Document_and_Entity_Informatio
Document and Entity Information | 12 Months Ended |
Dec. 31, 2014 | |
Document Information [Line Items] | |
Document Type | 20-F |
Amendment Flag | FALSE |
Document Period End Date | 31-Dec-14 |
Document Fiscal Year Focus | 2014 |
Document Fiscal Period Focus | FY |
Trading Symbol | DQ |
Entity Registrant Name | DAQO NEW ENERGY CORP. |
Entity Central Index Key | 1477641 |
Current Fiscal Year End Date | -19 |
Entity Well-known Seasoned Issuer | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Common Stock, Shares Outstanding | 223,577,853 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets: | ||
Cash and cash equivalents | $7,068,483 | $7,831,084 |
Restricted cash | 22,169,236 | 8,826,110 |
Accounts receivable, net of allowance for doubtful accounts of $7,160,782 and $3,189,110 as of December 31, 2013 and 2014 | 8,714,261 | 9,909,662 |
Note receivables | 50,239,886 | 15,929,627 |
Prepaid expenses and other current assets | 12,835,869 | 23,870,690 |
Advances to suppliers | 1,352,747 | 860,546 |
Inventories | 9,581,784 | 10,500,256 |
Amount due from related parties | 9,986,968 | 13,416,452 |
Total current assets | 121,949,234 | 91,144,427 |
Property, plant and equipment, net | 559,006,119 | 488,504,183 |
Prepaid land use rights | 29,006,693 | 30,377,493 |
Other non-current assets | 169,173 | 173,440 |
TOTAL ASSETS | 710,131,219 | 610,199,543 |
Current liabilities: | ||
Short-term bank borrowings, including current portion of long-term bank borrowings | 159,803,876 | 118,870,857 |
Accounts payable | 16,784,156 | 17,695,490 |
Note payables | 48,941,807 | 1,573,646 |
Advances from customers | 7,308,535 | 13,217,775 |
Payables for purchases of property, plant and equipment | 64,575,527 | 51,766,695 |
Accrued expenses and other current liabilities | 8,955,663 | 7,461,621 |
Amount due to related parties | 89,698,151 | 88,537,790 |
Total current liabilities | 396,067,715 | 299,123,874 |
Long-term bank borrowings | 77,336,160 | 134,870,287 |
Advance from customers | 3,401,667 | 11,924,121 |
Deferred government subsidies | 26,557,607 | 26,954,700 |
Total liabilities | 503,363,149 | 472,872,982 |
Commitments and contingencies (Note 17) | ||
Daqo New Energy Corp. shareholders' equity: | ||
Ordinary shares; $0.0001 per value 500,000,000 shares authorized as of December 31, 2013 and 2014; 175,714,103 and 225,864,103 shares issued as of December 31, 2013 and 2014, respectively and 173,427,853 and 223,577,853 shares outstanding as of December 31, 2013 and 2014, respectively | 22,358 | 17,343 |
Additional paid in capital | 203,125,494 | 146,676,163 |
Accumulated losses | -16,018,293 | -32,667,469 |
Accumulated other comprehensive income | 20,037,183 | 23,699,196 |
Treasury Stock, at cost (2,286,250 and 2,286,250 shares as of December 31, 2013 and 2014, respectively) | -398,672 | -398,672 |
Total Daqo New Energy Corp. shareholders' equity | 206,768,070 | 137,326,561 |
Total equity | 206,768,070 | 137,326,561 |
TOTAL LIABILITIES AND EQUITY | $710,131,219 | $610,199,543 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Accounts receivable, allowance for doubtful accounts | $3,189,110 | $7,160,782 |
Ordinary shares, par value | $0.00 | $0.00 |
Ordinary shares, shares authorized | 500,000,000 | 500,000,000 |
Ordinary shares, shares issued | 225,864,103 | 175,714,103 |
Ordinary shares, shares outstanding | 223,577,853 | 173,427,853 |
Treasury Stock, shares | 2,286,250 | 2,286,250 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Revenues | |||
Revenues | $182,571,852 | $108,999,805 | $86,858,401 |
Cost of revenues | |||
Total cost of revenues | -139,308,511 | -135,103,408 | -124,290,384 |
Gross (loss) profit | 43,263,341 | -26,103,603 | -37,431,983 |
Operating (expenses) income: | |||
Selling, general and administrative expenses | -10,293,851 | -18,132,515 | -12,930,198 |
Research and development expenses | -1,486,978 | -3,391,012 | -4,130,533 |
Other operating income, net | 552,444 | 5,420,777 | 8,729,301 |
Long-lived asset impairment | -158,424,827 | -42,754,481 | |
Total operating expenses | -11,228,385 | -174,527,577 | -51,085,911 |
(Loss) income from operations | 32,034,956 | -200,631,180 | -88,517,894 |
Interest expense | -15,654,106 | -19,349,190 | -15,408,023 |
Interest income | 324,118 | 149,752 | 990,117 |
Exchange (loss) gain | -55,792 | 11,875 | -55,800 |
(Loss) income before income taxes | 16,649,176 | -219,818,743 | -102,991,600 |
Income tax expense | -1,271,765 | -10,253,587 | |
Net (loss) income from continuing operations | 16,649,176 | -221,090,508 | -113,245,187 |
Total (loss) discontinued operations | -2,392,228 | ||
Net (loss) income | 16,649,176 | -221,090,508 | -115,637,415 |
Net (loss) income attributable to non-controlling interest | -150,147,024 | -3,708,474 | |
Net (loss) income attributable to Daqo New Energy Corp. ordinary shareholders | 16,649,176 | -70,943,484 | -111,928,941 |
NET (LOSS) EARNINGS PER ORDINARY SHARE | |||
Continuing operations | $0.08 | ($0.41) | ($0.63) |
Discontinued operations | ($0.01) | ||
Basic-ordinary shares | $0.08 | ($0.41) | ($0.64) |
Continuing operations | $0.08 | ($0.41) | ($0.63) |
Discontinued operations | ($0.01) | ||
Diluted-ordinary shares | $0.08 | ($0.41) | ($0.64) |
ORDINARY SHARES USED IN CALCULATING EARNINGS PER ORDINARY SHARE | |||
Basic-ordinary shares | 206,349,976 | 173,068,420 | 175,067,343 |
Diluted-diluted shares | 211,353,643 | 173,068,420 | 175,067,343 |
Products [Member] | Third parties [Member] | |||
Revenues | |||
Revenues | 158,256,486 | 93,710,464 | 81,929,050 |
Products [Member] | Related parties [Member] | |||
Revenues | |||
Revenues | 15,840,860 | 13,471,866 | 2,799,427 |
Service Fee [Member] | Third parties [Member] | |||
Revenues | |||
Revenues | 5,165,254 | 1,817,475 | 2,129,924 |
Service Fee [Member] | Related parties [Member] | |||
Revenues | |||
Revenues | $3,309,252 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME [Abstract] | |||
Net (loss) income | $16,649,176 | ($221,090,508) | ($115,637,415) |
Other comprehensive income: | |||
Foreign currency translation adjustments | -3,662,013 | 5,543,033 | 3,838,790 |
Total other comprehensive income | -3,662,013 | 5,543,033 | 3,838,790 |
Comprehensive (loss) income | 12,987,163 | -215,547,475 | -111,798,625 |
Comprehensive (loss) income attributable to noncontrolling interest | -148,752,181 | -2,075,866 | |
Comprehensive (loss) income attributable to Daqo New Energy Corp. shareholders | $12,987,163 | ($66,795,294) | ($109,722,759) |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $) | Total | Ordinary shares [Member] | Treasury stock [Member] | Additional paid in capital [Member] | Accumulated Loss [Member] | Accumulated other comprehensive income [Member] | Noncontrolling interest [Member] |
Balance at Dec. 31, 2011 | $452,026,227 | $17,571 | $142,511,581 | $150,204,956 | $18,444,123 | $140,847,996 | |
Balance, shares at Dec. 31, 2011 | 175,714,103 | ||||||
Net (loss) income | -115,637,415 | -111,928,941 | -3,708,474 | ||||
Other comprehensive income | 3,838,790 | 2,206,182 | 1,632,608 | ||||
Share-based compensation | 2,249,834 | 2,249,834 | |||||
Stock Repurchases | -500,724 | -283 | -494,928 | -5,513 | |||
Stock Repurchases, shares | -2,836,670 | ||||||
Disposal of Nanjing Daqo New Energy Co., Ltd | -1,099,299 | -1,099,299 | |||||
Balance at Dec. 31, 2012 | 340,877,413 | 17,288 | -494,928 | 144,755,902 | 38,276,015 | 19,551,006 | 138,772,130 |
Balance, shares at Dec. 31, 2012 | 172,877,433 | ||||||
Net (loss) income | -221,090,508 | -70,943,484 | -150,147,024 | ||||
Other comprehensive income | 5,543,033 | 4,148,190 | 1,394,843 | ||||
Share-based compensation | 1,881,401 | 1,881,401 | |||||
Deconsolidation of Daqo New Material Co., Ltd. | 9,980,051 | 9,980,051 | |||||
Options Exercised | 135,171 | 55 | 96,256 | 38,860 | |||
Options Exercised, shares | 550,420 | ||||||
Balance at Dec. 31, 2013 | 137,326,561 | 17,343 | -398,672 | 146,676,163 | -32,667,469 | 23,699,196 | |
Balance, shares at Dec. 31, 2013 | 173,427,853 | ||||||
Net (loss) income | 16,649,176 | 16,649,176 | |||||
Other comprehensive income | -3,662,013 | -3,662,013 | |||||
Share-based compensation | 1,792,819 | 1,792,819 | |||||
Follow-on equity offering, net of issuance costs | 54,624,447 | 5,000 | 54,619,447 | ||||
Follow-on equity offering, net of issuance costs, shares | 50,000,000 | ||||||
Options Exercised | 37,080 | 15 | 37,065 | ||||
Options Exercised, shares | 150,000 | ||||||
Balance at Dec. 31, 2014 | $206,768,070 | $22,358 | ($398,672) | $203,125,494 | ($16,018,293) | $20,037,183 | |
Balance, shares at Dec. 31, 2014 | 223,577,853 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Operating activities: | |||
Net (loss) income | $16,649,176 | ($221,090,508) | ($115,637,415) |
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | |||
Long-lived assets impairment | 158,424,827 | 42,754,481 | |
Share-based compensation | 1,792,819 | 1,881,401 | 2,249,834 |
Inventory write-down | 175,568 | 29,905,734 | 14,821,620 |
Allowance for doubtful accounts | -3,823,744 | 5,482,019 | 359,733 |
Depreciation of property, plant and equipment | 28,007,943 | 52,250,595 | 37,371,791 |
Gain on disposition of Nanjing Daqo | -1,099,299 | ||
Loss on disposal of Property Plant and Equipment | 314,728 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | 4,775,333 | 12,431,119 | -10,295,169 |
Note receivables | -34,702,180 | -11,496,473 | -2,633,764 |
Prepaid expenses and other current assets | 10,217,835 | 29,616 | -15,042,913 |
Advances to suppliers | -513,373 | -122,753 | 2,098,761 |
Inventories | 484,562 | -25,270,470 | -6,745,803 |
Amount due from related parties | 2,193,604 | -6,853,965 | 8,418,601 |
Prepaid land use rights | 623,413 | 264,549 | -841,195 |
Other non-current assets | 229,688 | 4,513,271 | 4,645,277 |
Accounts payable | -475,966 | 5,349,428 | 3,249,172 |
Note payables | 31,992,814 | -19,760,436 | 16,776,966 |
Accrued expenses and other current liabilities | 1,677,622 | 468,946 | -150,005 |
Income tax payable | -160,480 | -8,052,589 | |
Advances from customers | -13,813,120 | -4,254,342 | -8,794,585 |
Amount due to related parties | -453,075 | -415,960 | 14,047,531 |
Deferred government subsidies | 266,082 | 482,563 | 618,958 |
Deferred tax assets | 1,415,502 | 11,572,778 | |
Net cash (used in) provided by operating activities | 45,619,729 | -16,525,817 | -10,307,234 |
Investing activities: | |||
Purchases of property, plant and equipment | -77,028,755 | -32,504,507 | -105,659,395 |
(Decrease)/Increase in restricted cash | -13,560,277 | 1,823,635 | 80,435 |
Proceeds from disposition of Nanjing Daqo | 2,656,490 | ||
Decrease in cash on deconsolidation of Daqo New Material | -15,241 | ||
Net cash used in investing activities | -90,589,032 | -30,696,113 | -102,922,470 |
Financing activities: | |||
Proceeds from related parties loans | 275,134,122 | 157,271,287 | 1,645,923 |
Repayment of related parties loans | -275,088,560 | -69,386,568 | |
Proceeds from bank borrowings | 176,114,553 | 74,551,991 | 129,572,090 |
Repayment of bank borrowings | -186,549,888 | -113,745,197 | -103,573,459 |
Purchase and retirement of treasury shares | -500,724 | ||
Proceeds from options exercised | 37,080 | 135,171 | |
Proceeds from follow-on equity offering | 58,000,000 | ||
Insurance cost for follow-on equity offering | -3,375,553 | ||
Net cash provided by financing activities | 44,271,754 | 48,826,684 | 27,143,830 |
Effect of exchange rate changes on cash and cash equivalents | -65,052 | -452,694 | 67,800 |
Net (decrease) increase in cash and cash equivalents | -762,601 | 1,152,060 | -86,018,074 |
Cash and cash equivalents at the beginning of the year | 7,831,084 | 6,679,024 | 92,697,098 |
Cash and cash equivalents at the end of the year | 7,068,483 | 7,831,084 | 6,679,024 |
Supplemental disclosure of cash flow information: | |||
Interest paid | 17,771,457 | 19,657,071 | 15,555,495 |
Income taxes paid | 8,052,589 | ||
Disposition and Deconsolidation: | |||
Less: cash and cash equivalents disposed | -15,241 | ||
Net cash inflow on the disposition | 2,656,490 | ||
Supplemental schedule of non-cash investing activities: | |||
Purchases of property, plant and equipment included in payable | 79,989,590 | 51,766,695 | 46,594,935 |
Purchases of property, plant and equipment included in amount due to related parties | 5,651,053 | 940,135 | 5,678,393 |
Nanjing Daqo [Member] | |||
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | |||
Gain on disposition of Nanjing Daqo | -1,099,299 | ||
Investing activities: | |||
Proceeds from disposition of Nanjing Daqo | 2,656,490 | ||
Decrease in cash on deconsolidation of Daqo New Material | -2,122,167 | ||
Disposition and Deconsolidation: | |||
Total consideration | 9,888,742 | ||
Less: amount due from Daqo Group | -5,110,085 | ||
Total cash consideration received | 4,778,657 | ||
Less: cash and cash equivalents disposed | -2,122,167 | ||
Net cash inflow on the disposition | $2,656,490 |
ORGANIZATION_AND_PRINCIPAL_ACT
ORGANIZATION AND PRINCIPAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2014 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES [Abstract] | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. ORGANIZATION AND PRINCIPAL ACTIVITIES |
The consolidated financial statements include the financial statements of Daqo New Energy Corp. (the “Company”), its wholly owned subsidiaries, Chongqing Daqo New Energy Co., Ltd. (“Chongqing Daqo”), Nanjing Daqo New Energy Co., Ltd. (“Nanjing Daqo”) (which was disposed to Daqo Group Co., Ltd. ("Daqo Group") on September 28, 2012), Xinjiang Daqo New Energy Co., Ltd (“Xinjiang Daqo”), Daqo Solar Energy North America (“Daqo America”) (which was liquidated in 2013) and Daqo New Energy Holdings (Canada) Ltd.(“Daqo Canada”) (which was liquidated in 2013) and its consolidated variable interest entity (“VIE”) Daqo New Material Co., Ltd. (“Daqo New Material”) (which was deconsolidated on December 31, 2013) (collectively, the “Group”). | |
The Company was incorporated on November 22, 2007 in the Cayman Islands. Chongqing Daqo, Nanjing Daqo and Xinjiang Daqo were incorporated by the Company on January 14, 2008, December 20, 2007 and February 22, 2011, respectively, in the Peoples' Republic of China (“PRC”). Daqo America was incorporated by the Company in January 2009, in California, USA. Daqo Canada was incorporated by the Company in April 2011, in Hamilton, Ontario, Canada. | |
