General Steel Reports Third Quarter 2013 Financial Results
Company Achieves Positive Gross and Net Margins,
Generates $75 Million Quarterly Operating Cash Flows and
Enhances Production Costs
BEIJING – November 12, 2013– General Steel Holdings, Inc. (“General Steel” or the “Company”) (NYSE: GSI), a leading non-state-owned steel producer in China, today announced financial results for the third quarter ended September 30, 2013.
“I am delighted that we achieved positive gross and net margins during the third quarter,” said Henry Yu, Chairman and Chief Executive Officer of General Steel. “We also significantly enhanced our cost structure with the launch of two additional continuous-rolling production lines, with one commencing production in July and the other entering trial production earlier this month.”
“We also observed positive market momentum for China’s steel industry. The average selling prices of key steel products rebounded moderately during the third quarter, driven by the robust demand from multi-sectors including infrastructure construction and automotive sectors. In addition, manufacturing activities in China grew at its fastest pace in the most recent seven months, with the Purchasing Managers Index reaching 50.9 this October, as the government readies a series of key economic reforms. Given our improving profitability, enhanced cost structure and positive momentum in the industry, we feel optimistic about our business in the quarters ahead.”
John Chen, Chief Financial Officer of General Steel, commented, “I’m very pleased with our execution this third quarter. We generated a positive quarterly operating cash inflow of $75 million and vastly improved profitability. Additionally, we further cut finance expenses and enhanced our financing flexibility, through better planning, budgeting and securing additional working capital support through favorable payment terms granted by our stakeholders. I believe we are at the beginning of a sustainable business turn-around.”
Third Quarter 2013 Financial Information
| · | Sales decreased by 14.2% year-over-year to $610.1 million, from $711.4 million in the third quarter of 2012. |
| · | Sales volume decreased by 10.0% year-over-year to approximately 1.3 million metric tons, compared with 1.4 million metric tons in the third quarter of 2012. |
| · | Gross profit was $8.2 million, or 1.3% of revenue, compared with a gross loss of $(13.6) million, or negative (1.9%) of revenue in the third quarter of 2012. |
| · | Operating income was $30.4 million, compared with an operating loss of $(36.4) million in the third quarter of 2012. |
| · | Net income attributable to the Company was $3.8 million, or $0.07 per diluted share, compared with a net loss of $(41.6) million, or $(0.76) per diluted share in the third quarter of 2012. |
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| · | Net operating cash inflow was $75.5 million, compared with $9.5 million in the third quarter of 2012. |
| · | As of September 30, 2013, the Company had cash and restricted cash of $467.9 million. |
First Nine Months 2013 Financial Information
| · | Sales decreased by 10.5% year-over-year to $1.9 billion, from $2.1 billion in the same period of 2012. |
| · | Sales volume increased by 0.9% year-over-year to approximately 3.95 million metric tons, compared with 3.91 million metric tons in the same period of 2012. |
| · | Gross loss was $(23.2) million, or negative (1.2%) of revenue, compared with a gross profit of $20.1 million, or 0.9% of revenue in the same period of 2012. |
| · | Operating income was $25.2 million, compared with an operating loss of $(41.5) million in the same period of 2012. |
| · | Net loss attributable to the Company narrowed to $(32.9) million, or $(0.60) per diluted share, compared with $(102.8) million, or $(1.87) per diluted share in the same period of 2012. |
| · | Net operating cash inflow was $14.0 million, compared with a net outflow of $(90.1) million in the same period of 2012. |
Third Quarter 2013 Financial and Operating Results
Total Sales
Total sales for the third quarter of 2013 decreased by 14.2% year-over-year to $610.1 million, compared with $711.4 million in the third quarter of 2012. The year-over-year revenue decreases were due to less sales volume and a decrease in average selling price of the products.
| · | Total sales volume in the third quarter of 2013 was 1.3 million metric tons, a decrease of 10.0% compared with 1.4 million metric tons in the third quarter of 2012. |
| · | The average selling price of rebar decreased 6.1% to approximately $489.6 per ton in the third quarter of 2013 from approximately $521.2 per ton in the same period of 2012. |
Gross Profit and Gross Margin
Gross profit for the quarter was $8.2 million, compared with a gross loss of $(13.6) million in the third quarter of 2012. The gross margin increased to 1.3% of total sales in the third quarter of 2013, compared with gross loss margin of negative (1.9%) of total sales in the same period a year ago, which reflects our production efficiency improvement and a slower decrease in ASP compared with cost of rebar.
