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Ever-Glory Reports 2007 Full Year Financial ResultsAdd: 2008 Update: 2009/03/21 |
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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 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:
Ever-Glory 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 Ever-Glory International Group, Inc.
Source: PR Newswire (March 11, 2008 - 4:00 PM EDT)
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