-- Revenues for 2009 were RMB 320.7 million (US$47.0 million), compared
with RMB 447.3 million in 2008
-- Net loss for 2009 was RMB 19.0 million (US$2.8 million), compared with
net income of RMB 18.2 million in 2008
-- Basic and diluted loss per share for 2009 was RMB 1.45 (US$0.21),
compared with basic and diluted earnings per share RMB 1.39 in 2008
-- Cash on hand at December 31, 2009 was RMB 26.8 million (US$3.9
million), compared with RMB 15.8 million as of December 31, 2008
-- Sales of specialty films in the fourth quarter of 2009 were RMB 12.2
million (US$1.8 million), or 14.5% of total revenues, compared with
RBM 10.4 million in the fourth quarter of 2008.
"2009 was a challenging year for Fuwei but we are beginning to see new orders
from our customers including orders for some of our specialty film products,
which increase our confidence in R&D. Due to the lingering effects of the downturn,
our financial results in 2009 suffered in comparison to the results in the prior
year," said Mr. Xiaoan He, Chairman and CEO of Fuwei. "In 2010, we are better
positioned now to leverage our market leadership and competitive advantages by
focusing on our R&D, expanding the export market now that the world economy appears
to be stabilizing. We expect the year 2010 to be a better year."
Fourth Quarter 2009 Results
Revenues were RMB 84.0 million (US$12.3 million), compared with RMB 98.6million
in the fourth quarter of 2008.
Sales of specialty films in the fourth quarter of 2009 were RMB 12.2 million
(US$1.8 million), or 14.5% of total revenues, compared with RMB 10.4 million
in the fourth quarter of 2008.
The following is a breakdown of commodity and specialty film sales for the
three-month periods ended December 31, 2009 and December 31, 2008 (amounts in
thousands):
Three months period ended
------------------------------------------------
December 31, 2009 December 31, 2008
----------------- ------------------
RMB US$ % of Total RMB % of Total
Printing film 8,307 1,217 9.9% 8,560 8.7%
Stamping film 52,493 7,689 62.5% 51,655 52.4%
Metallization film 6,629 971 7.9% 9,232 9.4%
Specialty film 12,187 1,785 14.5% 10,368 10.5%
Base film for other
applications 4,424 648 5.3% 18,811 19.1%
Total 84,040 12,310 100% 98,626 100%
Sales from overseas were RMB11.1million (US$1.6 million), or 13.4% of total
revenues, compared with RMB 9.8 million in the fourth quarter of 2008.
The following is a breakdown of domestic versus overseas sales for the three-month
periods ended December 31, 2009 and December 31, 2008 (amounts in thousands):
Three-month period ended
------------------------------------------------
December 31, 2009 December 31, 2008
----------------- -------------------
RMB US$ % of Total RMB % of Total
Sales in China 71,983 10,544 88.6% 88,848 90.1%
Sales in other countries 11,150 1,633 13.4% 9,778 9.9%
--------- -------- --------- -------- ---------
Total 83,133 12,177 100% 98,626 100%
Gross profit for the fourth quarter of 2009 was RMB 10.4 million (US$1.5 million),
compared with RMB 12.2 million in the fourth quarter of 2008. Gross margin was
12.4%, the same as 2008. The decrease in gross profit was primarily due to the
decline in sales price.
Selling, general and administrative expense (SG&A) was RMB 10.4 million (US$1.5
million), compared with RMB 17.2 million in the fourth quarter of 2008. The
decrease was mainly a result of decreases of professional service fees related
to being a public company and decreased allowances for doubtful account receivable
and other receivables.
Operating loss was RMB 8000 (US$1200), compared with operating loss of RMB 5.0
million in the fourth quarter of 2008.
Net income was RMB 0.5 million (US$0.08 million), compared with net loss of RMB
6.5 million in the fourth quarter of 2008. Basic and diluted EPS was RMB 0.04
(US$0.01) in the fourth quarter 2009, compared with basic and diluted net loss
per share of RMB 0.50 in the fourth quarter of 2008.
2009 Full Year Results
During the fiscal year ended December 31, 2009, our revenues were RMB 320.7 million
(US$47.0 million), which is a decrease of RMB 126.5 million or 28.3%, as compared
to the same period for 2008. The decrease in sales is mainly due to the decrease
of average unit sales price and the closing of the leased production line.
