UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A AMENDMENT NO. 1 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to ________________. Commission file number: 0-4041 HATHAWAY CORPORATION (Exact name of registrant as specified in its charter) COLORADO 84-0518115 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 8228 PARK MEADOWS DRIVE LITTLETON, COLORADO 80124 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 799-8200 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par value INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ] INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [ ] As of August 31, 2000, the aggregate market value of voting stock held by non-affiliates of the Registrant, computed by reference to the average bid and asked prices of such stock approximated $26,539,000. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's definitive Proxy Statement dated September 18, 2000 are incorporated by reference in Part III of this Report.
HATHAWAY CORPORATION Part IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. a) 2. FINANCIAL STATEMENT SCHEDULES In addition to the documents previously filed pursuant to this section, the financial statements for Beijing Hathaway Si Fang Protection and Control Equipment Co., Ltd. (Si Fang) for the years ended December 31, 2000, 1999 and 1998 prepared in accordance with "Accounting Standards for Enterprises" and "Accounting Regulations of the People's Republic of China for Enterprises with Foreign Investment" are included below. Si Fang uses Chinese Yuan Renminbi (RMB) as its reporting currency. For the five year period from January 1, 1996 through December 31, 2000 the exchange rate has been approximately 8.3RMB to $1USD (US Dollar). Reconciliations of Net Income and Equity per the financial statements to Net Income and Equity per Generally Accepted Accounting Principles in the United States are as follows: Si Fang Reconciliation of Net Income per Financial Statements to Net Income per Generally Accepted Accounting Principles in the United States (RMB, In thousands) For the year ended December 31, 2000 1999 1998 -------------- -------------- --------------- Net income as shown in the financial statements 53,099 35,754 19,962 Adjustments to reported income: Provision for bad debts (5,670) (6,800) (5,700) Profit appropriations (7,113) (2,787) (1,264) VAT refund receivable 6,000 -- -- Sales to subcontractors, net -- 1,651 (1,651) -------------- -------------- --------------- Total adjustments to reported income (6,783) (7,936) (8,615) -------------- -------------- --------------- Net income according to generally accepted accounting principles in the United States 46,316 27,818 11,347 ============== ============== =============== Si Fang Reconciliation of Equity per Financial Statements to Equity per Generally Accepted Accounting Principles in the United States (RMB, In thousands) As of the year ended December 31, 2000 1999 1998 -------------- -------------- --------------- Equity as shown in the financial statements 132,235 88,847 38,537 Adjustments to undistributed profits: Provision for bad debts (18,170) (12,500) (5,700) Profit appropriations (5,310) (1,787) -- VAT refund receivable 6,000 -- -- Capital contribution received prior to updated business license for new capital -- -- 870 Sales to subcontractors, net -- -- (1,651) -------------- -------------- --------------- Total adjustments to undistributed profits (17,480) (14,287) (6,481) -------------- -------------- --------------- Equity according to generally accepted accounting principles in the United States 114,755 74,560 32,056 ============== ============== =============== There are no material differences between cash flows reported in the financial statements and the cash flows that would be reported in a statement of cash flows prepared in accordance with generally accepted accounting principles in the United States. 2
