BCD Semiconductor Manufacturing Ltd

CIK:0001289814|SEC Filings

NET INCOME PER SHARE

12 Months Ended

Dec. 31, 2011

3. NET INCOME PER SHARE

Basic and diluted net income per share is computed using the weighted-average number of ordinary shares outstanding during the year. When calculating net income per share, the two class method has been used, and net income has been allocated on a pro rata basis to the ordinary and convertible preference shares to the extent that each class may share income for the period. In years with profits from continuing operations, potential ordinary shares, including options and warrants computed using the treasury stock method, will only have a dilutive effect when the average fair value of ordinary shares during the period exceeds the exercise price of those instruments. For the potential ordinary shares issuable upon conversion of convertible preference shares computed under the if-converted method, they would be excluded from the computation of net income per share if the inclusion will result in antidilutive effect.

The following table sets forth the computation of basic and diluted net income per share attributable to ordinary shareholders.

		$$000,00			$$000,00			$$000,00
	Years Ended December 31
	2009			2010			2011
Numerator:
Net income	$	6,908,095		$	20,437,113		$	13,469,190
Accretion of Series C Preference Shares		(57,806	)		—			—
Deemed dividend to induce conversion of Series C preference shares into ordinary shares		—			—			(9,133,333	)
Income attributable to convertible preference shareholders		(5,322,917	)		(15,771,962	)		(195,902	)

Net income attributable to ordinary shareholders	$	1,527,372		$	4,665,151		$	4,139,955

		$000,00000		$000,00000		$000,00000
	Years Ended December 31
	2009		2010		2011
Denominator:
Weighted-average ordinary shares outstanding—Basic		16,710,192		16,908,553		102,556,103
Diluted shares
Options to purchase ordinary shares		2,431,854		10,533,505		6,928,793
Warrants to purchase ordinary shares		—		27,143		7,509

Weighted-average outstanding shares—Diluted		19,142,046		27,469,201		109,492,405

Basic net income per share:
Net incomeattributable to ordinary shareholders	$	0.09	$	0.28	$	0.04

Diluted net income per share:
Net income attributable to ordinary shareholders	$	0.08	$	0.17	$	0.04

After deducting accretion of Series C preference shares, deemed dividend to induce conversion of Series C preference shares into ordinary shares and income attributable to convertible preference shareholders from income to determine net income attributable to ordinary shareholders, the following warrants, options and preference shares that could allow the holders to purchase or convert to potential ordinary shares were excluded from the computation of diluted net income per ordinary share as the effects of purchasing or converting those potential ordinary shares and increasing the income attributable to ordinary shareholders following such purchases and conversions would not have been dilutive under the if-converted method:


	Years Ended December 31
	2009		2010		2011
Number of warrants to purchase ordinary shares		202,500		—		—
Number of warrants to purchase Series C preference shares		1,600,000		1,600,000		1,600,000
Series A preference shares		27,660,000		27,660,000		27,660,000
Series B preference shares		10,575,289		10,575,289		10,575,289
Series C preference shares		20,000,000		20,000,000		20,000,000

On February 2, 2011, the Company closed its initial public offering on the Nasdaq Global Select Market under the symbol “BCDS”. The Company offered a total of 6,000,000 American Depositary Shares (hereafter, referred to as ADSs) representing 36,000,000 ordinary shares. On the basis of the one for six conversion rate of ADS and company’s ordinary shares, the basic and diluted earnings per ADS for 2011 were $0.24 and $0.23 respectively.

