FFHL Fuwei Films Holdings Company Ltd

In the news release, "Fuwei Films Announces First Quarter 2008 Financial Results", issued yesterday, May 14, by Fuwei Films (Holding) Co., Ltd. over Xinhua PR Newswire, we are advised by the company that the "FINANCIAL TABLES" section had several minor typos, as originally issued inadvertently. The corrected tables are hereby appended at the end of the press release: Fuwei Films Announces First Quarter 2008 Financial Results - Teleconference to be Held Thursday, May 15, 2008, at 8:30 a.m. EDT - BEIJING, May 14, 2008 /Xinhua-PRNewswire-FirstCall/ -- Fuwei Films (Holdings) Co. Limited (NASDAQ:FFHL) ("Fuwei" or "the Company"), a manufacturer and distributor of high-quality BOPET plastic films in China, today released the financial results for the first quarter of 2008 ended March 31, 2008. First Quarter 2008 Financial Highlights -- Revenues rose 4.8% to US$14.5 million (RMB 104.0 million) from the first quarter of 2007 -- Net income declined to US$1.1 million (RMB 7.9 million) from RMB 13.3 million in first quarter 2007, but rose from RMB 1.0 million in fourth quarter 2007 "We entered 2008 facing a number of challenges," said Xiaoan He, Chairman and CEO of Fuwei. "However, our newly strengthened R&D platform is expected to increase our ability to develop more high value-added specialty film products to counter the unfavorable trend of higher energy and raw material costs." First Quarter 2008 Financial Results Revenues for the first quarter of 2008 rose 4.8% to US$14.5 million (RMB 104.0 million), from RMB 99.3 million in the first quarter of 2007. Revenues of specialty films in first quarter 2008 were US$4.7 million (RMB 33.8 million), or 32.5% of total revenues. The following is a breakdown of commodity and specialty film sales for the three-month periods ended March 31, 2008 and March 31, 2007 (amounts in thousands): Three months period ended March March 31,2008 31,2007 RMB US$ % of Total RMB % of Total Printing film 19,230 2,686 18.5% 19,585 19.7% Stamping film 21,211 2,963 20.4% 23,128 23.3% Metallization film 2,901 405 2.8% 5,936 6.0% Base film for other Applications 26,927 3,761 25.9% 12,128 12.2% Specialty film 33,765 4,716 32.5% 38,489 38.8% Total 104,034 14,530 100.0% 99,265 100.0% Revenues from overseas in the first quarter of 2008 were US$3.4 million (RMB 24.1 million), or 23.2% of total revenues. The following is a breakdown of domestic versus overseas sales for the three-month periods ended March 31, 2008 and March 31, 2007 (amounts in thousands): Three months period ended March March 31,2008 31,2007 RMB US$ % of Total RMB % of Total Sales in China 79,899 11,160 76.8% 66,247 66.7% Sales in other countries 24,135 3,371 23.2% 33,018 33.3% Total 104,034 14,530 100.0% 99,265 100.0% Gross profit for the first quarter of 2008 was US$3.0 million (RMB 21.6 million), compared with RMB 23.6 million in same period 2007. The Company generated a gross margin of 20.8% in the first quarter 2008, versus 23.7% in the same period of 2007. The decrease in gross margin was due to increased consumption of raw materials, labor and power. Operating expenses in the first quarter of 2008 were US$1.6 million (RMB 11.2 million), compared with RMB 6.2 million in same period 2007. The increase was mainly due to the increased legal expenses related to ongoing litigation and increased staffing costs. Selling expenses in the first quarter 2008 decreased to US$0.5 million (RMB 3.4 million) from RMB 3.7 million in the same period 2007. Administrative expenses increased to US$1.1 million (RMB 7.7 million) from RMB 2.5 million in the first quarter of 2007. Net income for the first quarter of 2008 decreased to US$1.1 million (RMB 7.9 million), or diluted EPS of US$0.08 (RMB 0.61), from RMB 13.3 million, or diluted EPS of RMB 1.02 in the same period of 2007. On a sequential basis, net income rose from RMB 1.0 million, or RMB 0.08 per share, in the fourth quarter of 2007. Total cash and cash equivalents as of March 31, 2008 were US$1.6 million (RMB 11.4 million) as compared with RMB 30.9 million as of December 31, 2007. Total shareholders' equity increased to US$74.3 million (RMB 521.1 million) as of March 31, 2008 from RMB 512.5 million as of December 31, 2007. As of March 31, 2008, the Company had 13,062,500 basic and diluted total ordinary shares outstanding. Anti-Dumping Case Updates