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Press release from PR Newswire

Hanwha SolarOne Reports Fourth Quarter 2010 and Full Year 2010 Results

Thursday, March 17, 2011

Hanwha SolarOne Reports Fourth Quarter 2010 and Full Year 2010 Results07:39 EDT Thursday, March 17, 2011SHANGHAI, March 17, 2011 /PRNewswire/ -- Hanwha SolarOne Co., Ltd. ( "SolarOne" or the "Company") (Nasdaq: HSOL), a vertically integrated manufacturer of silicon ingots, wafers and photovoltaic ("PV") cells and modules in China, today reported its unaudited financial results for the quarter ended December 31, 2010.  The Company will host a conference call to discuss the results at 8:00 am Eastern Time (8:00 pm Shanghai Time) on March 17, 2011.  A slide presentation with details of the results will also be available on the Company's website prior to the call.FOURTH QUARTER 2010 HIGHLIGHTS Total net revenues were RMB2,112.7 million (US$320.1 million), a decrease of 3.3% from 3Q10, but an increase of 68.7% from 4Q09. PV module shipments, including module processing services, reached 218.8 MW, a decrease of 2.3% from 223.9 MW in 3Q10, but an increase of 97.5% from 110.8 MW in 4Q09.Total net revenues and PV module shipments for 4Q10 reported above are lower than the estimated total revenues and PV module shipments for 4Q10 reported in the Company's pre-announcement dated February 24, 2011.  Subsequent to the Company's pre-announcement, the Company experienced a cancellation of one order totaling 4.1 MW of PV modules, an equivalent to Euro5.4 million in revenue. This order had been shipped to the intended customer in 4Q10.  Due to the rapidly changing regulatory conditions in Europe, the customer has notified us that it could not complete the sales contract. The Company plans to sell these PV modules to other customers in a later period. Average selling price ("ASP"), excluding module processing services, increased to RMB11.82 per watt (US$1.79) from RMB11.72 per watt in 3Q10, but decreased 11.2% from RMB13.31 per watt in 4Q09. Gross profit decreased 13.6% to RMB428.7 million (US$64.9 million) from RMB496.4 million in 3Q10, but increased 82.0% from RMB235.6 million in 4Q09.  Gross margin decreased to 20.3%, compared with 22.7% in 3Q10, primarily due to an increase in the raw material costs. Gross margin in 4Q09 was 18.8%.Operating profit decreased 24.8% to RMB296.2 million (US$44.9 million) from RMB393.9 million in 3Q10, but increased from RMB127.7 million in 4Q09.  The decrease in operating income in 4Q10 from 3Q10 was primarily due to lower gross profit and higher selling expenses and research and development expenses.Operating margin decreased to 14.0% from 18.0% in 3Q10, but increased from 10.2% in 4Q09.Income tax expense in 4Q10 increased to RMB 148.9 million (US$ 22.6 million) compared with RMB 75.5 million in 3Q10 and RMB 7.3 million in 4Q09.  In accordance with the People's Republic of China ("PRC") income tax laws, an enterprise awarded with a High and New Technology Enterprise ("HNTE") status may be eligible to apply for a reduced Enterprise Income Tax ("EIT") rate of 15% instead of the statutory EIT rate of 25%, subject to an annual self-assessment to determine whether it continues to satisfy the criteria as an HNTE for each tax year. One of the Company's major operating subsidiaries was certified by the PRC taxation authorities as an HNTE and obtained its HNTE certificate in 2008, which is valid for a three-year period through 2010.  In the fourth quarter of 2010, the Company recognized an incremental income tax expense of RMB 116.1 million (US$17.6 million) and a corresponding liability due to the uncertainty as to whether this subsidiary met certain requirement of HNTE in 2010.  The Company did not recognize a similar uncertain tax position in the first three quarters of 2010 because the self-assessment for the 2010 tax year could only be conducted when the full-year 2010 financial statements were available in January 2011. The PRC taxation authorities may determine, within a three-year statute of limitation period starting from December 31, 2010, that this subsidiary was not eligible for applying the EIT rate of 15% for the 2010 tax year. In the absence of such determination during the three-year period, the liability for this uncertain tax position will be reversed.Net income attributable to shareholders on a non-GAAP basis(1) was RMB134.6million (US$20.4million), a decrease of 50.8% from RMB273.7million in 3Q10, but an increase of 40.4% from RMB95.9 million in 4Q09.Net income per basic ADS on a non-GAAP basis was RMB1.82 (US$0.28), a decrease of 60.6% from RMB4.62 in 3Q10, but an increase of 9.0% from RMB1.67 in 4Q09.  