China Fire & Security (NASDAQ:CFSG)

BEIJING, Nov. 4, 2011 (GLOBE NEWSWIRE) -- China Fire & Security Group, Inc. (the "Company") (Nasdaq:CFSG), a leading total solution provider of industrial fire protection systems in China, announced today the completion of the merger (the "Merger") contemplated by the previously announced Agreement and Plan of Merger, dated May 20, 2011 (the "Merger Agreement"), by and among the Company, Amber Parent Limited, an exempted company incorporated in the Cayman Islands (the "Parent"), an affiliate of funds managed by Bain Capital Partners, LLC (the "Bain Capital"), and Amber Mergerco, Inc., a Florida corporation and a wholly-owned subsidiary of Parent (the "Merger Sub"). As a result of the Merger, the Company became a wholly-owned subsidiary of Parent.

Under the terms of the Merger Agreement, which was approved by the Company's shareholders at the special meeting held on September 22, 2011, each share of the Company's common stock issued and outstanding immediately prior to the effective time of the Merger was converted automatically into the right to receive $9.00 in cash without interest and less any applicable withholding taxes, except for shares beneficially owned by the Company, any subsidiary of the Company, Parent or Merger Sub, including shares contributed to Parent or Merger Sub by certain special purpose companies (the "Rollover Investors") related to Mr. Weigang Li, the Chairman of the Board of the Company, Mr. Brian Lin, the Chief Executive Officer of the Company, and Mr. Weishe Zhang, the Vice President of Strategic Planning of the Company, which were cancelled without receiving any consideration. Under the terms of the Rollover Agreement, by and among the Parent, the Merger Sub and the Rollover Investors, entered into concurrently with the execution of the Merger Agreement, the shares contributed to the Parent were exchanged immediately prior to the Merger for a certain equity interest in the Parent and the shares contributed to Merger Sub were exchanged for a per share amount equal to $9.00 per share, which will be paid after the Company's shareholders generally receive their merger consideration. No shareholders have exercised appraisal rights. In addition, each outstanding stock option was canceled in exchange for a cash payment equal to the excess, if any, of $9.00 over the exercise price per share of such stock option less any required withholding taxes. Payment to holders of vested outstanding stock options was made as of the effective time of the Merger. Payment to holders of unvested outstanding stock options will be made on the dates such unvested stock options would have vested (subject to the same conditions on vesting as applied to the unvested stock options immediately prior to the completion of the Merger if such unvested stock options had not been cancelled as of the effective time of the Merger) without any crediting of interest for the period from the completion of the Merger until the date of such payment. Each outstanding share of restricted stock was converted into the right to receive, on the date such share of restricted stock would have vested (subject to the same conditions on vesting as applied to each share of restricted stock immediately prior to the completion of the Merger if such share of restricted stock had not been converted as of the effective time of the Merger), an amount in cash equal to $9.00 less any required withholding taxes and without any crediting of interest for the period from the effective time of the Merger until vesting.

BEIJING, Sept. 22, 2011 (GLOBE NEWSWIRE) -- China Fire & Security Group, Inc. (the "Company") (Nasdaq:CFSG), a leading total solution provider of industrial fire protection systems in China, announced today that, at the special meeting of shareholders held today, the Company's shareholders voted in favor of the proposal to adopt the previously announced Agreement and Plan of Merger, dated May 20, 2011 (the "Merger Agreement"), by and among the Company, Amber Parent Limited, an exempted company incorporated in the Cayman Islands ("Parent"), and Amber Mergerco, Inc., a Florida corporation and a wholly-owned subsidiary of Parent ("Merger Sub"), providing for the merger of Merger Sub with and into the Company (the "Merger"), with the Company surviving the merger as a wholly-owned subsidiary of Parent. Approximately 83.92% of the Company's total outstanding shares of common stock entitled to vote at such meeting voted in person or by proxy at the special meeting. Of the total outstanding shares of the Company's common stock entitled to vote at such meeting, approximately 83.04% were voted in favor of the proposal to adopt the Merger Agreement. The proposal to adopt the Merger Agreement was also approved by approximately 60.05% of the shares of common stock outstanding held by unaffiliated shareholders, satisfying the "majority of the minority" voting requirement set forth in the Merger Agreement.

