Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K/A - LINCOLN FLOORPLANNING CO., INC. | d8k.htm |
| EX-99.1 - EXHIBIT 99.1 - LINCOLN FLOORPLANNING CO., INC. | exhibit99-1.htm |
| EX-23.1 - EXHIBIT 23.1 - LINCOLN FLOORPLANNING CO., INC. | exhibit23-1.htm |
Exhibit 99.2
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma consolidated financial statements give pro forma effect to the purchase of Shandong Fuyuan Equipment Installation Co., Ltd. (“Fuyuan Installation”), and the assumptions and adjustments as set forth in the accompanying notes to the pro forma consolidated financial statements.
On July 1, 2010, Henan Desheng Boiler Installation Co., Ltd. (“Desheng Installation”), a subsidiary of China Power Technology, Inc., (“China Power”, China Power and its subsidiaries are collectively referred to as the “Group”), acquired 60% of the equity of Shandong Fuyuan Equipment Installation Co., Ltd. (“Fuyuan Installation”) and from Mr. Shisen Zhang, one of the original stockholders of Fuyuan Installation for cash consideration of RMB63 million (US$9.3 million) by contributing $0.4 million to Fuyuan Installation’s registered capital, representing 5.6% equity interest of the total registered capital, and purchasing 54.4% equity interest from a prior shareholder for $8.9 million. (the “Acquisition”)
The Fuyuan Installation purchase price has been allocated based on estimates of the fair market value of the assets acquired and liabilities assumed on July 1, 2010. See Note (b) to the Notes to Unaudited Pro Forma Consolidated Financial Statements. The pro forma adjustments are subject to change pending a final analysis of the fair values of the assets acquired and liabilities assumed. The impact of these changes could be material.
Periods Covered
The Acquisition will be accounted for in accordance with the purchase method of accounting.
The unaudited pro forma consolidated balance sheet as of June 30, 2010 is based on the individual historical balance sheets of the Group and Fuyuan Installation, and gives effect to the acquisition as if it had occurred on June 30, 2010. The unaudited pro forma consolidated statements of income and comprehensive income for the year ended December 31, 2009 and six months period ended June 30, 2010 are based on the historical statements of income and comprehensive income of the Group and Fuyuan Installation and their combined result of operations for the year ended December 31, 2009 and six month period ended June 30, 2010, respectively, and as if the Acquisition had occurred as of January 1, 2009
The unaudited pro forma consolidated financial statements are based on estimates and assumptions. These estimates and assumptions are preliminary and have been made solely for purposes of developing this pro forma information. Unaudited pro forma consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved if the acquisitions of Fuyuan Installation had been consummated as of the beginning of the periods indicated, nor is it necessarily indicative of the results of future operations. The pro forma consolidated financial information does not give effect to any cost savings or restructuring and integration costs that may result from the integration of the Group’s and Fuyuan Installation’s businesses. Costs related to restructuring and integration has not yet been determined.
This unaudited pro forma consolidating financial information is based upon the respective historical financial statements of the Group and Fuyuan Installation and related notes and should be read in conjunction with those statements and the related notes.