Daqo New Material and the Company were under common control by Daqo New Material's ultimate shareholders prior to November 11, 2009. Daqo New Material was established by Daqo Group, an affiliate of the Company on November 16, 2006, for the primary purpose of developing a photovoltaic business. Daqo New Material's activities included acquiring land use rights and constructing certain polysilicon production infrastructure, including buildings and production machinery and equipment. Chongqing Daqo acquired additional machinery and equipment that are used in connection with Daqo New Material's land and production infrastructure. | |
Subsequent to its establishment, Chongqing Daqo entered into a lease agreement with Daqo New Material to rent all of Daqo New Material's land, production infrastructure and machinery and equipment for the Group's polysilicon production. The lease period is from July 1, 2008 to December 31, 2013, with monthly lease payments that have been renegotiated periodically and are eliminated in consolidation. The lease agreement also provided that if Daqo New Material transferred the ownership of the leased assets to any third party, the lease agreement would remain effective and enforceable against the new owner. One month before the expiry of the lease period, Chongqing Daqo had the option to renew the lease on the same terms and conditions for an additional five-year periods. Furthermore, Chongqing Daqo has the option to purchase, or to designate any person to purchase, the leased assets at the then fair value at any time during the lease period or within one year following the lease period, if permitted by the PRC laws and regulations. If Daqo New Material desires to transfer the ownership of the leased assets to a third party, Chongqing Daqo has the right of first refusal to acquire the leased assets under the same conditions. If the leased assets are transferred to a third party, the lease agreement will remain effective and enforceable against the new owner. | |
Because the aggregate value of the monthly rental payments that Chongqing Daqo is contractually obligated to make to Daqo New Material represents the majority of the value of Daqo New Material's assets, Chongqing Daqo has the majority of investment risk in Daqo New Material. Further, the Group has concluded that the arrangement results in Chongqing Daqo providing an implicit guarantee to protect Daqo Group from absorbing losses incurred by Daqo New Material, thus Daqo New Material is considered to be a variable interest entity of Chongqing Daqo. Furthermore, the operating activities of Daqo New Material are most closely associated with Chongqing Daqo and the management of Chongqing Daqo also acts as the management of Daqo New Material. Based on these factors, Chongqing Daqo has the power to control Daqo New Material and is considered the primary beneficiary of Daqo New Material. The assets and liabilities of Daqo New Material are consolidated at historical cost given they were held by entities under common control at the time of the lease agreement. Daqo Group's total equity interests in Daqo New Material are presented as a noncontrolling interest. | |
On December 31, 2013, Chongqing Daqo and Daqo New Material terminated the lease agreement. As a result, the Company deconsolidated Daqo New Material on December 31, 2013. . | |
In the periods presented, the Group manufactured and sold polysilicon and wafers through Chongqing Daqo and Xinjiang Daqo, and sold modules through Nanjing Daqo before September 28, 2012 when Nanjing Daqo was sold to the Daqo Group. | |
SUMMARY_OF_PRINCIPAL_ACCOUNTIN
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES [Abstract] | |||||||||||||
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | ||||||||||||
(a) Basis of presentation | |||||||||||||
The consolidated financial statements of the Group have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). | |||||||||||||
The accompanying consolidated financial statements have been prepared assuming that the Group will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Group's ability to generate cash flows from operations, and the Group's ability to arrange adequate financing arrangements, including the renewal or rollover of its bank borrowings, to support its working capital requirements. | |||||||||||||
As of December 31, 2014, the Group's current liabilities exceed its current assets by $274,118,480. While the Group had cash and cash equivalents of $ 7,068,483, and short-term bank borrowings of $ 90,443,007 will be due within one year. The current portion of long-term bank borrowings amounting to $ 69,360,869 is restricted to purchase fixed assets and required to be paid off upon due dates. Additionally, the Group has capital commitment of $20.4 million to be fulfilled in the next twelve months. | |||||||||||||
However, the Group regards the going concern assumption as appropriate considering the following plans and actions: | |||||||||||||
1. On March 6, 2015, the Group obtained a letter of financial support from Daqo Group which has committed to provide sufficient financial support to the Group to ensure the Group has the funds required to satisfy its obligations as they come due in the normal course during the twelve months ending December 31, 2015. Further, the support letter provides that Daqo Group will not require the Group to pay the amount owed to the Daqo Group and subsidiaries of Daqo Group, Daqo Solar, Daqo New Material and Xinjiang Daqo Investment. | |||||||||||||
2. In February 2015, the Group has obtained approximately $28.0 million through follow-on equity offering. | |||||||||||||
3. For the first time since 2012, the Group generated net income and positive cash flow from operations in 2014 amounting to $16.7 million and $45.6 million, respectively. | |||||||||||||
4. The Group has or is in the process of taking a number of cost reduction initiatives, including the new hydrochlorination system, technology improvement and polysilicon capacity expansion in Xinjiang. | |||||||||||||
5. The Group has performed a review of its cash flow forecasts for the twelve month period ending December 31, 2015, and believes that its operating cash flow will be positive during the twelve month period ending December 31, 2015. | |||||||||||||
6. As of March 31, 2015, the Company successfully rolled over, renewed or replaced with new loans by existing creditors totaling $30.6 million. While there can be no assurance, management believes they will be able to roll over or renew substantially all of the $90.4 million of short term loans outstanding as of December 31, 2014. | |||||||||||||
Based on the above factors, management believes that adequate sources of liquidity will exist to fund the Group's working capital and capital expenditures requirements, and to meet its short term debt obligations, other liabilities and commitments as they become due. | |||||||||||||
(b) Basis of consolidations | |||||||||||||
The consolidated financial statements include the financial statements of the Group. All intercompany transactions and balances have been eliminated on consolidation. | |||||||||||||
(c) Use of estimates | |||||||||||||
The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Management has made significant estimates in a variety of areas, including but not limited to allowance for doubtful accounts, inventories valuation, useful lives and residual values of long-lived assets, impairment for long lived assets, consolidation of Daqo New Material, valuation allowances for deferred tax assets, interest capitalization, warranty accrual and certain assumptions used in the computation of share-based compensation and related forfeiture rates. The Group revised the estimates of expected useful lives of property, plant and equipment on January 1, 2014, and please refers to Note 2 (i) for details. | |||||||||||||
(d) Concentration of credit risk | |||||||||||||
Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, accounts receivable and notes receivable. | |||||||||||||
The Group places its cash and cash equivalents in various financial institutions in the PRC. The Group believes that no significant credit risk exists as these banks are principally government-owned financial institutions with high credit ratings. | |||||||||||||
Accounts receivable represent those receivables derived in the ordinary course of business. The Group conducts credit evaluations of customers to whom credit terms are extended. The Group establishes an allowance for doubtful accounts mainly based on aging of the receivables and other factors surrounding the credit risk of specific customers. The allowance for doubtful accounts is $7,160,782 and $3,189,110 as of December 31, 2013 and 2014, respectively, based on the aging of the receivables and the Group's assessment of the customers' credit risk. | |||||||||||||
The following customers accounted for 10% or more of accounts receivable: | |||||||||||||
December 31, | |||||||||||||
Accounts | 2013 | 2014 | |||||||||||
receivable | |||||||||||||
Customer A | $ | 3,673,455 | $ | * | |||||||||
Customer B | $ | 1,225,831 | $ | * | |||||||||
Customer C | $ | 1,507,576 | $ | 2,213,393 | |||||||||
Customer D | $ | * | $ | 1,578,947 | |||||||||
Customer E | $ | * | $ | 1,330,145 | |||||||||
Customer F | $ | * | $ | 1,071,415 | |||||||||
* | Represents less than 10% | ||||||||||||
From time to time, certain accounts receivable balances are settled in the form of notes receivable. As of December 31, 2013 and 2014, notes receivable represents bank acceptance drafts that are non-interest bearing and due within 6 months. | |||||||||||||
Total sales of polysilicon to the Group's largest customers whose sales constitute over 10% of revenue accounted for approximately 25%, 30% and 23% of revenues for the years ended December 31, 2012, 2013 and 2014, respectively. The Group is substantially dependent upon the continued participation of these customers in order to maintain its total revenues. Significantly reducing the Group's dependence on these customers is likely to take time and there can be no guarantee that the Group will succeed in reducing that dependence. | |||||||||||||
Furthermore, all of the Group's long-term bank borrowings are guaranteed by Daqo Group, our related party, who has also committed to provide financial support to meet the Group's short term bank borrowings obligations, other liabilities and commitments as they become due (see Note 2(a)). The Group's access to credit is significantly reliant on Daqo Group's ability and willingness to continue to provide sufficient financial support. | |||||||||||||
(e) Cash and cash equivalents | |||||||||||||
Cash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal and use, and which have maturities of three months or less when purchased. | |||||||||||||
(f) Restricted cash | |||||||||||||
Restricted cash amounted to $8,826,110 and $22,169,236 as of December 31, 2013 and 2014, respectively, and are deposited in bank accounts as deposits for short-term letters of credit and notes issued by several banks for purchases of raw materials, plant and equipment. These deposits carry fixed interest rates and will be released when the related letters of credit or notes are settled by the Group. The Group considers the restricted cash balances as equivalent to an investment whose return of principal requires the satisfaction of conditions (i.e., settlement of letters of credit or notes) rather than a withdrawal demand. Therefore, deposits and withdrawals of principal balances in restricted cash accounts represent the creation or return of investment and, accordingly, the Group has presented such deposits and withdrawals as investing activities in the consolidated statements of cash flows. | |||||||||||||
(g) Allowance for Doubtful Accounts | |||||||||||||
The Group determines its allowance for doubtful accounts by actively monitoring the financial condition of its customers to determine the potential for any nonpayment of trade receivables. In determining its allowance for doubtful accounts, the Group also considers other economic factors, such as aging trends. The Group believes that its process of specific review of customers combined with overall analytical review provides an effective evaluation of ultimate collectability of trade receivables. | |||||||||||||
(h) Inventories | |||||||||||||
Inventories are stated at lower of cost or market. Costs are determined using weighted average costs. Costs comprise direct materials, direct labor and overhead costs incurred in bringing the inventories to their present location and condition. The Group writes down the cost of excess inventories to the estimated market value based on historical and forecasted demand. Estimated market value is measured as the estimated selling price of each class of inventory in the ordinary course of business less estimated costs of completion and disposal. The charges to inventory for the years ended December 31, 2012, 2013 and 2014 were $14,821,620, $ 29,905,734 and $175,568, respectively. | |||||||||||||
The Group has outsourced portions of its manufacturing process, including cutting ingots into wafers, and converting wafers into solar cells, to various third-party manufacturers. These outsourcing arrangements may or may not include transfer of title of the raw material inventory (ingots, wafers or cells) to the third-party manufacturers. | |||||||||||||
For those outsourcing arrangements in which title does not transfer, the Group maintains the inventory in the balance sheet as raw materials inventory while it is in physical possession of the third-party manufacturers. Upon receipt of the processed inventory from the third-party manufacturers, it is reclassified to work-in-progress inventory with the processing fee capitalized as cost of inventory. | |||||||||||||