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Operating Expenses and Operating Income
Selling, general and administrative expenses for the third quarter of 2013 decreased 13.7% to $19.7 million, compared to $22.8 million in the third quarter of 2012. General and administrative expenses decreased to $12.4 million, compared with $14.1 million in the same period of 2012. The decrease in general and administrative expense was mainly due to a decrease of $1.7 million in bad debt expenses, partially offset by an additional write-off of a prepaid special fund of $0.6 million in the third quarter of 2013, compared with the same period of last year. Selling expenses decreased 16.5% to $7.3 million, compared to $8.7 million in the same period of 2012. The decrease in selling expense was primarily attributable to savings in a special fund related to the sales of the Company’s products, which was no longer imposed by the PRC tax authorities in 2013, while $1.6 million of the special fund was imposed in the third quarter of 2012.
The Company recognized other operating income of $41.8 million due to change in the fair value of profit sharing liability during the third quarter of 2013, compared with $0 in the same period of last year, which reflects a change in the estimated fair value of the Company’s profit sharing liability.
Correspondingly, income from operations for the third quarter of 2013 was $30.4 million, compared with a loss from operations of $(36.4) million in the third quarter of 2012.
Finance Expense
Finance and interest expense in the third quarter of 2013 decreased $11.1 million to $25.5 million, of which, $7.8 million was the non-cash interest expense on capital lease, as compared with $10.7 million in the same period of 2012, and $17.7 million was the interest expense on bank loans and discounted note receivables as compared with $25.9 million in the third quarter of 2012. The decrease in interest expense on bank loans and discounted note receivables was primarily attributable to a reduction in the amount of bank notes receivable redeemed early, and less interest-bearing loans from banks and third parties, benefiting from additional financing support from suppliers and vendors during the third quarter of 2013.
Net Income and Net Income per Share
Net income attributable to General Steel for the third quarter of 2013 was $3.8 million, or $0.07 per diluted share, based on 55.1 million weighted average shares outstanding. This compares to a net loss of $(41.6) million, or $(0.76) per diluted share, based on 54.5 million weighted average shares outstanding in the third quarter of 2012.
First Nine Months 2013 Financial Results and Operating Results
Total Sales
Total sales for the first nine months of 2013 decreased 10.5% year-over-year to $1.9 billion, compared with $2.1 billion in the first nine months of 2012. The year-over-year revenue decreases were due to a decrease in the average selling price.
| · | Total sales volume in the first nine months of 2013 was 3.95 million metric tons, an increase of 0.9% compared with 3.91 million metric tons in the first nine months of 2012. |
| · | The average selling price of rebar decreased 12.6% to approximately $495.6 per ton in the first nine months of 2013 from approximately $566.8 per ton in the same period of 2012. |
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Gross Profit and Gross Margin
Due to a steeper decrease in average selling price in the first half of 2013, gross loss for the first nine months of 2013 was $(23.2) million, or (1.2%) of total sales, compared with a gross profit of $20.1 million, or 0.9% of total sale in the first nine months of 2012.
Operating Expenses and Operating Income
Selling, general and administrative expenses for the first nine months of 2013 decreased 3.4% to $59.5 million, compared to $61.5 million in the first nine months of 2012. General and administrative expenses increased slightly to $34.9 million, compared with $33.7 million in the same period of 2012. Selling expenses decreased 11.9% to $24.6 million, compared to $27.9 million, which included a $4.5 million special fund imposed in the same period of 2012.
The Company recognized other operating income of $107.9 million due to change in the fair value of profit sharing liability during the first nine months of 2013, compared with $0 in the same period of last year.
Correspondingly, income from operations for the first nine months of 2013 was $25.2 million, compared with a loss from operations of $(41.5) million in the first nine months of 2012.
Finance Expense
Finance and interest expense in the first nine months of 2013 was $81.4 million, of which, $27.8 million was the non-cash interest expense on capital lease as compared with $32.4 million in the same period of 2012, and $53.6 million was the interest expense on bank loans and discounted note receivables, as compared with $106.6 million in the first nine months of 2012.
