UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Amendment No. 2
to
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

STR Holdings (New) LLC
to be converted as described herein to
a corporation named

10 Water Street
Enfield, CT 06082
(860) 749-8371
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)

Barry A. Morris
Executive Vice President and Chief Financial Officer
10 Water Street
Enfield, CT 06082
(860) 749-8371
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "accelerated filer," "large accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

Prior to this offering, we conducted our business through STR Holdings LLC and its subsidiaries. Except as disclosed in the accompanying prospectus, the consolidated financial statements and selected historical consolidated financial data and other financial information included in this registration statement are those of STR Holdings LLC and its subsidiaries and do not give effect to the corporate reorganization. Prior to the consummation of this offering, STR Holdings LLC will enter into a corporate reorganization, whereby the unitholders of STR Holdings LLC will become unitholders of STR Holdings (New) LLC, a Delaware limited liability company and the registrant, which then will be converted into a Delaware corporation and renamed STR Holdings, Inc. See "Corporate Reorganization" in the accompanying prospectus. Shares of the common stock of STR Holdings, Inc. are being offered by the prospectus. Prior to the corporate reorganization and this offering, STR Holdings (New) LLC was an indirect subsidiary of STR Holdings LLC and held no material assets and did not engage in any operations.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

This is an initial public offering of shares of common stock of STR Holdings, Inc.

We are selling 2,300,000 shares of common stock, and the selling stockholders, which include entities affiliated with members of our board of directors and an affiliate of Credit Suisse Securities (USA) LLC, an underwriter participating in this offering, and each of our executive officers, are selling a total of 10,000,000 shares of common stock. We will not receive any proceeds from the sale of the shares by the selling stockholders.

Prior to this offering there has been no public market for our common stock. The initial public offering price is expected to be between $13.00 and $15.00 per share. We have applied to list our common stock on the New York Stock Exchange under the symbol "STRI."

The underwriters have an option to purchase a maximum of 1,845,000 additional shares of common stock from the selling stockholders. The underwriters can exercise this option at any time within 30 days from the date of this prospectus.

Investing in our common stock involves risks. See "Risk Factors" on page 16.

Delivery of the shares of common stock in book-entry form only will be made on or about , 2009.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

You should rely only on the information contained in this document and any free writing prospectus prepared by us or on our behalf. We and the selling stockholders have not, and the underwriters have not, authorized anyone to provide you with any additional information or information that is different. This document may only be used where it is legal to sell these securities. The information in this document is only accurate as of the date of this document.

"STR," "PhotoCap" and their respective logos are our trademarks. Solely for convenience, we refer to our trademarks in this prospectus without the ™ and ® symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to our trademarks. Other service marks, trademarks and trade names referred to in this prospectus are the property of their respective owners.

Until , 2009 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to each dealer's obligation to deliver a prospectus when acting as underwriter and with respect to unsold allotments or subscriptions.

This section summarizes key information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and consolidated financial statements included elsewhere in this prospectus. You should carefully review the entire prospectus, including the risk factors, the consolidated financial statements and the notes thereto, and the other documents to which this prospectus refers before making an investment decision. Prior to this offering, we conducted our business through STR Holdings LLC and its subsidiaries. Prior to the consummation of this offering, STR Holdings LLC will enter into a corporate reorganization, whereby the unitholders of STR Holdings LLC will become unitholders of STR Holdings (New) LLC, which then will convert from a Delaware limited liability company into a Delaware corporation to be called STR Holdings, Inc., and each of the unitholders of STR Holdings (New) LLC will become a stockholder of STR Holdings, Inc. We refer to the foregoing as our corporate reorganization. Unless the context requires otherwise, references in this prospectus to "STR," "we," "us," "our company" or similar terms refer to STR Holdings, Inc. and its subsidiaries, after giving effect to our corporate reorganization. Unless otherwise indicated, references to our solar manufacturing and production capacity are to annual capacity.

We are a global leader in each of our businesses: solar power module encapsulant manufacturing and consumer product quality assurance. Our solar business is a leading global provider of encapsulants, which are specialty extruded sheets and film that hold a solar module together and protect the embedded semiconductor circuit. Encapsulants are a critical component used in solar modules. We supply solar module encapsulants to many of the major solar module manufacturers, including BP Solar, First Solar, Inc., Solarwatt AG, SunPower Corporation and United Solar Ovonic LLC. We believe we were the primary supplier of encapsulants to each of our top 10 customers in the first six months of 2009, which we believe is due to our superior product performance and customer service. Our encapsulants are used in both crystalline and thin-film solar modules.

Our quality assurance business is a leader in the consumer products quality assurance market, and we believe our quality assurance business is the only global testing services provider exclusively focused on the consumer products market. Our quality assurance business provides inspection, testing and audit services that enable retailers and manufacturers to determine whether products and facilities meet applicable safety, regulatory, quality, performance and social standards.

Our solar business is a leading global provider of encapsulants, which are specialty extruded sheets and film that hold a solar module together and protect the embedded semiconductor circuit. We, in conjunction with the predecessor to the U.S. Department of Energy, were the first to develop the original ethylene-vinyl-acetate, or EVA, encapsulants used in commercial solar module manufacturing in the 1970s, and we have sold our EVA encapsulants commercially since the late 1970s. We have continually improved our encapsulants, and we have developed many significant innovations since we first commercialized our products, including encapsulants that maintain their dimensional stability and ultra-fast curing formulations. Our encapsulants are used in both of the prevailing solar panel technologies, crystalline and thin-film, and are valued by our customers because they maintain their size and shape throughout the solar module manufacturing process, have fast curing times and have demonstrated long-term stability. These attributes are critical to solar module manufacturers, which typically provide 20- to 25-year warranties of the performance of their solar modules and continually seek to maximize manufacturing yield and optimize efficiency. Despite the critical nature of encapsulant to solar cell applications, the encapsulant represents a small percentage of the overall manufacturing cost of the total solar module.

Our current PhotoCap products consist primarily of EVA, which is modified with additives and put through our proprietary manufacturing process to increase product stability and make the encapsulant suitable for use in extreme, long-term outdoor applications. Encapsulants are made-to-order to customer specifications for use in their solar module manufacturing process.

In 2008, we sold approximately 2,470 megawatts, or MW, solar module equivalent of encapsulant worldwide, of which approximately 1,300 MW were produced at our three facilities in the United States and approximately 1,170 MW were produced at our facility in Spain. We estimate that our approximately 2,470 MW of solar module equivalent encapsulant sales in 2008 were equal to approximately 36% of the global market. See "Industry and Market Data." We expect to be able to continue to improve our ability to service the growing Asian solar module market from our new facility in Malaysia, which began shipping production quantities of encapsulants in the third quarter of 2009. We expect our global production capacity to be 6,350 MW by the end of 2009.

Solar energy has emerged as one of the most rapidly growing renewable energy sources. A number of different technologies have been developed to harness solar energy. The most prevalent technology is the use of inter-connected photovoltaic, or PV, cells to generate electricity directly from sunlight. PV systems are used in industrial, commercial and residential applications. Higher global energy prices, increased environmental awareness and the desire for energy independence are accelerating the adoption of renewable energy sources, including solar. Governments around the world have also implemented various tariffs, tax credits and other incentives designed to encourage the use of renewable energy sources, including solar.

According to Solarbuzz, an independent solar energy research firm, total worldwide PV cell production increased from 682 MW in 2003 to 6,854 MW in 2008, which represented a compound annual growth rate, or CAGR, of approximately 58.7%. During the same period, solar power industry revenues grew to approximately $37 billion in 2008 from approximately $4 billion in 2003. Solarbuzz projects global production of solar cells will reach approximately 17,200 MW by 2013 in its "Green World Scenario," which we believe represents the most appropriate of three forecast scenarios published by Solarbuzz because it balances further growth resulting from increased development of governmental incentive programs with measured growth in industry production capacity. This represents a CAGR of 20.2% from 2008 actual solar cell production of 6,854 MW as reported by Solarbuzz.

Regardless of the technology used to create solar energy from a PV system, the core component of the solar cell is the semiconductor circuit. To protect and preserve the embedded semiconductor circuit, solar module manufacturers use an encapsulant. Encapsulants are critical to the proper functioning of solar modules, as they protect cells from the elements, bond the multiple layers of a module (top surface, PV cells, and rear surface) together, and provide electrical insulation. Because encapsulants are a critical and integral component of solar modules, demand for encapsulants is expected to track the strong growth forecasted for the global PV market.

We believe that our solar business possesses a number of key competitive strengths, including:

Our objective is to enhance our position as a leading global provider of encapsulants to solar module manufacturers. Our strategies to meet that objective are:

We have offered quality assurance services since 1973. Our quality assurance business helps clients determine whether the products designed and manufactured by them or on their behalf meet applicable safety, regulatory, quality, performance and social standards. The primary clients for quality assurance services are large North American and European retailers that manage global supply chains of manufacturers, vendors and importers. In particular, retailers, importers and manufacturers that choose to outsource production to developing countries rely on our quality assurance services to ensure product quality and standards.

Since forming our quality assurance business, we have expanded our quality assurance service offerings and have increased the scale of the business to meet the growing worldwide needs of the consumer products manufacturing industry. Our quality assurance business has an extensive network of 15 laboratories, 73 inspection and audit offices and 22 sales offices in 37 countries across North America, South America, Europe, Asia and Africa with an experienced team of over 1,000 scientists, technicians, engineers, auditors, trainers and inspectors. We have a broad client base, serving over 6,000 clients in 2008. The average length of our relationship with our top 10 clients, which includes several new clients, in 2008 was approximately 15 years. Our quality assurance business's reputation for quality is demonstrated by our more than 40 internationally recognized accreditations and memberships.

Our business is subject to numerous risks, as discussed more fully in the section entitled "Risk Factors" beginning on page 16 of this prospectus, which you should read in its entirety. In particular:

On June 15, 2007, DLJ Merchant Banking Partners IV, L.P. and affiliated investment funds, or DLJMB, and its co-investors, together with members of our board of directors, our executive officers and other members of management, acquired 100% of the voting equity interests in our wholly-owned subsidiary, Specialized Technology Resources, Inc. for $365.6 million, including transaction costs. They acquired Specialized Technology Resources, Inc. for investment purposes.

We refer to the foregoing transactions collectively as the "DLJ Transactions." DLJMB is an affiliate of Credit Suisse Securities (USA) LLC, an underwriter participating in this offering, and Credit Suisse, the administrative agent and collateral agent under our first and second lien credit facilities.

The following table sets forth the sources and uses of funds for the DLJ Transactions.

Sources				Uses

(dollars in millions)
Cash contribution from DLJMB				Purchase of equity	$	324.7
	and its co-investors	$	145.7	Repayment of debt		61.7
First lien credit facility(1)			185.0	Settlement of options		1.5
Second lien credit facility			75.0	Financing costs		7.9
				Transaction costs		4.4
				Cash retained for working capital purposes		5.5

	Total sources of funds	$	405.7	Total uses of funds	$	405.7

In connection with the DLJ Transactions, we granted Class B, C, D, E and F incentive units to, among others, our named executive officers and members of our board of directors. We granted Class B units to Messrs. Morris and Yorgensen in connection with a deferred compensation arrangement and Class C, D and E units to, among others, our named executive officers in connection with the DLJ Transactions to retain and motivate such executive officers. We granted Class F units to, among others, John A. Janitz and Dominick J. Schiano, members of our board of directors, in exchange for their services on our behalf. We also made one-time bonus payments to Messrs. Morris and Yorgensen and our former Vice President and Chief Operating Officer, John F. Gual, who retired in April 2009, of $600,000, $900,000 and $600,000, respectively, in connection with the consummation of the DLJ Transactions. In addition, we entered into two separate advisory services and monitoring agreements, (i) one with DLJ Merchant Banking, Inc., an affiliate of DLJMB, Westwind STR Advisors, LLC, an affiliate of our former director Michael R. Stone, and Mr. Jilot and (ii) one with Evergreen Capital Partners, LLC, an affiliate of our directors Messrs. Janitz and Schiano, in each case to provide us assistance with operational, financial and transactional analyses as well as financial and business monitoring services. We pay quarterly fees to these parties pursuant to the advisory services and monitoring agreements, and we paid one-time fees to Westwind, Mr. Jilot and Evergreen of approximately $164,500, $98,500 and $1.4 million, respectively, under such agreements in connection with the DLJ Transactions. The advisory services and monitoring agreement with DLJ Merchant Banking, Inc., Westwind and Mr. Jilot terminated with respect to Westwind when Mr. Stone resigned from our board of directors in 2008 and will automatically terminate with respect to DLJ Merchant Banking, Inc. and Mr. Jilot upon the consummation of this offering. In connection with such termination, we will be required to make final payments to DLJ Merchant Banking, Inc. and Mr. Jilot of approximately $2.6 million and approximately $0.2 million, respectively, representing the present value of all annual monitoring fees remaining under the current term of the advisory services and monitoring agreement. For further information regarding the incentive units and the advisory services and monitoring agreements, see "Certain Relationships and Related Person Transactions—Advisory Services and Monitoring Agreements" and "—Incentive Unit Grant Agreements." For further information regarding the one-time bonus payments to Messrs. Morris, Yorgensen and Gual, see "Executive and Director Compensation—Summary Compensation Table."

operations. Prior to the consummation of this offering, STR Holdings LLC will enter into a corporate reorganization, whereby the unitholders of STR Holdings LLC will become unitholders of STR Holdings (New) LLC, which then will be converted into a Delaware "C" corporation and renamed STR Holdings, Inc. As a result of the conversion, the holders of all outstanding units of STR Holdings (New) LLC, including incentive units, will receive an aggregate amount of 39,021,138 shares of common stock, including 1,575,341 shares of restricted stock, of STR Holdings, Inc. For further information regarding the corporate reorganization, see "Corporate Reorganization."

Under the Third Amended and Restated Limited Liability Company Agreement of STR Holdings LLC, or the STR Holdings LLC Agreement, STR Holdings LLC's Class A, B, C, D, E and F units are subject to a priority distribution of shares of common stock in the event of an initial public offering. In connection with the offering, the priority distribution of shares will be based on our equity value as represented by the initial public offering price. For the units issued in connection with the DLJ Transactions, the shares of common stock will be distributed as follows: (i) first, the Class A unitholders will receive an aggregate amount of common stock equal in value to their aggregate capital contributions; (ii) second, a pro rata distribution will be made with respect to the Class A, B, C, D and F units until the Class A unitholders receive an aggregate amount of common stock equal in value to 2.5 times their aggregate capital contributions; and (iii) finally, a pro rata distribution will be made of the remaining shares to each Class A, B, C, D, E and F unitholder based upon the number of units held by each unitholder. Holders of Class C and D incentive units that were issued in 2008 will receive distributions on the same basis as described above, provided that such holders will only receive their pro rata distribution of shares after shares with an aggregate value of approximately $505.5 million have been distributed to the holders of the previously outstanding units. Holders of the Class E incentive units that were issued in 2008 will only receive their pro rata distribution of shares after shares with an aggregate value of approximately $818.0 million have been distributed to the holders of the previously outstanding units. This priority distribution will apply on the same terms to the units of STR Holdings (New) LLC received by unitholders of STR Holdings LLC in connection with the corporate reorganization. The final allocation of shares among the classes of outstanding units of STR Holdings (New) LLC, pursuant to the corporate reorganization, will be based on the initial public offering price of our common stock in this offering.

Pursuant to the corporate reorganization, our named executive officers, Messrs. Jilot, Morris and Yorgensen, and our former Vice President and Chief Operating Officer, Mr. Gual, who retired in April 2009, will receive an aggregate of 2,969,303, 507,238, 871,577 and 664,696 shares of our common stock, respectively, some of which will be restricted stock as a result of the aforementioned transactions. Pursuant to the corporate reorganization, our directors, Messrs. Janitz and Schiano, will receive an aggregate of 337,934 and 337,934 shares of our common stock, respectively, some of which will be restricted stock as a result of the aforementioned transactions. In addition, DLJMB and its affiliated funds will receive an aggregate of 19,933,878 shares of our common stock, which may be deemed to be beneficially owned by the members of our board of directors affiliated with DLJMB. For further information regarding the ownership of our common stock by our executive officers and members of our board of directors, see "Certain Relationships and Related Person Transactions—Incentive Unit Grant Agreements—Ownership" and "Principal and Selling Stockholders."

The purpose of the corporate reorganization is to reorganize our corporate structure so that the top-tier entity in our corporate structure—the entity that is offering common stock to the public in this offering—is a corporation rather than a limited liability company and so that our existing investors will own our common stock rather than equity interests in a limited liability company. References in this prospectus to our capitalization and other matters pertaining to our equity and incentive units relate to the capitalization and equity and incentive units of STR Holdings LLC. In addition, the consolidated financial statements and consolidated financial data, except for the pro forma financial data, included in this prospectus are those of STR Holdings LLC and do not give effect to the corporate reorganization.

Our ownership and corporate structure immediately following the corporate reorganization and this offering are set forth in the following chart:

The following table sets forth our net sales, gross profit, EBITDA, net income and other data for the quarter ended September 30, 2009. These results are unaudited and remain subject to the completion of our normal quarter-end closing procedures (dollars in millions):


Net sales—Solar		$	35.3
Net sales—Quality Assurance			32.0

	Total net sales		67.3

Gross profit—Solar			13.5
Gross profit—Quality Assurance			11.8

	Total gross profit		25.3

EBITDA(1)—Solar			16.4
EBITDA(1)—Quality Assurance			7.2
EBITDA(1)—Corporate			(2.0	)

Total EBITDA			21.6
Depreciation and amortization			(5.9	)
Interest income			—
Interest expense			(4.2	)
Unrealized gain on interest rate swap			0.3

Income before income tax expense			11.8
Income tax expense			(3.9	)

Net income		$	7.9

Amortization of intangibles—Solar			$	2.1
Amortization of intangibles—Quality Assurance				0.8

		Total amortization of intangibles	$	2.9

Stock based compensation—Solar			$	0.1
Stock based compensation—Quality Assurance				0.1
Stock based compensation—Corporate				0.7

		Total stock based compensation	$	0.9

Foreign exchange gain (loss)—Solar				0.3
Foreign exchange gain (loss)—Quality Assurance				(0.4	)

	Total foreign exchange gain (loss)		$	(0.1	)

Depreciation expense—Solar			$	1.5
Depreciation expense—Quality Assurance				1.5
Depreciation expense—Corporate				—

	Total depreciation expense		$	3.0

The following table sets forth our capital structure as of September 30, 2009. These results are unaudited and remain subject to the completion of our normal quarter-end closing procedures (dollars in millions):

We are a Delaware limited liability company. Prior to the consummation of this offering, we will convert into a Delaware corporation, STR Holdings, Inc. Our principal executive offices are located at 10 Water Street, Enfield, Connecticut 06082, and our telephone number is (860) 749-8371. Our web address is www.strholdings.com. The information that appears on our web site is not part of, and is not incorporated into, this prospectus.


Common stock offered by us		2,300,000 shares.
Common stock offered by the selling stockholders		10,000,000 shares.
Total offered		12,300,000 shares.
Common stock to be outstanding after this offering		41,349,710 shares.
Option to purchase additional shares		The underwriters have an option to purchase a maximum of 1,845,000 additional shares of common stock from the selling stockholders. The underwriters can exercise this option at any time within 30 days from the date of this prospectus.
Use of proceeds		We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and estimated offering expenses, will be approximately $25.4 million, assuming the shares are offered at $14.00 per share (the midpoint of the price range set forth on the cover of this prospectus). We intend to use $15.0 million of our net proceeds from the shares that we sell in this offering to repay borrowings under our credit facilities. We intend to use any remaining proceeds for working capital and general corporate purposes, including the final payments of $2.8 million under an advisory services and monitoring agreement with certain of our affiliates that will terminate in connection with this offering. See "Certain Relationships and Related Person Transactions—Advisory Services and Monitoring Agreements—DLJ Transactions." We will not receive any proceeds from the sale of shares by the selling stockholders, which include entities affiliated with members of our board of directors and an affiliate of Credit Suisse Securities (USA) LLC, an underwriter participating in this offering, and each of our executive officers. See "Use of Proceeds."
Dividend policy		We do not anticipate paying any dividends on our common stock in the foreseeable future. See "Dividend Policy."
Risk factors		Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 16 of this prospectus for a discussion of factors you should carefully consider before investing in our common stock.
Proposed NYSE symbol		"STRI."
Conflicts of Interest		Affiliates of certain of the underwriters will receive a portion of the net proceeds from this offering and may be deemed to have a "conflict of interest" with us and the selling stockholders. For more information, see "Conflicts of Interest."

The following table sets forth our summary consolidated financial and other data for the periods and as of the dates indicated. We derived the statement of operations and other data for the six months ended June 30, 2009 and 2008 and the balance sheet data as of June 30, 2009 from our unaudited consolidated financial statements included elsewhere in this prospectus. We derived the statement of operations and other data for (i) the period from January 1 to June 14, 2007 and the year ended December 31, 2006 (predecessor company period) and (ii) the year ended December 31, 2008 and the period from June 15 to December 31, 2007 (successor company period) from our audited consolidated financial statements included elsewhere in this prospectus. We have prepared the unaudited consolidated financial information on the same basis as our audited consolidated financial statements and have included all adjustments, consisting of only normal recurring adjustments, that we consider necessary for the fair presentation of our financial position and operating results for such periods. The interim results are not necessarily indicative of results for the year ending December 31, 2009 or for any other period.

The pro forma basic and diluted net income per share and weighted average shares outstanding data in the summary consolidated financial and other data table presented below are unaudited and give effect to our corporate reorganization, as described under "Corporate Reorganization."

On June 15, 2007, DLJMB and its co-investors, together with members of our board of directors, our executive officers and other members of management, through STR Holdings LLC, acquired Specialized Technology Resources, Inc. All periods prior to June 15, 2007 are referred to as "Predecessor," and all periods including and after such date are referred to as "Successor." The consolidated financial statements for all Successor periods are not comparable to those of the Predecessor periods.

Our historical results are not necessarily indicative of future operating results. You should read the information set forth below in conjunction with "Selected Historical Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included elsewhere in this prospectus.

