FUSHI COPPERWELD (NASDAQ:FSIN)

BEIJING, October 19, 2012 /PRNewswire/ -- Fushi Copperweld, Inc. ("Fushi" or the "Company") (NASDAQ: FSIN) announced today that it has filed its definitive proxy materials with the Securities and Exchange Commission ("SEC"), in connection with the Agreement and Plan of Merger (the "Merger Agreement"), dated June 28, 2012, between the Company and entities affiliated with its Chairman and Co-Chief Executive Officer, Mr. Li Fu and Abax Global Capital (Hong Kong) Limited ("Abax").

A special meeting of Fushi's stockholders (the "Special Meeting") to consider and vote upon, among other things, the proposal to approve the Merger Agreement will be held on December 11, 2012 at 9:00 a.m. Eastern Time at the offices of Loeb & Loeb LLP, 345 Park Avenue, New York, NY 10154. Fushi stockholders of record as of the close of business on October 12, 2012 will be entitled to vote at the Special Meeting.

If the Merger Agreement is approved and the merger is completed, each share of the Company's common stock that is issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive $9.50 in cash, without interest, except for shares owned by Mr. Fu, Abax, and their respective affiliates, who currently beneficially own an aggregate of approximately 29.4% of the Company's outstanding shares.

The closing of the merger is subject to the satisfaction or waiver of certain conditions customary for transactions of this type, including stockholder approval of the Merger Agreement at the Special Meeting (including the approval of the holders of at least 60% of the outstanding Fushi shares not owned by Mr. Fu, Abax and their respective affiliates).

Fushi's Board of Directors, upon the unanimous recommendation of a Special Committee, comprised solely of independent and disinterested directors, recommends that stockholders vote FOR approval of the merger agreement - by telephone, by Internet or by signing, dating, and returning the Company's proxy card. A failure to vote will have the same effect as a vote AGAINST the proposal to approve the merger agreement.

Fushi's stockholders are encouraged to read the definitive proxy materials in their entirety, as they provide important information regarding the merger and the Special Committee's unanimous recommendation.

Second Quarter 2012 Results

• Revenues were $77.3 million compared to $79.0 million in the year ago period;
• Gross profit was $19.8 million, or 25.7% of revenues, compared to $21.0 million, or 26.6% of revenues, in the year ago period;
• Income from operations was $11.1 million, or 14.3% of revenues, compared to $15.3 million, or 19.4% of revenues, in the year ago period;
• Net income was $7.4 million, or $0.19 per diluted share, compared to net income of $10.6 million, or $0.28 per diluted share, in the year ago period;
• Cash position of $203.3 million at June 30, 2012.

Joe Longever, co-Chief Executive Officer of Fushi Copperweld, commented, "Our performance for the 2012 second quarter was in-line with our expectations, as we continued to execute on our strategic objectives. While the telecom markets in China and the U.S. remained challenging, we saw improved sales in our utility and transportation product lines in North America driven by higher domestic and international demand, which drove strong volume and profitability growth at our Fayetteville facility. In Europe, the ramp-up of operations at our new facility in Liege continues, and the benefits of being closer to our customers and decreased delivery times are becoming more tangible, as customer orders for bimetallic wire in Western Europe, the Middle East, Africa and emerging Asian markets accelerate. At the same time, we continue to secure re-certifications for our copper tubing product in major markets across the continent, enhancing our ability to generate sales for this product. We are building on this momentum with the recently announced establishment of our EMEA-focused sales and innovation office in Milan, Italy. In total, we believe the investments we are making across our businesses are gaining traction and will help drive our long-term growth, particularly as the demand environment improves and the market adoption for bimetallics increases."

Outlook

Based on its second quarter performance and current business trends, Fushi Copperweld continues to expect 2012 fully diluted earnings per share between $0.76 and $0.86, based on an estimated weighted average diluted share count of 38.3 million shares and an effective tax rate of 31.5%.

BEIJING, June 29, 2012 /PRNewswire-Asia-FirstCall/ -- Fushi Copperweld, Inc. ("Fushi" or the "Company") (Nasdaq: FSIN) today announced that it has entered into an Agreement and Plan of Merger (the "Merger Agreement") with entities affiliated with its Chairman and Co-Chief Executive Officer, Mr. Li Fu, and Abax Global Capital (Hong Kong) Limited ("Abax"), at a price of $9.50 per share in cash.

Under the terms of the Merger Agreement, each share of the Company's common stock that is issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive $9.50 in cash without interest, except for shares owned by Mr. Fu, Abax and their respective affiliates, who currently beneficially own an aggregate of approximately 29.4% of the Company's outstanding shares.  Full release.

First Quarter 2012 Results

• Revenues were $62.1 million compared to $65.9 million in the year ago period;
• Gross profit was $16.4 million, or 26.3% of revenues, compared to $17.1 million, or 26.0% of revenues, in the year ago period;
• Income from operations was $8.1 million, or 13.0% of revenues, compared to $10.5 million, or 15.9% of revenues, in the year ago period;
• Net income was $4.9 million, or $0.13 per diluted share, compared to net income of $6.8 million, or $0.18per diluted share, in the year ago period;
• Cash position of $205.4 million at March 31, 2012.

Joe Longever, co-Chief Executive Officer of Fushi Copperweld, commented, "The quarter came in largely as expected, and we saw a slight improvement in business conditions and greater predictability in orders relative to what we experienced in the 2011 fourth quarter. While sales atDalian were impacted by softening telecom demand, we benefitted from solid performance in our utility product lines and lower raw material costs in what continued to be a challenging market environment. We also began to see some traction from our growth initiatives in the period, including increased order and inquiry activity from European, African and broader Asian markets, for a variety of products. The ramp up of our operations in Liege, Belgium continued, and Liege is becoming a key competitive differentiator for us, as we have secured promising new copper tubing and bi-metallic wire orders and interest, as a result of our on-the-ground presence in this market."

