Harbin Electric (NASDAQ:HRBN)

A major factor in the Company’s liquidity and capital resource planning is its generation of operating cash flow, which is strongly dependent on the demand for our products. This is supplemented by our financing activities in the capital markets including potential debt and equity, which support major acquisitions and capital investments for business growth.

Our liquidity position remains adequate, with $98.8 million in cash and cash equivalents as of December 31, 2010, compared to $92.9 million as of December 31, 2009. Cash provided by operating activities totaled $93.2 million in 2010 compared to $62.5 million in 2009. Net proceeds from the Term Loan Facility totaled $49.6 million. Capital spending from operations for 2010 totaled approximately $57.5 million, compared to $16.5 million for 2009. The capital spending in both periods reflects primarily the investments in the construction and upgrading of our facilities and purchases of new production and testing equipment.

GeoTeam® Note: Investors should take these comments with a grain of salt, since the company has an open S-3 filing.