.2 million for the year ended December 31, 2013. This increase was due primarily to higher shipment volume for our wafers, modules and cells, partially offset by a decrease of other sales. Solar wafer and module sales constituted the two largest components of our net sales, accounting for approximately 55.3% and 25.7%, respectively, for the year ended December 31, 2013, and approximately 64.1% and 27.8%, respectively, for the year ended December 31, 2014.

The increase in our wafer sales was mainly attributable to an increase in our shipments from 1,483.5 MW for the year ended December 31, 2013 to 1,685.3 MW for the year ended December 31, 2014, while the average selling price of our wafers kept stable at $0.22 per watt during the years ended December 31, 2013 and 2014. We also recorded cancellation revenue of $58.7 million for the year ended December 31, 2014, as compared to $11.2 million for the year ended December 31, 2013. The increase in our module sales was mainly attributable to an increase in our shipments from 257.3 MW for the year ended December 31, 2013 to 312.5 MW for the year ended December 31, 2014 while the average selling price of our modules kept stable at $0.60 per watt during the years ended December 31, 2013 and 2014. The decrease in sales of our silicon and other materials was mainly attributable to the deconsolidation of Sunways, which provided approximately $10 million in sales of other materials during the year ended December 31, 2013. The decrease in sales of our EPC services for the year ended December 31, 2014 was primarily due to the deconsolidation of our former subsidiary, SPI, in the third quarter of 2014.

On a segment basis, net sales for our polysilicon segment were $4.0 million while net sales for our other PV products segment were $676.2 million for the year ended December 31, 2014, as compared to net sales of $0.6 million for our polysilicon segment and $597.6 million for our other PV products segment for the year ended December 31, 2013. The above net sales have excluded our inter-segment sales between the polysilicon segment and the other PV products segment. The increase in net sales for our polysilicon segment was mainly attributable to the suspension of our polysilicon production since the third quarter of 2012 due to significant reduction in market demand and depressed market prices of PV products until July 2014 when we restarted the production of our Mahong Plant. We test-ran our hydrochlorination facilities installed on one of the polysilicon production lines at the Mahong Plant in September 2014 and completed the installation of all of our hydrochlorination facilities at our Mahong Plant in December 2014. The increase in year-on-year net sales for our other PV products segment was mainly attributable to an increase in our shipment volume for our wafers and modules.

During the years ended December 31, 2013 and 2014, our net sales by product or service were as follows:


	Year Ended December 31,
	2013				2014
Product/Service	Net Sales		% of Total		Net Sales		% of Total
	($ in millions)				($ in millions)
Wafers		331.0		55.3		435.9		64.1
Including contract cancellation revenue		11.2		1.9		58.7		8.6
Modules		153.7		25.7		188.8		27.8
Processing of PV products for others		—		—		—		—
Silicon and other materials		36.0		6.0		17.7		2.6
EPC services		42.6		7.1		27.9		4.1
Others		34.9		5.9		10.0		1.5

Total net sales		598.2		100.0		680.3		100.0

During the years ended December 31, 2013 and 2014, our net sales breakdown by geographic region was as follows:


	Year Ended December 31,
	2013				2014
Geographic Region	Net Sales		% of Total		Net Sales		% of Total
	($ in millions)				($ in millions)
China		292.7		48.9		352.4		51.8
Europe		99.0		16.6		96.6		14.2
Asia Pacific excluding China		161.3		27.0		164.3		24.2
North America		45.2		7.5		67.0		9.8

Total net sales		598.2		100.0		680.3		100.0

We intend to periodically adjust our geographic market classifications on the basis of our sales as our management determines from time to time to be appropriate in reflecting our operations.

Cost of goods sold. For the year ended December 31, 2014, our cost of goods sold was $714.9 million, representing a decrease of $109.7 million, as compared to our cost of goods sold of $824.6 million for the year ended December 31, 2013. This was primarily due to a decrease in our processing cost, raw material cost and inventory write-down, partially offset by an increase in polysilicon feedstock cost. The average cost of polysilicon increased to $21.4 per kilogram for the year ended December 31, 2014, as compared to $17.0 per kilogram for the year ended December 31, 2013, primarily attributable to an increase in market price of polysilicon. Our provision for inventory write-down for the year ended December 31, 2014 decreased by $49.9 million to $20.8 million, as compared to $70.7 million for the year ended December 31, 2013.

During the years ended December 31, 2013 and 2014, our cost of goods sold by product/service was as follows:


	Year Ended December 31,
	2013				2014
Product/Service	Cost of Goods Sold		% of Total		Cost of Goods Sold		% of Total
	($ in millions)				($ in millions)
Wafers		359.0		43.5		407.0		56.9
Modules		187.8		22.8		175.3		24.5
Processing of PV products for others		—		—		—		—
Silicon and other materials		187.7		22.8		102.0		14.3
Construction contracts		45.4		5.5		20.8		2.9
Others		44.7		5.4		9.8		1.4

Total cost of goods sold		824.6		100.0		714.9		100.0

Gross loss. For the year ended December 31, 2014, our gross loss was $34.7 million, as compared to a gross loss of $226.4 million for the year ended December 31, 2013. Our gross loss margin was 5.1% for the year ended December 31, 2014, as compared with a gross loss margin of 37.8% for the year ended December 31, 2013. This decrease in gross loss and gross loss margin was primarily due to a higher utilization rate, a decrease in our processing cost, a decrease in cost of raw materials (other than polysilicon feedstock) and a decrease in inventory write-down during the year ended December 31, 2014.

On a segment basis, we recorded gross loss of $72.2 million for our polysilicon segment and gross profit of $37.6 million for our other PV products segment for the year ended December 31, 2014, as compared to gross loss of $107.1 million for our polysilicon segment and gross loss of $119.3 million for our other PV products segment for the year ended December 31, 2013. These gross losses have excluded any profit/loss resulting from

our inter-segment sales between the polysilicon segment and other PV products segment. The decrease in gross loss for our polysilicon segment was mainly attributable to the restart of polysilicon production at our Mahong Plant in July 2014. The change from gross loss to gross profit in our PV products segment was mainly attributable to a higher utilization rate, a decrease in our processing cost, a decrease in cost for purchases and a decrease in inventory write-down during the year ended December 31, 2014.

Operating expenses. For the year ended December 31, 2014, our operating expenses were $124.5 million, representing a decrease of $985.5 million, as compared to our operating expenses of $1,110.0 million for the year ended December 31, 2013. The decrease was due primarily to a decrease in impairment loss for property, plant and equipment of $756.2 million and a decrease in general and administrative expenses of $224.6 million. The decrease in our general and administrative expenses for the year ended December 31, 2014 was primarily due to a decrease in provision for doubtful recoveries of prepayments to suppliers, receivables and other assets of $194.4 million. For the year ended December 31, 2013, we recorded an impairment loss of $756 million on property, plant and equipment, including $144 million for buildings, $356 million for plant and machinery and $256 million for construction in progress, due to the facts and circumstances surrounding decreases in the estimated future selling price of our products combined with technological changes in certain machinery and equipment, and overcapacity in certain production facilities.

Interest income and expense. For the year ended December 31, 2014, our interest income was $3.8 million, representing a decrease of $1.5 million, as compared to our interest income for the year ended December 31, 2013 of $5.3 million. This decrease was due primarily to a decrease in cash in bank. For the year ended December 31, 2014, our interest expense increased to $328.9 million, as compared to $259.9 million for the year ended December 31, 2013. This increase was primarily due to an increase in interest recognized for LDK Silicon preferred shares and increase in borrowings.

Foreign currency exchange loss, net. For the year ended December 31, 2014, our foreign currency exchange loss, net, was $3.6 million, representing a decrease of $17.1 million, as compared to our foreign currency exchange loss, net, of $20.7 million for the year ended December 31, 2013. This decrease was due primarily to an appreciation of the U.S. dollar against Renminbi related to our cash or receivables in U.S. dollar, and partially offset by a depreciation of the euro against U.S. dollar related to our receivables in euro.

Government subsidy. For the year ended December 31, 2014, government subsidies we received and recognized as other income totaled $0.6 million, as compared to $1.8 million for the year ended December 31, 2013. We received these government subsidies as general incentives to us in connection with the development of our wafer, cell and module businesses.

Gain on troubled debt restructuring. For the year ended December 31, 2014, our gain on troubled debt restructuring was $96.5 million compared to $4.6 million for the year ended December 31, 2013. The increase was mainly attributable to the restructuring of LDK Silicon preferred shares and payables due to other offshore creditors, through the provisional liquidation in the year ended December 31, 2014.

Equity in gain/loss from associates and a jointly controlled entity. For the year ended December 31, 2014, our equity in gain from associates and a jointly controlled entity was $0.2 million, as compared to the equity in loss from associates and a jointly controlled entity of $8.1 million for the year ended December 31, 2013, primarily due to the recognition of impairment loss from investment in an associate in the year ended December 31, 2013.

Gain on deconsolidation of former subsidiaries. We deconsolidated Sunways on April 28, 2014 as Sunways was under the supervision and administration of its insolvency administrator appointed by the relevant German court and we no longer have the ability to exercise influence over Sunways. We recognized a gain of $28.2 million from the deconsolidation of Sunways after netting off provision for our receivables due from Sunways. We deconsolidated SPI on August 11, 2014 when we ceased to have a controlling financial interest in SPI and recognized a gain on deconsolidation of $90.1 million. We measured the fair value of our retained investment in SPI based on the trading price of SPI shares quoted on the OTC market.