Net Income and Net Income per Share
Net loss attributable to General Steel for the first nine months of 2013 was $(32.9) million, or $(0.60) per diluted share, based on 55.0 million weighted average shares outstanding. This compares to a net loss of $(102.8) million, or $(1.87) per diluted share, based on 55.0 million weighted average shares outstanding in the first nine months of 2012.
Balance Sheet
As of September 30, 2013, the Company had cash and restricted cash of approximately $467.9 million, compared to $369.9 million as of December 31, 2012. The Company had an inventory balance of approximately $177.4 million as of September 30, 2013, compared to $212.7 million as of December 31, 2012.
Conference Call and Webcast:
General Steel will hold a corresponding conference call and live webcast at 8:00 a.m. EST on Tuesday, November 12, 2013 (which corresponds to 9:00 p.m. Beijing/Hong Kong Time on Tuesday, November 12, 2013) to discuss the results and answer questions from investors. Listeners may access the call by dialing 1-877-870-4263 in the U.S., and 1-412-317-0790 internationally.
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The call will also be available as a live, listen-only webcast under the "Events and Presentations" page on the "Investor Relations" section of the Company's website at http://www.mzcan.com/us/GSI/irwebsite/index.php?mod=event. Following the live webcast, an online archive will be available for 90 days.
About General Steel Holdings, Inc.
General Steel Holdings, Inc., headquartered in Beijing, China, produces a variety of steel products including rebar, high-speed wire and spiral-weld pipe. The Company has operations in China’s Shaanxi and Guangdong provinces, Inner Mongolia Autonomous Region and Tianjin municipality, with seven million metric tons of crude steel production capacity under management. For more information, please visitwww.gshi-steel.com.
To be added to the General Steel email list to receive Company news, or to request a hard copy of the Company’s Annual Report on Form 10-K, please send your request togeneralsteel@asiabridgegroup.com.
Forward-Looking Statements
This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Actual results could differ materially from those projected in the forward-looking statements as a result of inaccurate assumptions or a number of risks and uncertainties. These risks and uncertainties are set forth in the Company's filings under the Securities Act of 1933 and the Securities Exchange Act of 1934 under “Risk Factors” and elsewhere, and include: (a) those risks and uncertainties related to general economic conditions in China, including regulatory factors that may affect such economic conditions; (b) whether the Company is able to manage its planned growth efficiently and operate profitable operations, including whether its management will be able to identify, hire, train, retain, motivate and manage required personnel or that management will be able to successfully manage and exploit existing and potential market opportunities; (c) whether the Company is able to generate sufficient revenues or obtain financing to sustain and grow its operations; (d) whether the Company is able to successfully fulfill our primary requirements for cash; and (e) other risks, including those disclosed in the Company’s Form 10-K, filed with the SEC. Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.
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Contact Us
General Steel Holdings, Inc.
In China:
Jenny Wang
Tel: +86-10-5775-7691
Email: jenny.wang@gshi-steel.com
In the US:
Joyce Sung
Tel: +1-347-534-1435
Email: joyce.sung@gshi-steel.com
Asia Bridge Capital Limited
Carene Toh
Tel: +1-888-957-3362
Email: generalsteel@asiabridgegroup.com
General Steel Holdings, Inc.
