UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
6-K
REPORT
OF FOREIGN PRIVATE ISSUER
PURSUANT
TO
RULE
13a-16 OR 15d-16 UNDER
THE
SECURITIES EXCHANGE ACT OF 1934
For September
30, 2008
Commission
File No. 001-33176
Fuwei
Films (Holdings) Co., Ltd.
No.
387
Dongming Road
Weifang
Shandong
People’s
Republic of China, Postal Code: 261061
(ADDRESS
OF PRINCIPAL EXECUTIVE OFFICES.)
Indicate
by check mark whether the registrant files or will file annual reports under
cover Form 20-F or Form 40-F.
Form
20-F
x
Form
40-F
¨
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1):
¨
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7):
¨
Indicate
by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes
¨
No
¨
If
“Yes”
marked, indicate below the file number assigned to the registrant in connection
with Rule 12g3-2(b): 82-________
EXPLANATORY
NOTE
This
Report of Foreign Private Issuer on Form 6-K contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, and Section
21E
of the Securities Exchange Act of 1934. These statements relate to future events
or the future financial performance of Fuwei Films (Holdings) Co. Ltd. (the
“Company”). The Company has attempted to identify forward-looking statements by
terminology including “anticipates”, “believes”, “expects”, “can”, “continue”,
“could”, “estimates”, “intends”, “may”, “plans”, “potential”, “predicts”,
“should” or “will” or the negative of these terms or other comparable
terminology. These statements are only predictions, uncertainties and other
factors may cause the Company’s actual results, levels of activity, performance
or achievements to be materially different from any future results, levels
of
activity, performance or achievements expressed or implied by these
forward-looking statements. The information in this Report on Form 6-K is not
intended to project future performance of the Company. Although the Company
believes that the expectations reflected in the forward-looking statements
are
reasonable, the Company does not guarantee future results, levels of activity,
performance or achievements. The Company’s expectations are as of the date this
Form 6-K is filed, and the Company does not intend to update any of the
forward-looking statements after the date this Report on Form 6-K is filed
to
confirm these statements to actual results, unless required by law.
The
forward-looking statements included in this Form 6-K are subject to risks,
uncertainties and assumptions about the Company’s businesses and business
environments. These statements reflect the Company’s current views with respect
to future events and are not a guarantee of future performance. Actual results
of the Company’s operations may differ materially from information contained in
the forward-looking statements as a result of risk factors some of which
include, among other things, competition in the BOPET film industry; growth
of,
and risks inherent in, the BOPET film industry in China;
changes
in the international market; the increase of the price of energy (mainly refer
to power) and the sometimes inadequate energy supply in the area where Shandong
Fuwei locates, which may result in the increase of production cost, decrease
of
sales, and negatively influence the Company’s financial performance;
uncertainty
of various kinds of international barriers; uncertainty as to future
profitability and its ability to obtain adequate financing for its planned
capital expenditure requirements; uncertainty as to the Company’s ability to
successfully obtain financing and consequently continue the operation of the
Third BOPET Production Line, the construction of which has already been
commenced; uncertainty as to the Company’s ability to continuously develop new
BOPET film products and keep up with changes in BOPET film technology;
instability of power and energy supply; risks associated with possible defects
and errors in its products; uncertainty as to its ability to protect and enforce
its intellectual property rights; uncertainty as to its ability to attract
and
retain qualified executives and personnel; and uncertainty in acquiring raw
materials on time and on acceptable terms, particularly in light of the
volatility in the prices of petroleum products in recent years and the potential
impact resulting from the pending criminal litigation and related new
developments to the major shareholders.
On
November 13, 2008, the Company announced its unaudited consolidated financial
results for the nine months period ended September 30, 2008.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
AS
OF SEPTEMBER 30, 2008 AND DECEMBER 31, 2007
(amounts
in thousands except share and per share value)
|
|
As
of Sep. 30, 2008
(Unaudited)
|
|
As
of Dec. 31, 2007
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
ASSETS
|
|
Current
assets
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
3,383
|
|
|
493
|
|
|
30,909
|
|
Restricted
cash
|
|
|
14,097
|
|
|
2,056
|
|
|
64,909
|
|
Accounts
receivable, net
|
|
|
63,995
|
|
|
9,335
|
|
|
58,195
|
|
Inventory
|
|
|
56,557
|
|
|
8,250
|
|
|
41,670
|
|
Advance
to suppliers
|
|
|
30,425
|
|
|
4,438
|
|
|
13,538
|
|
Prepayments
and other receivables
|
|
|
3,592
|
|
|
526
|
|
|
2,622
|
|
Total
current assets
|
|
|
172,049
|
|
|
25,098
|
|
|
211,842
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant
and equipment, net
|
|
|
214,710
|
|
|
31,321
|
|
|
228,309
|
|
Construction
in progress
|
|
|
301,155
|
|
|
43,931
|
|
|
265,253
|
|
Lease
prepayments, net
|
|
|
22,638
|
|
|
3,302
|
|
|
22,290
|
|
Intangible
assets
|
|
|
-
|
|
|
-
|
|
|
36
|
|
Goodwill
|
|
|
10,276
|
|
|
1,499
|
|
|
10276
|
|
Deposit
|
|
|
21,000
|
|
|
3,064
|
|
|
-
|
|
Deferred
tax assets
|
|
|
1,019
|
|
|
150
|
|
|
969
|
|
Total
assets
|
|
|
742,847
|
|
|
108,365
|
|
|
738,975
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
|
166,491
|
|
|
24,287
|
|
|
188,027
|
|
Accounts
payables
|
|
|
20,878
|
|
|
3,046
|
|
|
19,609
|
|
Advance
from customers
|
|
|
15,012
|
|
|
2,190
|
|
|
10,957
|
|
Accrued
expenses and other payables
|
|
|
3,104
|
|
|
453
|
|
|
7,587
|
|
Deferred
tax liabilities
|
|
|
259
|
|
|
38
|
|
|
265
|
|
Total
liability
|
|
|
205,744
|
|
|
30,014
|
|
|
226,445
|
|
Shareholders’
equity
|
|
|
|
|
|
|
|
|
|
|
Registered
capital (of US$0.129752 par value; 20,000,000
shares
authorized; 13,062,500 issued and outstanding)
|
|
|
13,323
|
|
|
1,944
|
|
|
13,323
|
|
Additional
paid-in capital
|
|
|
311,907
|
|
|
45,500
|
|
|
311,907
|
|
Statutory
reserve
|
|
|
30,077
|
|
|
4,387
|
|
|
26,924
|
|
Retained
earnings
|
|
|
180,780
|
|
|
26,372
|
|
|
159,228
|
|
Cumulative
translation adjustment
|
|
|
1,016
|
|
|
148
|
|
|
1,148
|
|
Total
shareholders’ equity
|
|
|
537,103
|
|
|
78,351
|
|
|
512,530
|
|
Total
liabilities and shareholders’ equity
|
|
|
742,847
|
|
|
108,365
|
|
|
738,975
|
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated statements.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
AND
OTHER COMPREHENSIVE INCOME
FOR
THE THREE AND NINE MONTH PERIOD ENDED SEPTEMBER 30, 2008 AND
2007
(amounts
in thousands except share and per share value)
(UNAUDITED)
|
|
Three
Month Period ended Sep. 30
|
|
Nine
Month Period ended Sep. 30
|
|
|
|
2008
|
|
2007
|
|
|
|
2007
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
Revenue
|
|
|
119,849
|
|
|
17,489
|
|
|
107,652
|
|
|
348,629
|
|
|
49,812
|
|
|
327,847
|
|
Cost
of sales
|
|
|
(105,297
|
)
|
|
(15,365
|
)
|
|
(84,067
|
)
|
|
(290,503
|
)
|
|
(41,507
|
)
|
|
(247,323
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
14,552
|
|
|
2,124
|
|
|
23,585
|
|
|
58,126
|
|
|
8,305
|
|
|
80,524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
(3,857
|
)
|
|
(563
|
)
|
|
(2,869
|
)
|
|
(11,595
|
)
|
|
(1,657
|
)
|
|
(11,623
|
)
|
Administrative
expenses
|
|
|
(4,510
|
)
|
|
(658
|
)
|
|
(5,116
|
)
|
|
(16,939
|
)
|
|
(2,420
|
)
|
|
(11,571
|
)
|
Total
operating expenses
|
|
|
(8,367
|
)
|
|
(1,221
|
)
|
|
(7,985
|
)
|
|
(28,534
|
)
|
|
(4,077
|
)
|
|
(23,194
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
6,185
|
|
|
903
|
|
|
15,600
|
|
|
29,592
|
|
|
4,228
|
|
|
57,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income/(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Interest income
|
|
|
551
|
|
|
80
|
|
|
236
|
|
|
619
|
|
|
88
|
|
|
513
|
|
-
Interest expense
|
|
|
(392
|
)
|
|
(57
|
)
|
|
(1,745
|
)
|
|
(9,037
|
)
|
|
(1,
291
|
)
|
|
(6,581
|
)
|
-
Other, net
|
|
|
1,381
|
|
|
202
|
|
|
263
|
|
|
6,032
|
|
|
862
|
|
|
(299
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other income/(expense)
|
|
|
1,540
|
|
|
225
|
|
|
(1,246
|
)
|
|
(2,386
|
)
|
|
(341
|
)
|
|
(6,367
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income tax expense
|
|
|
7,725
|
|
|
1,128
|
|
|
14,354
|
|
|
27,206
|
|
|
3,887
|
|
|
50,963
|
|
Income
tax benefit/(expense)
|
|
|
(617
|
)
|
|
(90
|
)
|
|
(1,443
|
)
|
|
(2,505
|
)
|
|
(358
|
)
|
|
(4,702
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
7,108
|
|
|
1,038
|
|
|
12,911
|
|
|
24,701
|
|
|
3,529
|
|
|
46,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-Foreign
currency translation adjustments
|
|
|
(300
|
)
|
|
(44
|
)
|
|
(8
|
)
|
|
(133
|
)
|
|
(19
|
)
|
|
(579
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
|
6,809
|
|
|
994
|
|
|
12,903
|
|
|
24,568
|
|
|
3,510
|
|
|
45,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share, basic and diluted
|
|
|
0.54
|
|
|
0.08
|
|
|
0.99
|
|
|
1.89
|
|
|
0.27
|
|
|
3.54
|
|
Weighted
average number ordinary
shares,
basic and diluted
|
|
|
13,062,500
|
|
|
13,062,500
|
|
|
13,062,500
|
|
|
13,062,500
|
|
|
13,062,500
|
|
|
13,062,500
|
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated statements.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR
THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2008 AND 2007
(amounts
in thousands except share and per share value)
(UNAUDITED)
|
|
Period
Ended Sep.30, 2008
|
|
Period
Ended Sep.30, 2007
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net
income
|
|
|
24,701
|
|
|
3,529
|
|
|
46,261
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities
|
|
|
|
|
|
|
|
|
|
|
-
Depreciation of property, plant and equipment
|
|
|
18,510
|
|
|
2,645
|
|
|
18,295
|
|
-
Amortization of intangible assets
|
|
|
377
|
|
|
54
|
|
|
561
|
|
-
Deferred income taxes
|
|
|
-
|
|
|
-
|
|
|
974
|
|
-
Bad debt expense
|
|
|
662
|
|
|
95
|
|
|
-
|
|
Changes
in operating assets and liabilities, net of
|
|
|
|
|
|
|
|
|
|
|
-
Accounts receivable
|
|
|
(6,213
|
)
|
|
(888
|
)
|
|
24,153
|
|
-
Inventories
|
|
|
(14,887
|
)
|
|
(2,127
|
)
|
|
(27,325
|
)
|
-
Advance to suppliers