The Company applies the two-class method in accordance with the provisions of ASC Topic 260, “Earnings Per Share,” which established standards regarding the computation of earnings per share by companies with participating securities or multiple classes of ordinary shares. The Company’s Series A through C convertible redeemable preference shares were participating securities due to their participation rights in accordance with the Company’s Articles of Association. (Note 20)

Further, the following table sets forth the computation of basic and diluted net income per share attributable to participating securities holders:


	Years Ended December 31
	2009		2010		2011
Numerator:
Income attributable to convertible preference shareholders	$	5,322,917	$	15,771,962	$	195,902

Denominator:
Weighted-average convertible preference shares outstanding—Series A through C – basic		58,235,289		58,235,289		4,852,941
Diluted shares
Warrants to purchase Series C preference shares		90,566		359,690		13,930

Weighted-average convertible preference shares outstanding – diluted		58,325,855		58,594,979		4,866,871

Basic net income per share:
Net income attributable to convertible preference shareholders	$	0.09	$	0.27	$	0.04

Diluted net income per share:
Net income attributable to convertible preference shareholders	$	0.09	$	0.27	$	0.04

As of December 31, 2011, the following ordinary shares, warrants and options that could allow the holders to purchase potential ordinary shares were outstanding:


Ordinary shares			109,593,222
Number of warrants to purchase ordinary shares			2,202,501
Number of options to purchase ordinary shares, vested or expected to vest			17,203,054

			128,998,777

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	12 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 13,469,190	$ 20,437,113	$ 6,908,095
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5,802,229	3,880,859	3,572,323
Impairment loss of acquired intangible assets	796,802
Loss (gain) on disposal of property, plant and equipment	(172,806)	1,344	(104,307)
Impairment loss on investment	548,735
Provisions for (reversal of) allowance for doubtful accounts and sales discounts	(29,233)	13,743	442,837
Provisions for warranty reserves	733,966	445,251	522,813
Inventory write down	2,855,816	2,044,215	2,185,349
Deferred income tax	(88,952)	147,355	606,562
Gain on valuation of warrant liability	(744,597)	(613,200)	(145,156)
Gain on valuation of financial instruments	(21,365)	(761,892)
Change in operating assets and liabilities:
Accounts receivable	(5,226,652)	(1,066,557)	(9,212,491)
Inventories	(5,915,026)	(10,573,282)	1,942,253
Excess value-added tax paid	345,522	(1,460,870)	214,235
Prepaid expenses and other current assets	(2,271,949)	(508,175)	(981,382)
Accounts payable	(1,931,025)	2,257,954	5,579,568
Notes payable	5,519,258	5,051,643	6,635,300
Accrued expenses	(1,369,401)	229,281	(409,415)
Withholding tax liability	38,446	25,979	(7,833)
Other current liabilities	(987,824)	529,508	(838,703)
Deferred rent	(15,064)	(60,396)	(74,414)
Net cash provided by operating activities	13,333,054	21,771,295	18,494,093
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in restricted cash	(1,025,201)	187,078	(467,057)
Acquisitions of property, plant and equipment	(28,280,667)	(13,950,307)	(3,048,675)
Acquisition of land use right		(101,053)
Proceeds from disposal of property, plant and equipment	434,837	13,748	137,746
Increase in other assets	(943,553)	(12,072)	(141,387)
Receivable due from ZiZhu	(3,921,475)
Acquisition of Aura Micro	(4,582,068)
Net cash used in investing activities	(38,318,127)	(13,862,606)	(3,519,373)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for offering expenses	(2,404,539)	(458,295)
Proceeds received from initial public offerings	49,085,090
Proceeds from short-term bank loans	8,300,000	12,016,612	8,577,860
Repayments for short-term bank loans	(12,039,833)	(8,554,838)	(12,157,659)
Exercise of stock options	172,773	131,462
Principal paid under capital lease	(64,517)	(43,746)
Proceeds from performance obligation	618,112
Repurchase of treasury stock	(1,496,755)
Net cash provided by (used in) financing activities	42,170,331	3,091,195	(3,579,799)
NET INCREASE IN CASH AND CASH EQUIVALENTS	17,185,258	10,999,884	11,394,921
EFFECTS OF EXCHANGE RATE CHANGES	2,234,521	1,511,642	36,360
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	44,716,943	32,205,417	20,774,136
CASH AND CASH EQUIVALENTS, END OF YEAR	64,136,722	44,716,943	32,205,417
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid	1,040,972	958,303	14,667
Interest paid	354,133	443,144	766,030
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Increase (decrease) in payable for purchase of property, plant and equipment	9,912,763	(404,198)	(577,427)
Increase (decrease) in obligation under capital lease			366,129
Decrease in land use right			1,652,945
Increase (decrease) in performance obligation			1,727,291
TRANSACTION AFFECTING BOTH CASH AND NON-CASH ITEMS
Total charge of offering expenses	2,862,834
Increase (decrease) in deferred offering expenses	(1,956,571)	1,956,571
Decrease (increase) in accrued offering expenses	1,498,276	(1,498,276)
Cash paid for offering expenses	2,404,539	458,295
Employee
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense	1,943,544	1,647,883	1,651,707
Non Employee
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense	$ 53,440	$ 103,539	$ 6,752