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GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands)
| | | September 30, | | | December 31, | |
| | | 2013 | | | 2012 | |
| ASSETS | | | | | | | | |
| CURRENT ASSETS: | | | | | | | | |
| | | | | | | | | |
| Cash | | $ | 62,091 | | | $ | 46,467 | |
| Restricted cash | | | 405,781 | | | | 323,420 | |
| Notes receivable | | | 116,900 | | | | 145,502 | |
| Restricted notes receivable | | | 357,250 | | | | 357,900 | |
| Loans receivable - related parties | | | 4,540 | | | | 69,319 | |
| Accounts receivable, net | | | 8,577 | | | | 6,695 | |
| Accounts receivable - related parties | | | 3,252 | | | | 14,966 | |
| Other receivables, net | | | 56,494 | | | | 8,407 | |
| Other receivables - related parties | | | 51,501 | | | | 68,382 | |
| Inventories | | | 177,383 | | | | 212,671 | |
| Advances on inventory purchase | | | 79,855 | | | | 79,715 | |
| Advances on inventory purchase - related parties | | | 29,667 | | | | 46,416 | |
| Prepaid expense and other | | | 1,490 | | | | 450 | |
| Prepaid taxes | | | 16,415 | | | | 24,116 | |
| Short-term investment | | | 2,771 | | | | 2,619 | |
| TOTAL CURRENT ASSETS | | | 1,373,967 | | | | 1,407,045 | |
| | | | | | | | | |
| PLANT AND EQUIPMENT, net | | | 1,250,542 | | | | 1,167,836 | |
| | | | | | | | | |
| OTHER ASSETS: | | | | | | | | |
| Advances on equipment purchase | | | 21,715 | | | | 6,499 | |
| Long-term other receivable | | | - | | | | 43,008 | |
| Investment in unconsolidated entities | | | 1,161 | | | | 1,166 | |
| Long-term deferred expense | | | 713 | | | | 1,062 | |
| Intangible assets, net of accumulated amortization | | | 23,928 | | | | 24,066 | |
| TOTAL OTHER ASSETS | | | 47,517 | | | | 75,801 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 2,672,026 | | | $ | 2,650,682 | |
| | | | | | | | | |
| LIABILITIES AND DEFICIENCY | | | | | | | | |
| | | | | | | | | |
| CURRENT LIABILITIES: | | | | | | | | |
| Short term notes payable | | $ | 987,988 | | | $ | 983,813 | |
| Accounts payable | | | 495,488 | | | | 352,052 | |
| Accounts payable - related parties | | | 172,259 | | | | 177,432 | |
| Short term loans - bank | | | 254,929 | | | | 147,124 | |
| Short term loans - others | | | 130,170 | | | | 147,323 | |
| Short term loans - related parties | | | 48,889 | | | | 79,557 | |
| Current maturities of long-term loans - related party | | | 47,896 | | | | 54,885 | |
| Other payables and accrued liabilities | | | 52,272 | | | | 54,589 | |
| Other payable - related parties | | | 106,153 | | | | 73,025 | |
| Customer deposits | | | 95,695 | | | | 125,890 | |
| Customer deposits - related parties | | | 14,512 | | | | 21,998 | |
| Deposit due to sales representatives | | | 28,184 | | | | 33,870 | |
| Deposit due to sales representatives - related parties | | | 1,809 | | | | 1,238 | |
| Taxes payable | | | 9,716 | | | | 16,674 | |
| Deferred lease income, current | | | 2,178 | | | | 2,120 | |
| TOTAL CURRENT LIABILITIES | | | 2,448,138 | | | | 2,271,590 | |
| | | | | | | | | |
| NON-CURRENT LIABILITIES: | | | | | | | | |
| Long-term loans - related party | | | 24,450 | | | | 38,088 | |
| Long-term other payable - related party | | | - | | | | 43,008 | |
| Deferred lease income, noncurrent | | | 75,480 | | | | 75,079 | |
| Capital lease obligations | | | 354,576 | | | | 330,099 | |
| Profit sharing liability | | | 241,090 | | | | 328,827 | |
| Other noncurrent liabilities | | | 1,402 | | | | - | |
| TOTAL NON-CURRENT LIABILITIES | | | 696,998 | | | | 815,101 | |
| | | | | | | | | |
| TOTAL LIABILITIES | | | 3,145,136 | | | | 3,086,691 | |
