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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
    Form 20-F
  (Mark One)o

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

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2010.ORo

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

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this
    shell company reportFor the transition period
    from          to   Commission file number:
    001-33107
  CANADIAN SOLAR INC.
 (Exact name of Registrant as
    specified in its charter)
  N/A
  (Translation of
    Registrants name into English)
  Canada
  (Jurisdiction of incorporation
    or organization)
  650 Riverbend Drive,
    Suite B
    Kitchener, Ontario, Canada N2K 3S2 (Address of principal
    executive offices)
  Weiwen Chen, Chief Financial
    Officer
    650 Riverbend Drive, Suite B
    Kitchener, Ontario, Canada N2K 3S2
    Tel: (1-905)
    530-2334
    Fax: (1-905)
    530-2001 (Name, Telephone,
    E-mail
    and/or Facsimile number and Address of Company Contact
    Person)
  Securities registered or to be
    registered pursuant to Section 12(b) of the Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon shares with no par value

The NASDAQ Stock Market LLC
    (The NASDAQ Global Market)   Securities registered or to be
    registered pursuant to Section 12(g) of the Act:
    None (Title of
    Class)
  Securities for which there is a
    reporting obligation pursuant to Section 15(d) of the
    Act:
    None (Title of
    Class)
    o þ
 o þ
 þ o
 Regulation S-T o o
 Rule 12b-2
 Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o  þ o o
 o o
 Rule 12b-2 o þ
  o o




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TABLE OF
    CONTENTS
  PageContentsINTRODUCTION


1PART I


2ITEM 1

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
    ADVISERS


2ITEM 2

OFFER STATISTICS AND EXPECTED TIMETABLE


2ITEM 3

KEY INFORMATION


2ITEM 4

INFORMATION ON THE COMPANY


25ITEM 4A

UNRESOLVED STAFF COMMENTS


46ITEM 5

OPERATING AND FINANCIAL REVIEW AND PROSPECTS


46ITEM 6

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES


69ITEM 7

MAJOR SHAREHOLDERS AND RELATED PARTY
    TRANSACTIONS


82ITEM 8

FINANCIAL INFORMATION


82ITEM 9

THE OFFER AND LISTING


86ITEM 10

ADDITIONAL INFORMATION


87ITEM 11

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


94ITEM 12

DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES


95PART II


95ITEM 13

DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUENCIES


95ITEM 14

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
    HOLDERS AND USE OF PROCEEDS


95ITEM 15

CONTROLS AND PROCEDURES


95ITEM 16

NONE


97ITEM 16A

AUDIT COMMITTEE FINANCIAL EXPERT


97ITEM 16B

CODE OF ETHICS


97ITEM 16C

PRINCIPAL ACCOUNTANT FEES AND SERVICES


98ITEM 16D

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
    COMMITTEES


98ITEM 16E

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
    AFFILIATED PURCHASERS


98ITEM 16F

CHANGE IN REGISTRANTS CERTIFYING
    ACCOUNTANT


98ITEM 16G

CORPORATE GOVERNANCE


98PART III


98ITEM 17

FINANCIAL STATEMENTS


98ITEM 18

FINANCIAL STATEMENTS


98ITEM 19

EXHIBITS


99EX-4.5EX-4.7EX-4.8EX-4.9EX-8.1EX-12.1EX-12.2EX-13.1EX-13.2EX-23.1   i




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INTRODUCTION  Form 20-F
  
    CSI, we, us, our
    company and our are to Canadian Solar Inc.,
    its predecessor entities and its consolidated subsidiaries;
    $, US$ and U.S. dollars
    are to the legal currency of the United States;
    RMB and Renminbi are to the legal
    currency of China;
    C$ are to the legal currency of Canada;
     and Euro are to the legal
    currency of the European Economic and Monetary Union; and
    China and the PRC are to the
    Peoples Republic of China, excluding, for the purposes of
    this annual report on
    Form 20-F,
    Taiwan and the special administrative regions of Hong Kong and
    Macau.  Form 20-F
  Form 20-F
  FORWARD-LOOKING
    INFORMATION
  Form 20-F
  
    our expectations regarding the worldwide demand for electricity
    and the market for solar power;
    our beliefs regarding the importance of environmentally friendly
    power generation;
    our expectations regarding governmental support for solar power;
    our beliefs regarding the future shortage or availability of
    high-purity silicon;
    our beliefs regarding our ability to resolve our disputes with
    suppliers with respect to our long-term supply agreements;
    our beliefs regarding the rate at which solar power technologies
    will be adopted and the continued growth of the solar power
    industry;
    our beliefs regarding the competitiveness of our solar module
    products;
    our expectations with respect to increased revenue growth and
    improved profitability;
    our expectations regarding the benefits to be derived from our
    supply chain management and vertical integration manufacturing
    strategy; 1




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
    our beliefs and expectations regarding the use of upgraded
    metallurgical grade silicon materials, or UMG-Si, and solar
    power products made of this material;
    our ability to continue developing our in-house solar components
    production capabilities and our expectations regarding the
    timing and production capacity of our internal manufacturing
    programs;
    our ability to secure adequate silicon and solar wafers and
    cells to support our solar module production;
    our beliefs regarding the effects of environmental regulation;
    our beliefs regarding the changing competitive environment in
    the solar power industry;
    our future business development, results of operations and
    financial condition; and
    competition from other manufacturers of solar power products and
    conventional energy suppliers.   PART I  ITEM 1.
    IDENTITY
    OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS    ITEM 2.
    OFFER
    STATISTICS AND EXPECTED TIMETABLE    ITEM 3.
    KEY
    INFORMATION  A.
    Selected
    Financial Data  Selected
    Consolidated Financial and Operating Data
  Form 20-F. Form 20-F.
      2




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Year Ended December 31,2006


2007


2008


2009


2010(In thousands of US$, except share and per share data, and
    operating data and percentages)Statement of operations data:Net revenues

$
68,212


$
302,798


$
705,006


$
630,961


$
1,495,509Net income (loss)


(9,430
)


(175
)


(7,534
)


22,646



50,569Earnings (loss) per share, basic


(0.50
)


(0.01
)


(0.24
)


0.61



1.18Shares used in computation, basic


18,986,498



27,283,305



31,566,503



37,137,004



42,839,356Earnings (loss) per share, diluted


(0.50
)


(0.01
)


(0.24
)


0.60



1.16Shares used in computation, diluted


18,986,498



27,283,305



31,566,503



37,727,138



43,678,208Other financial data:Gross margin


18.1
%


7.9
%


10.1
%


12.4
%


15.3
%Operating margin


1.6
%


(0.6
)%


3.4
%


1.0
%


8.0
%Net margin


(13.8
)%


(0.1
)%


(1.1
)%


3.6
%


3.4
%Selected operating data:Products sold (in MW) Standard solar modules


14.7



83.4



166.5



296.6



779.1 Solar system kits














0.6



24.4Total


14.7



83.4



166.5



297.2



803.5Average selling price (in $ per watt) Standard solar modules


3.97



3.75



4.23



2.13



1.80 Solar system kits














3.36



3.21Balance Sheet Data:Total assets


129,634



277,622



570,654



1,038,703



1,423,367Net assets


112,904



134,501



332,254



466,001



534,984Long-term debt






17,866



45,357



29,290



69,458Convertible notes






59,885



830



866



906Capital stock


97,302



97,454



395,154



500,322



501,146Number of shares
    outstanding(1)


27,270,000



27,320,389



35,686,313
(1)


42,745,360
(1)


42,893,044
(1)     (1)
    
    Excluding 58,250, 29,125 and nil restricted shares, which were
    subject to restrictions on voting and dividend rights and
    transferability, as of December 31, 2008, 2009 and 2010,
    respectively.  Exchange
    Rate Information
     3




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Renminbi per U.S. Dollar Exchange
    Rate(1)PeriodPeriod

End

Average(2)

Low

High(RMB per $1.00)2006


7.8041



7.9579



8.0702



7.80412007


7.2946



7.6058



7.8127



7.29462008


6.8225



6.9477



7.2946



6.78002009


6.8259



6.8307



6.8470



6.81762010


6.6000



6.7603



6.8330



6.6000November


6.6670



6.6538



6.6892



6.6330December


6.6000



6.6497



6.6745



6.60002011January


6.6017



6.5964



6.6364



6.5809February


6.5713



6.5761



6.5965



6.5520March


6.5483



6.5645



6.5743



6.5483April


6.4900



6.5267



6.5477



6.4900May (through May 13)


6.4977



6.4939



6.4986



6.4915     (1)
    
    For December 2009 and prior periods, the exchange rate refers to
    the noon buying rate as reported by the Federal Reserve Bank of
    New York. For January 2010 and later periods, the exchange rate
    refers to the exchange rate as set forth in the H.10 statistical
    release of the Federal Reserve Board.(2)
    
    Annual averages are calculated from month-end rates. Monthly
    averages are calculated using the average of the daily rates
    during the relevant period.  B.
    Capitalization
    and Indebtedness    C.
    Reasons
    for the Offer and Use of Proceeds    D.
    Risk
    Factors  Risks
    Related to Our Company and Our Industry
  We may be
    adversely affected by volatile market and industry conditions;
    in particular, the demand for our solar power products may
    decline, which may reduce our revenues and earnings.
   4




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and/or
  If the
    supply of solar wafers and cells increases concurrently with
    increases in the supply of polysilicon, then the corresponding
    oversupply of solar cells and modules may cause substantial
    downward pressure on the prices of our products and reduce our
    revenues and earnings.
    The
    execution of our growth strategy depends upon the continued
    availability of third-party financing arrangements for our
    customers, which is affected by general economic conditions.
    Tight credit markets could depress demand for solar products,
    hamper our expansion and materially affect our results of
    operations.
   5




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If
    governments revise, reduce or eliminate subsidies and economic
    incentives for solar power, the demand for our products could
    decline, which could materially and adversely affect our
    revenues, profits, margins and results of operations.
   6




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We may
    not be able to adjust our raw materials costs because we have
    entered into long-term supply agreements with several
    polysilicon and wafer suppliers. If we fail to adjust such costs
    or fail to recover all or part of our advance payments after we
    terminate certain long-term supply agreements, our profitability
    could be materially and adversely affected. In addition, we may
    be subject to litigation with certain suppliers.
             7




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Existing
    regulations, policies, and changes to these regulations and
    policies may present technical, regulatory and economic barriers
    to the purchase and use of solar power products, which may
    significantly reduce demand for our products and
    services.
    Our
    significant international operations subject us to a number of
    risks, including unfavorable political, regulatory, labor and
    tax conditions in countries where we operate.
    Because
    the markets in which we compete are highly competitive and many
    of our competitors have greater resources than us, we may not be
    able to compete successfully and we may lose or be unable to
    gain market share.
   8




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If
    sufficient demand for solar power products does not develop or
    takes longer to develop than we anticipate, our revenues may not
    continue to increase or may decline, and we may be unable to
    sustain our profitability.
    
    the cost-effectiveness, performance and reliability of solar
    power products compared to conventional and other renewable
    energy sources and products;
    the availability of government subsidies and incentives to
    support the development of the solar power industry;
    the cost and availability of capital, including long-term debt
    and tax equity, for solar projects;
    the success of other alternative energy technologies, such as
    wind power, hydroelectric power, geothermal power and biomass
    fuel;
    fluctuations in economic and market conditions that affect the
    viability of conventional and other renewable energy sources,
    such as increases or decreases in the prices of oil and other
    fossil fuels;
    capital expenditures by end users of solar power products, which
    tend to decrease when the economy slows; and
    the lack of favorable regulation for solar power within the
    electric power industry and broader energy industry.    We face
    risks associated with the marketing, distribution and sale of
    our solar power products internationally and if we are unable to
    effectively manage these risks, they could impair our ability to
    expand our business abroad.
    
    difficulties staffing and managing overseas operations;
    fluctuations in foreign currency exchange rates;
    the increased cost of understanding local markets and trends and
    developing and maintaining an effective marketing and
    distributing presence in various countries; 9




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
    the difficulty of providing customer service and support in
    various countries;
    the difficulty of managing our sales channels effectively as we
    expand beyond distributors to include direct sales to systems
    integrators, end users and installers;
    the difficulties and costs of complying with the different
    commercial, legal and regulatory requirements in the overseas
    market in which we offer our products;
    our failure to develop appropriate risk management and internal
    control structures tailored to overseas operations;
    our inability to obtain, maintain or enforce intellectual
    property rights;
    unanticipated changes in prevailing economic conditions and
    regulatory requirements; and
    trade barriers such as export requirements, tariffs, taxes and
    other restrictions and expenses, which could increase the prices
    of our products and make us less competitive in some countries.    The
    increase in the global supply of solar cells and modules, and
    increasing competition, may cause substantial downward pressure
    on the prices of such products and cause us to lose sales or
    market share, resulting in lower revenues, earnings and cash
    flow.
    Our
    quarterly operating results may fluctuate from period to
    period.
    
    the average selling prices of our solar modules, solar system
    kits and products;
    the rate and cost at which we are able to expand our internal
    manufacturing capacity;
    the availability and price of solar cells and wafers from our
    suppliers and toll manufacturers;
    the availability and price of raw materials, particularly
    high-purity silicon;
    changes in government incentive programs and regulations,
    particularly in our key and target markets;
    the unpredictable volume and timing of customer orders;
    the loss of one or more key customers or the significant
    reduction or postponement of orders;
    availability of financing for on-grid and off-grid solar power
    applications;
    acquisition and investment costs;
    geopolitical turmoil and natural disasters within any of the
    countries in which we operate or sell products;
    foreign currency fluctuations, particularly in the Euro,
    U.S. dollar and RMB;
    our ability to establish and expand customer relationships; 10




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
    changes in our manufacturing costs;
    the timing of new products or technology introduced or announced
    by our competitors;
    increases or decreases in electricity rates due to changes in
    fossil fuel prices or other factors;
    allowances for doubtful accounts and advances to suppliers;
    inventory write-downs; and
    loss on firm purchase commitments under long-term supply
    agreements.    A change
    in our effective tax rate can have a significant adverse impact
    on our business.
  non-U.S. earnings
  We may be
    responsible to pay an additional Canadian tax on behalf of
    certain of our pre-IPO investors in connection with the
    conversion of our convertible notes in 2006.
    Fluctuations
    in exchange rates could adversely affect our business, including
    our financial condition and results of operations.
   11




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Seasonal
    variations in demand linked to construction cycles and weather
    conditions may influence our results of operations.
    We may be
    unable to obtain adequate capital due to market conditions
    beyond our control, which may adversely influence our ability to
    grow our business.
   12




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
    our future financial condition, results of operations and cash
    flows;
    general market conditions for financing activities by
    manufacturers of photovoltaic and related products; and
    economic, political and other conditions in the PRC and
    elsewhere.    Our
    future success depends partly on our ability to significantly
    expand our capacity to manufacture solar components, which
    exposes us to a number of risks and uncertainties.
    
    the need to raise significant additional funds to purchase raw
    materials and to build additional manufacturing facilities,
    which we may be unable to obtain on commercially reasonable
    terms or at all;
    delays and cost overruns as a result of a number of factors,
    many of which are beyond our control, including delays in
    equipment delivery by vendors;
    delays or denial of required approvals by relevant government
    authorities;
    diversion of significant management attention and other
    resources; and
    failure to execute our expansion plan effectively.    Due to
    the general economic environment and other factors, we may be
    unable to generate sufficient cash flows or acquire access to
    external financing necessary to fund planned operations and make
    adequate capital investments.
     13




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and/or
  Our
    dependence on Chinese banks for extension of our existing loans
    and extension of additional loans exposes us to funding risks,
    which may materially and adversely affect our
    operations.
    Cancellation
    of customer orders may make us unable to recoup any prepayments
    made to suppliers.
    Credit
    terms offered to some of our customers expose us to the credit
    risks of such customers and may increase our costs and expenses,
    which could in turn materially and adversely affect our
    revenues, liquidity and results of operations.
  and/or
 14




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Our
    dependence on a limited number of silicon wafer and cell and
    silicon suppliers, and the limited number of suppliers for
    certain other components, such as silver metallization paste,
    solar module back-sheet, and ethylene vinyl acetate, or EVA,
    encapsulant, could prevent us from delivering our products to
    our customers in the required quantities and on time, which
    could result in order cancellations and decreased
    revenues.
  E-Ton
  We are
    developing and commercializing higher conversion efficiency
    cells, such as selective emitter cells, in order to produce
    higher-powered modules, which may command better prices. We
    cannot assure that we will be able to mass-produce these cells
    in a cost effective way, if at all.
   15




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Since we
    cannot test our products for the duration of our standard
    warranty periods, we may be subject to unexpected warranty
    expense.
  10-year 25-year
    We may
    not continue to be successful in developing and maintaining a
    cost-effective solar cell manufacturing capability.
   16




