CHINA VALVES TECHNOLOGY, INC

CIK:0001080360|SEC Filings

Earnings per Share

6 Months Ended

Mar. 31, 2012

Note 13 - Earnings per Share

The Company reports earnings per share in accordance with the provisions of the accounting standard regarding ASC260 "Earnings per Share." This accounting standard requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution (using the treasury stock method) that could occur if securities or other contracts to issue common stock were exercised and converted into common stock.

Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company’s net income (loss) position at the calculation date.

The following is a reconciliation of the basic and diluted earnings per share computation for the three and six months ended March 31, 2012 and 2011:

		Three months ended March 31,
Basic earnings per share		2012		2011
		(unaudited)		(unaudited)
Net income attributable to holders of common shares	$	1,770,636	$	7,569,446
Basic weighted average number of common shares outstanding		36,083,940		35,623,376
Basic earnings per share	$	0.05	$	0.21

		Three months ended March 31,
Dilutive earnings per share		2012		2011
		(unaudited)		(unaudited)
Net income attributable to holders of common shares	$	1,770,636	$	7,569,446
Basic weighted average number of common shares outstanding		36,083,940		35,623,376
Warrants
Stock compensation
Dilutive weighted average number of common shares outstanding		36,083,940		35,678,277
Dilutive earnings per share
	$	0.05	$	0.21

		Six months ended March 31,
Basic earnings per share		2012		2011
		(unaudited)		(unaudited)
Net income attributable to holders of common shares	$	9,969,894	$	13,977,605

Basic weighted average number of common shares outstanding		35,976,211			35,132,917
Basic earnings per share	$	0.28		$	0.40

		Six months ended March 31,
Dilutive earnings per share		2012		2011
		(unaudited)		(unaudited)
Net income attributable to holders of common shares	$	9,969,894	$	13,977,605
Basic weighted average number of common shares outstanding		35,976,211		35,132,917
Warrants
Stock compensation
Dilutive weighted average number of common shares outstanding		35,976,211		35,216,138
Dilutive earnings per share	$	0.28	$	0.40

No options in the three and six months ended March 31, 2012.

The 50,000 option shares granted to its independent directors and 500,000 restricted stock granted to its officers in 2012 were anti-dilutive for the three and six months ended March 31, 2012 as the average stock price was lower than the exercise prices. No dilution of shares from options or restricted stocks for the three and six months ended March 31, 2011

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	Mar. 31, 2012	Mar. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 9,969,894	$ 13,977,605
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expenses	2,994,782	3,238,022
Allowance for doubtful accounts	4,020,804	1,049,806
Gain on acquisition	0	(2,698,642)
Loss(Gain) on disposal of fixed assets	(12,068)	6,798
Stock-based compensation	700,603	41,282
Change in fair value of warrant liabilities	0	(389,490)
Deferred tax assets	(1,881,792)	0
Change in operating assets and liabilities:
Restricted cash due to sales covenant	0	(95,775)
Notes receivable	424,753	(294,546)
Accounts receivable-trade and retainage, short term	(30,505,000)	(16,385,371)
Accounts receivable - related parties	0	(402,794)
Other receivables	(2,568,982)	60,663
Other receivables-related party	0	(171,194)
Prepaid expenses and other current assets	81,101	2,401,668
Inventories, net	(3,864,272)	3,563,801
Advances on inventory purchases	(1,713,502)	(1,935,805)
Advances on inventory purchases-related party	1,568,847	(560,961)
Accounts receivable - retainage, long term	1,311,137	(3,899,147)
Accounts payable-trade	174,014	3,570,702
Accounts payable-trade- related parties	(794,945)	1,499,948
Other payables	(2,019,904)	3,024,468
Other payables - related parties	915,115	(57,264)
Accrued liabilities	1,041,463	(53,355)
Customer deposits	1,932,910	(151,841)
Taxes payable	(326,947)	(1,414,144)
Net cash provided by(used in) operating activities	(18,551,989)	3,924,434
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of intangible assets	(208,852)	(369,275)
Cash proceeds from sale of equipment	61,175	0
Purchases of equipment	(947,081)	(1,123,082)
Net cash used in investing activities	(1,094,758)	(1,492,357)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease (Increase) in restricted cash	(1,665,984)	159,331
Short term notes payable	2,529,364	0
Net proceeds from short-term loan - banks and others	1,580,853	3,614,497
Repayments of notes payables	0	(297,700)
Net cash provided by financing activities	2,444,233	12,867,610
Cash proceeds from public offering and warrants exercised	0	9,391,482
Effects of foreign currency translation	186,362	514,939
Net increase (decrease) in cash and cash equivalents	(17,016,152)	15,814,626
Cash and cash equivalents, beginning of period	28,076,692	8,387,646
Cash and cash equivalents, ending of period	11,060,540	24,202,272
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	212,722	134,585
Cash paid for income taxes	$ 4,476,715	$ 12,117,336

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2012	Sep. 30, 2011
Current assets:
Cash and cash equivalents	$ 11,060,540	$ 28,076,692
Restricted cash	4,044,152	2,344,276
Notes receivable	1,058,666	1,465,369
Accounts receivable, net of allowance for doubtful accounts of $8,134,227and $4,052,398 as of March 31, 2012 and September 30, 2011, respectively	152,665,973	124,514,274
Other receivables	7,746,257	5,106,572
Inventories, net of allowance of $1,959,843 and $ 2,394,319 as of March 31, 2012 and September 30, 2011, respectively	28,050,218	23,868,885
Advances on inventory and purchases	4,169,883	2,421,390
Advances on inventory purchase - related party	0	1,552,123
Prepaid expenses and other current assets	98,658	79,295
Total current assets	208,894,347	189,428,876
Property, plant and equipment, net	39,267,005	40,192,636
Accounts receivable - retainage, long term	4,484,135	5,724,024
Goodwill	34,415,741	33,976,186
Intangible assets, net	23,003,465	22,914,008
Other investments, cost	825,610	815,066
Other non-current assets	14,302	395,514
Deferred tax assets	1,885,817	0
Total assets	312,790,422	293,446,310
Current liabilities:
Accounts payable - trade	25,067,784	24,575,461
Accounts payable - related parties	0	786,471
Short-term loans	8,182,314	6,513,810
Other payables	3,280,532	5,287,964
Other payables - related parties	1,030,121	94,226
Notes payable	3,010,044	469,200
Accrued liabilities	5,173,615	4,091,998
Customer deposits	13,221,098	11,139,936
Income and other taxes payable	8,241,407	8,462,128
Total current liabilities	67,206,915	61,421,194
Commitments and contingencies	0	0
Shareholder's Equity:
Common stock, $0.001 par value; 300,000,000 shares authorized;36,119,654 and 35,869,654 shares issued and outstanding as of March 31, 2012 and September 30, 2011, respectively	36,119	35,869
Additional paid-in capital	107,208,452	106,508,099
Statutory reserves	11,460,305	11,224,490
Retained earnings	105,305,580	95,571,501
Accumulated other comprehensive income	21,573,051	18,685,157
Total shareholders' equity	245,583,507	232,025,116
Total liabilities and shareholders' equity	$ 312,790,422	$ 293,446,310