For those outsourcing arrangements in which title (including risk of loss) does transfer to the third-party manufacturer, the Group is contractually obligated to repurchase the processed inventory. To accomplish this, it enters into raw material sales agreements and processed inventory purchase agreements simultaneously with the third-party manufacturer. In such instances, where they are, in substance tolling arrangements, the Group retains the inventory in the consolidated balance sheets while it is in the physical possession of the third-party manufacturer. The cash received from the third-party manufacturer is recorded as a current liability on the balance sheet rather than revenue or deferred revenue. Upon receipt of the processed inventory, it is reclassified from raw materials to work-in-progress inventory and the processing fee paid to the third-party manufacturer is added to inventory cost. Cash payments for outsourcing arrangements which require prepayment for repurchase of the processed inventory are classified as current assets on the balance sheet. If there is no legal right of offset established by these arrangements, the associated assets and liabilities are presented separately on the balance sheet until the processed inventory is returned to the Group. | |||||||||||||
(i) Property, plant and equipment | |||||||||||||
Property, plant and equipment are recorded at cost less accumulated depreciation. Depreciation is recognized on a straight-line basis over the following estimated useful lives: | |||||||||||||
Buildings and plant | 30 years | ||||||||||||
Machinery and equipment | 15 years | ||||||||||||
Furniture, fixtures and equipment | 3-5 years | ||||||||||||
Motor vehicles | 6 years | ||||||||||||
The Group reassesses the reasonableness of the estimates of useful lives and residual values of long-lived assets when events or changes in circumstances indicate that the useful lives and residual values of a major asset or a major category of assets may not be reasonable. Factors that the Group considers in deciding when to perform an analysis of useful lives and residual values of long-lived assets include, but are not limited to, significant variance of a business or product line in relation to expectations, significant deviation from industry or economic trends, and significant changes or planned changes in the use of the assets. The analysis will be performed at the asset or asset category with the reference to the assets' conditions, current technologies, market, and future plan of usage and the useful lives of major competitors. | |||||||||||||
In 2013, the Group decided to relocate a majority of Chongqing's polysilicon assets to Xinjiang. As part of the decision to make significant investment to relocate the assets, the Group revisited the expectation as to the useful lives of these assets. Based on this review, the Group determined that the condition of its major assets, having now been in operations for a meaningful percentage of the original estimated lives, were in better condition, than the original useful life expectation had predicted, accordingly, the Group engaged an independent valuation firm to assist in reassessing the remaining economic useful life of the polysilicon assets in both Chongqing and Xinjiang. The analysis was completed in the first quarter of 2014. | |||||||||||||
Therefore, the Group revised the estimates of expected useful lives of long-lived assets from January 1, 2014. The useful lives of machinery and equipment were expended from 10 years to 15 years, while buildings and structures were expended from 20 years to 30 years. No changes were made to furniture, fixtures and equipment, or motor vehicles. During the year ended December 31, 2014, the change in useful lives reduced depreciation expense of approximately $18.7 million, a majority of which was recorded in "Total cost of revenues", accordingly the impact on net income and basic net income per share is $18.7 million and $0.09 per ordinary share respectively. | |||||||||||||
Costs incurred on construction are capitalized and transferred to property, plant and equipment upon completion, at which time depreciation commences. | |||||||||||||
Interest expense incurred for construction of property, plant, and equipment is capitalized as part of the cost of such assets. The Group capitalizes interest to the extent that expenditures to construct an asset have occurred and interest costs have been incurred. Interest expense capitalized for the years ended December 31, 2012, 2013 and 2014 was $7,245,747, $nil and $1,960,259 respectively. | |||||||||||||
(j) Prepaid land use rights | |||||||||||||
All land in the PRC is owned by the PRC government. The PRC government, according to PRC law, may sell the land use rights for a specified period of time. The Group's land use rights in the PRC are stated at cost less recognized lease expenses. Lease expense is recognized over the term of the agreement on a straight-line basis. The Group recorded lease expenses of $958,558, $781,706 and $628,052, for the years ended December 31, 2012, 2013 and 2014, respectively. | |||||||||||||
(k) Impairment of long-lived assets | |||||||||||||
The Group evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Factors that the Group considers in deciding when to perform an impairment review include, but are not limited to significant under-performance of a business or product line in relation to expectations, significant negative industry or economic trends, and significant changes or planed changes in the use of the assets. An impairment analysis is performed at the lowest level of identifiable independent cash flows for an asset or asset group. The Group makes subjective judgments in determining the independent cash flows that can be related to a specific asset group based on the asset usage model and manufacturing capabilities. The Group measures the recoverability of assets that will continue to be used in the operations by comparing the carrying value of the asset group to the estimate of the related total future undiscounted cash flows. If an asset group's carrying value is not recoverable through the related undiscounted cash flows, the impairment loss is measured by comparing the difference between the asset group's carrying value and its fair value. The Group determines the fair value of an asset or asset group utilizing estimated future discounted cash flows and incorporates assumptions that it believes marketplace participants would utilize. | |||||||||||||
During each of the three year ended December 31, 2012, 2013 and 2014, the impairment changes were $42,754,481, $158,424,827 and $nil, respectively. The impairment loss incurred during the year ended December 31, 2012 was related to the impairment of long-lived assets of the wafer business, and was triggered primarily by the significant decrease in average selling prices for wafers that was experienced in 2012. The impairment loss incurred during the year ended December 31, 2013 was related to the buildings and plant of polysilicon asset group in Chongqing Daqo and Daqo New Material, and was triggered primarily by the significant decrease in average selling prices for polysilicon and the Group's decision of relocating significant machinery and equipment located at Chongqing Daqo to Xinjiang Daqo as a part of its expansion plan. | |||||||||||||
(l) Revenue recognition | |||||||||||||
Product sales | |||||||||||||
The Group recognizes revenue when persuasive evidence of an arrangement exists, the sales price is fixed or determinable, delivery of the product has occurred, title and risk of loss have transferred to the customers and collectability of the receivable is reasonably assured. The majority of the sales contracts transfer title and risk of loss to customers upon receipt. Sales agreements for polysilicon and wafers typically do not contain product warranties except for return and replacement of defective products within a period generally ranging from 3 to 30 days from delivery. Sales agreements typically do not contain post-shipment obligations or other return or credit provisions. The Group may extend credit terms after assessing a number of factors to determine the customers' credit worthiness. | |||||||||||||
Customers frequently pay for products prior to the delivery of the products. Advance payments are recorded as advances from customers. | |||||||||||||
Service revenue | |||||||||||||
The Group also provides OEM services to customers, such as the provision of service to process polysilicon into ingots and wafers. The Group recognizes revenue when there is persuasive evidence of an arrangement, the service has been rendered, the sales price is fixed or determinable and collectability is reasonably assured. | |||||||||||||
(m) Cost of revenues | |||||||||||||
Cost of revenues consists of production related costs including costs of silicon raw materials, electricity and other utilities, consumables, direct labor, overhead costs, depreciation of property, plant and equipment, and manufacturing waste treatment processing fees. | |||||||||||||
(n) Shipping and handling | |||||||||||||
Costs to ship products to customers are recorded as selling expenses in the consolidated statements of operations. Costs to ship products to customers were $1,033,808, $1,901,384 and $2,054,786, respectively for the years ended December 31, 2012, 2013 and 2014. | |||||||||||||
(o) Research and development expenses | |||||||||||||
Research and development expenses include materials and utilities consumed in research and development activities, payroll and related costs and depreciation of property and equipment associated with the research and development activities, which are expensed when incurred. In the years ended December 31, 2013 and 2014, the Group incurred additional research and development expenses for its Xinjiang Phase II polysilicon facilities to achieve the targets for quality, capacity and cost during the pilot production period. | |||||||||||||
(p) Government subsidies | |||||||||||||
The Group receives unrestricted cash subsidies from local government agencies. The government agencies use their discretion to determine the amount of the subsidies with reference to land use right fees, value-added tax and income taxes paid, bank loan interest expenses paid or electricity consumed by the Group, however, these subsidies do not represent tax refunds or reimbursements of expenditures. The subsidies are unrestricted as to use and can be utilized by the Group in any manner it deems appropriate. The Group has utilized, and expects to continue to utilize, these subsidies to fund general operating expenses. The Group records unrestricted cash government subsidies as other operating income in the consolidated statements of operations. Unrestricted cash government subsidies received for the years ended December 31, 2012, 2013 and 2014 were $9,250,296, $5,249,788 and $926,173, respectively. Government grants related to assets are recorded as long term liabilities and are recognized as an offset to depreciation expense on a straight-line basis over the useful life of the associated asset. The Group received government grants related to assets of $1,383,487, $1,172,160 and $113,735 during the years ended December 31, 2012, 2013 and 2014, respectively. | |||||||||||||
(q) Income taxes | |||||||||||||
Deferred income taxes are recognized for temporary differences between the tax bases of assets and liabilities and their reported amount in the consolidated financial statements, net operating loss carry-forwards and credits by applying enacted tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided in accordance with the laws of the relevant taxing authorities. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in which temporary differences are expected to be realized or settled. The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the statement of operations in the period of the enactment of the change. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on the characteristics of the underlying assets and liabilities, or the expected timing of their use when they do not relate to a specific asset or liability. | |||||||||||||
(r) Share-based compensation | |||||||||||||
The Group recognizes share-based compensation in the statement of operations based on the fair value of equity awards on the date of the grant, with compensation expense recognized over the period in which the grantee is required to provide service to the Group in exchange for the equity award. The Group has made an estimate of expected forfeiture and is recognizing compensation costs only for those equity awards expected to vest. The share-based compensation expenses have been categorized as either selling, general and administrative expenses, research and development expenses and cost of sales, depending on the job functions of the grantees. For the years ended December 31, 2012, 2013 and 2014, the Group recognized share-based compensation expense of $2,249,834, $1,881,401 and $1,792,819, respectively, which was classified as follows: | |||||||||||||
Year ended December 31, | |||||||||||||
2012 | 2013 | 2014 | |||||||||||
Selling, general and administrative expenses | $ | 2,018,817 | $ | 1,743,768 | $ | 1,544,078 | |||||||
Research and development expenses | 175,242 | 60,987 | 12,310 | ||||||||||
Cost of sales | 55,775 | 76,646 | 236,431 | ||||||||||
Total | $ | 2,249,834 | $ | 1,881,401 | $ | 1,792,819 | |||||||
(s) (Loss) earnings per share | |||||||||||||
Basic (loss) earnings per ordinary share are computed by dividing the net (loss) net income attributable to ordinary shares by the weighted average number of ordinary shares outstanding during the year. | |||||||||||||
Diluted earnings per share is calculated by dividing net income attributable to ordinary shareholders as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary shares and dilutive ordinary share equivalents outstanding during the year. Diluted earnings per share is computed using the treasury stock method. During the years ended December 31, 2012, 2013 and 2014, the ordinary shares issuable upon the exercise of outstanding share options of nil, nil and 5,003,667 shares are included in the calculation of dilutive earnings per share. | |||||||||||||
(t) Foreign currency translation | |||||||||||||