Unaudited Pro Forma Consolidated Balance Sheet at June 30, 2010
| June 30, 2010 | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Fuyuan | Pro Forma | Pro Forma | ||||||||||||
| The Group (a) | Installation (a) | Adjustments | Consolidated | |||||||||||
| ASSETS | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | $ | 17,588,647 | $ | 5,524,473 | $ | (9,277,121 | ) | (b) | $ | 13,835,999 | ||||
| Accounts receivable, net | 12,571,774 | 3,724,417 | - | 16,296,191 | ||||||||||
| Inventories | 8,206,596 | - | - | 8,206,596 | ||||||||||
| Due from shareholders | - | 323,451 | - | 323,451 | ||||||||||
| Prepayments and other receivables | 2,881,674 | 1,291,133 | - | 4,172,807 | ||||||||||
| Total current assets | 41,248,691 | 10,863,474 | (9,277,121 | ) | 42,835,044 | |||||||||
| Non-current assets | ||||||||||||||
| Property, plant and equipment, net | 2,294,768 | 90,323 | - | 2,385,091 | ||||||||||
| Land use rights, net | 4,326,298 | - | - | 4,326,298 | ||||||||||
| Long term investment | 736,279 | - | - | 736,279 | ||||||||||
| Deferred tax assets | - | 11,806 | - | 11,806 | ||||||||||
| Intangible assets | - | - | 6,958,500 | (b) | 6,958,500 | |||||||||
| Goodwill | - | - | 1,660,922 | (b) | 1,660,922 | |||||||||
| 7,357,345 | 102,129 | 8,619,422 | 16,078,896 | |||||||||||
| $ | 48,606,036 | $ | 10,965,603 | $ | (657,699 | ) | $ | 58,913,940 | ||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| Current liabilities | ||||||||||||||
| Accounts payable | 2,749,068 | - | - | 2,749,068 | ||||||||||
| Accrued expenses and other payables | 3,661,405 | 2,323,975 | - | 5,985,380 | ||||||||||
| Income tax payable | 1,893,859 | 299,142 | - | 2,193,001 | ||||||||||
| Short-term loans | 4,712,188 | - | - | 4,712,188 | ||||||||||
| Total current liabilities | 13,016,520 | 2,623,117 | - | 15,639,637 | ||||||||||
| Deferred tax liability | - | - | 1,739,625 | (b) | 1,739,625 | |||||||||
| $ | 13,016,520 | $ | 2,623,117 | $ | 1,739,625 | $ | 17,379,262 | |||||||
| Equity | ||||||||||||||
| Common stock
(US$0.001 par value, 100,000,000 shares authorized,
43,703,704 shares outstanding as of June 30, 2010) |
43,704 | 7,004,229 | (7,004,229 | ) |
(e) | 43,704 | ||||||||
| Additional paid-in capital | 17,012,279 | - | - | 17,012,279 | ||||||||||
| Appropriated retained earnings | 3,534,093 | 500,317 | (500,317 | ) | (e) | 3,534,093 | ||||||||
| Unappropriated retained earnings | 12,106,844 | 329,125 | (329,125 | ) | (e) | 12,106,844 | ||||||||
| Accumulated other comprehensive income | 2,892,596 | 508,815 | (508,815 | ) | (e) | 2,892,596 | ||||||||
| Total stockholders' equity | 35,589,516 | 8,342,486 | (8,342,486 | ) | 35,589,516 | |||||||||
| Noncontrolling interest | - | - | 5,945,162 | (b) | 5,945,162 | |||||||||
| $ | 48,606,036 | $ | 10,965,603 | $ | (657,699 | ) | $ | 58,913,940 | ||||||
Unaudited Pro Forma Consolidated Statement of Income and Comprehensive Income for six months ended June 30, 2010
| Six months ended June 30, 2010 | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Fuyuan | Pro Forma | Non- | |||||||||||||
| The Group | Installation | Adjustments | controlling | Pro Forma | |||||||||||
| (a) | (a) | (c) | interest (d) | Consolidated | |||||||||||
| Revenues | $ | 46,706,197 | $ | 7,880,190 | - | - | $ | 54,586,387 | |||||||
| Cost of goods sold | 31,051,753 | 4,790,078 | - | - | 35,841,831 | ||||||||||
| Gross profit | 15,654,444 | 3,090,112 | - | - | 18,744,556 | ||||||||||
| Operating expenses | |||||||||||||||
| Selling expenses | 1,605,692 | 470,409 | - | - | 2,076,101 | ||||||||||
| General and administrative expenses | 986,065 | 219,671 | 658,914 | - | 1,864,650 | ||||||||||
| 2,591,757 | 690,080 | 658,914 | - | 3,940,751 | |||||||||||
| Other income (expenses) | |||||||||||||||
| Interest income | 8,175 | 6,927 | - | - | 15,102 | ||||||||||
