All currency figures stated in this report are in US Dollars unless stated otherwise. The financial statement amounts in this report are determined in accordance with US GAAP. SHANGHAI, Aug. 11 /PRNewswire-Asia/ -- Semiconductor Manufacturing International Corporation (NYSE: SMI; SEHK: 981) ("SMIC" or the "Company"), one of the leading semiconductor foundries in the world, today announced its consolidated results of operations for the three months ended June 30, 2010. Second Quarter 2010 Highlights: -- Revenue up by 8.4% to $381.1 million in 2Q10 from $351.7 million in 1Q10 and up by 42.5% compared to 2Q09. -- Gross margins improved to 15.6% in 2Q10 compared to 14.6% in 1Q10 primarily due to an increase in utilization. -- Net cash flow from operations has increased to $167.5 million in 2Q10 from $153.3 million in 1Q10. -- Gain attributable to holders of ordinary shares was US$96.0 million in 2Q10, compared to loss of US$181.9 million in 1Q10, driven by a change in the fair value of US$105.9 million gain of commitment to grant shares and warrants. -- Fully diluted EPS was $0.20 per ADS. Third Quarter 2010 Guidance: The following statements are forward looking statements which are based on current expectation and which involve risks and uncertainties, some of which are set forth under "Safe Harbor Statements" below. -- Revenue is expected to range from 4% to 6% increase. -- Gross margin is expected to range from 20% to 22%. -- Operating expenses excluding foreign exchange differences are expected to range from $80 million to $84 million. -- 2010 annual capital expenditures expected to range from $700 million to $750 million. Commenting on the quarterly results, Dr. David NK Wang, President and Chief Executive Officer of SMIC remarked, "We've witnessed overall improvement this quarter, and believe we are on course to profitability. With the world's highest GDP growth, China's market is playing a progressively greater part in the overall demand for IC's and playing an increasingly key role in SMIC's future success. Driven by China's maturing fabless companies, our China revenue has grown 27.4% quarter-over-quarter. As Chinese fabless companies continue to grow stronger and stronger, SMIC has positioned itself to become the preferred foundry. North American customers continue to contribute more than half of our revenue, and we are working to build up the relationships through improved operations, technology and service. From a technology stand-point, our 65-nanometer process is solid and ramping up, with shipments more than doubling quarter-over-quarter and likely to double again in the coming quarter. Our 45/40-nanometer development is well underway, and the technology will be ready by the end of 2010. We remain aggressive in turning this company around, determined to sustain our competitiveness by meeting our customers' needs with excellence while balancing increasing scale with sustainable profitability." Conference Call / Webcast Announcement Date: Wednesday, August 11, 2010 Time: 8:30 a.m. Shanghai time Dial-in numbers and pass code: US 1-617-597-5342 (Pass code: SMIC) HK 852-3002-1672 (Pass code: SMIC) A live webcast of the 2010 second quarter announcement will be available at http://www.smics.com under the "Investor Relations" section, or at URL: http://phx.corporate-ir.net/playerlink.zhtml?c=176474&;s=wm&e=3254288 . An archived version of the webcast, along with an electronic copy of this news release will be available on the SMIC website for a period of 12 months following the webcast. About SMIC Semiconductor Manufacturing International Corporation ("SMIC"; NYSE: SMI; SEHK: 981) is