omniture

Fuwei Films Announces Unaudited Financial Results for First Quarter of 2009

2009-05-13 04:42 1672

Teleconference to be Held on Wednesday, May 13, 2009 at 8:00 a.m. EDT

BEIJING, May 13 /PRNewswire-Asia/ -- Fuwei Films (Holdings) Co. Ltd. (Nasdaq: FFHL) ("Fuwei" or the "Company"), a manufacturer and distributor of high-quality BOPET plastic films in China, today announced the unaudited financial results for the first quarter of 2009 ended March 31, 2009.

Highlights

-- Revenues were RMB 74.5 million (US$10.9 million), compared with

RMB 104.0 million in the same period of 2008;

-- Net loss was RMB 14.1 million (US$2.1 million), compared with a net

income of RMB 7.9 million in the same period of 2008;

-- Diluted net loss per share was RMB 1.08 (US$0.16), compared with

diluted EPS of RMB 0.61 in the same period of 2008;

-- Net cash provided by operations was RMB 9.2 million (US$1.3 million),

compared with RMB 4.2 million in the same period of 2008;

-- Cash on hand at March 31, 2009 was RMB 22.8 million (US$3.3 million),

compared with RMB 15.8 million at year ended December 31, 2008

"We are seeing signs of economic recovery in China, and we believe the market demand for our BOPET film products to have stabilized," said Mr. Xiaoan He, Chairman and CEO of Fuwei. "Fuwei in the second half of last year was adversely affected by a significant drop in demand for our specialty films, as well as the continuingly high price of raw materials. To counter the negative trends, we took immediate actions to control costs in the first quarter, such as closing our sales office in Japan, shutting our leased production line, reducing the number of employees, and so on. At the same time, we were pleased to see the Chinese government also taking decisive actions to rejuvenate exporters, such as bringing the export tax rebates for BOPET films from 5% back to 11%, which could help us our products compete better in foreign markets. We believe that our internal efforts as well as the general improvement in the global economy will help us improve business in the rest of this year."

First Quarter 2009 Results

Revenues were RMB 74.5 million (US$10.9 million), compared with RMB 104.0 million in the same period of 2008.

Sales of specialty films in the first quarter of 2009 were RMB 4.1 million (US$0.6 million), or 5.6% of total revenues, compared with RMB 33.8 million in the same period of 2008.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended March 31, 2009 and March 31, 2008 (amounts in thousands):

Three-month period ended

March 31,2009 March 31,2008

RMB US$ % of Total RMB % of Total

Printing film 7,128 1,041 9.6% 19,230 18.5%

Stamping film 31,188 4,556 41.9% 21,211 20.4%

Metallization film 12,273 1,793 16.5% 2,901 2.8%

Base film for other

applications 19,780 2,889 26.5% 26,927 25.9%

Specialty film 4,148 606 5.6% 33,765 32.5%

Total 74,517 10,885 100.0% 104,034 100.0%

Sales from overseas were RMB 10.5 million (US$1.5 million), or 14.1% of total revenues, compared with RMB 24.1 million in the same period of 2008.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended March 31, 2009 and March 31, 2008 (amounts in thousands):

Three-month period ended

March 31,2009 March 31,2008

RMB US$ % of Total RMB % of Total

Sales in China 64,034 9,354 85.9% 79,899 76.8%

Sales in other

countries 10,483 1,531 14.1% 24,135 23.2%

Total 74,517 10,885 100.0% 104,034 100.0%

Gross profit for the first quarter of 2009 was RMB 73,000 (US$11,000), compared with RMB 21.6 million in the same period of 2008. Gross margin was 0.1%, compared with 20.8% in the same period of 2008. The decrease in gross profit and gross margin was primarily due to the decrease of the sales price of our products as well as the sharp decline of the sales of specialty films.

SG&A was RMB 16.4 million (US$2.4 million), compared with RMB 11.2 million in the same period of 2008. The increase was mainly due to the increased delivery fees, and the increased allowances for accounts receivables and other receivables.

Operating loss was RMB 16.3 million (US$2.4 million), compared with operating income of RMB 10.5 million in the same of 2008.

Tax benefit was RMB 2.5 million (US$0.3 million), compared with tax expense of RMB 1 million in the same period of 2008.

Net loss was RMB 14.1million (US$2.1 million), compared with net income of RMB 7.9 million in the same period of 2008. Diluted net loss per share was RMB 1.08 (US$0.16), compared with diluted EPS of RMB 0.61 in the first quarter of 2008.

Net cash provided by operating activities was RMB 9.2 million (US$1.3million), compared with RMB 4.2 million in the same period of 2008.

Cash on hand as of March 31, 2009 was RMB 22.8 million (US$3.3 million), compared with RMB 15.8 million as of December 31, 2008.

Total shareholders' equity was RMB 516.5 million (US$75.4 million) as of March 31, 2009, compared with RMB 530.6 million as of December 31, 2008.