The reporting currency of the Company is the United States dollar (“U.S. dollar”). The functional currency of the Company is the U.S. dollar. Monetary assets and liabilities denominated in other currencies other than the U.S. dollar are translated into U.S. dollar at the rates of exchange in effect at the balance sheet dates. Transactions dominated in currencies other than the U.S. dollar during the year are converted into U.S. dollar at the applicable rates of exchange prevailing when the transactions occur. Transaction gains and losses are recorded in the statements of operations. | |||||||||||||
The financial records of the Company's PRC subsidiaries and VIE are maintained in Chinese Renminbi (“RMB”), which is their functional currency. Assets and liabilities are translated at the exchange rates at the balance sheet date. Equity accounts are translated at historical exchange rates. Revenues, expenses, gains and losses are translated at average rate of exchange prevailing during the periods presented. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive income in the statement of changes in equity and comprehensive income. | |||||||||||||
The RMB is not a freely convertible currency. The State Administration for Foreign Exchange of People's Republic of China, under the authority of the People's Bank of China, controls the conversion of RMB into foreign currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China foreign exchange trading system market. The Group's aggregate amount of cash and cash equivalents and restricted cash denominated in RMB amounted to $11,436,370 and $24,356,970 as of December 31, 2013 and 2014, respectively. | |||||||||||||
(u) Comprehensive income | |||||||||||||
Our financial statements include the Consolidated Statements of Comprehensive (Loss) Income as required by new accounting guidance, which we retrospectively adopted during 2012. As of December 31, 2013 and 2014, Accumulated Other Comprehensive Income was comprised entirely of foreign currency translation adjustments. | |||||||||||||
(v) Fair value of financial instruments | |||||||||||||
The Group estimates fair value of financial assets and liabilities as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (also referred to as an exit price). The fair value measurement guidance establishes a hierarchy for inputs used in measuring fair value that gives the highest priority to observable inputs and the lowest priority to unobservable inputs. Valuation techniques used to measure fair value shall maximize the use of observable inputs. | |||||||||||||
• | Level 1—Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured. | ||||||||||||
• | Level 2—Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques. | ||||||||||||
• | Level 3—Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect the Group's own assumptions about the assumptions that market participants would use to price an asset or liability. | ||||||||||||
When available, the Group measures the fair value of financial instruments based on quoted market prices in active markets, valuation techniques that use observable market-based inputs or unobservable inputs that are corroborated by market data. Pricing information the Group obtains from third parties is internally validated for reasonableness prior to use in the consolidated financial statements. When observable market prices are not readily available, the Group generally estimates fair value using valuation techniques that rely on alternate market data or inputs that are generally less readily observable from objective sources and are estimated based on pertinent information available at the time of the applicable reporting periods. In certain cases, fair values are not subject to precise quantification or verification and may fluctuate as economic and market factors vary and the Group's evaluation of those factors changes. Although the Group uses its best judgment in estimating the fair value of these financial instruments, there are inherent limitations in any estimation technique. In these cases, a minor change in an assumption could result in a significant change in its estimate of fair value, thereby increasing or decreasing the amounts of the Group's consolidated assets, liabilities, shareholders' equity and net income or loss. | |||||||||||||
The Group's financial instruments include cash and cash equivalents, restricted cash, accounts receivable, other current assets, amount due from related parties, accounts payable, other current liabilities, payables for purchase of property, plant and equipment, amounts due to related parties and short-term and current portion of long-term bank borrowings. The carrying amounts of these short-term financial instruments approximate their fair values due to the short-term maturity of these instruments. | |||||||||||||
The fair values of the Group's plant and equipment and long-term bank borrowings as of December 31, 2013 and 2014 are estimated by discounted cash flow technique using an interest rate corresponding to debt with similar maturities and risks on the measurement date. | |||||||||||||
(w) Variable Interest Entity | |||||||||||||
The Group uses a qualitative approach in assessing the consolidation requirement for variable interest entities. The approach focuses on identifying which enterprise has the power to direct the activities that most significantly impact the variable interest entity's economic performance and which enterprise has the obligation to absorb losses or the right to receive benefits from the variable interest entity. In the event that the Group is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity will be included in the Group's Consolidated Financial Statements. | |||||||||||||
(x) Noncontrolling interest | |||||||||||||
The noncontrolling interest represents Daqo Group's equity interest in Daqo New Material. The Group classified the ownership interest in the consolidated entity held by a party other than the Group to noncontrolling interest in the consolidated financial statements. It also reported the consolidated net income at amounts that include the amounts attributable to both the parent and the noncontrolling interest on the face of the consolidated statements of operations and comprehensive income. On December 31, 2013, Daqo New Material was deconsolidated, therefore the noncontrolling interest was $nil as of December 31, 2013 and 2014. | |||||||||||||
(y) Treasury Stock | |||||||||||||
On July 9, 2012, the Company's Board of Directors authorized the Company to repurchase up to $5 million in aggregate value of its outstanding ordinary shares through open market or other legally permissible means prior to December 31, 2012 in accordance with applicable securities laws.. During the year ended December 31, 2012, the Company repurchased 2,836,670 shares for a total purchase price of $500,724. The Company has legal title to the shares, and no other party has the voting rights associated with these shares. | |||||||||||||
(z) Recent accounting pronouncements | |||||||||||||
On August 27, 2014, the FASB issued ASU 2014-15, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date of issuance of the entity's financial statements (or within one year after the date on which the financial statements are available to be issued, when applicable). Further, an entity must provide certain disclosures if there is “substantial doubt about the entity's ability to continue as a going concern.” The ASU is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The Group is in the process of evaluating the impact on its consolidated financial statements upon adoption. | |||||||||||||
In May 2014, the FASB issued a new pronouncement which affects any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts. In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (e.g. assets within the scope of Topic 360, Property, Plant, and Equipment, and intangible assets within the scope of Topic 350, Intangibles—Goodwill and Other) are amended to be consistent with the guidance on recognition and measurement (including the constraint on revenue) in this ASU. | |||||||||||||
The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: | |||||||||||||
Step 1: Identify the contract(s) with a customer. | |||||||||||||
Step 2: Identify the performance obligations in the contract. | |||||||||||||
Step 3: Determine the transaction price. | |||||||||||||
Step 4: Allocate the transaction price to the performance obligations in the contract. | |||||||||||||
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. | |||||||||||||
For a public entity, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. An entity should apply the amendments in this ASU using one of the following two methods: | |||||||||||||
1. Retrospectively to each prior reporting period presented and the entity may elect any of the following practical expedients: | |||||||||||||
For completed contracts, an entity need not restate contracts that begin and end within the same annual reporting period. | |||||||||||||
For completed contracts that have variable consideration, an entity may use the transaction price at the date the contract was completed rather than estimating variable consideration amounts in the comparative reporting periods. | |||||||||||||
For all reporting periods presented before the date of initial application, an entity need not disclose the amount of the transaction price allocated to remaining performance obligations and an explanation of when the entity expects to recognize that amount as revenue. | |||||||||||||
2. Retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. If an entity elects this transition method it also should provide the additional disclosures in reporting periods that include the date of initial application of: | |||||||||||||
The amount by which each financial statement line item is affected in the current reporting period by the application of this ASU as compared to the guidance that was in effect before the change. | |||||||||||||
The Group is in the process of evaluating the impact on its consolidated financial statements upon adoption. | |||||||||||||
EXIT_and_DISPOSAL_ACTIVITIES
EXIT and DISPOSAL ACTIVITIES | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
EXIT and DISPOSAL ACTIVITIES [Abstract] | ||||||
EXIT and DISPOSAL ACTIVITIES | 3. EXIT and DISPOSAL ACTIVITIES | |||||
(a) Disposal of Nanjing Daqo | ||||||
On September 28, 2012, in order to focus on the Group's core competency and enhance operating efficiency, the Group sold 100% equity interests in Nanjing Daqo to our related party, Daqo Group, after the Group failed to identify a third party investor from its public bidding procedure undertaken through the Nanjing Property Right Trading Center for a total consideration of RMB62 million (US$9.9 million). The sales price was determined with reference to the valuation result as of March 31, 2012 performed by an independent third party valuer, which determined the fair value to approximate the net asset value of approximately $12.0 million, less the operating loss of Nanjing Daqo incurred during the period from April 1, 2012 to September 28, 2012 of approximately $2.1 million. The loss from discontinued operation of $2,392,228 represents the aggregation of the loss incurred by Nanjing Daqo during the period from January 1, 2012 to September 28, 2012 of $3,491,527 and the gain on disposition of $1,099,299, which was the reclassification of foreign currency translation gain from other comprehensive income of $1,099,299. There were no remaining assets or liabilities associated with discontinued operations in the consolidated balance sheet as of December 31, 2012. | ||||||
The discontinued operations were retrospectively reflected for all the prior years presented in the consolidated statements of operations. The operating results reported as discontinued operations for the years ended December 31, 2012 are summarized as follows: | ||||||
Year ended December 31, | ||||||
2012 | ||||||
Revenues | $ | 6,454,830 | ||||
Operating costs and expenses | (9,946,357 | ) | ||||
Loss from discontinued operations before income taxes | (3,491,527 | ) | ||||
Income tax benefit | — | |||||
Loss from discontinued operations | $ | (3,491,527 | ) | |||
(b) Relocation of Polysilicon Operations to Xinjiang | ||||||
As of December 31, 2013, the Group had a plan to expand the capacity at the Xinjiang plant and is in the process of relocating significant production assets, with a carrying value of $ 144.7 million, from Chongqing Daqo to its Xinjiang plant. In connection with this relocation plan, the Group determined i) to cease a retooling project at its polysilicon production line located at Chongqing Daqo in the second quarter of 2013, and ii) it was more practical to relocate its machinery and equipment located at Chongqing Daqo, to Xinjiang as part of the Polysilicon Phase II Expansion Project plan. The Group expects to fully ramp up this expansion project by the end of the second quarter of 2015. Therefore, the Group recorded an impairment charge of $158.4 million in connection with this decision in the second quarter of 2013 and subsequently terminated its lease arrangement with Daqo New Material on December 30, 2013. As of December 31, 2013, the Group has incurred approximately $0.8 million in employee termination costs and $0.5 million in connection with relocation costs, all of which were recorded in selling, general and administrative expenses. | ||||||
In August 2014, the Board of Directors approved the Company to launch an early stage research for the Polysilicon Phase III Expansion Project in Xinjiang. After a comprehensive analysis of the capacity and comparability of the Chongqing machinery and equipment, the Company concluded that it would be more efficient to use part of the machinery and equipment in Phrase III, rather than using all of them in Phrase II Expansion Project. As a result, the Company has changed its original relocation plan and determined to utilize a portion of these equipment and machinery in Polysilicon Phase III Expansion Project in Xinjiang. | ||||||
As of December 31, 2014, about $46.1 million of $116.1 million of the machinery and equipment have been relocated from Chongqing Daqo to its Xinjiang plant for Polysilicon Phase II Expansion Project, which is expected to be fully ramp up by the end of the second quarter of 2015. The Company expects to complete the Polysilicon Phase III Expansion Project by early 2017, and the remaining machinery and equipment of $70.0 million will be relocated from Chongqing to Xinjiang then. The Group spent approximately $0.5 million on a quarterly basis to keep these machinery and equipment in good condition, including $0.3 million wages and $0.2 million electricity fees. | ||||||
