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UNITED STATES SECURITIES AND
EXCHANGE COMMISSION

Washington, D.C. 20549





Form 20-F





(Mark One)

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

OR



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

For the fiscal year ended December 31, 2011

OR



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

For the transition period from              to

OR



| ̈ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:
|- | --------------------------------------------------------------------------------------------

Date of event requiring this shell company report

Commission file number 001-33464





LDK Solar Co.,
Ltd.

(Exact name of Registrant as specified in its charter)





N/A

(Translation of Registrants name into English)

Cayman Islands

(Jurisdiction of incorporation or organization)

Hi-Tech Industrial Park

Xinyu City

Jiangxi Province 338032

Peoples Republic of China

(Address of principal executive offices)

Jack Lai

Chief Financial Officer

+1 (408) 245-0858 (Telephone)

+1 (408) 245-8802 (Facsimile)

1290 Oakmead Parkway, Suite 306

Sunnyvale, California 94085

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

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



|                                                                                              |  |                                          
|--------------------------------------------------------------------------------------------- |  | -----------------------------------------
|Title of Each Class                                                                           |  | Name of Each Exchange on which
Registered
|American depositary shares, each representing
one ordinary share of par value $0.10 per share |  | New York Stock Exchange, Inc.            

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

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





Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period
covered by the annual report.133,518,800 ordinary shares, par value $0.10 per share.

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

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

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

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

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

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



|                           |  |                      |  |                         
|-------------------------- |  | -------------------- |  | ------------------------
|Large accelerated filer   ̈ |  | Accelerated filer  x |  | Non-accelerated filer   ̈

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



|             |  |                                                                                                       |  |   |  |         
|------------ |  | ----------------------------------------------------------------------------------------------------- |  | - |  | --------
|U.S. GAAP  x |  | International Financial Reporting Standards as issued by the
International Accounting Standards Board |  |  ̈ |  | Other   ̈

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

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

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

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









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Table of Contents



|                              |  |                                                            |   |      |     | 
|----------------------------- |  | ---------------------------------------------------------- | - | ---- | --- | 
|                              |  |                                                            |   | Page |    
|Certain Terms and Conventions |  |                                                            | 1 |     
|Exchange Rate Information     |  |                                                            | 2 |     
|Forward-Looking Statements    |  |                                                            | 3 |     
|                              |  |                                                           
|                              |  | PART I                                                     |   |      |     | 
|ITEM 1.                       |  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS      |   |      | 4   | 
|ITEM 2.                       |  | OFFER STATISTICS AND EXPECTED TIMETABLE                    |   |      | 4   | 
|ITEM 3.                       |  | KEY INFORMATION                                            |   |      | 4   | 
|                              |  | A. Selected Financial and Operating Data                   |   |      | 4   | 
|                              |  | B. Capitalization and Indebtedness                         |   |      | 7   | 
|                              |  | C. Reasons for the Offer and Use of Proceeds               |   |      | 7   | 
|                              |  | D. Risk Factors                                            |   |      | 7   | 
|ITEM 4.                       |  | INFORMATION ON THE COMPANY                                 |   |      | 52  | 
|                              |  | A. History and Development                                 |   |      | 52  | 
|                              |  | B. Business Overview                                       |   |      | 53  | 
|                              |  | C. Organizational Structure                                |   |      | 76  | 
|                              |  | D. Property, Plants and Equipment                          |   |      | 77  | 
|ITEM 4A.                      |  | UNRESOLVED STAFF COMMENTS                                  |   |      | 77  | 
|ITEM 5.                       |  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS               |   |      | 77  | 
|                              |  | A. Operating Results                                       |   |      | 77  | 
|                              |  | B. Liquidity and Capital Resources                         |   |      | 100 | 
|                              |  | C. Research and Development, Patents and Licenses, Etc.    |   |      | 106 | 
|                              |  | D. Trend Information                                       |   |      | 107 | 
|                              |  | E. Off-Balance Sheet Arrangements                          |   |      | 111 | 
|                              |  | F. Tabular Disclosure of Contractual Obligations           |   |      | 111 | 
|                              |  | G. Safe Harbor                                             |   |      | 112 | 
|ITEM 6.                       |  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                 |   |      | 112 | 
|                              |  | A. Directors and Senior Management                         |   |      | 112 | 
|                              |  | B. Compensation of Directors and Officers                  |   |      | 114 | 
|                              |  | C. Board Practices                                         |   |      | 115 | 
|                              |  | D. Employees                                               |   |      | 117 | 
|                              |  | E. Share Ownership                                         |   |      | 118 | 
|ITEM 7.                       |  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS          |   |      | 121 | 
|                              |  | A. Major Shareholders                                      |   |      | 121 | 
|                              |  | B. Related Party Transactions                              |   |      | 122 | 
|                              |  | C. Interests of Experts and Counsel                        |   |      | 124 | 
|ITEM 8.                       |  | FINANCIAL INFORMATION                                      |   |      | 124 | 
|                              |  | A. Consolidated Statements and Other Financial Information |   |      | 124 | 
|                              |  | B. Significant Changes                                     |   |      | 125 | 
|ITEM 9.                       |  | THE OFFER AND LISTING                                      |   |      | 125 | 
|ITEM 10.                      |  | ADDITIONAL INFORMATION                                     |   |      | 126 | 
|                              |  | A. Share Capital                                           |   |      | 126 | 
|                              |  | B. Memorandum and Articles of Association                  |   |      | 126 | 
|                              |  | C. Material Contracts                                      |   |      | 135 | 
|                              |  | D. Exchange Controls                                       |   |      | 135 | 
|                              |  | E. Taxation                                                |   |      | 135 | 
|                              |  | F. Dividends and Paying Agents                             |   |      | 142 | 
|                              |  | G. Statement by Experts                                    |   |      | 142 | 
|                              |  | H. Documents on Display                                    |   |      | 142 | 
|                              |  | I. Subsidiary Information                                  |   |      | 142 | 
|ITEM 11.                      |  | QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK |   |      | 142 | 



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|                                           |  |                                                                                                                     |     |      |     | 
|------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------- | --- | ---- | --- | 
|                                           |  |                                                                                                                     |     | Page |    
|ITEM 12.                                   |  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                                                              |     |      | 144 | 
|                                           |  | A. Debt Securities                                                                                                  |     |      | 144 | 
|                                           |  | B. Warrants and Rights                                                                                              |     |      | 144 | 
|                                           |  | C. Other Securities                                                                                                 |     |      | 144 | 
|                                           |  | D. American Depositary Shares                                                                                       |     |      | 144 | 
|                                           |  |                                                                                                                    
|                                           |  | PART II                                                                                                             |     |      |     | 
|ITEM 13.                                   |  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                                                                     |     |      | 155 | 
|ITEM 14.                                   |  | MATERIAL MODIFICATIONS TO RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS                                            |     |      | 155 | 
|                                           |  | A.  Material Modification to Instruments Defining Rights of Security
Holders                                        |     |      | 156 | 
|                                           |  | B.  
Material Modification to Rights of Registered Securities by Issuing or Modifying any Other Class of Securities |     |      | 156 | 
|                                           |  | C.  
Withdrawal or Substitution of a Material Amount of the Assets Securing any Registered Securities               |     |      | 156 | 
|                                           |  | D.  Change of Trustees or Paying Agents for any Registered Securities                                               |     |      | 156 | 
|                                           |  | E.  Use of Proceeds                                                                                                 |     |      | 156 | 
|ITEM 15.                                   |  | CONTROLS AND PROCEDURES                                                                                             |     |      | 156 | 
|ITEM 16.                                   |  | RESERVED                                                                                                            |     |      | 158 | 
|ITEM 16A.                                  |  | AUDIT COMMITTEE FINANCIAL EXPERT                                                                                    |     |      | 158 | 
|ITEM 16B.                                  |  | CODE OF ETHICS                                                                                                      |     |      | 158 | 
|ITEM 16C.                                  |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                              |     |      | 159 | 
|ITEM 16D.                                  |  | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                                                          |     |      | 159 | 
|ITEM 16E.                                  |  | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS                                              |     |      | 160 | 
|ITEM 16F.                                  |  | CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT                                                                        |     |      | 160 | 
|ITEM 16G.                                  |  | CORPORATE GOVERNANCE                                                                                                |     |      | 160 | 
|ITEM 16H.                                  |  | MINE SAFETY DISCLOSURE                                                                                              |     |      | 161 | 
|                                           |  |                                                                                                                    
|                                           |  | PART III                                                                                                            |     |      |     | 
|ITEM 17.                                   |  | FINANCIAL STATEMENTS                                                                                                |     |      | 161 | 
|ITEM 18.                                   |  | FINANCIAL STATEMENTS                                                                                                |     |      | 161 | 
|ITEM 19.                                   |  | EXHIBITS                                                                                                            |     |      | 162 | 
|                                           | 
|Index to Consolidated Financial Statements |  |                                                                                                                     | F-1 |     



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CERTAIN TERMS AND CONVENTIONS

We measure our wafer production capacity in megawatts, or MW, representing 1,000,000 watts, or in gigawatts, or GW, representing
1,000 MW, each a unit of power-generating capacity. For purposes of this annual report, we have assumed an average photovoltaic, or PV, conversion efficiency rate of 15.3% for our multicrystalline wafers and cells and modules using our
multicrystalline wafers prior to December 31, 2010, and 16.5% for our multicrystalline wafers and cells and modules using our multicrystalline wafers since January 1, 2011. The conversion efficiency rate of a PV cell is the percentage of
light energy from the sun that the cell converts into electrical energy. This conversion efficiency rate is estimated based on feedback from our selected customers and is highly dependent on the solar cell and module production processes of these
customers. Based on this conversion efficiency rate, we have further assumed that, with respect to our wafers, each 125 by 125 millimeters, or mm, wafer we produce generates approximately 2.4 watts of power prior to January 1, 2011
and 2.6 watts of power since that date; each 150 by 150 mm wafer we produce generates approximately 3.4 watts of power prior to January 1, 2011 and 3.7 watts of power since that date; and each 156 by 156 mm wafer we produce
generates approximately 3.8 watts of power prior to January 1, 2011 and 4.1 watts of power since that date.

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

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

We,
us, our company or LDK Solar refers to LDK Solar Co., Ltd., a Cayman Islands company, and its subsidiaries.

Rmb or Renminbi refers to the legal currency of China; $, dollars, US$ or U.S. dollars refers to the legal currency of the
United States.

We have sourced various solar industry data used in this annual report from Solarbuzz LLC, or Solarbuzz, an
independent solar energy industry research company. We have assumed the correctness and truthfulness of such data, including projections and estimates, when we use them in this annual report.

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



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EXCHANGE RATE INFORMATION

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

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



|         |  |                      |        |  |         |  |        |      |  |  |        |  |  |  |        | 
|-------- |  | -------------------- | ------ |  | ------- |  | ------ | ---- |  |  | ------ |  |  |  | ------ | 
|         |  | Noon Buying Rate     |       
|Period   |  | Period End           |        |  | Average |  |        | High |  |  | Low    | 
|         |  | (Renminbi per $1.00) |       
|2007     |  |                      | 7.2946 |  |         |  | 7.6058 |      |  |  | 7.8127 |  |  |  | 7.2946 | 
|2008     |  |                      | 6.8225 |  |         |  | 6.9477 |      |  |  | 7.2946 |  |  |  | 6.7800 | 
|2009     |  |                      | 6.8259 |  |         |  | 6.8307 |      |  |  | 6.8470 |  |  |  | 6.8176 | 
|2010     |  |                      | 6.6000 |  |         |  | 6.7603 |      |  |  | 6.8330 |  |  |  | 6.0000 | 
|2011     |  |                      | 6.2939 |  |         |  | 6.4496 |      |  |  | 6.6017 |  |  |  | 6.3187 | 
|November |  |                      | 6.3765 |  |         |  | 6.3564 |      |  |  | 6.3839 |  |  |  | 6.3400 | 
|December |  |                      | 6.2939 |  |         |  | 6.3482 |      |  |  | 6.3733 |  |  |  | 6.2939 | 
|2012     |  |                      |        |  |         |  |        |      |  |  |        |  |  |  |        | 
|January  |  |                      | 6.3080 |  |         |  | 6.3119 |      |  |  | 6.3330 |  |  |  | 6.2940 | 
|February |  |                      | 6.2989 |  |         |  | 6.3000 |      |  |  | 6.3120 |  |  |  | 6.2940 | 
|March    |  |                      | 6.2975 |  |         |  | 6.3125 |      |  |  | 6.3315 |  |  |  | 6.2975 | 
|April    |  |                      | 6.2790 |  |         |  | 6.3043 |      |  |  | 6.3123 |  |  |  | 6.2790 | 

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

On May 11, 2012, the noon buying rate for U.S. dollars in effect in New York City for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve Bank of New York was
$1.00 = Rmb 6.3097.



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FORWARD-LOOKING STATEMENTS

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



| |  |  | our goals and strategies;
| | - |  | -------------------------



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



| |  |  | our plans to expand our production capacity of PV products;
| | - |  | -----------------------------------------------------------



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



| |  |  | our ability to maintain and strengthen our position as a leading vertically integrated manufacturer of PV products;
| | - |  | -------------------------------------------------------------------------------------------------------------------



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



| |  |  | effect of competition on demand for and price of our products;
| | - |  | --------------------------------------------------------------



| |  |  | determination of the fair value of our ordinary shares and American depositary shares, or ADSs;
| | - |  | -----------------------------------------------------------------------------------------------



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



| |  |  | PRC governmental policies regarding foreign investments;
| | - |  | --------------------------------------------------------



| |  |  | our contemplated equity offerings and debt re-financings; and
| | - |  | -------------------------------------------------------------



| |  |  | risks identified under Item 3. Key Information  D. Risk Factors in this annual report.
| | - |  | -----------------------------------------------------------------------------------------

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

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



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change in the future. Whether actual results will conform with our expectations and predictions is subject to a number of risks and uncertainties, many of which are beyond our control, and
reflect future business decisions that are subject to change. All forward-looking statements contained in this annual report are qualified by reference to this cautionary statement.

PART I



|ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
|------- | -----------------------------------------------------

Not applicable, but see Item 6. Directors, Senior Management and Employees  A. Directors and Senior Management in this annual report.



|ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE
|------- | ---------------------------------------

Not applicable.



|ITEM 3. | KEY INFORMATION
|------- | ---------------



|A. | SELECTED FINANCIAL AND OPERATING DATA
|-- | -------------------------------------

The following selected consolidated statement of operations data (other than ADS data) and selected consolidated statement of cash flows
data for the years ended December 31, 2009, 2010 and 2011 and the selected consolidated balance sheet data as of December 31, 2010 and 2011 have been derived from our audited consolidated financial statements included elsewhere in this
annual report. The selected consolidated statement of operations data (other than ADS data) and selected consolidated statements of cash flows data for the years ended December 31, 2007 and 2008 and the selected consolidated balance sheet data
as of December 31, 2007, 2008 and 2009 are derived from our audited consolidated financial statements not included in this annual report. You should read the following selected consolidated financial data in conjunction with our consolidated
financial statements and related notes and the information under Item 5. Operating and Financial Review and Prospects in this annual report. We have prepared our consolidated financial statements in accordance with generally
accepted accounting principles, or GAAP, in the United States, or U.S. GAAP. Our historical results for any period are not necessarily indicative of results to be expected for any future period.

We were incorporated in the Cayman Islands on May 1, 2006 as the holding company for, and currently conduct our operations mainly
through, subsidiaries in China, including Jiangxi LDK Solar Hi-Tech Co., Ltd., or Jiangxi LDK Solar, Jiangxi LDK PV Silicon Technology Co., Ltd., or Jiangxi LDK Silicon, Jiangxi LDK Solar Polysilicon Co., Ltd., or Jiangxi LDK Polysilicon, LDK Solar
Hi-Tech (Nanchang) Co., Ltd., or LDK Nanchang, LDK Solar Hi-Tech (Suzhou) Co., Ltd., or LDK Suzhou, LDK Solar Hi-Tech (Xinyu) Co., Ltd., or LDK Xinyu and LDK Solar Hi-Tech (Hefei) Co., Ltd., or LDK Hefei. We have restructured our polysilicon
business so that LDK Silicon & Chemical Technology Co., Ltd., our wholly owned subsidiary incorporated under the laws of the Cayman Islands, or LDK Silicon, holds indirectly all of our polysilicon businesses operated by Jiangxi LDK
Silicon and Jiangxi LDK Polysilicon in China.



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



|                                                                                            |  |                                                   |         |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|------------------------------------------------------------------------------------------- |  | ------------------------------------------------- | ------- | - | ---- | - | --------- | ---- |  | - | --------- | - |  | ---- | --------- | - |  | - | --------- | -
|                                                                                            |  | Year Ended December 31,                           |        
|                                                                                            |  | 2007                                              |         |   | 2008 |   |           | 2009 |  |   | 2010      |   |  | 2011 |          
|                                                                                            |  | (In thousands, except per share and per ADS data) |        
|Consolidated Statement of Operations Data                                                   |  |                                                   |         |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Net sales                                                                                   |  | $                                                 | 523,946 |   |      | $ | 1,643,495 |      |  | $ | 1,098,038 |   |  | $    | 2,509,347 |   |  | $ | 2,157,813 |  
|Inventory write-downs                                                                       |  |                                                   | (4,170  | ) |      |   | (311,999  | )    |  |   | (180,213  | ) |  |      | (6,113    | ) |  |   | (305,175  | )
|Gross profit (loss)(1)                                                                      |  |                                                   | 170,237 |   |      |   | 88,356    |      |  |   | (113,583  | ) |  |      | 557,835   |   |  |   | (39,661   | )
|Provision for doubtful recoveries of prepayments to suppliers and trade accounts receivable |  |                                                   |        |   |      |   | (20,582   | )    |  |   | (22,425   | ) |  |      | (3,872    | ) |  |   | (174,315  | )
|Income (loss) from operations(2)                                                            |  |                                                   | 146,802 |   |      |   | 8,990     |      |  |   | (230,132  | ) |  |      | 434,917   |   |  |   | (460,246  | )
|Interest expense and amortization of debt issuance costs and debt discount(3)               |  |                                                   | (9,419  | ) |      |   | (38,162   | )    |  |   | (50,068   | ) |  |      | (95,012   | ) |  |   | (189,938  | )
|Government subsidy                                                                          |  |                                                   | 3,461   |   |      |   | 19,665    |      |  |   | 26,927    |   |  |      | 5,625     |   |  |   | 33,698    |  
|Change in fair value of prepaid forward contracts                                           |  |                                                   |        |   |      |   | 60,028    |      |  |   |          |   |  |      |          |   |  |   |          |  
|Earnings (loss) before income taxes                                                         |  |                                                   | 143,301 |   |      |   | 71,547    |      |  |   | (254,908  | ) |  |      | 362,677   |   |  |   | (604,813  | )
|                                                                                            |  |                                                   |         |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Net income (loss)(4)                                                                        |  | $                                                 | 144,059 |   |      | $ | 66,408    |      |  | $ | (233,996  | ) |  | $    | 296,467   |   |  | $ | (608,954  | )
|                                                                                            |  |                                                   |         |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Earnings attributable to non-controlling interests                                          |  |                                                   |        |   |      |   |          |      |  |   | (229      | ) |  |      | (5,670    | ) |  |   | (393      | )
|Earnings attributable to redeemable non-controlling interests                               |  |                                                   |        |   |      |   |          |      |  |   |          |   |  |      |          |   |  |   | (11,522   | )
|                                                                                            |  |                                                   |         |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Net income (loss) attributable to our shareholders                                          |  |                                                   | 144,059 |   |      |   | 66,408    |      |  |   | (234,225  | ) |  |      | 290,797   |   |  |   | (620,869  | )
|Accretion to redemption value of redeemable non-controlling interests                       |  |                                                   |        |   |      |   |          |      |  |   |          |   |  |      |          |   |  |   | (34,590   | )
|Accretion of Series A, Series B and Series C preferred shares to redemption values          |  |                                                   | (4,937  | ) |      |   |          |      |  |   |          |   |  |      |          |   |  |   |          |  
|                                                                                            |  |                                                   |         |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Net income (loss) available to our shareholders(4)                                          |  |                                                   | 139,122 |   |      |   | 66,408    |      |  |   | (234,225  | ) |  |      | 290,797   |   |  |   | (655,459  | )
|                                                                                            |  |                                                   |         |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Earnings (loss) per ordinary share(4)                                                       |  |                                                   |         |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Basic                                                                                       |  | $                                                 | 1.50    |   |      | $ | 0.63      |      |  | $ | (2.18     | ) |  | $    | 2.32      |   |  | $ | (4.90     | )
|Diluted                                                                                     |  | $                                                 | 1.37    |   |      | $ | 0.61      |      |  | $ | (2.18     | ) |  | $    | 2.27      |   |  | $ | (4.90     | )
|Earnings (loss) per ADS(5)                                                                  |  |                                                   |         |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Basic                                                                                       |  | $                                                 | 1.50    |   |      | $ | 0.63      |      |  | $ | (2.18     | ) |  | $    | 2.32      |   |  | $ | (4.90     | )
|Diluted                                                                                     |  | $                                                 | 1.37    |   |      | $ | 0.61      |      |  | $ | (2.18     | ) |  | $    | 2.27      |   |  | $ | (4.90     | )
|Ordinary shares used in computation                                                         |  |                                                   |         |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Basic                                                                                       |  |                                                   | 92,674  |   |      |   | 104,994   |      |  |   | 107,238   |   |  |      | 125,581   |   |  |   | 133,807   |  
|Diluted                                                                                     |  |                                                   | 104,859 |   |      |   | 109,240   |      |  |   | 107,238   |   |  |      | 136,568   |   |  |   | 133,807   |  



|(1) | Gross profit (loss) for the years ended December 31, 2007, 2008, 2009, 2010 and 2011 reflected $1,772,000, $3,667,000, $3,381,000, $2,783,000 and $1,881,000 of
share-based compensation expense allocated to cost of goods sold, respectively.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Income (loss) from operations for the years ended December 31, 2007, 2008, 2009, 2010 and 2011 reflected $9,390,000, $16,614,000, $14,212,000, $11,044,000 and
$9,927,000 of share-based compensation expense, respectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Interest expense for the years ended December 31, 2007, 2008, 2009, 2010 and 2011 included nil, $14,019,000, $14,574,000, $19,278,000 and $7,690,000, respectively,
related to interest and the amortization of issuance costs and debt discount of our 2013 convertible notes issued in April 2008.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



5



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##### Table of Contents

|(4) | Our PRC subsidiary, Jiangxi LDK Solar, is entitled to a tax holiday of 2-year full tax exemption followed by 3-year 50% reduction in the income tax rate starting from
2006 under the then effective tax rules and regulations. Such tax holiday is grandfathered by the PRC Enterprise Income Tax Law effective since January 1, 2008 and its relevant regulations. Without this tax holiday, our income tax expense would have
increased and our net income and net income available to our shareholders would have been reduced by approximately $53,316,000, $5,897,000 and $44,561,000 for the years ended December 31, 2007, 2008 and 2010, respectively. Our basic earnings
per share would have been reduced by $0.58, $0.06 and $0.35 for the years ended December 31, 2007, 2008 and 2010, respectively, and our diluted earnings per share would have been reduced by $0.51, $0.05 and $0.33 for the years ended
December 31, 2007, 2008 and 2010, respectively. As Jiangxi LDK Solar incurred loss for the years ended December 31, 2009 and 2011, the above mentioned tax holiday had no impact on our income tax expense, net loss, net loss available to our
shareholders, basic loss per share and diluted loss per share for the years ended December 31, 2009 and 2011.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | ADS refers to any of our American depository shares, each representing one ordinary share.
|--- | --------------------------------------------------------------------------------------------

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



|                                                                           |  |                    |           |  |      |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|-------------------------------------------------------------------------- |  | ------------------ | --------- |  | ---- | - | --------- | ---- |  | - | --------- |  |  | ---- | --------- |  |  | - | --------- | 
|                                                                           |  | As of December 31, |          
|                                                                           |  | 2007               |           |  | 2008 |   |           | 2009 |  |   | 2010      |  |  | 2011 |          
|                                                                           |  | (In thousands)     |          
|Consolidated Balance Sheet Data                                            |  |                    |           |  |      |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Cash and cash equivalents                                                  |  | $                  | 83,470    |  |      | $ | 255,523   |      |  | $ | 384,761   |  |  | $    | 202,127   |  |  | $ | 244,072   | 
|Pledged bank deposits                                                      |  |                    | 135,950   |  |      |   | 83,383    |      |  |   | 68,913    |  |  |      | 503,721   |  |  |   | 565,062   | 
|Inventories                                                                |  |                    | 349,997   |  |      |   | 616,901   |      |  |   | 432,193   |  |  |      | 474,612   |  |  |   | 654,947   | 
|Trade accounts and bills receivable, net                                   |  |                    | 3,767     |  |      |   | 97,808    |      |  |   | 217,892   |  |  |      | 384,265   |  |  |   | 491,407   | 
|Prepayments to suppliers, net                                              |  |                    | 138,193   |  |      |   | 71,214    |      |  |   | 40,784    |  |  |      | 112,448   |  |  |   | 28,178    | 
|Total current assets                                                       |  |                    | 741,748   |  |      |   | 1,237,642 |      |  |   | 1,386,445 |  |  |      | 1,975,421 |  |  |   | 2,350,922 | 
|Property, plant and equipment, net                                         |  |                    | 336,763   |  |      |   | 1,697,203 |      |  |   | 2,608,725 |  |  |      | 2,993,213 |  |  |   | 3,872,361 | 
|Deposits for purchases of property, plant and equipment and land use right |  |                    | 151,233   |  |      |   | 233,296   |      |  |   | 32,529    |  |  |      | 144,298   |  |  |   | 151,701   | 
|Inventories to be processed beyond one year                                |  |                    | 29,981    |  |      |   |          |      |  |   | 10,947    |  |  |      | 13,024    |  |  |   |          | 
|Prepayments to suppliers expected to be utilized beyond one year           |  |                    | 18,994    |  |      |   | 33,617    |      |  |   | 26,482    |  |  |      | 14,318    |  |  |   | 11,153    | 
|Total assets                                                               |  |                    | 1,309,986 |  |      |   | 3,373,372 |      |  |   | 4,384,209 |  |  |      | 5,492,157 |  |  |   | 6,853,861 | 
|Short-term borrowings and current installments of long-term borrowings     |  |                    | 264,101   |  |      |   | 666,200   |      |  |   | 980,359   |  |  |      | 1,501,588 |  |  |   | 2,032,023 | 
|Advance payments from customers, current installments                      |  |                    | 141,223   |  |      |   | 256,411   |      |  |   | 199,075   |  |  |      | 196,812   |  |  |   | 210,412   | 
|Convertible senior notes, less debt discount                               |  |                    |          |  |      |   |          |      |  |   |          |  |  |      | 355,445   |  |  |   |          | 
|Total current liabilities                                                  |  |                    | 522,014   |  |      |   | 1,510,955 |      |  |   | 2,220,026 |  |  |      | 3,577,822 |  |  |   | 4,450,317 | 
|Long-term borrowings, excluding current installments                       |  |                    | 25,125    |  |      |   | 154,252   |      |  |   | 408,062   |  |  |      | 604,495   |  |  |   | 890,432   | 
|Advance payments from customers  non-current                              |  |                    | 67,554    |  |      |   | 487,577   |      |  |   | 177,773   |  |  |      | 148,022   |  |  |   | 121,740   | 
|Other payable due to customers                                             |  |                    |          |  |      |   |          |      |  |   | 172,848   |  |  |      | 752       |  |  |   |          | 
|Convertible senior notes, less debt discount                               |  |                    |          |  |      |   | 385,685   |      |  |   | 391,642   |  |  |      | 34,658    |  |  |   | 23,733    | 
|Rmb-denominated US$-settled senior notes, less debt discount               |  |                    |          |  |      |   |          |      |  |   |          |  |  |      |          |  |  |   | 258,827   | 
|Total liabilities                                                          |  |                    | 616,915   |  |      |   | 2,583,505 |      |  |   | 3,507,273 |  |  |      | 4,472,419 |  |  |   | 6,009,243 | 
|Redeemable non-controlling interests                                       |  |                    |          |  |      |   |          |      |  |   |          |  |  |      |          |  |  |   | 219,694   | 
|Ordinary shares                                                            |  |                    | 10,604    |  |      |   | 11,311    |      |  |   | 12,977    |  |  |      | 13,295    |  |  |   | 13,352    | 
|Non-controlling interests                                                  |  |                    |          |  |      |   |          |      |  |   | 37,511    |  |  |      | 498       |  |  |   | 15,008    | 
|Total equity                                                               |  | $                  | 693,071   |  |      | $ | 789,867   |      |  | $ | 876,936   |  |  | $    | 1,019,738 |  |  | $ | 624,924   | 



6



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



|                                                    |  |                         |          |   |      |   |            |      |  |   |          |   |  |      |          |   |  |   |           |  
|--------------------------------------------------- |  | ----------------------- | -------- | - | ---- | - | ---------- | ---- |  | - | -------- | - |  | ---- | -------- | - |  | - | --------- | -
|                                                    |  | Year Ended December 31, |         
|                                                    |  | 2007                    |          |   | 2008 |   |            | 2009 |  |   | 2010     |   |  | 2011 |         
|                                                    |  | (In thousands)          |         
|Consolidated Statement of Cash Flows Data           |  |                         |          |   |      |   |            |      |  |   |          |   |  |      |          |   |  |   |           |  
|Net cash (used in) provided by operating activities |  | $                       | (80,663  | ) |      | $ | 333,061    |      |  | $ | 18,614   |   |  | $    | 559,993  |   |  | $ | (286,968  | )
|Net cash used in investing activities               |  |                         | (328,623 | ) |      |   | (1,247,174 | )    |  |   | (797,315 | ) |  |      | (929,118 | ) |  |   | (816,044  | )
|Net cash provided by financing activities           |  | $                       | 462,324  |   |      | $ | 1,087,698  |      |  | $ | 907,315  |   |  | $    | 180,388  |   |  | $ | 1,138,499 |  

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



|                                                 |  |                         |       |   |      |   |       |      |  |   |       |    |  |      |         |   |  |   |         |   
|------------------------------------------------ |  | ----------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -- |  | ---- | ------- | - |  | - | ------- | --
|                                                 |  | Year Ended December 31, |      
|                                                 |  | 2007                    |       |   | 2008 |   |       | 2009 |  |   | 2010  |    |  | 2011 |        
|Other Financial and Operating Data               |  |                         |       |   |      |   |       |      |  |   |       |    |  |      |         |   |  |   |         |   
|Gross margin(1)                                  |  |                         | 32.5  | % |      |   | 5.4   | %    |  |   | (10.3 | )% |  |      | 22.2    | % |  |   | (1.8    | )%
|Operating margin(1)                              |  |                         | 28.0  |   |      |   | 0.5   |      |  |   | (21.0 | )  |  |      | 17.3    |   |  |   | (21.3   | ) 
|Net margin(1)                                    |  |                         | 27.5  | % |      |   | 4.0   | %    |  |   | (21.3 | )% |  |      | 11.8    | % |  |   | (28.2   | )%
|Polysilicon production (in MT)                   |  |                         |      |   |      |   |      |      |  |   | 225   |    |  |      | 5,052   |   |  |   | 10,455  |   
|Average polysilicon selling price (per kilogram) |  | $                       |      |   |      | $ |      |      |  | $ |      |    |  | $    | 59.64   |   |  | $ | 56.46   |   
|Wafers sold (in MW)                              |  |                         | 223.8 |   |      |   | 636.3 |      |  |   | 898.1 |    |  |      | 1,717.6 |   |  |   | 1,540.7 |   
|Average wafer selling price (per watt)           |  | $                       | 2.24  |   |      | $ | 2.35  |      |  | $ | 1.05  |    |  | $    | 0.89    |   |  | $ | 0.67    |   
|Modules sold (in MW)                             |  |                         |      |   |      |   |      |      |  |   | 32.7  |    |  |      | 346.1   |   |  |   | 551.0   |   
|Average module selling price (per watt)          |  | $                       |      |   |      | $ |      |      |  | $ | 1.81  |    |  | $    | 1.83    |   |  | $ | 1.31    |   



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



|B. | CAPITALIZATION AND INDEBTEDNESS
|-- | -------------------------------

Not applicable.



|C. | REASONS FOR THE OFFER AND USE OF
PROCEEDS
|-- | -----------------------------------------

Not applicable.



|D. | RISK FACTORS
|-- | ------------

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

Risks Relating to Our Company and Our Industry

We are operating with a significant working capital deficit; if we do not successfully execute our liquidity plan, we face the risk
of not being able to continue as a going concern.

As of December 31, 2009, 2010 and 2011, we had a working
capital deficit (being our total consolidated current liabilities less our total consolidated current assets) of $833.6 million, $1,602.4 million and



7



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$2,099.4 million. We incurred a net loss of $234.0 million and $609.0 million, respectively, for the years ended December 31, 2009 and 2011 although we generated a net profit
of $296.5 million for the year ended December 31, 2010. As of December 31, 2011, we had cash and cash equivalents of $244.1 million. The majority of our cash and cash equivalents was held by our subsidiaries in China. In addition, we
had short-term borrowings and current installments of our long-term borrowings totaling $2,032.0 million as of December 31, 2011, most of which were the obligations of our subsidiaries in China. These factors raise substantial doubt as to
our ability to continue as a going concern.

PV business is capital-intensive. We have expended significant financial
resources in order to construct, improve, ramp up and adjust our vertically integrated PV operations. We have financed a substantial portion of our capacity expansion by relying on short-term borrowings and prepayments from our customers. Although
PRC commercial banks have made short-term financings available to us, it is almost impossible for us to secure long-term financings from them for our projects if we have yet to receive the final project approvals from the National Development and
Reform Commission, or NDRC, and other applicable governmental authorities in China. The NDRC approval process is time-consuming, and we typically commence our preparatory and other construction work as approved by the other relevant governmental
authorities before we have obtained the final NDRC approval necessary for us to commission a project. The lack of long-term financings in China and the on-going difficulties in the global financial markets have adversely impacted and may continue to
adversely affect our liquidity, capital expenditure financing and working capital.

As of December 31, 2011, we had a working
capital deficit (total consolidated current liabilities exceeding total consolidated current assets) of $2,099.4 million. As of the same date, we had cash and cash equivalents of $244.1 million, most of which were held by our subsidiaries in China
with approximately 89.2% of our short term bank borrowings and current installments of our long-term debt totaling $1,869.6 million residing with these subsidiaries. Taking into account of our unaudited financial results for the fourth quarter of
2011, our Consolidated Fixed Charge Coverage Ratio, as defined in the indenture governing our 2014 senior notes, has been negatively impacted as a result of a significant reduction of the aggregate amount of our Consolidated
EBITDA, as defined in the indenture governing our 2014 senior notes, for the four most recent full fiscal quarters, while our Consolidated Fixed Charges, as defined in the indenture governing our senior notes, for such four-quarter
period, have increased. As a result, we will not be able to incur any additional indebtedness until our Consolidated Fixed Charge Coverage Ratio significantly improves on the basis of our four most recent full fiscal quarters unless such
indebtedness falls into one of the permitted exceptions or exemptions, such as re-financing existing indebtedness. These factors raise substantial doubt as to our ability to continue as a going concern. However, management believes it has developed
a liquidity plan, as summarized below, that, if executed successfully, will provide sufficient liquidity to meet our obligations as they become due for a reasonable period of time.



| |  |  | Delaying in capital expenditure and improvement in working capital management
| | - |  | -----------------------------------------------------------------------------

We have been negotiating with a number of vendors, including suppliers of equipment and construction materials, for them to provide us
with lower prices or more favorable payment terms in order to achieve cost savings. We have decided to postpone a substantial portion of our planned capital expenditures for the next 12 months. In addition, we have implemented measures to more
closely monitor our inventory levels and our collection of receivable balances with an aim to improving liquidity.



| |  |  | Bank Financing
| | - |  | --------------

To improve liquidity, we have successfully negotiated with some of our banks and will continue to negotiate with other banks to obtain revolving bank facilities to ensure our bank borrowings can be
renewed on an on-going basis. From January 1 to April 30, 2012, we have obtained additional secured and unsecured short-term bank borrowings in the aggregate principal amount of $924.3 million with interest rates ranging from 2.484% to



8



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9.500% and secured and unsecured long-term bank borrowings in the aggregate principal amount of $45.3 million with interest rates ranging from 5.900% to 7.050% (subject to repricing). We have
also repaid short-term borrowings and current installments of long-term borrowings in the aggregate principal amount of $937.0 million during this period. We believe that we will be able to obtain additional facilities from the banks so that,
together with our existing bank revolving facilities, we will be able to re-finance any bank loans due for repayment within the next 12 months to the extent necessary.



| |  |  | Refund of prepaid land use rights and disposal of properties
| | - |  | ------------------------------------------------------------

In view of our postponement in expansion, we have signed letters of intent with local governmental authorities for the return of our
prepayments for land use rights. In addition, we have entered into several letters of intent to sell some of our real properties, mainly staff quarters and the corresponding land use rights, to local governmental authorities.



| |  |  | Additional equity offers
| | - |  | ------------------------

We intend to raise funds through equity offerings, including private placements and at-the-market offerings, when market conditions permit and such issuances are in the overall interests of our business.

For more information regarding our liquidity plan, see Item 5. Operating and Financial Review and Prospects 
B. Liquidity and Capital Resources and Note (1)  Basis of Presentation of our consolidated financial statements beginning on page F-1.

We believe that the measures as described in the above liquidity plan will be adequate to satisfy our liquidity requirements for the next 12 months. Our board of directors has also instructed and
authorized our management to establish an ad hoc committee to be headed by Mr. Peng, our CEO, to monitor the progress of our implementation of the liquidity plan and to report to our board on a fortnightly basis. There is no assurance, however, we
will be able to successfully implement the liquidity plan. If we fail to successfully execute this plan, we may not be able to continue as a going concern. Our consolidated financial statements do not reflect any adjustments relating to
recoverability and classification of recorded assets or the amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to continue as a going concern. Significant difficulties in our operations or
a deterioration of our financial condition could also result in the exercise of broadly drafted provisions in some of our loan agreements that give our lenders the right to accelerate the payment of the loans under such circumstances. Such
acceleration could potentially trigger cross-default provisions in other financing agreements, including the indentures relating to our 4.75% convertible senior notes due 2013, or our 2013 convertible notes, and our US$-settled 10% senior notes
due 2014, or our 2014 senior notes, if we are unable to repay these loans upon acceleration. The occurrence of any of the foregoing events would materially and adversely affect our financial condition, results of operations and business prospects.

We have substantial existing indebtedness, in particular short-term indebtedness, and we may incur substantial additional indebtedness
in the future subject to our compliance with the covenants and other requirements in our existing financing arrangements, which could adversely affect our financial condition and our ability to generate sufficient cash to satisfy our outstanding and
future debt obligations and we may not be able to refinance our current borrowings on terms that are acceptable to us, or at all.

We now have, and will continue to have, a substantial amount of indebtedness. As of December 31, 2011, our total liabilities amounted to $6,009.2 million, with outstanding short-term borrowings
(including current installments of long-term borrowings) and short-term PRC notes at $2,095.5 million, and outstanding long-term



9



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##### Table of Contents

borrowings (excluding current installments) and long-term PRC notes at $969.8 million. Subsequent to December 31, 2011 and up to April 30, 2012, we obtained additional secured and
unsecured short-term bank borrowings in the aggregate principal amount of $924.3 million, with interest rates ranging from 2.484% to 9.500%, and secured and unsecured long-term bank borrowings in the aggregate principal amount of $45.3 million,
with interest rates ranging from 5.900% to 7.050% (subject to repricing). During this period, we also repaid short-term borrowings and current installments of long-term borrowings totaling $937.0 million. We may from time to time incur
substantial additional indebtedness subject to the restrictions contained in our existing financing arrangements although, as we have disclosed below, taking into account our unaudited financial results for the fourth fiscal quarter in 2011, due to
our existing high leverage coupled with a net loss in the fourth quarter of 2011, our Consolidated Fixed Charge Coverage Ratio, as defined in the indenture governing our 2014 senior notes, has been negatively impacted as a result of a
significant reduction of the aggregate amount of our Consolidated EBITDA, as defined in the indenture governing our 2014 senior notes, for the four most recent full fiscal quarters, while our Consolidated Fixed Charges, as
defined in the indenture governing our 2014 senior notes, for such four-quarter period, have increased. As a result, we will not be able to incur any indebtedness until our Consolidated Fixed Charge Coverage Ratio significantly improves
on the basis of our four most recent full fiscal quarters unless we could finance in reliance upon one of the exemptions or exceptions. If we or our subsidiaries incur additional debt, the risks that we face as a result of our indebtedness and
leverage could intensify.

Our substantial existing debt and the incurrence of any additional debt could:



| |  |  | limit our ability to satisfy our obligations under our debt instruments;
| | - |  | ------------------------------------------------------------------------



| |  |  | increase our vulnerability to adverse general economic and industry conditions;
| | - |  | -------------------------------------------------------------------------------



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



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



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



| |  |  | increase our exposure to interest rate fluctuations;
| | - |  | ----------------------------------------------------



| |  |  | limit our ability to borrow additional funds and impose additional financial and other restrictive covenants on us; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | increase the cost of additional financing.
| | - |  | ------------------------------------------

Because the majority of our indebtedness is short-term indebtedness, we may suffer a near-term liquidity problem if we are unable to refinance these borrowings as they become due. As of December 31,
2010 and 2011, our outstanding short-term borrowings (including current installments of long-term borrowings) were $1,501.6 million and $2,032.0 million, respectively, and our short-term borrowings (excluding the current portion of long-term
borrowings) bore a weighted average interest rate of 4.27% and 6.24%, respectively. Generally, our short-term loans contain no specific renewal terms, although we have historically negotiated renewals of some of our loans shortly before they would
mature. However, we cannot assure you that we will be able to renew our loans in the future as they mature. If we are unable to obtain renewals of any future loans or sufficient alternative funding on reasonable terms, we will have to repay these
borrowings.

In addition to our debt, pursuant to a subscription agreement dated as of December 30, 2010, China
Development Bank Capital Corporation Ltd., or CDB Capital, a wholly owned subsidiary of China Development



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Bank Corporation, or CDB, Excel Rise Holdings Limited and Prosper East Limited, investment funds affiliated with China Construction Bank Corporation, and Apollo Asia Investment Limited, an
investment fund affiliated with Bank of China Limited, subscribed on June 3, 2011 for 240 million series A redeemable convertible preferred shares, par value $0.10 each, of LDK Silicon, or LDK Silicon preferred shares, which
represented, on an as-if-converted basis, approximately 18.46% of the aggregate issued and outstanding share capital of LDK Silicon on a fully diluted basis, for an aggregate price of $240 million. Pursuant to the terms of the investment, the
investors have the right to require us and/or LDK Silicon to redeem the LDK Silicon preferred shares at a redemption price equal to 100% of the subscription price plus a 23% investment internal rate of return if there should occur any material
breach by us of the terms and conditions of the investment agreements prior to a qualified initial public offering by LDK Silicon (as defined in the agreement) or if LDK Silicon fails to complete such a qualified initial public offering by
June 3, 2013. Under the terms of the investment, we will also be required to pay cash compensation to the investors in accordance with an agreed formula if the consolidated net profit of LDK Silicon and its subsidiaries fails to achieve a
targeted net profit of $190 million in 2011. Based on the preliminary financial statements of LDK Silicon for the fiscal year 2011, we believe that we have achieved the net profit target for the year and will not be required to pay such cash
compensation. In addition, the articles of association of LDK Silicon mandate an annual dividend on a pro rata basis among all existing shareholders of LDK Silicon up to an amount of its retained earnings so that the holders of LDK Silicon preferred
shares will receive at least $15 million of such dividend, to the extent the declaration and distribution of such dividend are permitted by applicable laws and by contractual obligations applicable to us.

As discussed above in  We are operating with a significant working capital deficit; if we do not successfully execute our
liquidity plan, we face the risk of not being able to continue as a going concern, obtaining additional bank financing is one element of our liquidity plan to address our liquidity problem. However, the lenders under our existing credit
facilities as well as those for any new loan facilities subject to negotiation could terminate or refuse to fund additional borrowings, or raise the interest rates, under these facilities. In general, these facilities are subject to credit reviews
and other conditions imposed by the lenders at the time we request additional borrowings under these facilities. In addition, our failure to comply with certain covenants in our loan and guarantee agreements may make it more difficult to obtain
additional borrowings. If we are unable to borrow additional amounts under our existing credit facilities or any new facilities we negotiate, we may lack sufficient financial resources to make payments on our outstanding and future debt obligations,
address our liquidity problem, or fund our other cash requirements.

Our ability to generate sufficient cash to satisfy our
outstanding and future debt and other obligations will depend upon our future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, many of which are beyond our control. For
example, the PRC government may pass measures to tighten credit, including trade financing, available in the PRC market. For example, in 2011, Chinas central bank, the Peoples Bank of China, or PBOC, raised its benchmark one-year lending
rate by an aggregate of 75 basis points to 6.56%. In addition to the higher interest rate, PBOC increased the deposit reserve ratio requirements of Chinas domestic lenders in 2011 from 18.5% to 21.0% for large banks and from 15.0% to
17.5% for small and medium-sized banks, before it decided to lower such deposit reserve ratio requirements in February 2012 to 20.5% for large banks and 17.0% for small and medium-sized banks. Further and future monetary tightening measures in China
as well as other monetary, fiscal and industrial policy changes by the PRC government could materially affect the cost and availability of financing, our liquidity and access to capital, and our ability to operate our business.

Depending on our operating cash flow and our operational needs, we may incur additional debt obligations to finance our operations and,
as a result, we may allocate an increasing portion of our cash flow to service such obligations. Such diversion of our cash flow for debt service could impair our ability to make necessary capital expenditures, develop business opportunities or make
strategic acquisitions. To the extent that our business is not generating sufficient cash flow from operations to service our debts and to make necessary capital expenditures,



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we may be forced to seek additional financing, dispose of assets, or seek to refinance some or all of our debts. These alternatives may not, however, be implemented on satisfactory terms, if at
all. Although we had positive net cash flow of $18.6 million, $560.0 million from operating activities in the years ended December 31, 2009 and 2010, respectively while we had negative cash flow of $287.0 million in the year ended
December 31, 2011, we cannot assure that we will have positive net cash flows from operating activities in the future. If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions
such as reducing or delaying capital expenditures, selling assets, restructuring or refinancing existing indebtedness or seeking financing from the capital markets. We cannot assure you that we would be able to implement these strategies
successfully or on satisfactory terms. Any of these constraints upon us could materially and adversely affect our business, financial condition, ability to satisfy our obligations and results of operations.

In addition, the indenture governing our 2014 senior notes prohibits us from incurring additional indebtedness unless (i) we are
able to satisfy certain financial ratios or (ii) we are able to incur such additional indebtedness pursuant to any of the exceptions to the financial ratio requirements, and meet other applicable restrictions. Some of our other financing
arrangements also impose operating and financial restrictions on our business. You may find additional information under Item 5. Operating and Financial Review and Prospects F. Tabular Disclosure of Contractual
Obligations and Item 10. Additional Information  C. Material Contracts. These restrictions in the indenture governing our 2014 senior notes and our other financing arrangements may negatively affect our
ability to react to changes in market conditions, take advantage of business opportunities we believe to be desirable, obtain future financing, fund required capital expenditures, or withstand a continuing or future downturn in our business or the
general economy. For example, taking into account our unaudited financial results for the fourth fiscal quarter in 2011, due to our existing high leverage coupled with a net loss in the fourth quarter of 2011, our Consolidated Fixed Charge
Coverage Ratio, as defined in the indenture governing our 2014 senior notes, has been negatively impacted as a result of a significant reduction of the aggregate amount of our Consolidated EBITDA, as defined in the indenture
governing our 2014 senior notes, for the four most recent full fiscal quarters, while our Consolidated Fixed Charges, as defined in the indenture governing our 2014 senior notes, for such four-quarter period, have increased. As a result,
we will not be able to incur any additional indebtedness until our Consolidated Fixed Charge Coverage Ratio significantly improves on the basis of our four most recent full fiscal quarters. Unless we find a permitted exception or
exemption from such ratio requirement, our ability to incur additional financial indebtedness is severely curtailed. Moreover, our ability to meet these financial and operating ratios and restrictions may be affected by any deterioration of our
business, financial condition or results of operations or by various political, economic, social and market events beyond our control. Such events could impact our ability to satisfy these ratios or restrictions and result in a violation of the
terms of certain of our financial arrangements or the indenture governing our 2014 senior notes. We cannot assure you that we will be able to comply with these ratios or restrictions. Any of these factors could materially and adversely affect our
ability to satisfy our obligations under our 2014 senior notes, our 2013 convertible notes and other debt.

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

Most of our long-term loan agreements and some of our short-term loan agreements between our PRC
operating subsidiaries and the various PRC banks and financial institutions require the prior written consent of the lenders before we may undertake specified corporate actions or transactions, such as increasing debt financing, providing new
guarantees, sale or disposal of major assets, pledge of assets, amending certain corporate registration records, and engaging in certain related-party transactions. Some of our loan agreements with commercial banks in China do not include any
materiality threshold under these negative covenants. While we continue to negotiate with our PRC commercial banks with a view to modifying their form loan agreements



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approved by their headquarters, we have been using a practice to bridge the timing gap between our operational needs and the banks internal procedures. For our operational needs, we seek
financing in various ways, from time to time, and often with a short completion cycle. Before each such corporate action or transaction that needs the prior written consents of our lenders, we would typically orally communicate with our lenders and,
to the extent the lenders could not provide the prior written consents as requested, would proceed with the corporate action or transaction with their prior oral consents, with the mutual understanding that such lenders would provide their written
confirmations of consent as soon as they complete their internal procedures. Therefore, we have in such situations technically failed to comply with the requirements that we obtain prior written consents from our lenders prior to undertaking certain
specified corporate actions or transactions. Most of our lenders have accepted our practice, have subsequently provided their written confirmations of consent in such situations, and have waived our past covenant breaches. We have not, however,
received such consent or waiver from a branch of Agricultural Bank of China in Hefei City of Anhui Province with respect to two loans in the aggregate principal amount of approximately $2.2 million that will become due and mature in September 2012.
Our subsidiary borrower of such loans has failed to maintain its debt-to-asset ratio at 75% or less as required by the loan agreements. As a result, this lender has the right to accelerate the loans in accordance with the loan agreements, but, to
date, we have not received any notice of event of default or any threat to accelerate the maturity of such loans. You may find additional disclosure in note (11)(a) of our consolidated financial statements beginning on page F-1.

To date, we have not been subject to any claims or proceedings, or any threat of such claims or proceedings, from our lenders for not
strictly complying with the relevant loan covenants. None of our technical breaches of the loan covenants has triggered any cross-default provisions under our other financing documents. Neither have we or any of our subsidiaries been included as a
defaulting borrower in the PBOC credit search system available to all lending institutions in China. However, we cannot assure you that we will succeed in obtaining consents or waivers in the future, or that our lenders will continue to accept this
consent-and-waiver arrangement and grant us consents or waivers, or that our lenders will not impose additional operating and financial restrictions on us, and/or will not otherwise seek to modify the terms of our existing loan agreements in ways
that are adverse to us.

Although the current consent-and-waiver procedures we have employed for our technical noncompliance
under the current prevailing PRC lending environment have not had any material adverse impact on our liquidity, we cannot assure that we will not breach any material covenants or undertakings under our loan agreements and we will additionally be
able to obtain consents or waivers from our lenders for such breaches. An event of default under our loan agreements may cause acceleration of the repayment of the indebtedness under the relevant loan agreements, which may in turn require us to
repay the entire principal amounts, including interest accrued, of certain other existing indebtedness prior to their maturity under cross-default provisions in our existing loan agreements, including the indentures relating to our 2013 convertible
notes and 2014 senior notes. If we are required to repay a significant portion or all of our existing indebtedness prior to their maturity or if we are unable to borrow additional amounts under existing credit facilities, we may lack sufficient
financial resources to make these payments or to fund our other cash requirements. Any such event could have a material adverse effect on our financial condition, results of operations and business prospects. You may also refer to the risk factor
entitled  Our operations are restricted by the terms of our 2014 senior notes; if we are unable to comply with the restrictions and covenants in our debt agreements, including the indenture governing the 2014 senior notes, there could be
a default under the terms of these agreements, which could cause repayment of our debt to be accelerated for additional risks.

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

We produce polysilicon in two plants, Xiacun Plant, located at Yushui Xiacun
Industrial Park in Xinyu City, and Mahong Plant, located at Xinyu Hi-Tech Industrial Park. As of March 31, 2012, our total polysilicon annual



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production capacity was approximately 17,000 MT, representing contributions of approximately 1,200 MT from our Xiacun Plant and approximately 15,800 MT from our Mahong Plant, with the completion
of the third train at our Mahong Plant in the third quarter of 2011. We have been actively working to add a second production train, with an annualized 1,800-MT initial production capacity, at our Xiacun Plant, which will expand our aggregate
annualized installed production capacity at Xiacun Plant to 3,000 MT. We also plan to implement debottlenecking improvements at our Mahong Plant, which will bring our aggregate annualized installed production capacity at our Mahong Plant to 22,000
MT. Our current debottlenecking initiatives aim to increase our silicon tetrachloride (SiCl4), or STC, to trichlorosilane (HSiCl3), or TCS, conversion by the improvement of the conversion capacity of our STC hot carbon rod reactors, or STC thermal converters, and by the installation of hydrochlorination facilities at both our
Xiacun Plant and Mahong Plant. However, due to the uncertainties in the current PV market, we have slowed or delayed the implementation of parts of such expansion plans. We will, however, need additional funding to finance the expansion of our
Xiacun Plant and the debottlenecking at both our Xiacun Plant and Mahong Plant and bring our total polysilicon production capacity to 25,000 MT per year, currently expected to be by the year-end of 2012.

As of March 31, 2012, we had an annualized production capacity of approximately 4.3 GW of solar wafers, 1.7 GW of solar cells and
1.7 GW of solar modules. During 2012, we plan to expand our annualized production capacity to 4.5 GW of solar wafers, 2.2 GW of solar cells and 2.6 GW of solar modules. We will also need substantial additional funding to finance our continued solar
wafer, cell and module production capacity expansion and our working capital requirements. In April 2011, we announced a proposed $40 million investment to add a light-emitting disde, or LED, sapphire wafer manufacturing capability to our
facilities in Nanchang City, Jiangxi Province, and a $35 million investment to establish a new manufacturing line to produce silane gas by installing add-on units to our existing polysilicon production facilities at Mahong Plant. Due to the
current market conditions, we have similarly delayed the implementation of these additional expansions. We will need additional funding not only for such and related capital expenditures but also for the related working capital needs. We will also
need capital to fund our research and development, or R&D, activities to remain competitive on cost and technology. In addition, future acquisitions, expansions, market changes or other developments may require us to seek additional financing.
Historically, we have relied on equity, convertible debt and senior debt offerings, substantial short-term borrowings and advance payments from customers to finance our capital expenditures, working capital requirements, and the refinancing of our
outstanding indebtedness.

Our ability to obtain external financing in the future is subject to a number of uncertainties,
including:



| |  |  | our future financial condition, results of operations and cash flows;
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| |  |  | general market conditions for financing activities by companies in our industry;
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| |  |  | economic, political and other conditions in China and elsewhere;
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| |  |  | speed and duration of the recovery from the current global economic slowdown; and
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| |  |  | compliance with our restrictive covenents as contained in the indenture governing our 2014 senior notes or other restrictions contained in our other
financing arrangements.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

Growth of the PV market,
particularly for on-grid applications, depends largely on the availability and size of government subsidies and economic incentives granted by various governments. The cost of solar power now



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substantially exceeds the cost of conventional power provided by electric utility grids in most locations around the world. Various governments have used different policy initiatives to encourage
or accelerate the development and adoption of solar power and other renewable energy sources. Renewable energy policies are in place in certain European Union member states, most notably Germany and Italy, certain countries in Asia, including China,
Japan and South Korea, certain states in Australia, and the United States. Examples of government-sponsored financial incentives include capital cost rebates, feed-in tariffs, tax credits, net metering and other incentives to end-users,
distributors, system integrators and producers of PV products. These policies are intended to promote the use of solar power in both on-grid and off-grid applications and to reduce dependency on conventional forms of energy. On-grid applications
refer to applications of PV products to systems that are connected to an electricity transmission grid and feed electricity generated into the electricity transmission grid, while off-grid applications refer to applications of PV products to systems
that operate on a stand-alone basis to provide electricity independent of an electricity transmission grid. However, governments may decide to reduce or eliminate these economic incentives for political, financial or other reasons, including in
response to fiscal pressures currently affecting many developed and developing nations. Governments may reduce these economic incentives in several ways, including imposing ceilings on the total amount of economic incentives available and reducing
feed-in tariffs. If the government subsidies and economic incentives are reduced or eliminated, such reduction or elimination may adversely affect the growth of this market or result in increased price competition, either of which could cause our
revenues to decline.

Government subsidies have already been reduced in a number of countries, such as Germany, Italy and
Spain, and may be further reduced or eliminated in the future. For instance, the German government reduced the countrys solar energy feed-in tariffs in 2009 and 2010 and further trimmed its solar power subsidies in 2011. In Spain, since 2009,
continued reductions in feed-in tariffs as a result of the governments spending cuts have resulted in a weakened solar market. The Italian government also reduced feed-in tariffs in an effort to curb overheating of its solar market. Reductions
in, or eliminations of, government subsidies and economic incentives before the PV industry reaches a sufficient scale to be cost-effective in a non-subsidized marketplace could reduce demand for our products and adversely affect our business
prospects and results of operations. In addition, reductions in, or eliminations of, government subsidies and economic incentives may cause the prices for the PV products of our customers to decline and we may in turn face increased pressure to
reduce the sale price of our products. To the extent any price decline cannot be offset by further reduction of our costs, our profit margin will suffer. There can be no assurance regarding the magnitude or length of time of the effects on our
financial condition and results of operations caused by these developments in the global PV market or by the general global economy.

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

Prices for our PV products are based on a variety of factors, including global prices for these
products, supply and demand conditions, and the terms of our customer contracts, including sales volumes. Global spot prices for PV products have fluctuated significantly over the years. According to Solarbuzz, solar-use polysilicon average spot
prices were between approximately $300 and $380 per kilogram during the first half of 2008. With the onset of the global financial crisis in the third quarter of 2008 and European financial crisis in 2011, solar-use polysilicon spot prices fell to
$80 per kilogram by the first half of 2009, and continued to fall to approximately $53 per kilogram during the first quarter of 2010, $65 per kilogram during the first quarter of 2011 and $30 per kilogram during the fourth quarter of 2011.
Similarly, solar wafer prices fell below $2 per watt for the first time in 2009, and reached $0.91 per watt in the fourth quarter of 2010, and $0.41 in fourth quarter of 2011, according to Solarbuzz. Solar module prices followed a similar pattern.
Module prices fell to $1.45 per watt in the fourth quarter of 2010, and reached $0.87 per watt in fourth quarter of 2011, according to Solarbuzz. As the solar power industry strives to be increasingly competitive, we expect there to be continued
downward pressure on pricing along the solar power value chain in the next few years due to anticipated cost reductions across the supply chain, increased volumes, and industry improvements in operational efficiency and technology.





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Declining prices of PV products have had a negative impact on the net realizable value of
our inventories and we have had to write down the carrying value of our inventories to the extent that they are greater than their net realizable value. For the years ended December 31, 2009, 2010 and 2011, we recognized inventory write-downs
of $177.8 million, $0.3 million and $288.1 million, respectively, representing the amounts that the book value of our inventories exceeded their estimated net realizable values, primarily as a result of the decline in PV product selling
prices. In addition, for the years ended December 31, 2009, 2010 and 2011, we recognized a provision for loss on firm purchase commitments of $1.1 million, nil and $27.6 million, respectively, which was determined by applying a methodology similar
to that used to make inventory write-down. If PV product prices decline in the future and we are unable to lower our costs in line with the price decline, our gross margins will be adversely affected and we could be required to make additional
inventory write-downs and provision for loss on firm purchase commitments.

In addition, any aggressive expansion of
manufacturing capacity in the future by us and our competitors may have a material adverse impact on the overall PV market. During 2012, we plan to expand our annualized production capacity of polysilicon, solar wafers, cells and modules to
approximately 25,000 MT, 4.5 GW, 2.2 GW and 2.6 GW, respectively. Our expansion plans have been based on our projected market demand for solar polysilicon, wafers and modules, and are subject to change in line with the actual development of the
global PV market. However, the past and continued expansion of production capacity by us and our competitors may result in significant excess capacity in the overall PV industry. As a result, prices for the PV products may decline, our production
capacity utilization ratios may decrease and our results of operations and financial condition may be adversely affected.

Furthermore, we typically maintain a certain level of inventory of raw materials and finished or semi-finished goods based on our
projected market demands. If the actual market demands fall short of our expectations, we will have excess inventory, which will adversely affect our working capital, and we could also be required to make inventory write-downs and our profitability
could be adversely affected.

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

We have historically
generated substantially less revenue in the first quarter of the year than the other three quarters largely due to the holiday season in China, lower shipments to the European market due to financial difficulties in the Eurozone as well as the
downward adjustment in feed-in tariffs and subsidies at the beginning of each year. In addition, our changing product mix also tends to add fluctuations to our revenues and margins which may affect our first quarter profitability. Our customers also
tend to place orders with us in the first quarter of a calendar year when their budget year begins. In 2009, approximately 25.8%, 20.8%, 25.7% and 27.7% of our annual revenues were generated in the first, second, third and fourth quarters,
respectively. In 2010, approximately 13.9%, 22.5%, 26.9% and 36.7% of our annual revenues were generated in the first, second, third and fourth quarters, respectively. In 2011, approximately 35.5%, 23.1%, 21.9% and 19.5% of our annual revenue were
generated in the first, second, third and fourth quarters, respectively. Our gross profit margins also tend to fluctuate on a quarterly basis largely due to fluctuations in the market prices of PV products we sell, our product mix, our ability to
reduce manufacturing costs, our ability to procure low cost raw materials such as polysilicon, cells and other materials, and our ability to ramp up our in-house polysilicon and cell production. We anticipate that we will continue to experience
significant fluctuations in revenues, cost of revenues and other results of operations from quarter to quarter during any year in the future. This quarterly fluctuation of revenues and other results of operations has adversely affected and is likely
to continue to adversely affect our cash flow and working capital positions on a quarterly basis.



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

The industrial production of high-purity silicon involves highly complex technical and operational processes, and to establish and maintain these complex processes involve significant inherent risks.
Currently we produce polysilicon in two plants, Xiacun Plant and Mahong Plant. As of March 31, 2012, our Xiacun Plant had an annualized installed production capacity of 1,200 MT, and our Mahong Plant had an annualized installed production
capacity of 15,800 MT. We produced a total of approximately 5,052 MT of polysilicon in 2010 and 10,455 MT of polysilicon in 2011, and expect to produce between 12,000 MT and 15,000 MT in 2012. We have been actively working to add a
second production train, with an annualized 1,800-MT initial production capacity, at our Xiacun Plant, which will expand our aggregate annualized installed production capacity at Xiacun Plant to 3,000 MT. We also plan to implement debottlenecking
improvements at our Mahong Plant, which will bring our aggregate annualized installed production capacity at our Mahong Plant to 22,000 MT, and to develop a silane production capacity of up to 2,000 MT per year by installing add-on units to our
existing polysilicon production facilities at Mahong Plant when market condition improves. In addition, we have announced our entry into a non-binding framework cooperation agreement with the Hohhot municipal government to develop a new polysilicon
plant in Hohhot City, Inner Mongolia Autonomous Region of China. Although we have completed basic engineering and design of the project, the commencement of the construction work is subject to final approvals from relevant NDRC and local government
authorities. Furthermore, we rely in large part on contractors, consultants, managers and technicians that we have hired or will hire to construct, complete, operate and maintain these polysilicon plants. We also rely on equipment that we have
imported or contracted to import for our polysilicon production operations.

Our ability to successfully carry out these
operational plans for our polysilicon production is contingent upon various factors that are subject to risks and uncertainties, including:



| |  |  | our ability to raise additional funds to finance the construction, ramp-up, and maintenance of the polysilicon production and related facilities on
reasonable terms, or at all, including our ability or inability to satisfy the various financial covenants and restrictions contained in our existing and future financing arrangements;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | our ability to significantly increase our STC-TCS conversion;
| | - |  | -------------------------------------------------------------



| |  |  | the reliability, diligence, and proficiency of the contractors, consultants, managers, and technicians that we have hired or will hire to construct,
complete, test-run, and maintain our plants;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the possibility of construction delays, delays in equipment deliveries, and cost overruns;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | our ability to recruit and train additional skilled employees, including technicians and managers at different levels; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to obtain and maintain the various required PRC government approvals.
| | - |  | ---------------------------------------------------------------------------------

We cannot assure you that all of these contingencies will turn out in our favor. Any negative development could undermine our ability to
maintain and expand our overall production capacity as planned, which could, in turn, adversely affect our business and results of operations. If we fail to ramp up our polysilicon production on time, fail to make them operational up to their
installed capacity, or fail to produce polysilicon that meets our quality standards, or if the construction and ramp-up costs for our expansion and debottlenecking improvements significantly exceed our budget, or if we otherwise fail to carry out
our expansion plans for any reason, our results of operations, implementation of our vertical integration, and our low-cost production strategies will be materially and adversely affected.





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We have limited experience producing polysilicon and may not succeed in producing polysilicon
cost-effectively.

We commenced polysilicon production in the third quarter of 2009. As of March 31, 2012, our
aggregate annualized installed production capacity was approximately 17,000 MT, while we produced a total of approximately 5,052 MT of polysilicon in 2010 and 10,455 MT of polysilicon in 2011, and expect to produce between 12,000 and
15,000 MT in 2012. We have limited experience producing polysilicon and may, therefore, face significant operational challenges in our polysilicon production. The technology we use to produce polysilicon is complex and is continuously being
modified in an effort to improve yield and product performance. Operating large-scale industrial plants like ours contains inherent risks and operational excellence may take time to develop. We may encounter problems in our production process as a
result of, among other things, production failures, construction delays, human error, equipment malfunction, or process contamination, all of which could seriously harm our operations. We may experience production delays if any modifications we make
in the production process to shorten production cycles or to improve our STC-TCS conversion processes are unsuccessful. We therefore may not be able to ramp up our production and enjoy economies of scale. If we experience such difficulties in our
production process, we may be unable to achieve cost-effective production of polysilicon.

TCS is one of the most costly
chemicals used in the production of polysilicon. We produce a substantial portion of our TCS internally via chlorination of metallurgical-grade silicon feedstock. Our ability to convert the STC generated as a byproduct from our production process
back into TCS to re-enter production, forming a closed loop, is a critical factor in increasing our output and reducing our production costs and environmental compliance costs. Currently, we use a hydrogenation process to thermally
convert STC into TCS. We are currently undertaking debottlenecking initiatives to increase the conversion capacity of our STC thermal converters and to construct hydrochlorination facilities to add onto our production trains as an additional
conversion mechanism with the goal to convert more STC into TCS as our total polysilicon production capacity and output increase. We cannot assure you that we will be successful in improving the conversion capacity of our STC thermal converters or
completing the construction of the hydrochlorination facilities on schedule, or at all, or integrating such facilities with our existing facilities without material disruption to our production. The production of TCS, including the STC-TCS
conversion mechanisms, is difficult and requires strict controls over the management of raw materials and the production process. We have limited experience producing TCS and no previous experience operating hydrochlorination facilities. Therefore,
we cannot assure you that our production of TCS will be more cost-efficient than purchasing TCS from external suppliers. Although we now produce internally a substantial portion of TCS we need for our production, we may still from time to time have
to purchase additional amounts of TCS from external sources. We are at present also implementing a number of cost-saving initiatives to further reduce our production cost. If we are unable to enhance our TCS production, source additional TCS we
require at a reasonable cost, or at all, or successfully execute the cost-saving initiatives, we may not be able to achieve lower cost per unit of production, which would lower our profitability. Any of the foregoing factors could materially and
adversely affect our business, financial condition and results of operations.

Our future success substantially depends on our ability
to manage our production and facilities effectively and to reduce our manufacturing costs. Our ability to achieve such goals is subject to a number of risks and uncertainties.

Our future success depends on our ability to manage our production and facilities effectively and to reduce our manufacturing costs. Our
efforts to reduce our manufacturing costs include lowering our material costs, improving manufacturing productivity, and adopting additional lean manufacturing processes. If we are unable to achieve these goals, we may be unable to decrease our
costs per watt, maintain our competitive position or improve our profitability. Our ability to achieve such goals is subject to significant risks and uncertainties, including:



| |  |  | our ability to renegotiate our existing supply agreements;
| | - |  | ----------------------------------------------------------



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| |  |  | delays and cost overruns as a result of a number of factors, many of which may be beyond our control, such as long lead times or delays with certain
equipment suppliers;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to address safety and quality issues;
| | - |  | -------------------------------------------------



| |  |  | delays or denial of required approvals by relevant government authorities; and
| | - |  | ------------------------------------------------------------------------------



| |  |  | diversion of significant managerial and other resources by non-operational matters such as litigations.
| | - |  | -------------------------------------------------------------------------------------------------------

If we are unable to establish or successfully make improvements to our manufacturing facilities or to reduce our manufacturing costs, or
if we encounter any of the risks described above, we may be unable to improve our business as planned. Moreover, we cannot assure you that even if we achieve our goals of improving management and reducing cost, we will not otherwise fail to
cope with the general market trends such as the decreases of prices for PV products, or to generate sufficient customer demand for our PV products.

We have limited experience and operating history in the solar cell and solar module businesses, and we may not succeed in our new endeavors, which could adversely affect our business expansion and
vertical integration strategies and harm our reputation.

We commenced our solar module business in the third quarter
of 2009 by sourcing our solar cell requirements from third parties. We commenced our solar cell production in the third quarter of 2010. As of March 31, 2012, we had an annualized production capacity of approximately 1.7 GW of solar cells and
1.7 GW of solar modules. We currently consume all of the solar cells that we produce in our production of solar modules, and we sell our solar modules principally to international solar panel makers, solar system integrators and PV wholesale
distributors. During 2012, we plan to expand our annualized production capacity to 2.2 GW of solar cells and 2.6 GW of solar modules. Although we currently procure a significant portion of the solar cells we use in manufacturing modules primarily
from our solar cell production facilities, our ability to successfully implement our solar cell and module business strategy is subject to various risks and uncertainties, including:



| |  |  | our short history in the new solar cell and module businesses;
| | - |  | --------------------------------------------------------------



| |  |  | the solar module business typically has longer cash conversion cycles with respect to inventory and therefore will lengthen our accounts receivable
turnover time;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our expanded warranty liabilities associated with the solar module business, with warranty periods of 20 to 25 years;
| | - |  | ---------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to increase our in-house cell manufacturing capabilities;
| | - |  | ---------------------------------------------------------------------



| |  |  | potential conflicts with our customers as a result of our direct competition with them in the solar cell and module
businesses;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | recruitment of additional skilled employees, including engineers, technicians and managers at different levels, in connection with our expansion in the
solar cell and module businesses; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | potential conflicts with our customers as a result of our direct competition with them in the solar cell and module businesses; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | new risks associated with the solar cell and module businesses yet to be fully understood by the industry and market.
| | - |  | ---------------------------------------------------------------------------------------------------------------------

All these and other related factors and uncertainties relating to our solar cell and module businesses could adversely affect our
business expansion strategy and our chance of success in our vertical integration.



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

Our operations, especially wafer manufacturing and polysilicon production, use complex and potentially hazardous equipment, such as
chemical vapor deposition, or CVD, reactors, STC thermal converters, and hydrochlorination reactors, directional solidification system, or DSS, furnaces, squares and wire saws, that requires skill and experience for safe operation. Our production of
polysilicon employs volatile materials and involves chemical reactions that are sensitive to temperature and pressure, and intricate and meticulous external controls are mandatory to maintain safe operation. For example, we use TCS as a key
intermediary in producing polysilicon. TCS is a type of chlorosilane gas that, when purified, is highly combustible upon contact with air, making it potentially destructive and extremely dangerous if mishandled or used in uncontrolled circumstances.
We could experience events such as equipment failures, explosions, or fires due to employee errors, equipment malfunctions, accidents, electric power or cooling water supply interruptions, natural disasters, or other disruptions. A catastrophic
event at one of our plants could disrupt or destroy a significant portion of our production capacity, and we will not be able to restore the disrupted or destroyed capacity for a significant period of time, if at all. In addition, such an event
could damage properties or cause personal injuries or even deaths. As a result of these types of accidents or events, we may experience production curtailments or shutdowns or periods of reduced production, which would negatively affect our results
of operations. Our polysilicon operations also involve the use, handling, generation, processing, storage, transportation, and disposal of hazardous materials that may result in fires, explosions, spills, leakage, and other unexpected or dangerous
accidents causing personal injuries or death, property damage, environmental damage, and business interruptions. For instance, we experienced an accident at our Xiacun Plant in July 2010 due to non-compliant handling of certain add-on equipment by a
third-party contractor during the trial run of such add-on equipment installed by the third-party contractor, which resulted in very serious bodily injuries to one of our employees and one employee of the third-party contractor and a temporary
shut-down of the production unit with the add-on equipment. For further information regarding the incident, see Item 4. Information on the Company  B. Business  Production Safety and Environment  Safety. Even though
there have been no legal proceedings against us, and we have not otherwise suffered any material adverse effect on our operations from this incident, we cannot assure you that other accidents at our plants due to machinery malfunctions or
mishandling of hazardous materials or other reasons will not occur in the future, which may result in similar or more serious damage or even human death. Any event of these types could result in civil lawsuits or regulatory enforcement proceedings,
which in turn could lead to significant liabilities. We maintain property insurance at our plants, but such coverage is limited and in any event does not extend to certain significant potential losses, including those from lost production. Damage
from any of the above events or disruptions could also harm our reputation in the industry and among our customers and potential customers. Any such event or disruption could have a material adverse effect on our business, operating results, and
financial condition.

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

We consume a significant amount of electricity in our operations, and we need a constant supply of
electricity to maintain optimal production conditions. If the necessary level of electricity supply is not maintained, we may experience significant delays and disruptions in our production. With the rapid development of the PRC economy, demand for
electricity has continued to increase. There have been electricity supply shortages in various regions across China, especially during the summer peak season and in winter when the weather is inclement. For instance, in early 2008, due to severe
weather conditions over a period of two weeks, the electricity supply to our plants was curtailed as a result of damages to some of the national grid lines in certain PRC provinces, including Jiangxi Province. Consequently, we experienced delays in
some of our shipments to customers and some of the shipments from our suppliers as a result of highway closures and power outages in various parts of China. There have been instances where high power-consuming industrial plants, like ours, are
required by the government to temporarily curtail or suspend operations to alleviate burden on the power grid. Although we have installed backup power transformer substations on site at our production facilities,



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we cannot assure you that there will not be interruptions or shortages in our electricity supply or that sufficient electricity will continue to be available to us in the future as our
requirements grow. Shortages in electricity supply may disrupt our normal operations and adversely affect our profitability.

We enjoyed certain electricity usage subsidies from the local government in Xinyu City. For the years ended December 31, 2009, 2010
and 2011, we incurred electricity costs of approximately $35.0 million, $127.0 million and $220.3 million, respectively, and recorded electricity subsidies of $4.8 million, $35.8 million and $66.2 million, respectively. As a result, we recorded a
net electricity cost of approximately $30.2 million, $91.2 million and $154.1 million, respectively, for the same periods. In May 2010, the State Council and various PRC governmental agencies, including NDRC, issued a series of notices and
instructions designed to control energy consumption and environmental pollution. One of these initiatives aims to immediately terminate preferential electricity consumption policies adopted by local governments that may benefit high-energy-consuming
and/or highly polluting enterprises in their jurisdictions, unless the local preferential electricity consumption policies have been duly approved by the designated PRC central government agencies. The polysilicon industry has been included in the
high-energy-consuming category under these central government notices. Our electricity subsidy arrangements were not approved by a central government agency and were terminated as of June 30, 2011. We have negotiated with the relevant local
governments with respect to our electricity subsidies under these new governmental regulations and initiatives. In July 2011, various district-level local governments in Xinyu City agreed to grant us certain subsidies in support of our production.
We cannot assure you that we will be granted or continue to receive the same or similar subsidies as we have enjoyed so far. Nor can we assure you that the local governments will not have to terminate or reduce the current subsidies that they have
agreed to grant us as a result of these recent regulations and initiatives by the PRC central government. To date, we have not received any request from any relevant government authority to amend or terminate our electricity subsidy arrangement.

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

We have recently started to engage in the solar farm project business and related EPC business, and we may not succeed in these new endeavors or
may not have sufficient financing for them, which could adversely affect our vertical integration strategies and harm our reputation.

We develop solar farm projects in the United States, Europe and China and may enter additional markets for project development in the future. As of the date of this annual report, we have one jointly
controlled entity and 16 subsidiaries established under the laws of jurisdictions within China and outside China, including Italy, Germany and the United States. We typically develop these projects with the intent of selling them to third parties
upon completion of their development. For substantial projects, we have also used financing from commercial banks or financial institutions. We commenced our solar farm related engineering, procurement and construction, or EPC, business in China in
the first quarter of 2009. While we use our own EPC capabilities in China, we conduct our international EPC business both on our own and in collaboration with other EPC companies. We have also been engaged in a number of solar power generation
projects for sale to interested power companies. Our ability to successfully implement our solar farm projects and the related EPC business strategy is subject to various risks and uncertainties, including:



| |  |  | our lack of experience in these new businesses;
| | - |  | -----------------------------------------------



| |  |  | the need to raise additional funds to finance our new business operations, which we may be unable to obtain on reasonable terms or at all, including
our ability or inability to satisfy the various financial covenants and restrictions contained in our existing and future financing arrangements;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the solar farm projects and related EPC business typically have longer cash conversion cycles than our polysilicon, wafer and module businesses and
therefore our accounts receivable turnover time may increase;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | our expanded warranty liabilities associated with the solar farm projects and related EPC business;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | our possible lack of competitiveness in the solar farm projects and related EPC business as compared to other vertically integrated PV companies;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | potential delays in our timetable for the development of solar farm projects;
| | - |  | -----------------------------------------------------------------------------



| |  |  | the costs incurred in developing these solar farm projects may exceed our budget;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | our ability to sell our solar farm projects within targeted timelines, or at all;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | potential conflicts with our down-stream customers as a result of our direct competition with them in the solar farm projects and related EPC
business; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the purchase of our solar farm projects requires significant capital expenditures by our customers and these customers may have difficulty in obtaining
the necessary financing on acceptable terms or at all.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, we will need to recruit additional
skilled employees, including engineers, technicians and managers at different levels, for our successful operation in these businesses as we have limited experience in these areas. All these factors and uncertainties could adversely affect our
business growth and our chance of success in these areas.

We intend to develop new solar farm projects through new companies
that we establish or through jointly controlled entities or project partnerships. We expect to hold a majority equity interest in these project companies, which may require us to make substantial investments. In addition, we expect that these
project companies will finance most of their project developments through debt financing. The obligations to fund these solar power development projects are expected, therefore, to make further demands on our capital expenditures and further
increase our already substantial indebtedness. As we have disclosed in the risk factor entitled  We have substantial existing indebtedness, in particular short-term indebtedness, and we may incur substantial additional indebtedness in
the future subject to our compliance with the covenants and other requirements in our existing financing arrangements, which could adversely affect our financial condition and our ability to generate sufficient cash to satisfy our outstanding and
future debt obligations and we may not be able to refinance our current borrowings on terms that are acceptable to us, or at all above, following our recent announcement of our unaudited financial results for the fourth fiscal quarter in 2011,
due to our existing high leverage coupled with a net loss in the fourth quarter of 2011, our Consolidated Fixed Charge Coverage Ratio, as defined in the indenture governing our 2014 senior notes, has been negatively impacted as a result
of a significant reduction of the aggregate amount of our Consolidated EBITDA, as defined in the indenture governing our 2014 senior notes, for the four most recent full fiscal quarters, while our Consolidated Fixed Charges,
as defined in the indenture governing our 2014 senior notes, for such four-quarter period, have remained constant. As a result, we will not be able to incur any indebtedness until our Consolidated Fixed Charge Coverage Ratio
significantly improves on the basis of our four most recent full fiscal quarters. To the extent we may and could obtain additional financing for our solar farm projects, these capital expenditures and additional debt obligations could affect our
liquidity, ability to obtain future financing or withstand any future downturn in our business or in the general economy.

We have
announced our proposed investments in the LED sapphire wafer manufacturing and in silane gas production, and we may not succeed in these new lines of business, which could adversely affect our strategies to expand into higher value-added sectors and
to lower our overall production costs.

In April 2011, we announced a proposed $40 million investment to add an LED
sapphire wafer manufacturing capability to our facilities in Nanchang City, Jiangxi Province, in order to be able to capture the growth opportunities in the LED industry. We also announced in April 2011 a proposed $35 million investment to establish
a new manufacturing line to produce silane gas by installing add-on units to our existing polysilicon production facilities at Mahong Plant in order to meet the growing demand from the semiconductor, solar and flat panel display industries. We have
delayed the implementation of these expansion programs due to the on-going



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market conditions. Although we regard these additions as a natural growth from our existing business operations, they nevertheless constitute new business ventures for us. We have not engaged in
any LED sapphire wafer manufacturing or silane gas production before, and our ability to successfully implement such new business strategies is subject to various risks and uncertainties, including:



| |  |  | our lack of experience in these new businesses;
| | - |  | -----------------------------------------------



| |  |  | our need to raise additional funds to finance these new business operations, which we may be unable to obtain on reasonable terms or at all, including
our ability or inability to satisfy the various financial covenants and restrictions contained in our existing and future financing arrangements;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | LED sapphire wafer manufacturing requires technologies different from our current polysilicon wafers, involving additional or different machinery, raw
materials, manufacturing process and labor skills;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | silane gas is an extremely toxic gas, and its production is a highly dangerous process, which requires not only additional or different machinery and
manufacturing process, but also extremely particular labor skills and care;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our possible lack of competitiveness in these new business operations as compared to other PV companies;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | the costs incurred in developing these new business operations may exceed our budget; and
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | our ability to incorporate these new products into higher value-added products as we have contemplated, or at all.
| | - |  | ------------------------------------------------------------------------------------------------------------------

In addition, as in any new business venture, we will need to recruit additional skilled employees, including engineers, technicians and
managers at different levels, for our successful expansion into these new businesses. Our current management team has limited experience in these areas, and we have to rely on lateral hires to assist us. Such laterally hired employees may be under
contractual obligations with their existing or former employers relating to non-competition, non-solicitation, confidentiality and intellectual property protection, and our employment of such personnel may be construed as a violation of such
obligations, which may impede or delay our employment of such skilled managers, engineers or technicians. All these factors could adversely affect our vertical integration strategy and our chance of success in these new expansion endeavors.

We have entered into long-term sales contracts with some of our customers that may be renegotiated at terms less favorable to us, and
result in the return of prepayments we have received, or which our customers may breach or otherwise fail to perform; any such changes, refunds or breaches may materially and adversely affect our operations and may result in costly and
time-consuming litigation or other proceedings.

We have entered into long-term sales arrangements with some of our
major customers. Pursuant to these arrangements, we have committed to supply them with specific quantities of polysilicon, wafers and/or modules over the next few years, with some of these agreements subject to periodic negotiations of prices. We
have also entered into framework agreements with other customers under which the volume and price, as well as other terms, are determined on a quarterly or annual basis or through monthly purchase orders. Some of our customers prepay a part of their
procurements pursuant to their contracts with us. The global economic slowdown and crisis in the global financial markets in late 2008 and early 2009 and European financial crisis in 2011 caused a number of our wafer customers to seek to terminate
their contracts or request us to delay our shipments of wafers. At their request, we re-negotiated various terms under the existing contractual arrangements, including contract quantity, price and delivery timetable. Through these developments, we
had to concede to terms that in some cases were less favorable to us, including returning all or part of the prepayments our customers made to us pursuant to our contracts. Any significant deviation from the contractual terms or our inability to
negotiate or renegotiate acceptable quantity, price and delivery terms from time to time with our customers may disrupt our operations and materially and adversely affect our financial condition and results of operations.



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We have been involved in litigations or arbitrations arising out of customer contract
renegotiations or breaches of these contracts by our customers. These and additional dispute resolution proceedings have subjected and may continue to subject us to legal expenses that could be potentially expensive. These proceedings tend to
distract our management from the day-to-day operation of our business. They also expose us to risks for which appropriate damages may not be awarded to or be collectable by us. Any of these risks and factors could materially and adversely affect our
business and financial condition.

As we have significantly expanded our polysilicon, wafer, solar cell and module
manufacturing facilities, we typically maintain a calculated level of inventory of raw materials and finished goods based on our existing and projected contractual arrangements with our customers. As a result, any breach or default by our customers
with respect to their contractual arrangements with us may result in our bearing any related economic losses. Consequently, the non-performance of contracts by our customers could have a material adverse effect on our financial condition and results
of operations.

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

Our customers are
mostly solar cell and module manufacturers, solar farm developers, PV products distributors, and PV system integrators. Our largest customers as of December 31, 2011 in terms of goods and services sold included Jiangxi Risun Solar Energy Co.,
Ltd., or Jiangxi Risun, Gintech Energy Corporation, or Gintech, Shannxi Luan Photovoltaics Technology Co., Ltd., or Shannxi Luan, Sumitomo Corporation, or Sumitomo, and Solartech Energy Corporation, or Solartech. During the years ended
December 31, 2009, 2010 and 2011, our top five customers collectively accounted for approximately 45.5%, 30.6% and 20.3%, respectively, of our net sales. For the year ended December 31, 2009, Gintech and Q-Cells contributed 12.5% and
10.7%, respectively, to our net sales; for the year ended December 31, 2010, Q-Cells and MEMC contributed 8.5% and 7.2%, respectively, to our net sales; and for the year ended December 31, 2011, Jiangxi Risun and Gintech contributed 5.5%
and 4.5%,respectively, to our net sales.