Gain on change in equity interests in an associate. We deconsolidated SPI on August 11, 2014 when we ceased to have a controlling financial interest in SPI. As we had ability to exercise significant influence over SPI subsequent to the deconsolidation, we accounted for our investment in SPI using the equity method accounting. We accounted for the share issuances by SPI post-deconsolidation as if we had sold a proportionate share of our investment. Accordingly, we recognized a gain on changes in equity interests in an associate of $19.9 million for the years ended December 31, 2014.

Gain on sale of available-for-sale equity security. We sold our equity interest in JYT Technology in September 2014 to settle a portion of the penalty payable to JYT Technology. As a result, we realized gain of $10.9 million, which, previously recognized in our other comprehensive income, was reversed into earnings and recorded as a gain on sale of available-for-sale equity security for the year ended December 31, 2014.

Income tax expense. For the year ended December 31, 2014, our income tax expense was $30.4 million, as compared to $29.1 million for the year ended December 31, 2013. Our effective income tax rate was negative 1.8% and negative 12.7% for the years ended December 31, 2013 and 2014, respectively. Our effective income tax rate for the year ended December 31, 2014 was lower than the 25% statutory income tax rate applicable to Chinese subsidiaries, due primarily to the recognitions of valuation allowance on deferred income tax assets as our management determined that not all of the deferred income tax assets could be realized.

Net loss. For the year ended December 31, 2014, our net loss after taxes before non-controlling interests was $269.7 million, as compared to a net loss of $1,637.2 million for the year ended December 31, 2013. This decrease was due primarily to a decrease of $756.2 million in impairment loss on plant and equipment, a decrease of $194.4 million in provision for doubtful recoveries of prepayments to suppliers, receivables and other assets, a gain of $121.0 million upon deconsolidation of former subsidiaries and a gain of $91.9 million upon troubled debt restructuring.

(Earnings) loss attributable to non-controlling interests and redeemable non-controlling interests. For the year ended December 31, 2014, we had loss attributable to non-controlling interests of $2.8 million and no loss attributable to redeemable non-controlling interests, respectively, as compared to loss attributable to non-controlling interests of $20.2 million and loss attributable to redeemable non-controlling interests of $6.9 million for the year ended December 31, 2013. This change was due primarily to the deconsolidation of former subsidiaries, including SPI and Sunways, and the derecognition of redeemable non-controlling interests.

Accretion to redemption value of redeemable non-controlling interests. For the year ended December 31, 2014, accretion to redemption value of redeemable non-controlling interests was nil as the LDK Silicon preferred share holders have elected to redeem as of end of 2013.

Net loss available to our shareholders. For the year ended December 31, 2014, net loss available to our ordinary shareholders was $266.9 million, as compared to a net loss of $1,643.1 million available to our ordinary shareholders for the year ended December 31, 2013.

Year ended December 31, 2013 compared with year ended December 31, 2012


	Year Ended December 31,
	2012						2013
	($ in thousands)			(% of Net Sales)			($ in thousands)			(% of Net Sales)
Net sales:
Wafers		344,846			40.0			331,023			55.3
Including contract cancellation revenue		92,233			10.7			11,193			1.9
Modules		276,195			32.0			153,703			25.7
Processing of PV products for others		1,092			0.1			—			—
Silicon and other materials		93,197			10.8			35,995			6.0
EPC services		73,499			8.5			42,629			7.1
Others		74,053			8.6			34,896			5.9

Total net sales		862,882			100.0			598,246			100.0
Cost of goods sold:
Wafers		(463,551	)		(53.7	)		(358,974	)		(60.0	)
Modules		(353,389	)		(41.0	)		(187,801	)		(31.4	)
Processing of PV products for others		(1,129	)		(0.1	)		—			—
Silicon and other materials		(251,042	)		(29.1	)		(187,693	)		(31.3	)
EPC services		(66,173	)		(7.7	)		(45,398	)		(7.6	)
Others		(80,190	)		(9.3	)		(44,730	)		(7.5	)

Total costs of goods sold		(1,215,474	)		(140.9	)		(824,596	)		(137.8	)

Gross loss		(352,592	)		(40.9	)		(226,350	)		(37.8	)
Selling expenses		(45,008	)		(5.2	)		(18,737	)		(3.1	)
General and administrative expenses		(183,908	)		(21.3	)		(317,541	)		(53.1	)
Research and development expenses		(17,781	)		(2.1	)		(17,467	)		(2.9	)
Loss on write-down of assets held for sale to fair value less cost to sell		(74,178	)		(8.6	)		—			—
Impairment loss on intangible assets		(25,255	)		(2.9	)		—			—
Impairment loss on property, plant and equipment		(109,027	)		(12.6	)		(756,239	)		(126.5	)

Total operating expenses		(455,157	)		(52.7	)		(1,109,984	)		(185.6	)

Loss from operations		(807,749	)		(93.6	)		(1,336,334	)		(223.4	)
Other income (expenses):
Interest income		12,153			1.4			5,295			0.9
Interest expense and amortization of debt issuance costs and debt discount		(258,971	)		(30.0	)		(259,876	)		(43.4	)
Foreign currency exchange loss, net		(6,403	)		(0.7	)		(20,680	)		(3.5	)
Government subsidy		4,242			0.5			1,804			0.3
Gain on restructuring of payables		10,510			1.2			4,645			0.8
Equity in loss for associates and a jointly-controlled entity		(2,295	)		(0.3	)		(8,057	)		(1.3	)
Others, net		5,298			0.6			5,061			0.8

Loss before income taxes		(1,043,215	)		(120.9	)		(1,608,142	)		(268.8	)
Income tax expense		(8,844	)		(1.0	)		(29,069	)		(4.9	)

Net loss		(1,052,059	)		(121.9	)		(1,637,211	)		(273.7	)
(Earnings) Loss attributable to non-controlling interests		39,125			4.5			20,225			3.4
(Earnings) Loss attributable to redeemable non-controlling interests		41,963			4.9			6,918			1.2

Net loss attributable to our shareholders		(970,971	)		(112.5	)		(1,610,068	)		(269.1	)
Accretion to redemption value of redeemable non-controlling interests		(153,984	)		(17.9	)		(33,077	)		(5.5	)

Net loss available to our shareholders		(1,124,955	)		(130.4	)		(1,643,145	)		(274.6	)

Net sales. For the year ended December 31, 2013, our net sales were $598.2 million, representing a decrease of $264.7 million, as compared to our net sales of $862.9 million for the year ended December 31, 2012. This decrease was due primarily to the lower average selling price, lower shipment volume for our modules and lower sales of silicon and other materials as we suspended our polysilicon production since the third quarter of 2012 and throughout the year of 2013. Solar wafer and module sales constituted the two largest components of our net sales, accounting for approximately 40.0% and 32.0%, respectively, for the year ended December 31, 2012, and approximately 55.3% and 25.7%, respectively, for the year ended December 31, 2013.

The slight decrease in our wafer sales was mainly attributable to a decrease in the average selling price of our wafers from $0.28 per watt during the year ended December 31, 2012 to $0.22 per watt during the year ended December 31, 2013 and a decrease in cancellation revenue from $92.2 million for the year ended December 31, 2012 to $11.2 million for the year ended December 31, 2013, partially offset by an increase in our shipments from 896.1 MW for the year ended December 31, 2012 to 1,483.5 MW for the year ended December 31, 2013. The decrease in our module sales was mainly attributable to a decrease in our shipments from 371.3 MW for the year ended December 31, 2012 to 257.3 MW for the year ended December 31, 2013 and a decrease in the average selling price of our modules from $0.74 per watt during the year ended December 31, 2012 to $0.60 per watt during the year ended December 31, 2013. Our sales from processing of PV products for our customers primarily stopped for the year ended December 31, 2013 as demand from such services dropped completely, while we delivered approximately 3.3 MW in shipments of such processed PV products to our customers during the year ended December 31, 2012. The significant decrease in our sales of silicon and other materials was mainly attributable to our suspension of polysilicon production since the third quarter of 2012 and throughout the whole year of 2013. The decrease in sales of our EPC services during the year ended December 31, 2013 was primarily due to our EPC business in USA declined significantly.

On a segment basis, net sales for our polysilicon segment were $0.6 million while net sales for our other PV products segment were $597.6 million for the year ended December 31, 2013, as compared to net sales of $25.5 million for our polysilicon segment and $837.4 million for our other PV products segment for the year ended December 31, 2012. The above net sales have excluded our inter-segment sales between the polysilicon segment and the other PV products segment. As disclosed elsewhere, the decrease in net sales for our polysilicon segment was mainly attributable to our suspension of polysilicon production since the third quarter of 2012 and throughout the whole year of 2013. The decrease in year-on-year net sales for our other PV products segment was mainly attributable to a decrease in the average selling price for our wafers and modules and a decrease in our shipment volume of modules, partially offset by an increase in our shipment volume of wafers.