CONSOLIDATED BALANCE SHEETS (USD $)	Dec. 31, 2011	Dec. 31, 2010
Current Assets:
Cash	$ 64,136,722	$ 44,716,943
Restricted cash	7,701,956	6,355,347
Accounts receivable, net	20,443,884	14,744,761
Inventories	27,966,314	24,187,846
Excess value-added tax paid	2,414,366	2,605,883
Deferred offering expense		1,956,571
Receivable from ZiZhu	4,027,537
Prepaid expenses and other current assets	6,379,189	4,182,278
Total current assets	133,069,968	98,749,629
Property, plant and equipment, net	66,421,384	31,512,211
Land use right, net	3,080,828	2,997,495
Acquired intangible assets, net	2,018,551
Investment in equity securities	1,115,161	1,586,966
Goodwill	284,044
Other assets	3,273,646	2,175,689
Total assets	209,263,582	137,021,990
Current liabilities:
Short-term bank loans	8,300,000	12,039,833
Accounts payable	17,003,899	18,359,734
Notes payable	21,449,317	15,930,059
Accrued expenses	3,790,503	6,635,366
Payable for purchase of property, plant and equipment	10,675,843	763,080
Withholding tax liability	1,827,944	1,789,498
Warrant liability		1,397,973
Other current liabilities	2,126,296	2,497,478
Total current liabilities	65,173,802	59,413,021
Noncurrent liabilities:
Deferred rent-noncurrent	120,938	107,870
Performance obligation	3,903,080	3,109,444
Obligation under capital lease-noncurrent	205,953	269,636
Deferred grant-noncurrent	410,705
Total noncurrent liabilities	4,640,676	3,486,950
Total liabilities	69,814,478	62,899,971
Commitments and contingencies (Note 13)
Convertible redeemable preference shares, authorized-63,500,000 shares; $0.001 par value, issued and outstanding-58,235,289 shares at December 31, 2010 (2011: Nil) Liquidation preference-$90,879,112 at December 31, 2010 (2011: Nil)		90,569,174
Shareholders' equity (capital deficiency)
Ordinary shares, $0.001 par value, authorized-200,000,000 and 1,000,000,000 shares as of December 31,2010 and 2011, respectively; issued - 17,225,275 and 111,334,002 shares as of December 31, 2010 and 2011, respectively; outstanding-17,225,275 and 109,593,222 shares as of December 31, 2010 and 2011, respectively	111,334	17,225
Additional paid-in capital	160,242,021	13,083,248
Accumulated other comprehensive income	12,567,986	8,258,725
Accumulated deficit	(33,470,496)	(37,806,353)
Treasury stock-1,740,780 shares as of December 31, 2011 (2010: Nil)	(1,741)
Total shareholders' equity (capital deficiency)	139,449,104	(16,447,155)
Total liabilities and equity	$ 209,263,582	$ 137,021,990