| | | | | | | | | |
| COMMITMENTS AND CONTINGENCIES | | | | | | | | |
| | | | | | | | | |
| DEFICIENCY: | | | | | | | | |
| Preferred stock, $0.001 par value, 50,000,000 shares authorized, 3,092,899 shares issued and outstanding as of September 30, 2013 and December 31, 2012 | | | 3 | | | | 3 | |
| Common stock, $0.001 par value, 200,000,000 shares authorized, 57,771,038 and 57,269,838 shares issued, 55,298,732 and 54,797,532 shares outstanding as of September 30, 2013 and December 31, 2012, respectively | | | 58 | | | | 57 | |
| Treasury stock, at cost, 2,472,306 shares as of September 30, 2013 and December 31, 2012 | | | (4,199 | ) | | | (4,199 | ) |
| Paid-in-capital | | | 106,405 | | | | 105,714 | |
| Statutory reserves | | | 6,263 | | | | 6,076 | |
| Accumulated deficits | | | (414,696 | ) | | | (381,782 | ) |
| Accumulated other comprehensive income | | | 2,471 | | | | 10,185 | |
| TOTAL GENERAL STEEL HOLDINGS, INC. DEFICIENCY | | | (303,695 | ) | | | (263,946 | ) |
| | | | | | | | | |
| NONCONTROLLING INTERESTS | | | (169,415 | ) | | | (172,063 | ) |
| TOTAL DEFICIENCY | | | (473,110 | ) | | | (436,009 | ) |
| | | | | | | | | |
| TOTAL LIABILITIES AND DEFICIENCY | | $ | 2,672,026 | | | $ | 2,650,682 | |
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GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(In thousands, except per share data)
| | | For the
Three months ended September 30, | | | For the
Nine months ended September 30, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | | | | | | | | | | | | |
| SALES | | $ | 514,549 | | | $ | 518,542 | | | $ | 1,534,330 | | | $ | 1,441,325 | |
| | | | | | | | | | | | | | | | | |
| SALES - RELATED PARTIES | | | 95,546 | | | | 192,883 | | | | 380,707 | | | | 698,824 | |
| TOTAL SALES | | | 610,095 | | | | 711,425 | | | | 1,915,037 | | | | 2,140,149 | |
| | | | | | | | | | | | | | | | | |
| COST OF GOODS SOLD | | | 511,932 | | | | 528,586 | | | | 1,550,829 | | | | 1,426,589 | |
| | | | | | | | | | | | | | | | | |
| COST OF GOODS SOLD - RELATED PARTIES | | | 89,932 | | | | 196,435 | | | | 387,446 | | | | 693,482 | |
| TOTAL COST OF GOODS SOLD | | | 601,864 | | | | 725,021 | | | | 1,938,275 | | | | 2,120,071 | |
| | | | | | | | | | | | | | | | | |
| GROSS PROFIT (LOSS) | | | 8,231 | | | | (13,596 | ) | | | (23,238 | ) | | | 20,078 | |
| | | | | | | | | | | | | | | | | |
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | | | (19,661 | ) | | | (22,787 | ) | | | (59,464 | ) | | | (61,548 | ) |
| CHANGE IN FAIR VALUE OF PROFIT SHARING LIABILITY | | | 41,825 | | | | - | | | | 107,877 | | | | - | |
| | | | | | | | | | | | | | | | | |
| INCOME (LOSS) FROM OPERATIONS | | | 30,395 | | | | (36,383 | ) | | | 25,175 | | | | (41,470 | ) |
| | | | | | | | | | | | | | | | | |
| OTHER INCOME (EXPENSE) | | | | | | | | | | | | | | | | |
| Interest income | | | 2,835 | | | | 4,337 | | | | 8,657 | | | | 13,039 | |
| Finance/interest expense | | | (25,503 | ) | | | (36,615 | ) | | | (81,355 | ) | | | (138,929 | ) |
| Change in fair value of derivative liabilities | | | - | | | | (55 | ) | | | 1 | | | | (48 | ) |
| Gain on disposal of equipment | | | 17 | | | | 293 | | | | 113 | | | | 177 | |
| Income from equity investments | | | 47 | | | | 44 | | | | 137 | | | | 80 | |
| Foreign currency transaction gain (loss) | | | 322 | | | | (581 | ) | | | 448 | | | | (1,169 | ) |
| Lease income | | | 542 | | | | 528 | | | | 1,613 | | | | 1,588 | |
| Other non-operating income (expense), net | | | 770 | | | | 2,314 | | | | 1,559 | | | | 3,316 | |
