Unassociated Document
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
6-K/A
Amendment
No. 2 to
REPORT
OF FOREIGN PRIVATE ISSUER
PURSUANT
TO RULE
13a-16 OR 15d-16 UNDER
THE
SECURITIES EXCHANGE ACT OF 1934
For June
30, 2007
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
x
If
“Yes”
marked, indicate below the file number assigned to the registrant in connection
with Rule 12g3-2(b):
82-________
EXPLANATORY
NOTE
This
Amendment No. 2 to Report of Foreign Private Issuer on Form 6-K/A (this “Form
6-K/A”) is being submitted to amend the Form 6-K submitted to the Securities and
Exchange Commission on July 26, 2007 (the “Original Filing”). This Form 6-K/A
amends solely the dollar amounts and currency appearing in the “Contractual
Obligations” table on page 24 in the “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” section which was reported in the
Original Filing in United States Dollars ($) rather than Chinese Renmimbi
(RMB),
and as a result, the liabilities were overstated, rather than understated
by the
error.
This
Report of Foreign Private Issuer on Form 6-K/A 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 Company’s future financial performance. The Company has
attempted to identify forward-looking statements by terminology including
“anticipates”, “believes”, “expects”, “can”, “continue”, “could”, “estimates”,
“expects”, “intends”, “may”, “plans”, “potential”, “predict”, “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 or 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 expectations are as of the date this Form 6-K/A 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/A is filed to confirm these statements to
actual results, unless required by law.
The
forward-looking statements included in this Form 6-K/A are subject to risks,
uncertainties and assumptions about our businesses and business environments.
These statements reflect our current views with respect to future events and
are
not a guarantee of future performance. Actual results of our operations may
differ materially from information contained in the forward-looking statements
as a result of risk factors some of which are include, among other things,
competition in the BOPET film industry; growth of, and risks inherent in, the
BOPET film industry in China; uncertainty as to future profitability and our
ability to obtain adequate financing for our planned capital expenditure
requirements; uncertainty as to our ability to continuously develop new BOPET
film products and keep up with changes in BOPET film technology; risks
associated with possible defects and errors in our products; uncertainty as
to
our ability to protect and enforce our intellectual property rights; uncertainty
as to our ability to attract and retain qualified executives and personnel;
and
uncertainty in acquiring raw materials on time and on acceptable terms,
particularly in view of the volatility in the prices of petroleum products
in
recent years.
On
July
26, 2007, Fuwei Films (Holdings) Co. Ltd. (the “Company”) announced its
unaudited consolidated financial results for the six months period ended June
30, 2007.
CONDENSED
CONSOLIDATED BALANCE SHEETS
AS
OF JUNE 30, 2007 AND DECEMBER 31, 2006
(amounts
in thousands except share and per share value)
|
|
As
of Jun. 30, 2007
|
|
As
of Dec. 31, 2006
|
|
ASSETS
|
|
RMB
|
|
US$
|
|
RMB
|
|
|
|
(unaudited)
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
128,344
|
|
|
16,861
|
|
|
253,250
|
|
Accounts
receivable, net
|
|
|
58,196
|
|
|
7,645
|
|
|
75,530
|
|
Inventory
|
|
|
36,923
|
|
|
4,851
|
|
|
23,783
|
|
Prepayments
and other receivables
|
|
|
47,800
|
|
|
6,279
|
|
|
19,440
|
|
Total
current assets
|
|
|
271,263
|
|
|
35,636
|
|
|
372,003
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant
and equipment, net
|
|
|
239,434
|
|
|
31,455
|
|
|
250,937
|
|
Construction
in progress
|
|
|
163,778
|
|
|
21,516
|
|
|
66,752
|
|
Lease
prepayments, net
|
|
|
22,682
|
|
|
2,980
|
|
|
23,059
|
|
Deposits
for purchase of property, plant and equipment
|
|
|
—
|
|
|
—
|
|
|
13,900
|
|
Intangible
assets
|
|
|
72
|
|
|
9
|
|
|
109
|
|
Goodwill
|
|
|
10,276
|
|
|
1,350
|
|
|
10,276
|
|
Deferred
tax assets
|
|
|
1,047
|
|
|
138
|
|
|
1,047
|
|
Total
assets
|
|
|
708,552
|
|
|
93,084
|
|
|
738,083
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
|
169,090
|
|
|
22,214
|
|
|
239,678
|
|
Accounts
payables
|
|
|
17,066
|
|
|
2,242
|
|
|
12,809
|
|
Accrued expenses
and other
payables
|
|
|
22,854
|
|
|
3,002
|
|
|
19,497
|
|
Deferred
tax liabilities
|
|
|
856
|
|
|
112
|
|
|
192
|
|
Total
liability
|
|
|
209,866
|
|
|
27,570
|
|
|
272,176
|
|
Shareholders’
equity
|
|
|
|
|
|
|
|
|
|
|
Registered
capital
|
|
|
13,323
|
|
|
1,707
|
|
|
13,323
|
|
Additional
paid-in capital
|
|
|
311,908
|
|
|
39,967
|
|
|
311,908
|
|
Retained
earnings
|
|
|
172,241
|
|
|
22,119
|
|
|
138,891
|
|
Cumulative
translation adjustment
|
|
|
1,214
|
|
|
1,721
|
|
|
1,785
|
|
Total
shareholders’ equity
|
|
|
498,686
|
|
|
65,514
|
|
|
465,907
|
|
Total
liabilities and shareholders’ equity
|
|
|
708,552
|
|
|
93,084
|
|
|
738,083