????????????8? ????: +86(010)65542288 ????C?12? telephone: +86(010)65542288 12th Floor, Block C, Fu Hua Mansion SHINEWING No.8, Chao Yang Men Bei Da Jie, ??: +86(010)6554 1612 CERTIFIED PUBLIC Dong Cheng District, facsimile: +86(010)6554 1612 ACCOUNTANTS Beijing, 100027, P.R.China ?????? your reference ?????? our reference REPORT OF THE AUDITORS (ENGLISH TRANSLATION-FOR REFERENCE ONLY) TO THE BOARD OF DIRECTORS OF BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. We have audited the balance sheet of Beijing Hathaway Si Fang Protection And Control Equipment Co., Ltd. (the"Company") at 31 December 2000, its income statement and cash flows statement for the year then ended. These financial statements are the responsibility of the Company and our responsibility is to express an audit opinion on these statements. We conducted our audit in accordance with Standards for Independent Audits of PRC Certified Public Accountants. We have examined, on a test basis, the accounting records and supporting evidence, and have carried out such audit procedures as we considered necessary. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company at 31 December 2000, the results of its operations and cash flows for the year then ended, in conformity with Accounting Standards for Enterprises and Accounting Regulations for Joint Stock Limited Company, and on a consistent basis. SHINE WING CERTIFIED PUBLIC ACCOUNTANTS BEIJING CHINA JANUARY 16, 2001 3
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. BALANCE SHEETS AS OF DECEMBER 31, 2000 AND 1999 (Amounts expressed in Renminbi) ASSETS Notes 2000 1999 - ------ ---------- ------------------------ ------------------------ CURRENT ASSETS Cash 4.1) 47,549,464 30,795,042 Accounts receivable, net 4.2) 129,938,580 97,301,787 Inventories 4.3) 86,535,583 74,773,525 Prepayments 12,507,072 14,252,368 Other receivables, net 11,332,854 6,655,939 ------------------------ ------------------------ Total Current Assets 287,863,553 223,778,661 CONSTRUCTION-IN-PROGRESS 4.5) 98,450,165 17,587,106 FIXED ASSETS, net 4.4) 19,267,400 15,468,803 INTANGIBLE ASSETS 4.6) 5,697,188 -- ------------------------ ------------------------ TOTAL ASSETS 411,278,306 256,834,570 ======================== ======================== LIABILITIES AND OWNERS' EQUITY CURRENT LIABILITIES Short-term bank loans 4.7) 60,000,000 50,000,000 Accounts payable 83,466,439 80,677,521 Other payables 4.9) 54,771,847 7,592,544 Taxes payable 4.8) 10,053,935 1,957,730 Advances from customers 3,753,571 17,249,029 Accrued expenses 4.10) 14,357,575 4,472,544 Dividends payable -- 2,847,500 Salary and welfare payable 2,431,281 3,190,370 Other payables to government 208,383 -- ------------------------ ------------------------ Total Current Liabilities 229,043,031 167,987,238 LONG TERM LOANS 50,000,000 -- ------------------------ ------------------------ Total Liabilities 279,043,031 167,987,238 ------------------------ ------------------------ OWNERS' EQUITY Paid-in capital 4.12) 50,000,000 10,870,000 Capital surplus 4.13) 592,460 39,122,460 Statutory reserves 4.14) 7,352,288 2,483,195 Retained earnings 4.15) 74,290,527 36,371,677 ------------------------ ------------------------ Total Owners' Equity 132,235,275 88,847,332 ------------------------ ------------------------ TOTAL LIABILITIES AND OWNERS' EQUITY 411,278,306 256,834,570 ======================== ======================== The accompanying notes are an integral part of these financial statements. 4
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 (Amounts expressed in Renminbi) 2000 1999 Sales, net 401,412,695 271,909,576 Less: Cost of sales (295,706,842) (216,835,732) ----------------------- ------------------------ Gross margin 105,705,853 55,073,844 Less: Selling expenses (18,359,451) (2,414,570) General and administrative expenses (23,824,087) (11,627,696) Financial expenses (4,514,738) (2,342,919) Provision for loss on realization of inventory (1,529,064) -- Add: Other operating income, net 213,660 1,983,389 ----------------------- ------------------------ Operating income 57,692,173 40,672,048 Less: Non-operating expenses, net (70,745) (34,574) Add: Prior year adjustment 1,377,294 -- ----------------------- ------------------------ Income before taxation 58,998,722 40,637,474 Less: Income tax (5,899,872) (4,883,337) ----------------------- ------------------------ Net income 53,098,850 35,754,137 ======================= ======================== The accompanying notes are an integral part of these financial statements. 5