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



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



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



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

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

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

In addition to producing polysilicon by ourselves, we source some amount of solar-grade polysilicon
feedstock from third parties, which is an essential raw material in manufacturing our solar wafers. We will



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continue to rely on third-party suppliers for some of our solar-grade polysilicon requirements until our in-house polysilicon production facilities reach their designed production capacity.
Therefore, to such extent, our operations still continue to depend on our ability to procure sufficient quantities of solar-grade polysilicon on a timely basis and on commercially reasonable terms to supplement our in-house polysilicon production.
Polysilicon is also an essential raw material for the semiconductor industry, which requires polysilicon of higher purity than that used in the solar industry. Spot solar-use polysilicon prices have fluctuated widely over the years, with such spot
prices reaching an average of approximately $380 per kilogram in the second quarter in 2008 and then dropping to $80 per kilogram during the first half in 2009, $53 per kilogram during the first half of 2010, $65 per kilogram during the first half
in 2011, and $30 per kilogram during the fourth quarter in 2011, each according to Solarbuzz. Most of our polysilicon supply agreements are subject to fluctuating market prices or price negotiations with our suppliers. In addition to price changes,
suppliers may delay or default in their delivery obligations under the supply agreements. We cannot assure you that we will continue to be able to acquire polysilicon in sufficient quantities and on commercially reasonable terms or that we will be
able to pass any increased costs of polysilicon to our customers. If we fail to do either, our business and profitability will be materially and adversely affected.

Polysilicon production requires significant capital investments, and there are only a limited number of polysilicon producers in the world. These polysilicon producers provide polysilicon feedstock not
only to the solar industry but also to the semiconductor industry. From time to time, we have experienced delays or defaults by some of our polysilicon suppliers in delivering supplies to us. Material or prolonged delays or defaults in polysilicon
supply could adversely impact our production and delivery schedule and harm our reputation. Our suppliers of raw materials and equipment, particularly virgin polysilicon suppliers, require us to make prepayments from time to time. We make these
prepayments, without receiving any collateral, in order to secure a stable supply of solar-use polysilicon. As of December 31, 2011, our prepayments to polysilicon suppliers amounted to $32.6 million. Some of our suppliers have failed to
meet their delivery schedules in the past. In addition, we commenced production of polysilicon in the third quarter of 2009 and sell some of this output to third-party customers. As a result of this development, and as a result of perceived
competition from us, some virgin polysilicon suppliers may not want to supply us with polysilicon in such quantity or at all. Before our in-house polysilicon production facilities reach their designed production capacity, if we fail to develop or
maintain our relationships with polysilicon suppliers, if any of our major suppliers fails or becomes unwilling to deliver the polysilicon we have ordered on time or at all, or if any of them encounters difficulties in its production or shipment of
polysilicon feedstock to us, whether due to natural disasters, labor unrest, adverse global economic conditions, or any other reason, it may be difficult for us to find alternative sources on a timely basis and on commercially reasonable terms or at
all. If any such defaulting supplier fails to return our prepayments, our cash flows would be adversely affected.

We
recognized a provision for doubtful recoveries of $38.5 million, $40.8 million and $107.0 million, respectively, for prepayments to suppliers as of December 31, 2009, 2010 and 2011. Our claims for repayment of these amounts, or any
other claims against our suppliers to recover prepayments, would rank as unsecured claims, which would expose us to the credit risks of our suppliers in the event of their insolvency or bankruptcy. Under such circumstances, our claims against the
defaulting suppliers would rank below those of secured creditors, which would undermine our chances of obtaining the return of our advance payments. In addition, if the market price of polysilicon decreases after we prepay our suppliers, we may not
be able to adjust historical payments insofar as they relate to future deliveries. Furthermore, if demand for our PV products decreases, we may incur costs associated with carrying excess materials. Accordingly, any of the above scenarios may have a
material adverse effect on our financial condition, results of operations and liquidity.

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

We have expanded our business operations
significantly over the past few years. Although we have adjusted our expansion plan in light of the global economic conditions from time to time, the success of our business



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growth will depend upon, among other factors, the general economic environment for the PV industry, our success in implementing our liquidity plan, our ability to succeed in our new businesses,
our ability to maintain and expand our relationships with customers, suppliers and other third parties, the improvement of our operational and financial systems, enhancement of our internal procedures and controls, increase in our production
capacity and output, and effective recruitment, training and retention of managers, technicians, engineers and skilled employees. We cannot assure you that the current global PV market and prospects will support our existing and anticipated
production capacity or that our current and planned operations, personnel, systems, internal procedures and controls will be adequate to support our growth. If we are unable to manage our growth effectively, we may not be able to take advantage of
market opportunities, successfully execute our business strategies or respond to the competitive economic and industrial environment and pressures, and our business, results of operations and financial condition may be adversely affected.

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

We have required certain customers to prepay a portion of the purchase price of their orders. These prepayment
arrangements with our customers have historically allowed us to rely less on borrowings to cover our working capital cash needs. Since the global financial crisis of late 2008 and early 2009 and European financial crisis in 2011, this practice has
become less sustainable, and, as a result, we have agreed to reduce the contractual prepayments of some of our customers and have accepted payments from other customers upon the delivery of our goods. Advance payments from customers decreased from
$376.8 million as of December 31, 2009 to $344.8 million as of December 31, 2010 and $332.2 million as of December 31, 2011. Our accounts and bills receivable increased from $217.9 million as of December 31,
2009 to $384.3 million as of December 31, 2010 and to $491.4 million as of December 31, 2011. Our expansion into the solar module and other PV down-stream businesses in recent years has not only increased our working capital
needs but has also extended our overall accounts receivable turnover time. Our module customers typically require longer payment terms as compared to our wafer customers. Our down-stream business also tends to increase our inventory turnover days as
compared to our wafering business. As a result, our expansion into solar module and other down-stream businesses may cause our working capital needs to significantly increase. If our working capital requirements increase, our business operations may
be materially and adversely affected if we fail to raise more cash on a timely basis, or at all, due to the resulting longer accounts receivable turnover cycles.

We recognized a provision for doubtful recoveries of $4.6 million, $6.2 million and $117.3 million, respectively, for trade accounts receivable as of December 31, 2009, 2010 and 2011. Our claims for
repayment of these amounts, or any other claims against our customers to recover the trade accounts receivable, would rank as unsecured claims, which would expose us to the credit risks of our customers in the event of their insolvency or
bankruptcy. Under such circumstances, our claims against the defaulting customers would rank below those of secured creditors, which would undermine our chances of obtaining the return of our trade accounts receivable. Accordingly, the failure of
any of our new or existing customers to meet their payment obligations would adversely affect our working capital, financial position, liquidity and results of operations.

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

Business operations of our scale require approval by, and registration with, various PRC governmental authorities in charge of, for example, land, buildings, urban planning, quality regulation, safety,
business operations and commercial activities, customs, taxation, environmental protection, and foreign exchange administration. If our operations continue to expand, we may, from time to time, be required to maintain or renew our existing
registrations or obtain additional approvals, which we cannot assure you that we will be able



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to do at all times. For example, although we have obtained land use rights certificates and property ownership certificates for properties underlying a majority of our production facilities, as
of the date of this annual report, we are still in the process of acquiring the land use right certificates relating to properties with a total of approximately 2.2 million square meters and the property ownership certificates relating to
properties with a total gross floor area of approximately 0.4 million square meters, each underlying certain of our polysilicon production facilities and wafer production facilities. If we fail to obtain, or experience material delay in
obtaining, these land use rights certificates and property ownership certificates, our business, results of operations, and financial condition may be materially and adversely affected.

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

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

The PV manufacturing market is highly competitive. Many of our current and potential competitors have a longer operating history, better
name recognition, greater resources, larger customer base, better access to raw materials and equipment, better vertically integrated platform, and greater economies of scale than we do. A number of our customers and suppliers are also our
competitors. We have expanded in recent years into the downstream solar cell and module businesses and face a series of related risks as we have disclosed in the risk factors entitled  We have limited experience and operating history in
the solar cell and solar module businesses, and we may not succeed in our new endeavors, which could adversely affect our business expansion and vertical integration strategies and harm our reputation,  We have recently started to
engage in the solar farm project business and related EPC business, and we may not succeed in these new endeavors or may not have sufficient financing for them, which could adversely affect our business expansion and vertical integration strategies
and harm our reputation and  We have announced our proposed investments in the LED sapphire wafer manufacturing and in silane gas production, and we may not succeed in these new lines of business, which could adversely affect our
strategies to expand into higher value-added sectors and to lower our overall production costs. The key barriers to enter our industry at present consist of availability of financing and development of technological know-how. If these barriers
disappear or become more easily surmountable, new competitors may successfully and more easily enter our industry, resulting in loss of our market share and increased price competition.

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

We have expanded our business operations outside China. Although we have had some international business operations
ever since our inception, they were historically concentrated in international sales and



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procurement of raw materials. In recent years, in addition to the development of solar farm projects overseas, our international business expansion also took the form of direct acquisitions of
existing businesses. In March 2011, we acquired a 72% interest in Solar Power, Inc., a California-based solar power EPC company, or SPI, for approximately $33 million. SPIs shares are listed and traded on the OTCBB market. In April 2012,
we acquired a 71% interest in sunways AG, or Sunways, a German stock corporation with its shares listed on the Frankfurt Stock Exchange, for approximately $30 million. Sunways currently produces, assembles and distributes solar cells and
modules, PV system inverters, and other components for the renewable power production. We may engage in additional acquisitions or undertake various other strategic alternatives, such as strategic alliances and joint ventures with other players in
the PV industry.

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



| |  |  | difficulty with staffing and managing overseas operations;
| | - |  | ----------------------------------------------------------



| |  |  | fluctuations in currency exchange rates;
| | - |  | ----------------------------------------



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



| |  |  | providing customer service and support in these markets;
| | - |  | --------------------------------------------------------



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



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



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



| |  |  | 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, that could increase the prices of our products and
services and make us less competitive in some countries.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As we expand internationally, in order to make
such acquisitions and strategic alternatives synergistic and favorable to our overall business operations, integration and pro-active global management will be crucial to our success as a vertically integrated global PV player. A significant portion
of our current operations are concentrated in China and, if we are unable to effectively manage the global integration and other risks relating to international operations, they could impair our ability to expand our business abroad. As a result,
our results of operations may be materially and adversely affected, and our business expansion and vertical integration strategies will be materially hampered.

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

We are currently focused on crystalline silicon solar technologies and we compete with alternative solar technologies. The PV industry is characterized by evolving technologies and standards. These
technological evolutions and developments place increasing demands on the improvement of our products such as higher PV efficiency and larger and thinner wafers. Some companies have spent significant resources in R&D of proprietary solar
technologies that may eventually produce PV products at costs similar to, or lower than, those of crystalline silicon PV products without compromising product quality. For example, they are developing or currently producing PV products based on
thin-film PV materials, which require significantly less polysilicon to produce than our crystalline silicon PV products. These alternative PV products may cost less than those based on crystalline technologies while achieving a competitive level of
conversion efficiency. Our founder, chairman, chief executive officer and ultimate controlling shareholder, Mr. Xiaofeng Peng, in his personal capacity, and his



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family members are engaged in certain alternative energy projects, including a project involving thin-film technology. In addition, Mr. Peng and his family may invest or otherwise
participate in their personal capacity in other alternative energy projects, such as projects involving solar thermal, wind energy and biofuels. After considering the available business opportunities, we have decided not to enter into thin-film
module production.

The solar technologies in general also compete with other renewable energy technologies, such as biomass,
hydroelectric, wind, and geothermal technologies, as well as nuclear power technologies, in addition to conventional power generation, for, among other things, government subsidies, market share, and public acceptance and support. If prices for
conventional and other renewable energy sources decline, or if these sources enjoy greater policy support than solar power, the solar power industry could suffer and our business and results of operations may be adversely affected.

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

Although the vast majority of polysilicon produced in the world utilizes the CVD process, or the modified Siemens process, which consumes
a large amount of electricity, several alternative crystalline silicon-based production processes have been developed that may significantly reduce power consumption and other production costs. For example, MEMC, Renewable Energy Corporation, or
REC, and Wacker Chemie AG, or Wacker, currently use, or are constructing facilities that use, the fluidized bed reactor, or FBR, method for producing polysilicon. Tokuyama Corporation has also developed a polysilicon technology called the
vapor-to-liquid deposition process. Other producers are developing the ability to produce upgraded metallurgical grade silicon as a low-cost alternative to solar-grade polysilicon produced through modified Siemens process. Further
developments in competing polysilicon production technologies may result in lower manufacturing costs or higher product performance than those achieved from the Siemens processes, including the modified Siemens process that we currently employ. As a
result, we may need to invest significant resources in R&D to maintain our market position, keep pace with technological advances in the PV industry and effectively compete in the future. Our failure to further refine and enhance our products or
to keep pace with evolving technologies and industry standards could cause our products and production facilities to become uncompetitive or obsolete, which could in turn reduce our market share and cause our net sales and profits to decline.

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

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



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

We
have from time to time experienced delays in fulfilling purchase orders from some of our customers due to fluctuations in our production output as we ramp up our vertically integrated production capacity, fluctuations in general market demand for
our products due to the global or regional economic conditions, disruptions to our delivery of products due to extraordinary weather conditions, and various other factors. In the past, when the global PV market was expanding aggressively, we often
entered into contractual commitments with our customers in anticipation of our successful and timely implementation of our expansion program. Under such circumstances, our ability to meet these contractual commitments to our customers depended
significantly on the successful and timely implementation of such expansion program. If we are unable to fulfill our customer orders or other commitments to customers on a timely basis, we may lose our customers and our reputation may be damaged.
Moreover, our contracts with our customers sometimes provide for specified monetary damages or penalties for non-delivery or failure to meet delivery schedules or product specifications. If any of our customers invokes these clauses against us, we
may need to defend ourselves against the relevant claims, which could be time-consuming and expensive. We may be found liable under these clauses and be required to pay damages, which could adversely affect our business, financial condition and
results of operations.

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

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

International trade related investigations and proceedings and any anti-dumping and/or countervailing
tariff imposed by any jurisdiction may cause a material adverse effect on our business prospects, financial condition and results of operations. In October 2011, for example, several U.S.-based manufacturers of PV products filed a petition with the
U.S. Department of Commerce, or DOC, and the U.S. International Trade Commission, or ITC, alleging that imports from China have caused injuries to the PV industry in the U.S. and seeking tariffs of more than 100% on crystalline silicon PV cells
imported from China into the U.S., whether or not assembled into solar modules. A group of PRC PV product exporters have responded to the complaint, contesting the allegations. ITC is currently in the process of making a preliminary determination on
whether the alleged injuries to the U.S. PV industry exist. Meanwhile, DOC is in the process of determining whether each PV exporter in China is engaged in dumping activities or exporting PV products supported by illegal government subsidies into
the U.S. If both ITC and DOC make an affirmative determination, each PRC respondent company will have an opportunity to contest to DOC the calculation of individualized anti-dumping duty and countervailing duty that would be applicable to it. Given
the early stage of such investigations by DOC and ITC, it is not certain whether the U.S. government will impose antidumping and/or countervailing tariffs as requested, or whether the relevant PRC respondent companies will challenge any adverse U.S.
government decisions in court. We have historically sold limited quantities of our PV products directly to the U.S. market, but we have supplied polysilicon to other PRC-based PV product manufacturers who export their PV products to the U.S. market.
Any anti-dumping and/or countervailing tariff finally imposed by the U.S. authorities may indirectly affect us through its impact on such PRC-based PV product manufacturers, and may have a material adverse effect on our business prospects, financial
condition and results of operations. As we have significantly relied on international customers for our products since our inception, any similar or other trade related investigations and proceedings as well as any



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similar or other resultant anti-dumping and/or countervailing tariff imposed by jurisdictions where we have directly or indirectly sold significant quantities of our PV products may result in a
material adverse effect on our business prospects, financial condition and results of operations.

We have also been, and may
continue to be, subject to adverse press articles, media or market reports, or other public statements or allegations on our business operations, financial condition, internal control, corporate governance, environmental protection, workplace
safety, and/or our relationship with customers, suppliers, governmental authorities, banks, and investors, with or without appropriate bases. Although we will disclose any material development as required by law to keep our investors informed, and
may attempt to correct some of the wrong information in the marketplace, we cannot assure you that adverse statements or allegations in the public domain will, with or without justification, cast us in a negative light and may adversely affect our
business reputation and operations as well as the value and trading price of our shares and other securities.

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

Our success depends on the continued services of our executive officers and key personnel, in particular Mr. Xiaofeng Peng, our founder, chairman and chief executive officer. We do not maintain
key-man life insurance on any of our executive officers and key personnel. If one or more of our executive officers and key personnel are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at
all. As a result, our business may be materially disrupted and we may have to incur additional expenses in order to recruit and retain new personnel. In addition, if any of our executives joins a competitor or forms a competing company, we may lose
some of our customers. Each of our executive officers and key personnel has entered into an employment agreement with us that contains confidentiality and non-competition provisions. However, if any dispute arises between our executive officers or
key personnel and us, we cannot assure you, in light of uncertainties associated with the PRC legal system, that these agreements could be enforced in China where most of our executive officers and key personnel reside and hold most of their assets.
In addition, Mr. Peng, our founder, chairman, chief executive officer and controlling shareholder, in his personal capacity, and his family members are engaged in certain alternative energy projects, including a project involving thin-film
technology. Mr. Peng and his family may invest or otherwise participate in their personal capacity in other alternative energy projects, such as projects involving solar thermal, wind energy and biofuels. To the extent that Mr. Peng
devotes significant time to any such projects, it may reduce his time and services devoted to our company as chairman and chief executive officer, which could materially and adversely affect our business.

Our founder, chairman, and chief executive officer, Mr. Xiaofeng Peng, has substantial control over our company and his interests may not be
aligned with the interests of our shareholders.

Mr. Peng, our founder, chairman and chief executive officer,
currently beneficially owns, through LDK New Energy Holding Limited, his wholly owned British Virgin Islands company, or LDK New Energy, 72,892,163 of our shares, representing approximately 53.27% of our outstanding share capital, without
taking into account any securities that any shareholder or option holder has the right to acquire within 60 days after the date of this annual report through the exercise of any option, warrant or right. As such, Mr. Peng will have
substantial control over our business, including decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, election of directors, dividend policy and other significant corporate actions. Mr. Peng may
take actions that are not in the best interest of our company or our shareholders and other securities holders.

Mr. Peng, in his personal capacity, and his family members are engaged in certain alternative energy projects, including a project
involving thin-film solar technology. LDK New Energy is the beneficial owner of all of the equity interest of the thin-film solar company. In addition, Mr. Peng and his family may invest or otherwise participate in their personal capacity in
other alternative energy projects, such as projects involving solar thermal, wind energy and biofuels which might not be aligned with the interests of our shareholders.



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Our controlling shareholder, Mr. Peng, has directly or indirectly pledged a significant portion
of his equity interests in our company to secure certain loan facilities. A default under these loan facilities could potentially result in a change of control of our company.

Our controlling shareholder, Mr. Peng, through his wholly owned entity, LDK New Energy, has pledged a significant portion of his
equity interest (in the form of ordinary shares or ADSs) in our company to secure certain loan facilities to finance his investment in the thin-film solar project and other projects. These loan facilities also require LDK New Energy to pledge
additional shares or ADSs or other collateral if the market value of the pledged shares or ADSs fall below a certain threshold. For example, the decline of the price of our ADSs on the New York Stock Exchange has from time to time triggered margin
calls under these loan facilities. As of the date of this annual report, LDK New Energy has pledged up to 52.0 million of our ordinary shares (including ordinary shares represented by ADSs), representing approximately 38.88% of our outstanding
ordinary shares, to secure such loan facilities. Under such loan agreements, Mr. Peng has also provided unlimited personal guarantees to secure the loans. LDK New Energy and Mr. Peng may from time to time obtain additional loans that are
secured by a pledge of additional equity interests (in the form of ordinary shares or ADSs) in our company to finance the thin-film solar project or for other purposes. Turbulences in the global economy and financial markets or declines in the
market value of our ADSs could trigger additional margin calls for these loan facilities. Failure or delay by LDK New Energy to promptly meet these margin calls or other default under these financing arrangements could result in the sale or other
disposition of some or all of the pledged shares. As Mr. Peng has provided personal guarantees for some of our existing loan facilities, if we default under the loan agreements for which Mr. Peng has provided such personal guarantees,
Mr. Pengs personal properties, including his shares in us, may be seized and sold by the relevant lenders. Any of these events may potentially result in a change in control of our company.

Upon the occurrence of a change of control, we will be required to purchase the 2014 senior notes at a purchase price equal to 101% of
the principal amount plus accrued and unpaid interest in accordance with the terms of the indenture. In addition, a change of control of our company may constitute a default under our loan agreements, which could potentially trigger cross-default
provisions in other financing agreements, including the 2014 senior notes and 2013 convertible notes. If we are required to repay a significant portion or all of our existing indebtedness prior to their maturity or if we are unable to borrow
additional amounts under existing credit facilities, we may lack sufficient financial resources to make these payments or to fund other cash requirements, which would have a material adverse effect on our financial condition, results of operations
and business prospects.

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

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



| |  |  | wide commercial adoption and application of PV technology;
| | - |  | ----------------------------------------------------------



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



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



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



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| |  |  | success of solar technologies other than crystalline silicon;
| | - |  | -------------------------------------------------------------



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



| |  |  | deregulation of the electric power industry and the broader energy industry; and
| | - |  | --------------------------------------------------------------------------------



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

If the average selling price or demand for PV products decrease dramatically, we may not be able to grow our business or generate
sufficient revenues to sustain our profitability. For example, partially due to the global economic slowdown and turmoil in the global financial markets since late 2008, we incurred a net loss of $234.0 million and $609.0 million,
respectively, for the years ended December 31, 2009 and 2011 although we generated a net profit of $296.5 million for the year ended December 31, 2010. In addition, the prices of PV products have declined since the first half of 2010 due
primarily to lower prices of polysilicon during this time and increased manufacturing capacity for PV products. Any negative market and industry trends could materially and adversely affect our business, financial condition and results of
operations. We cannot assure you that we will not generate net losses or no greater amounts of net losses going forward due to numerous factors beyond our control, including the external global economic environment, the well-being of the PV
industry, and our internal productivity and other operational conditions.

We may be adversely affected by volatile market and industry
trends; in particular, the demand for our PV products may decline, which may reduce our revenues and earnings.

We are
affected by solar energy market and industry trends as well as macro-economic factors. For example, the prices of PV products have declined since the first half of 2010 due primarily to lower prices of polysilicon during this time and increased
manufacturing capacity for PV products. As the impact of the global economic crisis subsided through 2011, the combination of increased demand and growth from new markets and buyers, such as the United States, Canada, China, India, and
Thailand), and decreased average selling prices of PV products contributed to an overall increase in demand for PV products in 2011. The demand for PV products is also influenced by macroeconomic factors such as the global economic conditions,
the supply and prices of other energy products, such as oil, coal and natural gas, as well as government regulations and policies concerning the electric utility industry. A decrease in oil prices, for example, may reduce demand for investment
and consumption in alternative energy. A global economic downturn, which affects the availability of financing, may also contribute to decreased sales and shipments of PV products and the slowdown of the solar project market segments. Any
negative market and industry trends could materially and adversely affect our business, financial condition and results of operations.

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

As part of our strategy,
we intend to enter into strategic acquisitions and investments and establish strategic alliances with third parties in the PV industry if suitable opportunities arise. We may acquire or invest in technologies, businesses or assets that are
strategically important to our business expansion. For example, in January 2008, we acquired a 33.5% interest in Jiangxi Sinoma New Material Co., Ltd., or Jiangxi Sinoma, a Xinyu-based crucibles manufacturer, from Xinyu Chengdong Investment and
Construction Co., Ltd. for consideration of approximately Rmb 16.8 million. In February 2010, we acquired crystalline module manufacturing equipment in China from Best Solar Co., Ltd., a wholly owned subsidiary of LDK New Energy, or Best
Solar, for consideration of $21.2 million. In March 2011, we acquired a 72% interest in SPI, California-based solar power EPC company, for approximately $33 million. In April 2012, we acquired a 71% interest in Sunways, a German PV
company, for approximately $30 million. We may engage in similar or other acquisitions



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and investments that we believe will complement our expansion strategies, including acquisitions or investments in new technology. We may also make strategic dispositions of our assets or
restructure our business operations. We may raise additional financing through a partial and complete disposal of our stakes in our polysilicon plant or other businesses. Any strategic acquisition, investment and alliance with third parties could
subject us to a number of risks, including risks associated with the assimilation of new operations, technologies and personnel, any unforeseen or hidden liabilities, the inability to generate sufficient revenue and income to offset the costs and
expenses of acquisitions, the potential loss of, or harm to, our relationships with employees, customers and suppliers as a result of integration of new businesses, and a reduction or loss of control of operations that are material to our business.
Moreover, strategic acquisitions, investments and alliances may divert our cash flow from servicing our debts and making necessary capital expenditures and subject us to impairment losses on our acquisitions and investments in equity securities and
risks of non-performance by counterparties, which may in turn lead to monetary losses that may materially and adversely affect our business. An acquisition could also expose us to related litigation and other proceedings, unknown liabilities and
other unforeseen risks. For example, a putative class-action lawsuit was initiated by a minority shareholder of SPI seeking to enjoin our acquisition of SPI and seeking money damages soon after we acquired a stake in SPI, with us named as a
defendant together with SPI and its board of directors in the class action. Although this class action has been dismissed with prejudice, such and other lawsuits and proceedings could cause us to incur additional legal and other costs and expenses
(including the payment of damages, settlement sums or other compensation) as well as divert the attention of our management. Difficulties encountered with respect to the acquisitions, investments, or alliances or in the process of integration could
have an adverse effect on our ability to manage our business. Any failure to integrate any acquired businesses or joint ventures into our operations successfully and any material liabilities or potential liabilities of any acquired businesses or
joint ventures that are not identified by us during our due diligence process for such acquisitions or investments could materially and adversely affect our business and financial condition.

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

Our products may contain defects that are not detected until they have been shipped, installed or otherwise incorporated into PV products of our customers. In 2009, 2010 and 2011, we recorded inventory
write-downs of $2.4 million, $5.8 million and $17.1 million, respectively, due to defects identified in some of our products. In the ordinary course of our business, we also encounter periodic sales returns due to non-conformity with
customers specifications or product defects. In each case, we are required to replace our products promptly. Product defects and the possibility of product defects could cause significant damage to our market reputation and reduce our product
sales and market share. If we cannot successfully maintain consistency and quality throughout our production process, this will result in substandard quality or performance of our products. If we deliver products with defects, or if there is a
perception that our products are of substandard quality, we may incur substantially increased costs associated with replacements of products, our credibility and market reputation will be harmed and sales of our PV products may be adversely
affected.

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

As a public company, we are subject to the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. Section 404 of the Sarbanes-Oxley
Act and the related rules of the Securities and Exchange Commission, or the SEC, require that we evaluate the effectiveness, as of the end of each fiscal year, of our internal control over financial reporting and include in our annual report on
Form 20-F for each fiscal year (i) a report of our management on our internal control over financial reporting that contains, among other things, managements assessment of the effectiveness of our internal control over financial
reporting as of the end of the most recent fiscal year, including a statement on whether or not internal control over financial reporting is effective and (ii) the opinion of our registered public accounting firm, either unqualified or adverse,
as to whether we



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maintained, in all material respects, effective internal control over financial reporting as of the end of such fiscal year. Our management and auditors are not permitted to conclude that our
internal control over financial reporting is effective if there are one or more material weaknesses in our internal control over financial reporting, as defined in rules of the SEC and the U.S. Public Company Accounting Oversight
Board, or PCAOB. We cannot assure you that our internal control over financial reporting will continue to be effective or that any significant deficiencies or material weaknesses in our internal control over financial reporting will not be
identified in the future. Moreover, if we fail to maintain the adequacy of our internal control, we may not be able to conclude that we have effective internal control over financial reporting. Even if we do conclude that our internal control over
financial reporting is effective, our independent registered public accounting firm may still issue a report that is qualified or adverse if it is not satisfied with our internal control. Furthermore, effective internal control over financial
reporting is necessary for us to produce reliable financial reports and is important to help us to manage the company effectively and prevent fraud. We have incurred, and will continue to incur, significant costs and have used, and will continue to
use, significant management and other resources in order to comply with Section 404 of the Sarbanes-Oxley Act.

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

Our independent registered public
accounting firm that issues the audit report included in our annual reports filed with the SEC, as auditors of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United
States), or the PCAOB, is required by the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the applicable laws of the United States and professional standards. Our operations are principally
conducted in China, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the PRC authorities. Accordingly, any audit documentation located in China related to our independent registered public accounting
firms report included in our filings with the SEC is not currently inspected by the PCAOB.

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

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

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

We started to provide financial disclosure in interactive data format on SECs electronic filing system and post them on our corporate website in connection with our annual report on Form 20-F for
the fiscal year ended December 31, 2010 as required by the SEC rules and regulations. As required by the SEC, we use the eXtensible Business Reporting Language, or XBRL, and the taxonomy or standard list of tags in XBRL format developed for
financial reporting in interactive format consistent with U.S. GAAP and SEC rules and regulations. The XBRL list of tags contains descriptive labels, definitions, authoritative references to U.S. GAAP and the SEC rules and regulations where
applicable, and other elements, all of which aim to provide the contextual information necessary for interactive data to be recognized and processed by software. For the fiscal year ended December 31, 2010, we tagged our consolidated financial
statements, with the footnotes and schedules each tagged in a block of text. Starting with this annual report, we will be required to tag the detailed quantitative



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disclosures within the footnotes and schedules to our consolidated financial statements and will be permitted, but not required, to the extent we choose, to tag each narrative disclosure. As we
took advantage of 30-day grace period for submitting our initial interactive data exhibit for fiscal year 2010, we will similarly make use of the 30-day grace period permitted for submitting our first interactive data exhibit in connection with this
annual report. Starting with our annual report for the fiscal year ending December 31, 2012, we will not have the benefit of any such grace period, and must file such interactive data as an exhibit to our annual report on Form 20-F. As required
by the SEC rules and regulations, we are also required to post our interactive data for at least 12 months on our corporate website on the same day we submit or file our annual report on Form 20-F.

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

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

We are subject to liabilities under the federal securities laws with respect to our interactive data files submitted or filed with the
SEC, with a modified liability for our interactive data submitted for the fiscal year ended December 31, 2010 and to be submitted for the fiscal year ended December 31, 2011. Such modification will primarily deem our interactive data not
as filed, but only as submitted, for purposes of specified liability provisions under the federal securities laws, and we are additionally protected from liability for failure to comply with the tagging requirements for the fiscal years ended
December 31, 2010 and 2011 if our interactive data file should fail to meet the SEC requirements so long as the failure shall have occurred despite our good faith effort and we have corrected the failure promptly after becoming aware of it. In
addition, if we fail to provide the required financial disclosure in interactive data format on SECs electronic filing system or post such interactive data our own corporate website each on the date so required, we will not be regarded as
current with our reports under the Securities Exchange Act of 1934, as amended, or the Securities Exchange Act, and, as a result, will not be eligible to use the short registration statement forms, such as Form F-3, and will not be deemed to have
available adequate current public information for purposes of the resale exemption safe harbor provided by Rule 144 under the Securities Act of 1933, as amended, or the Securities Act.



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If we are unable to attract, train and retain technicians and a skilled labor force, our business may
be materially and adversely affected.

Our continued success depends, to a significant extent, on our ability to
attract, train and retain technicians and a skilled labor force for our business. Recruiting and retaining capable technicians, particularly those with expertise in the PV industry, are vital to our success. Our principal operations are located at
Xinyu City of Jiangxi Province, a relatively less developed region compared to coastal cities in China. Our location adds difficulties to our recruiting efforts. In addition, there exists substantial competition for qualified technicians in the PV
industry, and there can be no assurance that we will be able to attract or retain technicians. Neither can we assure you that we will be able to recruit, train and retain skilled workers. As we have disclosed in the risk factors entitled
 We have expanded our international business operations, and our failure or inexperience in these new endeavors could adversely affect our business expansion strategies and harm our reputation,  We have
recently started to engage in the solar farm project business and related EPC business, and we may not succeed in these new endeavors or may not have sufficient financing for them, which could adversely affect our business expansion and vertical
integration strategies and harm our reputation and  We have announced our proposed investments in the LED sapphire wafer manufacturing and in silane gas production, and we may not succeed in these new lines of business, which
could adversely affect our strategies to expand into higher value-added sectors and to lower our overall production costs, we now face additional difficulties in staffing our overseas operations and the new business operations we have recently
expanded into or will enter into. If we fail to attract and retain qualified employees, our business and prospects may be materially and adversely affected.

Fluctuations in exchange rates could adversely affect our business.

As of December 31, 2011, our sales were primarily denominated in U.S. dollars, Renminbi and euros. As we develop our modules and
solar farm project businesses, we will increasingly be exposed to currency risks relating to euros and U.S. dollars. Our costs are largely denominated in Renminbi and U.S. dollars, while our capital expenditures are largely denominated in
U.S. dollars, Renminbi and euros. Therefore, fluctuations in currency exchange rates could have a material adverse effect on our financial condition and results of operations. Fluctuations in exchange rates, particularly among the
U.S. dollar, Renminbi and euro, affect our gross and net profit margins and could result in foreign exchange and operating losses.

The functional currency of our principal operating subsidiaries, which are located in China, is the Renminbi. To the extent these subsidiaries hold assets denominated in U.S. dollars, any
appreciation of Renminbi against the U.S. dollar could result in a charge to our statements of operations and a reduction in the value of their U.S. dollar-denominated assets. In addition, a depreciation of Renminbi against the
U.S. dollar could reduce the U.S. dollar equivalent amounts of our financial results.

We incurred a net foreign
currency exchange loss of $0.6 million and $2.0 million during the years ended December 31, 2009 and 2011, respectively, and we recorded a net foreign currency exchange gain of $8.3 million for the year ended December 31, 2010.
We cannot predict the impact of future exchange rate fluctuations on our results of operations and may incur additional net foreign currency losses in the future. During 2009, 2010 and 2011, we entered into certain foreign exchange forward contracts
to reduce the effect of our foreign exchange exposure. However, we cannot assure you that these types of hedging activities will be effective in managing our foreign exchange risk exposure.

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

The majority of our business operations are located in China, and we are required to comply with
all PRC national and local regulations regarding the protection of the environment and the safety of operations. Our overseas subsidiaries are required to comply with national, federal and local regulations regarding the environmental protection and
operational safety for their businesses in their respective jurisdictions. Compliance



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with environmental and safety regulation is expensive. The PRC government is adopting more stringent environmental protection and operational safety regulations and the costs of complying with
these regulations are expected to increase. See Item 4. Information on the Company  B. Business Overview  Regulatory Framework  Environmental regulations and  Production Safety and
Environment for details. Although we have obtained all of the necessary approvals and permits for our production facilities currently existing or under construction, we cannot assure you that we will be able to comply with all applicable
environmental protection and operational safety requirements, and obtain all of the required governmental approvals and permits that may be or may become applicable to us on a timely basis, or at all, or will be able to complete all our
registrations and filings with the government, in time for all of our projects currently under construction or our future projects. The relevant governmental authorities may impose on us fines for any non-compliance, set deadlines for rectification,
and order us to cease construction or production if we fail to comply with their requirements.

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

We are also subject to the periodic production safety examinations and reviews in order
to obtain or renew our operational safety permits. As we disclosed in the risk factor entitled  Unexpected equipment failures or accidents, including any accidental release of hazardous gases or materials, may lead to production
curtailments or shutdowns, personal injuries, even deaths or damage to properties, our operations, especially wafer manufacturing and polysilicon production, use complex and potentially hazardous equipment, such as CVD reactors, STC thermal
converters, and hydrochlorination reactors, DSS furnaces, squarers and wire saws, that requires skill and experience for safe operation. We also use and discharge toxic, volatile and otherwise hazardous chemicals in our polysilicon production
processes, for which we must register with the relevant authorities and obtain the relevant safety permits before we may use such hazardous chemicals in our production processes, including a permit for the storage and use of hazardous chemicals and
a permit for the use of atmospheric pressure containers. Although we have obtained all the necessary operational safety permits for our current operations, we will not be able to renew such operational safety permits, or obtain them for projects
under construction or within our expansion plan, if we fail to comply with present or future safety regulations in China. Our failure may subject us to substantial fines or damages or the suspension of our production operations, which may harm our
reputation and could negatively affect our results of operations and financial position.

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

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



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coverage compared to that offered in many other jurisdictions. Any business disruption or natural disaster could result in substantial losses and diversion of our resources.

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

We have developed various production process-related know-how and technologies in the production of polysilicon, ingots, wafers, cells and
modules. Know-how and technologies of this type play a critical role in our quality control and cost reduction. In addition, we have on-going R&D programs with a view to continually developing techniques and processes that will improve our
production efficiency and product quality. Our intellectual property and proprietary rights arising out of these R&D programs will be crucial in maintaining our competitive edge in the PV industry. We currently have 31 issued patents, 10 patent
right grant notices that entitle us to receive issued patents upon satisfaction of certain registration procedures, and 138 patent applications pending globally, of which 130 are pending in China. In addition, we also have two registered copyrights
and three registered trademarks in China. We rely primarily on patent, trademark, trade secret, copyright law and contractual arrangements with employees to protect our intellectual property and proprietary rights. Nevertheless, these afford only
limited protection and the actions that we may take to protect our intellectual property and proprietary rights may not be adequate. Our failure to protect our production process related know-how and technologies and/or our intellectual property and
proprietary rights may undermine our competitive position. Third parties may infringe or misappropriate our proprietary technologies or other intellectual property and proprietary rights. Policing unauthorized use of proprietary technology can be
difficult and expensive. Also, litigation, which can be costly and divert management attention and other resources away from our business, may be necessary to enforce our intellectual property rights, protect our trade secrets or determine the
validity and scope of our proprietary rights. We cannot assure you that the outcome of such potential litigation will be in our favor or that we will be able to effectively enforce any remedies available to us. An adverse determination in any such
litigation or failure to enforce our remedies will impair our intellectual property and proprietary rights and may harm our business, prospects and reputation.

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

Our success depends on our ability to use and develop our technology and know-how, to produce our polysilicon, ingots,
wafers, cells and modules and to sell our polysilicon, ingots, wafers, cells and modules without infringing the intellectual property or other rights of third parties. We may be subject to litigation involving claims of patent infringement or
violation of intellectual property rights of third parties. For example, in June 2008, an objection was filed against Jiangxi LDK Solar regarding its trademark LDK. The initial decision of the applicable trademark authority on this
objection was granted in our favor in November 2010 and we are awaiting the final judgment. The validity and scope of claims relating to PV technology patents involve complex scientific, legal and factual questions and analyses and, therefore, may
be highly uncertain. The defense and prosecution of intellectual property suits, patent opposition proceedings, trademark disputes and related legal and administrative proceedings can be both costly and time consuming and may significantly divert
our resources and the attention of our technical and management personnel. An adverse ruling in any such litigation or proceedings could subject us to significant liability to third parties, require us to seek licenses from third parties, to pay
ongoing royalties, or to redesign our products, or subject us to injunctions prohibiting the production and sale of our products or the use of our technologies. Protracted litigation could also result in our customers or potential customers
deferring or limiting their purchase or use of our products until resolution of such dispute.

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

We adopted a stock
incentive plan in 2006. As of the date of this annual report, we have outstanding stock options under this plan with respect to 10,348,468 shares, all of which were granted to our directors, employees,



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consultants and service providers. During the past few years, as a result of the significant decreases in our share prices, we and some of our optionees agreed to cancel some of the previously
granted, but not yet vested, stock options and to replace them with newly granted options with similar terms at lower exercise prices. According to Accounting Standards Codification, or ASC, Topic 718, Share-Based Payment, issued by the
Financial Accounting Standards Board, or FASB, we are required to recognize share-based compensation as compensation expense in the statement of operations based on the fair value of equity awards on the date of the grant, with the compensation
expense recognized over the period in which the recipient is required to provide service in exchange for the equity award. For the years ended December 31, 2009, 2010 and 2011, our non-cash share-based compensation expenses amounted to
$14.2 million, $11.0 million and $9.9 million, respectively, with respect to share options granted to our employees. The additional expenses associated with share-based compensation may reduce the attractiveness of issuing stock options
under our stock incentive plan. However, if we do not grant stock options or we reduce the number of stock options that we grant, we may not be able to attract and retain key personnel. If we grant more stock options to attract and retain key
personnel, the expenses associated with share-based compensation may adversely affect our net income.

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

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

We rely principally on dividends, if any, and the interest and principal payments on intercompany loans or advances paid by our subsidiaries to
fund our cash and financing requirements, and any limitation on the ability of our PRC subsidiaries to pay dividends or repay intercompany loans or advances to us could have a material adverse effect on our ability to conduct our business.

We are a holding company with no material operations. We conduct our operations mainly through our PRC subsidiaries.
As a holding company, we may depend on the receipt of dividends and the interest and principal payments on intercompany loans or advances from our subsidiaries to satisfy our obligations, including our obligations under our 2013 convertible notes
and 2014 senior notes and to pay any dividends we may declare. The ability of our subsidiaries to pay dividends and make payments on intercompany loans or advances to their shareholders is subject to, among other things, distributable earnings,
reserve funds, cash flow conditions, restrictions contained in the articles of association of our subsidiaries, applicable laws and restrictions contained in the debt instruments or agreements of such subsidiaries. In addition, if any of our
subsidiaries raises capital by issuing equity securities to third parties, the dividends declared and paid with respect to such equity securities would not be available to us, such as any dividends declared and paid by LDK Silicon on approximately
18.46% of its share capital that LDK Silicon sold to CDB Capital and affiliates of China Construction Bank Corporation and Bank of China Limited on June 3, 2011. In addition, the articles of association of LDK Silicon, as amended in connection
with such investments in LDK Silicon preferred shares, mandate an annual dividend on a pro rata



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basis among all existing shareholders of LDK Silicon up to an amount of its retained earnings so that the holders of LDK Silicon preferred shares will receive at least $15 million of such
dividend, to the extent the declaration and distribution of such dividend are permitted by applicable laws and by contractual obligations applicable to us. These restrictions and developments could reduce the amounts that we receive from our
subsidiaries, which could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, service our debts, or otherwise fund and conduct our business.

In connection with the consummation of the sale of LDK Silicon preferred shares to CDB Capital and affiliates of China Construction Bank
Corporation and Bank of China Limited, we have entered into a share pledge agreement with the investors pursuant to which we have pledged 15% of our shares in Jiangxi LDK Solar (including any dividends paid on those shares) to secure our obligations
relating to the investments in LDK Silicon preferred shares. In accordance with market practice in China, any dividends declared by Jiangxi LDK Solar on the pledged shares will be paid into an escrow account and held to secure our obligations
relating to the investments in LDK Silicon preferred shares until the pledge is eventually released.

PRC laws and regulations
permit payment of dividends only out of accumulated profits as determined in accordance with PRC accounting standards and regulations and such profits differ from profits determined in accordance with U.S. GAAP in certain significant respects,
including the use of different bases of recognition of revenue and expenses. Our PRC subsidiaries are also required to set aside a portion of their after-tax profits according to PRC accounting standards and regulations to fund certain reserves that
are not distributable as cash dividends. In practice, our PRC subsidiaries are also required to obtain a required tax clearance with the local tax bureau and complete the corresponding foreign exchange procedures before paying any dividends. In
addition, under the PRC Enterprise Income Tax Law, or the EIT Law, effective since January 1, 2008, and its implementing regulations, PRC income tax at the rate of 10% is applicable to dividends payable by PRC enterprises to non-resident
enterprises (enterprises that do not have an establishment or place of business in China or that have such an establishment or place of business in China but for which the relevant dividend income is not effectively connected with such
establishment or place of business), subject to any exemption or lower withholding tax rate as may be contained in any income tax treaty or agreement between China and the jurisdictions of incorporation of such non-resident enterprises.
Pursuant to an avoidance of double taxation arrangement between Hong Kong and the mainland PRC government, if a non-PRC parent company is a Hong Kong resident and directly holds a 25% or more interest in a PRC enterprise, such PRC withholding tax
rate may be lowered to 5%. Although some of our PRC operations are held through Hong Kong entities, such as LDK Solar International Company Limited, or LDK Hong Kong, and LDK Silicon Holding Co., Limited, or LDK Silicon Hong Kong, we have not yet
obtained the Hong Kong resident status for these entities for such withholding tax purposes. Recent PRC governmental explanations have casted additional uncertainties on whether and the extent to which Hong Kong holding companies may be eligible for
the benefits under this Hong Kong-mainland China double taxation avoidance arrangement. We therefore cannot assure how long it will take to apply for a Hong Kong tax residence, if and when we apply, and whether we will be successful in our
applications. As a result, neither can we assure you that we will have sufficient cash flow from dividends or repayments on intercompany loans or advances from our PRC subsidiaries to pay any dividend we may declare.

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



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authorities may require. You may find additional information under Item 10. Additional Information  E. Taxation  Peoples Republic of China Taxation in
this annual report.

Our operations are restricted by the terms of our 2014 senior notes; if we are unable to comply with the
restrictions and covenants in our debt agreements, including the indenture governing the 2014 senior notes, there could be a default under the terms of these agreements, which could cause repayment of our debt to be accelerated.

The indenture governing our 2014 senior notes includes a number of significant restrictive covenants. These covenants restrict, among
other things, our ability, and the ability of most of our subsidiaries, to:



| |  |  | incur or guarantee additional indebtedness and issue disqualified or preferred stock;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | declare dividends on capital stock or purchase or redeem capital stock;
| | - |  | -----------------------------------------------------------------------



| |  |  | make investments or other specified restricted payments;
| | - |  | --------------------------------------------------------



| |  |  | issue or sell capital stock of most of our subsidiaries;
| | - |  | --------------------------------------------------------



| |  |  | guarantee indebtedness of our subsidiaries;
| | - |  | -------------------------------------------



| |  |  | sell assets;
| | - |  | ------------



| |  |  | create liens;
| | - |  | -------------



| |  |  | enter into sale and leaseback transactions;
| | - |  | -------------------------------------------



| |  |  | engage in any business other than permitted business;
| | - |  | -----------------------------------------------------



| |  |  | enter into agreements that restrict our subsidiaries ability to pay dividends, transfer assets or make intercompany loans;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | enter into transactions with shareholders or affiliates; and
| | - |  | ------------------------------------------------------------



| |  |  | effect a consolidation or merger.
| | - |  | ---------------------------------

These covenants could limit our ability to plan for or react to market conditions or to meet our capital needs. Our ability to comply with these covenants may be affected by events beyond our control, and
we may have to curtail some of our operations and growth plans to maintain compliance. As we have disclosed in the risk factor entitled  We have substantial existing indebtedness, in particular short-term indebtedness, and we may incur
substantial additional indebtedness in the future subject to our compliance with the covenants and other requirements in our existing financing arrangements, which could adversely affect our financial condition and our ability to generate sufficient
cash to satisfy our outstanding and future debt obligations and we may not be able to refinance our current borrowings on terms that are acceptable to us, or at all above, following our recent announcement of our unaudited financial results
for the fourth fiscal quarter in 2011, due to our existing high leverage coupled with a net loss in the fourth quarter of 2011, our Consolidated Fixed Charge Coverage Ratio, as defined in the indenture governing our 2014 senior notes,
has been negatively impacted as a result of a significant reduction of the aggregate amount of our Consolidated EBITDA, as defined in the indenture governing our 2014 senior notes, for the four most recent full fiscal quarters, while our
Consolidated Fixed Charges, as defined in the indenture governing our 2014 senior notes, for such four-quarter period, have remained constant. As a result, we will not be able to incur any indebtedness until our Consolidated Fixed
Charge Coverage Ratio significantly improves on the basis of our four most recent full fiscal quarters.

If we are
unable to comply with the restrictions and covenants in the indenture governing our 2014 senior notes or our current or future debt obligations and other agreements, there could be a default under the terms of these agreements. In the event of a
default under these agreements, the holders of our debt could terminate their commitments to lend to us, accelerate repayment of the debt and declare all the outstanding amounts due and payable or terminate the agreements, as the case may be.
Furthermore, some of our debt agreements, including



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the indenture governing our 2014 senior notes and the indenture governing our 2013 convertible notes, contain cross-acceleration or cross-default provisions. As a result, our default under one
debt agreement may cause the acceleration of repayment of not only such debt but also other debt, including the 2014 senior notes or our 2013 convertible notes, and result in a default under our other debt agreements, including the indenture
governing our 2014 senior notes and the indenture governing our 2013 convertible notes. If any of these events occurs, we cannot assure you that our assets and cash flow would be sufficient to repay in full all of our indebtedness, or that we would
be able to find alternative financing. Even if we could obtain alternative financing, we cannot assure you that it would be on terms that are favorable or acceptable to us.

Risks Relating to Business Operations in China

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

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

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

Renminbi is not a freely convertible currency at present. Although the PRC government has recently been trying to internationalize
Renminbi, it continues to regulate conversion between Renminbi and foreign currencies. Changes in PRC laws and regulations on foreign exchange may result in uncertainties in our financing and operating plans in China. Over the years, China has
significantly reduced the governments control over routine foreign exchange transactions under current accounts, including trade and service related foreign exchange transactions, payment of dividends and service of foreign debts. In
accordance with the existing foreign exchange regulations in China, our PRC subsidiaries may, within the scope of current account transactions, pay dividends and service debts in foreign currencies without prior approval from the PRC State
Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. However, there can be no assurance that the current PRC foreign exchange policies with respect to debt service and payment of dividends in foreign
currencies will continue in the future. Changes in PRC foreign exchange policies may have a negative impact on our ability to service our foreign currency-denominated indebtedness and to distribute dividends to our shareholders in foreign currencies
since we, as a Cayman Islands holding company, rely on our operating subsidiaries in China to convert their Renminbi cash flow to service such foreign debt and to make such dividend payments. Foreign exchange transactions by our PRC subsidiaries
under the capital account continue to be subject to significant foreign exchange controls. In particular, foreign exchange transactions involving foreign direct investment, foreign debts and outbound investment in securities and derivatives are
subject to limitations and require approvals from the relevant SAFE authorities. We have the choice, as permitted by the PRC foreign investment regulations, to invest our net proceeds from our various offerings in the form of registered capital or a



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shareholder loan into our PRC subsidiaries to finance our operations in China. Our choice of investment is affected by the different treatments under the relevant PRC regulations with respect to
capital-account and current-account foreign exchange transactions in China. For example, our transfer of funds to our subsidiaries in China is subject to approval of PRC governmental authorities in case of an increase in registered capital, or
subject to registration with PRC governmental authorities in case of a shareholder loan. These and other limitations on the flow of funds between us and our PRC subsidiaries could restrict our ability to act in response to changing market conditions
and limit our flexibility in the management of our cash flow and financings.

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

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

Expiration of, or changes to, current PRC
tax incentives that our business enjoys could have a material adverse effect on our results of operations.

Under PRC
tax laws and regulations effective prior to January 1, 2008, a company established in China was typically subject to a national enterprise income tax at the rate of 30% on its taxable income and a local enterprise income tax at the rate of 3%
on its taxable income. The PRC government provided various incentives to foreign-invested enterprises to encourage foreign investments. These incentives included reduced tax rates and other measures. Foreign-invested enterprises that were determined
by PRC tax authorities to be manufacturing companies with authorized terms of operation for more than 10 years were eligible for:



| |  |  | a two-year exemption from the national enterprise income tax from their first profitable year; and
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | a 50% reduction of their applicable national enterprise income tax rate for the succeeding three years.
| | - |  | -------------------------------------------------------------------------------------------------------

The local preferential enterprise income tax treatment was within the jurisdiction of the local provincial authorities as permitted under
the prior PRC tax laws relating to foreign-invested enterprises. The local tax authorities would decide whether to grant any tax preferential treatment to foreign-invested enterprises on the basis of their local conditions. The Jiangxi provincial
government announced that energy companies with authorized terms of operation for more than 10 years were eligible for:



| |  |  | a five-year exemption from the 3% local enterprise income tax from their first profitable year; and
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | a 50% reduction of their local enterprise income tax rate for the succeeding five years.
| | - |  | ----------------------------------------------------------------------------------------

Under these pre-existing PRC tax laws and regulations, Jiangxi LDK Solar, as a foreign-invested manufacturing enterprise, was entitled to
a two-year exemption from the national enterprise income tax for 2006 and 2007 and would be subject to a reduced national enterprise income tax rate of 15% from 2008 through 2010.



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Likewise, Jiangxi LDK Solar was entitled to a five-year exemption from the local enterprise income tax beginning in 2006 and would be subject to a reduced local enterprise income tax rate of 1.5%
from 2011 through 2015.

The EIT Law, which became effective on January 1, 2008, imposes a unified income tax rate of 25%
on all domestic enterprises and foreign-invested enterprises unless they qualify for preferential tax treatments under certain limited exceptions. The EIT Law and the related regulations permit companies to continue to enjoy their preferential tax
treatments under the prior tax regime until such treatments expire in accordance with their terms, on the condition that such preferential tax treatments are available under the grandfather clauses of the EIT Law and the related regulations. As a
result, Jiangxi LDK Solar was subject to a reduced unified enterprise income tax rate of 12.5% from 2008 to 2010. In December 2009, Jiangxi LDK Solar was recognized by the PRC government as a High and New Technology Enterprise, or HNTE,
under the EIT Law and is therefore entitled to the preferential enterprise income tax rate of 15% from 2009 to 2011. Under the EIT Law, where the transitional preferential enterprise income tax policies and the preferential policies prescribed under
the EIT Law and its implementation rules overlap, an enterprise may choose the more favorable policy, but may not enjoy multiple preferential policies. Jiangxi LDK Solar chose to complete the above-mentioned
2-year-exemption-plus-3-year-50%-reduction tax holiday for the overlapping period of 2009 and 2010. As a result, Jiangxi LDK Solar will be subject to income tax at 15% for 2011. Subject to renewal, the HNTE status of Jiangxi LDK Solar will enable it
to enjoy the preferencencial income tax rate of 15% from 2012 to 2014. Based on our self-assessment result, we believe that Jiangxi LDK Solar meets all the criteria for the renewal of its HNTE status. In September 2011, Jiangxi LDK Silicon was
recognized by the PRC government as an HNTE and is entitled to the preferential income tax rate of 15% from 2011 to 2013. Based on our prevailing business plan, our management expects Jiangxi LDK Silicon will continue to meet all the critieria for
HNTE qualification upon renewal of such status which will enable it to enjoy the preferential income tax rate of 15% from 2014 to 2016. Our other PRC subsidiaries do not enjoy any preferential tax treatment in China. When our current tax benefits
expire or otherwise become unavailable to us for any reason, including their termination by the relevant government authority, our profitability will be adversely affected.

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

Under the EIT Law and its implementation rules, enterprises established outside mainland China whose de facto management
bodies are located in mainland China are considered PRC resident enterprises for income tax purposes. The implementation rules define the term de facto management body as a management body that exercises material and
overall management control over the business, personnel, accounts and properties of an enterprise. We hold our shareholders meetings and board meetings outside mainland China and keep our register of shareholders outside mainland China.
However, most of our directors and members of our senior management are currently based inside mainland China and we keep our books of account inside mainland China. The PRC tax authorities may consider these circumstances relevant in determining
whether we are a PRC resident enterprise for income tax purposes. Although we have not been notified by any PRC tax authorities that we are a PRC resident enterprise under the PRC tax law, and although it is unclear whether we have a de facto
management body located in mainland China for PRC tax purposes, we intend to take the position that we are not such a PRC resident enterprise. We cannot assure you however that the PRC tax authorities will agree with our position. If we are
deemed a PRC resident enterprise for income tax purposes, we will be subject to, among other things, the PRC enterprise income tax at the rate of 25% on our worldwide income excluding, however, the dividend income we receive from our PRC
subsidiaries. If we are treated as a PRC resident enterprise under the PRC tax law, we could face significant adverse tax consequences, which could adversely affect the value of our shares and ADSs.



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

The PRC labor laws and regulations have a direct impact on our business operations. The National
Peoples Congress promulgated the Labor Contract Law of China, which became effective on January 1, 2008. This labor contract law, together with its implementation rules and regulations, aims at providing employees with greater protection
in their employment relationships. For example, the labor contract law requires employers to enter into written contracts with their employees, and if an employer fails to enter into a written contract with an employee within one month of the
commencement of the employment, the employer is required to pay to the employee double salary for the noncompliance period for up to one year. This labor law also calls for open-ended employment contracts rather than fixed-term contracts under
specified circumstances. The law further prohibits an employer from entering into a one-year or shorter-term contract with an employee if it constitutes the third consecutive renewal of the employment contract unless it is so requested by the
employee. As a result of this more labor-friendly legislation, our discretion in the hiring and termination process has been significantly curtailed, which could in turn affect our overall labor costs and our ability to adjust our labor needs in
response to market changes. Our business, financial condition and results of operations could therefore be adversely affected by these PRC labor laws and regulations.

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

SAFE issued a public notice in October 2005, together with its subsequent implementation procedures and clarifications, to require PRC
residents, both legal and natural persons, to register with the relevant SAFE authorities before they establish or take control of any company outside China for the purpose of acquiring any asset of or equity interest in PRC companies and raising
funds overseas. SAFE refers to such companies outside China as offshore special purpose companies in its notice. In addition, SAFE also requires any PRC resident that is the shareholder of an offshore special purpose company to amend its
SAFE registration with respect to the offshore special purpose company in connection with any increase or decrease of capital, transfer of shares, merger, division, equity investment or creation of any security interest over any assets located in
China. If any PRC shareholder of an offshore special purpose company fails to make the required SAFE registration and amendment, the PRC subsidiaries of that offshore special purpose company may be prohibited from distributing their profits and the
proceeds from any reduction in capital, share transfer or liquidation to the offshore special purpose company. Moreover, failure to comply with such SAFE registration and amendment requirements could result in liabilities under the PRC law for
evasion of applicable foreign exchange restrictions. Our current beneficial owners who are PRC residents have completed registration with the relevant SAFE authorities as required under the above-mentioned SAFE notice except for updating the
registration with SAFE in connection with any change of their equity interests in us from time to time and the change of the assets and liabilities of our company as a result of any equity or debt offerings by us from time to time. The failure of
these beneficial owners to amend their SAFE registrations in a timely manner pursuant to the SAFE notice or the failure of our other future beneficial owners who are PRC residents to comply with the SAFE registration requirements may subject such
beneficial owners to fines and legal sanctions, and may also result in restrictions on our PRC subsidiaries in their abilities to distribute profits to us, or may otherwise materially and adversely interfere with our business.

All employee participants in our existing 2006 stock incentive plan who are PRC citizens may be required to register with SAFE. We may also face
regulatory uncertainties that could restrict our ability to adopt additional option plans for our directors and employees under PRC laws.

In March 2007, SAFE issued the Operating Procedures on Administration of Foreign Exchange Regarding Participation by PRC Individuals in Employee Stock Ownership Plan and Stock Option Plan of Overseas
Listed Companies, or the Stock Option Rule. It is not clear whether the Stock Option Rule covers any type of equity



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compensation plans or incentive plans which provide for the grant of ordinary share options or authorize the grant of restricted share awards. For plans so covered that are adopted by an overseas
listed company, the Stock Option Rule requires the employee participants in those plans who are PRC nationals to register with the relevant SAFE authorities within 10 days of the commencement of each quarter. In addition, the Stock Option Rule also
requires the employee participants who are PRC nationals to follow a series of requirements on making necessary applications for foreign exchange purchase quotas, opening special bank accounts and filings with the SAFE authorities before they
exercise their stock options.

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

We face risks related to health epidemics and other outbreaks of contagious diseases, including influenza A (H1N1), avian flu and SARS.

Our business could be adversely affected by the effects of influenza A (H1N1), avian flu, SARS, a highly contagious form of atypical
pneumonia, or other epidemic outbreaks. In April 2009, an outbreak of influenza A caused by the H1N1 virus occurred in Mexico and the United States, and rapidly spread into a number of countries. There have been reports of outbreaks of a highly
pathogenic avian flu, caused by the H1N1 virus, in certain regions of Asia and Europe. Over the years, there have been reports on the occurrences of avian flu in various parts of China, including a few confirmed human cases. An outbreak of avian flu
in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, particularly in Asia. Additionally, any recurrence of SARS similar to the outbreaks in 2003 which
affected China, Hong Kong, Taiwan, Singapore, Vietnam and certain other countries and regions could also have adverse effects of a similar scale. Any prolonged occurrence or recurrence of these contagious diseases or other adverse public health
developments may have a material adverse effect on our business operations. These include limitations on our ability to travel or ship our products outside China as well as temporary closure of our production facilities for quarantine or for
preventive purposes. Such closures or travel or shipment restrictions could severely disrupt our business operations and adversely affect our financial condition and results of operations. We have not adopted any written preventive measures or
contingency plans to combat any health epidemics and other outbreaks of contagious diseases, including influenza A (H1N1), avian flu, or SARS.

Risks Relating to Our ADSs and Shares

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

The market price of our ADSs experienced, and may continue to experience, significant volatility. For the period from
June 1, 2007 (commencement of trading of our ADSs on the New York Stock Exchange) to December 31, 2011, the closing price of our ADSs on the New York Stock Exchange has ranged from a low of $2.70 per ADS to a high of $73.95 per ADS. You
may find additional information on the historical high and low closing prices of our ADSs as reported by the New York Stock Exchange under Item 9. The Offer and Listing  A. Offer and Listing Details  4. Information
Regarding the Price History of the Stock and  C. Markets in this annual report.



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Numerous factors, including many over which we have no control, may have a significant
impact on the market price of our ADSs, including, among other things:



| |  |  | announcements of technological or competitive developments in the PV industry;
| | - |  | ------------------------------------------------------------------------------



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



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



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



| |  |  | actual or anticipated fluctuations in our quarterly operating results;
| | - |  | ----------------------------------------------------------------------



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



| |  |  | release or expiry of lock-up or other transfer restrictions on our outstanding ordinary shares or ADSs;
| | - |  | -------------------------------------------------------------------------------------------------------



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



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



| |  |  | announcements of acquisitions or consolidations involving industry competitors or industry suppliers or customers;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | changes in the economic performance or market valuations of other PV technology companies;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | addition or departure of our executive officers and key research personnel;
| | - |  | ---------------------------------------------------------------------------



| |  |  | sales or perceived sales of additional ordinary shares or ADSs by us or our significant shareholders;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | pledges or perceived pledges of additional ordinary shares or ADSs by our significant shareholders, and the foreclosure or perceived foreclosure of
such security interests, whether or not potentially resulting in a change of control;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | impact and development of any lawsuit, currently pending or threatened, or that may be instituted in the future.
| | - |  | ----------------------------------------------------------------------------------------------------------------

In addition, the stock market in recent years has experienced extreme price and trading volume fluctuations that often have been
unrelated or disproportionate to the operating performance of individual companies. These broad market fluctuations may adversely affect the price of our ADSs, regardless of our operating performance. These factors, among others, could significantly
depress the trading price of our ADSs.

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

Under the Cayman Islands law, we may only pay dividends out of our profits or our share premium account subject to our ability to service
our debts as they fall due in the ordinary course of our business. Our ability to pay dividends will therefore depend on our ability to generate sufficient profits. We cannot give any assurance that we will declare dividends of any amount, at any
rate or at all. We have not paid any dividend in the past. Future dividends, if any, will be at the discretion of our board of directors and will depend upon our future operations and earnings, capital expenditure requirements, general financial
condition, legal and contractual restrictions and other factors that our board of directors may deem relevant. Because we are a holding company, we rely principally on dividends, if any, paid by our subsidiaries to us to fund our dividend payments,
if any, to our shareholders, including you, and any limitation on the ability of our PRC subsidiaries to pay dividends to us could have a material adverse effect on our ability to pay dividends to you. You should refer to the section entitled
Item 8. Financial Information  A. Consolidated Statements and Other Financial Information  Dividend Distribution Policy in this annual report for additional information regarding our current dividend policy.



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

We may require additional funding to meet our working capital or capital expenditure requirements or in connection with our acquisitions, strategic collaborations or other transactions in the future. If
we raise such funding through issuance of new equity or equity-linked securities, it may cause a dilution in the percentage ownership of our then existing shareholders. Sales of a substantial number of ADSs or other equity-linked securities in the
public market could depress the market price of our ADSs, and impair our ability to raise capital through the sale of additional equity or equity-linked securities. We cannot predict the effect that future sales of our ADSs or other equity-linked
securities would have on the market price of our ADSs.

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



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



| |  |  | increase our vulnerability to general adverse economic and industry conditions;
| | - |  | -------------------------------------------------------------------------------



| |  |  | limit our ability to pursue our business strategies;
| | - |  | ----------------------------------------------------



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



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

You should refer to the risk factor entitled  Risks Relating to Our Company and Our Industry  We have substantial
existing indebtedness, in particular short-term indebtedness, and we may incur substantial additional indebtedness in the future, which could adversely affect our financial condition and our ability to generate sufficient cash to satisfy our
outstanding and future debt obligations and we may not be able to refinance our current borrowings on terms that are acceptable to us, or at all for additional information on the financial covenants contained in some of our debt instruments.

Substantial future sales or perceived sales by our existing shareholders of our ADSs, ordinary shares or equity-linked securities in
the public market could cause the price of our ADSs to decline.

Sales by our existing shareholders of our ADSs or
ordinary shares, including those equity-related securities issued upon the exercise of our outstanding stock options, in the public market, or the perception that these sales could occur, could cause the market price of our ADSs to decline. As of
December 31, 2011, we had 133,518,800 ordinary shares outstanding, including 83,049,491 ordinary shares represented by 83,049,491 ADSs. Mr. Peng currently has borrowings invested in his alternative energy projects from financial
institutions, which are secured by pledges of a significant amount of his shares and ADSs in our company, as we have disclosed in the risk factor entitled  Risks Relating to Our Company and Our Industry  Our controlling
shareholder, Mr. Peng, has directly or indirectly pledged a significant portion of his equity interests in our company to secure certain loan facilities. A default under these loan facilities could potentially result in a change of control of
our company. If Mr. Peng defaults on his obligations under these financings, the financial institutions may sell the pledged shares and ADSs. We cannot predict what effect, if any, market sales of securities held by our significant
shareholders or any financial institutions, or the availability of these securities for future sale, will have on the market price of our ADSs. The price of our ADSs may decline as a result.



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

Holders of ADSs do not have the same rights of our shareholders and may only exercise the voting rights
with respect to the underlying shares in accordance with the provisions of the deposit agreement. Upon receipt of voting instructions from ADS holders, the depositary will endeavor to vote the underlying shares in accordance with these instructions.
Otherwise, ADS holders will not be able to exercise their right to vote unless they withdraw the shares underlying their ADSs and vote such shares directly. Under our currently effective articles of association, as amended and restated, the minimum
notice period required to convene a general meeting is 10 clear days. When a general meeting is convened, ADS holders may not receive sufficient notice of a shareholders meeting to permit such holders to withdraw their shares to allow
them to cast their vote with respect to any specific matter. If requested in writing by us, the depositary will mail a notice of such a meeting to ADS holders. In addition, the depositary and its agents may not be able to send voting instructions to
ADS holders or carry out ADS holders voting instructions in a timely manner. Furthermore, the depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast or
for the effect of any such vote. As a result, you may not be able to exercise your right to vote and you may lack recourse if the ADSs are not voted as you requested. In addition, in your capacity as an ADS holder, you will not be able to call a
shareholder meeting.

You may be subject to limitations on transfers of your ADSs.

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

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

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

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

If we offer our shareholders any rights to subscribe for additional shares or any other rights, the depositary may make these rights available to you after consultation with us. We cannot make rights
available to you in the United States unless we register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. In addition, under the deposit agreement, the
depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities



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

Anti-takeover provisions of our articles of association could prevent a change in control even if such takeover is beneficial to our shareholders,
and certain provisions of our 2013 convertible notes and 2014 senior notes could also discourage an potential acquirer.

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

In addition, our 2013 convertible notes
and 2014 senior notes contain provisions that could make it more difficult or more expensive for a third party to acquire us, or may even prevent a third party from acquiring us. For example, upon the occurrence of certain transactions constituting
a fundamental change, holders of our 2013 convertible notes will have the right, at their option, to require us to repurchase for cash all or any portion of our 2013 convertible notes. Upon certain change of control transactions, holders of our 2013
convertible notes may elect to convert all or a portion of our 2013 convertible notes and holders of our 2014 senior notes have the right to require us to redeem all or a portion of such 2014 senior notes at 101% of their principal amount plus
accrued and unpaid interest. We may also be required to increase the conversion rate for conversions of our 2013 convertible notes in connection with certain fundamental changes. By discouraging a potential acquirer, these provisions could have the
effect of depriving our shareholders of an opportunity to sell their shares or ADSs at a premium over prevailing market prices, and might reduce the price of our shares and ADSs as a result.

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

We are a Cayman Islands
company and our corporate affairs are governed by our amended and restated memorandum and articles of association, the Cayman Islands companies law and the common law of the Cayman Islands. The rights of our shareholders to take action against our
directors, actions that may be taken by our minority shareholders and the fiduciary responsibilities of our directors to us under the Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the
Cayman Islands is



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derived in part from comparatively limited judicial precedents in the Cayman Islands as well as those from the English common law, which has persuasive, but not binding, authority on a court in
the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under the Cayman Islands law are not as clearly established as they are under statutes or judicial precedents in some jurisdictions in the United
States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. In addition, some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than
the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

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



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



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

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

You may have difficulty
enforcing judgments obtained against us.

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



|ITEM 4. | INFORMATION ON THE COMPANY
|------- | --------------------------



|A. | HISTORY AND DEVELOPMENT
|-- | -----------------------

Our legal and commercial name is LDK Solar Co., Ltd. We were incorporated in the Cayman Islands on May 1, 2006 by LDK New Energy, a
British Virgin Islands company wholly owned by Mr. Xiaofeng Peng, our founder, chairman and chief executive officer, to acquire all of the equity interests in Jiangxi LDK Solar from Suzhou Liouxin Industry Co., Ltd., or Suzhou Liouxin, and
Liouxin Industrial Limited. On July 10, 2006, upon approval of the relevant PRC government authorities, Jiangxi LDK Solar, a solar wafer manufacturer, became our wholly owned subsidiary. On September 5, 2006, we incorporated LDK Hong Kong
in Hong Kong as our wholly owned subsidiary. On January 15, 2007, we incorporated LDK Solar USA, Inc., or LDK USA, in California as our wholly owned subsidiary. In June 2007, we completed the initial public offering, or IPO, of our ADSs and
listed our ADSs on the New York Stock Exchange.



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Subsequent to our IPO, we established two wholly owned PRC subsidiaries, Jiangxi LDK Silicon
and Jiangxi LDK Polysilicon, on July 12 and October 11, 2007, respectively, both in Jiangxi Province, China. In an effort to reorganize our polysilicon business, we incorporated LDK Silicon in the Cayman Islands on December 8,
2009 as our direct wholly owned subsidiary and the holding company for our polysilicon business, and LDK Silicon Hong Kong in Hong Kong on January 12, 2010 as a direct wholly owned subsidiary of LDK Silicon to hold our equity interests in
Jiangxi LDK Silicon and Jiangxi LDK Polysilicon in China. On June 3, 2011, pursuant to a subscription agreement dated as of December 30, 2010, CDB Capital and investment funds affiliated with China Construction Bank Corporation and Bank of
China Limited subscribed for 240 million LDK Silicon preferred shares, which represented, on an as-if-converted basis, approximately 18.46% of the aggregate issued and outstanding share capital of LDK Silicon on a fully diluted basis.

In March 2009, we incorporated LDK Solar Europe S.A., or LDK Europe, in Luxemburg as our wholly owned subsidiary to engage
primarily in designing and developing solar farm projects in Europe. LDK Hong Kong owns a 100% interest in LDK Europe.

In
August and September 2010, we incorporated LDK Xinyu, in Jiangxi Province, China and LDK Hefei, in Anhui Province, China respectively to engage in solar cell production.

In September 2008 and January 2010, we incorporated LDK Nanchang, in Jiangxi Province, China and LDK Suzhou, in Jiangsu Province, China repectively to engage in solar module production.

In March 2011, we acquired a 72% interest in SPI, a California-based solar power EPC company. SPIs shares are listed and traded on
the OTCBB market.

In April 2012, we acquired a 71% interest in Sunways, a German-based PV company with its shares listed on
the Frankfurt Stock Exchange.

We are currently 53.27% beneficially owned by Mr. Peng without taking into account any
securities that any shareholder has the right to acquire within 60 days after the date hereof through the exercise of any option, warrant or right. As a result, Mr. Peng maintains, as he has since our inception, effective control over our
business and corporate matters that require shareholders approval.

Under our memorandum of association, the purpose of
our company is unrestricted. Our principal executive offices are located at Hi-Tech Industrial Park, Xinyu City, Jiangxi Province 338032, Peoples Republic of China, and our telephone number is (86 790) 686-0171. Our website is
www.ldksolar.com . Information contained on our website is not a part of this annual report.

See
Item 5. Operating and Financial Review and Prospects  B. Liquidity and Capital Resources Capital Expenditures for information on our capital expenditures.



|B. | BUSINESS OVERVIEW
|-- | -----------------

We are a leading vertically integrated manufacturer of PV products. While our historical strength was in the solar wafer business, we have expanded our business to meet the PV industrys requirements
for high-quality and low-cost polysilicon, wafers, cells, modules, systems, power projects and solutions. While we continue to pursue further vertical integration at each step of our PV product value chain, our revenue also includes significant
portions of sales of our solar wafers, modules and polysilicon.

Polysilicon. We commenced production and sale of
polysilicon in the third quarter of 2009. As of March 31, 2012, our two polysilicon plants, Mahong Plant and Xiacun Plant, located near our wafer production facilities, had an aggregate installed annualized polysilicon production capacity of
approximately 17,000 MT. We leverage a modified Siemens process as the basis for our polysilicon production, employ state-of-the-art production



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facilities at our polysilicon plants, and are able to produce polysilicon that meets the premium quality requirements of international PV and electronics industries. While all of the polysilicon
we currently produce is solar-grade, our Mahong Plant is capable of producing electronic-grade polysilicon in accordance with international industry standards and practice, representing approximately 90% of our aggregate polysilicon production
capacity. We intend to increase our total installed annualized polysilicon production capacity to 25,000 MT by the year-end of 2012 through the completion of our two plants, technological improvement, process refinement and equipment enhancement. As
part of our strategy to reduce wafer production costs, we consume a significant portion of our polysilicon output in our wafer production. For each of the years ended December 31, 2009, 2010 and 2011, we produced approximately 225 MT, 5,052 MT
and 10,455 MT of polysilicon, respectively, and consumed 100% and approximately 72.7% and 82.8%, respectively, of our total polysilicon production, with the rest sold to independent third-party customers.

Solar Wafers. We manufacture solar wafers in our wafer production facilities in Xinyu City Hi-Tech Industrial Park in Jiangxi
Province, China. We produce and sell multicrystalline and monocrystalline solar wafers globally to manufacturers of solar cells and solar modules. We also provide wafer processing services, producing wafers for customers who provide polysilicon
materials to us. As of March 31, 2012, we had an annualized solar wafer production capacity of approximately 4.3 GW. We plan to expand our annualized solar wafer production capacity to 4.5 GW by the year-end of 2012. As part of our
vertical integration strategy to capture opportunities at each value chain in the PV business, we consume a major portion of our solar wafer output in our solar cell production starting from 2010. For each of the years ended December 31, 2010
and 2011, we produced approximately 2.50 GW and 2.23 GW of solar wafers, respectively, and consumed approximately 3.5% and 29.5%, respectively, of our total solar wafer production in our in-house production of solar cells, with the rest sold to
independent third-party customers.

Solar Cells. We commenced solar cell production in the third quarter of 2010.
We produce solar cells in our production facilities in Hefei City of Anhui Province, and in Xinyu City Hi-Tech Industrial Park in Jiangxi Province, China. As of March 31, 2012, we had an annualized solar cell production capacity of
approximately 1.7 GW, and plan to expand our annualized solar cell production capacity to 2.2 GW by the year-end of 2012. For each of the years ended December 31, 2010 and 2011, we produced approximately 30.0 MW and 590.0 MW of solar
cells, respectively. We have used all the solar cells we produce in our in-house production of solar modules, in addition to outsourcing a significant amount of our cell requirements from third party suppliers.

Solar Modules. We commenced solar module production in 2010 and commenced commercial sales of our solar modules to PV product
developers, distributors and system integrators in the third quarter of 2009. We produce solar modules in our production facilities in Nanchang City of Jiangxi Province, Suzhou City of Jiangsu Province, Hefei City of Anhui Province, and
Shenzhen City of Guangdong Province, China. As of March 31, 2012, we had an annualized solar module production capacity of approximately 1.7 GW, and plan to expand our annualized solar module production capacity to 2.6 GW by the
year-end of 2012. Our modules have been certified in various European countries and the U.S. For each of the years ended December 31, 2010 and 2011, we produced approximately 540.0 MW and 840.0 MW of solar modules, respectively, and
consumed approximately 4.0% and 9.0%, respectively, of our total solar module production in our solar farm projects, with the rest sold to independent third-party customers.

Solar Farm Projects. We design and develop solar farm projects in China, Europe and the U.S. and may enter additional markets. We develop solar farm projects both on our own and through
jointly-controlled entities. We develop these projects with the intent to sell them to third parties upon completion of their development. We also provide EPC services for solar farm projects. We typically enter into a letter of intent to sell our
solar farm project prior to, and contingent upon, the completion of such project. We have financed our solar farm projects with bank financings.

Our production facilities are primarily located in Xinyu City, Jiangxi Province, with our cell production facilities also in Hefei City, Anhui Province, and our module production facilities in Nanchang
City, Jiangxi



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Province, Suzhou City, Jiangsu Province, Hefei City, Anhui Province, and Shenzhen City, Guangdong Province, China.

Our principal PV product customers, in terms of net sales for the year ended December 31, 2011, include Jiangxi Risun, Gintech, Shannxi Luan, Sumitomo and Solartech.

In the years ended December 31, 2009, 2010 and 2011, we had total net sales of $1,098.0 million, $2,509.3 million and
$2,157.8 million, respectively. For the years ended December 31, 2009 and 2011, we recorded a net loss of $234.0 million and $609.0 million. For the year ended December 31, 2010, we had net income of $296.5 million.

Competitive Strengths

We believe that our growth and strong market position are largely attributable to our following principal competitive strengths:



| |  |  | Large-scale cost-effective production. We are one of the largest manufacturers of PV products in terms of capacity and production. We have
established large-scale manufacturing facilities with an annual manufacturing capacity of approximately 17,000 MT for polysilicon, 4.3 GW for solar wafers, 1.7 GW for solar cells and 1.7 GW for solar modules as of March 31, 2012.
Leveraging our scale and market position, we have been able to improve our cost structure by procuring raw materials and advanced production equipment on favorable terms. Our cost structure has further been enhanced by our vertically integrated
business model, efficient production process, China-based manufacturing facilities and R&D, and the economies of scale of our operations. By producing all of our products in China, we have been able to benefit from low-cost labor, land,
ancillary equipment and facilities, consumables and utilities.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | High-level of vertical integration. We are a vertically integrated PV product manufacturer with production capabilities at each step of the
supply chain from polysilicon to solar farm projects. While historically our strength was in the solar wafer business, we have expanded our business to meet the PV industrys requirements for high-quality and low-cost solar materials,
polysilicon, wafers, modules, systems, projects and solutions. We believe our vertically integrated model will help capture additional revenue opportunities and reduce negative pressure on the margins resulting from periodic volatility in the
industry. Depending on market conditions, we have the flexibility to buy and sell PV products along the value chain to maximize our revenue and profit. In addition, with our in-house production capabilities, we can ensure stable feedstock at each
supply chain, better quality control and shorter production turnaround. The expanded addressable market as a result of our vertical integration also contributes to the diversification of our customer base.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Leading PV product manufacturer with a strong brand. We are a leading producer of PV products globally in terms of capacity and/or production.
Our continuous success, leading manufacturing scale and well-recognized product quality have enabled us to establish a strong brand name and reliable reputation in our industry. In addition, our modules have been certified in various European
countries and the U.S., which allows us to sell modules under our own brand name and also on an OEM basis. The credibility of the LDK brand name has enabled us not only to expand our global footprint quickly, but also to cross-sell our products as
we further pursue and optimize our vertical integration strategies.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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| |  |  | Diversified customer base. We have established a number of long-term relationships and sales arrangements with key players in the PV industry.
Our current customer base consists of some of the major international players in the PV sector, including Gintech, Sumitomo, Solartech, MEMC, NEO solar and Hyundai. Our revenues are also diversified geographically around the world. During the year
ended December 31, 2011, we sold our PV products to over 470 customers in 31 countries or regions.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our
Strategy

We intend to pursue the following strategies:



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



| |  |  | Develop and commercialize innovative technologies. We plan to continue to develop and commercialize innovative technologies. In collaboration
with universities, research institutions and equipment manufacturers, we have developed various production process related know-how and technologies in-house. We currently have a number of on-going R&D programs with a view to developing
techniques and processes that will improve our conversion efficiency and product quality or lower production cost. We have 31 issued patents, 10 patent right grant notices, which entitle us to receive issued patents upon satisfaction of certain
registration procedures, and 138 patent applications pending globally, of which 130 were pending in China. We have implemented and intend to continue to implement these and other patents and patent applications to further improve our
polysilicon production, silicon recycling, wafer production processes, solar cell structures, module designs and efficiency of our production equipment. We expect to continue to develop, procure and commercialize technologies that have significant
potential applications and may provide significant competitive advantages to us.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Continue to enhance our vertical integration. We plan to continue to enhance our vertical integration to strengthen our competitive position
globally. We currently produce polysilicon, solar wafers, cells and modules in-house, and procure additional solar cells from solar cell manufacturers. We also develop solar farm projects and provide related EPC services in Europe, the United States
and China. In addition to building up weaker links in our solar value chain to enhance our polysilicon production capabilities, we are undertaking debottlenecking initiatives to increase the conversion capacity of our STC thermal converters and to
construct hydrochlorination facilities to add onto our polysilicon production trains as an additional conversion mechanism with the goal to convert more STC into TCS as our total polysilicon production capacity and output increase. We are also
constructing a new production line to produce high-efficiency solar cells as part of our expansion of our cell production. We believe that by being a vertically integrated PV company, we will be able to provide our customers with a range of services
and products while at the same time giving us better control of the time to market, costs, supply and quality of the products we manufacture.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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| |  |  | Further expand our customer base and increase our brand recognition. We plan to further expand our customer base and increase our brand
recognition by increasing our sales and marketing efforts in countries such as the U.S., China and various European countries. We intend to continue to increase our brand recognition by delivering high-quality PV products and services. Besides
selling to third parties, we use significant amount of our intermediate products in our solar farm projects. We intend to continue to build out our solar farm project development teams in Europe, the United States and China, which will enable us to
promote our branded PV products through the construction and sale of solar farm projects. We develop these projects with the intent to sell them to third parties upon completion of their development.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Enter adjacent growth markets to diversify product offerings. We intend to continue to consider suitable opportunities to enter into adjacent
growth markets to expand our product offerings. For instance, we plan to take advantage of our large TCS production capacity and install add-on units at relatively low incremental costs to produce other high-value silicon-based materials. Through
such efforts, we endeavor to optimize returns on our production assets and become able to offer other silicon-based materials for the solar and electronics industries. Our announced $35 million investment in manufacturing silane gas will have
significant synergies with our polysilicon manufacturing expertise and will enhance our product offerings in the long term. Silane is a silicon gas produced by further refining TCS generated in our polysilicon production process, and a key input for
the manufacture of integrated circuits, and thin-film transistor LCDs, in addition to solar cells. It can also be further processed to produce ultra-pure polysilicon. In addition, to the extent that we believe it is synergistic and favorable to our
business and that our financial condition permits, we may also consider acquisitions of other PV operations. We believe that our relationships with many industry participants and our knowledge of, and experience in, the PV industry enables us to
understand industry trends, technological developments and applications of PV technologies, which should assist us in considering these various alternatives.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our Products and Services

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

The following table sets forth our installed annual
production capacity as of December 31, 2011 and March 31, 2012 and our expected installed annual production capacity as of December 31, 2012.



|            |  |                                                                                                                               |  |                           |           |  |                |  |           |                   |  |  |           | 
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | --------- |  | -------------- |  | --------- | ----------------- |  |  | --------- | 
|            |  |                                                                                                                               |  | Installed Annual Capacity |          
|Product     |  | Location                                                                                                                      |  | December 31, 2011         |           |  | March 31, 2012 |  |           | December 31, 2012 | 
|Polysilicon |  | Mahong Plant, Xinyu City; Jiangxi Province                                                                                    |  |                           | 15,800 MT |  |                |  | 15,800 MT |                   |  |  | 22,000 MT | 
|            |  | Xiacun Plant, Xinyu City; Jiangxi Province                                                                                    |  |                           | 1,200 MT  |  |                |  | 1,200 MT  |                   |  |  | 3,000 MT  | 
|Wafer       |  | Xinyu City, Jiangxi Province                                                                                                  |  |                           | 4.3 GW    |  |                |  | 4.3 GW    |                   |  |  | 4.5 GW    | 
|Cell        |  | Xinyu City, Jiangxi Province; Hefei City, Anhui Province                                                                      |  |                           | 1.7 GW    |  |                |  | 1.7 GW    |                   |  |  | 2.2 GW    | 
|Module      |  | Nanchang City, Jiangxi Province; Suzhou City, Jiangsu Province; Hefei City, Anhui Province; Shenzhen City, Guangdong Province |  |                           | 1.7 GW    |  |                |  | 1.7 GW    |                   |  |  | 2.6 GW    | 





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Polysilicon production

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

We leverage a modified Siemens process as the basis for our polysilicon production, employ state-of-the-art production facilities at our polysilicon plants, and are able to produce polysilicon that meets
the premium quality requirements of international PV and electronics industries. All of the polysilicon we currently produce is solar-grade. Based on tests we have conducted, our Mahong Plant is capable of producing electronic-grade polysilicon in
accordance with international industry standards and practice, representing approximately 90% of our polysilicon production capacity as of December 31, 2011. The international industry standards and practice with regard to
electronic-grade polysilicon focus on impurities levels and their composition as well as physical properties, rather than silicon purity alone. Our Mahong Plant is designed and equipped with state-of-the-art production facilities capable
of producing electronic-grade polysilicon in terms of purity, but as our current focus is on solar-use polysilicon production, we have yet to create the requisite clean handling environment that would enable us to supply electronic-grade polysilicon
to the electronics industry. We do not have any current plan to produce and supply electronic-grade polysilicon to the electronics industry unless we have a strong business case with favorable market conditions.