		Successor												Predecessor

		Six Months Ended June 30, 2009			Six Months Ended June 30, 2008			Year Ended December 31, 2008			Period from June 15, 2007 to December 31, 2007			Period from January 1, 2007 to June 14, 2007			Year Ended December 31, 2006
		(Unaudited)			(Unaudited)
		(in thousands, except per share/unit data)
Statement of Operations Data:
Net sales—Solar		$	63,830		$	85,873		$	182,311		$	52,967		$	25,648		$	45,275
Net sales—Quality Assurance			53,848			50,859			106,267			56,317			39,112			85,332

	Total net sales		117,678			136,732			288,578			109,284			64,760			130,607

Cost of sales—Solar			41,067			43,083			103,717			30,068			11,875			21,522
Cost of sales—Quality Assurance			36,104			35,038			70,930			35,620			25,225			55,042

	Total cost of sales		77,171			78,121			174,647			65,688			37,100			76,564

	Gross profit		40,507			58,611			113,931			43,596			27,660			54,043

Selling, general and administrative			20,262			21,643			41,414			18,400			12,017			24,052
Provision for bad debt expense			1,352			597			1,950			562			384			334
Transaction costs			—			—			—			—			7,737			—

Operating income			18,893			36,371			70,567			24,634			7,522			29,657

Interest income			70			101			249			203			143			305
Interest expense			(8,268	)		(10,653	)		(20,809	)		(13,090	)		(2,918	)		(6,743	)
Foreign currency transaction (loss) gain			(443	)		228			(1,007	)		(76	)		(32	)		(581	)
Unrealized gain (loss) on interest rate swap			587			(287	)		(3,025	)		(2,988	)		—			—

Income before income tax expense			10,839			25,760			45,975			8,683			4,715			22,638
Income tax expense			4,596			9,787			17,870			4,572			3,983			7,344

Net income		$	6,243		$	15,973		$	28,105		$	4,111		$	732		$	15,294

Other comprehensive income:
Foreign currency translation adjustments			24			1,545			(1,805	)		1,451			448			2,128

Total comprehensive income		$	6,267		$	17,518		$	26,300		$	5,562		$	1,180		$	17,422

Net income per share/unit data:
	Basic	$	0.35		$	0.89		$	1.57		$	0.23		$	0.08		$	1.81
	Diluted	$	0.35		$	0.89		$	1.57		$	0.23		$	0.08		$	1.68
Weighted average shares/units outstanding:
	Basic		17,864,924			17,864,924			17,864,924			17,864,924			8,632,893			8,439,658

	Diluted		17,864,924			17,864,924			17,864,924			17,864,924			9,134,536			9,122,840

Pro forma net income per share (unaudited)(1):
	Basic	$	0.17					$	0.77

	Diluted	$	0.16					$	0.73

Pro forma weighted average shares outstanding (unaudited)(1):
	Basic		37,112,606						36,573,234

	Diluted		38,218,700						38,497,447

Other Data:
Amortization of intangibles		$	5,752		$	5,752		$	11,503		$	6,231		$	50		$	109
Capital expenditures		$	10,611		$	14,959		$	35,288		$	10,064		$	3,510		$	2,604

An investment in our common stock involves a high degree of risk. You should carefully consider the following risks, as well as the other information contained in this prospectus, before making an investment in our company. If any of the following risks actually occurs, our business, results of operations or financial condition may be adversely affected. In such an event, the trading price of our common stock could decline and you could lose part or all of your investment.

If demand for solar energy in general and solar modules in particular does not continue to develop or takes longer to develop than we anticipate, sales in our solar business may not grow or may decline, which would negatively affect our financial condition and results of operations.

We expect that a significant amount of the growth in our overall business will come from the sale of encapsulants by our solar business. Because our encapsulants are used in the production of solar modules, our financial condition and results of operations and future growth are tied to a significant extent to the overall demand for solar energy and solar modules. The solar energy market is at a relatively early stage of development and the extent to which solar modules will be widely adopted is uncertain. Many factors may affect the viability and widespread adoption of solar energy technology and demand for solar modules, and in turn, our encapsulants, including:

For example, in the first six months of 2009, we experienced a decline in our solar business mainly due to decreased global demand for solar energy as a result of legislative changes, such as the cap in feed-in tariffs in Spain implemented in 2008, the ongoing global recession and the ongoing worldwide credit crisis.

If demand for solar energy and solar modules fails to develop sufficiently, demand for our customers' products as well as demand for our encapsulants will decrease, and we may not be able to grow our business or solar net sales and our financial condition and results of operations will be harmed.

A significant reduction or elimination of government subsidies and economic incentives or a change in government policies that promote the use of solar energy could have a material adverse effect on our business and prospects.

Demand for our encapsulants depends on the continued adoption of solar energy and the resultant demand for solar modules. Demand for our products depends, in large part, on government incentives aimed to promote greater use of solar energy. In many countries in which solar modules are sold, solar energy would not be commercially viable without government incentives. This is because the cost of generating electricity from solar energy currently exceeds, and we believe will continue to exceed for the foreseeable future, the costs of generating electricity from conventional energy sources.

The scope of government incentives for solar energy depends, to a large extent, on political and policy developments relating to environmental and energy concerns in a given country that are subject to change, which could lead to a significant reduction in, or a discontinuation of, the support for renewable energy in such country. Federal, state and local governmental bodies in many of the target markets for our solar business, including Germany, Italy, Spain, the United States, France, Japan and South Korea, have provided subsidies and economic incentives in the form of feed-in tariffs, rebates, tax credits and other incentives to end users, distributors, system integrators and manufacturers of solar energy products to promote the use of solar energy and to reduce dependency on other forms of energy. These government economic incentives could be reduced or eliminated earlier than anticipated. For example, in June 2008, the German parliament adopted new legislation that will decrease the feed-in tariff for solar energy between 8% and 10% in 2010 and 9% annually thereafter. Also, in September 2008, the Spanish parliament adopted new legislation that will decrease the feed-in tariff for solar energy by approximately 27% and capped its subsidized PV installations at 500 MW for 2009.

Moreover, electric utility companies, or generators of electricity from fossil fuels or other renewable energy sources, could also lobby for changes in the relevant legislation in their markets to protect their revenue streams. Reduced growth in or the reduction, elimination or expiration of government subsidies and economic incentives for solar energy, especially those in our target markets, could cause our solar net sales to decline and harm our business.

Our solar business is dependent on a limited number of customers, which may cause significant fluctuations or result in declines in our solar net sales.

The solar module industry is relatively concentrated. As a result, we sell substantially all of our encapsulants to a limited number of solar module manufacturers. We expect that our results of operations will, for the foreseeable future, continue to depend on the sale of encapsulants to a relatively small number of customers. Sales to First Solar accounted for 31.0% and 19.1% of our solar net sales in the six months ended June 30, 2009 and the year ended December 31, 2008, respectively. In addition, the top five customers in our solar segment accounted for approximately 63.6% and 47.0% of our solar net sales in the six months ended June 30, 2009 and the year ended December 31, 2008, respectively. Furthermore, participants in the solar industry, including our customers, are experiencing pressure to reduce their costs. Because we are part of the overall supply chain to our customers, any cost pressures experienced by them may affect our business and results of operations. Our customers may not continue to generate significant solar net sales for us. Conversely, we may be unable to meet the production demands of our customers or maintain these customer relationships. Also, new entrants into the solar module manufacturing industry, primarily from China, could negatively impact the demand for, and pricing of, our customers' products, which could reduce the demand for our encapsulants. We believe our European customers have lost market share to low-cost module

manufacturers, primarily from China, that continue to penetrate the European solar market and whom we do not sell encapsulants to. We have lost market share in the European market due to emerging low-cost solar module manufacturers, primarily from China, and if we are not able to supply encapsulants to these new entrants in the future, we could lose further market share and also face competition from new encapsulant manufacturers.

In addition, a significant portion of our outstanding accounts receivable is derived from sales to a limited number of customers. The accounts receivable from our top five solar customers with the largest receivable balances represented 44.8% and 34.6% of our accounts receivable balance as of June 30, 2009 and December 31, 2008, respectively. Moreover, many solar companies are facing and may continue to face significant liquidity and capital expenditure requirements, and as a result, our customers may have trouble making payments owed to us, which could affect our business, financial condition and results of operations. Any one of the following events may cause material fluctuations or declines in our solar net sales and have a material adverse effect on our business, financial condition and results of operations:

Our solar business's growth is dependent upon the growth of our key solar customers and our ability to keep pace with our customers' growth.

In addition to relying on a small number of customers, we believe we were the primary supplier to each of our top 10 solar customers in the first six months of 2009. The future growth and success in our solar business depends on the ability of such customers to grow their businesses and our ability to meet any such growth, principally through the addition of manufacturing capacity. If our solar customers do not increase production of solar modules, there will be no corresponding increase in encapsulant orders. Alternatively, in the event such customers grow their businesses, we may not be able to meet their increased demands, which would require such customers to find alternative sources for encapsulants. In addition, it is possible that customers for which we are the exclusive supplier of encapsulants will seek to qualify and establish a secondary supplier of encapsulants, which would reduce our share with such customers and could increase that customer's pricing leverage. If our solar customers do not grow their businesses or they find alternative sources for encapsulants to meet their demands, it could limit our ability to grow our business and increase our solar net sales.

Technological changes in the solar energy industry or our failure to develop and introduce or integrate new technologies could render our encapsulants uncompetitive or obsolete, which would adversely affect our business.

The solar energy market is rapidly evolving and competitive and is characterized by continually changing technology requiring continuous improvements in solar modules to increase efficiency and power output and improve aesthetics. This requires us and our customers to continuously invest significant financial resources to develop new solar module technology and enhance existing solar modules to keep pace with evolving industry standards and changing customer requirements and to compete effectively in the future. Our failure to further refine our encapsulant technology and develop and introduce new or enhanced encapsulants or other products, or our competitors' development of

products and technologies that perform better or are more cost effective than our products, could cause our encapsulants to become uncompetitive or obsolete, which would adversely affect our business, financial condition and results of operations. Product development activities are inherently uncertain, and we could encounter difficulties in commercializing new technologies. As a result, our product development expenditures in our solar business may not produce corresponding benefits.

Moreover, we produce a component utilized in the manufacturing of solar modules. New solar technologies may emerge or existing technologies may gain market share that do not require encapsulants as we produce them, or at all. Such changes could result in decreased demand for our encapsulants or render them obsolete, which would adversely affect our business, financial condition and results of operations.

We rely upon trade secrets and contractual restrictions, and not patents, to protect our proprietary rights. Failure to protect our intellectual property rights may undermine our competitive position and protecting our rights or defending against third-party allegations of infringement may be costly.

Protection of proprietary processes, methods, documentation and other technology is critical to our business. Failure to protect, monitor and control the use of our existing intellectual property rights could cause us to lose our competitive advantage and incur significant expenses. We rely on trade secrets, trademarks, copyrights and contractual restrictions to protect our intellectual property rights and currently do not hold any patents related to our solar business. However, the measures we take to protect our trade secrets and other intellectual property rights may be insufficient. While we enter into confidentiality agreements with our solar employees and third parties to protect our intellectual property rights, such confidentiality provisions related to our trade secrets could be breached and may not provide meaningful protection for our trade secrets. Also, others may independently develop technologies or products that are similar or identical to ours. In such case, our trade secrets would not prevent third parties from competing with us.

Third parties or employees may infringe or misappropriate our proprietary technologies or other intellectual property rights, which could harm our business and operating results. Policing unauthorized use of intellectual property rights can be difficult and expensive, and adequate remedies may not be available.

We are currently in litigation with a former employee, James P. Galica, in our solar business and his current employer, JPS Elastomerics Corp., for the misappropriation and theft of our trade secrets. In August 2008, the jury determined that the technology for our polymeric sheeting product line is a trade secret. The jury also determined that our former employee and his current employer had not misappropriated our trade secrets. We have not decided if we will appeal the jury's determination. The jury also found that our former employee had breached his confidentiality agreement with us. Subsequently, the judge determined that JPS and Galica had violated the Massachusetts Unfair and Deceptive Trade Practices Act, finding that the technology for our polymeric sheeting product is a trade secret and that JPS and Galica had misappropriated our trade secrets. The judge awarded us compensatory and punitive damages, attorneys' fees and costs and issued a temporary injunction preventing JPS from manufacturing, marketing or selling the competing products, which are substantially similar to some of our encapsulants. The final amount of damages to be awarded to us, as well as the scope of a permanent injunction, is still pending before the court and will be determined by the presiding judge. Final judgment will not be entered until these pending matters are resolved. The court has ordered each party to brief the remaining issues. Upon entry of final judgment, JPS will have the right to appeal the judge's ruling, and we will have the right to appeal the jury's verdict. If JPS or Galica is successful on the appeals from both the jury's verdict and the judge's rulings, the result may be a new trial or a final determination that JPS may compete with us by continuing to sell a product that is substantially similar to some of our encapsulants. JPS may also be allowed to compete with us on some encapsulant products based on the court's ruling on the scope and duration of the permanent injunction. Even if we are ultimately successful, this lawsuit and any future lawsuits to protect our

intellectual property rights or defend against third-party infringement claims may be costly and may divert management attention and other resources away from our business. For further information regarding the litigation with our former employee, see "Business—Legal Proceedings—Galica/JPS."

We face competition in our solar business from other companies producing encapsulants for solar modules.

The market for encapsulants is highly competitive and continually evolving. We compete with a number of encapsulant manufacturers, some of which are large, global companies with substantial financial, manufacturing and logistics resources and strong customer relationships. If we fail to attract and retain customers for our current and future products, we will be unable to increase our revenues and market share. Our primary encapsulant competitors include Bridgestone Corporation, ETIMEX Primary Packaging GmbH and Mitsui Chemicals, Inc. We also expect to compete with new entrants to the encapsulant market, including those that may offer more advanced technological solutions or that have greater financial resources than we do. Further, as the China solar market matures, we expect other encapsulant providers from China and the greater Asian markets will compete with us. Our competitors may develop and produce or may be currently producing encapsulants that offer advantages over our products. A widespread adoption of any of these technologies could result in a rapid decline in our position in the encapsulant market and our revenues and adversely affect our margins.

Our failure to build and operate new manufacturing facilities and increase production capacity at our existing facilities to meet our customers' requirements could harm our business and damage our customer relationships in the event demand for encapsulants increases. Conversely, expanding our production in times of overcapacity could have an adverse impact on our results of operations.

Prior to the fourth quarter of 2008, our manufacturing facilities generally operated at full production capacity, which constrained our ability to meet increased demand from our customers. The future success of our solar business depends, in part, on our ability to increase production capacity to satisfy any increased demand from our customers. We may be unable to expand our solar business, satisfy customer requirements, maintain our competitive position and improve profitability if we are unable to build and operate new manufacturing facilities and increase production capacity at our existing facilities to meet any increased demand for our solar products. For example, if there are delays in our new Malaysian facility achieving target yields and output, we will not meet our target for adding capacity, which would limit our ability to increase encapsulant sales and result in lower than expected solar net sales and higher than expected costs and expenses. Moreover, we may experience delays in receiving equipment and be unable to meet any increases in customer demand. Failure to satisfy customer demand may result in a loss of market share to competitors and may damage our relationships with key customers.

In addition, due to the lead time required to produce the equipment used in our encapsulant manufacturing process, it can take up to a year to obtain new machines after they are ordered. Accordingly, we are required to order production equipment well in advance of expanding our facilities or opening new facilities and in advance of accepting additional customer orders. If such facilities are not expanded or completed on a timely basis or if anticipated customer orders do not materialize, we may not be able to generate sufficient solar net sales to offset the costs of new production equipment, which could have an adverse impact on our results of operations. Furthermore, we rely on longer-term forecasts from our solar customers to plan our capital expenditures. If these forecasts prove to be inaccurate, either we may have spent too much on capacity growth, which could require us to consolidate facilities, in which case our financial results would be adversely affected, or we may have spent too little on capital expenditures, in which case we may be unable to satisfy customer demand, which could adversely affect our business. Furthermore, our ability to establish and operate new

manufacturing facilities and expand production capacity is subject to significant risks and uncertainties, including:

If we are unable to establish or successfully operate additional manufacturing facilities or to increase production capacity at our existing facilities, as a result of the risks described above or otherwise, we may not be able to expand our business as planned and our solar net sales may be lower than expected. Alternatively, if we build additional manufacturing facilities or increase production capacity at our existing facilities, we may not be able to generate sufficient customer demand for our encapsulants to support the increased production levels, which would adversely affect our business and operating margins.

Our solar business is exposed to risks related to running our facilities at full production capacity from time to time that could result in decreased solar net sales and affect our ability to grow our business in future periods.

Prior to the fourth quarter of 2008, our manufacturing facilities generally operated at full production capacity. If any of our current or future production lines or equipment were to experience any problems or downtime, such as in 2005 when one of our plants was without electricity for five days following a hurricane, we may not be able to shift production to new lines and may not be able to meet our production targets, which would result in decreased solar net sales and adversely affect our customer relationships. As a result, our per-unit manufacturing costs would increase, we would be unable to increase sales as planned and our earnings would likely be negatively impacted. In addition, when our encapsulant production lines are running at full capacity, they are generally used solely to meet current customers' orders. As such, there is very limited production line availability to test new technologies or further refine existing technologies that are important for keeping pace with evolving industry standards and changing customer requirements and competing effectively in the future. Limitations in our ability to test new products or enhancements to our existing products could cause our encapsulants to become uncompetitive or obsolete, which would adversely affect our business.

We may be subject to claims that we have infringed, misappropriated or otherwise violated the patent or other intellectual property rights of a third party. The outcome of any such claims is uncertain and any unfavorable result could adversely affect our business, financial condition and results of operations.

We may be subject to claims by third parties that we have infringed, misappropriated or otherwise violated their intellectual property rights. These claims may be costly to defend, and we ultimately may not be successful. An adverse determination in any such litigation could subject us to significant liability to third parties (potentially including treble damages), require us to seek licenses from third parties (which may not be available on reasonable terms, or at all), make substantial one-time or ongoing royalty payments, redesign our products or subject us to temporary or permanent injunctions

prohibiting the manufacture and sale of our products, the use of our technologies or the conduct of our business. 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 litigation. In addition, we may have no insurance coverage in connection with such litigation and may have to bear all costs arising from any such litigation to the extent we are unable to recover them from other parties. Any of these outcomes could have a material adverse effect on our business, financial condition and results of operations.

We generally operate on a purchase order basis with our solar customers, and their ability to cancel, reduce, or postpone orders could reduce our solar net sales and increase our costs.

Sales to our solar customers are typically made through non-exclusive, short-term purchase order arrangements that specify prices and delivery parameters. The timing of placing these orders and the amounts of these orders are at our customers' discretion. Customers may cancel, reduce or postpone purchase orders with us prior to production on relatively short notice. If customers cancel, reduce or postpone existing orders or fail to make anticipated orders, it could result in the delay or loss of anticipated sales, which could lead to excess inventory and unabsorbed overhead costs. Because our encapsulants have a limited shelf life from the time they are produced until they are incorporated into a solar module, we may be required to sell any excess inventory at a reduced price, or we may not be able to sell it at all and incur an inventory write-off, which could reduce our solar net sales and increase our costs. In the first six months of 2009, we experienced postponements and cancellations in orders and, as a result, incurred approximately $1.0 million of inventory write-offs.

We may be unable to manage the expansion of our solar operations effectively.

We expect to expand our existing facilities and add new facilities to meet future demand for encapsulants. We recently completed expansions in our facilities in Connecticut and Spain. The production line qualification on our Malaysian facility has been completed, and we began shipping production quantities of encapsulants from that facility in the third quarter of 2009. To manage the potential growth of our operations, we will be required to improve operational and financial systems, procedures and controls, increase manufacturing capacity and output and expand, train and manage our growing employee base. Furthermore, management will be required to maintain and expand our relationships with our customers, suppliers and other third parties. Our solar business's current and planned operations, personnel, systems, internal procedures and controls may not be adequate to support our future growth. If we are unable to manage the growth of our solar business effectively, we may not be able to take advantage of market opportunities, execute our business strategies or respond to competitive pressures.

Our dependence on a limited number of third-party suppliers for raw materials for our encapsulants and other significant materials used in our process could prevent us from timely delivering encapsulants to our customers in the required quantities, which could result in order cancellations and decreased revenues.

We purchase resin and paper liner, the two main components used in our manufacturing process, from a limited number of third-party suppliers. If we fail to develop or maintain our relationships with these suppliers or our other suppliers, or if the suppliers' facilities are affected by events beyond our control, we may be unable to manufacture our encapsulants or our encapsulants may be available only for customers in lesser quantities, at a higher cost or after a long delay. We may be unable to pass along any price increases relating to materials costs to our customers, in which case our margins could be reduced. In addition, we do not maintain long-term supply contracts with our suppliers. Our inventory of raw materials for our encapsulants, including back-up supplies of resin, may not be sufficient in the event of a supply disruption. In 2005, we encountered a supply disruption when one of our resin suppliers had its facilities damaged by a hurricane, and another supplier had a reactor fire at the same time. This forced us to use our back-up supplies of resin. The failure of a supplier to supply

materials and components, or a supplier's failure to supply materials that meet our quality, quantity and cost requirements in a timely manner, could impair our ability to manufacture our products to specifications, particularly if we are unable to obtain these materials and components from alternative sources on a timely basis or on commercially reasonable terms. If we are forced to change suppliers, our customers may require us to undertake testing to ensure that our encapsulants meet the customer's specifications.

Our solar gross margins and profitability may be adversely affected by rising commodity costs.

We are dependent on certain raw and other materials, particularly resin and paper, for the manufacture of our encapsulants. In addition, the cost of equipment used to manufacture our encapsulants is affected by steel prices. The prices for resin, paper and steel have been volatile over the past few years and could increase. If the prices for the commodities and equipment we use in our solar business increase, our gross margins and results of operations may be adversely affected.

As a supplier to solar module manufacturers, disruptions in any other component of the supply chain to solar module manufacturers may adversely affect our customers and consequently limit the growth of our business and revenue.

We supply a component to solar module manufacturers. As such, if there are disruptions in any other area of the supply chain for solar module manufacturers, it could affect the overall demand for our encapsulants. For example, the increased demand for polysilicon due to the rapid growth of the solar energy and computer industries and the significant lead time required for building additional capacity for polysilicon production led to an industry-wide shortage of polysilicon from 2005 through 2008, which is an essential raw material in the production of most of the solar modules produced by many of our customers. This and other disruptions to the supply chain may force our customers to reduce production, which in turn would decrease customer demand for our encapsulants and could adversely affect our solar net sales. In addition, reduced orders for our encapsulants could result in underutilization of our production facilities and cause an increase of our marginal production cost. In 2009, we experienced postponements and cancellations in orders and, as a result, incurred approximately $1.0 million of inventory write-offs.

The sales cycle for our encapsulants can be lengthy, which could result in uncertainty and delays in generating solar net sales.

The integration and testing of our encapsulants with prospective customers' solar modules or enhancements to existing customers' solar modules requires a substantial amount of time and resources. A solar customer may need up to one year to test, evaluate and adopt our encapsulants and qualify a new solar module, before ordering our encapsulants. Our solar customers then need additional time to begin volume production of solar modules that incorporate our encapsulants. As a result, the complete sales cycle for our solar business can be lengthy. We may experience a significant delay between the time we increase our expenditures for product development, sales and marketing efforts and inventory for our solar business and the time we generate solar net sales, if any, from these expenditures. In addition, because we typically do not have long-term commitments from our solar customers, we must repeat the sales process on a continual basis even for existing customers that develop new solar modules or enhancements to their existing solar modules.

Our solar business could be adversely affected by seasonal trends and construction cycles.