|
|
|
(16,887
|
)
|
|
(2,413
|
)
|
|
-
|
|
-
Prepaid expenses and other current assets
|
|
|
(1,970
|
)
|
|
(281
|
)
|
|
(29,292
|
)
|
-
Accounts payable
|
|
|
1,274
|
|
|
182
|
|
|
7,972
|
|
-
Accrued expenses and other payables
|
|
|
(1,479
|
)
|
|
(211
|
)
|
|
5,531
|
|
-
Advance from customers
|
|
|
4,056
|
|
|
579
|
|
|
-
|
|
-
Tax payable
|
|
|
(3,007
|
)
|
|
(430
|
)
|
|
-
|
|
Net
cash provided by operating activities
|
|
|
5,137
|
|
|
734
|
|
|
47,130
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Purchases
of property, plant and equipment
|
|
|
(4,912
|
)
|
|
(702
|
)
|
|
(130,700
|
)
|
Restricted
cash related to trade finance
|
|
|
50,811
|
|
|
7,260
|
|
|
(41,368
|
)
|
Addition
to construction in progress
|
|
|
(35,901
|
)
|
|
(5,130
|
)
|
|
-
|
|
Deposit
for purchase
|
|
|
(21,000
|
)
|
|
(3,000
|
)
|
|
-
|
|
Net
cash used in investing activities
|
|
|
(11,002
|
)
|
|
(1,572
|
)
|
|
(172,068
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOW FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Net
proceeds from issuance of share capital
|
|
|
|
|
|
|
|
|
|
|
Principal
payments of short-term bank loans
|
|
|
(275,249
|
)
|
|
(39,327
|
)
|
|
(239,678
|
)
|
Proceeds
from short-term bank loans
|
|
|
253,714
|
|
|
36,250
|
|
|
183,169
|
|
Net
cash used in financing activities
|
|
|
(21,535
|
)
|
|
(3,077
|
)
|
|
(56,509
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of foreign exchange rate changes
|
|
|
(126
|
)
|
|
171
|
|
|
(902
|
)
|
Net
decrease in cash and cash equivalent
|
|
|
(27,526
|
)
|
|
(3,744
|
)
|
|
(182,349
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalent
|
|
|
|
|
|
|
|
|
|
|
At
beginning of period/year
|
|
|
30,909
|
|
|
4,237
|
|
|
249,939
|
|
At
end of period/year
|
|
|
3,383
|
|
|
493
|
|
|
67,590
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|
|
-Interest
paid
|
|
|
9,578
|
|
|
1,369
|
|
|
10,068
|
|
-Income
taxes paid
|
|
|
3,655
|
|
|
522
|
|
|
4,702
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
transactions in investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
-
Construction in progress transferred to fixed assets
|
|
|
478
|
|
|
68
|
|
|
-
|
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated statements.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
1 - BACKGROUND
Fuwei
Films (Holdings) Co., Ltd (the “Company”) and its subsidiaries (the “Group”) are
principally engaged in the production and distribution of BOPET film, a high
quality plastic film widely used in packaging, imaging, electronics, electrical
and magnetic products in the People’s Republic of China (the “PRC”). The Company
is incorporated in the Cayman Islands, established on August 9, 2004 under
the
Cayman Islands Companies Law as an exempted company with limited
liability.
On
August
20, 2004, the Company was allotted and issued one ordinary share of US$1.00
in
Fuwei (BVI) (being the entire issued share capital of Fuwei (BVI)), thereby
establishing Fuwei (BVI) as the intermediate investment holding company of
the
Group.
The
Group
was established by certain members of the former management team and employees
(the “Group Founders”) of Shandong Neo-Luck Plastics Co., Ltd (“Shandong
Neo-Luck”), a company owned 59% by a PRC state-owned enterprise.
Prior
to
filing for bankruptcy protection on September 24, 2004, Shandong Neo-Luck was
engaged in the business of BOPET film production. Certain production-related
assets of Shandong Neo-Luck which had previously been mortgaged to the Bank
of
China, Weifang City branch (the “Mortgagee Bank”) as security for several loans
extended to Shandong Neo-Luck’s affiliates were acquired through public auction
by Fuwei Films (Shandong) Co., Ltd (“Shandong Fuwei”) on October 9, 2003 for
RMB156,000 as a result of the borrowers default on various bank loans.
Shandong
Fuwei, established in the PRC on January 28, 2003 as a limited liability
company, commenced its operations in July 2003. The principal activities of
Shandong Fuwei are those relating to the design, production and distribution
of
plastic films. Shandong Neo-Luck was subsequently declared bankrupt by the
Weifang Municipal People’s Court in the PRC on September 24, 2004.
Through
its intermediate holding company, Fuwei (BVI), the Company acquired a 100%
ownership interest in Shandong Fuwei on October 27, 2004 for a purchase price
of
RMB91,093. Shandong Fuwei thereafter became a wholly-owned subsidiary of Fuwei
(BVI) effective October 27, 2004.
On
December 25, 2004, Shandong Fuwei acquired additional production-related assets
through public auction that were formerly owned by Shandong Neo-Luck for
RMB119,280.
Shandong
Fuwei was converted into a wholly-foreign owned enterprise in the PRC on January
5, 2005, with a registered capital of US$11,000.
On
December 18, 2006, the Company became listed on the Nasdaq Global
Market.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Unaudited
Interim Financial Information
The
accompanying unaudited consolidated financial statements have been prepared
by
the Company,
pursuant
to the rules and regulations of the Securities and Exchange Commission (the
“SEC”) Form 10-Q as applicable to smaller reporting companies , and generally
accepted accounting principles for interim financial reporting. The information
furnished herein reflects all adjustments (consisting of normal recurring
accruals and adjustments) which are, in the opinion of management, necessary
to
fairly present the operating results for the respective periods. Certain
information and footnote disclosures normally presented in annual consolidated
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been omitted pursuant to such
rules and regulations. These consolidated financial statements should be read
in
conjunction with the audited consolidated financial statements and footnotes
included in the Company’s Annual Report on Form 20-F. The results of the nine
month period ended September 30, 2008 are not necessarily indicative of the
results to be expected for the full year ending December 31, 2008.
Principles
of Consolidation
The
condensed consolidated financial statements include the financial statements
of
the Company and its two subsidiaries. All significant inter-company balances
and
transactions have eliminated in consolidation.
Use
of Estimates
The
preparation of the consolidated financial statements in accordance with U.S.
GAAP requires management of the Group to make a number of estimates and
assumptions relating to the reported amounts of assets and liabilities and
the
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenue and expenses during
the
reporting period. Actual results could differ from those estimates. On an
ongoing basis, management reviews its estimates and assumptions, including
those
related to the recoverability of the carrying amount and the estimated useful
lives of long-lived assets, valuation allowances for accounts receivable and
realizable values for inventories. Changes in facts and circumstances may result
in revised estimates.
Foreign
Currency Transactions
The
Group’s reporting currency is the Renminbi (“RMB”).
The
Company and Fuwei (BVI) operate in Hong Kong as investment holding companies
and
their financial records are maintained in Hong Kong dollars, being the
functional currency of these two entities. Assets and liabilities are translated
into RMB at the exchange rates at the balance sheet date, equity accounts are
translated at historical exchange rates and income, expenses, and cash flow
items are translated using the average rate for the period. The translation
adjustments are recorded in accumulated other comprehensive income in the
statements of shareholders’ equity and comprehensive income.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Transactions
denominated in currencies other than RMB are translated into RMB at the exchange
rates quoted by the People’s Bank of China (the “PBOC”) prevailing at the dates
of transactions. Monetary assets and liabilities denominated in foreign
currencies are translated into RMB using the applicable exchange rates quoted
by
the PBOC at the balance sheet dates. The resulting exchange differences are
recorded in the statements of income.
RMB
is
not fully convertible into foreign currencies. All foreign exchange transactions
involving RMB must take place either through the PBOC or other institutions
authorized to buy and sell foreign currency. The exchange rate adopted for
the
foreign exchange transactions are the rates of exchange quoted by the PBOC
which
are determined largely by supply and demand.
Exchange
Rate Information
Foreign
Currency - The Company’s principal country of operations is in the People’s
Republic of China. The financial position and results of operations of the
Company are determined using the local currency (“Renminbi”) as the functional
currency. The results of operations denominated in foreign currency are
translated at the average rate of exchange during the reporting period.
Unless
otherwise noted, all translations from Renminbi to U.S. dollars in report of
assets and liabilities denominated in foreign currencies at the balance sheet
date are translated at the market rate of exchange prevailing on that date.
The
registered equity capital denominated in the functional currency is translated
at the historical rate of exchange at the time of capital contribution. All
translation adjustments resulting from the translation of the financial
statements into the reporting currency (“US Dollars”) are dealt with as a
separate component within shareholders’ equity. We make no representation that
any Renminbi or U.S. dollar amounts could have been, or could be, converted
into
U.S. dollars or Renminbi, as the case may be, at any particular rate, the rates
stated above, or at all.
Cash
and Cash Equivalents and Restricted
Cash
For
statements of cash flow purposes, the Company considers all cash on hand and
in
banks, including accounts in book overdraft positions, certificates of deposit
and other highly-liquid investments with maturities of three months or less,
when purchased, to be cash and cash equivalents.
Restricted
cash refers to the cash balance held by bank as deposit for Letters of Credit.
The Company has restricted cash of $2,056 and $8,898 as of September 30, 2008
and December 31, 2007, respectively.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Trade
Accounts Receivable
Trade
accounts receivable are recorded at the invoiced amount after deduction of
trade
discounts, value added taxes and allowances, if any, and do not bear interest.