Net income attributable to shareholders on a GAAP basis was RMB370.8 million (US$56.2million), compared with net loss attributable to shareholders of RMB25.2 million in 3Q10.  The Company recorded a non-cash gain of RMB255.6 million (US$38.7 million) from the change in fair value of the convertible feature of the Company's convertible bonds as compared to a non-cash loss of RMB279.2 million in 3Q10.  Net income attributable to shareholders on a GAAP basis in 4Q09 was RMB10.6 million including a non-cash loss of RMB71.3 million from the change in fair value of the convertible feature of the Company's convertible bonds.  As explained in prior quarters, the fluctuations in the fair value of the convertible feature of the Company's convertible bonds are primarily due to changes in the Company's ADS price, over which the Company has no direct control, and does not reflect the operating performance of the Company.  Net income per basic ADS on a GAAP basis was RMB5.02 (US$0.76), compared with net loss per basic ADS on a GAAP basis of RMB0.43 in 3Q10 and RMB0.18 in 4Q09. Annualized Return on Equity ("ROE") on a non-GAAP basis was 13.1% in 4Q10, compared with 35.3% in 3Q10 and 17.4% in 4Q09.  Annualized ROE on a GAAP basis was 33.2% in 4Q10, compared with negative 2.9% in 3Q10 and 1.5 in 4Q09.FULL YEAR 2010 HIGHLIGHTS Total net revenues were RMB7,527.0 million (US$1,140.5 million), representing an increase of 99.2% from RMB3,778.3 million in 2009.PV module shipments, including module processing services, reached 797.9 MW, representing an increase of 154.6% from 313.4 MW in 2009.Gross profit increased to RMB1,566.3 million (US$237.3 million) from RMB436.4 million in 2009.  Gross margin increased to 20.8% from 11.5% in 2009. Operating profit increased to RMB1,162.9 million (US$176.2 million) from RMB125.5 million in 2009. Operating margin increased to 15.5% from 3.3% in 2009. Net income attributable to shareholders on a non-GAAP basis(1) was RMB798.2 million (US$120.9 million), compared with net loss attributable to shareholders of RMB 20.0 million in 2009.Net income per basic ADS on a non-GAAP basis was RMB12.82 (US$1.94), compared with net loss per basic ADS of RMB0.36 in 2009.  Net income attributable to shareholders on a GAAP basis was RMB757.4 million (US$114.8 million), compared with net loss attributable to shareholders of RMB145.2 million in 2009.Net income per basic ADS on a GAAP basis was RMB12.17 (US$1.84), compared with net loss per basic ADS of RMB2.65 in 2009. ROE on a non-GAAP basis was 22.8% in 2010, compared with negative 0.9% in 2009.  ROE on a GAAP basis was 18.9% in 2010, compared with negative 5.2% in 2009.Dr. Peter Xie, President and CEO of Hanwha SolarOne, commented, " We concluded the year 2010 with another profitable quarter, a stronger balance sheet, and diversified our shipments towards new longer term growth markets. For the full year, our revenues nearly doubled to over $1 billion, our shipments rose 155%, and we returned to a healthy level of profitability. We enter 2011 with a high degree of enthusiasm and confidence: our capabilities and brand is strengthened with our strategic partnership with Hanwha, we have good visibility of orders into mid-year, new technology initiatives are progressing towards completion, and significant new capacity will come on stream soon enhancing our ability to meet customer demand and to improve our cost structure."FOURTH QUARTER 2010 RESULTS Total net revenues were RMB2,112.7 million (US$320.1 million), a decrease of 3.3% from RMB2,185.7 million in 3Q10, but an increase of 68.7% from RMB1,252.7 million in 4Q09. The decrease in net revenues in 4Q10 compared with 3Q10 was primarily due to lower shipments and was partially offset by higher ASP. Revenue contribution from PV module processing services as a percentage of total net revenues was 8.0%, compared with 6.9% in 3Q10. PV module shipments, including module processing services, reached 218.8 MW, a decrease from 223.9 MW in 3Q10, but an increase from 110.8 MW in 4Q09.