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It may be
    difficult to develop our internal production capabilities for
    silicon ingots and wafers or to achieve acceptable yields and
    product performance as a result of manufacturing
    problems.
        Our
    future growth depends in part on our ability to make strategic
    acquisitions and investments and to establish and maintain
    strategic relationships, and our failure to do so could have a
    material and adverse effect on our market penetration and
    revenue growth.
      If we are
    unable to attract, train and retain technical personnel, our
    business may be materially and adversely affected.
   17




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Our
    dependence on a limited number of customers and our lack of
    long-term customer contracts may cause significant fluctuations
    or declines in our revenues.
    
    reduced, delayed or cancelled orders from one or more of our
    significant customers;
    the loss of one or more of our significant customers;
    a significant customers failure to pay for our products on
    time; and
    a significant customers financial problems or insolvency.    Product
    liability claims against us could result in adverse publicity
    and potentially significant monetary damages.
    Our
    founder, Dr. Shawn Qu, has substantial influence over our
    company and his interests may not be aligned with the interests
    of our other shareholders.
    We may be
    exposed to infringement, misappropriation or other claims by
    third parties, which, if determined adversely to us, could
    require us to pay significant damage awards.
   18




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Compliance
    with environmental regulations can be expensive, and
    noncompliance with these regulations may result in adverse
    publicity and potentially significant monetary damages, fines
    and the suspension or even termination of our business
    operations.
      We may
    not be successful in establishing our brand name in important
    markets and the products we sell under our brand name may
    compete with the products we manufacture on an original
    equipment manufacturer, or OEM, basis for our
    customers.
   19




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Failure
    to protect our intellectual property rights in connection with
    new specialty solar modules and products may undermine our
    competitive position.
    If our
    internal control over financial reporting or disclosure controls
    and procedures are not effective, there may be errors in our
    financial statements that could require a restatement or our
    filing may not be timely and investors may lose confidence in
    our reported financial information, which could lead to a
    decline in our stock price.
    We face
    risks related to an SEC subpoena and private securities
    litigation.
     20




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Risks
    Related to Doing Business in China
  We have
    not obtained approvals from the PRC National Development and
    Reform Commission, or NDRC, for some of our operational projects
    in China, which may materially and adversely affect our
    business, results of operations and prospects.
      The
    enforcement of the new labor contract law and increases in labor
    costs in the PRC may adversely affect our business and our
    profitability.
   21




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Our
    subsidiaries will lose certain tax benefits over the next
    several years and we expect to pay additional PRC taxes as a
    result, which could have a material and adverse impact on our
    financial condition and results of operations.
      There are
    significant uncertainties in our tax liabilities regarding our
    income under the new Enterprise Income Tax Law.
    Dividends
    payable by us to our non-Chinese shareholders and gains on the
    sale of our common shares may become subject to PRC enterprise
    income tax liabilities.
   22




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Restrictions
    on currency exchange may limit our ability to receive and use
    our revenues effectively.
      Uncertainties
    with respect to the Chinese legal system could materially and
    adversely affect us.
    Risks
    Related to Our Common Shares
  The
    market price for our common stocks may be volatile.
    
    announcements of technological or competitive developments;
    regulatory developments in our target markets affecting us, our
    customers or our competitors; 23




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
    actual or anticipated fluctuations in our quarterly operating
    results;
    changes in financial estimates by securities research analysts;
    changes in the economic performance or market valuations of
    other solar power companies;
    the departure of executive officers and key research personnel;
    patent litigation and other intellectual property disputes;
    litigation and other disputes with our long-term suppliers;
    fluctuations in the exchange rates between the U.S. dollar,
    the Euro and the RMB;
    SEC investigations or private securities litigation;
    the release or expiration of
    lock-up or
    other transfer restrictions on our outstanding common
    shares; and
    sales or anticipated sales of additional common shares.    Substantial
    future sales of our common shares in the public market, or the
    perception that such sales could occur, could cause the price of
    our common shares to decline.
    Your
    right to participate in any future rights offerings may be
    limited, which may cause dilution to your holdings.
    Our
    articles of continuance contain anti-takeover provisions that
    could adversely affect the rights of holders of our common
    shares.
    
    Our board of directors has the authority, without approval from
    the shareholders, to issue an unlimited number of preferred
    shares in one or more series. Our board of directors may
    establish the number of shares to be included in each such
    series and may fix the designations, preferences, powers and
    other rights of the shares of a series of preferred shares. 24




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
    Our board of directors is entitled to fix and may change the
    number of directors within the minimum and maximum number of
    directors provided for in our articles. Our board of directors
    may appoint one or more additional directors to hold office for
    a term expiring no later than the close of the next annual
    meeting of shareholders, subject to the limitation that the
    total number of directors so appointed may not exceed one-third
    of the number of directors elected at the previous annual
    meeting of shareholders.  You may
    have difficulty enforcing judgments obtained against
    us.
    We may be
    classified as a passive foreign investment company, which could
    result in adverse U.S. federal income tax consequences to U.S.
    Holders of our common shares.
  non-U.S. corporation
  ITEM 4.
    INFORMATION
    ON THE COMPANY  A.
    History
    and Development of the Company      
    CSI Solartronics (Changshu) Co. Ltd., or CSI Solartronics,
    incorporated in November 2001, which has operations located in
    Changshu, China, where we conduct sales of solar modules; 25




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
    CSI Solar Manufacture Inc., or CSI Suzhou Manufacturing,
    incorporated in January 2005, which has operations located in
    Suzhou, China, where we manufacture primarily standard solar
    modules;
    CSI Solar Technologies Inc., or CSI Technologies, incorporated
    in August 2003, which has operations located in Changshu, China,
    where we conduct solar module product development;
    Canadian Solar Manufacturing (Luoyang) Inc. (formerly known as
    CSI Central Power Co. Ltd.), or CSI Luoyang Manufacturing,
    incorporated in February 2006, which has operations located in
    Luoyang, China, where we manufacture solar module products,
    solar ingots and solar wafers;
    CSI Cells Co. Ltd., or CSI Cells, incorporated in August 2006,
    which has operations located in Suzhou, China, where we
    manufacture solar cells;
    Canadian Solar Manufacturing (Changshu) Inc. (formerly known as
    Changshu CSI Advanced Solar Inc.), or CSI Changshu
    Manufacturing, incorporated in August 2006, which has operations
    located in Changshu, China, where we manufacture solar modules;
    CSI Solar Power (China) Inc., or CSI China Holdings,
    incorporated in July 2009, which has operations in Suzhou, China
    and serves as our holding company in China;
    CSI Solar New Energy (Suzhou) Co. Ltd., or CSI New Energy,
    incorporated in December 2005, which was acquired by CSI China
    Holdings in March 2010; through which we will manufacture solar
    cells in Suzhou;
    Canadian Solar Solutions Inc., or CSSI, incorporated in Ontario,
    Canada in June 2009, through which we conduct marketing and
    sales activities in Canada. We also have a number of non-wholly
    owned subsidiaries under CSSI, all of which were incorporated in
    Ontario, Canada in November 2009, through which we conduct
    project development activities in Canada;
    Canadian Solar (USA) Inc., incorporated in Delaware in June
    2007, through which we carry out marketing and sales activities
    in the United States;
    Canadian Solar Japan, K.K., or CSI Japan, incorporated in Japan
    as a wholly owned subsidiary in June 2009, through which we
    conduct marketing and sales activities in Japan; between
    December 2009 and May 2010, we sold an aggregate of 28% of the
    outstanding capital stock of CSI Japan to two Japanese
    companies; in August 2010, we increased our capital contribution
    in CSI Japan. We currently hold 91.4% of CSI Japan;
    Canadian Solar EMEA GmbH, (formerly known as Canadian Solar
    (Deutschland) GmbH), incorporated in Germany in August 2009,
    through which we conduct marketing and sales activities in
    Europe;
    CSI Project Consulting GmbH, or CSI Germany Projects,
    incorporated in Germany in 2009, a 70% owned subsidiary through
    which we invested in CVB Solar GmbH, a German solar power
    project. In January 2011, CSI Germany Projects sold all of its
    interest in CVB Solar GmbH to its joint venture partner;
    Canadian Solar Manufacturing (Ontario) Inc., or CSI Ontario
    Manufacturing, incorporated in Ontario, Canada in June 2010,
    through which we conduct our solar module manufacturing
    activities in Canada;
    Canadian Solar (Australia) Pty Ltd., incorporated in New South
    Wales, Australia in February 2011, though which we provide sales
    support services in Australia; and
    Canadian Solar International Limited, incorporated in Hong Kong
    in March 2011, through which we carry out sales and marketing
    activities.    530-2334 530-2001.
 26




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##### Table of Contents



www.canadiansolar.com.
  B.
    Business
    Overview  Overview
             27




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Our
    Products
    Standard
    Solar Modules
    Specialty
    Solar Modules and Products
    Solar
    Cells
   28




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Solar
    System Kits
  ready-to-install
  Solar
    Power Development Projects
  feed-in-tariffs.
      Solar
    System EPC contracting and subcontracting
    Supply
    Chain Management
     29




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Silicon
    Raw Materials and Solar Wafers
       30




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Solar
    Cells
  E-ton
  UMG-Si
    Cells
    Solar
    Module Manufacturing
     31




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Quality
    Control and Certifications
  ISO/TS
  DC-to-AC DC-to-DC
  time-to-market
  Markets
    and Customers
     32




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Years Ended December 31,2008

2009

2010Total Net



Total Net



Total NetRegion

Revenues

%

Revenues

%

Revenues

%(In thousands of US$, except for percentages)Europe


631,147



89.5



523,087



82.9



1,193,449



79.8Asia and others


41,571



5.9



70,966



11.3



186,366



12.5America


32,288



4.6



36,908



5.8



115,694



7.7Total net revenues


705,006



100



630,961



100



1,495,509



100     
    Germany.  The renewable energy laws in Germany
    require electricity transmission grid operators to connect
    various renewable energy sources to their electricity
    transmission grids and to purchase all electricity generated by
    such sources at guaranteed feed-in tariffs, or FIT. Additional
    regulatory support measures include investment cost subsidies,
    low-interest loans and tax relief to end users of renewable
    energy.Germanys renewable energy policy has had a strong solar
    power focus, which contributed to Germanys surpassing
    Japan in 2004 as the leading solar power market in terms of
    annual megawatt growth. According to SolarBuzz, the German
    market grew by 100% in 2010, from 3.87 GW at the end of 2009 to
    7.74 GW at the end of 2010. This outcome took place,
    notwithstanding the fact that at the beginning of 2010, the FIT
    dropped by 9%. Our products are used in large, ground-mounted
    solar power fields, commercial rooftops and residential
    rooftops. The FIT in Germany for 2010 was 0.243 per kWh
    and 0.284 per kWh for ground-mounted systems and between
    0.248 and 0.391 per kWh for rooftop systems. The
    German FIT was reduced by 9-10% at the end of 2010, and will be
    reduced again by approximately 9-10% at the end of 2011,
    depending on system size and type. In addition to scheduled
    reductions, Germany implemented a two-step FIT decline for
    roof-top and greenfield systems, which were to be enacted in
    July and October 2010. The two step reduction decreased the FITs
    for roof-top systems by 13% on July 1, 2010 and an
    additional 3% reduction from October 2010. Furthermore, the
    annual FIT will decrease more quickly than the base of 9% per
    year if annual installations exceed 3.5 GW. This means that
    solar system tariffs and solar system prices will likely fall
    more quickly than previously anticipated. In 2011, the German
    FIT is expected to be between 0.198 per kWh and
    0.221 per kWh for ground-mounted systems and between
    0.196 and 0.287 per kWh for rooftop systems.
    Spain.  According to SolarBuzz, the Spanish
    market installed 378 MW in 2010, up from 98 MW in
    2009. In Spain, the FIT for solar power energy is fully
    guaranteed for the first 25 years of system operation and
    80% thereafter. The 2010 market segmentation for power and
    application surface was 17 MW as roof mounted of
    £20
    kW; 126 MW as roof mounted of >20 kW and
    £20 MW;
    and 232 MW ground mounted of
    £10 MW.
    The Spanish FIT for applications of less than 100 kWh was
    initially 0.4404 per kWh for the first 25 years of
    system operation and 0.3523 per kWh thereafter for systems
    installed until September 2008. The current Spanish FIT is
    between 0.259/kWh and
    0.340/kWh,
    depending on the system size, type and quarterly digressions.
    Funding for the national PV 33




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program during 2010 was regulated by Royal Decree RD1578/2008.
    The quarterly quota calls allocate awards and modify FIT rates
    according to fulfillment of quota. The Renewable Energy Plan
    (PER
    2012-2020)
    reduced significantly the renewable energy content planned for
    2020 from previous plans. Further cuts in the PV target plan are
    expected in 2011 to about 7 GW PV capacity by 2020, down from
    the previously 8.5 GW in the NREAP.  
    Czech Republic.  According to SolarBuzz, the
    Czech Republic market increased approximately 242% from
    397 MW in 2009 to 1,420 MW in 2010, which includes
    about 0.5 MW off-grid installations. The countrys
    initial legal basis for establishing FIT rates for electricity
    from renewable energy sources was set by the Renewable Energy
    Law on August 1, 2005. The respective remuneration rates
    became effective on January 1, 2006. The PV funding scheme
    in the Czech Republic is based on two alternative funding
    mechanisms, a FIT system and a green bonus scheme. The FITs (and
    green premium rates) for the next calendar year are determined
    by the Energy Regulatory Office in November each year. The FIT
    rate for existing installations increases each year typically
    between 2% and 4%, depending on the consumer price index. There
    is no fixed annual reduction of tariffs for newly installed
    systems. In 2010, PV systems connected to the grid during the
    year received 12.25 CZK/kWh (0.463/kWh) if their nominal
    power was up to 30 kW and 12.15 CZK/kWh (0.459/kWh) if
    their nominal power was above 30 kW. As with the FITs, the green
    bonus rates are also paid over a
    20-year
    duration, and the tariffs for already existing systems are
    adjusted annually. The green bonus remuneration has also
    depended on the system size from 2009. In 2010, installations of
    up to 30 kW built in the same year were remunerated at 11.28
    CZK/kWh (0.427/kWh); systems above 30 kW were paid at
    11.18 CZK/kWh (0.423/kWh). In March 2010, the government
    enacted a law that allowed a reduction of the incentive tariffs
    for newly installed systems to exceed 5% per year. In addition,
    it implemented a third system size category. PV systems of up to
    30 kW connected in 2011 are being remunerated at 7.50 CZK/kWh
    (0.298/kWh), installations of above 30 kW and up to 100 kW
    receive 5.90 CZK (0.235/kWh), and PV systems above 100 kW
    receive a rate of 5.5 CZK/kWh (0.219/kWh). Due to the
    substantial reduction of funding options in 2011, the Czech PV
    market is now projected to fall well below 0.5 GW. After March
    2011, it is expected to be dominated by roof or BIPV
    installations of up to 30 kW.
    Italy.  According to SolarBuzz, the Italian
    solar market grew by 386% from 770 MW in 2009 to reach
    3,740 MW at the end of 2010. This number comprises
    2.5 MW off-grid installations. At the end of 2010, the
    Italian FIT for systems range from 0.346 per kWh, for
    larger ground-mounted systems, to 0.440 per kWh for
    smaller BIPV systems, a relatively modest decline from the
    previous years rates. Furthermore, system owners may also
    benefit from self-consumption with a reduced electrical bill.
    The Italian market saw an enormous boost in large installations
    in 2009 and 2010 and the Italian government is expected to
    implement much lower FIT in order to control the market growth.
    In 2011, the Italian FIT is expected to be approximately
    0.28 to 0.44 per kWh in the first half of the year,
    and to decline further in the second half year.
    United States.  According to SolarBuzz, the US
    market almost doubled to 949 MW in 2010 from 485 MW in
    2009, while its share in the global market slightly decreased to
    5% in 2010 from 6% in 2009. Over 10 states in the
    U.S. offer significant incentives, with California offering
    the most preferential incentives. In January 2006, the
    California Public Utilities Commission enacted the California
    Solar Initiative, a $2.9 billion program that subsidizes
    solar power systems by $2.80 per watt. Due to excessive demand,
    this subsidy was reduced to $2.50 per watt. Combined with
    federal tax credits for solar power usage, the subsidy may
    account for as much as 50% of the cost of a solar power system.
    The program will last until 2016 and is expected to dramatically
    increase the use of solar power for on-grid applications in
    California. Incentives in other US states include state
    renewable energy credits, capital subsidies and in some states,
    such as Vermont, FIT. Many states and various federal
    departments are also subject to renewable energy portfolio
    standards that mandate minimum percentages of renewable energy
    production by utilities. By the end of 2010, 29 states and
    Washington DC currently have enacted mandatory RPS policies
    while seven states had voluntary renewable goals. Finally, the
    U.S. federal government passed several renewable energy
    provisions totaling more than $70 billion in the American
    Recovery and Reinvestment Act, including a 30% investment tax
    credit, 34