| Other expense, net | | | (20,970 | ) | | | (29,735 | ) | | | (68,827 | ) | | | (121,946 | ) |
| | | | | | | | | | | | | | | | | |
| INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES AND NONCONTROLLING INTEREST | | | 9,425 | | | | (66,118 | ) | | | (43,652 | ) | | | (163,416 | ) |
| | | | | | | | | | | | | | | | | |
| PROVISION FOR INCOME TAXES | | | | | | | | | | | | | | | | |
| Current | | | 25 | | | | 100 | | | | 201 | | | | 510 | |
| Deferred | | | - | | | | - | | | | - | | | | 169 | |
| Provision for income taxes | | | 25 | | | | 100 | | | | 201 | | | | 679 | |
| | | | | | | | | | | | | | | | | |
| NET INCOME (LOSS) | | | 9,400 | | | | (66,218 | ) | | | (43,853 | ) | | | (164,095 | ) |
| | | | | | | | | | | | | | | | | |
| Less: Net income (loss) attributable to noncontrolling interest | | | 5,599 | | | | (24,620 | ) | | | (10,939 | ) | | | (61,336 | ) |
| | | | | | | | | | | | | | | | | |
| NET INCOME (LOSS) ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC. | | $ | 3,801 | | | $ | (41,598 | ) | | $ | (32,914 | ) | | $ | (102,759 | ) |
| | | | | | | | | | | | | | | | | |
| NET INCOME (LOSS) | | $ | 9,400 | | | $ | (66,218 | ) | | $ | (43,853 | ) | | $ | (164,095 | ) |
| | | | | | | | | | | | | | | | | |
| OTHER COMPREHENSIVE INCOME (LOSS) | | | | | | | | | | | | | | | | |
| Foreign currency translation adjustments | | | (2,547 | ) | | | (698 | ) | | | (12,283 | ) | | | (577 | ) |
| | | | | | | | | | | | | | | | | |
| COMPREHENSIVE INCOME (LOSS) | | | 6,853 | | | | (66,916 | ) | | | (56,136 | ) | | | (164,672 | ) |
| | | | | | | | | | | | | | | | | |
| Less: Comprehensive income (loss) attributable to noncontrolling interest | | | 4,782 | | | | (24,888 | ) | | | (15,508 | ) | | | (61,721 | ) |
| | | | | | | | | | | | | | | | | |
| COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC. | | $ | 2,071 | | | $ | (42,028 | ) | | $ | (40,628 | ) | | $ | (102,951 | ) |
| | | | | | | | | | | | | | | | | |
| WEIGHTED AVERAGE NUMBER OF SHARES | | | | | | | | | | | | | | | | |
| Basic and Diluted | | | 55,141 | | | | 54,466 | | | | 54,976 | | | | 54,946 | |
| | | | | | | | | | | | | | | | | |
| EARNINGS (LOSS) PER SHARE | | | | | | | | | | | | | | | | |
| Basic and Diluted | | $ | 0.07 | | | $ | (0.76 | ) | | $ | (0.60 | ) | | $ | (1.87 | ) |
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GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
| | | For the
Nine months ended September 30, | |
| | | 2013 | | | 2012 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
| | | | | | | | | |
| Net loss | | $ | (43,853 | ) | | $ | (164,095 | ) |
| Adjustments to reconcile net loss to cash provided by (used in) operating activities: | | | | | | | | |
| | | | | | | | | |
| Depreciation, amortization and depletion | | | 64,955 | | | | 62,538 | |
| | | | | | | | | |
| Change in fair value of derivative liabilities | | | (1 | ) | | | 48 | |
| Gain on disposal of equipment | | | (113 | ) | | | (177 | ) |
| Provision for doubtful accounts | | | (251 | ) | | | 2,316 | |
| Reservation of mine maintenance fee | | | 315 | | | | 3 | |
| | | | | | | | | |
| Stock issued for services and compensation | | | 692 | | | | 679 | |
| | | | | | | | | |
| Amortization of deferred financing cost on capital lease | | | 27,778 | | | | 32,363 | |
| Income from equity investments | | | (137 | ) | | | (80 | ) |
| Foreign currency transaction gain | | | (448 | ) | | | 1,169 | |
| Deferred tax assets | | | - | | | | 169 | |
| Deferred lease income | | | (1,613 | ) | | | (1,588 | ) |
| Changes in fair value of profit sharing liability | | | (107,877 | ) | | | - | |