| Interest expense | (129,050 | ) | - | - | - | (129,050 | ) | ||||||||
| Other operating income | 11,332 | - | - | - | 11,332 | ||||||||||
| (109,543 | ) | 6,927 | - | - | (102,616 | ) | |||||||||
| Income before income tax expense | 12,953,144 | 2,406,959 | (658,914 | ) | - | 14,701,189 | |||||||||
| Income tax expense | 2,752,751 | 601,740 | (164,728 | ) | - | 3,189,763 | |||||||||
| Net income | $ | 10,200,393 | $ | 1,805,219 | $ | (494,186 | ) | $ | - | $ | 11,511,426 | ||||
| Less: net income attributable to noncontrolling interest | - | - | - | 524,413 | 524,413 | ||||||||||
| Net income attributable to stockholders | $ | 10,200,393 | $ | 1,805,219 | $ | (494,186 | ) | $ | (524,413 | ) | $ | 10,987,013 | |||
| Comprehensive income: | |||||||||||||||
| Net income | 10,200,393 | 1,805,219 | (494,186 | ) | (524,413 | ) | 10,987,013 | ||||||||
| Foreign currency translation adjustment | 188,256 | 39,359 | 1,064 | - | 228,679 | ||||||||||
| Comprehensive income | $ | 10,388,649 | $ | 1,844,578 | (493,122 | ) | (524,413 | ) | $ | 11,215,692 | |||||
| Less: comprehensive income attributable to noncontrolling interest | - | - | - | 16,169 | 16,169 | ||||||||||
| Comprehensive income attributable to stockholders | $ | 10,388,649 | $ | 1,844,578 | $ | (493,122 | ) | $ | (540,582 | ) | $ | 11,199,523 | |||
| Basic and diluted earnings per share | $ | 0.27 | N/A | N/A | N/A | $ | 0.29 | ||||||||
| Weighted average common shares outstanding- basic and diluted | 37,603,621 | N/A | 37,603,621 | (f) | N/A | 37,603,621 | |||||||||
Unaudited Pro Forma Consolidated Statement of Income and Comprehensive Income for year ended December 31, 2009
| Year ended December 31, 2009 | |||||||||||||||
| (Audited) | |||||||||||||||
| Fuyuan | Pro Forma | Non- | |||||||||||||
| The Group | Installation | Adjustments | controlling | Pro Forma | |||||||||||
| (a) | (a) | (c) | interest (d) | Consolidated | |||||||||||
| Revenues | $ | 70,974,991 | $ | 10,789,810 | - | - | 81,764,801 | ||||||||
| Cost of goods sold | 47,353,025 | 6,444,689 | - | - | 54.797,714 | ||||||||||
| Gross profit | 23,621,966 | 4,345,121 | - | - | 27,967,087 | ||||||||||
| Operating expenses | |||||||||||||||
| Selling expenses | 2,430,278 | 733,689 | - | - | 3,163,967 | ||||||||||
| General and administrative expenses | 1,666,483 | 323,389 | 1,641,087 | - | 3,630,959 | ||||||||||
| 4,096,761 | 1,057,078 | 1,641,087 | - | 6,794,926 | |||||||||||
| Other income (expenses) | |||||||||||||||
| Interest income | 48,590 | 9,061 | - | - | 57,651 | ||||||||||
| Interest expense | (291,282 | ) | (42,488 | ) | - | - | (333,770 | ) | |||||||
| Other operating income | 119,175 | - | - | - | 119,175 | ||||||||||
| (123,517 | ) | (33,427 | ) | - | - | (156,944 | ) | ||||||||
| Income before income tax expense | 19,401,688 | 3,254,616 | (1,641,087 | ) | - | 21,015,217 | |||||||||
| Income tax expense | 4,011,483 | 813,654 | (410,272 | ) | - | 4,414,865 | |||||||||
| Net income | $ | 15,390,205 | $ | 2,440,962 | $ | (1,230,815 | ) | - | $ | 16,600,352 | |||||
| Less: net income attributable to noncontrolling interest | - | - | - | 484,059 | 484,059 | ||||||||||
| Net income attributable to stockholders | $ | 15,390,205 | $ | 2,440,962 | $ | (1,230,815 | ) | $ | (484,059 | ) | $ | 16,116,293 | |||
| Comprehensive income: | |||||||||||||||
| Net income | 15,390,205 | 2,440,962 | (1,230,815 | ) | (484,059 | ) | 16,116,293 | ||||||||
| Foreign currency translation adjustment | 50,227 | 10,279 | 221 | - | 60,727 | ||||||||||
| Comprehensive income | $ | 15,440,432 | $ | 2,451,241 | (1,230,594 | ) | (484,059 | ) | 16,177,020 | ||||||
| Less: comprehensive income attributable to noncontrolling interest | - | - | - | 4,200 | 4,200 | ||||||||||
| Comprehensive income attributable to stockholders | $ | 15,440,432 | $ | 2,451,241 | $ | (1,230,594 | ) | $ | (488,259 | ) | $ | 16,172,820 | |||