In April, the Company received notice of a preliminary anti-dumping assessment issued by the Korean Trade Commission (KTC). The initial assessment of the tariff rate for Fuwei was 6.13%, versus 24.37% for Chinese companies on average. The KTC began its anti-dumping investigation of BOPET film products from China and India in November 2007. After studying the trade practices of six Chinese BOPET manufacturers, including Fuwei, and several Indian manufacturers, the KTC issued its preliminary tariff assessment. Fuwei was notified by the KTC that its tarrif rate will be 6.13%, the single-lowest rate received among all the Chinese and Indian manufacturers involved in the investigation. KTC will announce a formal resolution of the anti-dumping case in the summer, upon which the new rates will become effective. "The decision reached by the KTC is expected to strengthen Fuwei's reputation as a Chinese exporter of BOPET films to Korea," said Mr. Xiaoan He, Chairman and CEO of Fuwei. "Fuwei first entered the Korean market in 2005 and since then we have been adding higher-end specialty film products to our export offerings, which makes our products less liable for the anti-dumping case. While tariffs have always been a distortion of the market force, we expect the Korean assessment to work to our advantage to further expand our presence in the overseas market." Additionally, the U.S. Department of Commerce has also informed the Company of its preliminary assessment of dumping margins, which has been set at 46.82%, also the lowest among Chinese companies investigated. The Department of Commerce is expected to make its final determination in July 2008. Conference Call Information The Company will host a teleconference tomorrow, Thursday, May 15, 2008, at 8:30 a.m. EDT / 8:30 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 call start time. The call is being simultaneously Webcast and can be accessed on the Fuwei Films Website at http://www.fuweiholdings.com/. Please visit the Web site at least 15 minutes prior to the scheduled call time to register for the Web cast and download any necessary audio software. A replay of the call can also be accessed via telephone from 12:00 p.m. EDT on Thursday, May 15, 2008, through 11:59 p.m. EST on Friday, May 23, 2008, 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: 283212. A Web cast replay of the call will also be made and can be accessed on the Fuwei Films site at http://www.fuweiholdings.com/. About Fuwei Films Fuwei Films conducts its business through its wholly owned subsidiary Shandong Fuwei Films Co., Ltd. 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. For more information about the Company, please visit the Company's website at http://www.fuweiholdings.com/ . 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. Any such forward-looking statements involve risk and uncertainties that could cause actual results to differ materially from any future results described by the forward-looking statements. Risk factors that could contribute to such differences include those matters more fiscally disclosed in the Company's reports filed with the Securities and Exchange Commission. 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. The forward-looking statements included in this press release are subject to risks, uncertainties and assumptions about our businesses and business environments. These statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual results of our operations may differ materially from information contained in the forward-looking statements as a result of risk factors some of which are include, among other things, 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. For more information, please contact: In China: Christina He Investor Relations Manager Tel: +86-10-8518-5620 Email: In the U.S.: Leslie Wolf-Creutzfeldt Investor Relations Grayling Global Tel: +1-646-284-9472 Email: Financial Tables to Follow FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2008 AND DECEMBER 31, 2007 (amounts in thousands except share and per share value) As of Mar. 31, 2008 As of Dec. 31, 2007 RMB US$ RMB (Unaudited) (Audited) ASSETS Current assets Cash and cash equivalents 11,416 1,628 30,909 Restricted cash 31,444 4,484 64,909 Accounts receivables, net 57,428 8,190 58,195 Inventories 49,690 7,086 41,670 Prepayments and other receivables 