one of the leading semiconductor foundries in the world and the largest and most advanced foundry in Mainland China, providing integrated circuit (IC) foundry and technology services at 0.35-micron to 45/40-nanometer. Headquartered in Shanghai, China, SMIC has a 300mm wafer fabrication facility (fab) and three 200mm wafer fabs in its Shanghai mega-fab, two 300mm wafer fabs in its Beijing mega-fab, a 200mm wafer fab in Tianjin, a 200mm fab under construction in Shenzhen, and an in-house assembly and testing facility in Chengdu. SMIC also has customer service and marketing offices in the U.S., Europe, and Japan, and a representative office in Hong Kong. In addition, SMIC manages and operates a 200mm wafer fab in Chengdu owned by Cension Semiconductor Manufacturing Corporation, and a 300mm wafer fab in Wuhan owned by Wuhan Xinxin Semiconductor Manufacturing Corporation. For more information, please visit: http://www.smics.com . Safe Harbor Statements (Under the Private Securities Litigation Reform Act of 1995) This press release contains, in addition to historical information, "forward-looking statements" within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements, including statements concerning our belief that we are on course to profitability, and statements under "Third Quarter 2010 Guidance" are based on SMIC's current assumptions, expectations and projections about future events. SMIC uses words like "believe," "anticipate," "intend," "estimate," "expect," "project" and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements are necessarily estimates reflecting the best judgment of SMIC's senior management and involve significant risks, both known and unknown, uncertainties and other factors that may cause SMIC's actual performance, financial condition or results of operations to be materially different from those suggested by the forward-looking statements including, among others, risks associated with cyclicality and market conditions in the semiconductor industry, the downturn in the global economy and the impact on China's economy, intense competition, timely wafer acceptance by SMIC's customers, timely introduction of new technologies, SMIC's ability to capture growth opportunities in China, supply and demand for semiconductor foundry services, industry overcapacity, shortages in equipment, components and raw materials, orders or judgments from pending litigation, availability of manufacturing capacity and financial stability in end markets. Investors should consider the information contained in SMIC's filings with the U.S. Securities and Exchange Commission (SEC), including its annual report on 20-F filed with the SEC on June 29, 2010, especially in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections, and such other documents that SMIC may file with the SEC or The Hong Kong Stock Exchange Limited ("SEHK") from time to time, including on Form 6-K. Other unknown or unpredictable factors also could have material adverse effects on SMIC's future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. Except as required by law, SMIC undertakes no obligation and does not intend to update any forward-looking statement, whether as a result of new information, future events or otherwise. Summary of Second Quarter 2010 Operating Results Amounts in US$ thousands, except for EPS and operating data 2Q10 1Q10 QoQ 2Q09 YoY Revenue 381,142 351,724 8.4 % 267,422 42.5 % Cost of sales 321,755 300,270 7.2 % 280,319 14.8 % Gross profit (loss) 59,387 51,454 15.4 % (12,897) -- Operating expenses 71,507 79,496 -10.0 % 81,606 -12.4 % Loss from operations (12,120) (28,042) -56.8 % (94,503) -87.2 % Other income (expenses), net 101,812 (155,567) -- (5,802) -- Income tax credit 6,466 2,374 172.4 % 2,880 124.5 % Net income (loss) after income taxes 96,158 (181,235) -- (97,425) -- Income (Loss) from equity investment 141 (455) -- (482) -- Net income (loss) 96,299 (181,690) -- (97,907) -- Accretion of interest to noncontrolling interest (262) (259) 1.2 % (262) 0.0 % Gain (Loss) attributable to Semiconductor Manufacturing International Corporation 96,037 (181,949) -- (98,169) -- Gross margin 15.6 % 14.6 % -4.8 % Operating margin -3.2 % -8.0 % -35.3 % Net income (loss) per ordinary share (basic)(1) 0.00 (0.01) (0.00) Net income (loss) per ADS (basic) 0.21 (0.41) (0.22) Net income (loss) per ordinary share (diluted)(1) 0.00 (0.01) (0.00) Net income (loss) per ADS (diluted) 0.20 (0.41) (0.22) Wafers shipped (in 8" wafers)(2) 496,766 455,010 9.2 % 341,261 45.6 % Capacity utilization 94.3 % 92.1 % 75.4 % Note: (1) Based on weighted average ordinary shares of 22,480 million (basic) and 24,534 million (diluted) in 2Q10, 22,397 million (basic) and 22,397 million (diluted) in 1Q10 and 22,352 million (basic) and 22,352 million (diluted) in 2Q09 (2) Including copper interconnects -- Revenue increased to $381.1 million in 2Q10, up 8.4% QoQ from $351.7 million in 1Q10 due to a 9.2% increase in wafer shipments resulting largely from a change in the business model with our managed fabs, Xinxin in Wuhan and Cension in Chengdu. Under the revised business model, customers are to sign foundry service agreements directly with SMIC, while the orders are outsourced to Xinxin and Cension. This model results in a change in revenue booking methodology from a commission model to a buy-and-resell model. Revenue from Xinxin and Cension totalled $17.7 million, which was 4.6% of our total revenue. -- Cost of sales increased to $321.8 million in 2Q10, up 7.2% QoQ from $300.3 million in 1Q10. -- Gross profit of $59.4 million in 2Q10, compared to a gross profit of $51.5 million in 1Q10 and gross loss of $12.9 million in 2Q09. -- Gross margins improved to 15.6% in 2Q10 from 14.6% in 1Q10 primarily due to an increase in utilization. -- Total operating expenses decreased to $71.5 million in 2Q10 from $79.5 million in 1Q10, a decrease of 10.0% QoQ driven by a decrease in G&A related expenses and an impairment loss of long-lived assets in 1Q10. -- R&D expenses decreased to $43.3 million in 2Q10, down 0.6% QoQ from $43.6 million in 1Q10. -- G&A expenses decreased to $15.0 million in 2Q10 from $17.6 million in 1Q10. -- Selling & marketing expenses increased to $7.0 million in 2Q10, up 16.1% QoQ from $6.0 million in 1Q10. Analysis of Revenues Sales Analysis By Application 2Q10 1Q10 2Q09 Computer 3.4 % 4.3 % 4.3 % Communications 47.1 % 51.5 % 53.5 % Consumer 42.2 % 37.0 % 36.1 % Others 7.3 % 7.2 % 6.1 % By Service Type 2Q10 1Q10 2Q09 Logic(1) 90.6 % 90.3 % 90.9 % Memory 1.7 % 2.7 % 2.7 % Mask Making, testing, others 7.7 % 7.0 % 6.4 % By Customer Type 2Q10 1Q10 2Q09 Fabless semiconductor companies 66.1 % 66.4 % 65.1 % Integrated device manufacturers (IDM) 16.1 % 17.0 % 18.2 % System companies and others 17.8 % 16.6 % 16.7 % By Geography 2Q10 1Q10 2Q09 North America 52.2 % 58.9 % 61.4 % China(2) 28.7 % 24.4 % 19.0 % Eurasia(3) 19.1 % 16.7 % 19.6 % Wafer Revenue Analysis By Technology (logic, memory & copper 2Q10 1Q10 2Q09 interconnect only) 0.09um and below 23.6 % 20.3 % 16.7 % 0.13um 32.2 % 35.5 % 29.7 % 0.15um 1.8 % 1.5 % 1.5 % 0.18um 26.8 % 24.2 % 29.8 % 0.25um 0.5 % 0.3 % 0.5 % 0.35um 15.1 % 18.2 % 21.8 % Note: (1) Including 0.13mm copper interconnects (2) Including Hong Kong (3) Excluding China -- Advanced technology shipment