As of March 31, 2009, the Company had 13,062,500 basic and diluted total common shares outstanding.

Recent Events

On April 15, 2009, Fuwei announced the dismissal of Hampden Kent Group LLC ("HKG")'s claims against the Company filed by the American Arbitration Association ("AAA")'s International Centre for Dispute Resolution (the" ICDR"), without prejudice to HKG's right to re-file these claims. In December 2007, HKG filed a demand for arbitration with the ICDR, seeking a penalty fee against the Company in the amount of $3.8 million, relating to services allegedly performed by HKG in attempting to provide financing to the Company pursuant to an August 19, 2006 agreement between the parties. Pursuant to the agreement, any dispute between the parties was to be resolved by binding arbitration in accordance with the AAA's Commercial Arbitration Rules.

On April 7, 2009, the Company announced that Mr. Bin Sun, who was then the President of Fuwei Films (Shandong) Co., Ltd. ("Fuwei Shandong"), the Company's wholly owned operating subsidiary, would not remain with the Company after his contract expired at the end of April 2009. Mr. Sun had been Fuwei Shandong's President since January 2007. The Company's Chairman and CEO, Mr. Xiaoan He, assumed Mr. Sun's general managerial position at Fuwei Shandong, effective May 1, 2009. Mr. He remains the Company's Chairman and CEO. The Company also announced that the Board of Directors of the Company accepted the resignation of Mr. Bo Xu, the Secretary of the Board of Directors, Mr. Bo Xu, on March 31, 2009. The Company's Senior Vice President, Mr. Zhibing Qian, assumed Mr. Xu's role, effective April 1, 2009.

Conference Call Information

The Company will host a teleconference on Wednesday, May 13, 2009, at 8:00 a.m. EDT / 8:00 p.m. Beijing time to discuss the quarterly results. To participate in the call, please dial +1-877-407-9205 in North America, or

+1-201-689-8054 internationally, approximately 10 minutes prior to the scheduled start time. The call is being simultaneously Webcast and can be accessed on Fuwei's Website at http://www.fuweiholdings.com . Please visit the Website at least 15 minutes prior to the scheduled start time to register for the Web cast and download any necessary audio software.

A replay of the call can also be accessed via telephone by calling

+1-877-660-6853 in North America, or +1-201-612-7415 internationally, and entering the following access codes: Account #: 286 and Conference ID: 323204. A Web cast replay of the call will also be made and can be accessed on the Fuwei's Website at http://www.fuweiholdings.com .

About Fuwei Films

Fuwei Films conducts its business through its wholly owned subsidiary, Fuwei Shandong. Fuwei Shandong develops, manufactures and distributes

high-quality plastic films using the biaxial oriented stretch technique, otherwise known as BOPET film (biaxially oriented polyethylene terephthalate). Fuwei's BOPET film is widely used to package food, medicine, cosmetics, tobacco, and alcohol, as well as in the imaging, electronics, and magnetic products industries.

Safe Harbor

This press release contains information that constitutes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to risks. Risk factors that could contribute to such differences include those matters more fully disclosed in the Company's reports filed with the U.S. Securities and Exchange Commission which, among other things, include both the short and long-term effects of the global financial crisis on the Company and the BOPET film industry; competition in the BOPET film industry; growth of, and risks inherent in, the BOPET film industry in China; uncertainty as to future profitability and our ability to obtain adequate financing for our planned capital expenditure requirements; uncertainty as to our ability to continuously develop new BOPET film products and keep up with changes in BOPET film technology; risks associated with possible defects and errors in our products; uncertainty as to our ability to protect and enforce our intellectual property rights; uncertainty as to our ability to attract and retain qualified executives and personnel; and uncertainty in acquiring raw materials on time and on acceptable terms, particularly in view of the volatility in the prices of petroleum products in recent years. The

forward-looking information provided herein represents the Company's estimates as of the date of the press release, and subsequent events and developments may cause the Company's estimates to change. The Company specifically disclaims any obligation to update the forward-looking information in the future. Therefore, this forward-looking information should not be relied upon as representing the Company's estimates of its future financial performance as of any date subsequent to the date of this press release. Actual results of our operations may differ materially from information contained in the forward-looking statements as a result of the risk factors.

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2009 AND DECEMBER 31, 2008

(amounts in thousands except share and per share value)

As of Mar. 31, As of Dec.