In 2009, sales of special films were RMB 34.0 million ?US$5.0 million? and 10.6%
of our total revenues as compared to RMB 107.4 million and 24.0% in 2008, which
is a decrease of RMB 73.0 million, or 68.0%, as compared to the same period in
2008.
The following is a breakdown of commodity and specialty film sales for the
full-year periods ended December 31, 2009 and December 31, 2008 (amounts in
thousands):
Year ended
------------------------------------------------
December 31, 2009 December 31, 2008
----------------- ------------------
RMB US$ % of Total RMB % of Total
Printing film 35,231 5,161 11.0% 56,607 12.7%
Stamping film 174,356 25,539 54.4% 139,571 31.2%
Metallization film 35,138 5,147 10.9% 45,148 10.1%
Specialty film 34,004 4,981 10.6% 98,526 22.0%
Base film for other
applications 42,002 6,152 13.1% 107,404 24.0%
Total 320,731 46,980 100% 447,255 100%
Sales from overseas were RMB 35.6million (US$5.2million), or 11.1% of total
revenues.
The following is a breakdown of domestic versus overseas sales for the full-year
periods ended December 31, 2009 and December 31, 2008 (amounts in thousands):
Year ended
------------------------------------------------
December 31, 2009 December 31, 2008
----------------- ------------------
RMB US$ % of Total RMB % of Total
Sales in China 285,120 41,764 88.9% 388,823 86.9%
Sales in other countries 35,611 5,216 11.1% 58,432 13.1%
--------- -------- --------- -------- ---------
Total 320,731 46,980 100% 447,255 100%
======== ======== ========= ======== =========
Gross profit during the year ended December 31, 2009 was RMB 24.6 million ?US$3.6
million?representing a gross margin of 7.7%, compared to RMB 70.3 million or
15.7% for the year ended December 31, 2008. The decrease in gross profit margin
was mainly due to the decline in sales quantity of specialty films which further
lead to a sharp decline in average unit sale prices.
SG&A was RMB 41.2 million (US$6.0 million), compared with RMB 45.7 million in
2008. The decrease was mainly the result of increases of professional service
fees related to being a public company and decreased allowances for doubtful
account receivable and other receivables.
Operating loss was RMB 16.5 million (US$2.4 million), compared with operating
income of RMB 24.6 million in 2008.
The effective tax rate was 17.7% and 14.0% in 2009 and 2008 respectively. The
lower effective tax rate in 2009 was primarily due to the net loss for the period
ended 2009, and as a result no income tax was incurred and there was only deferred
tax expense.
Net loss for 2009 was RMB 19.0 million (US$2.8 million), compared with RMB 18.2 million in 2008. Basic and diluted net loss per share for 2009 was RMB 1.45 (US$0.21), compared with basic and diluted EPS RMB 1.39 in 2008. Net cash from operating activities was RMB 9.9 million (US$1.5 million) for the year ended December 31, 2009 as compared to RMB 80.0 million for the year ended December 31, 2008. The decrease was mainly due to net loss and increased inventories. Total shareholders' equity decreased to RMB 511.8 million (US$75.0 million) as of December 31, 2008?which was RMB 530.6 million. As of December 31, 2009, the Company had 13,062,500 basic and diluted total ordinary shares outstanding. 2009 Events On November 12? 2009? the Company announced that it became aware of the final verdict issued by the Supreme People's Court of Shandong Province, concerning the Company's three major shareholders, Mr. Jun Yin, Mr. Tongju Zhou and Mr. Duo Wang. The Supreme People's Court upheld the initial verdict issued by the Intermediate court in March 2009. The March 2009 initial verdict sentenced Mr. Yin to death, with a stay of execution for two years; the other two defendants, Mr. Zhou and Mr. Wang, each received life imprisonment; all of the personal property of the three individuals will be confiscated. The three individuals appealed the initial verdict to the Supreme People's Court of Shandong Province in March 2009. Fuwei was honored in May and August 2009 by several awards for Technological Innovation in Shandong Province by the China Plastic and Packaging Association. On April 23, 2009, Fuwei Films USA, LLC was set up in South Carolina and co-invested by Fuwei Films (Holdings) Co., Ltd. and Newell Finance Management Co., Ltd. Fuwei Films