We may be subject to industry-specific seasonal fluctuations in the future, particularly in climates that experience colder weather during the winter months, such as Germany. For example, in the first six months of 2009, we experienced a decline in our solar business mainly due to decreased global demand for solar energy as a result of legislative changes, such as the cap in feed-in tariffs in Spain implemented in 2008, the ongoing global recession and the ongoing worldwide credit crisis. There are

various reasons for seasonality fluctuations, mostly related to economic incentives and weather patterns. In Germany, the construction of solar energy systems is concentrated in the second half of the calendar year, largely due to the annual reduction of the applicable minimum feed-in tariff. In the United States, solar module customers will sometimes make purchasing decisions towards the end of the year in order to take advantage of tax credits or for budgetary reasons. In addition, construction levels are typically slower in colder months. Accordingly, our business and quarterly results of operations could be affected by seasonal fluctuations in the future.

Problems with product quality or product performance, including defects, could result in a decrease in customers and solar net sales, unexpected expenses and loss of market share.

Our encapsulants are complex and must meet stringent quality requirements. Products as complex as our encapsulants may contain undetected defects, especially when first introduced. For example, our encapsulants may contain defects that are not detected until after they are shipped or are installed because we cannot test for all possible scenarios. These defects could cause us to incur significant costs, including costs to service or replace products, divert the attention of our engineering personnel from product development efforts and significantly affect our customer relations and business reputation. If we deliver products with defects, or if there is a perception that our products contain errors or defects, our credibility and the market acceptance and sales of our encapsulants could materially decline. In addition, we could be subject to product liability claims and could experience increased costs and expenses related to significant product liability claims or other legal judgments against us, or a widespread product recall by us or a solar module manufacturer. For example, during the second half of 2008, we recorded an accrual of $5.6 million relating to specific product performance matters, which amount represents management's best estimate of the costs to repair or replace such product. The majority of this accrual relates to a quality claim by one of our customers in connection with a non-encapsulant product that we purchased from a vendor in 2005 and 2006 and resold. We stopped selling this product in 2006 and are currently attempting to resolve this matter. We may increase our accruals in future periods or incur charges in excess of that amount, which would result in increased expenses in future periods that adversely affect our results of operations.

The manufacturing process for our encapsulants is highly complex. Minor deviations in the manufacturing process can cause substantial decreases in yield and, in some cases, cause production to be suspended. We have from time to time experienced lower than anticipated manufacturing yields. This typically occurs during the production of new encapsulants or the installation and start-up of new process technologies or equipment. As we expand our production capacity, we may experience lower yields initially as is typical with any new equipment or process. If we do not achieve planned yields, our costs of sales could increase, and product availability would decrease resulting in lower solar net sales than expected.

Changes to existing regulations in the utility sector and the solar energy industry may present technical, regulatory and economic barriers to the purchase and use of solar modules, which in turn may significantly reduce demand for our products.

The market for power generation products is heavily influenced by government regulations and policies concerning the electric utility industry, as well as the internal policies of electric utility companies. These regulations and policies often relate to electricity pricing and technical interconnection of end user-owned power generation. In a number of countries, these regulations and policies are being modified and may continue to be modified. End users' purchases of alternative energy sources, including solar modules, could be deterred by these regulations and policies. For example, utility companies sometimes charge fees to larger, industrial customers for disconnecting from the electricity transmission grid or relying on the electricity transmission grid for back-up purposes. Such fees could increase the costs of using solar modules, which may lead to reduced demand for solar modules and, in turn, our encapsulants.

We anticipate that solar modules and their installation will continue to be subject to oversight and regulation in accordance with national and local ordinances relating to building codes, safety, environmental protection, utility interconnection and metering and related matters in various countries. Any new government regulations or utility policies pertaining to solar modules may result in significant additional expenses to our solar customers, and their distributors and end users, which could cause a significant reduction in demand for solar modules and, in turn, our encapsulants.

The quality assurance testing markets are highly competitive, and many of the companies with which we compete have substantially greater resources and geographical presence than us.

The quality assurance industry is highly competitive, and our quality assurance business competes in the United States and internationally with many well-established quality assurance and certification companies on the basis of technical and industry knowledge, pricing, geographic proximity, client service, timeliness, accuracy, marketing, breadth of service offering, level of consultation and actionable information and technical excellence in a given product category. Our global competitors operate in multiple geographic areas while other competitors operate locally. In addition, we compete with non-profit certification companies and in-house quality assurance programs maintained and operated by manufacturers and retailers themselves. The ability to increase or maintain our quality assurance net sales or gross margins in the global market or in various local markets may be limited as a result of actions by competitors.

Our competitors may be able to provide clients with different or greater capabilities or benefits than we can provide in areas such as geographical presence, technical qualifications, price and the availability of human resources. The inability of our quality assurance business to compete effectively with respect to any of these or other factors could have a material adverse effect on our business, financial condition or results of operations. In order to remain competitive in the quality assurance testing industry, we must also keep pace with changing technologies and client preferences. If we are unable to expand our geographic presence and testing capacity, maintain or enter into strategic partnerships or differentiate our services from those of our competitors, our quality assurance business may not be able to obtain new clients or it may lose existing clients. Competitors may in the future adopt aggressive pricing policies and diversify their service offerings. In addition, new competitors or alliances among competitors may emerge and compete more effectively than our quality assurance business can. There is also a trend towards consolidation in certain markets that our quality assurance business serves, which may result in the emergence of new or bigger competitors. If we cannot offer prices, services or a quality of service at least comparable to those offered by our competitors, we could lose market share or our profitability may be affected. These competitive pressures could materially and adversely affect our business, financial condition and results of operations.

Failure to maintain professional accreditations and memberships may affect our quality assurance business's ability to compete or generate net sales.

Our quality assurance clients rely on our numerous professional accreditations and memberships, including ISO 9000, ISO 17025, SA 8000 and Underwriters Laboratories, to ensure continued compliance with their quality assurance and social audit standards. Certain accreditations are granted for limited periods of time and are subject to periodic renewal. Any failure to meet our ongoing professional responsibilities could lead us to lose, either temporarily or on a permanent basis, one or more of such accreditations or memberships. In addition, a public authority or professional organization that has granted one or more accreditations or memberships to us could decide to unilaterally withdraw such accreditations and memberships. If our accreditations and memberships with these or other professional organizations are suspended or revoked, our clients may decrease the amount of business that they do with our quality assurance business, or stop doing business with us altogether, which would negatively affect our business, financial condition and results of operations.

Damage to the professional reputation of our quality assurance business would adversely affect our quality assurance net sales and the growth prospects of our quality assurance business.

Our quality assurance business depends on longstanding relationships with our clients, including leading global retailers and consumer product manufacturers, for a significant portion of our quality assurance net sales. Product liability claims, poor performance, lax standards, violations of laws or regulations, employee misconduct, information security breaches or other action affecting our quality assurance business could damage our reputation. Providing quality assurance services for products for human use or consumption involves inherent legal and reputational risks and our success depends on the ability of our quality assurance business to maintain service quality for our existing clients. Service quality issues, real or alleged, or allegations of product defects, contamination, tampering, misbranding, spoliation, or other adulteration, even when false or unfounded, could tarnish the image of our quality assurance business and may cause our clients to choose other quality assurance providers. We also provide our clients with limited indemnities for our failure to meet applicable standards. Quality assurance testing protocols only identify known risks, and we have cleared products in the past that later were determined to present a previously unknown risk. No testing protocol can discern unknown risks but we may nevertheless be held liable for those risks. A significant product liability or other legal judgment against our quality assurance business, or a widespread product recall of a tested product, may adversely affect our profitability. Moreover, even if a product liability or consumer fraud claim is unsuccessful, has no merit or is not pursued, the negative publicity surrounding assertions against products or processes that our quality assurance business tested could adversely affect our reputation, which in turn could lead to a loss of existing clients or make it more difficult to attract new clients. If our quality assurance business's reputation is damaged, our net sales and growth prospects could be adversely affected.

Our quality assurance business's growth depends on our ability to expand our operations and capacity and manage such expansion effectively.

In order to maintain our current clients and grow our quality assurance business, we must be able to meet increasing client demand, which requires additional space, equipment and human resources. The future success of our quality assurance business depends on our ability to increase our service capacity, and if we are unable to expand our operations, obtain testing equipment and hire additional qualified personnel, we may be unable to expand our quality assurance business and satisfy client demands. The testing equipment our quality assurance business uses is highly customized and is built to order, which results in significant lead times. Therefore, it can take several months to obtain, install and calibrate new equipment once ordered, and we must have the facilities available to accommodate it. Building a new testing facility can take up to a year.

We have recently expanded our quality assurance operations and plan to continue to expand such operations, which can result in significant demands on administrative, operational and financial personnel and other resources. Additional expansion in existing or new markets could strain these resources and increase capital needs, and our personnel, systems, procedures, controls and existing space may not be adequate to support further expansion. Additionally, international growth in our quality assurance business may be limited by the fact that in some countries we are required to operate with a local strategic partner. Finding these partners may be difficult or impossible, and our arrangements with them may negatively affect our quality assurance net sales.

Moreover, we have a limited number of laboratories in which to process engagements and a limited number of trained personnel to conduct inspections and audits. When these laboratories or our personnel resources are at capacity, we cannot accept more engagements. Our quality assurance clients may require capacity and resources greater than that which we can provide. If we cannot process engagements in the time our clients require due to capacity or other resource constraints, we may lose clients or experience a decline in engagements.

Our quality assurance business may lose money or experience reduced margins if we do not adequately estimate the cost of our quality assurance engagements.

We perform the majority of our quality assurance engagements on a fixed-price basis. Fixed-price contracts require us to price our contracts by predicting expenditures in advance. In addition, some engagements obligate our quality assurance business to provide ongoing and other supporting or ancillary services on a fixed-price basis or with limitations on our ability to increase prices. When making proposals for engagements on a fixed-price basis, we rely on our estimates of costs and timing for completing the projects. These estimates reflect management's best judgment regarding our quality assurance business's capability to complete the task efficiently. Any increased or unexpected costs or unanticipated delays in connection with the performance of fixed-price contracts, including delays caused by factors outside our control, such as increased energy and labor costs, could result in losses or reduced margins. Unexpected costs and unanticipated delays may cause our quality assurance business to incur losses or reduced margins on fixed-price contracts. In addition, some of our quality assurance engagements are on a time-and-material basis. While these types of contracts are generally subject to less uncertainty than fixed-price contracts, to the extent that actual labor and other costs are higher than the contract rates, these contracts may be less profitable or unprofitable.

Our failure to establish and maintain partnerships and other strategic alliances with other quality assurance providers may delay the expansion or provision of our services, harm our reputation and cause us to lose clients or prevent us from growing our quality assurance business.

Our quality assurance business serves a diverse and global client base, which requires us to operate where such clients operate. We are required to work with a partner in certain countries either because of local laws and regulations or because such arrangements are customary to doing business in such countries. Also, we enter into and will continue to enter into strategic alliances with other quality assurance services in order to meet client demands in countries in which it may not be practicable for us to operate on a stand-alone basis. We do not generally have long-term contracts with our strategic partners, so they may cease doing business with us on relatively short or no notice. Yet if performance issues arise with respect to a strategic partner's services, such issues could damage our quality assurance business's reputation and exclusivity arrangements with such partners could prevent us from engaging in new strategic alliances for certain testing and inspection services in particular markets. In addition, we have also entered into joint venture agreements that restrict our ability to enter into certain product testing markets in specified geographic markets, either with another strategic partner or on our own. If we are unable to establish or maintain relationships with strategic partners, if such partners damage our reputation or if contract arrangements with such partners prevent us from entering certain testing markets, we could lose quality assurance clients or may not be able to expand our quality assurance business, either of which could have an adverse effect on our results of operations.

Our quality assurance business's failure to develop and protect its proprietary systems of design reviews and research processes could negatively affect its business and future growth.

Similar to our solar business, our quality assurance business does not rely on any patents and relies primarily on trade secrets, trademarks, copyrights and other contractual restrictions to protect our intellectual property. In addition to breaching confidentiality agreements, former employees and others may obtain knowledge of our quality assurance business's trade secrets through independent development or other legal means. Policing unauthorized use of proprietary technology can be difficult and expensive, and adequate remedies may not be available in the event of unauthorized use or disclosure of trade secrets. Any lawsuits to protect our quality assurance business's intellectual property may be costly and may divert management attention and other resources away from our business, and any such litigation may not be resolved in our favor. An adverse determination in any such litigation will impair our quality assurance business's intellectual property rights and may harm our business,

prospects and competitive position. In addition, we have no insurance coverage against such litigation costs and have to bear all costs arising from such litigation to the extent we are unable to recover them from other parties.

Our quality assurance business may be subject to professional liability claims and may not have adequate insurance coverage.

Quality assurance testing protocols are only designed to identify known risks. In the past, our quality assurance business has cleared products that only later were determined to present a previously unknown risk. Testing protocols cannot discern unknown risks, for which we nevertheless may be held liable. Also, there may be a significant delay between the provision of services and the making of a related claim. While we maintain insurance for our quality assurance business to protect against losses from professional liability claims, such insurance may not be available, is subject to deductibles and may not be adequate to cover all the costs and expenses related to a significant professional liability or other legal judgment against us, which could adversely affect the results of operations of our quality assurance business.

In addition, the insurance market could evolve in a manner unfavorable to us, resulting in increased premiums or making it impossible or much more expensive to obtain adequate insurance coverage. These factors could result in a substantial increase in our insurance costs, cause us to operate without insurance or cause us to withdraw from certain markets, which could have a significant adverse effect on our quality assurance business and related results of operations.

Changes in regulations applicable to our quality assurance business could have a significant effect on our business, financial condition, results of operations or future growth.

Our quality assurance business conducts operations in a heavily regulated environment, with regulations differing, sometimes substantially, from one country to another. Regulations applicable to our quality assurance business may change either favorably or unfavorably for us. The strengthening or enforcement of regulations, while in some cases creating new business opportunities, may also create operating conditions that increase our operating costs, limit our business areas or more generally slow the development of our quality assurance business. In extreme cases, such changes in the regulatory environment could lead us to exit certain markets where we consider the regulation to be overly burdensome. In general, rapid and/or important changes in regulations could have a significant adverse effect on our business, financial condition, results of operations or future growth.

We have reported potential violations of the U.S. Foreign Corrupt Practices Act to the U.S. Department of Justice, or the DOJ, and the U.S. Securities and Exchange Commission, or the SEC, which could result in criminal prosecution, fines, penalties or other sanctions and could have a material adverse effect on our business, financial condition, results of operations and cash flows. As of the date of this filing, the DOJ has not indicated whether it intends to pursue this matter, and the SEC has advised us that because it does not appear that we were subject to the SEC's jurisdiction during the relevant period, the SEC does not intend to pursue this matter at this time. We cannot predict the outcome of this matter.

The U.S. Foreign Corrupt Practices Act, or FCPA, makes it unlawful for, among other persons, a U.S. company or its employees or agents to offer or make improper payments to any "foreign official" in order to obtain or retain business or to induce such "foreign official" to use his or her influence with a foreign government or instrumentality thereof for such purpose. Under the FCPA, we and our officers, directors, controlling stockholders, employees and agents who knew about (or, in certain circumstances, should have known about) or were otherwise involved with potential violations could be subject to substantial fines, potential criminal prosecution, injunctions against further violations or

deferred prosecution arrangements. Other requirements can be imposed on companies that violate the FCPA, including the appointment of a government-approved monitor or the implementation of enhanced compliance procedures.

In late 2008, in the course of routine monitoring of our internal controls, our internal audit staff discovered certain payments made and expenses for entertainment provided to government officials in India from approximately 2006 to 2008 that may have been in violation of the FCPA as well as Indian law. The payments and entertainment expenses were related to our quality assurance business and totaled approximately $26,000. Upon discovering such payments and expenses and performing an initial review and evaluation with the assistance of an outside forensic accounting firm, our Audit Committee directed outside legal counsel to perform an investigation. Our internal audit staff, outside legal counsel or forensic accounting firm performed investigative procedures in 12 of our foreign locations where major international operations are conducted. In the course of that investigation, we discovered up to approximately $74,000 in additional expenses since 2003 in two other jurisdictions that also may be inconsistent with the requirements of the FCPA. Our internal investigation uncovered no evidence that the payments or expenses were related to (i) falsifying, altering or otherwise influencing the conduct of our quality assurance tests or test results or (ii) securing any government contracts.

After completing our internal investigation, we made personnel changes in India and enhanced our FCPA-related policies and procedures, including providing additional ethical and FCPA training to key employees, enhancing our monitoring of expenses and other internal controls and appointing a chief compliance director. It is possible that despite our efforts, additional FCPA issues, or issues under anti-corruption laws of other jurisdictions, could arise in the future. Any failure by us to comply with the FCPA or anti-corruption laws in the future could have a material adverse effect on our business, financial condition, results of operations and cash flows.

In early June 2009, we self-reported the results of our inquiry to the U.S. Department of Justice, or the DOJ, and the enforcement division of the U.S. Securities and Exchange Commission, or the SEC. To our knowledge, the DOJ and SEC were not aware of this matter prior to our report. Shortly after our report, we provided additional information requested by the DOJ and SEC. Since providing that additional information, and as of the date of this filing, the DOJ has not responded to our report or requested any additional information from us. The DOJ has not informed us as to whether it intends to pursue this matter further. In addition, the SEC has advised us that because it does not appear that we were subject to the SEC's jurisdiction during the relevant period, the SEC does not intend to pursue this matter at this time. We cannot predict the outcome resulting from our report to the DOJ. Any criminal prosecution would be costly and time-consuming to defend and such defense may not be successful and would have a material adverse effect on our business, result in harm to our reputation and negatively impact our results of operations. In addition, any fines or penalties imposed by the DOJ could be substantial and any requirements imposed upon us by the DOJ could be difficult, time-consuming and expensive to implement and comply with and could result in difficulties in conducting business in foreign jurisdictions and maintaining existing and attracting new customer relationships. Any failure to comply with any such requirements could result in further prosecution, fines or penalties. Any adverse determination by the DOJ, if material, could also be deemed to be a breach of covenants and an event of default under our credit facilities, which could result in our being required to immediately repay the principal amount outstanding under such facilities and prevent us from borrowing under our revolving credit facility, and adversely affect our liquidity and financial condition.

The ongoing global financial crisis and adverse worldwide economic conditions may have significant effects on our business, financial condition and results of operations.

The ongoing global financial crisis—which has included, among other things, significant reductions in available capital and liquidity, substantial reductions and/or fluctuations in equity and currency values

and a worldwide recession, the extent of which is likely to be significant and prolonged—may materially adversely affect both our solar and quality assurance businesses. We have already begun to experience some weakening in demand for our products and services. Factors such as lack of consumer spending, business investment and government spending, the volatility and weakness of the capital markets, and inflation all affect the business and economic environment and, ultimately, the amount and profitability of our business. In an economic downturn like the current one, which is characterized by higher unemployment, lower family income, lower corporate earnings, lower business investment and lower consumer spending, the demand for our products and services may be adversely affected. Continued market disruptions and broader economic downturns may affect our and our customers' access to capital, lead to lower demand for our products and services, increase our exposure to losses from bad debts or result in our customers ceasing operations, any of which could materially adversely affect our business, financial condition and results of operations.

The credit markets have been experiencing unprecedented levels of volatility and disruption since August 2007. In many cases, the markets have limited credit capacity for certain issuers, and lenders have requested more restrictive terms. The market for new debt financing is extremely limited and in some cases not available at all. In addition, the markets have increased the uncertainty that lenders will be able to comply with their previous commitments. If current levels of market disruption and volatility continue or worsen, we may not be able to refinance our existing debt, draw upon our revolving credit facility or incur additional debt, which may require us to seek other funding sources to meet our liquidity needs or to fund planned expansion. As such, we may not be able to obtain debt or other financing on reasonable terms, or at all. Furthermore, the tightening of credit in financial markets may delay or prevent our customers from securing funding adequate to operate their businesses and purchase our products and services and could lead to an increase in our bad debt levels.

We are dependent on the services of Dennis L. Jilot, our Chairman, President and Chief Executive Officer, Barry A. Morris, our Executive Vice President and Chief Financial Officer, Robert S. Yorgensen, our Vice President and President of STR Solar, Mark A. Duffy, who was appointed as our Vice President and President of STR Quality Assurance in August 2009, and other members of our senior management team. The loss of any member of our senior management team could have a material adverse effect on us. Members of our senior management team may terminate their employment with us upon little or no notice. There is a risk that we will not be able to retain or replace these key employees.

If we are unable to attract, train and retain technical personnel, our businesses may be materially and adversely affected.

Our future success depends, to a significant extent, on our ability to attract, train and retain qualified technical personnel. There is substantial competition for qualified technical personnel for both our solar and quality assurance businesses, and we may be unable to attract or retain our technical personnel. If we are unable to attract and retain qualified employees, our businesses may be materially and adversely affected.

We operate in 37 countries worldwide, we have encapsulant manufacturing facilities operating in Spain and Malaysia, and our quality assurance business annually conducts audits or inspections in over 100 countries. 40.5% and 49.3% of our total net sales were generated from outside the United States in the six months ended June 30, 2009 and the year ended December 31, 2008, respectively, and we

expect that our international operations will continue to grow. As such, our international operations are subject to a number of risks, including:

Fluctuations in exchange rates could have an adverse effect on our results of operations, even if our underlying business results improve or remain steady.

Our reporting currency is the U.S. dollar, and we are exposed to foreign exchange rate risk because a significant portion of our net sales and costs are currently denominated in a number of foreign currencies, primarily Euros, Hong Kong dollars, Chinese renminbi and British pounds sterling, which we convert to U.S. dollars for financial reporting purposes. We do not engage in any hedging activities with respect to currency fluctuations. Changes in exchange rates on the translation of the earnings in foreign currencies into U.S. dollars are directly reflected in our financial results. As such, to the extent the value of the U.S. dollar increases against these foreign currencies, it will negatively impact our net sales, even if our results of operations have improved or remained steady. While the currency of our net sales and costs are generally matched, to the extent our costs and net sales are not denominated in the same currency for a particular location, we could experience further exposure to foreign currency fluctuations. We cannot predict the impact of future exchange rate fluctuations on our results of operations and may incur net foreign currency losses in the future.

Our indebtedness could adversely affect our financial health, harm our ability to react to changes to our business and prevent us from fulfilling our obligations under our indebtedness.

As a result of the DLJ Transactions, we have a significant amount of indebtedness. As of June 30, 2009, after giving effect to the completion of this offering and application of our estimated net proceeds therefrom, we would have had total indebtedness of approximately $241.5 million. Based on that level of indebtedness and interest rates applicable at June 30, 2009, our annual interest expense,

excluding the effect of interest rate swaps, would have been $10.2 million. Although we believe that our current cash flows will be sufficient to cover our annual interest expense, any increase in the amount of our indebtedness or any decline in the amount of cash available to make interest payments could require us to divert funds identified for other purposes for debt service and impair our liquidity position.

