Fushi International Reports Second Quarter 2007 Financial Results

Fushi International Reports Second Quarter 2007 Financial Results

August 15, 2007

- Revenues Increased 42% to $26.1 Million in 2Q07 -


    DALIAN, China, Aug. 15 /Xinhua-PRNewswire/ -- Fushi
International, Inc. (OTC Bulletin Board: FSIN), a low-cost,
leading Chinese manufacturer of bimetallic wire used in a
variety of communication, transmission and other electrical
products, today announced financial results for the second
quarter of 2007.

    Revenues for the second quarter of 2007 increased 42.3%
to $26.1 million, from $18.3 million in the prior year's
quarter. Revenues increased year over year despite an
unusually strong 2Q06, during which a sudden, sharp
increase in copper prices led to both higher demand for
Fushi's products and a sell- through of low cost inventory.
In the second quarter of 2007, revenues were driven by a 4%
increase in the average selling price of product sold and a
37% increase in the volume of bimetallic product sold.
Coaxial cable accounted for approximately 59.1% of sales,
magnet wire for about 16.2% of sales, and shielding wire
for about 24.7% of sales.

    Gross profit increased 18.6% year-over-year to $9.7
million. Gross margin of 37.0% represented the third
consecutive quarter of gross margin improvement, up from
36.4% in the first quarter of 2007. On a year-over-year
basis, gross margin was down from 44.4%, when the increased
copper prices highlighted above resulted in an unusually
higher level of profitability.

    Operating expenses in the second quarter increased 158%
to $2.2 million compared to $0.9 million in the prior year
period. This increase was primarily a result of higher
general and administrative expenses associated with the
compliance of Sarbanes-Oxley, as well as costs associated
with preparing to list the company's shares on a major
exchange. Also included in the general and administrative
expenses for the second quarter of 2007 was share-based
compensation expense of $645,158, which was equivalent to
2.5% of net revenues.

    Net income in the second quarter of 2007 was $7.0
million, down slightly from $7.2 million last year due to
the unusually strong Q206, and up 40.4% sequentially from
$5.0 million in the first quarter of 2007. Diluted earnings
per share for the second quarter of 2007 were $0.28 compared
to $0.34 in the prior year period, and $0.20 in the first
quarter of 2007, as a result of higher total diluted share
count of 25,192,643 at the end of the second quarter,
reflecting the Company's January 2007 issuance of $20
million in convertible debt to Citadel Equity Fund Ltd. 

    Mr. Li Fu, Chairman and Chief Executive Officer of
Fushi International commented, "We are pleased to
report another quarter of continued growth in our business.
We believe that we have laid the foundation to become a
domestic and international market leader in the bimetallic
industry. Our copper clad aluminum products have delivered
consistent revenue growth for us. We are well on our way to
executing our strategic plan through technological
innovation, manufacturing expertise, domestic and
international marketing and branding and strong
management."

    Mr. Fu continued, "While we have in the past been
primarily focused on the regular CCA market, we are also
leveraging our expertise to tap into significant
opportunities in other areas of the market. We believe
these new areas can provide us with not only substantial
new revenue opportunities, but also with higher margins. We
have begun to enter the market for flat wire and continue to
market our fine wire, which we believe can offer us higher
margin business in a broader market. We are aggressively
ramping up our production capacity to meet demand in these
areas, as well as in our core regular CCA market. We
believe that we will have a competitive advantage in these
markets, as our state-of-the-art manufacturing technology
allows us to develop reliable quality products in the time
frame and manner our customers expect."

    Financial Expectations

    For the full year 2007, the Company reiterates diluted
earnings per share of approximately $1.03-$1.13.

    Mr. Fu stated, "We are excited about the remainder
of 2007 and are confident that we have put in place a
foundation for continued growth and financial flexibility.
Our cash balance of $75.2 million places us in a strong
financial position of not only being able to increase our
capacity and plan for acquisitions but also having the
working capital on hand to grow our revenues and best serve
our customers. The nature of our business is that it
requires a strong balance sheet to support growth. We
believe our strong balance sheet and our access to capital
has been a significant competitive factor in our success,
as customers are assured that we can meet their
needs."

