XINYU CITY, China and SUNNYVALE, Calif., March 11 /PRNewswire-FirstCall/ -- LDK Solar Co., Ltd. ("LDK Solar") , a leading manufacturer of multicrystalline solar wafers, today reported its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2008.
All financial results are reported in U.S. dollars on a U.S. GAAP basis. Fiscal Year 2008 Financial Highlights: -- Fiscal year 2008 revenue of $1.6 billion, up 214% year-over-year; -- Annualized wafer production capacity expanded by over 1 GW, reaching 1.46 GW at the end of 2008; -- Annual wafer shipments increased nearly four-fold to 818 MW in 2008; -- Commenced in-house polysilicon production in early January, 2009 for additional cost savings; and -- Signed 14 long-term wafer supply agreements during the year, achieving a sales backlog of over 14 GW through 2018.
Net sales for the fourth quarter of fiscal 2008 were $426.6 million, down 21.3% from $541.8 million for the third quarter of fiscal 2008, and up 121% from $192.8 million for the fourth quarter of fiscal 2007.
During the fourth quarter, LDK Solar recorded a write-down of $216.7 million against the cost of inventories for a decline in net realizable value of inventories resulting from the rapid market price decline for solar wafers. As a result, gross profit and income from operations were negatively impacted in the fourth quarter of fiscal 2008.
For the fourth quarter of fiscal 2008, gross profit was negative $126.8 million, compared to $122.9 million in the third quarter of fiscal 2008, and $58.0 million for the fourth quarter of fiscal 2007.
Excluding the inventory write-down, gross profit was $89.9 million, or a gross margin of 21.1% for the fourth quarter and operating profit was $61.7 million, or an operating margin of 14.5% for the fourth quarter.
Gross margin for the fourth quarter of fiscal 2008 was negative 29.7% compared to 22.7% in the third quarter of fiscal 2008 and 30.1% in the fourth quarter of fiscal 2007.
Loss from operation for the fourth quarter of fiscal 2008 was $155.1 million, compared to income from operation of $107.8 million for the third quarter of fiscal 2008, and income from operation of $46.7 million for the fourth quarter of fiscal 2007.
Operating margin for the fourth quarter of fiscal 2008 was negative 36.3% compared to 19.9% in the third quarter of fiscal 2008 and 24.2% in the fourth quarter of fiscal 2007.
Income tax benefit for the fourth quarter of fiscal 2008 was $18.4 million, compared to income tax expense of $13.8 million in the third quarter of fiscal 2008.
Net loss for the fourth quarter of fiscal 2008 was $133.1 million, or $1.25 per diluted ADS, compared to net income of $88.4 million, or $0.77 per diluted ADS, for the third quarter of fiscal 2008.
Revenue for the fiscal year ended December 31, 2008 was $1.6 billion, up 214% from revenue of $523.9 million for 2007. Gross profit for the year ended December 31, 2008 was $173.0 million, compared to $170.2 million for fiscal 2007. Gross margin for the year ended December 31, 2008 was 10.5%, compared to 32.5% for fiscal 2007.
Operating profit for the year ended December 31, 2008 was $105.6 million, compared to $146.8 million for fiscal 2007.
Operating margin for the year ended December 31, 2008 was 6.4%, compared to 28.0% for fiscal 2007.
Excluding the inventory write-down, gross profit was $389.7 million, or a gross margin of 23.7% for fiscal 2008 and operating profit was $322.3 million, or an operating margin of 19.6% for fiscal 2008.
For the year ended December 31, 2008, income tax expense was $17.2 million, compared to income tax benefit of $0.8 million for fiscal 2007.
For the year ended December 31, 2008, net income was $154.7 million, or $1.42 per diluted ADS, compared to net income of $144.1 million, or $1.37 per diluted ADS, for fiscal 2007.
LDK Solar ended fiscal 2008 with $255.5 million in cash and cash equivalents and $83.4 million in short-term pledged bank deposits.
"Despite its challenges, 2008 was a year of impressive and rapid growth for LDK Solar," stated Xiaofeng Peng, Chairman and CEO of LDK Solar. "We successfully executed on aggressive expansion plans, increasing wafer capacity from 420 MW in 2007 to 1.46 GW at the end of 2008 which was correlated by a dramatic increase in wafer sales year over year.