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accelerated five-year system depreciation and an expansion of
    Department of Energy loan guarantees. These provisions were
    further expanded in 2010 to include a cash grant in lieu of the
    investment tax credit and were uncapped with respect to system
    size (the previous maximum rebate was $2,000) to allow larger
    organizations such as utilities to take advantage of the tax
    credit or cash in-lieu of the grant for large scale projects.
    The constrained appetite for tax equity may limit the
    effectiveness of some of these provisions, such as accelerated
    depreciation.  
    China.  According to SolarBuzz, the Chinese
    market witnessed a 155% growth in installations in 2010 to
    532 MW, up from 208 MW in 2009. Chinas Renewable
    Energy Law, which went into effect on January 1, 2006,
    authorizes the relevant authorities to set favorable prices for
    the purchase of on-grid electricity generated by solar power and
    provides other financial incentives for the development of
    renewable energy projects. Chinas top-level controlling
    agency on energy policy has been the governments central
    planning agency, the NDRC, with the ancillary National Energy
    Administration specifically focusing on energy supply and
    production. The National Energy Commission, a new ministerial
    level regulatory organization headed by Premier Wen, was
    established in January 2010 to oversee all energy related
    sectors in China.On March 23, 2009, Chinas Ministry of Finance
    promulgated the Interim Measures for Administration of
    Government Subsidy Funds for Application of Solar Photovoltaic
    Technology in Building Construction, or Interim Measures, to
    support the development of solar PV technology in China. Local
    governments are encouraged to issue and implement supporting
    policies. Under the Interim Measures, a subsidy, which is set at
    RMB20 per watt, peaked in 2009, which covers solar PV technology
    integrated into building construction. The Interim Measures do
    not apply to projects completed before March 23, 2009, the
    promulgation date of the Interim Measures.China finances its off-grid solar installations through the
    now-completed township program and the current village program.
    The five-year plan from 2006 to 2010 was targeted to provide
    electricity to 29,000 villages, mainly in western China. The
    Ministry of Housing and Urban-Rural Development (formerly, the
    Ministry of Construction) has promulgated directives encouraging
    the development and use of solar power in urban and rural areas.
    Various local authorities have also introduced initiatives to
    encourage the adoption of renewable energy, including solar
    power.We believe that we are well positioned to take advantage of
    growth opportunities in the Chinese solar power market, which
    has the potential to become one of the fastest growing markets
    for solar power. In addition to project approvals of 640 MW
    under the Golden Sun Program and 91 MW in the Solar Rooftop
    Program in 2009, programs like Renewable Energy Applications in
    Buildings and National Green Energy Demonstration County are
    re-enforcing the project pipeline.Beginning in March 2009, several policy initiatives were
    announced, including open bidding for a
    20-year
    operating license for a 10 MW solar power plant project in
    Gansu Province of China and the Golden Sun program,
    which subsidizes the capital expenses of solar projects by
    approximately $2.00 per watt. A number of provincial incentives
    were announced as well. However, the central government has not
    approved a definitive implementation scheme or any of the
    provincial schemes.The 2010 Golden Sun project list was released in
    November 2010 with 120 new projects totaling 272 MW. The
    Golden Sun program will approve another 320MW of
    rooftop PV projects in 2011, and the total new installation,
    including rooftop and ground-mounted projects, in 2011 will be
    approximately
    500-700MW
    based on the estimates by the China Photovoltaic Society. The
    subsidies provided by the government will cover 50% of the total
    PV project cost.
    Canada.  According to SolarBuzz, the Canadian
    market in 2010 was dominated by installations in the Province of
    Ontario, emanating from the now defunct Renewable Energy
    Standard Offer Program (RESOP) and the newer FIT policy
    inaugurated in 2009. In all, Ontario accounted for more than 90%
    of the installed PV capacity in the country in 2010 with
    170 MW of solar PV installations. Of this, utility-scale
    RESOP installations represented approximately 150 MW of
    installed capacity with the remainder coming from small-scale
    systems driven by Ontarios FIT. 35




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Ontario market growth in 2010 was a remnant of RESOP, a program
    that offered renewable energy projects up to 10 MW a
    guaranteed tariff of C$0.42/kWh for 20 years. The program
    closed in May 2008 due to overwhelming uptake and projects in
    the pipeline were frozen until May 2009 when Ontario passed the
    Green Energy Act and with it a new FIT program. Both programs
    are administered by the Ontario Power Authority, or OPA, which
    is responsible for setting rates, regulations, and monitoring
    all FIT activity. The proposed price for solar power under the
    Ontario FIT program ranges from C$0.443 to C$0.80 per kWh
    depending on the system size and type. We and our partners have
    applied for and received 176 MW of contract offers for open
    field solar power generation projects. We may obtain additional
    contract offers in 2011. Initial designs of these projects are
    being completed and the projects are being processed through the
    permitting stage.
    Japan.  According to SolarBuzz, the Japanese
    market grew from 477 MW in 2009 to 960 MW in 2010, as
    a result of the nationwide residential incentive program and the
    introduction of a Japanese version of a FIT in 2009. The
    Japanese government has announced a long-term goal of increasing
    installed solar power capacity by between 20 and 55 times, which
    would require 28 GW or more of solar power capacity by 2020.
    Japan is a signatory to the Kyoto Protocol, which requires it to
    reduce greenhouse gas emissions by 6% from the 1990 baseline
    level by 2012 and by 20% by 2020. Japan currently funds a number
    of programs supporting domestic solar power installations and
    has announced a plan to begin installing solar power systems on
    federal buildings through 2012. As Japan will not likely reach
    its renewable energy (including solar) targets, Japan is
    increasing its incentives for solar power installations. To
    refuel the declining domestic market, the federal government
    brought back the nationwide residential subsidy in 2009. The
    residential program was re-launched in January 2009 under a
    FY2008 supplemental budget of ¥9 billion. For FY2010,
    the residential incentive program had a funding of
    ¥40.15 billion to cover about 150,000 projects and the
    application period was open between April and December 2010. The
    residential program provides a subsidy of ¥70 per watt, and
    to promote further cost reduction, this subsidy is only
    applicable to a PV system with a total installed cost of less
    than ¥650 per watt. Besides the upfront cash incentives,
    the federal government crafted a Net FIT policy, requiring
    electric power utilities to buy excess electricity generated by
    PV systems at a premium rate. Residential PV owners, for
    example, were paid for 10 years a rate of ¥48/kWh,
    compared to the average of ¥24/kWh under the previous net
    billing arrangement. For FY2010, the government kept the net FIT
    rates at the 2009 level (¥48/kWh for residential and
    ¥24/kWh for non-residential).
    Australia.  According to SolarBuzz, in 2010,
    the Australian market grew from 79MW in 2009 to 265MW in 2010,
    representing a growth rate of more than 360%. The largest state
    market by far in 2010 was New South Wales, which saw over
    150 MW in PV installations, mostly due to its FIT program.
    Queensland also saw a significant amount of capacity installed
    during 2010, again due to its FIT program. The on-grid
    residential segment continued to dominate the market as the
    largest customer group. The main federal incentive active during
    2010 was the Solar Credits program, which provided a renewable
    energy credit multiplier for the first 1.5 kW of small-scale
    renewable energy systems. The result of the program was an
    upfront rebate of between AUD4,000 and AUD6,200 for 1.5 kW
    systems depending on location. The Solar Credits program was the
    successor of the Solar Homes and Communities Program (SHCP),
    which offered an AUD8 per watt rebate on the first 1,000W of a
    solar PV system. The SHCP was cancelled in June 2009 but
    continued to impact 2010 market size due to the significant
    backlog of installations. The Solar Credits Program is part of
    the Renewable Energy Target, which is set to ensure that
    Australia will generate 45,000 GWh (20%) of its energy from
    renewable sources by 2020. Due to the uncertain nature of
    federal incentive programs, the states/territories have launched
    their own programs to drive PV demand. The programs that drive
    the vast majority of systems are FITs. These FITs mainly
    affected the residential segment as each program has different
    eligibility requirements that work to minimize system sizes or
    specify directly that the rates are only accessible by
    residential customers. Along with changes to programs affecting
    small-scale residential systems, the past year also brought news
    of funding changes for utility-scale projects. The biggest news
    came in January 2011 and concerned the Solar Flagships program.
    The Australia government revised its Solar Flagships program,
    which was originally scheduled to install 150 MW of 36




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utility-scale solar PV and 250 MW of CSP plants by 2016. As
    well, every region intends to have a PV specific FIT or
    net-metering policy in 2010.  Sales
    and Marketing
  Standard
    Solar Modules
      
    Sales contracts to distributors and project
    customers.  Since late 2007, we have been entering
    into annual sales
    and/or
    distribution agreements with most of our key customers. We
    typically use either letters of credit or wire money transfers
    prior to shipping to secure payment. Since late 2008, we have
    often provided short-term credit sales ranging from 21 to
    45 days. To some customers, we provide medium-term credit
    sales from 30 to 120 days. We actively use credit insurance
    coverage for credit sales.
    OEM/tolling manufacturing arrangements.  Under
    these arrangements, we purchase silicon wafers and solar cells
    from customers, and then sell solar module products back to the
    same customers, who then sell those products under their own
    brands. In addition, we have been using our own solar cells or
    cells that we purchase to make modules for a limited number of
    strategic customers who brand the finished solar module products
    with their own labels. Since 2009, this has been the primary OEM
    arrangement.
    Solar System Kits.  In 2010, we commenced sale
    of solar system kits. Solar systems kits are packaged,
    pre-specified components required for a third party to construct
    a system on behalf of the end buyer. A variety of systems kits
    were sold in Japan and Ontario in 2010. In 2010, the sale of
    solar systems kits reached 24.4 MW.  Specialty
    Solar Modules and Products
    Solar
    Power Development Projects
  feed-in-tariff
 37




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Solar
    System EPC contracting and subcontracting
    Customer
    Support and Service
  10-year 25-year
      Competition
   38




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
    price;
    the ability to deliver products to customers on time and in the
    required volumes;
    product quality and associated service issues;
    name-plate power and other performance parameters of the module,
    such as power tolerances;
    value-added services such as system design and installation;
    value-added features such as those that make a module easier or
    cheaper to install;
    additional system components such a mounting systems, delivered
    as a package or bundle;
    brand equity and any good reputation resulting from the above
    items, including the willingness of banks to finance projects
    using a particular module supplier;
    customer relationships and distribution channels; and
    the aesthetic appearance of solar module products.    Insurance
     39




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Environmental
    Matters
        Government
    Regulation
    Renewable
    Energy Law and Other Government Directives
         40




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Environmental
    Regulations
   41




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Admission
    of Foreign Investment
      Income
    and VAT Taxes
  C
       42




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Foreign
    Currency Exchange
   43




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and/or
  Dividend
    Distribution
     44




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C.
    Organizational
    Structure    
    D.
    Property,
    Plant and Equipment    
    CSI Changshu Manufacturing rents approximately
    31,119 square meters in Changshu, including
    13,889 square meters for manufacturing facilities under a
    lease effective from June 1, 2010 to May 31, 2011,
    17,230 square meters for manufacturing facilities under a
    lease effective from April 1, 2010 to March 31, 2013,
    8,670 square meters for warehouse under a lease effective
    from February 2, 2010 to February 1, 2012, and
    1765 square meters for warehouse under a lease effective
    from December 10, 2010 to December 9, 2011.
    CSI Luoyang Manufacturing holds the land use rights certificate
    for approximately 35,345 square meters of land in Luoyang
    (Phase I), on which we have constructed a manufacturing facility
    for module manufacturing and an office building. The floor area
    of all workshops and office buildings in Phase I is
    approximately 6,761 square meters. The property ownership
    certificate was granted in June 2008. In 45




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2008, CSI Luoyang Manufacturing obtained the land use rights for
    approximately 79,685 square meters of adjacent land (Phase
    II), on which we are currently constructing wafer manufacturing
    facilities. The floor area of Phase II is
    30,071 square meters. We expect to receive the property
    ownership certificate upon passing the required inspection after
    the completion of construction.  
    CSI Cells holds the land use rights certificate for
    approximately 65,661 square meters of land in Suzhou. We
    completed the construction of our first solar cell manufacturing
    facilities on this site in the first quarter of 2007. The Phase
    I manufacturing facility has a 14,077 square meter workshop
    and office building, for which we obtained the property
    ownership certificate. The Phase II cell manufacturing
    facilities, with 28,917 square meters of workshop space,
    were completed in 2009. We expect to receive the property
    ownership certificate upon passing the required inspection. We
    are currently constructing Phase III cell manufacturing
    facilities with a total floor area of approximately
    21,448 square meters.
    CSI Changshu Manufacturing holds the land use rights certificate
    for approximately 40,000 square meters of land in Changshu,
    on which we have built a module manufacturing facility of
    approximately 23,671 square meters. Production in this
    facility began in April 2008. We also constructed a canteen and
    a dormitory for employees in September 2010 with a total floor
    area of 11,283 square meters. The property ownership
    certificate was granted in March 2011.
    CSI Changshu Manufacturing also holds a land use rights
    certificate for approximately 180,000 square meters of land
    in Changshu, on which we have built two module manufacturing
    facilities, three warehouses and other buildings with a total
    floor area of approximately 62,093 square meters (Phase I).
    Production in this facility began in August 2008 and the central
    warehouses construction was completed in April 2010. Phase I
    occupies 78,320 square meters of land. We are currently
    constructing Phase II manufacturing facilities with an
    additional warehouse and three other buildings. The total floor
    area of approximates 46,507 square meters. Phase II
    will be completed in the first half of 2011, occupying
    22,442 square meters of land. Phase III manufacturing
    facilities on the remaining land are still in the design and
    planning stage.
    CSI New Energy holds a land use rights certificate for
    approximately 10,000 square meters of land in Suzhou.
    CSI Ontario Manufacturing has leased approximately
    14,851 square meters of manufacturing facilities in Guelph,
    Ontario, Canada for a term of 10 years commencing
    August 1, 2010. We will also lease an additional warehouse
    of 7,912 square meters and an office building of
    570 square meters on the same premises. Completion of the
    manufacturing facilities, warehouse and office building space is
    expected to be completed in July 2011.  ITEM 4A.
    UNRESOLVED
    STAFF COMMENTS    ITEM 5.
    OPERATING
    AND FINANCIAL REVIEW AND PROSPECTS  The following discussion and analysis of our financial
    condition and results of operations should be read in
    conjunction with our consolidated financial statements and the
    related notes included elsewhere in this annual report on
    Form 20-F.
    This discussion may contain forward-looking statements based
    upon current expectations that involve risks and uncertainties.
    Our actual results may 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 or in other parts
    of this annual report on
    Form 20-F.
  A.
    Operating
    Results    
    government subsidies and the availability of financing for solar
    projects;
    industry and seasonal demand; 46




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
    product pricing;
    the cost of solar cells and wafers and silicon raw materials
    relative to the selling prices of modules and the impact of
    certain of our long-term purchase commitments; and
    foreign exchange.  Government
    Subsidies and the Availability of Financing for Solar
    Projects
      Industry
    and Seasonal Demand
      Product
    Pricing
   47




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year-to-year
  Price
    of Solar Cells and Wafers and Silicon Raw
    Materials
    Foreign
    Exchange
   48




---



##### Table of Contents



Overview
    of Financial Results
    Net
    Revenues
    Cost of
    Revenues
    
    solar cells;
    silicon wafers;
    high purity and solar grade silicon materials;
    materials used in solar cell production, such as metallic pastes;
    installation components in solar system kits, such as inverters
    and racking systems;
    other materials for the production of solar modules such as
    glass, aluminum frames, EVA (ethylene vinyl acetate, an
    encapsulant used to seal the module), junction boxes and polymer
    back sheets;
    production labor, including salaries and benefits for
    manufacturing personnel;
    warranty costs;
    overhead, including utilities, production equipment maintenance,
    share-based compensation expenses for options granted to
    employees in our manufacturing department and other support
    expenses associated with the manufacture of our solar power
    products;
    depreciation and amortization of manufacturing equipment and
    facilities, which are increasing as we expand our manufacturing
    capabilities;
    inventory write-downs; and
    loss on firm purchase commitments under long-term supply
    agreements.   49




---



##### Table of Contents



10-year 25-year 25-year,
   50




---



##### Table of Contents



Gross
    Profit/Gross Margin
      Operating
    Expenses
    Selling
    Expenses
    General
    and Administrative Expenses
    Research
    and Development Expenses
   51




---



##### Table of Contents



Share-based
    Compensation Expenses
        Years Ended December 31,2008


2009


2010(In thousands of US$, except for percentages)Share-based compensation expenses included in:Cost of revenues