    "We believe that we are well on our way to
becoming a dominant player in the bimetallic market. We
will continue to explore opportunities to increase
revenues, to grow our market share, and to sustain our
strong margins," concluded Mr. Fu.

    The Company will conduct a conference call to discuss
the second quarter 2007 results today, Tuesday, August 14,
2007 after the market close at 5:30 pm ET. Listeners may
access the call by dialing 913-981-5543. A live webcast of
the conference call will also be available at
www.viavid.net. A replay of the call will be available from
August 14, 2007 to August 21, 2007. Listeners may access the
replay by dialing # 719-457-0820; passcode: 3477104.

    About Fushi International 

    Fushi International, through its wholly owned
subsidiary, Fushi International (Dalian), manufactures
bimetallic composite wire products, principally copper clad
aluminum wires ("CCA"). CCA, the company's core
product, combines the conductivity and corrosion resistance
of copper with the light weight and relatively low cost of
aluminum. It is a cost-effective substitute for single
copper wire in a wide variety of applications such as
coaxial cable for cable television (CATV), signal
transmission lines for telecommunication networks,
distribution lines for electricity, electrical
transformers, wire components for electronic instruments
and devices. For more information on Fushi, visit the
website: http://www.fushiinternational.com/ .

    Safe Harbor Statement

    This press release may include certain statements that
are not descriptions of historical facts, but are
forward-looking statements. Forward- looking statements can
be identified by the use of forward-looking terminology such
as "will" "believes",
"expects" or similar expressions. These forward-
looking statements may also include statements about our
proposed discussions related to our business or growth
strategy, which is subject to change. Such information is
based upon expectations of our management that were
reasonable when made but may prove to be incorrect.

    All of such assumptions are inherently subject to
uncertainties and contingencies beyond our control and upon
assumptions with respect to future business decisions, which
are subject to change. We do not undertake to update the
forward-looking statements contained in this press release.
For a description of the risks and uncertainties that may
cause actual results to differ from the forward-looking
statements contained in this press release, see our most
recent Annual Report filed with the Securities and Exchange
Commission (SEC) on Form 10-K, and our subsequent SEC
filings. Copies of filings made with the SEC are available
through the SEC's electronic data gathering analysis
retrieval system (EDGAR) at www.sec.gov.

    For more information, please contact:

    Nathan Anderson
    Director of Investor Relations
    Tel: [phone]
    Email: [e-mail]

    Bill Zima & Ashley Ammon MacFarlane
    Integrated Corporate Relations
    Tel: [phone]

                         (Financial Tables to Follow)



                   FUSHI INTERNATIONAL, INC.  AND
SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF INCOME AND
                           OTHER COMPREHENSIVE INCOME
        FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30,
2007 AND 2006

                         Three months ended June 30, Six
months ended June 30,
                               2007          2006        
2007        2006
                            (Unaudited)   (Unaudited) 
(Unaudited) (Unaudited)
    REVENUES                $26,085,908  $18,335,021 
$47,223,825  $32,925,164

    COST OF GOODS SOLD       16,433,794   10,199,652  
29,886,532   19,521,213

    GROSS PROFIT              9,652,114    8,135,369  
17,337,293   13,403,951

    OPERATING EXPENSE
      Selling expenses          193,916      132,629     
369,110      249,249
      General and
       administrative
       expenses               2,028,574      730,180   
3,469,576    1,486,701
        Total operating
         expense              2,222,490      862,809   
3,838,686    1,735,950

    INCOME FROM OPERATIONS    7,429,624    7,272,560  
13,498,607   11,668,001

    OTHER INCOME (EXPENSE)
      Interest income           318,244        1,419     
509,454       12,431
      Interest expense       (1,666,043)    (263,458) 
(2,948,115)   (513,564)
      Gain on cross currency
       hedge                    802,523           -      
802,523           -

      Other income              112,506      229,175     
174,616      320,722
      Other expense             (14,195)    (113,552)    
(79,694)   (138,850)
        Total other expense    (446,965)    (146,416) 
(1,541,216)   (319,261)