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. STATEMENT OF CASH FLOW FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 (Amounts expressed in Renminbi) 2000 1999 ---------------------- -------------------- 1. CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from sales of goods or rendering of services 215,044,972 136,300,136 Refund of tax 3,590,737 -- Other cash received relating to operating activities 28,675,141 10,707,892 ---------------------- -------------------- Sub-total of cash inflows 247,310,850 147,008,028 ---------------------- -------------------- Cash paid for goods and services (141,449,851) (120,215,564) Cash paid to and on behalf of employees (27,263,818) (14,252,663) Value-added tax on purchases paid (16,213,997) (10,927,839) Income tax paid (8,021,718) (4,241,013) Taxes paid other than value-added tax and income tax (514,471) (183,671) Other cash paid relating to operating activities (32,919,050) (11,414,268) ---------------------- -------------------- Sub-total of cash outflows (226,382,905) (161,235,018) ---------------------- -------------------- NET CASH FLOWS USED IN OPERATING ACTIVITIES 20,927,945 (14,226,990) ---------------------- -------------------- 2. CASH FLOWS FROM INVESTING ACTIVITIES: Net cash received from disposal of fixed assets -- 39,432 ---------------------- -------------------- Sub-total of cash inflows -- 39,432 ---------------------- -------------------- Cash paid to acquire fixed assets (45,247,658) (18,585,765) ---------------------- -------------------- Sub-total of cash outflows (45,247,658) (18,585,765) ---------------------- -------------------- NET CASH FLOWS USED IN INVESTING ACTIVITIES (45,247,658) (18,546,333) ---------------------- -------------------- 3. CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings 124,000,000 52,000,000 Proceeds from issuing shares -- 19,400,000 ---------------------- -------------------- Sub-total of cash inflows 124,000,000 71,400,000 ---------------------- -------------------- Cash payments of amounts borrowed (64,000,000) (22,770,000) Cash payments for distribution of dividends or profits (10,207,500) (4,402,500) Cash payments of interest expenses (4,305,131) (2,615,564) Other cash paid relating to financing activities (4,297,090) -- ---------------------- -------------------- Sub-total of cash outflows (82,809,721) (29,788,064) ---------------------- -------------------- NET CASH FLOWS FROM FINANCING ACTIVITIES 41,190,279 41,611,936 ---------------------- -------------------- EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH (116,143) -- ---------------------- -------------------- 4. NET INCREASE IN CASH 16,754,423 8,838,613 ====================== ==================== The accompanying notes are an integral part of these financial statements. 6
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. CASH FLOWS STATEMENT (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2000 & 1999 (Amounts expressed in Renminbi) 2000 1999 ---------------------- --------------------- RECONCILIATION OF NET INCOME TO CASH FLOWS FROM OPERATING ACTIVITIES Net income 53,098,850 35,754,137 Add: Provision for bad debt 8,497,296 750,334 Provision for loss on net realizable value of inventory 1,529,064 -- Depreciation of fixed assets 2,503,860 1,826,552 Amortisation of intangible assets 96,562 -- Losses on disposal of fixed assets -- 5,873 Financial expenses 4,514,738 2,342,919 Increase in inventories (13,291,122) (20,497,982) Increase in operating receivables (35,188,611) (50,383,329) Decrease in operating payables (832,692) 15,974,506 ---------------------- --------------------- NET CASH FLOWS USED IN OPERATING ACTIVITIES 20,927,945 (14,226,990) ====================== ===================== NET INCREASE IN CASH Cash, end of the year 47,549,465 30,795,042 Less: Cash, beginning of the year 30,795,042 21,956,429 ---------------------- --------------------- NET INCREASE IN CASH 16,754,423 8,838,613 ====================== ===================== The accompanying notes are an integral part of these financial statements. 7
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2000 (Unless otherwise indicated, all figures are stated in RMB) 1. GENERAL A. Beijing Hathaway Si Fang Protection and Control Equipment Co., Ltd (the "Company") is a Sino-foreign equity joint venture set up on April 8, 1994. The registered capital was increased from US$700,000 at the time of establishment to RMB50,000,000 at December 31, 2000. B. According to the resolution of the board on May 2000, the Company increased its registered capital to US$4,820,000 through transferring its undistributed profit of 1998 at an amount of RMB1,186,900 (equivalent to US$1,430,000), the enterprise expansion fund RMB6,625,000( equivalent to US$750,000), reserve fund RMB1,079,000 (equivalent to US$130,000) and cash contributions at an amount of US$1,210,000. Shareholding interests are remain the same after the increase. A new business license was obtained after the change. C. According to the Board of Directors of the Company on May 2000 and the approval