Outlook

Based on its first quarter performance and current business trends, Fushi Copperweld continues to expect 2012 fully diluted earnings per share between $0.76 and $0.86, based on an estimated weighted average diluted share count of 38.3 million shares and an effective tax rate of 31.5%. The Company expects profitability in subsequent quarters to improve over the first quarter due to higher revenues with the absence of the Chinese New Year and increased traction from business development and certification efforts.

BEIJING, April 12, 2012 /PRNewswire-Asia-FirstCall/ -- Fushi Copperweld, Inc. ("Fushi" or the "Company") (NasdaqGS: FSIN) , the leading global manufacturer and innovator of copper-clad bimetallic wire used in a variety of telecommunication, utility, transportation and other electrical applications, today commented on the report issued by Muddy Waters on April 10, 2012.

Fushi Copperweld has reviewed the report and categorically denies all of its claims, which are vague and non-specific, and were made in the absence of any discussion with the Company.

The Company also announced that it expects to report results for the first quarter of 2012 on May 3, 2012.

The Company is committed to providing full and accurate disclosure to investors and to rebutting any false claims that attempt to undermine confidence in the Company's business, management, and operations.

We expect that we will be able to meet our needs to fund operations, capital expenditures and other commitments in the next 12 months primarily with operating cash flows.

Fourth Quarter 2011 Results

• Revenues were $68.2 million compared to $69.9 million in the year ago period;
• Gross profit was $16.8 million, or 24.7% of revenues compared to $22.2 million, or 31.8% of revenues, in the year ago period;
• Income from operating activities was $9.4 million, or 13.8% of revenues compared to $16.0 million, or 22.8% of revenues, in the year ago period;
• Net cash generated by operating activities of $31.4 million, compared to $28.2 million net cash generated by operating activities in the fourth quarter of 2010; and
• Cash position at quarter end remains strong at $200.5 million.

Joe Longever, co-Chief Executive Officer of Fushi Copperweld, commented, "The fourth quarter saw a continuation of the challenging market conditions that affected our business in the third quarter. Reacting to macroeconomic factors, some of our customers continued to reduce or delay their orders, which decreased sales volumes, particularly in the U.S., and, combined with the effects of changes in raw material prices, reduced our margins. Despite the difficult environment, we continued to make solid progress in the execution of our global strategy. The ramp-up of our new facility in Belgium is proceeding as planned. We expect to be in a position to generate sales of tubing, CCA and CCS products from this facility in early-2012 as anticipated, and we have received strong feedback from current and potential customers in the market about our enhanced regional presence."

Outlook

Based on fourth quarter performance and current business conditions, Fushi Copperweld currently expects 2012 fully diluted earnings per share of between $0.76 and $0.86 based on an estimated weighted average diluted share count of 38.3 million shares, and an effective tax rate of 31.5%. The first fiscal quarter is typically the Company's weakest quarter due to the timing of the Chinese New Year, during which the Company's operating facilities in China are closed for two weeks. The Company expects profitability in subsequent quarters to improve over the first quarter due to higher revenues with the absence of the Chinese New Year and increased traction from business development and certification efforts.

BEIJING, December 29, 2011 /PRNewswire-Asia-FirstCall/ -- The Special Committee of the Board of Directors of Fushi Copperweld, Inc. ("Fushi" or the "Company") (Nasdaq: FSIN) today announced that it has received a revised proposal from its Chairman and Co-Chief Executive Officer, Mr. Li Fu, Abax Global Capital on behalf of funds managed, advised and/or appointed by it and its affiliated management companies (collectively, "Abax"), and TPG Growth Asia, Inc. (an affiliate of TPG Capital, L.P.), for the acquisition of all of the outstanding shares of Common Stock of Fushi not currently owned by Mr. Fu and his affiliates or Abax in a going private transaction for $9.50 per share in cash, subject to certain conditions.

The Special Committee noted that while the revised proposal is higher than the $9.25 per share proposal previously submitted by Mr. Fu and Abax, it is lower than the $11.50 per share proposal initially submitted by Mr. Fu and Abax, does not contain customary financing commitments and is still highly conditional.

Consistent with its fiduciary duties, the Special Committee, in consultation with its independent legal and financial advisors, will carefully review the revised proposal to determine the course of action that it believes is in the best interests of the Company and all Fushi shareholders that are not participating in the buyout proposal. The Special Committee intends to notify shareholders of its position regarding the revised proposal in due course.

BofA Merrill Lynch is serving as the financial advisor to the Special Committee of Fushi's Board of Directors and Gibson, Dunn & Crutcher LLP is serving as legal counsel.

GeoTeam Note:

Excerpt from a Yahoo message board posting:

Even the wording of the special committee is also very interesting...

trying to unload some tonight 9FSIN), if it doesn't give it all back by opening I'll sell some more tomorrow:

1) Not even a draft facility agreement with CDB yet
2) brand new investor in the mix that needs to do due diligence
3) expecting draft facility agreement in late January
4) hope to finalize a merger agreement by 2/29
5) then we'll have a vote - got to think that takes a month
6) giving special committee until mid February or 2/29 to approve offer
7) 2.7% increase from last offer, how can special committee justify that
8) Indicated that this is the final offer

basically still think the company is worth more than this price but this deal is putting a real drag on this stock and when traders start realizing that from the AH price of 8.18 there is only 16% upside and it is going to take 3.5 to 4 months to get the cash, if the deal goes through, they are going to drop this stock down 20% to where we were a few days ago.