The change to the original relocation plan indicated that the carrying amount of the remaining machinery and equipment of $70.0 million may not be recoverable. The Group engaged an independent valuation firm to assist in performing the recoverability test. Based on the test, the Group concluded that the estimated sum of the undiscounted cash flows expected to be generated from the use and eventual disposition of the polysilicon group were in substantial excess of the carrying amount, and no impairment was noted as of December 31, 2014. | ||||||
During the year ended December 31, 2014, additional $0.8 million relocation cost occurred, which was recorded in selling, general and administrative expenses. No material liabilities, including contract termination costs, are recorded in connection with this relocation plan as of December 31, 2013 and 2014. The Group expects to incur additional costs of $2.3 million in relocating the equipment. |
FOLLOWON_EQUITY_OFFERING
FOLLOW-ON EQUITY OFFERING | 12 Months Ended |
Dec. 31, 2014 | |
FOLLOW-ON EQUITY OFFERING [Abstract] | |
FOLLOW-ON EQUITY OFFERING | 4. FOLLOW-ON EQUITY OFFERING |
In May 2014, the Company issued and sold 2,000,000 America depositary shares ("ADSs"), representing 50,000,000 ordinary shares, through a follow-on equity offering. The proceeds, net of issuance cost of $3.4 million, were $54.6 million. | |
ALLOWANCES_FOR_DOUBTFUL_RECEIV
ALLOWANCES FOR DOUBTFUL RECEIVABLES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
ALLOWANCES FOR DOUBTFUL RECEIVABLES [Abstract] | |||||||||||||
ALLOWANCES FOR DOUBTFUL RECEIVABLES | 5. ALLOWANCES FOR DOUBTFUL RECEIVABLES | ||||||||||||
The Group made provisions for doubtful accounts receivables in the aggregate amount of $359,733 and $5,482,019 during the year ended 2012 and 2013. The Group reversed provision for doubtful accounts receivables in the aggregate amount of $3,823,744 during the year ended December 31, 2014. | |||||||||||||
Analysis of allowances for accounts receivable is as follows: | |||||||||||||
Year ended December 31, | |||||||||||||
2012 | 2013 | 2014 | |||||||||||
Beginning of the year | $ | 1,202,940 | $ | 1,592,467 | $ | 7,160,782 | |||||||
Allowances (Reversal) during the year | 359,733 | 5,482,019 | (3,823,744 | ) | |||||||||
Foreign exchange effect | 29,794 | 86,296 | (147,928 | ) | |||||||||
Closing balance | $ | 1,592,467 | $ | 7,160,782 | $ | 3,189,110 | |||||||
As of December 31, 2013, the Group provided full allowance for certain long aging receivables based on available information on the customer's deteriorated credit risks and poor financial performance. In 2014, along with the recovery of solar industry and continued legal actions, the Group was able to collect payments on these receivable, as such, an allowance of $4,171,528 previously recorded has been reversed in 2014. | |||||||||||||
PREPAID_EXPENSE_AND_OTHER_CURR
PREPAID EXPENSE AND OTHER CURRENT ASSETS | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
PREPAID EXPENSE AND OTHER CURRENT ASSETS [Abstract] | |||||||||
PREPAID EXPENSE AND OTHER CURRENT ASSETS | 5. PREPAID EXPENSE AND OTHER CURRENT ASSETS | ||||||||
Prepaid expense and other current assets consist of the following: | |||||||||
December 31, | |||||||||
2013 | 2014 | ||||||||
Spare parts | $ | 6,264,805 | $ | 6,385,388 | |||||
Prepaid Value added tax (“VAT”) | 15,273,592 | 5,857,017 | |||||||
Prepaid insurance fee | 218,865 | 226,564 | |||||||
Others | 2,113,428 | 366,900 | |||||||
Total | $ | 23,870,690 | $ | 12,835,869 |
INVENTORIES
INVENTORIES | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
INVENTORIES [Abstract] | |||||||||
INVENTORIES | 6. INVENTORIES | ||||||||
Inventories consist of the following: | |||||||||
December 31, | |||||||||
2013 | 2014 | ||||||||
Raw materials | $ | 2,084,050 | $ | 1,362,944 | |||||
Work-in-process | 4,666,821 | 5,411,360 | |||||||
Finished goods | 3,749,385 | 2,807,480 | |||||||
Total | $ | 10,500,256 | $ | 9,581,784 | |||||
Inventory write-down was $14,821,620, $29,905,734 and $175,568 for the years ended December 31, 2012, 2013 and 2014, respectively. |
PROPERTY_PLANT_AND_EQUIPMENT_N
PROPERTY, PLANT AND EQUIPMENT, NET | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
PROPERTY, PLANT AND EQUIPMENT, NET [Abstract] | |||||||||
PROPERTY, PLANT AND EQUIPMENT, NET | 7. PROPERTY, PLANT AND EQUIPMENT, NET | ||||||||
Property, plant and equipment, net, consist of the following: | |||||||||
December 31, | |||||||||
2013 | 2014 | ||||||||
Cost | |||||||||
Buildings and plant | $ | 235,690,310 | $ | 233,230,935 | |||||
Machinery and equipment | 355,429,064 | 351,409,724 | |||||||
Furniture, fixtures and equipment | 21,329,752 | 18,469,913 | |||||||
Motor vehicles | 262,562 | 257,408 | |||||||
Less: Accumulated depreciation | (145,031,744 | ) | (169,264,463 | ) | |||||
Property, plant and equipment, net | $ | 467,679,944 | $ | 434,103,517 | |||||
Construction in process | 20,824,239 | 124,902,602 | |||||||
Total | $ | 488,504,183 | $ | 559,006,119 | |||||
Depreciation expense was $37,371,791, $52,250,595 and $28,007,943 for the years ended December 31, 2012, 2013 and 2014, respectively. | |||||||||
The Group recognized impairments for long-lived assets of $42,754,481, $158,424,827 and $nil during the years ended December 31, 2012, 2013 and 2014, respectively. |
BORROWINGS
BORROWINGS | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
BORROWINGS [Abstract] | |||||||||
BORROWINGS | 8. BORROWINGS | ||||||||
The Group's bank borrowings consisted of the following: | |||||||||
December 31, | |||||||||
2013 | 2014 | ||||||||
Short-term bank borrowings | $ | 68,821,014 | $ | 90,443,007 | |||||
Long-term bank borrowings, current portion | 50,049,843 | 69,360,869 | |||||||
Total borrowings, current | 118,870,857 | 159,803,876 | |||||||
Long-term bank borrowings, non-current portion | 134,870,287 | 77,336,160 | |||||||
Total | $ | 253,741,144 | $ | 237,140,036 | |||||
Short-term bank borrowings | |||||||||
The Group's short-term bank borrowing consisted of the following: | |||||||||
December 31, | |||||||||
2013 | 2014 | ||||||||
Short-term bank borrowing guaranteed by Daqo Group and Mr. Guangfu Xu and Mr. Xiang Xu | $ | 28,080,770 | $ | 27,389,890 | |||||
Short-term bank borrowing guaranteed by Daqo Group and a third party | 11,562,670 | 11,278,190 | |||||||
Short-term credit bank borrowings | 29,177,574 | 51,774,927 | |||||||
Total | $ | 68,821,014 | $ | 90,443,007 | |||||
The Group had available credit of $18.2 million and $8.5 million under its short-term bank facilities with various banks as of December 31, 2013 and 2014, respectively. | |||||||||
The weight average interest rate on the short-term bank borrowing was 6.4% and 6.8% as of December 31, 2013 and 2014. | |||||||||
Long-term bank borrowings | |||||||||
The long-term bank borrowings, including current portion, as of December 31, 2013 and 2014 are comprised of: | |||||||||
December 31, | |||||||||
2013 | 2014 | ||||||||
Borrowing from China Construction Bank | $ | 7,102,783 | $ | 6,444,680 | |||||
Borrowing from Huaxia Bank | 35,679,096 | 25,778,720 | |||||||
Borrowing from Bank of China | 123,885,750 | 101,503,710 | |||||||
Borrowing from Chongqing Rural Commercial Bank | 18,252,501 | 12,969,919 | |||||||
Total | $ | 184,920,130 | $ | 146,697,029 | |||||
On January 21, 2009, Chongqing Daqo entered into a six-year long term facility agreement with China Construction Bank. Such borrowing is restricted to the purchase of fixed assets and has a maximum borrowing credit amounted to $64.4 million (RMB400 million), bearing a standard five-year long term interest rate issued by People's Bank of China. The borrowing is guaranteed by Daqo Group and Mr. Guangfu Xu. As of December 31, 2014, Chongqing Daqo had drawn down $64.4 million (RMB400 million) and had no facility available for future draw down. Chongqing Daqo had repaid $58.0 million (RMB360 million) as of December 31, 2014, and the remaining $6.4 million (RMB40 million) had also been repaid in January 2015. There are no financial covenants associated with the facility. | |||||||||
On September 28, 2011, Chongqing Daqo entered into a four-year credit facility agreement with Huaxia Bank with maximum amount of $64.4 million (RMB400 million). Chongqing Daqo drew down $61.2 million (RMB380 million), including: $20.9 million (RMB130 million) with fixed interest rate of 6.65%, which is designated for working capital and $40.3 million (RMB250 million) with fixed interest rate of 6.9% which is restricted to the purchase of fixed assets. Chongqing Daqo used the remaining facility of $3.2 million (RMB20 million) through use of bank acceptance notes. As of December 31, 2014, Chongqing Daqo had repaid 38.7 million (RMB240 million) and had no facility available for future draw down. This credit facility is guaranteed by Daqo Group and also collateralized by Chongqing Daqo's land use right and plant amounting to $8.7 million as of December 31, 2014. The facility contains a financial covenant, and Chongqing Daqo was in compliance as of December 31, 2014. | |||||||||
On September 30, 2011, Xinjiang Daqo entered into a six-year bank borrowing agreement with Bank of China. Such borrowing is restricted to the purchase of fixed assets and has a maximum borrowing amount of $120.8 million (RMB750 million) and bears interest at standard five-year long term interest rate issued by People's Bank of China plus 5%. As of December 31, 2014, Xinjiang Daqo had drawn down $120.8 million (RMB750 million) and repaid $19.3 million (RMB 120 million) and had no facility available for future draw down. The borrowing is guaranteed by Daqo Group, Daqo New Material, two affiliated companies under Daqo Group and Mr. Guangfu Xu. On June 30, 2014, an amendment to this credit facility was signed between Xinjiang Daqo and Bank of China, under which machinery and equipment with a total carrying amount of $103.4 million was pledged as collaterals for this credit facility. The borrowing contains a financial covenant, and Xinjiang Daqo was in compliance as of December 31, 2014. | |||||||||
On October 26, 2011, Chongqing Daqo entered into a four-year credit facility agreement with Chongqing Rural Commercial Bank. Such borrowing is restricted to the purchase of fixed assets and has a maximum borrowing amount $39.6 million (RMB 245.5 million) and bears interest at three to five-year long term interest rate issued by People's Bank of China plus 10%. The borrowing is guaranteed by Daqo Group, and two directors of the Company. As of December 31, 2014, Chongqing Daqo had drawn down $39.6 million (RMB 245.5 million) and repaid $26.6 million (RMB 165 million) and had no facility for future draw down. There are no financial covenants associated with the facility. | |||||||||
The weighted average interest rate as of December 31, 2013 and 2014 for the Group's long-term bank borrowings was 7.2% and 6.9%, respectively. | |||||||||
The principal maturities of these long-term bank borrowings as of December 31, 2014 are as follows: | |||||||||
31-Dec-14 | Amount | ||||||||
2015 | $ | 69,360,869 | |||||||
2016 | 40,279,250 | ||||||||
2017 | 37,056,910 | ||||||||
Total | $ | 146,697,029 |
ACCRUED_EXPENSES_AND_OTHER_CUR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES [Abstract] | |||||||||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||||||||
Accrued expenses and other current liabilities consist of the following: | |||||||||
December 31, | |||||||||
2013 | 2014 | ||||||||
Accrued payroll and welfare | $ | 2,588,312 | $ | 3,309,850 | |||||
Accrued professional fees | 624,825 | 576,786 | |||||||
Other tax payable | 1,378,963 | 2,263,055 | |||||||
Interest payable | 305,087 | 148,995 | |||||||
Government subsidy | 908,496 | — | |||||||
Contingent liability (Note 17) | — | 400,000 | |||||||
Others | 1,655,938 | 2,256,977 | |||||||
Total | $ | 7,461,621 | $ | 8,955,663 |
ADVANCES_FROM_CUSTOMERS
ADVANCES FROM CUSTOMERS | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
ADVANCES FROM CUSTOMERS [Abstract] | |||||||||
ADVANCES FROM CUSTOMERS | 10. ADVANCES FROM CUSTOMERS | ||||||||
Advances from customers represent prepayments from customers and are recognized as revenue in accordance with the Group's revenue recognition policy. | |||||||||
Advances from customers consist of the following and is analyzed as long term and short term portion respectively: | |||||||||
December 31, | |||||||||
2013 | 2014 | ||||||||
Customer A* | $ | 15,987,573 | $ | 8,041,836 | |||||
Customer G | 4,220,355 | 2,405,619 | |||||||
Customer H | 2,996,550 | — | |||||||
Others | 1,937,418 | 262,747 | |||||||
Total | $ | 25,141,896 | $ | 10,710,202 | |||||
Less: Current portion of advances from customers | $ | 13,217,775 | $ | 7,308,535 | |||||
Long term advances from customers | $ | 11,924,121 | $ | 3,401,667 | |||||
* | Pursuant to the terms of the Group's revised supply agreement with this customer the Group will deliver monthly amounts of polysilicon, totaling no less than RMB2.4 million (equivalent of $0.4 million) from April 2014 to September 2016, or until such time as the advance has been fully utilized. | ||||||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS [Abstract] | |||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | 11. FAIR VALUE MEASUREMENTS | ||||||||||||||||||||||||
The following table presents the financial instruments for which fair value does not approximate carrying value as of December 31, 2013 and 2014: | |||||||||||||||||||||||||
As of December 31, 2013 | As of December 31, 2014 | ||||||||||||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||||
Long-term bank borrowing | $ | 134,870,287 | $ | 124,047,823 | 77,336,160 | 71,422,148 | |||||||||||||||||||
Nonrecurring Fair Value Measurements | |||||||||||||||||||||||||
The following table displays assets and liabilities that were measured at fair value on a non-recurring basis after initial recognition; | |||||||||||||||||||||||||
Year ended December 31, 2013 | |||||||||||||||||||||||||