$
350



3.8
%

$
412



7.6
%

$
231



6.0
%Selling expenses


1,060



11.7



733



13.5



509



13.1General and administrative expenses


7,306



80.3



3,772



69.4



2,873



74.1Research and development expenses


386



4.2



519



9.5



264



6.8Total share-based compensation expenses

$
9,102



100.0
%

$
5,436



100.0
%

$
3,877



100.0
%     Interest
    Expenses
   52




---



##### Table of Contents



Gain on
    Change in Fair Value of Derivatives
    Foreign
    Exchange Gain (Loss)
    Income
    Tax Expense
           53




---



##### Table of Contents



Critical
    Accounting Policies
      Revenue
    Recognition
  ready-to-install
         54




---



##### Table of Contents



Warranty
    Cost
  10-year 25-year
  25-year
  Impairment
    of Long-lived Assets
    Allowance
    for Doubtful Accounts
   55




---



##### Table of Contents



Inventories
      take-or-pay take-or-pay take-or-pay take-or-pay
  work-in-process
   56




---



##### Table of Contents



Fair
    Value of Derivative and Financial Instruments
          Income
    Taxes
   57




---



##### Table of Contents



Share-based
    Compensation
    Recently
    Issued Accounting Pronouncements
  2010-13,
 58




---



##### Table of Contents



Results
    of Operations
    Years Ended December 31,2008

2009

2010(In thousands of US$, except percentages)Net revenues


705,006



100.0%



630,961



100.0%



1,495,509



100.0%Cost of revenues


633,998



89.9%



552,856



87.6%



1,266,737



84.7%Gross profit


71,008



10.1%



78,105



12.4%



228,772



15.3%Operating expenses:Selling expenses


10,608



1.5%



22,089



3.5%



47,109



3.2%General and administrative expenses


34,510



4.9%



46,324



7.3%



54,520



3.6%Research and development expenses


1,825



0.3%



3,180



0.5%



6,843



0.5%Total operating expenses


46,943



6.7%



71,593



11.3%



108,472



7.3%Income from continuing operations


24,065



3.4%



6,512



1.0%



120,300



8.0%Other income (expenses)Interest expenses


(12,201
)


(1.7)%



(9,459
)


(1.5)%



(22,164
)


(1.5)%Interest income


3,531



0.5%



5,084



0.8%



6,936



0.5%Gain on change in fair value of derivatives


14,455



2.1%



9,870



1.6%



1,657



0.1%Gain on debt extinguishment


2,429



0.3%















Debt conversion inducement expenses


(10,170
)


(1.5)%















Investment income (loss)










1,788



0.3%



(2,853
)


(0.2)%Foreign exchange gain (loss)


(19,989
)


(2.8)%



7,681



1.2%



(36,294
)


(2.4)%Income before income taxes


2,120



0.3%%



21,476



3.4%



67,582



4.5%Income tax (expense) benefit


(9,654
)


(1.4)%



1,302



0.2%



(16,754
)


(1.1)%Net income (loss) from continuing operations


(7,534
)


(1.1)%



22,778



3.6%



50,828



3.4%Less: Net income attributable to non-controlling interest










132







259



Net income (loss)


(7,534
)


(1.1)%



22,646



3.6%



50,569



3.4%   Year
    Ended December 31, 2010 Compared to Year Ended
    December 31, 2009
  Net Revenues.
    Cost of Revenues.
 59




---



##### Table of Contents



Gross Profit.
  Operating Expenses.
  Selling Expenses.
  General and Administrative Expenses.
  Research and Development Expenses.
  Interest Expenses, Net.
  Gain On Change in Fair Value of
    Derivatives.
  Investment Income/(Loss).
  Foreign Exchange Gain.
 60




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##### Table of Contents



Income Tax Benefit (Expenses).
  Net Income Attributable To Non-Controlling
    Interest.
  Net Income (Loss) Attributable To Canadian Solar
    Inc.
  Year
    Ended December 31, 2009 Compared to Year Ended
    December 31, 2008
  Net Revenues.
    Cost of Revenues.
  Gross Profit.
  Operating Expenses.
  Selling Expenses.
 61




---



##### Table of Contents



General and Administrative Expenses.
  Research and Development Expenses.
  Interest Expenses.
  Gain On Change In Fair Value Of
    Derivatives.
  Foreign Exchange Gain.
  Income Tax Benefit (Expense).
  Net Income Attributable To Non-Controlling
    Interest.
  Net Income (Loss) Attributable To Canadian Solar
    Inc.
  B.
    Liquidity
    and Capital Resources  Cash
    Flows and Working Capital
   62




---



##### Table of Contents



Years Ended December 31,2008

2009

2010(In thousands of US$)Net cash provided by (used in) operating activities

$
3,193


$
50,915


$
(58,487
)Net cash used in investing activities


(125,762
)


(234,568
)


(133,989
)Net cash provided by financing activities


201,356



228,173



312,629Net increase in cash and cash equivalents


77,994



44,450



128,541Cash and cash equivalents at the beginning of the year


37,667



115,661



160,111Cash and cash equivalents at the end of the year


115,661



160,111



288,652   Operating
    Activities
   63




---



##### Table of Contents



Investing
    Activities
      Financing
    Activities
        Capital
    Expenditures
    Restricted
    Net Assets
   64




---



##### Table of Contents



C.
    Research
    and Development  state-of-the-art
    
    improving the conversion efficiency of solar cells and
    developing new cell structures and technologies for high
    conversion efficiency;
    developing modules with improved design and assembly methods
    employing metal wrap-through cells. Such modules will employ
    conductive adhesives on a metal foil back-sheet instead of
    employing conventional soldering techniques on a plastic
    back-sheet;
    improving manufacturing yield and reliability of solar modules
    and reducing manufacturing costs;
    developing modules with improved power conversion devices
    integrated into the construction of the module including a
    variety of micro-inverters and
    DC-to-DC
    power converters;
    testing, data tracing and analysis for module performance and
    reliability;
    designing and developing more efficient specialty solar modules
    and products to meet customer requirements;
    developing new methods and equipment for analysis and quality
    control of incoming materials (such as polysilicon, wafers and
    cells);
    developing new technologies in ingot growth and
    characterization, wafering, cell processing and module
    manufacturing that make use of low-cost alternative silicon
    materials such as solar grade silicon; and
    improving the wafer quality and production yield for both
    conventional wafer and
    e-wafer
    processing.      
    High efficiency cells.  Our ESE and metal
    wrap-through cells, which we have begun commercializing as well
    as future research and development on N-type, heterojunction
    intrinsic thin-layer and other high efficiency cell designs. On
    a test basis, we have produced an N-type bi-facial cell;
    however, we do not 65




---



##### Table of Contents



plan to commercially produce this product until a later date.
    Such cell structures are believed to lower the overall cost of
    manufacturing solar modules and making the resulting modules
    cheaper to install. Higher-powered modules might also command a
    modest premium.  
    Solar grade silicon materials technologies and high
    efficiency cell technologies.  We began the mass
    production of solar grade silicon crystalline modules, namely
    e-Modules,
    in April 2008, and have been working on improving new
    technologies in ingot, wafer, cell and module manufacturing
    using solar grade silicon. With our continuous efforts to
    optimize solar grade silicon material preparation, ingot growth,
    wafering and cell processing, we anticipate additional increases
    in our solar grade silicon cell efficiency, and expect that with
    our new solar grade silicon cell design, our solar grade silicon
    cell could reach conversion efficiency close to that of
    conventional multi-crystalline cells.
    Solar module manufacturing technologies.  With
    the opening of our Center for Photovoltaic Testing and
    Reliability Analysis, we intend to focus on developing
    state-of-the-art
    testing and diagnostic techniques that improve solar module
    production yield, efficiency, performance and durability.
    Product development of specialty solar modules and
    products.  We are expanding our product
    development capabilities for specialty solar modules and
    products to position ourselves for the expected growth in this
    area of the solar power market. For example, we are
    collaborating with a research institute in China to develop a
    concentrator module technology and a glass curtain wall company
    based in China to develop BIPV technology. In 2008, we completed
    a BIPV project in our Luoyang plant. We also supplied BIPV
    modules and other BIPV related design elements for a project for
    the Beijing Olympic Games.
    Power system integration and solar application
    products.  We recently began to explore power
    system integration products and expanded our research and
    development efforts in solar application products. We plan to
    hire additional engineering staff and increase investment in
    these areas.  D.
    Trend
    Information  Form 20-F,
  E.
    Off
    Balance Sheet Arrangements   66




---



##### Table of Contents



F.
    Tabular
    Disclosure of Contractual Obligations  Contractual
    Obligations and Commercial Commitments
    Payment Due by PeriodLess Than





More ThanTotal

1 Year

1-3 Years

3-5 Years

5 Years(In thousands of US$)Short-term debt obligations


540,520



540,520











Interest related to short-term debt
    obligations(1)


8,945



8,945











Operating lease obligations


11,382



2,558



2,892



2,279



3,653Purchase
    obligations(2)


3,366,588



336,459



1,343,452



1,621,674



65,003Convertible
    notes(3)


1,420



60



120



120



1,120Other long-term
    borrowing(4)


69,458







30,199



39,259



Interest related to long-term
    debt(5)


11,691



4,103



5,825



1,763



Total


4,010,004



892,645



1,382,488



1,665,095



69,776     (1)
    
    Interest rates range from 0% to 5.81% per annum for short-term
    debt.(2)
    
    Includes commitments to purchase production equipment of
    $46.3 million and commitments to purchase solar cells,
    wafers and silicon raw materials of $3,320.3 million.(3)
    
    Assumes redemption of $1.0 million aggregate principal
    amount of 6.0% convertible senior notes due on December 15,
    2017, and assumes none of the convertible senior notes will be
    converted into ordinary shares prior to their scheduled due date
    in December 2017. The holders of our convertible senior notes
    may require us to repurchase the convertible senior notes as
    early as December 2012. This amount also includes interest
    payable until December 2017.(4)
    
    The other long-term borrowings mainly consist of the following
    items: commercial loans with Agricultural Bank of China of
    $24.2 million; secured commercial loans with Bank of
    Communication of $22.6 million; and commercial loans with
    Export and Import Bank of Nanjing of $22.6 million.(5)
    
    Interest rates range from 4.50% to 6.22% per annum for long-term
    borrowings.      G.
    Safe
    Harbor  Form 20-F
 67




---



##### Table of Contents




    our expectations regarding the worldwide supply and demand for
    solar power products and the market demand for our products;
    our beliefs regarding the importance of environmentally friendly
    power generation;
    our expectations regarding governmental support for solar power;
    our beliefs regarding the fluctuation in availability of
    silicon, solar wafers and solar cells;
    our beliefs regarding our ability to resolve our disputes with
    suppliers with respect to our long-term supply agreements;
    our beliefs regarding the continued growth of the solar power
    industry;
    our beliefs regarding the competitiveness of our solar module
    products;
    our expectations with respect to increased revenue growth and
    improved profitability;
    our expectations regarding the benefits to be derived from our
    supply chain management and vertical integration manufacturing
    strategy;
    our beliefs and expectations regarding the use of UMG-Si and
    solar power products made of this material;
    our ability to continue developing our in-house solar components
    production capabilities and our expectations regarding the
    timing and production capacity of our internal manufacturing
    programs;
    our ability to secure adequate silicon and solar cells to
    support our solar module production;
    our beliefs regarding the effects of environmental regulation;
    our beliefs regarding the changing competitive landscape in the
    solar power industry;
    our future business development, results of operations and
    financial condition; and
    competition from other manufacturers of solar power products and
    conventional energy suppliers.   68




---



##### Table of Contents



ITEM 6.
    DIRECTORS,
    SENIOR MANAGEMENT AND EMPLOYEES  A.
    Directors
    and Senior Management  Form 20-F.*
  Name

Age

Position/TitleShawn (Xiaohua) Qu


47


Chairman of the Board, President and Chief Executive OfficerRobert McDermott


69


Lead Independent DirectorLars-Eric Johansson


64


Independent DirectorMichael G. Potter


44


Independent DirectorWeiwen Chen


43


Chief Financial Officer, Compliance OfficerCharlotte Xi Klein


55


Vice President, Global OperationsYan Zhuang


47


Vice President, Global Sales and MarketingJessica Zhou


38


General Counsel and Corporate SecretaryGregory Spanoudakis


53


President, European SalesXiaohu Wang


55


Vice President, Purchase and PlanningBencheng Li


68


Vice President, Ingot and Wafer Division     *
    
    Arthur Chien resigned as Chief Financial Officer in October 2010
    and resigned from the Company and the board of directors in
    December 2010. The size of our board of directors was reduced
    from five to four members.  Directors
  Dr. Shawn (Xiaohua) Qu
  Mr. Robert McDermott
  Mr. Lars-Eric Johansson
 69




---



##### Table of Contents



Mr. Michael G. Potter
  Executive
    Officers
  Mr. Weiwen Chen
  Ms. Charlotte Xi Klein
 70




---



##### Table of Contents



Mr. Yan Zhuang
  Ms. Jessica Zhou
  Mr. Gregory Spanoudakis
  Mr. Xiaohu Wang
  Mr. Bencheng Li Sino-American
 71




---



##### Table of Contents



Duties
    of Directors
    
    convening shareholder meetings and reporting to shareholders at
    such meetings;
    declaring dividends and authorizing other distributions to
    shareholders;
    appointing officers and determining the term of office of
    officers;
    exercising the borrowing powers of our company and mortgaging
    the property of our company; and
    approving the issuance of shares.  B.
    Compensation
    of Directors and Executive Officers  Cash
    Compensation
    Share-based
    Compensation
  Share
    Incentive Plan
          Types of Awards.
  
    options to purchase our common shares, and
    restricted shares, which are non-transferable common shares
    without voting or dividend rights.  Plan Administration.
 72




---



##### Table of Contents



Award Agreement.
  Eligibility.
  Acceleration of Awards upon Corporate
    Transactions. change-of-control change-of-control
  Exercise Price and Term of Awards.
    Vesting Schedule.
  Options
    Common

Common

Common

CommonShares

Shares

Shares

Shares

ExerciseUnderlying

Underlying

Underlying

Underlying

PriceOptions

Options

Options

Options

(US$ perName

Granted

Exercised

Forfeited

Outstanding

Share)

Date of Grant

Date of ExpirationDirectors:Shawn (Xiaohua) Qu


20,000











20,000



3.18



March 12, 2009



March 11, 201925,000











25,000



11.33



August 27, 2010



August 26, 2020Robert McDermott


46,600
(1)










46,600



15.00
(3)


August 8, 2006



August 7, 201623,300
(2)


23,300











9.88



July 1, 2007



June 30, 201723,300
(2)










23,300



41.75
(4)


June 26, 2008



June 25, 201823,300
(2)










23,300



13.75
(4)


June 29, 2009



June 28, 201923,300
(2)










23,300



12.09
(4)


September 20, 2010



September 19, 2020Lars-Eric Johansson


46,600
(2)


25,000







21,600



15.00
(3)


August 8, 2006



August 7, 201623,300
(2)










23,300



9.88
(4)


July 1, 2007



June 30, 201723,300
(2)










23,300



41.75
(4)


June 26, 2008



June 25, 201823,300
(2)










23,300



13.75
(4)


June 29, 2009



June 28, 201923,300
(2)










23,300



12.09
(4)


September 20, 2010



September 19, 2020 73




---



##### Table of Contents



Common

Common

Common

CommonShares

Shares

Shares

Shares

ExerciseUnderlying

Underlying

Underlying

Underlying

PriceOptions

Options

Options

Options

(US$ perName

Granted

Exercised

Forfeited

Outstanding

Share)

Date of Grant

Date of ExpirationMichael G. Potter


23,300
(2)










23,300



7.36
(4)


September 24, 2007



September 23, 201723,300
(2)










23,300



41.75
(4)


June 26, 2008



June 25, 201823,300
(2)










23,300



13.75
(4)


June 29, 2009



June 28, 201923,300
(2)










23,300



12.09
(4)


September 20, 2010



September 19, 2020Arthur
    Chien(9)


46,600
(1)


46,600











4.29



August 6, 2006



August 7, 201623,300
(2)


23,300











9.88



July 1, 2007



June 30, 201746,600



34,950



11,650







7.36



September 24, 2007



September, 23, 201720,000



5,000



15,000







3.18



March 12, 2009



March 11, 201915,000







15,000







11.33



August 27, 2010



August, 26, 2020Directors as a Group


569,300



158,150



41,650



369,500Executive Officers:Weiwen Chen


100,000











100,000



15.19



October 8, 2010



October 7, 2020Yan Zhuang


23,300
(2)


23,300











7.36



September 24, 2007



September 23, 201723,300
(2)