I'll rebuy if the stock does drop below $7

BEIJING, Nov. 21, 2011 /PRNewswire/ -- The Special Committee of the Board of Directors of Fushi Copperweld, Inc. ("Fushi" or the "Company") (Nasdaq: FSIN) today announced that it has received a revised proposal from its Chairman and Co-Chief Executive Officer, Mr. Li Fu and Abax Global Capital (Hong Kong) Limited on behalf of funds managed by it and its affiliates ("Abax"), for Mr. Fu and Abax to acquire all of the outstanding shares of Common Stock of Fushi not currently owned by Mr. Fu and his affiliates in a going private transaction for $9.25 per share in cash, subject to certain conditions.    

The Special Committee noted that the revised proposal is lower than the $11.50 per share in cash proposal previously submitted by Mr. Fu and Abax, does not contain customary financing commitments and is still highly conditional.  For several months the Special Committee of Fushi's Board of Directors has been actively engaged with Mr. Fu and Abax and their advisors regarding their $11.50 per share proposal, and has been considering a number of other strategic alternatives to maximize value for all Fushi shareholders that are not participating in the Fu/Abax buyout proposal, including, among other things, a potential sale of the Company or remaining an independent public company.

Consistent with its fiduciary duties, the Special Committee, in consultation with its independent legal and financial advisors, will carefully review the revised proposal from Mr. Fu and Abax to determine the course of action that it believes is in the best interests of the Company and all Fushi shareholders that are not participating in the Fu/Abax proposal.  The Special Committee intends to notify shareholders of its position regarding the revised proposal in due course.

BoA Merrill Lynch is serving as the financial advisor to the Special Committee of Fushi Copperweld's Board of Directors and Gibson, Dunn & Crutcher LLP is serving as legal counsel.

Liquidity statement from 2010 10K:

We expect that we will be able to meet our needs to fund operations, capital expenditures and other commitments in the next 12 months primarily with operating cash flows.

Please note that the above liquidity statement in subsequent quarterly filings in 2011 do not contain the same verbiage.

Third Quarter 2011 Results

On June 27, 2011, Copperweld Bimetallics LLC (“Copperweld”), a wholly owned subsidiary of Fushi Copperweld, Inc., and Regions Bank, an Alabama banking corporation (the “Lender”) entered into the First Amendment (the “First Amendment”) to the Credit and Security Agreement (the “Original Credit Agreement”) dated as of August 31, 2010 (the “Original Closing Date”).

The Original Credit Agreement provided for a $2.5 million revolving credit facility and a term facility of up to $6.5 million. The Lender has agreed, pursuant to the First Amendment, to increase the maximum amount of the revolving credit facility from $2.5 million to $4.5 million, thereby increasing the total facility cap from $9 million to $11 million. Further, the Original Credit Agreement included a financial covenant by Copperweld to maintain a Tangible Net Worth (as defined in the Original Credit Agreement) during the term of the Original Credit Agreement of no less than the sum of $18,500,000 and 50% of Copperweld’s cumulative positive net income from and after the Original Closing Date. The First Amendment amends the minimum Tangible Net Worth definition to provide that for the fiscal year ended December 31, 2011 and for each fiscal year thereafter, Copperweld’s Tangible Net Worth shall be not less than the sum of $17,000,000 and 50% of Copperweld’s cumulative positive net income from and after January 1, 2011. Finally, the term of the Original Credit Agreement of three years from the Original Closing Date has been extended to four years from the Original Closing Date pursuant to the First Amendment.

SAN DIEGO--(BUSINESS WIRE)--Robbins Geller Rudman & Dowd LLP ("Robbins Geller") (http://www.rgrdlaw.com/cases/fushi/) today announced that a class action has been commenced on behalf of an institutional investor in the United States District Court for the Middle District of Tennessee on behalf of purchasers of Fushi Copperweld, Inc. ("Fushi") (NASDAQ:FSIN) securities during the period between August 14, 2007 and May 4, 2011 (the "Class Period").

If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from May 6, 2011. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, Darren Robbins of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at djr@rgrdlaw.com. If you are a member of this class, you can view a copy of the complaint as filed or join this class action online athttp://www.rgrdlaw.com/cases/fushi/. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.

The complaint charges Fushi and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Fushi is a producer of bimetallic wire products, principally copper-clad aluminum and copper-clad steel products.

The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business practices and financial results. As a result of defendants’ false statements, Fushi stock traded at artificially inflated prices during the Class Period, reaching a high of $27.00 per share in December 2007.

On March 11, 2011, Fushi issued a press release announcing its preliminary fourth quarter and full year 2010 earnings results. Additionally, the Company announced it was reevaluating the application of Generally Accepted Accounting Principles ("GAAP") in certain accounting treatments applied to its 2007, 2008 and 2009 financial results and its previously filed quarterly financial statements for the first three quarters of 2010. On this news, Fushi shares dropped by $1.68 per share, to close at $7.74 per share on March 16, 2011 – a three day decline of 18%.

Subsequently, on March 29, 2011, Fushi filed a Form 8-K with the SEC disclosing that its Audit Committee had concluded that the Company’s previously reported financial statements for the years ended December 31, 2009, 2008 and 2007 and its unaudited interim financial statements for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010 should be restated and should no longer be relied upon. On this news, Fushi shares dropped by $0.19 per share, to close at $8.12 per share on March 30, 2011, a one-day decline of 2.3% per share.

Then, on May 4, 2011, Fushi issued a press release announcing its first quarter 2011 financial results. The Company reported revenue of $65.9 million and net income of $6.8 million, or $0.18 diluted earnings per share ("EPS"), below analysts’ estimates of EPS of $0.23. On this news, Fushi’s stock dropped again and began a steady decline from $8.46 per share on May 3, 2011, to $7.05 per share on May 19, 2011.