Description | Carrying | Quoted Prices in | Significant | Significant | Total Losses | ||||||||||||||||||||
amount | Active Markets | Other | Unobservable | ||||||||||||||||||||||
for Identical | Observable | Inputs (Level 3) | |||||||||||||||||||||||
Assets (Level 1) | Inputs (Level 2) | ||||||||||||||||||||||||
Long-lived assets held and used | $ | 307,942,362 | $ | $ | 149,517,535 | $ | — | $ | 158,424,827 | ||||||||||||||||
During the year ended December 31, 2013, long-lived assets held and used with a carrying amount of $308 million were written down to their fair value of $150 million, resulting in an impairment charge of $158 million, about $143 million of this amount related to Daqo New Material. Based on the nature of the property being assessed, buildings and land use rights, the fair value was estimated using direct comparison method under the market approach. The direct comparison method is a set of procedures in which a value indication is derived by comparing the real estate being appraised to similar real estate that have been sold recently. Then applying appropriate units of comparison and making adjustments to the sale prices of the comparable based on the elements of comparison such as differences in location, size, decoration and year of completion, etc. to derive at the fair value of the real estate. |
MAINLAND_CHINA_CONTRIBUTION_PL
MAINLAND CHINA CONTRIBUTION PLAN AND PROFIT APPROPRIATION | 12 Months Ended |
Dec. 31, 2014 | |
MAINLAND CHINA CONTRIBUTION PLAN AND PROFIT APPROPRIATION [Abstract] | |
MAINLAND CHINA CONTRIBUTION PLAN AND PROFIT APPROPRIATION | 12. MAINLAND CHINA CONTRIBUTION PLAN AND PROFIT APPROPRIATION |
(a) China Contribution Plan | |
Full time employees of the Group in the PRC participate in a government-mandated, multi-employer, defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. PRC labor regulations require the Group to accrue for these benefits based on a certain percentage of the employees' salaries. Contributions to defined contribution plans are expensed as incurred. During the years ended December 31, 2012, 2013 and 2014, the Group recognized $3,325,383, $3,142,213 and $3,130,308 respectively. | |
(b) Statutory Reserves | |
Foreign invested enterprises in PRC are required under PRC laws to provide for certain statutory reserves, such as a general reserve, an enterprise expansion fund and a staff welfare and bonus fund. These entities are required to allocate at least 10% of their after tax profits as reported in their PRC statutory financial statements to the general reserve and have the right to discontinue allocations to the general reserve if the balance of such reserve have reached 50% of their registered capital. These statutory reserves are not available for distribution to the owners (except in liquidation) and may not be transferred in the form of loans, advances or cash dividends. As of December 31, 2013 and 2014, $16,803,191 and $20,190,729 was respectively appropriated from the accumulated loss of Chongqing Daqo. As a result of these PRC laws and regulations, the Company's PRC subsidiaries are restricted in their abilities to transfer the registered capital and statutory reserves to the Company in the form of dividends, loans or advances and the restricted portion amounted to $124,814,365 and $182,840,330 as of December 31, 2013 and 2014, respectively. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
INCOME TAXES [Abstract] | |||||||||||||
INCOME TAXES | 13. INCOME TAXES | ||||||||||||
Cayman Islands Tax | |||||||||||||
The Company is incorporated in the Cayman Islands and is not subject to tax in this jurisdiction. | |||||||||||||
PRC Tax | |||||||||||||
The Company's subsidiaries are registered in the PRC as foreign invested enterprises. Under the Laws of the People's Republic of China on Enterprise Income Tax (the “EIT Law”) which are effective January 1, 2008, the statutory enterprise income tax rate is 25%. | |||||||||||||
Chongqing Daqo is a foreign invested enterprise located in Chongqing. In accordance with a PRC tax regulation which encourages investment in China's southwest region, Chongqing Daqo is entitled to a preferential tax rate of 15% from its establishment through 2012. On November 19, 2012, Chongqing Daqo obtained a High and New Technology Enterprise (“HTNE”) certificate for a valid period of 3 years till 2014. During the years ended December 31, 2013 and 2014, Chongqing Daqo was entitled to a preferential tax rate of 15% because of its HTNE status. | |||||||||||||
Daqo New Material, which was deconsolidated on December 31, 2013, is a domestic enterprise registered in Chongqing and is subject to an income tax rate of 25% for each of the two years ended December 31, 2013. | |||||||||||||
Nanjing Daqo is a foreign-invested enterprise established on December 20, 2007 located in Nanjing. The Group started to carry out its operation from July, 2011, and was disposed on September 28, 2012. It is subject to an income tax rate of 25% for the year ended December 31, 2012. | |||||||||||||
Xinjiang Daqo is a foreign-invested enterprise established on February, 2012 located in Shihezi Economic Development Area in Xinjiang Autonomous Region. The entity was subject to an income tax rate of 25% for the years ended December 31, 2012 and 2013. On November 25, 2014, Xin Jiang Daqo was entitled to a preferential tax rate of 15%, because of the obtainment of a High and New Technology Enterprise ("HTNE") certificate for a valid period of 3 years till 2016. | |||||||||||||
United States | |||||||||||||
Daqo America was liquidated in 2013 and it was subject to United States income tax at a combined federal and state tax rate of 40% in 2012 and 2013. | |||||||||||||
Under the current EIT Law and implementation regulations issued by the PRC State Council, an income tax rate of 10% is applicable to interest and dividends payable to investors that are “non-resident enterprises”, which do not have an establishment or place of business in the PRC, or which have such establishment or place of business but the relevant income is not effectively connected with the establishment or place of business, to the extent such interest or dividends have their sources within the PRC. The Company's PRC subsidiaries did not have retained earnings as of December 31, 2014, therefore, no provision for PRC dividend withholding tax has been provided thereon. | |||||||||||||
The Group made its assessment of the level of authority for each tax position (including the potential application of interests and penalties) based on the tax positions' technical merits, and measured the unrecognized benefits associated with the tax positions. The Group did not have any unrecognized tax benefits as of December 31, 2013 and 2014. The Group does not anticipate that unrecognized tax benefits will significantly increase or decrease within the next twelve months. | |||||||||||||
According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB0.1 million is specifically listed as a special circumstance). In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. From inception to 2013, the Group's PRC subsidiaries are subject to examination of the PRC tax authorities. The Group classifies interest and penalties associated with taxes as income tax expense. Such charges were immaterial in the years ended December 31, 2012, 2013 and 2014. | |||||||||||||
Income tax expenses comprise: | |||||||||||||
Year ended December 31, | |||||||||||||
2012 | 2013 | 2014 | |||||||||||
Current Tax Expenses (Benefit) | $ | (1,894,736 | ) | $ | (162,621 | ) | $ | — | |||||
Deferred Tax Expenses (Benefit) | 12,148,323 | 1,434,386 | — | ||||||||||
Total | $ | 10,253,587 | $ | 1,271,765 | $ | — | |||||||
The principal components of deferred income tax assets and liabilities are as follows: | |||||||||||||
December 31, | |||||||||||||
2013 | 2014 | ||||||||||||
Net operating loss carried forward | $ | 29,784,578 | $ | 27,349,606 | |||||||||
Inventory write-down | 1,531,750 | 26,141 | |||||||||||
Bad debt provision | 1,518,953 | 478,367 | |||||||||||
Government grants related to assets | 423,938 | 498,582 | |||||||||||
Long-lived asset impairment & depreciation | 23,083,996 | 21,009,037 | |||||||||||
Others | 290,652 | 748,018 | |||||||||||
Sub-total | 56,633,867 | 50,109,751 | |||||||||||
Valuation Allowance | (56,633,867 | ) | (50,109,751 | ) | |||||||||
Total | $ | - | $ | — | |||||||||
Deferred tax assets are analyzed as: | |||||||||||||
Current | $ | — | $ | — | |||||||||
Non-current | — | — | |||||||||||
The changes of valuation allowance are as follows: | |||||||||||||
Year ended December 31, | |||||||||||||
2012 | 2013 | 2014 | |||||||||||
Beginning balance | $ | — | $ | 37,682,733 | $ | 56,633,867 | |||||||
Additions (Reversal) | 37,238,701 | 56,697,096 | (5,168,917 | ) | |||||||||
Deconsolidation | — | (39,357,744 | ) | — | |||||||||
Foreign exchange effect | 444,032 | 1,611,782 | (1,355,199 | ) | |||||||||
Ending Balance | $ | 37,682,733 | $ | 56,633,867 | $ | 50,109,751 | |||||||
The Group uses the asset and liability method to record related deferred tax assets and liabilities. The Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of operating losses, forecasts of future profitability, the duration of statutory carry forward periods, the Group's experience with tax attributes expiring unused and tax planning alternatives. Valuation allowances have been established for deferred tax assets based on a more likely than not threshold. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. | |||||||||||||
As of December 31, 2014, Chongqing Daqo and Xinjiang Daqo had net operating losses carried forward of $109.4 million, and nil respectively, accordingly all the related deferred tax assets of $27.4 million was contributed by Chongqing Daqo. Almost all the deductible difference of long-lived asset impairment & depreciation was from Chongqing Daqo as well as of December 31, 2014. Based on the related operating performance and the level of projections for future taxable income over the periods in which the deferred tax assets are deductible, the Group believes it is not more likely than not that the Group will realize the benefits of these deductible differences, therefore full valuation allowance was applied as of December 31, 2014. | |||||||||||||
The Group uses the asset and liability method to record related deferred tax assets and liabilities. In assessing the reliability of deferred tax assets, the Group considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based on the continuous operating losses suffered and the level of projections for future taxable income over the periods in which the deferred tax assets are deductible, the Group believes it is not more likely than not that the Group will realize the benefits of these deductible differences of Chongqing Daqo and Xinjiang Daqo as at December 31, 2014. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry-forward period are reduced. Xinjiang Daqo and Chongqing Daqo had net operating losses carried forward of approximately $109,398,425 and $nil, respectively, which would expire if not used before December 31, 2018. | |||||||||||||
The effective income tax rate of the Group is different from the expected PRC statutory rate as a result of the following items: | |||||||||||||
Year ended December 31, | |||||||||||||
2012 | 2013 | 2014 | |||||||||||
PRC Enterprise Income Tax | 25 | % | 25 | % | 25 | % | |||||||
Preferential income tax rate of a subsidiary | (9 | )% | (2 | )% | (9 | )% | |||||||
Effect of different reversal rate | 8 | % | 3 | % | 1 | % | |||||||
Additional tax deductions | — | % | (1 | )% | (8 | )% | |||||||
Non-deductible expenses | — | % | — | % | — | % | |||||||
Different tax rate in other jurisdictions | (1 | )% | — | % | 6 | % | |||||||
Changes in valuation allowance | (35 | )% | (26 | )% | — | % | |||||||
Tax credits | — | % | — | % | (15 | )% | |||||||
Prior year adjustment | 2 | % | — | % | — | % | |||||||
Effective tax rate | (10 | )% | (1 | )% | — | % | |||||||
Xinjiang Daqo and Chongqing Daqo enjoy the preferential tax rate of 15%, which may be extended if the requirements of High and New Technology Enterprise are satisfied. The impact of the preferential tax rates decreased income taxes by $nil, $nil and $ 3.0 million for the years of 2012, 2013 and 2014, respectively. The benefit on net income per share was $nil, $ nil and $0.01 for the years of 2012, 2013 and 2014, respectively. | |||||||||||||
SHARE_BASED_COMPENSATION
SHARE BASED COMPENSATION | 12 Months Ended | ||||||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||||||
SHARE BASED COMPENSATION [Abstract] | |||||||||||||||||||||||||||||||||
SHARE BASED COMPENSATION | 14. SHARE BASED COMPENSATION | ||||||||||||||||||||||||||||||||
In December 2014, The Company's shareholders adopted the 2014 share incentive plan. The Company's shareholders have authorized the issuance of up to 21,000,000 ordinary shares underlying all options (including incentive share options, or ISOs), restricted shares and restricted share units granted to a participant under the plan, or the awards. | |||||||||||||||||||||||||||||||||
During the years ended December 31, 2012, 2013 and 2014, the Company granted 1,190,000 and 140,000 and 6,274,166 share options respectively to its officers, directors and employees, respectively. | |||||||||||||||||||||||||||||||||
On January 28, 2014, the Company granted options to acquire 566,666 ordinary shares to independent directors of the Company pursuant to the Option Plan. Twenty-five percent (25%) of the options will vest half- year following the service inception date, twenty-five percent (25%) of the options will vest on the second half year of service inception date, and the remaining forty percent (50%) of the options will vest in twenty-four equal installments over the next two years. The exercise price is $1.49. | |||||||||||||||||||||||||||||||||
On January 28, 2014, the Company granted options to acquire 5,707,500 ordinary shares to employees and executive officers of the Company pursuant to the Option Plan. Twenty-five percent (25%) of the options will vest half- year following the service inception date, twenty-five percent (25%) of the options will vest on the second half year of service inception date, and the remaining forty percent (50%) of the options will vest in thirty-six equal installments over the next three years. The exercise price is $1.49. | |||||||||||||||||||||||||||||||||