Xiacun Plant and Mahong Plant. Our Xiacun Plant was initially designed to comprise one production train, with an annualized
1,000-MT initial polysilicon production capacity. We commenced polysilicon production at our Xiacun Plant and made our first shipment of polysilicon in the third quarter of 2009. Our Mahong Plant was initially designed to comprise three production
trains, each with an annualized 5,000-MT initial polysilicon production capacity. In September 2009, our Mahong Plant commenced operations with the completion of its first production train, which entered production in January 2010. The second train
at our Mahong Plant was completed in July 2010 and entered production in October 2010, and the third train was mechanically completed in September 2011 and is expected to enter production in the second half of 2012 subject to market conditions. As
of March 31, 2012, we had a total annualized installed polysilicon production capacity of approximately 17,000 MT. We intend to increase our total installed annualized polysilicon production capacity to 25,000 MT by the year-end of 2012 through
the completion of our two plants, technological improvement, process refinement and equipment enhancement, such as our ongoing debottlenecking and hydrochlorination at both Mahong Plant and Xiacun Plant, and the addition of Line B at our
Xiacun Plant. We have engaged Fluor Corporation and its affiliates to provide general engineering, procurement, construction and management services for our Mahong Plant. As part of our strategy to reduce wafer production costs, we consume a
significant portion of our polysilicon output in our wafer production. For each of the years ended December 31, 2009, 2010 and 2011, we produced approximately 225 MT, 5,052 MT and 10,544 MT of polysilicon, respectively, and consumed 100% and
approximately 72.7% and 82.8%, respectively, of our total polysilicon production, with the rest sold to independent third-party customers.

Debottlenecking. When a constraint in one procedure of our large polysilicon production facility restricts or limits the overall production flow, a bottleneck develops that lowers the
capacity, or otherwise limits the functionality, of some other procedures or the entire manufacturing system. The removal of such constraints, or debottlenecking, becomes necessary to enhance the production capacity of the entire system.
At present, the main bottleneck in our polysilicon production is STC-TCS conversion. Secondary bottlenecks include utilities such as our tank storage, nitrogen, hydrogen, demineralized water, cooling water, waste water treatment, and process
venting/scrubbing systems. Through our ongoing debottlenecking initiatives, we intend to remove all such primary and secondary bottlenecks.



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In order for us to ramp up and increase our polysilicon production at or beyond our initial
installed production capacity, our thermal converters are currently insufficient to recycle all of our STC into TCS and, therefore, we have to rely on external parties to off-take some excess STC and purchase additional TCS from external suppliers
to support our production. A significant increase in recycling our STC into TCS will effectively remove this bottleneck in our polysilicon production and boost our production capacity to desired levels while obviating the need to dispose of excess
STC and purchase additional TCS. We are implementing two concurrent measures to improve our STC-TCS conversion. First, we are undertaking improvements to our thermal converters to improve their conversion capacity. Second, we are constructing
hydrochlorination facilities, at both Xiacun Plant and Mahong Plant, as an additional conversion mechanism. The hydrochlorination facility in the Xiacun Plant was put into operation in December 2011. We expect our hydrochlorination facilities in the
Mahong Plant to complete their mechanical construction and enter operation in the first half of 2013.

Silane Gas
Production. We announced in April 2011 our intention to invest $35 million to construct a silane gas production facility with an annualized initial production capacity of up to 2,000 MT of silane gas to meet the demand from the semiconductor,
solar and flat panel display industries. We have completed the project design for the silane production, and have engaged Fluor Corporation and its affiliates to provide general engineering, procurement, construction and management services for this
silane project. Due to market conditions, we have delayed the implementation of this silane gas manufacturing line, but intend to resume when market conditions permit.

Inner Mongolia Polysilicon Manufacturing Facility. In September 2011, we entered into a framework cooperation agreement with the Municipal Government of Hohhot, capital of Inner Mongolia Autonomous
Region, China, with regard to the construction and development of a proposed polysilicon manufacturing facility in Jinsan Development Zone to produce high-purity polysilicon. As planned, the Hohhot facility will have two phases, each an annualized
polysilicon production capacity of 30,000 MT. The framework cooperation agreement, except for certain confidentiality terms, is not legally binding, and only memorializes mutual understandings by both sides. Although we have completed basic
engineering and design of the project, the commencement of the construction work is subject to final approvals from relevant NDRC and local government authorities.

Our Xiacun Plant occupies approximately 0.8 million square meters and is located in Yushui Xiacun Industrial Park in Xinyu City, approximately 15 kilometers away from our facilities at Xinyu Hi-Tech
Industrial Park. Our Mahong Plant occupies a site area of approximately 2.3 million square meters and is located next to our primary facilities in the Xinyu Hi-Tech Industrial Park.

As of December 31, 2011, we had installed the following equipment in our polysilicon production plants:



| |  |  | 67 CVD reactors;
| | - |  | ----------------



| |  |  | 32 STC thermal converters; and
| | - |  | ------------------------------



| |  |  | other ancillary polysilicon production equipment.
| | - |  | -------------------------------------------------



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

LOGO

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

Both the metallurgical-grade silicon chlorination and TCS decomposition reactions generate STC as a byproduct, which is fed back into the TCS production process for re-use as a production input, and hence
recycled in what is known as a closed-loop process. The STC generated from both the metallurgical-grade silicon chlorination and the TCS decomposition is fed through STC thermal converters, where it undergoes a hydrogenation reaction with hydrogen,
resulting in TCS and HCl. This TCS, mixed with unreacted STC, is further redirected back to the TCS distillation procedure as preparation for TCS decomposition through the closed loop. Over the years, in order for us to maintain production levels at
or near our desired capacity, our thermal hydrogenation procedure is insufficient to convert more STC into TCS and, therefore, we have to rely on third parties to offtake some excess STC and purchase some additional TCS from external suppliers. As a
part of our efforts to convert more STC into TCS, we are constructing hydrochlorination facilities, one put into operation in December 2011 and the other is scheduled to enter commercial operation in the first half of 2013, to run in parallel with
our existing STC thermal converters. Hydrochlorination is an efficient STC-TCS conversion process, during which STC reacts with silicon and hydrogen, also resulting in TCS and HCl. The HCl created in



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

Our planned production of silane will involve further processing of TCS. Some purified TCS will be redirected from the production loop to
a chemical processing unit where the gas goes through a series of distillation steps that redistribute the gas molecules to eventually form silane. The removed molecules will at each step be recycled back to the closed loop.

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

Cost-Saving Initiatives. In order to achieve economies of scale and reduce per-unit production cost in our
polysilicon manufacturing business, we have significantly ramped up our polysilicon production, and have been implementing the debottlenecking initiatives to boost our production capacity to enable further production increases. In addition, we are
developing and implementing a number of cost-saving initiatives to further lower our production cost.



| |  |  | First, we completed our switch from diesel to natural gas for our fuel needs in June 2011. We used a significant amount of diesel in our operations to
power some of our production equipment, and this switch to natural gas should help us save such fuel costs. Due to our current technological and equipment set-up, we have retained the flexibility of switching back to diesel-powered systems in the
event that there may be an economic case to do so in the future.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Second, we acquired high-pressure steam from a nearby co-located steam generation plant in Xinyu City. The use of steam in some of our production
processes has further decreased our cost of energy.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We consume a significant amount of electricity in our polysilicon production operations, and a constant supply of electricity is critical to our
ability to maintain optimal production conditions. Currently, our facilities are powered by the common industrial power grid. Since September 2007, we have been subsidized by the local PRC government in electricity usage. See  Suppliers
 Production Inputs.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We are also applying an advanced coating technology to our CVD reactors as well as implementing certain process improvements to reduce our CVD
reactors electricity consumption.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | As we ramp up our operations, we are in the process of defining and implementing a set of continuous improvement measures to improve operational
excellence and enhance operational reliability and thereby further reducing operating cost.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We are also closely monitoring the development of, and market for, the various polysilicon production equipment in China. To the extent locally made
equipment meets our quality requirements with a substantial pricing advantage, we will also consider purchasing such locally made equipment to reduce our equipment cost without compromising our quality.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Wafer production

We manufacture and sell solar wafers in our wafer production facilities in Xinyu City Hi-Tech Industrial Park in Jiangxi Province, China. We currently produce and sell solar wafers in three principal
sizes of 125 by 125 mm, 150 by 150 mm and 156 by 156 mm, and with thicknesses from 180 to 220 microns. In addition to our multicrystalline wafer products, we also manufacture monocrystalline wafers. As of March 31, 2012, we had an
annualized wafer production capacity of approximately 4.3 GW. By the end of 2012, we plan to expand our annualized solar wafer capacity to approximately 4.5 GW.

We also provide wafer processing services to both monocrystalline and multicrystalline solar cell and module manufacturers, who provide us with their own silicon materials, such as polysilicon feedstock
and ingots. We process this feedstock to produce ingots. We then slice these ingots and the ingots provided by our customers into wafers to be delivered back to our customers. We charge a fee based on the number of wafers processed and the type of
materials we receive. In addition, we also sell silicon materials, which include ingots and polysilicon scraps.

As part of
our vertical integration strategy to capture opportunities at each value chain in the PV business, we consume a major portion of our solar wafer output in our solar cell production starting from 2010. For each of the years ended December 31,
2010 and 2011, we produced approximately 2.50 GW and 2.23 GW of solar wafers, respectively, and consumed approximately 3.5% and 29.5%, respectively, of our total solar wafer production in our in-house production of solar cells, with the rest sold to
independent third-party customers.

We have also delayed the implementation of the $40 million LED sapphire wafer
manufacturing facility in Nanchang City, Jiangxi Province, we announced in April 2011, but intend to resume once market conditions permit in order to capture the growth opportunities in the LED industry by supplying up to 2.0 million two-inch
equivalent pieces of LED sapphire wafers on an annual basis.

Production of wafers can be divided into two main steps:



| |  |  | Production of Polysilicon Ingot. We prepare our polysilicon feedstock with de-ionized water in etching stations. The prepared polysilicon
feedstock is then placed in crucibles and each crucible is loaded into our DSS furnaces for melting and crystallization. Polysilicon ingots formed during the crystallization process are then cut into smaller blocks with a squarer, in a process known
as squaring. Our polysilicon ingots are currently 270 kilograms or 450 kilograms in weight and 690 by 690 mm or 840 by 840 mm in width and 243 mm in height. We have been engaged in R&D efforts in collaboration with GT Solar to increase the
number of wafers that can be produced per standard ingot by approximately 15%. We successfully produced a multicrystalline silicon ingot weighing 660 kilograms in June 2009. The 660-kilogram ingot was the largest ingot we have produced and
represented a 46.7% increase in capacity from the standard 450 kilogram ingot. The casting process for monocrystalline wafers is generally more expensive than that for multicrystalline wafers with similar dimensions. However, monocrystalline wafers
are generally more efficient than multicrystalline wafers because the increased conductivity of electrons in monocrystalline silicon yields higher energy conversion rates than multicrystalline silicon.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



LOGO

We manufacture multicrystalline and monocrystalline wafers and ingots at our facilities in Xinyu City,
Jiangxi Province, China. Our wafer manufacturing facilities occupy a site area of approximately 3.1 million square meters in Xinyu Hi-Tech Industrial Park of the high-tech development zone of Xinyu City.

Our multicrystalline and monocrystalline wafer manufacturing operations are housed in four plants in the Xinyu Hi-Tech Industrial Park.
As of December 31, 2011, we had the following multicrystalline and monocrystalline wafer manufacturing equipment in operation:



| |  |  | 488 DSS furnaces used for multicrystalline ingot production;
| | - |  | ------------------------------------------------------------



| |  |  | 256 sets of pullers used for monocrystalline ingot production;
| | - |  | --------------------------------------------------------------



| |  |  | 87 squarers used to cut ingots into blocks;
| | - |  | -------------------------------------------



| |  |  | 318 wire saws used to slice blocks into wafers; and
| | - |  | ---------------------------------------------------



| |  |  | other supplemental or ancillary facilities.
| | - |  | -------------------------------------------

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

We recover some of the polysilicon slurry generated in the wafering, wafer cleaning and sorting process. We have also purchased slurry
recovery systems from Applied Materials, Inc., or Applied Materials, and GT Solar to recover the slurry internally. As of December 31, 2011, we had installed three slurry recovery systems. The slurry recovery ratio of these systems is over 75%
of slurry we generate. Through additional R&D, we endeavor to recycle and re-use as many of our production consumables as possible. This is not only a cost reduction measure, but also an important part of our program of conducting
environmentally friendly operations.

Cell production

We commenced our solar cell production in the third quarter of 2010. We produce solar cells in our production facilities in Hefei City of Anhui Province, and in Xinyu City Hi-Tech Industrial Park in
Jiangxi Province, China. Depending on the availability of our in-house supply, we may source a portion of our cell requirements from third parties. As of March 31, 2012, we had an annualized solar cell production capacity of approximately
1.7 GW, and plan to expand our annualized solar cell production capacity to 2.2 GW by the year-end of 2012. For each of the years ended December 31, 2010 and 2011, we produced approximately 30.0 MW and 590.0 MW of solar cells,
respectively. We have used all the solar cells we produce in our in-house production of solar modules, in addition to outsourcing a significant amount of our cell requirements from third party suppliers. In 2010, we also completed an R&D line
for high-efficiency solar cells.



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Module production

We commenced solar module production in 2010 and commenced commercial sales of our solar modules to PV product developers, distributors and system integrators in the third quarter of 2009. We produce
solar modules in our production facilities in Nanchang City of Jiangxi Province, Suzhou City of Jiangsu Province, Hefei City of Anhui Province, and Shenzhen City of Guangdong Province, China. As of March 31, 2012, we had an annualized
solar module production capacity of approximately 1.7 GW, and plan to expand our annualized solar module production capacity to 2.6 GW by the year-end of 2012. For each of the years ended December 31, 2010 and 2011, we produced
approximately 540 MW and 840 MW of solar modules, respectively, and consumed approximately 4.0% and 9.0%, respectively, of our total solar module production in our solar farm projects, with the rest sold to independent third-party customers.

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

Solar farm project development and related EPC

We design and develop solar farm projects in China, Europe and the U.S. and may enter additional markets. We develop solar farm projects both on our own and through jointly-controlled entities. We develop
these projects with the intent to sell them to third parties upon completion of their development. We also provide EPC services for solar farm projects. We develop solar farm projects and provide related EPC services in Europe through our
subsidiary, Solar Green Technology S.p.A. We develop solar farm projects in the U.S. through our subsidiary, SPI, California-based solar power EPC company. We develop solar farm projects with the intent to sell them to third parties upon
completion of their construction. We typically enter into a letter of intent to sell our solar farm project prior to, and contingent upon, the completion of such project. We have financed our solar farm projects with bank financings.

As of the date of this annual report, we have seven subsidiaries engaged in solar farm project in China and one jointly controlled entity
and nine subsidiaries engaged in solar farm projects outside China, with seven established under the laws of Italy and two under the laws of the United States of America. We own an equity interest between 51% and 100% in these projects through our
subsidiaries. We expect that these solar farm projects will be sold by the end of 2012 or within six months after their completion, while we establish additional similar project companies from time to time in these and other jurisdictions.

Quality Control

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

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



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As of December 31, 2011, we had a core quality management unit consisting of
2,651 persons overseeing our quality control processes, audits and engineering. In addition, this unit runs the testing procedures at the quality-control checkpoints during the production process of polysilicon, ingots, wafers, cells and
modules.

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

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

Customers, Sales and Marketing

Our principal customers include Jiangxi Risun, Gintech, Shanxi Luan, Sumitomo, Solartech and MEMC in terms of net sales for the year ended December 31, 2011. For the years ended
December 31, 2009, 2010 and 2011, we derived approximately 25.0%, 34.2% and 38.6%, respectively, of our net sales from sales to PV customers in China and approximately 75.0%, 65.8% and 61.4%, respectively, from exports. During the years ended
December 31, 2009, 2010 and 2011, our top five customers collectively accounted for approximately 45.5%, 30.6% and 20.3%, respectively, of our net sales. For the year ended December 31, 2009, Gintech, Q-Cells and Hyundai contributed 12.5%,
10.7% and 7.5%, respectively, of our net sales. For the year ended December 31, 2010, Q-Cells and MEMC contributed 8.5% and 7.2%, respectively, of our net sales. For the year ended December 31, 2011, Jiangxi Risun and Gintech contributed
5.5% and 4.5%, respectively, of our net sales. No other single customer contributed more than 10% of our net sales in 2009, 2010 or 2011. For a description of our net sales generated from the geographic regions of our customers, see
Item 5. Operating and Financial Review and Prospects  A. Operating Results  Net Sales in this annual report. We intend to continue to enhance and broaden our revenue and customer base to target other
leading global PV products manufacturers.

We have written agreements with most of our customers although our sales to some of
our customers have been based on periodic purchase orders. Our customers generally make an advance payment representing a portion of the contract value to us. The global economic slowdown and crisis in the global financial markets in late 2008 and
early 2009 caused a number of our customers to request us to delay our shipments of wafers and certain customers requested us to re-negotiate the contract price. As a result, during the second half of 2008 and in 2009, we amended and/or supplemented
many of our long-term supply contracts with our customers. Substantially all of these contracts were entered into in 2007 and the first half of 2008 with delivery volumes and unit pricing that reflected the strong market conditions of the solar
industry prior to the global economic slowdown and crisis in the global financial market. These amendments and supplements generally provide for postponement of deliveries, adjustment to pricing on a prospective basis by reference to the current
market, adjustment to the ratio between supply of polysilicon feedstock and delivery of solar wafers, and changes from solar wafers to solar modules. Any significant deviation from the contract terms on our customers part or our inability to
negotiate or renegotiate acceptable quantities, prices and delivery terms from time to time with our customers may disrupt our operations and materially adversely affect our financial results.

Our net sales generated from the various geographic regions during the years ended December 31, 2009, 2010 and 2011 as a percentage
of our net sales has experienced some significant changes. Based on the immediate destination of our goods shipped, our sales to China as a percentage of our total sales increased from



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25.0% in the year ended December 31, 2009 to 34.2% in the year ended December 31, 2010 and to 38.6% in the year ended December 31, 2011. Our net sales to Asia Pacific ex-China
during the year ended December 31, 2010 decreased to 22.6% as compared to 50.3% during the year ended December 31, 2009 and slightly increased to 26.5% in the year ended December 31, 2011. Our net sales to Europe increased from 20.4%
during the year ended December 31, 2009 to 35.6% during the year ended December 31, 2010 and decreased to 28.7% in the year ended December 31, 2011. Our net sales to North America increased from 4.3% during the year ended
December 31, 2009 to 7.6% during the year ended December 31, 2010 and decreased to 6.2% in the year ended December 31, 2011.

Suppliers

Production Inputs

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

Since 2009, we have been
increasingly sourcing our virgin polysilicon feedstock from our in-house production. We commenced our polysilicon production in 2009. As we continue to ramp up our in-house polysilicon production capacity, we expect to rely increasingly on our
in-house supply of polysilicon feedstock to meet our solar-grade silicon needs. See  Our Products and Services  Polysilicon production. We also source polysilicon feedstock from the spot market from time to time
depending on the price and our requirements. Polysilicon is a raw material used to manufacture wafers.

For the years ended
December 31, 2009, 2010 and 2011, polysilicon feedstock comprised approximately 54.7%, 50.4% and 49.2% of our wafer costs of goods sold (excluding inventory write-downs and loss on firm purchase commitments), respectively.

Our costs of other materials used to manufacture cells and modules have increased significantly in 2011 as we continue to ramp up our
cell production as well as module production. We expect the costs of materials used to manufacture cells and modules to increase as we continue with our vertical integration strategy.

We have written agreements with our principal polysilicon feedstock suppliers. We have also entered into polysilicon raw material supply
arrangements with our customers. In addition, we have sourced significant amounts of polysilicon feedstock from suppliers in the spot markets without any prior written agreements.

From time to time, we may have to make prepayments to our virgin polysilicon and other suppliers in order to secure a stable supply of
our virgin polysilicon feedstock and other materials. We make these prepayments without receiving any collateral. As of December 31, 2011, our prepayments to suppliers amounted to $39.3 million, including prepayments made to virgin
polysilicon suppliers.

To the extent our in-house cell production cannot meet the demand of our module production, we
purchase the short-fall from third parties for use in our module production. For the year ended December 31, 2010 and 2011, cells purchased from third parties comprised approximately 79.4% and 49.2% of our module cost of goods sold,
respectively, and 23.9% and 19.8% of our total cost of goods sold. We purchase cells from cell manufacturers including Helo Solar (HK) Co., Ltd, or Helo Solar, Solartech and Jiangxi Risun. As we ramp up our in-house cell production, we expect to
rely less on third parties for our cell supplies.

We use consumables in our production including slurry, sawing wires,
crucibles and other materials. We source most of our consumables from suppliers in China. In January 2008, we acquired 33.5% of Jiangxi Sinoma, a Xinyu-based crucibles manufacturer, in an effort to ensure supply of our needs for crucibles.



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Equipment

We source our key manufacturing equipment mostly from leading international manufacturers and some reputable domestic manufacturers. GT Solar has provided most of our DSS furnaces, CVD reactors and STC
thermal converters. JYT Corporation has also provided some of our DSS furnaces. All of our DSS furnaces are equipped with safety kits that limit potential damage in the event of an accident. M.S.A. Apparatus Construction for Chemical Equipment Ltd.
is also a supplier of some of our CVD reactors and STC thermal converters. JYT Corporation has provided all of our current monocrystalline pullers. Meyer Burger and Applied Materials have provided all of our squarers and wire saws. We have purchased
our cell manufacturing equipment from Applied Materials and others. We also purchase ancillary equipment from these and other manufacturers.

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

Competition

The PV market is highly competitive and rapidly evolving. We may face increasing pressure on price reduction, reduced profit margin
or loss of market share. Like us, during the past few years, other PV companies have also engaged in aggressive expansion programs. In addition, the number of new entrants in the PV market has also rapidly increased due to the growth of actual
and forecasted demand for PV products.

As a vertically integrated manufacturer of PV products, we compete with other
integrated solar companies as well as with manufacturers of polysilicon, solar wafers and modules, and developers of PV projects. We compete with players such as CSI, First Solar, GCL-Poly Energy Holdings Limited, Hemlock Semiconductor Group,
JA Solar, M.SETEK, MEMC, OCI Company Ltd., REC, ReneSola, Suntech Power, Trina, Wacker Chemie, Yingli and DAQO New Energy Corp. In recent years, many technology companies, which have historically not manufactured solar products, have recently
also been developing PV capabilities in-house. These players include AU Optronics, Samsung and TSMC. Some of our current and potential competitors may have a longer operating history, wider name recognition, greater resources, larger customer
base, better access to low-cost raw materials and greater economies of scale than us.

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



| |  |  | cost competitiveness and price;
| | - |  | -------------------------------



| |  |  | product quality;
| | - |  | ----------------



| |  |  | economies of scale;
| | - |  | -------------------



| |  |  | advanced technology and manufacturing processes;
| | - |  | ------------------------------------------------



| |  |  | strong global distribution channels and customer relationships;
| | - |  | ---------------------------------------------------------------



| |  |  | reputation for consistency and excellence; and
| | - |  | ----------------------------------------------



| |  |  | brand recognition.
| | - |  | ------------------

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



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controlling shareholder, Mr. Peng, in his personal capacity, and his family members are engaged in certain alternative energy projects, including a project involving thin-film technology. In
addition, Mr. Peng and his family may invest or otherwise participate in their personal capacity in other alternative energy projects, such as projects involving solar thermal, wind energy and biofuels. See Item 6. Directors, Senior
Management and Employees  A. Directors and Senior Management. We have decided not to enter into the thin-film module production business.

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

Property

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

Owned property

We own the land use rights related to our production
facilities, including our polysilicon, wafer, cell and module production facilities, located in Xinyu City and Nanchang City, Jiangxi Province, Hefei City, Anhui Province, Suzhou City, Jiangsu Province, Shenzhen City, Guangdong Province, China.
In 2011, we acquired additional land use rights for a total site area of 1,503,136 square meters located in Xinyu City, Suzhou City, Nanchang City and Hefei City for approximately $68 million. As of the date of this annual report, we own
approximately 9,822,783 square meters for an original term of 50 years, renewable upon its expiration. We are currently in the process of acquiring land use rights with respect to a total site area of approximately 2,248,565 square
meters.

As of the date of this annual report, we have obtained property ownership certificates relating to our plants in
Xinyu City and Nanchang City, Jiangxi Province, Hefei City, Anhui Province, Suzhou City, Jiangsu Province, Shenzhen City, Guangdong Province, China with a gross floor area of approximately 1,673,930 square meters and we are in the process
of acquiring property ownership certificates with a total a gross floor area of approximately 361,049 square meters. We occupy our owned properties for purposes of production, R&D and as our headquarters office and employee living
quarters.

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

Leased property

We currently have leasehold interests in the following real estate properties as our offices in various jurisdictions:



| |  |  | 209 square meters of office space in Shanghai leased from an independent third party, with its current lease term to expire in December 2013;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 2,860 square feet of office space in Sunnyville, California, leased from an independent third party, with its current lease term to expire in November
2013; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | 1,617 square feet of office space in Hong Kong leased from an independent third party, with its current lease term to expire in January 2013.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------

We also currently have the following leasehold interests in real estate properties as our factories,
offices and dormitories in two cities in China:



| |  |  | We currently lease an aggregate of 19,073 square meters of factory space and office space in Nanchang City, Jiangxi Province, from an independent
third party. The lease related to the factory space expired in December 2011, and we are currently negotiating with the landlord for its renewal. As a result, we are tenant on a month-by-month basis until we renew the lease agreement. With
regard to our office space, the lease related to 100 square meters will expire in September 2012; the lease related to 50 square meters will expire in March 2013; and the lease related to 500 square meters does not have a fixed term. As of the date
of this annual report, we have yet to receive the relevant property ownership certificates from the leasing party for these factory and office properties.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We currently lease an aggregate of 76,856 square meters of factory space in Suzhou City, Jiangsu Province, from an independent third party. The lease
expired in December 2011 and we are currently negotiating with the landlord for its renewal. As a result, we are tenant on a month-by-month basis until we renew the lease agreement.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We currently lease an aggregate of 13,500 square meters of factory, dormitory and office spaces in Shenzhen City, Guangdong Province, from an
independent third party, with its current lease term to expire in February 2012. As of the date of this annual report, we have received from the leasing party the relevant usage certificates for the buildings leased to us, as confirmed by the
relevant local government authorities, but have yet to receive the relevant property ownership certificates.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Insurance

We maintain property insurance coverage on our facilities, production equipment and inventory in stock, which amounted to
approximately $2,894.8 million as of December 31, 2011. We do not have insurance coverage on other assets of ours, such as products in transit, interruption of business or product liabilities. We consider our insurance coverage to be adequate
to cover all normal risks associated with our operations in accordance with industry standards and practices in China. We have purchased director and officer liability insurance for our directors and officers.

Production Safety and Environment

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

Safety

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



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We experience accidents from time to time at our plants and facilities, as we have disclosed
in Item 3. Key Information  D. Risk Factors  Risks Relating to Our Company and Our Industry  Unexpected equipment failures or accidents, including any accidental release of hazardous gases or
materials, may lead to production curtailments or shutdowns, personal injuries, even deaths or damage to properties in this annual report. We have not, however, encountered accidents in any fiscal year that, individually or collectively, have
resulted in costs, damages, penalties or claims against us in excess of $100,000. We experienced an accident at our Xiacun Plant in July 2010, which resulted in serious bodily injuries to a few of our employees and third-party contractors and the
shut-down of some of our facilities, due to the non-compliant handling of certain add-on equipment by a third-party contractor during the trial run of such add-on equipment being installed by the third-party contractor. This accident resulted in
very serious bodily injuries, as described in the Xinyu City government investigation report, to one of our employees and one employee of the third-party contractor as well as a temporary shut-down of the unit with the add-on equipment.
Xinyu Municipal Production Safety Supervisory and Administrative Bureau, the local production safety authority in Xinyu City, conducted a formal investigation and concluded that the third-party contractor was primarily responsible for the accident.
The unit with the add-on equipment in question was ordered by the Xinyu City government authority to be temporarily shut down, although it resumed operations a month later in August 2010 with the approval of the same local government authority.
Since the unit with the add-on equipment did not affect our main production systems, its temporary shut-down did not adversely affect our business operations in any material way. The employee of ours injured in the accident was insured against
workplace injuries under our insurance policies, and such insurance has covered most of his medical expenses. We have so far incurred less than $9,000 in medical expenses and other payments in connection with this accident. The accident did not
result in any material adverse impact on us or our operations, and we have not had any material liabilities arising from the accident. There have not been any legal proceedings against us as a result of this incident. Our management, however, has
subsequently taken various remedial and precautionary measures in order to minimize the chance of occurrence of similar events in the future. The measures include reiterating the workplace safety guidelines in our employees manual and
introducing additional safety-related best practices to heighten the safety awareness of our employees and to improve our workplace safety environment. We have also engaged an external advisory firm to perform procedures on our internal control over
HSE affairs. As part of the ongoing internal control review process, we are in the process of further enhancing our internal controls. Specifically addressing this accident, we will extend oversight over certain procedures handled by contractors,
including their equipment safety certification and installation application.

We require our employees who operate special
equipment to undergo the necessary training before they are allowed to operate such equipment. We conduct regular mandatory maintenance on our equipment to ensure proper and safe working conditions.

Environment

We
have undertaken various measures to reduce pollution and the impact of our manufacturing process on the environment. These measures include monitoring and controlling solid waste, waste water, exhaust fumes and noise. Our advanced closed-loop
polysilicon production process also significantly reduces pollution. We believe that we are currently in compliance with all environmental laws and regulations applicable to our operations in China.

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

Waste water. We chemically treat the
various types of waste water to harmless levels before discharging it to our dedicated sewage network. We currently have an on-site waste water treatment station with a 1,200-cubic-meter daily treatment capacity.

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



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

We currently have a team of 122 personnel who
are experienced and trained in HSE matters and are in charge of formulating and implementing our HSE measures, of whom 62 hold Licenses for Safety Management in Hazardous Chemical Enterprises and 23 are State-Certified Safety
Engineers. The PRC safety and environmental protection authorities regularly inspect our plants and facilities on both announced and unannounced bases, and we have not received any citations relating to HSE measures.

As a large growing enterprise, we have various projects under construction, with additional expansions planned from time to time. As we
have disclosed in Item 3. Key Information  D. Risk Factors  Risks Relating to Our Company and Our Industry  Compliance with environmental and safety regulations is expensive, and noncompliance may
result in adverse publicity and potentially significant monetary damages and fines or suspension of our business operations in this annual report, the various PRC governmental approval processes may not always be in sync with our construction
and production schedules. We perform necessary application procedures and try to obtain the relevant approvals and/or registrations in line with the contemplated progress of the construction and production at each of our projects. Where the
construction of a project is complete before we have received the relevant final permits for its full production, we would typically engage in trial productions in compliance with the relevant PRC laws and regulations. To date, there has not been
any material adverse effect on our business or results of operations due to our handling of, or the timing in our receiving, the necessary approvals and permits for our current plants and facilities and for those under construction. But we cannot
assure that we will always be able to obtain all of the governmental permits and acceptances, and complete all of the registrations and filings with the government, in time for all of our projects currently under construction or our future projects.
Although we have not been subject to any penalty, or any threat of such penalty, from any PRC government agencies in this regard, as we have disclosed in the above-mentioned risk factor, it continues to present as a potential risk to us and our
operations.

Regulatory Framework

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

Renewable energy law and government directives

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

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



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

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

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

In December 2010, the Ministry of Industry and Information Technology, NDRC and the Ministry of Environmental Protection jointly issued a
circular entitled the Conditions of Entry to Polysilicon Industry to curb excessive capacity and redundant construction in the PRC polysilicon industry. According to the circular, these PRC governmental agencies will, in principle, not approve any
new polysilicon project until the PRC government has promulgated a new guideline for these types of investment projects, except for projects that have already been approved by the relevant central-government-level investment administration
authorities. For existing polysilicon projects, the relevant enterprises must submit an application pursuant to the circular to the relevant provincial authorities responsible for industry and information technology for review. Any enterprise that
fails to meet the requirements contained in the circular will be required to withdraw or terminate its polysilicon project. This circular also sets forth specific requirements, including those relating to capital, scale of production, energy
consumption and environmental protection.

Environmental regulations

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

Restriction on foreign investments

The principal regulation governing foreign ownership of solar power businesses in China is the revised Foreign Investment Industrial
Guidance Catalog, effective as of January 30, 2012 and subject to amendment and supplement by the government from time to time. Under this guidance currently in force, our solar cell production business and solar farm projects fall within the
category of industries in which foreign investment is encouraged.

Tax

The PRC enterprise income tax is calculated based on the taxable income determined under the PRC tax laws and regulations. In accordance
with the PRC Income Tax Law for Enterprises with Foreign Investment and



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Foreign Enterprises and the related implementation rules effective prior to January 1, 2008, foreign-invested enterprises incorporated in China, such as Jiangxi LDK Solar, Jiangxi LDK
Silicon and Jiangxi LDK Polysilicon, were generally subject to a national enterprise income tax at the rate of 30% on their taxable income and a local enterprise income tax at the rate of 3% on their taxable income. This foreign invested enterprise
income tax law and its implementation rules provided certain favorable tax treatments to foreign-invested enterprises such as a two-year exemption from the national enterprise income tax from their first profitable year and a 50% reduction of their
applicable national enterprise income tax rate for the subsequent three years for manufacturing enterprises with operating terms of more than 10 years. Pursuant to then PRC tax laws relating to foreign-invested enterprises, local preferential
enterprise income tax treatment was within the jurisdiction of the applicable local provincial authorities. For example, the Jiangxi Provincial government specified that energy companies that were established for operations in the province for more
than 10 years, such as Jiangxi LDK Solar, Jiangxi LDK Silicon and Jiangxi LDK Polysilicon, were eligible for a five-year exemption from the 3% local enterprise income tax from their first profitable year, and a 50% reduction of their local
enterprise income tax rate for the succeeding five years.

Since January 1, 2008, the EIT Law became effective. This new
tax law imposes a unified income tax rate of 25% on all domestic enterprises and foreign-invested enterprises unless they qualify for preferential tax treatments under certain limited exceptions. The EIT Law and the related regulations permit
companies to continue to enjoy their preferential tax treatments under the prior tax regime until such treatments expire in accordance with their terms, on the condition that such preferential tax treatments are available under the grandfather
clauses of the EIT Law and the related regulations.

In December 2009, Jiangxi LDK Solar was recognized by the PRC government
as an HNTE under the EIT Law and is entitled to the preferential enterprise income tax rate at 15% from 2009 to 2011. Subject to renewal, Jiangxi LDK Solars HNTE status will enable it to enjoy the preferencencial income tax rate of 15% from
2012 to 2014. Based on our self-assessment result, our management believes that Jiangxi LDK Solar meets all the criteria for the renewal of its HNTE status. In September 2011, Jiangxi LDK Silicon was recognized by the PRC government as an HNTE and
is entitled to the preferential income tax rate of 15% from 2011 to 2013. Based on our prevailing business plan, our management expects Jiangxi LDK Silicon will continue to meet all the critieria for HNTE qualification upon renewal of such status
which will enable it to enjoy the preferential income tax rate of 15% from 2014 to 2016.

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

Pursuant to the EIT Law and its implementation regulations, since January 1, 2008, dividend payments relating to earnings derived
since January 1, 2008 to foreign investors made by foreign-invested enterprises, such as our PRC subsidiaries, Jiangxi LDK Solar, Jiangxi LDK Silicon and Jiangxi LDK Polysilicon, are subject to a 10% withholding tax unless any such foreign
investors jurisdiction of incorporation has a tax treaty or agreement with China that provides for a different withholding arrangement. The Cayman Islands, where we are incorporated, does not have such a tax treaty or agreement with China. In
addition, under the EIT Law, enterprises established under the laws of jurisdictions outside China with their de facto management bodies located within China may be considered PRC resident enterprises and therefore subject to PRC
enterprise income tax at the rate of 25% as to their worldwide income. Under the implementation regulations issued by the State Council relating to the EIT Law, de facto management body is defined as the body that has material and
overall management control over the business, personnel, accounts and properties of an enterprise. In April 2009, the PRC State Administration of Taxation promulgated a circular to clarify the definition of de facto



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management body for enterprises incorporated overseas with controlling shareholders being PRC enterprises. Therefore, it remains unclear how the tax authorities will, in practice, treat an
overseas enterprise invested or controlled by another overseas enterprise and ultimately controlled by PRC individual residents as is in our case. We are currently not treated as a PRC resident enterprise by the relevant PRC tax authorities. Since
substantially all of our management is currently based in China and may remain in China in the future, we may be treated as a PRC resident enterprise for the PRC tax purposes and subject to PRC enterprise income tax at the rate of 25% as
to our worldwide income.

Foreign currency exchange

See Item 10. Additional Information  D. Exchange Controls in this annual report.

Dividend distribution

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



| |  |  | Company Law of 1993, as amended;
| | - |  | --------------------------------



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



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



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



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

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

Regulation of
overseas investments and listings

SAFE issued a public notice in October 2005 to require all PRC residents, including
both legal persons and natural persons, to register with the relevant local SAFE authorities before establishing or gaining control over any company outside China, referred to in such SAFE notice as an offshore special purpose company,
for the purpose of acquiring any assets of or equity interest in PRC companies and raising funds from overseas. In addition, any PRC resident that is already a shareholder of an offshore special purpose company is required to amend its SAFE
registration with the local SAFE authorities with respect to that offshore special purpose company in connection with any increase or decrease of capital, transfer of shares, merger, division, equity or



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debt investment or creation of any security interest. If any PRC shareholder of any offshore special purpose company fails to make the required SAFE registration or its amendment, the PRC
subsidiaries of that offshore special purpose company may be prohibited from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to the offshore special purpose company. Moreover, failure to
comply with such SAFE registration and amendment requirements could result in liabilities under PRC laws for evasion of applicable foreign exchange restrictions.

NDRC promulgated a rule in October 2004, which requires all China-incorporated entities to seek approval from the NDRC authorities for any overseas investment. This NDRC rule also applies to overseas
investments by PRC individuals as well.

In August 2006, six PRC regulatory agencies, including the Ministry of Commerce, the
State Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, China Securities Regulatory Commission, or CSRC, and SAFE, jointly adopted the Regulation on Mergers
and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A rule. This M&A rule includes provisions that purport to require special purpose companies formed for purposes of overseas listing of equity interest in PRC companies
and controlled directly or indirectly by PRC companies or individuals to obtain the approval from CSRC prior to the listing and trading of their securities on any overseas stock exchange. Pursuant to the related procedures CSRC published on its
official website in September 2006, CSRC requires the filing of a number of documents and it could take several months to complete the approval process. The application of the M&A rule with respect to overseas listings of special purpose
companies remains unclear with no consensus currently among leading PRC law firms regarding the scope of the applicability of the CSRC approval requirement.

Our PRC counsel, Grandall Law Firm (Shanghai), has advised us that, based on their understanding of the current PRC laws, rules and regulations, including the M&A rule and the CSRC approval procedures
announced in September 2006:



| |  |  | CSRC has not issued any definitive rule or interpretation requiring offerings like our IPO to be subject to such procedures; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | In spite of the above, because we completed our restructuring and established an overseas holding structure before the M&A rule came into effect,
neither the M&A rule nor the CSRC approval procedures require an application to be submitted to CSRC for the approval of the listing and trading of our ADSs on the New York Stock Exchange unless we are clearly required to do so by possible later
rules of CSRC.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|C. | ORGANIZATIONAL STRUCTURE
|-- | ------------------------

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



LOGO

|
|
|



|(1) | Joint venture, partnership or company established for holding our solar farm projects.
|--- | --------------------------------------------------------------------------------------

|(2) | LQ energy GmbH is a jointly controlled entity incorporated under the laws of Germany.
|--- | -------------------------------------------------------------------------------------



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In the ordinary course of our solar farm project development, we have established, and may
continue to establish, from time to time, jointly controlled entities, project partnerships or subsidiary companies for the purpose of developing and selling these projects. As of the date of this annual report, we have one jointly controlled entity
and sixteen subsidiaries established under the laws of jurisdictions within China and outside China, including Italy, Germany and the United States. We intend to sell these projects by disposing of our interests in these joint ventures, partnerships
or subsidiary companies to third parties.

Currently, we are 53.27% beneficially owned by Mr. Peng, without taking into
account any securities that any shareholder or option holder has the right to acquire within 60 days after the date of this annual report through the exercise of any option, warrant or right. Mr. Peng maintains effective control over our
business and corporate matters that require shareholders approval.



|D. | PROPERTY, PLANTS AND EQUIPMENT
|-- | ------------------------------

For information regarding our material property, plant and equipment, see  B. Business Overview 
Suppliers  Equipment and  Property in this annual report.



|ITEM 4A. | UNRESOLVED STAFF COMMENTS
|-------- | -------------------------

None.



|ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS
|------- | --------------------------------------------



|A. | OPERATING RESULTS
|-- | -----------------

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

Overview

We are a leading vertically integrated manufacturer of PV products. While our historical strength was in the solar wafer business, we have
expanded our business to meet the PV industrys requirements for high-quality and low-cost polysilicon, wafers, cells, modules, systems, power projects and solutions. While we continue to pursue further vertical integration at each step of our
PV product value chain, our revenue also includes significant portions of sales of our solar wafers, modules and polysilicon.

Polysilicon. We commenced production and sale of polysilicon in the third quarter of 2009. As of March 31, 2012, our two
polysilicon plants, Mahong Plant and Xiacun Plant, located near our wafer production facilities, had an aggregate installed annualized polysilicon production capacity of approximately 17,000 MT. We leverage a modified Siemens process as the basis
for our polysilicon production, employ state-of-the-art production facilities at our polysilicon plants, and are able to produce polysilicon that meets the premium quality requirements of international PV and electronics industries. While all of the
polysilicon we currently produce is solar-grade, our Mahong Plant is capable of producing electronic-grade polysilicon in accordance with international industry standards and practice, representing approximately 90% of our aggregate polysilicon
production capacity. We intend to increase our total installed annualized polysilicon production capacity to 25,000 MT by the year-end of 2012 through the completion of our two plants, technological improvement, process refinement and equipment
enhancement. As part of our strategy to reduce wafer production costs, we consume a significant portion of our polysilicon output in our wafer production. For each of the years ended December 31, 2009, 2010 and 2011, we produced approximately
225 MT, 5,052 MT and 10,455 MT of polysilicon, respectively, and consumed 100% and approximately 72.7% and 82.8%, respectively, of our total



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polysilicon production, with the rest sold to independent third-party customers. We have delayed the implementation of the $35 million silane gas manufacturing line we announced in April
2011, but intend to resume once market conditions permit in order to supply up to 2,000 MT of silane gas per year to meet the demand from the semiconductor, solar and flat panel display industries.

Solar Wafers. We manufacture solar wafers in our wafer production facilities in Xinyu City Hi-Tech Industrial Park in Jiangxi
Province, China. We produce and sell multicrystalline and monocrystalline solar wafers globally to manufacturers of solar cells and solar modules. We also provide wafer processing services, producing wafers for customers who provide polysilicon
materials to us. As of March 31, 2012, we had an annualized solar wafer production capacity of approximately 4.3 GW. We plan to expand our annualized solar wafer production capacity to 4.5 GW by the year-end of 2012. As part of our
vertical integration strategy to capture opportunities at each value chain in the PV business, we consume a major portion of our solar wafer output in our solar cell production starting from 2010. For each of the years ended December 31, 2010
and 2011, we produced approximately 2.50 GW and 2.23 GW of solar wafers, respectively, and consumed approximately 3.5% and 29.5%, respectively, of our total solar wafer production in our in-house production of solar cells, with the rest sold to
independent third-party customers. We have also delayed the implementation of the $40 million LED sapphire wafer manufacturing facility in Nanchang City, Jiangxi Province, we announced in April 2011, but intend to resume once market conditions
permit in order to capture the growth opportunities in the LED industry by supplying up to 2.0 million two-inch equivalent pieces of LED sapphire wafers on an annual basis.

Solar Cells. We commenced solar cell production in the third quarter of 2010. We produce solar cells in our production
facilities in Hefei City of Anhui Province, and in Xinyu City Hi-Tech Industrial Park in Jiangxi Province, China. As of March 31, 2012, we had an annualized solar cell production capacity of approximately 1.7 GW, and plan to expand our
annualized solar cell production capacity to 2.2 GW by the year-end of 2012. For each of the years ended December 31, 2010 and 2011, we produced approximately 30 MW and 590 MW of solar cells, respectively. We have used all the solar cells
we produce in our in-house production of solar modules, in addition to outsourcing a significant amount of our cell requirements from third party suppliers.

Solar Modules. We commenced solar module production in 2010 and commenced commercial sales of our solar modules to PV product developers, distributors and system integrators in the third
quarter of 2009. We produce solar modules in our production facilities in Nanchang City of Jiangxi Province, Suzhou City of Jiangsu Province, Hefei City of Anhui Province, and Shenzhen City of Guangdong Province, China. As of March 31,
2012, we had an annualized solar module production capacity of approximately 1.7 GW, and plan to expand our annualized solar module production capacity to 2.6 GW by the year-end of 2012. Our modules have been certified in various European
countries and the U.S. For each of the years ended December 31, 2010 and 2011, we produced approximately 540 MW and 840 MW of solar modules, respectively, and consumed approximately 4.0% and 9.0%, respectively, of our total solar module
production in our solar farm projects, with the rest sold to independent third-party customers.

Solar Farm Projects.
We design and develop solar farm projects in China, Europe and the U.S. and may enter additional markets. We develop solar farm projects both on our own and through jointly-controlled entities. We develop these projects with the intent to sell them
to third parties upon completion of their development. We also provide EPC services for solar farm projects. We typically enter into a letter of intent to sell our solar farm project prior to, and contingent upon, the completion of such project. We
have financed our solar farm projects with bank financings.

Our production facilities are primarily located in Xinyu City,
Jiangxi Province, with our cell production facilities also in Hefei City, Anhui Province, and our module production facilities in Nanchang City, Jiangxi Province, Suzhou City, Jiangsu Province, Hefei City, Anhui Province, and Shenzhen City,
Guangdong Province, China.

Our principal PV product customers, in terms of net sales for the year ended December 31,
2011, include Jiangxi Risun, Gintech, Shannxi Luan, Sumitomo and Solartech.



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In the years ended December 31, 2009, 2010 and 2011, we had total net sales of
$1,098.0 million, $2,509.3 million and $2,157.8 million, respectively. For the years ended December 31, 2009 and 2011, we recorded a net loss of $234.0 million and $609.0 million. For the year ended December 31, 2010, we had net
income of $296.5 million.

Key Factors Affecting Our Results of Operations

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



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



| |  |  | the pricing of our PV products;
| | - |  | -------------------------------



| |  |  | mix of our PV products;
| | - |  | -----------------------



| |  |  | our manufacturing and raw material costs; and
| | - |  | ---------------------------------------------



| |  |  | our production capacity and its utilization.
| | - |  | --------------------------------------------

Demand for our PV products

Our business and revenue growth are, in
part, a function of the demand for PV products. The PV market remains at a relatively early stage of development and it is uncertain whether solar energy will be widely adopted. Demand for PV products has grown significantly over the past decade,
although the global solar power industry experienced a decline in demand in the fourth quarter of 2008 and first quarter of 2009 due to the reduced availability of financing for downstream buyers as a result of the global financial crisis and the
rapid slide in petroleum and natural gas prices, which rendered solar energy less cost competitive and less attractive as an alternative source of energy. Demand for our PV products rebounded from the second quarter of 2009 as the global economy
gradually recovered. Many of our customers who experienced financing and/or operational difficulties during the global economic slowdown have regained access to credit and resumed performance of their contracts with us that were temporarily
suspended or delayed in the fourth quarter of 2008 and first quarter of 2009. Although the demand for our PV products increased in 2010, the solar market has deteriorated starting from the second half of 2011 and there are still significant
uncertainties for the sustainability of the growth in the PV market under the current macroeconomic environment, which could lead to fluctuations in the demand for our products.

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

Certain recent developments have adversely affected our results of operations
in 2012 to date:



| |  |  | continual decline in the average selling price across the chain of PV products;
| | - |  | -------------------------------------------------------------------------------



| |  |  | seasonal slowdown in our business due to the Chinese New Year holiday;
| | - |  | ----------------------------------------------------------------------



| |  |  | global PV manufacturing capacity potentially exceeding global demand; and
| | - |  | -------------------------------------------------------------------------



| |  |  | international trade related investigations and proceedings and anti-dumping and/or countervailing tariff imposed by the U.S. and other jurisdictions.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------

There can be no assurance regarding the magnitude or length of time of the effects on our financial results
caused by the developments described above.



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Pricing of our PV products

PV products, including polysilicon, wafers, cells and modules, systems and solutions are priced based on a variety of factors, including
our costs, global PV market prices, supply and demand conditions, and the terms of our customer contracts. We price our PV products on a per-piece and per-watt basis. Prices for PV products that we price on a per-watt basis have fluctuated
significantly. While sale prices for PV products are immediately affected by market prices, the costs of our PV products typically do not adjust with the same immediacy, therefore any sudden drop in PV products sale prices will inevitably affect our
gross margin. While PV prices increased throughout most of 2010 and into early 2011, prices for most PV products along the value chain have recently declined due to reductions in government incentives in certain major PV markets and capacity
expansion of PV players. We expect PV prices to decline further. If PV products prices decline and we are unable to lower our costs in line with the price decline, whether through more cost-effective manufacturing of feedstock, larger ingots or
thinner wafers, or through technological advances, our profitability and financial condition would be adversely affected.

Mix of our PV
products

As a vertically integrated manufacturer of PV products, we sell polysilicon, wafer, module and
PV projects to the market. While polysilicon cost represents a significant portion of our wafer manufacturing costs and we intend to leverage our in-house polysilicon supply to further optimize our wafer cost structure, we have and may continue
to sell polysilicon directly to third-party customers to the extent commercially sensible rather than consuming all of it in-house. We also offer wafer and module processing services to our customers who provide us with polysilicon and cells,
respectively. We do not sell cells to third-party customers, and we have been increasing the sales of modules to third-party customers. With our expansion into solar farm projects, our revenues and margins will also be affected since we can only
recognize revenues from projects once the project is sold or when certain criteria have been met. We also offer related EPC services which carry significantly lower gross margins compared to our historical performance. As the product mix
changes, our revenues, gross margins and operating margins may change. If module sales gain a larger portion of our total sales, our margins are expected to decline.

Our manufacturing and raw material costs

Our cost of goods sold
consists primarily of the costs of polysilicon feedstock, consumables, materials for cells, modules and projects, other manufacturing costs, and depreciation. Historically, polysilicon costs represented the majority of our overall cost of goods
sold. For the years ended December 31, 2009, 2010 and 2011, our costs of polysilicon feedstock consumed for our wafer production accounted for approximately 54.7%, 50.4% and 49.2%, respectively, of our wafer cost of goods sold (excluding
inventory write-downs and loss on firm purchase commitments). With the completed construction and the gradual ramp-up of our polysilicon production plants, we have implemented measures to reduce our manufacturing costs in polysilicon production. We
also procure external cells for our production of solar modules which contributed to a significant portion of our costs of goods sold. From the first quarter of 2012 onwards, external cell procurement costs should decline as we continue to ramp up
our solar cell plants. Furthermore, cell processing and module processing costs have increased as a percentage of our costs of goods sold, and as we increase the vertical integration of our PV product value chain, we expect cell processing and
module processing costs to increase. Although we have significantly reduced our manufacturing costs, there still exists much for us to improve. We have made continuous endeavors to reduce our manufacturing costs, through increased production scale,
improved production yield, using automatic sorting equipment to reduce wafer breakage, and more skilled manufacturing personnel following their initial learning curve. Effective cost-reduction measures in our polysilicon, wafers, cells and modules
production have become critical to our financial condition and results of operations. If we fail to continue to reduce our manufacturing costs, our profitability and competitiveness will be adversely affected.



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Our production capacity and its utilization

Demand for our PV products has been fluctuating following a gradual recovery from the global economic slowdown and turmoil in the
global financial markets in the second half of 2008 and early 2009. The market has again been adversely affected by the European financial crisis in 2011. To capitalize on the periodic growing demand for our products, we continued to expand our
installed annualized polysilicon production capacity from 11,000 MT as of December 31, 2010 to 17,000 MT by March 31, 2012. We also expanded our annualized production capacity of solar wafers from 3.0 GW as of December 31, 2010 to 4.3 GW
as of March 31, 2012. In addition, we expanded our solar cell business from 1.5 GW as of December 31, 2010 to 1.7 GW in annualized production capacity as of March 31, 2012 and our module business from 0.2 GW as of December 31, 2010 to 1.7 GW in
annualized production capacity as of March 31, 2012. We will continue to monitor market demand to determine the timing for any further expansion.

If we fail or encounter significant impediments in our efforts to match our production capacity with market demand for our products, or if the global economic conditions experience another downturn and we
fail to successfully utilize our manufacturing capacity, we will either be unable to increase our sales and profits and capture additional market share, or unable to generate revenue, profit and cash flow from our substantial capital expenditures
and be faced with excessive production capacities, and our financial condition and results of operations will be adversely affected.

Net
Sales

We derive revenues primarily from the sale of PV products, including wafers and modules. We sell our wafers to cell
and module producers, and we sell our modules to developers, distributors and system integrators. We also provide processing services to customers who supply silicon materials and/or multicrystalline or monocrystalline ingots to us for processing
into wafers. In addition, we sell polysilicon and silicon materials, which include ingots as well as silicon scraps. For the years ended December 31, 2009, 2010 and 2011, approximately 86.1%, 60.7% and 47.8%, respectively, of our net sales were
generated from sales of wafers. Sales of modules accounted for 5.4%, 25.3% and 33.4% respectively, of our net sales during the year ended December 31, 2009, 2010 and 2011. Sales from processing services and silicon materials accounted for 7.3%
and 0.7%, respectively, of our net sales during the year ended December 31, 2009, 8.2% and 3.2%, respectively, of our net sales during the year ended December 31, 2010 and 1.3% and 11.1%, respectively, of our net sales during the year
ended December 31, 2011. We expect that sales of solar wafers will continue to account for a significant portion of our net sales for the foreseeable future while sales of modules will become a significant component of our net sales as we
gradually expand our module manufacturing sales. We also expect our solar farm projects and related EPC business to increase as a proportion of our net sales as we continue to develop our solar farm projects.

During the years ended December 31, 2009, 2010 and 2011, our net sales by product were as follows:



|                                              |  |                         |         |  |            |  |       |               |  |   |            |  |  |               |       |   |            |   |         |  |  |  |       |  
|--------------------------------------------- |  | ----------------------- | ------- |  | ---------- |  | ----- | ------------- |  | - | ---------- |  |  | ------------- | ----- | - | ---------- | - | ------- |  |  |  | ----- | -
|                                              |  | Year Ended December 31, |        
|                                              |  | 2009                    |         |  | 2010       |  |       | 2011          | 
|Product                                       |  | Net Sales               |         |  | % of Total |  |       | Net Sales     |  |   | % of Total |  |  | Net Sales     |       |   | % of Total |  
|                                              |  | (In millions)           |         |  |            |  |       | (In millions) |  |   |            |  |  | (In millions) |       |   |            |  
|Wafers                                        |  | $                       | 945.0   |  |            |  | 86.1  | %             |  | $ | 1,522.9    |  |  |               | 60.7  | % |            | $ | 1,031.3 |  |  |  | 47.8  | %
|Modules                                       |  |                         | 58.9    |  |            |  | 5.4   |               |  |   | 634.4      |  |  |               | 25.3  |   |            |   | 720.9   |  |  |  | 33.4  |  
|Processing of PV products on behalf of others |  |                         | 80.6    |  |            |  | 7.3   |               |  |   | 204.9      |  |  |               | 8.2   |   |            |   | 27.6    |  |  |  | 1.3   |  
|Silicon and other materials                   |  |                         | 8.0     |  |            |  | 0.7   |               |  |   | 79.1       |  |  |               | 3.2   |   |            |   | 239.9   |  |  |  | 11.1  |  
|Others                                        |  |                         | 5.5     |  |            |  | 0.5   |               |  |   | 68.0       |  |  |               | 2.6   |   |            |   | 138.1   |  |  |  | 6.4   |  
|                                              |  |                         |         |  |            |  |       |               |  |   |            |  |  |               |       |   |            |   |         |  |  |  |       |  
|Total net sales                               |  | $                       | 1,098.0 |  |            |  | 100.0 | %             |  | $ | 2,509.3    |  |  |               | 100.0 | % |            | $ | 2,157.8 |  |  |  | 100.0 | %
|                                              |  |                         |         |  |            |  |       |               |  |   |            |  |  |               |       |   |            |   |         |  |  |  |       |  



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Our net sales are affected by our unit sales volume, average selling prices and product mix.
We currently make most of our sales to customers through non-exclusive, short-term purchase order arrangements. Increased sales on a long-term contract rather than spot market basis are likely to lead to a reduction in average selling prices. We
have entered into long-term sales arrangements with some of our major customers, including Photovoltech, NEO, Moser Baer, Sumitomo, Mitsubishi and Solartech Energy. Pursuant to these arrangements we have committed to supply each of them with
specific quantities of wafers over the next few years, with some subject to periodic negotiations on prices. For the years ended December 31, 2009, 2010 and 2011, our top five customers accounted for 45.5%, 30.6% and 20.3%, respectively, of our
net sales, Gintech, Q-Cells and Hyundai contributing 12.5%, 10.7% and 7.5%, respectively, of our net sales for the year ended December 31, 2009, Q-Cells and MEMC contributing approximately 8.5% and 7.2%, respectively, of our net sales for the
year ended December 31, 2010, and Jiangxi Risun and Gintech contributing approximately 5.5% and 4.5%, respectively, of our net sales for the year ended December 31, 2011.

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



| |  |  | Europe;
| | - |  | -------



| |  |  | China;
| | - |  | ------



| |  |  | Asia Pacific ex-China; and
| | - |  | --------------------------



| |  |  | North America.
| | - |  | --------------

During the years ended December 31, 2009, 2010 and 2011, our net sales generated from these geographic regions were as follows:



|                      |  |                         |           |  |            |  |       |                |  |   |            |  |  |                |       |   |            |   |           |  |  |  |       |  
|--------------------- |  | ----------------------- | --------- |  | ---------- |  | ----- | -------------- |  | - | ---------- |  |  | -------------- | ----- | - | ---------- | - | --------- |  |  |  | ----- | -
|                      |  | Year Ended December 31, |          
|                      |  | 2009                    |           |  | 2010       |  |       | 2011           | 
|Geographic Region     |  | Net Sales               |           |  | % of Total |  |       | Net Sales      |  |   | % of Total |  |  | Net Sales      |       |   | % of Total |  
|                      |  | (In thousands)          |           |  |            |  |       | (In thousands) |  |   |            |  |  | (In thousands) |       |   |            |  
|Europe                |  | $                       | 223,835   |  |            |  | 20.4  | %              |  | $ | 892,803    |  |  |                | 35.6  | % |            | $ | 619,531   |  |  |  | 28.7  | %
|China                 |  |                         | 274,019   |  |            |  | 25.0  |                |  |   | 858,988    |  |  |                | 34.2  |   |            |   | 833,387   |  |  |  | 38.6  |  
|Asia Pacific ex-China |  |                         | 552,610   |  |            |  | 50.3  |                |  |   | 566,172    |  |  |                | 22.6  |   |            |   | 571,325   |  |  |  | 26.5  |  
|North America         |  |                         | 47,574    |  |            |  | 4.3   |                |  |   | 191,384    |  |  |                | 7.6   |   |            |   | 133,570   |  |  |  | 6.2   |  
|                      |  |                         |           |  |            |  |       |                |  |   |            |  |  |                |       |   |            |   |           |  |  |  |       |  
|Net sales             |  | $                       | 1,098,038 |  |            |  | 100.0 | %              |  | $ | 2,509,347  |  |  |                | 100.0 | % |            | $ | 2,157,813 |  |  |  | 100.0 | %
|                      |  |                         |           |  |            |  |       |                |  |   |            |  |  |                |       |   |            |   |           |  |  |  |       |  

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

Cost of Goods Sold

Our
cost of goods sold consists primarily of:



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



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



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



| |  |  | materials for manufacturing cells and modules;
| | - |  | ----------------------------------------------



| |  |  | cells purchased from third parties;
| | - |  | -----------------------------------



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| |  |  | materials for solar farm projects;
| | - |  | ----------------------------------



| |  |  | depreciation and amortization of property, plant, equipment and technical know-how;
| | - |  | -----------------------------------------------------------------------------------



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



| |  |  | utilities, net of government subsidies;
| | - |  | ---------------------------------------



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



| |  |  | share-based compensation attributable to our manufacturing personnel;
| | - |  | ---------------------------------------------------------------------



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



| |  |  | provisions for losses on firm purchase commitments; and
| | - |  | -------------------------------------------------------



| |  |  | warranty expenses related to our solar module business.
| | - |  | -------------------------------------------------------

During the years ended December 31, 2009, 2010 and 2011, our cost of goods sold by product/service was as follows:



|                                              |  |                         |         |  |           |  |       |                   |  |   |           |  |  |                   |       |   |           |   |         |  |  |  |       |  
|--------------------------------------------- |  | ----------------------- | ------- |  | --------- |  | ----- | ----------------- |  | - | --------- |  |  | ----------------- | ----- | - | --------- | - | ------- |  |  |  | ----- | -
|                                              |  | Year Ended December 31, |        
|                                              |  | 2009                    |         |  | 2010      |  |       | 2011              | 
|Product                                       |  | Cost ofGoods Sold       |         |  | % ofTotal |  |       | Cost ofGoods Sold |  |   | % ofTotal |  |  | Cost ofGoods Sold |       |   | % ofTotal |  
|                                              |  | (In millions)           |         |  |           |  |       | (In millions)     |  |   |           |  |  | (In millions)     |       |   |           |  
|Wafers                                        |  | $                       | 1,089.7 |  |           |  | 89.9  | %                 |  | $ | 1,118.6   |  |  |                   | 57.3  | % |           | $ | 983.2   |  |  |  | 44.8  | %
|Modules                                       |  |                         | 52.1    |  |           |  | 4.3   |                   |  |   | 586.8     |  |  |                   | 30.1  |   |           |   | 885.9   |  |  |  | 40.3  |  
|Processing of PV products on behalf of others |  |                         | 62.2    |  |           |  | 5.2   |                   |  |   | 133.5     |  |  |                   | 6.8   |   |           |   | 21.7    |  |  |  | 1.0   |  
|Silicon and other materials                   |  |                         | 3.5     |  |           |  | 0.3   |                   |  |   | 59.0      |  |  |                   | 3.0   |   |           |   | 209.2   |  |  |  | 9.5   |  
|Others                                        |  |                         | 4.1     |  |           |  | 0.3   |                   |  |   | 53.6      |  |  |                   | 2.8   |   |           |   | 97.5    |  |  |  | 4.4   |  
|                                              |  |                         |         |  |           |  |       |                   |  |   |           |  |  |                   |       |   |           |   |         |  |  |  |       |  
|Total cost of goods sold                      |  | $                       | 1,211.6 |  |           |  | 100.0 | %                 |  | $ | 1,951.5   |  |  |                   | 100.0 | % |           | $ | 2,197.5 |  |  |  | 100.0 | %
|                                              |  |                         |         |  |           |  |       |                   |  |   |           |  |  |                   |       |   |           |   |         |  |  |  |       |  

Our total cost of goods sold is expected to increase as we increase our production volume. Depreciation
and amortization of property, plant and equipment will also constitute a significant part of our cost of goods sold.

Operating Expenses

Our operating expenses include selling expenses, general and administrative expenses, and R&D expenses. Our operating
expenses have increased substantially as we have expanded our wafer and module operations and ramped up our polysilicon production during the relevant periods.

Selling expenses

Selling expenses consist primarily of salaries and
benefits for sales personnel, including share-based compensation attributable to our sales personnel, transportation costs and marketing expenses. Our selling expenses have increased as we endeavored to increase our sales and marketing efforts, hire
additional sales personnel and establish overseas sales and support offices to enhance the effectiveness of our direct marketing.

We expect our selling expenses to increase substantially in the near future as we hire additional sales personnel, devote more resources toward sales and marketing of our modules.

General and administrative expenses

General and administrative expenses consist primarily of salaries, bonuses and benefits for our administrative and management personnel, consulting and professional service fees, insurance premiums,
travel



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and related costs of our administrative and management personnel, and costs of maintaining our information technology systems. General and administrative expenses also include the share-based
compensation attributable to our directors, administrative and management personnel and service providers and in 2009, 2010 and 2011, included provisions for doubtful recoveries of accounts receivable and prepayments to our suppliers. Our general
and administrative expenses are expected to increase along with our wafer, module and cell production expansion and polysilicon production ramp-up as well as the continued upgrade of our information technology infrastructure.

Research and development expenses

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

We expect our R&D expenses to increase substantially in the
near future as we hire additional R&D personnel, devote more resources toward improving our manufacturing processes and optimizing our polysilicon use in the production of our PV products and as we continue to research new innovations and
technologies in PV production.

Share-based Compensation Expenses

For the years ended December 31, 2009, 2010 and 2011, we recorded share-based compensation expenses of approximately $14,212,000,
$11,044,000 and $9,927,000, respectively. We allocated these share-based compensation expenses for the years ended December 31, 2009, 2010 and 2011 as follows:



| |  |  | approximately $3,381,000 and $2,783,000 and $1,881,000, respectively, to our cost of goods sold;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | approximately $32,000, $57,000 and $126,000, respectively, to our selling expenses;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | approximately $10,478,000, $7,717,000 and $7,260,000, respectively, to our general and administrative expenses; and
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | approximately $321,000, $487,000 and $660,000, respectively, to our R&D expenses.
| | - |  | ---------------------------------------------------------------------------------

We made the above allocations on the basis of the job functions of grantees to whom we granted the stock options. As of December 31,
2009, 2010 and 2011, there was unrecognized compensation cost in the aggregate of $10.6 million, $37.8 million and $29.6 million, respectively, relating to non-vested stock options. We expect to recognize this stock option compensation
cost over the remaining vesting period of the related options. We will incur additional share-based compensation expenses in 2012 and future periods due to amortization of the unrecognized cost as of December 31, 2011 as well as any additional
stock option grants after December 31, 2011.

Other Income and Expenses

Our other income and expenses consist mainly of interest income, interest expense, foreign currency exchange gain/(loss), change in fair
value of prepaid forward contracts, equity in income of an associate and government subsidies.

Interest income or expense

Our interest income represents interests on our cash balances.



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Our interest expense consists primarily of interest expenses with respect to our short-term
and long-term borrowings from banks, and interest and amortization of issuance costs of our 2013 convertible notes, less interest expenses capitalized to the extent they relate to our capital expenditures. Our interest income and expense also
include our gain or loss on interest rate swap contracts. We have not entered into any interest rate swap contract since the beginning of 2009.

Foreign currency exchange gain/(loss), net

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

Government subsidy

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

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

Taxation and Incentives

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

Under the PRC tax laws and regulations effective prior to
January 1, 2008, a company established in China was typically subject to a national enterprise income tax at the rate of 30% on its taxable income and a local enterprise income tax at the rate of 3% on its taxable income. The PRC government
provided various incentives to foreign-invested enterprises to encourage foreign investments. Such incentives included reduced tax rates and other measures. Foreign-invested enterprises that were determined by PRC tax authorities to be manufacturing
enterprises with authorized terms of operation for more than ten years were eligible for:



| |  |  | a two-year exemption from the national enterprise income tax from their first profitable year; and
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | a 50% reduction of their applicable national enterprise income tax rate for the succeeding three years.
| | - |  | -------------------------------------------------------------------------------------------------------

The local preferential enterprise income tax treatment was within the jurisdiction of the local provincial authorities as permitted under
the prior PRC tax laws relating to foreign-invested enterprises. The local tax authorities would decide whether to grant any tax preferential treatment to foreign-invested enterprises on the basis of their local conditions. The Jiangxi provincial
government announced that energy companies, including our subsidiary, Jiangxi LDK Solar, with authorized terms of operation for more than ten years were eligible for:



| |  |  | a five-year exemption from the 3% local enterprise income tax from their first profitable year; and
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | a 50% reduction of their local enterprise income tax rate for the succeeding five years.
| | - |  | ----------------------------------------------------------------------------------------

2006 was the first profitable year of Jiangxi LDK Solar. As a foreign-invested manufacturing enterprise, it was entitled to full
exemption from the national and local enterprise income taxes for 2006 and 2007. Due to



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these preferential tax treatments, no income tax was incurred by Jiangxi LDK Solar for the years ended December 31, 2006 and 2007. You may find additional information in Item 3.
Key Information  D. Risk Factors  Risks Relating to Business Operations in China  Expiration of, or changes to, current PRC tax incentives that our business enjoys could have a material adverse effect on our results
of operations in this annual report. In March 2007, the PRC National Peoples Congress enacted the EIT Law, which became effective on January 1, 2008. The new tax law imposes a unified income tax rate of 25% on all domestic
enterprises and foreign-invested enterprises unless they qualify for preferential tax treatments under certain limited exceptions. The new tax law and the related regulations permit companies to continue to enjoy their preferential tax treatments
under the prior tax regime until such treatments expire in accordance with their terms, on the condition that such preferential tax treatments are available under the grandfather clauses of the new tax law and the related regulations.

In December 2009, Jiangxi LDK Solar was recognized by the PRC government as an HNTE under the EIT Law and is entitled to the preferential
enterprise income tax rate at 15% from 2009 to 2011. As a result, Jiangxi LDK Solar will be subject to income tax at 15% for 2011. Subject to renewal, the HNTE status of Jiangxi LDK Solar will enable it to enjoy the preferencencial income tax rate
of 15% from 2012 to 2014. Based on our self-assessment result, we believe that Jiangxi LDK Solar meets all the criteria for the renewal of its HNTE status. In September 2011, Jiangxi LDK Silicon was recognized by the PRC government as an HNTE and is
entitled to the preferential income tax rate of 15% from 2011 to 2013. Based on our prevailing business plan, our management expects Jiangxi LDK Silicon will continue to meet all the critieria for HNTE qualification upon renewal of such status which
will enable it to enjoy the preferential income tax rate of 15% from 2014 to 2016.

Under the PRC Income Tax Law for
Enterprises with Foreign Investment and Foreign Enterprises, the total income tax rate applicable to Jiangxi LDK Polysilicon in 2007 was 33%. Effective from January 1, 2008, Jiangxi LDK Polysilicon and our other PRC subsidiaries are subject to
the unified income tax rate of 25% pursuant to the EIT Law.

Under the former PRC tax law, dividend payments to foreign
investors made by foreign-invested enterprises such as our PRC subsidiaries, Jiangxi LDK Solar, Jiangxi LDK Silicon and Jiangxi LDK Polysilicon, were exempt from PRC withholding tax. Pursuant to the new tax laws and regulations, however, dividends
payable for earnings derived since January 1, 2008 by a foreign-invested enterprise to its foreign investors are subject to a 10% withholding tax, unless any such foreign investors jurisdiction of incorporation has a tax treaty or
agreement with China that provides for a different withholding arrangement. The Cayman Islands, where we are incorporated, does not have such a tax treaty or agreement with China. In addition, under the EIT Law, enterprises established under the
laws of jurisdictions outside China with their de facto management bodies located within China may be considered PRC resident enterprises and therefore subject to PRC enterprise income tax at the rate of 25% as to their worldwide income.
Under the implementation regulations issued by the State Council relating to the new tax law, de facto management body is defined as the body that has material and overall management control over the business, personnel, accounts and
properties of an enterprise. In April 2009, the PRC State Administration of Taxation promulgated a circular to clarify the definition of de facto management body for enterprises incorporated overseas with controlling shareholders being
PRC enterprises. Therefore, it remains unclear how the tax authorities will treat an overseas enterprise invested or controlled by another overseas enterprise and ultimately controlled by PRC individual residents as is in our case. We are currently
not treated as a PRC resident enterprise by the relevant tax authorities. Since substantially all of our management is currently based in China and may remain in China in the future, we may be considered a resident enterprise for the PRC
tax purposes, in which case, we will be subject to the uniform 25% enterprise income tax as to our global income.

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



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Critical Accounting Policies

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



| |  |  | the reported amounts of our assets and liabilities;
| | - |  | ---------------------------------------------------



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



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

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



| |  |  | our selection of critical accounting policies;
| | - |  | ----------------------------------------------



| |  |  | the judgment and other uncertainties affecting the application of such policies; and
| | - |  | ------------------------------------------------------------------------------------



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

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

Depreciation and amortization

Our long-lived assets include property, plant and equipment, and intangible assets relating to technical know-how. We amortize our long-lived assets using the straight-line method over the estimated
useful lives of the assets, taking into account the assets estimated residual values. We estimate the useful lives and residual values at the time we acquire the assets based on our managements knowledge of the useful lives of similar
assets and replacement costs of similar assets having been used for the same useful lives respectively in the market, and taking into account anticipated technological or other changes. On this basis, we have estimated the useful lives of our
buildings to be 30 years, our plants and machinery to be 10 years, our furniture and office equipment to be five years and our motor vehicles to be six years. For intangible assets of technical know-how that we acquire from equipment
manufacturers in connection with the operation of our acquired production equipment, we amortize them over their estimated useful lives of 10 years. We review the estimated useful life and residual value for each of our long-lived assets on a
regular basis. If technological changes are to occur more rapidly than anticipated, we may shorten the useful lives or lower the residual value assigned to these assets, which will result in the recognition of increased depreciation and amortization
expense in future periods.

Impairment of long-lived assets

We evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not
be recoverable, such as change of business plan, obsolescence, and continuous loss suffered. We assess recoverability of assets by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by
the asset. In determining estimates of future cash flows, we have to exercise significant judgment in terms of projection of future cash flows and assumptions including average selling prices, shipments and gross profit margin. If the carrying
amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds its fair value. We estimate the fair value of an asset based on the best information
available, including prices for similar assets and, in the absence of observable market prices, the result of using a present value technique to estimate the fair value of the asset. We recognized an impairment loss of $2.0 million for the year
ended December 31, 2009.



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Realization of inventory

Our inventories are stated at the lower of cost or market. Market value does not exceed the net realizable value of the inventory, which
is the estimated selling price of our inventory in the ordinary course of business, less reasonably predicable costs of completion and disposal. We routinely evaluate the net realizable value of our inventories in light of market conditions and
recognize inventory write-downs when considered necessary. The evaluation takes into consideration a number of factors including historical and forecasted consumption of our raw materials, our sales contracts for finished goods on hand,
marketability of our inventories, anticipated change in market selling price, risk of obsolescence of our inventories due to change in technology or change in physical properties over time and other factors. Also, the price of polysilicon materials
is subject to fluctuation based on global supply and demand, which may have an impact on our ability to recover our inventories costs. Furthermore, when our finished goods products contain defects, either caused by our production or delivery
process, as confirmed by our quality control department, our management will decide whether to sell the products at a discounted price or recycle the wafers back to our furnaces as raw materials, the decision of which will impact the amount of
inventory write-down required. During the years ended December 31, 2009, 2010 and 2011, total inventory write-downs were $180.2 million, $6.1 million and $305.2 million, respectively. A majority of our total inventory write-down
during 2009 and 2011 was to adjust the carrying value of certain inventories to estimated net realizable values to take into account the rapid market selling price decline for solar wafers. Such write-downs negatively impacted our gross profit and
income from operations. No significant inventory write-down was made in 2010 with the stabilization of selling price for solar wafers. There have been no significant recoveries in inventories beyond amounts that were previously written down.

Firm purchase commitments

Until the third quarter of 2008, an industry-wide shortage of high purity polysilicon coupled with a growing demand for PV modules caused the increases of polysilicon prices. In order to ensure the
adequate supply of polysilicon, we entered into several fixed price supply contracts under which the polysilicon feedstock would be supplied to us from 2009 to 2016. However, since 2009, the polysilicon price has decreased significantly as a result
of increased polysilicon manufacturing capacity and the pressure from the decreasing average selling price of PV products. As a result, we recognized provisions for loss or firm purchase commitments of $1.1 million, nil and $27.6 million under these
fixed price polysilicon contracts for the year ended December 31, 2009, 2010 and 2011, respectively. The provision was determined by applying the lower of cost or market, a methodology similar to that used with respect to inventory. Given the
uncertainty of future polysilicon prices, this loss may or may not be recovered and further losses on the outstanding purchase commitments may be recorded in future periods.

Provision for doubtful recoveries on prepayment to suppliers

We
make short-term and long-term prepayments to our raw materials suppliers from time to time in order to secure stable supply of polysilicon feedstock. Consistent with industry practices, we make such prepayments without any collateral. We
continuously make assessments on the creditworthiness of these suppliers, primarily based on their historical track records to honor their contractual commitments to us. If there is any indication that the creditworthiness of a supplier is
deteriorating, as evidenced by the suppliers failure to deliver to us the ordered polysilicon feedstock and repay our advances in accordance with the terms of our contract, we will assess and determine the amount of provision for doubtful
recoveries required on the prepayments we made with reference to any available internal and external information in respect of financial condition of that supplier. Based on such assessment, we made provision for doubtful recoveries totaling
$17.9 million during the year ended December 31, 2009, $4.7 million during the year ended December 31, 2010 and $70.5 million during the year ended December 31, 2011 against the prepayments we made to certain suppliers.



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Share-based compensation

We adopted our 2006 stock incentive plan on July 31, 2006 and have outstanding options granted to certain of our officers, directors
and employees and certain service providers to purchase an aggregate of 10,348,468 shares as of the date of this annual report. For a description of our stock options granted, including the exercise prices and vesting periods, see
Item 6. Directors, Senior Management and Employees  E. Share Ownership  2006 Stock Incentive Plan in this annual report. We recognize share-based compensation as compensation expense in our statement of
operations based on the fair value of equity awards on the date of the grant, with the compensation expense recognized over the period in which the recipient is required to provide service in exchange for the equity award. A fair value-based method
is used for measuring the compensation expense related to share-based compensation. Our stock option compensation charges may change based on changes in our actual forfeitures. We record compensation expense for the fair value of the options at the
grant date. We then amortize share-based compensation expenses over the vesting periods of the related options. The fair value of the shares underlying the options we have granted subsequent to our IPO has been based on the closing price of our ADSs
listed on the New York Stock Exchange for the trading day prior to the respective grant dates.

Recently Issued Accounting Standards

In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets
and Liabilities. ASU 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on its financial position, and to allow
investors to better compare financial statements prepared under U.S. GAAP with financial statements prepared under International Financial Reporting Standards, or IFRS. The new standards are effective for annual periods beginning January 1,
2013, and interim periods within those annual periods. Retrospective application is required. We will implement the provisions of ASU 2011-11 for reporting periods starting January 1, 2013 and do not expect the adoption of ASU 2011-11 will
result in any material impact on our consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05,
Comprehensive Income (Topic 220): Presentation of Comprehensive Income. Under ASU 2011-05, an entity will have the option to present the components of net income and comprehensive income in either one or two consecutive financial statements.
ASU 2011-05 eliminates the option in U.S. GAAP to present other comprehensive income in the statement of changes in equity. An entity should apply ASU 2011-05 retrospectively. Early adoption is permitted. In December 2011, the FASB decided to defer
the effective date of those changes in ASU 2011-05 that relate only to the presentation of reclassification adjustments in the statement of income by issuing ASU 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for
Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update 2011-05. We plan to implement the provisions of ASU 2011-05 by presenting a single statement of other
comprehensive income following the statement of income in 2012. In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and
IFRSs. The new standards do not extend the use of fair value but, rather, provide guidance about how fair value should be applied where it already is required or permitted under IFRS or U.S. GAAP. For U.S. GAAP, most of the changes are
clarifications of existing guidance or wording changes to align with IFRS. We expect that the adoption of ASU 2011-04 in 2012 will not have a material impact on our consolidated financial statements.



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Segments Operations

For the years ended December 31, 2009 and 2010, we operated in a single business segment that was the design, development and manufacture of PV products. In June 2011, we sold a minority stake in our
upstream polysilicon business. Since then, we have two reportable operating segments:



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



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

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

Results of Operations

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



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Year ended December 31, 2011 compared with year ended December 31, 2010



|                                                                           |  |                         |            |   |                  |  |       |                |  |   |                  |   |  |  |        |   
|-------------------------------------------------------------------------- |  | ----------------------- | ---------- | - | ---------------- |  | ----- | -------------- |  | - | ---------------- | - |  |  | ------ | --
|                                                                           |  | Year Ended December 31, |           
|                                                                           |  | 2010                    |            |   | 2011             | 
|                                                                           |  | (In thousands)          |            |   | (% of Net Sales) |  |       | (In thousands) |  |   | (% of Net Sales) |  
|Net sales:                                                                 |  |                         |            |   |                  |  |       |                |  |   |                  |   |  |  |        |   
|Wafers                                                                     |  | $                       | 1,522,925  |   |                  |  | 60.7  | %              |  | $ | 1,031,259        |   |  |  | 47.8   | % 
|Modules                                                                    |  |                         | 634,387    |   |                  |  | 25.3  |                |  |   | 720,863          |   |  |  | 33.4   |   
|Processing of PV products on behalf of others                              |  |                         | 204,915    |   |                  |  | 8.2   |                |  |   | 27,589           |   |  |  | 1.3    |   
|Silicon and other materials                                                |  |                         | 79,089     |   |                  |  | 3.2   |                |  |   | 239,897          |   |  |  | 11.1   |   
|Others                                                                     |  |                         | 68,031     |   |                  |  | 2.6   |                |  |   | 138,205          |   |  |  | 6.4    |   
|                                                                           |  |                         |            |   |                  |  |       |                |  |   |                  |   |  |  |        |   
|Total net sales                                                            |  |                         | 2,509,347  |   |                  |  | 100   |                |  |   | 2,157,813        |   |  |  | 100.0  |   
|Cost of goods sold:                                                        |  |                         |            |   |                  |  |       |                |  |   |                  |   |  |  |        |   
|Wafers                                                                     |  |                         | (1,118,605 | ) |                  |  | (44.6 | )              |  |   | (983,163         | ) |  |  | (45.6  | ) 
|Modules                                                                    |  |                         | (586,755   | ) |                  |  | (23.4 | )              |  |   | (885,884         | ) |  |  | (41.1  | ) 
|Processing of PV products on behalf of others                              |  |                         | (133,513   | ) |                  |  | (5.3  | )              |  |   | (21,654          | ) |  |  | (1.0   | ) 
|Silicon and other materials                                                |  |                         | (59,028    | ) |                  |  | (2.4  | )              |  |   | (209,159         | ) |  |  | (9.7   | ) 
|Others                                                                     |  |                         | (53,611    | ) |                  |  | (2.1  | )              |  |   | (97,614          | ) |  |  | (4.4   | ) 
|                                                                           |  |                         |            |   |                  |  |       |                |  |   |                  |   |  |  |        |   
|Total costs of goods sold                                                  |  |                         | (1,951,512 | ) |                  |  | (77.8 | )              |  |   | (2,197,474       | ) |  |  | (101.8 | ) 
|                                                                           |  |                         |            |   |                  |  |       |                |  |   |                  |   |  |  |        |   
|Gross profit (loss)                                                        |  |                         | 557,835    |   |                  |  | 22.2  |                |  |   | (39,661          | ) |  |  | (1.8   | ) 
|Selling expenses                                                           |  |                         | (21,734    | ) |                  |  | (0.9  | )              |  |   | (43,192          | ) |  |  | (2.0   | ) 
|General and administrative expenses                                        |  |                         | (90,380    | ) |                  |  | (3.6  | )              |  |   | (330,883         | ) |  |  | (15.3  | ) 
|Research and development expenses                                          |  |                         | (10,804    | ) |                  |  | (0.4  | )              |  |   | (46,510          | ) |  |  | (2.2   | ) 
|Impairment loss for property, plant and equipment                          |  |                         |           |   |                  |  |      |                |  |   |                 |   |  |  |       |   
|                                                                           |  |                         |            |   |                  |  |       |                |  |   |                  |   |  |  |        |   
|Total operating expenses                                                   |  |                         | (122,918   | ) |                  |  | (4.9  | )              |  |   | (420,585         | ) |  |  | (19.5  | ) 
|                                                                           |  |                         |            |   |                  |  |       |                |  |   |                  |   |  |  |        |   
|Income (loss) from operations                                              |  |                         | 434,917    |   |                  |  | 17.3  |                |  |   | (460,246         | ) |  |  | (21.3  | ) 
|Other income (expenses):                                                   |  |                         |            |   |                  |  |       |                |  |   |                  |   |  |  |        |   
|Interest income                                                            |  |                         | 4,632      |   |                  |  | 0.2   |                |  |   | 7,365            |   |  |  | 0.3    |   
|Interest expense and amortization of debt issuance costs and debt discount |  |                         | (95,012    | ) |                  |  | (3.8  | )              |  |   | (189,938         | ) |  |  | (8.8   | ) 
|Foreign currency exchange gain (loss), net                                 |  |                         | 8,327      |   |                  |  | 0.3   |                |  |   | (2,040           | ) |  |  | (0.1   | ) 
|Government subsidy                                                         |  |                         | 5,625      |   |                  |  | 0.2   |                |  |   | 33,698           |   |  |  | 1.6    |   
|Equity in income (loss) for associates and a jointly-controlled entity     |  |                         | 3,570      |   |                  |  | 0.1   |                |  |   | (787             | ) |  |  | (0.0   | ) 
|Others, net                                                                |  |                         | 618        |   |                  |  | 0.1   |                |  |   | 7,135            |   |  |  | 0.3    |   
|                                                                           |  |                         |            |   |                  |  |       |                |  |   |                  |   |  |  |        |   
|Earnings (loss) before income taxes                                        |  |                         | 362,677    |   |                  |  | 14.4  |                |  |   | (604,813         | ) |  |  | (28.0  | ) 
|Income tax expense                                                         |  |                         | (66,210    | ) |                  |  | (2.6  | )              |  |   | (4,141           | ) |  |  | (0.2   | ) 
|                                                                           |  |                         |            |   |                  |  |       |                |  |   |                  |   |  |  |        |   
|Net income (loss)                                                          |  |                         | 296,467    |   |                  |  | 11.8  |                |  |   | (608,954         | ) |  |  | (28.2  | ) 
|Earnings attributable to non-controlling interests                         |  |                         | (5,670     | ) |                  |  | (0.2  | )              |  |   | (393             | ) |  |  | (0.0   | ) 
|Earnings attributable to redeemable non-controlling interests              |  |                         |           |   |                  |  |      |                |  |   | (11,522          | ) |  |  | (0.6   | ) 
|                                                                           |  |                         |            |   |                  |  |       |                |  |   |                  |   |  |  |        |   
|Net income (loss) attributable to our shareholders                         |  |                         | 290,797    |   |                  |  | 11.6  |                |  |   | (620,869         | ) |  |  | (28.8  | ) 
|Accretion to redemption value of redeemable non-controlling interests      |  |                         |           |   |                  |  |      |                |  |   | (34,590          | ) |  |  | (1.6   | ) 
|                                                                           |  |                         |            |   |                  |  |       |                |  |   |                  |   |  |  |        |   
|Net income (loss) available to our shareholders                            |  | $                       | 290,797    |   |                  |  | 11.6  | %              |  | $ | (655,459         | ) |  |  | (30.4  | )%
|                                                                           |  |                         |            |   |                  |  |       |                |  |   |                  |   |  |  |        |   



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Net sales. For the year ended December 31, 2011, our net sales were
$2,157.8 million, representing a decrease of $351.5 million as compared to our net sales of $2,509.3 million for the year ended December 31, 2010. This decrease was due primarily to a $491.7 million decrease in our wafer sales, a
$177.3 million decrease in our processing of PV products for our customers, partially offset by a $86.5 million increase in our module sales and a $231.0 million increase in our sales of silicon and other materials. Wafer sales continued to
constitute the largest component of our net sales, 60.7% for the year ended December 31, 2010 and 47.8% for the year ended December 31, 2011.