23,300



41.75



June 26, 2008



June 25, 201880,000











80,000



9.37



May 23, 2009



May 22, 201915,000











15,000



11.33



August 27, 2010



August 26, 2010Gregory Spanoudakis


116,500











116,500



2.12



May 30, 2006



May 29, 201620,000











20,000



3.18



March 12, 2009



March 11, 201912,000











12,000



11.33



August 27, 2010



August 26, 2020Xiaohu Wang


89,705



44,853







44,852



2.12



May 30, 2006



May 29, 201612,000











12,000



3.18



March 12, 2009



March 11, 201912,000











12,000



11.33



August 27, 2010



August 26, 2020Bencheng Li


64,075



48,056







16,019



2.12



May 30, 2006



May 29, 201612,000











12,000



3.18



March 12, 2009



March 11, 201912,000











12,000



11.33



August 27, 2010



August 26, 2020Charlotte Xi Klein


46,600



34,950







11,650



12.10



March 1, 2007



February 28, 201711,652
(5)


11,652











7.36



September 24, 2007



September 23, 201712,000



3,000







9,000



3.18



March 12, 2009



March 11, 201940,000











40,000



16.10



November 8, 2009



November 7, 201915,000











15,000



11.33



August 27, 2010



August 26, 2020Jessica Zhou


36,000



6,000







30,000



3.18



March 12, 2009



March 11, 201912,000











12,000



11.33



August 27, 2010



August 26, 2020Executive Officers as a Group


765,132



171,811







593,321Employees:Seven employees as a group


520,755



233,265



121,160



166,330



2.12



May 30, 2006



May 29, 2016One employee


23,300



5,825



17,475







4.29



May 30, 2006



May 29, 2016Twenty-seven employees as a group


102,870



41,623



14,795



46,452



4.29



May 30, 2006



May 29, 2016One employee


2,330
(6)


2,330











4.29



May 30, 2006



May 29, 2016Two employees as a group


51,260



47,765







3,495



4.29



June 30, 2006



June 29, 2016One employee


64,075



34,056







30,019



4.29



July 17, 2006



July 16, 2016Hanbing
    Zhang(7)


46,600











46,600



4.29



July 28, 2006



July 27, 2016One employee


58,250



14,563







43,687



12.00
(8)


August 8, 2006



August 7, 2016Three employees as a group


11,650



5,079



1,747



4,824



12.00
(8)


August 31, 2006



August 30, 2016Two employees as a group


33,300



11,650



21,650







12.10



March 1, 2007



February 28, 2017One employee


6,990



1,748



5,242







12.10



March 1, 2007



February 28, 2017Five employees as a group


52,280



5,413



41,867



5,000



8.21



August 17, 2007



August 16, 2017Seven employees as a group


27,556



22,724



4,832







7.36



September 24, 2007



September 23, 2017 74




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##### Table of Contents



Common

Common

Common

CommonShares

Shares

Shares

Shares

ExerciseUnderlying

Underlying

Underlying

Underlying

PriceOptions

Options

Options

Options

(US$ perName

Granted

Exercised

Forfeited

Outstanding

Share)

Date of Grant

Date of ExpirationThirteen employees as a group


170,145



68,943



49,332



51,870



7.36



September 24, 2007



September 23, 2017Six employees as a group


36,136







5,500



30,636



19.55



February 28, 2008



February 27, 2018One employee


10,000











10,000



20.67



March 31, 2008



March 30, 2018Two employees as a group


18,000







18,000







20.67



March 31, 2008



March 30, 2018One employee


30,000











30,000



46.28



June 26, 2008



June 25, 2018Four employees as a group


30,000







12,500



17,500



27.88



August 7, 2008



August 6, 2018Seventy-four employees as a group


308,200



39,500



97,050



171,650



3.18



March 12, 2009



March 11, 2019Hanbing
    Zhang(7)


6,000











6,000



3.18



March 12, 2009



March 11, 2019One employee


20,000



2,500







17,500



5.26



March 30, 2009



March 29, 2019Eighteen employees as a group


59,400



750



5,650



53,000



9.37



May 23, 2009



May 22, 2019One employee


10,000











10,000



11.58



May 31, 2009



May 30, 2019Seven employees as a group


30,800







8,800



22,000



15.18



August 6, 2009



August 5, 2019Thirteen employees as a group


42,600







2,800



39,800



16.10



November 8, 2009



November 7, 2019One hundred and twenty-seven employees as a group


420,600







79,200



341,400



11.33



August 27, 2010



August 26, 2020Hanbing
    Zhang(7)


12,000











12,000



11.33



August 27, 2010



August 26, 2020One hundred and fifty-three employees as a group


236,000







9,500



226,500



15.24



November 14, 2010



November 13, 2020Five employees as a group


32,900











32,900



13.99



March 5, 2011



March 4, 2021Employees as a group


2,473,997



537,734



517,100



1,419,163Two individuals as a group


11,650











11,650



15.00
(3)


April 13, 2007



April 12, 2017Individuals as a group


11,650











11,650Total Options


3,820,079



867,695



558,750



2,393,634     (1)
    
    Vest in two equal installments, the first upon the date of grant
    and the second upon the first year anniversary of the grant date
    so long as the director remains in service.(2)
    
    All vest immediately upon the date of grant.(3)
    
    The initial public offering price of the common shares.(4)
    
    Exercise price equal to the average of the trading prices of the
    common shares for the 20 trading days preceding the date of
    grant.(5)
    
    Vest one year after the grant date.(6)
    
    Vesting accelerated on termination.(7)
    
    The wife of Dr. Qu, our founder, chairman, president and
    chief executive officer.(8)
    
    80% of the initial public offering price of the common shares.(9)
    
    Resigned as Chief Financial Officer in October 2010 and from the
    Board of Directors in December 31, 2010   75




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##### Table of Contents



Restricted
    Shares
    Restricted

RestrictedShares

SharesName

Granted

Exercised

Date of Grant

ExpirationExecutive OfficersGregory Spanoudakis


233,000







May 30, 2006



May 29, 2016Bencheng Li


23,300



23,300



May 30, 2006



May 29, 2016Xiaohu Wang


18,640



18,640



May 30, 2006



May 29, 2016Executive Officers as a group


274,940



41,940EmployeesEight individuals as a group


44,270



40,490



May 30, 2006



May 29, 2016Hanbing
    Zhang(3)


116,500
(4)






July 28, 2006



July 27,2016Employees as a group


160,770



40,490Other IndividualsOne individual


11,650



11,650



May 30, 2006



May 29, 2016One individual


2,330
(1)


2,330



May 30, 2006



May 29, 2016One individual


116,500
(2)


116,500



June 30, 2006



June 29, 2016Other Individuals as a group


130,480



130,480Total Restricted Shares


566,190



212,910     (1)
    
    Also vest on accelerated termination.(2)
    
    Vest over a two-year period from the date of grant.(3)
    
    The wife of Dr. Qu, our founder, chairman and chief
    executive officer.(4)
    
    Vest over a four-year period from the date of grant.  C.
    Board
    Practices    Terms
    of Directors and Executive Officers
    Committees
    of the Board of Directors
    Audit
    Committee
   76




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##### Table of Contents




    selecting our independent auditors and pre-approving all
    auditing and non-auditing services permitted to be performed by
    our independent auditors;
    reviewing with our independent auditors any audit problems or
    difficulties and managements responses;
    reviewing and approving all proposed related-party transactions,
    as defined in Item 404 of
    Regulation S-K
    under the Securities Act;
    discussing the annual audited financial statements with
    management and our independent auditors;
    reviewing major issues as to the adequacy of our internal
    controls and any special audit steps adopted in light of
    material control deficiencies;
    annually reviewing and reassessing the adequacy of our audit
    committee charter;
    such other matters that are specifically delegated to our audit
    committee by our board of directors from time to time;
    meeting separately and periodically with management and our
    internal and independent auditors; and
    reporting regularly to the full board of directors.    Compensation
    Committee
    
    reviewing and approving corporate goals and objectives relevant
    to the compensation of our chief executive officer, evaluating
    the performance of our chief executive officer in light of those
    goals and objectives, and setting the compensation level of our
    chief executive officer based on this evaluation;
    reviewing and approving the compensation arrangements for our
    other executive officers and our directors; and
    overseeing and periodically reviewing the operation of our
    employee benefits plans, including bonus, incentive
    compensation, stock option, pension and welfare plans.    Nominating
    and Corporate Governance Committee
   77




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##### Table of Contents




    identifying and recommending to the board nominees for election
    or re-election to the board, or for appointment to fill any
    vacancy;
    reviewing annually with the board the current composition of the
    board in light of the characteristics of independence, age,
    skills, experience and availability of service to us;
    identifying and recommending to the board the directors to serve
    as members of the boards committees;
    advising the board periodically with respect to significant
    developments in the law and practice of corporate governance as
    well as our compliance with applicable laws and regulations, and
    making recommendations to the board on all matters of corporate
    governance and on any corrective action to be taken; and
    monitoring compliance with our code of business conduct and
    ethics, including reviewing the adequacy and effectiveness of
    our procedures to ensure proper compliance.    Interested
    Transactions
    Remuneration
    and Borrowing
    Qualification
    Employment
    Agreements
     78




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##### Table of Contents




    communicate or have any dealings with our customers or suppliers
    that would be likely to harm the our business relationship with
    them;
    provide services, whether as a director, officer, employee,
    independent contractor or otherwise, to a competitor or acquire
    or hold any interest in, whether as a shareholder, partner or
    otherwise, in a competitor provided that the executive officer
    may hold up to 5% of the outstanding shares or other securities
    of a competitor that is listed on a securities exchange or
    recognized securities market; and
    approach solicit, whether by offer of employment or otherwise,
    the services of any of our employees.    Director
    Agreements
    Indemnification
    of Directors and Officers
       79




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##### Table of Contents



D.  Employees
    As of December 31, 2010Number of Employees

Percentage of TotalManufacturing


8,048



92%General and administrative


487



5%Research and development


135



2%Sales and marketing


63



1%Total


8,733



100%     E.  Share
    Ownership
    
    each of our directors and executive officers; and
    each person known to us to own beneficially more than 5% of our
    common shares. 80




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##### Table of Contents



Shares Beneficially
    Owned(1)Number

%Directors and Executive
    Officers:(2)Shawn (Xiaohua)
    Qu(3)


13,040,000



30.0
%Robert
    McDermott(4)


116,500




*Lars-Eric
    Johansson(5)


114,800




*Michael G.
    Potter(6)


93,200




*Weiwen Chen







*Yan
    Zhuang(7)


43,300




*Gregory
    Spanoudakis(8)


359,500




*Bencheng
    Li(9)


22,019




*Charlotte Xi
    Klein(10)


24,650




*Xiaohu
    Wang(11)


50,852




*Jessica
    Zhou(12)


12,000




*Arthur
    Chien(13)


42,675




*All Directors and Executive Officers as a Group


13,919,496



31.8
%Principal ShareholdersColumbia Wanger Asset Management,
    LLC(14)


3,683,600



8.5
%SAM Sustainable Asset Management
    AG(15)


3,573,200



8.2
%     *
    
    The person beneficially owns less than 1% of our outstanding
    shares.(1)
    
    Beneficial ownership is determined in accordance with
    Rule 13d-3
    of the General Rules and Regulations under the Securities
    Exchange Act of 1934, as amended, and includes voting or
    investment power with respect to the securities.(2)
    
    The business address of our directors and executive officers is
    199 Lushan Road, Suzhou New District, Suzhou, Jiangsu 215129,
    Peoples Republic of China. Unless otherwise stated below,
    all shares beneficially owned by directors and officers represent(3)
    
    Includes 10,000 common shares issuable upon exercise of options
    held by Mr. Qu.(4)
    
    Includes 116,500 common shares issuable upon exercise of options
    held by Mr. McDermott.(5)
    
    Includes 114,800 common shares issuable upon exercise of options
    held by Mr. Johansson.(6)
    
    Includes 93,200 common shares issuable upon exercise of options
    held by Mr. Potter.(7)
    
    Includes 43,300 common shares issuable upon exercise of options
    held by Mr. Zhuang.(8)
    
    Includes 126,500 common shares issuable upon exercise of options
    held by Mr. Spanoudakis.(9)
    
    Includes 22,019 common shares issuable upon exercise of options
    held by Mr. Li.(10)
    
    Includes 24,650 common shares issuable upon exercise of options
    held by Ms. Xi Klein.(11)
    
    Includes 50,852 common shares issuable upon exercise of options
    held by Mr. Wang.(12)
    
    Includes 12,000 common shares issuable upon exercise of options
    held by Ms. Zhou.(13)
    
    Resigned as Chief Financial Officer in October 2010 and from the
    board of directors in December 2010.(14)
    
    Represents 3,683,600 common shares of our Company held by
    Columbia Wanger Asset Management, LLC, as reported on Schedule
    13G filed by Columbia Wanger Asset Management, LLC on
    February 10, 2011. The percentage of beneficial ownership
    was calculated based on the total number of our common 81




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##### Table of Contents



shares as of March 31, 2011. The principal business address
    of Columbia Wanger Asset Management, LLC is 227 West Monroe
    Street, Suite 3000, Chicago, IL 60606.(15)
    
    Represents 3,573,200 common shares of our Company held by SAM
    Sustainable Asset Management AG, as reported on Schedule 13G
    filed by SAM Sustainable Asset Management AG on
    February 14, 2011. The percentage of beneficial ownership
    was calculated based on the total number of our common shares as
    of March 31, 2011. The principal business address of SAM
    Sustainable Asset Management AG is Josefstrasse 218, 8005
    Zurich, Switzerland.  Form 20-F.
  ITEM 7.
    MAJOR
    SHAREHOLDERS AND RELATED PARTY TRANSACTIONS  A.
    Major
    Shareholders    B.
    Related
    Party Transactions  Guarantees
    and Share Pledges
    Employment
    Agreements
    Share
    Incentive Plan
    C.
    Interests
    of Experts and Counsel    ITEM 8.
    FINANCIAL
    INFORMATION  A.
    Consolidated
    Statements and Other Financial Information    Legal
    and Administrative Proceedings
  Class Action
    Lawsuits
   82




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##### Table of Contents



Rule 10b-5
  and/or
    Shunda
          Systaic
   83




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##### Table of Contents



LDK
    Premier
    Power Group
        Dividend
    Policy
     84




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##### Table of Contents



B.
    Significant
    Changes     85




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##### Table of Contents



ITEM 9.
    THE
    OFFER AND LISTING  A.
    Offering
    and Listing Details    Trading PriceHigh

LowUS$

US$Annual Highs and Lows2006 (from November 9, 2006)


16.73



9.432007


31.44



6.502008


51.80



3.112009


30.51



3.002010


33.68



8.99Quarterly Highs and LowsFirst Quarter 2009


7.49



3.00Second Quarter 2009


16.45



5.44Third Quarter 2009


19.91



9.21Fourth Quarter 2009


30.51



13.66First Quarter 2010


33.68



18.41Second Quarter 2010


26.26



8.99Third Quarter 2010


16.35



9.28Fourth Quarter 2010


17.63



12.11First Quarter 2011


16.79



10.20Monthly Highs and Lows2010November


16.75



13.00December


14.20



12.112011January


15.28



12.46February


16.79



13.51March


14.79



10.20April


11.47



9.37May (through May 16)


10.77



9.32   B.
    Plan
    of Distribution    C.
    Markets    D.
    Selling
    Shareholders    E.
    Dilution   86




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##### Table of Contents



F.
    Expenses
    of the Issue    ITEM 10.
    ADDITIONAL
    INFORMATION  A.
    Share
    Capital    B.
    Memorandum
    and Articles of Association  No. 333-138144),
  C.
    Material
    Contracts  Form 20-F.
  D.
    Exchange
    Controls    E.
    Taxation  Material
    Canadian Federal Tax Considerations
  General
     87




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##### Table of Contents



TAX MATTERS ARE VERY COMPLICATED AND THE CANADIAN FEDERAL TAX
    CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF COMMON
    SHARES WILL DEPEND ON THE SHAREHOLDERS PARTICULAR
    SITUATION. THIS SUMMARY IS NOT INTENDED TO BE A COMPLETE
    ANALYSIS OF OR DESCRIPTION OF ALL POTENTIAL CANADIAN FEDERAL TAX
    CONSEQUENCES, AND SHOULD NOT BE CONSTRUED TO BE, LEGAL, BUSINESS
    OR TAX ADVICE DIRECTED AT ANY PARTICULAR HOLDER OR PROSPECTIVE
    PURCHASER OF COMMON SHARES. ACCORDINGLY, HOLDERS OR PROSPECTIVE
    PURCHASERS OF COMMON SHARES SHOULD CONSULT THEIR OWN TAX
    ADVISORS FOR ADVICE WITH RESPECT TO THE CANADIAN FEDERAL TAX
    CONSEQUENCES OF AN INVESTMENT IN COMMON SHARES BASED ON
    THEIR PARTICULAR CIRCUMSTANCES.
  Dividends
    Disposition
    of Our Common Shares
    60-month
     88