|
|
The
accompanying notes are an integral part of this condensed consolidated
statement.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE
INCOME
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(amounts
in thousands except share and per share value)
|
|
Three
Months Ended
|
|
Six
Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
|
|
(unaudited)
|
|
|
|
(unaudited)
|
|
|
|
Net
sales
|
|
|
120,929
|
|
|
15,750
|
|
|
122,886
|
|
|
220,194
|
|
|
28,529
|
|
|
219,939
|
|
Cost
of sales
|
|
|
88,264
|
|
|
11,496
|
|
|
94,470
|
|
|
163,257
|
|
|
21,152
|
|
|
167,594
|
|
Gross
profit
|
|
|
32,665
|
|
|
4,254
|
|
|
28,416
|
|
|
56,937
|
|
|
7,377
|
|
|
52,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
5,090
|
|
|
663
|
|
|
5,111
|
|
|
8,754
|
|
|
1,134
|
|
|
8,858
|
|
Administrative
expenses
|
|
|
3,528
|
|
|
459
|
|
|
2,943
|
|
|
5,718
|
|
|
741
|
|
|
3,194
|
|
Depreciation
and amortization
|
|
|
416
|
|
|
54
|
|
|
266
|
|
|
737
|
|
|
96
|
|
|
540
|
|
Total
operating expenses
|
|
|
(9,034
|
)
|
|
(1,176
|
)
|
|
(8,320
|
)
|
|
(15,209
|
)
|
|
(1,971
|
)
|
|
(12,592
|
)
|
Operating
income
|
|
|
23,631
|
|
|
3,078
|
|
|
20,096
|
|
|
41,728
|
|
|
5,406
|
|
|
39,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income/(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Interest income
|
|
|
87
|
|
|
11
|
|
|
3
|
|
|
277
|
|
|
36
|
|
|
7
|
|
-
Interest expense
|
|
|
(1,684
|
)
|
|
(219
|
)
|
|
(3,649
|
)
|
|
(4,835
|
)
|
|
(626
|
)
|
|
(6,940
|
)
|
-
Others, net
|
|
|
(178
|
)
|
|
(23
|
)
|
|
(153
|
)
|
|
(562
|
)
|
|
(73
|
)
|
|
(299
|
)
|
Total
other income/(expense)
|
|
|
(1,775
|
)
|
|
(231
|
)
|
|
(3,799
|
)
|
|
(5,120
|
)
|
|
(663
|
)
|
|
(7,232
|
)
|
Income
before income tax /(benefit)
|
|
|
21,856
|
|
|
2,847
|
|
|
16,297
|
|
|
36,608
|
|
|
4,743
|
|
|
32,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax /(benefit)
|
|
|
1,770
|
|
|
231
|
|
|
(44
|
)
|
|
3,258
|
|
|
422
|
|
|
233
|
|
Net
income
|
|
|
20,086
|
|
|
2,616
|
|
|
16,341
|
|
|
33,350
|
|
|
4,321
|
|
|
32,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Foreign currency translation adjustments
|
|
|
(4,547
|
)
|
|
(592
|
)
|
|
(721
|
)
|
|
(571
|
)
|
|
1,492
|
|
|
—
|
|
Comprehensive
income
|
|
|
15,539
|
|
|
2,024
|
|
|
15,620
|
|
|
32,779
|
|
|
5,813
|
|
|
32,288
|
|
Earnings
per share (basic and diluted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Basic
|
|
|
1.54
|
|
|
0.20
|
|
|
21,195
|
|
|
2.55
|
|
|
0.33
|
|
|
41,878
|
|
-
Diluted
|
|
|
1.54
|
|
|
0.20
|
|
|
21,195
|
|
|
2.55
|
|
|
0.33
|
|
|
41,878
|
|
Weighted
average number ordinary shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Basic
|
|
|
13,062,500
|
|
|
13,062,500
|
|
|
771
|
|
|
13,062,500
|
|
|
13,062,500
|
|
|
771
|
|
-
Diluted
|
|
|
13,062,500
|
|
|
13,062,500
|
|
|
771
|
|
|
13,062,500
|
|
|
13,062,500
|
|
|
771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of this condensed consolidated
statement.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR
THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(amounts
in thousands except share and per share value)
|
|
Ordinary
Shares
|
|
|
|
|
|
|
|
|
|
|
|
Number
of
shares
|
|
|
|
Additional
paid-in
capital
|
|
Accumulated
other
comprehensive
income
|
|
Retained
earnings
|
|
Total
shareholders'
equity
|
|
|
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
RMB
|
|
RMB
|
|
Balance
as of December 31, 2005
|
|
|
771
|
|
|
1
|
|
|
|
|
|
1,732
|
|
|
71,227
|
|
|
72,960
|
|
Issue
of new shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,288
|
|
|
32,288
|
|
Appropriation
to statutory reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of Jun. 30, 2006
|
|
|
771
|
|
|
1
|
|
|
|
|
|
1,732
|
|
|
103,515
|
|
|
105,248
|
|
Conversion
of shareholders loans
|
|
|
8,749,229
|
|
|
8,936
|
|
|
80,426
|
|
|
|
|
|
|
|
|
89,362
|
|
Issue
of ordinary shares, net of expenses
|
|
|
4,312,500
|
|
|
4,386
|
|
|
225,839
|
|
|
|
|
|
|
|
|
230,225
|
|
share-based
payment transactions
|
|
|
|
|
|
|
|
|
5,643
|
|
|
|
|
|
|
|
|
5,643
|
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,376
|
|
|
35,376
|
|
Foreign
currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
53
|
|
|
|
|
|
53
|
|
Balance
as of December 31, 2006
|
|
|
13,062,500
|
|
|
13,323
|
|
|
311,908
|
|
|
1,785
|
|
|
138,891
|
|
|
465,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue
of new shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,350
|
|
|
33,350
|
|
Appropriation
to statutory reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
(571
|
)
|
|
|
|
|
(571
|
)
|
Balance
as of Jun. 30, 2007-unaudited
|
|
|
13,062,500
|
|
|
13,323
|
|
|
311,908
|
|
|
1,214
|
|
|
172,241
|
|
|
498,686
|
|
Balance
as of Jun. 30, 2007 - US$
|
|
|
13,062,500
|
|
|
1,707
|
|
|
39,967
|
|
|
1,721
|
|
|
22,119
|
|
|
65,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of this condensed consolidated
statement.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR
THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(amounts
in thousands except share and per share value)
|
|
Periods
Ended
Jun.
30, 2007
|
|
Periods
Ended
Jun.