34,118 4,866 16,160 Total current assets 184,096 26,254 211,842 Property, plant and equipment, net 223,346 31,852 228,309 Construction in progress 290,926 41,490 265,253 Lease prepayments, net 22,915 3,268 22,290 Deposit 26,000 3,708 -- Intangible assets 3 0.4 36 Goodwill 10,276 1,465 10,276 Deferred tax assets 969 138 969 Total assets 758,531 108,176 738,975 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term borrowings 185,669 26,479 188,027 Accounts payables 21,300 3,038 19,609 Accrued expenses and other payables 30,209 4,308 18,544 Deferred tax liabilities 265 38 265 Total liabilities 237,443 33,863 226,445 Shareholders' equity Ordinary shares of US$0.129752 par value; 20,000,000 shares authorized; 13,062,500 issued and outstanding 13,323 1,900 13,323 Additional paid-in capital 311,907 44,482 311,907 Retained earnings 194,089 27,679 186,152 Cumulative translation adjustment 1,769 252 1,148 Total shareholders' equity 521,088 74,313 512,530 Total liabilities and shareholders' equity 758,531 108,176 738,975 FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2008 AND 2007 (amounts in thousands except share and per share value) (UNAUDITED) Period Ended Period Ended Mar.31,2008 Mar. 31, 2007 RMB US$ RMB Revenue 104,034 14,530 99,265 Cost of goods sold (82,409) (11,510) (75,709) Gross profit 21,625 3,020 23,556 Operating expenses - Distribution expenses (3,438) (480) (3,666) - Administrative expenses (7,724) (1,079) (2,509) Total operating expenses (11,163) (1,559) (6,175) Operating income 10,463 1,461 17,381 Other income/(expense) - Interest income 16 2 190 - Interest expense (3,790) (529) (3,150) - Other income, net 2,241 313 331 Total other expense (1,533) (214) (2,629) Income before income tax expense 8,930 1,247 14,752 Income tax expense (993) (139) (1,489) Net income 7,937 1,109 13,263 Other comprehensive income - Foreign currency translation adjustments 620 87 3,977 Comprehensive income 8,557 1,195 17,240 Earnings per share - Basic 0.61 0.08 1.02 - Diluted 0.61 0.08 1.02 Weighted average number of ordinary shares - Basic 13,062,500 13,062,500 13,062,500 - 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 PERIODS ENDED MARCH 31, 2008 AND 2007 (amounts in thousands except share and per share value) (UNAUDITED) Period Ended Period Ended Mar. Mar. 31, 2008 31, 2007 RMB US$ RMB CASH FLOWS FROM OPERATING ACTIVITIES Net income 7,937 1,109 13,263 Adjustments to reconcile net income to net cash Provided by operating activities - Depreciation of property, plant and equipment 5,909 825 5,847 - Amortization of lease prepayments and intangible assets (149) (21) 149 - Deferred income taxes -- -- 507 - Bad debt expense 73 10 (872) Changes in operating assets and liabilities, net of - Share capital contribution - rental and interest paid by shareholders 2,756 385 - Accounts receivable 856 120 985 - Inventories (8,020) (1,120) (1,127) - Prepaid expenses and other current assets (18,859) (2,634) 2,054 - Accounts payable 1,695 237 4,913 - Accrued expenses and other payables 11,667 1,629 834 Net cash provided by operating activities 4,162 581 26,553 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (946) (132) (134) Restricted cash related to trade finance 33,464 4,674 13,900 Addition to construction in progress (25,673) (3,586) (47,604) Deposit for purchase (26,000) (3,631) Net cash used in investing activities (19,155) (2,675) (33,838) CASH FLOW FROM FINANCING ACTIVITIES Principal payments of short-term bank loans (12,869) (1,797) (237,670) Proceeds from short-term bank loans 11,139 1,556 169,090 Net cash used in financing activities (1, 730) (242) (68,580) Effect of foreign exchange rate changes (2,770) (273) (1,008) Net increase/(decrease) in cash and cash equivalent (1,9,493) (2,609) (76,798) - Cash and cash equivalent at beginning of period 30,909 4,237 253,250 - Cash and cash equivalent at end of period 11,416 1,628 176,452 Supplemental disclosure of cash flow information Cash paid during the period for - Interest paid 2,966 414 4,774 - Income taxes paid 802 112 -- DATASOURCE: Fuwei Films (Holdings) Co. Limited CONTACT: In China: Christina He, Investor Relations Manager at +86-10- 8518-5620 or ; or in the U.S.: Leslie Wolf-Creutzfeldt, Investor Relations at Grayling Global at +1-646-284-9472 or lwolf- Web Site: http://www.fuweiholdings.com/

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