The parties currently expect to complete the merger in the last quarter of 2011, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement. If completed, the proposed merger would result in the Company becoming a privately held company and its common stock would no longer be listed on the NASDAQ Capital Market. 

Notice the slight difference in verbiage in the company's June 2011 10Q vs. March 10Q (Use of the word NORMAL). This slightly increases the dilution risk in this name.

June Q

As a result of the total cash activities, net cash increased $2.4 million from December 31, 2010. We believe that our currently available working capital of $115.6 million, including cash and cash equivalents of $30.6 million, is adequate to sustain our operations at our current level and our normal anticipated growth.

March Q

We believe that our currently available working capital of $109.0 million, including cash and cash equivalents of $23.9 million, is adequate to sustain our operations at our current level and our anticipated expansion.

We believe that our currently available working capital of $109.0 million, including cash and cash equivalents of $23.9 million, is adequate to sustain our operations at our current level and our anticipated expansion.

BEIJING, May 20, 2011 (GLOBE NEWSWIRE) -- China Fire & Security Group, Inc. (Nasdaq:CFSG) ("China Fire" or the "Company"), a leading total solution provider of industrial fire protection systems in China, today announced that it has entered into a definitive merger agreement with Amber Parent Limited ("Parent"), an affiliate of funds managed by Bain Capital Partners, LLC ("Bain Capital"), and Amber Mergerco, Inc., a wholly-owned subsidiary of Parent ("Merger Sub").

Fourth Quarter Highlights:

• For the fourth quarter of 2010, the Company's revenue was $11.4 million, as compared to $16.9 million during the same period in 2009
• Operating income for the fourth quarter of 2010 was negative $2.3 million, compared to $3.3 million for the same period last year. 
• Net income was negative $2.1 million for the fourth quarter of 2010, as compared to $2.9 million for the same period of 2009. As a result, GAAP fully diluted EPS was negative $0.08 in the fourth quarter of 2010, versus $0.10 in the fourth quarter of the prior year.

Backlog

As of December 31, 2010, the Company's total backlog was $151.3 million.  Among that backlog, the iron and steel industry was still the major vertical, contributing approximately 51.8%, while traditional power generation and nuclear power contributed approximately 4.7% and 18.7% of current backlog, respectively. International market contributed to 14.6% while the petrochemical and other verticals together represented the remaining 10.2%. 

Mr. Brian Lin, Chief Executive Officer of China Fire, commented, "In spite of lower than expected revenue in the fourth quarter and the full year of 2010, I am satisfied with our business momentum and with the groundwork that we laid out over the past year. In 2010, we have signed over $170 million worth of new contracts – a new record in company's history. In addition to our continuous success in iron and steel industry, we have made significant progress in nuclear power sector, transportation sector and international markets. We have demonstrated our capabilities in penetrating into new industrial verticals by leveraging our strong brand name, excellent technical expertise and project management track records. However, the nature of our business as a total solution provider may occasionally depend on the profitability and cash position of our major customers, thereby impacting our revenue and consequently our quarterly and annual financial results. With strong visibility from the $151 million backlog and our more diversified customer base, China Fire's management team continues to be excited with our growth prospects in our core iron and steel market and other industrial sectors."

According to our standard contract terms, the prerequisite that must be met in order to have the legal right to bill our customers for the amounts recognized as unbilled costs and earnings is the customer’s acceptance of the completion of different stages throughout the implementation of the whole project. This is accomplished through the customer’s inspection process upon completion of certain stages of a project’s implementation including (but not limited to): the completion of a project’s design, the delivery of certain equipment to a project’s location, the completion of a certain stage of a project’s construction, the completion of a system adjustment and final acceptance by the customer and the fire safety department. For a standard system contracting project, there are multiple stages of construction, customer inspection and billing. These processes are on-going throughout the term of the contract, which can be for an extended period of time. In our operating history, we have never been unable to bill our customers or receive payments for the amounts recognized as unbilled costs and earnings as a result of the customer’s inspection process upon achieving a certain stage. Therefore, the collectability of the amounts recognized as unbilled costs and earnings is reasonably assured.