During the years ended December 31, 2012 and 2013, our net sales by product or service were as follows:


	Year Ended December 31,
	2012				2013
Product/Service	Net Sales		% of Total		Net Sales		% of Total
	($ in millions)				($ in millions)
Wafers		344.8		40.0		331.0		55.3
Including contract cancellation revenue		92.2		10.7		11.2		1.9
Modules		276.2		32.0		153.7		25.7
Processing of PV products for others		1.1		0.1		—		—
Silicon and other materials		93.2		10.8		36.0		6.0
EPC services		73.5		8.5		42.6		7.1
Others		74.1		8.6		34.9		5.9

Total net sales		862.9		100.0		598.2		100.0

During the years ended December 31, 2012 and 2013, our net sales breakdown by geographic region was as follows:


	Year Ended December 31,
	2012				2013
Geographic Region	Net Sales		% of Total		Net Sales		% of Total
	($ in millions)				($ in millions)
China		275.6		31.9		292.7		48.9
Europe		290.7		33.7		99.0		16.6
Asia Pacific excluding China		221.9		25.7		161.3		27.0
North America		74.7		8.7		45.2		7.5

Total net sales		862.9		100.0		598.2		100.0

Cost of goods sold. For the year ended December 31, 2013, our cost of goods sold was $824.6 million, representing a decrease of $390.9 million, as compared to our cost of goods sold of $1,215.5 million for the year ended December 31, 2012. This was primarily due to a decrease in our shipment volume of modules, a decrease in our processing business, a decrease in our shipment of polysilicon and other materials, and a decrease in our processing cost and cost for purchases. The average cost of polysilicon decreased to $17.0 per kilogram for the year ended December 31, 2013, as compared to $27.9 per kilogram for the year ended December 31, 2012, primarily as a result of reduction in cost of purchase. Our provision for inventory write-downs for the year ended December 31, 2013 decreased by $110.2 million to $70.7 million, as compared to $180.9 million for the year ended December 31, 2012. Our provision (reversal of provision) for loss on a firm purchase commitment for the year ended December 31, 2013 decreased by $11.5 million to $(0.8) million, as compared to $10.7 million for the year ended December 31, 2012. We recorded inventory write-downs and provision for loss on a firm purchase commitment during the year ended December 31, 2013 primarily due to the market value of our products falling below our cost of inventories as a result of the significant drop in the average selling price of our products.

During the years ended December 31, 2012 and 2013, our cost of goods sold by product/service was as follows:


	Year Ended December 31,
	2012				2013
Product/Service	Cost of Goods Sold		% of Total		Cost of Goods Sold		% of Total
	($ in millions)				($ in millions)
Wafers		463.6		38.1		359.0		43.5
Modules		353.4		29.1		187.8		22.8
Processing of PV products for others		1.1		0.1		—		—
Silicon and other materials		251.0		20.7		187.7		22.8
Construction contracts		66.2		5.4		45.4		5.5
Others		80.2		6.6		44.7		5.4

Total cost of goods sold		1,215.5		100.0		824.6		100.0

Gross loss. For the year ended December 31, 2013, our gross loss was $226.4 million, as compared to a gross loss of $352.6 million for the year ended December 31, 2012. Our gross loss margin was 37.8% for the year ended December 31, 2013, as compared with a gross loss margin of 40.9% for the year ended December 31, 2012. This decrease in gross loss and gross loss margin was primarily due to the significant drop in the average selling price of our products, the lower utilization rate, and the recognition of inventory write-down of $70.7 million during 2013.

On a segment basis, we recorded gross loss of $107.1 million for our polysilicon segment and gross loss of $119.3 million for our other PV products segment for the year ended December 31, 2013, as compared to gross loss of $86.6 million for our polysilicon segment and gross loss of $266.0 million for our other PV products segment for the year ended December 31, 2012. These gross losses have excluded any profit/loss resulting from our inter-segment sales between the polysilicon segment and other PV products segment. The increase in gross loss for our polysilicon segment was mainly attributable to our suspension of polysilicon production since the third quarter of 2012 and throughout the whole year of 2013, while we have continually recorded depreciation in cost. The decrease in gross loss in our PV products segment between the years was mainly attributable to the significant reduction of raw material purchase costs and a decline in our inventory write-down.

Operating expenses. For the year ended December 31, 2013, our operating expenses were $1,110.0 million, representing an increase of $654.8 million, as compared to our operating expenses of $455.2 million for the year ended December 31, 2012. The increase was due primarily to an increase in impairment loss for property, plant and equipment of $647.2 million, and an increase in general and administrative expenses of $133.6 million, partially offset by a decrease in impairment loss on intangible assets of $25.3 million and a decrease in loss on write-down of assets held for sales to fair value less cost to sell of $74.2 million. The increase in our general and administrative expenses for the year ended December 31, 2013 was primarily due to an increase in provision for doubtful recovery of accounts receivable, prepayments and other assets in 2013. For the year ended December 31, 2013, we recorded an impairment loss of $756 million on property plant and equipment, including $144 million for buildings, $356 million for plant and machinery and $256 million for construction in progress. The facts and circumstances leading to the impairment were primarily due to the decrease in the estimated future selling price of our products combined with technological changes in certain machinery and equipment, and overcapacity in certain production facilities. These factors caused us to constructively abandon certain production machinery and equipment and facilities and uncompleted production plants relating to our polysilicon and wafer production since no future service potential exists for these assets. The method for determining fair value of these assets was primarily estimated market prices.

Interest income and expense. For the year ended December 31, 2013, our interest income was $5.3 million, an decrease of $6.9 million, as compared to our interest income for the year ended December 31, 2012 of $12.2 million. This decrease was due primarily to an decrease in cash in bank. For the year ended December 31, 2013, our interest expense slightly increased to $259.9 million, as compared to $259.0 million for the year ended December 31, 2012. This increase was primarily due to an increase in interest recognized for our redeemable preferred shares, partially offset by decrease in average interest rate for our bank borrowings.

Foreign currency exchange loss, net. For the year ended December 31, 2013, our foreign currency exchange loss, net, was $20.7 million, an increase of $14.3 million, as compared to our foreign currency exchange loss, net, of $6.4 million for the year ended December 31, 2012. This increase was due primarily to a depreciation of the U.S. dollar against Renminbi related to our 2014 senior notes.

Government subsidy. For the year ended December 31, 2013, government subsidies we received and recognized as other income totaled $1.8 million, as compared to $4.2 million for the year ended December 31, 2012. We received these government subsidies as general incentives to us in connection with the development of our wafer, cell and module businesses.

Equity in loss from associates and a jointly controlled entity. For the year ended December 31, 2013, our equity in loss from associates and a jointly controlled entity was $8.1 million, as compared to the equity in loss from associates and a jointly controlled entity of $2.3 million for the year ended December 31, 2012, primarily due to the recognition of impairment loss from investment in an associate in 2013.

Income tax expense. For the year ended December 31, 2013, our income tax expense totaled $29.1 million, as compared to our income tax expense of $8.8 million for the year ended December 31, 2012. Our effective income tax rate was negative 0.8% and negative 1.8% for the years ended December 31, 2012 and 2013,

respectively. Our effective income tax rate for the year ended December 31, 2013 was lower than the 25% statutory income tax rate applicable to Chinese subsidiaries, due primarily to the recognitions of valuation allowance on deferred income tax assets as our management determined that not all of the deferred income tax assets could be realized.

Net loss. For the year ended December 31, 2013, our net loss after taxes before non-controlling interests was $1,637.2 million, as compared to a net loss of $1,052.1 million for the year ended December 31, 2012. This increase was due primarily to the recognition of impairment loss on plant and equipment.

(Earnings) loss attributable to non-controlling interests and redeemable non-controlling interests. For the year ended December 31, 2013, we had loss attributable to non-controlling interests of $20.2 million and loss attributable to redeemable non-controlling interests of $6.9 million, respectively, as compared to earnings attributable to non-controlling interests of $39.1 million and earnings attributable to redeemable non-controlling interests of $42.0 million for the year ended December 31, 2012. This change was due primarily to loss attributable to our majority-owned subsidiaries, including LDK Silicon and other subsidiaries in Europe and the United States.

Accretion to redemption value of redeemable non-controlling interests. On June 3, 2011, LDK Silicon allotted and issued 240,000,000 LDK Silicon preferred shares to CDBI and investment funds affiliated with China Construction Bank Corporation and Bank of China Limited for an aggregate issuance price of $240 million. The LDK Silicon preferred shares on an as-if-converted basis represented approximately 18.46% of the aggregate issued and outstanding share capital of LDK Silicon, with us holding the remaining 81.54% equity interest in LDK Silicon. In the event of any redemption under this right, the redemption price is equal to 100% of the subscription price of $240 million, plus a 23% internal rate of return on such subscription price minus any dividends paid up to the date of redemption plus an annual dividend on a pro rata basis among all shareholders of LDK Silicon up to an amount of its retained earnings so that the holders of the LDK Silicon preferred shares will receive at least $15 million of such dividend, to the extent the declaration and distribution of such dividend are permitted by laws and contractual obligations applicable to LDK Silicon. During the year ended December 31, 2013, the holders of LDK Silicon preferred shares agreed to waive their annual dividends retrospectively. Accordingly, the redemption value was adjusted as of December 31, 2013.

Net loss available to our shareholders. For the year ended December 31, 2013, net loss available to our ordinary shareholders was $1,643.1 million, as compared to a net loss of $1,125.0 million available to our ordinary shareholders for the year ended December 31, 2012.

B.	LIQUIDITY AND CAPITAL RESOURCES

Production of PV products requires intensive capital investment, and we have financed our operations and capital expenditures substantially through cash flow from financing activities, including capital market financings and bank borrowings, as well as advance payments from customers.

