NANJING, China, March 11 /Xinhua-PRNewswire-FirstCall/ -- Ever-Glory International Group, Inc. (OTC Bulletin Board: EVGY) ("Ever-Glory"), a leading apparel manufacturer in the People’s Republic of China ("PRC"), announced its financial results for the fiscal year ended December 31, 2007.
Full Year 2007 Highlights
-- Total net sales increased 37.7% to $70.3 million
-- Gross profit increased 31.3% to $11.3 million
-- Operating income increased 30.7% to $7.3 million
-- Net income increased 34.4% to $6.8 million, or $0.94 per diluted share
-- Established state-of-the-art fabric testing center at new headquarters
-- Acquired Nanjing New-Tailun Garments Co., Ltd. and Nanjing Catch-Luck
Garments Co., Ltd., increasing production capacity to 9.0 million
garment pieces
-- Completed $2.0 million private debt financing
-- Completed 10-for-1 reverse stock split
-- In January 2008, signed agreement to launch the private-label LA GO GO
line of women’s apparel
Full Year 2007 Results
During the fiscal year ended December 31, 2007, net sales increased 37.7% to $70.3 million from $51.1 million in 2006. The increase in sales resulted from overall increases in sales to customers in Europe, the U.S., Japan and China, where sales grew 37%, 73%, 18% and 47%, respectively, from 2006.
"We concluded the 2007 fiscal year with a very strong finish, continuing to generate record revenues and profits," said Mr. Yihua Kang, Chairman and Chief Executive Officer of Ever-Glory. "We successfully integrated two important acquisitions, improving our in-house production capacity and expanding our opportunities for future growth. We enter 2008 in a solid financial position for the widescale launch of our domestic retail LA GO GO brand and have sufficient capacity to take on additional, larger orders from our expanding customer base."
Gross profit in 2007 increased 31.3% to $11.3 million from $8.6 million a year ago. Gross margin was 16.1% in 2007, compared to 16.9% in 2006. The slight decrease in margin was due to an increase in the amount of lower-margin orders accepted from major customers, as the Company sought to expand its business.
Operating expenses increased 32.2% to $4.0 million in 2007. This increase was primarily due to higher general and administrative expenses resulting from the purchase of new equipment and supplies for the Company’s new headquarters and new housing tax expenses, higher payroll expense resulting from an increase in staff for the Company’s business expansion and increased depreciation expense related to the completion of the new manufacturing facility. Operating expenses as a percentage of net sales were 5.7% in 2007, down from 5.9% in 2006, due to the benefits of scale.
Operating income for the 2007 fiscal year was $7.3 million, an increase of 30.7% from operating income of $5.6 million in 2006. Operating income as a percentage of sales was 10.4%, compared to 11.0% in 2006.
For the 2007 fiscal year, net income was $6.8 million, or $0.94 per fully diluted share, an increase of 34.4% from $5.0 million, or $0.44 per fully diluted share, in 2006, as the Company experienced greater revenue growth as a result of the acquisitions of New-Tailun and Catch-Luck. Earnings per share for both periods have been adjusted for a 10-for-1 reverse split effective December 3, 2007.
At the end of 2007, total annual production capacity was 9.0 million garment pieces, up from 7.0 million garment pieces at the end of 2006. The increase was related to the Company’s new factory and corporate headquarters in the Nanjing Jiangning Economic and Technological Development Zone in Nanjing, higher levels of outsourced production and the acquisitions of New-Tailun and Nanjing Catch-Luck.
Financial Condition
As of December 31, 2007, the company had $0.6 million in cash and cash equivalents, $9.5 million in working capital. The Company generated positive operating cash flow of $1.9 million during the year. As of December 31, 2007, stockholders’ equity stood at $19.9 million, up from $9.8 million on December 31, 2006.
Recent Events
In December 2007, the Company completed a 10-for-1 reverse stock split, bringing the total number of outstanding shares to approximately 11.4 million.
In January 2008, Ever-Glory launched its private-label LA GO GO brand, which provides stylish fashion and accessories to young, professional women.