According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) Fushi was improperly applying hedge accounting to a cross currency interest swap derivative entered into in April 2007; (b) Fushi failed to recognize changes in the fair value of the April 2007 swap in its earnings during the Class Period, inflating its reported net income by material amounts; (c) Fushi misstated its net income for 2007, 2008, 2009 and for the quarters ended March 31, 2010, June 30, 2010, and September 30, 2010; (d) Fushi had material deficiencies in its internal controls over its financial reporting; (e) Fushi’s financial statements were not fairly presented in conformity with GAAP; and (f) Fushi’s business was not as healthy as represented by defendants.

Plaintiff seeks to recover damages on behalf of all purchasers of Fushi securities during the Class Period (the "Class"). The plaintiff is represented by Robbins Geller, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.

Robbins Geller, a 180-lawyer firm with offices in San Diego, San Francisco, New York, Boca Raton, Washington, D.C., Philadelphia and Atlanta, is active in major litigations pending in federal and state courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of human rights violations. The Robbins Geller Web site (http://www.rgrdlaw.com) has more information about the firm.

BEIJING, May 26, 2011 /PRNewswire-Asia-FirstCall/ -- In response to investor inquiries, the Special Committee of the Board of Directors of Fushi Copperweld, Inc. ("Fushi" or the "Company") (Nasdaq: FSIN ) today provided an update regarding the proposal previously submitted by the Company's Chairman and Co-Chief Executive Officer, Mr. Li Fu ("Mr. Fu") and Abax Global Capital (Hong Kong) Limited on behalf of funds managed by it and its affiliates ("Abax"), for the acquisition of all of the outstanding shares of Common Stock of Fushi not currently owned by Mr. Fu and his affiliates in a going private transaction for $11.50 per share in cash, subject to certain conditions.

As previously announced, Fushi's Board of Directors formed a Special Committee of independent directors to consider this proposal.  The Special Committee has negotiated and executed confidentiality and standstill agreements with each of Mr. Fu and Abax.  The Special Committee and its independent financial and legal advisors are currently facilitating the due diligence investigation of the Company by Mr. Fu and Abax so that they can be in a position to submit a firm, fully financed offer to the Special Committee.  The Special Committee, with the assistance of its advisors, is also considering other strategic alternatives to Mr. Fu's proposal, including any other acquisition proposal that may be submitted to the Company or to the Special Committee or remaining an independent public company.

There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated.  The Special Committee does not intend to disclose developments regarding these matters unless and until it deems disclosure appropriate.

BoA Merrill Lynch is serving as independent financial advisor to the Special Committee and Gibson, Dunn & Crutcher LLP is serving as independent legal counsel.

Rodman and Renshaw on FSIN                       5/5/2011

A Disappointing Quarter; Waiting for the MBO Decision.

Despite reporting disappointing 1Q11 results, Fushi Copperweld management maintained its full year EPS guidance of $1.15 - $1.25 per fully diluted share. At the same time, the company continued to generate strong cash flows from operations, ending the quarter with $128.9 million in net cash ($3.36 per fully diluted share), representing 41.2% of the company’s current market cap. With the management buyout proposal at $11.50 per share still on the table, we believe there is a significant near-term upside potential to the stock. We are maintaining our Market Outperform/Speculative Risk rating and a price target of $11.50. Our price target is in line with the proposed management buyout price and implies the shares attaining a P/E level of approximately 10x our FY11 fully diluted EPS estimate of $1.15.

Discussion

• 1Q11 EPS of $0.18 missed our EPS estimate of $0.28 by $0.10 The company reported earnings significantly below our expectations on lower than expected gross margins, additional audit fees and advisory expenses related to the proposed management buyout offer, and a higher than anticipated effective tax rate for the quarter. 1Q11 revenues came in at $65.9 million (~ up 10.7% YoY), including a $6.5 million contribution from the Dalian Jinchuan acquisition. While higher metal prices have lifted selling prices for both copper-clad aluminum and steel, sales volumes remained relatively flat year over year as company clients kept lean inventories. The overall gross margin declined from 29.9% in 1Q10 to 26.0% in 1Q11 on higher raw material costs, a shift in the sales mix and a weaker fixed cost absorption at Fayetteville facility due to a substantial drop in sales volumes. Operating expenses (excluding non-cash expenses) increased 35.7% to $6.5 million primarily due to the additional audit and advisory fees amounting to $1.55 million. The bottom line was also negatively impacted by a higher than anticipated effective tax rate for the quarter of 33.5% compared to the full year tax rate guidance of 25% and our full year estimate of 24%. Consequently, the company posted a 39.3% YoY decline in non-GAAP net income to $7.0 million or $0.18 per fully diluted share. GAAP net income declined 24.7% YoY to $6.8 million or $0.18 per fully diluted share.
• Sales Volumes Flat on Continued Slowdown of the 3G Network Build Out in China and Supply Chain Destocking Overall sales of copper-clad products declined 1.1% YoY from 9,100 MT in 1Q10 to 8,997 MT in 1Q11. A slight increase of 0.8% YoY in copper-clad aluminum (CCA) sales in China driven by the strengthening demand from utility customers was offset by a 1.8% YoY decline in the U.S. CCA sales volumes. Sales of copper-clad steel (CCS) out of the U.S.-based Fayetteville facility experienced a sharper decline of 11.5% YoY from 1,619 MT in 1Q10 to 1,446 MT in 1Q11.
  
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  This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.
  
  Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.
  