The following table sets forth a summary of our net cash flow for the years indicated:


	Year Ended December 31,
	2012			2013			2014
	($ in thousands)
Net cash provided by (used in) operating activities		39,916			(174,051	)		(125,146	)
Net cash used in investing activities		(57,602	)		(884	)		(86,748	)
Net cash provided by (used in) financing activities		(128,586	)		100,517			197,429
Effect of foreign currency exchange rate changes on cash and cash equivalents		483			6,108			2,418
Net (decrease) increase in cash and cash equivalents		(145,789	)		(68,310	)		(12,047	)
Cash and cash equivalents at the beginning of year		244,072			98,283			29,973
Cash and cash equivalents at the end of year		98,283			29,973			17,926

Operating Activities

During the year ended December 31, 2012, our net cash provided by operating activities increased to $39.9 million from a net cash used in operating activities of $287.0 million during the year ended December 31, 2011, primarily due to a decrease in trade accounts receivable and bills receivable of $145.3 million, a decrease in inventories of $179.3 million and the release of pledged bank deposits related to purchase of inventory and other operating activities of $250.8 million, partially offset by a $322.8 million cash outflow in trade accounts payable and bills payable.

During the year ended December 31, 2013, our net cash used in operating activities decreased to $174.1 million from net cash provided by operating activities of $39.9 million during the year ended December 31, 2012, primarily due to a decrease in trade accounts payable and bills payable of $150.9 million and a decrease in advance payments from customers of $46.4 million.

During the year ended December 31, 2014, our net cash used in operating activities decreased to $125.1 million from $174.1 million during the year ended December 31, 2013, primarily due to a release of pledged bank deposits related to purchase of inventory and other operating activities of $102 million.

Investing Activities

During the year ended December 31, 2012, our net cash used in investing activities amounted to $57.6 million due primarily to our payment for property, plant and equipment of $106.7 million and cash paid for acquisition of a subsidiary of $14.6 million, partially offset by cash received for disposal of property, plant and equipment and land use right of $35.2 million and $30.8 million released from pledged bank deposits related to the purchase of property, plant and equipment.

During the year ended December 31, 2013, our net cash used in investing activities amounted to $0.9 million due primarily to our payment for property, plant and equipment of $5.5 million and cash of disposed subsidiaries of $2.7 million, partially offset by cash received for disposal of property, plant and equipment and land use right of $9.7 million. During the year ended December 31, 2013, we pledged bank deposits of $2.9 million as security for the issuance of letters of credit in connection with our purchases of property, plant and equipment, and no pledged bank deposits related to the purchase of property, plant and equipment were released during the year.

During the year ended December 31, 2014, our net cash used in investing activities was $86.7 million primarily due to our payments for property, plant and equipment of $82.3 million.

Financing Activities

During the year ended December 31, 2012, our net cash used in financing activities amounted to $128.6 million due primarily to the net decrease in our borrowings during the year. Our aggregate new loans and borrowings during the year ended December 31, 2012 amounted to $4,245.9 million. We repaid an aggregate principal amount of $4,410.7 million of our loans and borrowings during the year.

During the year ended December 31, 2013, our net cash provided by financing activities amounted to $100.5 million due primarily to the $64.7 million net increase in our borrowings during the year and the issuance of ordinary shares of $50.3 million, partially offset by a repayment of 2013 convertible notes of $11.2 million and a repayment of capital lease obligation of $3.4 million. Our aggregate new loans and borrowings during the year ended December 31, 2013 amounted to $5,267.2 million, while we repaid an aggregate principal amount of

$5,202.5 million of our loans and borrowings during the year. We did not pledge any additional bank deposits for our bank borrowings onshore or offshore China. The aggregate principal amount of our short-term bank borrowings and current portion of long-term borrowings outstanding as of December 31, 2011, 2012 and 2013 was $2,032.0 million, $2,391.3 million and $2,525.4 million, respectively. The short-term bank borrowings outstanding as of December 31, 2013 had maturity terms ranging from one month to 12 months and interest rates ranging from 3.643% to 11.000% and a weighted average interest rate of 6.032%. These loans were obtained from various financial institutions in China. The proceeds from these short-term bank borrowings were for working capital purposes.

During the year ended December 31, 2014, our net cash provided by financing activities amounted to $197.4 million due primarily to the $339.9 million net increase in our borrowings during the year, partially offset by the repayment of certain Chinese debt securities of $81.7 million and the pledge of additional $65.4 million bank deposits for bank borrowing. Our aggregate new loans and borrowings during the year ended December 31, 2014 amounted to $578.3 million, while we repaid an aggregate principal amount of $238.4 million of our loans and borrowings during the year. The aggregate principal amount of our short-term bank borrowings and current portion of long-term borrowings outstanding as of December 31, 2012, 2013 and 2014 was $2,391.3 million, $2,525.4 million and $2,839.3 million, respectively. The short-term bank borrowings outstanding as of December 31, 2014 had maturity terms ranging from one month to 12 months and interest rates ranging from 3.6% to 6.7% and a weighted average interest rate of 5.5%. These loans were obtained from various financial institutions in China. The proceeds from these short-term bank borrowings were for working capital purposes. As of December 31, 2014, we had no long-term borrowings, excluding current portion.

Working Capital Deficit

We have suffered recurring losses from operations and have incurred a net loss of $269.7 million for the year ended December 31, 2014. In addition, we had a working capital deficit (total consolidated current liabilities exceeding total consolidated current assets) of $3,899.5 million and a total capital deficit of $2,312.4 million as of December 31, 2014. As of December 31, 2014, we had cash and cash equivalents of $17.9 million, and total short-term borrowings and current portion of long-term borrowings of $2,839.3 million. As of December 31, 2014, an aggregate of $539.6 million of our onshore indebtedness has been subject to standstill and forbearance arrangement with our creditors onshore China. The significant financial difficulties we are currently experiencing, combined with the deterioration of our financial condition, could result in acceleration of the indebtedness under some of our financing arrangements that give our creditors a right to accelerate the repayment of our borrowings from them. These and other factors we have disclosed in this annual report raise substantial doubt as to our ability to continue as a going concern. However, we believe that we have developed a liquidity plan, as summarized below, that, if executed successfully, will provide sufficient liquidity to meet our obligations for a reasonable period of time.

Bank financing and other financial support

On November 11, 2013, we signed a framework agreement with a syndicate of 11 commercial banks in China for a working capital facility in the aggregate principal amount of Rmb 1,560.0 million, or approximately $255.9 million. As of March 31, 2015, we had withdrawn Rmb 400.0 million (or approximately $65.4 million) from the credit facility and may further draw down when necessary. The proceeds of the Rmb 1,560.0 million working capital facility are strictly limited to financing our operations onshore China within Jiangxi Province, and we may not use any of the proceeds to service our existing indebtedness, whether onshore or offshore China. The facility will terminate on November 10, 2016 and each draw-down under the facility may be made subject to the absolute discretion and additional conditions imposed by the syndicate on a draw-specific basis. The syndicate has also designated a working group to monitor our performance under the facility agreement, with a number of controlled bank accounts in place to monitor our use of funds and collection of cash flow. In addition, HRX has also committed to providing a working capital facility in the aggregate principal amount of $14.0 million to support our offshore working capital needs for the years ending December 31, 2018.

We have not been servicing approximately an aggregate of Rmb 3,301.5 million, or approximately $539.6 million, of indebtedness onshore China as of December 31, 2014 subject to standstill and forbearance arrangements, and we believe, however, that we will be able to keep such standstill and forbearance arrangement in place for a reasonable period of time. We have also been actively investigating and exploring the possibility of engaging our creditors onshore China with a view to restructuring our overall indebtedness in China, in addition to introduction of potential strategic and financial investors during the process, to improve our liquidity.

Sales of solar farm projects and other assets

We will continue to sell our solar farm projects in the ordinary course of our solar farm project development business. Some of the projects have become, or should soon become, salable in Europe, the United States and China. In the year ended December 31, 2014, we transferred 100% equity interest in Taojiang LDK PV Technology Co., Ltd., or Taojiang LDK, to Shunfeng for a consideration of approximately $3.3 million. On March 30, 2015, we entered into an agreement with subsidiaries of SPI to sell our solar farm projects in Europe and the United States to them. In addition, we are also investigating the possibility to pledge or sell our shares in SPI for new financing to support our working capital needs.

Delay in capital expenditure and improvement in working capital management

We have been negotiating with a number of our vendors, including suppliers of equipment and construction materials, to obtain preferential pricing terms and more favorable payment terms. We have also decided to postpone a substantial portion of our planned capital expenditures for the next 12 months until market conditions improve and when we are comfortable in incurring such expenditures. To actively manage our cash flow and working capital requirements, we have implemented various measures to closely monitor our inventory levels and manage the collection of our receivables.

We believe that the measures as described in the above liquidity plan will be adequate to satisfy our liquidity requirements for the next 12 months. For additional information regarding our liquidity plan, see “Item 4. Information on the Company — A. History and Development” and “Note (1) — Basis of Presentation” of our consolidated financial statements beginning on page F-1. There is no assurance, however, that we will be able to successfully implement the liquidity plan. If we fail to successfully execute this plan, it will have a material adverse effect on our business, results of operations and financial position, and will materially and adversely affect our ability to continue as a going concern. Also see “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Company and Our Industry — We are operating, and may continue to operate, with a significant working capital deficit; there exist substantial doubts and uncertainties as to our ability to continue as a going concern” and “— We have substantial existing indebtedness and may incur substantial additional indebtedness in the future, which could adversely affect our financial condition and our ability to generate sufficient cash to satisfy our outstanding and future debt obligations; and we may not be able to refinance our current borrowings on terms that are acceptable to us, or at all” in this annual report.