(Photo:  http://photos.prnewswire.com/prnh/20110317/LA66986-a)(Photo:  http://photos.prnewswire.com/prnh/20110317/LA66986-b)Module revenue attributable to shipments to Germany decreased to 25% in 4Q10 from 53% in 3Q10, while shipments to Italy, China, USA, Australia, France and the Netherlands increased during the quarter.Average selling price ("ASP"), excluding module processing services, increased to RMB11.82 per watt (US$1.79) from RMB11.72 per watt in 3Q10, but decreased 11.2% from RMB13.31 per watt in 4Q09.  Gross profit decreased 13.6% to RMB428.7 million (US$64.9 million) from RMB496.4 million in 3Q10, but increased 82.0% from RMB235.6 million in 4Q09.  Gross margin decreased to 20.3% compared with 22.7% in 3Q10, primarily due to an increase in raw material costs.  Gross margin in 4Q09 was 18.8%. The decrease from 4Q10 was primarily due to the increase in the cost of silicon materials, including polysilicon and externally sourced wafers and cells.  (Photo:  http://photos.prnewswire.com/prnh/20110317/LA66986-c)(Photo:  http://photos.prnewswire.com/prnh/20110317/LA66986-d)The blended cost of goods sold ("COGS") per watt, excluding module processing services, was US$1.41, representing a 4.4% increase from US$ 1.35 in 3Q10. The blended COGS takes into account the production cost (silicon and non-silicon) using internally sourced wafers, purchase costs and additional processing costs of externally sourced wafers and cells, as well as freight costs.The production cost (including both silicon and non-silicon costs) using internal wafers was US$1.20 per watt, representing a 3.4% increase from US$1.16 per watt in 3Q10.  The increase was primarily due to the increase in polysilicon price. Operating profit decreased 24.8% to RMB296.2 million (US$44.9 million) from RMB393.9 million in 3Q10, but increased from RMB127.7 million in 4Q09.  Operating margin decreased to 14.0% from 18.0% in 3Q10, but increased from 10.2% in 4Q09.Operating expenses as a percentage of total net revenues were 6.3% in 4Q10, as compared with 4.7% in 3Q10 and 8.6% in 4Q09.  The higher operating expenses in 4Q10 compared with 3Q10 was primarily due to higher selling expenses and research and development expenses. Interest expense was RMB40.7 million (US$6.2 million), compared with RMB39.9 million in 3Q10 and RMB39.7 million in 4Q09.  The Company recorded a net foreign exchange loss of RMB 4.5 million (US$ 0.7 million), which combined a foreign exchange loss with a loss from the change in fair value of foreign currency derivatives.  The Company recorded a net foreign exchange loss of RMB34.1 million in 3Q10 and a net foreign exchange loss of RMB0.7 million in 4Q09.Gain from the change in fair value of the conversion feature of the Company's convertible bonds was RMB255.6 million (US$38.7 million), compared with a loss of RMB279.2 million in 3Q10 and a loss of RMB71.3 million in 4Q09.  The fluctuations resulting from the adoption of ASC 815-40 on January 1, 2009, were primarily due to changes in the Company's ADS price during the quarter. This line item has fluctuated, and is expected to continue to fluctuate quarter-to-quarter. The Company has no direct control over the fluctuations.Income tax expense in 4Q10 increased to RMB 148.9 million (US$ 22.6 million) compared with RMB 75.5 million in 3Q10 and RMB 7.3 million in 4Q09.  In accordance with the People's Republic of China ("PRC") income tax laws, an enterprise awarded with a High and New Technology Enterprise ("HNTE") status may be eligible to apply a reduced Enterprise Income Tax ("EIT") rate of 15% instead of the statutory EIT rate of 25%, subject to an annual self-assessment to determine whether it continues to satisfy the criteria as an HNTE for each tax year. One of the Company's major operating subsidiaries, was certified by the PRC taxation authorities as an HNTE and obtained its HNTE certificate in 2008, which is valid for a three-year period through 2010.  In the fourth quarter of 2010, the Company recognized an incremental income tax expense of RMB 116.1 million (US$17.6 million) and a corresponding liability due to the uncertainty as to whether this subsidiary would meet certain requirement of HNTE.  