Our indebtedness could also have other significant consequences. For example, it could:

Increases in interest rates could increase interest payable under our variable rate indebtedness.

We are subject to interest rate risk in connection with our variable rate indebtedness. Interest rate changes could increase the amount of our interest payments and thus negatively impact our future earnings and cash flows. We currently estimate that our annual interest expense on our floating rate indebtedness would increase by approximately $2.6 million, before giving effect to our interest rate swap, for each increase in interest rates of 1%. If we do not have sufficient earnings, we may be required to refinance all or part of our existing debt, sell assets, borrow more money or sell more securities, none of which we can guarantee we will be able to do. Although we have hedging arrangements for a portion of our variable rate debt, they may prove inadequate or ineffective.

Despite current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. Although the agreements governing our credit facilities contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. For example, we had $20.0 million of borrowings available under our revolving credit facility as of June 30, 2009. If we incur additional debt above the levels currently in effect, the risks associated with our substantial leverage would increase.

To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.

Our ability to make payments on and to refinance our indebtedness and to fund our operations will depend on our ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Specific events that might adversely affect our cash flow include the loss of a key customer or declines in orders for our products or decreased use of our services. Accordingly, we may not be able

to generate cash to service our indebtedness, which could lead to a default under our credit agreements and adversely affect our financial condition.

We are a holding company with no business operations of our own and depend on our subsidiaries for cash.

We are a holding company with no significant business operations of our own. Our operations are conducted through our subsidiaries. Dividends from, and cash generated by, our subsidiaries are our principal sources of cash to repay indebtedness, fund operations and pay dividends, if any, which such payment is prohibited under the terms of our credit facilities. Accordingly, our ability to repay our indebtedness, fund operations and pay any dividends to our stockholders is dependent on the earnings and the distributions of funds from our subsidiaries. The agreements governing our credit facilities significantly restrict our subsidiaries from paying dividends and otherwise transferring cash or other assets to us. In addition, our subsidiaries are permitted under the agreements governing our credit facilities to incur additional indebtedness that may severely restrict or prohibit the making of distributions, the payment of dividends or the making of loans by our subsidiaries to us.

Restrictive covenants in the agreements governing our credit facilities may restrict our ability to pursue our business strategies.

The agreements governing our credit facilities contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to pursue our business strategies or undertake actions that may be in our best interests. Our credit facilities include covenants restricting, among other things, our ability to:

Compliance with environmental and health and safety regulations can be expensive, and noncompliance with these regulations may result in adverse publicity, potentially significant liabilities and monetary damages and fines.

We are required to comply with federal, state, local and foreign laws and regulations regarding protection of the environment and health and safety. If more stringent laws and regulations are adopted in the future, the costs of compliance with these new laws and regulations could be substantial. If we do not comply with such present or future laws and regulations or related permits, we may be required to pay substantial fines, suspend production or cease operations. We use, generate and discharge hazardous substances, chemicals and wastes in our product development, testing and manufacturing activities. Any failure by us to control the use of, to remediate the presence of, or to

restrict adequately the discharge of, such substances, chemicals or wastes could subject us to potentially significant liabilities, clean-up costs, monetary damages and fines or suspensions in our business operations.

We may undertake acquisitions, investments, joint ventures or other strategic alliances, which may have a material adverse effect on our ability to manage our business, and such undertakings may be unsuccessful.

Acquisitions, joint ventures and strategic alliances may expose us to new operational, regulatory, market and geographic risks as well as risks associated with additional capital requirements.

Any of these events could disrupt our ability to manage our business, which in turn could have a material adverse effect on our financial condition and results of operations. Such risks could also result in our failure to derive the intended benefits of the acquisitions, strategic investments, joint ventures or strategic alliances, and we may be unable to recover our investment in such initiatives.

Prior to this offering, there has been no public market for shares of our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of a trading market on the New York Stock Exchange, or the NYSE, or how liquid that market may become. If an active trading market does not develop, you may have difficulty selling any of our common stock that you purchase. The initial public offering price of shares of our common stock will be determined by negotiation between us and the underwriters and may not be indicative of prices that will prevail following the completion of this offering. The market price of shares of our common stock may decline below the initial public offering price, and you may not be able to resell your shares of our common stock at or above the initial offering price.

As a public company, we will become subject to additional financial and other reporting and corporate governance requirements that may be difficult for us to satisfy.

We have historically operated our business as a private company. After this offering, we will be required to file with the SEC annual and quarterly information and other reports that are specified in

Section 13 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We will also be required to ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis. We will also become subject to other reporting and corporate governance requirements, including the requirements of the NYSE, and certain provisions of the Sarbanes-Oxley Act of 2002 and the regulations promulgated thereunder, which will impose significant compliance obligations upon us. As a public company, we will be required to:

These changes will require a significant commitment of additional resources. We may not be successful in implementing these requirements and implementing them could adversely affect our business or operating results. In addition, if we fail to implement the requirements with respect to our internal accounting and audit functions, our ability to report our operating results on a timely and accurate basis could be impaired.

Our independent registered public accounting firm reported to us that, at December 31, 2008, we had significant deficiencies in our internal controls.

Our independent registered public accounting firm reported to us that at December 31, 2008, we had significant deficiencies in our internal controls with respect to our tax function, our overall control structure and our information technology general computer controls. Our independent accounting firm previously reported to us that at December 31, 2007, we had material weaknesses and significant deficiencies in our internal controls over financial reporting, which are necessary in order to produce Public Company Accounting Oversight Board, or PCAOB, compliant financial statements. Under standards established by the PCAOB, a "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis, and a "significant deficiency" is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the registrant's financial reporting. For the year ended December 31, 2008, we remediated the material weakness related to our financial accounting and reporting function and partially remediated the material weakness related to our tax function such that for 2008, we have a significant deficiency related to our tax function. The 2007 significant deficiencies related to the documentation of our information technology systems, general computer controls, policies and procedures and documentation of our overall internal control environment continued to be significant deficiencies in 2008. We are in the process of remediating the

significant deficiencies identified at December 31, 2008. Our remediation efforts include hiring additional qualified personnel, providing additional training, implementing additional financial accounting controls and procedures and hiring a consultant to assist us in our procedure documentation and development of key controls with respect to our information technology systems. However, these and other remediation efforts may not enable us to remedy the significant deficiencies or avoid material weaknesses or other significant deficiencies in the future. In addition, these significant deficiencies, any material weaknesses and any other significant deficiencies will need to be addressed as part of the evaluation of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and may impair our ability to comply with Section 404.

Our internal control over financial reporting does not currently meet the standards required by Section 404 of the Sarbanes-Oxley Act of 2002, and failure to achieve and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on us.

Our internal control over financial reporting does not currently meet the standards required by Section 404, standards that we will be required to meet in the course of preparing our 2010 financial statements. We do not currently have comprehensive documentation of our internal controls, nor do we document or test our compliance with these controls on a periodic basis in accordance with Section 404. Furthermore, we have not tested our internal controls in accordance with Section 404 and, due to our lack of documentation, such a test would not be possible to perform at this time.

We are in the early stages of addressing our internal control procedures to satisfy the requirements of Section 404, which requires an annual management assessment of the effectiveness of our internal control over financial reporting. If, as a public company, we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, our independent registered public accounting firm may not be able to attest to the effectiveness of our internal control over financial reporting. If we are unable to maintain adequate internal control over financial reporting, we may be unable to report our financial information on a timely basis, may suffer adverse regulatory consequences or violations of applicable stock exchange listing rules and may breach the covenants under our credit facilities. There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements.

In addition, we will incur additional costs in order to improve our internal control over financial reporting and comply with Section 404, including increased auditing and legal fees and costs associated with hiring additional accounting and administrative staff.

Insiders will continue to have substantial control over us after this offering which could limit your ability to influence the outcome of key transactions, including a change of control.

Our principal stockholders, directors and executive officers and entities affiliated with them will own approximately 45.0% of the outstanding shares of our common stock after this offering. As a result, these stockholders, if acting together, would be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other extraordinary transactions. They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. In addition, we have elected to opt out of Section 203 of the Delaware General Corporation Law, which prohibits a publicly-held Delaware corporation from engaging in a "business combination" with an "interested stockholder," and we will be able to enter into transactions with our principal stockholders. The concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.

We expect that our stock price will fluctuate significantly, which could cause the value of your investment to decline, and you may not be able to resell your shares at or above the initial public offering price.

Securities markets worldwide have experienced, and are likely to continue to experience, significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could reduce the market price of our common stock regardless of our operating performance. The trading price of our common stock is likely to be volatile and subject to wide price fluctuations in response to various factors, including:

These and other factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the company that issued the stock. If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management from our business, which could significantly harm our profitability and reputation.

If a substantial number of shares become available for sale and are sold in a short period of time, the market price of our common stock could decline.

If our existing stockholders sell substantial amounts of our common stock in the public market following this offering, the market price of our common stock could decrease significantly. The perception in the public market that our existing stockholders might sell shares of common stock could also depress the market price of our common stock. Upon the consummation of this offering, we will have 41,349,710 shares of common stock outstanding. Our directors, executive officers, the selling stockholders and substantially all of our other stockholders will be subject to the lock-up agreements described in "Underwriting" and are subject to the Rule 144 holding period requirements described in "Shares Eligible for Future Sale." After these lock-up agreements have expired and holding periods have elapsed and the lock-up periods set forth in our registration rights agreement to be entered into in connection with this offering have expired, 29,049,710 additional shares, some of which will be subject to vesting, will be eligible for sale in the public market. The market price of shares of our common stock may drop significantly when the restrictions on resale by our existing stockholders lapse. A decline in the price of shares of our common stock might impede our ability to raise capital through the issuance of additional shares of our common stock or other equity securities.

If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our stock or if our results of operations do not meet their expectations, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover us downgrade our stock, or if our results of operations do not meet their expectations, our stock price could decline.

Some provisions of Delaware law and our certificate of incorporation and bylaws may deter third parties from acquiring us and diminish the value of our common stock.

These provisions in our certificate of incorporation and bylaws may discourage, delay or prevent a transaction involving a change of control of our company that is in the best interest of our minority stockholders. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging future takeover attempts.

We do not anticipate paying any cash dividends for the foreseeable future.

We currently intend to retain our future earnings, if any, for the foreseeable future, to repay indebtedness and to fund the development and growth of our business. We do not intend to pay any dividends to holders of our common stock and the agreements governing our credit facilities prohibit our payment of dividends. As a result, capital appreciation in the price of our common stock, if any, will be your only source of gain on an investment in our common stock. See "Dividend Policy."

New investors in our common stock will experience immediate and substantial book value dilution after this offering.

The initial public offering price of our common stock will be substantially higher than the pro forma net tangible book value per share of the outstanding common stock immediately after the offering. Based on an assumed initial public offering price of $14.00 per share (the midpoint of the price range set forth on the cover of this prospectus) and our net tangible book value as of June 30, 2009, if you purchase our common stock in this offering, you will suffer immediate dilution in net tangible book value per share of approximately $18.82 per share. See "Dilution."

Our certificate of incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities.

Our certificate of incorporation provides for the allocation of certain corporate opportunities between us and DLJMB. Under these provisions, neither DLJMB, its affiliates and subsidiaries, nor any of their officers, directors, agents, stockholders, members or partners will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. For instance, a director of our company who also serves as a director, officer or employee of DLJMB or any of its subsidiaries or affiliates may pursue certain acquisition or other opportunities that may be complementary to our business and, as a result, such acquisition or other opportunities may not be available to us. These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations or prospects if attractive corporate opportunities are allocated by DLJMB to itself or its subsidiaries or affiliates instead of to us. The terms of our certificate of incorporation are more fully described in "Description of Capital Stock."

This prospectus contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this prospectus are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "may," "should," "can have," "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

The forward-looking statements contained in this prospectus are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this prospectus, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. We believe these factors include, but are not limited to, those described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements.

Any forward-looking statement made by us in this prospectus speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Under the STR Holdings LLC Agreement, STR Holdings LLC's Class A, B, C, D, E and F units are subject to a priority distribution of shares of common stock in the event of an initial public offering. In connection with the offering, the priority distribution of shares will be based on our equity value as represented by the initial public offering price. For the units issued in connection with the DLJ Transactions, the shares of common stock will be distributed as follows: (i) first, the Class A unitholders will receive an aggregate amount of common stock equal in value to their aggregate capital contributions, which we refer to as our first priority; (ii) second, a pro rata distribution will be made with respect to the Class A, B, C, D and F units until the Class A unitholders receive an aggregate amount of common stock equal in value to 2.5 times their aggregate capital contributions, which we refer to as our second priority; and (iii) finally, a pro rata distribution will be made of the remaining shares to each Class A, B, C, D, E and F unitholder based upon the number of units held by each unitholder, which we refer to as our third priority. Holders of Class C and D incentive units that were issued in 2008 will receive distributions on the same basis as described above, provided that such holders will only receive their pro rata distribution of shares after shares with an aggregate value of approximately $505.5 million have been distributed to the holders of the previously outstanding units, which we refer to as our fourth priority. Holders of the Class E incentive units that were issued in 2008 will only receive their pro rata distribution of shares after shares with an aggregate value of approximately $818.0 million have been distributed to the holders of the previously outstanding units, which we refer to as our fifth priority.

The following table sets forth the priority distribution as applied to each class of units as well as the applicable threshold levels, each as described above, and the implied allocation of value at each distribution priority level:

	Percentage of Equity Value Received

Class	First Priority			Second Priority			Third Priority			Fourth Priority			Fifth Priority
	(dollars in millions)
A units		100.00	%		88.66	%		86.95	%		86.89	%		N/A
B units		—			0.98	%		0.96	%		0.96	%		N/A
C units		—			5.50	%		5.40	%		5.45	%		N/A
D units		—			1.98	%		1.94	%		1.96	%		N/A
E units		—			—			1.92	%		1.92	%		N/A
F units		—			2.88	%		2.83	%		2.83	%		N/A

Total		100.00	%		100.00	%		100.00	%		100.00	%		N/A

Distribution threshold	$	—		$	181		$	487		$	505		$	818
Equity value allocation(1)	$	181		$	306		$	19		$	41		$	—
Equity value allocation—cumulative(1)	$	181		$	487		$	505		$	546			N/A

The following table sets forth the total number of shares allocated to each class of units based on the equity value allocated to each class divided by the initial public offering price of $14.00 per share (the midpoint of the price range set forth on the cover of this prospectus):

The following table sets forth the implied exchange ratio applicable to each class of units reflecting the priority distribution of the equity value allocated to each class based on the initial public offering price of $14.00 per share (the midpoint of the price range set forth on the cover of this prospectus):

The following table provides a sensitivity analysis for the exchange ratio based on a $1.00 change in the assumed initial public offering price of $14.00 per share (the midpoint of the price range set forth on the cover of this prospectus):

The priority distribution described above will apply on the same terms to the units of STR Holdings (New) LLC received by unitholders of STR Holdings LLC in connection with the corporate reorganization. The final allocation of shares among the classes of outstanding units of STR Holdings (New) LLC, pursuant to the corporate reorganization, will be based on the initial public offering price of our common stock in this offering.

Pursuant to the corporate reorganization, our named executive officers, Messrs. Jilot, Morris and Yorgensen and our former Vice President and Chief Operating Officer, Mr. Gual, who retired in April 2009, will receive an aggregate of 2,969,303, 507,238, 871,577 and 664,696 shares of our common stock, respectively, some of which will be restricted stock as a result of the aforementioned transactions. Pursuant to the corporate reorganization, our directors, Messrs. Janitz and Schiano, will receive an aggregate of 337,934 and 337,934 shares of our common stock, respectively, some of which will be restricted stock as a result of the aforementioned transactions. In addition, pursuant to the corporate reorganization, DLJMB and its affiliated funds will receive an aggregate of 19,933,878 shares of our common stock, which may be deemed to be beneficially owned by the members of our board of directors affiliated with DLJMB. For further information regarding the ownership of our common stock by our executive officers and members of our board of directors, see "Certain Relationships and Related Person Transactions—Incentive Unit Grant Agreements—Ownership" and "Principal and Selling Stockholders."

The corporate reorganization will not affect our operations, which we will continue to conduct through our operating subsidiaries.

Our ownership and corporate structure immediately following the corporate reorganization and this offering are set forth in the following chart:

We estimate that the net proceeds to us from our sale of 2,300,000 shares of common stock in this offering will be $25.4 million, after deducting underwriting discounts and commissions and estimated expenses payable by us in connection with this offering. This assumes an initial public offering price of $14.00 per share, which is the midpoint of the price range set forth on the cover of this prospectus. We intend to use our net proceeds from the shares that we sell in this offering to repay $15.0 million of borrowings under our credit facilities, to pay $2.8 million to terminate an advisory services and monitoring agreement we entered into in connection with the DLJ Transactions, and any remaining proceeds for working capital and general corporate purposes.

As of June 30, 2009, we had $256.3 million of borrowings outstanding under our credit facilities. The principal amounts of our term loans under our first lien credit facility amortize in quarterly installments of $462,500 and mature on June 15, 2014. The term loans under our second lien credit facility mature on December 15, 2014. Borrowings under our credit facilities bear interest at variable rates. As of June 30, 2009, the weighted average interest rate under our credit facilities was 4.14%, before the effect of our interest rate swap.

A $1.00 increase (decrease) in the assumed initial public offering price of $14.00 per share would increase (decrease) the net proceeds to us from this offering by $2.2 million, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated expenses payable by us.

We will not receive any proceeds from the sale of shares by the selling stockholders, which include entities affiliated with members of our board of directors and an affiliate of Credit Suisse Securities (USA) LLC, an underwriter participating in this offering, and each of our executive officers.

Since the DLJ Transactions, we have not declared or paid cash dividends on our units. We do not anticipate paying any cash dividends on our capital stock for the foreseeable future and are currently prohibited from doing so under our credit facilities. We intend to retain all available funds and any future earnings to reduce debt and fund the development and growth of our business.

Any future determination to pay dividends will be at the discretion of our board of directors and will take into account:

The following table sets forth our cash and cash equivalents and our capitalization as of June 30, 2009:

This table should be read in conjunction with "Use of Proceeds," "Selected Historical Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes thereto included elsewhere in this prospectus.

				As of June 30, 2009

				(Unaudited)
				Actual			Pro Forma As Adjusted(1)
				(in thousands, except share/ unit data)
Cash and cash equivalents				$	37,465		$	48,631

Debt:
	Current portion of long-term debt			$	2,020		$	2,020
	Long-term debt, less current portion(2)				254,494			239,494

		Total debt		$	256,514		$	241,514

Contingently redeemable units(3)				$	3,531		$	—
Unitholders' equity:
	Class A Units, 17,864,924 units authorized and outstanding				178,649			—
	Class F Units, 588,171 units authorized and outstanding				1,598			—
	Retained earnings				38,459			—
	Accumulated other comprehensive expense				(330	)		—

		Total unitholders' equity		$	218,376		$	—

Stockholders' equity:
	Preferred stock, $0.01 par value, 20,000,000 shares authorized; no shares issued and outstanding, on a pro forma as adjusted basis				—			—
	Common stock, $0.01 par value, 200,000,000 shares authorized; 41,349,710 shares issued and outstanding, on a pro forma as adjusted basis(4)				—			396
	Additional paid in capital				—			209,020
	Retained earnings				—			36,520
	Accumulated other comprehensive income				—			(330	)

		Total stockholders' equity			—			245,606

			Total capitalization	$	478,421		$	487,120

If you invest in our common stock in this offering, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per share of common stock upon the completion of this offering.

As of June 30, 2009, our net tangible book value was approximately $(223.4) million, or $(5.72) per share. Our net tangible book value per share represents our total tangible assets less total liabilities divided by the total number of shares of common stock outstanding. Dilution in the net tangible book value per share represents the difference between the amount per share paid by purchasers of common stock in this offering and the pro forma net tangible book value per share of common stock immediately after the consummation of this offering.

After giving effect to (i) the conversion of all outstanding Class A, B, C, D, E and F units into 39,021,138 shares of our common stock, assuming an initial public offering price of $14.00 per share (the midpoint of the price range set forth on the cover of this prospectus), which includes the conversion of unvested Class A, C, D, E and F incentive units into 1,575,341 shares of our restricted stock that will continue to vest in accordance with their respective terms, prior to the consummation of this offering and (ii) the sale of our common stock at an assumed initial public offering price of $14.00 per share (the midpoint of the price range set forth on the cover of this prospectus), and after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of June 30, 2009 would have been approximately $(199.7) million, or $(4.82) per share.

This represents an immediate increase in pro forma net tangible book value of $0.90 per share to our existing stockholders and an immediate dilution of $18.82 per share to new investors purchasing shares of common stock in this offering at the initial public offering price.

The following table illustrates this dilution to new investors on a per share basis:

A $1.00 increase (decrease) in the assumed initial public offering price of $14.00 per share (the midpoint of the price range set forth on the cover of this prospectus) would increase (decrease) our pro forma net tangible book value after this offering by $2.2 million and increase (decrease) the dilution to new investors by $0.05 per share, assuming the number of shares offered by us, as set forth on the cover of this prospectus remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The following table summarizes, as of June 30, 2009, the total number of shares of our common stock we issued and sold, the total consideration we received and the average price per share paid to us by our existing stockholders and to be paid by new investors purchasing shares of our common stock in this offering. The table assumes an initial public offering price of $14.00 per share (the midpoint of the

price range set forth on the cover of this prospectus) before deducting underwriting discounts and commissions and estimated offering expenses payable by us:

Sales by the selling stockholders in this offering will reduce the number of shares held by existing stockholders to 29,021,138, or 70.2% of the total number of shares of our common stock to be outstanding after the offering, and will increase the number of shares held by new investors to 12,300,000, or 29.7% of the total number of shares of our common stock to be outstanding after the offering. If the underwriters exercise their overallotment option in full, the percentage of shares of common stock held by existing stockholders will decrease to 65.7% of the total number of shares of our common stock outstanding after the offering, and the number of shares of our common stock held by new investors will increase to 14,145,000, or 34.2% of the total shares of our common stock outstanding after this offering.

In addition, we may choose to raise additional capital based on market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

The unaudited pro forma consolidated balance sheet gives effect to our corporate reorganization, described under "Corporate Reorganization," as if it had occurred on June 30, 2009. The unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. The unaudited pro forma consolidated balance sheet is presented for informational purposes only. The unaudited pro forma consolidated balance sheet does not purport to represent what our actual consolidated balance sheet would have been had the corporate reorganization actually occurred on the date indicated, nor is it necessarily indicative of a future consolidated balance sheet.