30, 2006
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
|
|
|
|
|
|
|
|
Cash
flow from operating activities
|
|
|
|
|
|
|
|
Net
income
|
|
|
33,350
|
|
|
4,321
|
|
|
32,288
|
|
Adjustments
to reconcile net income to net cash
|
|
|
|
|
|
|
|
|
|
|
(used
in)/provided by operating activities
|
|
|
|
|
|
|
|
|
|
|
-
Depreciation of property, plant and equipment
|
|
|
11,742
|
|
|
1,521
|
|
|
11,700
|
|
-
Amortization of lease prepayments and intangible assets
|
|
|
429
|
|
|
56
|
|
|
254
|
|
-
Deferred income taxes
|
|
|
664
|
|
|
51
|
|
|
233
|
|
Changes
in operating assets and liabilities, net of effect of purchase of
Shandong
Fuwei
|
|
|
|
|
|
|
|
|
|
|
-
Accounts receivable
|
|
|
17,334
|
|
|
2,033
|
|
|
(26,105
|
)
|
-
Inventories
|
|
|
(13,140
|
)
|
|
(1,803
|
)
|
|
4,808
|
|
-
Prepaid expenses and other current assets
|
|
|
(28,360
|
)
|
|
(3,789
|
)
|
|
(6,119
|
)
|
-
Accounts payable
|
|
|
4,257
|
|
|
601
|
|
|
(1,713
|
)
|
-
Accrued expenses and other payables
|
|
|
3,357
|
|
|
504
|
|
|
(2,172
|
)
|
Net
cash provided by operating activities
|
|
|
29,633
|
|
|
3,495
|
|
|
13,174
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flow from investing activities
|
|
|
|
|
|
|
|
|
|
|
Purchases
of property, plant and equipment
|
|
|
(83,365
|
)
|
|
(12,077
|
)
|
|
(1,435
|
)
|
Payment
of land use rights
|
|
|
(15
|
)
|
|
(2
|
)
|
|
(2,649
|
)
|
Net
cash used in investing activities
|
|
|
(83,380
|
)
|
|
(12,079
|
)
|
|
(4,084
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flow from financing activities
|
|
|
|
|
|
|
|
|
|
|
Principal
payments of short-term bank loans
|
|
|
(239,678
|
)
|
|
(30,712
|
)
|
|
(18,016
|
)
|
Proceeds
from short-term bank loans
|
|
|
169,090
|
|
|
22,214
|
|
|
10,000
|
|
Payments
of expenses relating to the proposed offering
|
|
|
—
|
|
|
—
|
|
|
(3,046
|
)
|
Net
cash used in financing activities
|
|
|
(70,588
|
)
|
|
(8,498
|
)
|
|
(11,062
|
)
|
Effect
of foreign exchange rate changes
|
|
|
(571
|
)
|
|
1,492
|
|
|
—
|
|
Net
increase in cash
|
|
|
(124,906
|
)
|
|
(15,590
|
)
|
|
(1,972
|
)
|
Cash
|
|
|
|
|
|
|
|
|
|
|
At
beginning of period/year
|
|
|
253,250
|
|
|
32,451
|
|
|
7,427
|
|
At
end of year
|
|
|
128,344
|
|
|
16,861
|
|
|
5,455
|
|
Supplemental
disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|
|
Cash
paid during the period/year for
|
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
|
7,413
|
|
|
960
|
|
|
7,910
|
|
Income
taxes paid
|
|
|
981
|
|
|
127
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of this condensed consolidated
statement.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements and related notes. The
accompanying unaudited condensed consolidated financial statements and related
notes should be read in conjunction with the audited consolidated financial
statements of the Company and notes thereto for the year ended December 31,
2006.
In
the
opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (which include only normal
recurring adjustments) necessary to present fairly the consolidated balance
sheets of Fuwei Films (Holdings) Co., Ltd and subsidiaries as of June 30, 2007
and December 31, 2006 and the condensed results of their operations for the
three and six months period ended June 30, 2007 and 2006, and cash flows for
the
six months ended June 30, 2007 and 2006. The results of operations for the
six
periods ended June 30, 2007 and 2006 are not necessarily indicative of the
results to be expected for the entire year.
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 this quarter
report that assets
and
liabilities denominated in foreign currencies at the balance sheet date are
translated at the market rate of exchange ruling at 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.
The
following table sets forth various information concerning exchange rates between
the Renminbi and the U.S. dollar for the periods indicated. These rates are
provided solely for your convenience and are not necessarily the exchange rates
that we used in this annual report or will use in the preparation of our
periodic reports or any other information to be provided to you. The source
of
these rates is the Federal Reserve Bank of New York.
|
|
Average
|
|
Period-end
|
|
|
|
(Rmb
per U.S. $1.00)
|
|
|
|
2006
(1)
|
|
|
7.9723
|
|
|
7.8041
|
|
January
2006 (2)
|
|
|
8.0659
|
|
|
8.0608
|
|
February
2006 (2)
|
|
|
8.0512
|
|
|
8.0415
|
|
March
2006(2)
|
|
|
8.0450
|
|
|
8.0167
|
|
April
2006 (2)
|
|
|
8.0143
|
|
|
8.0165
|
|
May
2006 (2)
|
|
|
8.0136
|
|
|
8.0215
|
|
June
2006 (2)
|
|
|
8.0042
|
|
|
7.9943
|
|
January
2007 (2)
|
|
|
7.7888
|
|
|
7.7714
|
|
February
2007 (2)
|
|
|
7.7498
|
|
|
7.7410
|
|
March
2007(2)
|
|
|
7.7370
|
|
|
7.7232
|
|
April
2007 (2)
|
|
|
7.7247
|
|
|
7.7090
|
|
May
2007 (2)
|
|
|
7.6762
|
|
|
7.6463
|
|
June
2007 (2)
|
|
|
7.6333
|
|
|
7.6120
|
|
|
|
|
|
|
|
|
|
1、Annual
averages are calculated by averaging the rates on the last business
day of
each month during the relevant period.
|
2、Monthly
average is calculated by averaging the daily rates during the relevant
period.
|
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO 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
December 18, 2006, the Company became listed on the Nasdaq Global Market and
offered 3,750,000 ordinary shares, at an IPO price of US$8.28 per ordinary
share. On December 18, 2006, an additional 562,500 ordinary shares were sold
at
the IPO price of US$8.28 per ordinary share pursuant to the underwriter’s
exercise of its over-allotment option. As of June 30, 2007, the number of total
issued ordinary shares issued and outstanding was 13,062,500.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The
Group’s consolidated financial statements are presented in accordance with
accounting principles generally accepted in the United States of America (“US
GAAP”).
This
basis of accounting differs in certain material respects from that used in
the
preparation of the books of account of Shandong Fuwei, the Company’s principal
subsidiary, which are prepared in accordance with the accounting principles
and
the relevant financial regulations applicable to enterprises limited by shares
as established by the Ministry of Finance of the PRC (“PRC GAAP”), the
accounting standards used in the country of its domicile. The accompanying
condensed consolidated financial statements reflect necessary adjustments not
recorded in the books of account of the Company’s subsidiaries to present them
in conformity with US GAAP.
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 been eliminated in consolidation.
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.
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.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
2 - 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 collectibility.
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
|
|
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 testing 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.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
(CONTINUED)
Intangible
Assets
The
Group
acquired a trademark for use in the production and distribution of plastic
flexible packaging materials. 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
completed during the year resulted in no impairment losses.
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 flexible packaging materials 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.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
(CONTINUED)
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 Postretirement Benefits
Contributions
to retirement schemes (which are defined contribution plans) are charged to
expense as and when the related employee service is provided.
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 carryforwards. 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.
Use
of Estimates
The
preparation of the consolidated financial statements in accordance with US
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.
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.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)
Recently
Issued Accounting Standards
FIN
48
In
July
2006, the FASB issued FASB Interpretation No. 48, Accounting
for Uncertainties in Income Taxes -
an
interpretation of FASB Statement No. 109
(“FIN
48”), which clarifies the accounting for uncertainty in income taxes recognized
in the Group’s financial statements in accordance with SFAS No.109, Accounting
from Income Taxes.