The main reason for the recent delays or prolonged customer inspection processes is the weakness in the iron and steel industry. These delays or prolonged inspection processes can slow the customers’ payments to their suppliers including our company. The recent delays in our customer’s inspection process did not relate to any performance issues raised by our customers. We have not experienced any inability to bill and/or non-payment for a receivable and/or customer’s claim because of a contract dispute. In recent quarters, we have not made any material changes in the standard contract payment provisions as compared to prior periods. In the future, we will disclose any material contract changes to our standard contractual terms and also provide investors with an explanation of such changes, along with an explanation of any material impact such changes are having or may have on our operating results and liquidity.

BEIJING, March 7, 2011 (GLOBE NEWSWIRE) -- China Fire & Security Group, Inc.announced today that the Special Committee of its Board of Directors (the "Special Committee") has received a non-binding letter from a leading global private equity firm (the "PE"), pursuant to which the PE proposes to acquire all of the outstanding shares of common stock of China Fire in cash at a price which represents a premium over the current stock price (the "Proposal"). According to the Proposal, the PE is willing to structure the proposed acquisition to allow the existing members of the Company's management to exchange all or part of their equity interests in the Company into equity securities in the post-acquisition company. The Proposal is subject to certain conditions, including, among other things, successful completion of due diligence to the satisfaction of the PE.

Third quarter 2010 Results

• Revenues were relatively unchanged at $24.8 million, as compared to the same period in 2009.

• Gross margin for the third quarter of 2010 was 50.5%, compared to a gross margin of 56.4% for the third quarter of 2009. The decrease in the Company's gross margin was mainly due to a change in the contract mix during the period.

• The Company's operating income for the third quarter of 2010 was $6.8 million, compared to $8.5 million for the same period last year.

• GAAP net income for the third quarter of 2010 was $5.9 million, compared to $7.6 million for the same period of 2009, representing an annual decrease of 21.4%. 

• Fully diluted EPS was $0.20 in the third quarter of 2010, versus $0.27 in the third quarter of 2009.

Mr. Brian Lin, chief executive officer of China Fire, commented, "In recent months, the iron & steel industry witnessed lower steel prices and, at the same time, a significant increase in production costs. As such, our core customers – China's mid-to-large iron & steel manufacturers – have experienced a squeeze in profits and cash flows. In light of this, we have also adopted cautious measures to preserve our cash by slowing some of our ongoing projects in order to control expenditures."

Presentation at 2010 Rodman & Renshaw Annual Global Investor Conference.

Financial Outlook for 2010

Based on the Company's current backlog and contract pipeline, for full year 2010,

• The Company now expects to achieve revenues of $118 million to $125 million, representing an annual top line growth of 45%-54%.
  
• The Company estimates that GAAP net income will be in the range of $34 million to $36 million, or EPS of $1.20 to $1.26 based on fully diluted shares outstanding of 28.5 million, representing an annual bottom line growth of 39% - 47%. This is in comparison to the previous targets of revenue of $135 million to $145 million, net income of $47 million to $49 million and EPS of $1.65 to $1.70.

Mr. Lin concluded, "We believe that the current setback within China's iron and steel industry is only a short-term challenge to our business. We find it prudent to revise our 2010 outlook accordingly. We remain fully confident in our ability to grow our business and expand our market share in different verticals. The long-term $2 billion market potential of retrofitting opportunities within the iron and steel industry has not changed, and in our view, we are well-positioned to capture tremendous business opportunities from the industry recovery and from China's industrialization process overall. As such, we believe that China Fire's current stock price level does not reflect the intrinsic value of our Company, and so we intend to actively implement our existing share buy-back plan of $10 million. We are confident that by leveraging our proprietary products, leading brand name and strong track record, China Fire will continue to gain significant market shares from the iron and steel, power generation, chemical, transportation and international markets."