The allowance for doubtful accounts is the Group’s best estimate of the amount
of probable credit losses in the Group’s existing accounts receivable. The Group
determines the allowance based on historical write-off experience, customer
specific facts and economic conditions.
The
Group
reviews its allowance for doubtful accounts monthly. Past due balances over
90
days and over a specified amount are reviewed individually for collectability.
All other balances are reviewed on a pooled basis by aging of such balances.
Account balances are charged off against the allowance after all means of
collection have been exhausted and the potential for recovery is considered
remote. The Group does not have any off-balance-sheet credit exposure related
to
its customers.
The
Group
has a credit policy in place and the exposure to credit risk is monitored on
an
ongoing basis. Credit evaluations are performed on all customers requiring
credit over a certain amount. These receivables are due within 7 to 60 days
from
the date of billing. Normally, the Group does not obtain collateral from
customers.
Inventories
Inventories
are stated at the lower of cost or market value. Cost is determined using the
average cost method. Cost of work in progress and finished goods comprises
of
direct material, direct production cost and an allocated portion of production
overheads based on normal operating capacity.
Property,
Plant and Equipment
Property,
plant and equipment are stated at cost less accumulated depreciation and
impairment.
Depreciation
on property, plant and equipment is calculated on the straight-line method
(after taking into account their respective estimated residual values) over
the
estimated useful lives of the assets.
There
are
as follows:
|
|
Years
|
Buildings
and improvements
|
|
25
- 30
|
Plant
and equipment
|
|
10
- 15
|
Computer
equipment
|
|
5
|
Furniture
and fixtures
|
|
5
|
Motor
vehicles
|
|
5
|
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Depreciation
of property, plant and equipment attributable to manufacturing activities is
capitalized as part of the inventory, and expensed to cost of goods sold when
inventory is sold. Depreciation related to abnormal amounts from idle capacity
is charged to cost of goods sold for the period incurred.
Construction
in progress represented capital expenditure in respect of the third production
line and the trial production line. No depreciation is provided in respect
of
construction in progress.
Lease
Prepayments
Lease
prepayments represent the costs of land use rights in the PRC. Land use rights
are carried at cost and charged to expense on a straight-line basis over the
respective periods of rights of 30 years. The current portion of lease
prepayments has been included in prepayments and other receivables in the
balance sheet.
Intangible
Assets
The
Group
acquired a trademark for use in the production and distribution of plastic
films. The trademark is carried at cost less accumulated amortization.
Amortization expense is recognized on the straight-line basis over the estimated
useful life of 5 years of the trademark.
Goodwill
Goodwill
represents the excess of purchased cost over fair value of net assets of the
Shandong Fuwei’s acquired business. Goodwill is evaluated for impairment
annually. The Company evaluates the carrying value of goodwill during the fourth
quarter of each year and between annual evaluations if events occur or
circumstances change that would more likely than not reduce the fair value
of
the reporting unit below its carrying amount. Such circumstances could include,
but are not limited to: (1) a significant adverse change in legal factors or
in
business climate, (2) unanticipated competition, or (3) an adverse action or
assessment by a regulator. When evaluating whether goodwill is impaired, the
Company compares the fair value of the reporting unit to which the goodwill
is
assigned to the reporting unit’s carrying amount, including goodwill. The fair
value of the reporting unit is estimated using a combination of the income,
or
discounted cash flows, approach and the market approach, which utilizes
comparable companies’ data. If the carrying amount of a reporting unit exceeds
its fair value, then the amount of the impairment loss must be measured. The
impairment loss would be calculated by comparing the implied fair value of
reporting unit goodwill to its carrying amount. In calculating the implied
fair
value of reporting unit goodwill, the fair value of the reporting unit is
allocated to all of the other assets and liabilities of that unit based on
their
fair values. The excess of the fair value of a reporting unit over the amount
assigned to its other assets and liabilities is the implied fair value of
goodwill. An impairment loss would be recognized when the carrying amount of
goodwill exceeds its implied fair value. The Company’s evaluation of goodwill
resulted in no impairment losses.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Impairment
of Long-lived Assets
Long-lived
assets, other than goodwill, including property, plant, and equipment and
intangible assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable.
Recoverability
of assets to be held and used is measured by a comparison of the carrying amount
of an asset to the estimated undiscounted future cash flows expected to be
generated by the asset. If the carrying amount of an asset exceeds its estimated
future cash flows, an impairment charge is recognized by the amount in which
the
carrying amount of the asset exceeds the fair value of the asset.
Revenue
Recognition
Sales
of
plastic films are reported, net of value added taxes (“VAT”), sales returns,
trade discounts and allowances. The standard terms and conditions under which
the Group generally delivers allow a customer the right to return product for
refund only if the product does not conform to product specifications; the
non-conforming product is identified by the customer; and the customer rejects
the non-conforming product and notifies the Group within 7 days and 30 days
of
receipt for sales to customers in the PRC and overseas, respectively. The Group
recognizes revenue when products are delivered and the customer takes ownership
and assumes risk of loss, collection of the relevant receivable is probable,
persuasive evidence of an arrangement exists and the sales price is fixed or
determinable.
In
the
PRC, VAT of 17% on invoice amount is collected in respect of the sales of goods
on behalf of tax authorities. The VAT collected is not revenue of the Group;
instead, the amount is recorded as a liability on the consolidated balance
sheet
until such VAT is paid to the authorities.
Government
Grants
Government
grants are recognized in the consolidated balance sheet initially as deferred
income when they have been received. Grants that compensate the Group for
expenses incurred are recognized as a reduction of expenses in the consolidated
statement of income in the same period in which the related expenses are
incurred.
Retirement
and Other Post-retirement Ben
efits
Contributions
to retirement schemes (which are defined contribution plans) are charged to
expense as and when the related employee service is provided.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Income
Taxes
Income
taxes are accounted for under the asset and liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts
of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carry forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment
date.
Earnings
Per Share
Basic
earnings per share are computed by dividing net earnings by the weighted average
number of ordinary shares outstanding during the year. Diluted earnings per
share is calculated by dividing net earnings by the weighted average number
of
ordinary and dilutive potential ordinary shares outstanding during the year.
Diluted potential ordinary shares consist of shares issuable pursuant to stock
option plan.
Contingencies
In
the
normal course of business, the Group is subject to contingencies, including
legal proceedings and claims arising out of the business that relate to a wide
range of matters, including among others, product liability. The Group
recognizes a liability for such contingency if it determines it is probable
that
a loss has occurred and a reasonable estimate of the loss can be made. The
Group
may consider many factors in making these assessments including past history
and
the specifics of each matter. As the Group has not become aware of any product
liability claim since operations commenced, the Group has not recognized a
liability for any product liability claims.
Recently
Issued Accounting Standards
In
September 2006, FASB issued SFAS No. 158 “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
No. 87, 88, 106, and 132(R)”. This Statement improves financial reporting by
requiring an employer to recognize the over funded or under funded status of
a
defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net assets
of a not-for-profit organization. This Statement also improves financial
reporting by requiring an employer to measure the funded status of a plan as
of
the date of its year-end statement of financial position, with limited
exceptions. An employer with publicly traded equity securities is required
to
initially recognize the funded status of a defined benefit postretirement
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
plan
and
to provide the required disclosures as of the end of the fiscal year ending
after December 15, 2006. An employer without publicly traded equity securities
is required to recognize the funded status of a defined benefit postretirement
plan and to provide the required disclosures as of the end of the fiscal year
ending after June 15, 2007. However, an employer without publicly traded equity
securities is required to disclose the following information in the notes
to financial statements for a fiscal year ending after December 15, 2006, but
before June 16, 2007, unless it has applied the recognition provisions of this
Statement in preparing those financial statements:
|
o
|
A
brief description of the provisions of this Statement;
|
|
|
The
date that adoption is required;
and
|
|
|
The
date the employer plans to adopt the recognition provisions of this
Statement, if earlier.
|
The
requirement to measure plan assets and benefit obligations as of the date of
the
employer’s fiscal year-end statement of financial position is effective for
fiscal years ending after December 15, 2008. Management is currently evaluating
the effect of this pronouncement on financial statements.
In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements”. This Statement amends ARB 51 to establish
accounting and reporting standards for the non-controlling (minority) interest
in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that
a
non-controlling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements. SFAS No. 160 is effective for the Company’s fiscal year
beginning October 1, 2009. Management is currently evaluating the effect of
this
pronouncement on financial statements.
In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”. This
Statement replaces SFAS No. 141, Business Combinations. This Statement retains
the fundamental requirements in Statement 141 that the acquisition method of
accounting (which Statement 141 called the purchase method) be used for all
business combinations and for an acquirer to be identified for each business
combination. This Statement also establishes principles and requirements for
how
the acquirer: a) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in the acquire; b) recognizes and measures the goodwill acquired in
the
business combination or a gain from a bargain purchase and c) determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. SFAS No. 141(R)
will apply prospectively to business combinations for which the acquisition
date
is on or after Company’s fiscal year beginning October 1, 2009. While the
Company has not yet evaluated this statement for the impact, if any, that SFAS
No. 141(R) will have on its consolidated financial statements, the Company
will
be required to expense costs related to any acquisitions after September 30,
2009.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
On
March
19, 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative
Instruments and Hedging Activities. The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. "Use and complexity of derivative instruments and hedging activities
have increased significantly over the past several years. This has led to
concerns among investors that the existing disclosure requirements in FASB
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities,
do not provide enough information about how these instruments and activities
affect the entity’s financial position and performance," explained Kevin
Stoklosa, project manager. "By requiring additional information about how and
why derivative instruments are being used, the new standard gives investors
better information upon which to base their decisions." The new standard also
improves transparency about the location and amounts of derivative instruments
in an entity’s financial statements; how derivative instruments and related
hedged items are accounted for under Statement 133; and how derivative
instruments and related hedged items affect its financial position, financial
performance, and cash flows. FASB Statement No. 161 achieves these improvements
by requiring disclosure of the fair values of derivative instruments and their
gains and losses in a tabular format. It also provides more information about
an
entity’s liquidity by requiring disclosure of derivative features that are
credit risk-related. Finally, it requires cross-referencing within footnotes
to
enable financial statement users to locate important information about
derivative instruments. Management is currently evaluating the effect of this
pronouncement on financial statements.
In
May of
2008, FSAB issued SFASB No.162, The Hierarchy of Generally Accepted Accounting
Principles. The pronouncement mandates the GAAP hierarchy reside in the
accounting literature as opposed to the audit literature. This has the practical
impact of elevating FASB Statements of Financial Accounting Concepts in the
GAAP
hierarchy. This pronouncement will become effective 60 days following SEC
approval. The Company does not believe this pronouncement will impact its
financial statements.