of Hai yuan wai Jing(2000) No. 490 issued by Zhong Guan Cun Science and Technology Region Management Committee, Norva (S.E.A.) Private Limited transferred all its share interests (5%) to Hathaway Corporation. On August 2000, the registered capital of the Company was increased from US$ 4,820,000 to RMB 50,000,000 and the Company changed its legal form from Sino-foreign equity enterprise to domestic limited company, according to the Board of Directors of the Company on August 2000 and the approvals of Hai yuan wai jing (2000) No.722 issued by Zhong Guan Cun Science and Technology Region Management Committee. The equity interest after the change are as follows: JOINT VENTURE PARTNER CAPITAL INVESTED % ( RMB ) Beijing Sifang Tongchuang Protection and Control Equipment Co., Ltd. 11,050,000 22.10 State Power Company Nanjing Electric Power Automation Equipment General Factory 10,050,000 20.10 Hathaway Corporation 10,000,000 20.00 XJ Group Corporation 9,875,000 19.75 China Huadian Power Equipment and Engineering 5,025,000 10.05 (Group) Corporation The State Electrified Netting Materials Co., Ltd. 4,000,000 8.00 ------------------------- ----------- Total 50,000,000 100.00 ========================= =========== 8
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2000 (Unless otherwise indicated, all figures are stated in RMB) D. The increased capital was verified by Beijing Zhongjiaxin CPAs in 2000 ( appraisal report No.122). The Company obtained a new business license after that the Company changed as a domestic enterprise on 28th September 2000. The Company is principally engaged in designing, manufacturing and sales of microprocessor-based relays, power substation automation systems and power system security and stability control system, providing after-sales services for the self-produced products and technical consultant on the power system security and stability control system. 2. PRINCIPAL ACCOUNTING POLICIES 1) Basis of Presentation The financial statement is in conformity with Accounting Standards for Enterprises and Accounting Regulations for Joint Stock Limited Company. As a result of changes of the Company's legal form from a Sino-foreign equity joint venture to a domestic limited company, the Company is applied to the Accounting Regulations for Foreign Investment Company of PRC before October 2000, and the Accounting Regulations for Joint Stock Limited Company during the period of October to December 2000,. There is no significant change in accounting policies adopted between the two periods except for changes in provision estimates in bad debts and inventory. Also certain reclassification have been made against beginning balances in consistent with presentation format of ending balance. 2) Accounting period The accounting period of the Company is the calendar year. 3) Currency The Company uses RMB as its reporting currency 4) Basis of preparation and cost principle The financial statements are prepared on accrual-basis accounting principles. Assets and liabilities are accounted for at their historical costs. 5) Translation of foreign currencies Foreign currency transactions during the year are translated into RMB at the rates of exchange quoted by the People's Bank of China on the first day of the month in which the transactions occurred. Foreign currency monetary assets and liabilities are translated into RMB at the rates of exchange prevailing at the balance sheet date. Exchange differences arising are included in the operating results. 9
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2000 (Unless otherwise indicated, all figures are stated in RMB) 6) Cash equivalents Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 7) Provision for bad debts Upon the death or insolvent of debtors, or proved by sufficient evidences that the outstanding in the receivable, bad debts are recognized and charged to income statement. General provision method is used. According to the resolution of the board, after taking into account of possibilities of receivables, the following ratios for bad debts provision are used: Within one year 3% 1-2 years 10% 2-3 years 20% More than 3 years 50% 8) Inventories Inventories, comprising mainly of raw materials, work-in-process and finished good, semi-finished goods, etc, are stated at the lower of cost and net realisable value. The cost of raw materials includes all costs, transportation, loading and unloading and insurance, in bring the raw materials to the present location and condition. In the