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Ever-Glory Reports 2007 Full Year Financial Results

Add: 2008   Update: 2009/03/21

NANJING, China, March 11 /Xinhua-PRNewswire-FirstCall/ -- International Group, Inc. (OTC Bulletin Board: EVGY) (''), 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 . '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, 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 International Group, Inc.

 

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 also has three subsidiaries, Goldenway Nanjing Garments Co. Ltd., Nanjing New- Tailun Garments Co, Ltd. and Nanjing Catch-Luck Garments Co., Ltd. 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 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 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 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 篓C related parties 245,589 2,005,323

Other payables - related party 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 $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 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 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 (1,668,357) --

Accounts payable 425,682 1,111,099

Accounts payable - related companies (1,844,649) 583,214

Other payables and accrued liabilities 143,002 2,005,057

Payables to related parties (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

 

 

 

 

For more information, please contact:

 

International Group, Inc

Emily Guo, Chief

Financial Executive

Tel: +86-25-5209-6222

Email: emily@ever-glory.com

 

CCG Elite Investor Relations

Crocker Coulson, President

Tel: +1-646-213-1915 (New York)

Email: crocker.coulson@ccgir.com

 

SOURCE International Group, Inc.

 

 

 

Source: PR Newswire (March 11, 2008 - 4:00 PM EDT)

 

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