STR HOLDINGS LLC AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
As of June 30, 2009
(in thousands, except shares/units and per share/unit amounts)

				Pro Forma June 30, 2009					June 30, 2009

				(Unaudited)					(Unaudited)
ASSETS
CURRENT ASSETS
	Cash and cash equivalents				37,465		—		$	37,465
	Accounts receivable, trade, less allowances for doubtful accounts of $4,022 in 2009				26,773		—			26,773
	Unbilled receivables				3,160		—			3,160
	Inventories				13,009		—			13,009
	Prepaid expenses and other current assets				3,664		—			3,664
	Current deferred tax assets				1,750		—			1,750

			Total current assets		85,821		—			85,821
	Property, plant and equipment, net				67,427		—			67,427
	Intangible assets, net				221,914		—			221,914
	Goodwill				223,359		—			223,359
	Deferred financing costs				5,619		—			5,619
	Deferred tax assets				5,092		—			5,092
	Other noncurrent assets				6,221		—			6,221

			Total assets		615,453		—		$	615,453

LIABILITIES, CONTINGENTLY REDEEMABLE UNITS AND UNITHOLDERS' EQUITY
CURRENT LIABILITIES
	Current portion of long-term debt				2,020		—		$	2,020
	Book overdraft				547		—			547
	Accounts payable				6,284		—			6,284
	Billings in excess of earned revenues				5,746		—			5,746
	Accrued liabilities				12,824		—			12,824
	Income taxes payable				7,909		—			7,909

			Total current liabilities		35,330		—			35,330
	Long-term debt, less current portion				254,494		—			254,494
	Interest rate swap liability				5,426		—			5,426
	Other long-term liabilities				4,775		(250	)		5,025
	Deferred tax liabilities				93,271		—			93,271

			Total liabilities		393,296		(250	)		393,546

Contingently redeemable units					—		3,531			3,531
Stockholders' equity
	Pro forma common stock, $0.01 par value, 200,000,000 shares authorized; 39,021,138 shares issued and outstanding on a pro forma basis				373		373			—
	Pro forma additional paid-in capital				183,655		183,655			—
Unitholders' equity
	Units
		Class A—17,864,924 units authorized and outstanding			—		(178,649	)		178,649
		Class F—588,171 units authorized and outstanding			—		(1,598	)		1,598
	Retained earnings				38,459		—			38,459
	Accumulated other comprehensive (expense) income				(330	)	—			(330	)

			Total stockholders'/unitholders' equity		222,157		3,781			218,376

			Total liabilities, contingently redeemable units and stockholders'/unitholders' equity		615,453		—		$	615,453

STR HOLDINGS LLC AND SUBSIDIARIES
NOTE TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

Prior to the anticipated initial public offering, the Company conducted its business through STR Holdings LLC and its subsidiaries. STR Holdings (New) LLC, a Delaware limited liability company and the registrant, is currently an indirect subsidiary of STR Holdings LLC and holds no material assets and does not engage in any operations. In connection with the consummation of the initial public offering, the following transactions will occur:

Under the STR Holdings LLC Agreement, STR Holdings LLC's Class A, B, C, D, E and F units are subject to a priority distribution of shares of common stock in the event of an initial public offering. In connection with the offering, the priority distribution of shares will be based on the Company's equity value as represented by the initial public offering price. For the units issued in connection with the DLJ Transactions, the shares of common stock will be distributed as follows: (i) first, the Class A unitholders will receive an aggregate amount of common stock equal in value to their aggregate capital contributions; (ii) second, a pro rata distribution will be made with respect to the Class A, B, C, D and F units until the Class A unitholders receive an aggregate amount of common stock equal in value to 2.5 times their aggregate capital contributions; and (iii) finally, a pro rata distribution will be made of the remaining shares to each Class A, B, C, D, E and F unitholder based upon the number of units held by each unitholder. Holders of Class C and D incentive units that were issued in 2008 will receive distributions on the same basis as described above, provided that such holders will only receive their pro rata distribution of shares after shares with an aggregate value of approximately $505.5 million have been distributed to the holders of the previously outstanding units. Holders of the Class E incentive units that were issued in 2008 will only receive their pro rata distribution of shares after shares with an aggregate value of approximately $818.0 million have been distributed to the holders of the previously outstanding units.

STR HOLDINGS LLC AND SUBSIDIARIES
NOTE TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (Continued)

The following pro forma table represents the number of shares of common stock and unvested restricted common stock as of June 30, 2009 (unaudited), assuming an initial public offering price of $14.00 per share (the midpoint of the price range set forth on the cover of this prospectus). The number of shares of common stock and unvested restricted common stock issuable on a pro forma basis as of June 30, 2009 are based upon the vesting provisions of the outstanding units and reflect the units vested and unvested as of June 30, 2009:

The following unaudited pro forma condensed consolidated statement of operations for the twelve months ended December 31, 2007 has been developed by applying pro forma adjustments to the historical audited consolidated financial statements appearing elsewhere in this prospectus.

The unaudited pro forma condensed consolidated statement of operations gives effect to the DLJ Transactions as if they had occurred on January 1, 2007. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with this unaudited pro forma condensed consolidated statement of operations. The unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. The unaudited pro forma condensed consolidated statement of operations is presented for informational purposes only. The unaudited pro forma condensed consolidated statement of operations does not purport to represent what our actual consolidated results of operations would have been had the DLJ Transactions actually occurred on the date indicated, nor is it necessarily indicative of future consolidated results of operations. The unaudited pro forma condensed consolidated statement of operations should be read in conjunction with the information contained in "Selected Historical Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the audited consolidated financial statements and the related notes thereto appearing elsewhere in this prospectus. All pro forma adjustments and their underlying assumptions are described more fully in the notes to our unaudited pro forma condensed consolidated statement of operations.

STR HOLDINGS LLC AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

For The Twelve Months Ended December 31, 2007

(in thousands, except per share/unit and share/unit data, unaudited)

		Predecessor Period from January 1 to June 14, 2007			Successor Period from June 15 to December 31, 2007			The DLJ Transactions			Pro Forma

Net sales—Solar		$	25,648		$	52,967		$	—		$	78,615
Net sales—Quality Assurance			39,112			56,317			—			95,429

Total net sales			64,760			109,284			—			174,044

Cost of sales—Solar			11,875			30,068			4,251	(a)		46,194
Cost of sales—Quality Assurance			25,225			35,620			1,952	(b)		62,797

Total cost of sales			37,100			65,688			6,203			108,991

Gross profit			27,660			43,596			(6,203	)		65,053
Selling, general and administrative expenses			12,017			18,400			(390	)(c)		30,027
Provision for bad debt expense			384			562			—			946
Transaction costs			7,737			—			—			7,737

Operating income			7,522			24,634			(5,813	)		26,343
Interest income			143			203			—			346
Interest expense			(2,918	)		(13,090	)		(8,414	)(d)		(24,422	)
Foreign currency transaction losses			(32	)		(76	)		—			(108	)
Unrealized loss on interest rate swap			—			(2,988	)		—			(2,988	)

Income before income tax expense			4,715			8,683			(14,227	)		(829	)
Income tax expense			3,983			4,572			(5,264	)(e)		3,291

Net income		$	732		$	4,111		$	(8,963	)	$	(4,120	)

Basic net income per share/unit		$	0.08		$	0.23					$	(0.23	)

Diluted net income per share/unit		$	0.08		$	0.23					$	(0.23	)

Weighted average share/units outstanding
	Basic		8,632,893			17,864,924						17,864,924

	Diluted		9,134,536			17,864,924						17,864,924

See Accompanying Notes to the Unaudited Pro Forma Condensed
Consolidated Statement of Operations.

STR HOLDINGS LLC AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

The following adjustments reflect, on a pro forma basis, the recurring items related to the DLJ Transactions, in accordance with Article 11 of Regulation S-X under the Securities Act of 1933, as amended. The write-up of acquired inventory to fair value which would be recognized in cost of sales of $0.9 million has been excluded due to its non-recurring nature.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Continued)

The following table sets forth our selected historical consolidated financial data for the periods and as of the dates indicated. The selected historical consolidated financial data as of and for the six months ended June 30, 2009 and 2008 have been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The balance sheet data as of December 31, 2008 and 2007 and the statement of operations and other data for each of (i) the year ended December 31, 2008, (ii) the period from June 15 to December 31, 2007, (iii) the period from January 1 to June 14, 2007 and (iv) the year ended December 31, 2006 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The balance sheet data as of December 31, 2006, 2005 and 2004 and the statement of operations and other data for the years ended December 31, 2005 and 2004 are derived from our audited financial statements that are not included in this prospectus. The historical data as of and for the year ended December 31, 2004 have been adjusted from amounts reported on by our previous auditors.

The pro forma basic and diluted net income per share and weighted average shares outstanding data in the selected historical consolidated financial data table presented below are unaudited and give effect to our corporate reorganization, as described under "Corporate Reorganization."

The results indicated below and elsewhere in this prospectus are not necessarily indicative of our future performance. You should read this information together with "Capitalization," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.

		Successor								Predecessor

		Six Months Ended June 30, 2009		Six Months Ended June 30, 2008				Period from June 15 to December 31, 2007		Period from January 1 to June 14, 2007		Year Ended December 31,
						Year Ended December 31, 2008						Year Ended December 31,
						Year Ended December 31, 2008						2006		2005		2004
		(Unaudited)		(Unaudited)
				(in thousands, except per share/unit and share/unit data)
Statement of Operations Data:
Net sales		$	117,678	$	136,732	$	288,578	$	109,284	$	64,760	$	130,607	$	114,862	$	95,068

Operating income			18,893		36,371		70,567		24,634		7,522		29,657		25,129		16.749

Net income		$	6,243	$	15,973	$	28,105	$	4,111	$	732	$	15,294	$	13,073	$	10,897

Net income per share/unit data:
	Basic	$	0.35	$	0.89	$	1.57	$	0.23	$	0.08	$	1.81	$	1.60	$	1.33
	Diluted	$	0.35	$	0.89	$	1.57	$	0.23	$	0.08	$	1.68	$	1.44	$	1.18
Weighted average shares/units outstanding:
	Basic		17,864,924		17,864,924		17,864,924		17,864,924		8,632,893		8,439,658
	Diluted		17,864,924		17,864,924		17,864,924		17,864,924		9,134,536		9,122,840
Pro forma net income per share (unaudited)(1):
	Basic	$	0.17			$	0.77
	Diluted	$	0.16			$	0.73
Pro forma weighted average shares outstanding (unaudited)(1):
	Basic		37,112,606				36,573,234
	Diluted		38,218,700				38,497,447
Amortization of intangibles		$	5,752	$	5,752	$	11,503	$	6,231	$	50	$	109	$	109	$	764
Capital expenditures		$	10,611	$	14,959	$	35,288	$	10,064	$	3,510	$	2,604	$	5,142	$	6,020
Cash dividends declared per common share/unit		$	—	$	—	$	—	$	—	$	—	$	—	$	1.34	$	0.57
Contingently redeemable units		$	3,531	$	2,254	$	2,930	$	1,463	$	—	$	—	$	—	$	—

	Successor								Predecessor

	Six Months Ended June 30, 2009		Six Months Ended June 30, 2008				Period from June 15 to December 31, 2007		Period from January 1 to June 14, 2007	Year Ended December 31,
					Year Ended December 31, 2008					Year Ended December 31,
					Year Ended December 31, 2008					2006			2005			2004
	(Unaudited)		(Unaudited)
			(in thousands, except per share/unit and share/unit data)
Balance Sheet Data (as of period end):
Cash and cash equivalents	$	37,465	$	32,115	$	27,868	$	21,180		$	17,939		$	8,305		$	15,087
Total assets	$	615,453	$	615,502	$	620,922	$	575,157		$	77,640		$	70,751		$	64,056
Total debt	$	256,514	$	258,525	$	257,521	$	259,526		$	68,101		$	74,762		$	44,845
Total stockholders'/unitholders' equity (deficit)	$	218,376	$	203,042	$	211,967	$	185,382		$	(9,397	)	$	(20,898	)	$	5,294

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the financial condition and results of our operations should be read together with "Selected Historical Consolidated Financial Data" and our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under "Risk Factors" and elsewhere in this prospectus.

We are a leading global provider of encapsulants to the solar module industry. Encapsulants, which are specialty extruded sheets and film that hold a solar module together and protect the embedded semiconductor circuit, are a critical component used in all solar modules. Our polymeric PhotoCap products consist primarily of ethylene-vinyl-acetate, or EVA, which is modified with additives and put through our proprietary manufacturing process to increase product stability and make the encapsulant suitable for use in extreme, long-term outdoor applications. We supply solar module encapsulants to many of the major solar module manufacturers, including BP Solar, First Solar, Solarwatt, SunPower and United Solar. We believe we were the primary supplier of encapsulants to each of our top 10 customers in the first six months of 2009, which we believe is due to our superior products and customer service. Our encapsulants are used in both crystalline and thin-film solar modules. Our solar segment net sales have increased from $9.9 million in 2003 to $182.3 million in 2008, representing a CAGR of 79.1%. In 2009, our solar segment was impacted by decreased global demand for solar energy as a result of legislative changes, such as the cap in feed-in tariffs in Spain implemented in late 2008, the ongoing global recession and the ongoing worldwide credit crisis. Also, our European encapsulant customers have lost market share to emerging low-cost solar module manufacturers, primarily from China, that continue to penetrate the solar market.

Our quality assurance business is a leader in the consumer products quality assurance market, and we believe our quality assurance business represents the only global testing service provider exclusively focused on the consumer products market. Our quality assurance business provides inspection, testing, auditing and consulting services that enable retailers and manufacturers to determine whether products and facilities meet applicable safety, regulatory, quality, performance and social standards. Our quality assurance net sales have increased from $66.5 million in 2003 to $106.3 million in 2008, representing a CAGR of 9.8%.

We were founded in 1944 as a plastics research and development company. We launched our quality assurance business in 1973, and we commenced sales of our solar encapsulant products in the late 1970s.

On June 15, 2007, DLJ Merchant Banking Partners IV, L.P. and affiliated investment funds, or DLJMB, and its co-investors, together with members of our board of directors, our executive officers and other members of management, acquired 100% of the voting equity interests in our wholly-owned subsidiary, Specialized Technology Resources, Inc., for $365.6 million, including transaction costs. In connection with the acquisition:

Our solar segment manufactures encapsulants for sale to solar module manufacturers. Our solar customer base is comprised of over 80 solar module manufacturers. Our solar segment grew rapidly through 2008 and became our largest segment in terms of net sales beginning in the first quarter of 2008. In 2009, our solar segment was impacted by decreased global demand for solar energy as a result of legislative changes, such as the cap in feed-in tariffs in Spain implemented in late 2008, the ongoing global recession and the ongoing worldwide credit crisis. Operations for our solar segment are conducted in five locations, three in the United States, one in Spain and one in Malaysia. For the six months ended June 30, 2009 and the year ended December 31, 2008, our solar net sales were $63.8 million and $182.3 million, respectively.

We expect the following factors to affect our solar segment's results of operations in future periods:

Our quality assurance segment offers services that help clients determine whether the products designed and manufactured by them or on their behalf meet applicable safety, regulatory, quality, performance and social standards. These services, which include testing, inspection, auditing and consulting, are provided to retailers and manufacturers worldwide. We have a broad client base, serving over 6,000 clients in 2008. For the six months ended June 30, 2009 and the year ended December 31, 2008, our quality assurance net sales were $53.8 million and $106.3 million, respectively.

We expect our quality assurance segment will be impacted by the desire of product designers and manufacturers to meet applicable safety, regulatory, quality, performance and social standards and to ensure that product quality and standards are met as retailers, importers and manufacturers choose to outsource production to developing countries. To meet the demand for quality assurance services, we have developed an extensive network of 15 laboratories, 73 inspection and audit offices and 22 sales offices in 37 countries across North America, South America, Europe, Asia and Africa. In addition, we have more than 40 internationally recognized accreditations and memberships.

We expect the following factors to affect our quality assurance segment's results of operations in future periods:

For purposes of our management discussion and analysis that follows, our consolidated net sales, costs and expenses for the period ended December 31, 2007 have been presented on a pro forma basis, as if the DLJ Transactions had taken place on January 1, 2007. Pro forma adjustments include amortization expense of acquired intangible assets, increased cost of goods sold expense due to the step up of our inventory to fair value, increased depreciation expense due to the step up to fair value of property, plant and equipment, increased interest expense associated with increased borrowings and the associated tax effect of those adjustments. The consolidated financial statements for all Successor periods ending on or after June 15, 2007 reflect the fair value adjustments made to our assets and liabilities in recording the DLJ Transactions. See note 3 to our consolidated financial statements included elsewhere in this prospectus. As a result, the consolidated financial statements for all periods on or after June 15, 2007 are not directly comparable to those of any prior period.

The following table sets forth our net sales for each segment and the percentage of total net sales by segment for the periods presented.

Our solar net sales are primarily derived from the sale of encapsulants to both crystalline and thin-film solar module manufacturers. Our solar net sales have increased from $9.9 million in 2003 to $182.3 million in 2008. In the first six months of 2009, our solar segment net sales decreased by 25.7% compared to the corresponding six-month period in 2008. We expect that our results of operations, for the foreseeable future, will depend primarily on the sale of encapsulants to a relatively small number of our existing customers. Sales to First Solar accounted for 31.0% and 19.1% of our solar net sales in the six months ended June 30, 2009 and the year ended December 31, 2008, respectively. The top five customers in our solar segment accounted for approximately 63.6% and 47.0% of our solar net sales in the six months ended June 30, 2009 and the year ended December 31, 2008, respectively.

Sales to our solar customers have been typically made through non-exclusive, short-term purchase order arrangements that specify prices and delivery parameters but do not obligate the customer to purchase any minimum amounts. As our customers look to secure materials or access to our production capacity to support their module production, we have recently entered into, or are in negotiations to enter into, contracts that include periods of exclusivity and minimum purchase requirements. Although such contracts provide for the sale of encapsulants at lower prices than our shorter-term arrangements,

they will provide greater predictability of demand. As of September 30, 2009, we had entered into contracts with five of our largest customers.

Our solar net sales are affected by our ability to meet customer demand, both in terms of encapsulant production and timing of delivery. We have five encapsulant manufacturing facilities, of which three are in the United States, one is in Spain and one is in Malaysia. Our expansion strategy, guided by our customers' forecasts of their demand for our products and independent research on solar energy, is to meet our customers' growing demands and serve the markets in which they operate by adding production lines and facilities as our customers, and the market for our products generally, grow.

Pricing of our encapsulants is based on the competition faced by our customers, and the quality and performance of our encapsulant formulations, including their impact on improving our customers' manufacturing yields, their history in the field, our ability to meet our customers' delivery requirements, overall supply and demand levels in the industry and our customer service and technical support. While our encapsulant pricing has not decreased as rapidy as solar module pricing over the last few years, over the next several years, we expect our encapsulant pricing to be negatively impacted by increased competition in the solar module industry.

We generate net sales in our quality assurance segment primarily from our contracts to provide inspection, testing and audit services to our clients. We enter into contracts on a fixed price, time and material, or a cost-plus fixed fee basis. We also provide services on a non-contract basis pursuant to a fixed price list.

We have a broad client base, serving over 6,000 clients in 2008, with our top five clients accounting for 22.6% and 18.0% of our quality assurance net sales in the six months ended June 30, 2009 and the year ended December 31, 2008, respectively. Our quality assurance business operates a network of 15 laboratories, 73 inspection and audit offices and 22 sales offices in 37 countries across North America, South America, Europe, Asia and Africa. In addition, because our quality assurance business serves a diverse and global client base, we strive to operate where such clients operate and where the products they purchase are manufactured. We are required to work with a partner in certain countries either because of local laws and regulations or because such arrangements are customary to doing business in such countries. Also, we may enter into strategic alliances with other quality assurance providers in order to meet client demands in countries where it may not be practicable for us to operate on a stand-alone basis.

Net sales in our quality assurance segment are typically lower in the first quarter of the year, in part due to the impact of holiday seasons on consumer products businesses. Pricing of our quality assurance services is based on pricing in the quality assurance industry, which is generally highly competitive.

In our solar segment, we manufacture all of the products that we sell. Our cost of sales in our solar segment consists primarily of our costs associated with raw materials and other components, direct labor, manufacturing overhead, salaries, other personnel-related expenses, write-off of excess or obsolete inventory, quality control, freight, insurance, disposition of defective product and depreciation and amortization of intangibles as a result of the DLJ Transactions. Resin constitutes the majority of our raw materials and components costs, and paper liner is the second largest cost. The price and availability of resin and paper liner are subject to market conditions affecting supply and demand. The price of resin has been volatile and generally increases as demand rises and as oil and gas prices rise. Paper prices have also been volatile. We also experienced price increases in the equipment used in our production lines over the past three years.

Overall, we expect our solar cost of sales, as a percentage of solar net sales, to increase over the next several years due to (i) lower overall solar module industry pricing driven by increased competition faced by our customers and reduced average selling price related to volume discounts in return for contractual arrangements and (ii) increased commodity costs, partially offset by more efficient absorption of fixed costs driven by economies of scale, geographic diversification into lower-cost manufacturing regions, production efficiency and any reduction in commodity pricing precipitated by the current economic downturn.

In our quality assurance segment, we conduct our testing primarily at our facilities and incur travel expense when performing inspections and audits. Our cost of sales in our quality assurance segment consists primarily of our costs associated with direct labor, operational overhead, laboratory supplies, salaries and other personnel-related expenses, travel expenses, insurance and depreciation and amortization of intangibles. Labor and benefits represented our largest cost of quality assurance sales in the six months ended June 30, 2009 and the year ended December 31, 2008 at 31.4% and 30.8% of net sales, respectively. Although we expect our quality assurance cost of sales to increase as we expand our operations, we believe our quality assurance cost of sales as a percentage of quality assurance net sales will be positively affected by the expansion and/or shift in operations to sites with lower operating costs, such as China and the Indian sub-continent.

Gross profit is affected by numerous factors, including our average selling prices, foreign exchange rates, seasonality, our manufacturing costs and the effective utilization of our facilities. Another factor impacting gross profit is the time required for new production facilities and the expansion of existing facilities to reach full production capacity. As a result, gross profit varies from quarter to quarter and year to year.

Our selling and marketing expenses consist primarily of salaries, travel, commissions and other personnel-related expenses for employees engaged in sales, marketing and support of our products and services, trade shows and promotions. General and administrative expenses consist of outside professional fees and expenses for our executive, finance, administrative, information technology and human resource functions. Upon the consummation of this offering, our obligation to pay annual advisory fees to certain of our affiliates pursuant to advisory services and monitoring agreements we entered into in connection with the DLJ Transactions will terminate.

Our selling, general and administrative expenses have increased in absolute terms over the past three years primarily as a result of increased headcount resulting from the strengthening of our management and corporate infrastructure, particularly in our finance and information technology departments, and increasing marketing and legal costs.

We expect our selling and marketing expenses to increase in absolute terms as we expand our direct sales force and increase our sales and marketing activities. However, we do not expect them to increase significantly as a percentage of total net sales. We expect our general and administrative expenses will increase in absolute terms and as a percentage of net sales in the shorter term as a result of the costs associated with becoming a public company.