In
May of
2008, FASB issued SFASB No. 163, Accounting for Financial Guarantee Insurance
Contracts-an interpretation of FASB Statement No. 60. The scope of the statement
is limited to financial guarantee insurance (and reinsurance) contracts. The
pronouncement is effective for fiscal years beginning after December 31, 2008.
The Company does not believe this pronouncement will impact its financial
statements.
NOTE
3 - ACCOUNTS RECEIVABLES, NET
Accounts
receivables at September 30, 2008 and December 31, 2007 consist of the
following:
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
3 - ACCOUNTS RECEIVABLES, NET (continued)
|
|
9-30-2008
|
|
12-31-2007
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
|
|
(Unaudited)
|
|
|
|
Accounts
receivable
|
|
|
50,696
|
|
|
7,395
|
|
|
35,893
|
|
Less:
Allowance for doubtful accounts
|
|
|
(3,056
|
)
|
|
(446
|
)
|
|
(2,644
|
)
|
|
|
|
47,640
|
|
|
6,949
|
|
|
33,249
|
|
Bills
receivable
|
|
|
16,355
|
|
|
2,386
|
|
|
24,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,995
|
|
|
9,335
|
|
|
58,195
|
|
Bill
receivables are bank’s acceptance bills, which are guaranteed by
bank.
NOTE
4-INVENTORIES
Inventories
at September 30, 2008 and December 31, 2007 consist of the
following:
|
|
9-30-2008
|
|
12-31-2007
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
|
|
(Unaudited)
|
|
|
|
Raw
materials
|
|
|
18,460
|
|
|
2,693
|
|
|
14,944
|
|
Work-in-progress
|
|
|
2,130
|
|
|
311
|
|
|
956
|
|
Finished
goods
|
|
|
35,443
|
|
|
5,170
|
|
|
25,321
|
|
Consumables
and spare parts
|
|
|
524
|
|
|
76
|
|
|
449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,557
|
|
|
8,250
|
|
|
41,670
|
|
NOTE
5-PROPERTY, PLANT AND EQUIPMENT, NET
Property,
plant and equipment consist of the following:
|
|
9-30-2008
|
|
12-31-2007
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
|
|
(Unaudited)
|
|
|
|
Buildings
|
|
34,571
|
|
5,043
|
|
33,699
|
|
Plant
and equipment
|
|
|
280,531
|
|
|
40,923
|
|
|
276,943
|
|
Computer
equipment
|
|
|
1,336
|
|
|
195
|
|
|
1,007
|
|
Furniture
and fixtures
|
|
|
4,480
|
|
|
653
|
|
|
1,844
|
|
Motor
vehicles
|
|
|
1,739
|
|
|
254
|
|
|
1,273
|
|
|
|
|
322,657
|
|
|
47,068
|
|
|
314,766
|
|
Less:
accumulated depreciation
|
|
|
(107,947
|
)
|
|
(15,747
|
)
|
|
(86,457
|
)
|
|
|
|
214,710
|
|
|
31,321
|
|
|
228,309
|
|
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
5-PROPERTY, PLANT AND EQUIPMENT, NET
(continued)
Total
depreciation for the nine month period ended September 30, 2008 and 2007 was
RMB
18,510 (US$ 2,645) and RMB18,295 (US$2,388). For the periods three months ended
September 30, 2008 and 2007, depreciation expenses were RMB6,202 (US$ 905)
and
RMB6,553 (US$868).
NOTE
6 - CONSTRUCTION IN PROGRESS
Construction-in-progress
represents capital expenditure in respect of the BOPET production line and
the
trial production line. Construction in progress was RMB
301,155
(US$43,931) ended September 30, 2008, and RMB265,253 (US$36,362) ended December
31, 2007, respectively.
Interest
expense capitalized during the nine month period ended September 30, 2008 and
2007 was RMB 0 (US$0) and RMB4,012 (US$524), respectively. For the three month
period ended September 30, 2008 and 2007 the interest expense capitalized was
RMB 0 (US$0) and RMB1,433 (US$190), respectively.
NOTE
7 - LEASE PREPAYMENTS
As
of
September 30, 2008 and December 31, 2007, lease prepayments, net of amortization
were RMB22,638 (US$3,302) and RMB 22,290 (US$ 3,179), respectively.
Amortization
of land use rights for the nine month period ended September 30, 2008 and 2007
were RMB377 (US$ 54) and RMB 561(US$73), respectively. Amortization of land
use
rights for the three month period ended September 30, 2008 and 2007 were RMB117
(US$17) and RMB132 (US$17 ), respectively.
Amortization
expenses for the next five years after September 30, 2008 are as
follows:
|
|
RMB
|
|
US$
|
|
1
year after
|
|
|
503
|
|
|
73
|
|
2
year after
|
|
|
503
|
|
|
73
|
|
3
year after
|
|
|
503
|
|
|
73
|
|
4
year after
|
|
|
503
|
|
|
73
|
|
5
year after
|
|
|
503
|
|
|
73
|
|
NOTE
8 - DEPOSIT
On
January 20, 2008, Shandong Fuwei signed a “Letter of Intent of Joyinn Capital
Increase and Share Expansion”(“LOI”) with Joyinn Hotel Investment &
Management Co., Ltd. (“Joyinn”) and the Shareholder of Joyinn. Joyinn is a legal
company of limited liability that registered on May 19, 2006 in Beijing, with
registered capital of RMB 50,000. In order to grow, Joyinn plans to increase
its
registered capital by RMB 52,000 to a total of RMB 102,000, and plans to accept
Shandong Fuwei as a new shareholder to invest and buy its shares.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
8 - DEPOSIT (continued)
According
to the LOI, Shandong Fuwei deposited RMB 26,000 (half of the would-be added
register capital of RMB 52,000), to Joyinn as the prepayment as of March 31,
2008. The prepayment to Joyinn will be regarded as investment payment after
all
parties enter into the final capital increase and shares expansion agreement
during the effective term of this LOI. A share pledging agreement was entered
into subsequently on April 9, 2008 between Shandong Fuwei and Shandong Xinmeng
Investment Co., Ltd (“Pledger”), which holds 97.6% shares of Joyinn. The Pledger
agreed to pledge its 52% interest in Joyinn, as a guarantee to the prepayment
on
the newly increased register capital made by Shandong Fuwei to Joyinn. Based
on
the mutual supplementary agreement signed on June 2008, the prepayment has
decreased by RMB 5,000 and returned to the Company on June 18, 2008. As of
September 30, 2008, the actual total amount of the deposit paid to Joyinn was
RMB 21,000 (US$3,064).
NOTE
9 - SHORT-TERM BANK LOANS
|
|
Interest
|
|
9-30-2008
|
|
12-31-2007
|
|
Lender
|
|
rate
per annum
|
|
RMB
|
|
US$
|
|
RMB
|
|
|
|
|
|
|
|
|
|
|
|
Bank
of Communications Co., Ltd.
|
|
|
|
|
|
|
|
|
|
-
January 15, 2007 to January 15, 2008
|
|
|
6.73
|
%
|
|
-
|
|
|
-
|
|
|
100,000
|
|
-
February 6, 2007 to January 15, 2008
|
|
|
6.73
|
%
|
|
-
|
|
|
-
|
|
|
52,590
|
|
-
July 16, 2008 to June 10, 2009
|
|
|
8.22
|
%
|
|
82,580
|
|
|
12,047
|
|
|
-
|
|
-
July 18, 2008 to June 23, 2009
|
|
|
8.22
|
%
|
|
60,000
|
|
|
8,753
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weifang
Commercial Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
January 31, 2007 to January 30, 2008
|
|
|
3.06
|
%
|
|
-
|
|
|
-
|
|
|
16,500
|
|
-
October 30, 2007 to January 24, 2008
|
|
|
0.00
|
%
|
|
-
|
|
|
-
|
|
|
3,500
|
|
-
January 24, 2008 to January 12, 2009
|
|
|
0.00
|
%
|
|
10,000
|
|
|
1,459
|
|
|
-
|
|
-
January 30, 2008 to January 18, 2009
|
|
|
0.00
|
%
|
|
10,000
|
|
|
1,459
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank
of China
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
August 25, 2007 to August 24, 2008
|
|
|
6.02
|
%
|
|
-
|
|
|
-
|
|
|
4,826
|
|
-
August 13, 2007 to August 12, 2008
|
|
|
6.03
|
%
|
|
-
|
|
|
-
|
|
|
3,399
|
|
-
August 31, 2007 to August 30, 2008
|
|
|
6.01
|
%
|
|
-
|
|
|
-
|
|
|
2,252
|
|
-
August 31, 2007 to August 30, 2008
|
|
|
6.01
|
%
|
|
-
|
|
|
-
|
|
|
3,100
|
|
-
November 14, 2007 to November 14, 2008
|
|
|
5.66
|
%
|
|
1,785
|
|
|
260
|
|
|
1,860
|
|
-
March 13, 2008 to March 13, 2009
|
|
|
5.45
|
%
|
|
2,126
|
|
|
310
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,491
|
|
|
24,287
|
|
|
188,027
|
|
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
9 - SHORT-TERM BANK LOANS (continued)
As
of
September 30, 2008 and December 31, 2007, the Company had entered into various
loan agreements with commercial banks with terms ranging from six months to
one
year to finance its working capital, construction, and foreign trade. None
of
the loan agreements requires the Company to comply with financial covenants.
The
weighted average interest rate of short-term bank loans outstanding as of
September 30, 2008 and December 31, 2007 were 6.88% and 6.22% per annum,
respectively.
The
principal amounts of the above short-term loans are repayable at the end of
the
loan period.
In
August
2007,
Shandong
Fuwei was recommended by Bank of China Weifang branch to invest in a foreign
currency investment portfolio,
targeting to reduce the cost of foreign
exchange when Shandong Fuwei imports raw materials. As of September 30, 2008,
the company has obtained loans with total amount of USD 570 (RMB 3,911) in
US
Dollars from Bank of China in November 2007 and March 2008, respectively, for
which two parties have signed the foreign currency loan contracts with one-year
term and the loan interest rates of which were lower than the benchmark interest
rate of the People’s Bank of China, ranging between 5.45% and 5.66% per
annum.
NOTE
10 - INTEREST EXPENSE
The
Group
capitalizes interest expense as a component of the cost of construction in
progress. The following is a summary of interest cost incurred during the nine
months periods ended September 30, 2008 and 2007:
|
|
9-30-2008
|
|
9-30-2007
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
|
|
(Unaudited)
|
|
|
|
Interest
cost capitalized
|
|
-
|
|
-
|
|
4,012
|
|
Interest
cost charged to expense
|
|
|
9,037
|
|
|
1,291
|
|
|
6,581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,037
|
|
|
1,291
|
|
|
10,593
|
|
NOTE
11-INCOME TAX
The
Company is registered in Cayman Islands and has operations primarily in two
tax
jurisdictions - the PRC and Cayman Island.