The decrease in our wafer sales was mainly attributable to a decrease in our shipments to 1,540.7 MW for the year ended December 31, 2011 as compared to 1,717.6 MW for the year ended
December 31, 2010 and a decrease in the average selling price of our wafers decreased from $0.89 per watt during the year ended December 31, 2010 to $0.67 per watt during the year ended December 31, 2011. The increase in our module
sales was mainly attributable to an increase in our shipments to 551.0 MW for the year ended December 31, 2011 as compared to 346.1 MW for the year ended December 31, 2010, which was partially offset by the decrease in the average selling
price of our modules from $1.81 per watt during the year ended December 31, 2010 to $1.31 per watt during the year ended December 31, 2011. The decrease in processing of PV products for our customers was mainly attributable to a
significant decrease in our shipments to 66.1MW for the year ended December 31, 2011 as compared to 427.3 MW for the year ended December 31, 2010 as demand from these customers dropped significantly during the year. The increase in our
sales of silicon and other materials was mainly attributable to an increase in our polysilicon shipments to 2,563 MT for the year ended December 31, 2011 as compared to 1,326 MT for the year ended December 31, 2010 since our second 5,000
MT train commenced production in August 2010.

Net sales were $145.6 million for our polysilicon segment and $2,012.2 million
for our other PV products segment for the year ended December 31, 2011, compared to $83.5 million for our polysilicon segment and $2,425.9 million for our other PV products segment for the year ended December 31, 2010. The above net sales
have excluded our inter-segment sales between the polysilicon segment and other PV products segment. The increase in net sales for our polysilicon segment was mainly attributable to the increase in our polysilicon shipments after the commencement of
our second 5,000 MT train in August 2010. The decrease in net sales for our other PV products segment was mainly attributable to the decrease in our wafer sales as a result of decrease in our wafer shipment and the corresponding average selling
price, which was partially offset by the increase in our module shipment.

During the years ended December 31, 2010 and
2011, our net sales by product were as follows:



|                                              |  |                         |         |  |           |  |       |               |  |   |           |  |  |  |       |  
|--------------------------------------------- |  | ----------------------- | ------- |  | --------- |  | ----- | ------------- |  | - | --------- |  |  |  | ----- | -
|                                              |  | Year Ended December 31, |        
|                                              |  | 2010                    |         |  | 2011      | 
|Product                                       |  | Net Sales               |         |  | % ofTotal |  |       | Net Sales     |  |   | % ofTotal | 
|                                              |  | (In millions)           |         |  |           |  |       | (In millions) |  |   |           | 
|Wafers                                        |  | $                       | 1,522.9 |  |           |  | 60.7  | %             |  | $ | 1,031.3   |  |  |  | 47.8  | %
|Modules                                       |  |                         | 634.4   |  |           |  | 25.3  |               |  |   | 720.9     |  |  |  | 33.4  |  
|Processing of PV products on behalf of others |  |                         | 204.9   |  |           |  | 8.2   |               |  |   | 27.6      |  |  |  | 1.3   |  
|Silicon and other materials                   |  |                         | 79.1    |  |           |  | 3.2   |               |  |   | 239.9     |  |  |  | 11.1  |  
|Others                                        |  |                         | 68.0    |  |           |  | 2.6   |               |  |   | 138.1     |  |  |  | 6.4   |  
|                                              |  |                         |         |  |           |  |       |               |  |   |           |  |  |  |       |  
|Total net sales                               |  | $                       | 2,509.3 |  |           |  | 100.0 | %             |  | $ | 2,157.8   |  |  |  | 100.0 | %
|                                              |  |                         |         |  |           |  |       |               |  |   |           |  |  |  |       |  



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During the years ended December 31, 2010 and 2011, our net sales breakdown by
geographic region was as follows:



|                      |  |                         |         |  |           |  |       |               |  |   |           |  |  |  |       |  
|--------------------- |  | ----------------------- | ------- |  | --------- |  | ----- | ------------- |  | - | --------- |  |  |  | ----- | -
|                      |  | Year Ended December 31, |        
|                      |  | 2010                    |         |  | 2011      | 
|Geographic Region     |  | Net Sales               |         |  | % ofTotal |  |       | Net Sales     |  |   | % ofTotal | 
|                      |  | (In millions)           |         |  |           |  |       | (In millions) |  |   |           | 
|China                 |  |                         | 859.0   |  |           |  | 34.2  |               |  | $ | 833.4     |  |  |  | 38.6  | %
|Europe                |  | $                       | 892.8   |  |           |  | 35.6  | %             |  |   | 619.5     |  |  |  | 28.7  |  
|Asia Pacific ex-China |  |                         | 566.1   |  |           |  | 22.6  |               |  |   | 571.3     |  |  |  | 26.5  |  
|North America         |  |                         | 191.4   |  |           |  | 7.6   |               |  |   | 133.6     |  |  |  | 6.2   |  
|                      |  |                         |         |  |           |  |       |               |  |   |           |  |  |  |       |  
|Total net sales       |  | $                       | 2,509.3 |  |           |  | 100.0 | %             |  | $ | 2,157.8   |  |  |  | 100.0 | %
|                      |  |                         |         |  |           |  |       |               |  |   |           |  |  |  |       |  

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

Cost of goods sold. For the
year ended December 31, 2011, our cost of goods sold was $2,197.5 million, representing an increase of $246.0 million as compared to our cost of goods sold of $1,951.5 million for the year ended December 31, 2010. This was
primarily due to the recognition of inventory write-down of $305.2 million and provision for loss on firm purchase commitment of $27.6 million during the year ended December 31, 2011. The average cost of polysilicon we consumed to manufacture
wafers decreased to $48.1 per kilogram for the year ended December 31, 2011 as compared to $53.9 per kilogram for the year ended December 31, 2010, primarily as a result of reduction in cost of purchases. Our provisions for inventory
write-downs for the year ended December 31, 2011 increased by $299.1 million to $305.2 million as compared to $6.1 million for the year ended December 31, 2010. We recorded inventory write-downs and provision for loss on firm purchase
commitment during the year ended December 31, 2011 primarily due to the net realized value of our products falling below our cost of inventories as a result of the significant drop in the average selling price of our products.

During the years ended December 31, 2010 and 2011, our cost of goods sold by product/service was as follows:



|                                              |  |                         |         |  |           |  |       |                    |  |   |           |  |  |  |       |  
|--------------------------------------------- |  | ----------------------- | ------- |  | --------- |  | ----- | ------------------ |  | - | --------- |  |  |  | ----- | -
|                                              |  | Year Ended December 31, |        
|                                              |  | 2010                    |         |  | 2011      | 
|Product                                       |  | Cost of Goods Sold      |         |  | % ofTotal |  |       | Cost of Goods Sold |  |   | % ofTotal | 
|                                              |  | (In millions)           |         |  |           |  |       | (In millions)      |  |   |           | 
|Wafers                                        |  | $                       | 1,118.6 |  |           |  | 57.3  | %                  |  | $ | 983.2     |  |  |  | 44.7  | %
|Modules                                       |  |                         | 586.8   |  |           |  | 30.1  |                    |  |   | 885.9     |  |  |  | 40.3  |  
|Processing of PV products on behalf of others |  |                         | 133.5   |  |           |  | 6.8   |                    |  |   | 21.7      |  |  |  | 1.1   |  
|Silicon and other materials                   |  |                         | 59.0    |  |           |  | 3.0   |                    |  |   | 209.1     |  |  |  | 9.5   |  
|Others                                        |  |                         | 53.6    |  |           |  | 2.8   |                    |  |   | 97.6      |  |  |  | 4.4   |  
|                                              |  |                         |         |  |           |  |       |                    |  |   |           |  |  |  |       |  
|Total cost of goods sold                      |  | $                       | 1,951.5 |  |           |  | 100.0 | %                  |  | $ | 2,197.5   |  |  |  | 100.0 | %
|                                              |  |                         |         |  |           |  |       |                    |  |   |           |  |  |  |       |  

Gross profit (loss). For the year ended December 31, 2011, our gross loss was
$39.7 million, compared to a gross profit of $557.8 million for the year ended December 31, 2010. Our gross loss margin was 1.8% for the year ended December 31, 2011, compared with a gross profit margin of 22.2% for the year
ended December 31, 2010. This decrease in gross profit and gross margin was primarily due to the recognition of inventory write-down of $305.2 million and provision for firm purchase commitment of $27.6 million during the year ended
December 31, 2011 and the significant drop in the average selling price of our products.

We recorded gross profit of
$41.5 million for our polysilicon segment and gross loss of $2,239.0 million for our other PV products segment for the year ended December 31, 2011, compared to gross profit of $21.0 million



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for our polysilicon segment and $536.9 million for our other PV products segment for the year ended December 31, 2010. The above gross profit (loss) has excluded the profit (loss) resulting
from our inter-segment sales between the polysilicon segment and other PV products segment. The increase in gross profit for our polysilicon segment was mainly attributable to the increase in shipments, partially offset by the decrease
in average selling price of the polysilicon during the year. The decrease in gross profit in our PV products segment was mainly attributable to the decrease in average selling price for our PV products and the recognition of inventory write-down and
provision for loss on firm purchase commitment during the year ended December 31, 2011.

Operating expenses. For
the year ended December 31, 2011, our operating expenses were $420.6 million, representing an increase of $297.7 million, as compared to our operating expenses of $122.9 million for the year ended December 31, 2010. The
increase was due primarily to an increase in our selling expenses, including additional marketing expenses and freight and custom fees, incurred as a result of the expansion of our operations in our module business, the promotion of our different
products and overseas sales and an increase in our general and administrative expenses mainly as a result of provision for doubtful receivables and prepayments of $174.3 million. Compared to the year ended December 31, 2010, our general and
administrative expenses for the year ended December 31, 2011 included higher legal and professional expenses relating to contract disputes with our customers and suppliers, higher bank, insurance charges, salary and welfare expenses as a result
of expansion of our operations in our module business.

Interest income and expense. For the year ended
December 31, 2011, our interest income was $7.4 million, an increase of $2.8 million, as compared to our interest income for the year ended December 31, 2010 of $4.6 million. This increase was due primarily to increase in
interest rate. For the year ended December 31, 2011, our interest expense increased to $189.9 million, as compared to $95.0 million for the year ended December 31, 2010. This increase was due primarily to the increase in average
interest rate from 5.032% in 2010 to 6.371% in 2011 and the increase in average loan balances from $1,724.9 million in 2010 to $2,514.3 million in 2011.

Foreign currency exchange gain (loss), net. For the year ended December 31, 2011, our foreign currency exchange loss, net, was $2.0 million, a decrease of $10.3 million, as compared
to our foreign currency exchange gain, net, of $8.3 million for the year ended December 31, 2010. This decrease was due primarily to depreciation of the U.S dollar against Renminbi resulting in an exchange loss of $10.8 million related to
our 2014 senior notes.

Government subsidy. For the year ended December 31, 2011, government subsidies we received
and recognized as other income totaled $33.7 million, as compared to $5.6 million for the year ended December 31, 2010. All of these government subsidies related to the general incentives provided to us in connection with the
development of our wafer, cell and module businesses. The increase in government subsidies was due primarily to the general incentives provided to us in connection with our newly setup cell business.

Equity in income (loss) from associates and a jointly controlled entity. For the year ended December 31, 2011, our equity in
loss from associates and a jointly controlled entity totaled $0.8 million, as compared the income of $3.6 million for the year ended December 31, 2010, due primarily to the recognition of loss from a jointly controlled entity of $2.7
million during the year ended December 31, 2011.

Income tax expense. For the year ended December 31, 2011,
our income tax expense totaled $4.1 million, as compared to our income tax expense of $66.2 million for the year ended December 31, 2010. This change was due primarily to our loss before income tax of $604.8 million during the
year ended December 31, 2011, as compared to our earnings before income tax of $362.7 million that we recorded for the year ended December 31, 2010. Jiangxi LDK Solar, one of our principal operating subsidiaries, is entitled to a
preferential income tax rate of 12.5% for the year ended December 31, 2010 as a result of a reduced unified enterprise income tax. Jiangxi LDK Solar is entitled to a preferential income tax rate of 15% subject to HNTE for the year ended December 31,
2011. Our effective income tax rate was 18.3% and a negative 0.7% for each of the years ended December 31, 2010 and 2011, respectively. Our effective income tax rate for the year ended December 31, 2011 was lower than the 12.5% applicable
to Jiangxi LDK Solar, the subsidiary engaged in wafer production and sales, due primarily



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to a recognition of $174.3 million valuation allowance on deferred income tax assets as our management determined that not all of the deferred income tax assets could be realized, partially
offset by the $44.3 million reversal of tax effect of loss on transfer of equity interests within our group that was eliminated on consolidation. See Item 3. Key Information  D. Risk Factors  Risks Relating
to Business Operations in China  Expiration of, or changes to, current PRC tax incentives that our business enjoys could have a material adverse effect on our results of operations.

Net income (loss). For the year ended December 31, 2011, our net loss after taxes before non-controlling interests was
$609.0 million, as compared to a net income of $296.5 million for the year ended December 31, 2010. This decrease was due primarily to decrease in gross profit as a result of significant declines in the price and the recognition of
inventory write-down and provision for firm purchase commitments, recognition of provision for double receivables and prepayments and valuation allowance on deferred income tax assets.

Earnings attributable to non-controlling interests and redeemable non-controlling interests. For the year ended
December 31, 2011, we had earnings attributable to non-controlling interests of $0.4 million and attributable to redeemable non-controlling interests of $11.5 million, respectively, as compared to earnings of $5.7 million for the year
ended December 31, 2010. This change was due primarily to earnings attributable to our majority-owned subsidiaries in Europe and the United States.

Accretion to redemption value of redeemable non-controlling interests. On December 30, 2010, LDK Silicon, one of our wholly-owned subsidiaries which indirectly holds all of our polysilicon
businesses operated by Jiangxi LDK Silicon and Jiangxi LDK Polysilicon in China, entered into a subscription investment agreement with China Development Bank Capital Corporation Ltd., two investment funds affiliated with China Construction Bank
Corporation Ltd. and an investment fund affiliated with another major PRC bank to allot and issue 240,000,000 series A redeemable convertible preferred shares for an aggregate issuance price of $240 million. The transaction was consummated with the
preferred shares allotted and issued on June 3, 2011. The preferred shares on an as-if-converted basis represented approximately 18.46% of the aggregate issued and outstanding share capital of LDK SCT on the closing date, with us holding the
remaining 81.54%. For the year ended December 31, 2011, accretion to redemption value of redeemable non-controlling interests was $34.6 million.

Net income (loss) available to our shareholders. For the year ended December 31, 2011, net loss available to our ordinary shareholders was $655.5 million, as compared to a net income of
$290.8 million available to our ordinary shareholders for the year ended December 31, 2010.



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Year ended December 31, 2010 compared with year ended December 31, 2009



|                                                                                                        |  |                         |            |   |                  |  |        |                |  |   |                  |   |  |  |       |  
|------------------------------------------------------------------------------------------------------- |  | ----------------------- | ---------- | - | ---------------- |  | ------ | -------------- |  | - | ---------------- | - |  |  | ----- | -
|                                                                                                        |  | Year Ended December 31, |           
|                                                                                                        |  | 2009                    |            |   | 2010             | 
|                                                                                                        |  | (In thousands)          |            |   | (% of Net Sales) |  |        | (In thousands) |  |   | (% of Net Sales) |  
|Net sales:                                                                                              |  |                         |            |   |                  |  |        |                |  |   |                  |   |  |  |       |  
|Wafers                                                                                                  |  | $                       | 945,009    |   |                  |  | 86.1   | %              |  | $ | 1,522,925        |   |  |  | 60.7  | %
|Modules                                                                                                 |  |                         | 58,957     |   |                  |  | 5.4    |                |  |   | 634,387          |   |  |  | 25.3  |  
|Processing of PV products on behalf of others                                                           |  |                         | 80,557     |   |                  |  | 7.3    |                |  |   | 204,915          |   |  |  | 8.2   |  
|Silicon and other materials                                                                             |  |                         | 8,007      |   |                  |  | 0.7    |                |  |   | 79,089           |   |  |  | 3.2   |  
|Others                                                                                                  |  |                         | 5,508      |   |                  |  | 0.5    |                |  |   | 68,031           |   |  |  | 2.6   |  
|                                                                                                        |  |                         |            |   |                  |  |        |                |  |   |                  |   |  |  |       |  
|Total net sales                                                                                         |  |                         | 1,098,038  |   |                  |  | 100    |                |  |   | 2,509,347        |   |  |  | 100   |  
|Cost of goods sold:                                                                                     |  |                         |            |   |                  |  |        |                |  |   |                  |   |  |  |       |  
|Wafers                                                                                                  |  |                         | (1,089,660 | ) |                  |  | (99.2  | )              |  |   | (1,118,605       | ) |  |  | (44.6 | )
|Modules                                                                                                 |  |                         | (52,154    | ) |                  |  | (4.7   | )              |  |   | (586,755         | ) |  |  | (23.4 | )
|Processing of PV products on behalf of others                                                           |  |                         | (62,244    | ) |                  |  | (5.7   | )              |  |   | (133,513         | ) |  |  | (5.3  | )
|Silicon and other materials                                                                             |  |                         | (3,459     | ) |                  |  | (0.3   | )              |  |   | (59,028          | ) |  |  | (2.4  | )
|Others                                                                                                  |  |                         | (4,104     | ) |                  |  | (0.4   | )              |  |   | (53,611          | ) |  |  | (2.1  | )
|                                                                                                        |  |                         |            |   |                  |  |        |                |  |   |                  |   |  |  |       |  
|Total costs of goods sold                                                                               |  |                         | (1,211,621 | ) |                  |  | (110.3 | )              |  |   | (1,951,512       | ) |  |  | (77.8 | )
|                                                                                                        |  |                         |            |   |                  |  |        |                |  |   |                  |   |  |  |       |  
|Gross (loss) profit                                                                                     |  |                         | (113,583   | ) |                  |  | (10.3  | )              |  |   | 557,835          |   |  |  | 22.2  |  
|Selling expenses                                                                                        |  |                         | (4,738     | ) |                  |  | (0.4   | )              |  |   | (21,734          | ) |  |  | (0.9  | )
|General and administrative expenses                                                                     |  |                         | (91,513    | ) |                  |  | (8.3   | )              |  |   | (90,380          | ) |  |  | (3.6  | )
|Research and development expenses                                                                       |  |                         | (8,299     | ) |                  |  | (0.8   | )              |  |   | (10,804          | ) |  |  | (0.4  | )
|Legal settlements, net of insurance recoveries                                                          |  |                         | (10,000    | ) |                  |  | (0.9   | )              |  |   |                 |   |  |  |      |  
|Impairment loss for property, plant and equipment                                                       |  |                         | (1,999     | ) |                  |  | (0.2   | )              |  |   |                 |   |  |  |      |  
|                                                                                                        |  |                         |            |   |                  |  |        |                |  |   |                  |   |  |  |       |  
|Total operating expenses                                                                                |  |                         | (116,549   | ) |                  |  | (10.6  | )              |  |   | (122,918         | ) |  |  | (4.9  | )
|                                                                                                        |  |                         |            |   |                  |  |        |                |  |   |                  |   |  |  |       |  
|(Loss) income from operations                                                                           |  |                         | (230,132   | ) |                  |  | (20.9  | )              |  |   | 434,917          |   |  |  | 17.3  |  
|Other income (expenses):                                                                                |  |                         |            |   |                  |  |        |                |  |   |                  |   |  |  |       |  
|Interest income                                                                                         |  |                         | 2,408      |   |                  |  | 0.2    |                |  |   | 4,632            |   |  |  | 0.2   |  
|Interest expense and amortization of existing convertible senior notes issuance costs and debt discount |  |                         | (50,068    | ) |                  |  | (4.6   | )              |  |   | (95,012          | ) |  |  | (3.8  | )
|Foreign currency exchange (loss) gain, net                                                              |  |                         | (613       | ) |                  |  | (0.1   | )              |  |   | 8,327            |   |  |  | 0.3   |  
|Government subsidy                                                                                      |  |                         | 26,927     |   |                  |  | 2.5    |                |  |   | 5,625            |   |  |  | 0.2   |  
|Equity in (loss) income for an associate and a jointly-controlled entity                                |  |                         | (3,343     | ) |                  |  | (0.3   | )              |  |   | 3,570            |   |  |  | 0.1   |  
|Others, net                                                                                             |  |                         | (87        | ) |                  |  |       |                |  |   | 618              |   |  |  | 0.1   |  
|                                                                                                        |  |                         |            |   |                  |  |        |                |  |   |                  |   |  |  |       |  
|(Loss) earnings before income taxes                                                                     |  |                         | (254,908   | ) |                  |  | (23.2  | )              |  |   | 362,677          |   |  |  | 14.4  |  
|Income tax benefit (expense)                                                                            |  |                         | 20,912     |   |                  |  | 1.9    |                |  |   | (66,210          | ) |  |  | (2.6  | )
|                                                                                                        |  |                         |            |   |                  |  |        |                |  |   |                  |   |  |  |       |  
|Net (loss) income                                                                                       |  |                         | (233,996   | ) |                  |  | (21.3  | )              |  |   | 296,467          |   |  |  | 11.8  |  
|Loss (earnings) attributable to non-controlling interests                                               |  |                         | (229       | ) |                  |  |       |                |  |   | (5,670           | ) |  |  | (0.2  | )
|                                                                                                        |  |                         |            |   |                  |  |        |                |  |   |                  |   |  |  |       |  
|Net (loss) income available to our shareholders                                                         |  | $                       | (234,225   | ) |                  |  | (21.3  | )%             |  | $ | 290,797          |   |  |  | 11.6  | %
|                                                                                                        |  |                         |            |   |                  |  |        |                |  |   |                  |   |  |  |       |  



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Net sales. For the year ended December 31, 2010, our net sales were
$2,509.3 million, representing an increase of $1,411.3 million as compared to our net sales of $1,098.0 million for the year ended December 31, 2009. This increase was due primarily to a $577.9 million increase in our wafer
sales, a $575.4 million increase in our module sales, a $124.4 million increase in our processing of PV products for our customers and a $133.6 million increase in our sales of silicon and other materials. Wafer sales continued to
constitute the largest component of our net sales, 86.1% for the year ended December 31, 2009 and 60.7% for the year ended December 31, 2010.

The increase in our wafer sales was mainly attributable to an increase in our shipments to 1,717.6 MW for the year ended December 31, 2010 as compared to 898.1 MW for the year ended
December 31, 2009. The average selling price of our wafers decreased from $1.05 per watt during the year ended December 31, 2009 to $0.89 per watt during the year ended December 31, 2010. The increase in our module sales was mainly
attributable to the ramp-up of our module production capacity to approximately 1,500 MW on an annualized basis as of December 31, 2010, subsequent to our acquisition of crystalline module manufacturing equipment and other related assets
from Best Solar in February 2010. The average selling price of our modules also increased during this period. The increase in processing of PV products for our customers was mainly attributable to more demand from these customers in the first half
of 2010. The increase in our sales of silicon materials was mainly attributable to the commencement of commercial production of the first and second 5,000 MT trains in our second polysilicon production plant in September 2009 and August 2010,
respectively.

During the years ended December 31, 2009 and 2010, our net sales by product were as follows:



|                                              |  |                         |         |  |           |  |       |               |  |   |           |  |  |  |       |  
|--------------------------------------------- |  | ----------------------- | ------- |  | --------- |  | ----- | ------------- |  | - | --------- |  |  |  | ----- | -
|                                              |  | Year Ended December 31, |        
|                                              |  | 2009                    |         |  | 2010      | 
|Product                                       |  | Net Sales               |         |  | % ofTotal |  |       | Net Sales     |  |   | % ofTotal | 
|                                              |  | (In millions)           |         |  |           |  |       | (In millions) |  |   |           | 
|Wafers                                        |  | $                       | 945.0   |  |           |  | 86.1  | %             |  | $ | 1,522.9   |  |  |  | 60.7  | %
|Modules                                       |  |                         | 58.9    |  |           |  | 5.4   |               |  |   | 634.4     |  |  |  | 25.3  |  
|Processing of PV products on behalf of others |  |                         | 80.6    |  |           |  | 7.3   |               |  |   | 204.9     |  |  |  | 8.2   |  
|Silicon and other materials                   |  |                         | 8.0     |  |           |  | 0.7   |               |  |   | 79.1      |  |  |  | 3.2   |  
|Others                                        |  |                         | 5.5     |  |           |  | 0.5   |               |  |   | 68.0      |  |  |  | 2.6   |  
|                                              |  |                         |         |  |           |  |       |               |  |   |           |  |  |  |       |  
|Total net sales                               |  | $                       | 1,098.0 |  |           |  | 100.0 | %             |  | $ | 2,509.3   |  |  |  | 100.0 | %
|                                              |  |                         |         |  |           |  |       |               |  |   |           |  |  |  |       |  

During the years ended December 31, 2009 and 2010, our net sales breakdown by geographic region was
as follows:



|                      |  |                         |         |  |           |  |       |               |  |   |           |  |  |  |       |  
|--------------------- |  | ----------------------- | ------- |  | --------- |  | ----- | ------------- |  | - | --------- |  |  |  | ----- | -
|                      |  | Year Ended December 31, |        
|                      |  | 2009                    |         |  | 2010      | 
|Geographic Region     |  | Net Sales               |         |  | % ofTotal |  |       | Net Sales     |  |   | % ofTotal | 
|                      |  | (In millions)           |         |  |           |  |       | (In millions) |  |   |           | 
|Europe                |  | $                       | 223.8   |  |           |  | 20.4  | %             |  | $ | 892.8     |  |  |  | 35.6  | %
|China                 |  |                         | 274.0   |  |           |  | 25.0  |               |  |   | 859.0     |  |  |  | 34.2  |  
|Asia Pacific ex-China |  |                         | 552.6   |  |           |  | 50.3  |               |  |   | 566.1     |  |  |  | 22.6  |  
|North America         |  |                         | 47.6    |  |           |  | 4.3   |               |  |   | 191.4     |  |  |  | 7.6   |  
|                      |  |                         |         |  |           |  |       |               |  |   |           |  |  |  |       |  
|Total net sales       |  | $                       | 1,098.0 |  |           |  | 100.0 | %             |  | $ | 2,509.3   |  |  |  | 100.0 | %
|                      |  |                         |         |  |           |  |       |               |  |   |           |  |  |  |       |  

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

Cost of goods sold. For the
year ended December 31, 2010, our cost of goods sold was $1,951.5 million, representing an increase of $739.9 million, as compared to our cost of goods sold of $1,211.6 million for the year



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ended December 31, 2009. This was primarily due to an increase in our overall sales volume, including the sales volume of wafers, modules and silicon materials, and a shift in our product
mix to the sale of more modules, which have a lower gross margin and higher costs of goods sold compared to wafers, partially offset by a decrease in the average cost of polysilicon consumption and provisions for inventory write-downs. The average
cost of polysilicon we consumed to manufacture wafers decreased to $53.9 per kilogram for the year ended December 31, 2010 as compared to $111.5 per kilogram for the year ended December 31, 2009, primarily as a result of our increased use
of polysilicon produced in-house with the ramping up of our in-polysilicon production capabilities and the significant decrease in polysilicon material price in the open market resulting from the expanded supply. Our provisions for inventory
write-downs for the year ended December 31, 2010 decreased by $174.1 million to $6.1 million as compared to $180.2 million for the year ended December 31, 2009. We recorded inventory write-downs of $177.8 million during
the year ended December 31, 2009 primarily because the net realizable value of our products fell below our cost of inventories as a result of the significant drop in the average selling prices of our products following the global financial
crisis.

During the years ended December 31, 2009 and 2010, our cost of goods sold by product/service was as follows:



|                                              |  |                         |         |  |           |  |       |                    |  |   |           |  |  |  |       |  
|--------------------------------------------- |  | ----------------------- | ------- |  | --------- |  | ----- | ------------------ |  | - | --------- |  |  |  | ----- | -
|                                              |  | Year Ended December 31, |        
|                                              |  | 2009                    |         |  | 2010      | 
|Product                                       |  | Cost of Goods Sold      |         |  | % ofTotal |  |       | Cost of Goods Sold |  |   | % ofTotal | 
|                                              |  | (In millions)           |         |  |           |  |       | (In millions)      |  |   |           | 
|Wafers(1)                                     |  | $                       | 1,089.7 |  |           |  | 89.9  | %                  |  | $ | 1,118.6   |  |  |  | 57.3  | %
|Modules                                       |  |                         | 52.1    |  |           |  | 4.3   |                    |  |   | 586.8     |  |  |  | 30.1  |  
|Processing of PV products on behalf of others |  |                         | 62.2    |  |           |  | 5.2   |                    |  |   | 133.5     |  |  |  | 6.8   |  
|Silicon and other materials                   |  |                         | 3.5     |  |           |  | 0.3   |                    |  |   | 59.0      |  |  |  | 3.0   |  
|Others                                        |  |                         | 4.1     |  |           |  | 0.3   |                    |  |   | 53.6      |  |  |  | 2.8   |  
|                                              |  |                         |         |  |           |  |       |                    |  |   |           |  |  |  |       |  
|Total cost of goods sold                      |  | $                       | 1,211.6 |  |           |  | 100.0 | %                  |  | $ | 1,951.5   |  |  |  | 100.0 | %
|                                              |  |                         |         |  |           |  |       |                    |  |   |           |  |  |  |       |  



|(1) | Includes substantially all of the provision for inventory write-downs in 2009 and 2010.
|--- | ---------------------------------------------------------------------------------------

Gross (loss) profit. For the year ended December 31, 2010, our gross profit was $557.8 million, compared to a gross loss
of $113.6 million for the year ended December 31, 2009. This increase in gross profit was primarily due to our higher net sales, a decrease in average production costs and a decrease in provision for inventory write-down mentioned above.
Our gross profit margin was 22.2% for the year ended December 31, 2010, compared with a gross loss margin of 10.3% for the year ended December 31, 2009. This increase in gross profit margin was due primarily to the decrease in average
production costs and a decrease in provision for inventory write-down, which was partially offset by the increased module sales in our product mix from 5.4% for the year ended December 31, 2009 to 25.3% for the year ended December 31,
2010. Module sales generated a lower gross profit margin of 7.5% as compared to 26.5% from wafer sales for the year ended December 31, 2010.

Operating expenses. For the year ended December 31, 2010, our operating expenses were $122.9 million, representing an increase of $6.4 million, as compared to our operating expenses
of $116.5 million for the year ended December 31, 2009. The increase was due primarily to an increase in our selling expenses, including additional marketing expenses and freight and custom fees, incurred as a result of the expansion of
our operations, the promotion of our different products and overseas sales while our general and administrative expenses remained stable in the year ended December 31, 2010. Compared to the year ended December 31, 2009, our general and
administrative expenses for the year ended December 31, 2010 included higher legal and professional expenses relating to contract disputes with our customers and suppliers and higher bank and insurance charges in respect of our module sales,
which was offset by a decrease in our provisions for doubtful recovery of prepayments to our suppliers from $17.9 million for the year ended December 31, 2009 to $4.7



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million for the year ended December 31, 2010, and a $2.6 million decrease in stock-based compensation, as we completed amortization of certain stock-based compensation expenses relating
to stock options we granted in 2007.

Interest income and expense. For the year ended December 31, 2010, our
interest income was $4.6 million, an increase of $2.2 million, as compared to our interest income for the year ended December 31, 2009 of $2.4 million. This increase was due primarily to our higher level of bank deposits. For the
year ended December 31, 2010, our interest expense increased to $95.0 million, as compared to $50.1 million for the year ended December 31, 2009. This increase was due primarily to an increase in our bank borrowings to finance
our working capital needs and capital expenditures, as well as a decrease in interest expenses that had previously been capitalized following the commencement of commercial production of the first and second 5,000 MT trains in our second
polysilicon production plant in September 2009 and August 2010, respectively. Lower interest rates applicable to our bank borrowings and bank deposits also affected our interest income and expense for the year ended December 31, 2010.

Foreign currency exchange (loss) gain, net. For the year ended December 31, 2010, our foreign currency exchange
gain, net, was $8.3 million, an increase of $8.9 million, as compared to our foreign currency exchange loss, net, of $0.6 million for the year ended December 31, 2009. This increase was due primarily to the further depreciation
of the U.S. dollar against Renminbi during the year ended December 31, 2010 while the exchange rate of the U.S. dollar remained stable against the Renminbi for the year ended December 31, 2009. Our PRC operating subsidiaries, whose
functional currency is Renminbi, held U.S. dollar denominated liabilities on a net basis for the year ended December 31, 2010.

Government subsidy. For the year ended December 31, 2010, government subsidies we received and recognized as other income totaled $5.6 million, as compared to $26.9 million for the
year ended December 31, 2009. All of these government subsidies related to the general incentives provided to us in connection with the development of our wafer and module businesses. The decrease in government subsidies was due primarily to
one-time incentives provided by the local government in respect of our polysilicon and module businesses that we received during the year ended December 31, 2009.

Equity in (loss) income for an associate and a jointly controlled entity. For the year ended December 31, 2010, our equity in income from an associate and a jointly controlled entity totaled
$3.6 million, as compared to our equity in loss of $3.3 million for the year ended December 31, 2009, due primarily to the ramp-up of crucible manufacturing operations by Jiangxi Sinoma, in which we hold a 33.5% interest.

Income tax benefit (expense). For the year ended December 31, 2010, our income tax expense totaled $66.2 million, as
compared to our income tax benefit of $20.9 million for the year ended December 31, 2009. This change was due primarily to our earnings before income tax of $362.7 million during the year ended December 31, 2010, as compared to
our loss before income tax of $254.9 million that we recorded for the year ended December 31, 2009. Jiangxi LDK Solar, one of our principal operating subsidiaries, is entitled to a preferential income tax rate of 12.5% for the three years
beginning from January 1, 2008. Our effective income tax rate was 8.2% and 18.3% for each of the years ended December 31, 2009 and 2010, respectively. Our effective income tax benefit rate for the year ended December 31, 2009 was
lower than the 12.5% applicable to Jiangxi LDK Solar due primarily to our incurrence of a loss before taxation combined with our incurrence of certain non-tax deductible expenses, primarily including share-based compensation expenses as well as
interest and amortization expenses related to our 2013 convertible notes. Our effective income tax rate for the year ended December 31, 2010 was higher than the 12.5% applicable to Jiangxi LDK Solar, the subsidiary engaged in wafer production
and sales, due primarily to an increase in the portion of our income coming from our polysilicon and modules sales during the year ended December 31, 2010 as compared to the year ended December 31, 2009, as the subsidiaries engaged in
polysilicon and module production and sales are subject to a tax rate of 25%. Our higher effective income tax rate for the year ended December 31, 2010 was also partially due to our incurrence of share-based compensation expenses and interest
and amortization expenses relating to our 2013 convertible notes that were not deductible for tax purposes as well as the higher foreign income tax rates applicable to our



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subsidiaries operating in various foreign jurisdictions. Jiangxi LDK Solars preferential income tax rate will increase to 15% in 2011 and will expire at the end of that year. See
Item 3. Key Information  D. Risk Factors  Risks Relating to Business Operations in China  Expiration of, or changes to, current PRC tax incentives that our business enjoys could have a material
adverse effect on our results of operations.

Net (loss) income. For the year ended December 31, 2010, our
net income after taxes before non-controlling interests was $296.5 million, as compared to a net loss of $234.0 million for the year ended December 31, 2009. This increase was due primarily to our higher net sales and a decrease in
our provisions for inventory write-downs.

Earnings attributable to non-controlling interests. For the year ended
December 31, 2010, we had earnings attributable to non-controlling interests of $5.7 million, as compared to earnings of $0.2 million for the year ended December 31, 2009. This change was due primarily to earnings attributable to
the 15% equity interest in Jiangxi LDK Silicon that we sold to Jiangxi Trust on November 20, 2009.

Net (loss) income
available to our shareholders. For the year ended December 31, 2010, net income available to our ordinary shareholders was $290.8 million, as compared to a net loss of $234.2 million available to our ordinary shareholders for the
year ended December 31, 2009.



|B. | LIQUIDITY AND CAPITAL RESOURCES
|-- | -------------------------------

Solar wafer manufacturing and polysilicon production require intensive capital investment, and we have financed our operations and capital
expenditures substantially through cash flow from financing activities, including the proceeds of our IPO, our 2013 convertible notes offering in April 2008, follow-on equity offerings in September 2008, December 2009 and February 2011, 2014
senior notes offerings in February and April 2011 and short-term bank borrowings, as well as advance payments from customers.

The following table sets forth a summary of our net cash flows for the periods indicated:



|                                                                              |  |                         |          |   |      |   |          |      |  |   |           |  
|----------------------------------------------------------------------------- |  | ----------------------- | -------- | - | ---- | - | -------- | ---- |  | - | --------- | -
|                                                                              |  | Year Ended December 31, |         
|                                                                              |  | 2009                    |          |   | 2010 |   |          | 2011 | 
|                                                                              |  | (In thousands)          |         
|Net cash provided by (used in) operating activities                           |  | $                       | 18,614   |   |      | $ | 559,993  |      |  | $ | (286,968  | )
|Net cash used in investing activities                                         |  |                         | (797,315 | ) |      |   | (929,118 | )    |  |   | (816,044  | )
|Net cash provided by financing activities                                     |  |                         | 907,315  |   |      |   | 180,388  |      |  |   | 1,138,499 |  
|Effect of foreign currency exchange rate changes on cash and cash equivalents |  |                         | 624      |   |      |   | 6,103    |      |  |   | 6,458     |  
|Net increase (decrease) in cash and cash equivalents                          |  |                         | 129,238  |   |      |   | (182,634 | )    |  |   | 41,945    |  
|Cash and cash equivalents at the beginning of year                            |  |                         | 255,523  |   |      |   | 384,761  |      |  |   | 202,127   |  
|Cash and cash equivalents at the end of year                                  |  | $                       | 384,761  |   |      | $ | 202,127  |      |  | $ | 244,072   |  

Operating activities

During the year ended December 31, 2009, while we had a net loss of $234.0 million, our net cash inflow from operating activities was $18.6 million. As compared to the year ended
December 31, 2008, our operating cash inflow decreased from $333.1 million to $18.6 million primarily due to a decrease in cash inflow generated from sales and in advance from customers, which amounted to $835.3 million in the
year ended December 31, 2009 as compared to $2.1 billion in the year ended December 31, 2008. The decrease in cash inflow from sales and advance from customers mainly resulted from the significant decrease in the average selling
prices of our wafers despite a significant increase in our wafer sales volume. Following the global economic slowdown and financial crisis in late 2008, most of our customers renegotiated their purchase terms, including changing the payment method
from advance payment to credit purchase. We granted different credit periods to most of our customers in line with the current industry practice. The change in payment method also had negative impact to



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our operating cash inflow in 2009. The decrease in cash inflow was partially offset by a decrease in cash outflow for polysilicon, solar modules, other materials and labor cost, which was
$862.8 million in the year ended December 31, 2009 as compared to $1.6 billion in the year ended December 31, 2008.

During the year ended December 31, 2010, our net cash provided by operating activities increased from $18.6 million to $560.0 million primarily due to an increase in cash inflow generated
from cash collected from customers, which amounted to $2.4 billion during the year ended December 31, 2010 as compared to $835.5 million for the year ended December 31, 2009, and a $390.7 million increase in our trade and
bills payable resulting from our negotiation of longer credit periods with certain of our major raw materials vendors as part of our liquidity plan. The increase in cash inflow from cash collected from customers mainly resulted from the significant
increase in our wafer and module sales volume following the gradual recovery of the solar PV product industry and the global economy. Such cash inflow increases were partially offset by an increase in cash outflow for the purchase of polysilicon raw
materials, solar cells and other materials to meet the increasing demand for our products, which amounted to $1.7 billion during the year ended December 31, 2010 as compared to $862.8 million for the year ended December 31, 2009.

During the year ended December 31, 2011, our net cash provided by operating activities decreased from
$560.0 million to a net cash used in operating activities of $287.0 million primarily due to a decline in cash inflow generated from cash collected from customers, which amounted to $1.9 billion during the year ended December 31, 2011
as compared to $2.4 billion for the year ended December 31, 2010, and a $443.6 million increase in inventories as a result of volatile solar market during the second half of 2011. The decrease in cash inflow from cash collected from customers
mainly resulted from a decline in the average selling price of our products and prolonged credit periods given to our customers.

Investing
activities

During the year ended December 31, 2009, our net cash used in investing activities amounted to
$797.3 million, mainly as a result of investments in additional property, plant and equipment of $750.0 million for our polysilicon plant construction, purchase of additional land use rights at our Xinyu Hi-Tech Industrial Park site,
Nanchang City and Hefei City for $24.6 million. Net cash used in investing activities also included $74.5 million in the investment of a jointly controlled entity, which was partially offset by the capital repayment from the entity of
$24.9 million. Our pledged bank deposits as security for the issuance of letters of credit in connection with our purchases of property, plant and equipment also decreased by $37.4 million for the year ended December 31, 2009.

During the year ended December 31, 2010, our net cash used in investing activities amounted to $929.1 million due
primarily to our investments in additional property, plant and equipment of $577.1 million and our purchase of additional land use rights at our Xinyu Hi-Tech Industrial Park site and Nanchang for $89.4 million. During the year ended
December 31, 2010, we pledged bank deposits of $293.2 million as security for the issuance of letters of credit in connection with our purchases of property, plant and equipment, and $98.6 million of pledged bank deposits related to
the purchase of property, plant and equipment were released.

During the year ended December 31, 2011, our net cash used
in investing activities amounted to $816.0 million due primarily to our investments in additional property, plant and equipment of $982.4 million and our purchase of additional land use rights at our Xinyu Hi-Tech Industrial Park site, Suzhou
and Hefei for $90.4 million. During the year ended December 31, 2011, we pledged bank deposits of $41.7 million as security for the issuance of letters of credit in connection with our purchases of property, plant and equipment, and
$236.6 million of pledged bank deposits related to the purchase of property, plant and equipment were released.

Financing activities

During the year ended December 31, 2009, our net cash provided by financing activities amounted to
$907.3 million, mainly as a result of the net proceeds of $679.2 million from our net bank borrowings and



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issuance of ADSs during the period. Our aggregate new loans and borrowings during the year ended December 31, 2009 amounted to $2,251.6 million. We repaid an aggregate principal amount
of $1,684.2 million of our loans and borrowings during the period. In addition, we received net proceeds of $216.4 million from our disposal of a 15% equity interest in Jiangxi LDK Silicon to Jiangxi Trust in November 2009.

During the year ended December 31, 2010, our net cash provided by financing activities amounted to $180.4 million due primarily
to the $683.6 million net increase in our borrowings during the period, partially offset by our $131.6 million repayment of a prepayment made by Q-Cells and the payment of $215.3 million related to the purchase of a non-controlling
interest. Our aggregate new loans and borrowings during the year ended December 31, 2010 amounted to $2,733.1 million. We repaid an aggregate principal amount of $2,049.6 million of our loans and borrowings during the year. We pledged
additional bank deposits of $136.8 million for our bank borrowings, $126.1 million of which was used as security for certain of our offshore loans as of December 31, 2010.

During the year ended December 31, 2011, our net cash provided by financing activities amounted to $1,138.5 million due
primarily to the $729.4 million net increase in our borrowings during the period, the issuance of ordinary shares of $193.1 million, the issuance of preferred shares by our subsidiary of $240.0 million, the issuance of 2014 senior notes of
$258.7 million and the issuance of short-term and long-term PRC notes of $142.8 million, which was partly offset by the payment of $364.8 million related to our 2013 convertible notes redemption. Our aggregate new loans and borrowings during
the year ended December 31, 2011 amounted to $3,650.8 million. We repaid an aggregate principal amount of $2,921.4 million of our loans and borrowings during the year. We pledged additional bank deposits of $56.2 million for our
bank borrowings, $52.9 million of which was used as security for certain of our offshore loans as of December 31, 2011.

The aggregate principal amount of our short-term bank borrowings and current portion of long-term borrowings outstanding as of December 31, 2009, 2010 and 2011 was $980.4 million,
$1,501.6 million and $2,032.0 million, respectively. The short-term bank borrowings outstanding as of December 31, 2011 had maturity terms ranging from one month to 12 months and interest rates ranging from 3.081% to 10.500% and a
weighted average interest rate of 6.236%. These loans were obtained from various financial institutions. The proceeds from these short-term bank borrowings were for working capital purposes.

As of December 31, 2011, we had total long-term borrowings, excluding current portion, of approximately $890.4 million. As of
that date, the interest rates of our long-term borrowings ranged from 3.51% to 9.25%.

Working Capital Deficit

As of December 31, 2011, we had a working capital deficit (total consolidated current liabilities exceeding total consolidated current
assets) of $2,099.4 million. As of the same date, we had cash and cash equivalents of $244.1 million, most of which were held by our subsidiaries in China with approximately 89.2% of our short term bank borrowings, current installments of our
long-term debt and short-term PRC notes totaling $1,869.6 million residing with these subsidiaries. Taking into account of our unaudited financial results for the fourth quarter of 2011, our Consolidated Fixed Charge Coverage Ratio, as
defined in the indenture governing our 2014 senior notes, has been negatively impacted as a result of a significant reduction of the aggregate amount of our Consolidated EBITDA, as defined in the indenture governing our 2014 senior
notes, for the four most recent full fiscal quarters, while our Consolidated Fixed Charges, as defined in the indenture governing our senior notes, for such four-quarter period, have increased. As a result, we will not be able to incur
any additional indebtedness until our Consolidated Fixed Charge Coverage Ratio significantly improves on the basis of our four most recent full fiscal quarters unless such indebtedness falls into one of the permitted exceptions or
exemptions, such as re-financing existing indebtedness. These factors raise substantial doubt as to our ability to continue as a going concern. However, management believes it has developed a liquidity plan, as summarized below, that, if executed
successfully, will provide sufficient liquidity to meet our obligations as they become due for a reasonable period of time.



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| |  |  | Delaying in capital expenditure and improvement in working capital management
| | - |  | -----------------------------------------------------------------------------

We have been negotiating with a number of vendors, including suppliers of equipment and construction materials, for them to provide us
with lower prices or more favorable payment terms in order to achieve cost savings. We have decided to postpone a substantial portion of our planned capital expenditures for the next 12 months. In addition, we have implemented measures to more
closely monitor our inventory levels and our collection of receivable balances with an aim to improving liquidity.



| |  |  | Bank Financing
| | - |  | --------------

To improve liquidity, we have successfully negotiated with some of our banks and will continue to negotiate with other banks to obtain revolving bank facilities to ensure our bank borrowings can be
renewed on an on-going basis. From January 1 to April 30, 2012, we have obtained additional secured and unsecured short-term bank borrowings in the aggregate principal amount of $924.3 million with interest rates ranging from 2.484% to 9.500% and
secured and unsecured long-term bank borrowings in the aggregate principal amount of $45.3 million with interest rates ranging from 5.900% to 7.050% (subject to repricing). We have also repaid short-term borrowings and current installments of
long-term borrowings in the aggregate principal amount of $937.0 million during this period. We believe that we will be able to obtain additional facilities from the banks so that, together with our existing bank revolving facilities, we will be
able to re-finance any bank loans due for repayment within the next 12 months to the extent necessary.



| |  |  | Refund of prepaid land use rights and disposal of properties
| | - |  | ------------------------------------------------------------

In view of our postponement in expansion, we have signed letters of intent with local governmental authorities for the return of our
prepayments for land use rights. In addition, we have entered into several letters of intent to sell some of our real properties, mainly staff quarters and the corresponding land use rights, to local governmental authorities.



| |  |  | Additional equity offers
| | - |  | ------------------------

We intend to raise funds through equity offerings, including private placements and at-the-market offerings, when market conditions permit and such issuances are in the overall interests of our business.

For more information regarding our liquidity plan, see Item 5. Operating and Financial Review and Prospects 
B. Liquidity and Capital Resources and Note (1)  Basis of Presentation of our consolidated financial statements beginning on page F-1.

We believe that the measures as described in the above liquidity plan will be adequate to satisfy our liquidity requirements for the next 12 months. Our board of directors has also instructed and
authorized our management to establish an ad hoc committee to be headed by Mr. Peng, our CEO, to monitor the progress of our implementation of the liquidity plan and to report to our board on a fortnightly basis. There is no assurance, however, we
will be able to successfully implement the liquidity plan. If we fail to successfully execute this plan, we may not be able to continue as a going concern. Our consolidated financial statements do not reflect any adjustments relating to
recoverability and classification of recorded assets or the amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to continue as a going concern. Significant difficulties in our operations or
a deterioration of our financial condition could also result in the exercise of broadly drafted provisions in some of our loan agreements that give our lenders the right to accelerate the payment of the loans under such circumstances. Such
acceleration could potentially trigger cross-default provisions in other financing agreements, including the indentures relating to our 2013 convertible notes and our 2014 senior notes, if we are unable to repay these loans upon acceleration. The
occurrence of any of the foregoing events would materially and adversely affect our financial condition, results of operations and business



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prospects. See Item 3. Key Information  D. Risk Factors  Risks Relating to Our Company and Our Industry  We have substantial existing indebtedness, in particular
short-term indebtedness, and we may incur substantial additional indebtedness in the future, which could adversely affect our financial condition and our ability to generate sufficient cash to satisfy our outstanding and future debt obligations and
we may not be able to refinance our current borrowings on terms that are acceptable to us, or at all for additional information on our existing indebtedness and restrictions on our ability to incur additional indebtedness in the future and
 We are operating with a significant working capital deficit; if we do not successfully execute our liquidity plan, we face the risk of not being able to continue as a going concern for a more detailed discussion of risks relating
to our working capital deficit and our liquidity plan.

Capital Expenditures

To implement our vertical integration strategy, we invested $861.2 million and $877.9 million in capital expenditures during the
years ended December 31, 2010 and 2011, respectively, primarily to build and expand our wafer and ingot processing plant, purchase production equipment and construct our polysilicon production plant.

We estimate that we will have capital expenditures of approximately $150 million to $250 million in 2012 primarily in
connection with the continued development and ramp-up of our two polysilicon production plants and the equipment improvement of our wafer, cell and module production facilities. As part of our development strategy, we may also incur additional
capital expenditures to fund the design and development of solar farm projects as suitable opportunities arise.

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

Prepayments to Suppliers

In order to secure a stable supply of raw materials for our polysilicon, wafer and module businesses, we make prepayments to certain
suppliers based on written purchase orders detailing product, quantity and price. Our prepayments to suppliers are recorded either as prepayments to suppliers, if they are expected to be utilized within 12 months as of each balance sheet date,
or as prepayments to suppliers to be utilized beyond one year, if they are expected to be utilized after 12 months. As of December 31, 2010 and 2011, we had prepayments to suppliers of $112.4 million and $28.2 million, respectively,
and prepayments to suppliers to be utilized beyond one year of $14.3 million and $11.2 million, respectively. Prepayments to suppliers are reclassified to inventories when we apply the prepayments to related purchases of raw materials for our
businesses, and these reclassifications are not reflected in our consolidated cash flows from operations.

We make prepayments
without receiving any collateral, and, as a result, we are subject to counterparty risks. Any claims we make for these prepayments would rank as unsecured claims, exposing us to the credit risks of these suppliers in the event of their insolvency or
bankruptcy. See Item 3. Key Information  D. Risk Factors  Risks Relating to Our Company and Our Industry  We have entered into long-term sales contracts with some of our customers that may be renegotiated at terms
less favorable to us, and result in the return of prepayments we have received, or which our customers may breach or otherwise fail to perform; any such changes, refunds or breaches may materially and adversely affect our operations and may result
in costly and time-consuming litigation or other proceedings for a discussion on risks relating to our prepayment obligations to our suppliers.



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Advance Payments from Customers

As of December 31, 2011, advance payments from our customers amounted to $332.2 million, a decrease of $12.6 million as compared to
$344.8 million received as of December 31, 2010. These prepayments represent prepayments made to us by our customers under supply agreements, primarily for wafers and polysilicon products.

Restricted Net Assets

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

Other Recent Developments

Since the year-end of 2011, there have been recent developments as follows:

Our Investment in Sunways

Pursuant to the investment agreement dated December 31, 2011, through our wholly owned subsidiary, LDK Solar Germany Holding GmbH, we acquired approximately 71% of the equity interest in Sunways, a
German stock corporation with its shares listed on the Frankfurt Stock Exchange, through capital increases by Sunways against our cash contribution and contributions in kind followed by a public tender offer consummated in April 2012. As a part of
the arrangements under the investment agreement, Sunways and we have terminated the formerly existing long-term contract for the supply of wafers by us to Sunways.

Rmb 3,000,000,000 Notes

Subsequent to the offering by Jiangxi LDK
Solar in December 2011 of the aggregate principal amount of Rmb 500,000,000 (approximately $78,800,000) of 6.8% notes due 2014, which is the first tranche of our offering plan approved by the relevant PRC governmental authorities of notes in an
aggregate principle amount of Rmb 3,000,000,000, or the PRC notes, to institutional investors in China, Jiangxi LDK Solar is planning to issue the second, third and fourth tranches, consisting of an aggregate principal amount of Rmb
500,000,000, Rmb 1,000,000,000 and Rmb 1,000,000,000, respectively, in the second half of 2012 if the market situation allows. Each tranche will be priced in line with the then prevailing market conditions. We have used the net proceeds of the
first tranch, and intend to use the net proceeds of the second, third and fourth tranches, to replace our short-term debts.



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

Research and Development

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



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



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



| |  |  | fuel conversion from diesel to natural gas and high-pressure steam;
| | - |  | -------------------------------------------------------------------



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



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



| |  |  | developing a silicon recovery technology for the recovery of silicon dust from wafer processing;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | developing a new silicon crystallization technology for higher quality wafers;
| | - |  | ------------------------------------------------------------------------------



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



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



| |  |  | developing slurry recycling technologies to lower slurry cost;
| | - |  | --------------------------------------------------------------



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



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



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



| |  |  | new design for light modules with less use of materials.
| | - |  | --------------------------------------------------------

In addition, we established the LDK Laboratory with Shanghai Jiaotong University in October 2005. This laboratory has been focused on developing quality consumables and supplemental equipment to be
produced in China. Under our arrangement with Shanghai Jiaotong University, we and the university will jointly own all research results of the laboratory and we will have the priority right to utilize these research results. We and the university
are entitled to 40% and 30% of all economic benefits derived from these research results, respectively, and the remaining 30% of the economic benefits will be reinvested in the laboratory. We plan to continue to expand our R&D efforts by
establishing additional research ventures, both in China and overseas, to improve our production technologies and processes.

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

Intellectual Property Rights

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



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

As of the date of this annual report, we have 31 issued patents, 10 patent right grant notices that entitle us to receive issued
patents upon satisfaction of certain registration procedures, and 138 patent applications pending globally, of which 130 were pending in China. These patent applications and granted patents relate to various technologies, including
polysilicon production, silicon recycling, wafer production processes, solar cell structure, module design and production equipment. While we currently use some of these technologies in our operations, we expect some of these technologies that we
have not yet implemented have significant potential future applications. We intend to continue to assess appropriate opportunities for patent protection of those aspects of our technology that we believe provide a significant competitive advantage
to us. We have not taken any action outside China to protect our intellectual property. You should refer to potential claims relating to our trademark in Item 3. Key Information  D. Risk Factors  Risks Relating to
Our Company and Our Industry  We may be exposed to intellectual property infringement, misappropriation or other claims by third parties and an adverse determination could result in us paying significant damages.



|D. | TREND INFORMATION
|-- | -----------------

PV is one of the proven and most rapidly growing renewable energy sources in the world. Energy from the sun is converted into electricity primarily through the PV effect and, to a lesser extent, through
concentrated solar thermal technologies. Solarbuzz reports that the global PV market reached 18.2 GW in 2010, an increase from 1.8 GW in 2006, representing an annual compound growth rate, or CAGR, of 78.3%. At the end of 2011, cumulative global
PV installations were 70.6 GW at the end of 2011, according to Solarbuzz.

Solar power systems use solar cells based on two
main technologies: crystalline-silicon, or C-Si, and thin-film. According to Solarbuzz, C-Si based solar cells dominate the PV market, accounting for approximately 89.1% of the total solar cell production in 2011 due to their high energy conversion
efficiency and reliability.



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2011 saw aggressive capacity expansion throughout the manufacturing chain. According to
Solarbuzz, the manufacturing capacity of polysilicon available to the PV industry reached a level equivalent to 41.0 GW crystalline silicon solar cells in 2011 from 25.3 GW in 2010, representing an annual growth rate of 762.1%. Wafering capacity
grew by 57.3% to 47.5 GW, according to Solarbuzz. Cell and module capacity also grew by 64.8% and 50.8% to 43.5 GW and 45.1 GW, respectively, according to Solarbuzz. Thin-film PV cell manufacturing capacity increased 37.8% to 6.2 GW, according to
Solarbuzz. The following diagram illustrates the forecast of the global PV demand from 2011 to 2016 under Solarbuzzs production-led energy scenario.



LOGO





Source:Marketbuzz 2012, Production-led Scenario, Annual World Photovoltaic Market Review

Solarbuzz has laid out three scenarios: balanced energy, green world and production-led scenarios. The balanced energy scenario assumes
that the PV markets growth is limited by restrictions on incentives and policies, and projects the global PV market to reach 31.5 GW in 2016, according to Solarbuzz. The green world energy scenario assumes a higher level of installation
resulting from growth led by new and growing market incentive programs for grid-connected photovoltaics, and projects the global PV market to reach 54.3 GW in 2016, according to Solarbuzz. The production-led scenario assumes the most aggressive PV
market growth led by pricing decline and strong growth in the U.S. market, and projects the global PV market to reach 89.9 GW in 2016, according to Solarbuzz. We believe that among the three scenarios, the production-led scenario provides the
most convincing projection of market growth given the growth of the market size in 2011 and therefore we have presented the production-led scenario instead of the other two scenarios, although we cannot assure you that the production-led scenario,
or any other scenario, will materialize.

Key Drivers of PV Industry

Advantages of Solar Power

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

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

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

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



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

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

Government Incentives for Solar Power

The use of solar power has continued to grow in countries where governments have implemented renewable energy policies and incentives to encourage the use and accelerate the development of solar power and
other renewable energy sources. Many governments worldwide, such as those of Germany, Spain, Japan, the United States, Italy, the Czech Republic, Belgium and China, have offered various types of financial incentives in the form of capital cost
subsidies, feed-in tariffs, net metering, tax credits and other incentives to end-users, distributors, system integrators and manufacturers of solar power products, to make solar power more cost competitive with conventional energy. International
environmental protection initiatives, such as the Kyoto Protocol for the reduction of overall carbon dioxide and other gas emissions, have also created momentum for government incentives encouraging solar power and other renewable energy sources.
Governments of major solar markets may, from time to time, modify their policies in order to manage the growth of the markets and to incentivize local PV manufacturers to become more cost competitive. Germany, Spain and Italy are examples of those
who have modified their incentive policies for solar power in recent years.

Decreasing Costs of Solar Energy

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

Key Challenges for PV Industry

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

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

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

Overview of PV Industry Value Chain

The crystalline silicon-based solar
power manufacturing value chain starts with processing quartz sand to metallurgical-grade silicon. The material is further purified to solar grade or semiconductor grade polysilicon feedstock. Recoverable silicon materials acquired from
semiconductor and solar power industries, such as integrated circuit scraps, partially processed and broken silicon wafers, broken solar cells, pot scraps, silicon



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powder, ingot tops and tails, and other off-cuts, can also be used as feedstock. Most recoverable silicon materials sourced from the semiconductor industry are of higher purity than solar-grade
recoverable silicon materials. However, the use of recoverable silicon materials increases the difficulty of producing silicon ingots with quality similar to those made from virgin polysilicon, and advanced technologies are required to produce
silicon ingots from recovered silicon materials, which come in varying grades.

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

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



LOGO

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

Polysilicon

Polysilicon is the primary raw material for the PV and
semiconductor industries. Historically, the semiconductor industry has been the dominant user of polysilicon. Due to the recent rapid growth of the PV industry, the polysilicon consumption by the PV industry has exceeded that by the semiconductor
industry. As a result of this rapid expansion, sales to the PV industry are now the key factor affecting the price, profit and growth of the polysilicon market. According to Solarbuzz, the polysilicon production capacity is expected to reach 685kMT
in 2015, representing a CAGR of 11.1% from 2012. The greater China area, which includes China and Taiwan, played an important role in polysilicon manufacturing and accounted for 39% of the production in 2011, according to Solarbuzz.

Wafer

There are two
primary types of wafer production: monocrystalline wafers and multicrystalline wafers.

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

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



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

The expansion of manufacturing capacity for wafers depends on the secure supply of raw materials and key wafer
manufacturing equipment, such as wire saws. Similar to the polysilicon industry, the production base for wafer has also shifted to China and Taiwan. In 2011, 73% of global wafer production capacity was located in China and Taiwan, according to
Solarbuzz.

Solar Cell and Module Production

According to Solarbuzz, C-Si cell production grew at a CAGR of 72% from 2006 to 2010. Solarbuzz reported that the global center of cell production has shifted from Japan to China and Taiwan. Cell
production in the PRC and Taiwan rose to 72.5% in 2011, ahead of both Europe and Japan, according to Solarbuzz. We believe the shift toward increasing manufacturing dominance by China and Taiwan is as evident for modules as it is for wafers and
cells.



|E. | OFF-BALANCE SHEET ARRANGEMENTS
|-- | ------------------------------

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



|F. | TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
|-- | ---------------------------------------------

The following table sets forth our contractual cash commitments as of December 31, 2011.



|                                                          |  |                |           |  |                 |   |           |           |  |   |           |  |  |                  |        |  |  |   |   | 
|--------------------------------------------------------- |  | -------------- | --------- |  | --------------- | - | --------- | --------- |  | - | --------- |  |  | ---------------- | ------ |  |  | - | - | 
|                                                          |  | Total          |           |  | Less than1 Year |   |           | 1-3 Years |  |   | 3-5 Years |  |  | More than5 Years |       
|                                                          |  | (In thousands) |          
|Long-term debt obligations (including interest payments)  |  | $              | 1,391,590 |  |                 | $ | 413,309   |           |  | $ | 978,281   |  |  | $                |       |  |  | $ |  | 
|Short-term debt obligations (including interest payments) |  |                | 1,726,549 |  |                 |   | 1,726,549 |           |  |   |          |  |  |                  |       |  |  |   |  | 
|Capital (finance) lease obligations                       |  |                | 115,209   |  |                 |   | 47,903    |           |  |   | 54,818    |  |  |                  | 12,488 |  |  |   |  | 
|Non-cancelable purchase obligations                       |  |                |           |  |                 |   |           |           |  |   |           |  |  |                  |        |  |  |   |   | 
| raw materials                                           |  |                | 43,168    |  |                 |   | 9,594     |           |  |   | 19,188    |  |  |                  | 14,386 |  |  |   |  | 
| equipment                                               |  |                | 443,001   |  |                 |   | 78,068    |           |  |   | 364,933   |  |  |                  |       |  |  |   |  | 
|PRC notes (including interest payments)                   |  |                | 163,843   |  |                 |   | 73,697    |           |  |   | 90,146    |  |  |                  |       |  |  |   |  | 
|2014 senior notes (including interest payments)           |  |                | 323,684   |  |                 |   | 25,895    |           |  |   | 297,789   |  |  |                  |       |  |  |   |  | 
|2013 convertible notes (including interest payments)      |  |                | 25,279    |  |                 |   | 1,130     |           |  |   | 24,149    |  |  |                  |       |  |  |   |  | 
|                                                          |  |                |           |  |                 |   |           |           |  |   |           |  |  |                  |        |  |  |   |   | 
|Total                                                     |  | $              | 4,232,323 |  |                 | $ | 2,376,145 |           |  | $ | 1,829,304 |  |  | $                | 26,874 |  |  | $ |  | 
|                                                          |  |                |           |  |                 |   |           |           |  |   |           |  |  |                  |        |  |  |   |   | 



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As of December 31, 2011, our long-term debt obligations and short-term debt obligations
consisted of loans due to commercial banks and others aggregating $1,234.1 million and $1,688.4 million, respectively, and carried effective interest rates ranging from 3.510% to 9.250% and from 3.081% to 10.500%, respectively.

We have entered into substantial commitments for future purchases of raw materials and equipment, including polysilicon feedstock, wafer
manufacturing equipment and polysilicon production equipment. These commitments for purchase of raw materials as of December 31, 2011 amounted to approximately $43.2 million in total, including approximately $9.6 million for 2012. Our
actual purchases of polysilicon feedstock, wafer manufacturing equipment and polysilicon production equipment in the future may exceed these amounts.

The $443.0 million of non-cancelable purchase obligations relating to equipment in the above table included an aggregate amount of $154.6 million, $66.0 million and $38.0 million in
purchase obligations to JYT Corporation for pullers, Applied Materials for wire saws and Tokyo Rope for wire saws, respectively, to be delivered in 2012 and 2013 and 2014.



|G. | SAFE HARBOR
|-- | -----------

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



|ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|------- | ------------------------------------------



|A. | DIRECTORS AND SENIOR MANAGEMENT
|-- | -------------------------------

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



|                                 |  |     |    |  |          |                                                                
|-------------------------------- |  | --- | -- |  | -------- | ---------------------------------------------------------------
|Directors and Executive Officers |  | Age |    |  | Position
|Xiaofeng Peng                    |  |     | 37 |  |          | Chairman and Chief Executive Officer                           
|Xingxue Tong                     |  |     | 49 |  |          | Director, President and Chief Operating Officer                
|Liangbao Zhu                     |  |     | 46 |  |          | Director and Executive Vice President                          
|Yonggang Shao                    |  |     | 49 |  |          | Director and Executive Vice President                          
|Maurice Wai-fung Ngai            |  |     | 50 |  |          | Independent Director                                           
|Bing Xiang                       |  |     | 50 |  |          | Independent Director                                           
|Junwu Liang                      |  |     | 78 |  |          | Independent Director                                           
|Jack Lai                         |  |     | 58 |  |          | Executive Vice President, Chief Financial Officer and Secretary
|Yuepeng Wan                      |  |     | 48 |  |          | Senior Vice President, Chief Technology Officer                
|Rongqiang Cui                    |  |     | 71 |  |          | Consultant, Head of Shanghai Jiaotong University LDK Laboratory
|Qiqiang Yao                      |  |     | 41 |  |          | Senior Vice President                                          

Directors

Xiaofeng Peng is the chairman of our board of directors and the chief executive officer of our company. He founded our company in July 2005. Prior to founding our company, Mr. Peng founded
Suzhou Liouxin in March 1997 and was its chief executive officer until February 2006. Suzhou Liouxin is a leading manufacturer of personal protective equipment in Asia. Mr. Peng graduated from Jiangxi Foreign Trade School in 1993 with a diploma
in international business and from Beijing University Guanghua School of Management with an executive MBA degree in 2002. Mr. Peng, in his personal capacity, and his family members are engaged in certain alternative energy projects, including a
project involving thin-film technology. In addition, Mr. Peng and his family members may invest or otherwise participate in their personal capacity in several alternative energy projects, including projects involving solar thermal, wind energy
and biofuels.

Xingxue Tong is a director and the president and chief operating officer of our company. He joined our
company in January 2007. Mr. Tong has approximately 11 years of experience in managing operations of companies in the solar industry. Prior to joining our company, Mr. Tong served as general manager for south-east



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Asia business development with GT Solar since 2004. He was the executive president of commerce of CSI in 2004 and vice general manager of an affiliate of Tianwei Yingli from 1999 to 2004.
Mr. Tong received a diploma in industrial economic management from Renmin University of China in 1988 and a diploma in English from Hebei University in 1998.

Liangbao Zhu is a director and the executive vice president of operations of our company. He joined our company in November 2005. Dr. Zhu has approximately 17 years of experience in
managing operations of manufacturing enterprises and managing marketing and sales operations in China and overseas. Prior to joining our company, Dr. Zhu held multiple management positions in manufacturing, investment and trading companies in
China and overseas from 1993 to 2005. Dr. Zhu graduated from Yangzhou Normal College with a bachelors degree in 1982, from Suzhou University with an MBA degree in 2002 and a doctors degree in business management in 2005.

Yonggang Shao is a director and a senior vice president of corporate strategy of our company. He joined our company in February
2006. Prior to joining our company, Mr. Shao served as a managing director in the corporate finance department of Guotai Junan Securities Company Limited and its predecessors from 1998 to 2006. Mr. Shao graduated from Shanghai University
in 1990 with a bachelors degree in industrial management and from Beijing University Guanghua School of Management with an executive MBA degree in 2002.

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

Bing Xiang became an independent director of our company in July 2007. Professor Xiang has been a
member of the board of directors of Perfect World Co., Ltd., a company listed on the Nasdaq Global Market, since 2007. Professor Xiang is the Dean and a professor at Cheung Kong Graduate School of Business in Beijing, China since 2002. Prior to
that, he held various positions as a professor of accounting at Peking University, The Chinese University of Hong Kong and China Europe International Business School. Professor Xiang received his bachelors degree in engineering from Xian
Jiaotong University in China and his Ph.D. in business administration from the University of Alberta in Canada.

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

Executive Officers

Jack Lai is an executive vice president, chief financial officer and secretary of our company. He joined our company in August
2006. Mr. Lai has approximately 22 years of experience in finance, strategic planning and corporate management. Prior to joining our company, Mr. Lai served as the chief financial officer and vice



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

Yuepeng Wan is a group senior vice president and the chief technology officer of our company. He joined our company in February
2007. Dr. Wan has approximately 17 years of experience in R&D in silicon and materials engineering. Prior to joining our company, Dr. Wan was a R&D manager at GT Solar in New Hampshire from October 2005 to February 2007 in
charge of DSS furnace R&D. Prior to that, he was a research associate of the materials crystal division at Saint-Gobain Northboro R&D Center in Massachusetts from January 2005 to October 2005. From April 2000 to January 2005, he was a
senior applications engineer at GT Solar in New Hampshire responsible for design and development of crystal growth furnaces. Dr. Wan received a bachelor of science degree in materials engineering from University of Science & Technology
of China in 1986, a master of science degree in mechanical engineering from University of Science & Technology of China in 1989 and a Ph.D. degree in mechanical engineering from Aachen University of Technology of Germany in 1997.

Rongqiang Cui is a consultant and the head of our R&D laboratory operated jointly with Shanghai Jiaotong
University. He is also a professor at Shanghai Jiaotong University. Professor Cui joined our company in September 2005 as director of our Shanghai Jiaotong University LDK Laboratory. Professor Cui began solar energy research in 1971 and became the
head of the solar research institute of Shanghai Jiaotong University in 1997. Previously, he was an assistant tutor, lecturer and professor in the physics department of Xian Jiaotong University from 1964 to 1996. Professor Cui graduated from the
Xian Jiaotong University in 1964 with a diploma in engineering physics.

Qiqiang Yao is a group senior vice president
of our company. He joined our company in February 2006. Prior to joining our company, Mr. Yao held multiple positions in finance and accounting from 2002 to 2006 at various companies in China. Mr. Yao received a bachelors degree in
accounting from Anhui University of Accounting in 1993 and an MBA from China Southeast University in 2003. Mr. Yao is a registered accountant in China.



|B. | COMPENSATION OF DIRECTORS AND OFFICERS
|-- | --------------------------------------

Compensation of Directors and Executive Officers

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

For the year ended December 31, 2011, the aggregate cash compensation that we paid to
directors and executive officers was $4,603,281.

You may find more details of the stock options we have granted to our
directors and executive officers pursuant to our 2006 stock incentive plan under  E. Share Ownership  2006 Stock Incentive Plan below.

Indemnification

Cayman Islands law does not limit the extent to which a
companys articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman



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

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

Employment Agreements

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



|C. | BOARD PRACTICES
|-- | ---------------

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



| |  |  | the audit committee,
| | - |  | --------------------



| |  |  | the compensation committee, and
| | - |  | -------------------------------



| |  |  | the corporate governance and nominating committee.
| | - |  | --------------------------------------------------

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

We have a staggered board of directors. Our directors will be divided into three classes, as nearly equal in number as the
then total number of directors permits. Yonggang Shao, Liangbao Zhu and Maurice Ngai have been designated as Class I directors with their terms to expire at our shareholders general meeting in 2014; Xingxue Tong and Bing Xiang have been
designated as Class II directors with their terms to expire at our shareholders general meeting in 2012; Xiaofeng Peng and Junwu Liang have been designated as Class III directors with their terms to expire at our shareholders
general meeting in 2013. At each annual general meeting



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of our shareholders, successors to the class of directors whose terms expire at that meeting will be elected for a three-year term. If the number of directors changes, any increase or decrease
will be apportioned among the classes so as to maintain the number of directors in each class as nearly as possible. Any additional directors of a class elected to fill a vacancy resulting from an increase in such class will hold office for a term
that coincides with the remaining term of that class. Decrease in the number of directors will not shorten the term of any incumbent director. Nonetheless, whenever the holders of preferred shares have the right, voting separately as a class, to
elect directors, the election, term of office, filling of vacancies and other features of directorships will be governed by the applicable terms of our articles of association and the rights attaching to those preferred shares. These board
provisions make it more difficult for third parties to gain control of our company because it is more difficult to replace members of a staggered board.

Audit committee

Our audit committee consists of three directors,
namely Maurice Ngai, Bing Xiang and Dr. Junwu Liang. Mr. Ngai, Mr. Xiang and Dr. Liang satisfy the independence requirements of the New York Stock Exchange Listing Rules and the SEC regulations. In addition, our board
of directors has determined that Mr. Ngai and Mr. Xiang are qualified as audit committee financial experts within the meaning of SEC regulations. The audit committee oversees our accounting and financial reporting processes and the audits
of the financial statements of our company. The audit committee is responsible for, among other things:



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



| |  |  | reviewing and approving all proposed related-party transactions;
| | - |  | ----------------------------------------------------------------



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



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



| |  |  | meeting separately and periodically with management and the independent auditors;
| | - |  | ---------------------------------------------------------------------------------



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



| |  |  | reporting regularly to the full board of directors.
| | - |  | ---------------------------------------------------

Compensation committee

Our compensation committee consists of
Xiaofeng Peng, Maurice Ngai, Bing Xiang and Junwu Liang. Mr. Ngai, Mr. Xiang and Dr. Liang satisfy the independence requirements of the New York Stock Exchange Listing Rules and the SEC regulations. Our compensation
committee assists the board in reviewing and approving the compensation structure of our directors and executive officers, including all forms of compensation to be provided to our directors and executive officers. The compensation committee is
responsible for, among other things:



| |  |  | reviewing and determining the compensation package for our senior executives;
| | - |  | -----------------------------------------------------------------------------



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



| |  |  | reviewing and approving officer and director indemnification and insurance matters;
| | - |  | -----------------------------------------------------------------------------------



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



| |  |  | reporting regularly to the full board of directors.
| | - |  | ---------------------------------------------------



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Corporate governance and nominating committee

Our corporate governance and nominating committee consists of Xiaofeng Peng, Maurice Ngai, Bing Xiang and Dr. Junwu Liang.
Mr. Ngai, Mr. Xiang and Dr. Liang satisfy the independence requirements of the New York Stock Exchange Listing Rules and the SEC regulations. The corporate governance and nominating committee assists the board of directors
in identifying individuals qualified to become our directors and in determining the composition of the board and its committees. The corporate governance and nominating committee is responsible for, among other things:



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



| |  |  | appointment to fill any vacancy;
| | - |  | --------------------------------



| |  |  | reviewing annually with the board the current composition of the board in light of the characteristics of independence, age, skills, experience and
availability of service to us;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | identifying and recommending to the board the directors to serve as members of the boards committees;
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | advising the board periodically with respect to significant developments in the law and practice of corporate governance as well as our compliance with
applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any corrective action to be taken;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | reporting regularly to the full board of directors.
| | - |  | ---------------------------------------------------

Duties of Directors

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



|D. | EMPLOYEES
|-- | ---------

We had an aggregate of 13,464, 22,400 and 24,449 full-time employees as of December 31, 2009, 2010 and 2011. Most of these employees were located at our manufacturing plants in Xinyu City,
Jiangxi Province, China.

A breakdown of our employees by areas of operations and as a percentage of our workforce as of
December 31, 2011 is set forth below:



|                                      |  |                    |        |  |                    |  |       |  
|------------------------------------- |  | ------------------ | ------ |  | ------------------ |  | ----- | -
|                                      |  | Number ofEmployees |        |  | Percentageof Total | 
|Manufacturing                         |  |                    | 16,363 |  |                    |  | 66.9  | %
|Quality control                       |  |                    | 2,651  |  |                    |  | 10.9  |  
|Research, development and engineering |  |                    | 870    |  |                    |  | 3.6   |  
|Administration                        |  |                    | 3,237  |  |                    |  | 13.2  |  
|Production planning                   |  |                    | 987    |  |                    |  | 4.0   |  
|Finance                               |  |                    | 219    |  |                    |  | 0.9   |  
|Procurement                           |  |                    | 122    |  |                    |  | 0.5   |  
|                                      |  |                    |        |  |                    |  |       |  
|Total                                 |  |                    | 24,449 |  |                    |  | 100.0 | %
|                                      |  |                    |        |  |                    |  |       |  



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

As required by PRC regulations, we
participate in statutory retirement plans organized by the respective PRC local governments. We currently contribute approximately 29% of the staffs basic salaries to such funds. Our contributions to the statutory retirement plans are charged
to the consolidated profit and loss account as and when incurred. We also provide our employees with medical insurance and unemployment insurance as required by the PRC laws and regulations. For the years ended December 31, 2009, 2010 and 2011,
our total expense under the statutory employee benefit plans was approximately $4,096,699, $6,540,815 and $13,379,155, respectively.

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

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



|E. | SHARE OWNERSHIP
|-- | ---------------

2006 Stock Incentive Plan

We adopted our 2006 stock incentive plan on
July 31, 2006. The purpose of our 2006 stock incentive plan is to recognize and acknowledge the contributions the eligible participants made to our company and to promote the success of our business. Through the provision of an opportunity to
have a personal stake in our company, our 2006 stock incentive plan aims to:



| |  |  | motivate the eligible participants to optimize their performance efficiency for the benefit of our company;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | attract and retain the best available personnel in our industry through additional incentive to our employees and directors; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | attract and otherwise maintain our on-going business relationship with consultants and business entities whose contributions are or will be beneficial
to our long-term growth.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Eligible participants

Under our 2006 stock incentive plan, our board of directors may, at its discretion, offer to grant an option to subscribe for such number
of our ordinary shares at an exercise price as our directors may determine to:



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



| |  |  | any directors, including non-executive directors and independent non-executive directors, of our company or any of our subsidiaries;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



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



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

Maximum number of shares

The maximum number of ordinary shares in respect of which options may be granted (including ordinary shares in respect of which options, whether exercised or still outstanding, have already been granted)
under our 2006 stock incentive plan may not in the aggregate exceed 10% of the total number of ordinary shares in issue



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from time to time, including ordinary shares issuable upon conversion of any of our preferred shares or upon the exercise of any options, each in issue from time to time. As of the date of this
annual report, the maximum number of ordinary shares in respect of which we may grant options (including ordinary shares in respect of which options have already been granted but still outstanding) under our 2006 stock incentive plan is 13,351,880
ordinary shares.

Price of shares

Our board of directors may, in its discretion, determine the subscription price of an ordinary share in respect of any particular option granted under our 2006 stock incentive plan. However, such
determination by our board of directors of the subscription price will generally be by reference to the fair market value of the ordinary shares. If there exists a public market for our ordinary shares, including our ADSs, the fair market value of
our ordinary shares will be the closing price for the last market trading day prior to the time of the determination on the stock exchange determined by our board of directors to be the primary market for our ordinary shares or ADSs. If there is no
established market for our ordinary shares, our board of directors will determine the fair market value of our ordinary shares in good faith by reference to the placing price of the latest private placement of our ordinary shares and the development
of our business operations since such latest private placement.

Performance criteria

Our 2006 stock incentive plan allows our board of directors to establish the performance criteria when granting stock options on the basis
of any one of, or combination of, increase in our share price, earnings per share, total shareholder return, return on equity, return on assets, return on investment, net operating income, cash flow, revenue, economic value added, personal
management objectives, or other measures of performance selected by our board of directors. Partial achievement of the specified criteria may result in a vesting corresponding to the degree of achievement as specified in the award agreement with the
relevant optionee.



