SEC Company Response from Cheetah Mobile (CMCM) — Aug 10, 2015
Cheetah Mobile Inc.
Date: Aug. 10, 2015 · CIK: 0001597835 · Accession: 0001104659-15-057875
AI Filing Summary & Sentiment
File numbers found in text: 001-36427
Referenced dates: July 27, 2015
Letter
Cheetah Mobile Inc.
Fosun International Center Tower
No. 237 Chaoyang North Road
Chaoyang District, Beijing 100022
People’s Republic of China
August 10, 2015
VIA EDGAR
Craig D. Wilson, Senior Assistant Chief Accountant
Eiko Yaoita Pyles, Staff Accountant
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Cheetah Mobile Inc.
Form 20-F for Fiscal Year Ended December 31, 2014 (the “2014 Form 20-F”)
Filed April 21, 2015 (File No. 001-36427)
Ladies and Gentlemen:
This letter sets forth the Company’s response to the comment contained in the letter dated July 27, 2015 from the staff of the Securities and Exchange Commission (the “Staff”) regarding the 2014 Form 20-F. The “Company” is used in this letter to refer to Cheetah Mobile Inc., its subsidiaries, variable interest entities and the subsidiary of a variable interest entity. The comments are repeated below and followed by the response thereto. Capitalized terms used but not defined herein have the meanings set forth in the 2014 Form 20-F.
Operating and Financial Review and Prospects
A. Operating Results
Results of Operations, page 91
1. We note your response to comment 2. Please quantify the impact of the foreign rate differentials, tax holiday and preferential tax treatments on the effective tax rate by jurisdiction for each period presented and tell us how the income or loss mix changed in fiscal year 2014 as compared to prior periods. As part of your response, please confirm that you will include this information in future filings.
In response to the Staff’s comment, the Company confirms that it will add the disclosure set forth immediately after this paragraph, with any appropriate updates, in its future Form 20-F filings to disclose the income or loss before tax, and the impact of the foreign rate differentials, tax holiday and preferential tax treatments on the effective tax rate by jurisdiction for each reported period.
The following table sets forth our income (loss) before income tax and the effect of differing tax rates in different jurisdictions on our income tax expenses in each applicable jurisdiction, for the years ended December 31, 2012, 2013 and 2014.
Year ended December 31,
RMB
RMB
RMB
US$
(in thousands)
Cayman Islands
Loss before income tax*
(20,172
)
(51,299
)
(203,456
)
(32,791
)
Income tax expenses computed at the PRC statutory tax rate of 25%
(5,043
)
(12,825
)
(50,863
)
(8,198
)
Income tax expenses computed at Cayman Islands statutory tax rate of 0%
—
—
—
—
Effect of differing tax rates in different jurisdictions
5,043
12,825
50,863
8,198
USA
Income (loss) before income tax
—
(5,897
)
3,042
**
**
Income tax expenses computed at the PRC statutory tax rate of 25%
—
(1,474
)
Income tax expenses computed at the USA statutory tax rate of 35%
—
(2,064
)
1,065
Effect of differing tax rates in different jurisdictions
—
(590
)
Hong Kong
Income (loss) before income tax
(2,079
)
6,346
(97,876
)
(15,775
)
Income tax expenses computed at the PRC statutory tax rate of 25%
(519
)
1,586
(24,470
)
(3,944
)
Income tax expenses computed at the Hong Kong statutory tax rate of 16.5%
(343
)
1,047
(16,150
)
(2,605
)
Effect of differing tax rates in different jurisdictions
(539
)
8,320
1,339
PRC
Income before income tax
37,021
161,550
388,704
62,648
Income tax expenses computed at the PRC statutory tax rate of 25%
9,255
40,388
97,176
15,662
Income tax expenses computed at the PRC statutory tax rate of 25%
9,255
40,388
97,176
15,662
Effect of differing tax rates in different jurisdictions
—
—
—
—
British Virgin Islands
Income (loss) before income tax
(11
)
(12
)
Income tax expenses computed at the PRC statutory tax rate of 25%
(3
)
(3
)
Income tax expenses computed at the BVI statutory tax rate of 0%
—
—
—
—
Effect of differing tax rates in different jurisdictions
(123
)
(20
)
Total
Income before income tax
14,759
110,688
90,904
14,651
Income tax expenses computed at the PRC statutory tax rate of 25%
3,690
27,672
22,727
3,663
Income tax expenses computed at the statutory tax rate of different jurisdictions
8,912
39,371
82,091
13,229
Effect of differing tax rates in different jurisdictions
5,222
11,699
59,364
9,566
* The losses before income tax recorded under Cheetah Mobile Inc. for tax purposes included share-based compensation expenses for the Company.