    INCOME BEFORE INCOME
     TAXES                    6,982,659    7,126,144  
11,957,391   11,348,740

    PROVISION FOR INCOME TAXES        -      (60,064)      
    -      396,616

    NET INCOME                6,982,659    7,186,208  
11,957,391   10,952,124

    OTHER COMPREHENSIVE INCOME
    Foreign currency translation
     adjustment               2,113,689      722,695   
3,016,550    1,118,315
    Cross currency hedge
     adjustment                (872,519)           -    
(871,519)           -

    COMPREHENSIVE INCOME     $8,223,829   $7,908,903 
$14,102,422  $12,070,439

    NET INCOME PER
     SHARE-BASIC                  $0.32        $0.36       
$0.57        $0.55
    BASIC WEIGHTED AVERAGE
     NUMBER OF SHARES        21,487,056   19,894,315  
21,116,447   19,894,315
    NET INCOME PER
     SHARE-DILUTED                $0.28        $0.34       
$0.49        $0.51
    DILUTED WEIGHTED AVERAGE
     NUMBER OF SHARES        25,192,643   21,434,692  
24,667,346   21,434,692



                   FUSHI INTERNATIONAL, INC.  AND
SUBSIDIARIES
                          CONSOLIDATED  BALANCE SHEETS
                    AS OF JUNE 30, 2007 AND DECEMBER 31,
2006

                                   A S S E T S
                                                  June 30, 
    December 31,
                                                    2007   
        2006
                                                (Unaudited)
    CURRENT ASSETS:
    Cash                                        
$75,205,436    $20,493,551
    Accounts receivable, trade                    
9,497,345      7,042,408
    Inventories                                   
9,704,840      7,403,116
    Notes receivables                               
176,210              -

    Other receivables and prepaid expenses        
1,096,741        497,380
    Advances to suppliers                         
5,508,117      3,390,917
    Total current assets                        
101,188,689     38,827,372

    PLANT AND EQUIPMENT, net                     
54,065,998     47,256,475

    OTHER ASSETS:
    Advances to suppliers, noncurrent            
10,453,486      4,559,357
    Intangible asset, net                         
5,543,810      5,518,931
    Deferred loan expense                         
3,270,904              -

    Cross Currency hedge receivable                 
802,523
    Total other assets                           
20,070,723     10,078,288

    Total assets                               
$175,325,410    $96,162,135

           LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES:
    Accounts payable, trade                        $
742,254     $1,055,684
    Liquidated damage payable                             
-      1,466,250
    Other payables and accrued liabilities        
2,607,226        321,276
    Customer deposits                                     
-        531,065
    Taxes payable                                   
181,468        982,345
    Short term bank loans                        
11,703,500     12,504,135
    Current portion of long term debt            
10,520,000              -

    Loan from shareholder                           
557,520      3,911,256

    Total current liabilities                    
26,311,968     20,772,011

    LONG TERM LIABILITIES:
    Long term bank loans                                  
-     10,256,000
    Notes Payable                                
60,000,000              -

    Total long term liabilities                  
60,000,000     10,256,000

    CROSS CURRENCY HEDGE PAYABLE                    
871,519              -


    Total liabilities                            
87,183,487     31,028,011


    SHAREHOLDERS' EQUITY:
    Preferred stock, $0.001 par value,
     5,000,000 shares authorized, none
     outstanding as of June 30, 2007 and
     December 31, 2006, respectively                      
-              -
    Common stock, $0.006 par value,
     100,000,000 shares authorized, 22,178,578
     and 20,046,162 shares issued and
     outstanding as of June 30, 2007 and
     December 31, 2006, respectively                
133,072        120,277
    Additional paid in capital                   
40,065,842     29,364,955
    Deferred stock option compensation           
(1,808,305)             -

    Statutory reserves                            
6,115,309      4,452,467
    Retained earnings                            
38,791,251     28,496,702
    Accumulated other comprehensive income        
4,844,754      2,699,723
    Total shareholders' equity                   
88,141,923     65,134,124

    Total liabilities and shareholders' equity 
$175,325,410    $96,162,135