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Outstanding options granted under our 2006 stock incentive plan

The following table summarizes, as of the date of this annual report, the outstanding options granted under our 2006 stock incentive plan
to several of our directors, executive officers and investors and to other individuals as a group. Unless otherwise noted, the options granted vest over a three-to-five-year period beginning on the date of their respective grants.



|                                 |  |                                             |            |     |                         |   |       |               |  |                    |  |                  
|-------------------------------- |  | ------------------------------------------- | ---------- | --- | ----------------------- | - | ----- | ------------- |  | ------------------ |  | -----------------
|Name                             |  | Ordinary SharesUnderlyingOutstandingOptions |            |     | Exercise Price($/Share) |   |       | Date of Grant |  | Date of Expiration
|Xiaofeng Peng                    |  |                                             | 650,000    | (2) |                         | $ | 6.77  |               |  | April 7, 2010      |  | April 6, 2020    
|                                 |  |                                             | 15,000     | (2) |                         |   | 5.97  |               |  | February 7, 2012   |  | February 6, 2022 
|Xingxue Tong                     |  |                                             | *          | (2) |                         |   | 6.77  |               |  | April 7, 2010      |  | April 6, 2020    
|                                 |  |                                             | *          | (2) |                         |   | 5.97  |               |  | February 7, 2012   |  | February 6, 2022 
|Liangbao Zhu                     |  |                                             | *          | (2) |                         |   | 13.06 |               |  | January 15, 2009   |  | January 14, 2019 
|                                 |  |                                             | *          | (2) |                         |   | 6.77  |               |  | April 7, 2010      |  | April 6, 2020    
|Yonggang Shao                    |  |                                             | *          | (2) |                         |   | 13.06 |               |  | January 15, 2009   |  | January 14, 2019 
|                                 |  |                                             | *          | (2) |                         |   | 6.77  |               |  | April 7, 2010      |  | April 6, 2020    
|Jack Lai                         |  |                                             | *          | (2) |                         |   | 6.77  |               |  | April 7, 2010      |  | April 6, 2020    
|                                 |  |                                             | *          | (2) |                         |   | 5.97  |               |  | February 7, 2012   |  | February 6, 2022 
|Yuepeng Wan                      |  |                                             | *          | (2) |                         |   | 5.97  |               |  | February 7, 2012   |  | February 6, 2022 
|Qiqiang Yao                      |  |                                             | *          |     |                         |   | 4.45  |               |  | August 1, 2006     |  | July 31, 2012    
|                                 |  |                                             | *          | (2) |                         |   | 6.77  |               |  | April 7, 2010      |  | April 6, 2020    
|                                 |  |                                             | *          | (2) |                         |   | 5.97  |               |  | February 7, 2012   |  | February 6, 2022 
|Maurice Ngai                     |  |                                             | *          | (2) |                         |   | 5.97  |               |  | February 7, 2012   |  | February 6, 2022 
|Bing Xiang                       |  |                                             | *          | (2) |                         |   | 5.97  |               |  | February 7, 2012   |  | February 6, 2022 
|Junwu Liang                      |  |                                             | *          | (2) |                         |   | 5.97  |               |  | February 7, 2012   |  | February 6, 2022 
|Other employees as a group(1)    |  |                                             | 224,256    |     |                         |   | 33.96 |               |  | July 6, 2007       |  | July 5, 2012     
|Other employees as a group(1)    |  |                                             | 177,000    |     |                         |   | 29.55 |               |  | December 3, 2007   |  | December 2, 2012 
|Other employees as a group(1)(2) |  |                                             | 123,320    |     |                         |   | 13.12 |               |  | November 13, 2008  |  | November 12, 2018
|Other employees as a group(1)    |  |                                             | 100,000    |     |                         |   | 13.06 |               |  | January 15, 2009   |  | January 14, 2014 
|Other employees as a group(1)(2) |  |                                             | 18,380     |     |                         |   | 13.06 |               |  | January 15, 2009   |  | January 14, 2019 
|Other employees as a group(1)    |  |                                             | 100,000    |     |                         |   | 8.46  |               |  | April 16, 2009     |  | April 15, 2014   
|Other employees as a group(1)(2) |  |                                             | 26,200     |     |                         |   | 8.46  |               |  | April 16, 2009     |  | April 15, 2019   
|Other employees as a group(1)(2) |  |                                             | 1,736,319  |     |                         |   | 6.77  |               |  | April 7, 2010      |  | April 6, 2020    
|Other employees as a group(1)(2) |  |                                             | 388,540    |     |                         |   | 7.35  |               |  | August 9, 2010     |  | August 8, 2020   
|Other employees as a group(1)(2) |  |                                             | 110,740    |     |                         |   | 12.33 |               |  | November 4, 2010   |  | November 3, 2020 
|Other employees as a group(1)(2) |  |                                             | 32,520     |     |                         |   | 10.43 |               |  | January 10, 2011   |  | January 9, 2021  
|Other employees as a group(1)(2) |  |                                             | 127,320    |     |                         |   | 12.03 |               |  | April 7, 2011      |  | April 6, 2021    
|Other employees as a group(1)(2) |  |                                             | 1,380,800  |     |                         |   | 5.03  |               |  | February 2, 2012   |  | February 1, 2022 
|Other employees as a group(1)(2) |  |                                             | 981,406    |     |                         |   | 5.97  |               |  | February 7, 2012   |  | February 6, 2022 
|                                 |  |                                             |            |     |                         |   |       |               |  |                    |  |                  
|Total                            |  |                                             | 10,348,468 |     |                         |   |       |               |  |                    |  |                  
|                                 |  |                                             |            |     |                         |   |       |               |  |                    |  |                  



|* | These directors and executive officers as a group, each beneficially owning less than 1% of our outstanding shares, together hold stock options exercisable for
4,821,667 shares.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(1) | Each employee holds less than 1% of our total outstanding voting securities.
|--- | ----------------------------------------------------------------------------

|(2) | Subject to a five-year vesting period.
|--- | --------------------------------------

Other than options granted to Xiaofeng Peng, Liangbao Zhu, Yonggang Shao, Maurice Ngai, Bing Xiang, Junwu Liang, the numbers of shares underlying options granted, as described in the above table, are
subject to reduction by our board of directors on the basis of performance of each relevant optionee.



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Share Ownership by Directors and Executive Officers

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the
securities. Except as indicated below, and subject to applicable community property laws, the persons named in the table below have sole voting and investment power with respect to all shares shown as beneficially owned by them. A shareholder is
also deemed to be, as of any date, the beneficial owner of all securities that such shareholder has the right to acquire within 60 days after that date through (a) the exercise of any option, warrant or right, (b) the conversion of a
security, (c) power to revoke a trust, discretionary account or similar arrangement, or (d) the automatic termination of a trust, discretionary account or similar arrangement.

The following table sets forth information with respect to the direct and indirect beneficial ownership of our shares by each of our
directors and executive officers as of the date of this annual report:



|                                 |  |                           |            |  |             |  |      |  
|-------------------------------- |  | ------------------------- | ---------- |  | ----------- |  | ---- | -
|                                 |  | Shares 
BeneficiallyOwned |           
|                                 |  | Number                    |            |  | Percent (1) | 
|Directors and Executive Officers |  |                           |            |  |             |  |      |  
|Xiaofeng Peng(2)                 |  |                           | 72,488,031 |  |             |  | 53.7 | %
|Xingxue Tong(3)                  |  |                           | *          |  |             |  | *    |  
|Liangbao Zhu(4)                  |  |                           | *          |  |             |  | *    |  
|Yonggang Shao(5)                 |  |                           | *          |  |             |  | *    |  
|Maurice Ngai                     |  |                           | *          |  |             |  | *    |  
|Jack Lai                         |  |                           | *          |  |             |  | *    |  
|Yuepeng Wan                      |  |                           | *          |  |             |  | *    |  
|Rongqiang Cui                    |  |                           | *          |  |             |  | *    |  
|Qiqiang Yao(6)                   |  |                           | *          |  |             |  | *    |  
|Total                            |  |                           | 72,959,101 |  |             |  | 55.1 | %



|* | Less than 1% of our outstanding shares.
|- | ---------------------------------------

|(1) | The percentage of beneficial ownership is calculated by dividing the number of shares beneficially owned by such person or group by an aggregate of 134,916,800 shares
issued and outstanding, including shares not yet issued and outstanding but beneficially owned by our directors and executive officers as determined in accordance with the SEC rules and regulations, as of the date of this annual report.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Mr. Peng holds his shares through his wholly owned British Virgin Islands company, LDK New Energy.
|--- | --------------------------------------------------------------------------------------------------

|(3) | Mr. Tong holds his shares through his wholly owned British Virgin Islands company, Superb Bright Limited.
|--- | ---------------------------------------------------------------------------------------------------------

|(4) | Mr. Zhu holds his shares through his wholly owned British Virgin Islands company, Feliz International Inc.
|--- | ----------------------------------------------------------------------------------------------------------

|(5) | Mr. Shao holds his shares through his wholly owned British Virgin Islands company, SM Future Investment Inc.
|--- | ------------------------------------------------------------------------------------------------------------

|(6) | Mr. Yao holds his shares through his wholly owned British Virgin Islands company, Qiqiang Investment Consulting Inc.
|--- | --------------------------------------------------------------------------------------------------------------------



|ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|------- | -------------------------------------------------



|A. | MAJOR SHAREHOLDERS
|-- | ------------------

The following table sets forth information regarding the direct and indirect beneficial ownership of our shares as of March 31, 2012, by each person known to us to own 5.0% or more of our shares.



|              |  |                           |            |  |         |  |      |  
|------------- |  | ------------------------- | ---------- |  | ------- |  | ---- | -
|              |  | Shares Beneficially Owned |           
|Name          |  | Number                    |            |  | Percent | 
|Xiaofeng Peng |  |                           | 72,488,031 |  |         |  | 53.7 | %



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Mr. Peng is our founder, chairman, chief executive officer and ultimate controlling
shareholder. Mr. Peng holds his shares in our company through LDK New Energy, his wholly owned British Virgin Islands company. In connection with and to facilitate hedging transactions by investors holding our 2013 convertible notes we issued
in April 2008, Morgan Stanley & Co. Incorporated or its affiliate, acting as agent for LDK New Energy, may have sold up to 3,000,000 ordinary shares in the form of ADSs prior to June 27, 2008 on behalf of LDK New Energy pursuant to a
sales plan agreement dated April 9, 2008 with LDK New Energy and in compliance with Rule 144 under the Securities Act. Concurrently with each such sale, LDK New Energy agreed to purchase an equal amount of our ordinary shares in the form
of ADSs under prepaid forward contracts with affiliates of certain initial purchasers of such convertible notes. Prepayments for these purchases were made using the net proceeds from the sales under the sales plan. All of the 3,000,000 ordinary
shares in the form of ADSs have been returned to LDK New Energy as of the date of this annual report.

Mr. Peng, in his
personal capacity, and his family members are engaged in certain alternative energy projects, including a company that is developing a project involving thin-film solar technology. LDK New Energy, our immediate controlling shareholder that is wholly
owned by Mr. Peng, is the beneficial owner of all of the equity interest of this thin-film solar company. Thin-film solar technology is an alternative method of producing PV products compared to our crystalline wafer-based solar technology and
products. Mr. Peng and his family members may finance such alternative energy projects, including the thin-film solar project, in part, by proceeds from LDK New Energys sales of a portion of its equity interest in our company. In
addition, LDK New Energy has entered into loan facilities with financial and banking institutions to finance the thin-film solar project. As of the date of this annual report, LDK New Energy has pledged up to approximately 52.0 million of our
ordinary shares (including ordinary shares represented by ADSs). Mr. Peng and his family members may from time to time obtain additional borrowings to fund investments in such alternative energy projects from financial institutions, which may
be secured by additional pledges of a portion of LDK New Energys shares in our company. These future financing arrangements may be structured in such a way that Mr. Peng would be required to pledge additional shares or other collateral if
the market value of the pledged shares does not meet specified levels.

Failure or delay to promptly meet these margin calls
or other default under these financing arrangements could result in the sale or other disposition of some or all of the pledged shares in our company. In addition, in the event of a default under the loan agreements for which Mr. Peng has
provided a personal guarantee, Mr. Pengs personal property, including his shares in us, may be seized and sold by the relevant lenders. Any of these events may potentially result in a change in control of our company. You may find
additional information under Item 3. Key Information  D. Risk Factors  Risks Relating to Our Company and Our Industry  Our controlling shareholder, Mr. Peng, has directly or indirectly pledged a
significant portion of his equity interests in our company to secure certain loan facilities. A default under these loan facilities could potentially result in a change of control of our company.



|B. | RELATED PARTY TRANSACTIONS
|-- | --------------------------

We have engaged from time to time in various transactions with related parties. We believe that we have conducted our related-party
transactions on terms comparable to, or more favorable to us than, similar transactions we would enter into with independent third parties. Our related-party transactions have been and will continue to be subject to the review and approval of the
audit committee of our board of directors. The charter of our audit committee as adopted by our board of directors provides that we may not enter into any related-party transaction unless and until it has been approved by the audit committee.



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For the years indicated, in addition to the guarantees and security provided by related
parties for our bank borrowings, our principal related party transactions and amounts outstanding with our related parties are summarized as follows:



|                                                                 |  |                         |        |  |      |  |        |      |  |  |        | 
|---------------------------------------------------------------- |  | ----------------------- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                                                                 |  | Year Ended December 31, |       
|                                                                 |  | 2009                    |        |  | 2010 |  |        | 2011 | 
|                                                                 |  | (In thousands)          |       
|Sales of wafers under related parties arrangement(1)             |  |                         | 56,132 |  |      |  |       |      |  |  |       | 
|Purchases of modules production equipment from the Best Solar(2) |  |                         |       |  |      |  | 21,248 |      |  |  |       | 
|Purchases of inventories from Best Solar(2)                      |  |                         | 78,079 |  |      |  | 80,869 |      |  |  |       | 
|Purchases of buildings, plants and equipment from Best Solar(2)  |  |                         |       |  |      |  |       |      |  |  | 61,574 | 
|Sales of modules and cells to Best Solar(2)                      |  |                         |       |  |      |  | 4,587  |      |  |  |       | 
|Sales of PV projects to Best Solar(2)                            |  |                         |       |  |      |  |       |      |  |  | 723    | 
|Purchases of low value consumables from a related party(3)       |  |                         | 509    |  |      |  | 1,993  |      |  |  | 573    | 
|Purchases of auxiliary from a related party(4)                   |  |                         |       |  |      |  | 7,821  |      |  |  | 11,142 | 
|Purchases of crucibles from an associate(5)                      |  |                         | 1,271  |  |      |  | 14,252 |      |  |  | 18,116 | 
|Sales of modules and other PV products to Geermu Hydropower(6)   |  |                         |       |  |      |  |       |      |  |  | 36,526 | 



|(1) | During the year ended December 31, 2009, Jiangxi LDK Solar entered in to three wafer sales contracts with Gintech and one wafer sales contract with Motech with
contract values of $52,350,000 and $3,782,000, respectively, or the Wafer Sales Contracts. In addition, Gintech and Motech entered into agreements to sell corresponding quantities of cells, or the Cell Sales Arrangement, to Best Solar. Jiangxi LDK
Solar respectively agreed with Gintech and Motech that these Wafer Sales Contracts will be void if Best Solar did not procure the cells from Gintech and Motech pursuant to the Cell Sales Agreement. During the year ended December 31, 2009,
Jiangxi LDK Solar recognized revenue of $56,132,000 relating to these Wafer Sales Contracts when Gintech and Motech accepted delivery of wafers supplied by us and Best Solar accepted delivery of cells respectively supplied by Gintech and Motech.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | On February 28, 2010, we purchased the crystalline module production equipment from Best Solar at a consideration of $21,248,000, which approximates their fair
value in the market and carrying value as recorded in the books of Best Solar.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We purchased the crystalline
modules of $78,079,000 and $29,426,000 from Best Solar during the year ended December 31, 2009 and 2010, respectively. We also purchased raw materials and supplies relating to crystalline modules production of $51,443,000 from Best Solar during
the year ended December 31, 2010. Furthermore, we made prepayments of $15,573,000 to Best Solar under a thin-film module purchase agreement during the year ended December 31, 2010 and made prepayments of $37,615,000 to Best Solar for
crystalline module purchases and processing during the year ended December 31, 2009.

We purchased buildings, plants and
land use rights of $61,574,000 for module production from Best Solar during the year ended December 31, 2011.

We sold
crystalline modules and cells of $4,587,000 to Best Solar during the year ended December 31, 2010.

We sold a PV project
of $723,000 to Best Solar during the year ended December 31, 2011.

The outstanding amounts due from the Best Solar as of
December 31, 2010 and 2011 were $44,839,000 and $1,665,000, respectively.

|(3) | We purchased low value consumables from Jiangxi Liouxin Industry Co., Ltd., or Jiangxi Liouxin, a company controlled by Mr. Peng, of $509,000, $1,993,000 and
$573,000 during the years ended December 31, 2009, 2010 and 2011, respectively. The outstanding amount due to Jiangxi Liouxin was $656,000, $949,000 and $1,519,000 as of December 31, 2009, 2010 and 2011, respectively.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | We purchased auxiliary materials of $7,821,000 and $11,142,000 from Saiwen Industry (Suzhou) Co., Ltd., or Saiwen Industry, a company controlled by Mr. Peng,
during the year ended December 31, 2010 and 2011. The outstanding amounts due to Saiwen Industry were $2,211,000 and $8,340,000 as of December 31, 2010 and 2011, respectively. The outstanding amounts due from Saiwen Industry were nil and
$850,000 as of December 31, 2010 and 2011, respectively.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(5) | Jiangxi LDK Solar also purchased crucibles from Sinoma, which is an associate of Jiangxi LDK Solar, of $1,271,000, $14,252,000 and $18,116,000 during the years ended
December 31, 2009, 2010 and 2011, respectively. The outstanding amount due to Sinoma was $11,874,000 and $9,460,000 as of December 31, 2010 and 2011, respectively.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | We sold module and other PV products of $36,526,000 to Geermu Hydropower, an associate of LDK Solar Power Technology (Xinyu) Engineering Co., Ltd., during the year
ended December 31, 2011. The outstanding amount due from Geermu Hydropower was $38,805,000 as of December 31, 2011 and due to Geermu Hydropower was nil as of December 31, 2011.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Guarantees

Our ultimate
controlling shareholder, Mr. Peng, and his wife, Ms. Zhou Shan, as well as companies controlled by Mr. Peng have provided guarantees or collateral to financial institutions in China to secure bank loans borrowed by Jiangxi LDK Solar.
See note 11 to our consolidated financial statements beginning on page F-1 for more details on these borrowings. As of December 31, 2011, an aggregate of $256.8 million of our borrowings from commercial banks in China were
secured by guarantees from Mr. Peng and his wife or companies controlled by Mr. Peng.

Stock Option Grants

See Item 6. Directors, Senior Management and Employees  E. Share Ownership  2006 Stock Incentive
Plan in this annual report.

Individual Income Tax Withholding Obligation

Certain of our current and former executives and employees exercised share options that vested in 2007, 2008 and 2009. Pursuant to the PRC
tax regulations, the income derived from the exercise of the share options is subject to individual income tax, which should be withheld by us from these current and former executives and employees for payment to the PRC tax authorities. For the
years ended December 31, 2009, 2010 and 2011, we recorded a withholding tax liability of approximately $41.8 million, $46.3 million and $47.7 million, respectively, and the related gross receivable of $41.8 million,
$46.3 million and $47.7 million, respectively, from our current and former executives and officers arising out of their exercise of stock. You may refer to Item 10. Additional Information  E. Taxation 
Peoples Republic of China Taxation  Individual income tax withholding obligation.



|C. | INTERESTS OF EXPERTS AND COUNSEL
|-- | --------------------------------

Not applicable.



|ITEM 8. | FINANCIAL INFORMATION
|------- | ---------------------



|A. | CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
|-- | -------------------------------------------------------

See pages beginning on page F-1 in this annual report.

Legal Proceedings

We
and our directors and officers have been and in the future may be involved in allegations, litigation or legal or administrative proceedings, including those related to alleged violations of securities laws. We have also instituted, and may continue
to institute, legal proceedings against others. Regardless of the merits, attending to these matters and defending against and pursuing litigation can be time consuming and costly, and may result in substantial legal and administrative expenses, as
well as divert the attention of our management.

Dividend Distribution Policy

We have never declared or paid any dividends, nor do we anticipate paying any cash dividends on our shares in the foreseeable future. We
currently intend to retain most, if not all, of our available funds and any



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future earnings for use in the operation and expansion of our business. We are a holding company and our cash flow depends on dividends from our principal operating subsidiaries, Jiangxi LDK
Solar, Jiangxi LDK Silicon, Jiangxi LDK Polysilicon and other PRC operating subsidiaries, in China. The ability of our subsidiaries in China to pay dividends to us is subject to various restrictions, including legal restrictions in China that permit
payment of dividends only out of retained earnings determined in accordance with the PRC accounting standards and regulations. Under PRC laws, Jiangxi LDK Solar, as a wholly foreign-owned enterprise in China, must allocate at least 10% of its
after-tax profit to its statutory general reserve until the balance of the reserve reaches 50% of its registered capital. It must also allocate a certain percentage of its after-tax profit each year as its employee welfare and bonus fund, and its
board of directors has the discretion to determine the percentage of the after-tax profits for such employee welfare and bonus fund. Statutory general reserve and employee welfare and bonus fund are not distributable as cash dividends except in the
event of a liquidation. A sino-foreign joint venture enterprise, such as Jiangxi LDK Silicon and Jiangxi LDK Polysilicon, is required to set aside a certain percentage of its after-tax profit calculated in accordance with the PRC accounting
standards and regulations each year for its statutory general reserves, employee welfare and bonus fund and enterprise development fund in accordance with the requirement of relevant PRC laws and its articles of associations. The board of directors
of a sino-foreign joint venture enterprise has the discretion to determine the respective percentages of its after-tax profits for its statutory general reserves, employee welfare and bonus fund and enterprise development fund, which are not
distributable to its equity owners except in the event of a liquidation.

Our board of directors has complete discretion as to
whether we will pay dividends in the future. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition,
contractual restrictions and other factors that our board of directors may deem relevant.

The ADS depositary has agreed to
distribute the cash dividend or other distribution we declare and pay on our shares evidenced by ADSs to the holders of our ADSs, subject to the terms of the deposit agreement, to the same extent as holders of our shares, less its fees and expenses
payable under the deposit agreement and after deduction of any applicable taxes. The depositary may send to the holders of our ADSs anything else we distribute on deposited securities by means it considers lawful and reasonably practical. If it
cannot make the distribution that way, the depositary may decide to sell what we distribute and distribute the net proceeds in the same way as it does with cash or hold what we distribute if it cannot be sold. Cash dividends on our shares, if any,
will be paid in U.S. dollars.



|B. | SIGNIFICANT CHANGES
|-- | -------------------

None.



|ITEM 9. | THE OFFER AND LISTING
|------- | ---------------------

Not applicable, except for  A. Offer and Listing Details  4. Information Regarding the Price History of the Stock and  C. Markets as disclosed
below.

We listed our ADSs on the New York Stock Exchange in June 2007. For the year ended December 31, 2011, the closing
price of our ADSs on the New York Stock Exchange ranged from $2.70 to $14.49 per ADS.



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Set forth below, for the applicable periods indicated, are the high and low closing prices
per ADS as reported by the New York Stock Exchange.



|                                                                       |  |      |       |  |     |   |       | 
|---------------------------------------------------------------------- |  | ---- | ----- |  | --- | - | ----- | 
|                                                                       |  | High |       |  | Low |  
|Annual Highs and Lows                                                  |  |      |       |  |     |   |       | 
|2007 (from June 1, date of our ADS listing on New York Stock Exchange) |  | $    | 73.95 |  |     | $ | 23.20 | 
|2008                                                                   |  |      | 51.26 |  |     |   | 9.95  | 
|2009                                                                   |  |      | 16.01 |  |     |   | 4.04  | 
|2010                                                                   |  |      | 13.90 |  |     |   | 5.00  | 
|2011                                                                   |  |      | 14.49 |  |     |   | 2.70  | 
|Quarterly Highs and Lows                                               |  |      |       |  |     |   |       | 
|Second Quarter 2010                                                    |  |      | 8.43  |  |     |   | 5.00  | 
|Third Quarter 2010                                                     |  |      | 10.45 |  |     |   | 5.20  | 
|Fourth Quarter 2010                                                    |  |      | 13.90 |  |     |   | 9.80  | 
|First Quarter 2011                                                     |  |      | 14.49 |  |     |   | 10.29 | 
|Second Quarter 2011                                                    |  |      | 12.03 |  |     |   | 6.18  | 
|Third Quarter 2011                                                     |  |      | 7.36  |  |     |   | 3.12  | 
|Fourth Quarter 2011                                                    |  |      | 5.24  |  |     |   | 2.70  | 
|First Quarter 2012                                                     |  |      | 6.70  |  |     |   | 4.00  | 
|Monthly Highs and Lows                                                 |  |      |       |  |     |   |       | 
|November 2011                                                          |  |      | 3.92  |  |     |   | 2.83  | 
|December 2011                                                          |  |      | 5.24  |  |     |   | 3.62  | 
|January 2012                                                           |  |      | 5.52  |  |     |   | 4.22  | 
|February 2012                                                          |  |      | 6.70  |  |     |   | 5.03  | 
|March 2012                                                             |  |      | 5.70  |  |     |   | 4.00  | 
|April 2012                                                             |  |      | 3.85  |  |     |   | 2.95  | 

On May 14, 2012, the last reported closing sale price of our ADSs on the New York Stock Exchange was
$3.13 per ADS.



|ITEM 10. | ADDITIONAL INFORMATION
|-------- | ----------------------



|A. | SHARE CAPITAL
|-- | -------------

Not applicable.



|B. | MEMORANDUM AND ARTICLES OF ASSOCIATION
|-- | --------------------------------------

Our shareholders adopted our fourth amended and restated memorandum and articles of association, which took effect upon completion of our
IPO in June 2007. On June 17, 2008, our shareholders at their annual general meeting adopted a special resolution to amend our memorandum and articles of association to clarify the power of our company to redeem or repurchase its shares.

As of the date of this annual report, our authorized share capital consists of 499,580,000 ordinary shares, par value of
$0.10 each, and 420,000 shares of such class or designation as our board of directors may determine in accordance with our articles of association, par value of $0.10 each. As of the date of this annual report, an aggregate of
133,860,445 shares have been issued and an aggregate of 133,518,800 shares are outstanding.

Ordinary Shares and Ordinary
Shares Represented by ADSs

We are a Cayman Islands company and our affairs are governed by our memorandum and
articles of association and the Cayman Islands companies law.



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Meetings

Subject to the regulatory requirements applicable to us, we will call an annual general meeting and any extraordinary general meeting by not less than 10 clear days notice in writing. Notice of
every general meeting will be given to all of our shareholders other than those that, under the provisions of our current articles of association or the terms of issue of the ordinary shares they hold, are not entitled to receive such notices from
us, and also to our directors and principal external auditors. Extraordinary general meetings may be called only by the chairman of our board of directors or a majority of our board of directors, and may not be called by any other person.

Notwithstanding that a meeting is called by shorter notice than that mentioned above, subject to applicable regulatory
requirements, the meeting will be deemed to have been duly called, if it is so agreed (1) in the case of a meeting called as an annual general meeting by all of our shareholders entitled to attend and vote at the meeting; or (2) in the
case of any other meeting, by a majority in number of our shareholders having the right to attend and vote at the meeting, being a majority together holding not less than 95% in nominal value of our issued shares giving that right.

Voting rights

Each of our ordinary shares is entitled to one vote on all matters upon which our ordinary shares are entitled to vote. Voting at any
meeting of our shareholders is by show of hands unless (before or on the declaration of the result of the show of hands or on withdrawal of any other demand for a poll) a poll is demanded as described in our fourth amended and restated articles of
association. A poll may be demanded by:



| |  |  | the chairman of the meeting;
| | - |  | ----------------------------



| |  |  | at least three shareholders present in person or, in the case of a shareholder being a corporation, by its duly authorized representative, or by proxy
for the time being entitled to vote at the meeting;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any shareholder or shareholders present in person or, in the case of a shareholder being a corporation, by its duly authorized representative, or by
proxy and representing not less than one-tenth of the total voting rights of all the shareholders having the right to vote at the meeting; or
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a shareholder or shareholders present in person or, in the case of a shareholder being a corporation, by its duly authorized representative, or by
proxy and holding not less than one-tenth of the issued share capital of our voting shares.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A quorum
required for a meeting of our shareholders consists of at least two shareholders holding at least one-third in nominal value of our total issued voting shares present in person or by proxy or, if a corporation or other non-natural person, by its
duly authorized representative.

An ordinary resolution to be passed by our shareholders requires the affirmative vote of a
simple majority of the votes attaching to our ordinary shares cast in a general meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to our ordinary shares. A special resolution is
required for important matters such as a change of name or an amendment to our memorandum or articles of association. Holders of our ordinary shares may effect certain changes by an ordinary resolution, including alteration of the amount of our
authorized share capital, consolidation and division of all or any of our share capital into shares of larger or smaller amount than our existing share capital, and cancel any unissued shares.

If a recognized clearing house, depositary or its nominee is our shareholder, it may authorize such person or persons as it thinks fit to
act as its representative(s) at any meeting or at any meeting of any class of shareholders, provided that, if more than one person is so authorized, the authorization shall specify the number and class of shares in respect of which each such person
is so authorized. A person authorized pursuant thereto is entitled to exercise the same powers on behalf of the recognized clearing house, depositary or its nominee as if such person was the registered holder of our shares held by that clearing
house, depositary or its nominee, including the right to vote individually on a show of hands.



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Protection of minority shareholders

The Grand Court of the Cayman Islands may, on the application of shareholders holding not less than one fifth of our shares in issue,
appoint one or more inspectors to examine our affairs and to report thereon in a manner as the Grand Court shall direct.

Any
shareholder of a company may petition the Grand Court of the Cayman Islands, which may make a winding-up order if such court is of the opinion that it is just and equitable that the company should be wound up or, as an alternative to a winding-up
order, (a) an order regulating the conduct of the companys affairs in the future, (b) an order requiring the company to refrain from doing or continuing an act complained of by the shareholder petitioner or to do an act which the
shareholder petitioner has complained it has omitted to do, (c) an order authorizing civil proceedings to be brought in the name and on behalf of the company by the shareholder petitioner on such terms as such court may direct, or (d) an
order providing for the purchase of the shares of any shareholders of the company by other shareholders or by the company itself and, in the case of a purchase by the company itself, a reduction of the companys capital accordingly.

Claims against us by our shareholders must, as a general rule, be based on the general laws of contract or tort applicable in the Cayman
Islands or their individual rights as shareholders as established by our fourth amended and restated memorandum and articles of association.

The Cayman Islands courts ordinarily would be expected to follow English case law precedents which permit a minority shareholder to commence a representative action against, or derivative actions in our
name to challenge (1) an act which is ultra vires or illegal, (2) an act which constitutes a fraud against the minority and the wrongdoers are themselves in control of us, and (3) an irregularity in the passing of a resolution which
requires a qualified (or special) majority.

Dividends

Subject to the Cayman Islands companies law, our board of directors may from time to time declare dividends in any currency to be paid to our shareholders. Dividends may be declared and paid out of our
profits, realized or unrealized, or from any reserve set aside from profits which our directors determine is no longer needed. Our board of directors may also declare and pay dividends out of the share premium account or any other fund or account
that can be authorized for this purpose in accordance with the Cayman Islands companies law.

Except in so far as the rights
attaching to, or the terms of issue of, any share otherwise provides (1) all dividends shall be declared and paid according to the amounts paid up on the shares in respect of which the dividend is paid, but no amount paid up on a share in
advance of calls shall be treated for this purpose as paid up on that share and (2) all dividends shall be apportioned and paid pro rata according to the amounts paid upon the shares during any portion or portions of the period in respect of
which the dividend is paid.

Our directors may also pay any dividend that is payable on any shares semi-annually or on any
other dates, whenever our financial position, in the opinion of our directors, justifies such payment. Our directors may deduct from any dividend or bonus payable to any shareholder all sums of money (if any) presently payable by such shareholder to
us on account of calls, installments or otherwise. No dividend or other money payable by us on or in respect of any share will bear interest against us.

In respect of any dividend proposed to be paid or declared on our share capital, our directors may resolve and direct that (1) such dividend be satisfied wholly or in part in the form of an allotment
of shares credited as fully paid up, provided that our members entitled thereto will be entitled to elect to receive such dividend (or part thereof if our board so determine) in cash in lieu of such allotment or (2) the shareholders entitled to
such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as our board may think fit. We may also, on the recommendation of our directors, resolve in respect
of any particular dividend that, notwithstanding the foregoing, it may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right of shareholders to elect to receive such dividend in cash in lieu
of such allotment.



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Any dividend interest or other sum payable in cash to the holder of shares may be paid by
check or warrant sent by mail addressed to the holder at his registered address, or addressed to such person and at such addresses as the holder may direct. Every check or warrant shall, unless the holder or joint holders otherwise direct, be made
payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on the register in respect of such shares, and shall be sent at his or their risk and payment of the check or warrant by the bank
on which it is drawn shall constitute a good discharge to us.

All dividends or bonuses unclaimed for one year after having
been declared may be invested or otherwise made use of by our board of directors for the benefit of us until claimed. Any dividend or bonuses unclaimed after a period of six years from the date of declaration of such dividend may be forfeited by our
board of directors and, if so forfeited, shall revert to us.

Whenever our directors or our shareholders in a general meeting
have resolved that a dividend be paid or declared, our directors may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind, and in particular of paid up shares, debentures or warrants to
subscribe for our securities or securities of any other company. Where any difficulty arises with regard to such distribution, our directors may settle it as they think expedient. In particular, our directors may issue certificates in respect of
fractions of Shares, ignore fractional entitlement or round the same up or down, fix the value for distribution purposes of any such specific assets, determine that cash payments shall be made to any of our shareholders upon the footing of the value
so fixed in order to adjust the rights of the parties, vest any such specific assets in trustees as may seem expedient to our directors, and appoint any person to sign any requisite instruments of transfer and other documents on behalf of a person
entitled to the dividend, which appointment shall be effective and binding on our shareholders.

Transfer of shares

Subject to the restrictions contained in our fourth amended and restated articles of association, as more fully described below, any of
our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or by any other form approved by our board of directors or in a form prescribed by a designated stock exchange.

Our board of directors may, in its absolute discretion, and without giving any reason, decline to register a transfer of any
ordinary share which is not fully paid up or on which we have a lien. Our directors may also decline to register any transfer of any ordinary share unless:



| |  |  | the instrument of transfer is lodged with us, accompanied by the relevant certificate for the ordinary shares and such other evidence as our board of
directors may reasonably require to show the right of the transferor to make the transfer;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the instrument of transfer is in respect of only one class of ordinary shares;
| | - |  | ------------------------------------------------------------------------------



| |  |  | the instrument of transfer is properly stamped, if applicable;
| | - |  | --------------------------------------------------------------



| |  |  | in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; or
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a fee of such maximum sum as a designated stock exchange may determine to be payable, or such lesser sum as our board of directors may from time to
time require, is paid to us.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There is presently no legal requirement under Cayman Islands law for
instruments of transfer relating to our ordinary shares to be stamped. In addition, our board of directors has no present intention to charge any fee in connection with the registration of a transfer of our ordinary shares.



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If our directors refuse to register a transfer, they must, within two months after the date
on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal. The registration of transfers may, upon prior notice given by advertisement in one or more newspapers or by electronic means,
be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, but we may not suspend the registration of transfers nor close the register for more than 30 days in any year.

Liquidation

Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares (i) if we are
wound up and the assets available for distribution among our shareholders are more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed pari passu among those shareholders
in proportion to the amount paid up at the commencement of the winding up on the shares held by them, respectively, and (ii) if we are wound up and the assets available for distribution among the shareholders as such are insufficient to repay
the whole of the paid-up capital, those assets shall be distributed so that, as nearly as may be, the losses shall be borne by the shareholders in proportion to the capital paid up at the commencement of the winding up on the shares held by them,
respectively.

If we are wound up (whether the liquidation is voluntary or by the court), the liquidator may with the sanction
of a special resolution (requiring a majority of not less than two-thirds of votes cast at a shareholders meeting) and any other sanction required by the Cayman Islands companies law, divide among our shareholders in specie or kind the whole or any
part of our assets (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as the liquidator deems fair upon any property to be divided and may determine how such division shall be carried out as
between the shareholders or different classes of shareholders. The liquidator may also vest the whole or any part of these assets in trustees upon such trusts for the benefit of the shareholders as the liquidator shall think fit, but so that no
shareholder will be compelled to accept any assets, shares or other securities upon which there is a liability.

Alteration of capital

We may from time to time by ordinary resolution:



| |  |  | increase our capital by such sum, to be divided into shares of such amounts, as the resolution shall prescribe;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | consolidate and divide all or any of our share capital into shares of larger amount than our existing shares;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | cancel any shares which at the date of the passing of the resolution have not been taken or agreed to be taken by any person, and diminish the amount
of its share capital by the amount of the shares so cancelled;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | sub-divide our shares or any of them into shares of smaller amount than is fixed by our fourth amended and restated memorandum of association, subject
nevertheless to the Cayman Islands companies law, and so that the resolution whereby any share is sub-divided may determine that, as between the holders of the shares resulting from such subdivision, one or more of the shares may have any such
preference or other special rights, over, or may have such deferred rights or be subject to any such restrictions as compared with the others as we have power to attach to unissued or new shares; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | divide shares into several classes and without prejudice to any special rights previously conferred on the holders of existing shares, attach to the
shares respectively any preferential, deferred, qualified or special rights, privileges, conditions or such restrictions which in the absence of any such determination in general meeting as the directors may determine.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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We may, by special resolution (requiring a majority of not less than three-quarters of votes
cast at a shareholders meeting), subject to any confirmation or consent required by the Cayman Islands companies law, reduce our share capital or any capital redemption reserve in any manner authorized by law.

Calls on shares and forfeiture of shares

Our fourth amended and restated articles of association permit us to issue our shares, including ordinary shares, nil paid and partially paid provided that no share is issued at a discount. This permits
us to issue shares where the payment for such shares has yet to be received. Although our fourth amended and restated articles of association give us the flexibility to issue nil paid and partly paid shares, our board of directors has no present
intention to do so. Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice served to such shareholders at least 14 clear days prior to the specified time and place of payment. The
shares that have been called upon and remain unpaid on the specified time are subject to forfeiture.

Redemption of shares

Subject to the provisions of the Cayman Islands companies law, the rules of the designated stock exchange, our fourth
amended and restated memorandum and articles of association and any special rights conferred on the holders of any shares or class of shares, we may issue shares on terms that they are subject to redemption at our option or at the option of the
holders, on such terms and in such manner as may be determined by our board of directors. Subject to the Cayman Islands companies law, any preferred shares may be issued or converted into our shares, at a determinable date or at our option or the
option of the holders, if so authorized by our memorandum of association, are liable to be redeemed on such terms and in such manner as we, before the issue or conversion, may by ordinary resolution of our members determine. Our currently
outstanding ordinary shares will not be subject to redemption at the option of the holders or our board of directors.

Variations of
rights of shares

All or any of the special rights attached to any class of our shares may, subject to the provisions
of the Cayman Islands companies law, be varied with the sanction of a special resolution passed at a general meeting of the holders of the shares of that class.

Inspection of register of members

Pursuant to our articles of
association, our register of members and branch register of members shall be open for inspection, unless the register is closed in accordance with our fourth amended and restated articles of association:



| |  |  | by shareholders for such times and on such days as our board of directors may determine, without charge, at our registered office or such other place
where we keep our register in accordance with the Cayman Islands companies law, or
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | by any other person, upon a maximum payment of $2.50 or such other sum specified by our board of directors, at our registered office or such other
place where we keep our register in accordance with the Cayman Islands companies law, or if appropriate, upon a maximum payment of $1.00 or such other sum specified by our board of directors at the registration office.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Designations and classes of shares

All of our issued shares are ordinary shares. Our articles of association provide that our authorized unissued shares shall be at the disposal of our board of directors, which may offer, allot, grant
options over or otherwise dispose of them to such persons, at such times and for such consideration and upon such terms and conditions as



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our board of directors may in its absolute discretion determine. In particular, our board of directors is empowered to authorize from time to time the issuance of one or more classes or series of
preferred shares and to fix their designations, powers, and preferences, as well as their relative, participating, optional and other rights, if any, and their qualifications, limitations and restrictions, if any, including the number of shares
constituting each such class or series, dividend rights, conversion rights, redemption privileges, voting powers, full or limited or no voting powers, and liquidation preferences, and to increase or decrease the size of any such class or series.
Subject to the Cayman Islands companies law, any preferred shares may be issued or converted into our shares, at a determinable date or at our option or the option of the holders, if so authorized by our memorandum of association, are liable to be
redeemed on such terms and in such manner as we, before the issue or conversion, may by ordinary resolution of our members determine.

Anti-takeover provisions

Cayman Islands law does not prevent companies from adopting a wide range of defensive measures, such as staggered boards, blank check preferred, removal of directors only for cause and provisions that
restrict the right of shareholders to call meetings, act by written consent and submit shareholder proposals.

Share repurchase

We are empowered by the Cayman Islands companies law and our articles of association to purchase our own shares,
subject to certain restrictions. Our directors may only exercise this power on our behalf, subject to the Cayman Islands companies law, our memorandum and articles of association and to any applicable requirements imposed from time to time by the
New York Stock Exchange, the SEC or by any other recognized stock exchange on which our securities may be listed.

Untraceable
shareholders

We are entitled to sell any shares of a shareholder who is untraceable, provided that:



| |  |  | all checks or warrants in respect of dividends of such shares, not being less than three in number, for any sums payable in cash to the holder of such
shares have remained uncashed for a period of 12 years prior to the publication of the advertisement and during the three months referred to in third bullet point below;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we have not during that time received any indication of the whereabouts or existence of the shareholder or person entitled to such shares by death,
bankruptcy or operation of law; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we have caused an advertisement to be published in newspapers in the manner stipulated by our amended and restated articles of association, giving
notice of our intention to sell these shares, and a period of three months has elapsed since such advertisement and the stock exchange on which we list has been notified of such intention.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The net proceeds of any such sale shall belong to us, and when we receive these net proceeds we shall become indebted to the former
shareholder for an amount equal to such net proceeds.

Protection of minority shareholders

The Cayman Islands courts ordinarily would be expected to follow English case law precedents which permit a minority shareholder to
commence a representative action against or derivative actions in the name of the company to challenge (a) an act which is ultra vires or illegal, (b) an act which constitutes a fraud against the minority shareholders and the wrongdoers
are themselves in control of the company, and (c) an irregularity in the passing of a resolution which requires a qualified (or special) majority.

In the case of a company (not being a bank) having a share capital divided into shares, the Grand Court of the Cayman Islands, or the Cayman Court, may, on the application of members holding not less than
one fifth of the shares of the company in issue, appoint an inspector to examine into the affairs of the company and to report thereon in such manner as the Cayman Court shall direct.



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Any shareholder of a company may petition the Cayman Court which may make a winding-up order
if the Cayman Court is of the opinion that it is just and equitable that the company should be wound up or, as an alternative to a winding up order, (a) an order regulating the conduct of the companys affairs in the future, (b) an
order requiring the company to refrain from doing or continuing an act complained of by the shareholder petitioner or to do an act which the shareholder petitioner has complained it has omitted to do, (c) an order authorizing civil proceedings
to be brought in the name and on behalf of the company by the shareholder petitioner on such terms as the Cayman Court may direct, or (d) an order providing for the purchase of the shares of any shareholders of the company by other shareholders
or by the company itself and, in the case of a purchase by the company itself, a reduction of the companys capital accordingly.

Generally claims against a company by its shareholders must be based on the general laws of contract or tort applicable in the Cayman Islands or their individual rights as shareholders as established by
the companys memorandum and articles of association.

Mergers and similar arrangements

A merger of two or more constituent companies under Cayman Islands law requires a plan of merger or consolidation to be approved by the
directors of each constituent company and a special resolution of the shareholders of each constituent company.

A merger
between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders. For this purpose a subsidiary is a company of which at least 90% of the issued shares entitled to vote are
owned by the parent company.

The consent of each holder of a fixed or floating security interest over a constituent company
is required unless this requirement is waived by a court in the Cayman Islands.

Except in certain circumstances, a
dissentient shareholder of a Cayman constituent company is entitled to payment of the fair value of his/her shares upon dissenting to a merger or consolidation. The exercise of appraisal rights will preclude the exercise of any other rights except
for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.

In addition, there are
statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors (representing 75% by value) with whom the
arrangement is to be made, and who must, in addition, represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened
for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Cayman Court. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the
Cayman Court can be expected to approve the arrangement if it determines that:



| |  |  | the statutory provisions as to the required majority vote have been met;
| | - |  | ------------------------------------------------------------------------



| |  |  | the shareholders have been fairly represented at the meeting or meetings in question and the statutory majority is acting bona fide without coercion of
the minority to promote interests adverse to those of the class;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the arrangement is such that may be reasonably approved by an intelligent and honest person of that class acting in respect of his/her
interest; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the arrangement is not one that would more properly be sanctioned under some other provision of the Cayman Islands companies law.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



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When a take-over offer is made and accepted by holders of 90% of the shares within four
months, the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Cayman Court
but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.

If an arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting
shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.

Winding up

A
company may be wound up compulsorily by order of the Cayman Court voluntarily or under the supervision of the Cayman Court. The Court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of
the Cayman Court, just and equitable to do so.

A company may be wound up voluntarily when the members so resolve in general
meeting by special resolution, or, in the case of a limited duration company, when the period fixed for the duration of the company by its memorandum or articles expires, or the event occurs on the occurrence of which the memorandum or articles
provides that the company is to be dissolved, or, the company does not commence business for a year from its incorporation (or suspends its business for a year), or, the company is unable to pay its debts. In the case of a voluntary winding up, such
company is obliged to cease to carry on its business from the time of passing the resolution for voluntary winding up or upon the expiry of the period or the occurrence of the event referred to above.

For the purpose of conducting the proceedings in winding up a company and assisting the Cayman Court, there may be appointed one or more
than one person to be called an official liquidator or official liquidators; and the Cayman Court may appoint to such office such qualified person or persons, either provisionally or otherwise, as it thinks fit, and if more persons than one are
appointed to such office, the Cayman Court shall declare whether any act hereby required or authorized to be done by the official liquidator is to be done by all or any one or more of such persons. The Cayman Court may also determine whether any and
what security is to be given by an official liquidator on his appointment; if no official liquidator is appointed, or during any vacancy in such office, all the property of the company shall be in the custody of the Cayman Court. A person shall be
qualified to accept an appointment as an official liquidator if he is duly qualified in terms of the Insolvency Practitioners Regulations. A foreign practitioner may be appointed to act jointly with a qualified insolvency practitioner.

In the case of a members voluntary winding up of a company, the company in general meeting must appoint one or more liquidators for
the purpose of winding up the affairs of the company and distributing its assets. A declaration of solvency must be signed by all the directors of a company being voluntarily wound up within 28 days of the commencement of the liquidation,
failing which, its liquidator must apply to the Cayman Court for an order that the liquidation continue under the supervision of the Cayman Court.

Upon the appointment of a liquidator, the responsibility for the companys affairs rests entirely in his hands and no future executive action may be carried out without his approval. A
liquidators duties are to collect the assets of the company (including the amount (if any) due from the contributories), settle the list of creditors and, subject to the rights of preferred and secured creditors and to any subordination
agreements or rights of set-off or netting of claims, discharge the companys liability to them (pari passu if insufficient assets exist to discharge the liabilities in full) and to settle the list of contributories (shareholders) and
divide the surplus assets (if any) amongst them in accordance with the rights attaching to the shares.

As soon as the affairs
of the company are fully wound up, the liquidator must make up an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed



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of, and thereupon call a general meeting of the company for the purposes of laying before it the account and giving an explanation thereof. At least 21 days before the final meeting, the
liquidator shall send a notice specifying the time, place and object of the meeting to each contributory in any manner authorized by the companys articles of association and published in the Gazette in the Cayman Islands.



|C. | MATERIAL CONTRACTS
|-- | ------------------

For additional information on our material contracts, see Item 4. Information on the Company  B. Business Overviews  Customers, Sales and Marketing,
 Suppliers, Item 5. Operating and Financial Review and Prospects  B. Liquidity and Capital Resources and Item 7. Major Shareholders and Related Party Transactions  B. Related
Party Transactions and Item 19. Exhibits in this annual report.



|D. | EXCHANGE CONTROLS
|-- | -----------------

China regulates foreign currency exchanges primarily through the following rules and regulations:



| |  |  | Foreign Currency Administration Rules of 1996, as amended; and
| | - |  | --------------------------------------------------------------



| |  |  | Administrative Rules of the Settlement, Sale and Payment of Foreign Exchange of 1996.
| | - |  | -------------------------------------------------------------------------------------

As we have disclosed in Item 3. Key Information  D. Risk Factors  Risks Relating to Business Operations
in China  Changes in foreign exchange and foreign investment regulations in China may affect our ability to invest in China and the ability of our PRC subsidiaries to pay dividends and service debts in foreign currencies in this
annual report, Renminbi is not a freely convertible currency at present. Under the current PRC regulations, conversion of Renminbi is permitted in China for routine current-account foreign exchange transactions, including trade and service related
foreign exchange transactions, and payment of dividends. Conversion of Renminbi for most capital-account items, such as direct investments, investments in PRC securities markets and repatriation of investments, however, is still subject to the
approval of SAFE.

Pursuant to the above-mentioned administrative rules, foreign-invested enterprises, such as our PRC
subsidiaries, may buy, sell and/or remit foreign currencies for current-account transactions at banks in China with authority to conduct foreign exchange business by complying with certain procedural requirements, such as presentment of valid
commercial documents. As previously disclosed in this annual report, for capital-account transactions involving foreign direct investment, foreign debts and outbound investment in securities and derivatives, approval from SAFE is a pre-condition.
Capital investments by foreign-invested enterprises outside China are subject to limitations and requirements in China, such as prior approvals from the PRC Ministry of Commerce, SAFE and NDRC.



|E. | TAXATION
|-- | --------

The following summary of material Cayman Islands, PRC and United States federal tax consequences of an investment in our ordinary shares or ADSs is based upon laws and relevant interpretations thereof in
effect as of the date of this annual report, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our ordinary shares or ADSs, such as the tax consequences under state, local
and other tax laws.

Cayman Islands Taxation

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty.
There are no other taxes likely to be material to us or to holders of our ordinary shares or ADSs solely by reason of becoming holders of our ordinary shares or ADSs levied by the government of the Cayman Islands except for stamp duties which may be
applicable on instruments executed in, or after execution brought within the jurisdiction of, the Cayman Islands. The Cayman Islands is not party to any double tax treaties. There are no exchange control regulations or currency restrictions in the
Cayman Islands.



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We are incorporated under the laws of the Cayman Islands as an exempted company with limited
liability and, as such, has obtained an undertaking from the Governor in Cabinet of the Cayman Islands as to tax concessions under the Tax Concessions Law (1999 Revision). In accordance with the provision of section 6 of The Tax Concessions Law
(1999 Revision), the Governor in Cabinet undertakes with LDK Solar Co., Ltd.:



| |  |  | That no law which is hereafter enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to
the Company or its operations; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be
payable, on or in respect of the shares, debentures or other obligations of the Company, or by way of the withholding, in whole or part, of any relevant payment as defined in Section 6(3) of the Tax Concessions Law (1999 Revision).
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

These concessions shall be for a period of 20 years from May 29, 2007.

Peoples Republic of China Taxation

Corporate Income Tax

Under the former Income Tax Law for Enterprises with Foreign Investment and Foreign Enterprises, any dividends payable by foreign-invested enterprises to non-PRC investors, such as dividends from our PRC
subsidiaries to our Cayman Islands holding company, were exempt from any PRC withholding tax. In addition, any dividends payable, or distributions made, by us to holders or beneficial owners of our ADSs or ordinary shares would not have been subject
to any PRC tax, provided that such holders or beneficial owners, including individuals and enterprises, were not deemed to be PRC residents under the PRC tax law and had not become subject to PRC tax.

On January 1, 2008, the EIT Law took effect. Under the EIT Law, enterprises established under the laws of non-PRC jurisdictions but
whose de facto management body is located in China are considered resident enterprises for PRC tax purposes. Under the implementation regulations issued by the State Council relating to the effectively connected with such
establishment or place of business in China, or be subject to 20% income tax for investors who are non-resident individuals.

Moreover, the EIT Law provides that a withholding tax of 10% is normally applicable to dividends payable to non-PRC investors who are
non-resident enterprises, to the extent such dividends are derived from sources within China. We are a Cayman Islands holding company and substantially all of our income is derived from dividends we receive from our operating
subsidiaries located in China. Thus dividends paid to us by our subsidiaries in China may be subject to the 10% withholding tax if we are considered as a non-resident enterprise under the EIT Law.

We believe that under the existing implementation regulations of the EIT Law, dividends paid by us to holders of our ordinary shares or
ADSs should not be deemed to be derived from sources within China under the EIT Law and therefore should not be subject to the 10% withholding tax. However, what will constitute income derived from sources within China is currently unclear. We
intend to take the position that it is not a PRC resident enterprise for tax purpose, but cannot assure you that the tax authorities will agree with this position. If we are considered a PRC enterprise the capital gains on the disposition of shares
or ADSs may be subject to PRC withholding tax. However, these conclusions are not entirely free from doubt. In addition, it is possible that these rules may change in the future, possible with retroactive effect.

Individual Income Tax Withholding Obligation

Under the PRC law, employees who exercise stock options are generally required to pay, on the date of exercise, individual income tax on the difference between the exercise price and the market price of
the shares on such date, and the employer has the obligation to withhold the relevant individual income tax. In August 2007



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and in August 2008, eight then employees exercised their stock options, but did not pay individual income tax on the date of exercise, nor did we withhold such individual income tax on the date
of exercise. The Xinyu tax authorities in Jiangxi Province issued deferral decisions in February 2008 and September 2008. The deferral decisions waived the obligations of these eight current and former employees to declare and pay the individual
income tax, as well as our withholding obligation on the date of exercise. Such payment and withholding obligations were deferred until the shares are sold. As of the date of this annual report, these current and former employees are paying the
individual income tax they owe on a stage by stage basis according to the PRC laws and the deferral decisions issued by the Xinyu tax authorities in Jiangxi Province. As of December 31, 2011, for accounting purposes, we had an outstanding gross
receivable of $47.7 million from these current and former employees and payable to the PRC tax authorities in relation to the individual income tax liabilities arising from the exercise of stock options by these current and former employees.
Our PRC counsel, Grandall Law Firm (Shanghai), is of the opinion that (i) the Xinyu tax authorities have the proper authority to issue the deferral decisions described above and such deferral decisions were validly issued; and (ii) such
optionees or the payor on their behalf as accepted by the Xinyu tax authorities are obligated to pay the PRC individual income tax, and we will not be liable for such PRC individual income tax, other than to withhold taxes for payment to the
relevant PRC tax authorities. In addition, at all times from the date when any of the stock options was first exercised through the date of this annual report, there has been no outstanding loan or advance by us or any of our subsidiaries to any of
these optionees in respect of the PRC individual income tax liabilities resulting from the exercise of their stock options.

Certain United
States Federal Income Taxation Considerations

The following is a general discussion of certain United States federal
income tax consequences to U.S. Holders (defined below) under present law of the acquisition, ownership and disposition of our ordinary shares or ADSs. This summary applies only to U.S. Holders that hold our ordinary shares or ADSs as
capital assets and that have the U.S. dollar as their functional currency.

This discussion is based on the United States
Internal Revenue Code of 1986, as amended, or the Code, current and proposed U.S. Treasury regulations, rulings and judicial decisions thereunder as of the date hereof. All of the foregoing authorities are subject to change, which change could
apply retroactively and could affect the tax consequences described below.

The following discussion does not deal with the
tax consequences to any particular investor or to persons in special tax situations such as:



| |  |  | certain financial institutions;
| | - |  | -------------------------------



| |  |  | insurance companies;
| | - |  | --------------------



| |  |  | broker dealers;
| | - |  | ---------------



| |  |  | traders that elect to mark-to-market;
| | - |  | -------------------------------------



| |  |  | tax-exempt entities;
| | - |  | --------------------



| |  |  | persons liable for alternative minimum tax;
| | - |  | -------------------------------------------



| |  |  | persons holding an ordinary share or ADS as part of a straddle, constructive sale, hedging, conversion or integrated transaction;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | persons that actually or constructively own 10% or more of our voting stock; or
| | - |  | -------------------------------------------------------------------------------



| |  |  | persons holding ordinary shares or ADSs through partnerships or other entities classified as partnerships for United States federal income tax
purposes.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



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Prospective purchasers are urged to consult their tax advisors about the United States
federal, state and local tax consequences to them of the purchase, ownership and disposition of our ordinary shares or ADSs.

The discussion below of the United States federal income tax consequences to U.S. Holders will apply if you are the beneficial owner of ordinary shares or ADSs and you are for United
States federal income tax purposes:



| |  |  | a citizen or resident of the United States;
| | - |  | -------------------------------------------



| |  |  | a corporation (or other entity classified as a corporation for United States federal income tax purposes) organized in or under the laws of the United
States, any state thereof or the District of Columbia;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an estate whose income is subject to United States 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 one or more U.S. persons have the authority to
control all substantial decisions of the trust or (2) was in existence on August 20, 1996, was treated as a U.S. person under the Code on the previous day and has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a U.S. person.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If a partnership holds ordinary shares or ADSs, the tax
treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding ordinary shares or ADSs, you should consult your tax advisor.

The discussion below assumes that the representations contained in the deposit agreement are true and that the obligations in the deposit
agreement and any related agreement will be performed in accordance with the terms. If you hold ADSs, you generally will be treated as the owner of the underlying ordinary shares represented by those ADSs for United States federal income tax
purposes. Accordingly, deposits or withdrawals of ordinary shares for ADSs will not be subject to United States federal income tax. The U.S. Treasury has expressed concerns that parties to whom American depositary shares are released before
shares are delivered to the depositary (pre-release), or certain intermediaries in the chain of ownership, may be taking actions that are inconsistent with the claiming of foreign tax credits by holders of American depositary receipts.
These actions would also be inconsistent with claiming the reduced rate for qualified dividend income described below. Accordingly, the creditability of any PRC taxes, and the availability of the reduced tax rate for qualified dividend
income, could be affected by actions taken by such parties or intermediaries.

Taxation of dividends and other distributions on the
ordinary shares or ADSs

Subject to the passive foreign investment company, or PFIC, rules discussed below, the gross
amount of any distribution (including the amount of any PRC taxes withheld, if any) to you with respect to the ordinary shares or ADSs, other than certain pro rata distributions of our ordinary shares or ADSs, will be includible in your gross income
as ordinary dividend income when you, in the case of ordinary shares, or the depositary, in the case of ADSs, receive the distribution, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits (as
determined under United States federal income tax principles). The dividends will not be eligible for the dividends-received deduction allowed to corporations. To the extent that the amount of the distribution exceeds our current and accumulated
earnings and profits (as determined under United States federal income tax principles), it will be treated first as a tax-free return of your tax basis in your ordinary shares or ADSs, and to the extent the amount of the distribution exceeds your
tax basis, the excess will be taxed as capital gain. Because we do not maintain calculations of our earnings and profits under U.S. federal income tax principles, it is expected that any distributions will generally be reported to
U.S. Holders as dividends.

With respect to certain non-corporate U.S. Holders, including individual
U.S. Holders, for taxable years beginning before January 1, 2013, dividends may constitute qualified dividend income and be taxed at the lower applicable capital gains rate provided that (1) the ADS or ordinary shares, as
applicable, are readily



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tradable on an established securities market in the United States, (2) we are not a PFIC (as discussed below) for either our taxable year in which the dividend was paid or the preceding
taxable year, and (3) certain holding period requirements are met. Under Internal Revenue Service authority, ADSs are considered for purposes of clause (1) above to be readily tradable on an established securities market in the United
States because they are listed on the New York Stock Exchange. Moreover, as explained in further detail below, we do not expect to be a PFIC for our current taxable year or the foreseeable future. You should consult your tax advisor regarding the
availability of the lower rate for dividends paid with respect to our ADSs or ordinary shares.

Dividends will constitute
foreign source income for U.S. foreign tax credit limitation purposes. The rules governing foreign tax credits are complex. Investors are urged to consult with their own tax advisors regarding the availability of foreign tax credits under their
particular circumstances.

In the event that we are required to withhold PRC income tax on dividends paid to you with respect
to our ordinary shares or ADSs under the PRC enterprise income tax law, subject to applicable limitations you will generally be able to claim a foreign tax credit in respect of the withheld tax. Subject to generally applicable limitations, you may
be able to claim a deduction instead of the foreign tax credit. You are urged to consult your tax advisors regarding the availability of the foreign tax credit or deduction under your particular circumstances.

Taxation of disposition of ordinary shares or ADSs

Subject to the PFIC rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of an ADS or ordinary share equal to the difference between the amount
realized for the ADS or ordinary share and your tax basis in the ADS or ordinary share. The gain or loss generally will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the
ADS or ordinary share for more than one year, you will be eligible for reduced tax rates. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize will generally be treated as U.S. source income or
loss for foreign tax credit limitation purposes. However, the PRC enterprise income tax law may apply to gains on the sale and disposition of our ordinary shares or ADSs. If we are deemed to be a resident of China under the U.S.-PRC Avoidance of
Double Taxation Treaty, such gain may be treated as arising from sources within China. You are urged to consult your tax advisors regarding the tax consequences if PRC withholding tax is imposed on the disposition of ADSs or ordinary shares,
including the availability of the foreign tax credit under your particular circumstances.

Passive foreign investment company rules

We do not expect to be a PFIC for U.S. federal income tax purposes for our current taxable year, and provided
that our passive income does not exceed our gross loss (if any) from operations we do not expect to become a PFIC in the foreseeable future. Our actual PFIC status for our current taxable year ending December 31, 2012 will not be determinable
until after the close of our current taxable year ending December 31, 2012 and accordingly, there is no guarantee that we will not be a PFIC for 2012 or any future taxable year. A non-U.S. corporation is considered to be a PFIC for any
taxable year if either:



| |  |  | at least 75% of its gross income is passive; or
| | - |  | -----------------------------------------------



| |  |  | at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets
that produce or are held for the production of passive income.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We will be treated as owning our
proportionate share of the assets and earnings and our proportionate share of the income of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock.

A separate determination must be made each year as to whether we are a PFIC. As a result, our PFIC status may change. If we are a PFIC
for any year during which you hold ADSs or ordinary shares, we generally will continue to be treated as a PFIC for all succeeding years during which you hold such ADSs or ordinary shares.



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If we are a PFIC for any year in which you hold ADSs or ordinary shares, you will be subject
to special tax rules with respect to any excess distribution that you receive and any gain you realize from a sale or other disposition (including certain pledges) of the ADSs or ordinary shares, unless you make a
mark-to-market election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding
period for the ADSs or ordinary shares will be treated as an excess distribution. Under these special tax rules:



| |  |  | the excess distribution or gain will be allocated ratably over your holding period for the ADSs or ordinary shares;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we became a PFIC, will be treated as
ordinary income; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to
underpayments of tax will be imposed on the resulting tax attributable to each such year.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The tax liability
for amounts allocated to years prior to the year of disposition or excess distribution cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the ADSs or ordinary shares cannot be
treated as capital, even if you hold the ADSs or ordinary shares as capital assets.

Alternatively, a U.S. Holder of
marketable stock (as defined below) in a PFIC may make a mark-to-market election for such stock of a PFIC to elect out of the tax treatment discussed in the two preceding paragraphs. If you make a mark-to-market election for the ADSs,
you will include in income each year an amount equal to the excess, if any, of the fair market value of the ADSs as of the close of your taxable year over your adjusted basis in such ADSs. You are allowed a deduction for the excess, if any, of the
adjusted basis of the ADSs over their fair market value as of the close of the taxable year. However, deductions are allowable only to the extent of any net mark-to-market gains on the ADSs included in your income for prior taxable years. Amounts
included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the ADSs in a taxable year when we are a PFIC, are treated as ordinary income. Ordinary loss treatment also applies to the deductible
portion of any mark-to-market loss on the ADSs as well as to any loss realized on the actual sale or disposition of the ADSs in a taxable year when we are a PFIC, to the extent that the amount of such loss does not exceed the net mark-to-market
gains previously included for such ADSs. Your basis in the ADSs will be adjusted to reflect any such income or loss amounts. The tax rules that apply to distributions by corporations that are not PFICs that are described above in
 Taxation of dividends and other distributions on the ordinary shares or ADSs would, except as described below with respect to qualified dividend income, apply to distributions by us in years subsequent to the year in which
you made the mark-to-market election.

The mark-to-market election is available only for marketable stock, which
is stock that is regularly traded in other than de minimis quantities on at least 15 days during each calendar quarter on a qualified exchange, including the New York Stock Exchange, or other market, as defined in applicable
U.S. Treasury regulations. The ADSs are listed on the New York Stock Exchange, and we expect, although no assurance can be given, that they will be regularly traded on the New York Stock Exchange. It is unclear whether the ordinary shares will
be treated as marketable stock for purpose of the mark-to-market rules. You are urged to consult your own tax advisors regarding the U.S. federal income tax consequences that would arise if we are treated as a PFIC while you hold
ordinary shares or ADSs.

In addition, notwithstanding any election you make with regard to the ADSs or ordinary shares,
dividends that you receive from us will not constitute qualified dividend income to you if we are a PFIC either in the taxable year of the distribution or the preceding taxable year. Instead, you must include the gross amount of any such dividend
paid by us in your gross income, and it will be subject to tax at rates applicable to ordinary income. Moreover, your ADSs or ordinary shares will be treated as stock in a PFIC if we were a PFIC at any



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time during your holding period in your ADSs or ordinary shares, even if we are not currently a PFIC. For purposes of this rule, if you make a mark-to-market election with respect to your ADSs or
ordinary shares, you will be treated as having a new holding period in your ADSs or ordinary shares beginning on the first day of the first taxable year beginning after the last taxable year for which the mark-to-market election applies.

If your ADSs or ordinary shares are treated as shares in a PFIC, you will be required to file Internal Revenue Service Form 8621
regarding distributions received on the ADSs or ordinary shares and any gain realized on the disposition of the ADSs or ordinary shares. In addition, under recently enacted legislation, if you hold ADSs or ordinary shares in any year in which we are
a PFIC, you generally are required to file an annual report containing such information as the U.S. Treasury may require.

In
addition, if we are a PFIC, we do not intend to prepare or provide you with the information necessary to make a qualified electing fund election, which, like the mark-to-market election, is a means by which U.S. taxpayers may elect
out of the tax treatment that generally applies to PFICs.

You are urged to consult your tax advisor regarding the application
of the PFIC rules to your investment in ADSs or ordinary shares.

Recently Enacted Legislation  Medicare Tax

Recently enacted legislation will impose a 3.8% tax with respect to certain individuals, trusts and estates on the
lesser of (i) modified adjusted gross income in excess of $200,000 ($250,000 for joint-filers) and (ii) net investment income, in either case for taxable years beginning after December 31, 2012. For these purposes, net investment
income will generally include any dividends paid to you with respect to the ADSs or ordinary shares and any gain realized on the sale, exchange or other taxable disposition of an ADS or ordinary share.

Information Reporting and Backup Withholding

In general, information reporting for United States federal income tax purposes will apply to distributions made on the ordinary shares or ADSs paid within the United States to a non-corporate
U.S. Holder and on sales or other dispositions of the ordinary shares or ADSs to or through a United States office of a broker by a non-corporate U.S. Holder. Payments made outside the United States will be subject to information reporting
in certain circumstances.

In addition, backup withholding of United States federal income tax at a rate of 28% will apply to
distributions made on ordinary shares or ADSs within the United States to a non-corporate U.S. Holder and on sales of ordinary shares or ADSs to or through a United States office of a broker by a non-corporate U.S. Holder who:



| |  |  | fails to provide an accurate taxpayer identification number,
| | - |  | ------------------------------------------------------------



| |  |  | is notified by the Internal Revenue Service that backup withholding will be required, or
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | in certain circumstances, fails to comply with applicable certification requirements.
| | - |  | -------------------------------------------------------------------------------------

The amount of any backup withholding collected will be allowed as a credit against United States federal income tax liability provided
that appropriate returns are filed.

Recently enacted legislation imposes new reporting requirements on certain U.S. investors
in connection with holding interests of a foreign company, including ADSs or ordinary shares, either directly or through a foreign financial institution. This new legislation also imposes penalties if such investor is required to submit
such information to the Internal Revenue Service and fails to do so.



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|F. | DIVIDENDS AND PAYING AGENTS
|-- | ---------------------------

Not applicable.



|G. | STATEMENT BY EXPERTS
|-- | --------------------

Not applicable.



|H. | DOCUMENTS ON DISPLAY
|-- | --------------------

We are currently subject to periodic reporting and other informational requirements of the Securities Exchange Act as applicable to
foreign private issuers. Accordingly, we are required to file reports, including annual reports on Form 20-F, and other information with the SEC. All information filed with the SEC can be inspected and copied at the public reference facilities
maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, and at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You can request copies of these documents upon payment of a
duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Additional information may also be obtained over the Internet at the SECs website at
www.sec.gov.

As a foreign private issuer, we are exempt under the Securities Exchange Act from, among other things, the rules
prescribing the furnishing and content of proxy statements, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Securities
Exchange Act. In addition, we will not be required under the Securities Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the
Securities Exchange Act. However, we intend to furnish the depositary with our annual reports, which will include a review of operations and annual audited consolidated financial statements prepared in conformity with U.S. GAAP, and all notices
of shareholders meeting and other reports and communications that are made generally available to our shareholders. The depositary will make such notices, reports and communications available to holders of our ADSs and, upon our request, will
mail to all record holders of our ADSs the information contained in any notice of a shareholders meeting received by the depositary from us.



|I. | SUBSIDIARY INFORMATION
|-- | ----------------------

Not applicable.



|ITEM 11. | QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

Inflation

According to the National Bureau of Statistics of China,
Chinas overall national inflation rate, as represented by the general consumer price index, was approximately negative 0.7% in 2009, 3.3% in 2010 and 5.4% in 2011. We have not in the past been materially affected by any such inflation,
however, we cannot assure you that we will not be affected in the future.

Foreign Currency Risk

Our financial statements are expressed in U.S. dollars but the functional currency of our principal operating subsidiaries, Jiangxi
LDK Solar, Jiangxi LDK Silicon and Jiangxi LDK Polysilicon, is Renminbi. To the extent our principal PRC operating subsidiaries hold assets or liabilities denominated in foreign currencies, any appreciation of Renminbi against such foreign currency
denominated assets or depreciation of Renminbi against foreign currency denominated liabilities could result in a charge to our statement of operations. For more information on foreign currency translations for our financial reporting purposes, see
note (2)(c) to our audited consolidated financial statements beginning on page F-1 in this annual report.



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Generally, appreciation of Renminbi against U.S. dollars and euros will result in
foreign exchange losses for monetary assets denominated in U.S. dollars and euros and result in foreign exchange gains for monetary liabilities denominated in U.S. dollars and euros. Conversely, depreciation of Renminbi against
U.S. dollars and euros will generally result in foreign exchange gains for monetary assets denominated in U.S. dollars and euros and result in foreign exchange losses for monetary liabilities denominated in U.S. dollars and euros.
Fluctuations in currency exchange rates could have a significant effect on our financial stability due to a mismatch among various foreign currency denominated assets and liabilities. Fluctuations in exchange rates, particularly among the
U.S. dollar, euro and Renminbi, affect our operating and net profit margins and would result in foreign currency exchange gains and losses on our foreign currency denominated assets and liabilities. As of December 31, 2009, 2010 and 2011,
our monetary assets denominated in U.S. dollars and euros were primarily related to cash and cash equivalents, pledged bank deposits, trade accounts receivable and prepayments to suppliers, and our monetary liabilities denominated in
U.S. dollars and euros were primarily related to short-term bank borrowings, long-term bank borrowings, advance payments from customers, trade accounts payable and other payables. Our exposure to foreign exchange risk primarily relates to
foreign currency exchange gains or losses resulting from timing differences between the signing of the contracts and the settlement of the contracts. As of December 31, 2009, 2010 and 2011, our principal operating subsidiaries held the
following amounts of monetary assets and liabilities denominated in U.S. dollars and euros:



|             |  |                         |             |   |                         |  |              |                         |  |  |         |  |  |     |             |   |       |  |              |     |  |  |     |  |  |     |             |   |  |  |              |   |  |  |   | 
|------------ |  | ----------------------- | ----------- | - | ----------------------- |  | ------------ | ----------------------- |  |  | ------- |  |  | --- | ----------- | - | ----- |  | ------------ | --- |  |  | --- |  |  | --- | ----------- | - |  |  | ------------ | - |  |  | - | 
|             |  | As of December 31, 2009 |             |   | As of December 31, 2010 |  |              | As of December 31, 2011 | 
|             |  | ()                     |             |   | ($)                     |  |              | (HK$)                   |  |  | ()     |  |  | ($) |             |   | (HK$) |  |              | () |  |  | ($) |  |  | HK$ |            
|Assets       |  |                         | 57,523,262  |   |                         |  | 256,816,436  |                         |  |  | 828,140 |  |  |     | 14,685,946  |   |       |  | 371,571,276  |     |  |  |    |  |  |     | 45,258,445  |   |  |  | 722,335,964  |   |  |  |  | 
|Liabilities  |  |                         | (43,319,943 | ) |                         |  | (482,621,936 | )                       |  |  |        |  |  |     | (34,359,994 | ) |       |  | (599,553,338 | )   |  |  |    |  |  |     | (44,578,538 | ) |  |  | (653,459,365 | ) |  |  |  | 
|             |  |                         |             |   |                         |  |              |                         |  |  |         |  |  |     |             |   |       |  |              |     |  |  |     |  |  |     |             |   |  |  |              |   |  |  |   | 
|Net exposure |  |                         | 14,203,319  |   |                         |  | (225,805,500 | )                       |  |  | 828,140 |  |  |     | (19,674,048 | ) |       |  | (227,982,062 | )   |  |  |    |  |  |     | 679,907     |   |  |  | 68,876,599   |   |  |  |  | 
|             |  |                         |             |   |                         |  |              |                         |  |  |         |  |  |     |             |   |       |  |              |     |  |  |     |  |  |     |             |   |  |  |              |   |  |  |   | 

We incurred a net foreign currency exchange loss of approximately $0.6 million for the year ended
December 31, 2009. We recorded a net foreign currency exchange gain of approximately $8.3 million for the year ended December 31, 2010. We recorded a net foreign exchange loss of $2.0 million for the year ended December 2011. Since
2007, we have entered into certain foreign exchange forward contracts to reduce the effect of our foreign exchange risk exposure. However, we cannot assure you that we would be able to effectively manage our foreign exchange risk exposure.

Without taking into account the effect of the potential use of hedging or other derivative financial instruments, we estimate
that a 10% appreciation of Renminbi against U.S. dollars based on the foreign exchange rate on December 31, 2011 would result in net loss of $6.9 million (2010: net gain of $22.8 million) for our assets and liabilities
denominated in U.S. dollars as of December 31, 2011. Conversely, we estimate that a 10% depreciation of Renminbi against U.S. dollars would result in net gain of $6.9 million (2010: net loss of $22.8 million) for our assets
and liabilities denominated in U.S. dollars as of December 31, 2011.

Without taking into account the effect of the
potential use of hedging or other derivative financial instruments, we estimate that a 10% appreciation of Renminbi against euro based on the foreign exchange rate on December 31, 2011 would result in net loss of $0.1 million (2010: net
gain of $2.6 million) for our assets and liabilities denominated in euro as of December 31, 2011. Conversely, we estimate that a 10% depreciation of Renminbi against euro would result in net gain of $0.1 million (2010: net loss of
$2.6 million) for our assets and liabilities denominated in euro as of December 31, 2011.

We cannot predict the
effect of future exchange rate fluctuations on our results of operations and may incur net foreign currency exchange losses in the future.

Interest Rate Risk

Our
exposure to the risk of changes in market interest rates primarily relates to our interest-bearing borrowings. Our future interest expenses on our borrowings may increase due to changes in market interest rates.



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With an aim to reduce our interest rate exposure, we, from time to time, enter into interest rate swap contracts with financial institutions in China. Since the beginning of 2009, we have not
entered into any interest rate swap contract. We may, however, engage in interest rate hedging activities in the future. As of December 31, 2011, our total outstanding bank borrowings amounted to $2,922.5 million and our short-term
borrowings amounted to $1,688.4 million with a weighted average interest rate of 6.236% per annum and maturity terms ranging from a month to 12 months. Majority of our indebtedness accrues interest at fixed rates, including our 2013 convertible
notes and our 2014 senior notes.

Credit Risk

Substantially all of our cash and cash equivalents are held in major financial institutions located in China, which our management believes are of high credit quality. We have policies that limit the
amount of credit exposure to any financial institution. Because we are often required to prepay substantial amounts to our raw material and equipment suppliers to ensure availability and timely delivery, we are subject to the credit quality of such
suppliers. Although we make every effort to screen our suppliers and ensure that we enter into transactions with creditworthy suppliers only, there can be no assurance that we will not suffer from default by any of these suppliers. As of
December 31, 2009, 2010 and 2011, we made aggregate prepayments of approximately $99.8 million, $271.1 million and $191.0 million to our suppliers, respectively. As of December 31, 2011, we recognized a provision for doubtful
recoveries of $107.0 million relating to our prepayments to suppliers.

Liquidity Risk

Our liquidity is primarily dependent on our ability to maintain adequate cash inflows from our operations to meet our debt obligations as
they become due, and our ability to obtain external financing to meet our committed future capital expenditures and to refinance our short-term debts as they mature. Our cash outflow from investing activities was $816.0 million for the year
ended December 31, 2011. With regard to our future capital commitments and other financing requirements, we have obtained approximately $4.2 billion in aggregate principal amount of banking facilities mainly from various reputable
commercial banks in China, as of December 31, 2011, of which $1.7 billion was unutilized. You should also refer to our additional disclosure under Item 5. Operating and Financial Review and Prospects  B. Liquidity and
Capital Resources  Working Capital Deficit in this annual report.



|ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|-------- | ------------------------------------------------------



|A. | DEBT SECURITIES
|-- | ---------------

Not applicable.



|B. | WARRANTS AND RIGHTS
|-- | -------------------

Not applicable.



|C. | OTHER SECURITIES
|-- | ----------------

Not applicable.



|D. | AMERICAN DEPOSITARY SHARES
|-- | --------------------------

JPMorgan Chase Bank, N.A., as depositary, has issued the ADSs representing our ordinary shares. Each ADS represents the ownership interest
in one ordinary share which we deposit with the custodian, as agent of the depositary, under the deposit agreement among ourselves, the depositary and each ADR holder. Each ADS will also represent any securities, cash or other property deposited
with the depositary that have not been distributed



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directly to the ADR holders. Unless specifically requested by you as an ADS owner, all ADSs will be issued on the books of our depositary in book-entry form and periodic statements will be mailed
to you that reflect your ownership interest in such ADSs.

The depositarys office is located at 4 New York Plaza, New
York, New York 10004.

You may hold ADSs either directly or indirectly through your broker or other financial institution. If
you hold ADSs directly, by having an ADS registered in your name on the books of the depositary, you are an ADR holder. This description assumes you hold your ADSs directly. If you hold the ADSs through your broker or financial institution nominee,
you must rely on the procedures of such broker or financial institution to assert the rights of an ADR holder described in this section. You should consult with your broker or financial institution to find out what those procedures are.

Because the depositarys nominee will actually be the registered owner of the ordinary shares underlying your ADSs, you must rely on
it to exercise the rights of a shareholder on your behalf. The obligations of the depositary and its agents are set out in the deposit agreement. The deposit agreement and the ADSs are governed by New York law.

The following is a summary of the material terms of the deposit agreement, as supplemented. Because it is a summary, it does not contain
all the information that may be important to you. For more complete information, you should read the entire deposit agreement, including the form of ADR, which contains the terms of the ADSs. You can read a copy of the deposit agreement which is
filed as an exhibit to the registration statement on Form F-6 (File No. 333-142899) we filed with the SEC in May 2007.

Share
Dividends and Other Distributions

How will I receive dividends and other distributions on the shares underlying my
ADSs?

We may make various types of distributions with respect to our securities. The depositary has agreed to pay to you
the cash dividends or other distributions it or the custodian receives on shares or other deposited securities, after converting any cash received into U.S. dollars and, in all cases, making any necessary deductions provided for in the deposit
agreement. You will receive these distributions in proportion to the number of underlying securities that your ADSs represent.

Except as stated below, to the extent the depositary is legally permitted it will deliver such distributions to ADR holders in proportion
to their interests in the following manner:



| |  |  | Cash. The depositary will distribute any U.S. dollars available to it resulting from a cash dividend or other cash distribution or the net
proceeds of sales of any other distribution or portion thereof (to the extent applicable), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or
impracticable with respect to certain registered holders, and (iii) deduction of the depositarys expenses in (1) converting any foreign currency to U.S. dollars to the extent that it determines that such conversion may be made
on a reasonable basis, (2) transferring foreign currency or U.S. dollars to the United States by such means as the depositary may determine to the extent that it determines that such transfer may be made on a reasonable basis,
(3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time and (4) making any sale by public or private means in any
commercially reasonable manner. If exchange rates fluctuate during a time when the depositary cannot convert a foreign currency, you may lose some or all of the value of the distribution.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Shares. In the case of a distribution in shares, the depositary will issue additional ADRs to evidence the number of ADSs representing such
shares. Only whole ADSs will be issued. Any shares which would result in fractional ADSs will be sold and the net proceeds will be distributed in the same manner as cash to the ADR holders entitled thereto.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Rights to Receive Additional Shares. In the case of a distribution of rights to subscribe for additional shares or other rights, if we provide
satisfactory evidence that the depositary may lawfully distribute such rights, the depositary will distribute warrants or other instruments representing such rights. However, if we do not furnish such evidence, the depositary may (i) sell such
rights if practicable and distribute the net proceeds as cash; or (ii) if it is not practicable to sell such rights, do nothing and allow such rights to lapse, in which case ADR holders will receive nothing. We have no obligation to file a
registration statement under the Securities Act in order to make any rights available to ADR holders.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other Distributions. In the case of a distribution of securities or property other than those described above, the depositary may either
(i) distribute such securities or property in any manner it deems equitable and practicable or (ii) to the extent the depositary deems distribution of such securities or property not to be equitable and practicable, sell such securities or
property and distribute any net proceeds in the same way it distributes cash.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If the depositary determines
that any distribution described above is not practicable with respect to any specific ADR holder, the depositary may choose any practicable method of distribution for such ADR holder, including the distribution of foreign currency, securities or
property, or it may retain such items, without paying interest on or investing them, on behalf of the ADR holder as deposited securities, in which case the ADSs will also represent the retained items.

Any U.S. dollars will be distributed by checks drawn on a bank in the United States for whole dollars and cents. Fractional cents
will be withheld without liability for interest thereon and dealt with by the depositary in accordance with its then current practices.

The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADR holders.

There can be no assurance that the depositary will be able to convert any currency at a specified exchange rate or sell any property,
rights, shares or other securities at a specified price, nor that any of such transactions can be completed within a specified time period.

Deposit, Withdrawal and Cancellation

How does the depositary issue ADSs?

The depositary will issue ADSs if you
or your broker deposit shares or evidence of rights to receive shares with the custodian. Shares deposited with the custodian must be accompanied by certain delivery documentation, including instruments showing that such shares have been properly
transferred or endorsed to the person on whose behalf the deposit is being made.

The custodian will hold all deposited shares
for the account of the depositary. ADR holders thus have no direct ownership interest in the shares and only have such rights as are contained in the deposit agreement. The custodian will also hold any additional securities, property and cash
received on or in substitution for the deposited shares. The deposited shares and any such additional items are referred to as deposited securities in this prospectus.

Upon each deposit of shares, receipt of related delivery documentation and compliance with the other provisions of the deposit agreement,
including the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the depositary will issue an ADR or ADRs in the name or upon the order of the person entitled thereto evidencing the number of ADSs to
which such person is entitled. All of the ADSs issued will, unless specifically requested to the contrary, be part of the depositarys direct registration system, and a registered holder will receive periodic statements from the depositary
which will show the number of ADSs registered in such holders name. An ADR holder can request that the ADSs not be held through the depositarys direct registration system and that a certificated ADR be issued.



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How do ADR holders cancel an ADS and obtain deposited securities?

When you turn in your ADSs at the depositarys office, or when you provide proper instructions and documentation in the case of ADSs
within the depositarys direct registration system, the depositary will, upon payment of certain applicable fees, charges and taxes, deliver the underlying shares at the custodians office or effect delivery by such other means as the
depositary deems practicable, including transfer to an account of an accredited financial institution on your behalf. At your risk, expense and request, the depositary may deliver deposited securities at such other place as you may request.

The depositary may only restrict the withdrawal of deposited securities in connection with:



| |  |  | temporary delays caused by the closing of our transfer books or those of the depositary, the deposit of shares in connection with voting at our
shareholders meeting or the payment of dividends;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the payment of fees, taxes and similar charges; or
| | - |  | --------------------------------------------------



| |  |  | compliance with any U.S. or foreign laws or governmental regulations relating to the ADRs or to the withdrawal of deposited securities.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------

This right of withdrawal may not be limited by any other provision of the deposit agreement.

Record Dates

The
depositary may fix record dates for the determination of the ADR holders who will be:



| |  |  | entitled to receive dividends, distributions or rights,
| | - |  | -------------------------------------------------------



| |  |  | entitled to give instructions for the exercise of voting rights at a meeting of holders of ordinary shares or other deposited securities,
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | obligated to pay fees assessed by the depositary for administration of the ADR program and for any expenses as provided for in the deposit
agreement, or
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | entitled to receive any notice or to act in respect of other matters,
| | - |  | ---------------------------------------------------------------------

all subject to the provisions of the deposit agreement.

Voting Rights

How do I vote?

If you are an ADR holder and the depositary asks you to provide it with voting instructions, you may instruct the depositary how to exercise the voting rights for the shares that underlie your ADSs. After
receiving voting materials from us, the depositary will notify the ADR holders of any shareholders meeting or solicitation of consents or proxies. This notice will provide such information as is contained in the voting materials and describe how you
may instruct the depositary to exercise the voting rights for the shares that underlie your ADSs. It will also include instructions for giving a discretionary proxy to a person designated by us. For instructions to be valid, the depositary must
receive them in the manner and on or before the date specified. The depositary will try, as far as practical, subject to the provisions of or governing the underlying shares or other deposited securities, to vote or to have its agents vote the
shares or other deposited securities as you instruct. The depositary will only vote or attempt to vote as you instruct. The depositary will not itself exercise any voting discretion. Furthermore, neither the depositary nor its agents are responsible
for any failure to carry out any voting instructions, for the manner in which any vote is cast or for the effect of any vote.

There is no guarantee that you will receive voting materials in time to instruct the depositary to vote and it is possible that you,
whether you hold your ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote.



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Reports and Other Communications

Will I be able to view our reports?

The depositary will make available for inspection by ADR holders any written communications from us which are both received by the custodian or its nominee as a holder of deposited securities and made
generally available to the holders of deposited securities. We will furnish these communications in English when so required by any rules or regulations of the SEC.

Additionally, if we make any written communications generally available to holders of our shares, including the depositary or the custodian, and we request the depositary to provide them to ADR holders,
the depositary will mail copies of them or, at its option, English translations or summaries of them to ADR holders.

Fees and Expenses

What fees and expenses will I be responsible for paying?