Outlook for 2008
"As we head into 2008, we are working to make domestic growth in China a major part of our strategy and to launch the retail and wholesale distribution of our youth lifestyle and fashion products under our own brands in China," Mr. Kang said. "Our new LA GO GO brand is currently in the registration process and is positioned in the tremendous Chinese market of young women’s casual wear and fashions. We will set up our retail channels around the major developed cities in China through the assistance of our strategic partner, Shanghai La Chapelle Garments Co., Ltd., which has developed more than 360 retail outlets nationwide. We hope to move toward our goal of 60 stores by the end of this year."
Conference Call
The company will host a conference call at 9:00 a.m. EDT on, Wednesday, March 12, 2008, to discuss its financial results for the fiscal year ended December 31, 2007. To participate in the event by telephone, please dial 888-419-5570 five to 10 minutes prior to the start time (to allow time for registration) and reference passcode 89822572. International callers should dial 617-896-9871. The conference call will be broadcast live over the Internet and can be accessed by all interested parties at the Company’s Web site, http://www.everglorygroup.com . To listen to the call, please visit the site at least 15 minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live webcast, it will be archived using the same link for 90 days. A digital replay of the call will also be available on Wednesday, March 12 at approximately 11:00 a.m. EDT, through Wednesday, March 19 at midnight EDT. Dial 888-286-8010 and enter the conference ID number 28193448. International callers should dial 617-801-6888 and enter the same conference ID number.
About Ever-Glory International Group, Inc.
Ever-Glory International Group (OTC Bulletin Board: EVGY) is a U.S. publicly-traded company engaged in international garment manufacturing for well-known middle- to high-grade casual, outer, and sportswear brands. The company’s U.S. headquarters is based in Los Angeles, CA, although Ever-Glory also has three subsidiaries, Goldenway Nanjing Garments Co. Ltd., Nanjing New-Tailun Garments Co, Ltd. and Nanjing Catch-Luck Garments Co., Ltd. Ever-Glory has strategic business partners in countries including China, Japan, Europe and the U.S. The company cooperates with well-respected garment retail chains. In 2007, 57% of the company’s total sales revenue came from customers in Europe, 16% from Japan, 21% from the United States and 6% from within China. For more information about Ever-Glory International Group, please visit: http://www.everglorygroup.com .
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This press release contains certain "forward-looking statements," as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management’s current expectations. Such factors include, but are not limited to the company’s ability to accurately complete product orders, coordinate product design with its customers, ability to expand and grow its distribution channels, political and economic factors in the People’s Republic of China, the company’s ability to find attractive acquisition candidates, dependence on a limited number of larger customers and other factors detailed from time to time in the Company’s filings with the United States Securities and Exchange Commission and other regulatory authorities. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
- FINANCIAL TABLES FOLLOW -
EVER-GLORY INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
AUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
2007 2006
Restated
CURRENT ASSETS
Cash and cash equivalents $641,739 $897,093
Accounts receivable 13,035,299 7,881,131
Accounts receivable - related parties
under common control 158,235 2,463,857
Inventories 1,897,023 1,216,251
Other receivables and prepaid expenses 150,855 153,216
Advances on inventory purchase -
related parties under common control 2,568,040 --
Deferred financing costs 191,995 --
Total Current Assets 18,643,186 12,611,548
LAND USE RIGHT, NET 2,729,183 2,521,109
PROPERTY AND EQUIPMENT, NET 12,140,903 13,301,164
TOTAL ASSETS $33,513,272 $28,433,821
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable $1,796,655 $1,264,200
Accounts payable - related parties
under common control 245,589 2,005,323
Other payables - related party
under common control 650,000 2,621,130
Other payables and accrued
liabilities 1,069,682 3,742,088
Value added tax payable 378,898 239,738
Income tax payable and other
taxes payable 146,226 61,930
Bank loans 4,798,500 4,482,180
Convertible notes payable,
(net of unamortized
discount of $1,974,497) 25,503 --