The Company utilized the Binomial option pricing model to evaluate the fair value of the stock options with reference to the closing price of the Company on the measurement dates. | |||||||||||||||||||||||||||||||||
The following assumptions were used in the Binomial option pricing model: | |||||||||||||||||||||||||||||||||
Year Ended December 31, 2013 | |||||||||||||||||||||||||||||||||
Options | Average | Exercise | Volatility | Dividend | Post- | ||||||||||||||||||||||||||||
granted | risk-free | multiple | rate | yield | vesting | ||||||||||||||||||||||||||||
rate of | forfeiture | ||||||||||||||||||||||||||||||||
return | rate | ||||||||||||||||||||||||||||||||
3-Apr-13 | 2.29% | 2.8 times | 51.78% | 0% | 3% | ||||||||||||||||||||||||||||
Year Ended December 31, 2014 | |||||||||||||||||||||||||||||||||
Options | Average | Exercise | Volatility | Dividend | Post- | ||||||||||||||||||||||||||||
granted | risk-free | multiple | rate | yield | vesting | ||||||||||||||||||||||||||||
rate of | forfeiture | ||||||||||||||||||||||||||||||||
return | rate | ||||||||||||||||||||||||||||||||
28-Jan-14 | 2.77% | 3.0-3.5 times | 93.00% | 0% | 3-9.5% | ||||||||||||||||||||||||||||
The risk-free rate of return is based on the yield curve of China USD sovereign bond commensurate with the same maturity at the respective grant dates. The exercise multiple is estimated by reference to the proprietary research and empirical studies. The expected volatility is based on the average of historical daily annualized share price volatility of 6 comparable companies over a normalized period that commensurate with the option life of 10 years. The post-vesting forfeiture rate is based on the historical data and management's best estimation. | |||||||||||||||||||||||||||||||||
A summary of the aggregate option activity and information regarding options outstanding as of December 31, 2014 is as follows: | |||||||||||||||||||||||||||||||||
Number of | Weighted | Weighted | Aggregate | ||||||||||||||||||||||||||||||
Options | Average | Average | Intrinsic | ||||||||||||||||||||||||||||||
Exercise | Remaining | Value | |||||||||||||||||||||||||||||||
Price | Contract Life | ||||||||||||||||||||||||||||||||
Options outstanding on January 1, 2014 | 6,371,250 | $ | 0.25 | ||||||||||||||||||||||||||||||
Granted | 6,274,166 | $ | 1.49 | ||||||||||||||||||||||||||||||
Forfeited | (112,500 | ) | $ | 1.49 | |||||||||||||||||||||||||||||
Expired | (7,500 | ) | $ | 1.49 | |||||||||||||||||||||||||||||
Exercised | (150,000 | ) | $ | 0.25 | |||||||||||||||||||||||||||||
Options outstanding on December 31, 2014 | 12,375,416 | $ | 0.87 | 7.23 | $ | 5,016,816 | |||||||||||||||||||||||||||
Options vested or expected to vest on December 31, 2014 | 8,693,171 | $ | 0.47 | 6.02 | $ | 5,763,445 | |||||||||||||||||||||||||||
Options exercisable on December 31, 2014 | 7,353,583 | $ | 0.51 | 6.07 | $ | 4,689,250 | |||||||||||||||||||||||||||
The share-based compensation charge related to the share options of approximately$2,249,834 and $1,881,401 and $1,792,819 was recognized by the Company for the years ended December 31, 2012, 2013 and 2014, respectively. | |||||||||||||||||||||||||||||||||
The weighted average grant date fair value of options granted during the year ended December 31, 2012, 2013 and 2014 was $0.23 and $0.11 and $0.98, respectively. | |||||||||||||||||||||||||||||||||
As of December 31, 2014, there was $4,700,682 in total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of 2.97 years. |
RELATED_PARTY_TRANSACTIONS_AND
RELATED PARTY TRANSACTIONS AND BALANCES | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
RELATED PARTY TRANSACTIONS AND BALANCES [Abstract] | ||||||||||||||||
RELATED PARTY TRANSACTIONS AND BALANCES | 15. RELATED PARTY TRANSACTIONS AND BALANCES | |||||||||||||||
(1) | The relationships between the Group and related party are as follows: | |||||||||||||||
Name of the related party | Relationship | |||||||||||||||
Daqo Group | Daqo Group and the Group are controlled by same group of shareholders. | |||||||||||||||
Zhenjiang Daqo Solar Co. Ltd(“Zhenjiang Daqo) | An affiliated company which is 100% held by Daqo Group | |||||||||||||||
Daqo Solar Co. Ltd (“Daqo Solar”) | An affiliated company which is 100% held by Daqo Group | |||||||||||||||
Nanjing Daqo | An affiliated company which was 100% held by the Group before September 28, 2012 and is 100% held by Daqo Group since September 28, 2012 | |||||||||||||||
Daqo Xinjiang Investment Co., Ltd. ("Xinjiang Daqo Investment") | An affiliated company which is 100% held by Daqo Group | |||||||||||||||
Daqo New Material Co., Ltd. ("Daqo New Material") | An affiliated company which is 100% held by Daqo Group, and was consolidated by the Company as VIE on December 31, 2013 | |||||||||||||||
Chongqing Daqo Tailai Electric Co., Ltd. (“Chongqing Daqo Tailai”) | An affiliated company which is 100% held by Daqo Group | |||||||||||||||
Nanjing Daqo Transformer Systems Co., Ltd. (“Nanjing Daqo Transformer”) | An affiliated company which is 100% held by Daqo Group | |||||||||||||||
Jiangsu Daqo Changjiang Electric Co., Ltd. (“Jiangsu Daqo”) | An affiliated company which is 100% held by Daqo Group | |||||||||||||||
Nanjing Daqo Electric Co., Ltd. (“Nanjing Daqo Electric”) | An affiliated company which is 100% held by Daqo Group | |||||||||||||||
Zhenjiang Klockner-Moeller Electrical Systems Co., Ltd. (“Zhenjiang Moeller”) | An affiliated company which is 100% held by Daqo Group | |||||||||||||||
Nanjing Intelligent Apparatus Co., Ltd. (“Intelligent Apparatus”) | An affiliated company which is 100% held by Daqo Group | |||||||||||||||
Nanjing Intelligent Software Co., Ltd. (“Intelligent Software”) | An affiliated company which is 100% held by Daqo Group | |||||||||||||||
Daqo Investment Co., Ltd. (“Daqo Investment”) | An affiliated company which is 100% held by Daqo Group | |||||||||||||||
Shanghai Sailfar Electric Technology Co., Ltd. (“Daqo Sailfar”) | An affiliated company which is 100% held by Daqo Group | |||||||||||||||
(2) | Related party balances: | |||||||||||||||
The balance with Daqo Group and its subsidiaries was as follows: | ||||||||||||||||
The balances due from related parties mainly included the consideration for the transfer of 100% ownership of Nanjing Daqo to Daqo Group and amount due from Zhenjiang Daqo for sales of wafer and polysilicon. Such balances are unsecured, interest-free, and are payable on demand. The balances are as follows: | ||||||||||||||||
December 31, | ||||||||||||||||
2013 | 2014 | |||||||||||||||
Amount due from related party | ||||||||||||||||
Zhenjiang Daqo | $ | 6,898,980 | $ | 4,551,846 | ||||||||||||
Daqo Group | 6,465,561 | 5,110,085 | ||||||||||||||
Others | 51,911 | 325,037 | ||||||||||||||
Total | $ | 13,416,452 | $ | 9,986,968 | ||||||||||||
Interest free loans due to related parties received primarily for working capital purposes from Daqo Solar and Xinjiang Daqo Investment, wholly-owned subsidiaries of Daqo Group. The balances are payable on demand and are as follows: | ||||||||||||||||
December 31, | ||||||||||||||||
2013 | 2014 | |||||||||||||||
Amount due to related party | ||||||||||||||||
Daqo Solar | $ | 66,750,009 | $ | 54,275,617 | ||||||||||||
Xinjiang Daqo investment | 18,482,300 | 23,104,709 | ||||||||||||||
Daqo New Material | 449,988 | 4,950,746 | ||||||||||||||
Chongqing Daqo Tailai | - | 1,755,326 | ||||||||||||||
Nanjing Daqo Transformer | 18,546 | 1,595,659 | ||||||||||||||
Daqo Group | 461,796 | 1,339,128 | ||||||||||||||
Jiangsu Daqo | 46,437 | 1,200,018 | ||||||||||||||
Nanjing Daqo | 1,651,810 | - | ||||||||||||||
Nanjing Daqo Electric | 33,697 | 742,747 | ||||||||||||||
Others* | 643,207 | 734,201 | ||||||||||||||
Total | $ | 88,537,790 | $ | 89,698,151 | ||||||||||||
* | ||||||||||||||||
The remaining balance of amount due to related party of $734,201 as of December 31, 2014 was comprised of Zhenjiang Moeller, Intelligent Apparatus, Intelligent Software, Daqo Investment, Daqo Sailfar and Zhenjiang Daqo in the amount of $310,395, $302,807, $54,461, $5,360, $34, and $61,144, respectively. | ||||||||||||||||
-3 | The transactions with Daqo Group and its subsidiaries were as follows: | |||||||||||||||
Transaction | Year Ended December 31, | |||||||||||||||
Name of Related parties | Nature | 2012 | 2013 | 2014 | ||||||||||||
Daqo Group | Purchase-Fixed asset | 7,849,533 | — | 486,948 | ||||||||||||
Proceeds from interest free loans | — | 813,105 | 10,821,462 | |||||||||||||
Repayment of interest free loans | — | 813,105 | 8,115,813 | |||||||||||||
Disposition of 100% equity interest of Nan Jing Daqo | 9,888,742 | — | — | |||||||||||||
Zhenjiang Daqo | Sales | 2,799,428 | 13,471,866 | 9,554,320 | ||||||||||||
Daqo Solar | Sales | — | — | 9,595,680 | ||||||||||||
Prepayment received | 13,497,973 | — | — | |||||||||||||
Proceeds from interest free loans | — | 76,881,392 | 157,241,390 | |||||||||||||
Repayment of interest free loans | — | 28,379,678 | 166,231,092 | |||||||||||||
Nanjing Daqo | Sales | 80,126 | — | 112 | ||||||||||||
Proceeds from interest free loans | — | — | 973,898 | |||||||||||||
Repayment of interest free loans | — | — | 2,921,693 | |||||||||||||
Related party interest bearing loan | 1,584,820 | — | — | |||||||||||||
Interest charged | 40,611 | — | — | |||||||||||||
Xinjiang Daqo Investment | Prepayment received | 2,354,620 | — | — | ||||||||||||
Proceeds from interest free loans | — | 58,389,643 | 98,367,234 | |||||||||||||
Repayment of interest free loans | — | 40,193,785 | 93,219,846 | |||||||||||||
Daqo New Material | Proceeds from interest free loans | — | — | 7,729,501 | ||||||||||||
Repayment of interest free loans | — | — | 4,600,117 | |||||||||||||
Rental expense | — | — | 1,071,287 | |||||||||||||
Others subsidiaries under Daqo Group | Proceeds from interest free loans | — | — | 636 | ||||||||||||
Purchase-Fixed asset** | 202,556 | 157,742 | 6,714,476 | |||||||||||||
Purchase-Raw material | 5,282 | — | — | |||||||||||||
Total | Sales | $ | 2,799,427 | $ | 13,471,866 | $ | 19,150,112 | |||||||||
Disposition of 100% equity interest in Nanjing Daqo | $ | 9,888,742 | $ | — | $ | — | ||||||||||
Purchase-Fixed asset | $ | 8,052,089 | $ | 157,742 | $ | 7,201,424 | ||||||||||
Purchase-Raw material | $ | 5,282 | $ | — | $ | — | ||||||||||
Rental expense | $ | — | $ | — | $ | 1,071,287 | ||||||||||
Interest expense | $ | 40,611 | $ | — | $ | — | ||||||||||
Prepayment received* | $ | 15,852,593 | $ | — | $ | — | ||||||||||
Proceeds from interest free loans | $ | 1,584,820 | $ | 136,084,140 | $ | 275,134,122 | ||||||||||
Repayment of interest free loans | $ | — | $ | 69,386,568 | $ | 275,088,560 | ||||||||||
* | Prepayment has been considered a related party loan given there has been no deliveries since the prepayment was provided | |||||||||||||||
** | The transactions of $6,714,476 in 2014 were comprised of the purchase of fixed assets from Nanjing Daqo Electric, Nanjing Daqo Transformer, Jiangsu Daqo, Chongqing Daqo Tailai and Intelligence Apparatus in the amount of $763,856, $1,913,941, $1,165,346, $2,724,790 and $146,543, respectively. | |||||||||||||||
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
EARNINGS PER SHARE [Abstract] | |||||||||||||
EARNINGS PER SHARE | 16. EARNINGS PER SHARE | ||||||||||||
The calculation of earnings per share is as follows: | |||||||||||||
Year ended December 31, | |||||||||||||
2012 | 2013 | 2014 | |||||||||||
Numerator used in basic and diluted earnings per share: | |||||||||||||
Net (loss) income attributable to Daqo New Energy Corp. ordinary shareholders—basic and diluted | $ | (111,928,891 | ) | $ | (70,943,484 | ) | $ | 16,649,176 | |||||
Denominator used in basic and diluted earnings per share: | |||||||||||||
Weighted average number of ordinary shares outstanding used in computing earnings per share—basic | 175,067,343 | 173,068,420 | 206,349,976 | ||||||||||
Plus: share options | — | — | 5,003,667 | ||||||||||
Weighted average number of ordinary shares outstanding used in computing earnings per share—diluted | 175,067,343 | 173,068,420 | 211,353,643 | ||||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO DAQO NEW ENERGY CORP. PER ORDINARY SHARE—Basic | $ | (0.64 | ) | $ | (0.41 | ) | $ | 0.08 | |||||
NET (LOSS) INCOME ATTRIBUTABLE TO DAQO NEW ENERGY CORP. PER ORDINARY SHARE—Diluted | $ | (0.64 | ) | $ | (0.41 | ) | $ | 0.08 | |||||
Outstanding employee options totaling of 7,179,500, 6,371,250 and 6,154,166 were excluded from the computation of diluted earnings per share as their effects would have been anti-dilutive for the year ended December 31, 2012, 2013 and 2014, respectively. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||||
COMMITMENTS AND CONTINGENCIES | 17. COMMITMENTS AND CONTINGENCIES | ||||
Capital commitments | |||||
As of December 31, 2014, commitments outstanding for the purchases of property, plant and equipment approximated $34.8 million, which will be due subsequent to receipt of the purchases. | |||||
Lease commitments | |||||
The operating lease commitments as of December 31, 2014 were principally for its facility in Daqo New Material. The lease expense was $580,724, $164,811 and $1,071,287 for the year ended December 31, 2012, 2013 and 2014, respectively. | |||||
Future minimum lease payments are as follows: | |||||
Year ending December 31 | USDUSD | ||||
2015 | $ | 1,071,287 | |||
2016 | 1,071,287 | ||||
2017 | - | ||||
Total | $ | 2,142,574 | |||
Legal Matter | |||||
The Group is the defendant in arbitration involving a supplier claiming approximately $0.8 million from alleged breach of an equipment supply contract. The Group determined that the likelihood of loss is probable and the best estimate of loss is $0.4 million. Accordingly, the contingent liability of $0.4 million was accrued in "Accrued Expenses And Other Current Liabilities" as of December 31, 2014. | |||||
VARIABLE_INTEREST_ENTITY
VARIABLE INTEREST ENTITY | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
VARIABLE INTEREST ENTITY [Abstract] | ||||||||||||||
VARIABLE INTEREST ENTITY | 18. VARIABLE INTEREST ENTITY | |||||||||||||
