CHINA LINEN TEXTILE INDUSTRY, LTD

CIK:0001336655|SEC Filings

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2011

19. EARNINGS PER SHARE

As of March 23, 2011, the Company filed an Amended and Restated Memorandum of Association of the Company, which consolidates the share capital of the Company at a ratio of 3.5:1 by increasing the par value of the Company’s share capital from US$0.002 par value each to US$0.007 par value each, thereby reducing the number of authorized shares from US$1,000,000 divided into 500,000,000 ordinary shares of US$0.002 par value each to US$1,000,000 divided into 142,857,142.86 ordinary shares of US$0.007 par value each (the “Share Consolidation”). The market date of effectiveness of the Share Consolidation is March 30, 2011.

The earnings per share assuming the share consolidation occurred as of December 31, 2011, 2010 and 2009 consist of the followings:

	December 31,		December 31,		December 31,
	2011		2010		2009
Net income for basic earnings per share($)		12,305,290		9,565,032		5,730,519
Weighted average number of shares		5,835,145		5,786,140		5,745,238
Basic earnings per share($)		2.11		1.65		1.00

	December 31,		December 31,		December 31,
	2011		2010		2009
Net income for basic earnings per share($)		12,305,290		9,652,958		5,730,519
Interest expense adjustment arising from deemed conversion of convertible notes		556,484		87,926		-
Net income for diluted earnings per share($)		12,861,774		9,740,884		5,730,519

Weighted average number of shares before dilution		5,835,145		5,786,140		5,745,238
Diluted shares arising from conversion of convertible notes		1,324,248		210,429		-
Weighted average number of shares after dilution		7,159,393		5,996,569		5,745,238

Diluted earnings per share($)	$	1.80	$	1.61	$	1.00

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	$ 12,305,290	$ 9,565,032	$ 5,730,519
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt (recoveries)/expenses	(220,255)	660,640	(31,313)
Impairment loss on property, plant and equipment	0	0	4,081
Depreciation	1,167,908	693,045	506,434
Amortization	30,406	10,191	8,795
Deferred income taxes	(685,980)	235,411	(15,290)
Prepaid expenses	281,206	(90,283)	0
Share issued to management	46,255	0	0
Fair value of contributed common stock for advisory services	0	211,571	8,984
Unpaid Interest expense on convertible notes	28,109	4,267	0
Changes in assets and liabilities:
Decrease/(increase) in bank checks and commercial paper	0	1,949,419	(351,798)
Decrease/(increase) in accounts receivable	(433,048)	(3,983,248)	884,956
Decrease/(increase) in inventory	(17,047,792)	(4,371,691)	3,484,721
Decrease/(increase) in prepayment	637,243	1,264,985	(620,250)
Decrease in other receivables	(37,971)	58,830	244,367
Increase in governmental subsidy, net	3,071,738	(1,358,679)	(484,093)
Decrease/(increase) in due from/to related parties	79,879	2,459,171	(1,048,002)
Increase/(decrease) in accounts payable	2,392,825	857,584	(149,159)
Decrease in accrued expenses and other payables	(228,264)	(263,792)	(548,092)
Increase/(decrease) in taxes payable	249,230	(2,253,455)	(4,310,506)
Increase/(decrease) in deferred revenue	194,228	(259,140)	162,204
Net cash provided by operating activities	1,831,007	5,389,858	3,476,558
Cash Flows from Investing Activities
Acquisition of investment in subsidiaries, net of cash acquired	0	(6,607,413)	0
Net cash inflow from acquisition of a subsidiary	0	482	0
Purchase of property, plant and equipment	(188,613)	(2,862,895)	(872,962)
Net cash used in investing activities	(188,613)	(9,469,826)	(872,962)
Cash Flows from Financing Activities
Proceeds from bank loans	1,392,800	5,480,286	4,043,601
Payments on bank loans	(3,714,135)	(6,069,920)	(4,043,601)
Payments on loans from local government	0	0	(295,321)
Gross proceeds from issue of convertible notes	0	6,418,293	0
Net cash used in financing activities	(2,321,335)	5,828,659	(295,321)
Net increase in cash and cash equivalents	(678,941)	1,748,691	2,308,275
Effects of foreign currency conversion on cash	1,543,752	92,722	1,707
Cash and cash equivalents beginning of year/period	4,162,069	2,320,656	10,674
Cash and cash equivalents end of year/period	5,026,880	4,162,069	2,320,656
Supplemental Disclosures of Cash Flow Information
Income taxes	4,974,504	5,481,979	1,526,428
Convertible Debt [Member]
Supplemental Disclosures of Cash Flow Information
Interest Paid	564,245	48,273	0
Bank Loans [Member]
Supplemental Disclosures of Cash Flow Information
Interest Paid	$ 133,596	$ 180,062	$ 310,895

CONSOLIDATED BALANCE SHEETS (USD $)	Dec. 31, 2011	Dec. 31, 2010
ASSETS
Cash	$ 5,026,880	$ 4,162,069
Accounts receivable, net	14,116,345	13,310,770
Inventory	26,956,581	9,908,789
Prepayment	347,717	984,960
Other receivables	239,867	201,896
Due from related parties	0	79,879
Prepaid expenses	296,461	577,667
Governmental subsidy receivable	468,751	2,890,197
Deferred tax assets	30,863	113,440
Total current assets	47,483,465	32,229,667
Non-current assets
Property, plant and equipment, net	15,871,521	16,153,577
Land use right, net	885,693	872,324
Governmental subsidy receivable, non-current	1,265,868	1,918,212
Deferred tax assets, non-current	473,580	473,470
TOTAL ASSETS	65,980,127	51,647,250
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank loans	1,428,367	3,623,900
Accounts payable	5,903,526	3,510,701
Accrued expenses and other payables	692,271	920,535
Taxes payable	1,435,438	1,186,208
Deferred revenue	396,937	202,709
Deferred governmental subsidy	96,287	91,608
Deferred tax liabilities	117,188	722,549
Convertible notes payable, net	7,019,548	0
Total current liabilities	17,089,562	10,258,210
Non-current liabilities
Deferred governmental subsidy, non-current	1,746,785	1,753,516
Deferred tax liabilities, non-current	316,467	479,553
Convertible notes payable, net	0	6,991,439
TOTAL LIABILITIES	19,152,814	19,482,718
STOCKHOLDER'S EQUITY
Common stock $0.007par value, 142,857,142.86 shares authorized; 5,846,686 shares issued and outstanding as of December 31, 2011	42,800	42,698
Additional paid-in capital	3,483,418	3,437,264
Statutory reserves	3,541,401	2,768,269
Retained earnings	34,982,484	23,450,326
Accumulated other comprehensive income	4,777,210	2,465,975
TOTAL STOCKHOLDER'S EQUITY	46,827,313	32,164,532
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 65,980,127	$ 51,647,250