FIN 48
provides guidance on the measurement, recognition, classification and disclosure
of tax positions, along with accounting for the related interest and penalties.
FIN 48 is effective for fiscal years beginning after December 15, 2006, and
is
to be applied to all open tax years as of the date of
effectiveness.
SFAS
No.
157
In
September 2006, the FASB issued SFAS No. 157, Fair
Value Measurements (“SFAS
No. 157”).
SFAS
No. 157 defines fair value, establishes a framework for measuring fair value
in
generally accepted accounting principles, and expands disclosures about fair
value measurements. SFAS No. 157 applies under other accounting pronouncements
that require or permit fair value measurements, the FASB having previously
concluded in those accounting pronouncements that fair value is the relevant
measurement attribute. Accordingly, SFAS No. 157 does not require any new fair
value measurements. Under SFAS No. 157, fair value refers to price that would
be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants in the market in which the reporting
entity transacts. SFAS No. 157 is effective for financial statements issued
for
fiscal years beginning after November 15, 2007, and interim periods within
those
fiscal years, with early adoption permitted. The Company does not expect the
adoption of SFAS No. 157 to have a material impact on the consolidated financial
statements
SFAS
No
158
During
September of 2006, the Financial Accounting Standards Board issued SFAS NO
158
“Employer’s Accounting for Defined Benefit Pension and other Postretirement
Plans”. Currently the Company has no defined benefit pension or other
postretirement plans, therefore, the adoption of this SFAS is not expected
to
have any impact on the Company’s consolidated statements.
SFAS
No
159
During
February of 2007, the Financial Accounting Standards Board issued SFAS NO 159
“The Fair Value Option for Financial Assets and Financial Liabilities”. This
SFAS permits Companies to choose to measure eligible items at fair value at
specific election dates. This SFAS becomes effective for Companies with fiscal
years beginning after November 15, 2007. The Company is currently evaluating
the
effect, if any,that adoption of this SFAS will have on the Company’s
consolidated financial statements.
SAB
108
In
September 2006, the Securities and Exchange Commission (“SEC”) issued Staff
Accounting Bulletin No. 108, Considering
the Effects of Prior Year Misstatements when Quantifying Misstatements in
Current Year Financial Statements
(“SAB
108”). SAB 108 provides interpretive guidance on how the effects of the
carryover or reversal of prior year misstatements should be considered in
quantifying a current year misstatement. The SEC staff believes that registrants
should quantify errors using both a balance sheet and an income statement
approach and evaluate whether either approach results in a quantifying
misstatement that, when all relevant quantitative and qualitative factors are
considered, is material. SAB 108 is effective for the Company’s fiscal year
ending December 31, 2006. The initial adoption of SAB 108 had no impact on
the
consolidated financial statements.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
Accounts
receivable at June 30, 2007 and December 2006 consist of the
following:
|
|
30-Jun-07
|
|
31-Dec-06
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
Accounts
receivable
|
|
|
48,804
|
|
|
6,411
|
|
|
39,053
|
|
Less:
Allowance for doubtful accounts
|
|
|
—
|
|
|
—
|
|
|
-872
|
|
Receivables-Guaranteed
by banks
|
|
|
9,392
|
|
|
1,234
|
|
|
37,349
|
|
|
|
|
58,196
|
|
|
7,645
|
|
|
75,530
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE
4-INVENTORIES
Inventories
at June 30, 2007 and December 31, 2006 consist of the following:
|
|
30-Jun-07
|
|
31-Dec-06
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
Raw
materials
|
|
|
13,888
|
|
|
1,824
|
|
|
10,526
|
|
Work-in-progress
|
|
|
1,947
|
|
|
256
|
|
|
2,029
|
|
Finished
goods
|
|
|
20,697
|
|
|
2,720
|
|
|
10,874
|
|
Consumables
and spare parts
|
|
|
391
|
|
|
51
|
|
|
354
|
|
|
|
|
36,923
|
|
|
4,851
|
|
|
23,783
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE
5-PROPERTY, PLANT AND EQUIPMENT, NET
Property,
plant and equipment consist of the following:
|
|
30-Jun-07
|
|
31-Dec-06
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
Buildings
|
|
|
33,699
|
|
|
4,427
|
|
|
33,699
|
|
Plant
and equipment
|
|
|
276,448
|
|
|
36,317
|
|
|
276,328
|
|
Computer
equipment
|
|
|
959
|
|
|
126
|
|
|
955
|
|
Furniture
and fixtures
|
|
|
1,798
|
|
|
236
|
|
|
1,798
|
|
Motor
vehicles
|
|
|
1,497
|
|
|
197
|
|
|
1,390
|
|
|
|
|
314,401
|
|
|
41,303
|
|
|
314,170
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
accumulated depreciation
|
|
|
(74,967
|
)
|
|
(9,848
|
)
|
|
(63,233
|
)
|
|
|
|
239,434
|
|
|
31,455
|
|
|
250,937
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
depreciation for the periods ended June 30, 2007 and 2006 was RMB 11,742 (US$
1,521) and RMB 11,700 (US$ 1,457), respectively of which RMB 11,004(US$ 1,426)
and RMB 11,160 (US$1,389), were included as a component of cost of goods sold.
For the three months ended June 30, 2007 and 2006, depreciation expenses totaled
RMB 5,872 (US$ 767) and RMB 5,853 (US$ 731) respectively. For the three months
ended June 30, 2007
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
5 - PROPERTY, PLANT AND EQUIPMENT, NET, (continued)
and
2006,
depreciation expenses totaled RMB 5,698 (US$ 744) and RMB 5,689 (US$ 710) were
included in cost of goods sold, respectively.
Note
6 - CONSTRUCTION IN PROGRESS
Construction-in-progress
represents capital expenditure in respect of the BOPET production line and
the
trial line.
Construction
in progress was RMB 163,778 (US$ 21,516) ended June 30, 2007, and RMB 66,752
(US$ 8,853) ended December 31, 2006, respectively.
Interest
expense capitalized during the periods ended June 30, 2007 and 2006 was RMB
2,579 (US$ 334) and RMB 970 (US$ 121), respectively. For the three months ended
June 30, 2007 and 2006, the interest expense capitalized was RMB 985 (US$ 128)
and RMB 256 (US$ 32).
NOTE
7 - LEASE PREPAYMENTS
As
of
June 30, 2007 and December 31, 2006, net of amortization land use right was
RMB
22,682 (US$ 2,980) and RMB 23,059 (US$ 2,955), respectively, and were included
in the balance sheet under property, plant and equipment.