The Company had not recognized a similar uncertain tax position in prior three quarters of 2010 because the self-assessment for the 2010 tax year could only be conducted when the full-year 2010 financial statements were available in January 2011. The PRC taxation authorities may determine, within a three-year statute of limitation period starting from December 31, 2010, that this subsidiary was not eligible for applying the EIT rate of 15% for the 2010 tax year. In the absence of such determination during the three-year period, the liability for this uncertain tax position will be reversed.Net income attributable to shareholders on a non-GAAP basis(1) was RMB134.6million (US$20.4million), a decrease of 50.8% from RMB273.7 million in 3Q10, but an increase of 40.4% from RMB95.9 million in 4Q09.Net income per basic ADS on a non-GAAP basis was RMB1.82 (US$0.28), a decrease of 60.6% from RMB4.62 in 3Q10, but an increase of 9.0% from RMB1.67 in 4Q09.  Net income attributable to shareholders on a GAAP basis was RMB370.8 million (US$56.2million), compared with net loss attributable to shareholders of RMB25.2 million in 3Q10 and net income attributable to shareholders of RMB10.6 million in 4Q09.Net income per basic ADS on a GAAP basis was RMB5.02 (US$0.76), compared with net loss per basic ADS of RMB0.43 in 3Q10 and net income per basic ADS of RMB0.18 in 4Q09.Annualized ROE on a non-GAAP basis was 13.1% in 4Q10, compared with 35.3% in 3Q10 and 17.4% in 4Q09.Annualized ROE on a GAAP basis was 33.2% in 4Q10, compared with negative 2.9% in 3Q10 and 1.5% in 4Q09.FINANCIAL POSITION As of December 31, 2010, the Company had cash and cash equivalents of RMB1,630.8 million (US$247.1 million) and net working capital of RMB3,179.9 million (US$481.8 million), compared with cash and cash equivalents of RMB1,296.7 million and net working capital of RMB2,286.5 million as of September 30, 2010.  Total short-term bank borrowings (including the current portion of long-term bank borrowings) were RMB533.9 million (US$80.9 million), compared with RMB950.5 million as of September 30, 2010.  The decrease in short-term borrowings was because the Company repaid some of its bank borrowings with the proceeds from its equity offering in November 2010.    As of December 31, 2010, the Company had total long-term debt of RMB822.4 million (US$124.6 million), which comprised both long-term bank borrowings and convertible notes payable. The Company's long-term bank borrowings are to be repaid in installments until their maturities in 2011 and 2012.  Holders of the convertible notes have the option to require the Company to redeem the notes on January 15, 2015. Net cash generated from operating activities in 4Q10 was RMB50.4million (US$7.6million), compared with net cash used in operating activities of RMB194.0 million in 3Q10 and RMB336.9 million in 4Q09. As of December 31, 2010, accounts receivable were RMB1,282.8 million (US$194.4 million) compared with RMB1,289.9 million as of September 30, 2010 and RMB587.5 million as of December 31, 2009.  Days sales outstanding increased to 55 days in 4Q10 from 46 days in 3Q10 and 47 days in 4Q09. As of December 31, 2010, inventories increased to RMB790.8 million (US$119.8 million) from RMB689.6 million as of September 30, 2010, and from RMB784.0 million as of December 31, 2009.  Days inventory was 40 days in 4Q10 compared with 35 days in 3Q10 and 71 days in 4Q10. Capital expenditures were RMB332.7 million (US$50.4 million) in 4Q10.  For full year 2010, the total capital expenditures were RMB717.8 million (US$108.8 million).CAPACITY EXPANSION Details on the Company's annual production capacities and expected production capacities are as follows:Capacity ramp-up plan Q4 2010Q1 2011 (Projected)Q2 2011 (Projected)Q3 2011 (Projected)Q4 2011 (Projected)Ingot MW400400450710800WaferMW400400450700800CellMW6006509001,2001,300Module MW9009001,0001,5001,500BUSINESS OUTLOOK The Company provides the following guidance based on current operating trends and market conditions. For 1Q11, the Company expects: Total module shipments to be 235MW to 245MW, of which about 25% to 30% will be for PV module processing services. ASP excluding PV module processing services to decrease approximately 5% from 4Q10, assuming that the average Euro/US dollar exchange rate stays at around 1.36 the rest of 1Q11.For the full year 2011, the Company expects: Module shipments ranging from 1GW to 1.2GW of which about 20-25% will be for PV module processing services.Capital expenditures to be approximately US$450 millionCONFERENCE CALL The Company will host a conference call to discuss the fourth quarter and full year of 2010 results at 8:00 AM Eastern Time (8:00 PM Shanghai Time) on March 17, 2011. Mr. Peter Xie, CEO and President, Mr. Gareth Kung, Chief Financial Officer, and Mr. Paul Combs, Vice President of Investor Relations, will discuss the results and take questions following the prepared remarks.  