"Additionally, we completed the construction of and commenced polysilicon production in our 1,000 MT polysilicon plant, and are very pleased with the high quality output produced to date. We continue to progress in the construction of our 15,000 MT plant and expect the first 5,000 MT train to reach mechanical completion at the end of the second quarter of 2009. We look forward to realizing the cost saving benefits of in-house polysilicon production as we work towards our current targets of between 2,000 and 3,000 MT of polysilicon output in 2009," continued Mr. Peng.
"We enter 2009 with conservative optimism. In light of the continued economic slowdown and global credit crisis, we recently amended our expansion plans to lower capital expenditure needs in the near term and to better reflect muted market expectations for 2009. As the credit markets continue to contract, we believe that conservative cash management is imperative and will focus on closely monitoring capital spending to protect our healthy cash position and unused credit facilities, which were $850 million at the end of 2008. While the business environment has been challenging, we believe we are uniquely positioned within the solar industry and going forward will benefit from our lean cost structure and economies of scale. As we brace for continued challenges in the current marketplace, we remain confident in the core strengths of our business model and long-term growth strategies," concluded Mr. Peng.
Business Outlook
The following statements are based upon management's current expectations. These statements are forward-looking in nature, and the actual results may differ materially. You should read the "Safe Harbor Statement" below with respect to the risks and uncertainties relating to these forward-looking statements.
For the first quarter of fiscal 2009, LDK Solar estimates its revenue to be in the range of $240 million to $280 million with wafer shipments between 170 MW to 200 MW and gross margin between 3% and 6%. For the full year of fiscal 2009, LDK Solar currently estimates:
-- Revenue to be in the range of $1.4 billion to $1.8 billion; -- Wafer shipments in the range of 1.2 GW to 1.45 GW; -- Gross margin between 12% and 19%; and -- Production of between 2,000 and 3,000 MT of polysilicon in 2009. Conference Call Details
The LDK Solar Fourth Quarter and Fiscal Year 2008 teleconference and webcast is scheduled to begin at 8:00 a.m. Eastern Time (ET), on March 11, 2009. To listen to the live conference call, please dial 800-366-7449 (within U.S.) or 303-228-2965 (outside U.S.) at 7:50 a.m. ET on March 11, 2009. An audio replay of the call will be available to investors through March 16, 2009, by dialing 800-405-2236 (within U.S.) or 303-590-3000 (outside U.S.) and entering the passcode 11126850#.
LDK Solar Co., Ltd. Unaudited Condensed Consolidated Balance Sheet Information (In US$'000, except share and per share data) 12/31/2008 9/30/2008 12/31/2007 Assets Current assets Cash and cash equivalents 255,523 347,762 83,470 Pledged bank deposits 83,383 115,028 135,950 Trade accounts receivable 94,733 40,286 3,767 Bills receivable 3,075 - - Inventories 704,439 702,314 349,997 Prepayments to suppliers, net 83,561 294,855 138,193 Other current assets 68,123 47,800 29,825 Deferred income tax assets, net 32,205 1,965 546 ------ ----- --- Total current assets 1,325,042 1,550,010 741,748 Property, plant and equipment, net 1,697,203 1,138,539 336,763 Deposits for purchases of property, plant and equipment 233,296 301,252 151,233 Intangible asset, net 1,037 1,074 1,096 Land use rights 99,162 97,818 29,259 Inventories to be processed beyond one year - 7,678 29,981 Prepayments to suppliers expected to be utilized beyond one year, net 33,617 22,082 18,994 Pledged bank deposits - non-current 49,686 49,476 - Debt issuance costs, net 8,764 9,657 - Investment in an associate 5,630 2,579 - Other financial assets - - 525 Deposits relating to sales and leaseback transactions 7,316 - - Deferred income tax assets 375 1,052 387 --- ----- --- Total assets 3,461,128 3,181,217 1,309,986 --------- --------- --------- Liabilities and shareholders' equity Current liabilities Short-term bank borrowings and current portion of long-term bank borrowings 666,200 451,940 264,101 Bills payable 11,406 - - Trade accounts payable 124,066 59,165 18,032 Advance payments from customers, current portion 256,411 342,879 141,223 Accrued expenses and other payables 429,968 331,418 95,301 Due to a related party 4,359 - - Other financial liabilities 18,545 500 3,357 ------ --- ----- Total current liabilities 1,510,955 1,185,902 522,014 Convertible senior notes 400,000 400,000 - Long-term bank borrowings, excluding current portions 154,252 159,465 25,125 Obligations under capital leases, excluding current installments 40,083 - - Advance payments from customers - non-current 487,577 