USA, LLC has a registered capital of US$10,000 and total investment amount of US$100,000. Fuwei Films (Holdings) Co., Ltd. and Newell Finance Management Co., Ltd. own 60% and 40% of the total shares of Fuwei Films USA, LLC, respectively. As of December 31, 2009 the sale revenue of the Fuwei USA was $449,830. On February 11, 2009, the Company announced that Fuwei Films (Shandong) Co., Ltd. ("Fuwei Shandong"), the Company's wholly owned operating subsidiary, received the "High-and-New Tech Enterprise" ("HNTE") designation from Shandong Province. As a new HNTE, Fuwei Shandong is entitled to a preferred tax rate of 15%, retroactive as of January 1, 2008 until the expiration of the designation in 2011. On December 3, 2009, the Company announced that Fuwei Shandong recently received RMB 10 million financial support in the form of a loan from the local Chinese government. This financial support is an eight year long-term loan with an interest rate of 5.346% and RMB 3.3 million payments of equal installments within 3 years prior to the expiration of the loan. Conference Call Information The Company will host a teleconference on Thursday, April 22, 2010, at 8:00 a.m. EDT or 8:00 p.m. Beijing time to discuss the year end 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 will be played on webcast simultaneously and can be accessed on the Fuwei's Website at http://www.fuweiholdings.com. Please visit the Web site 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: 318483. 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 Fuwei conducts its business through its wholly owned subsidiary, Fuwei Films Shandong. Fuwei 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
CONSOLIDATED BALANCE SHEETS
As of December 31, 2008 and 2009
(amounts in thousands, except share and per share data)
2008 2009
---------- ---------------------
RMB RMB US$
ASSETS
Current assets
Cash and cash equivalents 15,823 26,804 3,926
Restricted cash 10,411 12,541 1,837
Accounts receivable, net 38,579 28,785 4,216
Inventories, net 30,589 45,039 6,597
Advance to suppliers 6,846 3,956 579
Prepayments and other receivables 1,857 957 140
Deferred tax assets - current 457 1,198 175
---------- ---------- ----------
Total current assets 104,562 119,282 17,470
---------- ---------- ----------
Plant, properties and equipment, net 259,235 318,600 46,668
Construction in progress 319,408 237,118 34,732
Lease prepayments, net 22,507 21,548 3,156
Advanced to suppliers - long term 4,308 2,367 347
Goodwill 10,276 10,276 1,505
Deposit 17,613 21,000 3,076
Deferred tax assets - non current 1,995 5,318 779
Total assets 739,904 735,509 107,733
LIABILITIES AND EQUITY
Current liabilities
Short-term bank loans 164,764 153,179 22,435
Accounts payables 23,301 25,898 3,794
Advance from customers 8,781 12,608 1,847
Accrued expenses and other payables 7,460 6,981 1,023
204,305 198,666 29,099
Long-term loans 5,000 25,000 3,662
Total liabilities 209,305 223,666 32,761
Commitments and contingencies - - -
Equity
Shareholders' equity
Common Stock (of US$0.129752 par value;
20,000,000 shares authorized; 13,062,500
issued and outstanding as of December 31,
2008 and 2009, respectively) 13,323 13,323 1,952
Additional paid-in capital 311,907 311,907 45,687
Statutory reserve 29,338 29,338 4,297
Retained earnings 174,970 156,006 22,851
Accumulated other comprehensive income 1,061 993 145
Total shareholders' equity 530,599 511,567 74,932
Non-controlling interest - 276 40
Total equity 530,599 511,843 74,972
Total liabilities and equity 739,904 735,509 107,733
FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the years ended December 31, 2007, 2008 and 2009
(amounts in thousands, except share and per share data)
2007 2008 2009
---------- ---------- ----------------------
RMB RMB RMB US$
Revenues, net 449,373 447,255 320,731 46,980
Cost of goods sold (349,531) (376,923) (296,118) (43,375)
---------- ---------- ---------- ----------
Gross profit 99,842 70,332 24,612 3,605
---------- ---------- ---------- ----------
Operating expenses
- Distribution expenses (15,061) (15,604) (15,227) (2,230)
- Administrative expenses (20,515) (30,124) (25,932) (3,798)
---------- ---------- ---------- ----------
Total operating expenses (35,576) (45,728) (41,159) (6,028)
---------- ---------- ---------- ----------