2009 (Unaudited) 31, 2008

RMB US$ RMB

ASSETS

Current assets

Cash and cash equivalents 22,764 3,325 15,823

Restricted cash 7,764 1,134 10,411

Accounts receivable, net 27,628 4,036 38,579

Inventory 33,222 4,853 30,589

Advance to suppliers 2,813 411 6,846

Prepayments and other receivables 1,528 223 1,857

Deferred tax assets - current 1,379 201 457

Total current assets 97,098 14,183 104,562

Plant and equipment, net 252,377 36,867 259,235

Construction in progress 321,613 46,981 319,408

Lease prepayments, net 22,376 3,269 22,507

Advanced to suppliers - Long Term 4,613 675 4,308

Intangible assets -- -- --

Goodwill 10,276 1,501 10,276

Deposit 18,808 2,747 17,613

Deferred tax assets - non-current 3,566 521 1,995

Total assets 730,727 106,744 739,904

Current liabilities

Short-term borrowings 152,500 22,277 164,764

Accounts payables 23,257 3,397 23,301

Advance from customers 17,866 2,610 8,781

Accrued expenses and other payables 5,652 826 7,460

Deferred tax liabilities -- -- --

Total current liabilities 199,275 29,110 204,305

Long-term loan 15,000 2,191 5,000

Total liabilities 214,275 31,301 209,305

Shareholders’ equity

Registered capital (US$0.129752 par

value; 20,000,000 shares authorized;

13,062,500 shares issued and

outstanding) 13,323 1,946 13,323

Additional paid-in capital 311,907 45,563 311,907

Statutory reserve 29,338 4,286 29,338

Retained earnings 160,835 23,495 174,970

Cumulative translation adjustment 1,049 153 1,061

Total shareholders’ equity 516,452 75,443 530,599

Total liabilities and shareholders’

equity 730,727 106,744 739,904

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2009 AND 2008

(amounts in thousands except share and per share value)

(UNAUDITED)

Three-Month Period ended Mar. 31

2009 2008

RMB US$ RMB

Revenue 74,517 10,885 104,034

Cost of revenue (74,444) (10,874) (82,409)

Gross profit 73 11 21,625

Operating expenses

Selling expenses (4,897) (715) (3,438)

Administrative expenses (11,462) (1,675) (7,724)

Total operating expenses (16,359) (2,390) (11,163)

Operating income/(loss) (16,286) (2,379) 10,463

Other income/(expense)

- Interest income 101 15 16

- Interest expense -- -- (3,790)

- Other, net (445) (65) 2,241

Total other income/(expense) (344) (50) (1,533)

Income/(loss) before income tax

expense (16,630) (2,429) 8,930

Income tax benefit/(expense) 2,494 364 (993)

Net income/(loss) (14,136) (2,065) 7,937

Other comprehensive income

-Foreign currency translation

adjustments (11) (2) 620

Comprehensive income (14,147) (2,083) 8,557

Earnings per share, basic and diluted (1.08) (0.16) 0.61

Weighted average number ordinary

shares, basic and diluted 13,062,500 13,062,500 13,062,500

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2009 AND 2008

(amounts in thousands except share and per share value)

(UNAUDITED)

Period Ended Mar. 31, Period Ended

2009 Mar. 31, 2008

RMB US$ RMB

CASH FLOWS FROM OPERATING ACTIVITIES

Net income/(loss) (14,136) (2,065) 7,937

Adjustments to reconcile net income

to net cash provided by operating

activities

- Depreciation of property, plant and

equipment 7,284 1,064 5,909

- Amortization of intangible assets 113 17 149

- Deferred income taxes (2,493) (364) --

- Bad debt expense/(recovery) 6,148 898 73

Changes in operating assets and

liabilities, net of

Share capital contribution - rental

and interest paid by shareholders -- -- 2,756

- Accounts receivable 9,534 1,393 856

- Inventories (2,632) (385) (8,020)

- Advance to suppliers 3,728 545 --

- Prepaid expenses and other current

assets (5,579) (815) (18,859)

- Accounts payable (44) (6) 1,695

- Accrued expenses and other payables (361) (53) 11,667

- Advance from customers 9,086 1,327 --

- Tax payable (1,445) (211) --

Net cash provided by operating

activities 9,203 1,344 4,162

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property, plant and

equipment (427) (62) (946)

Restricted cash related to trade

finance 2,647 387 33,464

Addition to construction in progress (2,205) (322) (25,673)

Deposit for purchase -- -- (21,000)

Net cash provided by/(used in)

investing activities 15 2 (19,155)

CASH FLOW FROM FINANCING ACTIVITIES

Net proceeds from issuance of share

capital

Principal payments of short-term bank

loans (12,264) (1,792) (12,869)

Proceeds from short-term bank loans 10,000 1,461 11,139

Net cash (used in)/provided by

financing activities (2,264) (331) (1,730)

Effect of foreign exchange rate

changes (13) (2) (2,770)

Net increase/(decrease) in cash and

cash equivalent 6,941 1,017 (19,493)

Cash and cash equivalent

At beginning of period/year 15,823 2,308 30,909

At end of period/year 22,764 3,325 11,416

Supplemental disclosure of cash flow

information

-Interest paid 1,777 260 2,966

-Income taxes paid -- -- 802

Source: Fuwei Films (Holdings) Co. Ltd.
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