434,303 67,554 Other liabilities 3,485 2,172 2,222 Deferred income tax liability 1,468 - - ----- --- --- Total liabilities 2,597,820 2,181,842 616,915 Shareholders' equity Ordinary shares: US$0.10 par value; 499,580,000 shares authorized; 113,501,049, 113,501,049 and 106,044,700 shares issued as of December 31, 2008, September 30, 2008 and December 31, 2007, respectively; 113,110,396, 113,109,250 and 106,044,700 shares outstanding as of December 31, 2008, September 30, 2008 and December 31, 2007, respectively 11,311 11,311 10,604 Additional paid-in capital 446,327 441,913 486,253 Statutory reserve 29,676 18,697 18,697 Accumulated other comprehensive income 86,219 93,610 31,481 Retained earnings 289,775 433,844 146,036 ------- ------- ------- Total shareholders' equity 863,308 999,375 693,071 Total liabilities and shareholders' equity 3,461,128 3,181,217 1,309,986 --------- --------- --------- LDK Solar Co., Ltd. Unaudited Condensed Consolidated Income Statement Information (In US$'000, except per ADS data) For the 3 Months Ended Fiscal Year 12/31/2008 9/30/2008 2008 2007 Net sales 426,612 541,819 1,643,495 523,946 Cost of goods sold (553,402) (418,906) (1,470,511) (353,709) --------- --------- ----------- --------- Gross (loss) / profit (126,790) 122,913 172,984 170,237 Selling expenses (1,139) (1,567) (3,786) (873) General and Administrative expenses (23,028) (10,904) (56,073) (19,360) Research and development expenses (4,114) (2,648) (7,570) (3,202) ------- ------- ------- ------- Total operating expenses (28,281) (15,119) (67,429) (23,435) -------- -------- -------- -------- (Loss) / income from operations (155,071) 107,794 105,555 146,802 Other income/(expenses): Interest income 979 1,872 5,875 4,109 Interest expense and amortization of discount on exchange notes and convertible senior notes issuance costs (8,284) (10,612) (34,347) (9,419) Decrease in fair value of warrants - - - 2 Foreign currency exchange gain / (loss), net 4,950 (1,617) 14,495 (1,654) Government subsidy 5,366 5,431 19,665 3,461 Change in fair value of prepaid forward contracts - - 60,028 - Others 567 (641) 656 - --- ----- --- - (Loss) / income before income tax (151,493) 102,227 171,927 143,301 Income tax benefit / (expenses) 18,403 (13,779) (17,209) 758 ------ -------- -------- --- Net income (133,090) 88,448 154,718 144,059 Accretion of Series A - - - (860) Accretion of Series B - - - (2,726) Accretion of Series C - - - (1,351) --- --- --- ------- Net (loss) / income Available to ordinary shareholders (133,090) 88,448 154,718 139,122 --------- ------ ------- ------- Net (loss) / Income per ADS, Diluted $(1.25) $0.77 $1.42 $1.37 ----------- ---------- ---------- ---------- About LDK Solar
LDK Solar Co., Ltd. is a leading manufacturer of multicrystalline solar wafers, which are the principal raw material used to produce solar cells. LDK Solar sells multicrystalline wafers globally to manufacturers of photovoltaic products, including solar cells and solar modules. In addition, LDK Solar provides wafer processing services to monocrystalline and multicrystalline solar cell and module manufacturers. LDK Solar's headquarters and manufacturing facilities are located in Hi-Tech Industrial Park, Xinyu City, Jiangxi Province in the People's Republic of China. LDK Solar's office in the United States is located in Sunnyvale, California.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this press release are forward-looking statements, including but not limited to, LDK Solar's ability to raise additional capital to finance its operating activities, the effectiveness, profitability and marketability of its products, the future trading of its securities, the ability of LDK Solar to operate as a public company, the period of time during which its current liquidity will enable LDK Solar to fund its operations, its ability to protect its proprietary information, the general economic and business environment and conditions, the volatility of LDK Solar's operating results and financial condition, its ability to attract and retain qualified senior management personnel and research and development staff, its ability to timely and efficiently complete its ongoing construction projects, including its polysilicon plants, and other risks and uncertainties disclosed in LDK Solar's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on information available to LDK Solar's management as of the date hereof and on its current expectations, assumptions, estimates and projections about LDK Solar and the solar industry. Actual results may differ materially from the anticipated results because of such and other risks and uncertainties. LDK Solar undertakes no obligation to update forward-looking statements to reflect subsequent events or circumstances, or changes in its expectations, assumptions, estimates and projections except as may be required by law.