Operating income/(loss) 64,266 24,604 (16,547) (2,423)
---------- ---------- ---------- ----------
Other income/(expense)
- Interest income 589 688 154 23
- Interest expense (13,233) (3,995) (6,540) (958)
- Others income /
(expense), net 319 (174) (92) (13)
---------- ---------- ---------- ----------
Total other
income/(expense) (12,325) (3,481) (6,478) (948)
---------- ---------- ---------- ----------
Income before income tax
benefit/(expense) 51,941 21,123 (23,024) (3,371)
Income tax
benefit/(expense) (4,681) (2,966) 4,064 595
---------- ---------- ---------- ----------
Net Income/(loss) 47,260 18,157 (18,960) (2,776)
---------- ---------- ---------- ----------
Non-controlling interest - - 3 0
---------- ---------- ---------- ----------
Net income/(loss)
attributable to the
Company 47,260 18,157 (18,963) (2,778)
Other comprehensive
income/(loss)
- Foreign currency
translation adjustments (637) (87) (68) (10)
---------- ---------- ---------- ----------
Comprehensive income/(loss) 46,623 18,070 (19,032) (2,786)
========== ========== ========== ==========
Earnings (loss) per share,
Basic and diluted 3.62 1.39 (1.45) (0.21)
Weighted average number
ordinary shares,
Basic and diluted 13,062,500 13,062,500 13,062,500 13,062,500
FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2007, 2008 and 2009
(amounts in thousands, except share and per share data)
2007 2008 2009
---------- ---------- ----------------------
RMB RMB RMB US$
Cash flow from operating
activities
Net income /(loss) 47,260 18,157 (18,960) (2,776)
Adjustments to reconcile
net income /(loss) to net
cash (used in)/provided by
operating activities
- Depreciation of property,
plant and equipment 23,217 25,168 35,464 5,195
- Amortization of intangible
assets 73 490 889 130
- Lease prepayments charged
to expense 741 - - -
- Deferred income taxes 152 (1,748) (4,064) (595)
- Bad debt expense/
(recovery) 1,772 4,818 697 102
- Inventory provision - - 4,242 621
Changes in operating assets
and liabilities
- Accounts receivable 17,335 18,186 11,609 1,700
- Inventories (19,659) 11,080 (18,693) (2,742)
- Advance to suppliers - 2,384 4,831 708
- Prepaid expenses and
other current assets 6,698 89 (4,929) (722)
- Accounts payable 6,824 3,691 (4,475) (655)
- Accrued expenses and other
payables (1,557) (284) 1,902 279
- Advance from customers (2,176) 3,827 561
- Tax payable - 172 (2,411) (353)
---------- ---------- ---------- ----------
Net cash provided by
operating activities 82,856 80,027 9,929 1,453
Cash flow from investing
activities
Purchases of property,
plant and equipment (590) (56,093) (87,758) (12,847)
Restricted cash related to
trade finance (61,598) 54,498 (2,130) (312)
Addition to construction in
progress (184,600) (54,155) 82,290 12,054
Deposits for purchase - (21,000) - -
---------- ---------- ---------- ----------
Net cash used in investing
activities (246,787) (76,750) (7,599) (1,112)
Cash flow from financing
activities
Principal payments of
short-term bank loans (51,650) (23,262) (11,585) (1,697)
Proceeds from short-term
bank loans - 5,000 20,000 2,930
---------- ---------- ---------- ----------
Net cash used in
/(provided) by financing
activities (51,650) (18,262) 8,415 1,233
---------- ---------- ---------- ----------
Effect of foreign exchange
rate changes (3,448) (104) 236 44
Net increase (decrease) in
cash and cash equivalent (219,029) (15,086) 10,981 1,618
---------- ---------- ---------- ----------
Cash and cash equivalent
At beginning of the year 249,939 30,909 15,823 2,308
At end of the year 30,909 15,823 26,804 3,926
========== ========== ========== ==========
SUPPLEMENTARY DISCLOSURE:
Interest paid 12,921 11,705 8,399 1,230
========== ========== ========== ==========
Income tax paid - 2,966 - -
========== ========== ========== ==========
SUPPLEMENTARY SCHEDULE OF
NONCASH INVESTING AND
FINANCIAL ACTIVITIES:
During the year ended
December 31, 2009, the
Company acquired equipment
by incurring accounts
payable in the amount of - - 7,071 1,035
========== ========== ========== ==========
Contact Information: For more information, please contact: In China: Maggie Huang Investor Relations Manager Phone: +86-10-685-226-12 Email: fuweiIR@fuweifilms.com In the U.S.: Leslie Wolf-Creutzfeldt Investor Relations Grayling Phone: +1-646-284-9472 Email: lwolf-creutzfeldt@hfgcg.com