The dial-in details for the live conference call are as follows: U.S. Toll Free Number: +1 866 700 5192International dial-in number: +1 617 213 8833China Toll Free Number (North):  +10 800 152 1490China Toll Free Number (South): +10 800 130 0399China Toll Free Number (South): +10 800 852 1490Passcode: HSOL A live webcast of the conference call will be available on the investor relations section of the Company's website at: http://www.hanwha-solarone.com. A replay of the webcast will be available for one month. A telephone replay of the call will be available for seven days after the conclusion of the conference call. The dial-in details for the replay are as follows: U.S. Toll Free Number: 1 888 286 8010 International dial-in number: +1 617 801 6888 Passcode: 36339192FOREIGN CURRENCY CONVERSION The conversion in this release of Renminbi into U.S. dollars is made solely for the convenience of the reader, and is based on the exchange rate as set forth in the H.10 statistical release of the Federal Reserve Board as of December 31, 2010, which was RMB 6.6000 to US$1.00. No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on December 31, 2010 or at any other date.  The percentages stated in this press release are calculated based on Renminbi amounts. USE OF NON-GAAP FINANCIAL MEASURES The Company has included in this press release certain non-GAAP financial measures, including certain line items presented on the basis that the accounting impact of ASC 815-40 had not been recorded.  The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the performance of the Company and when planning and forecasting future periods. Readers are cautioned not to view non-GAAP financial measures on a stand-alone basis or as a substitute for GAAP measures, or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP measures with non-GAAP measures also included herein. SAFE HARBOR STATEMENT This press release contains forward-looking statements.  These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include 1Q and full-year 2011 estimates for PV product shipments, ASPs, production capacities and other results of operations. Forward-looking statements involve inherent risks and uncertainties and actual results may differ materially from such estimates depending on future events and other changes in business climate and market conditions.  Hanwha SolarOne disclaims any obligation to update or correct any forward-looking statements. About Hanwha SolarOneHanwha SolarOne Co., Ltd. (NASDAQ: HSOL) is a leading manufacturer of solar PV cells and modules in China, focusing on delivering high quality and reliable products at competitive prices. Hanwha SolarOne produces its monocrystalline and polycrystalline products at its internationally certified, vertically-integrated manufacturing facilities. Hanwha SolarOne partners with third-party distributors, OEM manufacturers, and system integrators to sell its modules into large-scale utility, commercial and governmental, and residential/small commercial markets. Hanwha SolarOne maintains a strong global presence with local staff throughout Europe, North America, and Asia.  Hanwha SolarOne embraces environmental responsibility and sustainability by taking an active role in the photovoltaic cycle voluntary recycling program. (1)  All non-GAAP numbers used in this press release exclude the accounting impact from the adoption of ASC 815-40, which relates to the accounting treatment for the convertible bonds.   Please refer to the attached financial statements for the reconciliation between the GAAP and non-GAAP financial results.For further information, please contact:    Hanwha SolarOne Co., Ltd.           