| Basic and diluted earnings per share | $ | 0.42 | N/A | N/A | N/A | $ | 0.44 | ||||||||
| Weighted average common shares outstanding- basic and diluted | 36,800,000 | N/A | 36,800,000 | (g) | N/A | 36,800,000 | |||||||||
Adjustments to Pro Forma Financial Statements
| (a) |
The Group and Fuyuan Installation historical presentation –Based on the unaudited consolidated balance sheet of the Group as of June 30, 2010; the unaudited consolidated statements of income and comprehensive income of the Group for the six month period ended June 30, 2010 and the audited combined statements of income and comprehensive income of Henan Kaifeng Desheng Boiler Co., Ltd. (“Desheng Boiler”) and Desheng installation for the year ended December 31, 2009; the audited financial statements of Fuyuan Installation as of and for the year ended December 31, 2009, and the unaudited financial statements of Fuyuan Installation as of and for the six month period ended June 30, 2010. |
| (b) |
Purchase Price Allocation – The allocation of Fuyuan Installation’s purchase price among the assets acquired and liabilities assumed is based on estimates of the fair value. Under the purchase method of accounting, the total purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values with the excess charged to goodwill. The following table provides the allocation of the purchase price based upon Fuyuan Installation’s June 30, 2010 balance sheet: |
| Assets | |||
| Cash and cash equivalents | $ | 5,524,473 | |
| Accounts receivable | 3,724,417 | ||
| Due from owner | 323,451 | ||
| Other receivables | 1,291,133 | ||
| Property, plant and equipment, net | 90,323 | ||
| Identifiable intangible assets | |||
| -License for Boiler | 5,357,611 | ||
| -License for Pipe | 1,274,058 | ||
| -Unfinished contracts | 326,831 | ||
| Total Identifiable intangible assets | 6,958,500 | ||
| Deferred tax assets | 11,806 | ||
| Goodwill | 1,660,922 | ||
| Liabilities | |||
| Accrued expenses and other payables | 2,323,975 | ||
| Income tax payable | 299,142 | ||
| Deferred tax liability | 1,739,625 | ||
| Less: Fair value of noncontrolling interest | 5,945,162 | ||
| Purchase price | $ | 9,277,121 |
Pursuant to the authoritative guidance on goodwill and other intangible assets, goodwill is not amortized; rather, impairment tests are performed at least annually or more frequently if circumstances indicate impairment may have occurred. If impairment exists, goodwill is immediately written off to its fair value through a current charge to income. Accordingly, goodwill arising from the Acquisition will be subject to impairment testing annually.
| (c) |
Pro Forma Adjustment in Profit or loss – Reflects the amortization of identifiable intangible assets shown in Note (b). |
| Identifiable intangible assets | Amount | Residual | Amortization for year | Amortization for six months | |||||||||
| Life (year) | ended December 31, 2009 | ended June 30, 2010 | |||||||||||
| License for Boiler | $ | 5,357,611 | 5 | $ | 1,063,694 | $ | 532,325 | ||||||
| License for Pipe | 1,274,058 | 5 | 252,950 | 126,589 | |||||||||
| Unfinished contracts | 326,831 | <1 | 324,443 | - | |||||||||
| $ | 1,641,087 | $ | 658,914 |
| (d) |
Non-controlling interest – Reflects 40% non-controlling interest in Fuyuan Installation. |
| (e) |
Elimination of equity balance of Fuyuan Installation on June 30, 2010. |
| (f) |
Basis and diluted weighted average common shares outstanding of 37,603,621 on June 30, 2010 was determined assuming the Acquisition of Fuyuan Installation was occurred on January 1, 2009 and the shares are outstanding for the entire period. |
| (g) |
Basis and diluted weighted average common shares outstanding of 36,800,000 on December 31, 2009 was determined assuming the Acquisition of Fuyuan Installation was occurred on January 1, 2009 and the shares are outstanding for the entire period. |