comprising 0.13m and below made up 55.8% of overall wafer revenue in 2Q10. Capacity* Fab / (Wafer Size) 2Q10 1Q10 Shanghai Mega Fab (8") 84,000 84,000 Beijing Mega Fab (12") 46,125 46,800 Tianjin Fab (8") 33,000 34,300 Total monthly wafer fabrication capacity 163,125 165,100 Note: * Wafers per month at the end of the period in 8" equivalent wafers Shipment and Utilization 8" equivalent wafers 2Q10 1Q10 2Q09 Wafer shipments including copper interconnects 496,766 455,010 341,261 Utilization rate(1) 94.3% 92.1% 75.4% Note: (1) Capacity utilization based on total wafer out divided by estimated capacity -- Wafer shipments increased 9.2% QoQ to 496,766 units of 8-inch equivalent wafers in 2Q10 from 455,010 units of 8-inch equivalent wafers in 1Q10, and up 45.6% YoY from 341,261 8-inch equivalent wafers in 2Q09. Detailed Financial Analysis Gross Profit Analysis Amounts in US$ thousands 2Q10 1Q10 QoQ 2Q09 YoY Cost of sales 321,755 300,270 7.2% 280,319 14.8% Depreciation 131,188 143,919 (8.8%) 146,763 (10.6%) Other manufacturing costs 189,620 155,119 22.2% 132,541 43.1% Share-based compensation 947 1,232 (23.1%) 1,015 (6.7%) Gross profit (loss) 59,387 51,454 15.4% (12,897) -- Gross margin 15.6% 14.6% (4.8%) -- Cost of sales increased to $321.8 million in 2Q10, up 7.2% QoQ from $300.3 million in 1Q10 primarily due to increase in wafer shipments. -- Gross profit of $59.4 million in 2Q10, compared to a gross profit of $51.5 million in 1Q10 and gross loss of $12.9 million in 2Q09. -- Gross margins improved to 15.6% in 2Q10 from 14.6% in 1Q10 primarily due to an increase in utilization. Operating Expense Analysis Amounts in US$ thousands 2Q10 1Q10 QoQ 2Q09 YoY Total operating expenses 71,507 79,496 (10.0%) 81,606 (12.4%) Research and development 43,330 43,592 (0.6%) 48,450 (10.6%) General and administrative 15,017 17,601 (14.7%) 17,196 (12.7%) Selling and marketing 7,019 6,045 16.1% 6,905 1.7% Amortization of intangible assets 6,686 6,886 (2.9%) 8,858 (24.5%) (Gain) Loss from disposal of properties (545) 233 -- 197 -- Impairment loss of long-lived assets -- 5,138 -- -- -- -- Total operating expenses decreased to $71.5 million in 2Q10 from $79.5 million in 1Q10, a decrease of 10.0% QoQ driven by a decrease in G&A related expenses and an impairment loss of long-lived assets in 1Q10. -- R&D expenses decreased to $43.3 million in 2Q10, down 0.6% QoQ from $43.6 million in 1Q10. -- G&A expenses decreased to $15.0 million in 2Q10 from $17.6 million in 1Q10. -- Selling & marketing expenses increased to $7.0 million in 2Q10, up 16.1% QoQ from $6.0 million in 1Q10. Other Income (Expenses) Amounts in US$ thousands 2Q10 1Q10 QoQ 2Q09 YoY Other income (expenses) 101,812 (155,567) -- (5,802) -- Interest income 879 878 0.1% 635 38.4% Interest expense (6,293) (7,784) (19.2%) (8,386) (25.0%) Change in the fair value of commitment to issue shares and warrants 105,952 (146,561) -- -- -- Foreign currency exchange (loss) gain (3,164) (3,241) (2.4%) 219 -- Other, net 4,438 1,141 289.0% 1,730 156.5% -- Combined with the foreign exchange difference arising from operating activities, the Company recorded an overall foreign exchange gain of $2.2 million in 2Q10 as compared to a foreign exchange loss of $1.7 million in 1Q10. -- Other income of $101.8 million in 2Q10 was mainly due to a change in the fair value of the commitment to grant shares and warrants, compared to an expense of $155.6 million in 1Q10. Depreciation and Amortization -- Total depreciation and amortization in 2Q10 was $164.9 million compared to $174.7 million in 1Q10. Liquidity Amounts in US$ thousands 2Q10 1Q10 Cash and cash equivalents 506,547 523,208 