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##### Table of Contents



United
    States Federal Income Taxation
      
    banks;
    certain financial institutions;
    insurance companies;
    regulated investment companies;
    real estate investment trusts;
    broker dealers;
    traders that elect to mark to market;
    U.S. expatriates;
    tax-exempt entities;
    persons liable for alternative minimum tax;
    persons holding a common share as part of a straddle, hedging,
    conversion or integrated transaction;
    persons that actually or constructively own 10% or more of the
    total combined voting power of all classes of our voting stock;
    persons who acquired common shares pursuant to the exercise of
    any employee share option or otherwise as compensation; or
    partnerships or other pass-through entities, or persons holding
    common shares through such entities.  INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS ABOUT THE
    APPLICATION OF THE U.S. FEDERAL TAX RULES TO THEIR
    PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE, LOCAL,
    NON-U.S. AND
    OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
    DISPOSITION OF COMMON SHARES.
    
    an individual who is a citizen or resident of the United States;
    a corporation (or other entity taxable as a corporation for
    U.S. federal income tax purposes) created or organized in
    the United States or under the laws of the United States, any
    State thereof or the District of Columbia;
    an estate, the income of which is subject to U.S. federal
    income taxation regardless of its source; or
    a trust that (1) is subject to the primary supervision of a
    court within the United States and the control of one or more
    U.S. persons for all substantial decisions or (2) has
    a valid election in effect under applicable U.S. Treasury
    regulations to be treated as a U.S. person. 89




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##### Table of Contents



Taxation
    of Dividends and Other Distributions on the Common
    Shares
          Taxation
    of Disposition of Common Shares
   90




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##### Table of Contents



Passive
    Foreign Investment Company
  non-U.S. corporation
  
    at least 75% of its gross income for such year is passive
    income; or
    at least 50% of the value of its assets (based on an average of
    the quarterly values of the assets) during such year is
    attributable to assets that produce passive income or are held
    for the production of passive income.        mark-to-market
  
    the excess distribution or recognized gain will be allocated
    ratably over your holding period for the common shares;
    the amount allocated to the current taxable year, and any
    taxable years in your holding period prior to the first taxable
    year in which we were a PFIC, will be treated as ordinary
    income; and
    the amount allocated to each other taxable year will be subject
    to the highest tax rate in effect for individuals or
    corporations, as applicable, for each such year and the interest
    charge generally applicable to underpayments of tax will be
    imposed on the resulting tax attributable to each such year. 91




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##### Table of Contents



mark-to-market mark-to-market mark-to-market mark-to-market mark-to-market mark-to-market mark-to-market
  mark-to-market mark-to-market mark-to-market mark-to-market
  non-U.S. corporation
    You are strongly urged to consult your tax advisor regarding
    the application of the PFIC rules to your investment in common
    shares.
 92




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##### Table of Contents



Information
    Reporting and Backup Withholding
  Form W-9.
    Additional
    Reporting Requirements
    F.
    Dividends
    and Paying Agents    G.
    Statement
    by Experts    H.
    Documents
    on Display  Form F-1, 333-138144).
  Form 20-F 1-800-SEC-0330.
     93




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##### Table of Contents



I.
    Subsidiary
    Information    ITEM 11.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Foreign
    Exchange Risk
      mark-to-market
    Interest
    Rate Risk
   94




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##### Table of Contents



ITEM 12.
    DESCRIPTION
    OF SECURITIES OTHER THAN EQUITY SECURITIES   PART II  ITEM 13.
    DEFAULTS,
    DIVIDEND ARREARAGES AND DELINQUENCIES    ITEM 14.
    MATERIAL
    MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
    PROCEEDS    ITEM 15.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
  Rule 13a-15(e)
  Managements
    Annual Report on Internal Control over Financial
    Reporting
  Rule 13a-15(f)
       95




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##### Table of Contents



Attestation
    Report of the Independent Registered Public Accounting
    Firm
    Internal Control  Integrated Framework
        Internal Control  Integrated Framework
        96




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##### Table of Contents



Changes
    in Internal Controls
    
    The control designed to ensure that all revenue recognition
    criteria were met prior to recognizing revenue did not operate
    effectively.
    An appropriate control was not designed to ensure that estimated
    sales returns were recorded.
    There is lack of control procedures to ensure that long-term
    purchase commitments are evaluated and appropriately accounted
    for in the appropriate accounting period.
    The control designed to ensure that significant subsequent
    events were properly identified, analyzed and appropriately
    recorded in the Companys consolidated financial
    statements, did not operate effectively.    
    Hired additional credit control personnel and revised the
    standard operating procedures related to customer credit
    assessment and revenue recognition;
    Established a sales return reserve policy to account for any
    non-routine sales returns after period end;
    Improved internal communication protocols for timely recording
    and disclosure of financial transactions; and
    Reviewed and revised the current checklists used to ensure
    adequate controls to capture possible material accounting
    adjustments subsequent to the balance sheet date to the date of
    reporting.    ITEM 16.
    NONE  ITEM 16A.
    AUDIT
    COMMITTEE FINANCIAL EXPERT  Form 20-F.
  ITEM 16B.
    CODE
    OF ETHICS  www.canadiansolar.com.
 97




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##### Table of Contents



ITEM 16C.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    For the Years Ended December 31,2008

2009

2010Audit
    fees(1)


1,925,862



1,420,000



2,384,000Audit-related
    fees(2)










Tax fees










All other fees






47,484



69,344     (1)
    
    Audit fees means the aggregate fees billed for
    professional services rendered by our principal auditors for the
    audit of our annual financial statements and assurance and
    related services. In 2008, these were mainly for the review of
    financial statements and offering documents in connection with
    our follow-on public offering of common shares in July 2008. In
    2009 and 2010, these were mainly for the review and audit of
    financial statements. The increase of fees in 2010 was mainly
    related to audit committee investigation for the SEC subpoena.(2)
    
    Audit-related fees represents aggregate fees billed
    for professional services rendered by our principal auditors for
    consultations and related services.  de minimus
  ITEM 16D.
    EXEMPTIONS
    FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES    ITEM 16E.
    PURCHASES
    OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
    PURCHASERS    ITEM 16F.
    CHANGE
    IN REGISTRANTS CERTIFYING ACCOUNTANT    ITEM 16G.
    CORPORATE
    GOVERNANCE   PART III  ITEM 17.
    FINANCIAL
    STATEMENTS    ITEM 18.
    FINANCIAL
    STATEMENTS   98




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##### Table of Contents



ITEM 19.
    EXHIBITS  ExhibitNumber

Description of Document1
.1

Amended Articles of Continuance (incorporated by reference to
    Exhibit 3.2 of our registration statement on
    Form F-1
    (File
    No. 333-138144),
    as amended, initially filed with the SEC on October 23,
    2006)2
.2

Indenture, dated as of December 10, 2007, between Canadian
    Solar Inc. and The Bank of New York, as trustee, including the
    form of 6.0% Convertible Senior Notes due 2017
    (incorporated by reference to Exhibit 4.2 of our
    registration statement on
    Form F-3
    (File
    No. 333-149497),
    as amended, initially filed with the SEC on March 3, 2008)4
.1

Form of Director Indemnity Agreement (incorporated by reference
    to Exhibit 4.1 of our annual report on
    Form 20-F
    for the year ended December 31, 2008 (File
    No. 001-33107),
    as amended, initially filed with the SEC on June 8, 2009)4
.2

English translation of Supplementary Agreement between Jiangsu
    Zhongneng Polysilicon Technology Development Co., Ltd., CSI
    Cells Co., Ltd., Changshu CSI Advanced Solar Inc. and CSI
    Central Solar Power Co., Ltd., dated May 22, 2009,
    supplementing the original Polysilicon Supply Contract dated
    August 20, 2008 and the original Solar Wafer Supply
    Contract dated August 20, 2008 (incorporated by reference
    to Exhibit 4.3 of our annual report on
    Form 20-F
    for the year ended December 31, 2008 (File
    No. 001-33107),
    as amended, initially filed with the SEC on June 8, 2009)4
.3

English translation of Long-term
    (10-Year)
    Multi-crystalline Wafer Supply Contract between CSI Cells Co.,
    Ltd. and Jiangxi LDK Solar Hi-Tech Co., Ltd., dated
    June 27, 2008 (incorporated by reference to
    Exhibit 4.8 of Amendment No. 1 on
    Form 20-F/A
    to our annual report on
    Form 20-F
    for the year ended December 31, 2008 (File
    No. 001-33107),
    filed with the SEC on October 14, 2009)4
.4

English translation of Long-term
    (10-Year)
    Multi-crystalline Wafer Supply Contract between CSI Solar Power
    Inc. and Jiangxi LDK Solar Hi-Tech Co., Ltd., dated
    June 27, 2008 (incorporated by reference to
    Exhibit 4.9 of Amendment No. 1 on
    Form 20-F/A
    to our annual report on
    Form 20-F
    for the year ended December 31, 2008 (File
    No. 001-33107),
    filed with the SEC on October 14, 2009)4
.5*

Amended and Restated Share Incentive Plan of the Registrant,
    dated September 20, 20104
.6

Employment Agreement between Canadian Solar Inc. and the
    Dr. Shawn Qu (incorporated by reference to
    Exhibit 10.2 of our registration statement on
    Form F-1
    (File
    No. 333-138144),
    as amended, initially filed with the SEC on October 23,
    2006)4
.7*

Form of Employment Agreement between Canadian Solar Inc. and its
    executive officers4
.8*

English translation of 3rd Supplementary Agreement to the
    Multi-crystalline Solar Wafer Supply Contract, dated November
    24, 2010, among CSI Cells Co., Ltd., Jiangsu Zhongneng
    Polysilicon Technology Development Co., Ltd., GCL (Nanjing)
    Solar Energy Technology Company Limited, Jiangsu GCL Silicon
    Material Technology Development Co., Ltd., Changzhou GCL
    Photovoltaic Technology Co., Ltd. and Suzhou GCL Photovoltaic
    Technology Co., Ltd.4
.9*

English translation of 4th Supplementary Agreement to the
    Multi-crystalline Solar Wafer Supply Contract, dated December
    31, 2010, between CSI Cells Co., Ltd. and Suzhou GCL
    Photovoltaic Technology Co., Ltd.8
.1*

List of Subsidiaries12
.1*

CEO Certification Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200212
.2*

CFO Certification Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200213
.1*

CEO Certification Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 200213
.2*

CFO Certification Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 200223
.1*

Consent of Deloitte Touché Tohmatsu CPA Ltd.     *
    
    Filed herewith
    
    Confidential treatment has been requested with respect to
    portions of these exhibits and such confidential treatment
    portions have been deleted and replaced with ****
    and filed separately with the Securities and Exchange Commission
    pursuant to
    Rule 24b-2
    under the Exchange Act 99




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##### Table of Contents



SIGNATURES
  Form 20-F
    By:
    /s/  Shawn
    (Xiaohua) QuName:  Shawn
    (Xiaohua) Qu
    Title:    Chairman, President and Chief
    Executive
                 Officer    100




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##### Table of Contents



CANADIAN
    SOLAR INC.
  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
  Reports of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of
    December 31, 2009 and 2010


F-3Consolidated Statements of Operations for the
    Years Ended December 31, 2008, 2009 and 2010


F-5Consolidated Statements of Changes in Equity and
    Comprehensive Income for the Years Ended December 31, 2008,
    2009 and 2010


F-6Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2008, 2009 and 2010


F-7Notes to Consolidated Financial Statements


F-9Additional Information  Financial
    Statements Schedule I


F-38  F-1




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM          Internal Control  Integrated Framework
  
    
 F-2




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##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED BALANCE SHEETS
  December 31,

December 31,2009

2010(In U.S. dollars, except share and per share data)ASSETSCurrent assets:Cash and cash equivalents


160,110,887



288,651,701Restricted cash


179,389,811



187,594,816Accounts receivable, net of allowance of $18,029,440 and
    $7,956,036 on December 31, 2009 and 2010, respectively


151,549,471



169,657,473Amount due from related parties






1,355,760Inventories


164,313,448



272,096,575Value added tax recoverable


39,494,689



42,296,999Advances to suppliers, net of allowance of $3,662,645 and
    $2,930,978 on December 31, 2009 and 2010, respectively


17,264,319



27,320,901Foreign currency derivative assets






2,182,677Prepaid expenses and other current assets


41,865,170



43,508,018Total current assets


753,987,795



1,034,664,920Property, plant and equipment, net


217,135,540



330,459,978Deferred tax assets


10,909,778



16,725,349Advances to suppliers, net of allowance of $7,322,550 and
    $16,458,564 on December 31, 2009 and 2010, respectively


35,209,654



13,946,324Prepaid land use right


12,535,450



13,377,894Long-term investment, net of impairment of nil and $3,000,000 on
    December 31, 2009 and 2010, respectively


3,000,000



Investments in affiliates


4,100,628



5,671,159Other non-current assets


1,824,158



8,521,341TOTAL ASSETS


1,038,703,003



1,423,366,965    F-3




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##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED
    BALANCE SHEETS  (Continued)
  December 31,

December 31,2009

2010(In U.S. dollars, except share and per share data)LIABILITIES AND EQUITYCurrent liabilities:Short-term borrowings


251,702,149



540,520,075Accounts payable


92,271,107



113,404,167Short-term notes payable


105,217,737



9,969,217Amounts due to related parties


260,683



2,445,020Other payables


34,723,690



47,876,476Advances from customers


3,643,807



8,971,102Foreign currency derivative liabilities


523,462



2,452,162Provision for firm purchase commitments


13,822,818



15,888,507Other current liabilities


12,775,508



33,806,531Total current liabilities


514,940,961



775,333,257Accrued warranty costs


16,899,522



31,224,906Convertible notes


866,000



905,816Long-term borrowings


29,290,200



69,458,179Liability for uncertain tax positions


10,704,916



11,460,330TOTAL LIABILITIES


572,701,599



888,382,488Commitments and contingencies (Note 18)Equity:Common shares  no par value: unlimited authorized
    shares, 42,774,485 and 42,893,044 shares issued and
    outstanding at December 31, 2009 and 2010, respectively


500,322,431



501,145,991Additional paid-in capital


(61,268,954
)


(57,392,283
)Retained earnings


11,541,848



62,110,767Accumulated other comprehensive income


15,121,299



28,461,944Total Canadian Solar Inc. shareholders equity


465,716,624



534,326,419Non-controlling interest


284,780



658,058Total equity


466,001,404



534,984,477TOTAL LIABILITIES AND EQUITY


1,038,703,003



1,423,366,965    F-4




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##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED STATEMENTS OF
    OPERATIONS
  Years Ended December 31,2008


2009


2010(In U.S. dollars, except share and per share data)Net revenues


705,006,356



630,961,165



1,495,509,056Cost of revenues


633,998,620



552,856,159



1,266,737,444Gross profit


71,007,736



78,105,006



228,771,612Operating expenses:Selling expenses


10,607,562



22,088,657



47,109,261General and administrative expenses


34,510,263



46,323,959



54,519,646Research and development expenses


1,824,753



3,180,372



6,843,216Total operating expenses


46,942,578



71,592,988



108,472,123Income from operations


24,065,158



6,512,018



120,299,489Other income (expenses):Interest expense


(12,201,293
)


(9,458,983
)


(22,164,363
)Interest income


3,530,957



5,084,227



6,935,560Gain on change in foreign currency derivatives


14,454,814



9,870,333



1,656,928Gain on debt extinguishment


2,429,524







Debt conversion inducement expense


(10,170,118
)






Foreign exchange gain (loss)


(19,989,123
)


7,680,503



(36,291,898
)Investment income (loss)






1,788,036



(2,853,403
)Income before income taxes


2,119,919



21,476,134



67,582,313Income tax benefit (expense)


(9,653,780
)


1,302,065



(16,753,917
)Net income (loss)


(7,533,861
)


22,778,199



50,828,396Less: net income attributable to non-controlling interest






132,315



259,477Net income (loss) attributable to Canadian Solar Inc.