Investor Contact:              Paul Combs              V.P. Strategic Planning              Building 1, 18th Floor              1199 Minsheng Road, Shanghai, PRC 200135              P. R. China              Tel:  86-21-3852 1533 / Mobile:  86 138 1612 2768              E-mail: paul.combs@hanwha-solarone.com    Christensen              Kathy Li              Tel:  +1 480 614 3036              E-mail:  kli@ChristensenIR.com              Tip Fleming              Tel:  +852 9212 0684              E-mail:  tfleming@ChristensenIR.comHanwha SolarOne Co, Ltd.CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"))December 31September 30December 31December 312009201020102010(Unaudited)(Unaudited)(Unaudited)RMBRMBRMBUSDASSETSCurrent assetsCash and cash equivalents645,7201,296,7341,630,777247,087Restricted cash60,53963,858100,49015,226Derivative contracts7,3601,9107,4891,135Accounts receivable, net587,4881,289,9321,282,807194,365Notes receivable10,0001,515Inventories, net783,973689,566790,773119,814Advance to suppliers, net540,145851,329764,063115,767Other current assets180,315236,285255,43138,702Deferred tax assets - net63,11575,73491,61113,880Amount due from related parties12,458-42,8196,488    Total current assets2,881,1134,505,3484,976,260753,979Non-current assetsFixed assets ? net1,586,2831,829,3952,084,027315,762Intangible assets ? net208,563206,856205,76331,176Goodwill134,735134,735134,73520,414Deferred tax assets - net13,78916,23916,7592,539Long-term deferred expenses33,15829,63927,2734,132Long-term prepayment439,617395,007394,28359,741    Total non-current assets2,416,1452,611,8712,862,840433,764TOTAL ASSETS5,297,2587,117,2197,839,1001,187,743LIABILITIESCurrent liabilitiesDerivative contracts1,14870,6058,0471,219Short-term bank borrowings404,764748,010318,91948,321Long-term bank borrowings, current portion120,000202,500215,00032,576Accounts payable441,768528,902478,12972,444Notes payable186,921142,509181,26527,464Accrued expenses and other liabilities191,895356,860404,82661,337Customer deposits59,685127,49833,5385,082Deferred tax liabilities-766--Unrecognized tax benefit27,38527,385143,47321,738Amount due to related parties16,76513,76713,1831,997    Total current liabilities1,450,3312,218,8021,796,380272,178Non-current liabilitiesLong-term bank borrowings350,000200,000135,00020,455Convertible bonds658,653928,369687,435104,157Deferred tax liabilities26,56626,12425,9773,936    Total non-current liabilities1,035,2191,154,493848,412128,548TOTAL LIABILITIES2,485,5503,373,2952,644,792400,726Redeemable ordinary shares5555558EQUITYShareholders? equityOrdinary shares22725231448Additional paid-in capital2,331,7972,877,4473,956,953599,538Statutory reserves69,564151,541170,00025,758Retained earnings410,065714,6291,066,986161,665    Total shareholders? equity2,811,6533,743,8695,194,253787,009Noncontrolling interest--TOTAL EQUITY2,811,6533,743,8695,194,253787,009TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS? EQUITY5,297,2587,117,2197,839,1001,187,7430.00 0.00 0.00 0.00 Hanwha SolarOne Co, Ltd.CONSOLIDATED STATEMENTS OF OPERATIONS(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"),except for number of shares and per share data)For the three months endedFor the years endedDecember 31September 30December 31December 31 December 31 December 31 December 31 2009201020102010200920102010(Unaudited)(Unaudited)(Unaudited)(Unaudited) (Unaudiued) (Unaudiued) RMBRMBRMBUSD RMB RMB USDNet revenuePhotovoltaic modules1,153,1841,988,8011,851,940280,5973,375,6386,658,6421,008,885Photovoltaic cells12,56732,90918,8862,86238,396100,56615,237PV cells processing-------PV modules processing78,909151,037168,28025,497336,485644,03797,581Wafer processing774(1,922)--1,830--Raw materials7,27712,832--25,96723,3423,537System integration--68,43110,368-68,43110,368Others-2,0925,167783-31,9754,845Net revenues1,252,7112,185,7492,112,704320,1073,778,3167,526,9931,140,453Cost of revenue-Photovoltaic modules(927,266)(1,529,838)(1,458,188)(220,938)(3,012,428)(5,239,628)(793,883)Photovoltaic cells(15,317)(23,260)(18,135)(2,748)(53,516)(77,177)(11,693)PV cells processing-------PV modules processing(67,205)(124,446)(146,358)(22,176)(248,832)(537,314)(81,411)Wafer processing(965)2,137--(2,339)--Raw materials(6,388)(13,129)--(24,821)(23,582)(3,573)System integration--(56,114)(8,502)-(56,114)(8,502)Others-(857)(5,258)(797)-(26,833)(4,066)Cost of revenues(1,017,141)(1,689,393)(1,684,053)(255,161)(3,341,936)(5,960,648)(903,128)Gross profit 235,570496,356428,65164,946436,3801,566,345237,325Operating