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

""Exchange Rate Information'' in this prospectus for more information on exchange rates between the U.S.
dollar and Renminbi.
Net income. For the three months ended March 31, 2007, our net income increased by $191,000 to
$24.5 million compared with our net income of $24.3 million for the three months ended December 31, 2006.
For the three months ended March 31, 2007, our net margin decreased to 33.4% from 39.3% for the three
months ended December 31, 2006. Our PRC subsidiary, Jiangxi LDK Solar, is entitled to exemptions from
the PRC national and local enterprise income tax for at least two and five years, respectively, beginning with
calendar year 2006. Without this tax holiday, our income tax expense would have increased by approximately
$8.5 million and $8.4 million for the three months ended March 31, 2007 and the three months ended
December 31, 2006, respectively, with a corresponding reduction in the amount of our net income for the
periods.
Accretion of Series A, Series B, Series C preferred shares to redemption values. We issued our Series A
preferred shares in July 2006, our Series B preferred shares in September 2006 and our Series C preferred
shares in December 2006. For the three months ended March 31, 2007, we recognized accretion to the
redemption values of our Series A, Series B and Series C preferred shares of approximately $512,000,
$1.6 million and $805,000, respectively. The Series A, Series B, Series C preferred shares are each redeemable
36 months following the issuance date of the Series C preferred shares if a qualified initial public offering has
not occurred. The accretion of the Series A, Series B, Series C preferred shares to their redemption prices was
reflected as a reduction to our net income and represented the difference between our net income and our net
income available to ordinary shareholders.
Net income available to ordinary shareholders. As a result of the foregoing, for the three months ended
March 31, 2007, our net income available to ordinary shareholders was $21.6 million. Our net income
available to ordinary shareholders for the three months ended December 31, 2006 was $22.1 million. Without
the tax holiday as described in ""Ì Net income'' above, our net income available to ordinary shareholders
would have been reduced by approximately $8.5 million and $8.4 million for the three months ended
March 31, 2007 and the three months ended December 31, 2006, respectively.
Net income per ordinary share. For the three months ended March 31, 2007, net income per ordinary
share was $0.29 and $0.27 per share on a basic and diluted basis, respectively. For the three months ended
December 31, 2006, net income per ordinary share was $0.30 and $0.28 per share on a basic and diluted basis,
respectively. Without the tax holiday as described in ""Ì Net income'' above, our basic net income per
ordinary share would have been reduced by $0.11 for the three months ended March 31, 2007 and the three
months ended December 31, 2006, respectively, and our diluted net income per ordinary share would have
been reduced by $0.09 for the three months ended March 31, 2007 and the three months ended December 31,
2006, respectively.
Three months ended December 31, 2006 compared with three months ended September 30, 2006
Net sales. For the three months ended December 31, 2006, our net sales were approximately
$61.9 million, an increase of $30.4 million from our net sales of $31.5 million for the three months ended
September 30, 2006. This increase was primarily due to our increased sales volume. We sold 26.4 MW of
wafers during the three months ended December 31, 2006 and 14.0 MW of wafers during the three months
ended September 30, 2006. To meet growing demand for our products, we have been increasing our
production capacity. We had 51 DSS furnaces and 21 wire saws in operation as of December 31, 2006
compared with 30 DSS furnaces and 12 wire saws in operation as of September 30, 2006.
Gross profit. Our gross profit increased by $14.2 million to $26.6 million for the three months ended
December 31, 2006 from $12.4 million for the three months ended September 30, 2006. Our gross margin
increased to 42.9% for the three months ended December 31, 2006 from 39.4% for the three months ended
September 30, 2006, primarily due to our improved manufacturing efficiencies and economies of scale.
Operating expenses. For the three months ended December 31, 2006, our operating expenses were
$1.9 million, an increase of $121,000 from our operating expenses of $1.8 million for the three months ended
September 30, 2006. This increase was primarily due to an increase of approximately $123,000 in our research
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