In addition, in 2009, our outside professional fees have increased as a result of the costs of our investigation into potential violations of the FCPA. We have also incurred costs associated with our enhanced ethical and FCPA training, the hiring of additional personnel and our expanded expense monitoring efforts. If we incur any fines, penalties or compliance expenses as a result of the potential FCPA violations, that will increase our general and administrative expenses in future periods. For more

information regarding possible FCPA violations, see "Risk Factors—Risks Related to our Businesses—We have reported potential violations of the U.S. Foreign Corrupt Practices Act to the U.S. Department of Justice, or the DOJ, and the U.S. Securities and Exchange Commission, or the SEC, which could result in criminal prosecution, fines, penalties or other sanctions and could have a material adverse effect on our business, financial condition, results of operations and cash flows. As of the date of this filing, the DOJ has not indicated whether it intends to pursue this matter, and the SEC has advised us that because it does not appear that we were subject to the SEC's jurisdiction during the relevant period, the SEC does not intend to pursue this matter at this time. We cannot predict the outcome of this matter" and "Business—Legal Proceedings—Possible U.S. Foreign Corrupt Practices Act Violations."

We reserve for estimated losses resulting from the inability of our customers to make required payments. We review the collectability of our receivables on an ongoing basis and reserve for bad debt expense after reasonable collection efforts have been made and collection is deemed questionable or the debt uncollectible.

During the period from January 1 to June 14, 2007, we incurred and expensed our transaction costs in connection with the DLJ Transactions, such as merger and acquisition advisory fees, bonus payments and professional fees.

On October 5, 2009, we entered into an amendment to the first lien credit agreement and an amendment to the second lien credit agreement. The amendments for both credit agreements permitted us to enter into certain corporate reorganization transactions, including replacing STR Holdings LLC with STR Holdings (New) LLC as a guarantor under each credit agreement. The amendments and the repayment of $15.0 million of borrowings under our first lien credit facility with the proceeds from this offering will result in deferred financing costs of $1.1 million, which will be amortized over the remaining term of the credit agreements.

Interest income is comprised of interest income earned on our cash and cash equivalents and short-term investments, consisting primarily of certain investments that have contractual maturities no greater than three months at the time of purchase.

Interest expense consists primarily of interest on borrowings under our credit facilities entered into in connection with the DLJ Transactions. See "—Other Considerations—DLJ Transactions" and "—Financial Condition, Liquidity and Capital Resources—Credit Facilities" below.

Other income (expense) includes foreign currency transaction gains and losses and unrealized gains and losses on our interest rate swap. We are required under the terms of both our first lien and second lien credit facilities to fix our interest costs on at least 50% of the principal amount of our funded indebtedness for a minimum of three years. To manage our interest rate exposure and fulfill the requirements under our credit facilities, effective September 13, 2007, we entered into a $200.0 million notional principal amount interest rate swap agreement with Credit Suisse International that effectively converted a portion of our debt under our credit facilities from a floating interest rate to a fixed interest rate. The notional principal amount decreased to $130.0 million on October 1, 2008 and will remain at that amount until the agreement terminates on September 30, 2010. Under the interest rate

swap agreement, we pay interest at 4.622% and receive the floating three-month LIBOR rate from Credit Suisse International on the notional principal amount. As of June 30, 2009, our interest rate swap had a fair value of a liability of $5.4 million. Unrealized gains and losses on this interest rate swap represent the change in the fair value of the interest rate swap based on the floating interest rate and an assessment of counterparty credit risk.

Income tax expense is comprised of federal, state, local and foreign taxes based on income in multiple jurisdictions and changes in uncertain tax positions.

The acquisition was accounted for under the purchase method of accounting. We allocated the purchase price to the tangible and identifiable intangible assets and liabilities. These assets and liabilities were recorded at their respective fair values. The excess of cost over the fair value of the identifiable assets and liabilities was recorded as goodwill. As a result of these transactions, our interest expense and amortization expense have increased.

As a result of the DLJ Transactions, our consolidated financial statements for the periods prior to June 15, 2007 are not comparable to subsequent periods, primarily as a result of significantly increased interest, depreciation and amortization expenses.

Prior to this offering, we conducted our business through STR Holdings LLC and its subsidiaries. STR Holdings (New) LLC, a Delaware limited liability company and the registrant, is currently an indirect subsidiary of STR Holdings LLC and holds no material assets and does not engage in any operations. Prior to the consummation of this offering, STR Holdings LLC will enter into a corporate reorganization, whereby the unitholders of STR Holdings LLC will become unitholders of STR Holdings (New) LLC, which then will be converted into a Delaware "C" corporation and renamed STR Holdings, Inc. As a result of the conversion, the holders of all outstanding units of STR Holdings LLC, including incentive units, will receive an aggregate amount of 39,021,138 shares of common stock, including 1,575,341 shares of restricted stock, of STR Holdings, Inc. For further information regarding the corporate reorganization, see "Corporate Reorganization."

have been distributed to the holders of the previously outstanding units and holders of the Class E incentive units that were issued in 2008 will only receive their pro rata distribution of shares after shares with an aggregate value of approximately $818.0 million have been distributed to the holders of the previously outstanding units. This priority distribution will apply on the same terms to the units of STR Holdings (New) LLC received by unitholders of STR Holdings LLC in connection with the corporate reorganization. The final allocation of shares among the classes of outstanding units of STR Holdings (New) LLC, pursuant to the corporate reorganization, will be based on the initial public offering price of our common stock in this offering.

Our discussion and analysis of our consolidated financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, net sales and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates including those related to bad debts, valuation of inventory, long-lived intangible and tangible assets, goodwill, product performance matters, income taxes and stock-based compensation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

The accounting policies we believe to be most critical to understanding our financial results and condition and that require complex and subjective management judgments are discussed below.

We recognize revenue when evidence of an arrangement exists, delivery of the product or service has occurred and title and risk of loss have passed to the customer, the sales price is fixed or determinable and collectibility of the resulting receivable is reasonably assured.

Our solar business recognizes revenue from the manufacture and sale of its products either at the time of shipping or at the time the product is received at the customer's port or dock, depending upon shipping terms of the contract.

Our quality assurance business performs testing, quality assurance and compliance consulting on a fixed-price, time and material, or a cost plus fixed-fee basis. The majority of our quality assurance contracts encompass the provision of one service deliverable to the client, and revenue is recognized upon completion of such service when a report is provided to the client.

Certain quality assurance contracts include the performance of multiple service offerings in an integrated package and are more long term in nature. The amount of revenue recognized for these contracts amounted to approximately $1.6 million and $5.0 million in the six months ended June 30, 2009 and the year ended December 31, 2008, respectively. These contracts are accounted for under Emerging Issues Task Force No. 00-21, Revenue Recognition When Multiple Elements Exist ("EITF 00-21"). EITF 00-21 requires contract consideration in which multiple service offerings are provided under a single contract to be allocated to each specific service offering based on each portion of the contract's respective fair value in proportion to the contract's total fair value. We have determined that each deliverable under these contracts is a separate unit of accounting that possesses fair value that is represented by price lists and historical billing practices. We recognize revenue on each contract deliverable when the services have been completed and communicated to our client. Contractual termination provisions exist by which either party may cancel the contract with written notice. Upon notice, we are contractually entitled to receive compensation for all services performed up to and through the termination period.

Billing from these contracts occurs on a pre-determined schedule or at the end of the contractual term. Unbilled receivables represent revenue that has been recognized but not billed, while billings in excess of earned revenues represent billings to clients in excess of revenues recognized on contracts.

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We review the collectibility of our receivables on an ongoing basis and write off accounts receivable after reasonable collection efforts have been made and collection is deemed questionable or the debt uncollectible.

Our finished goods inventories are made-to-order and possess a shelf life of six to nine months from the date of manufacture. Inventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out basis and includes both the costs of acquisition and the costs of manufacturing. These costs include direct material, direct labor and fixed and variable indirect manufacturing costs, including depreciation and amortization.

We record an inventory valuation reserve when it is probable that our finished goods inventories carrying cost is not fully recoverable through sale or other disposition. Our reserve considers overall market conditions, customer inventory levels, legal or contractual provisions and age of the finished goods inventories.

Prior to 2009, obsolescence was not a significant factor in the valuation of inventory. Due to the current recessionary economic environment, some customers have canceled or delayed the delivery of orders after the product has been manufactured but not yet shipped. As such, $1.0 million of inventory reserves were recorded during the six months ended June 30, 2009.

We account for business acquisitions using the purchase method of accounting and record definite-lived intangible assets separately from goodwill. Intangible assets are recorded at their fair value based on estimates at the date of acquisition.

Our intangible assets include our customer relationships, trademarks, proprietary technology and accreditations.

Our customer relationships consist of the value associated with existing contractual arrangements as well as expected value to be derived from future contract renewals of our solar and quality assurance customers. We determined their value using the income approach. Their useful life was determined by consideration of a number of factors, including our longstanding customer base and historical attrition rates.

Our trademarks represent the value of our STR and Photocap trademarks. We determined their value using the "relief-from-royalty" method. The useful life of trademarks was determined by consideration of a number of factors, including elapsed time and anticipated future cash flows.

Our proprietary technology represents the value of our solar manufacturing processes. We determined its value using the "relief-from-royalty" method. The useful life of proprietary technology was determined by consideration of a number of factors, including elapsed time, prior innovations and potential future technological changes.

Our accreditations represent the value of our quality assurance business's technical skills and ability to provide worldwide product testing, inspection and audits under applicable standards. We determine their value using the cost approach. The useful life for accreditations is determined by consideration of a number of factors, including the duration such accreditations are expected to be in effect and anticipated future cash flows.

Determining the fair value and useful lives of our intangible assets requires management's judgment and involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates, asset lives and market royalty rates, among other items. While we believe our estimates are reasonable, different assumptions regarding items such as future cash flows and volatility in the markets we serve could affect our evaluations and result in an impairment charge to the carrying amount of our intangible assets.

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangibles Assets ("SFAS No. 142"), we assess the impairment of our definite-lived intangible assets whenever changes in events or circumstances indicate that the carrying value of such assets may not be recoverable. During each reporting period, we assess if the following factors are present, which would cause an impairment review: a significant decrease in sales that are generated under our trademarks and accreditations that may be prolonged; loss of a significant customer or reduction in our customers' demand for our products driven by competition they encounter, a significant adverse change in the extent to or manner in which we use our accreditations, trademarks or proprietary technology; such assets becoming obsolete due to new technology or manufacturing processes entering the markets or an adverse change in legal factors, such as the change in feed-in tariff policy implemented by the Spanish government in 2008 or any potential plans to divest or dispose of such intangible assets. We have assessed these factors as of June 30, 2009 and concluded that no impairment indicators exist that would require an impairment valuation assessment. However, if we experience significant future ongoing reductions in our solar net sales or a significant reduction of existing government incentives in the solar industry that are not offset by potential increases in solar programs in other countries, such as the United States and China, certain of our intangible assets may be subject to future potential impairment.

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, we review the carrying value of our long-lived assets, including property, plant and equipment, for impairment when events or changes in circumstances indicate the carrying value of an asset may not be recoverable. If a long-lived asset is found to be impaired, the amount recognized for impairment is equal to the difference between the carrying value and the asset's fair value. Fair value is estimated based upon discounted future cash flows or other reasonable estimates of fair market value.

Goodwill represents the excess of the purchase price consideration of acquired companies over the estimated fair value assigned to the individual assets acquired and liabilities assumed. As a result of the DLJ Transactions, we assigned the goodwill to each of our reportable segments, solar and quality assurance, which are our reporting units used to allocate goodwill, based on the acquired net assets assigned and on management's expectations regarding the extent to which each segment would benefit from the synergies of the acquired business. Our two reportable segments were determined to be our reporting units because they are two distinct operating segments, each of which is managed by its own president. Additionally, our board of directors and CEO review financial information and allocate resources at the level of our business segments. We do not amortize goodwill, but instead test goodwill for impairment in accordance with the two-step method described in SFAS No. 142. We perform our annual impairment review of goodwill in the fourth quarter, and will also perform a review if at any time facts and circumstances warrant. In assessing if there is impairment to goodwill, we first determine the fair value of our two reporting units, which are also our reportable segments. We substantially passed the first step of the two-step impairment testing method in the fourth quarter of 2008. At that time, step one of the impairment analysis described in SFAS No. 142 resulted in approximately $210.0 million of excess fair value over the carrying value. The excess of fair value over carrying value was approximately $180.0 million, or 59%, and $30.0 million, or 18%, for our solar and quality assurance segments, respectively. If the fair value of either of our two segments were to be less than its

carrying value, we would allocate the current fair value of the segment to the assets and liabilities of the segment to estimate the segment's goodwill. If such implied goodwill was less than the carrying value of such goodwill, we would record an impairment charge for the amount of such difference.

The estimate of fair value of each reporting unit was derived from the income approach that estimates the fair value of each of the reporting units using a discounted cash flow method. This method was considered the most appropriate technique to estimate the fair value of the reporting units in the absence of market-based comparable acquisition transaction activity caused by the ongoing global recession. The estimates of future cash flows used were consistent with the objective of measuring fair value and incorporate assumptions that marketplace participants would use in their estimates of fair value, such as growth rates, discount rates and capital structure. In order to derive the fair value of each of the reporting units using the discounted cash flow method, the discount rate for each reporting unit was calculated. A discount rate is generally used in asset valuation as the rate at which a series of future cash flows or earnings is reduced to present value. In the goodwill impairment calculation, we based our assumption of a discount rate on the use of a weighted average cost of capital method. In calculating the weighted average cost of capital for each reporting unit, we believe income risk is best determined by comparing it to the risk levels of guideline companies that operate in either of our business segments. Using these guideline companies, we calculated a weighted average cost of capital based on inputs that marketplace participants would use to discount their projected cash flow for each reporting unit.

During the first six months of 2009, we do not believe that there were any triggering events that would require us to perform a goodwill impairment test. However, if we experience future ongoing reductions in our solar net sales or a significant reduction of existing government incentives in the solar industry that are not offset by potential increases in solar programs in other countries, such as the United States and China, our reporting units may be subject to future potential impairment.

We typically do not provide contractual warranties on our products. However, on limited occasions, we incur costs to service our products in connection with specific product performance matters. Anticipated future costs are recorded as part of cost of sales and accrued liabilities for specific product performance matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated under SFAS No. 5, Accounting for Contingencies. During the second half of 2008, we recorded an accrual of $5.6 million relating to specific product performance matters, which amount represents management's best estimate of the costs to repair or replace such product. The majority of this accrual relates to a quality claim by one of our customers in connection with a non-encapsulant product that we purchased from a vendor in 2005 and 2006 and resold. We stopped selling this product in 2006 and are currently attempting to resolve this matter.

We account for income taxes using the asset and liability method in accordance with SFAS No. 109, Accounting for Income Taxes ("FAS 109"). Under this method, we recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for operating loss and tax credit carryforwards. We estimate our deferred tax assets and liabilities using the enacted tax laws expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled, and will recognize the effect of a change in tax laws on deferred tax assets and liabilities in the results of our operations during the period that includes the enactment date. We record a valuation allowance to reduce our deferred tax assets if we determine that it is more likely than not that some or all of the deferred tax assets will not be realized.

We operate in multiple taxing jurisdictions and are subject to the jurisdiction of a number of U.S. and non-U.S. tax authorities and to tax agreements and treaties among those authorities. Operations in

these jurisdictions are taxed on various bases, including income before taxes as calculated in accordance with jurisdictional regulations.

In the first quarter of 2007, we adopted Financial Accounting Standards Board ("FASB") Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 ("FIN 48"). This interpretation clarifies the accounting for uncertainty in income taxes recognized in a company's financial statements in accordance with FAS 109, and how companies should recognize, measure, present and disclose uncertain tax positions that have been or are expected to be taken. Tax benefits related to uncertain tax positions taken or expected to be taken on a tax return are recorded when such benefits meet a more likely than not threshold. Otherwise, these tax benefits are recorded when a tax position has been effectively settled, which means that the appropriate taxing authority has completed its examination even though the statute of limitations remains open, or the statute of limitation expires. Interest and penalties related to uncertain tax positions are recognized as part of our provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that the related tax benefits are recognized.

On January 1, 2006, we adopted SFAS No. 123(R), Share-Based Payment ("FAS 123(R)"). FAS 123(R) addresses accounting for share-based awards, including stock options, with compensation expense measured using fair value and recorded over the requisite service or performance period of the award. The fair value of equity instruments to be issued upon or after the closing of this offering will be determined based on a valuation using an option pricing model which takes into account various assumptions that are subjective. Key assumptions used in the valuation will include the expected term of the equity award taking into account both the contractual term of the award, the effects of expected exercise and post-vesting termination behavior, expected volatility, expected dividends and the risk-free interest rate for the expected term of the award.

We have issued restricted incentive units for purposes of equity compensation to members of management, employees and directors in 2008 and 2007.

The fair value of each incentive unit granted during the year ended December 31, 2008 and the period from June 15 to December 31, 2007 was determined on the respective date of the grant using a Black-Scholes option-pricing model that uses the assumptions noted in the following table, along with the associated weighted average fair values. Historical data was used to estimate pre-vesting forfeitures. To the extent actual results of forfeitures differ from the estimates, such amounts will be recorded as an adjustment in the period the estimates are revised. The expected volatilities are based on a peer group of companies. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the incentive units. The expected term represents the estimated time until a liquidity event. The most likely liquidity event is an initial public offering in which incentive units will be exchanged for our restricted common stock. The expected dividend yield was based on the assumption that no dividends are expected to be distributed in the near future.

For purposes of the following discussion and analysis of our operating results, our consolidated net sales, costs and expenses for the year ended December 31, 2007 have been presented on a pro forma basis, as if the DLJ Transactions had taken place on January 1, 2007. Pro forma adjustments include amortization expense of acquired intangible assets, increased cost of goods sold expense due to the step up of our inventory to fair value, increased depreciation expense due to the step up to fair value of property, plant and equipment, increased interest expense associated with increased borrowings and the associated tax effect of those adjustments.

We believe the presentation of our pro forma results of operations for the year ended December 31, 2007 provides important information on the full period or year effect of the DLJ Transactions for use in comparing our results of operations during these periods to our results in prior and future periods. The pro forma consolidated results of operations do not purport to represent our actual results of operations for the successor and predecessor periods in 2007 or what our actual consolidated results of operations would have been had the DLJ Transactions actually occurred on the date indicated, nor are they necessarily indicative of our future consolidated results of operations.

The following table sets forth our consolidated results of operations for the predecessor period from January 1 to June 14, 2007, the successor period from June 15 to December 31, 2007 and the pro forma year ended December 31, 2007. See "Unaudited Pro Forma Condensed Consolidated Statement of Operations."

		Successor			Predecessor			Pro Forma

		Period from June 15 to December 31, 2007			Period from January 1 to June 14, 2007			Year Ended December 31, 2007
								(Unaudited)
		(dollars in thousands)
Statement of Operations Data:
Net sales—Solar		$	52,967		$	25,648		$	78,615
Net sales—Quality Assurance			56,317			39,112			95,429

	Total net sales		109,284			64,760			174,044

Cost of sales—Solar			30,068			11,875			46,194
Cost of sales—Quality Assurance			35,620			25,225			62,797

	Total cost of sales		65,688			37,100			108,991

Gross profit			43,596			27,660			65,053
Selling, general and administrative expenses			18,400			12,017			30,027
Provision for bad debt expense			562			384			946
Transaction costs			—			7,737			7,737

Operating income			24,634			7,522			26,343
Interest income			203			143			346
Interest expense			(13,090	)		(2,918	)		(24,422	)
Foreign currency transaction losses			(76	)		(32	)		(108	)
Unrealized loss on interest rate swap			(2,988	)		—			(2,988	)

Income (loss) before income tax expense			8,683			4,715			(829	)
Income tax expense			4,572			3,983			3,291

Net income (loss)		$	4,111		$	732		$	(4,120	)

The following tables set forth our consolidated results of operations in dollars and as a percentage of total net sales, or in the case of segment cost of sales, the percentage of solar net sales and quality assurance net sales, as applicable, for the periods presented.

		Successor

		Successor									Pro Forma			Predecessor
		Six Months Ended June 30, 2009			Six Months Ended June 30, 2008						Pro Forma			Predecessor
		Six Months Ended June 30, 2009			Six Months Ended June 30, 2008			Year Ended December 31, 2008			Year Ended December 31, 2007			Year Ended December 31, 2006
		(Unaudited)			(Unaudited)						(Unaudited)
		(dollars in thousands)
Statement of Operations Data:
Net sales—Solar		$	63,830		$	85,873		$	182,311		$	78,615		$	45,275
Net sales—Quality Assurance			53,848			50,859			106,267			95,429			85,332

	Total net sales		117,678			136,732			288,578			174,044			130,607

Cost of sales—Solar			41,067			43,083			103,717			46,194			21,522
Cost of sales—Quality Assurance			36,104			35,038			70,930			62,797			55,042

	Total cost of sales		77,171			78,121			174,647			108,991			76,564

Gross profit			40,507			58,611			113,931			65,053			54,043
Selling, general and administrative expenses			20,262			21,643			41,414			30,027			24,052
Provision for bad debt expense			1,352			597			1,950			946			334
Transaction costs			—			—			—			7,737			—

Operating income			18,893			36,371			70,567			26,343			29,657
Interest income			70			101			249			346			305
Interest expense			(8,268	)		(10,653	)		(20,809	)		(24,422	)		(6,743	)
Foreign currency transaction (loss) gain			(443	)		228			(1,007	)		(108	)		(581	)
Unrealized gain (loss) on interest rate swap			587			(287	)		(3,025	)		(2,988	)		—

Income (loss) before income tax expense			10,839			25,760			45,975			(829	)		22,638
Income tax expense			4,596			9,787			17,870			3,291			7,344

Net income (loss)		$	6,243		$	15,973		$	28,105		$	(4,120	)	$	15,294

		Successor

		Successor									Pro Forma			Predecessor
		Six Months Ended June 30, 2009			Six Months Ended June 30, 2008						Pro Forma			Predecessor
		Six Months Ended June 30, 2009			Six Months Ended June 30, 2008			Year Ended December 31, 2008			Year Ended December 31, 2007			Year Ended December 31, 2006
		(Unaudited)			(Unaudited)						(Unaudited)
Statement of Operations Data:
Net sales—Solar			54.2	%		62.8	%		63.2	%		45.2	%		34.7	%
Net sales—Quality Assurance			45.8	%		37.2	%		36.8	%		54.8	%		65.3	%
	Total net sales		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales—Solar			64.3	%		50.2	%		56.9	%		58.8	%		47.5	%
Cost of sales—Quality Assurance			67.0	%		68.9	%		66.7	%		65.8	%		64.5	%
	Total cost of sales		65.6	%		57.1	%		60.5	%		62.6	%		58.6	%
Gross profit			34.4	%		42.9	%		39.5	%		37.4	%		41.4	%
Selling, general and administrative expenses			17.2	%		15.8	%		14.4	%		17.3	%		18.4	%
Provision for bad debt expense			1.1	%		0.5	%		0.6	%		0.5	%		0.3	%
Transaction costs			0.0	%		0.0	%		0.0	%		4.4	%		0.0	%
Operating income			16.1	%		26.6	%		24.5	%		15.1	%		22.7	%
Interest income			0.1	%		0.1	%		0.1	%		0.2	%		0.2	%
Interest expense			(7.0	)%		(7.8	)%		(7.3	)%		(14.0	)%		(5.2	)%
Foreign currency transaction (loss) gain			(0.4	)%		0.2	%		(0.4	)%		(0.1	)%		(0.4	)%
Unrealized gain (loss) on interest rate swap			0.5	%		(0.2	)%		(1.0	)%		(1.7	)%		0.0	%
Income (loss) before income tax expense			9.2	%		18.8	%		15.9	%		(0.5	)%		17.3	%
Income tax expense			3.9	%		7.2	%		6.2	%		1.9	%		5.6	%
Net income (loss)			5.3	%		11.7	%		9.7	%		(2.4	)%		11.7	%

Net sales decreased $19.1 million, or 13.9%, to $117.7 million for the six months ended June 30, 2009 from $136.7 million for the six months ended June 30, 2008 as a result of a decrease in our solar sales, partially offset by increased sales in our quality assurance business. Our solar segment accounted for 54.2% of our total net sales for the six months ended June 30, 2009 compared to 62.8% for the six months ended June 30, 2008.

