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

For additional information relating to our plan of operations through the remainder of 2007, see ""Use of
Proceeds,'' ""Ì Liquidity and Capital Resources'' and ""Business Ì Production Ì Production capacity expansion''
in this prospectus.
Liquidity and Capital Resources
Cash flow and working capital
Multicrystalline wafer manufacturing requires intensive capital investment and, due to our relatively short
history of operations, we have financed our operations substantially through cash flow from financing
activities.
The following table sets forth a summary of our net cash flows for the periods indicated:
Three Months
Period from July 5 Year Ended Ended
to December 31, December 31, March 31,
2005 2006 2007
(in thousands)
Net cash provided by (used in) operating
activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2,511 $(57,067) $ (8,707)
Net cash used in investing activities ÏÏÏÏÏÏÏ (20,940) (79,564) (23,336)
Net cash provided by financing activities ÏÏÏ 28,077 154,891 11,660
Effect of exchange rate changesÏÏÏÏÏÏÏÏÏÏÏ 39 2,280 1,504
Net increase in cash and cash equivalents ÏÏ
Cash and cash equivalents at the beginning
9,687 20,540 (18,879)
of period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash and cash equivalents at the end of
Ì 9,687 30,227
periodÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 9,687 $ 30,227 $ 11,348
Operating activities
Although we had no revenues and incurred a net loss of $274,000 for the period from July 5 to
December 31, 2005, our net cash provided by operating activities was $2.5 million because we received
$3.7 million from our customers in advance payments for sales orders, which were offset in part by
prepayments to our suppliers for purchases of materials to fill those orders. While we had $30.2 million of net
income during the year ended December 31, 2006, our net cash used in operating activities was $57.1 million
because we increased our inventories by $94.9 million and increased our advance payments to suppliers by
$36.8 million to secure future sources of materials. These cash outflows were only partially offset by an
increase of $36.3 million in advance payments from our customers for future sales. During the three months
ended March 31, 2007, while we had $24.5 million of net income, our net cash used in operating activities was
$8.7 million primarily because we increased our inventory of polysilicon feedstock by $19.3 million and our
advance payments to suppliers by $15.1 million to secure our future sources of raw materials.
Investing activities
Our investing activities in 2005 comprised primarily our acquisition of property, plant and equipment. See
""Ì Capital expenditures'' below. Net cash used in investing activities for the period from July 5 to
December 31, 2005 amounted to $20.9 million, mainly as a result of our purchases of property, plant and
equipment for $15.5 million and an advance of $5.5 million made to a related party for the purchase of
equipment and materials. Net cash used in investing activities for the year ended December 31, 2006
increased to approximately $79.6 million from $20.9 million for the period from July 5 to December 31, 2005,
mainly as a result of acquisitions of additional property, plant and equipment for $72.8 million, purchase of
land use rights at our Xinyu Hi-Tech Industrial Park site for $5.5 million and acquisition of intangible assets,
such as technical know-how, from equipment manufacturers in connection with the operation of our acquired
production equipment for $1.2 million. During the three months ended March 31, 2007, our net cash used in
investing activities was approximately $23.3 million mainly as a result of acquisitions of additional property,
plant and equipment for $22.0 million and payment of $1.3 million for the land use rights at our Xinyu Hi-
Tech Industrial Park site that we purchased in 2006.
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