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First Quarter Results:

• Revenues for the first quarter of 2011 increased 10.7% to $65.9 million, up from $59.5 million in the prior year
• Excluding all non-cash gains and expenses and one-time, non-recurring losses, adjusted net income was $7.0 million or $0.18 per diluted share in the first quarter of 2011, compared to adjusted net income of $10.7 million or $0.30 per diluted share

Joe Longever, co-Chief Executive Officer of Fushi Copperweld, commented, "Our first quarter is typically our slowest period of the year, and our results for the period reflect this seasonality combined with an improving but still uncertain economic environment, as the continued slowdown in the Chinese 3G build-out and our sales mix again reflects a shift to more utility customers. We have also seen a break from typical buying patterns, with customers continuing to draw down on their inventories and restocking at only minimal levels. While infrastructure spending priorities continue to shift and raw material pricing remains volatile, we continue to see customers attracted to our unique products for their technological superiority and economic value."

Based on current business trends, the Company reiterates its previously announced annual guidance of fully diluted earnings per share between $1.15 and $1.25 based on an estimated weighted average diluted share count of 38.2 million shares, and an effective income tax rate of 25.0%.  The Company expects profitability in subsequent quarters to improve over the first quarter due to higher revenues with the absence of the Chinese New Year, continued higher raw material prices, increased global demand and the increased capability to meet that demand.

Rodman and Renshaw on FSIN                  4/6/2011

FSIN: Amendments and FY10 10K Filed.

Fushi Copperweld reported 4Q10 and FY10 results in line with the previously issued preliminary financial results. Revenues for 4Q10 and FY10 came in at $69.9 million (~ up 35.2% YoY) and $265.0 million (~44.9% YoY), respectively. The company reported 4Q10 and FY10 gross profit of $22.2 million (~ up 29.1% YoY) and $79.3 million (~44.7% YoY). Excluding stock-based compensation, 4Q10 and FY10 operating income increased to $16.4 million (~29.8% YoY) and $59.0 million (59.9% YoY), respectively. Non-GAAP net income adjusted for non cash charges including $14.3 million deferred tax expense was $13.4 million or $0.35 per fully diluted share in 4Q10 and $49.4 million or $1.32 per fully diluted share for the full 2010. On a GAAP basis, Fushi Copperweld reported a 4Q10 loss of $2.4 million or ($0.06) per fully diluted share and FY10 net income of $31.9 million or $0.85 per fully diluted share. Based on the company’s FY11 fully diluted EPS guidance of $1.15 - $1.25, we are forecasting FY11 revenues of $290.7 million, adjusted net income of $46.4 million and fully diluted EPS of $1.21. We are maintaining our Market Outperform rating and a price target of $11.50. Our price target is in line with the proposed management buyout price and implies the shares attaining a P/E level of approximately 9.5x our FY11 fully diluted EPS estimate of $1.21

Restatements

Fushi Copperweld has completed the restatements of its financial statements for 2007, 2008 and 2009 and for the first three quarters of 2010 filing the required amendments and Form 10-K Annual Report for FY10. We remind that on March 11, 2011, the company announced that the filing of its detailed financial statements and Form 10-K will be delayed pending the reevaluation of the application of GAAP to certain non-cash items in the previously filed financial statements for 2007, 2008, 2009 and the first nine months of 2010. Specific items that were re-examined included allowance for $16 million of deferred income tax assets, qualification of cash flow hedge for cross-currency interest swap and $5 million bargain purchase gains recognized in 2010 acquisitions. The re-statements did not affect the company’s operating results. As the result of the aforementioned restatements, FSIN GAAP net income decreased to $23.9 million (from $29.5 million) for FY07, increased to $31.2 million (from $28.5 million) for FY08 and decreased to $21.9 million (from $24.0 million) in FY09. GAAP net income for the first nine months of FY10 increased from $33.7 million to $34.3 million.

Risks

(1) Fluctuating raw material prices (2) Slowdown in 3G capital expenditure (3) Copper-clad steel market acceptance in China (4) Business integration risk (5) Regulatory risks (6) Intellectual property loss (7) Litigation risk (8) MBO failure.


Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

On GAAP basis, net loss for the 2010 fourth quarter was $2.4 million, or $0.06 per diluted share. This compares with GAAP net income of $10.2 million, or $0.34 per diluted share, in the fourth quarter of 2009. GAAP results for the fourth quarter of 2010 include net interest income of $0.0 million, offset by other expenses of $0.4 million.

On non-GAAP basis, adjusted net income was $13.4 million or $0.35 per diluted share in the fourth quarter of 2010, compared to adjusted net income of $10.3 million or $0.34 per diluted share, in the prior year fourth quarter.

On GAAP basis, net income for the 2010 fiscal year was $31.9 million, or $0.85 per diluted share. This compares with net income of $21.9 million, or $0.76 per diluted share, in the 2009 fiscal year.

On non-GAAP basis, adjusted net income was $48.6 million or $1.30 per diluted share in 2010 fiscal year, compared to adjusted net income of $28.9 million or $1.01 per diluted share, in the 2009 fiscal year.