case of finished goods, costs include the actual cost of direct material, labour and manufacturing expenses. Raw material cost is allocated at a first-in-first-out method. Delivery and sale of finished products are stated at the planning costs. The differences between the actual and planning costs are recorded as operation costs. Out-side-processing products under or for installation mainly includes microprocessor-based relays, power substation automation systems and power system security and stability control system, cost is transferred to cost of sales individually upon the system is formally putting into operation by customers Fixed assets and depreciation Fixed assets are comprised of buildings, equipment and transportation. Fixed assets referred to the buildings, other mainly operation equipment, and non-operation equipment which the value is above RMB 2,000 and useful life over 2 years. Fixed assets are stated at cost. The depreciation of fixed assets is calculated on the straight line basis over its expected useful 10
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2000 (Unless otherwise indicated, all figures are stated in RMB) lives, taking into account their estimated residual value of 5% of the original cost of the assets concerned. The useful lives are: YEARS Buildings 20-40 Machinery and equipment 5-10 Motor vehicles 6 Office equipment and furniture 5-10 9) Construction in progress Construction in progress is stated at cost. This includes construction costs directly related to the construction of such assets and refurbishment expenses, installation and testing costs. The depreciation of the construction in progress is calculated as it puts into use. 10) Intangible assets Intangible assets is the right of use of the land, which is stated at cost and amortized over 50 years on the straight line's bases. 11) Revenue recognition Revenue is recognised when the significant risks and rewards of ownership of the goods have been transferred from the sellers to the buyers and continued management involvement of the seller with the goods sold is not the nature usually associated with ownership or with the effective control of the goods. Relevant sales and costs could be measured reliably and economic benefits could flow into the Company. 12) Taxable Income The company accounts for corporate income tax using the Tax Payable method under the Accounting for Income Tax methods. Income tax has been provided at the applicable rate on the taxable profit for the year. 3. PRINCIPAL TAXATION 1) Income tax In pursuant of Article No.4 of "Notice Concerning Preferential Tax Treatment on Local Income Tax for Enterprises with Foreign Investment and Foreign Enterprises" issued by the Beijing Local Tax Bureau, the Company is entitled to full exemption from local income tax from 1996 to 2000, and 50% exemption from 2001 to 2005. According to approved by Beijing State Administration of Taxation, the company is entitled to 50% exemption from 2000 to 2002, the applicable Enterprise Income Tax rate for 2000 is 10% (the effective rate). 2) Value added tax The Company is subject to value added tax (VAT). The rate for domestic sales is 17%. 11
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2000 (Unless otherwise indicated, all figures are stated in RMB) Input VAT from purchases of raw materials can be netted off against output VAT from sales. VAT payable or receivable is the net difference between output VAT and input VAT. 4. NOTES IN THE STATEMENT 1) Cash on Bank 2000.12.31 1999.12.31 Cash 43,023 62,529 Bank 47,506,442 30,732,513 ---------------------- -------------------- Total 47,549,465 30,795,042 ====================== ==================== 2) Account Receivables 2000.12.31 1999.12.31 Within 1year 106,901,072 74,079,813 Over 1 year 34,004,255 26,231,308 ----------------------- ------------------- Sub-total 140,905,327 100,311,121 ----------------------- ------------------- Less: Provision for doubtful debts 10,966,747 3,009,334 ----------------------- ------------------- Net accounts receivable 129,938,580 97,301,787 ======================= =================== 3) Inventory 2000.12.31 1999.12.31 PROVISION FOR LOSS ON PROVISION FOR LOSS ON REALIZATION OF REALIZATION OF AMOUNTS INVENTORIES AMOUNTS INVENTORIES Raw materials 18,162,826 622,055 9,858,026 Self-produced products 79,458 2,448,322 Semi-finished products 13,949,490 9,845,424 Work-in-progress 936,597 Outside processing products* 54,872,772 907,009 51,476,693 Purchases goods 63,504 1,145,060 ---------------- ------------------------- --------------- -------------------------- Total 88,064,647 1,529,064 74,773,525 0 ================ ========================= =============== ========================== * Represents power substation security and stability control system at testing and installing stages, according to the contracts. 12