The
provision for income taxes from operations consists of the following for the
nine month period ended September 30, 2008 and 2007:
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
11-INCOME TAX
(continued)
|
|
|
9-30-2008
|
|
|
9-30-2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(RMB)
|
|
|
(USD)
|
|
|
(RMB)
|
|
Cayman
Islands Current Income Tax Expense (Benefit)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
PRC
Current Income Expense (Benefit)
|
|
|
2,
560
|
|
|
366
|
|
|
4,702
|
|
Deferred
Tax Expense (Benefit)
|
|
|
(55
|
)
|
|
(8
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Provision for Income Tax
|
|
|
2,505
|
|
|
358
|
|
|
4,702
|
|
The
following is a reconciliation of the provision for income taxes at the
respective income tax rate to the income reflected in the Statement of
Operations:
|
|
|
9-30-2008
|
|
|
9-30-2007
|
|
|
|
|
|
|
|
|
|
Tax
expense (credit) - Cayman Islands
|
|
|
0
|
%
|
|
0
|
%
|
Foreign
income tax - PRC
|
|
|
15
|
%
|
|
15
|
%
|
Exempt
from income tax due to tax holidays
|
|
|
(6
|
%)
|
|
(6
|
%)
|
Tax
expense at actual rate
|
|
|
9
|
%
|
|
9
|
%
|
Cayman
Islands Ta
x
Under
the
current law of Cayman Island, the Company is not subject to tax on income or
capital gain. In addition, upon payments of dividends by the Company to its
shareholders, no Cayman Islands withholding tax is imposed.
PRC
Tax
Pursuant
to the acquisition by Fuwei (BVI), Shandong Fuwei became a wholly foreign-owned
enterprise under the laws of the PRC on January 5, 2005. Accordingly, Shandong
Fuwei is entitled to a new 2-year exemption and the 3-year 50% reduction
for Foreign Enterprise Income Tax holiday whereby the profit for the first
two
financial years beginning with the first profit-making year (after setting
off
tax losses carried forward from prior years) is exempted from income tax in
the
PRC and the profit for each of the subsequent three financial years is taxed
at
50% of the prevailing tax rates set by the relevant tax authorities. The tax
holiday of Shandong Fuwei commenced in 2005. Shandong Fuwei was exempted from
PRC income tax for the period from January 28, 2003 to December 31, 2006, and
50% reduction in tax rate for the year ended December 31, 2007 and in the nine
month period ended September 30, 2008. In addition, being a Hi-Tech Enterprise
in the Weifang Hi-Tech Industrial Zone in Shandong, according to the PRC Income
Tax Law and various approval documents issued by the Tax Bureau, the applicable
income tax rate for Shandong Fuwei is 15%.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
11-INCOME TAX
(continued)
The
New
Tax Law was adopted on March 16, 2007 in the PRC. Under the New Tax Law, which
became effective on January 1, 2008, domestic enterprises and foreign-invested
enterprises will generally become subject to a unified enterprise income tax
rate of 25%, except that enterprises incorporated prior to March 16, 2007 may
continue to enjoy existing preferential tax treatments until January 1, 2013.
Pursuant the New Tax Law, even if the Company continues to maintain its
High-Tech Enterprise status, Shandong Fuwei will be subject to the increased
25%
unified enterprise income tax rate after January 1, 2013.
Income
tax benefit reported in the consolidated statements of income differs from
the
income tax expense amount computed by applying the PRC income tax rate (the
statutory tax rate of the Company’s principal subsidiary). For the periods ended
September 30, 2008 and December 31, 2007, due to the tax holiday the Company’s
effective tax rates were both at 7.5%, saving 50% of the 15% rate for High-Tech
Enterprises located in the Development District of national level in China.
The
effective income tax rate for the nine month period ended September 30, 2008
and
2007 were 9% and 9%, respectively.
Tax
effects of temporary differences that give rise to significant portions of
the
deferred tax assets/(liabilities) as of September 30, 2008 and December 31,
2007, are presented below.
|
|
9-30-2008
|
|
9-30-2007
|
|
|
|
RMB
|
|
USD
|
|
RMB
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(263
|
)
|
|
(38
|
)
|
|
(295
|
)
|
Other
receivables
|
|
|
48
|
|
|
7
|
|
|
30
|
|
|
|
|
(215
|
)
|
|
(31
|
)
|
|
(265
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment, principally due to differences in
depreciation
and capitalized interest
|
|
|
2,082
|
|
|
304
|
|
|
2,134
|
|
Construction
in progress, principally due to capitalized interest
|
|
|
(680
|
)
|
|
(99
|
)
|
|
(735
|
)
|
Lease
prepayments, principally due to differences in charges
|
|
|
(427
|
)
|
|
(62
|
)
|
|
(431
|
)
|
|
|
|
975
|
|
|
142
|
|
|
969
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
deferred income tax assets
|
|
|
760
|
|
|
111
|
|
|
704
|
|
In
assessing the realizability of deferred tax assets, management considers whether
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. In order to fully realize
the deferred tax asset, Shandong Fuwei will need to generate future taxable
income of approximately RMB12,544 prior to 2031. Shandong Fuwei was under tax
concession period for the period from January 28, 2003 to December 31, 2006.
The
profit before taxation for Shandong Fuwei for the year ended December 31,
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
11-INCOME TAX
(continued)
2005,
2006 and 2007 was RMB58,586, RMB69,933 and RMB47,260 (US$6,214), respectively.
Based upon the level of historical performance of Shandong Fuwei, management
believes the deferred tax assets are realizable.
Effect
of Adoption of FASB Interpretation No. 48 (Fin 48), “Accounting for Uncertainly
in Income Taxes
In
2006,
the Financial Accounting Standards Board (FASB) issued FIN 48, which clarifies
the application of SFAS 109 by defining a criterion that an individual income
tax position must meet for any part of the benefit of that position to be
recognized in an enterprise’s financial statements and provides guidance on
measurement, recognition, classification, accounting for interest and penalties,
accounting in interim periods, disclosure and transition. In accordance with
the
transition provisions, the Company adopted FIN 48 effective January 1, 2007.
The
Company recognizes that virtually all tax positions in the PRC are not free
of
some degree of uncertainty due to tax law and policy changes by the state.
However, the Company cannot reasonably quantify political risk factors and
thus
must depend on guidance issued by current state officials.
Based
on
all known facts and circumstances and current tax law, the Company believes
that
the total amount of unrecognized tax benefits as of September 30, 2008, is
not
material to its results of operations, financial condition or cash flows. The
Company also believes that the total amount of unrecognized tax benefits as
of
September 30, 2008, if recognized, would not have a material effect on its
effective tax rate. The Company further believes that there are no tax positions
for which it is reasonably possible, based on current Chinese tax law and
policy, that the unrecognized tax benefits will significantly increase or
decrease over the next 12 months producing, individually or in the aggregate, a
material effect on the Company’s results of operations, financial condition or
cash flows.
NOTE
12- EARNINGS PER SHARE
The
Company adopted Statement of Financial Accounting Standards No. 128, "Earnings
per Share" (SFAS 128). SFAS 128 requires the presentation of earnings per share
(EPS) as Basic EPS and Diluted EPS.
Basic
earnings per share are computed by dividing net earnings by the weighted average
number of ordinary shares outstanding during the year. Diluted earnings per
share is calculated by dividing net earnings by the weighted average number
of
ordinary and dilutive potential ordinary shares outstanding during the year.
Diluted potential ordinary shares consist of shares issuable pursuant to stock
option plan.
The
weighted average number of shares used to calculate EPS was 13,062,500 for
the
nine month periods ended September 30, 2008 and 2007, respectively, and reflect
only the shares outstanding for those periods.
The
Company uses the treasury stock method to compute dilution related to
outstanding stock options. Because the option price exceeded the market price
for common stock at September 30, 2008, the options were anti-dilutive and
were
not included when computing diluted earning per share.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
12- EARNINGS PER SHARE (continued)
Basic
and
diluted earnings per share were RMB 1.89 ($0.27) and RMB3.54 ($0.46) for the
nine month period ended September 30, 2008 and 2007, respectively.
The
Company adopted SFAS No. 123 (Revised 2004), Share Based Payment ("SFAS
No. 123R"), under the modified-prospective transition method on
January 1, 2006. SFAS No. 123R requires companies to measure and
recognize the cost of employee services received in exchange for an award of
equity instruments based on the grant-date fair value. Share-based compensation
recognized under the modified-prospective transition method of SFAS
No. 123R includes share-based compensation based on the grant-date fair
value determined in accordance
with
the
original provisions of SFAS No. 123, Accounting for Stock-Based
Compensation, for all share-based payments granted prior to and not yet vested
as of January 1, 2006 and share-based compensation based on the grant-date
fair-value determined in accordance with SFAS No. 123R for all share-based
payments granted after January 1, 2006. SFAS No. 123R eliminates the
ability to account for the award of these instruments under the intrinsic value
method proscribed by Accounting Principles Board ("APB") Opinion No. 25,
Accounting for Stock Issued to Employees, and allowed under the original
provisions of SFAS No. 123.
NOTE
13 - STOCK OPTION PLAN
On
December 22, 2006, the Company granted 187,500 stock options to Maxim Group
LLC
as part of the compensation for the provision of services relating to the
initial public offering, or IPO, of the Company. The stock option is exercisable
at an exercise price equal to US$10.35 per ordinary shares and expires on
December 22, 2011. The stock option and ordinary shares underlying the stock
option may not be sold, transferred, assigned, pledged or hypothecated, or
be
the subject of any hedging, short sale, derivative, put or call transaction
that
would result in the effective disposition thereof by any person for a period
of
nine months. The fair value of each option award is estimated on the date of
grant using the Black-Scholes pricing model based on the following
assumptions:
Fair
value of shares on measurement date
|
|
US$ 8.28 per share
|
|
Expected
volatility
|
|
|
57.26
|
%
|
Expected
dividends
|
|
|
0.00
|
%
|
Expected
term (in years)
|
|
|
5
|
|
Risk-free
rate
|
|
|
4.56
|
%
|
The
fair
value of the Company’s shares was estimated based on the IPO price of US$8.28
per share. The expected volatility is estimated by reference to the historical
volatility of comparable companies listed on the Nasdaq Global Market. The
risk-free rate for periods within the contractual life of the options is based
on the U.S. government bond in effect at the time of grant. Expected dividend
yields are based on historical dividends. Changes in these subjective input
assumptions could materially affect the fair value estimates.