Rodman and Renshaw on FSIN                                                  3/16/2011

Strong Quarter, Disappointing Outlook; Lowering PT to $11.50

Fushi Copperweld issued unaudited preliminary 4Q10 and FY10 results simultaneously announcing a delay in the filing of Form 10K. The company expects to issue final audited financial results for 4Q10 and FY10 upon the reevaluation of the application of GAAP in certain accounting treatments applied to its 2007, 2008, 2009, and 2010 financial statements. The company’s preliminary 4Q10 and FY10 results exceeded ours and the Streets expectations. 4Q10 and FY10 revenues came in at $69.9 million (~ up 35.2% YoY) and $265.0 million (~44.9% YoY), respectively, relative to our forecasts of $62.3 million and $257.4 million and consensus of $67.1 million and $262.3 million. The company reported 4Q10 and FY10 gross profit of $22.2 million (~ up 29.1% YoY) and $79.3 million (~44.7% YoY) and operating income of $15.8 million (~ up 27.3% YoY) and $57.7 million (~ up 56.4% YoY). Based on the preliminary results, we are expecting 4Q10 and FY11 adjusted net income and fully diluted EPS of $52.4 million and $1.40, excluding the effect of $1.3 million deemed dividend and other non-cash expenses. Management issued FY11 fully diluted EPS guidance of $1.15 - $1.25, however, came short of our $1.48 estimate and consensus of $1.43. In light of the FY11 outlook, we are lowering our FY11 adjusted net income and fully diluted EPS forecasts to $46.2 million and $1.21, respectively. We are also lowering our price target to $11.50, in line with the proposed management buyout price.

Valuation

We are reducing our price target from $13 to the management buyout price of $11.50. While we believe that, in the long-term, the company’s dominant position in the bimetallics industry may position it for strong growth should the market demonstrate wider acceptance of bimetallic wire across industries, we are in the meanwhile perplexed by the slower than expected market penetration of bimetallic products in Asia and now believe that the proposed buyout price offers good value in the foreseeable future. Fushi Copperweld is currently trading at 6x our fully diluted FY10 EPS forecast of $1.40 and 7x our fully diluted FY11 EPS forecast of $1.21, significantly below the current industry multiples of 14x and 11x for the US-listed wire and cable manufacturers. Our price target of $11.50 is in line with the proposed management buyout price and implies the shares attaining a P/E level of approximately 9.5x our FY11 EPS estimate.

Risks

(1) Fluctuating raw material prices (2) Slowdown in 3G capital expenditure (3) Copper-clad steel market acceptance in China (4) Business integration risk (5) Regulatory risks (6) Intellectual property loss (7) Litigation risk.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

BEIJING, March 2, 2011 /PRNewswire-Asia/ -- Fushi Copperweld, Inc. announced today that the Special Committee of its Board of Directors, formed to consider, among other things, a proposal by a group headed by the Company's Chairman and Co-Chief Executive Officer, Mr. Li Fu, to take the Company private (the "Proposal"), has retained BofA Merrill Lynch as its financial advisor and Gibson, Dunn & Crutcher LLP as its legal advisor to assist the Special Committee in its consideration of such matters. No assurance can be given that the Proposal, or any other transaction, will be consummated. The Company does not intend to disclose developments regarding these matters unless and until its Board of Directors determines there is a need to update the market.

Rodman and Renshaw on FSIN                         02/03/2011

Key License Agreement Extended Until 2026

License Agreement Renewed: Fushi Copperweld (FSIN) announced this morning that it has extended its license agreement with Nexans Deutschland GmbH, a subsidiary of French cable maker Nexans SA, until 2026. The exclusive license, held by FSIN since 1991 and previously scheduled to expire in 2015, grants FSIN exclusive worldwide rights for certain patents and proprietary manufacturing technology related to the production of bimetallic copper-clad aluminum (CCA) wire. The license does not affect the production of copper-clad steel (CCS) which is based on the internally developed technology.

Payment Terms Renegotiated: According to the preceding agreement, FSIN paid Nexans a royalty equaling 1.7% of the CCA sales. Because FSIN products are priced on a cost plus basis which means that the increase or decrease in raw material prices is passed to the clients with the minimal effect on the company’s gross profit, the arrangement resulted in higher dollar payments to Nexans as rising copper prices lifted FSIN's selling prices. The new agreement stipulates that going forward the payment structure will be changed from the percentage of sales to a fixed $0.032/pound amount. We believe the change in payment terms will reduce the effect of raw material volatility on the company’s gross margins.

The License Provides an Important Quality Differentiator: FSIN differentiates itself from other bimetallics manufacturers by offering products with superior signal transmission and ample vertical current carrying capabilities. The technology sublicensed from Nexans allows FSIN to achieve better layering of copper that ensures more uniform metallurgical bond between copper and aluminum and hence fewer disruptions in signal transmission. We view FSIN's cold cladding technology as a key competitive advantage that enables it to provide flawless conductor performance essential for high-end markets. In contrast, FSIN's domestic competitors rely of inferior technology that does not deliver the same quality of signal transmission. We believe renewed agreement will help FSIN to maintain its leadership position in the high-end markets.

Valuation: FSIN is currently trading at 7 times our FY11 adjusted fully diluted FY11 EPS estimate of $1.40. We continue to view FSIN's valuation as attractive and reiterate our Market Outperform rating and 12-months price target of $13. Given FSIN's dominant position in the bimetallics industry and the long-term growth opportunity associated with the broader acceptance of bimetallics in multiple applications across industries and geographical regions, we believe the company warrants a higher valuation. Our 12-months price target of $13 is based on the shares attaining a P/E level of 9x our FY11 EPS estimate.

Risks: (1) Fluctuating raw material prices (2) Slowdown in 3G capital expenditure (3) Copper-clad steel market acceptance in China (4) Business integration risk (5) Regulatory risks (6) Intellectual property loss (7) Litigation risk.


Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman and Renshaw on FSIN                  01/27/2011

FSIN: Appoints KPMG as its New Auditor

FSIN announced that it has engaged KPMG as its new independent public accounting firm for the fiscal year ending December 31, 2010, effective immediately. KPMG replaces Frazer Frost, LLP, which audited the company’s financial statements for fiscal years 2008 and 2009. The change in auditing firm was primarily dictated by evolving audit needs associated with Fushi’s growing geographical presence and business scope and was not a result of any disagreements with Frazer Frost.

