LDK Solar Co., Ltd. - Asia Europe Clean Energy (Solar) Advisory Co ...

LDK SOLAR CO., LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
FOR THE PERIOD FROM JULY 5, 2005 TO DECEMBER 31, 2005
AND THE YEAR ENDED DECEMBER 31, 2006
(Amounts in US$ thousands, except share and per share data)
Cash flows from financing activities
Proceeds from issuance of ordinary shares ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10
Payment of expenses relating to the proposed offerÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (405)
Proceeds from issuance of exchangeable notes, net of issue cost US$52 ÏÏÏÏÏÏÏÏÏÏÏ
Proceeds from Series A-2 redeemable convertible preferred shares, net of issue
7,948
cost US$51 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Proceeds from Series B redeemable convertible preferred shares, net of issue
6,949
cost US$78 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 47,922
Proceeds from Series C redeemable convertible preferred shares ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 22,500
Net cash provided by financing activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 84,924
Net increase in cash and cash equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 178
Cash and cash equivalents at beginning of period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
Cash and cash equivalents at end of period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 178
(25) SUBSEQUENT EVENTS
Pursuant to the share option scheme adopted on July 31, 2006, the Company's Board of Directors
resolved on February 6, 2007 to grant 2,071,900 share options to a number of employees which enable the
grantees to subscribe for 2,071,900 ordinary shares at an exercise price of US$ 9.00. The options have a
contractual term of five years and vesting period of no less than three years, with no more than one-third of the
options to be vested each year.
Pursuant to the above share option scheme, the Company's Board of Directors further resolved on
April 17, 2007 to grant 550,900 share options in total to a number of employees, a non-executive director and a
candidate of an independent director which enable the grantees to subscribe for 550,900 ordinary shares at the
exercise price determined at the low-end price of the initial public offering price range, except for
200,000 share options granted to the non-executive director and the candidate of independent director, of
which the exercise price is set at US$9.00. The grant of share options to the candidate of independent director
is conditional upon the signing of the service contract between the Company and that candidate. The
contractual term and vesting period of these share options are the same as those granted previously.
On March 6, 2007, LDK New Energy Holding Limited settled the subscription receivable of US$7,490
in cash.
On March 16, 2007, the National People's Congress of the PRC passed the PRC Enterprise Income Tax
Law (the ""EIT Law'') which will become effective on January 1, 2008 when the FEIT Law will be abolished.
The EIT Law adopts a uniform tax rate of 25% for all enterprises including foreign-invested enterprises and
revokes the current tax exemption, reduction and preferential treatments only applicable to foreign-invested
enterprises. Management has made an assessment of the potential financial impact of this new tax law on the
Group's tax position and does not expect the change in the enacted tax law to have material impact on the
Group's deferred tax assets and liabilities.
As described in notes 16(b) and (c), the terms of the Series B and Series C preferred shares provide that
the respective Conversion Ratios are subject to adjustment based on the 2006/2007 net earnings and the 2007
net earnings respectively. In March 2007, the Company verbally agreed with each of the holders of Series B
and Series C preferred shares that, if the Company's public filing for a Qualified IPO takes place on or before
April 30, 2007, the 2006/2007 net earnings and the 2007 net earnings, based on which the respective
Conversion Ratio adjustments are determined, would be adjusted on a pro-rata basis based on the net earnings
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