UNAUDITED CONDENSED COMBINED PRO FORMA FINANCIAL STATEMENTS
In accordance with Article 11 of Regulation S-X under the Securities Act, an unaudited condensed combined pro forma balance sheet (the "pro forma balance sheet'') as of March 31, 2004, and unaudited condensed combined pro forma statement of income for the three months ended March 31, 2004, and the audited condensed combined pro forma statement of income for the year ended December 31, 2003 (the "pro forma statements of income''), have been prepared to reflect, for accounting purposes, the acquisition by Gansu Yasheng Group of Nicholas Investment Company.
The following pro forma financial statements have been prepared based upon the historical financial statements of Gansu Yasheng Group and Nicholas Investment Company. The pro forma financial statements should be read in conjunction with (a) the historical consolidated financial statements and related notes thereto of Gansu Yasheng Group as of December 31, 2003, 2002 and 2001, for the period ended December 31, 2003, 2002 and 2001, included in this filing; and (b) the historical consolidated financial statements and related notes thereto of Nicholas Investment Company as of December 31, 2003, and for the year ended December 31, 2003, included in this filing.
The March 31, 2004, pro forma balance sheet assumes that the merger was completed on March 31, 2004. The March 31, 2004, pro forma balance sheet includes the historical unaudited consolidated balance sheet data of Gansu Yasheng Group as of March 31, 2004, and the historical unaudited balance sheet data of Nicholas Investment Company as of March 31, 2004. Gansu Yasheng Group and Nicholas Investment Company have no intercompany activity that would require elimination in preparing the pro forma financial statements.
The pro forma statement of income for the three months ended March 31, 2004, assumes that the merger occurred on January 1, 2004, and includes the unaudited historical consolidated statement of income data of Gansu Yasheng Group for the three months ended March 31, 2004, and the unaudited historical statement of income data of Nicholas Investment Company for the three months ended March 31, 2004.
The pro forma statement of income for the year ended December 31, 2003, assumes that the merger occurred on January 1, 2003, and includes the audited historical consolidated statement of income data of Gansu Yasheng Group for the year ended December 31, 2003, and the audited historical statement of income data of Nicholas Investment Company for the year ended December 31, 2003.
The pro forma financial statements are provided for illustrative purposes only, and are not necessarily indicative of the operating results or financial position that would have occurred if the mergers had been consummated at the beginning of the periods or on the dates indicated, nor are they necessarily indicative of any future operating results or financial position. The pro forma financial statements do not include any adjustments related to any restructuring charges or one-time charges which may result from the mergers or the final result of valuations of inventories, property, plant and equipment, intangible assets, debt, and other obligations.
YASHENG GROUP
PRO-FORMA CONSOLIDATED BALANCE SHEETS
| December 31 2003 | March 31 2004 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $45,700,083 | $ 44,690,198 |
| Accounts receivable, net | 79,032,369 | 101,833,441 |
| Inventories, net | 55,325,772 | 53,968,450 |
| Other current assets | 1,122,607 | 1,157,831 |
| Total current assets | 181,180,831 | 201,649,920 |
| Property, plant and equipment, net | 1,088,009,899 | 1,123,435,307 |
| Intangible assets, net | 10,467,817 | 13,663,704 |
| Other assets | 478,003,013 | 61,069,432 |
| Total assets | 1,327,661,560 | 1,399,818,363 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable and accrued expenses | $51,890,589 | 96,605,138 |
| Accrued employee compensation and benefits | 9,199,478 | 9,559,921 |
| Short-term loans | 74,899,398 | 83,439,247 |
| Taxes payable | 11,504,544 | 11,421,146 |
| Total current liabilities | 147,494,009 | 201,025,452 |
| Long-term liabilities: | ||
| Long-term loans | 81,093,901 | 84,413,658 |
| Other long-term liabilities | 8,203,979 | 8,203,979 |
| Total long-term liabilities | 89,297,880 | 92,617,637 |
| Minority interest | 113,219,184 | 113,545,337 |
| Shareholders' equity: | ||
| Common stock, | 155,140,017 | 155,238,125 |
| Retained earnings | 822,522,598 | 837,391,812 |
| Total Shareholders' equity | 977,662,625 | 992,629,937 |
| Total Liabilities & Shareholders' Equity | $1,327,661,560 | $1,399,818,363 |
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YASHENG GROUP
PRO-FORMA CONSOLIDATED STATEMENTS OF INCOME
| For the Year Ended December 31 2003 | For the 3 Months Ended March 31 2004 | |
| Operating revenue | $605,248,813 | $146,602,060 |
| Operating expense | 487,918,542 | 122,573,496 |
| Gross profit | 117,330,217 | 24,028,565 |
| Selling expenses | 14,406,297 | 3,885,815 |
| General and administrative expenses | 21,732,964 | 5,325,427 |
| Other operating expenses | 26,797,165 | 2,418,424 |
| Operating profit | 54,803,035 | 12,398,899 |
| Investment income | 621,008 | 1,275,063 |
| Other income (expense) | 19,847,478 | 3,698,449 |
| Income before taxes | 4,862,331 | 7,372,411 |
| Income taxes | 7,536,444 | 1,570,662 |
| Minority shareholder earnings | 7,437,628 | 1,041,219 |
| Net income | $59,888,259 | 14,760,530 |
| Earnings per common share | ||
| Basic | $0.3860 | $0.09508 |
| Diluted | $0.3860 | $0.09508 |
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