(7,533,861
)


22,645,884



50,568,919Earnings (loss) per share-basic

$
(0.24
)

$
0.61


$
1.18Shares used in computation  basic


31,566,503



37,137,004



42,839,356Earnings (loss) per share-diluted

$
(0.24
)

$
0.60


$
1.16Shares used in computation-diluted


31,566,503



37,727,138



43,678,208    F-5




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##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND
    COMPREHENSIVE INCOME
  Retained

AccumulatedAdditional

Earnings

Other

Non-



TotalCommon

Paid-in

(Accumulated

Comprehensive

Controlling

Total

ComprehensiveShares

Capital

Deficit)

Income

Interest

Equity

IncomeNumber

$

$

$

$

$

$

$(In U.S. dollars, except share and per share data)Balance at December 31, 2007


27,320,389



97,454,214



34,636,199



(3,570,175
)


5,980,542







134,500,780Share-based compensation










9,102,002















9,102,002Conversion of convertible notes


3,966,841



182,550,305



(110,443,505
)














72,106,800Issuance of ordinary shares, net of issuance cost


3,500,000



110,659,864



















110,659,864Deferred tax on issuance costs of ordinary shares






2,552,082



















2,552,082Other


566,190























Exercise of share options


391,143



1,937,330



















1,937,330Net loss














(7,533,861
)










(7,533,861
)


(7,533,861
)Foreign currency translation adjustment


















8,928,984







8,928,984



8,928,984Balance at December 31, 2008


35,744,563



395,153,795



(66,705,304
)


(11,104,036
)


14,909,526







332,253,981



1,395,123Share-based compensation










5,436,350















5,436,350Issuance of ordinary shares, net of issuance cost


6,900,000



102,811,343



















102,811,343Deferred tax on issuance costs of ordinary shares






1,682,869



















1,682,869Exercise of share options


129,922



674,424



















674,424Paid-in capital from non-controlling interest






















9,173



9,173Sales of subsidiary shares to non-controlling interest






















143,292



143,292Net income














22,645,884







132,315



22,778,199



22,778,199Foreign currency translation adjustment


















211,773







211,773



211,773Balance at December 31, 2009


42,774,485



500,322,431



(61,268,954
)


11,541,848



15,121,299



284,780



466,001,404



22,989,972Share-based compensation










3,876,671















3,876,671Exercise of share options


118,559



823,560



















823,560Sales of subsidiary shares to non-controlling interest






















145,128



145,128Net income














50,568,919







259,477



50,828,396



50,828,396Foreign currency translation adjustment


















13,340,645



(31,327
)


13,309,318



13,309,318Balance at December 31, 2010


42,893,044



501,145,991



(57,392,283
)


62,110,767



28,461,944



658,058



534,984,477



64,137,714    F-6




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##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED STATEMENTS OF CASH
    FLOWS
  Years Ended December 31,2008

2009

2010(In U.S. dollars)Operating activities:Net income (loss)


(7,533,861
)


22,778,199



50,828,396Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation and amortization


9,282,276



20,508,383



31,266,181Loss on disposal of property, plant and equipment


5,126,852



174,292



194,243Gain on change in fair value of derivatives


(14,454,814
)


(9,870,333
)


(1,656,928
)Investment loss










2,853,403Allowance for doubtful debts


7,445,028



18,076,416



3,046,100Write down of inventories


23,784,578



12,478,944



2,101,124Provision for firm purchase commitment






13,822,818



1,562,002Amortization of discount on debt


1,179,446



35,638



39,816Gain on debt extinguishment


(2,429,524
)






Share-based compensation


9,102,002



5,436,350



3,876,671Debt conversion inducement expense


10,170,118







Changes in operating assets and liabilities:Inventories


(39,994,140
)


(83,970,843
)


(103,637,355
)Accounts receivable


2,126,297



(116,463,362
)


(5,704,039
)Amount due from related parties










(1,347,828
)Value added tax recoverable


(2,671,677
)


(21,981,216
)


(1,828,277
)Advances to suppliers


(33,572,770
)


6,751,157



2,227,991Long term prepaid expense










(5,826,029
)Prepaid expenses and other current assets


783,021



(16,899,415
)


(6,424,395
)Accounts payable


19,261,749



62,855,936



18,096,208Short-term notes payable


423,800



104,588,587



(96,011,517
)Other payables


2,369,498



9,065,342



10,979,862Advances from customers


1,367,209



65,703



5,120,313Amounts due to related parties


(119,706
)


166,900



2,163,515Accrued warranty costs


6,893,681



6,051,483



14,259,880Other current liabilities


1,893,489



8,452,665



18,875,491Prepaid land use right


(10,508,489
)


258,520



(454,803
)Liability for uncertain tax positions


6,425,348



2,001,086



755,414Deferred taxes


(982,236
)


(10,834,919
)


(5,179,877
)Settlement of foreign currency derivatives


7,825,523



17,367,159



1,337,319Net cash provided by (used in) operating activities


3,192,698



50,915,490



(58,487,119
) F-7




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##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS  (Continued)
  Years Ended December 31,2008

2009

2010(In U.S. dollars)Investing activities:Increase in restricted cash


(17,950,833
)


(158,622,411
)


(987,019
)Purchase of long-term investment


(3,000,000
)






Investment in affiliates






(4,100,084
)


(1,503,531
)Proceeds from disposal of investment in subsidiaries






148,898



2,524,541Purchase of property, plant and equipment


(104,817, 010
)


(72,214,660
)


(134,314,791
)Proceeds from disposal of property, plant and equipment


6,322



220,027



291,846Net cash (used in) investing activities


(125,761,521
)


(234,568,230
)


(133,988,954
)Financing activities:Proceeds from short-term borrowings


234,096,606



481,721,660



917,514,400Repayment of short-term borrowings


(169,919,741
)


(371,676,212
)


(695,513,690
)Proceeds from long-term borrowings


24,964,230



14,633,000



89,659,607Sales of subsidiary shares to non-controlling interest






9,173



145,128Issuance cost paid on convertible notes


(381,900
)






Proceeds from issuance of common shares


112,752,500



103,349,924



Issuance costs paid for common shares offering


(2,092,636
)


(538,581
)


Proceeds from exercise of stock options


1,937,330



674,424



823,560Net cash provided by financing activities


201,356,389



228,173,388



312,629,005Effect of exchange rate changes


(793,765
)


(70,682
)


8,387,882Net increase in cash and cash equivalents


77,993,801



44,449,966



128,540,814Cash and cash equivalents at the beginning of the year


37,667,120



115,660,921



160,110,887Cash and cash equivalents at the end of the year


115,660,921



160,110,887



288,651,701Supplemental disclosure of cash flow information:Interest paid, net of amounts capitalized


11,103,634



10,729,375



21,211,228Income taxes paid


2,683,014



4,367,772



13,635,216Supplemental schedule of non-cash activities:Income from disposal of subsidiaries included in prepaid
    expenses and other current assets






2,345,557



Property, plant and equipment cost included in other payables


17,339,148



18,943,086



22,199,024Conversion of convertible notes to equity


72,106,800







    F-8




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##### Table of Contents



CANADIAN
    SOLAR INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
    (In U.S. dollars)
  1.
    ORGANIZATION
    AND PRINCIPAL ACTIVITIES      2.
    SUMMARY
    OF PRINCIPAL ACCOUNTING POLICIES  (a)
    Basis
    of presentation    (b)
    Basis
    of consolidation    (c)
    Use of
    estimates    (d)
    Cash
    and cash equivalents      (e)
    Advances
    to suppliers   F-9




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##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    At December 31,

At December 31,2009

2010$

$Supplier A


20,768,495



18,004,235Supplier B


7,951,591



7,549,800Supplier C


11,716,080



9,054,708Supplier D


8,640,609



9,663,744   (f)
    Inventories      work-in-process
  take-or-pay
 F-10




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##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (g)
    Property,
    plant and equipment      Buildings

20 yearsLeasehold improvements

Over the shorter of the lease term or their estimated useful
    livesMachinery

5-10 yearsFurniture, fixtures and equipment

5 yearsMotor vehicles

5 years     (h)
    Prepaid
    land use right    (i)
    Long-term
    investment    other-than-temporary
  (j)
    Investments
    in affiliates    other-than-temporary. other-than-temporary.
 F-11




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##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (k)
    Impairment
    of long-lived assets    (l)
    Income
    taxes      (m)
    Revenue
    recognition  ready-to-install
   F-12




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##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (n)
    Cost
    of revenues    (o)
    Shipping
    and handling costs    (p)
    Research
    and development    (q)
    Advertising
    expenses    (r)
    Warranty
    cost  10-year 25-year
  25-year
  (s)
    Foreign
    currency translation   F-13




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##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (t)
    Foreign
    currency risk    (u)
    Concentration
    of credit risk      (v)
    Fair
    value of derivatives and financial instruments   F-14




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (w)
    Earnings
    per Share    (x)
    Share-based
    compensation    (y)
    Recently
    issued accounting pronouncements  2010-13,
  3.
    ALLOWANCE
    FOR DOUBTFUL RECEIVABLES      2008

2009

2010$

$

$Beginning of the year


376,178



5,605,983



18,029,440Allowances made (reversed) during the year


5,218,944



16,536,592



(10,082,718
)Accounts written-off against allowances


(19,000
)


(4,113,307
)


Foreign exchange effect


29,861



172



9,314Closing balance


5,605,983



18,029,440



7,956,036    F-15




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##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2008

2009

2010$

$

$Beginning of the year






2,341,685



10,985,195Allowances made during the year


2,226,084



8,641,316



10,239,858Accounts written-off against allowances










(2,205,848
)Foreign exchange effect


115,601



2,194



370,337Closing balance


2,341,685



10,985,195



19,389,542   4.
    INVENTORIES    At December 31,

At December 31,2009

2010$

$Raw materials


53,711,941



93,900,586Work-in-process


22,806,716



50,094,707Finished goods


87,794,791



128,101,282164,313,448



272,096,575     5.
    PROPERTY,
    PLANT AND EQUIPMENT, NET    At December 31,

At December 31,2009

2010$

$Buildings


63,340,108



67,962,404Leasehold improvements


3,226,741



3,293,248Machinery


136,755,699



213,220,584Furniture, fixtures and equipment


7,563,437



14,086,113Motor vehicles


1,325,384



2,252,790212,211,369



300,815,139Less: Accumulated depreciation


(31,862,352
)


(64,257,989
)180,349,017



236,557,150Construction in process


36,786,523



93,902,828Property, plant and equipment, net


217,135,540



330,459,978  F-16




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##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    6.
    FAIR
    VALUE MEASUREMENT    Fair Value Measurements at Reporting Date UsingQuoted PricesTotal Fair


in Active


SignificantValue and


Markets for


Other


SignificantCarrying


Identical


Observable


UnobservableValue on the


Assets


Inputs


InputsAs of December 31, 2009

Balance Sheet


(Level 1)


(Level 2)


(Level 3)Liabilities:Foreign exchange forward contracts

$
523,462


$



$
523,462


$
Total Liabilities

$
523,462






$
523,462



   Fair Value Measurements at Reporting Date UsingQuoted PricesTotal Fair


in Active


SignificantValue and


Markets for


Other


SignificantCarrying


Identical


Observable


UnobservableValue on the


Assets


Inputs


InputsAs of December 31, 2010

Balance Sheet


(Level 1)


(Level 2)


(Level 3)Assets:Foreign exchange forward contracts

$
2,182,677


$



$
2,182,677


$
Total Assets

$
2,182,677






$
2,182,677



Liabilities:Foreign exchange option contracts

$
1,062,179


$



$
1,062,179


$
Foreign exchange forward contracts

$
1,389,983


$



$
1,389,983


$
Total Liabilities

$
2,452,162






$
2,452,162



        F-17




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##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      At December 31, 2009

At December 31, 2010Carrying Value

Fair Value

Carrying Value

Fair ValueConvertible notes

$
866,000


$
1,458,502


$
905,816


$
924,363           Fair Values of Derivatives AssetAt December 31, 2010


At December 31, 2009Balance Sheet Location

Fair Value


Balance Sheet Location

Fair ValueForeign exchange option contracts

Foreign currency derivative assets





Foreign currency derivative assets

$
Foreign exchange forward contracts

Foreign currency derivative assets


2,182,677


Foreign currency derivative assets


Total derivatives




2,182,677




$
   Fair Values of Derivatives LiabilityAt December 31, 2010


At December 31, 2009Derivatives Not Designated as Hedging Instruments

Balance Sheet Location

Fair Value


Balance Sheet Location

Fair ValueForeign exchange option contracts

Foreign currency derivative liabilities

$
1,062,179


Foreign currency derivative liabilities

$
Foreign exchange forward contracts

Foreign currency derivative liabilities

$
1,389,983


Foreign currency derivative liabilities

$
523,462Total derivatives



$
2,452,162




$
523,462  F-18




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Location of

Amount of Gain (Loss) Recognized in Income on DerivativesGain (Loss) Recognized

Year Ended December 31Derivative Not Designated as Hedging Instruments

in Income on Derivatives

2008


2009


2010Foreign exchange option contracts

Gain on foreign currency derivatives

$
13,616,794


$
4,783,240


$
6,636,821Foreign exchange forward contracts

Gain on foreign currency derivatives


838,020



5,087,093



(4,979,893
)Total



$
14,454,814


$
9,870,333


$
1,656,928   7.
    INVESTMENTS
    IN AFFILIATES    At December 31,2009

2010Carrying

Ownership

Carrying

OwnershipValue

Percentage

Value

Percentage$

(%)

$

(%)Nernst New Energy (Suzhou) Co., Ltd.










1,509,808



50
%GD Inner Mongolia Jingyang Energy Co., Ltd.


659,030



15
%


674,956



15
%Ningxia GD CSI New Energy Co., Ltd.


512,578



35
%


528,486



35
%Suzhou Gaochuangte New Energy Co., Ltd.


2,929,020



40
%


2,957,909



40
%4,100,628







5,671,159          F-19




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##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    BANK
    BORROWING  At December 31,

At December 31,2009

2010$

$Bank borrowings


280,992,349



609,978,254Analysis as:Short-term


211,595,078



489,380,618Long-term, current portion


40,107,071



51,139,457Subtotal for short term


251,702,149



540,520,075Long-term, non-current portion


29,290,200



69,458,179Total


280,992,349



609,978,254       a)
    Short-term    At December 31,

At December 31,2009

2010$$Short-term borrowings guaranteed by Dr. Shawn Qu


37,012,750



37,749,000Short-term borrowing secured by account receivable


2,912,634



Short-term borrowings secured by restricted cash


60,813,374



84,381,806Short-term borrowings secured by inventory


5,764,876



Short-term borrowings secured by land use right and property,
    plant and equipment


10,251,570



53,286,488Notes


2,929,020



73,988,040Unsecured short-term borrowings


91,910,854



239,975,284Long-term Loans due within one yearUnsecured


14,645,100



6,039,857Secured by inventory






30,000,000Secured by property, plant and equipment


25,461,971



15,099,600Total


251,702,149



540,520,075      F-20




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      b)
    Long-term    At December 31,

At December 31,2009

2010$

$Unsecured


10,983,825



9,059,783Long-term Borrowings secured by land use right and property,
    plant and equipment


18,306,375



60,398,396Total


29,290,200



69,458,179        F-21




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        2011


51,139,4572012


19,629,4972013


10,569,7222014 and after


39,258,960Total


120,597,636Less: future principal repayment related to long-term loan,
    current portion


(51,139,457
)Total long-term portion

$
69,458,179   c)
    Interest
    expense  Years Ended December 312008

2009

2010$

$

$Interest capitalized


1,188,135



1,306,686



1,686,262Interest expense


12,201,293



9,458,983



22,164,363Total interest incurred


13,389,428



10,765,669



23,850,625   9.
    SHORT-TERM
    NOTES PAYABLE   F-22




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10.
    ACCRUED
    WARRANTY COSTS    2008

2009

2010$

$

$Beginning balance


3,878,755



10,846,719



16,899,522Warranty provision


6,978,411



6,199,240



14,707,513Warranty costs incurred


(10,447
)


(146,437
)


(382,129
)Ending balance


10,846,719



16,899,522



31,224,906   11.
    CONVERTIBLE
    NOTES  2007
    Convertible Note Subscription Agreement
      Maturity date.
  Interest.
  Conversion.
  Redemption.
   F-23




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          At December 31,

At December 31,2009

2010$

$Carrying amount of the equity component


156,848



156,848Principal amount of the debt component


1,000,000



1,000,000Unamortized debt discount


134,000



94,184Net carrying amount of the debt component


866,000



905,816     12.
    RESTRICTED
    NET ASSETS     F-24




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    13.
    INCOME
    TAXES    Years Ended December 31,2008

2009

2010$

$

$Income (Loss) before Income TaxCanada


(31,376,639
)


(8,876,370
)


18,354,204Other


33,496,558



30,352,504



49,228,1092,119,919



21,476,134



67.582,313Current TaxCanada


9,268,794



4,790,780



9,563,915Other


2,837,939



5,608,127



13,793,99712,106,733



10,398,907



23.357.912Deferred TaxCanada


571,861



(3,213,987
)


(848,566
)Other


(3,024,814
)


(8,486,985
)


(5,755,429
)(2,452,953
)


(11,700,972
)


(6,603,995
)Total Income Tax (Benefit) ExpenseCanada


9,840,655



1,576,793



8,715,349Other


(186,875
)


(2,878,858
)


8,038,5689,653,780



(1,302,065
)


16,753,917          F-25




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Company

Transitional Tax rate under the new EIT LawCSI Solartronics (Changshu) Co., Ltd.

25%CSI Solar Technologies Inc.

Exempted for 2008 and 2009 and 12.5% for 2010, 2011 and 2012
    (half reduction on 25%)CSI Cells Co., Ltd.