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2000 (Unless otherwise indicated, all figures are stated in RMB) 4) Fixed Assets BUILDINGS MACHINERY AND MOTOR VEHICLES OTHERS TOTAL EQUIPMENT COST OR VALUATION At 1 Jan. 2000 8,719,369 3,138,063 2,640,806 5,574,965 20,073,203 Additions 844,443 156,340 337,690 4,963,985 6,302,458 Disposals ---------------- --------------- ------------------ ------------------ --------------- At 31 Dec. 2000 9,563,812 3,294,403 2,978,496 10,538,950 26,375,661 ================ =============== ================== ================== =============== DEPRECIATION At 1 Jan. 2000 928,132 911,711 1,075,314 1,689,243 4,604,400 Charge for the year 588,909 371,436 308,967 1,162,549 2,503,861 Disposals ---------------- --------------- ------------------ ------------------ --------------- At 31 Dec. 2000 1,517,041 1,283,147 1,456,281 2,851,792 7,108,261 ================ =============== ================== ================== =============== NET BOOK VALUE At 31 Dec. 2000 8,046,771 2,011,256 1,522,215 7,687,158 19,267,400 ================ =============== ================== ================== =============== At 1 Jan. 2000 7,791,237 2,226,352 1,565,492 3,885,722 15,468,803 ================ =============== ================== ================== =============== 5) Construction in Progress PROJECTS 1999.12.31 ADDITIONS TRANSFERRED DISPOSALS 2000.12.31 Sifang buildings * 16,742,663 79,689,106 96,431,769 ERP system 2,018,396 2,018,396 Others 844,443 844,443 ------------------ ------------------ ----------------- ----------------- --------------- Total 17,587,106 81,707,502 844,443 0 98,450,165 ================== ================== ================= ================= =============== * The project is a new office and plant building of the Company, which had been completed and put into use in 2001. 13
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2000 (Unless otherwise indicated, all figures are stated in RMB) 6) Intangible Assets PROJECTS COSTS 1999.12.31 ADDITIONS AMORTISATION 2000.12.31 YEAR REMAINS Right of use of land 5,793,750 5,793,750 96,562 5,697,188 49 -------------- ------------- -------------- ------------------- --------------- Totals 5,793,750 0 5,793,750 96,562 5,697,188 ============== ============= ============== =================== =============== 7) Short-term Loans 2000.12.31 1999.12.31 ANNUAL INTEREST RATE(%) *Guaranteed Loans 30,000,000 50,000,000 5.85-7.02 Unsecured Loans 30,000,000 5.58-7.02 --------------- --------------- Totals 60,000,000 50,000,000 =============== =============== * The bank loan of RMB20,000,000 is guaranteed by State Power Corporation Nanjing Electric Power Automation Equipment General Factory and RMB 10,000,000 is guaranteed by Beijing High-technical Electric Research Industrial Corporation. 8) Taxes payable 2000.12.31 1999.12.31 VAT payable 6,662,688 -578,627 Business tax payable 283,400 City Construction tax payable 486,226 Income tax payable 2,621,621 2,536,356 --------------------- ----------------------------- Total 10,053,935 1,957,729 ===================== ============================= 14
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2000 (Unless otherwise indicated, all figures are stated in RMB) 9) Other payables 2000.12.31 1999.12.31 Ages AMOUNTS % AMOUNTS % Within 1year * 51,156,565 94 1,444,208 19 1-2 year 392,833 1 1,006,581 13 2-3 year 1,134,524 2 5,141,755 68 Over 3 years 2,087,925 3 ------------------------ ----------------- ------------------- ---------- Total 54,771,847 100 7,592,544 100 ======================== ================= =================== ========== * It represents other payable for Sifang building. 10) Accrued Expenses 2000.12.31 1999.12.31 Interests Paid 95,782 Agency fee 6,503,046 Technical Services fee 7,854,528 4,376,762 -------------------------- ------------------------- Total 14,357,574 4,472,544 ========================== ========================= 11) Long-term Loans 2000.12.31 1999.12.31 LOANS INTEREST CONDITIONS PERIODS RATES Industrial and Commercial Bank of 20,000,000 2000.4.5-2003.4.5 4.95% *Guaranteed China, Beijing, Haidian Branch Bank Of China, Beiing Haidian 20,000,000 2000.8.18-2002.8.18 5.94% **Guaranteed Branch Bank of China, Beijing, Haidian 10,000,000 2000.9.4-2002.9.4 5.94% **Guaranteed Branch ---------------- --------------- Total 50,000,000 0 ================ =============== * Guaranteed by XJ (Group) Corporation. ** Guaranteed by China Huadian Power Equipment and Engineering (Group) Corporation. 15