Amortization
of land use rights for the six months ended June 30, 2007 and 2006 was RMB
376
(US$ 49) and RMB 218 (US$ 27), respectively.
Amortization of land use rights for the three months ended June 30, 2007 and
2006 was RMB 263 (US$ 34) and RMB 138 (US$ 17), respectively.
NOTE
8 - SHORT-TERM BANK LOANS
|
|
Interest
rate
|
|
30-Jun-07
|
|
31-Dec-06
|
|
Lender
|
|
per
annum
|
|
RMB
|
|
US$
|
|
RMB
|
|
Bank
of Communications Co., Ltd.
|
|
|
|
|
|
|
|
|
|
-
January 15, 2007 to January 15, 2008
|
|
|
6.732%
|
|
|
52,590
|
|
|
6,909
|
|
|
52,600
|
|
-
January 15, 2007 to January 15, 2008
|
|
|
6.732%
|
|
|
100,000
|
|
|
13,137
|
|
|
100,000
|
|
-December
20, 2005 to December 13, 2006
|
|
|
6.696%
|
|
|
—
|
|
|
—
|
|
|
52,546
|
|
China
Construction Bank Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
June 30, 2006 to January 20, 2007
|
|
|
5.84%
|
|
|
—
|
|
|
—
|
|
|
8,934
|
|
Agricultural
Bank of China Co., Ltd.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
September 30, 2005 to September 9, 2006
|
|
|
7.25%
|
|
|
—
|
|
|
—
|
|
|
8,790
|
|
-
October 17, 2005 to October 16, 2006
|
|
|
7.25%
|
|
|
—
|
|
|
—
|
|
|
8,000
|
|
-
October 28, 2005 to October 27, 2006
|
|
|
7.25%
|
|
|
—
|
|
|
—
|
|
|
6,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weifang
City Commercial Bank
|
|
|
3.06%
|
|
|
16,500
|
|
|
2,168
|
|
|
|
|
Bankers
acceptance obligations
|
|
|
6.86%-7.00%
|
|
|
—
|
|
|
—
|
|
|
2,008
|
|
|
|
|
|
|
|
169,090
|
|
|
22,214
|
|
|
239,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
The
principal amounts of the above short-term loans are repayable at the end of
the
loan period. These notes were collateralized by the plant and
equipment.
Following
the maturity of the short-term loans of RMB 52,546 (US$ 6,804) and RMB 100,000
(US$12,948) from Bank of Communications Co., Ltd on December 13, 2006 and
September 20, 2006,
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
8 - SHORT-TERM BANK LOANS, (continued)
respectively,
the Company obtained new short-terms loans of RMB 52,590 (US$ 6,809) and
RMB100,000 (US$ 12,948) from Bank of Communications Co., Ltd. on January 15,
2007, with the maturity date on January 15, 2008, and 6.732% interest rate
per
annum.
All
of
the short-term loans from Agricultural Bank of China Co., Ltd., totaling RMB
23,590 (US$ 3,022), and a short-term loan from Bank of Communications Co.,
Ltd.
of RMB 52,600 (US$ 6,740), were fully repaid in January 2007 and February 2007,
respectively.
The
Company entered into a loan agreement with Weifang City Commercial Bank on
January 31, 2007, totaling RMB 16,500 (US$ 2,136), the loan is a low interest
rate loan from the government to enterprises and the interest rate applied
in
the Fund is 50% lower than the prevailing interest rate published by People’s
Bank of China. The loan is a kind of industrial development fund loan
administered by the local government in Shandong with the purpose of enhancing
the independent innovation and technical research and development ability of
local enterprises and supporting the development of local high and new
technology companies. RMB 8,238 (US$ 1,082) proceeds
from this loan have been invested in the construction of the Fuwei technology
center testing production line project.
NOTE
9
- 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
periods ended June 30, 2007 and 2006:
|
|
30-Jun-07
|
|
30-Jun-06
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
Interest
cost capitalized
|
|
|
2,579
|
|
|
334
|
|
|
970
|
|
Interest
cost charged to expense
|
|
|
4,834
|
|
|
626
|
|
|
6,940
|
|
|
|
|
7,413
|
|
|
960
|
|
|
7,910
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE
10-INCOME TAX
Cayman
Islands Tax
Under
the
current Cayman Island laws, 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
Shandong
Fuwei, being a Hi-Tech Enterprise in the Weifang Hi-Tech Industrial Zone in
Shandong, PRC, has been granted preferential tax treatments by the Tax Bureau
of
the PRC. According to the PRC Income Tax Law and various approval documents
issued by the Tax Bureau, Shandong Fuwei’s profit was taxed at a rate of
15%.
In
addition, Shandong Fuwei has been granted certain tax relief under which it
is
exempted from PRC income tax for the period from January 28, 2003 to December
31, 2006.
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 of the 3-year 50% reduction for
Foreign Enterprise Income Tax holiday whereby the profit for the first two
financial
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
10-INCOME TAX, (continued)
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.
The
tax
holiday resulted in tax savings as follows:
|
|
30-Jun-07
|
|
31-Dec-06
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
Approximate
tax savings
|
|
|
3,258
|
|
|
422
|
|
|
4,843
|
|
Benefit
per share
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
0.25
|
|
|
0.03
|
|
|
6,281
|
|
Diluted
|
|
|
0.25
|
|
|
0.03
|
|
|
6,281
|
|
|
|
|
|
|
|
|
|
|
|
|
On
December 29, 2006, the Standing Committee of the Tenth National People’s
Congress (“NPC”) passed a resolution to submit the draft Enterprises Income Tax
Law (“New Tax Law”) to the Tenth NPC plenary session for voting. The New Tax Law
was adopted on March 16, 2007. Under the New Tax Law, which will become
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.
As
a result of the New Tax Law, even if Shandong Fuwei continues to maintain its
high-tech enterprise status, Shandong Fuwei will be subject to the increased
25%
unified enterprise income tax rate on 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
June 30, 2007 and 2006, due to the tax holiday the company’s effective tax rates
were 7.5% and 0% respectively, saving 50% and 100% of the 15% rate for High-tech
enterprises located in the Development District of national level in
china.
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, derecognition, 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 June 30, 2007, 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
June 30, 2007, 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.
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
11-PENSION AND OTHER POSTRETIREMENT BENEFITS
Pursuant
to the relevant PRC regulations, the Group is required to make contributions
at
a rate of 20% of employees’ salaries and wages to a defined contribution
retirement scheme organized by the local Social Bureau in respect of the
retirement benefits for the Group’s employees in the PRC. The total amount of
contributions of RMB 436 (US$ 56)
and
RMB 462 (US$ 58) for the periods ended June 30, 2007and 2006, respectively,
and the total amount of contributions of RMB 98 (US$
13)
and RMB 116 (US$ 14) for the three months ended June 30, 2007and 2006,
respectively, were charged to administrative expenses in the accompanying
consolidated statements of income. The Group has no other obligation to make
payments in respect of retirement benefits of the employees.