** The Company’s U.S. subsidiary, Cheetah Mobile America, Inc., recorded an income before tax for 2014 but did not have assessable profit for the same year due to losses carried forward from previous years.
The following table sets forth the effect of tax holiday and preferential tax treatments on our income tax expenses in each applicable jurisdiction, for the years ended December 31, 2012, 2013 and 2014.
Year ended December 31,
RMB
RMB
RMB
US$
(In thousands)
Cayman Islands
—
—
—
—
USA
—
—
—
—
Hong Kong
—
—
—
—
PRC*
(4,201
)
(4,885
)
(54,944
)
(8,855
)
British Virgin Islands
—
—
—
—
Total
(4,201
)
(4,885
)
(54,944
)
(8,855
)
* Certain of our PRC entities were entitled to tax holiday as new software development enterprise or to the preferential income tax rate of 15% as high new technology enterprise. For details, see page F-49 of this annual report.
* * *
The Company hereby acknowledges that
· the Company is responsible for the adequacy and accuracy of the disclosure in the filing;
· Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and
· the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
If you have any additional questions or comments regarding the 2014 Form 20-F, please contact the undersigned at +86-10-6292-7779 or the Company’s U.S. counsel, Z. Julie Gao of Skadden, Arps, Slate, Meagher & Flom LLP at +852 3740-4863.
Very truly yours,
/s/ Ka Wai Andy Yeung
Show Raw Text
CORRESP 1 filename1.htm Cheetah Mobile Inc. Fosun International Center Tower No. 237 Chaoyang North Road Chaoyang District, Beijing 100022 People’s Republic of China August 10, 2015 VIA EDGAR Craig D. Wilson, Senior Assistant Chief Accountant Eiko Yaoita Pyles, Staff Accountant Division of Corporation Finance Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Re: Cheetah Mobile Inc. Form 20-F for Fiscal Year Ended December 31, 2014 (the “2014 Form 20-F”) Filed April 21, 2015 (File No. 001-36427) Ladies and Gentlemen: This letter sets forth the Company’s response to the comment contained in the letter dated July 27, 2015 from the staff of the Securities and Exchange Commission (the “Staff”) regarding the 2014 Form 20-F. The “Company” is used in this letter to refer to Cheetah Mobile Inc., its subsidiaries, variable interest entities and the subsidiary of a variable interest entity. The comments are repeated below and followed by the response thereto. Capitalized terms used but not defined herein have the meanings set forth in the 2014 Form 20-F. Operating and Financial Review and Prospects A. Operating Results Results of Operations, page 91 1. We note your response to comment 2. Please quantify the impact of the foreign rate differentials, tax holiday and preferential tax treatments on the effective tax rate by jurisdiction for each period presented and tell us how the income or loss mix changed in fiscal year 2014 as compared to prior periods. As part of your response, please confirm that you will include this information in future filings. In response to the Staff’s comment, the Company confirms that it will add the disclosure set forth immediately after this paragraph, with any appropriate updates, in its future Form 20-F filings to disclose the income or loss before tax, and the impact of the foreign rate differentials, tax holiday and preferential tax treatments on the effective tax rate by jurisdiction for each reported period. The following table sets forth our income (loss) before income tax and the effect of differing tax rates in different jurisdictions on our income tax expenses in each applicable jurisdiction, for the years ended December 31, 2012, 2013 and 2014. Year ended December 31, 2012 2013 2014 RMB RMB RMB US$ (in thousands) Cayman Islands Loss before income tax* (20,172 ) (51,299 ) (203,456 ) (32,791 ) Income tax expenses computed at the PRC statutory tax rate of 25% (5,043 ) (12,825 ) (50,863 ) (8,198 ) Income tax expenses computed at Cayman Islands statutory tax rate of 0% — — — — Effect of differing tax rates in different jurisdictions 5,043 12,825 50,863 8,198 USA Income (loss) before income tax — (5,897 ) 3,042 ** 490 ** Income tax expenses computed at the PRC statutory tax rate of 25% — (1,474 ) 761 123 Income tax expenses computed at the USA statutory tax rate of 35% — (2,064 ) 1,065 172 Effect of differing tax rates in different jurisdictions — (590 ) 304 49 Hong Kong Income (loss) before income tax (2,079 ) 6,346 (97,876 ) (15,775 ) Income tax expenses computed at the PRC statutory tax rate of 25% (519 ) 1,586 (24,470 ) (3,944 ) Income tax expenses computed at the Hong Kong statutory tax rate of 16.5% (343 ) 1,047 (16,150 ) (2,605 ) Effect of differing tax rates in different jurisdictions 176 (539 ) 8,320 1,339 PRC Income before income tax 37,021 161,550 388,704 62,648 Income tax expenses computed at the PRC statutory tax rate of 25% 9,255 40,388 97,176 15,662 Income tax expenses computed at the PRC statutory tax rate of 25% 9,255 40,388 97,176 15,662 Effect of differing tax rates in different jurisdictions — — — — British Virgin Islands Income (loss) before income tax (11 ) (12 ) 490 79 Income tax expenses computed at the PRC statutory tax rate of 25% (3 ) (3 ) 123 20 Income tax expenses computed at the BVI statutory tax rate of 0% — — — — Effect of differing tax rates in different jurisdictions 3 3 (123 ) (20 ) Total Income before income tax 14,759 110,688 90,904 14,651 Income tax expenses computed at the PRC statutory tax rate of 25% 3,690 27,672 22,727 3,663 Income tax expenses computed at the statutory tax rate of different jurisdictions 8,912 39,371 82,091 13,229 Effect of differing tax rates in different jurisdictions 5,222 11,699 59,364 9,566 * The losses before income tax recorded under Cheetah Mobile Inc. for tax purposes included share-based compensation expenses for the Company. ** The Company’s U.S. subsidiary, Cheetah Mobile America, Inc., recorded an income before tax for 2014 but did not have assessable profit for the same year due to losses carried forward from previous years. The following table sets forth the effect of tax holiday and preferential tax treatments on our income tax expenses in each applicable jurisdiction, for the years ended December 31, 2012, 2013 and 2014. Year ended December 31, 2012 2013 2014 RMB RMB RMB US$ (In thousands) Cayman Islands — — — — USA — — — — Hong Kong — — — — PRC* (4,201 ) (4,885 ) (54,944 ) (8,855 ) British Virgin Islands — — — — Total (4,201 ) (4,885 ) (54,944 ) (8,855 ) * Certain of our PRC entities were entitled to tax holiday as new software development enterprise or to the preferential income tax rate of 15% as high new technology enterprise. For details, see page F-49 of this annual report. * * * The Company hereby acknowledges that · the Company is responsible for the adequacy and accuracy of the disclosure in the filing; · Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and · the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. If you have any additional questions or comments regarding the 2014 Form 20-F, please contact the undersigned at +86-10-6292-7779 or the Company’s U.S. counsel, Z. Julie Gao of Skadden, Arps, Slate, Meagher & Flom LLP at +852 3740-4863. Very truly yours, /s/ Ka Wai Andy Yeung Ka Wai Andy Yeung Chief Financial Officer cc: Sheng Fu, Chief Executive Officer and Director, Cheetah Mobile Inc. Z. Julie Gao, Esq., Partner, Skadden, Arps, Slate, Meagher & Flom LLP King Li, Partner, Ernst & Young Hua Ming LLP Will H. Cai, Esq., Partner, Skadden, Arps, Slate, Meagher & Flom LLP