Capital Expenditures

We invested $79.5 million, $8.4 million and $82.3 million in capital expenditures during the years ended December 31, 2012, 2013 and 2014, respectively, primarily to construct and complete our polysilicon production plants and to purchase production equipments. We estimate that our expenditures during the year ending December 31, 2015 will be immaterial given our strategy to delay capital expenditures.

We will need additional funding to finance our working capital requirements and to repay indebtedness. In addition, we may require additional cash due to changing business conditions or other future developments. If we do not have sufficient cash to meet our requirements, we may seek to issue additional equity or debt securities or to borrow from lending institutions. If we are unable to obtain additional equity or debt financing as required, our business operations and prospects may suffer.

Prepayments to Suppliers

In order to secure a stable supply of raw materials for our polysilicon, wafer, cell and module businesses and a stable supply of our production equipment, we make prepayments to suppliers based on specific written purchase orders. Our prepayments to suppliers are recorded either as prepayments to suppliers, if they are expected to be utilized within 12 months as of each balance sheet date, or as prepayments to suppliers to be utilized beyond one year, if they are expected to be utilized after 12 months. As of December 31, 2012, 2013 and 2014, we had prepayments to suppliers of $18.4 million, $30.7 million and $6.2 million, respectively, and prepayments to suppliers to be utilized beyond one year of $8.0 million, nil and nil, respectively. Prepayments to raw materials suppliers are reclassified to inventories when we apply such prepayments to related purchases of raw materials for our businesses, and prepayments to equipment suppliers are reclassified to property, plant and equipment when we apply such prepayments to related purchases of equipment for our operations. These reclassifications are not reflected in our consolidated cash flow from operations.

We make prepayments without receiving any collateral, and, as a result, we are subject to counterparty risks. Any claims we make for these prepayments would rank as unsecured claims, exposing us to the credit risks of these suppliers in the event of their insolvency or bankruptcy. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Company and Our Industry — Some of our long-term sales contracts with customers and some of our long-term supply contracts with equipment manufacturers and polysilicon feedstock suppliers may continue to be subject to renegotiation at terms less favorable to us, and the terms of such renegotiation may materially and adversely affect our operations and may result in costly and time-consuming litigation or other proceedings” for a discussion on risks relating to our prepayment obligations to our suppliers.

Advance Payments from Customers

As of December 31, 2012, 2013 and 2014, advance payments from our customers amounted to $175.5 million, $115.3 million and $100.6 million, respectively. These prepayments were made to us by our customers under our supply agreements with them, primarily for their purchases of wafers and polysilicon products from us.

Restricted Net Assets

Our principal operating subsidiaries, Jiangxi LDK Solar, Jiangxi LDK Silicon, as well as our other Chinese operating subsidiaries are required under Chinese laws and regulations to make appropriations from their net income as determined under the Chinese accounting standards and regulations to non-distributable reserves, which include a statutory general reserve, an employee welfare and bonus fund and an enterprise development fund. The statutory general reserve for Jiangxi LDK Solar is required to be made at not less than 10% of its profit after tax as determined under the Chinese accounting standards and regulations. The employee welfare and bonus fund and enterprise development fund are determined by the board of directors of each subsidiary at its discretion. The statutory general reserve is used to offset future extraordinary losses. Jiangxi LDK Solar, Jiangxi LDK Silicon, Jiangxi LDK Polysilicon and other Chinese operating subsidiaries may, upon a resolution of their respective boards of directors, convert the statutory general reserve into capital. The employee welfare and bonus fund is used for the collective welfare of the employees of the relevant enterprise. The enterprise development fund is used for the purpose of future expansion and development of the relevant enterprise. These reserves represent appropriations of the retained earnings determined under the Chinese law. In addition to the statutory general reserve, Jiangxi LDK Solar, Jiangxi LDK Silicon, Jiangxi LDK Polysilicon and other Chinese operating subsidiaries are required to obtain approval from the local government authorities prior to distributing any of their registered share capital. Accordingly, both the appropriations to the statutory general reserve and the registered capital of Jiangxi LDK Solar, Jiangxi LDK Silicon, Jiangxi LDK Polysilicon and other Chinese operating subsidiaries are considered as restricted net assets.

C.	RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

Research and Development

We have a dedicated R&D team at our manufacturing facilities in Xinyu Hi-Tech Industrial Park. Its primary objectives are to enhance our product quality and to achieve a more efficient production process by improving yield and lowering production costs. Our current on-going initiatives include:

•

installation of hydrochlorination facilities to improve STC conversion and TCS production;

•

STC thermal converter improvements and optimization to enhance STC-TCS conversion;

•

fuel conversion from natural gas to high-pressure steam;

•

application of an advanced coating technology and certain process optimization to CVD reactors to reduce power consumption;

•

developing innovative recycling technologies for better utilization of scrap silicon materials from the semiconductor and PV industries;

•

developing a silicon recovery technology for the recovery of silicon dust from wafering processing;

•

developing a new silicon crystallization technology for higher quality wafers;

•

improving the crystallization and wafering processes and equipment to increase production output and reduce production costs;

•

developing wafering technologies for manufacturing thinner wafers with less kerf loss;

•

developing slurry recycling technologies to lower slurry cost;

•

developing new solar cell processes for the use of new silicon wafers;

•

developing new solar cell technologies for high efficiency solar cells, such as selective emitters;

•

exploring the use of new module materials to improve module conversion efficiency; and

•

new design for light modules with less use of materials.

Since 2007, we also maintain an LDK Solar Research Center with Nanchang University in Jiangxi Province. This laboratory has been focused on producing lower-cost consumables and reducing the cost of utilizing locally procured consumables in our manufacturing process. Under our arrangement with Nanchang University, we and the university will jointly own all research results of the laboratory. Any commercial utilization of the research results is subject to further negotiation between us and Nanchang University.

We also benefit from a National Photovoltaic Engineering Research Center commissioned by the Ministry of State Science and Technology at our Xinyu production site. At present, this constitutes the only national-level research center relating to PV technology in China. This center is primarily staffed and operated by us, and was accredited by the Ministry of State Science and Technology in December 2013 as a limited-purpose post-doctorate and research-fellow training facility. The center is focused on certain key aspects of research and development of low-cost PV production techniques, localization of core PV equipment, comprehensive utilization of resources in PV production process, and new PV products. We believe that the establishment and operation of the National Photovoltaic Engineering Research Center in Xinyu City will benefit not only our operations but also the PV industry in China.

Intellectual Property Rights

We have developed various production process related know-how and technologies in-house. In addition, we have a number of on-going R&D programs, including our collaboration with Shanghai Jiaotong University and Nanchang University, with a view to developing techniques and processes that will improve conversion efficiency and product quality and lower production cost. We rely on nondisclosure agreements, trade secrets and

technical know-how to protect our intellectual property and proprietary rights. We have entered into confidentiality, assignment of inventions and non-competition agreements with our executive employees, engineers and technicians. We have also entered into confidentiality arrangements with other employees, suppliers and distributors. Pursuant to the confidentiality, assignment of inventions and non-competition agreements, our senior employees, engineers and technicians have agreed and acknowledged that we own the rights to all technology, inventions, trade secrets, developments and other processes generated in connection with their employment with us or their use of our resources or relating to our business and that they must assign any ownership rights that they may claim in those works to us.

As of the date of this annual report, we have 121 issued patents, and 104 patent applications pending globally. In addition, we also have two registered copyrights and three registered trademarks in China. These patent applications and granted patents relate to various technologies, including polysilicon production, silicon recycling, wafer production processes, solar cell structure, module design, and production equipment. While we currently use some of these technologies in our operations, we expect some of these technologies that we have not yet implemented have significant potential future applications. We intend to continue to assess appropriate opportunities for patent protection of those aspects of our technology that we believe provide a significant competitive advantage to us. We have not taken any action outside China to protect our intellectual property. You should refer to “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Company and Our Industry — We may be exposed to intellectual property infringement, misappropriation or other claims by third parties and an adverse determination could result in us paying significant damages.” for additional information.

D.	TREND INFORMATION

The PV market has been highly competitive and volatile. Currently, China’s major solar manufacturers, including us, substantially rely on both exports of PV products and domestic demand. The reduced market demand for PV products in these markets has resulted in substantial oversupply. In addition, we and many of our competitors engaged in aggressive expansion programs during the past several years. As a result, competition has increased and the industry has experienced price reductions, which have materially and adversely affected our business operations and financial condition. Various consolidations are gathering speed in the PV industry in China and globally. Due to limited customer orders and depressed market prices with the global economic slowdown, many players, including us, have substantially reduced production volumes and/or have temporarily suspended the operations of certain plants.

PV is one of the proven and most rapidly growing renewable energy sources in the world. Energy from the sun is converted into electricity primarily through the PV effect and, to a lesser extent, through concentrated solar thermal technologies. According to PVinsights, the global PV installations for the years of 2012, 2013 and 2014 reached 29.0 GW, 37.2 GW and 42.3 GW, respectively.

Over the years, there was an aggressive capacity expansion throughout the manufacturing chain on a global basis until 2012. According to PVinsights, the manufacturing capacity of polysilicon available to the PV industry reached a level equivalent to 350.1 kMT, 397.8 kMT and 460.9 kMT, respectively, in 2012, 2013 and 2014. Wafering capacity grew to 46.3 GW in 2012, 49.1 GW in 2013 and 59.5 GW in 2014, according to PVinsights. Cell and module capacity also grew to 53.1 GW and 56.3 GW in 2012, 55.7 GW and 64.6 GW in 2013 and 63.1 GW and 71.9 GW in 2014, respectively, according to PVinsights.