NOTE
12- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
For
the
six months ended June 30, 2007, RMB 981 (US$
127)
of income taxes was paid, and RMB
1,613
(US$ 209) will pay for the remaining unpaid balance of income taxes for the
period ended June 30, 2007. No income taxes were paid for the six months ended
June 30, 2006 because the Company was tax-exempt during the year 2006, and
it
started paying income taxes from April 2007.
Interest
paid amounted to RMB 7,413 (US$ 960) and RMB 7,910 (US$ 985) for the six months
ended June 30, 2007 and 2006, respectively.
NOTE
13- 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. There are differences between Basic and
Diluted EPS for the three months ended June 30, 2007 and 2006.
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 and
771
for the six months ended June 30, 2007 and 2006 respectively, and reflect only
the shares outstanding for those periods.
Basic
and
diluted earnings per share for the periods ended June 30, 2007 and 2006 have
been calculated as follows:
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
NOTE
13- EARNINGS PER SHARE, (continued)
|
|
Periods
Ended
Mar
31, 2007
|
|
Periods
Ended
Mar
31, 2006
|
|
|
|
RMB
|
|
US$
|
|
RMB
|
|
Net
income available to ordinary shareholders
|
|
|
33,350
|
|
|
4,321
|
|
|
32,288
|
|
Denominator
for basic net income available to ordinary shareholders:
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of ordinary shares outstanding
|
|
|
13,062,500
|
|
|
13,062,500
|
|
|
771
|
|
Basic
earnings per share
|
|
|
2.55
|
|
|
0.33
|
|
|
41,878
|
|
Net
income available to ordinary shareholders
|
|
|
33,350
|
|
|
4,321
|
|
|
32,288
|
|
Denominator
for diluted net income available to ordinary shareholders:
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of ordinary shares outstanding
|
|
|
13,062,500
|
|
|
13,062,500
|
|
|
771
|
|
Weighted
average number of share options
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Diluted
earnings per share
|
|
|
2.55
|
|
|
0.33
|
|
|
41,878
|
|
|
|
|
|
|
|
|
|
|
|
|
The
company uses the treasure stock method to compute dilution related to
outstanding stock options. Because the option price exceeded the market price
for common stock at June 30, 2007, the options were anti-dilutive and were
not
included when computing diluted earning per share.
NOTE
14 - STOCK OPTION PLAN
On
December 18, 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 IPO
of
the Company. The stock option is exercisable at an exercises price equal to
US$10.35 per ordinary share commencing six months from December 18, 2006 and
expiring five years from December 18, 2006. 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 six months.
NOTE
15 - COMMITMENTS AND CONTINGENCIES
Shandong
Fuwei entered into an agreement for the rental of a BOPET production line with
Shandong Weifang Legang Food Co., Ltd ( “Legang”) for three years on March 5,
2007, This rental production line from Legang will also be used for BOPET film
manufacturing, primarily for producing general thick film. The Company plans
to
enter a part of the thick film market in advance of the third production line’s
completion by renting this production line. Shandong Fuwei has commenced the
trial operation of this rental line from April 1, 2007.
The
operating leases also include the Company rental of warehouse and staff
quarters. The term of these leases typically ranges from 1 to 5 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 operation lease agreements:
FUWEI
FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in thousands except share and per share value)
Note
15-COMMITMENTS AND CONTINGENCIES, (continued)
Year
Ending December 31,
|
|
Amount
(in
thousands)
|
|
2007
|
|
|
3,170
|
|
2008
|
|
|
3,170
|
|
2009
|
|
|
3,170
|
|
2010
|
|
|
170
|
|
2011
|
|
|
170
|
|
In
2006,
Shandong Fuwei received a correspondence relating to an arbitration proceeding
initiated by DMT S. A. (“DMT”) against Shandong Neo-Luck in the ICC
International Court of Arbitration and DMT is seeking monetary damages against
Shandong Neo-Luck of approximately US$1,250 plus interest relating to a claim
of
partial non-payment for the DMT production line Shandong Fuwei acquired from
Beijing Baorui in 2005. However, on the basis of an external legal opinion,
the
Company believes that, due to a lack of any contract or direct obligation
between Shandong Fuwei and DMT, the possibility of liability attaching to
Shandong Fuwei with respect to such proceeding is remote. As of June 30, 2007,
the Company has not accrued any liability in connection with this
litigation.
References
to "dollars" and "US$" are to United States Dollars. References to "we", "us",
the "Company" or "Fuwei" include Fuwei Fuwei Films (Holdings) Co., Ltd. and
its
subsidiaries, except where the context requires otherwise.
Results
of operations for the six months ended June
30, 2007 compared to June 30, 2006.
The
company entered the second quarter with a number of favorable factors including
the active markets requirements and the sales price increase of our products.
The results of the second quarter were as good as expected largely due to the
sales price increase of our products.
The
table
below sets forth certain line items from our Statement of Income as a percentage
of Net sales:
|
|
Periods
Ended
Jun
30, 2007
|
|
Periods
Ended
Jun
30, 2006
|
|
|
|
(as
% of Net sales)
|
|
Gross
profit
|
|
|
26
|
|
|
24
|
|
Operating
expenses
|
|
|
(7
|
)
|
|
(6
|
)
|
Operating
income
|
|
|
19
|
|
|
18
|
|
Other
income/(expense)
|
|
|
(2
|
)
|
|
(3
|
)
|
Income
tax benefit/(expense)
|
|
|
(1.5
|
)
|
|
(0.1
|
)
|
Net
income
|
|
|
15
|
|
|
15
|
|
Net
sales
The
Group’s net sales is primarily derived from the manufacture and sale of plastic
flexible packaging materials.
Net
sales
during the year ended June 30, 2007 amounted to RMB 220.2 million (US$ 28.5
million), compared to RMB 219.9 million (US$ 27.4 million) during the same
period 2006, representing 0.14% increase.
The
sales
of special films during the year ended June 30, 2007 were RMB86.5 million
(US$11.2 million), 10.7% higher than the same period last year. Sales of
specialty films in the first half 2007 reflected 39.3% of Fuwei’s total net
revenues as compared to 35.5% in the same period of 2006.