expenses-Selling expenses(46,114)(44,195)(65,143)(9,870)(105,454)(178,057)(26,978)G&A expenses(50,866)(55,716)(54,760)(8,297)(180,989)(190,594)(28,878)R&D expenses(12,843)(4,672)(14,622)(2,215)(32,025)(53,500)(8,106)Government grant2,0002,1662,1213217,57118,7552,841    Total operating expenses(107,823)(102,417)(132,404)(20,061)(310,897)(403,396)(61,121)Operating profit (loss)127,747393,939296,24744,885125,4831,162,949176,204-Interest expenses(39,662)(39,870)(40,658)(6,160)(157,907)(161,677)(24,497)Interest income1,2981,9622,3503565,0026,141930Exchange gain (loss)(14,694)76,220(36,222)(5,488)(23,814)(89,272)(13,526)Gain (loss) on change in fair value of derivative15,397(108,042)37,5055,6839,59477,53111,747Gain (loss) on change in conversion feature fair value of convertible bond(71,279)(279,228)255,59138,726(73,887)31,6234,791Other income1,2655,0867,0631,0706,28624,3533,691Other expenses(2,046)(1,291)(2,133)(323)(11,835)(5,903)(894)Government grant1,503--909,5951,454Net income (loss) before income tax18,02650,279519,74378,749(120,988)1,055,340159,900Income tax expenses(7,338)(75,525)(148,927)(22,565)(23,928)(297,983)(45,149)Net income (loss)10,688(25,246)370,81656,184(144,916)757,357114,751Net loss attributable to noncontrolling interest67---311-Net income (loss) attributable-to shareholders10,621(25,246)370,81656,184(145,227)757,357114,751Net income (loss) per shareBasic0.04(0.09)1.000.15(0.53)2.430.37Diluted0.04(0.09)0.350.05(0.53)2.360.36Shares used in computationBasic287,982,207296,202,329369,518,133369,518,133274,067,760311,263,308311,263,308Diluted288,210,311296,202,329415,850,842415,850,842274,067,760357,272,605357,272,605Net income (loss) per ADSBasic0.18(0.43)5.020.76(2.65)12.171.84Diluted0.18(0.43)1.760.27(2.65)11.821.79ADSs used in computationBasic57,596,44159,240,46673,903,62773,903,62754,813,55262,252,66262,252,662Diluted57,642,06259,240,46683,170,16883,170,16854,813,55271,454,52171,454,521For the three months ended For the twelve months endedDecember 31,2009September 30, 2010December 31, 2010December 31, 2010December 31, 2010December 31, 2010December 31,2009(RMB million)(RMB million)(RMB million)(US$ million)(RMB million)(US$ million)(RMB million)Non-GAAP net income/(loss)95.9273.7134.620.4798.2120.9(20.0)Fair value changes of the conversion features of the Convertible bonds(71.3)(279.2)255.638.731.64.8(73.9)Accretion of interest of the Convertible bonds(14.0)(19.7)(19.4)(2.9)(72.4)(11.0)(51.3)GAAP net income/(loss)10.6(25.2)370.856.2757.4114.8-145.2For the three months ended For the twelve months endedDecember 31,2009September 30, 2010December 31, 2010December 31, 2010December 31, 2010December 31, 2010December 31, 2009(RMB million)(RMB)(RMB)(USD)(RMB)(USD)(RMB)Non GAAP net income per ADS - Basic1.664.621.820.2812.821.94(0.36)Fair value changes of the conversion features of the Convertible bonds(1.24)(4.71)3.460.520.510.08(1.35)Accretion of interest of the Convertible bonds(0.24)(0.33)(0.26)(0.04)(1.16)(0.18)(0.94)Net profit contributed to shareholders per ADS - Basic0.18(0.43)5.020.7612.171.84(2.65)ADS (Basic)57,596,44159,240,46673,903,62773,903,62762,252,66262,252,66254,813,552For the three months ended Annualized for  Q4 2009Annualized for Q3 2010Annualized for Q4 2010For the twelve months endedFor the twelve months endedDecember 31,2009September 30, 2010December 31, 2010December 31,2009September 30, 2010December 31, 2010December 31, 2010December 31,2009Non-GAAP Return on Equity 4.4%8.8%3.3%17.4%35.3%13.1%22.8%-0.9%Fair value changes of the conversion features of the Convertible bonds-3.3%-9.0%5.5%-13.3%-35.9%21.8%-2.1%-2.5%Accretion of interest of the Convertible bonds-0.7%-0.6%-0.4%-2.6%-2.3%-1.7%-1.8%-1.8%GAAP Return on equity0.4%-0.7%8.3%1.5%-2.9%33.2%18.9%-5.2%Hanwha SolarOne Co, Ltd.CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"))For three months endedFor the years endedDecember 31, 2009September 30, 2010December 31,2010December 31,2010December 31, 2009December 31,2010December 31,2010(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)RMBRMBRMBUSDRMBRMBUSDCash flow from operating activitiesNet income (loss)10,688(25,246)370,81656,184(144,916)757,357114,751Adjustments to reconcile net income (loss) to net cashprovided (used) in operating activities:Unrealised financial derivative(47,701)134,483(68,138)(10,324)27,6616,7691,026Amortization