Key Drivers of PV Industry

Advantages of solar power

Solar power has several advantages over conventional and other forms of renewable energy:

Reduced Dependence on Finite Conventional Energy Sources. Solar power is an optimal renewable energy source. Using solar power reduces the need for a country to access the global commodity markets and allows it to rely on its own solar resources for power supply.

Ease of Installation Close to Demand Centers. Currently, most electricity is generated in centralized plants that rely on transmission systems to transport electricity to demand centers. Solar power systems can be modular and installed close to the demand centers in many instances, lessening the need to invest capital in new transmission systems and electricity grids.

Ability to Meet Peak Demand. Solar power systems generate electricity when sunlight is available, coinciding generally with the higher demand for electricity during the daytime.

Environmental Friendliness. Greenhouse gas emissions and their impact on climate change continue to be a global concern. Solar power systems emit no greenhouse gases, making them a ready solution to replace current power production that is dependent on fossil fuels.

Low Variable Cost. In addition to requiring no fuel supply, solar power systems also have limited operational and maintenance variable costs. After payment of the fixed installation cost, solar power becomes one of the lowest variable cost sources of energy.

Government incentives for solar power

The use of solar power has continued to grow in countries where governments have implemented renewable energy policies and incentives to encourage the use and accelerate the development of solar power and other renewable energy sources. Although governments have reduced or modified their incentives since the global financial crisis in 2008, many governments worldwide continue to offer various types of financial incentives, albeit in a reduced manner, in the forms of capital cost subsidies, feed-in tariffs, net metering, tax credits and other incentives to end-users, distributors, system integrators and manufacturers of solar power products, to make solar power more cost competitive with conventional energy. International environmental protection initiatives, such as the Kyoto Protocol, for the reduction of overall carbon dioxide and other gas emissions have also created momentum for government incentives encouraging solar power and other renewable energy sources. Governments of major solar markets may, from time to time, modify their policies in order to manage the growth of the markets and to incentivize local PV manufacturers to become more cost competitive.

Decreasing costs of solar energy

Solar energy has become an attractive alternative energy source because of narrowing cost differences between solar energy and conventional energy sources due to market-wide decreases in the average selling prices for solar power products due to lower raw materials costs and increased production efficiencies.

Key Challenges for PV Industry

Need to Improve Cost Competitiveness Against Other Energy Sources. The primary challenge for the PV industry is to reduce the price per watt of energy for end-users. It remains a challenge for the PV industry to reach a sufficient scale to be cost-effective in a non-subsidized marketplace.

Possible Reduction or Elimination of Government Subsidies and Incentives. Historically, the growth of the PV industry has substantially relied on the availability and size of government subsidies and economic incentives, such as capital cost rebates, favorable feed-in tariff, tax credits, net metering and other incentives. Reduction or elimination of such government subsidies and incentives may adversely affect the development of the PV industry.

Ability to Obtain Financing. Due to the high initial and continuing capital expenditure requirements, it is crucial for PV industry participants to obtain large amounts of financing to fund their operations, expansions and R&D activities in a timely manner in order to survive or succeed. It remains a considerable challenge for many PV industry players to secure an appropriate level of financing for their operations and expansion.

Overview of PV Industry Value Chain

The crystalline silicon-based solar power manufacturing value chain starts with processing quartz sand to metallurgical-grade silicon. The material is further purified to solar grade or semiconductor grade polysilicon feedstock. Recoverable silicon materials acquired from semiconductor and solar power industries, such as integrated circuit scraps, partially processed and broken silicon wafers, broken solar cells, pot scraps, silicon powder, ingot tops and tails, and other off-cuts, can also be used as feedstock. Most recoverable silicon materials sourced from the semiconductor industry are of higher purity than solar-grade recoverable silicon materials. However, the use of recoverable silicon materials increases the difficulty of producing silicon ingots with quality similar to those made from virgin polysilicon, and advanced technologies are required to produce silicon ingots from recovered silicon materials, which come in varying grades.

Feedstock is melted in high temperature furnaces and is then formed into silicon ingots through a crystallization process. To the extent that less virgin polysilicon and more recovered silicon materials may be used in the manufacture of ingots, the overall cost of raw materials will be lower. Silicon ingots are cut into blocks and then further sliced into silicon wafers using high precision techniques, such as wire-sawing technologies. Silicon wafers are manufactured into solar cells through a multiple-step manufacturing process that entails etching, doping, coating and applying electrical contacts. Solar cells are then electrically interconnected and laminated in durable and weather-proof packages to form solar modules, which, together with system components, such as batteries and inverters, are installed as solar power systems.

The following diagram illustrates the value chain for the manufacture of crystalline silicon-based solar power products:

LOGO

Thin-film technologies have received increasing attention over the years due to higher silicon prices. Such technologies require little or no silicon in the production of solar cells and modules and are therefore less susceptible to increases in costs of silicon. Thin-film solar products involve lower production costs and are lighter in weight than crystalline silicon-based solar cells. However, the conversion efficiencies of thin-film based solar cells are comparatively lower.

Polysilicon

Polysilicon is the primary raw material for the PV and semiconductor industries. Historically, the semiconductor industry has been the dominant user of polysilicon. Due to the rapid growth of the PV industry in recent years, the polysilicon consumption by the PV industry has exceeded that by the semiconductor industry. As a result of this rapid expansion, sales to the PV industry are now the key factor affecting the price, profit and growth of the polysilicon market. According to PVinsights, the polysilicon production capacity reached 350.1 kMT in 2012, 397.8 kMT in 2013 and 460.9 kMT in 2014. Players in China have played an important role in the global polysilicon manufacturing.

Wafer

There are two primary types of wafer production:

•

monocrystalline wafers, and

•

multicrystalline wafers.

Monocrystalline-based solar power products are more expensive to produce than multicrystalline-based solar power products of similar dimensions, but monocrystalline-based solar power products achieve higher conversion efficiencies as a result of their production technology and requirement of high purity of polysilicon.

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Multicrystalline silicon consists of numerous smaller crystals and generally contains more impurities and crystal defects that impede the flow of electrons relative to monocrystalline silicon. While this results in lower energy conversion efficiency, producing multicrystalline-based solar power products involves less labor and lower quality silicon feedstock, as compared to production of monocrystalline-based solar power products of similar dimensions.

The surface area of wafers is another key factor in determining how much incident light can be absorbed and converted into electricity. To reduce manufacturing costs and increase output, wafer manufacturers strive to reduce the thickness of wafers without reducing the surface area as the production of thinner wafers uses less silicon per unit.

The expansion of manufacturing capacity for wafers depends on the secure supply of raw materials and key wafer manufacturing equipment, such as wire saws. Similar to the polysilicon industry, the production base for wafer has also shifted to mainland China and Taiwan. In 2013 and 2014, respectively, 83.9% and 86.2% of global wafer production capacity was located in mainland China and Taiwan, according to PVinsights.

Solar cell and module production

According to PVinsights, global center of C-Si cell production has also shifted to mainland China and Taiwan. Cell production in mainland China and Taiwan rose to 72.8% in 2013 and 2014, according to PVinsights. We believe the shift toward an increasing manufacturing dominance by mainland China and Taiwan is as evident for modules as it is for wafers and cells.

E.	OFF-BALANCE SHEET ARRANGEMENTS

Other than our purchase obligations for raw materials and equipment, we have not entered into any financial guarantees or other commitments to guarantee the payment obligations of third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or R&D services with us. There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, net sales or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to you and other investors.

F.	TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table sets forth our contractual obligations (including interest payment) and commercial commitments as of December 31, 2014:


	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
	($ in thousands)
Borrowings		3,262,400		3,262,400		—		—		—
Capital lease obligations		83,618		64,562		19,056		—		—
Purchase obligations for equipment		173,076		10,589		162,487		—		—
Convertible senior notes		711,699		36,200		396,403		279,096		—
Convertible promissory note		10,000		—		—		—		10,000

Total		4,240,793		3,373,751		577,946		279,096		10,000

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The contractual obligations and commercial commitments disclosed in the table above are based on the original terms contained in the relevant agreements. They may differ from our disclosures in the consolidated financial statements, which will have to take into account the accounting classification and presentation of such contractual obligations and commercial commitments from time to time.

G.	SAFE HARBOR

The safe harbor provided in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act apply to the forward-looking information provided pursuant to Item 5.E and F.

ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.	DIRECTORS AND SENIOR MANAGEMENT

The following table sets forth information regarding our directors and executive officers as of the date of this annual report.


Directors and Executive Officers	Age	Position
Xingxue Tong	52	Director, Interim Chairman, President and Chief Executive Officer
Zhibin Liu	53	Non-executive Director
Shi Chen	54	Non-executive Director
Maurice Wai-fung Ngai	53	Independent Director
Junwu Liang	82	Independent Director
Shi-an Wu	66	Independent Director
Ceng Wang	42	Independent Director
Jack K.S. Lai	61	Executive Vice President, Chief Financial Officer and Secretary to Board
Yuepeng Wan	51	Senior Vice President, Chief Technology Officer

Mr. Xiaofeng Peng, founder and former Chairman, resigned on August 29, 2014 from our board of directors and all his executive and director positions with our various subsidiaries onshore and offshore China, except for SPI. We have retained Mr. Peng as a senior consultant and, in recognition of his many contributions to our company since its founding, have also named Mr. Peng the Chairman Emeritus for our company.