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2000 (Unless otherwise indicated, all figures are stated in RMB) 12) Paid-in capital Movements of share capitals of the Company are as follows: SHAREHOLDERS 1999.12.31 ADDITIONS DISPOSALS 2000.12.31 Beijing Sifang Tongchuang Protection and Control Equipment Co., Ltd. 2,402,300 8,647,700 11,050,000 State Power Company Nanjing Power Automation Equipment General Factory 2,184,900 7,865,100 10,050,000 Hathaway Corporation 2,174,000 7,826,000 10,000,000 XJ Group Corporation 1,603,300 8,271,700 China Huadian Power Equipment and Engineering (Group) Corporation 1,092,400 3,932,600 9,875,000 The State Electrified Netting Materials Co., Ltd. 869,600 3,130,400 5,025,000 Norva (S.E.A.) Private Limited 543,500 1,460,800 2,004,300 4,000,000 -------------- --------------- ------------- --------------- Total 10,870,000 41,134,300 2,004,300 50,000,000 ============== =============== ============= =============== For the movement details of the paid-in capitals please see Notes 1. 16
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2000 (Unless otherwise indicated, all figures are stated in RMB) 13) Capital Reserve ITEMS 1999.12.31 ADDITIONS DISPOSAL 2000.12.31 Provision for increased capital 38,530,000 * 38,530,000 Capital premium 592,460 592,460 ----------------- --------------- ---------------- ------------------ Total 39,122,460 0 38,530,000 592,460 ================= =============== ================ ================== * Represents contributions paid by the investors prior to the obtaining government approval for the increase of registered capital. the amounts are recorded as share capital in 2000 after the relevant approvals issued by the authorities. According to a series resolution of the board of directors of the Company and approvals issued by the related authorities, the beginning balances of the paid-in capital and capital reserve were reclassified. 14) Reserves Reserve Fund Enterprise Staff and Worker's Bonus Total Expansion Fund and Welfare Fund 1999.12.31 2,420,775 62,420 267,365 2,750,560 Additions 3,590,000 3,590,000 7,180,000 Disposals 2,578,272 2,578,272 ------------------ -------------------- --------------------------- ---------------------- 2000.12.31 6,010,775 62,420 1,279,093 7,352,288 ================== ==================== =========================== ====================== According to the resolution of the broad of directors on 30 October 2000, Reserve Fund, Enterprise Expansion Fund, Staff and worker's bonus and welfare fund are combining stated as surplus reserve at the ending balance, among which Staff and worker's bonus and welfare is stated as welfare surplus. 17
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2000 (Unless otherwise indicated, all figures are stated in RMB) 15) Retained Earnings 2000. 12. 31 1999. 12. 31 Beginning balance 36,371,677 20,443,540 Add: Current year profit 53,098,850 35,754,137 Less:* Appropriation to reserve fund 3,590,000 2,000,000 *Appropriation to Enterprise Expansion fund *Appropriation to Staff and Worker's Bonus and Welfare 3,590,000 1,000,000 Fund Dividend Declared 8,000,000 5,000,000 Transferred to Capital 11,826,000 -------------------- ------------------------ Ending Balances 74,290,527 36,371,677 ==================== ======================== o Reserve Fund, Enterprise Expansion Fund, Staff and worker's bonus and welfare fund are combining stated as surplus reserve at the ending balance, among which Staff and worker's bonus and welfare is stated as welfare surplus. 16) Finance Expenses 2000.12.31 1999.12.31 Interest paid 4,709,773 2,336,306 Less: Interest Received 340,083 Exchange loss 127,256 348 Others 17,792 6,265 ----------------------------- ---------------------- Total 4,514,738 2,342,919 ============================= ====================== 17) Prior year adjustment The Company enjoyed an income tax Preference in 1999. Income tax rate for 1999 was applied at 12%. After obtained approvals issued by Foreign Department of Stated Tax Bureau in August 2000, income tax rate at 7.5% was retroactively applied for 1999. The prior year adjustment primarily represents the income tax refund of overpaid income taxes at an income tax rate of 12% in the year 1999. 18