Exempted for 2008 and 12.5% for 2009, 2010 and 2011 (half
    reduction on 25%)Canadian Solar Manufacturing (Luoyang) Inc. (formerly known as
    CSI Central Solar Power Co., Ltd.)

Exempted for 2008 and 12.5% for 2009, 2010 and 2011 (half
    reduction on 25%)Canadian Solar Manufacturing (Changshu) Inc. (formerly
    known as Changshu CSI Advanced Solar Inc.)

Exempted for 2008 and 2009 and 12.5% for 2010, 2011 and 2012
    (half reduction on 25%)         At December 31,

At December 31,2009

2010$

$Beginning balance


8,703,830



10,704,916Gross increases  additions for tax positions and the
    additional interest and penalties taken for the year


2,001,086



755,414Ending balance


10,704,916



11,460,330    F-26




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      At December 31,

At December 31,2009

2010$

$Deferred tax assets:Accrued warranty costs


5,126,058



9,083,240Bad debt provision


4,604,892



3,239,612Issuance costs


3,414,898



1,849,697Inventory write-down


2,989,772



3,358,735Depreciation difference of property, plant and equipment


2,903,356



5,829,316Loss on firm purchase commitment


1,727,852



1,986,063Net operating loss carried forward


2,901,339



3,834,258Others


2,134,867



2,285,344Total deferred tax assets


25,803,034



31,466,265Valuation allowance


(2,194,062
)


(2,082,609
)Total deferred tax assets, net off valuation allowance


23,608,972



29,383,656Analysis as:Current


12,699,194



12,658,307Non-current


10,909,778



16,725,34923,608,972



29,383,656Deferred tax liabilities:Financial derivatives assets






274,521Analysis as:Current






274,521Non-current










274,521    F-27




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    At December 31,

Expiration2010

Year$Net operating loss carried forward:CSI Solartronics (Changshu) Co., Ltd.


1,739,120


2015CSI Solar Manufacture Inc.


2,897,652


2015Canadian Solar Solutions Inc.


2,532,251


2030Canadian Solar Manufacturing (Changshu) Inc.


10,482,080


2015Canadian Solar Manufacturing (Ontario) Inc.


737,671


2030CSI Solar New Energy (Suzhou) Co. Ltd.


70,823


2030Total


18,459,597     Years Ended December 31,2008

2009

2010$

$

$Combined federal and provincial income tax rate


34
%


33
%


31
%Taxable income not included in pre-tax income


384
%


0
%


0
%Expenses not deductible for tax purpose


220
%


31
%


3
%Tax exemption and tax relief granted to the Company


(249
)%


(64
)%


(8
)%Effect of different tax rate of subsidiary operations in other
    jurisdiction


(176
)%


(16
)%


(3
)%Unrecognized tax benefits


372
%


9
%


1
%Change of tax rates in the following years


(161
)%


(8
)%


(2
)%Valuation allowance






10
%


2
%Exchange gain (loss)


31
%


(1
)%


1
%455
%


(6
)%


25
%     Years Ended December 31,2008

2009

2010$

$

$The aggregate dollar effect


5,281,258



13,702,582



5,561,168Per share effect  basic


0.17



0.37



0.13Per share effect  diluted


0.17



0.36



0.13    F-28




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    14.
    EARNINGS
    PER SHARE    Years Ended December 31,2008


2009


2010$


$


$Net income (loss) attributable to Canadian Solar Inc.
     basic and diluted

$
(7,533,861
)

$
22,645,884


$
50,568,919Weighted average number of common shares  basic


31,566,503



37,137,004



42,839,356Diluted share number from share options and restricted shares






590,134



838,852Weighted average number of common shares  diluted


31,566,503



37,727,138



43,678,208Basic earnings (loss) per share

$
(0.24
)

$
0.61


$
1.18Diluted earnings (loss) per share

$
(0.24
)

$
0.60


$
1.16     Years Ended December 31,2008

2009

2010$

$

$Convertible notes


50,607



50,607



50,607Share options and restricted shares


740,326



597,842



426,716790,933



648,449



477,323   15.
    RELATED
    PARTY BALANCES AND TRANSACTIONS  Related
    party balances:
       F-29




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Related
    party transactions:
        16.
    FIRM
    PURCHASE COMMITMENTS  take-or-pay take-or-pay take-or-pay take-or-pay
    Year Ending December 31:

$2011


44,865,9702012


22,562,5162013


22,383,5162014


22,204,515Thereafter


87,028,054Total

$
199,044,571   17.
    COMMITMENTS
    AND CONTINGENCIES  a)
    Operating
    lease commitments   F-30




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year Ending December 31:

$2011


2,558,1392012


1,577,1552013


1,314,3792014


1,208,597Thereafter


4,723,375Total


11,381,645   b)
    Property,
    plant and equipment purchase commitments    c)
    Supply
    purchase commitments        Year Ending December 31:

$2011


290,139,3322012


657,387,6892013


686,064,3782014


685,885,3782015


935,789,021Thereafter


65,002,539Total


3,320,268,337   d)
    Contingencies  LDK
   F-31




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Class Action
    Lawsuits
  Rule 10b-5
  and/or
    Other
    Tax Contingencies
     F-32




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    18.
    SEGMENT
    INFORMATION      Years Ended December 31,2008

2009

2010$

$

$Europe: Germany


427,656,269



272,744,921



623,375,655 Spain


188,133,256



62,109,973



251,777,174 Czech


10,445,389



151,342,770



102,194,745 Italy






12,122,345



185,170,195 Others


4,912,021



24,767,310



30,930,744Europe Total


631,146,935



523,087,319



1,193,448,513Asia: China


25,356,557



25,915,331



45,482,615 Japan


14,697,754



1,885,530



32,667,658 Others


1,516,420



43,165,242



108,216,158Asia Total


41,570,731



70,966,103



186,366,431America


32,288,690



36,907,743



115,694,112Total net revenues


705,006,356



630,961,165



1,495,509,056     19.
    MAJOR
    CUSTOMERS    Years Ended December 312008

2009

2010$

$

$Company A


103,620,514



122,904,506



164,522,394Company B


10,445,389



151,342,770



96,025,973Company C


88,628,315



3,409,460



12,858,411Company D


76,660,435



4,436,180



Company E


50,637,781







    F-33




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  20.
    EMPLOYEE
    BENEFIT PLANS      21.
    SHARE
    OPTIONS      Options
    to Employees
     F-34




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008

2009

2010Risk free rate

5.14%~5.95%

4.67%~5.72%

4.25%~4.75%Average expected exercise term

n/a

n/a

n/aVolatility ratio

78%~79%

81%~84%

80%~84%Dividend yield





Annual exit rate

8%

3.56%~5.24%

2.89%~3.36%Suboptimal exercise factor

3.27~3.70

5.40~6.20

5.00     WeightedWeighted

AverageAverage

RemainingNumber

Exercise

Contract

Aggregateof Options

Price

Terms

Intrinsic Value$



$Options outstanding at January 1, 2010


1,964,007



9.34Granted


956,500



12.76Exercised


(118,559
)


6.95Forfeited


(184,282
)


7.72Options outstanding at December 31, 2010


2,617,666



10.79



8 years



10,148,844Options vested or expected to vest at December 31, 2010


2,457,313



10.74



8 years



9,787,824Options exercisable at December 31, 2010


1,246,994



10.08



7 years



6,810,766     Options
    and Restricted shares to Non-employees
    Restricted
    shares to Employees
   F-35




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Weighted AverageNumber of

Grant-DateShares

Fair Value$Unvested at January 1, 2010


29,125



14.12Granted






Vested


29,125



14.12Cancelled or Forfeited






Unvested at December 31, 2010






     22.
    INVESTMENT
    INCOME (LOSS)    Years Ended December 31,2008


2009


2010$


$


$Sale of subsidiaries






1,788,036



210,312Loss from investment in equity method affiliates










(63,715
)Impairment of long-term investment










(3,000,000
)Total investment income (loss)






1,788,036



(2,853,403
)      F-36




---



##### Table of Contents



APPENDIX 1
  Subsidiaries
    of CSI
    Place and

AttributableDate

EquitySubsidiary

of Incorporation

Interest Held

Principal ActivityCSI Solartronics(Changshu) Co., Ltd.

PRC
    November 23, 2001


100%


Developing solar power projectCSI Solar Technologies Inc.

PRC
    August 8, 2003


100%


Research and developing solar modulesCSI Solar Manufacture Inc.

PRC
    January 7, 2005


100%


Production of solar modulesCanadian Solar Manufacturing (Luoyang) Inc. (formerly known as
    CSI Central Solar Power Co., Ltd.)

PRC
    February 24, 2006


100%


Manufacture of solar modules, ingots and wafersCanadian Solar Manufacturing (Changshu) Inc. (formerly known as
    Changshu CSI Advanced Solar Inc.)

PRC
    August 1, 2006


100%


Production of solar modulesCSI Cells Co., Ltd.

PRC
    August 23, 2006


100%


Manufacture of solar cellsCanadian Solar (USA) Inc.

USA
    June 8, 2007


100%


Sale of solar modulesCSI Project Consulting GmbH

Germany
    May 26, 2009


70%


Developing solar power projectCVB Solar GmbH

Germany
    May 26, 2009


70%


Developing solar power projectCanadian Solar Japan K.K

Japan
    June 21, 2009


91.4%


Sales and marketing modules in JapanCanadian Solar Solutions Inc.

Canada
    June 22, 2009


100%


Developing solar power projectCSI Solar Power (China) Inc.

PRC
    July 7, 2009


100%


Planned investment holdingCanadian Solar EMEA GmbH (formerly known as Canadian Solar
    (Deutschland) GmbH)

Germany
    August 21, 2009


100%


Planned sales agency of solar modulesCSI Solar New Energy (Suzhou) Co. Ltd.

China
    February 9, 2010


100%


Production of solar modulesCanadian Solar Manufacturing (Ontario) Inc.

Canada
    June 30, 2010


100%


Production of solar modules     *
    
    On January 5, 2011, all the shares of CVB Solar GmbH held
    by CSI was sold to Solmotion GmbH. F-37




---



##### Table of Contents



Additional
 Information  Financial Statements
    Schedule I
  Canadian Solar Inc.
   Rule 12-04(a) Regulation S-X,
   F-38




---



##### Table of Contents



Financial
    Information of Parent Company
    Balance Sheets
   December 31,

December 31,2009

2010(In U.S. dollars, except share and per share data)ASSETSCurrent assets:Cash and cash equivalents


49,935,750



17,834,643Restricted cash


150,000



31,626,334Accounts receivable, net of allowance for doubtful accounts of
    $14,446,746 and $6,080,501 at December 31, 2009 and 2010,
    respectively


138,326,367



108,939,196Inventories


32,563,622



30,423,199Advances to suppliers






4,069,236Amounts due from related parties


92,599,693



108,899,314Deferred tax assets


4,194,303



1,723,766Prepaid expenses and other current assets


6,254,889



9,411,569Total current assets


324,024,624



312,927,257Advances to suppliers


20,768,495



13,946,324Investment in subsidiaries


336,827,824



422,256,208Deferred tax assets


7,570,263



9,648,202Other non-current assets


3,019,466



5,801,542TOTAL ASSETS


692,210,672



764,579,533LIABILITIES AND EQUITYCurrent liabilities:Accounts payable


6,150,845



10,087,952Amounts due to related parties


184,066,898



160,239,600Other current liabilities


9,595,268



20,574,458Total current liabilities


199,813,011



190,902,010Accrued warranty costs


15,110,121



26,984,958Convertible notes


866,000



905,816Liability for uncertain tax positions


10,704,916



11,460,330TOTAL LIABILITIES


226,494,048



230,253,114Equity:Common shares  no par value: unlimited authorized
    shares, 42,774,485 and 42,893,044 shares issued and
    outstanding at December 31, 2009 and 2010, respectively


500,322,431



501,145,991Additional paid-in capital


(61,268,954
)


(57,392,283
)Retained earnings


11,541,848



62,110,767Accumulated other comprehensive income


15,121,299



28,461,944Total equity


465,716,624



534,326,419TOTAL LIABILITIES AND EQUITY


692,210,672



764,579,533  F-39




---



##### Table of Contents



Financial
    Information of Parent Company
    Statements of Operations
   Years Ended December 312008

2009

2010(In U.S. dollars, except share and per share data)Net revenues


624,574,503



602,999,324



1,248,400,119Cost of revenues


624,628,119



591,746,362



1,201,713,356Gross profit (loss)


(53,616
)


11,252,962



46,686,763Operating expenses:Selling expenses


4,455,132



8,510,250



10,057,347General and administrative expenses


19,553,100



17,258,546



13,355,609Research and development expenses


622,383



664,102



792,509Total operating expenses


24,630,615



26,432,898



24,205,465Profit (loss) from operations


(24,684,231
)


(15,179,936
)


22,481,298Other income (expenses):Interest expense


(4,400,736
)


(140,314
)


(296,678
)Interest income


3,557,683



2,153,462



933,372Investment loss










(3,000,000
)Gain on debt extinguishment


2,429,524







Debt conversion inducement expense


(10,170,118
)






Foreign exchange gain


1,888,000



4,281,909



830,602Profit (loss) before income taxes and equity in earnings of
    subsidiaries


(31,379,878
)


(8,884,879
)


20,948,594Income tax expense


(9,840,655
)


(1,576,793
)


(9,956,513
)Equity in earnings of subsidiaries


33,686,672



33,107,556



39,576,838Net Income (loss)


(7,533,861
)


22,645,884



50,568,919  F-40




---



##### Table of Contents



Financial
    Information of Parent Company
    Statements of Cash Flows
   Years Ended December 31,2008

2009

2010(In U.S. dollars)Operating activities:Net Income (loss)


(7,533,861
)


22,645,884



50,568,919Depreciation and amortization


757



5,450



5,888Allowance for doubtful debts


4,880,241



8,208,800



(7,327,386
)Investment loss










3,000,000Amortization of discount on debt


1,179,446



35,638



39,816Equity in earnings of subsidiaries


(33,686,672
)


(33,107,556
)


(39,576,838
)Share-based compensation


9,102,002



5,436,350



3,876,671Gain on debt extinguishment


(2,429,524
)






Debt conversion inducement expense


10,170,118







Changes in operating assets and liabilities:Inventories


(2,361,759
)


(29,306,391
)


2,140,423Accounts receivable


8,430,376



(105,141,401
)


37,753,416Amounts due from related parties


(40,246,289
)


(9,102,961
)


(16,299,621
)Advances to suppliers


(6,074,708
)


(7,248,785
)


2,752,935Other current assets


224,152



(327,630
)


(4,195,539
)Other non current assets










(5,786,798
)Accounts payable


(2,411,261
)


6,026,101



3,937,109Advances from customers


(1,483,914
)


1,713,862



130,350Amounts due to related parties


22,314,717



139,080,262



(23,827,298
)Accrued warranty costs


6,069,954



5,618,662



11,874,837Other current liabilities


(100,189
)


3,900,397



10,848,840Liability for uncertain tax positions


6,425,348



2,001,087



755,415Deferred taxes


2,068,575



(3,213,988
)


392,598Net cash provided by (used in) operating activities


(25,462,491
)


7,223,781



31,063,737  F-41




---



##### Table of Contents



Financial
    Information of Parent Company
    Statements of Operations
   Years Ended December 31,2008

2009

2010$

$

$(In U.S. dollars)Investing activities:Increase in restricted cash






(150,000
)


(31,476,334
)Investment in subsidiaries


(93,600,000
)


(74,120,415
)


(45,851,545
)Purchase of equity investment


(3,000,000
)






Purchases of property, plant and equipment


(22,174
)


(3,497
)


(1,172
)Net cash used in investing activities


(96,622,174
)


(74,273,912
)


(77,329,051
)Financing activities:Proceeds from short-term borrowings


30,000,000







Repayment of short-term borrowings


(30,000,000
)






Issuance costs paid on convertible notes


(381,900
)






Proceeds from issuance of common shares


112,752,500



103,349,924



Issuance costs paid for common shares offering


(2,092,636
)


(538,581
)


Proceeds from exercise of stock options


1,937,330



674,424



823,560Net cash provided by financing activities


112,215,294



103,485,767



823,560Effect of exchange rate changes


747,321



210,504



13,340,647Net increase in cash and cash equivalents


(9,122,050
)


36,646,140



(32,101,107
)Cash and cash equivalents at the beginning of the year


22,411,660



13,289,610



49,935,750Cash and cash equivalents at the end of the year


13,289,610



49,935,750



17,834,643Supplemental disclosure of cash flow information:Interest paid


(2,601,581
)


(104,676
)


(296,678
)Income taxes paid






(1,680,672
)


(5,204,641
)Supplemental schedule of non-cash activities:Issuance cost included in other payable










Conversion of convertible notes to stockholders equity


72,106,800







  F-42