Restricted cash 37,099 29,286 Accounts receivable 208,856 204,983 Inventories 203,901 194,604 Others 53,410 53,687 Total current assets 1,009,813 1,005,768 Accounts payable 254,967 237,075 Short-term borrowings 357,387 333,795 Current portion of long-term debt 275,294 204,442 Others 328,668 442,538 Total current liabilities 1,216,316 1,217,850 Cash Ratio 0.4x 0.4x Quick Ratio 0.6x 0.6x Current Ratio 0.8x 0.8x Capital Structure Amounts in US$ thousands 2Q10 1Q10 Cash and cash equivalents 506,547 523,208 Restricted cash 37,099 29,286 Current portion of promissory notes 54,164 59,163 Non-current portion of promissory notes 69,921 83,913 Short-term borrowings 357,387 333,795 Current portion of long-term debt 275,294 204,442 Long-term debt 365,027 515,876 Total debt 997,708 1,054,113 Total equity 1,717,011 1,618,038 Total debt to equity ratio 58.1% 65.1% Cash Flow Amounts in US$ thousands 2Q10 1Q10 Net cash from operating activities 167,495 153,316 Net cash from investing activities (107,885) (64,546) Net cash from financing activities (75,757) (8,763) Effect of exchange rate changes (514) (262) Net change in cash (16,661) 79,745 Capex Summary -- Capital expenditures for 2Q10 were $92 million. Recent Highlights and Announcements -- SMIC 65-nm Technology Successfully Moves to Volume Production (2010-08-03) -- Notification of Board Meeting (2010-07-29) -- SMIC and Virage Logic Extend Partnership to 40nm LL Process Technology (2010-07-22) -- Overseas Regulatory Announcement (2010-07-21) -- Completion of Placing of New Shares under General Mandate (2010-07-15) -- Placing of New Shares under General Mandate (1) Potential Subscription of New Shares under Special Mandate by Datang Telecom Technology & Industry Holdings Co., Ltd. And (2) Release of Datang from Lock-up Restriction; Non-exempt Connected Transactions; Pre-emptive Right of TSMC (2010-07-08) -- Potential Non-exempt Connected Transactions (1) Potential Exercise of Pre-emptive Right and Further Subscription by Datang and (2) Release of Datang from Lock-up Restriction; Pre-emptive Right of TSMC (2010-07-07) -- Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (2010-06-29) -- Annual General Meeting held on June 3rd, 2010 Poll Results (2010-06-03) -- Grant of Options (2010-05-25) -- SMIC and Virage Logic Expand Partnership to Offer Virage Logic'S IP on SMIC'S 65nm II Process (2010-05-24) -- Synopsys Collaborates with SMIC to Deliver USB Logo-Certified DesignWare USB 2.0 nanoPHY in SMIC's 65 Nanometer LL Process Technology (2010-05-14) -- Closure of Register of Members (2010-05-12) -- SMIC Reports Results for The Three Months Ended March 31, 2010 (2010-05-11) -- 2009 Annual Report (2010-04-29) -- Circular - (1) Notice of AGM (2) Re-Election of Directors (3) Proposed General Mandates to Issue and Repurchase Shares (4) Proposed Special Mandate for Increasing The Limit on The Grant Of Equity Awards under The 2004 Equity Incentive Plan (5) Proposed Amendments to The 2004 Equity Incentive Plan (2010-04-29) -- Notification Letter and Change Request Form (2010-04-29) -- Notice of Annual General Meeting (2010-04-29) -- Notification of Board Meeting (2010-04-28) -- Announcement of 2009 Annual Results (2010-04-26) -- SMIC Issues Updates on First Quarter 2010 Financial Results and 2009 Annual Results (2010-04-19) -- Notification of Approval of the publication of 2009 Annual Results by the Board (2010-04-13) Please visit SMIC's website at http://www.smics.com/website/enVersion/Press_Center/newsRelease.ftl for further details regarding the recent announcements. Semiconductor Manufacturing International Corporation CONSOLIDATED BALANCE SHEETS (In US dollars, except