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Additional Information - Financial Statement Schedule I

12 Months Ended

Dec. 31, 2019

Additional Information - Financial Statement Schedule I

Additional Information - Financial Statement Schedule I

Additional Information — Financial Statement Schedule I

Canadian Solar Inc.

Schedule I has been provided pursuant to the requirements of Rule 12-04(a) and 4-08(e)(3) of Regulation S-X, which require condensed financial information as to financial position, changes in financial position and results of operations of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have been presented as the restricted net assets of Canadian Solar Inc.’s consolidated and unconsolidated subsidiaries not available for distribution to Canadian Solar Inc. as of December 31, 2019 of $497.2 million, exceeded the 25% threshold.

The condensed financial information has been prepared using the same accounting policies as set out in the consolidated financial statements, except that the equity method has been used to account for investments in subsidiaries.

FINANCIAL INFORMATION OF PARENT COMPANY

BALANCE SHEETS


		December 31,		December 31,
		2018		2019
		(In Thousands of U.S. Dollars, except
		share data)
ASSETS
Current assets:
Cash and cash equivalents		9,097		1,362
Restricted cash		—		950
Accounts receivable trade, net of allowance for doubtful accounts of $3,462 and $3,379 as of December 31, 2018 and 2019, respectively		11,476		—
Amounts due from subsidiaries		279,039		341,557
Prepaid expenses and other current assets		15,222		9,846
Total current assets		314,834		353,715
Investments in subsidiaries		1,154,004		1,383,935
Investments in affiliates		—		2,483
Deferred tax assets		28,208		23,657
Other non-current assets		68,068		69,070
TOTAL ASSETS		1,565,114		1,832,860
LIABILITIES AND EQUITY
Current liabilities:
Convertible notes		127,428		—
Accounts payable		3,903		3
Amounts due to related parties		154,765		340,502
Derivative liabilities		3,879		4,713
Other current liabilities		8,255		8,531
Total current liabilities		298,230		353,749
Long-term borrowings		—		50,000
Deferred tax liabilities		28,779		22,936
Liability for uncertain tax positions		12,633		13,041
TOTAL LIABILITIES		339,642		439,726
Equity:
Common shares — no par value: unlimited authorized shares, 59,180,624 and 59,371,684 shares issued and outstanding at December 31, 2018 and 2019, respectively		702,931		703,806
Treasury stock		—		(11,845)
Additional paid-in capital		10,675		17,179
Retained earnings		622,015		793,601
Accumulated other comprehensive loss		(110,149)		(109,607)
TOTAL EQUITY		1,225,472		1,393,134
TOTAL LIABILITIES AND EQUITY		1,565,114		1,832,860

FINANCIAL INFORMATION OF PARENT COMPANY

STATEMENTS OF OPERATIONS


		Years Ended December 31
		2017		2018		2019
		(In Thousands of U.S. Dollars)
Net revenues		35,011		86,755		4,351
Cost of revenues		29,542		53,926		4,188
Gross profit		5,469		32,829		163
Operating expenses:
Selling expenses		2,221		2,518		1,727
General and administrative expenses		18,390		18,970		29,093
Research and development expenses		645		795		462
Other operating loss, net		1,173		77		—
Total operating expenses		22,429		22,360		31,282
Income (loss) from operations		(16,960)		10,469		(31,119)
Other income (expenses):
Interest expense		(20,078)		(9,170)		(3,005)
Interest income		42,191		32,370		25,272
Loss on change in fair value of derivatives, net		(7,134)		(2,671)		(5,193)
Foreign exchange gain (loss)		(18,110)		22,255		(11,318)
Investment loss		(11,944)		—		(116,879)
Other income (expenses), net:		(15,075)		42,784		(111,123)
Income (loss) before income taxes and equity in earnings (loss) of subsidiaries and unconsolidated investees		(32,035)		53,253		(142,242)
Income tax (expense) benefit		1,686		(12,133)		5,230
Equity in earnings of subsidiaries		130,048		195,950		308,597
Equity in loss of unconsolidated investees		(127)		—		—
Net income		99,572		237,070		171,585

FINANCIAL INFORMATION OF PARENT COMPANY

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


		Years Ended December 31,
		2017		2018		2019
		(In Thousands of U.S. Dollars)
Net income		99,572		237,070		171,585
Other comprehensive income (loss) (net of tax of nil):
Foreign currency translation adjustment		37,780		(56,115)		542
Comprehensive income		137,352		180,955		172,127

FINANCIAL INFORMATION OF PARENT COMPANY

STATEMENTS OF CASH FLOWS


		Years Ended December 31,
		2017		2018		2019
		(In Thousands of U.S. Dollars)
Operating activities:
Net income		99,572		237,070		171,585
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		33		21		154
Loss on disposal of subsidiaries		9,559		—		116,879
Impairment loss of investment		3,686		—		—
Loss on change in fair value of derivatives		7,134		2,671		5,193
Allowance for doubtful accounts		2,666		(212)		(83)
Equity in earnings of subsidiaries		(130,048)		(195,950)		(308,597)
Equity in loss of unconsolidated investees		127		—		—
Share-based compensation		9,314		10,259		10,682
Changes in operating assets and liabilities:
Accounts receivable trade		(6,739)		(5,089)		11,563
Amounts due from subsidiaries		57,539		(184,755)		(43,630)
Advances to suppliers		(60)		60		—
Prepaid expenses and other current assets		(5,715)		(2,749)		5,449
Other non-current assets		1,016		(149)		(1,158)
Accounts payable		—		3,900		(3,900)
Amounts due to related parties		55,399		15,598		183,675
Other liabilities		22,436		(25,958)		1,193
Liability for uncertain tax positions		833		6,008		408
Deferred taxes		(6,106)		9,230		(1,292)
Net settlement of derivatives		(6,358)		21,450		(11,125)
Net cash provided by (used in) operating activities		114,288		(108,595)		136,996
Investing activities:
Investments in subsidiaries		(64,185)		(1,051)		(36,146)
Investments in affiliates		—		—		(2,483)
Proceeds from disposal of subsidiaries		61,749		—		—
Purchase of property, plant and equipment		(26)		—		1
Funding of loans to subsidiaries		(74,458)		(94,000)		(40,601)
Repayment of loans from subsidiaries		—		375,635		12,809
Net cash provided by (used in) investing activities		(76,920)		280,584		(66,420)
Financing activities:
Repayment of short-term borrowings		(49,000)		(151,000)		—
Proceeds from long-term borrowings		—		—		50,000
Repayment of convertible notes		—		—		(127,500)
Payments for repurchase of treasury stock		—		—		(11,845)
Proceeds from exercise of stock options		879		769		875
Net cash used in financing activities		(48,121)		(150,231)		(88,470)

Effect of exchange rate changes		6,362		(29,618)		11,110

Net decrease in cash and cash equivalents		(4,391)		(7,860)		(6,784)

Cash and cash equivalents at the beginning of the year		21,348		16,957		9,097
Cash and cash equivalents at the end of the year		16,957		9,097		2,313

Supplemental disclosure of cash flow information:
Interest paid (net of amounts capitalized)		18,375		10,154		4,644