ADR holders will be charged a fee for each issuance of ADSs, including issuances resulting from distributions of shares, rights and other
property, and for each surrender of ADSs in exchange for deposited securities. The fee in each case is $5.00 for each 100 ADSs (or any portion thereof) issued or surrendered.

The following additional charges will be incurred by the ADR holders, by any party depositing or withdrawing shares or by any party surrendering ADRs or to whom ADRs are issued (including issuance
pursuant to a stock dividend or stock split declared by us or an exchange of stock regarding the ADRs or the deposited securities or a distribution of ADRs), whichever is applicable:



| |  |  | to the extent not prohibited by the rules of any stock exchange or interdealer quotation system upon which the ADSs are traded, a fee of $1.50 per ADR
or ADRs for transfers of certificated ADRs or ADRs in the depositarys direct registration system;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a fee of $0.02 or less per ADS (or portion thereof) for any cash distribution made pursuant to the deposit agreement;
| | - |  | ---------------------------------------------------------------------------------------------------------------------



| |  |  | a fee of $0.02 per ADS (or portion thereof) per calendar year for services performed by the depositary in administering our ADR program (which fee will
be assessed against holders of ADRs as of the record date set by the depositary not more than once each calendar year and will be payable in the manner described in the next succeeding provision);
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any other charge payable by the depositary, any of the depositarys agents, including the custodian, or the agents of the depositarys agents
in connection with the servicing of our shares or other deposited securities (which charge will be assessed against registered holders of our ADRs as of the record date or dates set by the depositary and will be payable at the sole discretion of the
depositary by billing such registered holders or by deducting such charge from one or more cash dividends or other cash distributions);
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a fee for the distribution of securities (or the sale of securities in connection with a distribution), such fee being in an amount equal to the fee
for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities (treating all such securities as if they were shares) but which securities or the net cash proceeds from the sale thereof are instead
distributed by the depositary to those holders entitled thereto;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | stock transfer or other taxes and other governmental charges;
| | - |  | -------------------------------------------------------------



| |  |  | cable, telex and facsimile transmission and delivery charges incurred at your request;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection with the deposit or
withdrawal of deposited securities;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars; and
| | - |  | -------------------------------------------------------------------------------------------------------



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| |  |  | such fees and expenses as incurred by the depositary (including, without limitation, expenses incurred in connection with compliance with foreign
exchange control regulations or any law or regulation relating to foreign investment) in delivery of deposited securities or otherwise in connection with the depositarys or its custodians compliance with applicable laws, rules or
regulations.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We will pay all other charges and expenses of the depositary and any agent of the depositary
(except the custodian) pursuant to agreements from time to time between us and the depositary. The fees described above may be amended from time to time.

Payment of Taxes

ADR holders must pay any tax or other governmental charge
payable by the custodian or the depositary on any ADS or ADR, deposited security or distribution. If an ADR holder owes any tax or other governmental charge, the depositary may (i) deduct the amount thereof from any cash distributions or
(ii) sell deposited securities and deduct the amount owing from the net proceeds of such sale. In either case, the ADR holder remains liable for any shortfall. Additionally, if any tax or governmental charge is unpaid, the depositary may also
refuse to effect any registration, registration of transfer, split-up or combination of deposited securities or withdrawal of deposited securities (except under limited circumstances mandated by securities regulations). If any tax or governmental
charge is required to be withheld on any non-cash distribution, the depositary may sell the distributed property or securities to pay such taxes and distribute any remaining net proceeds to the ADR holders entitled thereto.

By holding an ADR or an interest therein, you are agreeing to indemnify us, the depositary, its custodian and any of our or their
respective directors, employees, agents and affiliates against, and hold each of them harmless from, any claims by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced
rate of withholding at source or other tax benefit obtained in respect of, or arising out of, your ADSs.

Reclassifications,
Recapitalizations and Mergers

If we take certain actions that affect the deposited securities, including (i) any
change in par value, split-up, consolidation, cancellation or other reclassification of deposited securities or (ii) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or
substantially all of our assets, then the depositary may choose to:



| |  |  | amend the form of ADR;
| | - |  | ----------------------



| |  |  | distribute additional or amended ADRs;
| | - |  | --------------------------------------



| |  |  | distribute cash, securities or other property it has received in connection with such actions;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | sell any securities or property received and distribute the proceeds as cash; or
| | - |  | --------------------------------------------------------------------------------



| |  |  | none of the above.
| | - |  | ------------------

If the depositary does not choose any of the above options, any of the cash, securities or other property it receives will constitute part of the deposited securities and each ADS will then represent a
proportionate interest in such property.

Amendment and Termination

How may the deposit agreement be amended?

We may agree with the depositary to amend the deposit agreement and the ADRs without your consent for any reason. ADR holders must be given at least 30 days notice of any amendment that imposes or
increases any



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fees or charges (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, cable, telex or facsimile transmission costs, delivery costs or other such
expenses), or prejudices any substantial existing right of ADR holders. If an ADR holder continues to hold an ADR or ADRs after being so notified, such ADR holder is deemed to agree to such amendment. Notwithstanding the foregoing, if any
governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment to or supplement of the deposit agreement or the form of ADR to ensure compliance therewith, we and the depositary may amend or supplement
the deposit agreement and the ADR at any time in accordance with such changed laws, rules or regulations, which amendment or supplement may take effect before a notice is given or you otherwise receive notice. No amendment, however, will impair your
right to surrender your ADSs and receive the underlying securities.

How may the deposit agreement be terminated?

The depositary may terminate the deposit agreement by giving the ADR holders at least 30 days prior notice, and it
must do so at our request. The deposit agreement will be terminated on the removal of the depositary for any reason. After termination, the depositarys only responsibility will be:



| |  |  | to deliver deposited securities to ADR holders who surrender their ADRs, and
| | - |  | ----------------------------------------------------------------------------



| |  |  | to hold or sell distributions received on deposited securities.
| | - |  | ---------------------------------------------------------------

As soon as practicable after the expiration of six months from the termination date, the depositary will sell the deposited securities
that remain and hold the net proceeds of such sales, without liability for interest, in trust for the ADR holders who have not yet surrendered their ADRs. After making such sale, the depositary will have no obligations except to account for such
proceeds and other cash. The depositary will not be required to invest such proceeds or pay interest on them.

Limitations on Obligations
and Liability to ADR Holders

Prior to the issuance, registration, registration of transfer, split-up, combination, or
cancellation of any ADRs, or the delivery of any distribution in respect thereof, the depositary and its custodian may require you to pay, provide or deliver:



| |  |  | payment with respect thereto of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or registration
fees in effect for the registration of transfers of shares or other deposited securities upon any applicable register and (iii) any applicable fees and expenses described in the deposit agreement;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the production of proof satisfactory to the depositary and its custodian of (i) the identity of any signatory and genuineness of any signature and
(ii) such other information, including information as to citizenship, residence, exchange control approval, beneficial ownership of any securities, payment of applicable taxes or governmental charges, or legal or beneficial ownership and the
nature of such interest, information relating to the registration of the shares on the books maintained by or on our behalf for the transfer and registration of shares, compliance with applicable laws, regulations, provisions of or governing
deposited securities and terms of the deposit agreement and the ADRs, as it may deem necessary or proper; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | compliance with such regulations as the depositary may establish consistent with the deposit agreement.
| | - |  | -------------------------------------------------------------------------------------------------------

The deposit agreement expressly limits the obligations and liability of the depositary, ourselves and our respective agents. Neither we
nor the depositary nor any such agent will be liable if:



| |  |  | present or future law, rule or regulation of the United States, China, the Cayman Islands or any other country, or of any governmental or regulatory
authority or securities exchange or market or automated quotation system, the provisions of or governing any deposited securities, any present or future provision of our charter, any act of God, war, terrorism or other circumstance beyond our, the
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | depositarys or our respective agents control will prevent, delay or subject to any civil or criminal penalty any act that the deposit agreement or the ADRs provide should be done or
performed by us, the depositary or our respective agents (including voting);
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the depositary or its agents exercise or fail to exercise discretion under the deposit agreement or the ADRs;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | the depositary or its agents perform their obligations without gross negligence or bad faith;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | the depositary or its agents take any action or refrain from taking any action in reliance upon the advice of or information from legal counsel,
accountants, any person presenting shares for deposit, any registered holder of ADRs, or any other person believed by it to be competent to give such advice or information; or
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the depositary or its agents rely upon any written notice, request, direction or other document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Neither the depositary nor its agents have any obligation to
appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities or the ADRs. We and our agents will only be obligated to appear in, prosecute or defend any action, suit or other proceeding in respect of any
deposited securities or the ADRs that, in our opinion, may involve us in expense or liability if indemnity to our satisfaction against all expenses (including fees and disbursements of counsel) and liabilities is furnished to us as often as we may
require. The depositary and its agents may fully respond to any and all demands or requests for information maintained by or on their behalf in connection with the deposit agreement, any registered holder or holders of ADRs, any ADSs or otherwise to
the extent such information is requested or required by or pursuant to any lawful authority, including laws, rules, regulations, administrative or judicial process, banking, securities or other regulators.

As disclosed previously, the depositary will not be responsible for failing to carry out instructions to vote the deposited securities or
for the manner in which the deposited securities are voted or the effect of the vote. In no event shall we, the depositary or any of our respective agents be liable to holders of ADSs or interests therein for any indirect, special, punitive or
consequential damages.

The depositary may own and deal in deposited securities and in ADSs.

Disclosure of Interest in ADSs

To the extent that the provisions of or governing any deposited securities may require disclosure of or impose limits on beneficial or other ownership of deposited securities, other shares and other
securities and may provide for blocking transfer, voting or other rights to enforce such disclosure or limits, you agree to comply with all such disclosure requirements and ownership limitations and to comply with any reasonable instructions we may
provide in respect thereof. We reserve the right to request you to deliver your ADSs for cancellation and withdrawal of the deposited securities so as to permit us to deal with you directly as a holder of deposited securities and, by holding an ADS
or an interest therein, you will be agreeing to comply with such instructions.

Requirements for Depositary Actions

We, the depositary or the custodian may refuse to:



| |  |  | issue, register or transfer an ADR or ADRs;
| | - |  | -------------------------------------------



| |  |  | effect a split-up or combination of ADRs;
| | - |  | -----------------------------------------



| |  |  | deliver distributions on any ADRs; or
| | - |  | -------------------------------------



| |  |  | permit the withdrawal of deposited securities (unless the deposit agreement provides otherwise); until the following conditions have been met:
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the holder has paid all taxes, governmental charges, and fees and expenses as required in the deposit agreement;
| | - |  | ----------------------------------------------------------------------------------------------------------------



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| |  |  | the holder has provided the depositary with any information it may deem necessary or proper, including, without limitation, proof of identity and the
genuineness of any signature; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the holder has complied with such regulations as the depositary may establish under the deposit agreement.
| | - |  | ----------------------------------------------------------------------------------------------------------

The depositary may also suspend the issuance of ADSs, the deposit of shares, the registration, transfer, split-up or combination of ADRs,
or the withdrawal of deposited securities (unless the deposit agreement provides otherwise), if the register for ADRs or any deposited securities is closed or the depositary decides it is advisable to do so.

Books of Depositary

The
depositary or its agent will maintain a register for the registration, registration of transfer, combination and split-up of ADRs, which register will include the depositarys direct registration system. You may inspect such records at such
office during regular business hours, but solely for the purpose of communicating with other holders in the interest of business matters relating to the deposit agreement. Such register may be closed from time to time when deemed expedient by the
depositary.

The depositary will maintain facilities to record and process the issuance, cancellation, combination, split-up
and transfer of ADRs. These facilities may be closed from time to time to the extent not prohibited by law.

Pre-release of ADSs

The depositary may issue ADSs prior to the deposit with the custodian of shares (or rights to receive shares) in
compliance with the deposit agreement. This is called a pre-release of ADSs. A pre-release is closed out as soon as the underlying shares (or rights to receive shares from us or from any registrar, transfer agent or other entity recording share
ownership or transactions) are delivered to the depositary. The depositary may pre-release ADSs only if:



| |  |  | the depositary has received collateral for the full market value of the pre-released ADSs (marked to market daily); and
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | each recipient of pre-released ADSs agrees in writing that he or she:
| | - |  | ---------------------------------------------------------------------



| |  |  | owns the underlying shares,
| | - |  | ---------------------------



| |  |  | assigns all rights in such shares to the depositary,
| | - |  | ----------------------------------------------------



| |  |  | holds such shares for the account of the depositary, and
| | - |  | --------------------------------------------------------



| |  |  | will deliver such shares to the custodian as soon as practicable, and promptly if the depositary so demands.
| | - |  | ------------------------------------------------------------------------------------------------------------

In general, the number of pre-released ADSs will not evidence more than 30% of all ADSs outstanding at any given time (excluding those
evidenced by pre-released ADSs). However, the depositary may change or disregard such limit from time to time as it deems appropriate. The depositary may retain for its own account any earnings on collateral for pre-released ADSs and its charges for
issuance thereof.

Appointment

In the deposit agreement, each holder and each person holding an interest in ADSs, upon acceptance of any ADSs (or any interest therein) issued in accordance with the terms and conditions of the deposit
agreement will be deemed for all purposes to:



| |  |  | be a party to and bound by the terms of the deposit agreement and the applicable ADR or ADRs, and
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | appoint the depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the
deposit agreement and the applicable ADR or ADRs, to adopt
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | any and all procedures necessary to comply with applicable laws and to take such action as the depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the
deposit agreement and the applicable ADR and ADRs, the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Restricted ADSs

In order to enable the deposit of restricted ordinary
shares, or restricted shares, in the event of a conversion of notes by holders that are not, and have not been during the three months immediately preceding such conversion, our affiliate within the meaning of Rule 144 under the Securities Act,
or non-affiliated holders, prior to the earlier of (i) the effective date of the shelf registration statement or (ii) the date when such non-affiliated holders are able to sell their notes immediately without any volume limitation under
Rule 144, we and the depositary have agreed to create and to provide for the issuance of restricted ADSs representing the restricted shares, or restricted ADSs, in accordance with the terms of a supplemental agreement to the deposit agreement.
The restricted ADSs, if issued, will be issued in book-entry form on the books of the depositary, which means that they will not be eligible for DTC or any other form of book-entry settlement, holding or transfer. At such time as the restricted
shares cease to be so restricted, and the depositary has received an opinion of counsel in form and substance acceptable to it and the applicable provisions of the deposit agreement and supplement thereto have been complied with and the depositary
has received unrestricted shares at its custodian, such restricted ADSs may be cancelled and our shares represented thereby may be deposited under the deposit agreement.

The books of the depositary that reflect the restricted ADSs will reflect that such restricted ADSs are endorsed with the following legend:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
ACT) AND ARE RESTRICTED SECURITIES AS DEFINED IN RULE 144 PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED OR TRANSFERRED EXCEPT (i) IN CONJUNCTION WITH AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR (iii) PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND DEPOSITARY, THAT SUCH REGISTRATION OR COMPLIANCE IS NOT
REQUIRED AS TO SAID SALE, OFFER, DISTRIBUTION OR TRANSFER.

Segregation of ADSs: So long as such restricted ADSs
represent restricted securities as defined in Rule 144 promulgated under the Securities Act, the depositary shall request the custodian to hold the underlying restricted shares to be evidenced by the restricted ADSs in an account or
accounts that are segregated and separate from any other account or accounts in which other shares of our company may be held. At such time as the restricted ADSs shall no longer be so restricted and our shares represented thereby may be deposited
under the deposit agreement, we will be required to ensure that the custodian receives a new share certificate or certificates representing the number of our shares previously represented by restricted ADSs and a certified share extract with respect
thereto. The depositary is not responsible if and to the extent the custodian refuses such request and no such request need be made if it will involve additional cost or expense to the depositary. To the extent the fees charged by the custodian
increase in any way as a result of the issuance of the restricted ADSs, the depositary may pass along the increased amount to the holders of restricted ADSs in any manner in which the depositary is permitted to charge fees or seek reimbursement of
expenses under the deposit agreement.

Lack of Fungibility: The restricted ADSs are not fungible with the fully
transferable ADSs issued and outstanding under the deposit agreement. The restricted ADSs will not be fungible with the fully transferable ADSs outstanding under the deposit agreement as long as the restricted ADSs and the restricted shares
represented thereby are restricted securities within the meaning of Rule 144(a)(3) under the Securities Act or are otherwise subject to restrictions on transfer.



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Fees and Charges Payable to Depositary



|                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |                                                                                                                                                                                                                         
|-------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Category                                                                   |  | Depositary Actions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | Associated Fee                                                                                                                                                                                                          
|Depositing or substituting underlying shares                               |  | Each person to whom ADRs are issued against deposits of Shares, including deposits and issuances in respect of:
    Share distributions, stock split, rights, merger
    Exchange of securities or any other transaction or event or other distribution
affecting the ADSs or the Deposited Securities                                                                                                                                                                                                                                               |  | $5.00 for each 100 ADSs (or portion thereof) evidenced by the new ADRs delivered                                                                                                                                        
|                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Receiving or distributing dividends                                        |  | Distribution of cash dividends                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | $0.02 or less per ADS (or portion thereof)                                                                                                                                                                              
|                                                                           |  | Distribution of share dividends                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | $5.00 for each 100 ADSs (or portion thereof)                                                                                                                                                                            
|                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Selling or exercising rights                                               |  | Distribution or sale of securities, the fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of
such securities                                                                                                                                                                                                                                                                                                                                                     |  | $5.00 for each 100 ADSs (or portion thereof)                                                                                                                                                                            
|                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Withdrawing underlying security                                            |  | Acceptance of ADRs surrendered for withdrawal of deposited securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | $5.00 for each 100 ADSs (or portion thereof) evidenced by the ADRs surrendered                                                                                                                                          
|                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Transferring, splitting or grouping ADRs                                   |  | Transfers, combining or grouping of ADRs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | $1.50 per ADS                                                                                                                                                                                                           
|                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|General depositary services, particularly those charged on an annual basis |  |     Other services performed by depositary in administering
ADRs     Provide information about depositarys right, if any, to
collect fees and charges by offsetting them against dividends received and deposited securities                                                                                                                                                                                                                                                                                                                        |  | $0.02 per ADS (or portion thereof) not more than once each calendar year and payable at sole discretion of depositary by billing ADR holders or by deducting such charge from cash
dividends or other cash distributions
|                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Expenses of Depositary                                                     |  | Expenses incurred on behalf of ADR holders in connection with
    Compliance with foreign exchange control regulations or any law or regulation
relating to foreign investment     Depositarys or its custodians
compliance with applicable law, rule or regulation     Stock transfer or
other taxes and other governmental charges     Cable, telex, facsimile
transmission/delivery     Expenses of depositary in connection with
conversion of foreign currency into U.S. dollars     Any other charge
payable by depositary or its agents |  | Expenses payable at sole discretion of depositary by billing ADR holders or by deducting charges from cash dividends or other cash distributions                                                                        



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Fees and Charges Payable by Depositary

JPMorgan Chase Bank, N.A., the depositary, has agreed to reimburse us for expenses we incur in connection with the establishment and
maintenance of our ADS program. The depositary has also agreed to pay the standard out-of-pocket maintenance costs for the ADSs, which consist of the expenses of postage and envelopes for mailing annual and interim financial reports, printing and
distributing dividend checks, electronic filing of U.S. federal tax information, mailing required tax forms, stationery, postage, facsimile, and telephone calls. It has also agreed to reimburse us annually for certain investor relationship programs
or special investor relations promotional activities. In certain instances, the depositary has agreed to provide additional payments to us based on applicable performance indicators relating to the ADS facility. There are limits on the amount of
expenses for which the depositary will reimburse us, but the amount of reimbursement available to us is not necessarily tied to the amount of fees the depositary collects from investors. In the year ended December 31, 2011, we received from the
depositary an aggregate of $360,000 for the reimbursement of the above-mentioned fees, costs and expenses.

In addition, as
part of its services to us, the depositary has agreed to waive fees for the standard costs associated with the administration of our ADR program. The depositary waived such costs in an aggregate amount of $290,000 in the year ended December 31,
2011.

PART II



|ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|-------- | -----------------------------------------------

None.



|ITEM 14. | MATERIAL MODIFICATIONS TO RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|-------- | ------------------------------------------------------------------------

On April 15, 2008, we completed an offering of $400 million of 4.75% convertible senior notes due 2013 pursuant to
Rule 144A under the Securities Act. On June 30, 2008, we filed a shelf registration statement on Form F-3 (File Number: 333-152009) for resale of the notes and our shares represented by the ADSs issuable upon conversion of the notes.

On September 24, 2008, we completed a follow-on public offering of 4,800,000 ADSs, each representing one share, at
$41.75 per ADS, pursuant to a shelf registration statement on Form F-3 (File Number: 333-153585), as supplemented, that we initially filed with the SEC on September 19, 2008.

On December 23, 2009, we completed a follow-on public offering of 16,520,000 ADSs, each representing one share, at $7.00 per ADS,
pursuant to a shelf registration statement on Form F-3 (File Number: 333-160110), as supplemented, that we initially filed with the SEC on June 19, 2009. On January 12, 2010, we completed the sale of an additional 1,645,900 ADSs, each
representing one share, at $7.00 per ADS, pursuant to the over-allotment option exercised by the underwriters in connection with the December 2009 follow-on offering.

On December 29, 2010, we completed our offer to exchange up to $300 million in aggregate principal amount of our then existing 4.75% convertible senior notes due 2013 that we issued on
April 15, 2008 for an equal aggregate principal amount of a newly issued class of 4.75% convertible senior notes due 2013 that did not contain an option for the holders to require us to repurchase such notes on April 15, 2011 prior to
maturity. The exchange offer was subject to the terms and conditions set forth in a Schedule TO (File Number: 005-83756) filed by us with the SEC on November 24, 2010, as amended and supplemented. The total principal amount of such
existing notes accepted for the exchange was approximately $31,918,000.

On February 1, 2011, we completed a follow-on
public offering of 13,800,000 ADSs, each representing one share, at $12.40 per ADS, including the exercise of the over-allotment option, pursuant to a shelf registration statement on Form F-3 (File Number: 333-171877), as supplemented, that we
initially filed with the SEC on January 26, 2011.



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On February 28, 2011, we completed an offering of Rmb 1.2 billion in aggregate
principal amount of US$-settled 10% senior notes due 2014 pursuant to Regulation S under the Securities Act. On April 11, 2011, we further completed a private placement of an additional Rmb 500 million in aggregate principal
amount of such 2014 senior notes of the same series pursuant to Regulation S under the Securities Act.

On June 3,
2011, pursuant to a subscription agreement dated as of December 30, 2010, CDB Capital, Excel Rise Holdings Limited and Prosper East Limited, investment funds affiliated with China Construction Bank Corporation, and Apollo Asia Investment
Limited, an investment fund affiliated with Bank of China Limited, subscribed for 240 million LDK Silicon preferred shares, which represented, on an as-if-converted basis, approximately 18.46% of the aggregate issued and outstanding share
capital of LDK Silicon on a post-money basis, for an aggregate price of $240 million. Pursuant to the terms of the investment, the investors have the right to require us and/or LDK Silicon to redeem the LDK Silicon preferred shares at a
redemption price equal to 100% of the subscription price plus a 23% investment internal rate of return if there should occur any material breach by us of the terms and conditions of the investment agreements prior to a qualified initial public
offering by LDK Silicon (as defined in the agreement) or if LDK Silicon fails to complete such a qualified initial public offering by June 3, 2013. In addition, the articles of association of LDK Silicon mandate an annual dividend on a pro rata
basis among all existing shareholders of LDK Silicon up to an amount of its retained earnings so that the holders of LDK Silicon preferred shares will receive at least $15 million of such dividend, to the extent the declaration and distribution of
such dividend are permitted by applicable laws and by contractual obligations applicable to us.

On September 19, 2011, we
privately issued and placed 4,374,315 ordinary shares at a price of $5.8958 per share for an aggregate of $25,790,086 to LDK New Energy, our controlling shareholder.



|A. | MATERIAL MODIFICATION TO INSTRUMENTS DEFINING RIGHTS OF
SECURITY HOLDERS
|-- | ------------------------------------------------------------------------

None.



|B. | MATERIAL MODIFICATION TO RIGHTS OF REGISTERED SECURITIES
BY ISSUING OR MODIFYING ANY OTHER CLASS OF SECURITIES
|-- | --------------------------------------------------------------------------------------------------------------

None.



|C. | WITHDRAWAL OR SUBSTITUTION OF A MATERIAL AMOUNT
OF THE ASSETS SECURING ANY REGISTERED SECURITIES
|-- | ------------------------------------------------------------------------------------------------

Not applicable.



|D. | CHANGE OF TRUSTEES OR PAYING AGENTS FOR ANY
REGISTERED SECURITIES
|-- | -----------------------------------------------------------------

None.



|E. | USE OF PROCEEDS
|-- | ---------------

Not applicable.



|ITEM 15. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Disclosure Controls and Procedures

As of the end of the period covered by
this annual report, our management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness of our



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disclosure controls and procedures within the meaning of Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act.

Based upon that evaluation, our management has concluded that, as of December 31, 2011, our disclosure controls and procedures were
effective in ensuring that the information required to be disclosed by us in the reports that we file and furnish under the Securities Exchange Act was recorded, processed, summarized and reported, within the time periods specified in the SECs
rules and forms.

Managements Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in
Rule 13a-15(f) of the Securities Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with the U.S. GAAP.

Due to its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements and can only provide reasonable assurance with respect to consolidated financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We assessed the effectiveness of our internal control over financial reporting as of December 31, 2011. In making this assessment, we used the criteria set forth in Internal Control 
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment using those criteria, our management (including our chief executive officer and chief financial officer) concluded that our
internal control over financial reporting was effective as of December 31, 2011.

KPMG, an independent registered public
accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 31, 2011, as stated in their report below.

Attestation Report of Independent Registered Public Accounting Firm

The Board of Directors
and Shareholders

LDK Solar Co., Ltd.:

We have audited LDK Solar Co., Ltd.s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control  Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). LDK Solar Co., Ltd.s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting, included in the accompanying Managements Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on LDK Solar Co., Ltd.s internal
control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in



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accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, LDK Solar Co., Ltd. maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2011, based on criteria established in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated
balance sheets of LDK Solar Co., Ltd. and subsidiaries as of December 31, 2010 and 2011, and the related consolidated statements of operations, equity and comprehensive income (loss), and cash flows for each of the years in the three-year
period ended December 31, 2011, and our report dated May 15, 2012 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG

Hong Kong, China

May 15, 2012

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the year ended December 31, 2011 that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



|ITEM 16. | RESERVED
|-------- | --------



|ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT
|--------- | --------------------------------

Our board of directors has determined that Mr. Maurice Ngai and Mr. Bing Xiang, both independent directors and members of our audit committee, are audit committee financial experts.



|ITEM 16B. | CODE OF ETHICS
|--------- | --------------

Our board of directors adopted a code of ethics that applies to our directors, officers, employees and advisors. A copy of our code of ethics can be found as Exhibit 99.1 to our Registration
Statement on Form F-1



158



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that we filed with SEC in May 2007 (File Number: 333-142881). The full text of our code of ethics has been posted on our internet website, www.ldksolar.com.



|ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|--------- | --------------------------------------

The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by our independent auditor for the periods indicated. We did not
pay any tax related or other fees to our auditors during the periods indicated below.



|                      |  |      |           |  |      |   |           | 
|--------------------- |  | ---- | --------- |  | ---- | - | --------- | 
|                      |  | 2010 |           |  | 2011 |  
|Audit fees(1)         |  | $    | 2,092,038 |  |      | $ | 3,641,971 | 
|Audit-related fees(2) |  |      | 1,100,290 |  |      |   | 4,993,927 | 
|Tax fees(3)           |  | $    | 334,548   |  |      | $ | 194,949   | 



|(1) | Audit fees means the aggregate fees billed for professional services rendered by our independent auditor for the annual audit of our consolidated financial
statements.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Audit-related fees means the aggregate fees billed for assurance and related services by our independent auditor that are reasonably related to the
performance of the audit or review of our consolidated financial statements and are not reported under Audit fees. Services comprising the fees disclosed under the category of Audit-related fees involve principally the issue
of comfort letter and reading of offering documents in connection with our follow-on equity offering, issurance of US$-settled senior notes and audit of financial statement for a proposed IPO in Hong Kong.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Tax fees include fees billed for tax compliance services.
|--- | -----------------------------------------------------------

All audit and non-audit services provided by our independent auditors must be pre-approved by our audit committee. Our audit committee has adopted a combination of two approaches in pre-approving proposed
services: general pre-approval and specific pre-approval. With general approval, proposed services are pre-approved without consideration of specific case-by-case services; with specific approval, proposed services require the specific pre-approval
of the audit committee. Unless a type of service has received general pre-approval, it will require specific pre-approval by our audit committee. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific
pre-approval by our audit committee.

All requests or applications for services to be provided by our independent auditors
that do not require specific approval by our audit committee will be submitted to our chief financial officer and must include a detailed description of the services to be rendered. The chief financial officer will determine whether such services
are included within the list of services that have received the general pre-approval of the audit committee. The audit committee will be informed on a timely basis of any such services. Requests or applications to provide services that require
specific approval by our audit committee will be submitted to the audit committee by both our independent auditors and our chief financial officer and must include a joint statement as to whether, in their view, the request or application is
consistent with the rules of the SEC on auditor independence.



|ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|--------- | ----------------------------------------------------------

Not applicable.



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|ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|--------- | ----------------------------------------------------------------------

The following table sets forth the information with respect to purchases made by or on behalf of us or any of our affiliated
purchasers, as defined in Rule 10b-18(a)(3) under the Securities Exchange Act, of shares, ADSs or other units of any class of our equity securities that is registered by us pursuant to Section 12 of the Securities Exchange Act.



|                   |  |                                         |            |  |                                       |  |      |                                                                                         |  |  |                                                                                                                     |  |  |   |              | 
|------------------ |  | --------------------------------------- | ---------- |  | ------------------------------------- |  | ---- | --------------------------------------------------------------------------------------- |  |  | ------------------------------------------------------------------------------------------------------------------- |  |  | - | ------------ | 
|Period             |  | TotalNumber
ofShares(or Units)Purchased |            |  | Average PricePaid per Share(or Units) |  |      | Total Number ofShares (or Units)Purchased as Part ofPublicly
AnnouncedPlans or Programs |  |  | Maximum
Number(or Approximate DollarValue) of Shares (or Units)that May Yet Be PurchasedUnder the Plans or Programs | 
|July 11 - 29, 2011 |  |                                         | 4,668,649  |  |                                       |  | 6.39 |                                                                                         |  |  | 4,668,649                                                                                                           |  |  | $ | 80.1 million | 
|Aug 2 - 26, 2011   |  |                                         | 13,988,838 |  |                                       |  | 5.73 |                                                                                         |  |  | 18,657,487                                                                                                          |  |  |   |             | 
|                   |  |                                         |            |  |                                       |  |      |                                                                                         |  |  |                                                                                                                     |  |  |   |              | 
|Total              |  |                                         | 18,657,487 |  |                                       |  |      |                                                                                         |  |  | 23,326,136                                                                                                          |  |  |   |              | 
|                   |  |                                         |            |  |                                       |  |      |                                                                                         |  |  |                                                                                                                     |  |  |   |              | 

On June 27, 2011, we announced the approval by our board of directors for a share repurchase program
established on the same day that authorized us to repurchase up to $110 million of our ADSs, each representing one of our ordinary shares, in the open market or through privately negotiated transactions. Pursuant to the share repurchase program, we
repurchased ADSs in the open market or through privately negotiated transactions for an aggregate amount of $110 million as described in the table above, which, however, exceeded the permitted restricted payments under the indenture governing our
2014 senior notes by $12.8 million. As a remedy and for other corporate purposes, on September 19, 2011, we privately issued and placed 4,374,315 ordinary shares at a price of US$5.8958 per share, the average repurchase price under the share
repurchase program, for an aggregate of $25,790,086 to LDK New Energy, our controlling shareholder.



|ITEM 16F. | CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
|--------- | --------------------------------------------

None.



|ITEM 16G. | CORPORATE GOVERNANCE
|--------- | --------------------

We are incorporated under the laws of Cayman Islands. Many of the corporate governance rules in the New York Stock Exchange Listed Company Manual, or the NYSE Standards, do not apply to us as a
foreign private issuer and we are permitted to follow the corporate governance practices in the Cayman Islands in lieu of most corporate governance standards contained in the NYSE Standards. Section 303A.11 of the NYSE Standards
requires foreign private issuers listed on the New York Stock Exchange to describe the significant differences between their corporate governance practices and the corporate governance standards applicable to U.S. domestic companies listed on
the New York Stock Exchange, or the U.S. domestic issuers. We set forth below a brief summary of such significant differences.

Board and Committee Independence

While NYSE Standards require
U.S. domestic issuers to have a majority of independent directors, we are not subject to this requirement. Three of our seven directors are independent directors.

NYSE Standards require U.S. domestic issuers to schedule an executive session at least once a year to be attended by only independent directors. We are not subject to such requirement and our
directors may attend all of our board meetings.

NYSE Standards require U.S. domestic issuers to disclose a method for
interested parties to communicate directly with the presiding director or with non-management directors as a group. We are not subject to such requirement and we have not adopted any such method.



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Audit Committee

If an audit committee member simultaneously serves on the audit committees of more than three public companies, and the listed company
does not limit the number of audit committees on which its audit committee members serve to three or less, then in each case, the boards of directors of U.S. domestic issuers are required to determine that such simultaneous service would not
impair the ability of such member to effectively serve on its audit committee and disclose such determination in its annual proxy statement or annual report. We are not subject to such requirement and our board of directors have not made any such
determination.

NYSE Standards require audit committees of U.S. domestic issuers to discuss guidelines and policies that
govern the process by which risk assessment and risk management are handled and include such responsibilities in their audit committee charters. We are not subject to such requirement and our audit committee charter does not contain such provisions.
Our audit committee charter provides that our audit committee will review our financial reporting processes and internal controls, based on consultation with our outside independent auditor and our internal accounting department.

Remuneration Committee

NYSE Standards require U.S. domestic issuers to have a remuneration committee composed entirely of independent directors. We are not subject to such requirement and have a compensation committee that
consists of three independent directors and one executive director.

NYSE Standards require remuneration committees of
U.S. domestic issuers to produce a remuneration committee report annually and include such report in their annual proxy statements or annual reports on Form 10-K. We are not subject to such requirement and our remuneration committee has
not produced any such report.

Nomination Committee

While NYSE Standards require U.S. domestic issuers to have only independent directors on their nomination committees, we are not
subject to such requirement and our corporate governance and nominating committee consists of three independent directors and one executive director.



|ITEM 16H. | MINE SAFETY DISCLOSURE
|--------- | ----------------------

Not applicable.

PART III



|ITEM 17. | FINANCIAL STATEMENTS
|-------- | --------------------

Not applicable.



|ITEM 18. | FINANCIAL STATEMENTS
|-------- | --------------------

See pages beginning on page F-1 in this annual report.



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|ITEM 19. | EXHIBITS
|-------- | --------

The following documents are filed as part of this annual report:



|              |  |                                                                                                                                                                                                                                                                                                                                                                                              
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Document                                                                                                                                                                                                                                                                                                                                                                                     
|              | 
|1 .1          |  | Fourth Amended and Restated Memorandum and Articles of Association of the registrant, dated as of June 17, 2008, incorporated by reference to Exhibit 1.1 to our annual report for
the year 2008 on Form 20-F filed with the SEC on May 22, 2009.                                                                                                                                            
|              | 
|2 .1          |  | Form of Deposit Agreement, incorporated by reference to Registration Statement on Form F-6 filed with the SEC (Registration No. 333-142899).                                                                                                                                                                                                                                                 
|              | 
|2 .2          |  | Restricted Issuance Agreement, dated as of April 15, 2008, as supplement to the Deposit Agreement under Exhibit 2.1, incorporated by reference to Exhibit 4.4 to our Registration
Statement on Form F-3 filed with the SEC (File Number: 333-152009).                                                                                                                                        
|              | 
|2 .3          |  | Indenture, dated April 15, 2008, between the registrant and The Bank of New York Mellon, as trustee and security agent, relating to 4.75% Convertible Senior Notes due 2013,
incorporated by reference to Exhibit 4.5 to our Registration Statement on Form F-3 filed with the SEC (File Number: 333-152009).                                                                                
|              | 
|2 .4          |  | Indenture, dated December 29, 2010, between the registrant and The Bank of New York Mellon, as trustee and security agent, relating to 4.75% Convertible Senior Notes due
2013, incorporated by reference to Exhibit (d)(3) to our Schedule TO filed by us with the SEC (File Number: 005-83756) on November 24, 2010.                                                                       
|              | 
|2 .5          |  | Indenture, dated February 28, 2011, between the registrant and The Bank of New York Mellon, London Branch, as trustee and paying and transfer agent, among others, relating to
US$-Settled 10% Senior Notes due 2014, incorporated by reference to Exhibit 2.5 to our annual report for the year 2010 on Form 20-F filed with the SEC (File Number: 001-33464) on May 2, 2011.               
|              | 
|4 .1          |  | Form Employment Agreement between the registrant and each senior officer, incorporated by reference to Exhibit 10.2 to our Registration Statement on Form F-1 filed with the SEC
(File Number: 333-142881).                                                                                                                                                                                  
|              | 
|4 .2          |  | Form Service Agreement between the registrant and each executive director, incorporated by reference to Exhibit 10.3 to our Registration Statement on Form F-1 filed with the SEC
(File Number: 333-142881).                                                                                                                                                                                 
|              | 
|4 .3          |  | Form Service Agreement between the registrant and each independent director, incorporated by reference to Exhibit 10.4 to our Registration Statement on Form F-1 filed with the SEC
(File Number: 333-142881).                                                                                                                                                                               
|              | 
|4 .4          |  | Form Confidentiality and Non-compete Agreement between the registrant and each senior officer, engineer and technician, incorporated by reference to Exhibit 10.5 to our Registration
Statement on Form F-1 filed with the SEC (File Number: 333-142881).                                                                                                                                    
|              | 
|4 .5          |  | Supply Agreement, dated July 18, 2007, between GT Solar, as seller, and the registrant and Jiangxi LDK Solar, as buyers (certain information in the agreement has been omitted
pursuant to a request for confidential treatment), incorporated by reference to Exhibit 4.36 to our annual report for the year 2007 on Form 20-F filed with the SEC (File Number: 001-33464) on April 7, 2008.
|              | 
|4 .6          |  | Summary translation of Loan Guarantee Agreement, dated February 5, 2007, between Mr. Xiaofeng Peng and Bank of China Xinyu Branch, incorporated by reference to Exhibit 4.37 to our
annual report for the year 2007 on Form 20-F filed with the SEC (File Number: 001-33464) on April 7, 2008.                                                                                               



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|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Document                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|              | 
|4.7           |  | Summary translation of Cooperation Agreement, dated January 23, 2007, between Jiangxi LDK Solar and Nanchang University, incorporated by reference to Exhibit 4.40 to our annual
report for the year 2007 on Form 20-F filed with the SEC (File Number: 001-33464) on April 7, 2008.                                                                                                                                                                     
|              | 
|4.8           |  | Summary translation of Loan Guarantee Agreement, dated April 23, 2008, among Mr. Xiaofeng Peng, Ms. Shan Zhou and China Development Bank, incorporated by reference to Exhibit 4.8 to
our annual report for the year 2008 on Form 20-F filed with the SEC (File Number: 001-33464) on May 22, 2009.                                                                                                                                                      
|              | 
|4.9           |  | Summary translation of Loan Guarantee Agreement, dated February 23, 2009, between Mr. Xiaofeng Peng and Agricultural Bank of China Xinyu Branch, incorporated by reference to Exhibit
4.9 to our annual report for the year 2008 on Form 20-F filed with the SEC (File Number: 001-33464) on May 22, 2009.                                                                                                                                               
|              | 
|4.10          |  | Summary translation of Supply Agreement, dated July 22, 2008, between JYT Corporation, as seller, and Jiangxi LDK Solar, as buyer, incorporated by reference to Exhibit 4.10 to our
annual report for the year 2008 on Form 20-F filed with the SEC (File Number: 001-33464) on May 22, 2009.                                                                                                                                                            
|              | 
|4.11          |  | Registration Rights Agreement, dated as of April 15, 2008, incorporated by reference to Exhibit 4.7 to our Registration Statement on Form F-3 filed with the SEC (File Number:
333-152009).                                                                                                                                                                                                                                                              
|              | 
|4.12          |  | Amended and Restated Framework Agreement, dated as of December 1, 2009, by and between the registrant and Best Solar Co., Ltd., incorporated by reference to Exhibit 4.12 to our
annual report for the year 2009 on Form 20-F filed with the SEC (File Number: 001-33464) on June 30, 2010.                                                                                                                                                              
|              | 
|4.13          |  | Asset Purchase Agreement, dated as of January 29, 2010, between the registrant and Best Solar Co., Ltd., incorporated by reference to Exhibit 4.13 to our annual report for the
year 2009 on Form 20-F filed with the SEC (File Number: 001-33464) on June 30, 2010.                                                                                                                                                                                     
|              | 
|4.14          |  | Series A Preferred Shares Subscription Agreement, dated as of December 30, 2010, by and among the registrant, LDK Silicon & Chemical Technology Co., Ltd. and
China Development Bank Capital Corporation Ltd., among others, relating to the sale and purchase of LDK Silicon preferred shares, incorporated by reference to Exhibit 4.14 to our annual report for the year 2010 on Form 20-F filed with the SEC (File
Number: 001-33464) on May 2, 2011.
|              | 
|4.15          |  | Shareholders Agreement, dated as of March 9, 2011, by and among the registrant, LDK Silicon & Chemical Technology Co., Ltd., China Development Bank Capital Corporation
Ltd. and other holders of LDK Silicon preferred shares, among others, incorporated by reference to Exhibit 4.15 to our annual report for the year 2010 on Form 20-F filed with the SEC (File Number: 001-33464) on May 2, 2011.                                                  
|              | 
|4.16          |  | Investment Agreement, dated as of December 31, 2011, by and among the registrant, LDK Solar Germany Holding GmbH and Sunways AG, among others.                                                                                                                                                                                                                                                                                                           
|              | 
|8             |  | List of subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|              | 
|11            |  | Code of Ethics of the registrant, incorporated by reference to Exhibit 99.1 to our Registration Statement on Form F-1 filed with the filed with the SEC (File Number:
333-142881).                                                                                                                                                                                                                                                                       
|              | 
|12.1          |  | Certification of the principal executive officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                  
|              | 
|12.2          |  | Certification of the principal financial officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                  
|              | 
|13.1          |  | Certification of the principal executive officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                  
|              | 
|13.2          |  | Certification of the principal financial officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                  
|              | 
|15.1          |  | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                                                                                                                                                                                                                                                



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SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report of its behalf.



LDK Solar Co., Ltd.By:

/s/ Xiaofeng PengName:    Xiaofeng PengTitle:      Chairman & Chief Executive Officer




By:

/s/ Jack LaiName:    Jack LaiTitle:      Chief Financial Officer


Date: May 15, 2012



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LDK SOLAR CO., LTD.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                        |  |      |      | 
|----------------------------------------------------------------------------------------------------------------------- |  | ---- | ---- | 
|                                                                                                                        |  | Page |     
|Report of Independent Registered Public Accounting Firm                                                                 |  |      | F-2  | 
|Consolidated Balance Sheets as of December 31, 2010 and 2011                                                            |  |      | F-3  | 
|Consolidated Statements of Operations for the years ended December 31, 2009, 2010 and
2011                              |  |      | F-5  | 
|Consolidated Statements of Equity and Comprehensive Income (Loss) for the years ended December 
31, 2009, 2010 and 2011 |  |      | F-6  | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2010 and
2011                              |  |      | F-9  | 
|Notes to the Consolidated Financial Statements for the years ended December 31, 2009, 2010 and
2011                     |  |      | F-11 | 



F-1



---

##### Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

LDK Solar Co., Ltd.:

We have audited the accompanying consolidated balance sheets of LDK
Solar Co., Ltd. and subsidiaries (the Group) as of December 31, 2010 and 2011, and the related consolidated statements of operations, equity and comprehensive income (loss), and cash flows for each of the years in the
three-year period ended December 31, 2011. These consolidated financial statements are the responsibility of the Groups management. Our responsibility is to express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of LDK Solar Co., Ltd. and subsidiaries as of December 31, 2010 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended
December 31, 2011, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial
statements have been prepared assuming that the Group will continue as a going concern. As described more fully in Note 1 to the consolidated financial statements, the Group has a net working capital deficit and is restricted to incur additional
indebtedness as it has not met a financial covenant ratio under a long-term debt agreement as of December 31, 2011. These conditions raise substantial doubt about the Groups ability to continue as a going concern. Managements plans in
regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), LDK Solar Co., Ltd.s internal control over financial reporting as of December
31, 2011, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated May 15, 2012 expressed an unqualified opinion on the
effectiveness of the LDK Solar Co., Ltd.s internal control over financial reporting.

/s/ KPMG

Hong Kong, China

May 15, 2012



F-2



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##### Table of Contents

LDK SOLAR CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in US$ thousands, except share data)



|                                                                                                                                                            |  |             |  |                  |           |  |                  |  |           | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- |  | ---------------- | --------- |  | ---------------- |  | --------- | 
|                                                                                                                                                            |  | Note        |  | December 31,2010 |           |  | December 31,2011 | 
|Assets                                                                                                                                                      |  |             |  |                  |           |  |                  |  |           | 
|Current assets                                                                                                                                              |  |             |  |                  |           |  |                  |  |           | 
|Cash and cash equivalents                                                                                                                                   |  |             |  |                  | 202,127   |  |                  |  | 244,072   | 
|Pledged bank deposits                                                                                                                                       |  | (11)        |  |                  | 503,721   |  |                  |  | 565,062   | 
|Trade accounts and bills receivable, net                                                                                                                    |  | (2g)        |  |                  | 384,265   |  |                  |  | 491,407   | 
|Inventories                                                                                                                                                 |  | (3)(11)     |  |                  | 474,612   |  |                  |  | 654,947   | 
|Prepayments to suppliers, net                                                                                                                               |  | (4)         |  |                  | 112,448   |  |                  |  | 28,178    | 
|Other current assets, including amounts due from the Groups executives and employees of $46,262 and $46,361 as of
December 31, 2010 and 2011, respectively |  | (5)         |  |                  | 237,173   |  |                  |  | 295,005   | 
|Due from related parties                                                                                                                                    |  | (27)        |  |                  | 45,161    |  |                  |  | 41,320    | 
|Deferred income tax assets, net                                                                                                                             |  | (20)        |  |                  | 15,914    |  |                  |  | 30,931    | 
|                                                                                                                                                            |  |             |  |                  |           |  |                  |  |           | 
|Total current assets                                                                                                                                        |  |             |  |                  | 1,975,421 |  |                  |  | 2,350,922 | 
|Property, plant and equipment, net                                                                                                                          |  | (6)(11)(14) |  |                  | 2,993,213 |  |                  |  | 3,872,361 | 
|Deposits for purchases of property, plant and equipment and land use right                                                                                  |  |             |  |                  | 144,298   |  |                  |  | 151,701   | 
|Land use rights                                                                                                                                             |  | (11)(27)    |  |                  | 220,405   |  |                  |  | 293,559   | 
|Inventories to be processed beyond one year                                                                                                                 |  | (3)(11)     |  |                  | 13,024    |  |                  |  | 0         | 
|Prepayments to suppliers expected to be utilized beyond one year                                                                                            |  | (4)         |  |                  | 14,318    |  |                  |  | 11,153    | 
|Pledged bank deposits  non-current                                                                                                                         |  | (11)        |  |                  | 43,965    |  |                  |  | 31,637    | 
|Investments in associates and a jointly-controlled entity                                                                                                   |  | (9)         |  |                  | 52,275    |  |                  |  | 50,358    | 
|Other non-current assets                                                                                                                                    |  | (10)        |  |                  | 13,935    |  |                  |  | 52,794    | 
|Deferred income tax assets, net                                                                                                                             |  | (20)        |  |                  | 21,303    |  |                  |  | 39,376    | 
|                                                                                                                                                            |  |             |  |                  |           |  |                  |  |           | 
|Total assets                                                                                                                                                |  |             |  |                  | 5,492,157 |  |                  |  | 6,853,861 | 
|                                                                                                                                                            |  |             |  |                  |           |  |                  |  |           | 
|Liabilities                                                                                                                                                 |  |             |  |                  |           |  |                  |  |           | 
|Current liabilities                                                                                                                                         |  |             |  |                  |           |  |                  |  |           | 
|Short-term borrowings and current installments of long-term borrowings                                                                                      |  | (11)        |  |                  | 1,501,588 |  |                  |  | 2,032,023 | 
|Convertible senior notes, less debt discount                                                                                                                |  | (15)        |  |                  | 355,445   |  |                  |  | 0         | 
|Short-term PRC Notes                                                                                                                                        |  | (17)        |  |                  | 0         |  |                  |  | 63,483    | 
|Bills payable                                                                                                                                               |  |             |  |                  | 271,772   |  |                  |  | 625,774   | 
|Trade accounts payable                                                                                                                                      |  |             |  |                  | 447,595   |  |                  |  | 699,346   | 
|Advance payments from customers, current installments                                                                                                       |  | (12)        |  |                  | 196,812   |  |                  |  | 210,412   | 
|Accrued expenses and other payables                                                                                                                         |  | (13)        |  |                  | 751,272   |  |                  |  | 749,388   | 
|Due to related parties                                                                                                                                      |  | (27)        |  |                  | 15,034    |  |                  |  | 19,319    | 
|Obligations under capital leases, current installments                                                                                                      |  | (14)        |  |                  | 36,339    |  |                  |  | 41,738    | 
|Other financial liabilities                                                                                                                                 |  |             |  |                  | 1,965     |  |                  |  | 8,834     | 
|                                                                                                                                                            |  |             |  |                  |           |  |                  |  |           | 
|Total current liabilities                                                                                                                                   |  |             |  |                  | 3,577,822 |  |                  |  | 4,450,317 | 
|                                                                                                                                                            |  |             |  |                  |           |  |                  |  |           | 



See accompanying notes
to consolidated financial statements



F-3



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##### Table of Contents

LDK SOLAR CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS  (CONTINUED)

(Amounts in US$ thousands, except share data)



|                                                                                                                                                                                                              |  |      |  |                  |           |  |                  |  |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | ---------------- | --------- |  | ---------------- |  | --------- | -
|                                                                                                                                                                                                              |  | Note |  | December 31,2010 |           |  | December 31,2011 | 
|Long-term borrowings, excluding current installments                                                                                                                                                          |  | (11) |  |                  | 604,495   |  |                  |  | 890,432   |  
|Convertible senior notes, less debt discount                                                                                                                                                                  |  | (15) |  |                  | 34,658    |  |                  |  | 23,733    |  
|RMB-denominated US$-settled senior notes, less debt discount                                                                                                                                                  |  | (16) |  |                  | 0         |  |                  |  | 258,827   |  
|Long-term PRC Notes                                                                                                                                                                                           |  | (17) |  |                  | 0         |  |                  |  | 79,354    |  
|Obligations under capital leases, excluding current installments                                                                                                                                              |  | (14) |  |                  | 15,938    |  |                  |  | 61,364    |  
|Advance payments from customers  non-current                                                                                                                                                                 |  | (12) |  |                  | 148,022   |  |                  |  | 121,740   |  
|Other payable due to customers                                                                                                                                                                                |  |      |  |                  | 752       |  |                  |  | 0         |  
|Other liabilities                                                                                                                                                                                             |  |      |  |                  | 76,395    |  |                  |  | 107,290   |  
|Deferred income tax liability                                                                                                                                                                                 |  | (20) |  |                  | 14,337    |  |                  |  | 16,186    |  
|                                                                                                                                                                                                              |  |      |  |                  |           |  |                  |  |           |  
|Total liabilities                                                                                                                                                                                             |  |      |  |                  | 4,472,419 |  |                  |  | 6,009,243 |  
|                                                                                                                                                                                                              |  |      |  |                  |           |  |                  |  |           |  
|                                                                                                                                                                                                              |  |      | 
|Redeemable Non-controlling Interests and Equity                                                                                                                                                               |  |      |  |                  |           |  |                  |  |           |  
|                                                                                                                                                                                                              |  |      | 
|Redeemable non-controlling interests                                                                                                                                                                          |  | (8)  |  |                  | 0         |  |                  |  | 219,694   |  
|                                                                                                                                                                                                              |  |      |  |                  |           |  |                  |  |           |  
|LDK Solar Co., Ltd. shareholders equity                                                                                                                                                                      |  |      |  |                  |           |  |                  |  |           |  
|Ordinary shares (US$ 0.10 par value; 499,580,000 shares authorized; 134,343,617 and 133,860,445 shares issued; 132,950,255 and
133,518,800 shares outstanding as of December 31, 2010 and 2011, respectively) |  | (22) |  |                  | 13,295    |  |                  |  | 13,352    |  
|Additional paid-in capital                                                                                                                                                                                    |  |      |  |                  | 589,839   |  |                  |  | 751,422   |  
|Statutory reserve                                                                                                                                                                                             |  | (23) |  |                  | 58,275    |  |                  |  | 75,780    |  
|Accumulated other comprehensive income                                                                                                                                                                        |  |      |  |                  | 128,393   |  |                  |  | 212,888   |  
|Retained earnings (Accumulated deficit)                                                                                                                                                                       |  |      |  |                  | 229,438   |  |                  |  | (443,526  | )
|                                                                                                                                                                                                              |  |      |  |                  |           |  |                  |  |           |  
|Total LDK Solar Co., Ltd. shareholders equity                                                                                                                                                                |  |      |  |                  | 1,019,240 |  |                  |  | 609,916   |  
|Non-controlling interests                                                                                                                                                                                     |  |      |  |                  | 498       |  |                  |  | 15,008    |  
|                                                                                                                                                                                                              |  |      |  |                  |           |  |                  |  |           |  
|Total equity                                                                                                                                                                                                  |  |      |  |                  | 1,019,738 |  |                  |  | 624,924   |  
|                                                                                                                                                                                                              |  |      |  |                  |           |  |                  |  |           |  
|Commitments and contingencies                                                                                                                                                                                 |  | (21) |  |                  |           |  |                  |  |           |  
|Total liabilities, redeemable non-controlling interests and equity                                                                                                                                            |  |      |  |                  | 5,492,157 |  |                  |  | 6,853,861 |  
|                                                                                                                                                                                                              |  |      |  |                  |           |  |                  |  |           |  

See accompanying notes to consolidated financial statements



F-4



---

##### Table of Contents

LDK SOLAR CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in US$ thousands, except per share data)



|                                                                                                                                                                                                                                                                  |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | ------------------------- | ---------- | - | ------------------------- |  | ---------- | ------------------------- |  |  | ---------- | -
|                                                                                                                                                                                                                                                                  |  | Note |  | YearendedDecember 31,2009 |            |   | YearendedDecember 31,2010 |  |            | YearendedDecember 31,2011 | 
|Net sales                                                                                                                                                                                                                                                         |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  
|Wafers                                                                                                                                                                                                                                                            |  |      |  |                           | 945,009    |   |                           |  | 1,522,925  |                           |  |  | 1,031,259  |  
|Processing of PV products on behalf of others                                                                                                                                                                                                                     |  |      |  |                           | 80,557     |   |                           |  | 204,915    |                           |  |  | 27,589     |  
|Modules                                                                                                                                                                                                                                                           |  |      |  |                           | 58,957     |   |                           |  | 634,387    |                           |  |  | 720,863    |  
|Silicon and other materials                                                                                                                                                                                                                                       |  |      |  |                           | 8,007      |   |                           |  | 79,089     |                           |  |  | 239,897    |  
|Others                                                                                                                                                                                                                                                            |  |      |  |                           | 5,508      |   |                           |  | 68,031     |                           |  |  | 138,205    |  
|                                                                                                                                                                                                                                                                  |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  
|Total net sales                                                                                                                                                                                                                                                   |  |      |  |                           | 1,098,038  |   |                           |  | 2,509,347  |                           |  |  | 2,157,813  |  
|                                                                                                                                                                                                                                                                  |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  
|Cost of goods sold                                                                                                                                                                                                                                                |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  
|Wafers                                                                                                                                                                                                                                                            |  |      |  |                           | (1,089,660 | ) |                           |  | (1,118,605 | )                         |  |  | (983,163   | )
|Processing of PV products on behalf of others                                                                                                                                                                                                                     |  |      |  |                           | (62,244    | ) |                           |  | (133,513   | )                         |  |  | (21,654    | )
|Modules                                                                                                                                                                                                                                                           |  |      |  |                           | (52,154    | ) |                           |  | (586,755   | )                         |  |  | (885,884   | )
|Silicon and other materials                                                                                                                                                                                                                                       |  |      |  |                           | (3,459     | ) |                           |  | (59,028    | )                         |  |  | (209,159   | )
|Others                                                                                                                                                                                                                                                            |  |      |  |                           | (4,104     | ) |                           |  | (53,611    | )                         |  |  | (97,614    | )
|                                                                                                                                                                                                                                                                  |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  
|Total cost of goods sold, including inventory write-downs of US$ 180,213, US$ 6,113 and US$ 305,175 and provisions for loss on
firm purchase commitment of US$ 1,120, US$ nil and US$ 27,637 during the years ended December 31, 2009, 2010 and 2011 respectively |  |      |  |                           | (1,211,621 | ) |                           |  | (1,951,512 | )                         |  |  | (2,197,474 | )
|                                                                                                                                                                                                                                                                  |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  
|Gross (loss) profit                                                                                                                                                                                                                                               |  |      |  |                           | (113,583   | ) |                           |  | 557,835    |                           |  |  | (39,661    | )
|                                                                                                                                                                                                                                                                  |  |      |  |                          
|Selling expenses                                                                                                                                                                                                                                                  |  |      |  |                           | (4,738     | ) |                           |  | (21,734    | )                         |  |  | (43,192    | )
|General and administrative expenses, including provisions for doubtful recoveries of prepayments to suppliers and trade accounts
receivable of US$ 22,425, US$ 3,872 and US$ 174,315 during the years ended 2009, 2010 and 2011 respectively                      |  |      |  |                           | (91,513    | ) |                           |  | (90,380    | )                         |  |  | (330,883   | )
|Research and development expenses                                                                                                                                                                                                                                 |  |      |  |                           | (8,299     | ) |                           |  | (10,804    | )                         |  |  | (46,510    | )
|Impairment loss for property, plant and equipment                                                                                                                                                                                                                 |  |      |  |                           | (1,999     | ) |                           |  | 0          |                           |  |  | 0          |  
|Legal settlements, net of insurance recoveries                                                                                                                                                                                                                    |  |      |  |                           | (10,000    | ) |                           |  | 0          |                           |  |  | 0          |  
|                                                                                                                                                                                                                                                                  |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  
|(Loss) income from operations                                                                                                                                                                                                                                     |  |      |  |                           | (230,132   | ) |                           |  | 434,917    |                           |  |  | (460,246   | )
|Other income (expenses):                                                                                                                                                                                                                                          |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  
|Interest income                                                                                                                                                                                                                                                   |  |      |  |                           | 2,408      |   |                           |  | 4,632      |                           |  |  | 7,365      |  
|Interest expense and amortization of debt issuance costs and debt discount                                                                                                                                                                                        |  | (18) |  |                           | (50,068    | ) |                           |  | (95,012    | )                         |  |  | (189,938   | )
|Foreign currency exchange (loss) gain, net                                                                                                                                                                                                                        |  |      |  |                           | (613       | ) |                           |  | 8,327      |                           |  |  | (2,040     | )
|Government subsidy                                                                                                                                                                                                                                                |  | (2v) |  |                           | 26,927     |   |                           |  | 5,625      |                           |  |  | 33,698     |  
|Equity in (loss) income for associates and a jointly-controlled entity                                                                                                                                                                                            |  | (9)  |  |                           | (3,343     | ) |                           |  | 3,570      |                           |  |  | (787       | )
|Others, net                                                                                                                                                                                                                                                       |  |      |  |                           | (87        | ) |                           |  | 618        |                           |  |  | 7,135      |  
|                                                                                                                                                                                                                                                                  |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  
|(Loss) earnings before income taxes                                                                                                                                                                                                                               |  |      |  |                           | (254,908   | ) |                           |  | 362,677    |                           |  |  | (604,813   | )
|Income tax benefit (expense)                                                                                                                                                                                                                                      |  | (20) |  |                           | 20,912     |   |                           |  | (66,210    | )                         |  |  | (4,141     | )
|                                                                                                                                                                                                                                                                  |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  
|Net (loss) income                                                                                                                                                                                                                                                 |  |      |  |                           | (233,996   | ) |                           |  | 296,467    |                           |  |  | (608,954   | )
|Earnings attributable to non-controlling interests                                                                                                                                                                                                                |  |      |  |                           | (229       | ) |                           |  | (5,670     | )                         |  |  | (393       | )
|Earnings attributable to redeemable non-controlling interests                                                                                                                                                                                                     |  |      |  |                           | 0          |   |                           |  | 0          |                           |  |  | (11,522    | )
|                                                                                                                                                                                                                                                                  |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  
|Net (loss) income attributable to LDK Solar Co., Ltd. shareholders                                                                                                                                                                                                |  |      |  |                           | (234,225   | ) |                           |  | 290,797    |                           |  |  | (620,869   | )
|Accretion to redemption value of redeemable non-controlling interests                                                                                                                                                                                             |  |      |  |                           | 0          |   |                           |  | 0          |                           |  |  | (34,590    | )
|                                                                                                                                                                                                                                                                  |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  
|Net (loss) income available to LDK Solar Co., Ltd. shareholders                                                                                                                                                                                                   |  |      |  |                           | (234,225   | ) |                           |  | 290,797    |                           |  |  | (655,459   | )
|                                                                                                                                                                                                                                                                  |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  
|Basic (loss) earnings per share                                                                                                                                                                                                                                   |  | (25) |  |                           | (2.18      | ) |                           |  | 2.32       |                           |  |  | (4.90      | )
|                                                                                                                                                                                                                                                                  |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  
|Diluted (loss) earnings per share                                                                                                                                                                                                                                 |  | (25) |  |                           | (2.18      | ) |                           |  | 2.27       |                           |  |  | (4.90      | )
|                                                                                                                                                                                                                                                                  |  |      |  |                           |            |   |                           |  |            |                           |  |  |            |  

See accompanying notes to consolidated financial statements



F-5



---

##### Table of Contents

LDK SOLAR CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31, 2009, 2010 AND 2011

(Amounts in US$ thousands, except share data)



|                                                                           |  |                 |             |  |                          |  |        |                  |  |  |                                     |  |  |                                      |        |  |                                             |  |        |                          |  |  |             |   |  |                                               |          |   |                                         |  |        |       |  |  |          |   |  |  |          |   |  |  |     |   |  |  |          |  
|-------------------------------------------------------------------------- |  | --------------- | ----------- |  | ------------------------ |  | ------ | ---------------- |  |  | ----------------------------------- |  |  | ------------------------------------ | ------ |  | ------------------------------------------- |  | ------ | ------------------------ |  |  | ----------- | - |  | --------------------------------------------- | -------- | - | --------------------------------------- |  | ------ | ----- |  |  | -------- | - |  |  | -------- | - |  |  | --- | - |  |  | -------- | -
|                                                                           |  |                 |             |  |                          |  |        |                  |  |  |                                     |  |  |                                      |        |  |                                             |  |        |                          |  |  |             |   |  |                                               |          |   | Comprehensive income (loss)             | 
|                                                                           |  | Ordinary shares |             |  | AdditionalPaid-inCapital |  |        | StatutoryReserve |  |  | AccumulatedOtherComprehensiveIncome |  |  | RetainedEarnings(Accumulateddeficit) |        |  | Total LDKSolar Co., Ltd.ShareholdersEquity |  |        | Non-controllingInterests |  |  | TotalEquity |   |  | Attributableto LDK SolarCo., Ltd.Shareholders |          |   | Attributableto
non-controllingInterests |  |        | Total | 
|                                                                           |  | Number          |             |  | Amount                   |  |        |                  |  |  |                                     |  |  |                                      |        | 
|January 1, 2009                                                            |  |                 | 113,110,396 |  |                          |  | 11,311 |                  |  |  | 464,101                             |  |  |                                      | 29,676 |  |                                             |  | 83,314 |                          |  |  | 201,465     |   |  |                                               | 789,867  |   |                                         |  | 0      |       |  |  | 789,867  |   |  |  |          |   |  |  |     |   |  |  |          |  
|                                                                           |  |                 |             |  |                          |  |        |                  |  |  |                                     |  |  |                                      |        |  |                                             |  |        |                          |  |  |             |   |  |                                               |          |   |                                         |  |        |       |  |  |          |   |  |  |          |   |  |  |     |   |  |  |          |  
|Net loss                                                                   |  |                 | 0           |  |                          |  | 0      |                  |  |  | 0                                   |  |  |                                      | 0      |  |                                             |  | 0      |                          |  |  | (234,225    | ) |  |                                               | (234,225 | ) |                                         |  | 229    |       |  |  | (233,996 | ) |  |  | (234,225 | ) |  |  | 229 |   |  |  | (233,996 | )
|Foreign currency translation adjustment, net of nil tax                    |  |                 | 0           |  |                          |  | 0      |                  |  |  | 0                                   |  |  |                                      | 0      |  |                                             |  | 2,543  |                          |  |  | 0           |   |  |                                               | 2,543    |   |                                         |  | (2     | )     |  |  | 2,541    |   |  |  | 2,543    |   |  |  | (2  | ) |  |  | 2,541    |  
|                                                                           |  |                 |             |  |                          |  |        |                  |  |  |                                     |  |  |                                      |        |  |                                             |  |        |                          |  |  |             |   |  |                                               |          |   |                                         |  |        |       |  |  |          |   |  |  |          |   |  |  |     |   |  |  |          |  
|Total comprehensive loss                                                   |  |                 |             |  |                          |  |        |                  |  |  |                                     |  |  |                                      |        |  |                                             |  |        |                          |  |  |             |   |  |                                               |          |   |                                         |  |        |       |  |  |          |   |  |  | (231,682 | ) |  |  | 227 |   |  |  | (231,455 | )
|                                                                           |  |                 |             |  |                          |  |        |                  |  |  |                                     |  |  |                                      |        |  |                                             |  |        |                          |  |  |             |   |  |                                               |          |   |                                         |  |        |       |  |  |          |   |  |  |          |   |  |  |     |   |  |  |          |  
|Acquisition of equity interest in Solar Green Technology Spa               |  |                 | 0           |  |                          |  | 0      |                  |  |  | 0                                   |  |  |                                      | 0      |  |                                             |  | 0      |                          |  |  | 0           |   |  |                                               | 0        |   |                                         |  | 254    |       |  |  | 254      |   |  |  |          |   |  |  |     |   |  |  |          |  
|Capital contribution from non-controlling interests                        |  |                 | 0           |  |                          |  | 0      |                  |  |  | 0                                   |  |  |                                      | 0      |  |                                             |  | 0      |                          |  |  | 0           |   |  |                                               | 0        |   |                                         |  | 58     |       |  |  | 58       |   |  |  |          |   |  |  |     |   |  |  |          |  
|Issuance of ordinary shares upon exercise of share options                 |  |                 | 141,247     |  |                          |  | 14     |                  |  |  | 772                                 |  |  |                                      | 0      |  |                                             |  | 0      |                          |  |  | 0           |   |  |                                               | 786      |   |                                         |  | 0      |       |  |  | 786      |   |  |  |          |   |  |  |     |   |  |  |          |  
|Issuance of new shares, net of related expenses US$6,415.                  |  |                 | 16,520,000  |  |                          |  | 1,652  |                  |  |  | 107,573                             |  |  |                                      | 0      |  |                                             |  | 0      |                          |  |  | 0           |   |  |                                               | 109,225  |   |                                         |  | 0      |       |  |  | 109,225  |   |  |  |          |   |  |  |     |   |  |  |          |  
|Disposal of 15% shares of LDK PV, net of tax expense of US$22,425 (Note 7) |  |                 | 0           |  |                          |  | 0      |                  |  |  | 158,330                             |  |  |                                      | 0      |  |                                             |  | (1,313 | )                        |  |  | 0           |   |  |                                               | 157,017  |   |                                         |  | 36,972 |       |  |  | 193,989  |   |  |  |          |   |  |  |     |   |  |  |          |  
|Share-based compensation (Note 24)                                         |  |                 | 0           |  |                          |  | 0      |                  |  |  | 14,212                              |  |  |                                      | 0      |  |                                             |  | 0      |                          |  |  | 0           |   |  |                                               | 14,212   |   |                                         |  | 0      |       |  |  | 14,212   |   |  |  |          |   |  |  |     |   |  |  |          |  
|                                                                           |  |                 |             |  |                          |  |        |                  |  |  |                                     |  |  |                                      |        |  |                                             |  |        |                          |  |  |             |   |  |                                               |          |   |                                         |  |        |       |  |  |          |   |  |  |          |   |  |  |     |   |  |  |          |  
|December 31, 2009                                                          |  |                 | 129,771,643 |  |                          |  | 12,977 |                  |  |  | 744,988                             |  |  |                                      | 29,676 |  |                                             |  | 84,544 |                          |  |  | (32,760     | ) |  |                                               | 839,425  |   |                                         |  | 37,511 |       |  |  | 876,936  |   |  |  |          |   |  |  |     |   |  |  |          |  
|                                                                           |  |                 |             |  |                          |  |        |                  |  |  |                                     |  |  |                                      |        |  |                                             |  |        |                          |  |  |             |   |  |                                               |          |   |                                         |  |        |       |  |  |          |   |  |  |          |   |  |  |     |   |  |  |          |  

See accompanying notes to consolidated financial statements



F-6



---

##### Table of Contents

LDK SOLAR CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME (LOSS)  (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2009, 2010 AND 2011

(Amounts in US$ thousands, except share data)



|                                                           |  |                 |             |  |                          |  |        |                  |  |  |                                     |   |  |                                      |        |  |                                             |  |         |                          |  |  |             |   |  |                                               |           |   |                                         |  |         |       |  |  |           |   |  |  |         |  |  |  |       |  |  |  |         | 
|---------------------------------------------------------- |  | --------------- | ----------- |  | ------------------------ |  | ------ | ---------------- |  |  | ----------------------------------- | - |  | ------------------------------------ | ------ |  | ------------------------------------------- |  | ------- | ------------------------ |  |  | ----------- | - |  | --------------------------------------------- | --------- | - | --------------------------------------- |  | ------- | ----- |  |  | --------- | - |  |  | ------- |  |  |  | ----- |  |  |  | ------- | 
|                                                           |  |                 |             |  |                          |  |        |                  |  |  |                                     |   |  |                                      |        |  |                                             |  |         |                          |  |  |             |   |  |                                               |           |   | Comprehensive income (loss)             | 
|                                                           |  | Ordinary shares |             |  | AdditionalPaid-inCapital |  |        | StatutoryReserve |  |  | AccumulatedOtherComprehensiveIncome |   |  | RetainedEarnings(Accumulateddeficit) |        |  | Total LDKSolar Co., Ltd.ShareholdersEquity |  |         | Non-controllingInterests |  |  | TotalEquity |   |  | Attributableto LDK SolarCo., Ltd.Shareholders |           |   | Attributableto
non-controllingInterests |  |         | Total | 
|                                                           |  | Number          |             |  | Amount                   |  |        |                  |  |  |                                     |   |  |                                      |        | 
|January 1, 2010                                            |  |                 | 129,771,643 |  |                          |  | 12,977 |                  |  |  | 744,988                             |   |  |                                      | 29,676 |  |                                             |  | 84,544  |                          |  |  | (32,760     | ) |  |                                               | 839,425   |   |                                         |  | 37,511  |       |  |  | 876,936   |   |  |  |         |  |  |  |       |  |  |  |         | 
|                                                           |  |                 |             |  |                          |  |        |                  |  |  |                                     |   |  |                                      |        |  |                                             |  |         |                          |  |  |             |   |  |                                               |           |   |                                         |  |         |       |  |  |           |   |  |  |         |  |  |  |       |  |  |  |         | 
|Net income                                                 |  |                 | 0           |  |                          |  | 0      |                  |  |  | 0                                   |   |  |                                      | 0      |  |                                             |  | 0       |                          |  |  | 290,797     |   |  |                                               | 290,797   |   |                                         |  | 5,670   |       |  |  | 296,467   |   |  |  | 290,797 |  |  |  | 5,670 |  |  |  | 296,467 | 
|Foreign currency translation adjustment, net of nil tax    |  |                 | 0           |  |                          |  | 0      |                  |  |  | 0                                   |   |  |                                      | 0      |  |                                             |  | 41,555  |                          |  |  | 0           |   |  |                                               | 41,555    |   |                                         |  | 945     |       |  |  | 42,500    |   |  |  | 41,555  |  |  |  | 945   |  |  |  | 42,500  | 
|                                                           |  |                 |             |  |                          |  |        |                  |  |  |                                     |   |  |                                      |        |  |                                             |  |         |                          |  |  |             |   |  |                                               |           |   |                                         |  |         |       |  |  |           |   |  |  |         |  |  |  |       |  |  |  |         | 
|Total comprehensive income                                 |  |                 |             |  |                          |  |        |                  |  |  |                                     |   |  |                                      |        |  |                                             |  |         |                          |  |  |             |   |  |                                               |           |   |                                         |  |         |       |  |  |           |   |  |  | 332,352 |  |  |  | 6,615 |  |  |  | 338,967 | 
|                                                           |  |                 |             |  |                          |  |        |                  |  |  |                                     |   |  |                                      |        |  |                                             |  |         |                          |  |  |             |   |  |                                               |           |   |                                         |  |         |       |  |  |           |   |  |  |         |  |  |  |       |  |  |  |         | 
|Appropriate to statutory reserve (Note 19)                 |  |                 | 0           |  |                          |  | 0      |                  |  |  | 0                                   |   |  |                                      | 28,599 |  |                                             |  | 0       |                          |  |  | (28,599     | ) |  |                                               | 0         |   |                                         |  | 0       |       |  |  | 0         |   |  |  |         |  |  |  |       |  |  |  |         | 
|Issuance of ordinary shares upon exercise of share options |  |                 | 1,532,712   |  |                          |  | 153    |                  |  |  | 6,815                               |   |  |                                      | 0      |  |                                             |  | 0       |                          |  |  | 0           |   |  |                                               | 6,968     |   |                                         |  | 0       |       |  |  | 6,968     |   |  |  |         |  |  |  |       |  |  |  |         | 
|Issuance of new shares, net of related expenses of US$461  |  |                 | 1,645,900   |  |                          |  | 165    |                  |  |  | 10,896                              |   |  |                                      | 0      |  |                                             |  | 0       |                          |  |  | 0           |   |  |                                               | 11,061    |   |                                         |  | 0       |       |  |  | 11,061    |   |  |  |         |  |  |  |       |  |  |  |         | 
|Purchase of non-controlling interests (Note 7)             |  |                 | 0           |  |                          |  | 0      |                  |  |  | (183,904                            | ) |  |                                      | 0      |  |                                             |  | 2,294   |                          |  |  | 0           |   |  |                                               | (181,610  | ) |                                         |  | (43,622 | )     |  |  | (225,232  | ) |  |  |         |  |  |  |       |  |  |  |         | 
|Disposal of subsidiaries                                   |  |                 | 0           |  |                          |  | 0      |                  |  |  | 0                                   |   |  |                                      | 0      |  |                                             |  | 0       |                          |  |  | 0           |   |  |                                               | 0         |   |                                         |  | (6      | )     |  |  | (6        | ) |  |  |         |  |  |  |       |  |  |  |         | 
|Share-based compensation (Note 24)                         |  |                 | 0           |  |                          |  | 0      |                  |  |  | 11,044                              |   |  |                                      | 0      |  |                                             |  | 0       |                          |  |  | 0           |   |  |                                               | 11,044    |   |                                         |  | 0       |       |  |  | 11,044    |   |  |  |         |  |  |  |       |  |  |  |         | 
|                                                           |  |                 |             |  |                          |  |        |                  |  |  |                                     |   |  |                                      |        |  |                                             |  |         |                          |  |  |             |   |  |                                               |           |   |                                         |  |         |       |  |  |           |   |  |  |         |  |  |  |       |  |  |  |         | 
|December 31, 2010                                          |  |                 | 132,950,255 |  |                          |  | 13,295 |                  |  |  | 589,839                             |   |  |                                      | 58,275 |  |                                             |  | 128,393 |                          |  |  | 229,438     |   |  |                                               | 1,019,240 |   |                                         |  | 498     |       |  |  | 1,019,738 |   |  |  |         |  |  |  |       |  |  |  |         | 
|                                                           |  |                 |             |  |                          |  |        |                  |  |  |                                     |   |  |                                      |        |  |                                             |  |         |                          |  |  |             |   |  |                                               |           |   |                                         |  |         |       |  |  |           |   |  |  |         |  |  |  |       |  |  |  |         | 

See accompanying notes to consolidated financial statements



F-7



---

##### Table of Contents

LDK SOLAR CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME (LOSS)  (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2009, 2010 AND 2011

(Amounts in US$ thousands, except share data)



|                                                                                         |  |                 |             |   |                          |  |        |                  |  |  |                                     |   |  |                                      |        |  |                                             |  |         |                          |  |  |             |   |  |                                              |           |   |                                         |  |        |       |  |  |           |   |  |  |          |   |  |  |     |   |  |  |          |  
|---------------------------------------------------------------------------------------- |  | --------------- | ----------- | - | ------------------------ |  | ------ | ---------------- |  |  | ----------------------------------- | - |  | ------------------------------------ | ------ |  | ------------------------------------------- |  | ------- | ------------------------ |  |  | ----------- | - |  | -------------------------------------------- | --------- | - | --------------------------------------- |  | ------ | ----- |  |  | --------- | - |  |  | -------- | - |  |  | --- | - |  |  | -------- | -
|                                                                                         |  |                 |             |   |                          |  |        |                  |  |  |                                     |   |  |                                      |        |  |                                             |  |         |                          |  |  |             |   |  |                                              |           |   | Comprehensive income (loss)             | 
|                                                                                         |  | Ordinary shares |             |   | AdditionalPaid-inCapital |  |        | StatutoryReserve |  |  | AccumulatedOtherComprehensiveIncome |   |  | RetainedEarnings(Accumulateddeficit) |        |  | Total LDKSolar Co., Ltd.ShareholdersEquity |  |         | Non-controllingInterests |  |  | TotalEquity |   |  | Attributableto LDKSolar Co.,Ltd.Shareholders |           |   | Attributableto
non-controllingInterests |  |        | Total | 
|                                                                                         |  | Number          |             |   | Amount                   |  |        |                  |  |  |                                     |   |  |                                      |        | 
|January 1, 2011                                                                          |  |                 | 132,950,255 |   |                          |  | 13,295 |                  |  |  | 589,839                             |   |  |                                      | 58,275 |  |                                             |  | 128,393 |                          |  |  | 229,438     |   |  |                                              | 1,019,240 |   |                                         |  | 498    |       |  |  | 1,019,738 |   |  |  |          |   |  |  |     |   |  |  |          |  
|                                                                                         |  |                 |             |   |                          |  |        |                  |  |  |                                     |   |  |                                      |        |  |                                             |  |         |                          |  |  |             |   |  |                                              |           |   |                                         |  |        |       |  |  |           |   |  |  |          |   |  |  |     |   |  |  |          |  
|Net loss (note 1)                                                                        |  |                 | 0           |   |                          |  | 0      |                  |  |  | 0                                   |   |  |                                      | 0      |  |                                             |  | 0       |                          |  |  | (620,869    | ) |  |                                              | (620,869  | ) |                                         |  | 393    |       |  |  | (620,476  | ) |  |  | (620,869 | ) |  |  | 393 |   |  |  | (620,476 | )
|Foreign currency translation adjustment, net of nil tax                                  |  |                 | 0           |   |                          |  | 0      |                  |  |  | 0                                   |   |  |                                      | 0      |  |                                             |  | 77,842  |                          |  |  | 0           |   |  |                                              | 77,842    |   |                                         |  | (25    | )     |  |  | 77,817    |   |  |  | 77,842   |   |  |  | (25 | ) |  |  | 77,817   |  
|Fair value changes in available-for-sale equity security, net of tax effect of US$ 2,218 |  |                 | 0           |   |                          |  | 0      |                  |  |  | 0                                   |   |  |                                      | 0      |  |                                             |  | 6,653   |                          |  |  | 0           |   |  |                                              | 6,653     |   |                                         |  | 0      |       |  |  | 6,653     |   |  |  | 6,653    |   |  |  | 0   |   |  |  | 6,653    |  
|                                                                                         |  |                 |             |   |                          |  |        |                  |  |  |                                     |   |  |                                      |        |  |                                             |  |         |                          |  |  |             |   |  |                                              |           |   |                                         |  |        |       |  |  |           |   |  |  |          |   |  |  |     |   |  |  |          |  
|Total comprehensive loss                                                                 |  |                 |             |   |                          |  |        |                  |  |  |                                     |   |  |                                      |        |  |                                             |  |         |                          |  |  |             |   |  |                                              |           |   |                                         |  |        |       |  |  |           |   |  |  | (536,374 | ) |  |  | 368 |   |  |  | (536,006 | )
|                                                                                         |  |                 |             |   |                          |  |        |                  |  |  |                                     |   |  |                                      |        |  |                                             |  |         |                          |  |  |             |   |  |                                              |           |   |                                         |  |        |       |  |  |           |   |  |  |          |   |  |  |     |   |  |  |          |  
|Appropriate to statutory reserve                                                         |  |                 | 0           |   |                          |  | 0      |                  |  |  | 0                                   |   |  |                                      | 17,505 |  |                                             |  | 0       |                          |  |  | (17,505     | ) |  |                                              | 0         |   |                                         |  | 0      |       |  |  | 0         |   |  |  |          |   |  |  |     |   |  |  |          |  
|Issuance of ordinary shares upon exercise of share options                               |  |                 | 1,051,717   |   |                          |  | 105    |                  |  |  | 4,640                               |   |  |                                      | 0      |  |                                             |  | 0       |                          |  |  | 0           |   |  |                                              | 4,745     |   |                                         |  | 0      |       |  |  | 4,745     |   |  |  |          |   |  |  |     |   |  |  |          |  
|Issuance of new shares, net of related expenses of US$8,536                              |  |                 | 13,800,000  |   |                          |  | 1,380  |                  |  |  | 161,204                             |   |  |                                      | 0      |  |                                             |  | 0       |                          |  |  | 0           |   |  |                                              | 162,584   |   |                                         |  | 0      |       |  |  | 162,584   |   |  |  |          |   |  |  |     |   |  |  |          |  
|Re-purchase of ordinary shares                                                           |  |                 | (18,657,487 | ) |                          |  | (1,865 | )                |  |  | (108,694                            | ) |  |                                      | 0      |  |                                             |  | 0       |                          |  |  | 0           |   |  |                                              | (110,559  | ) |                                         |  | 0      |       |  |  | (110,559  | ) |  |  |          |   |  |  |     |   |  |  |          |  
|Private placement of ordinary Shares                                                     |  |                 | 4,374,315   |   |                          |  | 437    |                  |  |  | 25,353                              |   |  |                                      | 0      |  |                                             |  | 0       |                          |  |  | 0           |   |  |                                              | 25,790    |   |                                         |  | 0      |       |  |  | 25,790    |   |  |  |          |   |  |  |     |   |  |  |          |  
|Acquisition of subsidiary                                                                |  |                 | 0           |   |                          |  | 0      |                  |  |  | 0                                   |   |  |                                      | 0      |  |                                             |  | 0       |                          |  |  | 0           |   |  |                                              | 0         |   |                                         |  | 13,071 |       |  |  | 13,071    |   |  |  |          |   |  |  |     |   |  |  |          |  
|Capital contribution from non-controlling interests                                      |  |                 | 0           |   |                          |  | 0      |                  |  |  | 0                                   |   |  |                                      | 0      |  |                                             |  | 0       |                          |  |  | 0           |   |  |                                              | 0         |   |                                         |  | 940    |       |  |  | 940       |   |  |  |          |   |  |  |     |   |  |  |          |  
|Share-based compensation (Note 24)                                                       |  |                 | 0           |   |                          |  | 0      |                  |  |  | 9,796                               |   |  |                                      | 0      |  |                                             |  | 0       |                          |  |  | 0           |   |  |                                              | 9,796     |   |                                         |  | 131    |       |  |  | 9,927     |   |  |  |          |   |  |  |     |   |  |  |          |  
|Recognition of redeemable non-controlling interests (Note 8)                             |  |                 | 0           |   |                          |  | 0      |                  |  |  | 69,284                              |   |  |                                      | 0      |  |                                             |  | 0       |                          |  |  | 0           |   |  |                                              | 69,284    |   |                                         |  | 0      |       |  |  | 69,284    |   |  |  |          |   |  |  |     |   |  |  |          |  
|Accretion to redemption value of redeemable non-controlling interests (Note 8)           |  |                 | 0           |   |                          |  | 0      |                  |  |  | 0                                   |   |  |                                      | 0      |  |                                             |  | 0       |                          |  |  | (34,590     | ) |  |                                              | (34,590   | ) |                                         |  | 0      |       |  |  | (34,590   | ) |  |  |          |   |  |  |     |   |  |  |          |  
|December 31, 2011                                                                        |  |                 | 133,518,800 |   |                          |  | 13,352 |                  |  |  | 751,422                             |   |  |                                      | 75,780 |  |                                             |  | 212,888 |                          |  |  | (443,526    | ) |  |                                              | 609,916   |   |                                         |  | 15,008 |       |  |  | 624,924   |   |  |  |          |   |  |  |     |   |  |  |          |  
|                                                                                         |  |                 |             |   |                          |  |        |                  |  |  |                                     |   |  |                                      |        |  |                                             |  |         |                          |  |  |             |   |  |                                              |           |   |                                         |  |        |       |  |  |           |   |  |  |          |   |  |  |     |   |  |  |          |  

Note 1: Exclude earnings attributable to redeemable non-controlling interests of US$11,522.

