In preparation for the growth of its 2008 wafer production and as noted on its fourth quarter conference call, LDK increased its inventory to $380 million at the end of 2007. Inventory in transit represented the most significant portion of the increase, growing from 263 MT to 752 MT during the quarter as the Company purchased silicon material from around the globe.

Approximately 8%, or $30 million, of LDK's inventory at year end was classified from an accounting perspective as non-current due to the expectation that these materials would be consumed over a period longer than one year. The materials included in the non-current category represent usable silicon materials, which, due to the current virgin polysilicon shortage can only be used and blended in smaller quantities.

The Company expects that the blending ratios of the non-current inventory will significantly change, increasing consumption of the non-current inventory as LDK Solar ramps production of its own polysilicon, and as more virgin polysilicon and higher resistivity feedstock become available. The higher inventory balance is an important factor in present and future cost reduction strategies at LDK Solar.

Additionally, LDK commented on its environmental practices. LDK maintains strong environmentally responsible standards across the Company. LDK is committed to building and operating safe and environmentally friendly polysilicon plants. In its state-of the-art polysilicon plants, currently under construction, the Company is implementing the latest proven Western technology for recycling.

The plants will utilize a vent recovery system that will recycle and convert silicon tetrachloride (STC) back to Trichlorosilane (TCS) for consumption in the production process. Once completed, LDK's plants will have a fully closed loop system where the majority of the potential waste (STC) will be recycled.

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