In addition, Mr. Bing Xiang, Mr. Hongjiang Yao and Mr. Xuezhi Liu resigned from our board of directors in 2014 all for personal reasons.

Directors

Xingxue Tong is a director, interim chairman, president and chief executive officer of our company. He joined us in January 2007. Mr. Tong has approximately 15 years of experience in managing operations of companies in the solar industry. Prior to joining our company, Mr. Tong served as general manager for south-east Asia business development with GT Advanced Technologies, formerly known as GT Solar, since 2004. He was the executive president of commerce of Canadian Solar Inc. in 2004 and vice general manager of an affiliate of Tianwei Yingli Energy Resources Co., Ltd. from 1999 to 2004. Mr. Tong received an EMBA degree from Cheung Kong Graduate School of Business in 2012, a diploma in industrial economic management from Renmin University of China in 1988 and a diploma in English from Hebei University in 1998. Mr. Tong’s interim chairmanship will terminate upon the identification and appointment of a permanent chairman of our company.

Zhibin Liu is a non-executive director of our company. He joined us in October 2012 as a director nominated by HRX. He has served as the chairman of the board and the general manager of Xinyu State-owned Asset Management Co., Ltd. since April 2007. He received a college degree from Yichun Normal College with a major in Chinese language and literature in 1981 and a bachelor’s degree from Party School of the Central Committee of C.P.C. with a major in economics and management.

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Shi Chen is a non-executive director of our company. He joined us in November 2013 as a director nominated by Fulai Investments. Dr. Chen has over 25 years of working experience in a variety of industries. He is currently a director of Mountain China Resorts (Holdings) Limited, a mountain resort developer in China and listed on TSX Venture Exchange in Canada, and has been holding this position since February 2012. Dr. Chen also served as the president of Caricom Limited, a Hong Kong investment company, from January 2002 to February 2013, a deputy general manager of Cityford Dyeing & Printing Industrial Limited from March 1998 to December 2001, and a deputy general manager of Yat Chau Holdings Limited from December 1994 to February 1998. Prior to these management positions, Dr. Chen worked as a deputy head and then the head of the policy division of social and economic research center of the People’s Government of Hainan Province from July 1989 to November 1994. Dr. Chen obtained a bachelor’s degree and a master’s degree in economics from Wuhan University in August 1982 and July 1985, respectively. He obtained a doctorate degree in economics from the Graduate School of the Chinese Academy of Social Sciences in July 1989.

Maurice Wai-fung Ngai became an independent director of our company in July 2011. Dr. Ngai, currently managing director and founder of MNCOR Consulting Limited, an independent specialty corporate service company, is a fellow of the Hong Kong Institute of Chartered Secretaries and the Institute of Chartered Secretaries and Administrators in the United Kingdom, a member of the Hong Kong Institute of Certified Public Accountants and a fellow of the Association of Chartered Certified Accountants in the United Kingdom and a fellow of Hong Kong Institute of Directors and a member of Hong Kong Securities and Investment Institute. He obtained a doctor’s degree in Economics (Finance) from Shanghai University of Finance and Economics, a master’s degree in Corporate Finance from Hong Kong Polytechnic University, a master’s degree in Business Administration from Andrews University and a bachelor’s degree in law from University of Wolverhampton.

Junwu Liang became an independent director of our company in March 2008. Dr. Liang is a professor at the Chinese Academy of Engineering, Beijing, China. From 1993 to 2005, Dr. Liang served as Chairman of the Institute of Electronic Materials. He was previously a faculty member in the Institute of Semiconductors at the Chinese Academy of Sciences, Beijing, China. Prior to that, he worked on the design and fabrication of integrated circuit devices at the Yichang Semiconductor Factory in Yichang city, Hubei province, China. He has published extensively in the areas of semiconductor materials fabrication and silicon characterization. He holds nine patents and is the recipient of numerous prizes in science and technology in China. He received his bachelor’s degree in engineering from Wuhan University in 1955 and his Ph.D. in material science from the Institute of Metallurgy at the Academy of Sciences of formerly USSR.

Shi-an Wu became an independent director of our company in October 2012. Mr. Wu is a professor of Jiangxi University of Finance and Economics. Mr. Wu graduated from Jiangxi University of Finance and Economics in 1982 with a bachelor’s degree in trading and economics. Since 1993, he has been a recipient of a special government allowance from the Chinese State Council. He was also awarded an honorary doctorate degree by the New York Institute of Technology in 2005.

Ceng Wang became an independent director of our company in October 2012. Mr. Wang currently serves as the managing partner of Rita Henrich Financial Advisory Firm, with extensive experience in corporate restructuring, merger and acquisition and investment and financing. Prior to that, Mr. Wang served as the president and chief executive officer of China Shenfei Group from April 2010 to March 2012 and chief strategic advisor from 2012 to 2014. Mr. Wang has held various management positions at Pudong Development Bank and Bank of China. Mr. Wang has also served as the financial consultant of the People’s Government of Xinyu City of Jiangxi Province since November 2010.

Executive Officers

Jack Lai is an executive vice president, chief financial officer and secretary of our company. He joined us in August 2006. Mr. Lai has approximately 25 years of experience in finance, strategic planning and corporate

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management. Prior to joining our company, Mr. Lai served as the chief financial officer and vice president of Silicon Storage Technology, Inc. He was the vice president of finance and administration and the chief financial officer of Aplus Flash Technology, Inc. in San Jose, California from 2000 to 2003. He served as vice president of finance and administration, chief financial officer and general manager of Wirex Corporation, Inc. in Portland, Oregon, from 1998 to 2000. Mr. Lai graduated from Tamkang University with a bachelor’s degree in business administration in 1976, from Chinese Culture University with an MBA degree in 1978 and from San Jose State University with an MBA degree in 1982.

Yuepeng Wan is a senior vice president and the chief technology officer of our company. He joined our company in February 2007. Dr. Wan has approximately 20 years of experience in R&D in silicon and materials engineering. Prior to joining our company, Dr. Wan was an R&D manager at GT Advanced Technologies, formerly known as GT Solar, in New Hampshire from October 2005 to February 2007 in charge of DSS furnace R&D. Prior to that, he was a research associate of the materials crystal division at Saint-Gobain Northboro R&D Center in Massachusetts from January 2005 to October 2005. From April 2000 to January 2005, he was a senior applications engineer at GT Advanced Technologies in New Hampshire responsible for design and development of crystal growth furnaces. Dr. Wan received a bachelor of science degree in materials engineering from University of Science & Technology of China in 1986, a master of science degree in mechanical engineering from University of Science & Technology of China in 1989 and a Ph.D. degree in mechanical engineering from Aachen University of Technology of Germany in 1997.

B.	COMPENSATION OF DIRECTORS AND OFFICERS

Compensation of Directors and Executive Officers

All directors receive reimbursements from us for expenses necessarily and reasonably incurred by them for providing services to us or in the performance of their duties. Our directors who are also our employees receive compensation in the form of salaries, housing allowances, other allowances and benefits in kind in their capacity as our employees. Independent directors are also paid a director’s fee in accordance with the applicable laws and regulations. No executive officer is entitled to any severance benefits upon termination of his or her employment with our company.

For the years ended December 31, 2012, 2013 and 2014, the aggregate cash compensation that we paid to our directors and executive officers was $3,525,196, $3,193,550 and $2,223,472, respectively.

You may find more details of the stock options we have granted to our directors and executive officers pursuant to our stock incentive plans under “— E. Share Ownership — Stock Incentive Plans” below.

Indemnification

Our directors and other officers may be indemnified under Cayman Islands law except for liabilities arising from their fraud, dishonesty, willful default or neglect, or equitable fraud. Pursuant to our memorandum and articles of association, our directors and officers, as well as any liquidator or trustee for the time being acting in relation to our affairs, will be indemnified and held harmless out of our assets and profits from and against all actions, costs, charges, losses, damages and expenses that any of them or any of their heirs, executors or administrators may incur or sustain by reason of any act done, concurred in or omitted in or about the execution of their duties in their respective offices or trusts. Accordingly, none of these indemnified persons will be answerable for the acts, receipts, neglects or defaults of each other; neither will they be answerable for joining in any receipts for the sake of conformity, or for any bankers or other persons with whom any monies or effects belonging to us may have been lodged or deposited for safe custody, or for insufficiency or deficiency of any security upon which any monies of or belonging to us may be placed out on or invested, or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts. This indemnity will not, however, extend to any fraud or dishonesty which may attach to any of said persons, or to acts of willful default or neglect, or equitable default.

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Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Employment Agreements

Officers are selected by and serve at the discretion of our board of directors. Each executive officer has entered into an employment agreement with us for an initial term of one year, which will be automatically renewed for successive one-year terms until terminated by either party with three months’ notice in writing to the other party.

C.	BOARD PRACTICES

Our board of directors is currently comprised of seven directors, including four independent board members. A director is not required to hold any shares in our company by way of qualification. A director may vote with respect to any contract, proposed contract or arrangement in which he or she has a material interest provided that a declaration of interest has been made in accordance with our articles of association and such director is not required to abstain from voting and/or be excluded from the counting of the quorum under our articles of association. Any director may exercise all the powers of our company to borrow money, mortgage its undertaking, property and uncalled capital, and subject to the Cayman Islands companies law, issue debentures or other securities whenever money is borrowed or as security for any obligation of our company or of any third party. We have established three committees of the board of directors:

•

the audit committee,

•

the compensation committee, and

•

the corporate governance and nominating committee.