Net sales in our solar segment decreased $22.0 million, or 25.7%, to $63.8 million for the six months ended June 30, 2009 from $85.9 million for the six months ended June 30, 2008, primarily as a result of decreased sales in Europe. Overall, the decrease in our solar segment's net sales was due to a 16% volume decline; 2% reduction in price; 4% unfavorable product mix and 4% negative impact from foreign currency.

Foreign currency translation loss negatively impacted our European results, as the Euro depreciated versus the U.S. dollar by approximately 12% in the first six months of 2009 compared to its value during the first six months of 2008. Our European solar business was also negatively impacted by industry-wide decreased demand in Germany and Spain. European net sales decreased in the first six months of 2009 by $23.9 million, or 51.1%, from the corresponding 2008 period and amounted to $22.9 million in the first six months of 2009. During the latter part of 2008, the Spanish government changed its feed-in tariff policy, capping its subsidized PV installations at 500 MW for 2009. Also, the negative global economic and lending environment limited the amount of financing available to fund major projects, which further reduced the number of end market installations and solar module demand. Lastly, our European customers have lost market share to low-cost module manufacturers, primarily from China, that continue to penetrate the European solar market. These events caused our European net sales in the first six months of 2009 to be negatively impacted by a 40% reduction in volume; 7% negative foreign currency impact and unfavorable product mix of 4%, with price remaining relatively flat.

Our U.S. solar business generated net sales of $40.7 million, representing an increase of $1.6 million, or 4.2%, during the first six months of 2009 compared to the first six months of 2008, as sales to our largest U.S. customers continued to grow as a result of their growth and our entering into contracts with three of these customers. Our sales growth was offset, in part, by lower unit pricing in these contracts. Overall, sales volumes increased 12% and were partially offset by a negative price impact of 5% and unfavorable product mix of 3%.

Net sales in our quality assurance segment increased $3.0 million, or 5.9%, to $53.8 million for the six months ended June 30, 2009 from $50.9 million for the six months ended June 30, 2008 due to increased volume in the United States and Asia, partially offset by a decline in Europe.

U.S. quality assurance sales growth was driven by increased testing of private label products to ensure quality as compared to premium brands. In addition, toy related testing increased as new U.S. safety regulations became effective in February 2009. Net sales in Asia also increased due to a higher level of testing performed for toy manufacturers that distribute their products in the United States to comply with new U.S. safety regulations. The increased sales in Asia and the United States were partially offset by a decline in European net sales as a result of adverse economic conditions in the United Kingdom and decreased value of the British pound sterling versus the U.S. dollar of approximately 24%.

Cost of sales decreased $1.0 million, or 1.2%, to $77.2 million for the six months ended June 30, 2009 from $78.1 million for the six months ended June 30, 2008 due to favorable foreign exchange

impact as the Euro depreciated versus the U.S. dollar, lower variable production costs associated with the sales volume decline including approximately $6.0 million of lower commodity costs in our solar segment, mostly offset by unfavorable fixed-cost absorption in our solar segment associated with the sales volume decline, $1.5 million of increased depreciation expense resulting from the impact of 2008 capital expenditures for projects that became operational in 2009, $1.0 million of inventory write-offs, $0.7 million of incremental production start-up costs associated with our recently opened Malaysian facility which did not occur in 2008 and $0.6 million of increased direct labor expense in our quality assurance business.

Cost of sales in our solar segment decreased $2.0 million, or 4.7%, to $41.1 million for the six months ended June 30, 2009 from $43.1 million for the six months ended June 30, 2008. The decrease in our solar segment's cost of sales was mainly due to reduced European sales volume, favorable foreign exchange rates and lower raw material costs for resin and paper of approximately $6.0 million, mostly offset by unfavorable fixed-cost absorption associated with the sales volume decline, $1.0 million of increased depreciation expense associated with the 2008 capital expenditures, $0.7 million of incremental operating costs associated with our recently opened Malaysian facility which did not occur in 2008, $1.0 million of inventory write-offs and $1.4 million of increased labor costs to support increased sales in the United States.

Cost of sales in our quality assurance segment increased $1.1 million, or 3.0%, to $36.1 million for the six months ended June 30, 2009 from $35.0 million for the six months ended June 30, 2008. The increase in our quality assurance's cost of sales was due to $0.5 million of increased depreciation expense and $0.6 million of increased direct labor expense, partially offset by favorable operating leverage associated with the increase in net sales.

Gross profit decreased $18.1 million, or 30.9%, to $40.5 million for the six months ended June 30, 2009 from $58.6 million for the six months ended June 30, 2008 primarily due to the sales decline in our solar segment. As a percentage of sales, gross profit decreased 850 basis points from 42.9% for the six months ended June 30, 2008 to 34.4% for the six months ended June 30, 2009.

The decrease in gross profit as a percentage of sales was primarily due to lower pricing and reduction in operating leverage associated with our solar sales volume decline, as a result of the level of fixed costs in our solar business. Also, we generated a lower mix of net sales in our higher margin solar business, which accounted for 54.2% and 62.8% of our consolidated net sales for the six months ended June 30, 2009 and 2008, respectively. These negative impacts to the first six months 2009 gross margin percentage more than offset a 185 basis point gross margin expansion in our quality assurance business resulting from improved labor cost efficiency as a result of our efforts to streamline our quality assurance testing processes, reduce backlog and increase turn-around time.

Selling, general and administrative and the provision for bad debt expenses decreased $0.6 million, or 2.8%, to $21.6 million for the six months ended June 30, 2009 from $22.2 million for the six months ended June 30, 2008. The decrease reflected lower professional fees of $1.6 million due to the non-recurrence of re-audits of our financial statements, which were incurred in preparation for this offering during the second quarter of 2008, partially offset by $0.8 million of increased bad debt expense and increased stock-based compensation cost.

Interest expense decreased $2.4 million, or 22.4%, to $8.3 million for the six months ended June 30, 2009 from $10.7 million for the six months ended June 30, 2008. This reduction was primarily the result of decreases in applicable interest rates on our variable rate debt.

During the six months ended June 30, 2009, we incurred a $0.6 million unrealized gain on our interest rate swap entered into during 2007 as a requirement under our credit facilities compared to a $0.3 million loss in the corresponding 2008 period. Foreign currency transaction losses increased $0.7 million during the six months ended June 30, 2009 to a loss of $0.5 million from a gain of $0.2 million during the six months ended June 30, 2008.

Income tax expense decreased $5.2 million to $4.6 million for the six months ended June 30, 2009 from $9.8 million for the six months ended June 30, 2008. Our effective tax rate for the six months ended June 30, 2009 was 42.4% compared to the federal statutory rate of 35% and our effective tax rate for the six months ended June 30, 2008 of 38.0%. The increase in our 2009 effective tax rate was mainly due to an increase in uncertain tax positions in foreign jurisdictions.

Net income decreased $9.7 million to $6.2 million for the six months ended June 30, 2009 from net income of $16.0 million for the six months ended June 30, 2008 primarily due to the reduction in net sales, increased inventory write-offs and depreciation expense, partially offset by decreased interest expense on our variable rate debt.

Year Ended December 31, 2008 Compared to Pro Forma Year Ended December 31, 2007

Net sales increased $114.5 million, or 65.8%, to $288.6 million for the year ended December 31, 2008 from $174.0 million for the pro forma year ended December 31, 2007. This increase was primarily the result of higher sales volumes to our existing solar customers. Our solar segment accounted for 63.2% of our total net sales for the year ended December 31, 2008 compared to 45.2% for the pro forma year ended December 31, 2007.

Net sales in our solar segment increased $103.7 million, or 131.9%, to $182.3 million for the year ended December 31, 2008 from $78.6 million for the pro forma year ended December 31, 2007. This increase was primarily the result of strong demand for our encapsulants from existing customers that we were able to meet with capacity from new manufacturing lines.

Net sales in our quality assurance segment increased $10.8 million, or 11.4%, to $106.3 million for the year ended December 31, 2008 from $95.4 million for the pro forma year ended December 31, 2007. This increase was primarily the result of increased demand from our existing quality assurance clients, particularly in the United States and Asia.

Cost of sales increased $65.7 million, or 60.2%, to $174.6 million for the year ended December 31, 2008 from $109.0 million for the pro forma year ended December 31, 2007. This increase was primarily the result of increased sales volume in our solar segment.

Cost of sales in our solar segment increased $57.5 million, or 124.5%, to $103.7 million for the year ended December 31, 2008 from $46.2 million for the pro forma year ended December 31, 2007.

This increase was primarily the result of higher labor and raw material costs of $42.2 million to support our higher net sales, higher indirect labor and benefits costs of $6.3 million and $5.6 million of product performance support costs.

Cost of sales in our quality assurance segment increased $8.1 million, or 13.0%, to $70.9 million for the year ended December 31, 2008 from $62.8 million for the pro forma year ended December 31, 2007. This increase was primarily the result of increased labor and travel expenses of $2.7 million to support our higher net sales volume, and higher indirect labor and benefits costs of $3.7 million.

Gross profit increased $48.9 million, or 75.1%, to $113.9 million for the year ended December 31, 2008 from $65.1 million for the pro forma year ended December 31, 2007. This increase was primarily the result of increased solar sales. As a percentage of sales, gross profit increased 210 basis points to 39.5% for the year ended December 31, 2008 from 37.4% for the pro forma year ended December 31, 2007. Such increase was due to higher growth in our higher margin solar segment and manufacturing economies of scale associated with capacity expansion, partially offset by higher raw material and product performance support costs in our solar segment.

Selling, general and administrative and the provision for bad debt expenses increased $12.4 million, or 40.0%, to $43.4 million for the year ended December 31, 2008 from $31.0 million for the pro forma year ended December 31, 2007. This increase was primarily the result of increased professional fees of $11.6 million, resulting primarily from the re-audit of our prior year financial statements in preparation for this offering and $1.0 million of increased bad debt expense. As a percentage of net sales, selling, general and administrative expenses decreased 280 basis points from 17.8% for the pro forma year ended December 31, 2007 to 15.0% for the year ended December 31, 2008 due to operating leverage associated with the increase in sales.

No transaction costs in connection with the DLJ Transactions were incurred for the year ended December 31, 2008. During the period from January 1 to June 14, 2007, we incurred and expensed our transaction costs in connection with the DLJ Transactions. Total transaction costs incurred during that period were $7.7 million, consisting primarily of $4.2 million in merger and acquisition advisory fees, $2.5 million in bonus payments and $0.8 million in professional fees.

Interest income decreased $0.1 million, or 28.0%, to $0.2 million for the year ended December 31, 2008 from $0.3 million for the pro forma year ended December 31, 2007. This decrease was primarily the result of lower prevailing interest rates applicable to our cash deposits.

Interest expense decreased $3.6 million, or 14.8%, to $20.8 million for the year ended December 31, 2008 from $24.4 million for the pro forma year ended December 31, 2007. This decrease was primarily the result of decreases in applicable interest rates on our debt.

During the year ended December 31, 2008, we incurred a $3.0 million unrealized loss on our interest rate swap entered into as a requirement under our credit facilities. Foreign currency transaction

losses increased $0.9 million during the year ended December 31, 2008 to a loss of $1.0 million from a loss of $0.1 million during the pro forma year ended December 31, 2007.

Income tax expense increased $14.6 million to $17.9 million for the year ended December 31, 2008 from $3.3 million for the pro forma year ended December 31, 2007. Our effective tax rate for the year ended December 31, 2008 was 38.9% compared to the statutory rate of 35.0%, primarily due to higher state income tax expense associated with our solar business's increased profitability and repatriation of foreign earnings.

Net income increased $32.2 million to $28.1 million for the year ended December 31, 2008 from a net loss of $4.1 million for the pro forma year ended December 31, 2007. This increase was primarily the result of higher sales volume to our existing solar customers and increased demand from our existing quality assurance clients, particularly in the United States and Asia, partially offset by higher raw material, labor, travel and product performance support costs, professional fees and taxes.

Pro Forma Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

Net sales increased $43.4 million, or 33.3%, to $174.0 million for the pro forma year ended December 31, 2007 from $130.6 million for the year ended December 31, 2006. This increase was primarily the result of higher sales volume to our existing solar customers. Our solar segment accounted for 45.2% of our total net sales in 2007 compared to 34.7% in 2006.

Net sales in our solar segment increased $33.3 million, or 73.6%, to $78.6 million for the pro forma year ended December 31, 2007 from $45.3 million for the year ended December 31, 2006. This increase was primarily the result of our ability to meet customer demand as a result of increased capacity from the addition of new production lines in Spain.

Net sales in our quality assurance segment increased $10.1 million, or 11.8%, to $95.4 million for the pro forma year ended December 31, 2007 from $85.3 million for the year ended December 31, 2006. This increase was primarily the result of increased demand from our existing quality assurance clients, particularly in Europe and Asia.

Cost of sales increased $32.4 million, or 42.4%, to $109.0 million for the pro forma year ended December 31, 2007 from $76.6 million for the year ended December 31, 2006. This increase was primarily the result of increased labor and raw material costs of $14.9 million to support our higher net sales, as well as amortization expense of $11.4 million and depreciation expense of $2.1 million related to the DLJ Transactions.

Cost of sales in our solar segment increased $24.7 million, or 114.6%, to $46.2 million for the pro forma year ended December 31, 2007 from $21.5 million for the year ended December 31, 2006. This increase was primarily the result of increased labor and raw material costs of $11.2 million to support our higher net sales, as well as amortization expense of $8.4 million and depreciation expense of $0.8 million related to the DLJ Transactions.

Cost of sales in our quality assurance segment increased $7.8 million, or 14.1%, to $62.8 million for the pro forma year ended December 31, 2007 from $55.0 million for the year ended December 31, 2006. This increase was primarily the result of increased labor costs of $2.9 million to support our

higher net sales, as well as amortization expense of $3.0 million and depreciation expense of $1.3 million related to the DLJ Transactions.

Gross profit increased $11.0 million, or 20.4%, to $65.1 million for the pro forma year ended December 31, 2007 from $54.0 million for the year ended December 31, 2006. This increase was primarily the result of increased higher margin solar sales.

Selling, general and administrative and the provision for bad debt expenses increased $6.6 million, or 25.4%, to $31.0 million for the pro forma year ended December 31, 2007 from $24.4 million for the year ended December 31, 2006. This increase was primarily the result of higher salary expense of $5.0 million due to increased head count and higher salaries.

During the period from January 1 to June 14, 2007, we incurred and expensed our transaction costs in connection with the DLJ Transactions. Total transaction costs incurred were $7.7 million, primarily consisting of $4.2 million in merger and acquisition advisory fees, $2.5 million in bonus payments and $0.8 million in professional fees.

Interest income was essentially flat at $0.3 million for the pro forma year ended December 31, 2007 compared to the year ended December 31, 2006.

Interest expense increased $17.7 million, or 262.2%, to $24.4 million for the pro forma year ended December 31, 2007 from $6.7 million for the year ended December 31, 2006. This increase was primarily the result of increased debt levels incurred in connection with the DLJ Transactions.

Other expense was $3.1 million for the pro forma year ended December 31, 2007 compared to $0.6 million for the year ended December 31, 2006. This increase in other expense was primarily the result of the unrealized loss on our interest rate swap. The unrealized loss represents the change in the fair value of the interest rate swap.

Income tax expense decreased $4.1 million, or 55.2%, to $3.3 million for the pro forma year ended December 31, 2007 from $7.3 million for the year ended December 31, 2006. Our income tax expense of $3.3 million on a loss before income tax expense of $0.8 million for the pro forma year ended December 31, 2007 is the result of the impact of non-deductible stock compensation expense for incentive units and seller transaction costs in connection with the DLJ Transactions on our small pro forma pre-tax loss of $0.8 million. Our effective tax rate for the year ended December 31, 2006 of 32.4% differs from the statutory rate primarily due to the favorable impact of being taxed at lower rates in foreign jurisdictions.

Net income decreased $19.4 million to a net loss of $4.1 million for the pro forma year ended December 31, 2007 from net income of $15.3 million for the year ended December 31, 2006. The

reduction in net income is due to the amortization of intangibles of $11.4 million, transaction costs of $7.7 million, increased interest expense of $17.7 million and the unrealized loss on our interest rate swap of $3.0 million, all related to the DLJ Transactions, and partially offset by higher sales volume to our existing solar customers and increased demand from our existing quality assurance clients, particularly in Europe and Asia.

Set forth below is a discussion of our results of operations for both the period from January 1 to June 14, 2007 and the period from June 15 to December 31, 2007. As a result of the DLJ Transactions, our consolidated financial statements for 2007 are not comparable to prior or subsequent periods, primarily as a result of significantly increased interest, depreciation and amortization expenses.

Net sales were $64.8 million for the period from January 1 to June 14, 2007 and $109.3 million for the period from June 15 to December 31, 2007. The increase in net sales during the period from June 15 to December 31, 2007 reflected higher sales volume primarily due to sales to our existing solar customers.

Cost of sales were $37.1 million for the period from January 1 to June 14, 2007 and $65.7 million for the period from June 15 to December 31, 2007. Cost of sales for the period from June 15 to December 31, 2007 included $1.1 million additional depreciation expense as a result of the step up of fair value of property, plant and equipment, $0.9 million related to the write-up to fair value of acquired inventory being sold and expensed to cost of goods sold, and $4.7 million amortization expense associated with acquired assets.

Selling, general and administrative and the provision for bad debt expenses were $12.4 million for the period from January 1 to June 14, 2007 and $19.0 million for the period from June 15 to December 31, 2007. The increase in selling, general and administrative expenses for the period from June 15 to December 31, 2007 reflect higher labor and benefit expenses and professional fees offset by lower management advisory fee expense paid to DLJMB as compared to our previous owners.

Transaction costs were $7.7 million for the period from January 1 to June 14, 2007 related to the DLJ Transactions. We did not incur transaction costs in connection with the DLJ Transactions during the period from June 15 to December 31, 2007.

Interest income was $0.1 million for the period from January 1 to June 14, 2007 and $0.2 for the period from June 15 to December 31, 2007.

Interest expense was $2.9 million for the period from January 1 to June 14, 2007 and $13.1 for the period from June 15 to December 31, 2007. The higher interest expense during the period from June 15 to December 31, 2007 resulted from higher borrowings and deferred financing costs associated with the DLJ Transactions.

We incurred a foreign currency transaction loss of approximately $32,000 during the period from January 1 to June 14, 2007. During the period from June 15 to December 31, 2007, we incurred $3.0 million of unrealized loss on our interest rate swap entered into as a requirement under our credit facilities and a foreign currency transaction loss of $0.1 million.

Income taxes were $4.0 million, an effective tax rate of 84.5%, for the period from January 1 to June 14, 2007 and $4.6 million, an effective tax rate of 52.7%, for the period from June 15 to December 31, 2007. The increase in effective tax rate for the period from January 1 to June 14, 2007 reflected the non-deductibility of certain transaction costs.

Net income was $0.7 million for the period from January 1 to June 14, 2007 and $4.1 million for the period from June 15 to December 31, 2007.

The following table sets forth our consolidated results of operations, other data and EBITDA on a quarterly basis for the six months ended June 30, 2009 and the year ended December 31, 2008.

		Year Ended December 31, 2008												Six Months Ended June 30, 2009

		First Quarter			Second Quarter			Third Quarter			Fourth Quarter			First Quarter			Second Quarter
		(Unaudited)
		(dollars in thousands)
Statement of Operations Data:
Net sales—Solar		$	39,291		$	46,582		$	48,134		$	48,304		$	34,187		$	29,643
Net sales—Quality Assurance			21,986			28,873			28,333			27,075			23,928			29,920

	Total net sales		61,277			75,455			76,467			75,379			58,115			59,563

Cost of sales—Solar			19,947			23,136			26,324			34,310			20,794			20,273
Cost of sales—Quality Assurance			16,861			18,177			18,273			17,619			17,199			18,905

	Total cost of sales		36,808			41,313			44,597			51,929			37,993			39,178

Gross profit			24,469			34,142			31,870			23,450			20,122			20,385
Selling, general and administrative expenses			9,096			12,547			11,771			8,000			10,852			9,410
Provision for bad debt expense			208			389			129			1,224			400			952
Transaction costs			—			—			—			—			—			—

Operating income			15,165			21,206			19,970			14,226			8,870			10,023
Interest income			61			40			44			104			14			56
Interest expense			(5,111	)		(5,542	)		(5,366	)		(4,790	)		(4,059	)		(4,209	)
Foreign currency transaction gain (loss)			335			(107	)		(696	)		(539	)		(360	)		(83	)
Unrealized (loss) gain on interest rate swap			(4,377	)		4,090			172			(2,910	)		569			18

Income before income tax expense			6,073			19,687			14,124			6,091			5,034			5,805
Income tax expense			2,279			7,508			5,219			2,864			1,921			2,675

Net income		$	3,794		$	12,179		$	8,905		$	3,227		$	3,113		$	3,130

Other Data:
Amortization of intangibles—Solar		$	2,108		$	2,108		$	2,108		$	2,108		$	2,108		$	2,108
Amortization of intangibles—Quality Assurance			768			768			768			768			768			768

	Total amortization of intangibles	$	2,876		$	2,876		$	2,875		$	2,876		$	2,876		$	2,876

Stock based compensation—Solar		$	109		$	109		$	94		$	92		$	92		$	82
Stock based compensation—Quality Assurance			115			114			99			97			96			56
Stock based compensation—Corporate			243			243			220			217			216			451

	Total stock based compensation	$	467		$	466		$	413		$	406		$	404		$	589

Foreign exchange gain (loss)—Solar		$	71		$	47		$	(183	)	$	(138	)	$	(206	)	$	146
Foreign exchange gain (loss)—Quality Assurance			264			(154	)		(513	)		(401	)		(154	)		(229	)

	Total foreign exchange gain (loss)	$	335		$	(107	)	$	(696	)	$	(539	)	$	(360	)	$	(83	)

EBITDA(1):
EBITDA—Solar		$	21,001		$	24,471		$	21,830		$	15,336		$	15,046		$	11,539
EBITDA—Quality Assurance			899			5,494			5,525			5,424			2,765			7,103
EBITDA—Corporate			(1,506	)		(3,907	)		(3,003	)		(756	)		(3,675	)		(2,816	)

	Total EBITDA		20,394			26,058			24,352			20,004			14,136			15,826
Depreciation and amortization			(4,894	)		(4,959	)		(5,078	)		(6,317	)		(5,626	)		(5,886	)
Interest income			61			40			44			104			14			56
Interest expense			(5,111	)		(5,542	)		(5,366	)		(4,790	)		(4,086	)		(4,182	)
Income tax expense			(2,279	)		(7,508	)		(5,219	)		(2,864	)		(1,921	)		(2,675	)
Unrealized (loss) gain on interest rate swap			(4,377	)		4,090			172			(2,910	)		596			(9	)

Net income		$	3,794		$	12,179		$	8,905		$	3,227		$	3,113		$	3,130

We have financed our operations primarily through cash provided by operations. From 2003 through 2008, net cash provided by operating activities has been sufficient to fund our working capital needs and capital expenditures. As of June 30, 2009, our principal sources of liquidity consisted of $37.5 million of cash and cash equivalents and $20.0 million of availability under the $20.0 million revolving portion of our first lien credit facilities. Our total indebtedness was $256.5 million as of June 30, 2009.