Total Current Liabilities 9,111,053 14,416,589
COMMITMENTS AND CONTINGENCIES -- --
LONG-TERM LIABILITIES
Loan from related party 4,474,985 4,238,526
TOTAL LIABILITIES 13,586,038 18,655,115
STOCKHOLDERS’ EQUITY
Preferred stock ($.001 par value,
authorized 5,000,000 shares, no
shares issued and outstanding) -- --
Series A Convertible Preferred Stock
($.001 par value, authorized 10,000
shares, 0 and 789 shares issued and
outstanding as of December 31, 2007
and 2006, respectively) -- 1
Common stock ($.001 par value,
authorized 50,000,000 shares,
11,379,309 and 1,997,203 shares issued
and outstanding as of December 31,
2007 and 2006, respectively) 11,379 1,997
Common stock to be issued for acquisition
(0 and 2,083,333 shares as of December
31, 2007 and 2006, respectively) -- 2,083
Additional paid-in capital 2,154,368 161,666
Retained earnings 12,247,748 6,260,518
Statutory reserve 3,437,379 2,659,360
Accumulated other comprehensive
income 2,076,360 693,081
Total Stockholders’ Equity 19,927,234 9,778,706
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY $33,513,272 $28,433,821
EVER-GLORY INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
AUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006(1)
2007 2006
Restated
NET SALES
To related parties under common
control $1,155,998 $479,004
To third parties 69,179,385 50,586,245
Total net sales 70,335,383 51,065,249
COST OF SALES
From related parties under common
control 995,398 420,756
From third parties 58,030,867 42,028,172
Total cost of sales 59,026,265 42,448,928
GROSS PROFIT 11,309,118 8,616,321
OPERATING EXPENSES
Selling expenses 593,570 726,574
General and administrative expenses 3,381,108 2,280,155
Total Operating Expenses 3,974,678 3,006,729
INCOME FROM OPERATIONS 7,334,440 5,609,592
OTHER INCOME (EXPENSES)
Interest income 174,036 7,309
Interest expenses (424,448) (285,876)
Other income 25,708 16,694
Other expenses (91,805) (439)
Total Other Income (Expenses) (316,509) (262,312)
INCOME BEFORE INCOME TAX EXPENSE 7,017,931 5,347,280
INCOME TAX EXPENSE (252,682) (312,010)
NET INCOME 6,765,249 5,035,270
OTHER COMPREHENSIVE INCOME
Foreign currency translation gain 1,383,279 657,375
COMPREHENSIVE INCOME $8,148,528 $5,692,645
Net income per share - basic $0.99 $0.93
Net income per share - diluted $0.94 $0.44
Weighted average number of
shares outstanding during
the year - basic 6,865,482 5,388,201
Weighted average number of
shares outstanding during
the year - diluted 7,244,062 11,379,700
(1) Earnings per share and weighted average shares for all periods
reflect a 10-for-1 reverse split, which was effective on November 30,
2007.
EVER-GLORY INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
AUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2007 AND 2006
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $6,765,249 $5,035,270
Adjusted to reconcile net income
to cash provided by operating
activities:
Depreciation and amortization 876,094 493,229
Amortization of discount on
convertible notes 25,503 --
Amortization of deferred financing costs 50,525 --
Loss on disposal of fixed assets 901 14,396
Changes in operating assets and
liabilities
Accounts receivable (3,798,964) (8,034,568)
Accounts receivable - related parties
under common control 1,601,978 1,789,187
Inventories (571,377) (197,690)
Other receivables and prepaid expenses 11,383 (61,843)
Advance on inventory
purchase to related party
under common control (1,668,357) --
Accounts payable 425,682 1,111,099
Accounts payable - related parties
under common control (1,844,649) 583,214
Other payables and accrued liabilities 143,002 2,005,057
Payables to related parties
under common control (334,672) 715,243
Value added tax payables 117,401 176,233
Income tax and other tax payables 76,759 121,032
Net cash provided by
operating activities 1,876,458 3,749,859
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of New Tailun (2,000,000) --
Purchase of property and equipment (3,127,321) (9,300,029)
Proceeds from sale of equipment 431,859 --
Net cash used in investing activities (4,695,462) (9,300,029)
CASH FLOWS FROM FINANCING ACTIVITIES
Contribution by stockholder -- 900,000
Proceeds from bank loan 8,558,550 4,389,210
Repayment of bank loan (8,558,550) (627,030)
Net proceeds from convertible notes 1,757,480 --
Net cash provided by
financing activities 1,757,480 4,662,180
EFFECT OF EXCHANGE RATE ON CASH 806,170 311,413
NET DECREASE IN CASH AND CASH EQUIVALENTS (255,354) (576,577)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 897,093 1,473,670
CASH AND CASH EQUIVALENTS AT END OF YEAR 641,739 897,093
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for:
Interest expense $162,156 $50,017
Income taxes $199,071 $357,280