As
of
September 30, 2008, there was no unrecognized compensation costs related to
unvested stock options.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
13 - STOCK OPTION PLAN (continued)
Following
is a summary of the stock option
activity:
|
|
Options
outstanding
|
|
Weighted
Average Exercise Price
|
|
Aggregate
Intrinsic
Value
|
|
Outstanding,
December 31, 2007
|
|
|
187,500
|
|
$
|
10.35
|
|
$
|
-
|
|
Granted
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Forfeited
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Outstanding,
September 30, 2008
|
|
|
187,500
|
|
$
|
10.35
|
|
$
|
-
|
|
Following
is a summary of the status of options outstanding at September 30, 2008:
Outstanding
Options
|
|
Exercisable
Options
|
|
Exercise
Price
|
|
Number
|
|
Average
Remaining
Contractual
Life
|
|
Average
Exercise
Price
|
|
Number
|
|
Average
Exercise Price
|
|
$
|
10.35
|
|
|
187,500
|
|
|
3.
25
|
|
$
|
10.35
|
|
|
187,500
|
|
$
|
10.35
|
|
NOTE
14 - COMMITMENTS AND CONTINGENCIES
Commitments
Shandong
Fuwei is operating a rental BOPET production line with Shandong Weifang Legang
Food Co., Ltd (“Legang”) for a term of three years, which began in April 2007.
The operating leases also include, among other things, the Company’s rental of a
warehouse, offices and staff quarters. The term of these leases typically ranges
from 1 to 3 years, and are renewable, subject to renegotiation of terms, upon
expiration.
The
following is a schedule by year of future minimum rental payments required
under
the operating lease agreements:
Year
after September 30, 2008
|
|
RMB
|
USD
|
1
year after
|
|
3,407
|
497
|
2
year after
|
|
1,667
|
243
|
Contingencies
In
2006,
Shandong Fuwei received correspondence relating to an arbitration proceeding
initiated by DMT S. A. (“DMT”) against Shandong Neo-Luck in the ICC
International Court of Arbitration (the “ICC”) in which DMT sought monetary
damages against Shandong Neo-Luck of approximately US $1,250 plus interest
relating to a claim of partial non-payment for the DMT production line Shandong
Fuwei acquired from Beijing Baorui in 2005. In early 2007, the ICC determined
that, despite arguments made to the ICC that Company should not be a party
to
the proceeding, the arbitration should proceed with Fuwei as the respondent
pending adjudication of issues relating to jurisdiction and
liability.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
14 - COMMITMENTS AND CONTINGENCIES (continued)
A
hearing
was held by the ICC in November 2007. Subsequent to the hearing, at the
invitation of Weifang Neoluck (Group) Co., Ltd (“Neoluck Group”), the original
majority shareholder of Shandong Neo-Luck, the Neoluck Group and DMT engaged
in
efforts to achieve a settlement of the pending arbitration on January 18, 2008.
Shandong Fuwei joined these discussions later as an interested party and in
order to support a resolution of the pending dispute and to achieve resolution
of certain outstanding service and spare part issues.
After
several weeks of negotiations among the parties, in March 2008, the parties
entered into two agreements, a Service and Technical Assistance Agreement (the
“Service Agreement”), between DMT and Shandong Fuwei, and a Settlement Agreement
(the “Settlement Agreement”) between DMT and the Neoluck Group. Under the
Service Agreement, Shandong Fuwei would pay an amount of US$ 180 in two
installments with respect to service and spare parts. The Company made its
first
payment in April 2008.
Under
the
Settlement Agreement, the Neoluck Group was obligated to pay an amount equal
to
US$ 900 in RMB by delivery of a bank draft to DMT. In late April, the Neoluck
Group had not performed its obligation under the Settlement Agreement and the
Neoluck Group and DMT entered into a Supplemental Agreement pursuant to which
the Neoluck Group would pay the amount owed to DMT in two installments. The
Neoluck Group paid the first installment equal to US$ 450 in April 2008. As
agreed between Neoluck Group and DMT, the remaining US$ 450 will be paid in
installments by the end of December 2008. As of November 7, 2008, Neoluck Group
has paid US$ 200.
In
the
event the arbitration proceedings continue as a result of non-performance of
the
payment obligation, it is possible for the arbitral tribunal for the ICC
International Court of Arbitration to rule in favor of DMT, which might result
in a liability for Fuwei for the amount claimed plus interest. However, any
possible liability regarding DMT’s claim should be reduced by the amount
previously paid to DMT in connection with the above-described settlement. It
should be noted further in such event that Fuwei might have sustainable claims
for damages as against the Neoluck Group for its failure to perform its
obligations under the Settlement Agreement.
HKG
Arbitration
At
December 31, 2007, Hampden Kent Group LLC had threatened the Company with
an arbitration, seeking a penalty fee in the amount of US$ 3,800, relating
to
services allegedly performed by HKG in attempting to provide financing to Fuwei
pursuant to an August 19, 2006 letter agreement (the "Letter
Agreement") between the parties. Pursuant to the Letter Agreement,
any dispute between the parties would be arbitrated by the American Arbitration
Association (“AAA”) in accordance with its Commercial Arbitration
Rules. Pursuant to these rules, a demand for arbitration must be filed with
the
AAA regional office together with a filing fee by the claimant, in this
case, HKG.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
14 - COMMITMENTS AND CONTINGENCIES (continued)
In
December 2007, HKG filed a demand for arbitration with the International Centre
for Dispute Resolution of the AAA (“AAA/ICDR”). On January 28, 2008, the
AAA/ICDR informed us that an arbitration process would commence in
accordance with its rules. On February 18, 2008, HKG submitted an
Amended Demand for Arbitration and Statement of Claim.
On
March
14, 2008, the Company submitted its answering statement and counterclaim in
response to HKG's Amended Demand for Arbitration and Statement of Claim. The
Company denied HKG's claims for breach of contract and breach of the covenant
of
good faith and fair dealing as legally and factually without merit and asserted
various defenses. The Company also asserted a counterclaim against HKG for
breach of the Letter Agreement, seeking to recover the over USD$300 in fees
and
costs paid to HKG and other consequential damages.
On
March
27, 2008, HKG submitted a letter in reply to the Company's counterclaim,
generally denying the allegations and claims made by the Company.
At
the
request of HKG, the Company had agreed to attempt to resolve this dispute
through mediation. A neutral mediator was appointed by the AAA/ICDR. On April
24, 2008, HKG unilaterally cancelled the mediation and sought to proceed with
the arbitration. A panel of three
arbitrators
(the “Panel”) was appointed, and a hearing on the parties’ respective
claims was scheduled to commence on September 22, 2008. By orders
dated September 9 and 15, 2008, the Panel suspended the hearing pending receipt
of a full deposit of the arbitrators’ fees. The arbitration remains suspended
pending receipt of the outstanding deposit.
The
Company believes that HKG’s allegations are without merit and intends to defend
itself vigorously against the claims. Management estimated the exposure to
the
claim ranges from US$0 to US$3,800 as of September 30, 2008.
Class
Action
On
October 19, 2007, the Company became aware that a class action lawsuit had
been
filed in the United States District Court for the Southern District of New
York,
on behalf of all purchasers of the Company’s stock from the date of the
Company’s IPO on December 19, 2006 through October 16, 2007. The complaint
alleged that the Company and certain of its present and former officers,
directors, and shareholders (collectively, the “defendants”) violated the
Securities Act of 1933.
On
November 21, 2007, the Company was given notice that a second class action
lawsuit had been filed in the United States District Court for the Southern
District of New York, commenced on behalf of all purchasers of the Company’s
stock pursuant or traceable to the Registration Statement and Prospectus issued
in connection with the Company’s IPO on December 19, 2006 through November 12,
2007. The complaint alleged that the Company, its underwriters, and certain
of
its executives (collectively, the “Defendants”) violated Sections 11, 12(2) and
15 of the Securities Act of 1933. The complaint also alleged that the Defendants
misrepresented or omitted material information regarding the Company and its
business operations.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
14 - COMMITMENTS AND CONTINGENCIES (continued)
On
January 24, 2008, the Court consolidated into a single action the putative
securities class actions pending against the Company and certain of its
officers, directors, and shareholders. The Court also appointed
Ninyat Tonyaz as lead plaintiff, appointed the Rosen Law Firm, P.A. as lead
counsel, and granted plaintiffs leave to file a consolidated amended class
action complaint. The consolidated action is styled
In
re
Fuwei Films Securities Litigation
, Case
No. 07-CV-9416 (RJS).
On
March
14, 2008, plaintiffs filed a consolidated amended class action
complaint (the "Amended Complaint") naming as defendants the
Company, Xiaoan He, Mark Stulga, Jun Yin, Tongju Zhou, Duo Wang, and the
Company's IPO underwriters — Maxim Group LLC, WR Hambrecht + Co., and
Chardan Capital Markets, LLC. The Amended Complaint asserts
claims for violation of Sections 11, 12(a)(2), and 15 of the Securities Act
of
1933. The Company, Messrs. He and Stulga, and the Underwriter Defendants
were served with the Amended Complaint and, as described below, have moved
to
dismiss the claims asserted against them.
Pursuant
to a scheduling order entered by the Court on February 19, 2008, the parties
named as defendants in the consolidated class action were required to answer
or
otherwise respond to the Amended Complaint on or before April
30, 2008. The Court subsequently extended defendants’ time to respond to
the Amended Complaint to May 14, 2008.
The
Company and Messrs. He and Stulga filed a motion to dismiss the Amended
Complaint in its entirety. The Underwriter Defendants separately
moved to dismiss the Amended Complaint. Both motions have been fully
briefed, and the parties await the Court's decision.
The
Company’s management believes that the allegations are without merit. The
Company intends to defend itself vigorously against the claims and has engaged
a
law firm in this regard. However, the
Company's management is currently unable to reasonably estimate
the amount or range of possible losses that will result from the ultimate
resolution of this matter. As of September 30, 2008, the Company has not
accrued any liability in connection with these litigations except for the
defense expenses.
On
November 3, 2008, Plaintiffs filed proofs of service with the Court, indicating
that Messrs. Yin, Zhou, and Wang were served with the Amended Complaint on
or
about August 14, 2008, and that they had 90 days after such date to serve an
answer to the Amended Complaint or a motion pursuant to Rule 12 of the Federal
Rules of Civil Procedure.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
15 - MAJOR CUSTOMERS AND VENDORS
There
were no major customers which accounting over 10% of the total net revenue
for
the nine month period ended September 30, 2008 and 2007.
One
vendor provided approximately 17.3% of the Company’s raw materials for the nine
months ended September 30, 2008. The Company had RMB16,160 ($2,357) advance
to
the vendor as of September 30, 2008.