See accompanying notes to consolidated financial statements



F-8



---

##### Table of Contents

LDK SOLAR CO., LTD . AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2009, 2010 AND 2011

(Amounts in US$ thousands)



|                                                                                                     |  |                            |          |   |                           |  |          |                           |  |  |          |  
|---------------------------------------------------------------------------------------------------- |  | -------------------------- | -------- | - | ------------------------- |  | -------- | ------------------------- |  |  | -------- | -
|                                                                                                     |  | YearendedDecember 
31,2009 |          |   | YearendedDecember 31,2010 |  |          | YearendedDecember 31,2011 | 
|Cash flows from operating activities:                                                                |  |                            |          |   |                           |  |          |                           |  |  |          |  
|Net (loss) income                                                                                    |  |                            | (233,996 | ) |                           |  | 296,467  |                           |  |  | (608,954 | )
|Adjustments to reconcile net (loss) income to net cash provided by operating activities:             |  |                            |          |   |                           |  |          |                           |  |  |          |  
|Depreciation and amortization                                                                        |  |                            | 70,565   |   |                           |  | 158,696  |                           |  |  | 234,068  |  
|Provisions for doubtful recovery of prepayments to suppliers                                         |  |                            | 17,874   |   |                           |  | 2,338    |                           |  |  | 66,225   |  
|Provisions for doubtful recovery of accounts receivable                                              |  |                            | 4,551    |   |                           |  | 1,534    |                           |  |  | 108,090  |  
|Inventory write-downs                                                                                |  |                            | 180,213  |   |                           |  | 6,113    |                           |  |  | 305,175  |  
|Impairment loss on property, plant and equipment                                                     |  |                            | 1,999    |   |                           |  | 0        |                           |  |  | 0        |  
|Deferred income tax (benefit) expense                                                                |  |                            | (35,049  | ) |                           |  | 31,908   |                           |  |  | (31,576  | )
|Equity in (income) loss of associates and a jointly-controlled entity                                |  |                            | 3,343    |   |                           |  | (3,570   | )                         |  |  | 787      |  
|Share-based compensation                                                                             |  |                            | 14,212   |   |                           |  | 11,044   |                           |  |  | 9,927    |  
|Amortization of debt issuance costs and debt discounts                                               |  |                            | 9,456    |   |                           |  | 10,174   |                           |  |  | 5,470    |  
|Gains on repurchase of convertible senior notes and RMB-denominated US$-settled senior notes         |  |                            | 0        |   |                           |  | 0        |                           |  |  | (4,831   | )
|Provision for loss on firm purchase commitments                                                      |  |                            | 1,120    |   |                           |  | 0        |                           |  |  | 27,637   |  
|Others                                                                                               |  |                            | 0        |   |                           |  | (364     | )                         |  |  | 22       |  
|Changes in operating assets and liabilities, net of the effect of acquisition:                       |  |                            |          |   |                           |  |          |                           |  |  |          |  
|Pledged bank deposits related to purchase of inventory and other operating activities                |  |                            | (11,796  | ) |                           |  | (106,265 | )                         |  |  | (251,939 | )
|Trade accounts receivable and bills receivable                                                       |  |                            | (124,229 | ) |                           |  | (166,676 | )                         |  |  | (253,821 | )
|Inventories                                                                                          |  |                            | (5,604   | ) |                           |  | (44,759  | )                         |  |  | (443,550 | )
|Prepayments to suppliers                                                                             |  |                            | 20,037   |   |                           |  | (59,753  | )                         |  |  | (39,628  | )
|Other assets                                                                                         |  |                            | 37,297   |   |                           |  | 5,679    |                           |  |  | (1,110   | )
|Other financial assets                                                                               |  |                            | (7,273   | ) |                           |  | 6,603    |                           |  |  | 670      |  
|Trade accounts payable and bills payable                                                             |  |                            | 154,154  |   |                           |  | 390,744  |                           |  |  | 594,339  |  
|Advance payments from customers                                                                      |  |                            | (138,542 | ) |                           |  | 18,966   |                           |  |  | (224     | )
|Income tax payable                                                                                   |  |                            | 10,438   |   |                           |  | 17,260   |                           |  |  | (60,730  | )
|Accrued expenses and other payables                                                                  |  |                            | 50,882   |   |                           |  | 14,029   |                           |  |  | 48,017   |  
|Amount due from related parties                                                                      |  |                            | (37,615  | ) |                           |  | (6,379   | )                         |  |  | 6,777    |  
|Amount due to related parties                                                                        |  |                            | 36,614   |   |                           |  | (23,885  | )                         |  |  | 2,345    |  
|Other financial liabilities                                                                          |  |                            | (37      | ) |                           |  | 89       |                           |  |  | (154     | )
|                                                                                                     |  |                            |          |   |                           |  |          |                           |  |  |          |  
|Net cash provided by (used in) operating activities                                                  |  |                            | 18,614   |   |                           |  | 559,993  |                           |  |  | (286,968 | )
|                                                                                                     |  |                            |          |   |                           |  |          |                           |  |  |          |  
|Cash flows from investing activities:                                                                |  |                            |          |   |                           |  |          |                           |  |  |          |  
|Purchase of land use rights                                                                          |  |                            | (24,591  | ) |                           |  | (89,416  | )                         |  |  | (90,421  | )
|Purchase of property, plant and equipment, including deposits and cash paid for interest capitalized |  |                            | (749,979 | ) |                           |  | (577,132 | )                         |  |  | (982,352 | )
|Pledged bank deposit related to purchase of property, plant and equipment                            |  |                            | (65,761  | ) |                           |  | (293,227 | )                         |  |  | (41,662  | )
|Release of pledged bank deposit related to purchase of property, plant and equipment                 |  |                            | 93,113   |   |                           |  | 98,575   |                           |  |  | 236,580  |  
|Cash received for disposal of a subsidiary                                                           |  |                            | 0        |   |                           |  | 559      |                           |  |  | 0        |  
|Cash paid for investment in an associate and a jointly-controlled entity                             |  |                            | (74,460  | ) |                           |  | 0        |                           |  |  | (476     | )
|Capital repayment from a jointly-controlled entity                                                   |  |                            | 24,867   |   |                           |  | 0        |                           |  |  | 0        |  
|Cash paid for short-term investment                                                                  |  |                            | 0        |   |                           |  | (68,477  | )                         |  |  | 0        |  
|Proceeds from disposal of short-term investment                                                      |  |                            | 0        |   |                           |  | 0        |                           |  |  | 68,947   |  
|Cash paid for acquisition of a subsidiary, less cash acquired                                        |  |                            | (504     | ) |                           |  | 0        |                           |  |  | (6,660   | )
|                                                                                                     |  |                            |          |   |                           |  |          |                           |  |  |          |  
|Net cash used in investing activities                                                                |  |                            | (797,315 | ) |                           |  | (929,118 | )                         |  |  | (816,044 | )
|                                                                                                     |  |                            |          |   |                           |  |          |                           |  |  |          |  



See accompanying notes
to consolidated financial statements



F-9



---

##### Table of Contents

LDK SOLAR CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW  (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2009, 2010 AND 2011

(Amounts in US$
thousands)



|                                                                                                                                                 |  |                            |            |   |                           |  |            |                           |  |  |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------- | ---------- | - | ------------------------- |  | ---------- | ------------------------- |  |  | ---------- | -
|                                                                                                                                                 |  | YearendedDecember 
31,2009 |            |   | YearendedDecember 31,2010 |  |            | YearendedDecember 31,2011 | 
|Cash flows from financing activities:                                                                                                            |  |                            |            |   |                           |  |            |                           |  |  |            |  
|Pledged bank deposits used for bank borrowings                                                                                                   |  |                            | (2,197     | ) |                           |  | (136,798   | )                         |  |  | (56,168    | )
|Pledged bank deposits released upon repayment of borrowings and payable due to a customer                                                        |  |                            | 0          |   |                           |  | 13,454     |                           |  |  | 92,889     |  
|Proceeds from new loans and borrowings                                                                                                           |  |                            | 2,251,631  |   |                           |  | 2,733,126  |                           |  |  | 3,650,798  |  
|Repayment of loans and borrowings                                                                                                                |  |                            | (1,684,219 | ) |                           |  | (2,049,569 | )                         |  |  | (2,921,358 | )
|Repayment of payable due to a customer                                                                                                           |  |                            | 0          |   |                           |  | (131,616   | )                         |  |  | 0          |  
|Repayment of loans and advances from related parties                                                                                             |  |                            | (2,195     | ) |                           |  | 0          |                           |  |  | 0          |  
|Proceeds from issuance of ordinary shares                                                                                                        |  |                            | 111,800    |   |                           |  | 18,029     |                           |  |  | 167,329    |  
|Proceeds from private placements of ordinary shares                                                                                              |  |                            | 0          |   |                           |  | 0          |                           |  |  | 25,790     |  
|Payment for repurchase of ordinary shares                                                                                                        |  |                            | 0          |   |                           |  | 0          |                           |  |  | (110,559   | )
|Payment of expenses relating to issuance of ordinary shares and convertible senior notes, RMB-denominated US$-settled senior
notes and PRC notes |  |                            | 0          |   |                           |  | (4,894     | )                         |  |  | (6,769     | )
|Payment of convertible senior notes redemption                                                                                                   |  |                            | 0          |   |                           |  | (7,719     | )                         |  |  | (364,765   | )
|Proceeds from issuance of RMB denominated US$-settled senior notes                                                                               |  |                            | 0          |   |                           |  | 0          |                           |  |  | 258,657    |  
|Payment for repurchase of RMB denominated US$-settled senior notes                                                                               |  |                            | 0          |   |                           |  | 0          |                           |  |  | (8,223     | )
|Proceeds from issuance of short-term and long-term PRC notes                                                                                     |  |                            | 0          |   |                           |  | 0          |                           |  |  | 142,837    |  
|Proceeds from sale-leaseback transaction                                                                                                         |  |                            | 43,935     |   |                           |  | 0          |                           |  |  | 95,526     |  
|Receipt of deposit for capital leases                                                                                                            |  |                            | 0          |   |                           |  | 0          |                           |  |  | 7,935      |  
|Payment of deposit for capital leases                                                                                                            |  |                            | (6,598     | ) |                           |  | 0          |                           |  |  | (14,061    | )
|Repayment of capital lease obligations                                                                                                           |  |                            | (21,314    | ) |                           |  | (38,299    | )                         |  |  | (52,393    | )
|Proceeds for sale of non-controlling interests in a subsidiary, net of direct incremental costs                                                  |  |                            | 216,414    |   |                           |  | 0          |                           |  |  | 0          |  
|Purchase of non-controlling interests                                                                                                            |  |                            | 0          |   |                           |  | (215,326   | )                         |  |  | (9,906     | )
|Capital contribution from non-controlling interests                                                                                              |  |                            | 58         |   |                           |  | 0          |                           |  |  | 940        |  
|Proceeds from issuance of preferred shares by a subsidiary                                                                                       |  |                            | 0          |   |                           |  | 0          |                           |  |  | 240,000    |  
|                                                                                                                                                 |  |                            |            |   |                           |  |            |                           |  |  |            |  
|Net cash provided by financing activities                                                                                                        |  |                            | 907,315    |   |                           |  | 180,388    |                           |  |  | 1,138,499  |  
|                                                                                                                                                 |  |                            |            |   |                           |  |            |                           |  |  |            |  
|Effect of foreign currency exchange rate changes on cash and cash equivalents                                                                    |  |                            | 624        |   |                           |  | 6,103      |                           |  |  | 6,458      |  
|                                                                                                                                                 |  |                            |            |   |                           |  |            |                           |  |  |            |  
|Net increase (decrease) in cash and cash equivalents                                                                                             |  |                            | 129,238    |   |                           |  | (182,634   | )                         |  |  | 41,945     |  
|Cash and cash equivalents at beginning of year                                                                                                   |  |                            | 255,523    |   |                           |  | 384,761    |                           |  |  | 202,127    |  
|                                                                                                                                                 |  |                            |            |   |                           |  |            |                           |  |  |            |  
|Cash and cash equivalents at end of year                                                                                                         |  |                            | 384,761    |   |                           |  | 202,127    |                           |  |  | 244,072    |  
|                                                                                                                                                 |  |                            |            |   |                           |  |            |                           |  |  |            |  
|Supplemental disclosures of cash flow information:                                                                                               |  |                            |            |   |                           |  |            |                           |  |  |            |  
|Interest payments, net of amount capitalized                                                                                                     |  |                            | 37,422     |   |                           |  | 85,328     |                           |  |  | 191,047    |  
|                                                                                                                                                 |  |                            |            |   |                           |  |            |                           |  |  |            |  
|Income tax paid                                                                                                                                  |  |                            | 4,238      |   |                           |  | 16,478     |                           |  |  | 95,152     |  
|                                                                                                                                                 |  |                            |            |   |                           |  |            |                           |  |  |            |  
|Supplemental disclosures of non-cash investing and financing transaction:                                                                        |  |                            |            |   |                           |  |            |                           |  |  |            |  
|Payable for purchase of property, plant and equipment                                                                                            |  |                            | 469,321    |   |                           |  | 404,557    |                           |  |  | 478,197    |  
|                                                                                                                                                 |  |                            |            |   |                           |  |            |                           |  |  |            |  
|Payable for capital lease                                                                                                                        |  |                            | 0          |   |                           |  | 0          |                           |  |  | 82,204     |  
|                                                                                                                                                 |  |                            |            |   |                           |  |            |                           |  |  |            |  
|Payable due to a customer                                                                                                                        |  |                            | 244,085    |   |                           |  | 0          |                           |  |  | 0          |  
|                                                                                                                                                 |  |                            |            |   |                           |  |            |                           |  |  |            |  
|Payable for purchase of non-controlling interests                                                                                                |  |                            | 0          |   |                           |  | 9,906      |                           |  |  | 0          |  
|                                                                                                                                                 |  |                            |            |   |                           |  |            |                           |  |  |            |  

See accompanying notes to consolidated financial statements



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##### Table of Contents

LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009, 2010 AND 2011

(Amounts in US$ thousands, except share and per share data)



|(1) | PRINCIPAL ACTIVITIES, ORGANIZATION AND BASIS OF PRESENTATION
|--- | ------------------------------------------------------------

Principal activities and organization

LDK Solar Co., Ltd. (the Company or LDK) is incorporated in the Cayman Islands and was established on May 1,
2006. LDK and its subsidiaries (collectively, the Group) are principally engaged in the design, development, manufacturing and marketing of photovoltaic (PV) products and development of power plant projects in the
Peoples Republic of China (PRC) and overseas market.

Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles
(U.S. GAAP).

The accompanying consolidated financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the
Companys ability to operate profitably, to generate cash flows from operations, and the Companys ability to pursue financing arrangements to support its working capital requirements.

As of December 31, 2011, the Group had a working capital deficit (total consolidated current liabilities exceeding total consolidated
current assets) of US$2,099.4 million. As of the same day, the Group had cash and cash equivalents of US$244.1 million, most of which are held by the Companys subsidiaries in China with 89.2% of the Groups short term bank borrowings,
current installments of its long-term debt and Short-term PRC Notes totaling US$1,869.6 million residing with these subsidiaries. Taking into account of the Groups unaudited financial results for the fourth quarter of 2011, the
Consolidated Fixed Charge Coverage Ratio, as defined in the indenture governing the RMB-denominated US$-settled senior notes, has been negatively impacted as a result of a significant reduction of the aggregate amount of the
Consolidated EBITDA, as defined in the indenture governing the RMB-denominated US$-settled senior notes, for the four most recent full fiscal quarters, while the Consolidated Fixed Charges, as defined in the indenture
governing the RMB-denominated US$-settled senior notes, for such four-quarter period, have increased. As a result, the Group will not be able to incur any additional indebtedness until the Consolidated Fixed Charge Coverage Ratio
significantly improves on the basis of the four most recent full fiscal quarters unless such indebtedness falls into one of the permitted exceptions or exemptions, such as re-financing existing indebtedness. These factors raise substantial doubt as
to the Groups ability to continue as a going concern. However, management believes it has developed a liquidity plan, as summarized below, that, if executed successfully, will provide sufficient liquidity to meet the Groups obligations
as they become due for a reasonable period of time.



| |  |  | Delaying in capital expenditure and improvement in working capital management
| | - |  | -----------------------------------------------------------------------------

The Group has been negotiating with a number of vendors, including suppliers of equipment and construction materials, for them to provide
the Group with lower prices or more favorable payment terms in order to achieve cost savings. The Group has decided to postpone a substantial portion of its planned capital expenditures for the next twelve months. In addition, the Group has
implemented measures to more closely monitor the inventory levels and the collection of receivable balances with an aim to improving liquidity.



| |  |  | Bank Financing
| | - |  | --------------

To improve liquidity, the Group has successfully negotiated with certain banks and will continue to negotiate with other banks to obtain revolving bank facilities to ensure the Groups bank
borrowings can be



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



renewed on an on-going basis. From January 1, 2012 to April 30, 2012, the Group has obtained additional secured and unsecured short-term bank borrowings of US$924.3 million with interest rates
ranging from 2.484% to 9.500% and secured and unsecured long-term bank borrowings of US$45.3 million with interest rates ranging from 5.900% to 7.050% (subject to repricing). The Group also repaid short-term borrowings and current installments of
long-term borrowings totaling US$937.0 million during the period from January 1, 2012 to April 30, 2012. The Groups management believes that the Group will be able to obtain additional facilities from the banks so that, together with
the Groups existing bank revolving facilities, the Group will be able to refinance any bank loans due for repayment within the next 12 months to the extent necessary.



| |  |  | Refund of prepaid land use rights and disposal of properties
| | - |  | ------------------------------------------------------------

In view of the postponement in expansion, the Group has signed letters of intent with local governmental authorities for the return of its
prepayments for land use rights. In addition, the Group had entered into several letters of intent to sell some of its real properties, mainly staff quarters and the corresponding land use right, to local government authorities.



| |  |  | Additional equity offering by the Company
| | - |  | -----------------------------------------

The Company intends to raise funds through equity offerings, including private placements and at-the-market offerings, when market conditions permit and such issuances are in the overall interests of the
Groups business.

While the Groups management believes that the measures as described in the above liquidity plan
will be adequate to satisfy its liquidity requirements for the next 12 months, there is no assurance that the liquidity plan will be successfully implemented. Failure to successfully implement the liquidity plan may have a material adverse effect on
its business, results of operations and financial position, and may materially adversely affect its ability to continue as a going concern. The consolidated financial statements do not include any adjustments related to the recoverability and
classification of recorded assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Group be unable to continue as a going concern. Significant difficulties in the Groups operations or
a deterioration of the Groups financial condition could also result in the exercise of broadly drafted provisions in some of the Groups loan agreements that give the Groups lenders the right to accelerate the payment of the loans
under such circumstances. Such acceleration could potentially trigger cross-default provisions in other financing agreements, including the indentures relating to the Convertible Senior Notes and RMB-denominated US$-settled senior notes if the Group
is unable to repay these loans upon acceleration.



|(2) | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|--- | ------------------------------------------



|(a) | Principles of consolidation
|--- | ---------------------------

The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated upon consolidation.
For consolidated subsidiaries where the Groups ownership in the subsidiary is less than 100%, the equity interest not held by the Group is shown as non-controlling interests. The Company has no involvement with variable interest entities. The
Company accounts for investments over which it has significant influence but not a controlling financial interest using the equity method of accounting.



|(b) | Use of estimates
|--- | ----------------

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management of the Group to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates, including those related to the



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



classification and realization of inventories, trade accounts receivable, prepayments to suppliers and deferred tax assets, estimated useful lives and residual values of long-lived assets, the
recoverability of the carrying values of long-lived assets, the determination of fair values of financial instruments and share-based instruments, provision for loss on firm purchase commitment and assessments about potential tax uncertainties and
contingent liabilities. Changes in facts and circumstances may result in revised estimates. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions.



|(c) | Foreign currency transactions and translations
|--- | ----------------------------------------------

The functional currency of the Company, LDK Solar USA Inc. (LDK USA), LDK Solar Technology USA Inc. (LDK UST), Solar Power Inc. (SPI), LDK Silicon & Chemical
Technology Co., Ltd. (LDK SCT), LDK Silicon Holding Co., Limited (LDKSH), LDK Solar International Company Limited (LDK International), LDK Solar Hi-tech (Hong Kong) Co., Ltd. (LDK HKT), LDK PV Tech
(Hong Kong) Co., Ltd. (LDK HKPVT) and LDK Solar Canada Inc. (LDK Canada) is the United States dollar (US$). The functional currency of those subsidiaries located in the PRC and Europe are Renminbi
(RMB) and EURO (EUR) respectively. Transactions denominated in foreign currencies are re-measured into the functional currency at the rates of exchange prevailing when the transactions occur. Monetary assets and
liabilities denominated in foreign currencies are remeasured into the functional currency at rates of exchange in effect at the balance sheet dates. Exchange gains and losses are included in the consolidated statements of operations.

The Groups reporting currency is the U.S. dollar. Accordingly assets and liabilities of subsidiaries, whose functional currency is
not the U.S. dollar , are translated into US$ using exchange rates in effect at each period end, and revenues and expenses are translated into RMB at average rates prevailing during the year. Gains and losses resulting from the translations of the
financial statements of these subsidiaries into US dollars are recognized in other comprehensive income (loss).



|(d) | Commitments and contingencies
|--- | -----------------------------

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of
the assessment can be reasonably estimated. Legal and other fees incurred in connection with loss contingencies are expensed as incurred. Legal cost expenses are reported net of expected insurance recoveries.



|(e) | Cash and cash equivalents
|--- | -------------------------

Cash and cash equivalents consist of cash at bank and on hand and certificates of deposit with an initial term of less than three months when purchased, and which are unrestricted as to withdrawal and
use.



|(f) | Pledged bank deposits
|--- | ---------------------

Pledged bank deposits represent amounts held by banks, which are not available for the Groups use, as security for issuance of letters of credit relating to purchase of raw materials and production
equipments, letters of guarantee or bank borrowings. Upon maturity of the letters of credit, letters of guarantee and repayment of bank borrowings, the deposits are released by the bank and become available for general use by the Group. Pledged bank
deposits are reported within cash flows from operating, investing or financing



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



activities in the consolidated statements of cash flows with reference to the purpose of making the pledge. Pledged bank deposits, which matures twelve months after the balance sheet date are
classified as non-current assets in the consolidated balance sheets.



|(g) | Trade accounts receivable
|--- | -------------------------

Trade accounts receivable are recorded at the amount due from customers for the sales of products sold and services rendered. Amounts collected on trade accounts receivable are included in net cash
provided by (used in) operating activities in the consolidated statements of cash flows. An allowance for doubtful accounts is provided based on the managements best estimate of the amount of probable credit losses in the Groups existing
accounts receivable. Management assesses the recoverability of accounts receivable by analyzing specific customer accounts that have known or potential recoverability issues. The Group does not have any off-balance-sheet credit exposure related to
its customers.

The following table presents the movement of the allowance for doubtful accounts:



|                                            |  |                  |       |  |                  |  |       |                  |  |  |         |  
|------------------------------------------- |  | ---------------- | ----- |  | ---------------- |  | ----- | ---------------- |  |  | ------- | -
|                                            |  | December 31,2009 |       |  | December 31,2010 |  |       | December 31,2011 | 
|Beginning Balance                           |  |                  | 0     |  |                  |  | 4,551 |                  |  |  | 6,226   |  
|Additions                                   |  |                  | 4,551 |  |                  |  | 1,690 |                  |  |  | 108,925 |  
|Reversal of allowance for doubtful accounts |  |                  | 0     |  |                  |  | (156  | )                |  |  | (835    | )
|Write-off of accounts receivable charged    |  |                  | 0     |  |                  |  | 0     |                  |  |  | 0       |  
|Foreign currency exchange rate effect       |  |                  | 0     |  |                  |  | 141   |                  |  |  | 2,972   |  
|                                            |  |                  |       |  |                  |  |       |                  |  |  |         |  
|Ending balance                              |  |                  | 4,551 |  |                  |  | 6,226 |                  |  |  | 117,288 |  
|                                            |  |                  |       |  |                  |  |       |                  |  |  |         |  



|(h) | Inventories
|--- | -----------

Inventories are stated at the lower of cost or market. Cost is determined using the weighted average method. Inventories expected to be
utilized for production and sold after twelve months are classified as non-current assets.

On occasion, the Company enters
into firm purchase commitments to acquire materials from its suppliers. A firm purchase commitment represents an agreement that specifies all significant terms, including the price and timing of the transactions, and includes a disincentive for
nonperformance that is sufficiently large to make performance probable. This disincentive is generally in the form of a take or pay provision which requires the Company to pay for committed volumes regardless of whether the Company
actually acquires the materials. The Company evaluates these agreements and records a loss, if any, on firm purchase commitments using the same lower of cost or market approach as that used to value inventory. The Company recognized a provision for
loss on firm purchase commitment of US$ 1,120, US$ nil and US$ 27,637 during the years ended December 31, 2009, 2010 and 2011, respectively, which is included in cost of goods sold in the Groups consolidated statements of operations.



|(i) | Property, plant and equipment, net
|--- | ----------------------------------

Property, plant and equipment are stated at cost. Equipment under capital leases are initially stated at the present value of minimum lease payments. Ordinary maintenance and repairs are charged to
expense as incurred, and replacements and betterments are capitalized.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



Depreciation, including amortization of equipment held under capital lease, is
calculated using the straight-line method over the estimated useful lives of the assets and their respective estimated residual values. The estimated useful lives of the Groups property, plant and equipment are as follows:



|                                        |  |  |                 | 
|--------------------------------------- |  |  | --------------- | 
|Buildings                               |  |  | 30 years        | 
|Plant and machinery                     |  |  | 10 and 15 years | 
|Furniture, fixture and office equipment |  |  | 5 years         | 
|Motor vehicles                          |  |  | 6 years         | 



|(j) | Land use rights
|--- | ---------------

Land use rights represent fees paid to obtain the right to occupy, use, develop, lease, or transfer a piece of land in the PRC, and are
charged to expense on a straight-line basis over the respective periods of the rights granted ranging from 49.5 to 50 years in the PRC. Amortization of land use rights is recognized in general and administrative expenses, and amounted to US$2,725,
US$3,869 and US$5,546 for the years ended December 31, 2009, 2010 and 2011, respectively.



|(k) | Investments in associates and a jointly-controlled entity
|--- | ---------------------------------------------------------

Investments in entities where the Group does not have a controlling financial interest, but has the ability to exercise significant influence over the operating and financial policies of the investee, are
accounted for using the equity method of accounting. Jointly-controlled entities are those in which the control is held jointly by the Company and one or more partners. Investments in jointly-controlled entities are recognized under the equity
method from the date the joint control is acquired. Under the equity method of accounting, the Groups share of the investees results of operations is included in other income (expense) in the Groups consolidated statements of
operations.



|(l) | Available-for-sale investments
|--- | ------------------------------

Investments designated as available-for-sale are reported at fair value, with unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income. Purchases and sales of
available-for-sale investments are included in investing activities in the consolidated statements of cash flows. At each period end date, investments are evaluated for impairment, and whether any such impairment is considered temporary or other
than temporary. Unrealized losses are recorded in other income and expense when a decline in fair value is determined to be other-than-temporary. Realized gains and losses are accounted for on the specific identification method. We also review our
ability and intent to liquidate our investments within the next 12 month operating cycle to determine the appropriate short or long-term classification. Our ability to liquidate is determined based on a review of current and short-term credit
and capital market conditions and the financial condition and near term prospects of the issuer.



|(m) | Impairment of long-lived assets
|--- | -------------------------------

Property, plant and equipment and purchased intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an
asset exceeds its estimated future cash flows, an impairment charge is recognized



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is determined through various valuation techniques including discounted cash flow models,
quoted market values and third party independent appraisals, as considered necessary.

Assets to be disposed of are reported at
the lower of carrying amount or fair value less costs to sell, and are no longer depreciated.



|(n) | Fair value measurement
|--- | ----------------------

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on
assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy
distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:



| |  |  | Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the
measurement date.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or
indirectly, for substantially the full term of the asset or liability.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available,
thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See note 29 to the consolidated financial statements.



|(o) | Derivative financial instruments
|--- | --------------------------------

The Group enters into derivative financial instruments such as foreign exchange forward contracts. In addition, the preferred shares issued by a subsidiary included an embedded derivative that is
separately accounted for as a derivative. See Note 8 to the consolidated financial statements.

The Group recognizes all
derivative instruments as either assets or liabilities in the balance sheet at their respective fair values. Changes in the fair value are recognized in earnings.



|(p) | Revenue recognition
|--- | -------------------

Sales represent revenue recognized for products sold and the delivery of services. The Group recognizes revenue from the sale of silicon
wafers, modules and other materials when the products are delivered and title transfers, the risks and rewards of ownership have been transferred to the customer, the fee is fixed or determinable and collection of the related receivable is
reasonably assured. For sales in the PRC, the majority of the Groups contracts provide that products are considered delivered when they reach customers destination and are signed-for by the customer. For export sales, products are
considered delivered when the goods have passed over the ships rail at the named port of shipment. The customer bears all costs and risks of loss or damage to the goods from that point.

Generally, no warranty is provided for silicon wafers sold to customers. Sales returns rights range from 7 to 15 days after the product
has been sold. The Group conducts rigorous quality control and testing procedures to ensure that the finished wafers meet the standard quality requirements before the product is shipped.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



Management estimates the amount of sales returns and the cost of replacement products based on historical return information.

The Group recognizes revenue for processing services when the services are completed, which is generally evidenced by delivery of
processed products to the customers.

The Group recognizes revenue from fixed price construction contracts using the
percentage-of-completion method of accounting. Under this method, PV projects revenue arising from fixed price construction contracts is recognized as work is performed based on the percentage of incurred costs to estimated total forecasted costs
utilizing the most recent estimates of forecasted costs.

The Group recognizes revenue for solar energy power project at the
time a sale arrangement with a third party is executed, delivery has occurred, sales price is fixed or determinable and the contract amount is collectible.

In the PRC, VAT of 17% on invoice amount is collected in respect of the sales of goods on behalf of tax authorities. VAT collected from customers, net of VAT paid for purchases, is recorded as a liability
in the consolidated balance sheets until it is paid to the authorities.



|(q) | Buy/sell arrangements
|--- | ---------------------

The Group enters into raw materials purchases transactions and finished goods sales transactions with the same counterparty. Each of these sales and purchases transactions with the same counterparty are
not legally contingent upon each other. These sales and purchases transactions were not conducted simultaneously and there was no direct linkage between any one or group of buy transactions with any one or group of sell transactions. There was also
no correlation between the value of raw materials received and the value of finished goods delivered pursuant to the contractual arrangement. Each buy or sell transaction was separately documented, transacted at the fair market value prevailing at
that time and gross-cash settled, with no specific legal right to offset in respect of the obligations between counterparties. These buy and sell transactions with the same counterparty were recognized and presented separately as sales and cost of
goods sold in the Groups consolidated financial statements. Raw materials purchases and finished goods sales with the same counterparty were recorded at their respective contract price, which represented their prevailing fair market value.



|(r) | Warranty cost
|--- | -------------

The
Group provides warranties up to 25 years for modules. Due to limited warranty claim history, the Group estimates warranty costs based on an assessment of its competitors history while incorporating estimates of failure rates through its
quality review. Consequently, the Group accrues the equivalent of 1% of gross revenues as a warranty liability to accrue the estimated cost of its warranty obligations. Actual warranty costs incurred for warranty claims by customers are recorded and
charged against the accrued warranty liability. To the extent that actual warranty costs differs from the estimates, the Group will prospectively revise its accrual rate. The Group commenced module sales in year 2009 and recognized warranty expenses
of US$752, US$6,344 and US$6,340 in cost of goods sold for the years ended December 31, 2009, 2010 and 2011, respectively. As of December 31, 2010 and 2011, the Groups accrued warranty costs were US$7,096 and US$14,978, respectively.
The warranty costs were classified as current and non-current liabilities under accrued expenses and other payables and other liabilities respectively, to reflect our estimate of the timing of when the warranty expenditures will likely be made.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



|(s) | Shipping and handling
|--- | ---------------------

Costs to ship products to customers are included in selling expenses in the consolidated statements of operations. Amounts billed to customers, if any, to cover shipping and handling are included in net
sales. Cost to ship products to customers were US$1,340, US$14,265 and US$17,911 for the years ended December 31, 2009, 2010 and 2011, respectively.



|(t) | Research and development costs
|--- | ------------------------------

Research and development costs are expensed as incurred.



|(u) | Advertising expenses
|--- | --------------------

Advertising expenses are charged to the consolidated statements of operations in the period incurred and are included in selling expenses. The Group incurred advertising expenses of US$ 1,804, US$ 3,186
and US$5,273 for the years ended December 31, 2009, 2010 and 2011, respectively.



|(v) | Government subsidy
|--- | ------------------

Government subsidies are recognized when received and when all the conditions for their receipt have been met. Subsidies that compensate
the Group for expenses incurred are recognized as a reduction of expenses in the consolidated statements of operations. Subsidies that are not associated with expenses are recognized as other income. Subsidies for the acquisition of equipment are
recorded as a liability until earned and then offset against the related capital assets. Subsidies for obtaining the rights to use land are recorded as a liability until earned and then amortized over the land use right period as a reduction of the
amortization charges of the related land use rights.

The Group received government subsidies of US$103,572, US$45,775 and
US$109,000 for the years ended December 31, 2009, 2010 and 2011, respectively, and recognized the subsidies as follows:



|                                               |  |                  |         |  |                  |  |        |                  |  |  |         | 
|---------------------------------------------- |  | ---------------- | ------- |  | ---------------- |  | ------ | ---------------- |  |  | ------- | 
|                                               |  | December 31,2009 |         |  | December 31,2010 |  |        | December 31,2011 | 
|Reduction to cost of goods sold                |  |                  | 4,776   |  |                  |  | 33,317 |                  |  |  | 65,855  | 
|Reduction to selling and G&A expenses          |  |                  | 0       |  |                  |  | 323    |                  |  |  | 235     | 
|Other income                                   |  |                  | 26,927  |  |                  |  | 5,625  |                  |  |  | 33,698  | 
|Reduction to acquisition cost of the equipment |  |                  | 4,673   |  |                  |  | 2,723  |                  |  |  | 2,387   | 
|Deferred revenue                               |  |                  | 67,196  |  |                  |  | 3,787  |                  |  |  | 6,825   | 
|                                               |  |                  |         |  |                  |  |        |                  |  |  |         | 
|Total                                          |  |                  | 103,572 |  |                  |  | 45,775 |                  |  |  | 109,000 | 
|                                               |  |                  |         |  |                  |  |        |                  |  |  |         | 

During the years ended December 31, 2009, 2010 and 2011, amortization of deferred revenue that was
recognized as a reduction of the amortization charges of the related land use rights amounted to US$813, US$1,346 and US$1,462, respectively.



|(w) | Income taxes
|--- | ------------

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred income tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. A valuation allowance is provided to reduce the carrying amount of deferred income tax assets if it is considered more likely than not that some portion, or all, of the deferred
income tax assets will not be realized.

The Company recognizes in the consolidated financial statements the impact of a tax
position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, management presumes
that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. In addition, a tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of
benefit to be recognized in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. The Group records interest and penalties related to an
uncertain tax position, if and when required, as part of income tax expense in the consolidated statements of operations.



|(x) | Share-based compensation
|--- | ------------------------

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the cost over the period during
which an employee is required to provide service in exchange for the award, which generally is the vesting period.

Transactions in which goods or services are received in exchange for equity instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the date on which the counterpartys performance is
completed.



|(y) | Employee benefit plans
|--- | ----------------------

As stipulated by the regulations of the PRC, the Groups PRC subsidiaries participate in various defined contribution plans organized by municipal and provincial governments for its employees. These
companies are required to make contributions to these plans at a rate of 29% on a standard salary base as determined by the local Social Security Bureau, to a defined contribution retirement scheme organized by the local Social Security Bureau in
respect of the retirement benefits for the Groups employees. Under these plans, certain pension, medical and other welfare benefits are provided to the employees. The Group has no other material obligations for the payment of employee benefits
associated with these plans beyond the annual contributions described above. Employee benefits associated with these plans are expensed when incurred. The total amounts for such employee benefits were US$4,097, US$6,541 and US$13,379 for the years
ended December 31, 2009, 2010 and 2011 respectively.



|(z) | (Loss) earnings per share
|--- | -------------------------

Basic (loss) earnings per ordinary share is computed by dividing net (loss) income available to LDK Solar Co., Ltd. shareholders by the weighted average number of ordinary shares outstanding during the
year.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



Diluted (loss) earnings per share is calculated by dividing net (loss) income available
to LDK Solar Co., Ltd. shareholders, less the accretion to redemption value of redeemable non-controlling interests, as adjusted to exclude any income or expenses related to dilutive ordinary equivalent shares by the weighted average number of
ordinary shares and dilutive ordinary share equivalents outstanding during the year. Ordinary share equivalents consist of the ordinary shares issuable upon the conversion of the convertible senior notes (using the if-converted method) and ordinary
shares issuable upon the exercise of outstanding share options (using the treasury stock method). Potential dilutive securities are not included in the calculation of dilutive earnings per share if the effect is anti-dilutive.



|(aa) | Segment reporting
|---- | -----------------

The Group had one reportable operating segment, which was the design, development and manufacture of PV products for the years ended
December 31, 2009 and 2010 because the Groups chief operating decision maker regularly reviewed consolidated results of the whole group prepared under U.S. GAAP when making decisions about allocating resources and assessing performance of
the Group. In June 2011, the Group sold a minority stake in the Groups upstream polysilicon business. Since then, the chief operating decision maker reviews the operating results of the polysilicon business as well as the PV product business
on a regular basis for purpose of resource allocation and assessment of performance. Accordingly, the two manufacturing entities engaged in its upstream polysilicon business are presented as a separate reportable segment. Please refer to Note 26 for
the details of segment reporting.



|(ab) | Start-up costs
|---- | --------------

All costs in connection with start-up activities, including preproduction costs associated with new manufacturing facilities are expensed
as incurred. Preproduction costs including the design, formulation and testing of new products or process alternatives are included in research and development expenses. Preproduction costs including facility and employee costs incurred in
connection with new manufacturing plants are included in general and administrative expenses.



|(3) | INVENTORIES
|--- | -----------



|                                                                        |  |                  |         |  |                  |  |         | 
|----------------------------------------------------------------------- |  | ---------------- | ------- |  | ---------------- |  | ------- | 
|                                                                        |  | December 31,2010 |         |  | December 31,2011 | 
|Inventories consist of the following:                                   |  |                  |         |  |                  |  |         | 
|                                                                        |  |                 
|Raw materials                                                           |  |                  | 149,004 |  |                  |  | 78,858  | 
|Work in progress                                                        |  |                  | 106,872 |  |                  |  | 163,831 | 
|Supplies                                                                |  |                  | 129,951 |  |                  |  | 99,018  | 
|Finished goods                                                          |  |                  | 101,809 |  |                  |  | 313,240 | 
|                                                                        |  |                  |         |  |                  |  |         | 
|                                                                        |  |                  | 487,636 |  |                  |  | 654,947 | 
|                                                                        |  |                  |         |  |                  |  |         | 
|Inventories:                                                            |  |                  |         |  |                  |  |         | 
| Current                                                               |  |                  | 474,612 |  |                  |  | 654,947 | 
| Non-current                                                           |  |                  | 13,024  |  |                  |  | 0       | 
|                                                                        |  |                 
|Raw materials, work in progress and supplies consigned to third parties |  |                  | 46,820  |  |                  |  | 14,185  | 

Raw materials consist of a variety of polysilicon materials, including solar-grade virgin polysilicon,
recyclable polysilicon materials, silicon powder and trichlorosilane.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



Write-downs of raw materials, work in progress and finished goods inventories were
US$180,213, US$6,113 and US$305,175 during the years ended December 31, 2009, 2010 and 2011, respectively, and are included in cost of goods sold.



|(4) | PREPAYMENTS TO SUPPLIERS, NET
|--- | -----------------------------

In order to secure a stable supply of silicon materials and other raw materials, the Group makes prepayments to certain
suppliers. Prepayments which the Group expects to take delivery of the inventory after the next twelve months are classified as non-current assets in the Groups consolidated balance sheets. Prepayments to suppliers are reclassified to
inventories when the Group applies the prepayment to related purchases of silicon and other solar materials. Such non-cash reclassifications from prepayment to inventories, which were included in the Changes in operating assets and
liabilities in the Groups consolidated statements of cash flows, amounted to US$579,233, US$337,930 and US$328,827 for the years ended December 31, 2009, 2010 and 2011, respectively.

The Group monitors suppliers to ensure the timely delivery of goods in accordance with agreed schedules. Management assesses the
recoverability of prepayments by analyzing specific supplier accounts that have known or potential settlement or recoverability issues.

The following table presents the movement of the provision for doubtful recoveries of prepayments. The additions and reversals of provision for doubtful recoveries of prepayments are included general and
administrative expenses in the Companys consolidated statements of operations.



|                                               |  |                  |        |  |                  |  |        |                  |  |  |         |  
|---------------------------------------------- |  | ---------------- | ------ |  | ---------------- |  | ------ | ---------------- |  |  | ------- | -
|                                               |  | December 31,2009 |        |  | December 31,2010 |  |        | December 31,2011 | 
|Beginning balance                              |  |                  | 20,582 |  |                  |  | 38,456 |                  |  |  | 40,794  |  
|Additions                                      |  |                  | 17,874 |  |                  |  | 4,749  |                  |  |  | 70,459  |  
|Reversals of provision for doubtful recoveries |  |                  | 0      |  |                  |  | (2,411 | )                |  |  | (4,234  | )
|                                               |  |                  |        |  |                  |  |        |                  |  |  |         |  
|Ending balance                                 |  |                  | 38,456 |  |                  |  | 40,794 |                  |  |  | 107,019 |  
|                                               |  |                  |        |  |                  |  |        |                  |  |  |         |  



|(5) | OTHER CURRENT ASSETS
|--- | --------------------



|                                                     |  |                  |         |  |                  |  |         | 
|---------------------------------------------------- |  | ---------------- | ------- |  | ---------------- |  | ------- | 
|                                                     |  | December 31,2010 |         |  | December 31,2011 | 
|Receivable from the Groups executives and employees |  |                  | 46,262  |  |                  |  | 46,361  | 
|VAT recoverable                                      |  |                  | 70,010  |  |                  |  | 136,303 | 
|Short-term investment                                |  |                  | 68,477  |  |                  |  | 0       | 
|Tax recoverable                                      |  |                  | 79      |  |                  |  | 35,162  | 
|Others                                               |  |                  | 52,345  |  |                  |  | 77,179  | 
|                                                     |  |                  |         |  |                  |  |         | 
|                                                     |  |                  | 237,173 |  |                  |  | 295,005 | 
|                                                     |  |                  |         |  |                  |  |         | 

During the years ended December 31, 2007, 2008, 2010 and 2011, certain of the Groups executives
and employees exercised share options which vested in 2007 and 2008. Pursuant to the PRC tax regulations, the income derived from the exercise of the share options is subject to individual income tax, of which a certain amount should be withheld by
the Group from these executives and employees for payment to the PRC tax authorities. As of December 31, 2010 and 2011, the Group had an outstanding receivable from these executives and employees of US$46,262 and US$46,361 respectively in
relation to the individual income



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



tax liabilities arising from their exercise of share options, which are included in other current assets. A corresponding amount of the Groups withholding obligation is recorded in
accrued expenses and other payables.

In December 2010, JXLDK made short-term investments in certain financial products issued
by China Merchants Bank, which had an aggregate principal amount of US$68 million and a fixed maturity date of 30 days. The return of the investments is fixed at a rate pre-determined on the date of purchase. In January 2011, the short-term
investments were all redeemed upon maturity at the aggregated principal amount plus the fixed return.



|(6) | PROPERTY, PLANT AND EQUIPMENT, NET
|--- | ----------------------------------



|                                         |  |                  |           |   |                  |  |           |  
|---------------------------------------- |  | ---------------- | --------- | - | ---------------- |  | --------- | -
|                                         |  | December 31,2010 |           |   | December 31,2011 | 
|Buildings                                |  |                  | 644,187   |   |                  |  | 815,713   |  
|Plant and machinery                      |  |                  | 1,877,841 |   |                  |  | 2,445,506 |  
|Furniture, fixtures and office equipment |  |                  | 21,293    |   |                  |  | 31,358    |  
|Motor vehicles                           |  |                  | 6,616     |   |                  |  | 8,066     |  
|                                         |  |                  |           |   |                  |  |           |  
|                                         |  |                  | 2,549,937 |   |                  |  | 3,300,643 |  
|Less: accumulated depreciation           |  |                  | (280,166  | ) |                  |  | (523,539  | )
|Construction in progress                 |  |                  | 723,442   |   |                  |  | 1,095,257 |  
|                                         |  |                  |           |   |                  |  |           |  
|                                         |  |                  | 2,993,213 |   |                  |  | 3,872,361 |  
|                                         |  |                  |           |   |                  |  |           |  

Depreciation expense was US$66,785, US$153,196 and US$221,119, for the years ended December 31, 2009,
2010 and 2011, respectively, of which 93.67%, 98.13% and 95.66% is recorded in cost of goods sold for the years ended December 31, 2009, 2010 and 2011.

Construction in progress as of December 31, 2011 includes US$239,112 (2010: US$151,300) of furnaces, wire saws for wafer production and other equipments for polysilicon, cell and module production
that have been received but is pending installation.

The Group recognized an impairment loss of US$1,999, US$ nil and US$ nil
during the years ended December 31, 2009, 2010 and 2011, respectively.



|(7) | PARTIAL DISPOSAL AND REPURCHASE OF EQUITY INTERESTS IN A SUBSIDIARY
|--- | -------------------------------------------------------------------

In November 2009, the Group sold a 15% equity interest in LDKPV to a PRC local company for a cash consideration of RMB
1,500,000 (US$219,651) and incurred direct incremental cost of US$3,237 for the disposal. As the Group still retained a controlling equity interest in LDKPV, the disposal was accounted for as an equity transaction in the Groups consolidated
financial statements. The difference between the net proceeds received of US$216,414 net of related income tax paid of US$22,425 and noncontrolling interests recognized upon disposal of US$ 36,972 was recognized in equity attributable to the
Company.

In connection with the Groups reorganization of the polysilicon business, the Group entered into a purchase
agreement (Purchase Agreement) with the PRC local company in December 2010 to repurchase the 15% equity interests in LDKPV held by it for a cash consideration of RMB1,500,000 (US$225,232). As the Group retained control over LDKPV before
and after the repurchase of the 15% equity interests, the acquisition of this additional equity interest is accounted for as an equity transaction in the Groups



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



consolidated financial statements. The difference between the consideration of US$225,232 and the carrying amount of the non-controlling interests of US$43,622 as of the repurchase date was
recognized as a deduction of equity attributable to the Company. US$215,326 of the total consideration had been paid by the Group as of December 31, 2010. The remaining consideration payable of US$ 9,906 was paid by the Group in the first
quarter of 2011.



|(8) | REDEEMABLE NONCONTROLLING INTERESTS
|--- | -----------------------------------

On December 30, 2010, LDK Silicon & Chemical Technology Co., Ltd. (LDK SCT), one of the
Companys wholly owned subsidiaries, entered into a subscription investment agreement with China Development Bank Capital Corporation Ltd., two investment funds affiliated with China Construction Bank Corporation Ltd. and an investment fund
affiliated with another major PRC bank (collectively as the Strategic Investors) to allot and issue 240,000,000 series A redeemable convertible preferred shares for an aggregate issuance price of US$ 240 million. The transaction was
consummated with the preferred shares allotted and issued on June 3, 2011. The preferred shares on an as-if-converted basis represented approximately 18.46% of the aggregate issued and outstanding share capital of LDK SCT on the closing date,
with the Company holding the remaining 81.54%.

Pursuant to the investment agreement, the Strategic Investors have the right to
convert all or any portion of their preferred shareholdings into ordinary shares of LDK SCT at the initial conversion ratio of 1:1 at any time after the date of issuance of the preferred shares and prior to the closing of a qualified initial public
offering of LDK SCT (Qualified IPO). The initial conversion ratio is subject to certain standard anti-dilution provisions. The strategic investors also have the right to require the Company and/or LDK SCT to redeem the preferred shares
if (i) LDK SCT has not completed a Qualified IPO by June 3, 2013, or (ii) a material breach of the terms and conditions of the investment agreements by the Company, LDK SCT, their respective subsidiaries, and Mr. Xiaofeng Peng.
In the event of any redemption under this right, the redemption price is equal to 100% of the subscription price of US$240 million, plus a 23% internal rate of return on such subscription price minus any dividends paid up to the date of redemption
plus an annual dividend on a pro rata basis among all shareholders of LDK SCT up to an amount of its retained earnings so that the strategic investors will receive at least US$15 million of such dividend, to the extent the declaration and
distribution of such dividend are permitted by laws and contractual obligations applicable to LDK SCT. LDK SCT will not be liable for the declaration and distribution of such dividend if, by the end of that year, it has received an approval for
listing of its shares on an internationally recognized stock exchange for a Qualified IPO and the Qualified IPO is consummated within three months from the date of the listing approval. In addition, a cash compensation is paid to the Strategic
Investors if the consolidated net profit of LDK SCT and its subsidiaries fails to achieve the targeted net profits for each of 2010 and 2011. Management concluded that the net profit target of LDK SCT and its subsidiaries was met for 2010 and 2011.
Accordingly, no cash compensation has been recognized. The Company also pledged 15% of its equity interests in Jiangxi LDK Solar Hi-Tech Co., Ltd. (JXLDK) to China Development Bank Capital Corporation Ltd, which shall expire and
automatically terminate immediately prior to the Qualified IPO.

The series A preferred shares issued by LDK SCT was recorded
and accounted for as redeemable non-controlling interests outside of permanent equity in the Groups consolidated balance sheets in accordance with ASC480-10. In accordance with ASC 810-10-65, changes in a parents ownership interest while
the parent retains its controlling financial interest in its subsidiary shall be accounted for as equity transactions. The redeemable non-controlling interests was initially measured at the non-controlling interests share of the carrying
amount of LDK SCTs net assets as of June 3, 2011.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



The difference between the measurement under ASC 810-10-65 of US$ 171 million and
the fair value of US$ 240 million of the redeemable non-controlling interests was recorded in additional paid-in capital. Subsequently, the redeemable non-controlling interests is carried at the higher of (1) the initial carrying amount,
increased or decreased for the non-controlling interests share of net income or loss or (2) the expected redemption value. The redemption value of redeemable non-controlling interests includes the principal subscription price of US$240
million, the 23% internal rate of return and the annual dividend of US$15 million. The change of the carrying amounts of the redeemable non-controlling interests is recognized as net income attributable to redeemable non-controlling interests in the
consolidated statements of operations. Adjustments to reflect the current period change in the excess, if any, of the redeemable non-controlling interests redemption value over their ASC 810-10 measurement amount is recorded against permanent
equity in retained earnings.

The change in the carrying amount of redeemable non-controlling interests is as follows:



|                                                                      |  |                  |         | 
|--------------------------------------------------------------------- |  | ---------------- | ------- | 
|                                                                      |  | December 31,2011 |        
|Balance as of December 31, 2010                                       |  |                  | 0       | 
|                                                                      | 
|Recognition of redeemable non-controlling interests on June 3, 2011   |  |                  | 170,716 | 
|Income attributable to the redeemable non-controlling interests       |  |                  | 11,522  | 
|Foreign currency translation adjustment                               |  |                  | 2,866   | 
|Accretion to redemption value of redeemable non-controlling interests |  |                  | 34,590  | 
|                                                                      | 
|Balance as of December 31, 2011                                       |  |                  | 219,694 | 



|(9) | INVESTMENT IN ASSOCIATES AND A JOINTLY CONTROLLED ENTITY
|--- | --------------------------------------------------------

In January 2008, the Group acquired a 33.5% equity interest in Jiangxi Sinoma New Material Co., Ltd.
(Sinoma), a crucible manufacturer based in the PRC, from an unrelated party. The investment is accounted for under equity method.

In March 2009, the Group entered into a joint venture agreement with Q-cells SE (Q-Cells) to form a jointly-owned company named LQ Energy GmbH (LQ Energy), which is engaged in the
investment in solar projects. The Groups contributed capital represented 51% of the share capital of LQ Energy. The Group accounts for its investment in LQ Energy using the equity method because the minority shareholder has significant
participating rights in determining certain financial and operating decisions of LQ Energy that are made in the ordinary course of business. Such participating rights include but are not limited to the selection of solar projects.

In September 2011, the Group entered into an investment agreement with Qinghai Hydropower (Group) Co., Ltd. (Qinghai Hydro),
to form a company named Qing Hai Hydropower Group (Geermu) Solar Energy Generating Co., Ltd. (Geermu Hydropower). The Groups investment, which represents 20% of the share capital of Geermu Hydropower, is accounted for under the
equity method.



|(10) | OTHER NON-CURRENT ASSETS
|---- | ------------------------

Other non-current assets includes an available-for-sale equity security with a carrying amount of US$10,265 as of
December 31, 2011, which represented 4 million equity shares of Beijing Jingyuntong Technology Co., Ltd. (JYT) held by the Companys subsidiary in the PRC, JXLDK. The equity shares in JYT accounted for approximately 1% of
JYTs total equity interests and are restricted for sale for a 36-month



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



period after the completion of JYTs initial public offering in the PRC in September 2011. The Group initially recognized the investment at cost before the shares of JYT became marketable,
and subsequently measured it at its fair value of US$ 10,265 as of December 31, 2011 based on the quoted price of shares of JYT and adjusted by a 25% discount to reflect the sale restriction. The unrealized gain of approximately US$6,653, net
of tax effect of US$2,218, was recognized as other comprehensive income for the year ended December 31, 2011.



|(11) | BORROWINGS
|---- | ----------



|(a) | Current
|--- | -------



|                                                             |  |                  |           |  |                  |  |           | 
|------------------------------------------------------------ |  | ---------------- | --------- |  | ---------------- |  | --------- | 
|                                                             |  | December 31,2010 |           |  | December 31,2011 | 
|Bank borrowings  secured                                    |  |                  | 427,806   |  |                  |  | 427,618   | 
|Bank borrowings  unsecured                                  |  |                  | 767,813   |  |                  |  | 1,260,765 | 
|Current installments of long-term bank borrowings (Note (b)) |  |                  | 305,969   |  |                  |  | 343,640   | 
|                                                             |  |                  |           |  |                  |  |           | 
|                                                             |  |                  | 1,501,588 |  |                  |  | 2,032,023 | 
|                                                             |  |                  |           |  |                  |  |           | 

The short-term borrowings outstanding as of December 31, 2011 carry a weighted average interest rate
of 6.236% (2010: 4.270%) and have maturity terms ranging from a month to twelve months and interest rates ranging from 3.081% to 10.500% (2010: 0.284% to 6.116%).

Included in short term borrowings at December 31, 2011 is US$98,997 payable to Agricultural Bank of China. These borrowings together with long term borrowings obtained from the same banker with an
outstanding balance of US$62,213 (Note (b)) are secured by JXLDKs inventories, LDKPVs plant and machinery and LDKXYCs plant and machinery and land use rights with carrying amounts of US$247,522, US$157,945, US$39,379 and US$28,059
as of December 31, 2011, and among which US$114,904 is guaranteed by the Companys shareholder, Mr. Peng. The rest of the Groups secured short term borrowings of US$328,621 are secured by pledged bank deposit of US$201,021 and
certain of the Groups bills receivable, plant and machinery with the carrying amounts of US$50,431 and US$106,592, as of December 31, 2011 respectively.

Outstanding borrowings totaling US$15,871 (2010: US$ nil) borrowed by LDKHF from Bank of Communication contain a financial covenant. The covenant specifies that if LDKHFs debt to asset ratio exceeds
80% or the net profit to revenue ratio is below 2%, which is calculated based on its financial statements prepared under generally accepted accounting policies in the Peoples Republic of China (PRC GAAP), Bank of Communication may
take actions as defined in the borrowing agreement, including but limited to the demand of immediate repayment of the outstanding borrowing balance. As of December 31, 2011, LDKHFs debt to asset ratio was 80.2% and the net profit to
revenue ratio was negative 10.2%. LDKHF has obtained a waiver letter dated May 15, 2012 from Bank of Communication confirming that it will not require LDK HF to repay the outstanding borrowings prior to maturity date or provide additional pledge or
collateral as a result of the breach of above financial covenants.

In addition, outstanding borrowings totaling US$2,185
(2010: US$ nil) borrowed by LDKHF from Agricultural Bank of China contain a financial covenant. The covenant specifies that if LDKHFs debt to asset ratio exceeds 75%, which is calculated based on its financial statements prepared under PRC
GAAP, Agricultural Bank of China may take actions as defined in the borrowing agreement, including but limited to the demand of immediate repayment of the outstanding borrowing balance. As of December 31, 2011,



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



LDKHFs debt to asset ratio was 80.2%. As a result, Agricultural Bank of China has the right to accelerate the borrowings in accordance with the borrowing agreements, but to date, LDKHF has
not received any notice of event of default or any threat to accelerate the stated maturity of such borrowings.

In addition,
outstanding long-term borrowings with an original maturity date beyond December 31, 2012, totaling US$25,000 (2010: US$ nil) borrowed by JXLDK from China Development Bank contain financial covenants. The covenants specify that if JXLDKs
debt to asset ratio exceeds 75% or the current ratio is below 0.7, which are calculated based on its financial statements prepared under PRC GAAP, China Development Bank may take actions as defined in the borrowing agreement, including but limited
to the demand of immediate repayment of the outstanding borrowing balance. As of December 31, 2011, JXLDKs debt to asset ratio was 80% and the current ratio was 0.83. The Company reclassified these borrowing to short-term borrowings as of
December 31, 2011.

As of December 31, 2011, the Group has total revolving credit of US$4,153,881 (2010:
US$2,912,011) and unused credit of US$1,650,126 (2010: US$1,150,268) which it can draw upon.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



|(b) | Long-term
|--- | ---------



|                                                                      |  |                  |          |   |                  |  |           |  
|--------------------------------------------------------------------- |  | ---------------- | -------- | - | ---------------- |  | --------- | -
|                                                                      |  | December 31,2010 |          |   | December 31,2011 | 
|Secured loan from China Construction Bank                             |  |                  | 54,660   |   |                  |  | 142,837   |  
|Secured loan from China Development Bank                              |  |                  | 150,498  |   |                  |  | 205,380   |  
|Secured loan from Bank of China                                       |  |                  | 60,398   |   |                  |  | 31,742    |  
|Secured loan from Agricultural Bank of China                          |  |                  | 60,398   |   |                  |  | 62,213    |  
|Secured loan from Bank of Communications                              |  |                  | 30,199   |   |                  |  | 0         |  
|Secured loan from Import-Export Bank of China                         |  |                  | 12,080   |   |                  |  | 50,786    |  
|Unsecured loan from China Merchant Bank                               |  |                  | 45,299   |   |                  |  | 23,806    |  
|Unsecured loan from Rural Credit Cooperatives Bank                    |  |                  | 10,570   |   |                  |  | 0         |  
|Unsecured loan from China Minsheng Banking Corp. Ltd.                 |  |                  | 0        |   |                  |  | 7,935     |  
|Unsecured loan from Huarong International Trusts Co., Ltd.            |  |                  | 75,498   |   |                  |  | 79,354    |  
|Unsecured loan from China Construction Bank                           |  |                  | 87,578   |   |                  |  | 0         |  
|Unsecured loan from Bank of China                                     |  |                  | 30,199   |   |                  |  | 31,741    |  
|Unsecured loan from China Development Bank                            |  |                  | 30,000   |   |                  |  | 180,422   |  
|Unsecured loan from the committee of local development districts      |  |                  | 28,609   |   |                  |  | 158,707   |  
|Unsecured loan from Xinyu Chengdong Construction Investment Co., Ltd. |  |                  | 7,984    |   |                  |  | 8,391     |  
|Unsecured loan from Huishang Bank                                     |  |                  | 75,498   |   |                  |  | 79,354    |  
|Unsecured loan from Shanghai Pudong Development Bank                  |  |                  | 150,996  |   |                  |  | 158,707   |  
|Unsecured loan from Import-Export Bank of China                       |  |                  | 0        |   |                  |  | 12,697    |  
|                                                                      |  |                  |          |   |                  |  |           |  
|                                                                      |  |                  | 910,464  |   |                  |  | 1,234,072 |  
|Less: current installments                                            |  |                  | (305,969 | ) |                  |  | (343,640  | )
|                                                                      |  |                  |          |   |                  |  |           |  
|                                                                      |  |                  | 604,495  |   |                  |  | 890,432   |  
|                                                                      |  |                  |          |   |                  |  |           |  

The long-term borrowings outstanding as of December 31, 2011 bear interest at a rate per annum equal
to a variable interest rate that is repriced either (a) annually with reference to the prevailing base lending rate pronounced by Peoples Bank of China (PBOC), or (b) semi-annually or quarterly with reference to the
prevailing six-month US LIBOR rate. The average effective interest rates for the years ended December 31, 2011 and 2010 were 6.5267% and 6.0317% respectively.

Except for the aforementioned (Note (a)) long-term borrowings payable to Agriculture Bank of China which is secured by JXLDKs inventories and LDKPVs plant and machinery, the remaining secured
long-term loans totaling US$287,908 are secured by the Groups land use rights, building and plant, and machinery with carrying amount of US$63,091, US$28,356 and US$402,072 as of December 31, 2011 respectively, among which US$141,897 is
guaranteed by the Companys shareholders, Mr. Peng and Ms. Zhou.

Outstanding long-term borrowings with an
original maturity date beyond December 31, 2012, totaling US$142,837 (2010: US$ nil) borrowed by JXLDK from China Construction Bank contain financial covenants. The covenants specify that if JXLDKs debt to asset ratio exceeds 75% or the
current ratio is below 0.9, which are calculated based on its financial statements prepared under PRC GAAP, China Construction Bank may take actions as defined in the borrowing agreement, including but limited to the demand of immediate repayment of
the outstanding borrowing balance. As of December 31, 2011, JXLDKs debt to asset ratio was 80% and the current ratio was 0.83. JXLDK has obtained a waiver letter



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



dated May 15, 2012 from China Construction Bank, in which China Construction Bank agrees not to require JXLDK to repay the outstanding long-term borrowings prior to maturity date or provide
additional pledge or collateral as a result of the breach of the financial covenants up to a period till January 1, 2013.

Our
long-term borrowings contain subjective acceleration provisions that may be triggered by material deterioration of our financial condition. We have obtained waiver letters from all the banks, except for Agricultural Bank of China, that the banks
confirm we are not in breach of any provisions contained in the borrowing agreements.

Future principal repayments on the
long-term bank borrowing are as follows:



|     |  |  |           | 
|---- |  |  | --------- | 
|2012 |  |  | 343,640   | 
|2013 |  |  | 641,240   | 
|2014 |  |  | 249,192   | 
|     |  |  |           | 
|     |  |  | 1,234,072 | 
|     |  |  |           | 



|(12) | ADVANCE PAYMENTS FROM CUSTOMERS
|---- | -------------------------------

The Group requires certain customers to make prepayments before delivery has occurred. Such prepayments are recorded as
advances from customers in the Groups consolidated financial statements, until delivery has occurred. Advances from customers for which the deliveries of goods are expected to occur after twelve months are classified as non-current liabilities
in the Groups consolidated balance sheets. Advance payments from customers are reclassified to other payables when the related wafer supply contracts or orders are cancelled, early terminated, expired or in dispute and it is probable that the
Group will refund the advance payment balances to the customers.



| | (a) | Contracts with Q-Cells
| | --- | ----------------------

On
December 4, 2009, the Group and Q-Cells reached an agreement (Original Agreement) to resolve a dispute over a long-term solar wafer supply agreement (wafer supply agreement). Pursuant to the Original Agreement, the Group
had agreed to cease any pending proceedings or claims against Q-Cells and Q-Cells had agreed not to withdraw the outstanding prepayment balance made under the wafer supply agreement of US$244,085 against a bank guarantee. As a result of the signing
of the Original Agreement, the Group reclassified the advance payments from Q-Cells to short-term and long-term other payables in accordance with the repayment schedule as set out in the Original Agreement. The non-cash reclassifications from
advance payments from customers to other payables was not included in the Changes in operating assets and liabilities in the Groups consolidated statements of cash flows because the Group considered that the payable to the German
customer is of financing nature as a result of signing the Amended Agreement. Repayments made in accordance with the Amendment Agreement are included in the financing activities in the Groups consolidated statements of cash flows.

On September 9, 2010, the Group and Q-Cells signed an amendment agreement (Amendment Agreement). Pursuant to the
Amendment Agreement, the Group agreed to accelerate the repayment of the outstanding payable of US$224,940 due to Q-Cells as of September 9, 2010 of which US$112,470 was paid in September 2010. On June 30 and August 30, 2011, the
Group and Q-Cells entered into two further agreements. Pursuant to the two agreements, the Group shall offset the remaining outstanding payable of US$112,470 to Q-Cells against the prepayment of US$ 60,000 made by the Group to Q-Cells and accounts
receivables of US$52,470 outstanding as of the agreement date.



| | (b) | Contracts with other customers
| | --- | ------------------------------

In addition to Q-Cells, several customers also ceased to execute the wafer purchase contracts with the Group due to dispute over wafer
price during the years ended December 31, 2010 and 2011. The Group initiated



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



either arbitrations or negotiation with those customers in an effort to resume the execution of contracts. However, no active response was received from those customers and certain customer had
demanded termination of contract and repayment of advance wafer payments. As a result, the Group assessed that it is probable that certain advances received from customers will be paid back by the Group and accordingly, advance payments of US$52,169
and US$16,577 were reclassified to other payables during the years ended December 31, 2010 and 2011, respectively. Such non-cash reclassification from advance from customers to other payables were included in the Changes in operating
assets and liabilities in the Groups consolidated statements of cash flows.



|(13) | ACCRUED EXPENSES AND OTHER PAYABLES
|---- | -----------------------------------

Components of accrued expenses and other payables are as follows:



|                                              |  |                  |         |  |                  |  |         | 
|--------------------------------------------- |  | ---------------- | ------- |  | ---------------- |  | ------- | 
|                                              |  | December 31,2010 |         |  | December 31,2011 | 
|Purchase of equipment                         |  |                  | 404,557 |  |                  |  | 478,197 | 
|Withholding individual income tax payable (a) |  |                  | 46,262  |  |                  |  | 47,652  | 
|Income tax payables                           |  |                  | 31,854  |  |                  |  | 6,207   | 
|Accrued payroll and welfare                   |  |                  | 15,555  |  |                  |  | 11,577  | 
|Other payable due to customers (Note 12)      |  |                  | 206,217 |  |                  |  | 89,491  | 
|Other accruals and payable                    |  |                  | 46,827  |  |                  |  | 116,264 | 
|                                              |  |                  |         |  |                  |  |         | 
|                                              |  |                  | 751,272 |  |                  |  | 749,388 | 
|                                              |  |                  |         |  |                  |  |         | 



| | (a) | Withholding individual income tax payable
| | --- | -----------------------------------------

As of December 31, 2010 and 2011, the Group had withholding individual income tax payable of US$46,262 and US$47,652 respectively, arising from the Groups withholding tax obligation in relation
to the exercise of share options by certain of the Groups executives and employees pursuant to PRC tax regulations (see Note 5).

In 2008, the Group obtained notices from the relevant PRC Tax Authority granting deferral of the payment of such withholding tax obligation until the Groups executives and employees sell their
shares, at which time the Group will withhold the tax and remit it on behalf of the employees. Since the Group has no control over the payment timing, the Group has classified the payable as a current liability as of December 31, 2010 and 2011.



|(14) | CAPITAL LEASE OBLIGATIONS
|---- | -------------------------

In December 2009 and 2011, the Group sold certain newly purchased equipment and equipment pending installation
(collectively Leased Assets) with carrying amounts of US$ 43,973 and US$ 113,621 to third-parties (the purchaser-lessors) for cash consideration of US$ 43,935 and US$ 95,526, respectively, and simultaneously entered into a 3
year contract and several 2-4 year contracts to lease back the Leased Assets from the purchaser-lessors. Pursuant to the terms of the contract, the Group is required to pay to the purchaser-lessors quarterly lease payments over 2-4 years and is
entitled to a bargain purchase option at the end of the lease. The leases are classified as capital leases. In connection with these sale-leaseback transactions, the Group recognized a loss of approximately US$ 38 and US$ 18,095 during the years
ended December 31, 2009 and 2011 respectively, which is being deferred and amortized in the consolidated statements of operations over the useful life of the leased assets.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



The gross amount of plant and equipment and related accumulated amortization recorded
under capital leases are as follows:



|                                                          |  |                  |         |   |                  |  |         |  
|--------------------------------------------------------- |  | ---------------- | ------- | - | ---------------- |  | ------- | -
|                                                          |  | December 31,2010 |         |   | December 31,2011 | 
|Plant and machinery                                       |  |                  | 71,886  |   |                  |  | 119,086 |  
|Less: accumulated amortization                            |  |                  | (8,618  | ) |                  |  | (9,824  | )
|                                                          |  |                  |         |   |                  |  |         |  
|                                                          |  |                  | 63,268  |   |                  |  | 109,262 |  
|Construction-in-progress  equipment pending installation |  |                  | 38,588  |   |                  |  | 24,053  |  
|                                                          |  |                  |         |   |                  |  |         |  
|                                                          |  |                  | 101,856 |   |                  |  | 133,315 |  
|                                                          |  |                  |         |   |                  |  |         |  

Amortization of assets held under capital leases is included with depreciation expense.

Future minimum lease payments under capital lease obligations as of December 31, 2011 are as follows:



|                                                                |  |  |         |  
|--------------------------------------------------------------- |  |  | ------- | -
|Year ending December 31:                                        |  |  |         |  
|2012                                                            |  |  | 47,903  |  
|2013                                                            |  |  | 29,292  |  
|2014                                                            |  |  | 25,526  |  
|2015                                                            |  |  | 12,487  |  
|                                                                |  |  |         |  
|Total minimum lease payments                                    |  |  | 115,208 |  
|Less: Amounts representing interest (at interest rate of 6.98%) |  |  | (12,106 | )
|                                                                |  |  |         |  
|Present value of minimum payments                               |  |  | 103,102 |  
|Current portion                                                 |  |  | (41,738 | )
|                                                                |  |  |         |  
|Non-current portion                                             |  |  | 61,364  |  
|                                                                |  |  |         |  



|(15) | CONVERTIBLE SENIOR NOTES
|---- | ------------------------

On April 15, 2008, the Company sold an aggregate principal amount of US$400,000 4.75% Convertible Senior Notes due
2013 (the Convertible Senior Notes or Existing Note) to Morgan Stanley & Co International plc, UBS AG, J.P. Morgan Securities Inc., Needham & Company, LLC, Cowen and Company, LLC and Lazard Capital Markets
LLC (the Initial Purchasers). The net proceeds from the offering, after deducting offering expenses, were approximately US$388,743. The Convertible Senior Notes bear interest at a rate of 4.75% per annum payable semi-annually in
arrears on April 15 and October 15 of each year beginning on October 15, 2008. The Convertible Senior Notes mature on April 15, 2013 (maturity date).

The Convertible Senior Notes are convertible at any time prior to (and including) the third business day preceding the maturity date into
the American Depositary Shares, or ADSs of the Company, based on an initial conversion rate of 25.4534 ADSs per US$1 principal amount of Convertible Senior Notes (which represents an initial conversion price of approximately US$39.29 per ADS),
subject to adjustments as defined in the Convertible Senior Notes Agreement (the Agreement). In no event will the conversion rate for the notes exceed 31.8167 ADSs shares per US$1 principal amount.

Upon conversion of the Convertible Senior Notes, in lieu of deliver of ADSs, the Company may elect to deliver cash or a combination of
cash and ADSs.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



If a fundamental change, as defined in the Agreement, occurs, the holders of the
Convertible Senior Notes may require the Company to repurchase all or a portion of their Convertible Senior Notes, in integral multiples of US$1, at a repurchase price in cash equal to 100% of the principal amount plus accrued and unpaid interest
to, but excluding, the repurchase date.

The Convertible Senior Notes could not be redeemed prior to April 15, 2011. At
any time on or after April 15, 2011, the Company may, at its option, redeem the Convertible Senior Notes, in whole or in part from time to time, in integral multiples of US$1, at a redemption price in cash equal to 100% of the principal amount
plus any accrued and unpaid interest to, but excluding, the redemption date, provided that the closing sale price of the Companys ADSs for at least 20 trading days in the 30 consecutive trading day period ending on the date one trading day
prior to the date of the notice of redemption is greater than 130% of the conversion price of the notes on the date of such notice.

On April 15, 2011, holders of the Convertible Senior Notes could have required the Company to repurchase all or a portion their Convertible Senior Notes, in integral multiples of US$1, at a price in
cash equal to 100% of the principal amount plus any accrued and unpaid interest to, but excluding, the repurchase date, subject to certain additional conditions, as defined in the Agreements.

The Convertible Senior Notes are unsecured, and are effectively subordinated to all of the Companys existing and future secured
indebtedness to the extent of the assets securing such indebtedness, and are structurally subordinated to all liabilities of our subsidiaries, including trade payables.

Pursuant to the registration rights agreement dated April 15, 2008, the Company is required to file with the SEC a shelf registration statement that would cover the resale of the Convertible Senior
Notes, the underlying ordinary shares and the underlying ADSs, cause the shelf registration statement to become effective and keep it continuously effective under the U.S. Securities Act within a specified period. If the Company fails to do so, the
Company is required to pay additional interest while there is a continuing registration default at a rate per annum equal to 0.25% for the 90-day period beginning on (and including) the date of the registration default events, and thereafter at a
rate per annum equal to 0.50%, of the aggregate principal amount of the applicable Convertible Senior Notes, payable semi-annually on April 15 and October 15 of each year, until the cessation of the registration default events. This
additional interest would be required to be paid in cash. The maximum amount of additional interest expense the Company would incur would be approximately US$9 million through the maturity of the Convertible Senior Notes. The Company filed the
required shelf registration statement and caused it to become effective under the U.S. Securities Act on September 30, 2008. Management currently believes that it is not probable the Company will be required to incur any additional interest for
failing to keep the shelf registration statement continuously effective within the period as specified in the registration rights agreement.

The convertible senior notes agreement does not contain any financial covenants or other significant restrictions.

The Company separated the 4.75% convertible senior notes into a liability component and an equity component. The carrying amount of the liability component was calculated by measuring the fair value of a
similar liability (including any embedded features other than the conversion option) that does not have an associated equity component. The carrying amount of the equity component representing the embedded conversion option was determined by
deducting the fair value of the liability component from the initial proceeds ascribed to the 4.75% convertible senior notes as a whole. The excess of the principal amount of the liability component over its carrying amount is amortized to interest
expense over the expected life of a similar liability that does not have an associated equity component using the effective interest method. The equity component is not remeasured as long as it continues to meet the conditions for equity
classification.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



Issuance and transaction costs incurred at the time of the issuance of the 4.75%
convertible senior notes with third parties are allocated to the liability and equity components in proportion to the allocation of proceeds and accounted for as debt issuance costs and equity issuance costs, respectively.

During the year ending December 31, 2010, the Group repurchased US$8,000 aggregate principal amount of Convertible Senior Notes for a
total cash consideration of US$7,719. Debt issuance costs and debt discount totalling US$88 were written off along with the repurchase transaction. A gain of US$193 on the repurchase was recorded in other income.

In December 2010, the Company completed an exchange of certain Existing Notes with Notes in an aggregate principal amount of US$31.9
million (the New Notes). The only material difference between the New Notes and Existing Notes is the absence in the New Notes of the provisions contained in the Existing Notes that allowed the holder of the Existing Notes to require the
Company to repurchase all or a portion of their Existing Notes on April 15, 2011. The Company determined that the New Notes are not substantially different from the Existing Notes and the exchange is accounted for as modification of Existing
Notes.

In March, May and September 2011, the Group repurchased US$5,400, US$200 and US$10,832 aggregate principal amount of
Convertible Senior Notes for a total cash consideration of US$5,397, US$200 and US$7,393 respectively. Debt issuance costs and debt discount totaled US$7, US$ nil and US$850 were written-off along with the repurchase transactions. A gain of US$2,585
on the repurchase was recorded in other income.

On April 15, 2011, certain holders of the outstanding Convertible Senior
Notes exercised the put option and the Company redeemed an aggregate principal amount of $351,775 of their Convertible Senior Notes.

The 4.75% convertible senior notes consisted of the following as of December 31, 2010 and 2011:



|                             |  |                  |         |   |                  |  |        |  
|---------------------------- |  | ---------------- | ------- | - | ---------------- |  | ------ | -
|                             |  | December 31,2010 |         |   | December 31,2011 | 
|Equity component (1)         |  |                  | 17,774  |   |                  |  | 17,774 |  
|                             |  |                 
|Liability component:         |  |                  |         |   |                  |  |        |  
|Principal                    |  |                  | 392,000 |   |                  |  | 23,793 |  
|Less: debt discount, net (2) |  |                  | (1,897  | ) |                  |  | (60    | )
|                             |  |                  |         |   |                  |  |        |  
|Net carrying amount          |  |                  | 390,103 |   |                  |  | 23,733 |  
|                             |  |                  |         |   |                  |  |        |  
| Current (3)                |  |                  | 355,445 |   |                  |  | 0      |  
| Non-current (4)            |  |                  | 34,658  |   |                  |  | 23,733 |  



| | (1) | Included in the consolidated balance sheets within additional paid-in capital.
| | --- | ------------------------------------------------------------------------------

| | (2) | Included in the consolidated balance sheets within convertible senior notes and is amortized over the remaining life of the 4.75% convertible senior notes.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Consisted of convertible senior notes that were repurchased by the Company in March and April 2011.
| | --- | ---------------------------------------------------------------------------------------------------

| | (4) | Consisted of convertible senior notes of which their holders either accepted the exchange offer in December 2010 or did not exercise the put option on April 15,
2011.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Debt issuance costs and debt discount are amortized as interest expense using the effective interest rate
method through the earliest date the holders of the Convertible Senior Notes can demand payments.

As of December 31,
2011, the remaining lives of the 4.75% convertible senior notes are 1.29 years.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



The following table set forth total interest expense recognized related to the 4.75%
convertible senior notes during the years ended December 31, 2009, 2010 and 2011, respectively:



|                                                   |  |                  |        |   |                  |  |        |                  |  |  |        |  
|-------------------------------------------------- |  | ---------------- | ------ | - | ---------------- |  | ------ | ---------------- |  |  | ------ | -
|                                                   |  | December 31,2009 |        |   | December 31,2010 |  |        | December 31,2011 | 
|Contractual interest incurred                      |  |                  | 19,000 |   |                  |  | 18,925 |                  |  |  | 6,551  |  
|Amortization of debt issuance costs                |  |                  | 3,499  |   |                  |  | 3,764  |                  |  |  | 2,196  |  
|Amortization of debt discount                      |  |                  | 5,957  |   |                  |  | 6,409  |                  |  |  | 1,795  |  
|                                                   |  |                  |        |   |                  |  |        |                  |  |  |        |  
|Total interest incurred                            |  |                  | 28,456 |   |                  |  | 29,098 |                  |  |  | 10,542 |  
|                                                   |  |                  |        |   |                  |  |        |                  |  |  |        |  
|Effective interest rate of the liability component |  |                  | 7.64   | % |                  |  | 7.64   | %                |  |  | 10.37  | %



|(16) | RMB-DENOMINATED US$-SETTLED SENIOR NOTES
|---- | ----------------------------------------

On February 18, 2011 and April 11, 2011, the Company sold an aggregate principal amount of RMB 1,200,000
and RMB 500,000 10% US$-settled senior notes due 2014 (the Senior Notes) outside the United States pursuant to Regulation S under the United States Securities Act of 1933, as amended (the Securities Act). The net
proceeds from the offering, after deducting the offering expenses of US$ 5,749, were approximately US$ 252,908. The Senior Notes bear interest at a rate of 10% per annum, payable semi-annually in arrears on February 28 and August 28
of each year beginning on August 28, 2011. The Senior Notes will mature on February 28, 2014 (maturity date). The indenture (the Indenture) provides that the Senior Notes are unsecured and guaranteed by certain
subsidiaries of the Company organized outside of the PRC (the Subsidiary Guarantees).

The Indenture governing the
Senior Notes restrict the Company and/or its subsidiaries from incurring additional indebtedness, as defined in the Indenture, unless i) the Company and/or its subsidiaries are able to satisfy certain financial ratios, or (ii) the Company
and/or its subsidiaries are able to incur such additional indebtedness pursuant to any of the exceptions to the financial ratio requirements, and meet other applicable restrictions as specified in the Indenture. In addition, the Indenture governing
the Senior Notes includes a number of significant restrictive covenants, such as restriction on the Companys ability, and the ability of most of its subsidiaries, to declare dividends on capital stock or purchase or redeem capital stock.
Taking into account of the Groups unaudited financial results for the fourth quarter of 2011, the Consolidated Fixed Charge Coverage Ratio, as defined in the senior notes, has been negatively impacted as a result of a significant
reduction of the aggregate amount of the Groups Consolidated EBITDA, as defined in the senior notes, for the four most recent full fiscal quarters, while the Groups Consolidated Fixed Charges, as defined in the
senior notes, for such four-quarter period, have increased. As a result, the Group will not be able to incur any additional indebtedness until the Groups Consolidated Fixed Charge Coverage Ratio significantly improves on the basis
of the Groups four most recent full fiscal quarters unless such indebtedness falls into one of the permitted exceptions or exemptions, such as re-financing existing indebtedness.

From August 29 to September 2, 2011, the Company repurchased RMB 68,400 (US$ equivalent: US$10,709) aggregate principal amount
of the Senior Notes due 2014 in the open market for a total cash consideration of US$8,223. Debt issuance costs and debt discount totaled US$240 was written-off along with the repurchase transactions. Gain of US$2,246 on the repurchase was recorded
in other income.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



The Senior Notes consisted of the following as of December 31, 2011:



|                             |  |                  |         |  
|---------------------------- |  | ---------------- | ------- | -
|                             |  | December 31,2011 |        
|Principal                    |  |                  | 258,948 |  
|Less: debt discount, net (1) |  |                  | (121    | )
|                             |  |                  |         |  
|Net carrying amount          |  |                  | 258,827 |  
|                             |  |                  |         |  



| | (1) | Included in the consolidated balance sheets within RMB-denominated US$-settled senior notes and is amortized over the remaining life of the Senior Notes.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

Debt issuance costs and debt discount are amortized as interest expense using the effective interest rate method
through the maturity date of the Senior Notes.

The following table set forth total interest expense recognized related to the
Senior Notes during the year ended December 31, 2011:



|                                            |  |                  |        |  
|------------------------------------------- |  | ---------------- | ------ | -
|                                            |  | December 31,2011 |       
|Contractual interest incurred               |  |                  | 20,893 |  
|Amortization of debt issuance costs         |  |                  | 1,427  |  
|Amortization of debt discount               |  |                  | 38     |  
|                                            |  |                  |        |  
|Total interest incurred                     |  |                  | 22,358 |  
|                                            |  |                  |        |  
|Effective interest rate of the Senior Notes |  |                  | 11.35  | %



|(17) | PRC NOTES
|---- | ---------

On October 19, 2011, JXLDK, a subsidiary in the PRC, sold an aggregate principal amount of RMB 400,000 PRC
domestic notes due 2012 (the Short-term PRC Notes) to institutional investors in the PRC. The net proceeds from the offering, after deducting offering expenses, were approximately RMB 398,222 (US$ 63,201). The Short-term PRC Notes bear
interest at a rate of 7.59% per annum, and are payable on October 21, 2012 (maturity date).

On
December 8, 2011, JXLDK sold an aggregate principal amount of RMB 500,000 PRC domestic notes due 2014 (the Long-term PRC Notes) to institutional investors in the PRC. The net proceeds from the offering, after deducting offering
expenses, were approximately RMB 495,350 (US$ 78,616). The Long-term PRC Notes bear interest at a rate of 6.8% per annum, payable on December 8 of each year beginning on December 8, 2012. The Long-term PRC Notes will mature on
December 8, 2014 (maturity date).

The Short-term PRC Notes and Long-term PRC Notes (the PRC
Notes) do not contain any financial covenants or other significant restrictions.

Debt issuance costs incurred at the
time of the issuance of the PRC Notes are capitalized and amortized as interest expense using the effective interest rate method through the maturity date of the PRC Notes.