of convertible bonds discount13,93314,47514,6572,22150,78860,4059,152Changes in fair value of conversion feature of convertible  bonds71,279279,228(255,591)(38,726)73,887(31,623)(4,791)Loss from disposal of fixed assets9613313921719957145Depreciation and amortization43,07248,06451,4907,802153,174187,58728,422Amortization of long-term deferred expense1,5701,8021,8162756,6707,1941,090Provision for doubtful debt of advance to suppliers163(46)--234,72411718Reversal of doubtful debt for accounts receivable3,723---3,723(278)(42)Provision for doubtful debt of accounts receivable--(1,006)(152)--Write down of inventory40,34141,49835,2665,343282,574134,48920,377Stock compensation expense8,50910,5866,7361,02142,67131,9634,843Warranty provision2,74421,7059,9251,50424,82458,2308,823Deferred tax benefit(854)(15,939)(17,310)(2,623)(15,792)(32,055)(4,857)Unrecognized tax benefit(1,082)-116,08917,589-116,08917,589Changes in operating assets and liabilities---Restricted cash5,16637,044(8,559)(1,297)2,011(5,298)(803)Inventory(15,899)(139,479)(136,472)(20,678)(334,839)(141,288)(21,407)Account receivables116,024(460,992)(1,870)(283)(271,674)(705,041)(106,824)Advances to suppliers(165,766)(310,268)87,26613,222370,745(224,035)(33,945)Prepaid expense18,66352,51025,3783,84586,37583,93412,717Other current assets84,065(63,457)(44,525)(6,746)215,059(159,052)(24,099)Long-term prepayment13,72118,198725110(439,617)45,3356,869Amount due from related parties30,13296,219(42,819)(6,488)(12,439)(30,361)(4,600)Accounts payable51,94642,067(37,112)(5,623)238,804(17,908)(2,713)Accrued expenses and other liabilities10,81164,46138,0415,76433,648154,68023,436Customer deposits38,3394,755(93,960)(14,236)50,191(26,147)(3,962)Amount due to related parties3,201(45,811)(584)(88)10,362(3,582)(543)Net cash provided (used) in operating activities336,884(194,010)50,3987,637689,333268,43840,672Cash flows from investing activitiesAcquisition of fixed assets(27,468)(103,397)(279,523)(42,352)(260,054)(634,506)(96,137)Change of restricted cash65,832(440)(28,074)(4,254)25,587(34,653)(5,250)Acquisition of intangible assets(125)---(438)(1,678)(254)Acquisition of subsidiaries(850)---(89,818)--Net cash provided (used) in investing activities37,389(103,837)(307,597)(46,606)(324,723)(670,837)(101,641)Cash flows from financing activitiesProceeds from share lending -21---213Proceeds from exercise of stock option224,2632,0483101,10312,1661,843Proceeds from issuance of ordinary shares70,387510,3301,070,784162,240148,9941,581,114239,563Proceeds from short-term bank borrowings65,097460,71332,6874,9531,900,6751,098,911166,502Payment of short term bank borrowings(674,071)(243,688)(461,777)(69,966)(2,594,743)(1,184,756)(179,508)Proceeds from long term bank borrowings----300,000--Payment for long term bank borrowings(7,500)(22,500)(52,500)(7,955)(30,000)(120,000)(18,182)Utilization of notes payable27,726---147,580--Profit distribution(3,400)---(3,400)---Net cash provided (used) by financing activities(521,739)709,139591,24289,582(129,791)1,387,456210,221Unrealised foreign exchange gain/lossNet increase (decrease) in cash and cash equivalents(147,466)411,292334,04350,612234,819985,057149,251Cash and cash equivalents at the beginning of period793,186885,4421,296,734196,475410,901645,72097,836Cash and cash equivalents at the end of period645,7201,296,7341,630,777247,087645,7201,630,777247,087-0-----Supplemental disclosure of cash flow information:--Interest paid21,26831,43811,6211,761156,14389,85513,614Income tax paid30,97841,58979,08011,98239,159160,61524,336Realized gain (loss) from derivative contracts(32,305)26,443(30,633)(4,641)37,25584,30112,773Supplemental schedule of non-cash activities:---Acquisition of fixed assets included in accounts payable, accrued expenses and other liabilities(2,803)9,69425,0963,80221,84248,6137,366Conversion of CB into ordinary shares----179--Transfer of unamortized debt issuance costs to equity upon conversion of CB into ordinary shares----(5)--SOURCE Hanwha SolarOne Co., Ltd.For further information: Investors, Paul Combs, V.P. Strategic Planning of Hanwha SolarOne Co., Ltd., 86-21-3852 1533, Mobile, 86 138 1612 2768, paul.combs@hanwha-solarone.com; or Kathy Li, +1-480-614-3036, kli@ChristensenIR.com, or Tip Fleming, +852 9212 0684, tfleming@ChristensenIR.com, both of Christensen, for Hanwha SolarOne Co., Ltd.