The
following is a breakdown of commodity and specialty film sales (amounts
in thousands):
|
|
Periods
ended
June
30,2007
|
|
% of Total
|
|
Periods
ended
June
30, 2006
|
|
% of Total
|
|
|
|
RMB
|
|
US$
|
|
|
|
RMB
|
|
|
|
Printing
film
|
|
|
13,605
|
|
|
1,763
|
|
|
6.20
|
%
|
|
19,177
|
|
|
8.72
|
%
|
Stamping
film
|
|
|
27,407
|
|
|
3,551
|
|
|
12.40
|
%
|
|
26,621
|
|
|
12.10
|
%
|
Metallization
film
|
|
|
51,072
|
|
|
6,617
|
|
|
23.20
|
%
|
|
48,547
|
|
|
22.07
|
%
|
Base
film for other applications
|
|
|
41,654
|
|
|
5,397
|
|
|
18.90
|
%
|
|
47,526
|
|
|
21.61
|
%
|
Special
film
|
|
|
86,456
|
|
|
11,201
|
|
|
39.30
|
%
|
|
78,068
|
|
|
35.50
|
%
|
|
|
|
220,194
|
|
|
28,529
|
|
|
100.00
|
%
|
|
219,939
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overseas
sales during the year ended June 30, 2007 were RMB71.7 million (US$ 9.3
million), which accounted for 32.6% of our total net revenues as compared to
RMB
46.4 million (US$ 5.8 million) and 21.1% in the same period of 2006, 11.5%
higher than the same period last year.
The
following is a breakdown of PRC domestic and overseas sales (amounts
in thousands):
|
|
June
30, 2007
|
|
% of Total
|
|
June
30, 2006
|
|
% of Total
|
|
|
|
RMB
|
|
US$
|
|
|
|
RMB
|
|
|
|
Sales
in China
|
|
|
148,467
|
|
|
19,236
|
|
|
67.40
|
%
|
|
173,551
|
|
|
78.90
|
%
|
Sales
in other countries
|
|
|
71,727
|
|
|
9,293
|
|
|
32.60
|
%
|
|
46,388
|
|
|
21.10
|
%
|
|
|
|
220,194
|
|
|
28,529
|
|
|
100.00
|
%
|
|
219,939
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of Goods Sold
Our
cost
of goods sold comprises mainly of materials costs, factory overheads, packaging
materials and direct labor. The breakdown of our cost of goods sold in
percentage is as follows:
|
|
June
30,2007
|
|
June
30,2006
|
|
|
|
(%
of total)
|
|
Materials
costs
|
|
|
86.7
|
%
|
|
88.3
|
%
|
Factory
overhead
|
|
|
9.7
|
%
|
|
8.4
|
%
|
Packaging
materials
|
|
|
2.8
|
%
|
|
2.6
|
%
|
Direct
labor
|
|
|
0.8
|
%
|
|
0.7
|
%
|
|
|
|
|
|
|
|
|
Gross
Profit
Our
gross
profit was RMB 56.9 million (US$ 7.4 million) ended June 30, 2007, representing
a gross margin of 25.9%, compared to 23.8% in the first half year of 2006,
showing 2.1% increase, which was mainly due to the increase in the sales price
of our products and more special films sales in the second quarter
2007.
Selling,
General and Administrative Expenses (SG&A)
SG&A
expenses during the year ended June 30, 2007 were RMB 15.2 million (US$ 2.0
million), which was RMB 2.6 million (US$ 0.3 million) or 20.6% higher than
in
the same period of 2006. This was mainly due to the increased costs related
to
being a U.S. listed, public reporting Company in the year 2007 when we were
not
during the same period in the prior year.
Interest
Expense
Interest
expense amounted RMB 4.8 million (US$ 0.6 million) ended June 30, 2007, compared
to RMB 6.9 million (US$ 0.9 million) during the same period last year, showing
30.3% decrease, which was mainly due to the decrease of the short-term bank
loans in the first six months 2007.
Other
Income /(expense)
Our
other
expenses ended June 30, 2007, amounted to RMB 5.1 million (US$ 0.7 million),
29.2% lower than previous comparable period.
Net
Income
Net
income ended June 30, 2007 was RMB 33.4
million (US$ 4.3 million) compared to RMB 32.3 million (US$ 4.0 million) in
the
comparable period of 2006, representing an increase of 3.4%.
Income
Tax Expense
Ended
June 30, 2007, the company recorded an income tax expense of RMB3.3 million
(US$0.4 million) compared to RMB0.2 million in the same periods of 2006. This
increase was due to expiration of the 100% tax holiday period at December 31,
2006. According to “Income Tax Law of the PRC for Enterprises with
Foreign
Investment
and Foreign Enterprises”, Shandong Fuwei is entitled to tax concessions whereby
the profit for the first two financial years beginning with the first
profit-making year (2005) is exempt from income tax in the PRC and the profit
for each of the subsequent three financial years (2007-2009) is taxed at 50%
of
the prevailing tax rates set by the relevant tax authorities. Therefore,
starting from 2007, the Company will be paying a 7.5% income tax rate as
compared to the zero tax rate the Company paid over the past two
years.
Results
of operations for three months ended June 30, 2007 compared to June 30,
2006.
Net
sales
The
table
below sets forth certain line items from our Statement of Income as a percentage
of Net sales:
|
|
June
30, 2007
|
|
June
30, 2006
|
|
|
|
(as
% of Net sales)
|
|
Gross
profit
|
|
|
27
|
|
|
23
|
|
Operating
expenses
|
|
|
(7
|
)
|
|
(7
|
)
|
Operating
income
|
|
|
20
|
|
|
16
|
|
Other
income/(expense)
|
|
|
(1.5
|
)
|
|
(3
|
)
|
Income
tax benefit/(expense)
|
|
|
(1.5
|
)
|
|
0.04
|
|
Net
income
|
|
|
17
|
|
|
13
|
|
Net
sales
for the second quarter 2007 decreased slightly to RMB 120.9 million (US$15.8
million) from RMB 122.9 million (US$ 15.3 million), 1.6 % lower than the second
quarter 2006. Total quantity of sales in the second quarter 2007 was lower
compared to same period 2006. However, the sales price of our products has
increased in proportion, which offset the negative affect from quantity
decrease. In this quarter, the Company chose the orders for production with
higher profit margin.
Second
quarter 2007 sales of special films were RMB 49.2 million (US$6.4 million),
6.2%
higher than the second quarter last year. Sales of special films reflected
40.7%
of Fuwei’s total net revenues as compared to 37.7% in the same period of 2006.
The increase was largely attributable to the stronger sales volume of the
special films
as
a result of increased trial and acceptance by our customers as well as growth
in
the overall market.