Three
vendors provided approximately 69% of the Company’s raw materials for the nine
month periods ended September 30, 2007 with each vendor individually accounting
for about 38%, 17%, and 14%. The Company had $67 accounts payable to these
vendors as of September 30, 2007.
NOTE
16 - OTHER EVENT, SUBSEQUENT EVENT AND LITIGATION PREVIOUSLY
REPORTED
On
March
26, 2008, the Korean Trading Committee (“KTC”) rendered a preparatory decision
on dumping practices and their industrial injuries. At the end of March, the
Company received the initial anti-dumping judgment from KTC. The Company was
informed it would receive an anti-dumping duty (“ADD”) of 6.13%. KTC made a
final determination of the anti-dumping investigation for BOPET films originated
in China and India in August 27, 2008. The final determination of the ADD rate
for Fuwei is at 5.67%, versus 6.13% in the preliminary determination. The ADD
rate for other Chinese companies is 23.6% except two other companies that enjoy
the ADD rate of 8.93% and 15.95%, respectively.
U.S.
began an anti-dumping investigation for BOPET films in October 2007. The
countries investigated were China, Brazil, Thailand, and the United Arab
Emirates. A total of 41 Chinese companies were part of this investigation.
In
October 2008, the final results of the investigation were announced. Fuwei
was
among five Chinese companies that received the lowest anti-dumping duty rate
of
3.49% in China with the other Chinese companies assessed a duty rate of 76.72%.
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
References
to "dollars" and "US$" are to United States Dollars. References to "we", "us",
the "Company" or "Fuwei" include Fuwei Films (Holdings) Co., Ltd. and its
subsidiaries, except where the context requires otherwise.
Results
of operations for the nine month periods ended September 30, 2008 compared
to
September 30, 2007
The
Company entered the first nine months of 2008 with a number of challenges
including strong competitions in the marketplace, an increase in the cost of
raw
materials, energy and labor, especially the rapid changes in the macro-economic
environments both at home and abroad, anti-dumping investigations in the United
States and Korea, and the inadequate domestic and overseas market demand
resulting from the world-wide financial crisis, which originated in the United
States during the third quarter. In addition, the tremendous volatility in
prices of crude oil has caused the sudden changes in our raw material prices
which has caused a decrease in market demand of our products and decrease in
the
sales price. Furthermore, the implementation of Chinese macro control policy
by
the Chinese government this year and the Chinese government’s support for
environmental protection and the measures taken by the government against
excessive luxurious packaging has caused the demand for the high-end and
luxurious BOPET films to decline. Despite the fact that we have received the
comparatively lower anti-dumping duty rate from Korea and the United States,
which was expected to have positive effects on recovering overseas sales,
current overseas sales still remained the same and export sales price
continuously decreased, resulting from the decreased demand in overseas market
caused by the financial crisis. Consequently, the results of the first nine
months in 2008 were not as strong as the same period last year and such trend
is
expected to last until 2009.
The
table
below sets forth certain line items from our Statement of Income as a percentage
of revenue:
|
|
Nine
Month Period Ended
September
30, 2008
|
|
Nine
Month Period Ended
September
30, 2007
|
|
|
|
(as
% of Revenue)
|
|
Gross
profit
|
|
|
16.7
|
|
|
24.6
|
|
Operating
expenses
|
|
|
(8.2
|
)
|
|
(7.1
|
)
|
Operating
income
|
|
|
8.5
|
|
|
17.5
|
|
Other
income/(expense)
|
|
|
(0.7
|
)
|
|
(1.9
|
)
|
Income
tax benefit/(expense)
|
|
|
(0.7
|
)
|
|
(1.4
|
)
|
Net
income
|
|
|
7.1
|
|
|
14.2
|
|
Revenue
The
Company’s revenue is primarily derived from the manufacture and sale of plastic
films.
Net
sales
during the nine month period ended September 30, 2008 amounted to RMB 348.6
million (US$ 49.8 million), compared to RMB 327.8 million (US$ 42.8 million)
during the same period 2007, representing a 6.3% increase.
The
sales
of specialty films during the nine month period ended September 30, 2008 were
RMB 97.0 million (US$ 13.9 million), a decrease 23.9% compared to the same
period last year. Sales of specialty films in the nine months ended 2008
reflected 27.8% of total net revenues as compared to 38.9% in the same period
of
2007. The decline was mainly due to the decreased demand volume of some
specialty films, including Matte film and Embossing film, for high-end and
luxurious packaging application from certain customers, such as the tobacco
packaging manufacturers, whose product packaging design needed to be adjusted
according to the relevant regulations of the country.
The
following is a breakdown of commodity and specialty film sales (amounts in
thousands):
|
|
Nine
Month Period
Ended
September
30,2008
|
|
% of Total
|
|
Nine
Month Period
Ended
September
30,2007
|
|
% of Total
|
|
|
|
RMB
|
|
US$
|
|
|
RMB
|
|
|
|
|
|
|
|
|
|
|
|
|
Printing
film
|
|
|
48,047
|
|
|
6,865
|
|
|
13.8
|
%
|
|
59,961
|
|
|
18.3
|
%
|
Stamping
film
|
|
|
87,916
|
|
|
12,561
|
|
|
25.2
|
%
|
|
75,288
|
|
|
23.0
|
%
|
Metallization
film
|
|
|
35,915
|
|
|
5,132
|
|
|
10.3
|
%
|
|
21,944
|
|
|
6.7
|
%
|
Base
film for other applications
|
|
|
79,716
|
|
|
11,390
|
|
|
22.9
|
%
|
|
43,173
|
|
|
13.1
|
%
|
Special
film
|
|
|
97,035
|
|
|
13,864
|
|
|
27.8
|
%
|
|
127,481
|
|
|
38.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
348,629
|
|
|
49,812
|
|
|
100.0
|
%
|
|
327,847
|
|
|
100.0
|
%
|
Overseas
sales during the nine months ended September 30, 2008 were RMB 48.7 million
(US$7.0 million), which accounted for 14.0% of our total net revenues as
compared to RMB 90.9 million (US$11.9 million) and 27.7% in the same period
of
2007, which is 46.4% lower than the same period last year. The decrease in
export sales was mainly due to the decrease in tax rebate rate from 11% to
5%,
the continuous appreciation of RMB versus the U.S dollar and the
Korean
won
,
the
influence of anti-dumping regulation in Korea and the U.S, and the decrease
in
demand caused by the worldwide financial crisis.
The
following is a breakdown of PRC domestic and overseas sales (amounts in
thousands)
|
|
Nine
Month Period
Ended
September
30,2008
|
|
% of Total
|
|
Nine
Month Period
Ended
September
30,2007
|
|
% of Total
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
|
|
|
|
|
|
Sales
in China
|
|
|
299,975
|
|
|
42,860
|
|
|
86.0
|
%
|
|
236,971
|
|
|
72.3
|
%
|
Sales
in other countries
|
|
|
48,654
|
|
|
6,952
|
|
|
14.0
|
%
|
|
90,876
|
|
|
27.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
348,629
|
|
|
49,812
|
|
|
100.0
|
%
|
|
327,847
|
|
|
100.0
|
%
|
Cost
of Goods Sold
Our
cost
of goods sold comprises mainly of material costs, factory overhead, packaging
materials and direct labor. The breakdown of our cost of goods sold in
percentage is as follows:
|
|
Nine
Month Period
Ended
September
30, 2008
|
|
Nine
Month Period
Ended
September
30, 2007
|
|
|
|
%
of total
|
|
%
of total
|
|
Materials
costs
|
|
|
79.7
|
%
|
|
81.8
|
%
|
Factory
overhead
|
|
|
8.5
|
%
|
|
8.2
|
%
|
Power
|
|
|
7.9
|
%
|
|
6.3
|
%
|
Packaging
materials
|
|
|
2.7
|
%
|
|
2.8
|
%
|
Direct
labor
|
|
|
1.2
|
%
|
|
0.9
|
%
|
Cost
of
goods sold during the first nine months of 2008 totaled RMB 290.5 million (US$
41.5 million) as compared to RMB 247.3 million (US$32.3 million) in the prior
year. This is 17.5% higher than the same period of 2007 mainly due to the
increased production volume during the first nine months of 2008 compared to
that of the same period in 2007. Additionally, the increased consumption of
raw
material, power, labor and factory overhead in the first nine months of 2008
compared to that of the corresponding period in 2007 also resulted in the
increase of cost of goods.
Gross
Profit
Our
gross
profit was RMB 58.1 million (US$ 8.3 million) during the first nine months
of
2008, representing a gross margin of 16.7%, a decrease of 7.9% from the same
period in 2007 with a gross profit of 24.6%, mainly due to the decreased average
sales price of our products and the increased consumption of raw materials,
power, and labor during the first nine months of 2008 compared to the same
period in 2007.
Operating
expenses
Operating
expenses for the nine months ended September 30, 2008 were RMB28.5 million
(US$4.1 million), which was RMB5.3 million (US$0.8 million), or 22.8%, higher
than the same period in 2007. This was mainly due to the increased allowance
for
doubtful accounts, domestic transportation expenses, labor costs, and the legal
expenses relating to ongoing litigation matters during the first nine months
of
2008 as compared to the same period in the prior year.
Interest
Expense
Interest
expense totaled RMB 9.0 million (US$1.3 million) during the first nine months
of
2008, which was 36.4% higher compared to RMB 6.6 million (US$ 0.9million) during
the same period in 2007. The increase is mainly due to increased interest rate
during the first half of 2008.
Other
Income /(expense)
Our
total
other expense during the period ended September 30, 2008 amounted to RMB2.4
million (US$ 0.3 million). After other income offsets other expense, the net
other expense decreased by RMB4.0 million (US$ 0.6 million) compared
to the corresponding period of 2007, the decrease mainly is due to the increase
of other income.
Income
Tax Expense
During
the first nine months of 2008, the Company recorded an income tax expense of
RMB
2.5 million (US$ 0.4 million) compared to RMB 4.7 million (US$ 0.6 million)
during the same period in 2007. This decrease was due to a decrease in taxable
income.
Net
Income
Net
Income during the first nine months of 2008 was RMB24.7 million (US$ 3.5
million) compared to RMB46.3million (US$6.0 million) during the same period
of
2007, representing a decrease of 46.7% from the same period in 2007. The
decrease in net income was primarily due to the decrease in gross profit, and
the increased operating expenses related to being a public reporting company,
such as increased legal expenses relating to ongoing litigation matters and
insurance fee.
Results
of operations for three month period ended September 30, 2008 compared to
September 30, 2007.