| Changes in operating assets and liabilities | | | | | | | | |
| Notes receivable | | | 32,138 | | | | (99,337 | ) |
| Accounts receivable | | | (483 | ) | | | 5,429 | |
| Accounts receivable - related parties | | | 11,968 | | | | (7,607 | ) |
| Other receivables | | | (3,466 | ) | | | (5,460 | ) |
| Other receivables - related parties | | | (55,744 | ) | | | 4,784 | |
| Inventories | | | 4,191 | | | | 73,024 | |
| Advances on inventory purchases | | | 1,996 | | | | (23,365 | ) |
| | | | | | | | | |
| Advances on inventory purchases - related parties | | | (27,882 | ) | | | (88,412 | ) |
| Prepaid expense and other | | | (1,016 | ) | | | (183 | ) |
| Long-term deferred expense | | | 373 | | | | 119 | |
| Prepaid taxes | | | 8,250 | | | | 4,168 | |
| Accounts payable | | | 113,592 | | | | (48,059 | ) |
| Accounts payable - related parties | | | 54,364 | | | | 31,353 | |
| Other payables and accrued liabilities | | | (3,742 | ) | | | 34,286 | |
| Other payables - related parties | | | (12,844 | ) | | | 95,746 | |
| Customer deposits | | | (33,185 | ) | | | (9,490 | ) |
| Customer deposits - related parties | | | (7,981 | ) | | | 14,740 | |
| Taxes payable | | | (7,317 | ) | | | (5,195 | ) |
| Other noncurrent liabilities | | | 1,384 | | | | - | |
| | | | | | | | | |
| Net cash provided by (used in) operating activities | | | 14,043 | | | | (90,114 | ) |
| | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | |
| Restricted cash | | | (72,676 | ) | | | (35,094 | ) |
| Loans to related parties | | | 1,460 | | | | (69,247 | ) |
| | | | | | | | | |
| Cash proceeds from (made to) short term investment | | | (80 | ) | | | 40 | |
| Cash proceeds from sales of equipment | | | 16 | | | | 19 | |
| Equipment purchase and intangible assets | | | (75,326 | ) | | | (15,909 | ) |
| | | | | | | | | |
| Effect on cash due to deconsolidating of a subsidiary | | | - | | | | (2,972 | ) |
| | | | | | | | | |
| Net cash used in investing activities | | | (146,606 | ) | | | (123,163 | ) |
| | | | | | | | | |
| CASH FLOWS FINANCING ACTIVITIES: | | | | | | | | |
| Capital contributed by noncontrolling interest | | | 18,028 | | | | - | |
| Payments made for treasury stock acquired | | | - | | | | (1,404 | ) |
| Notes receivable - restricted | | | 10,218 | | | | 521,866 | |
| Borrowings on short term notes payable | | | 1,348,631 | | | | 1,382,976 | |
| Payments on short term notes payable | | | (1,370,832 | ) | | | (1,637,570 | ) |
| Borrowings on short term loans - bank | | | 258,357 | | | | 237,535 | |
| Payments on short term loans - bank | | | (155,390 | ) | | | (355,008 | ) |
| Borrowings on short term loan - others | | | 148,678 | | | | 160,554 | |
| Payments on short term loans - others | | | (169,558 | ) | | | (193,964 | ) |
| Borrowings on short term loan - related parties | | | 362,202 | | | | 269,362 | |
| Payments on short term loans - related parties | | | (274,718 | ) | | | (221,134 | ) |
| Deposits due to sales representatives | | | (6,521 | ) | | | 11,939 | |
| Deposit due to sales representatives - related parties | | | 531 | | | | 285 | |
| Payments on long-term loans - related party | | | (22,856 | ) | | | - | |
| | | | | | | | | |
| Net cash provided by financing activities | | | 146,770 | | | | 175,437 | |
| | | | | | | | | |
| EFFECTS OF EXCHANGE RATE CHANGE IN CASH | | | 1,417 | | | | 1,426 | |
| INCREASE (DECREASE) IN CASH | | | 15,624 | | | | (36,414 | ) |
| CASH, beginning of period | | | 46,467 | | | | 120,016 | |
| | | | | | | | | |
| CASH, end of period | | $ | 62,091 | | | $ | 83,602 | |