The
following is a breakdown of commodity and specialty film sales (amounts
in thousands):
|
|
30-Jun-07
|
|
% of Total
|
|
30-Jun-06
|
|
% of Total
|
|
|
|
RMB
|
|
US$
|
|
|
|
RMB
|
|
|
|
Printing
film
|
|
|
7,552
|
|
|
984
|
|
|
6.20
|
%
|
|
8,737
|
|
|
7.10
|
%
|
Stamping
film
|
|
|
15,039
|
|
|
1959
|
|
|
12.40
|
%
|
|
15,061
|
|
|
12.30
|
%
|
Metallization
film
|
|
|
27,486
|
|
|
3580
|
|
|
22.70
|
%
|
|
26,379
|
|
|
21.40
|
%
|
Base
film for other applications
|
|
|
21,681
|
|
|
2823
|
|
|
18.00
|
%
|
|
26,414
|
|
|
21.50
|
%
|
Special
film
|
|
|
49,171
|
|
|
6404
|
|
|
40.70
|
%
|
|
46,295
|
|
|
37.70
|
%
|
|
|
|
120,929
|
|
|
15,750
|
|
|
100
|
%
|
|
122,886
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overseas
sales in the second quarter 2007 were RMB 38.7 million (US$5.0 million), which
accounted for 32.0% of our total net revenues as compared to RMB 27.3 million
(US$ 3.4 million) and 22.2% in the same period of 2006, 41.8% higher than the
second quarter last year. The increase was mainly due to management developing
and implementing its strategy of diversifying Fuwei’s customer portfolio and
targeting more overseas clients.
The
following is a breakdown of PRC domestic and overseas sales (amounts
in thousands):
|
|
30-Jun-07
|
|
% of Total
|
|
30-Jun-06
|
|
% of Total
|
|
|
|
RMB
|
|
US$
|
|
|
|
RMB
|
|
|
|
Sales
in China
|
|
|
82,220
|
|
|
10,708
|
|
|
68.00
|
%
|
|
95,602
|
|
|
77.80
|
%
|
Sales
in other countries
|
|
|
38,709
|
|
|
5,042
|
|
|
32.00
|
%
|
|
27,284
|
|
|
22.20
|
%
|
|
|
|
120,929
|
|
|
15,750
|
|
|
100
|
%
|
|
122,886
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of Goods Sold
|
|
June
30, 2007
|
|
June
30, 2006
|
|
|
|
(%
of total)
|
|
Materials
costs
|
|
|
86.7
|
%
|
|
88.3
|
%
|
Factory
overhead
|
|
|
9.7
|
%
|
|
8.4
|
%
|
Packaging
materials
|
|
|
2.8
|
%
|
|
2.6
|
%
|
Direct
labor
|
|
|
0.8
|
%
|
|
0.7
|
%
|
|
|
|
|
|
|
|
|
Cost
of
goods sold in the second quarter of 2007 totaled RMB88.3 million (US$11.5
million) as compared to RMB94.5 million (US$11.8 million) in the prior year
6.6%
lower than the same periods last year mainly due to the decrease in quantity
of
sales.
Gross
Profit
Our
gross
profit was RMB32.7 million (US$ 4.3 million) in the second quarter 2007,
representing a gross margin of 27.0%, a increase of 15% from the second quarter
of 2006 gross margin of 23.1%, higher profit margin in the second quarter 2007
is mainly due to the increase in the sales price of our products and more
specialty film sales in this quarter.
Selling,
General and Administrative Expenses (SG&A)
SG&A
expenses in the second quarter of 2007 were RMB9.0 million (US$1.2 million),
which was RMB0.7 million (US$0.1 million) or 8.6 % higher than in the prior
period. This was mainly due to the increased costs related to being a U.S.
listed, public reporting Company in the second quarter of 2007 when we were
not
during the same period in the prior year.
Interest
Expense
Interest
expense totaled RMB 1.7 million (US$0.2 million) in the second quarter of 2007
compared to RMB3.6 million (US$ 0.4 million)
in the second quarter of 2006, showing 52.8% decrease, which was mainly due
to
the decrease of the short-term bank loans in the second quarter
2007.
Other
Income /(expense)
Our
other
expenses in the second quarter of 2007 were RMB 1.8 million (US$ 0.2 million)
compared to RMB 3.8 million (US$ 0.5 million) in the same period of 2006,
showing 52.6% decrease, which was mainly due to the decrease of the short-term
bank loans.
Net
Income
Net
Income in the second quarter of 2007 was RMB20.1 million (US$2.6 million)
compared to RMB16.3 million (US$ 2.0 million) in the second quarter of 2006,
representing an increase of 23.3% from the second quarter of 2006. The increase
in net income was primarily due to the increase of sale price
of
products in the second quarter 2007.
Income
Tax Expense
In
the
second quarter of 2007, the company recorded an income tax expense of RMB1.8
million (US$0.2 million) compared to an income tax benefit of RMB0.04 million
in
the second quarter of 2006. This increase was due to expiration of the 100%
tax
holiday period at December 31, 2006.
Liquidity
and Capital Resources
Operating
Activities
Net
cash
flows provided by operating activities for the six months ended June 30, 2007,
was RMB29.6 million (US$3.8 million) compared with net cash flows used by
operating activities of RMB13.2 million (US$ 1.6 million) for the six months
ended June 30, 2006, for a net increase of RMB16.4 million (US$2.1 million).This
change in cash flows from operating activities was attributable primarily to
the
decrease of account receivable, inventories, and prepaid expenses.
Working
Capital
As
of
June 30, 2007, the Company had working capital of RMB 61.4 million (US$ 8.1
million).
The
Company anticipates that it will have adequate working capital in the
foreseeable future. However, the Company may wish to borrow additional amounts
or sell its common stock 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
June
30, 2007 (In thousands):
|
|
|
|
Payments
due by period
|
|
|
|
|
|
Less
than
|
|
1-3
|
|
3-5
|
|
More
than
|
|
Contractual
obligations |
|
Total
|
|
1
year
|
|
years
|
|
years
|
|
5
years
|
|
"Notes
payable"
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Rental
obligations
|
|
|
8,010
|
|
|
1,670
|
|
|
6,340
|
|
|
—
|
|
|
—
|
|
Purchase
obligations
|
|
|
153,700
|
|
|
153,150
|
|
|
550
|
|
|
—
|
|
|
—
|
|
Total
|
|
RMB
|
161,710
|
|
RMB
|
154,820
|
|
RMB
|
6,890
|
|
|
— |
|
|
— |
|
Exhibit
No.
|
|
Description
|
99.1
|
|
Press
Release dated July
26,
2007 - Fuwei Reports Unaudited Financial Results for the Second
Quarter
|
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. |
|
|
|
Dated: September
13, 2007 |
By: |
/s/ Xiaoan
He |
|
|
|
Name:
Xiaoan He
Title:
Chairman, Chief Executive Officer
|