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Fushi Copperweld Reports Second Quarter 2008 Financial Results


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           -- 2Q08 Revenues Increased 140% to $62.5 Million --

-- 2Q08 Net Income Increased 4% to $7.3 Million, after giving effect to a
               settlement expense totaling $2.1 million --

-- Earnings per diluted share of $0.25, after giving effect to a settlement

expense of $0.07 per diluted share --

DALIAN, China, Aug. 12 -- Fushi Copperweld, Inc. , the leading global manufacturer of bimetallic wire used in a variety of telecommunication, utility, automotive and other electrical applications, today announced financial results for the second quarter of 2008.

Revenues for the second quarter of 2008 increased 139.7% to $62.5 million, from revenue of $26.1 million in the prior year's quarter, primarily due to both an increase of 3301.8 tons in sales volume from our Dalian facility and the acquisition of Copperweld.

Gross profit in the second quarter increased 72.6% year over year to $16.7 million. Gross margin decreased to 26.8%, due to a combination of lower margins contributed by the Fayetteville and Telford facilities, an increase in the price of raw materials, and an increasingly competitive telecom market which led to some pricing pressure in that segment of the business.

Operating expenses in the second quarter increased 133.9% to $4.8 million, compared with $2.0 million in the prior year's quarter. This increase was due to a larger sales force and general and administrative expenses. On a percentage basis, operating expenses decreased to 7.6% from 7.8% in the year ago quarter, and were down sequentially from 10.8% in the first quarter 2008.

Adjusted net income increased 34.9% to $9.4 million, or $0.33 per diluted share. This compares with $7.0 million, or $0.28 per diluted share in the second quarter of 2007. The company realized an accrual during the quarter of $2.1 million before taxes, or $0.07 per diluted share, associated with pending litigation. Giving effect to this charge, net income for the 2008 second quarter was $7.3 million, or $0.25 per diluted share.

Mr. Li Fu, Chairman and Chief Executive Officer of Fushi Copperweld, commented, "We are pleased with our results for the second quarter, which reflect an ongoing integration of Fushi and Copperweld, as well as our continued ramp in production. We continue to see strong demand for all of our product lines, and are beginning to realize opportunities to broaden our target markets, not only geographically but also in terms of market segments, which we believe will increase our revenues over the long term while mitigating the risk associated with a narrower focus. We have significantly bolstered our sales efforts through the hires of several seasoned sales executives with substantial experience not only in the bimetallic market, but importantly in the end markets we plan to serve. We believe that we have taken the appropriate steps to ensure our position as a dominant player in the bimetallic industry through domestic and international sales, marketing and manufacturing expertise, branding and technological innovation."

Mr. Fu continued, "While we have historically been focused on capturing revenue from the telecommunications market, we believe there are substantial new opportunities in other underpenetrated market segments. We expect that telecommunications will remain a strong contributor for us, and expect this segment to continue to grow sequentially, but look for other market segments to begin to increase as a percentage of sales. We have already seen this trend beginning, and expect that it will continue on a larger scale going forward. We are excited about the revenue opportunities this presents to us, and look for this evolution to strengthen our foothold in the bimetallic market worldwide"

The accrual of $2.1 million charged to earnings during the quarter was related to a two year old complaint against Fushi that claimed an alleged breach of engagement. In October 2007, Fushi had signed an escrow agreement with the complainant, and funded that escrow agreement with $1 million restricted cash and 100,000 shares of common stock. On August 5, 2008, Fushi received a verdict from the US District Court that the complainant is entitled to recover from Fushi a total of $7.2 million. The company is in the process of appealing the case, Still, until a favorable outcome can be reached in the courts, Fushi will record an expense quarterly of $112,500 per quarter for the next 14 quarters

Financial Expectations

For the full year 2008, the company now expects adjusted fully diluted earnings per share between $1.40 and $1.45 based on an estimated weighted average diluted share count of 28.8 million shares. This adjustment to guidance is a function of macroeconomic trends in the United States relating to the slowing housing market, which feeds telecom demand. Additionally in China, the company is seeing some telecom capital spending being pushed out due to restructuring of the industry as well as a short term strain on the electrical grid associated with the Olympics and countrywide coal shortages, which is adversely affecting utility revenues in the short term. Taking into account the accrual and ongoing quarterly expenses of $112,500 associated with the aforementioned litigation settlement, management expects fully diluted earnings per share of $1.33-$1.38 for the full year 2008. Management continues to anticipate that 2008 will be a year of executing the integration of Fushi Copperweld, and looks to 2009 as the year in which the company can begin to realize the full range of benefits of the combined company, as a result of equipment relocation and additional product lines ramping up.

Going forward, the Company expects that overall, sales growth will continue to be increasingly broadly based as it supplies the growing demand in the Chinese industrial sector. Given the Company's facilities in Dalian, PRC; Fayetteville, TN, USA; and Telford, UK, it is geographically diversified and in a strong position to gain global market share. That said, it expects that the majority of net sales will continue to transpire in Asia.

Mr. Fu concluded, "We are excited about the traction we're gaining in our combined Fushi Copperweld businesses, and we are anticipating that our increased production capacities, combined with our strong branding presence in global markets will allow us to generate significant new sources of revenue. Looking ahead to the third quarter, we recognize the external factors that can affect our business from time to time, and we are well prepared to manage through them. We are building our business for the long term benefit of our shareholders, and believe in the long term potential of our strategy. We expect the coming quarters will be a time for strengthening our foundation to capture the benefits in 2009 of our efforts this year on behalf of our shareholders."

Conference Call

The Company will conduct a conference call to discuss the second quarter 2008 results today, Tuesday, August 12, 2008, at 8:30 am ET. Listeners may access the call by dialing 1-913-312-0636. A live webcast of the conference call will also be available at http://www.fushicopperweld.com/ , under the Calendar of Events link located on the Investor Relations section or at http://www.viavid.net/ . A replay of the call will be available from August 12, 2008 to September 12, 2008. Listeners may access the replay by dialing # 719- 457-0820; passcode: 3600374.

About Fushi Copperweld

Fushi Copperweld, Inc. through its wholly owned subsidiaries, Fushi International (Dalian) Bimetallic Cable Co, Ltd., and Copperweld Bimetallics, LLC, manufactures bimetallic composite wire products, principally copper-clad aluminum wires ("CCA") and copper-clad steel ("CCS"). CCA and CCS wire offers greater value than solid 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, utilities, appliances, automotive, building wire, and other industrial wire.