Our Thoughts: 

We view the appointment of KPMG as a positive step for the company. KPMG is one of the Big Four accounting firms with a significant presence in China. With recent reports of accounting deficiencies discovered in a few US-listed Chinese small-cap companies, we believe this auditor upgrade is timely and will help strengthen investors’ confidence in the company. Furthermore, the appointment confirms the management’s commitment to transparency and stringent corporate governance standards as the special committee reviews the submitted management buyout proposal. We remind that on November 3rd, 2010, the company’s Board of Directors received a proposal from the Company’s Chairman and CEO, Mr. Li Fu and Abax Global Capital to acquire all of the outstanding Fushi Copperweld common stock not currently owned by Mr. Fu and affiliates for $11.50 per share in cash. Although the offer price provides a 19.4% premium to yesterday’s closing price of $9.64, it values the shares at only 8.2x our FY11 fully diluted EPS estimate of $1.40. Adjusted for $117.9 million or $3.10 per fully diluted share in cash as of the end of 3Q10, the proposal values FSIN shares at 6x our FY11 EPS estimates. This multiple is significantly below the current FY11 industry average of 13.7x for the U.S. listed wire and cable manufacturers and our price target of $13. We continue to believe that the company warrants a higher takeout valuation.

Valuation 

FSIN is currently trading at 7 times our FY11 adjusted fully diluted FY11 EPS estimate of $1.40. We continue to view Fushi Copperweld’s valuation as attractive and reiterate our Market Outperform rating and 12-months price target of $13. Given Fushi Copperweld’s dominant position in the bimetallics industry and the long-term growth opportunity associated with the broader acceptance of bimetallics in multiple applications across industries and geographical regions, we believe the company warrants a higher valuation. Our 12-months price target of $13 is based on the shares attaining a P/E level of 9x our FY11 EPS estimate.

Risks 

(1) Fluctuating raw material prices (2) Slowdown in 3G capital expenditure (3) Copper-clad steel market acceptance in China (4) Business integration risk (5) Regulatory risks (6) Intellectual property loss (7) Litigation risk.


Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Third Quarter Highlights

• Revenues for the third quarter of 2010 increased 39.5% to $66.5 million, up from $47.7 million in the prior year quarter.  

• On a GAAP basis, net income for the 2010 third quarter was $12.9 million, or $0.34 per diluted share. This compares with net income of $9.2 million, or $0.31 per diluted share, in the third quarter of 2009.

• Excluding all non-cash gains and expenses and one-time, non-recurring losses, adjusted net income was $13.0 million or $0.34 per diluted share in the third quarter of 2010, compared to adjusted net income of $7.5 million or $0.26 per diluted share, in the prior year third quarter.

Joe Longever, co-Chief Executive Officer of Fushi Copperweld, commented, "Our performance in the third quarter reflects the global nature of our business, the breadth and flexibility of our product offering and the developing demand for our products worldwide.  While we experienced some slowdown within certain sectors in China, the subsequent volume declines were mostly offset by growth from our U.S. facility, which supplies product to a variety of markets including Europe, South America and the Middle East.  Additionally, although we saw a decrease in demand from telecom customers related to the 3G build out in China, there was a concurrent pick-up in sales in the utility market.  We also continued to make solid progress in introducing our products into new end markets, such as transportation and CATV in China, as well as new geographies worldwide."

Mr. Longever concluded, "Fushi Copperweld remains in an excellent position to capitalize on the many opportunities we see worldwide to expand our business and our position as the leading supplier of copper-clad bimetallic wire.  In China, the integration of our recent acquisitions and the roll out of our CCS product are both proceeding in line with our expectations, and we continue to increase our global presence to leverage the opportunities we see in emerging markets as countries continue to invest in critical infrastructure build outs.  With a liquid balance sheet and strong cash flows, we also have the financial flexibility to continue investing in our future growth.  Overall, Fushi Copperweld is well poised to address the large global market opportunity we see before us."

Outlook

Based on current business trends, the Company expects adjusted fully diluted earnings per share to be between

• $0.29 and $0.31 for the fourth quarter
• $1.25 and $1.29 for the 2010 full-year period

This expectation is based on the assumption that the effective tax rate at the consolidated level will be 23.0% and 12.8% for the fourth quarter and 2010 full-year period, respectively, and includes the one-time increase in tax expense of $0.03 per diluted share related to the Company's Yixing facility investment, as described above.

Rodman & Renshaw

Investment Thesis 

We are initiating coverage of Fushi Copperweld, Inc. (FSIN), a leading global manufacturer of bimetallic wire. Fushi Copperweld manufactured copper-clad aluminum and copper-clad steel provide low cost, technologically superior substitute to pure copper wire in a variety of applications within telecommunications, utilities, transportation and automotive sectors helping manufacturers to mitigate the impact of copper price volatility on their production costs. We consider Fushi Copperweld a compelling investment opportunity given the company’s advanced proprietary technology, world’s largest bimetallic production capacity, innovative products and expert management team, and favorable valuation that has been impacted by recent downdraft that carried many U.S.-listed Chinese equities to lower valuations. We believe the Street has not fully appreciated the substitution potential of bimetallics. In the near-term, the company should benefit from high copper pricing that encourages manufacturers to explore viable alternatives. Effective marketing and client education, the adoption and implementation of national industry standards for bimetallics in China, combined with the recent strategic acquisitions and expansion into the new geographical markets should help the company to monetize its unique technological advantages and vast bimetallic industry experience. We forecast revenues and adjusted net income of $287.3 million and $49.1 million in FY10 and $337.0 million and $53.9 million in FY11, respectively, which translates to fully diluted adjusted EPS of $1.31 in FY10 and $1.41 in FY11. We initiate coverage with a Buy rating and $13 price target based on the shares attaining a P/E level of 9x our FY11 EPS estimate. 