Subsequent to the resignation of Mr. Peng as our chairman, we established an executive committee within our board of directors, for an interim period until our permanent chairman is identified and appointed. This executive committee will support the work of our interim chairman.

We have adopted a charter for each committee to comply with the Sarbanes-Oxley Act and the relevant corporate governance rules. Each committee’s members and functions are described below.

We have a staggered board of directors. Our directors are divided into three classes, as nearly equal in number as the then total number of directors permits. Maurice Ngai, Ceng Wang and Shi Wang have been designated as Class I directors with their terms to expire at our shareholders’ general meeting in 2017; Xingxue Tong and Shi-an Wu have been designated as Class II directors with their terms to expire at our shareholders’ general meeting in 2015; and Zhibin Liu and Junwu Liang have been designated as Class III directors with their terms to expire at our shareholders’ general meeting in 2016. At each annual general meeting of our shareholders, successors to the class of directors whose terms expire at that meeting will be elected for a three-year term. Our service contracts with our directors do not provide for benefits upon the termination of their employment. If the number of directors changes, any increase or decrease will be apportioned among the classes so as to maintain the number of directors in each class as nearly as possible. Any additional directors of a class elected to fill a vacancy resulting from an increase in such class will hold office for a term that coincides with the remaining term of that class. Decrease in the number of directors will not shorten the term of any incumbent director. Nonetheless, whenever the holders of preferred shares have the right, voting separately as a class, to elect directors, the election, term of office, filling of vacancies and other features of directorships will be governed by the applicable terms of our articles of association and the rights attaching to those preferred shares. These provisions make it more difficult for third parties to gain control of our company because it is more difficult to replace members of a staggered board.

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Audit committee

Our audit committee consists of three directors, namely Maurice Ngai, Ceng Wang and Junwu Liang. Mr. Ngai, Mr. Wang and Dr. Liang satisfy the “independence” requirements of the SEC rules and regulations. In addition, our board of directors has determined that Mr. Ngai and Mr. Wang are each qualified as an audit committee financial expert within the meaning of SEC rules and regulations. The audit committee oversees our accounting and financial reporting processes and the audits of our financial statements. The audit committee is responsible for, among other things:

•

selecting the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors;

•

reviewing and approving all proposed related-party transactions;

•

discussing the annual audited financial statements and interim financial statements with management and the independent auditors;

•

annually reviewing and reassessing the adequacy of our audit committee charter;

•

meeting separately and periodically with management and the independent auditors;

•

such other matters that are specifically delegated to our audit committee by our board of directors from time to time; and

•

reporting regularly to the full board of directors.

Compensation committee

Our compensation committee consists of Xingxue Tong, Maurice Ngai and Junwu Liang. Our compensation committee assists the board in reviewing and approving the compensation structure of our directors and executive officers, including all forms of compensation to be provided to our directors and executive officers. The compensation committee is responsible for, among other things:

•

reviewing and determining the compensation package for our senior executives;

•

reviewing and making recommendations to the board with respect to the compensation of our directors;

•

reviewing and approving officer and director indemnification and insurance matters;

•

reviewing periodically and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans; and

•

reporting regularly to the full board of directors.

Corporate governance and nominating committee

Our corporate governance and nominating committee consists of Xingxue Tong, Zhibin Liu, Maurice Ngai and Junwu Liang. The corporate governance and nominating committee assists the board of directors in identifying individuals qualified to become our directors and in determining the composition of the board and its committees. The corporate governance and nominating committee is responsible for, among other things:

•

identifying and recommending to the board nominees for election or re-election to the board;

•

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 board’s committees;

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•

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;

•

monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and

•

reporting regularly to the full board of directors.

Duties of Directors

Under Cayman Islands law, our directors have a common law duty of loyalty to act honestly in good faith with a view to our best interests. Our directors also have a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association.

D.	EMPLOYEES

We had an aggregate of 8,979 persons, 9,494 persons and 8,529 persons as full-time employees as of December 31, 2012, 2013 and 2014, respectively. As of March 31, 2015, we had an aggregate of 7,231 full-time employees. Most of these employees were located at our manufacturing plants in Xinyu City, Jiangxi Province, China.

A breakdown of our employees by areas of operations and as a percentage of our workforce as of December 31, 2014 is set forth below:


	Number of Employees		Percentage of Total
Manufacturing		5,597		65.6	%
Quality control		927		10.9
Research, development and engineering		319		3.7
Administration		1,270		14.9
Production planning		275		3.2
Finance		107		1.3
Procurement		34		0.4

Total		8,529		100.0	%

From time to time, we also employ part-time or contract employees, as required, to meet any increased demand for our products. We plan to hire additional employees as needed.

As required by Chinese regulations, we participate in statutory retirement plans organized by the respective Chinese local governments. We currently contribute approximately 29% of the staff’s basic salaries to such funds. Our contributions to the statutory retirement plans are charged to the consolidated profit and loss account as and when incurred. We also provide our employees with medical insurance and unemployment insurance as required by the Chinese laws and regulations. For the years ended December 31, 2012, 2013 and 2014, we incurred cost under the statutory employee benefit plans of approximately $10.8 million, $6.6 million and $7.4 million, and received relevant government subsidy of approximately nil, nil and $5.3 million, respectively.

We have not experienced any significant difficulties in recruiting employees nor have we had any significant labor disputes. We consider our relationship with our employees to be good.

We enter into employment contracts with all of our officers, managers and employees, which contain a non-compete clause both for the period of their employment with our company and for an agreed period of time thereafter.

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E.	SHARE OWNERSHIP

Stock Incentive Plans

We adopted our 2006 stock incentive plan in July 2006 and our 2013 stock incentive plan in July 2013. The purpose of our stock incentive plans is to attract and retain the best available personnel, to provide additional incentives to employees and non-executive directors in recognition and acknowledgement of their contributions made to our company and to promote the success of our business.

Eligible participants

Under our stock incentive plans, our board of directors may, at its discretion, offer to grant an option to subscribe for such number of our ordinary shares at an exercise price as our board may determine to:

•

any full-time or part-time employees, executives or officers of our company or any of our subsidiaries; and

•

any directors, including non-executive directors and independent directors, of our company or any of our subsidiaries.

Our 2006 stock incentive plan also allows the following persons to be grantees of its stock options:

•

any advisers, consultants and agents to us or any of our subsidiaries; and

•

such other persons who, in the sole opinion of our board of directors, will contribute or have contributed to our development and operations.

Maximum number of shares

The maximum number of ordinary shares in respect of which options may be granted (including ordinary shares in respect of which options have already been granted and remain outstanding) under our stock incentive plans may not in the aggregate exceed 10% of the total number of ordinary shares in issue and outstanding from time to time, including ordinary shares issued and outstanding upon the exercise of any options granted under our stock incentive plans and upon conversion of any of our preferred shares. As of the date of this annual report, the maximum number of ordinary shares in respect of which we may grant options (including ordinary shares in respect of which options have already been granted but still outstanding) under our stock incentive plans is 26,158,596 ordinary shares.

Price of shares

Our board of directors may, in its discretion, determine the subscription price of an ordinary share in respect of any particular option granted under our stock incentive plans, provided that the subscription price for our 2006 stock incentive plan may not be lower than $4.43 per share as provided in such plan. The determination by our board of directors of the subscription price will be guided by the fair market value of our ordinary shares, subject to any discount considered reasonable by our board for any optionee as permitted under our stock incentive plans. If there exists a public market for our ordinary shares, including our ADSs, the fair market value of our ordinary shares will be the closing price for the last market trading day prior to the time of the determination on the stock exchange determined by our board of directors to be the primary market for our ordinary shares or ADSs. If there is no established market for our ordinary shares or ADSs, our board of directors will determine the fair market value of our ordinary shares in good faith by reference to the placing price of the latest private placement of our ordinary shares and the development of our business operations since such latest private placement.

Performance criteria

Our stock incentive plans allow our board of directors or its designated administrator to establish the performance criteria when granting stock options on the basis of any one of, or combination of, increase in our

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share price, earnings per share, total shareholder return, return on equity, return on assets, return on investment, net operating income, cash flow, revenue, economic value added, personal management objectives, or other measures of performance selected by our board of directors. Partial achievement of the specified criteria may result in a vesting corresponding to the degree of achievement as specified in the award agreement with the relevant optionee.

Outstanding options granted under our stock incentive plans

We have granted options under both our 2006 stock incentive plan and our 2013 stock incentive plan. As of the date of this annual report, the number of ordinary shares in respect of which we have granted options under our stock incentive plans is 30,252,010 ordinary shares, with options for 642,254 ordinary shares outstanding under our 2006 stock incentive plan and options for 7,228,183 ordinary shares outstanding under the 2013 stock incentive plan.

The following table summarizes, as of the date of this annual report, the outstanding options granted under our stock incentive plans to our directors, officers and other employees. These outstanding options are subject to a five-year vesting period beginning on the date of their respective grants.

Name

Ordinary Shares
Underlying
Outstanding
Options

Exercise Price
($/Share)

Date of Grant

Date of Expiration

Xingxue Tong

1.50

September 2, 2013

September 1, 2023

Jack Lai

1.50

September 2, 2013

September 1, 2023

Yuepeng Wan

1.50

September 2, 2013

September 1, 2023

Maurice Ngai

1.50

September 2, 2013

September 1, 2023

Junwu Liang

1.50

September 2, 2013

September 1, 2023