Net
sales
The
table
below sets forth certain line items from our Statement of Income as a percentage
of net sales:
|
|
Three
Month Period Ended
September
30, 2008
|
|
Three
Month Period Ended
September
30, 2007
|
|
|
|
(as
% of Revenue)
|
|
Gross
profit
|
|
|
12.1
|
|
|
21.9
|
|
Operating
expenses
|
|
|
(7.0
|
)
|
|
(7.4
|
)
|
Operating
income
|
|
|
5.2
|
|
|
14.5
|
|
Other
income/(expense)
|
|
|
(1.3
|
)
|
|
(1.2
|
)
|
Income
tax benefit/(expense)
|
|
|
(0.5
|
)
|
|
(1.3
|
)
|
Net
income
|
|
|
5.9
|
|
|
12.0
|
|
Net
sales
for the third quarter 2008 increased slightly to RMB 119.8 million
(US$17.5million) from RMB 107.7 million (US$14.3 million), 11.2% higher than
the
third quarter 2007. The increase was mainly due to an increase in total quantity
of sales in the third quarter 2008 compared to same period in 2007.
Sales
of
specialty films in the third quarter of 2008 were RMB 22.1million ($3.2million),
a decrease of 46.1% compared to the third quarter last year. Sales of specialty
films reflected 18.5% of Fuwei’s total net revenues as compared to 38.1% in the
same period in 2007. The decline was mainly due to the decreased demand volume
of some specialty films, including Matte film and Embossing film, for high-end
and luxurious packaging application from certain customers, such as the tobacco
packaging manufactuers, whose product packaging design needed to be adjusted
according to the relevant regulations of the country.
The
following is a breakdown of commodity and specialty film sales (amounts in
thousands):
|
|
Three
Month Period
ended
Sep. 30, 2008
|
|
% of Total
|
|
Three
Month Period
ended
Sep. 30, 2007
|
|
% of Total
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
|
|
|
|
|
|
|
|
|
|
|
Printing
film
|
|
|
16,661
|
|
|
2,431
|
|
|
13.9
|
%
|
|
18,327
|
|
|
17.0
|
%
|
Stamping
film
|
|
|
41,945
|
|
|
6,121
|
|
|
35.0
|
%
|
|
24,224
|
|
|
22.5
|
%
|
Metallization
film
|
|
|
20,171
|
|
|
2,943
|
|
|
16.8
|
%
|
|
8,323
|
|
|
7.7
|
%
|
Base
film for other applications
|
|
|
18,938
|
|
|
2,764
|
|
|
15.8
|
%
|
|
15,743
|
|
|
14.7
|
%
|
Special
film
|
|
|
22,134
|
|
|
3,230
|
|
|
18.5
|
%
|
|
41,037
|
|
|
38.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119,849
|
|
|
17,489
|
|
|
100.0
|
%
|
|
107,652
|
|
|
100.0
|
%
|
Overseas
sales for the third quarter 2008 were RMB16.2 million (US$2.4 million), which
accounted for 13.5% of our total net revenues as compared to RMB18.9million
(US$
2.5 million) and 17.6% during the same period in 2007, which is 14.5% lower
than
the third quarter last year. The decrease in export sales was mainly due to
the
decrease in tax rebate rate from 11% to 5%, the continuous appreciation of
RMB
versus the U.S. dollar and the Korean Won, the influence of anti-dumping
regulation in Korea and the U.S, and the decreased demand caused by the
worldwide financial crisis.
The
following is a breakdown of PRC domestic and overseas sales (amounts in
thousands):
|
|
Three
Month Period
ended
Sep. 30, 2008
|
|
% of Total
|
|
Three
Month Period
ended
Sep. 30, 2007
|
|
% of Total
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
Sales
in China
|
|
103,674
|
|
15,129
|
|
86.5
|
%
|
88,741
|
|
82.4
|
%
|
Sales
in other countries
|
|
|
16,175
|
|
|
2,360
|
|
|
13.5
|
%
|
|
18,912
|
|
|
17.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119,849
|
|
|
17,489
|
|
|
100.0
|
%
|
|
107,652
|
|
|
100.0
|
%
|
Cost
of Goods Sold
|
|
Three
Month Period
ended
Sep. 30, 2008
%
of total
|
|
Three
Month Period
ended
Sep.
30, 2007
%
of total
|
|
Materials
costs
|
|
79.9
|
%
|
84.0
|
%
|
Factory
overhead
|
|
|
7.9
|
%
|
|
5.0
|
%
|
Power
|
|
|
8.3
|
%
|
|
7.4
|
%
|
Packaging
materials
|
|
|
2.7
|
%
|
|
2.6
|
%
|
Direct
labor
|
|
|
1.2
|
%
|
|
1.0
|
%
|
Cost
of
goods sold in the third quarter of 2008 totaled RMB 105.3 million (US$15.4
million) as compared to RMB 84.1 million (US$11.1 million) during the same
quarter in the prior year, which is 25.2% higher. The increase was mainly due
to
the increase in quantity of sales. Additionally, the increased consumption
of
raw material, power, labor and factory overhead in the third quarter of 2008
compared to that of the corresponding period in 2007 resulted in the increase
of
cost of goods.
Gross
Profit
Our
gross
profit was RMB 14.6 million (US$2.1million) in the third quarter 2008,
representing a gross margin of 12.1%, a decrease of 9.8% from the same period
in
2007, which had a gross profit of 21.9%. The decrease was mainly due to the
decreased average sales price and increased consumption of raw materials, power
and labor in the third quarter 2008 compared with the same period in
2007.
Operating
expenses
Operating
expenses in the third quarter of 2008 were RMB8.4 million (US$1.2 million),
which was RMB0.4 million (US$ 0.6 million), or 4.8% higher, than the
corresponding period in 2007. This was mainly due to the increased allowance
for
doubtful accounts, and selling expenses compared to the corresponding period
in
2007.
Interest
Expense
Interest
expense totaled RMB 0.4 million (US$0.1 million) in the third quarter of 2008
compared to RMB1.7 million (US$ 0.2
million)
in the third quarter of 2007, a 76.5% decrease. The decrease was mainly due
to
the maturity of certain USD loans in the third quarter of 2008, which offset
part of the previously accrued withholding interest expense.
Other
Income / (expense)
Our
other
income in the third quarter of 2008 was RMB 1.5 million (US$ 0.2 million)
compared to total other expenses of RMB 1.2 million (US$ 0.2 million) in the
same period in 2007, a 250.0% other expenses decrease. This decrease is mainly
due to the maturity of certain USD loans in the third quarter of 2008, which
offset part of the previously accrued withholding interest expense, and
increased other income.
Income
Tax Expense
In
the
third quarter of 2008, the Company recorded an income tax expense of RMB0.6
million (US$0.1 million) compared to an income tax expenses of RMB1.4
million (US$0.2 million) in the third quarter of 2007. This decrease was due
to
the decrease in taxable income.
Net
Income
Net
Income in the third quarter of 2008 was RMB 7.1 million (US$1.0 million)
compared to RMB12.9 million (US$1.7 million) in the third quarter of 2007,
representing a decrease of 45.0% from the third quarter of 2007. The decrease
in
net income in the third quarter 2008 was primarily due to the decreased unit
price and the increased costs of goods sold, as well as the increased operating
expenses such as the allowance for doubtful accounts, domestic transportation
expenses and legal expenses.
Liquidity
and Capital Resources
Since
inception, the Company’s sources of cash were mainly from cash generated from
its operations and borrowings from financial institutions and capital
contributed by its shareholders.
From
2007
to the first nine months of 2008, our capital expenditures were primarily
financed through short-term borrowings from financial institutions and IPO
funds. The interest rates of short-term borrowings from financial institutions
during the periods from 2005 to the third quarter of 2008 ranged from 5.45%
to
8.22%.
As
of
September 30, 2008, we have borrowings of RMB 166.5 million, including several
different loan agreements with three financial institutions in the PRC. During
2008, we received an interest-free loan of RMB 20 million from the Weifang
City
Commercial Bank entrusted by the Weifang City Hi & New Technology Project
Industrial Development Fund. Each of the related loan agreements contains
provisions regarding collateral, covenants prohibiting the Company from engaging
in certain activities (including selling, mortgaging or otherwise disposing
of
or encumbering all or substantially all of its assets or before any merger,
acquisition, spin-off, or other transaction resulting in a change in its
corporate structure) without the lenders consent and acceleration (and setoff)
provisions in the event of default in payment or failure to comply with such
covenants. Because of appreciation of the exchange rate of RMB compared to
US
dollar, the estimated purchase price of the new thick BOPET film production
line
has been adjusted to US$ 35 million range, resulting in an available fund
shortage of US$ 15-20 million. Management is seeking sources of financing in
order to recommence this project in the near future.
The
Company is of the opinion that, after taking into consideration its present
banking facilities, existing cash and the expected cash flows to be generated
from its operations, it believes that it has adequate sources of liquidity
to
meet its short-term obligations, and its working capital.
Operating
Activities
Net
cash
flows provided by operating activities for the nine months ended September
30,
2008, was RMB 5.1 million (US$ 0.7 million) compared to net cash flows used
by
operating activities of RMB47.1 million (US$ 6.2million ) for the nine months
ended September 30, 2007, a decrease of RMB 42.0 million (US$ 5.5 million).
This
change in cash flows from operating activities was attributable primarily to
the
increase of prepaid expenses for raw materials and other receivables.
Working
Capital
As
of
September 30, 2008 and December 31, 2007, the Company had negative working
capital of RMB 33.7 million (US$4.9 million) and RMB 14.6 million (US$ 2.0
million), respectively.
The
Company anticipates that it will have adequate working capital in the
foreseeable future. However, the Company may wish to borrow additional capital
or sell its ordinary shares to realize additional funds in order to expand
and
grow its operations.
Contractual
Obligations
The
following table is a summary of the Company's contractual obligations as of
September 30, 2008 (In thousands):
|
|
Payments
due by period
|
|
|
|
Total
|
|
|
|
|
|
3-5
Years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental
obligations
|
|
|
740
|
|
|
497
|
|
|
243
|
|
|
|
|
|
|
|
Purchase
obligations
|
|
|
18,673
|
|
|
18,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
19,413
|
|
$
|
19,170
|
|
$
|
243
|
|
|
|
|
|
|
|
Exhibit
Index
Exhibit
No.
|
|
Description
|
99.1
|
|
Press
Release dated November 13, 2008.
|
SIGNATURE
Pursuant
to the requirements of the Securities
Exchange
Act of 1934, the
registrant
has
duly
caused this report to be signed on its behalf by the undersigned, thereunto
duly
authorized.
|
Fuwei
Films (Holdings) Co., Ltd
|
|
|
|
|
By:
|
/s/
Xiaoan He
|
|
Name:
Xiaoan He
|
|
Title:
Chairman, Chief Executive
Officer
|
Dated:
November 13, 2008
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