Our principal needs for liquidity have been, and for the foreseeable future will continue to be, for capital expenditures, debt service and working capital. The main portion of our capital expenditures has been and is expected to continue to be for expansion of our solar manufacturing capacity. Working capital requirements have increased as a result of our overall growth in prior years and the need to fund higher accounts receivable and inventory. We believe that our cash flow from operations, available cash and cash equivalents and available borrowings under the revolving portion of our credit facilities will be sufficient to meet our liquidity needs, including for capital expenditures, through at least the next 12 months. We anticipate that to the extent that we require additional liquidity, it will be funded through borrowings under our credit facilities, the incurrence of other indebtedness, additional equity financings or a combination of these potential sources of liquidity. The credit markets have been experiencing extreme volatility and disruption that have reached unprecedented levels. In many cases, the market for new debt financing is extremely limited and in some cases not available at all. In addition, the markets have increased the uncertainty that lenders will be able to comply with their previous commitments. As such, we cannot assure you that we will be able to obtain this additional liquidity on reasonable terms, or at all. Additionally, our liquidity and our ability to meet our obligations and fund our capital requirements are also dependent on our future financial performance, which is subject to general economic, financial and other factors that are beyond our control. Accordingly, we cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available under our credit facilities or otherwise to meet our liquidity needs.

Although we have no specific current plans to do so, if we decide to pursue one or more significant strategic acquisitions, we may incur additional debt or sell additional equity to finance the purchase of those businesses.

Net cash provided by operating activities was $20.9 million for the six months ended June 30, 2009 compared to $25.7 million for the six months ended June 30, 2008. The decrease was driven by lower cash earnings partially offset by improved working capital.

Net cash provided by operating activities was $47.7 million for the year ended December 31, 2008. Cash provided by operating activities was attributable to $28.1 million in net income and non-cash expenses, including $21.2 million of depreciation and amortization, $1.8 million of stock-based compensation and the $3.0 million unrealized loss on our interest rate swap transaction.

Net cash provided by operating activities was $5.5 million for the period from January 1 to June 14, 2007. This was primarily attributable to net income of $0.7 million and non-cash expenses, including depreciation and amortization and stock-based compensation, as well as an increase in net operating assets of $2.0 million. Net cash provided by operating activities was $12.1 million for the period from June 15 to December 31, 2007. This was primarily attributable to net income of $4.1 million and non-cash expenses, including depreciation and amortization, stock-based compensation and the unrealized loss on our interest rate swap transaction.

Net cash provided by operating activities for 2006 was $21.9 million. This was primarily attributable to net income, net of non-cash expenses including depreciation and amortization, and stock-based compensation. The balance was attributable to lower working capital needs.

Net cash used for investing activities was $10.6 million for the six months ended June 30, 2009 compared to $15.0 million for the six months ended June 30, 2008, as we reduced our capital expenditure activity due to the current negative economic conditions.

Net cash used for investing activities for the year ended December 31, 2008 was $35.3 million for capital expenditures.

Net cash used for investing activities was $3.5 million for the period from January 1 to June 14, 2007 for capital expenditures. Net cash used for investing activities was $327.0 million for the period from June 15 to December 31, 2007 for amounts paid in connection with the DLJ Transactions as well as capital expenditures.

Net cash used for investing activities was $2.4 million for the year ended December 31, 2006. This was primarily attributable to capital expenditures.

Net cash used in financing activities was $1.2 million for the six months ended June 30, 2009 compared to $1.0 million for the six months ended June 30, 2008, due to higher equity issuance costs of $0.2 million. Debt repayments remained consistent period over period.

Net cash used in financing activities was $5.3 million for the year ended December 31, 2008 primarily for payment of equity issuance costs of $3.3 million and $2.0 million for debt repayments.

Net cash used in financing activities was $6.1 million for the period from January 1 to June 14, 2007 for the repayment of indebtedness. Net cash provided by financing activities was $335.3 million for the period from June 15 to December 31, 2007 due to the receipt of proceeds from the issuance of equity and the incurrence of debt in connection with the DLJ Transactions.

Net cash used in financing activities was $10.0 million for the year ended December 31, 2006. This was primarily attributable to payments on long-term debt, short-term notes and our revolving line of credit.

We had capital expenditures of $10.6 million, $35.3 million, $13.6 million and $2.6 million in the six months ended June 30, 2009, the year ended December 31, 2008, the periods from January 1 to June 14 and June 15 to December 31, 2007 and the year ended December 31, 2006, respectively.

For our solar segment, we had capital expenditures of $4.3 million, $25.9 million, $9.0 million and $0.1 million in the six months ended June 30, 2009, the year ended December 31, 2008, the periods from January 1 to June 14 and June 15 to December 31, 2007 and the year ended December 31, 2006, respectively. Our solar capital expenditures for these periods consisted primarily of equipment costs associated with the addition of new production lines and construction costs for our recently opened Malaysia facility.

For our quality assurance segment, we had capital expenditures of $6.3 million, $8.9 million, $3.9 million and $1.8 million in the six months ended June 30, 2009, the year ended December 31, 2008, the periods from January 1 to June 14 and June 15 to December 31, 2007 and the year ended December 31, 2006, respectively. Our quality assurance capital expenditures for these periods consisted primarily of costs associated with equipment purchases for testing equipment needed to meet our contractual obligations as well as laboratory expansion in China and India.

For corporate, we did not incur any material capital expenditures in the six months ended June 30, 2009. We had capital expenditures of $0.5 million, $0.7 million and $0.7 million in the year ended December 31, 2008, the periods from January 1 to June 14 and June 15 to December 31, 2007 and the year ended December 31, 2006, respectively. Our corporate capital expenditures for these periods consisted primarily of costs for new information systems.

We expect consolidated capital expenditures for the last six months of 2009 to be approximately $9.0 million, of which solar capital expenditures represent approximately $1.0 million and quality assurance capital expenditures represent approximately $8.0 million.

In connection with the DLJ Transactions, we entered into a first lien credit facility and a second lien credit facility on June 15, 2007, which we refer to collectively in this prospectus as our "credit facilities," in each case with Credit Suisse, as administrative agent and collateral agent. The first lien credit facility consists of a $185.0 million term loan facility, which matures on June 15, 2014, and a $20.0 million revolving credit facility, none of which was outstanding at June 30, 2009, which matures on June 15, 2012. The second lien credit facility consists of a $75.0 million term loan facility, which matures on December 15, 2014. The revolving credit facility includes a sublimit of $15.0 million for letters of credit.

The obligations under each credit facility are unconditional and are guaranteed by us and substantially all of our existing and subsequently acquired or organized domestic subsidiaries. The first lien credit facility and related guarantees are secured on a first-priority basis, and the second lien credit facility and related guarantees are secured on a second-priority basis, in each case, by security interests (subject to liens permitted under the credit agreements governing the credit facilities) in substantially all tangible and intangible assets owned by us, the obligors under the credit facilities, and each of our other domestic subsidiaries, subject to certain exceptions, including limiting pledges of voting stock of foreign subsidiaries to 66% of such voting stock.

Borrowings under the first lien credit facility bear interest at a rate equal to (1) in the case of term loans, at our option (i) the greater of (a) the rate of interest per annum determined by Credit Suisse, from time to time, as its prime rate in effect at its principal office in the City of New York, and (b) the federal funds rate plus 0.50% per annum (the "base rate"), and in each case plus 1.50% per annum or (ii) the LIBOR (adjusted for statutory reserves) plus 2.50% and (2) in the case of the revolving loans, at our option (subject to certain exceptions) (i) the base rate plus 1.50% when our total leverage ratio (as defined in the first lien credit facility) is greater than or equal to 5.25 to 1.00 ("leverage level 1"), the base rate plus 1.25% when our total leverage ratio is greater than or equal to 4.50 to 1.00 but less than 5.25 to 1.00 ("leverage level 2") and the base rate plus 1.00% when our total leverage ratio is less than 4.50 to 1.00 ("leverage level 3") or (ii) the LIBOR (adjusted for statutory reserves) plus 2.50% in the case of leverage level 1, 2.25% in the case of leverage level 2 and 2.00% in the case of leverage level 3. Borrowings under the second lien credit facility bear interest at a rate equal to, at our option (i) the base rate plus 6.00% or (ii) the LIBOR (adjusted for statutory reserves) plus 7.00%. For the first five years of the second lien credit facility, we have the option to pay interest in cash or in kind, by increasing the outstanding principal amount of the loans by the amount of accrued interest. Interest paid in kind on the second lien credit facility will be at the rate of interest applicable to such loan described above plus an additional 1.50% per annum. If we default on the payment of any principal, interest, or any other amounts due under the credit facilities, we will be obligated to pay default interest. The default interest rate on principal payments will equal the interest rate applicable to such loan plus 2.00% per annum, and the default interest rate on all other payments will equal the interest rate applicable to base rate loans plus 2.00% per annum.

As of June 30, 2009 and December 31, 2008, the weighted average interest rate under our credit facilities was 4.14% and 4.27%, respectively, before the effect of our interest rate swap. At the rate in effect on June 30, 2009 and assuming an outstanding balance of $256.3 million as of June 30, 2009, our

annual debt service obligations would be $12.4 million, consisting of $10.6 million of interest and $1.8 million of scheduled principal payments.

In addition to paying interest on outstanding principal under the credit facilities, we are required to pay a commitment fee at a rate equal to 0.50% per annum on the daily unused commitments available to be drawn under the revolving portion of the first lien credit facility. We are also required to pay letter of credit fees, with respect to each letter of credit issued, at a rate per annum equal to the applicable LIBOR margin for revolving credit loans on the average daily amount of undrawn letters of credit plus the aggregate amount of all letter of credit disbursements that have not been repaid by us. We are also required to pay fronting fees, with respect to each letter of credit issued, at a rate specified by the issuer of the letters of credit and to pay Credit Suisse certain administrative fees from time to time, in its role as administrative agent. The term loans under the first lien credit facilities amortize in quarterly installments of 0.25% of the principal amount. Under certain circumstances, we may be required to reimburse the lenders under our credit facilities for certain increased fees and expenses caused by a change of law.

We are generally required to prepay term loan borrowings under the credit facilities with (1) 100% of the net cash proceeds we receive from non-ordinary course asset sales or as a result of a casualty or condemnation, (2) 100% of the net cash proceeds we receive from the issuance of debt obligations other than debt obligations permitted under the credit agreements, (3) 50% of the net cash proceeds of a public offering of equity (including this offering) and (4) 50% (or, if our leverage ratio is less than 5.25 to 1.00 but greater than or equal to 4.50 to 1.00, 25%) of excess cash flow (as defined in the credit agreements). Under the credit facilities, we are not required to prepay borrowings with excess cash flow if our leverage ratio is less than 4.50 to 1.00. Subject to a limited exception, all mandatory prepayments will first be applied to the first lien credit facility until all first lien obligations are paid in full and then to the second lien facility.

The first lien credit facility requires us to maintain certain financial ratios, including a maximum first lien debt ratio (based upon the ratio of indebtedness under the first lien credit facility to consolidated EBITDA, as defined in the first lien credit facility), a maximum total leverage ratio (based upon the ratio of total indebtedness, net of unrestricted cash and cash equivalents, to consolidated EBITDA) and a minimum interest coverage ratio (based upon the ratio of consolidated EBITDA to consolidated interest expense), which are tested quarterly. Based on the formulas set forth in the first lien credit agreement, as of June 30, 2009, we were required to maintain a maximum first lien debt ratio of 4.25 to 1.00, a maximum total leverage ratio of 6.25 to 1.00 and a minimum interest coverage ratio of 1.65 to 1.00. The second lien credit facility requires us to maintain a maximum total leverage ratio tested quarterly. Based on the formulas set forth in the second lien credit agreement, as of June 30, 2009, we were required to maintain a maximum total leverage ratio of 6.50 to 1.00. As of June 30, 2009, our first lien debt ratio was 1.81 to 1.00, our total leverage ratio was 2.76 to 1.00 and our interest coverage ratio was 4.69 to 1.00.

The financial ratios required under the first and second lien facilities become more restrictive over time. Based on the formulas set forth in the first lien credit agreement, as of March 31, 2010 and March 31, 2012, we are required to maintain a maximum first lien debt ratio of 4.00 to 1.00 and 3.00 to 1.00, respectively, a maximum total leverage ratio of 6.00 to 1.00 and 5.00 to 1.00, respectively, and a minimum interest coverage ratio of 1.80 to 1.00 and 2.00 to 1.00, respectively. Based on the formulas set forth in the second lien credit agreement, as of March 31, 2010 and March 31, 2012, we are required to maintain a maximum total leverage ratio of 6.25 to 1.00 and 5.25 to 1.00, respectively.

The credit agreements also contain a number of affirmative and restrictive covenants including limitations on mergers, consolidations and dissolutions; sales of assets; sale-leaseback transactions; investments and acquisitions; indebtedness; liens; affiliate transactions; the nature of our business; a prohibition on dividends and restrictions on other restricted payments; modifications or prepayments of our second lien credit facility or other material subordinated indebtedness; and issuing redeemable,

convertible or exchangeable equity securities. Under the credit agreements, we are permitted maximum annual capital expenditures of $12.0 million in the fiscal year ending December 31, 2009, with such limit increasing by $1.0 to $2.0 million for each fiscal year thereafter. Capital expenditure limits in any fiscal year may be increased by 40.0% of the excess of consolidated EBITDA for such fiscal year over baseline EBITDA for that year, which is defined as $50.0 million for the fiscal year ending December 31, 2009 and increasing by $5.0 million per year thereafter. The capital expenditure limitations are subject to a two-year carry-forward of the unused amount from the previous fiscal year. The credit agreements contain events of default that are customary for similar facilities and transactions, including a cross-default provision with respect to other material indebtedness (which, with respect to the first lien credit agreement, would include the second lien credit agreement and with respect to the second lien credit agreement, would include the first lien credit agreement) and an event of default that would be triggered by a change of control, as defined in the credit agreements, and which is not expected to be triggered by this offering. As of June 30, 2009, we were in compliance with all of our covenants and other obligations under the credit agreements.

We are required under the terms of both our first lien and second lien credit facilities to fix our interest costs on at least 50% of the principal amount of our funded indebtedness for a minimum of three years. To manage our interest rate exposure and fulfill the requirements under our credit facilities, effective September 13, 2007, we entered into a $200.0 million notional principal amount interest rate swap agreement with Credit Suisse International that effectively converted a portion of our debt under our credit facilities from a floating interest rate to a fixed interest rate. The notional principal amount decreased to $130.0 million on October 1, 2008 and will remain at that amount until the agreement terminates on September 30, 2010. Under the interest rate swap agreement, we pay interest at 4.622% and receive the floating three-month LIBOR rate from Credit Suisse International on the notional principal amount.

In addition, one of our foreign subsidiaries maintains a line of credit facility in the amount of $0.5 million (0.5 million Swiss francs) bearing an interest rate of approximately 4.25% and 4.75% as of June 30, 2009 and December 31, 2008, respectively. The purpose of the credit facility is to provide funding for the subsidiary's working capital as deemed necessary during the normal course of business. The facility was not utilized as of June 30, 2009 and December 31, 2008.

As of December 31, 2008, our contractual obligations and other commitments were as follows:


Delaware	3081	27-1023344
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

Title of Each Class of Securities to be Registered	Amount to be Registered(1)	Proposed Maximum Offering Price Per Share	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee



Common Stock, $0.01 par value	14,145,000	$15.00	$212,175,000	$11,840(3)

	Price to Public	Underwriting Discounts and Commissions	Proceeds to Us	Proceeds to Selling Stockholders

Per Share	$	$	$	$
Total	$	$	$	$


Credit Suisse		Goldman, Sachs & Co.
Cowen and Company		Jefferies & Company
Lazard Capital Markets		Macquarie Capital


Copies to:
Alexander D. Lynch, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 (212) 310-8000		Alan F. Denenberg, Esq. Davis Polk & Wardwell LLP 1600 El Camino Real Menlo Park, California 94025 (650) 752-2000

		Page

PROSPECTUS SUMMARY			1
RISK FACTORS			16
FORWARD-LOOKING STATEMENTS			40
CORPORATE REORGANIZATION			41
USE OF PROCEEDS			45
DIVIDEND POLICY			45
CAPITALIZATION			46
DILUTION			47
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET			49
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS			53
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA			57
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			59
INDUSTRY AND MARKET DATA			91
SOLAR POWER INDUSTRY			92
BUSINESS			95
MANAGEMENT			108
EXECUTIVE AND DIRECTOR COMPENSATION			113
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS			135
PRINCIPAL AND SELLING STOCKHOLDERS			143
DESCRIPTION OF CAPITAL STOCK			147
DESCRIPTION OF MATERIAL INDEBTEDNESS			150
SHARES ELIGIBLE FOR FUTURE SALE			153
MATERIAL U.S. FEDERAL TAX CONSIDERATIONS			155
UNDERWRITING			158
CONFLICTS OF INTEREST			163
LEGAL MATTERS			163
EXPERTS			163
CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			163
WHERE YOU CAN FIND ADDITIONAL INFORMATION			165
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1


Cash and cash equivalents	$	49.3
Short-term investments		1.0
First lien credit facility(1)		180.8
Second lien credit facility(1)		75.0
Capital lease obligations		0.2
Total debt		256.0
Unitholders' equity	$	228.0

Class	Value

	(dollars in millions)
A units	$	503.8	35,986,311
B units		3.6	254,738
C units		20.1	1,433,333
D units		7.2	515,290
E units		1.1	81,439
F units		10.5	750,027

Total	$	546.3	39,021,138

	Units

	Units				Exchange Ratio(2)		Shares of Common Stock
Class	Issued		Eligible(1)		Exchange Ratio(2)		Shares of Common Stock
A units		18,088,388		18,088,388		1.9895		35,986,311
B units		199,766		199,766		1.2752		254,738
C units		1,134,419		1,134,419		1.2635		1,433,333
D units		407,796		407,796		1.2636		515,290
E units		403,833		399,666		0.2038		81,439
F units		588,171		588,171		1.2752		750,027

Total		20,822,373		20,818,206		1.8744		39,021,138

	IPO Price per Share

	$13.00		$14.00		$15.00
A units		1.9982		1.9895		1.9819
B units		1.2290		1.2752		1.3152
C units		1.2164		1.2635		1.3043
D units		1.2165		1.2636		1.3044
E units		0.0751		0.2038		0.3152
F units		1.2290		1.2752		1.3152

Total		1.8743		1.8744		1.8745


Assumed initial public offering price per share				$	14.00
Pro forma net tangible book value per share as of June 30, 2009	$	(5.72	)
Increase in pro forma net tangible book value per share attributable to the sale of shares in this offering		0.90

Pro forma as adjusted net tangible book value per share after this offering					(4.82	)

Dilution per share to new investors				$	18.82

		Shares Purchased(1)					Total Consideration

		Shares Purchased(1)					Total Consideration						Average Price Per Share
		Number		Percent			Amount			Percent			Average Price Per Share
Existing stockholders			39,021,138		94.4	%	$	178,649,240	(2)		84.7	%	$	4.58
New investors			2,300,000		5.6			32,200,000			15.3		$	14.00

	Total		41,321,138		100	%	$	210,849,240			100	%

Class of Units

A units		35,561,100	425,211	35,986,311
B units		254,738	—	254,738
C units		606,606	826,727	1,433,333
D units		225,439	289,851	515,290
E units		22,208	59,231	81,439
F units		622,993	127,034	750,027

	Total	37,293,084	1,728,054	39,021,138

Intangible Assets Acquired	Allocated Value		Weighted- Average Useful Life		Annual Amortization Expense		Pro Forma Adjustment for the Period from January 1 to June 14, 2007

			(years)
Customer relationships	$	71,100		20	$	3,555	$	1,630
Trademarks		40,800		30		1,360		623
Proprietary technology		70,300		20		3,515		1,611

	$	182,200			$	8,430	$	3,864

		Year Ended December 31, 2008		Period from June 15 to December 31, 2007

Volatility		60.00	%	52.72	%
Risk-free interest rates		1.71	%	4.98	%
Expected term		2.2	Years	3.47	Years
Dividend yield		0.00	%	0.00	%
Weighted average grant-date fair value:
	Service-based	$7.26		$2.85
	Performance-based	$8.16		$3.22

		Payments Due by Period

		Total		2009		2010-2011		2012-2013		Thereafter
		(dollars in thousands)
Long-term debt obligations(a)		$	257,225	$	1,850	$	3,700	$	3,700	$	247,975
Interest costs(b)			62,569		10,992		21,820		21,600		8,157
Capital lease obligations(a)			296		162		134		—		—
Operating lease obligations			9,849		4,009		4,844		996		—
Other contractual obligations(c)			—		—		—		—		—

	Total	$	329,939	$	17,013	$	30,498	$	26,296	$	256,132

Intangible Assets Acquired	Allocated Value		Weighted- Average Useful Life		Annual Amortization Expense		Pro Forma Adjustment for the Period from January 1 to June 14, 2007

			(years)
Customer relationships	$	31,600		20	$	1,580	$	724
Trademarks		25,000		30		833		382
Accreditations		6,600		10		660		303

	$	63,200			$	3,073	$	1,409

Less historical amortization								(50	)

							$	1,359