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2000 (Unless otherwise indicated, all figures are stated in RMB) 5. RELATED PARTY TRANSACTION 1) Related Party without controlling power RELATED PARTY RELATIONSHIP Beijing Sifang Protection and Control The Shareholder of the Company, owned 22.1% interests Equipment Co., Ltd. Hathaway Corporation The shareholder of the Company, owned 20% interests 2) Pricing Policy The Company sells its products to related parties with a reference of fair market value. 3) Transactions of Related Party a) Transactions Sales RELATED PARTY DESCRIPTION AMOUNT AMOUNT 2000 1999 Beijing Sifang Tongchuang Protection and Control Sales of circuit Equipment Co., Ltd board 63,016,645 16,951,496 State Power Corporation Nanjing Electric Power Automation Equipment General Factory Sales of circuit board 58,455,699 -------------- --------------- Total 63,016,645 75,407,195 ============== =============== Materials in outside processing and purchases RELATED PARTY DESCRIPTION AMOUNT AMOUNT 2000 1999 Beijing Sifang Tong Chuang Protection and Control Materials in outside Equipment Co., Ltd. processing 74,761,576 40,163,677 State Power Company Nanjing Electric Power Materials in outside Automation Equipment General Factory processing 67,592,036 Hathaway Corporation Purchases 124,282 ----------------- ---------------- Total 74,761,576 107,879,995 ================= ================ 19
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2000 (Unless otherwise indicated, all figures are stated in RMB) Payments of technology fees RELATED PARTY DESCRIPTION AMOUNT AMOUNT 2000 1999 Beijing Sifang Tongchuang Protection and Control Equipment Co., Ltd. Technology service fee 861,987 1,725,878 State Power Company Nanjing Electric Power Automation Equipment General Factory Technology service fee 1,834,347 ----------- --------------- Total 861,987 3,560,225 =========== =============== b) Outstanding balance with related parties DESCRIPTION RELATED PARTY AMOUNT AMOUNT 2000.12.31 1999.12.31 State Power Company Nanjing Electric Power Automation Accounts receivable Equipment General Factory 74,974 Beijing Sifang Tongchuang Protection and control Equipment Co. Ltd 151,266 11,567,190 Hathway Corporation 29,431 State Power Company Nanjing Electric Power Automation Accounts payable Equipment General Factory 25,366,277 Beijing Sifang Tongchuang Protection and control Equipment Co. Ltd. 25,592,756 7,644,485 Hathaway Corporation 652,032 558,736 c) Others The Company made a guarantee for RMB 5,000,000 loan of Beijing Sifang tongchuang Protection and Control Equipment Co., Ltd. on 28 February 2000 (refer to Qingzi No3332) CONTINGENCY Except for the RMB 5,000,000 guarantee for a loan of Beijing Sifang tongchuang Protection and Control Equipment Co., Ltd, there is no material contingency existed at the balance sheet date. 6. SUBSEQUENT EVENTS In the pursuant of Jingguo shui (1999) No. 183, the Company applied for a VAT refund concerning VAT paid on sales of products with Knowledge Software developed by the 20
BEIJING HATHAWAY SI FANG PROTECTION AND CONTROL EQUIPMENT CO., LTD. NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2000 (Unless otherwise indicated, all figures are stated in RMB) Company independently on 20 September 2000. At 19th March 2001, RMB 6,000,000 VAT refund concerning the VAT paid at a rate over 6% was received. 7. OTHER MATTERS 1). According to the resolution of the Board of Directors on October 2000, the Company proposed to change it legal form from limited company to Stock Limited Company. 2). In the pursuant of Jinguoshui Waifen Pifu (2000) No.2008, the Company is qualified as an advanced technology foreign investment enterprise and entitled to Preferential Policy of Income Tax at a rate of 10%. After the Company was changed to a domestic company on 28 September 2000, the relevant laws and regulations for foreign investment enterprises are not applicable. An income tax rate for domestic enterprises should have been applied since October 2000. However, the procedures as concerned are still in process, and applicable income tax rate isn't determined yet. An income tax rate of 10% is still be applied by the Company at present. 21
HATHAWAY CORPORATION SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HATHAWAY CORPORATION By /s/ Richard D. Smith ----------------------- Richard D. Smith President, Chief Executive Officer and Chief Financial Officer Date: June 29, 2001 22