Mr. Gangjin Li, chairman and chief executive officer of China Fire, commented, "In spite of lower than expected revenue in the fourth quarter of 2009, I am satisfied with our business momentum and with the groundwork that we laid out over the past year. Due to the larger than expected size and scope of the Wuhan Iron and Steel retrofitting project, we had a delay in the signing of the contract, from which we had projected a $10 million revenue contribution during the fourth quarter of 2009. The nature of our business as a total solution provider may occasionally result in unexpected changes in the recognition of certain large projects or contracts, thereby impacting our quarterly results. At this point, however, we have successfully signed this record-high contract, as announced earlier this year, and I am more enthusiastic than ever about China Fire's growth momentum in 2010."

"For the full year 2010, the Company reaffirms its revenues will grow between 66% and 78% to a range of $135 million to $145 million. Net income is estimated to grow 89% to 105% to a range of $47 million to $49 million, or $1.65 to $1.70 per diluted share."

Source: PR Newswire (March 16, 2010)

Mr. Brian Lin, Chief Executive Office of China Fire commented, 'I am very pleased with our second quarter results. The Chinese government's stimulus plan and the new amendment to the Fire Protection Law, which requires all fire protection products to pass compulsory product certification, has improved demand for our high quality systems, and increased bidding activities from our Tier-1 customers. With our greater and deeper expertise, we significantly improved our efficiency in the execution of large iron and steel projects and reached a new record high gross margin in the second quarter. Our backlog remains strong at $85 million at the end of June 2009, which provides extra confidence to our existing revenue forecast.'

China Fire & Security Group has Raised its FY09 EPS Forecast

Full Year Fiscal 2009 Guidance Ending December

	2009 Guidance	2008 Reported	Period Change
GAAP Revenue	$88 to $95 million	$69.1 Million	28% to 38%
GAAP EPS	$1.00 to $1.05	$0.88	13.6% to 19.3%

Source: PR Newswire (August 10, 2009)

'Supported by our strong new contract wins and record backlog, we remain confident about the business and the growth of the fire protection industry in China. In our view, the Chinese government's stimulus plan has shown early signs of success, as bidding activities at our Tier-1 customers continue to trend up, and we continue to benefit from the accelerated infrastructure upgrades across our targeted verticals. The recent sharp rise in CLAS's purchasing managers' index for China is another indicator that manufacturing in China is heading towards reacceleration. We believe we are well positioned to capture revenue opportunities arising from improving market conditions.

China Fire & Security Group has reaffirmed its previous guidance.

Full Year Fiscal 2009 Guidance Ending December

	2009 Guidance	2008 Reported	Period Change
GAAP Revenue	$88 to $95 million	$69.1 Million	28% to 38%
GAAP EPS	$0.93 to $1.00	$0.88	5.68% to 13.64%

Source: PR Newswire (May 11, 2009)

Guidance Report: 

 Despite general concerns of challenging times for the iron and steel industry, we are actually witnessing strong demand for our total solutions in this vertical, as some of our Tier-1 customers are receiving more government-subsidized funding, pickup in demand from the end of last year, and extra government support for consolidation. As China continues to invest in upgrading the country's infrastructure, we are seeing real spending initiated by the government in the iron and steel, nuclear, power, petrochemical, and transportation sectors. We believe that most of these infrastructure investments will directly benefit China Fire, as they all require fire protection products and services. As such, we continue to be excited with the growth prospects in our core iron and steel market, and we continue to command firm pricing for our total solutions. We also are excited with our success in winning sizeable contracts in the nuclear, power, petrochemical, and transportation verticals, as well as notable contract wins in the international market. We are delighted with our strong financial position, which includes a growing cash position, no debt, and healthy cash flows. We believe that we are in an excellent position to capture new revenue opportunities and benefit from strategic consolidation opportunities."

Full Year Fiscal 2009 Guidance Ending December

	2009 Guidance	2008 Reported	Period Change
GAAP Revenue	$88 to $95 million	$69.1 Million	28% to 38%
GAAP EPS	$0.93 to $1.00	$0.88	5.68% to 13.64%

Source: PR Newswire (March 11, 2009)