share data) As of June 30, 2010 March 31, 2010 (Unaudited) (Unaudited) ASSETS Current assets: Cash and cash equivalents 506,547,279 523,207,927 Restricted cash 37,098,779 29,286,422 Accounts receivable, net of allowances of $77,464,910 and $96,111,136 at June 30 and March 31, 2010, respectively 208,856,202 204,982,678 Inventories 203,900,692 194,604,324 Prepaid expense and other current assets 38,703,151 32,269,099 Assets held for sale 9,167,973 13,244,958 Current portion of deferred tax assets 5,538,552 8,173,216 Total current assets 1,009,812,628 1,005,768,624 Prepaid land use rights 79,537,003 77,550,315 Plant and equipment, net 2,053,713,421 2,129,575,807 Acquired intangible assets, net 181,805,429 177,109,741 Equity investment 9,244,259 9,392,886 Other long-term prepayments 143,033 214,588 Deferred tax assets 109,849,717 98,651,547 TOTAL ASSETS 3,444,105,490 3,498,263,508 LIABILITIES AND EQUITY Current liabilities: Accounts payable 254,967,307 237,075,087 Accrued expenses and other current liabilities 113,563,072 116,494,349 Short-term borrowings 357,387,090 333,794,887 Current portion of promissory notes 54,164,481 59,163,022 Current portion of long-term debt 275,293,978 204,442,433 Commitment to issue shares and warrants relating to litigation settlement 160,846,576 266,798,990 Income tax payable 93,799 81,310 Total current liabilities 1,216,316,303 1,217,850,078 Long-term liabilities: Non-current portion of promissory notes 69,920,879 83,912,660 Long-term debt 365,027,154 515,875,782 Long-term payables relating to license agreements 2,418,587 4,837,526 Other long-term liabilities 36,952,392 21,647,675 Deferred tax liabilities 1,096,532 1,001,293 Total long-term liabilities 475,415,544 627,274,936 Total liabilities 1,691,731,847 1,845,125,014 Noncontrolling interest 35,362,192 35,100,411 Equity: Ordinary shares, $0.0004 par value, 50,000,000,000 shares authorized, 22,480,259,472 and 22,420,895,812 shares issued and outstanding at June 30 and March 31, 2010, respectively 8,992,104 8,968,359 Additional paid-in capital 3,507,140,466 3,503,714,048 Accumulated other comprehensive loss (1,161,906) (648,316) Accumulated deficit (1,797,959,213) (1,893,996,008) Total equity 1,717,011,451 1,618,038,083 TOTAL LIABILITIES, NONCONTROLLING INTEREST AND EQUITY 3,444,105,490 3,498,263,508 Semiconductor Manufacturing International Corporation CONSOLIDATED STATEMENT OF INCOME (In US dollars, except share data) For the three months ended June 30, 2010 March 31, 2010 (Unaudited) (Unaudited) Sales 381,142,152 351,724,012 Cost of sales 321,755,444 300,270,177 Gross profit 59,386,708 51,453,835 Operating expenses: Research and development 43,329,679 43,592,355 General and administrative 15,017,028 17,601,140 Selling and marketing 7,019,386 6,045,489 Amortization of acquired intangible assets 6,685,822 6,885,746 Impairment loss of long-lived assets -- 5,137,925 (Gain) loss from sale of equipment and other fixed assets (545,040) 233,053 Total operating expenses, net 71,506,875 79,495,708 Loss from operations (12,120,167) (28,041,873) Other income (expense): Interest income 879,279 877,711 Interest expense (6,293,613) (7,783,555) Change in the fair value of commitment to issue shares and warrants 105,952,415 (146,561,217) Foreign currency exchange loss (3,164,049) (3,241,001) Other, net 4,437,675 1,140,502 Total other income (expense), net 101,811,707 (155,567,560) Gain (loss) before income tax 89,691,540 (183,609,433) Income tax benefit 6,466,243 2,374,552 Gain (loss) from equity investment 140,793 (455,261) Net gain (loss) 96,298,576 (181,690,142) Accretion of interest to noncontrolling interest (261,781) (258,904) Gain (loss) attributable to Semiconductor Manufacturing International Corporation 96,036,795 (181,949,046) Net gain (loss) per share attributable to Semiconductor Manufacturing International Corporation ordinary shareholders, basic 0.00 (0.01) Net gain (loss) per share attributable to Semiconductor Manufacturing International Corporation ordinary shareholders, diluted 0.00 (0.01) Net gain (loss) per ADS attributable to Semiconductor Manufacturing International Corporation ordinary shareholders, basic 0.21 (0.41) Net gain (loss) per ADS attributable to Semiconductor Manufacturing International Corporation ordinary shareholders, diluted 0.20 (0.41) Shares used in calculating basic gain (loss) per share 22,480,222,740 22,396,835,456 Shares used in calculating diluted gain (loss) per share 24,533,730,903 22,396,835,456 Semiconductor Manufacturing International Corporation CONSOLIDATED STATEMENT OF CASH FLOWS (In US dollars) For the three months ended June 30, 2010 March 31, 2010 (Unaudited) (Unaudited) Operating activities Net gain (loss) 96,298,576 (181,690,142) Adjustments to reconcile net loss to net cash provided by operating activities: Deferred tax (8,468,268) (4,326,783) (Gain) loss from sale of equipment and other fixed assets (545,040) 233,053 Depreciation and amortization 155,371,401 164,246,614 Amortization of acquired intangible assets 6,685,823 6,885,746 Share-based compensation 2,802,616 3,583,507 Non-cash interest expense on promissory note and long-term payable relating to license agreements 1,120,440 1,129,497 (Gain) loss from equity investment (140,793) 455,261 Impairment loss of long-lived assets -- 5,137,925 Change in the fair value of commitment to issue shares and warrants (105,952,415) 146,561,217 Allowance for doubtful accounts 315,823 (33,407) Changes in operating assets and liabilities: Accounts receivable, net (4,189,347) (658,725) Inventories (9,296,368) (899,129) Prepaid expense and other current assets (6,362,497) (3,210,079) Accounts payable 19,833,793 8,714,410 Prepaid land use right (2,359,437) 222,141 Accrued expenses and other current liabilities 7,063,135 6,973,898 Income tax payable 12,489 22,737 Other long-term liabilities 15,304,717 (32,015) Net cash provided by operating activities 167,494,648 153,315,726 Investing activities: Purchase of plant and equipment (87,494,465) (73,172,437) Proceeds from government subsidy to purchase plant and equipment -- 23,884,935 Proceeds from sale of equipment 352,200 5,045,012 Proceeds received from sale of assets held for sale 4,382,259 1,286,854 Purchases of intangible assets (17,309,010) (12,663,539) Purchase of short-term investments (3,000,000) (2,668,692) Sale of short-term investments 2,997,000 2,668,692 Changes in restricted cash (7,812,357) (8,926,238) Net cash used in investing activities (107,884,373) (64,545,413) Financing activities: Proceeds from short-term borrowings 128,442,986 171,264,418 Repayment of short-term borrowings (104,850,783) (124,333,593) Proceeds from long-term debt -- 10,000,000 Repayment of long-term debt (79,997,083) (46,118,964) Repayment of promissory notes (20,000,000) (20,000,000) Proceeds from exercise of employee stock options 647,547 425,392 Net cash used in financing activities (75,757,333) (8,762,747) Effect of exchange rate changes (513,590) (262,153) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (16,660,648) 79,745,413 CASH AND CASH EQUIVALENTS, beginning of period 523,207,927 443,462,514 CASH AND CASH EQUIVALENTS, end of period 506,547,279 523,207,927 For more information, please contact: Investor Relations Phone: +86-21-3861-0000 x12804 Email: ir@smics.com