 Valuation 

Fushi Copperweld is currently trading at 6.6x our FY10 fully diluted EPS estimate of $1.31 and 6.2x our FY11 fully diluted EPS estimate of $1.41. These multiples are well below the current FY10 and FY11 industry averages of 16.2x and 11.5x for the US-listed wire and cable manufacturers. Given Fushi Copperweld’s dominant position in the bimetallics industry and the growth opportunity associated with the broader acceptance of bimetallics in multiple applications across industries and geographical regions, we believe the company warrants a higher valuation. We derive our 12-months price target by applying a 20% discount to the peer group FY11 average on the account of potentially slowing sales to the telecoms sector. 

Risks 

(1) Fluctuating raw material prices (2) Slowdown in 3G capital expenditure (3) Copper-clad steel market acceptance in China (4) Business integration risk (5) Regulatory risks (6) Intellectual property loss.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

 Second Quarter 2010 Highlights

    -- GAAP Net Income increased significantly to $13.4M, or $0.35 per diluted
       share
    -- Adjusted Net Income increased 74.5% to $12.4M, or $0.33 per diluted
       share
    -- US operations realized Net Income of $0.6M; best quarter since second
       quarter 2008
    -- Expanded presence in Southern China through acquisition of Shanghai
       Hongtai
    -- Sequential volume as measured in metric tons increased 9.6% as compared
       to the first quarter of 2010
    -- Gross profit increased 45.6% to $19.6M, or 28.4% of revenue
    -- Successfully installed 8,200 metric tons of copper-clad steel (CCS)

Mr. Joe Longever, co-Chief Executive Officer of Fushi Copperweld, commented, "We are very pleased with our performance in the 2010 second quarter, which speaks to the diversified nature of our business and the benefits of the actions we have taken to enhance our strategic positioning. Revenues in the quarter were driven by strong, emerging business in markets all over the world, which offset a decline in volumes resulting from what we believe to be a temporary slowdown in China's 3G build-out. The increased worldwide demand for our products was reflected in higher volumes at our Fayetteville facility, where we saw continued improvement in profitability as a result of higher utilization levels and the steps we've taken to reduce costs and improve our operational efficiency. The additional CCS capacity we recently added at our Dalian facility also enables us to meet some of this global demand and should play an even larger role in future quarters. Lastly, the integration of our recent acquisitions have progressed as planned, and we look forward to the additional benefits these strategic purchases will bring going forward."

Mr. Longever continued, "We remain confident in our ability to continue to grow our business and enhance our profitability. The demand for global infrastructure investment continues, even if the pace of the global economic recovery may have slowed since the beginning of the year. With so many attributes that differentiate our products, we are confident that we have the best solutions available to address the large market opportunity ahead of us. From an operational standpoint, we have the footprint to deliver our products anywhere in the world quickly and cost effectively, and we will continue to look for ways to better reach and serve our customers. We are very pleased with our progress and prospects."

Outlook

• Based on current business trends, the Company expects
• adjusted fully diluted earnings per share to be between $0.33 and $0.35 for the third quarter of 2010 and;
• to be between $1.25 and $1.29 for the 2010 full-year period,
• based on an estimated weighted average diluted share count of 38.3 million shares for the third quarter of 2010 and 37.4 million for full-year periods.
• This expectation is based on the assumption that the effective tax rate at the consolidated level will be 17.5%.

Mr. Chris Wang, President and CFO, commented, 'In the first quarter, lower copper prices resulted in lower average selling prices for our product, which negatively impacted our revenue. The benefit is that our working capital requirements are reduced, which allows us to sustain a strong balance sheet through the slowdown. Still, when we combine the lower copper prices with the general economic slowdown, we have seen a lot of our competitors feeling pressure to lower prices below levels at which we're willing to sell in order to liquidate their inventory. In the short term this can negatively impact our revenue growth and margins. But in the long run we believe under- capitalized competitors will have a difficult time staying in business and we would expect the industry to consolidate to a smaller number of healthier competitors. Considering our strong balance sheet and healthy cash balance, we expect to be one of the beneficiaries as we manage our capital carefully during this time.'

The Company expects profitability to improve sequentially throughout 2009 due to continued growth in demand for CCA-based telecom products, utility applications, increased profitability at the Fayetteville facility as a result of cost saving initiatives, and increased revenue from China's 3G infrastructure investments and the $585 billion stimulus package. In preparation for expected future demand, the Company successfully completed the installation of an additional 6,000 metric tons of CCA at its Dalian facility in April.

Guidance Report:

"We remain optimistic about the long term health of our industry, and about our positioning in the bimetallics industry. Still, we must be realistic about the challenges that the short term brings. The global economy continues to be unstable, and although copper prices have stabilized somewhat over the last several weeks, they are still down considerably from the peaks in 2008. Our plan is to continue to conservatively manage our balance sheet and prepare ourselves for the inevitable turn in the economy. Our steadfastness to our corporate vision to be the leading innovator in the bi-metallic conductor business will provide us with the preparation needed to benefit from pent-up demand when the market turns, while also increasing our market share during the downturn. We plan to continue to identify new and innovative ways to improve our products and to distinguish ourselves, especially during these challenging times."

The Company expects profitability in subsequent quarters to improve over the first quarter due to higher revenues with the absence of the Chinese New Year, increased profitability at the Fayetteville facility as a result of cost saving initiatives, and increased revenue from China's recently announced stimulus package.

First Quarter Fiscal 2009 Guidance Ending March

Source: PR Newswire (March 12, 2009)