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##### Table of Contents

LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



The following table set forth total interest incurred recognized related to the
Long-term PRC Notes during the year ended December 31, 2011:



|                                                   |  |                           |      |  
|-------------------------------------------------- |  | ------------------------- | ---- | -
|                                                   |  | YearendedDecember 31,2011 |     
|Contractual interest incurred                      |  |                           | 324  |  
|Amortization of debt issuance costs                |  |                           | 14   |  
|                                                   |  |                           |      |  
|Total interest incurred                            |  |                           | 338  |  
|                                                   |  |                           |      |  
|Effective interest rate of the Long-term PRC Notes |  |                           | 6.94 | %



|(18) | INTEREST COSTS
|---- | --------------

The following is a summary of the Groups interest costs incurred during years ended December 31, 2009, 2010
and 2011:



|                                                                                                                                                          |  |                           |        |  |                           |  |         |                           |  |  |         | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ------ |  | ------------------------- |  | ------- | ------------------------- |  |  | ------- | 
|                                                                                                                                                          |  | YearendedDecember 31,2009 |        |  | YearendedDecember 31,2010 |  |         | YearendedDecember 31,2011 | 
|Interest costs capitalized                                                                                                                                |  |                           | 48,169 |  |                           |  | 31,321  |                           |  |  | 33,141  | 
|                                                                                                                                                          |  |                           |        |  |                           |  |         |                           |  |  |         | 
|Interest costs charged to income                                                                                                                          |  |                           |        |  |                           |  |         |                           |  |  |         | 
| Interest on bank and other borrowings                                                                                                                   |  |                           | 35,494 |  |                           |  | 67,803  |                           |  |  | 157,908 | 
| Interest on Convertible Senior Notes, RMB-denominated US$-settled Senior Notes and PRC Notes, and amortization of debt
issuance costs and debt discount |  |                           | 14,574 |  |                           |  | 19,278  |                           |  |  | 31,326  | 
| Interest on long-term payable due to Q-cells                                                                                                            |  |                           | 0      |  |                           |  | 7,931   |                           |  |  | 704     | 
|                                                                                                                                                          |  |                           |        |  |                           |  |         |                           |  |  |         | 
|Sub-total                                                                                                                                                 |  |                           | 50,068 |  |                           |  | 95,012  |                           |  |  | 189,938 | 
|                                                                                                                                                          |  |                           |        |  |                           |  |         |                           |  |  |         | 
|Total interest costs                                                                                                                                      |  |                           | 98,237 |  |                           |  | 126,333 |                           |  |  | 223,079 | 
|                                                                                                                                                          |  |                           |        |  |                           |  |         |                           |  |  |         | 



|(19) | PREPAID FORWARD CONTRACTS
|---- | -------------------------

In connection with and to facilitate the offering of the Convertible Senior Notes, the Company entered into Prepaid
Forward Contracts (the Prepaid Forward Contracts) on April 9, 2008 with J.P. Morgan Chase Bank, Morgan Stanley & Co International plc and UBS AG, which are the affiliates of the representatives of the Initial Purchasers
(the Dealers). The Prepaid Forward Contracts relate to a number of the Companys ADSs equal to US$ 199,437, divided by the closing price of the Companys ADSs on the New York Stock Exchange on April 9, 2008. Pursuant to
the Prepaid Forward Contracts, the Company prepaid the Dealers US$ 199,437 on April 15, 2008 for the repurchase of 6,345,450 ADSs of the Company.

Until the Company satisfied certain conditions, including completing certain corporate actions and satisfying requirements of Cayman Islands law in relation to the repurchase of the Companys shares,
the



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



prepaid forward contracts would be settled in cash on the final settlement date (or earlier in certain circumstances) with the Dealers delivering the Company an amount of cash equal to the
product of (a) the ADS number of 6,345,450 and (b) the weighted average price of our ADSs over a number of days specified in the Prepaid Forward Contracts. Once those conditions are satisfied, the Prepaid Forward Contracts will, from the
date when such conditions are satisfied, be settled in shares with the Dealers delivering the ADSs at their discretion, in full or in part, at any time prior to May 30, 2013. The Companys management determined that the Company satisfied
all those conditions on June 17, 2008.

The Prepaid Forward Contracts were initially recognized as assets and measured at
fair value as the contracts could only be settled in cash at the inception date. When the conditions for physically settlement in shares were met on June 17, 2008, the fair value of Prepaid Forward Contracts as at that date were reclassified as
a reduction of additional paid-in capital in equity. The change in fair value of the Prepaid Forward Contracts of US$ 60,028 from the issuance date to June 17, 2008 was reported in the consolidated statements of operations for the year ended
December 31, 2008.

Since the Prepaid Forward Contracts require physical settlement of a fixed number of ADSs at a fixed
price per ADS at the time conditions for physical settlement are met, the shares to be repurchased pursuant to the Prepaid Forward Contracts are treated as retired from June 17, 2008 through December 31, 2011 for purposes of the
Companys basic and diluted earnings (loss) per share calculations during the years ended December 31, 2009, 2010 and 2011 respectively.



|(20) | INCOME TAXES
|---- | ------------

Cayman Islands

Under the current laws of the Cayman Islands, the Company and LDKSCT are not subject to any income tax or capital gains. In addition, there is no withholding tax on payments of dividends by Cayman Islands
companies.

Peoples Republic of China

The Companys PRC subsidiaries file separate income tax returns. Effective from January 1, 2008, pursuant to the Corporate
Income Tax Law (the CIT Law) which was passed by the National Peoples Congress of the PRC on March 16, 2007, the PRCs statutory income tax rate is 25%. The Companys PRC subsidiaries are subject to income tax at 25%
unless otherwise specified.

Prior to January 1, 2008, JXLDK was entitled to a tax holiday of 2-year full tax exemption
followed by 3-year 50% reduction in the income tax rate starting from 2006 under the then effective tax rules and regulations. Such tax holiday is grandfathered by the CIT Law and its relevant regulations. Accordingly, JXLDK is subject to income tax
at 12.5% for 2009 and 2010.

In December 2009, JXLDK was recognized by the Chinese government as a High and New
Technology Enterprise (HNTE) under the new CIT Law and is entitled to the preferential income tax rate of 15% from 2009 to 2011. Under the CIT Law, where the transitional preferential enterprise income tax policies and the
preferential policies prescribed under the CIT Law and its implementation rules overlap, an enterprise may choose the more favorable policy, but may not enjoy multiple preferential policies. JXLDK chose to complete the grandfathered tax holiday of
12.5% for the overlapping period of 2009 and 2010 and is subject to income tax at 15% for 2011. Subject to renewal, JXLDKs HNTE status will enable it to the preferential income tax rate of 15% from 2012 to 2014. Based on the self-assessment
result, management believes that JXLDK meets all the criteria for the renewal of its HNTE status.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



In September 2011, LDKPV was recognized by the Chinese government as an HNTE and is
entitled to the preferential income tax rate of 15% from 2011 to 2013. Further, based on the prevailing business plan, management expects LDKPV will continue to meet all the criteria for HNTE qualification upon renewal of such status which will
enable it to the preferential income tax rate of 15% from 2014 to 2016.

HK SAR

The Companys Hong Kong incorporated subsidiaries are subject to Hong Kong Profits Tax at 16.5% on income arising in or derived from
Hong Kong. No provision for Hong Kong Profits tax was made as they sustained tax losses for each of the years ended December 31, 2009, 2010 and 2011, where applicable. The payments of dividends by Hong Kong tax residents are not subject to Hong
Kong withholding tax.

United States

LDK USA, LDK UST and SPT are subject to US federal statutory tax rate of 34% and are also subject to the state of California income tax rate of 8.84%. The state income tax paid is deductible for US
federal income tax purposes.

European Countries

LDK Europe is incorporated in Luxemburg and is subject to a 28.59% corporate tax rate. Capital repayment received from LQ Energy within
one year after the incorporation of LQ Energy is subject to 26.375% withholding tax rate.

All of the Companys
subsidiaries incorporated in Italy are subject to corporate income tax at 31.4%.

LDK Trading Service Germany Limited and LDK
German Holding GmbH are incorporated in Germany and are each subject to an effective income tax rate of 32.98% which consists of 15% corporate income tax plus a solidarity surcharge of 5.5% on corporate income tax and a trade income tax rate of
17.15%.

LDK Solar Spain S.L. is incorporated in Spain and is subject to a 30% corporate tax rate.

LDK Solar Tech, Europe, GmbH is incorporated in Switzerland and is subject to a 21.17% corporate tax rate.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



The income tax expense (benefit) attributable to earnings (loss) from operations, which
is substantially derived from PRC sources, consists of:



|                             |  |         |        |   |          |  |         |       |  |  |         |  
|---------------------------- |  | ------- | ------ | - | -------- |  | ------- | ----- |  |  | ------- | -
|                             |  | Current |        |   | Deferred |  |         | Total | 
|Year ended December 31, 2011 |  |         |        |   |          |  |         |       |  |  |         |  
|PRC                          |  |         | 34,436 |   |          |  | (26,476 | )     |  |  | 7,960   |  
|U.S. Federal                 |  |         | 279    |   |          |  | 0       |       |  |  | 279     |  
|U.S. State and Local         |  |         | 48     |   |          |  | 0       |       |  |  | 48      |  
|Other jurisdictions          |  |         | 954    |   |          |  | (5,100  | )     |  |  | (4,146  | )
|                             |  |         |        |   |          |  |         |       |  |  |         |  
|                             |  |         | 35,717 |   |          |  | (31,576 | )     |  |  | 4,141   |  
|                             |  |         |        |   |          |  |         |       |  |  |         |  
|Year ended December 31, 2010 |  |         |        |   |          |  |         |       |  |  |         |  
|PRC                          |  |         | 34,948 |   |          |  | 27,264  |       |  |  | 62,212  |  
|U.S. Federal                 |  |         | 18     |   |          |  | 0       |       |  |  | 18      |  
|U.S. State and Local         |  |         | 8      |   |          |  | 0       |       |  |  | 8       |  
|Other jurisdictions          |  |         | (672   | ) |          |  | 4,644   |       |  |  | 3,972   |  
|                             |  |         |        |   |          |  |         |       |  |  |         |  
|                             |  |         | 34,302 |   |          |  | 31,908  |       |  |  | 66,210  |  
|                             |  |         |        |   |          |  |         |       |  |  |         |  
|Year ended December 31, 2009 |  |         |        |   |          |  |         |       |  |  |         |  
|PRC                          |  |         | 8,141  |   |          |  | (34,500 | )     |  |  | (26,359 | )
|U.S. Federal                 |  |         | 9      |   |          |  | 0       |       |  |  | 9       |  
|U.S. State and Local         |  |         | 4      |   |          |  | 0       |       |  |  | 4       |  
|Other jurisdictions          |  |         | 5,983  |   |          |  | (549    | )     |  |  | 5,434   |  
|                             |  |         |        |   |          |  |         |       |  |  |         |  
|                             |  |         | 14,137 |   |          |  | (35,049 | )     |  |  | (20,912 | )
|                             |  |         |        |   |          |  |         |       |  |  |         |  

(Loss) earnings before income taxes of the Group consist of the following:



|                         |  |                           |          |   |                           |  |         |                           |  |  |          |  
|------------------------ |  | ------------------------- | -------- | - | ------------------------- |  | ------- | ------------------------- |  |  | -------- | -
|                         |  | YearendedDecember 31,2009 |          |   | YearendedDecember 31,2010 |  |         | YearendedDecember 31,2011 | 
|PRC operations           |  |                           | (212,722 | ) |                           |  | 413,120 |                           |  |  | (540,245 | )
|U.S. operations          |  |                           | 14       |   |                           |  | 23      |                           |  |  | (1,318   | )
|Other foreign operations |  |                           | (42,200  | ) |                           |  | (50,466 | )                         |  |  | (63,250  | )
|                         |  |                           |          |   |                           |  |         |                           |  |  |          |  
|Total                    |  |                           | (254,908 | ) |                           |  | 362,677 |                           |  |  | (604,813 | )
|                         |  |                           |          |   |                           |  |         |                           |  |  |          |  



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##### Table of Contents

LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



The actual income tax (benefit) expense differed from the amounts computed by applying
the PRC statutory income tax rate of 25% to (loss) earnings before income taxes as a result of the following:



|                                                              |  |                            |          |   |                            |  |     |                            |  |  |         |   |  |  |     |    |  |  |          |   |  |  |     |   
|------------------------------------------------------------- |  | -------------------------- | -------- | - | -------------------------- |  | --- | -------------------------- |  |  | ------- | - |  |  | --- | -- |  |  | -------- | - |  |  | --- | --
|                                                              |  | Year endedDecember 31,2009 |          |   | Year endedDecember 31,2010 |  |     | Year endedDecember 31,2011 | 
|(Loss) earnings before income taxes                           |  |                            | (254,908 | ) |                            |  |     |                            |  |  | 362,677 |   |  |  |     |    |  |  | (604,813 | ) |  |  |     |   
|                                                              |  |                            |          |   |                            |  |     |                            |  |  |         |   |  |  |     |    |  |  |          |   |  |  |     |   
|Computed income tax (benefit) expense                         |  |                            | (63,727  | ) |                            |  | 25  | %                          |  |  | 90,669  |   |  |  | 25  | %  |  |  | (151,203 | ) |  |  | 25  | % 
|Effect of tax rate differential                               |  |                            | 33,244   |   |                            |  | (13 | %)                         |  |  | 7,736   |   |  |  | 2   | %  |  |  | 30,156   |   |  |  | (5  | %)
|Change in tax rate                                            |  |                            | 0        |   |                            |  | 0   | %                          |  |  | (743    | ) |  |  | 0   | %  |  |  | 1,687    |   |  |  | 0   | % 
|Non-deductible expenses                                       |  |                            |          |   |                            |  |     |                            |  |  |         |   |  |  |     |    |  |  |          |   |  |  |     |   
|Share-based compensation                                      |  |                            | 3,553    |   |                            |  | (2  | %)                         |  |  | 2,762   |   |  |  | 1   | %  |  |  | 2,482    |   |  |  | (1  | %)
|Others                                                        |  |                            | 39       |   |                            |  | 0   | %                          |  |  | 77      |   |  |  | 0   | %  |  |  | 47       |   |  |  | (0  | %)
|50% additional deduction of R&D expense                       |  |                            | (1,195   | ) |                            |  | 0   | %                          |  |  | (660    | ) |  |  | 0   | %  |  |  | (5,297   | ) |  |  | 1   | % 
|Change in valuation allowance                                 |  |                            | 1,251    |   |                            |  | (0  | %)                         |  |  | 4,621   |   |  |  | 1   | %  |  |  | 174,269  |   |  |  | (29 | %)
|Tax effect on transfer of equity interests within the Group   |  |                            | 0        |   |                            |  | 0   | %                          |  |  | 5,103   |   |  |  | 1   | %  |  |  | (44,332  | ) |  |  | 7   | % 
|Withholding tax on capital payment                            |  |                            | 5,950    |   |                            |  | (2  | %)                         |  |  | 0       |   |  |  | 0   | %  |  |  | 0        |   |  |  | 0   | % 
|Withholding tax on undistributed earnings of PRC subsidiaries |  |                            | 0        |   |                            |  | 0   | %                          |  |  | 3,788   |   |  |  | 1   | %  |  |  | (3,788   | ) |  |  | 1   | % 
|Tax holiday                                                   |  |                            | 0        |   |                            |  | 0   | %                          |  |  | (44,561 | ) |  |  | (12 | %) |  |  | 0        |   |  |  | 0   | % 
|Others                                                        |  |                            | (27      | ) |                            |  | 0   | %                          |  |  | (2,582  | ) |  |  | (1  | %) |  |  | 120      |   |  |  | 0   | % 
|                                                              |  |                            |          |   |                            |  |     |                            |  |  |         |   |  |  |     |    |  |  |          |   |  |  |     |   
|Actual income tax (benefit) expense                           |  |                            | (20,912  | ) |                            |  | 8   | %                          |  |  | 66,210  |   |  |  | 18  | %  |  |  | 4,141    |   |  |  | (1  | %)
|                                                              |  |                            |          |   |                            |  |     |                            |  |  |         |   |  |  |     |    |  |  |          |   |  |  |     |   

Without the tax holiday, the Groups income tax expense would have increased by US$44,561 for the
year ended December 31, 2010, and the impact on basic and diluted (loss) earnings per ordinary share for such periods was as follows:



|                                              |  |                            |      | 
|--------------------------------------------- |  | -------------------------- | ---- | 
|                                              |  | Year endedDecember 31,2010 |     
|Impact on (loss) earnings per ordinary share: |  |                            |      | 
|                                              | 
| Basic                                       |  |                            | 0.35 | 
|                                              |  |                            |      | 
| Diluted                                     |  |                            | 0.33 | 
|                                              |  |                            |      | 

The Group did not enjoy any tax holiday for the year ended December 31, 2009 and 2011.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



The tax effects of temporary differences that give rise to significant portions of the
deferred income tax assets and liabilities are presented below:



|                                                                                                                      |  |                  |         |   |                  |  |          |  
|--------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ---------------- |  | -------- | -
|                                                                                                                      |  | December 31,2010 |         |   | December 31,2011 | 
|Deferred income tax assets:                                                                                           |  |                  |         |   |                  |  |          |  
|Inventories write-down                                                                                                |  |                  | 582     |   |                  |  | 42,395   |  
|Impairment loss on equipment                                                                                          |  |                  | 418     |   |                  |  | 309      |  
|Provision for accounts receivable, prepayments to suppliers and deposit for purchase of property, plant and
equipment |  |                  | 7,232   |   |                  |  | 37,493   |  
|Provision for loss on firm purchase commitment                                                                        |  |                  | 173     |   |                  |  | 5,213    |  
|Accruals                                                                                                              |  |                  | 1,924   |   |                  |  | 3,976    |  
|Capital lease obligation                                                                                              |  |                  | 1,785   |   |                  |  | 1,430    |  
|Deferred revenue                                                                                                      |  |                  | 18,222  |   |                  |  | 18,720   |  
|Tax loss carry forwards                                                                                               |  |                  | 5,926   |   |                  |  | 155,372  |  
|Government subsidy                                                                                                    |  |                  | 7,012   |   |                  |  | 5,609    |  
|                                                                                                                      |  |                  |         |   |                  |  |          |  
|Total gross deferred income tax assets                                                                                |  |                  | 43,274  |   |                  |  | 270,517  |  
|Less: valuation allowance                                                                                             |  |                  | (5,872  | ) |                  |  | (196,994 | )
|                                                                                                                      |  |                  |         |   |                  |  |          |  
|Deferred income tax assets , net of valuation allowance                                                               |  |                  | 37,402  |   |                  |  | 73,523   |  
|                                                                                                                      |  |                  |         |   |                  |  |          |  
|                                                                                                                      |  |                 
|Deferred income tax liabilities:                                                                                      |  |                  |         |   |                  |  |          |  
| Interest capitalized in relation to plant and equipment                                                             |  |                  | (10,549 | ) |                  |  | (9,679   | )
| Property, plant and equipment                                                                                       |  |                  | (185    | ) |                  |  | (7,523   | )
| Withholding tax on undistributed earnings of PRC subsidiaries                                                       |  |                  | (3,788  | ) |                  |  | 0        |  
| Change in fair value of available-for-sale investment                                                               |  |                  | 0       |   |                  |  | (2,200   | )
|                                                                                                                      |  |                  |         |   |                  |  |          |  
|Total gross deferred income tax liabilities                                                                           |  |                  | (14,522 | ) |                  |  | (19,402  | )
|                                                                                                                      |  |                  |         |   |                  |  |          |  
|Net deferred income tax asset                                                                                         |  |                  | 22,880  |   |                  |  | 54,121   |  
|                                                                                                                      |  |                  |         |   |                  |  |          |  
|Classification on consolidated balance sheets:                                                                        |  |                  |         |   |                  |  |          |  
|                                                                                                                      |  |                 
|Deferred income tax assets:                                                                                           |  |                  |         |   |                  |  |          |  
| Current                                                                                                             |  |                  | 15,914  |   |                  |  | 30,931   |  
| Non-current                                                                                                         |  |                  | 21,303  |   |                  |  | 39,376   |  
|                                                                                                                      |  |                 
|Deferred income tax liability:                                                                                        |  |                  |         |   |                  |  |          |  
| Current                                                                                                             |  |                  | 0       |   |                  |  | 0        |  
| Non-current                                                                                                         |  |                  | (14,337 | ) |                  |  | (16,186  | )

The increase in the valuation allowance for the years ended December 31, 2009, 2010 and 2011 were
US$1,251, US$4,621 and US$191,122, respectively. In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized.
As of December 31, 2011, the valuation allowance of US$196,994 was related to the deferred income tax assets of JXLDK and certain European subsidiaries, LDK International, LDKSH, LDK HKT, LDK HKPVT, LDKAH and SPI. The ultimate realization of
deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible or utilized. Management considers the scheduled reversal of deferred income tax liability,
projected future taxable income and tax planning strategies in making this



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



assessment. In order to fully utilize the deferred income tax asset, certain PRC subsidiaries will need to generate future taxable income of approximately US$269,016.

Based upon an assessment of the level of historical taxable income and projections for future taxable income over the periods in which the
deferred income tax assets are deductible or can be utilized, and taking into account the availability of the tax planning strategies, management believes it is more likely than not that the Group will realize the benefits of these deductible
differences, net of the valuation allowance, as of December 31, 2011 and 2010. The amount of the deferred income tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income are reduced.

As of December 31, 2011, the Group has tax loss carryforwards of approximately US$640,295 relating to certain PRC and
overseas subsidiaries. Tax losses of the PRC subsidiaries amounted to US$481,419 as of December 31, 2011, of which US$344, US$5,020 and US$476,055 will expire by the end of 2014, 2015 and 2016 respectively if unutilized. Tax losses of HK
subsidiaries of US$104,114 as of December 31, 2011 can be utilized indefinitely.

The CIT Law and its relevant regulation
impose a 10% withholding income tax for dividends distributed by the PRC subsidiaries to the Company for distribution of earnings generated beginning on January 1, 2008. Undistributed earnings generated prior to January 1, 2008 are exempt
from such withholding tax. The Company did not recognize deferred income tax liabilities of US$18.6 million for the undistributed earnings of approximately US$186.0 million of the PRC subsidiaries as of December 31, 2011 as management plans to
reinvest these earnings indefinitely in the PRC.

As of January 1, 2009 and for each of the three years ended
December 31, 2009, 2010 and 2011, the Group has no unrecognized tax benefits relating to uncertain tax positions. Also, management does not expect that the amount of unrecognized tax benefits will increase significantly within the next 12
months.

The Groups subsidiaries file their income tax returns in the PRC, Hong Kong, United States and European Union.
According to the PRC Tax Administration and Collection Law, the statute of limitation is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitation extends to five
years under special circumstances, where the underpayment of taxes is more than RMB 100 thousand (US$ 15). In the case of transfer pricing issues, the statute of limitation is 10 years. There is no statute of limitation in the case of tax
evasion. The income tax returns of the Groups operating subsidiaries in the PRC for the years ended December 31, 2005 through 2011 are open to examination by the PRC state and local tax authorities. The income tax returns of LDK
International are open to audit for the years ended December 31, 2006 through 2011 under the statute of limitation established by the Hong Kong Inland Revenue Ordinance.

The PRC tax system is subject to substantial uncertainties. There can be no assurance that changes in PRC tax laws or their interpretation or their application will not subject the Groups PRC
entities to substantial PRC taxes in the future.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



|(21) | COMMITMENTS AND CONTINGENCIES
|---- | -----------------------------



|(a) | Capital commitments
|--- | -------------------

Capital commitments outstanding at December 31, 2010 and 2011 not provided for in the financial statements were as follows:



|                                          |  |                  |         |  |                  |  |         | 
|----------------------------------------- |  | ---------------- | ------- |  | ---------------- |  | ------- | 
|                                          |  | December 31,2010 |         |  | December 31,2011 | 
|Purchase of property, plant and equipment |  |                  | 857,275 |  |                  |  | 443,001 | 
|                                          |  |                  |         |  |                  |  |         | 



|(b) | Purchase commitments
|--- | --------------------

As
of December 31, 2011, the Group had entered into certain long-term silicon procurement contracts, under which the Group agreed to purchase silicon materials in an aggregate amount of approximately US$ 43,168 over the next five years.

Future materials purchase commitments are as follows:



|                        |  |          |        | 
|----------------------- |  | -------- | ------ | 
|Year ending December 31 |  | USD 000 |       
|2012                    |  |          | 9,594  | 
|2013                    |  |          | 9,594  | 
|2014                    |  |          | 9,594  | 
|2015                    |  |          | 7,193  | 
|2016                    |  |          | 7,193  | 
|                        |  |          |        | 
|Total                   |  |          | 43,168 | 
|                        |  |          |        | 



|(22) | ORDINARY SHARES
|---- | ---------------

During 2006, the Company issued 75,000,000 ordinary shares at par value of US$ 0.10 per share (adjusted for the
ten-for-one share split effected on July 18, 2006);

In June 2007, the Company issued 14,007,700 American Depositary
Shares (ADSs), representing 14,007,700 ordinary shares. The Companys ADSs are quoted on the New York Stock Exchange;

In June 2007, all issued and outstanding Series A, B and C redeemable convertible preferred shares were converted into 15,580,000 ordinary shares on a one to one basis upon the completion of the
Companys IPO;

In August 2007, 1,457,000 of vested stock options granted to executives and employees were exercised,
resulting in the issuance of 1,457,000 ordinary shares;

In September 2008, the Company issued 4,800,000 ADSs, representing
4,800,000 ordinary shares, at a price of US$ 41.75 per ADS, raising approximately US$ 190,892, net of related expenses of US$ 9,508;

During 2008, 2,265,696 of vested share options granted to executives, employees and investors were exercised, resulting in the issuance of 2,265,696 ordinary shares;

In June 2008 and November 2010, the Company issued 750,000 and 1,500,000 ordinary shares respectively to a third party service company in
preparation for any future exercise of share options. Ordinary shares held by the service company are reduced when share options are exercised by employees. As these ordinary shares are held by this service company on behalf of the Company and do
not contain any voting and



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



dividend rights, they are considered as issued but not outstanding shares and have been excluded in the number of outstanding ordinary shares and the EPS figures as disclosed in the consolidated
financial statements as of and for the years ended December 31, 2009, 2010 and 2011. Ordinary shares held by the service company were 390,653, 249,406 and 1,393,362 ordinary shares as at December 31, 2009, 2010 and 2011 respectively.

In December 2009, the Company issued 16,520,000 ADSs, representing 16,520,000 ordinary shares, at a price of US$ 7.00 per
ADS, raising approximately US$ 109,225 net of related expenses of US$ 6,415;

During 2009, 141,247 of vested share options
granted to executives and employees were exercised, resulting in the issuance of 141,247 ordinary shares.

In January 2010, the
Company issued 1,645,900 ADSs, representing 1,645,900 ordinary shares, at a price of US$ 7.00 per ADS, raising approximately US$ 11,061 net of related expenses of US$ 461;

During 2010, 1,532,712 of vested share options granted to executives and employees were exercised, resulting in the issuance of 1,532,712 ordinary shares;

In February 2011, the Company issued 13,800,000 ADSs, representing 13,800,000 ordinary shares, at a price of US$ 12.4 per ADS,
raising approximately US$162,584 net of related expense of US$ 8,536.

Pursuant to a share repurchase program established on
June 27, 2011, the Group repurchased 18,657,487 ADSs, representing 18,657,487 ordinary shares, in the open market or through privately negotiated transactions, for an aggregate amount of US$110,559 between July 11 and August 26, 2011.

On September 19, 2011, the Group privately issued and placed 4,374,315 ADSs, representing 4,374,315 ordinary shares at a
price of US$5.8958 per share, to LDK New Energy Holding Limited, the controlling shareholder of the Company, raising an aggregate of US$ 25,790.

During 2011, 1,051,717 of vested share options granted to executives and employees were exercised, resulting in the issuance of 1,051,717 ordinary shares.



|(23) | STATUTORY RESERVE
|---- | -----------------

Under the Law of the PRC on Enterprises with Wholly Owned Foreign Investment, the Companys subsidiaries in the
PRC are required to allocate at least 10% of their after tax profits, after making good of accumulated losses as reported in their PRC statutory financial statements, to the general reserve fund and have the right to discontinue allocations to the
general reserve fund if the balance of such reserve has reached 50% of their registered capital. At the Company level, a transfer of US$ nil, US$28,599 and US$17,505 from retained earnings to statutory reserve was recorded for the years ended
December 31, 2009, 2010 and 2011 respectively.



|(24) | SHARE BASED COMPENSATION
|---- | ------------------------

On July 31, 2006, the Company adopted the 2006 Stock Incentive Plan (the Plan) to recognize and
acknowledge the contributions the eligible participants made to the Company and to the business. As of December 31, 2011, options to purchase up to 13,351,880 ordinary shares are authorized under the Plan. Share options are granted at an
exercise price more than or equal to the stocks fair value at the date of grant and have a term of three to five years. Generally, share option granted vest over 3 to 5 years from date of grant while certain options granted vest immediately.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



The fair value of the option award is estimated on the date of grant using a
lattice-based option valuation model, which incorporates ranges of assumptions for inputs as noted in the following table. Prior to the Initial Public Offering (IPO) in June 2007, because the Company did not maintain an internal market
for its shares, the expected volatility was based on the historical volatilities of comparable publicly traded companies engaged in similar industry. The Company uses historical data to estimate employee termination within the valuation model. The
expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The employees that were granted the share options are expected to
exhibit the same behavior. Since the share options once exercised will primarily trade in the U.S. capital market and there was no comparable PRC zero coupon rate, the risk-free rate for periods within the contractual life of the option is based on
the U.S. Treasury Note as of the grant date.

Following the Companys IPO, because the Company did not have a sufficient
historical transaction data to date to calculate the volatility, the expected volatility was still based on the historical volatilities of comparable publicly traded companies engaged in similar industry until 2010. Subsequent to 2010, the
Companys calculation of expected volatility was based on the implied volatility of the Company as of the grant date. Other computational methodologies and assumptions remained unchanged.



|                                                   |  |      |                 |  |      |  |                 |      |  |  |                  | 
|-------------------------------------------------- |  | ---- | --------------- |  | ---- |  | --------------- | ---- |  |  | ---------------- | 
|                                                   |  | 2009 |                 |  | 2010 |  |                 | 2011 | 
|Expected volatility                                |  |      | 60.89%~62.31%   |  |      |  | 70.28%~88.64%   |      |  |  | 58.88%~ 63.96%   | 
|Expected dividends                                 |  |      | 0%              |  |      |  | 0%              |      |  |  | 0%               | 
|Expected term                                      |  |      | 9.42~9.50 years |  |      |  | 5.91~8.56 years |      |  |  | 5.51~ 6.95 years | 
|Risk-free interest rate                            |  |      | 2.22%~2.85%     |  |      |  | 2.44%~3.88%     |      |  |  | 3.02%~ 3.66%     | 
|Estimated fair value of underlying ordinary shares |  |      | US$5.84~US$9.80 |  |      |  | US$5.50~US$9.54 |      |  |  | US$3.79~US$7.84  | 

Prior to the IPO, the estimated fair value of the underlying ordinary shares granted was determined based
on a valuation analysis performed by Sallmanns based on various generally accepted valuation methodologies. Management determined that the income approach was appropriate to determine the fair value of the Companys business and its share
price.

The weighted-average grant-date fair value of options granted during the years ended December 31, 2009, 2010 and
2011 was US$8.19, US$5.76 and US$7.07 per share, respectively. The Company recorded non-cash share-based compensation expense of US$14,212, US$11,044 and US$9,927 for the years ended December 31, 2009, 2010 and 2011 respectively, in respect of
share options granted to employees, of which US$1,881 (2010: US$2,783; 2009: US$3,381) was allocated to costs of goods sold, US$7,260 (2010: US$7,717; 2009: US$10,478) was allocated to general and administrative expenses, US$126 (2010: US$57; 2009:
US$32) was allocated to selling expenses and US$660 (2010: US$487; 2009: US$321) was allocated to research and development costs. No non-cash share-based compensation expense was incurred for the years ended December 31, 2009, 2010 and
2011 respectively in respect of share options granted to non-employees.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



A summary of options for the years ended December 31, 2009, 2010 and 2011 is
presented below:



|                                     |  |           |            |   |               |  |          |                            |  |  |                                       |   |  |                                         |       |  |                         |  |            |  |  |  |        | 
|------------------------------------ |  | --------- | ---------- | - | ------------- |  | -------- | -------------------------- |  |  | ------------------------------------- | - |  | --------------------------------------- | ----- |  | ----------------------- |  | ---------- |  |  |  | ------ | 
|                                     |  | Employees |            |   | Non-employees |  |          | Number oftotal shareoption |  |  | Weightedaverageexerciseprice pershare |   |  | Weightedaverageremainingcontractualterm |       |  | Aggregateintrinsicvalue | 
|For the year ended December 31, 2009 |  |           |            |   |               |  |          |                            |  |  |                                       |   |  |                                         |       |  |                         |  |            |  |  |  |        | 
|                                     |  |           |            |   |               | 
|Outstanding as of December 31, 2008  |  |           | 6,268,499  |   |               |  | 130,000  |                            |  |  | 6,398,499                             |   |  | US$                                     | 11.93 |  |                         |  |            |  |  |  |        | 
|                                     |  |           |            |   |               |  |          |                            |  |  |                                       |   |  |                                         |       |  |                         |  |            |  |  |  |        | 
|Granted during 2009                  |  |           | 710,400    |   |               |  | 0        |                            |  |  | 710,400                               |   |  | US$                                     | 11.20 |  |                         |  |            |  |  |  |        | 
|Exercised                            |  |           | (41,247    | ) |               |  | (100,000 | )                          |  |  | (141,247                              | ) |  | US$                                     | 5.56  |  |                         |  |            |  |  |  |        | 
|Forfeited or cancelled               |  |           | (604,796   | ) |               |  | 0        |                            |  |  | (604,796                              | ) |  | US$                                     | 26.94 |  |                         |  |            |  |  |  |        | 
|Outstanding as of December 31, 2009  |  |           | 6,332,856  |   |               |  | 30,000   |                            |  |  | 6,362,856                             |   |  | US$                                     | 10.57 |  |                         |  | 2.0years   |  |  |  | 7,039  | 
|                                     |  |           |            |   |               |  |          |                            |  |  |                                       |   |  |                                         |       |  |                         |  |            |  |  |  |        | 
|                                     |  |           |            |   |               | 
|                                     |  | Employees |            |   | Non-employees |  |          | Number oftotal shareoption |  |  | Weightedaverageexerciseprice pershare |   |  | Weightedaverageremainingcontractualterm |       |  | Aggregateintrinsicvalue | 
|For the year ended December 31, 2010 |  |           |            |   |               |  |          |                            |  |  |                                       |   |  |                                         |       |  |                         |  |            |  |  |  |        | 
|                                     |  |           |            |   |               | 
|Outstanding as of December 31, 2009  |  |           | 6,332,856  |   |               |  | 30,000   |                            |  |  | 6,362,856                             |   |  | US$                                     | 10.57 |  |                         |  |            |  |  |  |        | 
|                                     |  |           |            |   |               |  |          |                            |  |  |                                       |   |  |                                         |       |  |                         |  |            |  |  |  |        | 
|Granted during 2010                  |  |           | 6,818,437  |   |               |  | 0        |                            |  |  | 6,818,437                             |   |  | US$                                     | 7.12  |  |                         |  |            |  |  |  |        | 
|Exercised                            |  |           | (1,532,712 | ) |               |  | 0        |                            |  |  | (1,532,712                            | ) |  | US$                                     | 4.55  |  |                         |  |            |  |  |  |        | 
|Forfeited or cancelled               |  |           | (503,463   | ) |               |  | 0        |                            |  |  | (503,463                              | ) |  | US$                                     | 21.29 |  |                         |  |            |  |  |  |        | 
|Outstanding as of December 31, 2010  |  |           | 11,115,118 |   |               |  | 30,000   |                            |  |  | 11,145,118                            |   |  | US$                                     | 8.80  |  |                         |  | 6.43 years |  |  |  | 29,992 | 
|                                     |  |           |            |   |               |  |          |                            |  |  |                                       |   |  |                                         |       |  |                         |  |            |  |  |  |        | 



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



|                                                   |  |           |            |   |               |  |         |                            |  |  |                                       |   |  |                                         |       |  |                         |  |            |  |  |  |   | 
|-------------------------------------------------- |  | --------- | ---------- | - | ------------- |  | ------- | -------------------------- |  |  | ------------------------------------- | - |  | --------------------------------------- | ----- |  | ----------------------- |  | ---------- |  |  |  | - | 
|                                                   |  | Employees |            |   | Non-employees |  |         | Number oftotal shareoption |  |  | Weightedaverageexerciseprice pershare |   |  | Weightedaverageremainingcontractualterm |       |  | Aggregateintrinsicvalue | 
|For the year ended December 31, 2011               |  |           |            |   |               |  |         |                            |  |  |                                       |   |  |                                         |       |  |                         |  |            |  |  |  |   | 
|                                                   |  |           |            |   |               | 
|Outstanding as of December 31, 2010                |  |           | 11,115,118 |   |               |  | 30,000  |                            |  |  | 11,145,118                            |   |  | US$                                     | 8.8   |  |                         |  |            |  |  |  |   | 
|                                                   |  |           |            |   |               |  |         |                            |  |  |                                       |   |  |                                         |       |  |                         |  |            |  |  |  |   | 
|Granted during 2011                                |  |           | 665,700    |   |               |  | 0       |                            |  |  | 665,700                               |   |  | US$                                     | 10.77 |  |                         |  |            |  |  |  |   | 
|Exercised                                          |  |           | (1,021,717 | ) |               |  | (30,000 | )                          |  |  | (1,051,717                            | ) |  | US$                                     | 4.51  |  |                         |  |            |  |  |  |   | 
|Forfeited or cancelled                             |  |           | (1,269,816 | ) |               |  | 0       |                            |  |  | (1,269,816                            | ) |  | US$                                     | 9.59  |  |                         |  |            |  |  |  |   | 
|Outstanding as of December 31, 2011                |  |           | 9,489,285  |   |               |  | 0       |                            |  |  | 9,489,285                             |   |  | US$                                     | 9.31  |  |                         |  | 6.64 years |  |  |  | 0 | 
|                                                   |  |           |            |   |               |  |         |                            |  |  |                                       |   |  |                                         |       |  |                         |  |            |  |  |  |   | 
|Vested or expected to vest as of December 31, 2011 |  |           | 9,484,343  |   |               |  | 0       |                            |  |  | 9,484,343                             |   |  | US$                                     | 9.31  |  |                         |  | 6.64 years |  |  |  | 0 | 
|                                                   |  |           |            |   |               |  |         |                            |  |  |                                       |   |  |                                         |       |  |                         |  |            |  |  |  |   | 
|Exercisable as of December 31, 2011                |  |           | 3,629,779  |   |               |  | 0       |                            |  |  | 3,629,779                             |   |  | US$                                     | 11.8  |  |                         |  | 3.80 years |  |  |  | 0 | 
|                                                   |  |           |            |   |               |  |         |                            |  |  |                                       |   |  |                                         |       |  |                         |  |            |  |  |  |   | 

The total intrinsic value of options exercised during the years ended December 31, 2009, 2010 and
2011 was US$711, US$4,719 and US$4,160 respectively.

The Company reduced the exercise price and extended the vesting period of
60,000 and 448,000 unvested share options held by employees in 2008 and 2009. The total incremental value as a result of the modification amounted to US$ 304 and US$2,559 in 2008 and 2009 respectively, which is recognized ratably over 3-5 years from
the date of modification. The Company has elected to bifurcate the amounts and recognize the incremental value over the period from the modification date until the date when the modified share option vest. The modified share options were included in
the number of share options granted and number of share options forfeited or cancelled for the years ended December 31, 2008 and 2009.

As of December 31, 2011, there was US$29,558 (2010: US$37,834) of total unrecognized compensation cost related to non-vested share options. This cost is expected to be recognized over a weighted
average period of approximately 3.31 years (2010: 4.1 years). The Company is expected to issue new shares to satisfy share option exercises. Cash received from the exercise of options under the share option plans during 2011 was US$4,745 (2010:
US$6,968).



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



|(25) | (LOSS) EARNINGS PER SHARE
|---- | -------------------------

The computation of basic and diluted (loss) earnings per share is as follows:



|                                                                                                                                                 |  |                           |             |   |                           |  |             |                           |  |  |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------- | ----------- | - | ------------------------- |  | ----------- | ------------------------- |  |  | ----------- | -
|                                                                                                                                                 |  | YearendedDecember 31,2009 |             |   | YearendedDecember 31,2010 |  |             | YearendedDecember 31,2011 | 
|Numerator used in basic (loss) earnings per share                                                                                                |  |                           |             |   |                           |  |             |                           |  |  |             |  
|Net (loss)/ income attributable to LDK Solar Co., Ltd. shareholders                                                                              |  |                           | (234,225    | ) |                           |  | 290,797     |                           |  |  | (620,869    | )
|Accretion to redemption value of redeemable non-controlling interests                                                                            |  |                           | 0           |   |                           |  | 0           |                           |  |  | (34,590     | )
|                                                                                                                                                 |  |                           |             |   |                           |  |             |                           |  |  |             |  
| Net (loss) income available to LDK Solar Co., Ltd. shareholders                                                                                |  |                           | (234,225    | ) |                           |  | 290,797     |                           |  |  | (655,459    | )
|                                                                                                                                                 |  |                           |             |   |                           |  |             |                           |  |  |             |  
|Plus interest expenses and amortization of convertible senior notes issuance costs and debt discount                                             |  |                           | 0           |   |                           |  | 19,278      |                           |  |  | 0           |  
|                                                                                                                                                 |  |                           |             |   |                           |  |             |                           |  |  |             |  
|Numerator used in diluted (loss) earnings per share                                                                                              |  |                           | (234,225    | ) |                           |  | 310,075     |                           |  |  | (655,459    | )
|                                                                                                                                                 |  |                           |             |   |                           |  |             |                           |  |  |             |  
|Shares (denominator):                                                                                                                            |  |                           |             |   |                           |  |             |                           |  |  |             |  
|Weighted average number of ordinary shares outstanding used in computing basic (loss) earnings per share                                         |  |                           | 107,238,244 |   |                           |  | 125,580,754 |                           |  |  | 133,806,940 |  
|                                                                                                                                                 |  |                           |             |   |                           |  |             |                           |  |  |             |  
|Plus incremental weighted average number of ordinary shares from assumed conversion of stock options using the treasury stock
method             |  |                           | 0           |   |                           |  | 841,673     |                           |  |  | 0           |  
|Plus incremental weighted average number of ordinary shares from assumed conversion of convertible senior notes using the as-if
converted method |  |                           | 0           |   |                           |  | 10,145,865  |                           |  |  | 0           |  
|                                                                                                                                                 |  |                           |             |   |                           |  |             |                           |  |  |             |  
|Weighted average number of ordinary shares outstanding used in computing diluted (loss) earnings per share                                       |  |                           | 107,238,244 |   |                           |  | 136,568,292 |                           |  |  | 133,806,940 |  
|                                                                                                                                                 |  |                           |             |   |                           |  |             |                           |  |  |             |  
|(Loss) earnings per share  basic                                                                                                                |  |                           | (2.18       | ) |                           |  | 2.32        |                           |  |  | (4.90       | )
|                                                                                                                                                 |  |                           |             |   |                           |  |             |                           |  |  |             |  
|(Loss) earnings per share  diluted                                                                                                              |  |                           | (2.18       | ) |                           |  | 2.27        |                           |  |  | (4.90       | )
|                                                                                                                                                 |  |                           |             |   |                           |  |             |                           |  |  |             |  

The computation of basic and dilutive (loss) earnings per share for the years ended December 31,
2009, 2010 and 2011 reflects a reduction of the weighted average of 6,345,450 ordinary shares deemed to have been retired as a result of the Prepaid Forward Contracts (see Note 19).

During the year ended December 31, 2011 the Groups dilutive potential ordinary shares outstanding consist of convertible senior
notes and share options. The computation of diluted loss per share for the year ended December 31, 2011 did not assume conversion of the convertible senior notes because, when applying the as-if converted method, the effect of the 3,398,960
ordinary shares issuable upon conversion of the convertible senior notes under the conversion terms of the convertible senior notes agreements was anti-dilutive. In computing diluted loss per share for the year ended December 31, 2011, there
was no dilutive effect of outstanding share options of 275,365 by applying the treasury stock method because the impact was anti-dilutive.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



During the year ended December 31, 2010 the Groups dilutive potential
ordinary shares outstanding consist of convertible senior notes and share options. The computation of diluted earnings per share for the year ended December 31, 2010 assume conversion of the convertible senior notes because, when applying the
as-if converted method, the effect of the 10,145,865 ordinary shares issuable upon conversion of the convertible senior notes under the conversion terms of the convertible senior notes agreements was dilutive. In computing diluted earnings per share
for the year ended December 31, 2010, there was dilutive effect of outstanding share options of 841,673 by applying the treasury stock method because the ordinary shares assumed to be issued upon the exercise of the share options was more than
the number of shares assumed to be purchased at the average estimated fair value during the period. The proceeds used for the assumed purchase include the sum of the exercise price of the share options and the average unrecognized compensation cost.

During the year ended December 31, 2009 the Groups dilutive potential ordinary shares outstanding consist of
convertible senior notes and share options. The computation of diluted loss per share for the year ended December 31, 2009 did not assume conversion of the convertible senior notes because, when applying the as-if converted method, the effect
of the 10,181,360 ordinary shares issuable upon conversion of the convertible senior notes under the conversion terms of the convertible senior notes agreements was anti-dilutive. In computing diluted loss per share for the year ended
December 31, 2009, there was no dilutive effect of outstanding share options of 1,234,030 by applying the treasury stock method because the impact was anti-dilutive.



|(26) | SEGMENT REPORTING AND CONCENTRATION OF RISK
|---- | -------------------------------------------

ASC 280, Segment Reporting, establishes standards for companies to report in their financial statements
information about operating segments, products, services, geographic areas and major customers. The method of determining what information to report is based on the way that management organizes the operating segments within the company for making
operating decisions and assessing financial performance.

The Company operates in two principal reportable business segments,
Polysilicon (Polysilicon segment) and Wafer, cell, module and PV project (Other PV products segment). The Polysilicon segment involves production and sales of polysilicon. The Other PV products segment involves the
manufacture and sales of monocrystalline and multicrystalline solar wafers and PV modules and processing services, manufacture and sales of PV cells and the development of power plant projects. Miscellaneous revenues and expenses and other
unallocated costs and expenses are recorded in Other. The chief operating decision maker is the chief executive officer of the Company.

Consistent with the reports received and reviewed by the chief operating decision maker for purpose of assessing the financial performance and allocating resources of the two business segments, the
Company reports the segment information at the net sales and gross profit level.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



The following table summarizes the Companys revenues generated from each segment:



|                      |  |                              |        |   |                         |  |           |             |  |  |         |   |  |  |           |  
|--------------------- |  | ---------------------------- | ------ | - | ----------------------- |  | --------- | ----------- |  |  | ------- | - |  |  | --------- | -
|                      |  | Year Ended December 31, 2009 |       
|                      |  | Polysiliconsegment           |        |   | Other PVproductssegment |  |           | Elimination |  |  | Total   |  
|Net sales             |  |                              | 18,064 |   |                         |  | 1,095,958 |             |  |  | (15,984 | ) |  |  | 1,098,038 |  
|Depreciation          |  |                              | (2,111 | ) |                         |  | (60,447   | )           |  |  | 0       |   |  |  | (62,558   | )
|Inventory write-downs |  |                              | 0      |   |                         |  | (180,213  | )           |  |  | 0       |   |  |  | (180,213  | )
|Gross profit (loss)   |  |                              | 3,169  |   |                         |  | (114,688  | )           |  |  | (2,064  | ) |  |  | (113,583  | )
|                      |  |                              |        |   |                         |  |           |             |  |  |         |   |  |  |           |  

|                      |  |                              |         |   |                         |  |           |             |  |  |          |   |  |  |           |  
|--------------------- |  | ---------------------------- | ------- | - | ----------------------- |  | --------- | ----------- |  |  | -------- | - |  |  | --------- | -
|                      |  | Year Ended December 31, 2010 |        
|                      |  | Polysiliconsegment           |         |   | Other PVproductssegment |  |           | Elimination |  |  | Total    |  
|Net sales             |  |                              | 272,791 |   |                         |  | 2,425,874 |             |  |  | (189,318 | ) |  |  | 2,509,347 |  
|Depreciation          |  |                              | (67,733 | ) |                         |  | (82,598   | )           |  |  | 0        |   |  |  | (150,331  | )
|Inventory write-downs |  |                              | 0       |   |                         |  | (6,113    | )           |  |  | 0        |   |  |  | (6,113    | )
|Gross profit (loss)   |  |                              | 60,707  |   |                         |  | 536,850   |             |  |  | (39,722  | ) |  |  | 557,835   |  
|                      |  |                              |         |   |                         |  |           |             |  |  |          |   |  |  |           |  

|                      |  |                              |         |   |                         |  |            |             |  |  |          |   |  |  |            |  
|--------------------- |  | ---------------------------- | ------- | - | ----------------------- |  | ---------- | ----------- |  |  | -------- | - |  |  | ---------- | -
|                      |  | Year Ended December 31, 2011 |        
|                      |  | Polysiliconsegment           |         |   | Other PVproductssegment |  |            | Elimination |  |  | Total    |  
|Net sales             |  |                              | 599,208 |   |                         |  | 2,012,180  |             |  |  | (453,575 | ) |  |  | 2,157,813  |  
|Depreciation          |  |                              | (99,423 | ) |                         |  | (112,099   | )           |  |  | 0        |   |  |  | (211,522   | )
|Inventory write-downs |  |                              | (743    | ) |                         |  | (304,432   | )           |  |  | 0        |   |  |  | (305,175   | )
|Gross profit (loss)   |  |                              | 208,972 |   |                         |  | (2,238,992 | )           |  |  | (167,454 | ) |  |  | (2,197,474 | )
|                      |  |                              |         |   |                         |  |            |             |  |  |          |   |  |  |            |  

The following table summarizes the Groups net revenues, based on the geographic location of the
customers:



|                                                 |  |                            |           |  |                            |  |           |                            |  |  |           | 
|------------------------------------------------ |  | -------------------------- | --------- |  | -------------------------- |  | --------- | -------------------------- |  |  | --------- | 
|                                                 |  | Year endedDecember 31,2009 |           |  | Year endedDecember 31,2010 |  |           | Year endedDecember 31,2011 | 
|Mainland China                                   |  |                            | 274,019   |  |                            |  | 858,988   |                            |  |  | 833,387   | 
|Europe excluding Germany                         |  |                            | 57,944    |  |                            |  | 380,339   |                            |  |  | 437,616   | 
|Asia Pacific excluding mainland China and Taiwan |  |                            | 198,484   |  |                            |  | 306,072   |                            |  |  | 320,285   | 
|Taiwan                                           |  |                            | 354,126   |  |                            |  | 260,100   |                            |  |  | 251,040   | 
|Germany                                          |  |                            | 165,891   |  |                            |  | 512,464   |                            |  |  | 181,915   | 
|North America                                    |  |                            | 47,574    |  |                            |  | 191,384   |                            |  |  | 133,570   | 
|                                                 |  |                            |           |  |                            |  |           |                            |  |  |           | 
|Total net revenue                                |  |                            | 1,098,038 |  |                            |  | 2,509,347 |                            |  |  | 2,157,813 | 
|                                                 |  |                            |           |  |                            |  |           |                            |  |  |           | 



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



Significant concentrations

The carrying amounts of cash and cash equivalents, pledged bank deposits, trade accounts receivable, prepayments and other current assets
represent the Groups maximum exposure to credit risk in relation to financial assets. As of December 31, 2011, substantially all of the Groups cash and cash equivalents and pledged bank deposits were held in major financial
institutions located in the mainland China, the Hong Kong Special Administrative Region, European Union and USA, which management believes have high credit ratings. As of December 31, 2011, cash and cash equivalents and pledged bank deposits
held in mainland China, Hong Kong, European and USA financial institutions amounted to US$840,771 in total and were denominated in the following currencies:



|                           |  |         |         |  |         |  |        |         |  |  |           |  |  |  |    | 
|-------------------------- |  | ------- | ------- |  | ------- |  | ------ | ------- |  |  | --------- |  |  |  | -- | 
|                           |  | US$     |         |  | EUR    |  |        | RMB     |  |  | HKD       | 
|                           |  | (000s) |         |  | (000s) |  |        | (000s) |  |  | (000s)   | 
|In mainland China          |  |         | 68,648  |  |         |  | 2,535  |         |  |  | 4,546,951 |  |  |  | 0  | 
|In Hong Kong               |  |         | 3,006   |  |         |  | 1,585  |         |  |  | 767       |  |  |  | 75 | 
|In USA                     |  |         | 31,786  |  |         |  | 5      |         |  |  | 0         |  |  |  | 0  | 
|In European Union          |  |         | 0       |  |         |  | 7,892  |         |  |  | 0         |  |  |  | 0  | 
|                           |  |         |         |  |         |  |        |         |  |  |           |  |  |  |    | 
|Total in original currency |  |         | 103,440 |  |         |  | 12,017 |         |  |  | 4,547,718 |  |  |  | 75 | 
|                           |  |         |         |  |         |  |        |         |  |  |           |  |  |  |    | 
|US$ equivalent             |  |         | 103,440 |  |         |  | 15,567 |         |  |  | 721,755   |  |  |  | 10 | 
|                           |  |         |         |  |         |  |        |         |  |  |           |  |  |  |    | 

The following represents the amount of sales to customers that directly or indirectly contributed, on an
individual basis, 10% or more of revenue for the years ended December 31, 2009, 2010 and 2011:



|           |  |                  |         |  |                  |  |         |                  |  |  |        | 
|---------- |  | ---------------- | ------- |  | ---------------- |  | ------- | ---------------- |  |  | ------ | 
|           |  | December 31,2009 |         |  | December 31,2010 |  |         | December 31,2011 | 
|Customer A |  |                  | 137,393 |  |                  |  | 109,597 |                  |  |  | 97,576 | 
|Customer B |  |                  | 117,893 |  |                  |  | 212,393 |                  |  |  | 30,378 | 

Accounts receivable balances due from the above customers are as follows:



|           |  |                  |        |  |                  |  |       | 
|---------- |  | ---------------- | ------ |  | ---------------- |  | ----- | 
|           |  | December 31,2010 |        |  | December 31,2011 | 
|Customer A |  |                  | 56,185 |  |                  |  | 6,037 | 
|Customer B |  |                  | 9,563  |  |                  |  | 5,238 | 

A significant portion of the Companys outstanding accounts receivables is derived from sales to a
limited number of customers. As of December 31, 2010 and 2011, in addition to the accounts receivable balances due from customers disclosed above, outstanding accounts receivables with individual customers in excess of 10% of total accounts
receivables are as follows:



|           |  |                  |        |  |                  |  |   | 
|---------- |  | ---------------- | ------ |  | ---------------- |  | - | 
|           |  | December 31,2010 |        |  | December 31,2011 | 
|Customer C |  |                  | 41,135 |  |                  |  | 0 | 

Solar-grade polysilicon feedstock is an essential raw material in manufacturing the Groups
multicrystalline solar wafers. The Groups operations depend on its ability to procure sufficient quantities of solar-grade polysilicon on a timely basis. The Groups failure to obtain sufficient quantities of polysilicon in a timely
manner could disrupt its operations, prevent it from operating at full capacity or limit its ability to expand as planned, which will reduce, and stunt the growth of its manufacturing output and revenue.



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



In order to secure stable supply of polysilicon and other raw materials, the Group makes
prepayments to certain suppliers. Such amounts are recorded as prepayments to suppliers on the consolidated balance sheets and amounted to US$146,350 for the year ended December 31, 2011 (2010: US$168,755). The Group makes the prepayments
without receiving collateral for such payments. As a result, the Groups claims for such prepayments would rank only as an unsecured claim, which exposes the Group to the credit risks of the suppliers. A provision for doubtful recoveries of
US$17,874, US$4,749 and US$70,459 for prepayments to suppliers was recognized for the years ended December 31, 2009, 2010 and 2011, respectively. As of December 31, 2010 and 2011, outstanding prepayments to individual suppliers in excess
of 10% of total prepayments to suppliers, net are as follows:



|           |  |                  |        |  |                  |  |       | 
|---------- |  | ---------------- | ------ |  | ---------------- |  | ----- | 
|           |  | December 31,2010 |        |  | December 31,2011 | 
|Supplier A |  |                  | 0      |  |                  |  | 4,746 | 
|Supplier B |  |                  | 18,126 |  |                  |  | 4,233 | 
|Supplier C |  |                  | 0      |  |                  |  | 3,589 | 
|Supplier D |  |                  | 60,826 |  |                  |  | 25    | 

In addition to the above, the Group also made significant prepayments to Best Solar Co., Ltd. (Best
Solar), which is controlled by Mr. Peng, for purchase of modules, which were recorded under due from related parties. See note 27 (b) for details.

The Group relies on a limited number of equipment suppliers for all of its principal manufacturing equipment. There is currently a shortage globally of the equipment required for its manufacturing process
and capacity expansion. If any of the Groups major equipment suppliers encounter difficulties in the manufacturing or shipment of its equipment to the Group or otherwise fail to supply equipment according to its requirements, it will be
difficult for the Group to find alternative providers for such equipment on a timely basis which in turn could adversely affect its production and sales.

Business and economic risks

The Group operates in an industry with limited
operating history and believes that changes in any of the following areas could have a material adverse effect on the Groups future financial position, results of operations or cash flows: advances and new trends in new technologies and
industry standards; capital market performance and public interest in companies operating in the PRC that are listed in the United States; competition from other competitors; changes in certain strategic relationships or customers relationships;
regulatory or other factors; the ability to obtain necessary financial and other resources at commercially viable terms; the ability to attract and retain employees necessary to support the Groups growth and general risks associated with the
solar industry.

The Group conducts its principal operations in the PRC and accordingly is subject to special considerations
and significant risks not typically associated with investments in equity securities of United States and Western European companies. These include risks associated with, among others, the political, economic, legal environment and social
uncertainties in the PRC, government agencies influence over certain aspects of the Groups operations and competition in the solar industry.

In addition, the ability to negotiate and implement specific business development projects in a timely and favorable manner may be impacted by political considerations unrelated to or beyond the control
of the Group. Although the PRC government has been pursuing economic reform policies for the past two decades, no assurance can be given that the PRC government will continue to pursue such policies or that



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



such policies may not be significantly altered. There is also no guarantee that the PRC governments pursuit of economic reforms will be consistent or effective and as a result, changes in
the rate or method of taxation and changes in State policies may have a negative impact on the Groups operating results and financial position.

Solar energy application requires significant initial capital investment. Industry demand for solar energy products depends on the availability of financing to downstream customers. The Groups
business and results of operations were adversely affected by the global economy slowdown and European debit crisis in 2011, which led to volatility in security prices, severely diminished liquidity and credit availability. Severe erosion on average
selling price of the Groups products was witnessed from the second quarter of 2011. This sustainable growth in solar energy market therefore has great uncertainty as the ultimate stabilization of global economy is uncertain under the current
macroeconomic market. Demand for our products might fluctuate if solar industry end-customers are not able to finance PV systems at a competitive cost.

The Group cannot assure that there will be no further deterioration of the global credit condition and any resulting effects of changes, including those described above, may have a material and adverse
effect on the Groups business, results of operations and financial condition in 2012.

Currency risk

The RMB is not a freely convertible currency. The PRC State Administration for Foreign Exchange, under the authority of the Peoples
Bank of China, controls the conversion of RMB into foreign currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the PRC foreign
exchange trading system market.



|(27) | RELATED PARTY TRANSACTIONS
|---- | --------------------------

For the periods presented, in addition to the guarantees and security provided by related parties for the Groups
bank borrowings in Note (11), the principal related party transactions and amounts outstanding with the related parties are summarized as follows:



|                                                                          |  |                            |        |  |                            |  |        |                            |  |  |        | 
|------------------------------------------------------------------------- |  | -------------------------- | ------ |  | -------------------------- |  | ------ | -------------------------- |  |  | ------ | 
|                                                                          |  | YearendedDecember 
31,2009 |        |  | YearendedDecember 
31,2010 |  |        | YearendedDecember 
31,2011 | 
|Sales of wafers under related parties arrangement (note a)                |  |                            | 56,132 |  |                            |  | 0      |                            |  |  | 0      | 
|Purchases of modules production equipment from Best Solar (note b)        |  |                            | 0      |  |                            |  | 21,248 |                            |  |  | 0      | 
|Purchases of inventories from Best Solar (note b)                         |  |                            | 78,079 |  |                            |  | 80,869 |                            |  |  | 0      | 
|Purchase of buildings, plant and land use rights from Best Solar (note b) |  |                            | 0      |  |                            |  | 0      |                            |  |  | 61,574 | 
|Sales of modules and cells to Best Solar (note b)                         |  |                            | 0      |  |                            |  | 4,587  |                            |  |  | 0      | 
|Sales of PV project to Best Solar (note b)                                |  |                            | 0      |  |                            |  | 0      |                            |  |  | 723    | 
|Purchases of low value consumables from a related party (note c)          |  |                            | 509    |  |                            |  | 1,993  |                            |  |  | 573    | 
|Purchases of auxiliary from a related party (note d)                      |  |                            | 0      |  |                            |  | 7,821  |                            |  |  | 11,142 | 
|Purchases of crucibles from an associate (note e)                         |  |                            | 1,271  |  |                            |  | 14,252 |                            |  |  | 18,116 | 
|Sales of modules and other PV products to Geermu Hydropower (note f)      |  |                            | 0      |  |                            |  | 0      |                            |  |  | 36,526 | 



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



|(a) | During the year ended December 31, 2009, JXLDK entered into three wafer sales contracts with Gintech and one wafer sales contract with Motech with contract values
of US$52,350 and US$3,782, respectively (collectively referred as Wafer Sales Contracts). In addition, Gintech and Motech entered into agreements to sell corresponding quantities of cells (Cell Sales Agreement) to Best Solar.
The Company respectively agreed with Gintech and Motech that these Wafer Sales Contracts will be void if Best Solar did not procure the cells from Gintech and Motech pursuant to the Cell Sales Agreement. During the year ended December 31, 2009,
JXLDK recognized revenue of US$56,132 relating to these Wafer Sales Contracts when Gintech and Motech accepted delivery of wafers supplied by the Group and Best Solar accepted delivery of cells respectively supplied by Gintech and Motech.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | On February 28, 2010, the Group purchased the crystalline module production equipment from Best Solar at a consideration of US$21,248, which approximates their
fair value in the market and carrying value as recorded in the books of Best Solar.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Group purchased the
crystalline modules of US$78,079 and US$29,426 from Best Solar during the years ended December 31, 2009 and 2010 respectively. The Group also purchased raw materials and supplies relating to crystalline modules production of US$51,443 from Best
Solar during the year ended December 31, 2010. Furthermore, the Group made prepayment of US$15,573 to Best Solar under a thin-film module purchase agreement during the year ended December 31, 2010 and made prepayments of US$37,615 to Best
Solar for crystalline module purchases and processing during the year ended December 31, 2009.

The Group purchased
buildings, plant and land use rights of US$61,574 for module production from Best Solar during the year ended December 31, 2011.

The Group sold crystalline modules and cells of US$4,587 to Best Solar during the year ended December 31, 2010.

The Group sold a PV project of US$723 to Best Solar during the year ended December 31, 2011.

The outstanding amounts due from Best Solar as of December 31, 2010 and 2011 were US$44,839 and US$1,665 respectively. The outstanding amounts due to Best Solar as of December 31, 2010 and 2011
were US$ nil respectively.



|(c) | The Group purchased low value consumables from Jiangxi Liouxin Industry Co., Ltd., (JXLXI) which is a company controlled by Mr. Peng, amounting to
US$509, US$1,993 and US$573 during the years ended December 31, 2009, 2010 and 2011 respectively. The outstanding amount due to JXLXI was US$949 and US$1,519 as of December 31, 2010 and 2011 respectively.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(d) | The Group purchased auxiliary materials of US$7,821 and US$11,142 from Saiwen Industry (Suzhou) Co., Ltd., (SZSW), a company controlled by Mr. Peng,
during the years ended December 31, 2010 and 2011 respectively. The outstanding amounts due to SZSW was US$2,211 and US$8,340 as of December 31, 2010 and 2011 and due from SZSW was US$ nil and US$850 as of December 31, 2010 and 2011.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(e) | JXLDK purchased crucibles from Sinoma, which is an equity method investee of JXLDK, amounting to US$1,271, US$14,252 and US$18,116 during the years ended
December 31, 2009, 2010 and 2011 respectively. The outstanding amount due to Sinoma was US$11,874 and US$9,460 as of December 31, 2010 and 2011.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(f) | The Group sold module and other PV products of US$36,526 to Geermu Hydropower, which is an equity method investee of LDK Solar Power Technology (Xinyu) Engineering Co.,
Ltd., during the year ended December 31, 2011. The outstanding amount due from Geermu Hydropower was US$38,805 as of December 31, 2011.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



In addition to the above, certain of the Groups executives and employees exercised
share options which vested in 2007 and 2008. Pursuant to the PRC tax regulations, the income derived from the exercise of the share options is subject to individual income tax, which should be withheld by the Group from these executives and
employees for payment to the PRC tax authorities. The Group had an outstanding receivable from these executives and employees of US$46,262 and US$46,361 as of December 31, 2010 and 2011 respectively in relation to the individual income tax
liabilities arising from the exercise of share options by these executives and employees, which are included in other current assets.



|(28) | LDK SOLAR CO., LTD. (PARENT COMPANY)
|---- | ------------------------------------

Relevant PRC statutory laws and regulation permit payments of dividends by the Companys subsidiaries in the PRC
only out of their retained earnings, if any, as determined in accordance with the PRC accounting standards and regulations.

Under the Law of the PRC on Enterprises with Wholly Owned Foreign Investment, the Companys subsidiaries in the PRC are required to
allocate at least 10% of their after tax profits, after making good of accumulated losses as reported in their PRC statutory financial statements, to the general reserve fund and have the right to discontinue allocations to the general reserve fund
if the balance of such reserve has reached 50% of their registered capital. These statutory reserves are not available for distribution to the shareholders (except in liquidation) and may not be transferred in the form of loans, advances, or cash
dividend.

For the year ended December 31, 2011, US$17,505 (2010: US$28,599; 2009: US$ nil) were appropriated from
retained earnings and set aside for the statutory reserve by the Companys subsidiaries in the PRC.

As a result of these
PRC laws and regulations, the Companys subsidiaries in the PRC are restricted in its ability to transfer a portion of its net assets to either in the form of dividends, loans or advances, which consisted of paid-up capital and statutory
reserve amounting to US$1,523,098 as of December 31, 2011 (2010: US$1,237,125).



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LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



The following presents condensed unconsolidated financial information of the Parent
Company only.

Condensed Balance Sheets



|                                                             |  |                  |           |  |                  |  |           | 
|------------------------------------------------------------ |  | ---------------- | --------- |  | ---------------- |  | --------- | 
|                                                             |  | December 31,2010 |           |  | December 31,2011 | 
|Cash and cash equivalents                                    |  |                  | 8,656     |  |                  |  | 7,129     | 
|Due from other affiliates                                    |  |                  | 0         |  |                  |  | 25,775    | 
|Due from subsidiaries                                        |  |                  | 31,885    |  |                  |  | 85,400    | 
|Prepaid expense
Other receivables                            |  |                  | 238877    |  |                  |  | 0250      | 
|Investment in subsidiaries                                   |  |                  | 1,629,564 |  |                  |  | 1,599,919 | 
|Debt issuance costs                                          |  |                  | 4,300     |  |                  |  | 5,598     | 
|                                                             |  |                  |           |  |                  |  |           | 
|Total assets                                                 |  |                  | 1,675,520 |  |                  |  | 1,724,071 | 
|                                                             |  |                  |           |  |                  |  |           | 
|Accrued expenses and other payables                          |  |                  | 7,648     |  |                  |  | 13,685    | 
|Borrowings                                                   |  |                  | 0         |  |                  |  | 29,800    | 
|RMB-denominated US$-settled senior notes, less debt discount |  |                  | 0         |  |                  |  | 258,827   | 
|Due to subsidiaries                                          |  |                  | 256,749   |  |                  |  | 786,338   | 
|Deferred revenue                                             |  |                  | 1,780     |  |                  |  | 1,772     | 
|Convertible senior notes                                     |  |                  | 390,103   |  |                  |  | 23,733    | 
|Total equity                                                 |  |                  | 1,019,240 |  |                  |  | 609,916   | 
|                                                             |  |                  |           |  |                  |  |           | 
|Total liabilities and equity                                 |  |                  | 1,675,520 |  |                  |  | 1,724,071 | 
|                                                             |  |                  |           |  |                  |  |           | 

Condensed Statements of operations



|                                                                                                                                                                                            |  |                           |          |   |                           |  |         |                           |  |  |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | -------- | - | ------------------------- |  | ------- | ------------------------- |  |  | -------- | -
|                                                                                                                                                                                            |  | YearendedDecember 31,2009 |          |   | YearendedDecember 31,2010 |  |         | YearendedDecember 31,2011 | 
|Revenue                                                                                                                                                                                     |  |                           | 0        |   |                           |  | 0       |                           |  |  | 4,534    |  
|General and administrative expenses                                                                                                                                                         |  |                           | (7,229   | ) |                           |  | (7,769  | )                         |  |  | (13,667  | )
|Legal settlement, net of insurance recoveries                                                                                                                                               |  |                           | (10,000  | ) |                           |  | 0       |                           |  |  | 0        |  
|Interest income                                                                                                                                                                             |  |                           | 1        |   |                           |  | 119     |                           |  |  | 65       |  
|Interest expense, amortization of discount on exchangeable notes and amortization of convertible senior notes and RMB-denominated
US$-settled senior notes issuance costs and debt discount |  |                           | (14,574  | ) |                           |  | (19,278 | )                         |  |  | (30,508  | )
|Foreign currency exchange loss, net                                                                                                                                                         |  |                           | 0        |   |                           |  | 0       |                           |  |  | (10,871  | )
|Others                                                                                                                                                                                      |  |                           | (3       | ) |                           |  | 55      |                           |  |  | 4,836    |  
|                                                                                                                                                                                            |  |                           |          |   |                           |  |         |                           |  |  |          |  
|(Loss) before income tax and equity in (loss) from subsidiaries                                                                                                                             |  |                           | (31,805  | ) |                           |  | (26,873 | )                         |  |  | (45,611  | )
|Equity in (loss) earnings from subsidiaries                                                                                                                                                 |  |                           | (202,420 | ) |                           |  | 318,986 |                           |  |  | (609,848 | )
|Income tax expense                                                                                                                                                                          |  |                           | 0        |   |                           |  | (1,316  | )                         |  |  | 0        |  
|                                                                                                                                                                                            |  |                           |          |   |                           |  |         |                           |  |  |          |  
|Net (loss) income available to ordinary shareholders                                                                                                                                        |  |                           | (234,225 | ) |                           |  | 290,797 |                           |  |  | (655,459 | )
|                                                                                                                                                                                            |  |                           |          |   |                           |  |         |                           |  |  |          |  



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##### Table of Contents

LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



Condensed Statements of Cash Flows



|                                                                                                                                      |  |                           |          |   |                           |  |          |                           |  |  |          |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | -------- | - | ------------------------- |  | -------- | ------------------------- |  |  | -------- | -
|                                                                                                                                      |  | YearEndedDecember 31,2009 |          |   | YearEndedDecember 31,2010 |  |          | YearendedDecember 31,2011 | 
|Cash flows from operating activities                                                                                                  |  |                           |          |   |                           |  |          |                           |  |  |          |  
|Net (loss) income                                                                                                                     |  |                           | (234,225 | ) |                           |  | 290,797  |                           |  |  | (655,459 | )
|Adjustments to reconcile net income to net cash used in operating activities:                                                         |  |                           |          |   |                           |  |          |                           |  |  |          |  
|Amortization of convertible senior notes issuance costs and debt discount                                                             |  |                           | 9,456    |   |                           |  | 10,174   |                           |  |  | 5,456    |  
|Equity in loss (earnings) from subsidiaries                                                                                           |  |                           | 202,420  |   |                           |  | (318,986 | )                         |  |  | 609,848  |  
|Compensation revenue                                                                                                                  |  |                           | 0        |   |                           |  | 0        |                           |  |  | (4,534   | )
|Gains on repurchase of convertible senior notes and RMB-denominated US$-settled senior notes                                          |  |                           | 0        |   |                           |  | 0        |                           |  |  | (4,831   | )
|Others                                                                                                                                |  |                           | 0        |   |                           |  | (193     | )                         |  |  | 0        |  
|Changes in operating assets/liabilities:                                                                                              |  |                           |          |   |                           |  |          |                           |  |  |          |  
|Due from subsidiaries                                                                                                                 |  |                           | (8,790   | ) |                           |  | 97,008   |                           |  |  | (53,515  | )
|Due from an affiliate                                                                                                                 |  |                           | 0        |   |                           |  | 0        |                           |  |  | (25,775  | )
|Due to subsidiaries                                                                                                                   |  |                           | 10,568   |   |                           |  | 176,052  |                           |  |  | 47,223   |  
|Other assets/liabilities                                                                                                              |  |                           | 11,646   |   |                           |  | (10,162  | )                         |  |  | 6,895    |  
|                                                                                                                                      |  |                           |          |   |                           |  |          |                           |  |  |          |  
|Net cash (used in) provided by operating activities                                                                                   |  |                           | (8,925   | ) |                           |  | 244,690  |                           |  |  | (74,692  | )
|                                                                                                                                      |  |                           |          |   |                           |  |          |                           |  |  |          |  
|                                                                                                                                      |  |                           |         
|Cash flows from investing activities                                                                                                  |  |                           |          |   |                           |  |          |                           |  |  |          |  
|Investment in subsidiaries                                                                                                            |  |                           | (131,462 | ) |                           |  | (262,253 | )                         |  |  | (377,015 | )
|                                                                                                                                      |  |                           |          |   |                           |  |          |                           |  |  |          |  
|Net cash used in investing activities                                                                                                 |  |                           | (131,462 | ) |                           |  | (262,253 | )                         |  |  | (377,015 | )
|                                                                                                                                      |  |                           |          |   |                           |  |          |                           |  |  |          |  
|                                                                                                                                      |  |                           |         
|Cash flows from financing activities                                                                                                  |  |                           |          |   |                           |  |          |                           |  |  |          |  
|Proceeds from related party borrowings                                                                                                |  |                           | 29,050   |   |                           |  | 20,173   |                           |  |  | 447,286  |  
|Proceeds from bank borrowings                                                                                                         |  |                           | 0        |   |                           |  | 0        |                           |  |  | 29,800   |  
|Proceeds from issuance of ordinary shares                                                                                             |  |                           | 111,800  |   |                           |  | 18,029   |                           |  |  | 167,329  |  
|Payment of expenses relating to issuance of ordinary shares and convertible senior notes and RMB-denominated US$-settled senior
notes |  |                           | 0        |   |                           |  | (4,894   | )                         |  |  | (5,749   | )
|Payment of repurchase of ordinary shares                                                                                              |  |                           | 0        |   |                           |  | 0        |                           |  |  | (110,559 | )
|Proceeds from issuance of RMB-denominated US$-settled senior notes                                                                    |  |                           | 0        |   |                           |  | 0        |                           |  |  | 258,657  |  
|Proceeds from private placements of ordinary shares                                                                                   |  |                           | 0        |   |                           |  | 0        |                           |  |  | 25,790   |  
|Payment for repurchase of RMB-denominated US$-settled senior notes                                                                    |  |                           | 0        |   |                           |  | 0        |                           |  |  | (8,223   | )
|Payment of convertible senior notes redemption                                                                                        |  |                           | 0        |   |                           |  | (7,719   | )                         |  |  | (364,765 | )
|                                                                                                                                      |  |                           |          |   |                           |  |          |                           |  |  |          |  
|Net cash provided by financing activities                                                                                             |  |                           | 140,850  |   |                           |  | 25,589   |                           |  |  | 439,566  |  
|                                                                                                                                      |  |                           |          |   |                           |  |          |                           |  |  |          |  
|Effect of foreign currency exchange rate changes on cash and cash equivalents                                                         |  |                           | 0        |   |                           |  | 0        |                           |  |  | 10,614   |  
|Net (decrease) increase in cash and cash equivalents                                                                                  |  |                           | 463      |   |                           |  | 8,026    |                           |  |  | (1,527   | )
|Cash and cash equivalents at beginning of year                                                                                        |  |                           | 167      |   |                           |  | 630      |                           |  |  | 8,656    |  
|                                                                                                                                      |  |                           |          |   |                           |  |          |                           |  |  |          |  
|Cash and cash equivalents at end of year                                                                                              |  |                           | 630      |   |                           |  | 8,656    |                           |  |  | 7,129    |  
|                                                                                                                                      |  |                           |          |   |                           |  |          |                           |  |  |          |  



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##### Table of Contents

LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



|(29) | FAIR VALUE MEASUREMENTS
|---- | -----------------------

Management used the following methods and assumptions to estimate the fair value of financial instruments at the
relevant balance sheet date:



| |  |  | Short-term financial instruments (cash equivalents, pledged bank deposits, trade accounts receivable and payable, bills receivable and payable,
short-term bank borrowings, and accrued liabilities)  cost approximates fair value because of the short maturity period.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Long-term bank borrowings  fair value is based on the amount of future cash flows associated with each debt instrument discounted at the
Groups current borrowing rate for similar debt instruments of comparable terms. The carrying values of the long-term borrowings approximate their fair values as all the long-term debt carries variable interest rates which approximate rates
currently offered by the Companys bankers for similar debt instruments of comparable maturities.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Convertible senior notes  the estimated fair value was US$15,783 as of December 31, 2011 and was based on the quoted market price in an
active market.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | RMB-denominated US$-settled senior notes  the estimated fair value was US$136,727 as of December 31, 2011 and was based on the quoted market
price in an active market.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Long-term PRC notes  the estimated fair value was US$79,255 as of December 31, 2011 and was based on the quoted market price in an active
market.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Available-for-sale equity security of JYT  fair value is based on the quoted price of the share of JYT and adjusted by a 25% discount to reflect
the sale restriction.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

The table below presents the assets and liabilities measured at fair value on a
recurring basis as of December 31, 2011, segregated by the level in the fair value hierarchy within which those measurements fall.



|                                          |  |                                   |        |         |                               |  |         |                               |  |         |   |  |  |  |        |  |  |  |   | 
|----------------------------------------- |  | --------------------------------- | ------ | ------- | ----------------------------- |  | ------- | ----------------------------- |  | ------- | - |  |  |  | ------ |  |  |  | - | 
|                                          |  | Carryingamount atDecember 31,2011 |        |         | Fair value atDecember 31,2011 |  |         | Fair value measurements using | 
|                                          |  |                                   |        | Level 1 |                               |  | Level 2 |                               |  | Level 3 |  
|Asset:                                    |  |                                   |        |         |                               |  |         |                               |  |         |   |  |  |  |        |  |  |  |   | 
|Available-for-sale equity security of JYT |  |                                   | 10,265 |         |                               |  | 10,265  |                               |  |         | 0 |  |  |  | 10,265 |  |  |  | 0 | 
|                                          |  |                                   |        |         |                               |  |         |                               |  |         |   |  |  |  |        |  |  |  |   | 

The following table presents fair value measurements of assets and liabilities that are measured at fair
value on a nonrecurring basis as of December 31, 2011:



|                                                                 |  |                            |   |  |                                                          |  |   |                                           |  |  |                                        |  |  |                     |   |  |  |  |   | 
|---------------------------------------------------------------- |  | -------------------------- | - |  | -------------------------------------------------------- |  | - | ----------------------------------------- |  |  | -------------------------------------- |  |  | ------------------- | - |  |  |  | - | 
|Description                                                      |  | Year endedDecember 31,2011 |   |  | Quotedprices inactivemarkets foridenticalassets(Level 1) |  |   | Significantotherobservableinputs(Level 2) |  |  | Significantunobservableinputs(Level 3) |  |  | Total gains(losses) |  
|Derivative liability of preferred share performance compensation |  |                            | 0 |  |                                                          |  | 0 |                                           |  |  | 0                                      |  |  |                     | 0 |  |  |  | 0 | 



|(30) | DERIVATIVE FINANCIAL INSTRUMENTS
|---- | --------------------------------

The Group is exposed to certain risks relating to its ongoing business operation in the PRC. The primary risks are
foreign currencies risks and interest rate risks, which are managed by using derivative instruments.



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##### Table of Contents

LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



The Companys principal operating subsidiaries are located in the PRC with the
Renminbi being their functional currency. The Companys PRC operating subsidiaries make sales, purchases and capital expenditures and obtain bank borrowings in currencies other than Renminbi, which primarily are in U.S. dollars. Historically,
the required payments in U.S. dollars resulting from purchases, capital expenditure and bank borrowings have exceeded receipts in U.S. dollars resulting from sales. Any appreciation of the U.S. dollar against the Renminbi will generally result in
foreign exchange losses and adversely affect the Groups net income. With an aim to reduce its risk exposure, the Company will, on a selected basis, enter into forward contracts with the same financial institutions to forward purchase U.S.
dollars when it obtains certain bank borrowings denominated in U.S. dollars through its PRC operating subsidiaries. During the year ended December 31, 2010, the Group entered into foreign exchange forward contracts with notional amount of
US$35,000 against its U.S. denominated receivables, foreign exchange forward contracts with notional amount of EUR2,000 against its Euro denominated receivable and US$35,000 against its U.S. denominated payables. During the year ended
December 31, 2011, the Group entered into foreign exchange forward contracts with notional amount of EUR5,000 against its Euro denominated receivables.

The Groups exposure to the risk of changes in market interest rates primarily relates to its bank borrowings. To finance its business operation and expansion, the Companys PRC operating
subsidiaries will obtain short-term and long-term bank borrowings. As of December 31, 2011, the Group had outstanding bank borrowings of US$2,922,455 in total, of which US$1,177,409 carry variable interest rates with effective interest rates
ranging from 3.081% to 9.250% per annum as of December 31, 2011. Interest expenses on these bank borrowings may increase as a result of change in market interest rates. With an aim to reduce its interest rate exposure, the Group will, from
time to time, enter into interest rate swap contracts with financial institutions in the PRC. During the years ended December 31, 2010 and 2011, the Group did not enter into any interest rate swap contract.

The derivative instruments relating to the foreign exchange forward contracts entered by the Group did not meet the conditions specified
to qualify for hedge accounting. These derivative financial instruments are initially recognized in the balance sheet at fair value and subsequently re-measured to their fair value with changes in fair value included in determination of net income
(loss).



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##### Table of Contents

LDK SOLAR CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(Amounts in US$ thousands, except share and per share data)



The location and fair value amounts of derivative instruments reported in the
consolidated balance sheets as of December 31, 2010 and 2011 are as follows:



|                                                                   |  |                      |                     |  |                       |  |     |                      |  |  |                  |  |  |                      |   |  |           |  |                            |                      |  |  |           |   |  |  |   |  |  |  |   | 
|------------------------------------------------------------------ |  | -------------------- | ------------------- |  | --------------------- |  | --- | -------------------- |  |  | ---------------- |  |  | -------------------- | - |  | --------- |  | -------------------------- | -------------------- |  |  | --------- | - |  |  | - |  |  |  | - | 
|                                                                   |  | Asset derivatives    |                     |  | Liability derivatives | 
|                                                                   |  | December 31,2010     |                     |  | December 31,2011      |  |     | December 31,2010     |  |  | December 31,2011 | 
|                                                                   |  | Balancesheetlocation |                     |  | Fairvalue             |  |     | Balancesheetlocation |  |  | Fairvalue        |  |  | Balancesheetlocation |   |  | Fairvalue |  |                            | Balancesheetlocation |  |  | Fairvalue |  
|Derivatives not designated as hedging instruments under ASC 815    |  |                      |                     |  |                       |  |     |                      |  |  |                  |  |  |                      |   |  |           |  |                            |                      |  |  |           |   |  |  |   |  |  |  |   | 
|                                                                   |  |                      |                     |  |                       |  |     |                     
| Foreign exchange forward contracts                               |  |                      | Other currentassets |  |                       |  | 735 |                      |  |  | 0                |  |  |                      | 0 |  |           |  | 0                          |                      |  |  | 0         |   |  |  | 0 |  |  |  | 0 | 
| Non-deliverable foreign exchange forward contract                |  |                      | 0                   |  |                       |  | 0   |                      |  |  | 0                |  |  |                      | 0 |  |           |  | Other financialliabilities |                      |  |  | (154      | ) |  |  | 0 |  |  |  | 0 | 
| Derivative liability of preferred share performance compensation |  |                      | 0                   |  |                       |  | 0   |                      |  |  | 0                |  |  |                      | 0 |  |           |  | 0                          |                      |  |  | 0         |   |  |  | 0 |  |  |  | 0 | 
|                                                                   |  |                      |                     |  |                       |  |     |                      |  |  |                  |  |  |                      |   |  |           |  |                            |                      |  |  |           |   |  |  |   |  |  |  |   | 
|Total derivatives                                                  |  |                      |                     |  |                       |  | 735 |                      |  |  |                  |  |  |                      | 0 |  |           |  |                            |                      |  |  | (154      | ) |  |  |   |  |  |  | 0 | 
|                                                                   |  |                      |                     |  |                       |  |     |                      |  |  |                  |  |  |                      |   |  |           |  |                            |                      |  |  |           |   |  |  |   |  |  |  |   | 

The effect of derivative instruments on the consolidated statements of operations for the years ended
December 31, 2010 and 2011 are as follows:



|                                                                 |  |                                                     |  |                                                   |      |  |  |  |      |  
|---------------------------------------------------------------- |  | --------------------------------------------------- |  | ------------------------------------------------- | ---- |  |  |  | ---- | -
|                                                                 |  |                                                     |  | Amount of gain recognized inincome on derivatives |     
|Derivatives not designated ashedging instruments
under ASC 815   |  | Location of gain recognized inincome on derivatives |  | Year ended December 31                            |     
|                                                                 |  | 2010                                                |  |                                                   | 2011 | 
|Foreign exchange forward contracts                               |  | Foreign currency exchangegain(loss), net            |  |                                                   | 543  |  |  |  | (581 | )
|Derivative liability of preferred share performance compensation |  | 0                                                   |  |                                                   | 0    |  |  |  | 0    |  
|                                                                 |  |                                                     |  |                                                   |      |  |  |  |      |  
|Total                                                            |  |                                                     |  |                                                   | 543  |  |  |  | (581 | )
|                                                                 |  |                                                     |  |                                                   |      |  |  |  |      |  

The Groups derivatives instruments outstanding as of December 31, 2011 do not contain any
credit-risk-related contingent features.



F-59