The equity interests in Daqo New Material, the VIE, are funded by Daqo Group. Daqo New Material was structured to acquire land use rights and to erect certain facilities for the future use of the Group. | ||||||||||||||
The lease agreement with the VIE is structured such that Chongqing Daqo protect Daqo Group from potential losses from Daqo New Material. As a result of this agreement, Chongqing Daqo is the primary beneficiary of Daqo New Material. Lease income and expenses and associated receivables and payables are eliminated upon consolidation as intercompany transactions. Net income of the VIE is reflected as an adjustment to noncontrolling interest. The Group relies on the lease agreements with Daqo New Material for material property, plant and equipment necessary for production. If Daqo New Material fails to perform or terminates the lease agreement for any reason, including, for example, due to its breach of the agreement or the unavailability of any required governmental approvals, or if it refuses to extend or renew the lease agreement when the agreement expires, and the Group cannot find an immediately available alternative source for leasing similar property, plant and equipment, then the Group's ability to carry on the operations will be impaired. If Daqo New Material fails to perform its obligations, the Group may need to initiate legal procedures to enforce the agreement. | ||||||||||||||
On December 31, 2013, Chongqing Daqo and Daqo New Material terminated this lease agreement. As a result of the change, Chongqing Daqo no longer has the power to direct the activities that most significantly impact Daqo New Material's operations, and as such Chongqing Daqo ceased to be the primary beneficiary of Daqo New Material and deconsolidated the entity on the date the lease arrangement was terminated, December 30, 2013. No gain or loss was recorded on termination of VIE arrangement. After deconsolidation, Daqo New Material remains a related party of the Group. On January 1, 2014, Chongqing Daqo signed a new operating lease agreement with Daqo New Material with respect to certain limited facilities, including the dining hall, office space and portions of the employee dormitory which it uses for its wafer business located nearby. The term of the lease is three years and the annual rental for these facilities is approximately $1 million. | ||||||||||||||
Daqo New Material leased all of its assets for use in the Group's operations before December 30, 2014. The revenues, operating costs and expenses and net income of the VIE are as follows: | ||||||||||||||
Year ended December 31, | ||||||||||||||
2012 | 2013 | 2014 | ||||||||||||
Revenues | $ | 10,743,336 | $ | — | * | $ | * | |||||||
Operating costs and expenses | $ | 14,451,810 | $ | 150,147,024 | $ | * | ||||||||
Net income (loss) | $ | (3,708,474 | ) | $ | (150,147,024 | ) | $ | * | ||||||
* | ||||||||||||||
The lease term was amended at the beginning of 2013 and reduced the rent to $0 per month and was later terminated on December 30, 2013. | ||||||||||||||
SEGMENT_INFORMATION
SEGMENT INFORMATION | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
SEGMENT INFORMATION [Abstract] | |||||||||||||||||
SEGMENT INFORMATION | 19. SEGMENT INFORMATION | ||||||||||||||||
The Group's chief operating decision maker has been identified as the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Group. Following the further expansion of module business and entering into the wafer business in 2011, the Group operated and viewed its performance in three segments. However, on September 28, 2012, the module business was disposed (see Note 3). Therefore, only two segments remained in 2013 and 2014, and the segment information in prior years was restated to be consistent with the current year reportable segments. Furthermore, the Group's chief operating decision maker is not provided with asset information by segment. As such, no asset information by segment is presented. The following tables summarized the Group's revenue and cost generated from different revenue streams. Substantially all of its revenues are derived in the PRC. The Group's long lived assets and operations are substantially all located in the PRC. | |||||||||||||||||
The following table summarizes the Group's revenue by segment: | |||||||||||||||||
Year ended December 31, 2012 | Polysilicon | Wafer | Elimination | Total | |||||||||||||
Revenue - External | $ | 73,450,807 | $ | 13,407,594 | $ | $ | 86,858,401 | ||||||||||
Revenue - Intersegment | 6,067,339 | — | (6,067,339 | ) | — | ||||||||||||
Total revenue | 79,518,146 | 13,407,594 | (6,067,339 | ) | 86,858,401 | ||||||||||||
Total Cost of revenue | 110,243,043 | 20,114,680 | (6,067,339 | ) | 124,290,384 | ||||||||||||
Gross loss | $ | (30,724,897 | ) | $ | (6,707,086 | ) | $ | — | $ | (37,431,983 | ) | ||||||
Year ended December 31, 2013 | Polysilicon | Wafer | Elimination | Total | |||||||||||||
Revenue - External | $ | 76,721,105 | $ | 32,278,700 | $ | - | $ | 108,999,805 | |||||||||
Revenue - Intersegment | 13,195,838 | - | (13,195,838 | ) | - | ||||||||||||
Total revenue | 89,916,943 | 32,278,700 | (13,195,838 | ) | 108,999,805 | ||||||||||||
Total Cost of revenue | 98,684,325 | 49,614,921 | (13,195,838 | ) | 135,103,408 | ||||||||||||
Gross loss | $ | (8,767,382 | ) | $ | (17,336,221 | ) | $ | - | $ | (26,103,603 | ) | ||||||
Year ended December 31, 2014 | Polysilicon | Wafer | Elimination | Total | |||||||||||||
Revenue – External | $ | 127,692,325 | $ | 54,879,527 | $ | - | $ | 182,571,852 | |||||||||
Revenue - Intersegment | 29,424,883 | - | (29,424,883 | ) | - | ||||||||||||
Total Revenue | 157,117,208 | 54,879,527 | (29,424,883 | ) | 182,571,852 | ||||||||||||
Total Cost of revenue | 119,703,550 | 47,861,811 | (28,256,850 | ) | 139,308,511 | ||||||||||||
Gross Profit | $ | 37,413,658 | $ | 7,017,716 | $ | (1,168,033 | ) | $ | 43,263,341 | ||||||||
The following customers accounted for 10% or more of revenues: | |||||||||||||||||
Year ended December 31, | |||||||||||||||||
2012 | 2013 | 2014 | |||||||||||||||
Customer I | $ | 21,749,284 | $ | * | $ | * | |||||||||||
Customer J | $ | * | $ | 19,644,488 | $ | 23,882,302 | |||||||||||
Customer C | $ | * | $ | * | $ | 18,210,196 | |||||||||||
Customer K | $ | * | $ | 13,471,873 | $ | * | |||||||||||
* | Represents less than 10% |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2014 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | 20. SUBSEQUENT EVENTS |
1) On January 12, 2015, the Company granted options to acquire 600,000 ordinary shares to independent directors pursuant to the 2014 Option Plan. | |
2) On January 12, 2015, the Company granted options to acquire 6,534,375 ordinary shares to directors, executive officers and employees pursuant to the 2014 Option Plan. | |
3) On January 12, 2015, the Company modified the exercise price for a total number of 6,274,166 options granted on January 28, 2014 from $1.49 per share to $0.87 per share. | |
4) In February 2015, the Company issued and sold 1,540,000 America depositary shares ("ADSs"), representing 38,500,000 ordinary shares, through a follow-on public offering. The proceeds, net of issuance cost of $2.1 million, were $28.0 million. The Company will use the net proceeds from this offering for general corporate purposes, including studying the feasibility of further expansion of its business, and working capital. | |
5) In January 2015, Chongqing Daqo Tailai, a related party, entered into an one-year credit facility agreement with Pingan Bank in the amount of $32.2 million (RMB200 million), of which $6.5 million (RMB40 million) is guaranteed by the Company. |
FINANCIAL_STATEMENT_SCHEDULE_I
FINANCIAL STATEMENT SCHEDULE I | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
FINANCIAL STATEMENT SCHEDULE I [Abstract] | |||||||||||||||||||||||||||||
FINANCIAL STATEMENT SCHEDULE I | FINANCIAL STATEMENT SCHEDULE I | ||||||||||||||||||||||||||||
DAQO NEW ENERGY CORP. | |||||||||||||||||||||||||||||
FINANCIAL INFORMATION OF PARENT COMPANY | |||||||||||||||||||||||||||||
BALANCE SHEET | |||||||||||||||||||||||||||||
DECEMBER 31, 2013 AND 2014 | |||||||||||||||||||||||||||||
(In U.S. dollars, except share data) | |||||||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||||||
2013 | 2014 | ||||||||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||||
CURRENT ASSETS | |||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 5,187,046 | $ | 4,493,150 | |||||||||||||||||||||||||
Prepaid expenses and other current assets | 177,487 | 204,682 | |||||||||||||||||||||||||||
Amount due from related party | 5,110,085 | 5,110,085 | |||||||||||||||||||||||||||
Total current assets | 10,474,618 | 9,807,917 | |||||||||||||||||||||||||||
Investments in subsidiaries, net | 127,203,565 | 197,571,399 | |||||||||||||||||||||||||||
TOTAL ASSETS | $ | 137,678,183 | $ | 207,379,316 | |||||||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||||||
CURRENT LIABILITIES | |||||||||||||||||||||||||||||
Accrued expenses and other current liabilities | $ | 351,622 | $ | 324,720 | |||||||||||||||||||||||||
Amount due to related party | — | 286,526 | |||||||||||||||||||||||||||
Total current liabilities | 351,622 | 611,246 | |||||||||||||||||||||||||||
EQUITY | |||||||||||||||||||||||||||||
Ordinary shares ($0.0001 per value 500,000,000 shares authorized as of December 31, 2013 and 2014; 175,714,103 and 240,714,103 shares issued as of December 31, 2013 and 2014, respectively and 173,427,853 and 223,577,853 shares outstanding as of December 31, 2013 and 2014, respectively) | 17,343 | 22,358 | |||||||||||||||||||||||||||
Additional paid in capital | 146,676,163 | 203,125,494 | |||||||||||||||||||||||||||
Retained accumulated losses | (32,667,469 | ) | (16,018,293 | ) | |||||||||||||||||||||||||
Accumulated other comprehensive income | 23,699,196 | 20,037,183 | |||||||||||||||||||||||||||
Treasury stock | (398,672 | ) | (398,672 | ) | |||||||||||||||||||||||||
Total shareholders' equity | 137,326,561 | 206,768,070 | |||||||||||||||||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 137,678,183 | $ | 207,379,316 | |||||||||||||||||||||||||
FINANCIAL STATEMENT SCHEDULE I | |||||||||||||||||||||||||||||
DAQO NEW ENERGY CORP. | |||||||||||||||||||||||||||||
FINANCIAL INFORMATION OF PARENT COMPANY | |||||||||||||||||||||||||||||
STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | |||||||||||||||||||||||||||||
FOR THE YEARS ENDED DECEMBER 31, 2012, 2013 AND 2014 | |||||||||||||||||||||||||||||
(In U.S. dollars) | |||||||||||||||||||||||||||||
Year ended December 31, | |||||||||||||||||||||||||||||
2012 | 2013 | 2014 | |||||||||||||||||||||||||||
OPERATING EXPENSES | |||||||||||||||||||||||||||||
General and administrative | $ | (3,528,728 | ) | $ | (2,979,454 | ) | $ | (2,738,085 | ) | ||||||||||||||||||||
Research and development | (175,242 | ) | (76,646 | ) | (12,310 | ) | |||||||||||||||||||||||
Total operating expenses | (3,703,970 | ) | (3,056,100 | ) | (2,750,395 | ) | |||||||||||||||||||||||
LOSS FROM OPERATION | (3,703,970 | ) | (3,056,100 | ) | (2,750,395 | ) | |||||||||||||||||||||||
Interest income | 3,074 | 3,130 | 8,144 | ||||||||||||||||||||||||||
NET LOSS BEFORE SHARE OF RESULTS OF SUBSIDIARIES | (3,700,896 | ) | (3,052,970 | ) | (2,742,251 | ) | |||||||||||||||||||||||
Equity in (losses) earnings of subsidiaries | (108,228,045 | ) | (67,890,514 | ) | 19,391,427 | ||||||||||||||||||||||||
Net (loss) income attributable to Daqo New Energy Corporation ordinary shareholders | $ | (111,928,941 | ) | $ | (70,943,484 | ) | $ | 16,649,176 | |||||||||||||||||||||
Other comprehensive (loss) income: | |||||||||||||||||||||||||||||
Foreign currency translation adjustments | 2,206,182 | 4,148,190 | (3,662,013 | ) | |||||||||||||||||||||||||
Total other comprehensive income | 2,206,182 | 4,148,190 | (3,662,013 | ) | |||||||||||||||||||||||||
Comprehensive (loss) income | $ | (109,722,759 | ) | $ | (66,795,294 | ) | $ | 12,987,163 | |||||||||||||||||||||
FINANCIAL STATEMENT SCHEDULE I | |||||||||||||||||||||||||||||
DAQO NEW ENERGY CORP. | |||||||||||||||||||||||||||||
FINANCIAL INFORMATION OF PARENT COMPANY | |||||||||||||||||||||||||||||
STATEMENT OF CHANGES IN EQUITY | |||||||||||||||||||||||||||||
FOR YEARS ENDED DECEMBER 31, 2012, 2013 AND 2014 | |||||||||||||||||||||||||||||
(In U.S. dollars, except share data) | |||||||||||||||||||||||||||||
Ordinary shares | Treasury Stock | Additional | Retained | Accumulated | Total | ||||||||||||||||||||||||
paid in capital | earning (accumulated | other | |||||||||||||||||||||||||||
losses) | comprehensive | ||||||||||||||||||||||||||||
income | |||||||||||||||||||||||||||||
Number | $ | ||||||||||||||||||||||||||||
Balance at January 1, 2012 | 175,714,103 | 17,571 | — | 142,511,581 | 150,204,956 | 18,444,123 | 311,178,231 | ||||||||||||||||||||||
Net loss | — | — | — | — | (111,928,941 | ) | — | (111,928,941 | ) | ||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 2,206,182 | 2,206,182 | ||||||||||||||||||||||
Share-based compensation | — | — | — | 2,249,834 | — | — | 2,249,834 | ||||||||||||||||||||||
Repurchase | (2,836,670 | ) | (283 | ) | (494,928 | ) | (5,513 | ) | — | — | (500,724 | ) | |||||||||||||||||
Deconsolidation of Nanjing Daqo New Energy Co.,Ltd | — | — | — | — | — | (1,099,299 | ) | (1,099,299 | ) | ||||||||||||||||||||
Balance at December 31, 2012 | 172,877,433 | 17,288 | (494,928 | ) | 144,755,902 | 38,276,015 | 19,551,006 | 202,105,283 | |||||||||||||||||||||
Net loss | (70,943,484 | ) | (70,943,484 | ) | |||||||||||||||||||||||||
Other comprehensive income | 4,148,190 | 4,148,190 | |||||||||||||||||||||||||||
Share-based compensation | 1,881,401 | 1,881,401 | |||||||||||||||||||||||||||
Option Exercised | 550,420 | 55 | 96,256 | 38,860 | 135,171 | ||||||||||||||||||||||||
Deconsolidation of VIE | |||||||||||||||||||||||||||||
Balance at December 31, 2013 | 173,427,853 | $ | 17,343 | $ | (398,672 | ) | $ | 146,676,163 | $ | (32,667,469 | ) | $ | 23,699,196 | $ | 137,326,561 | ||||||||||||||
Net income | 16,649,176 | 16,649,176 | |||||||||||||||||||||||||||
Other comprehensive income | (3,662,013 | ) | (3,662,013 | ) | |||||||||||||||||||||||||
Share-based compensation | 1,792,819 | 1,792,819 | |||||||||||||||||||||||||||
Option Exercised | 150,000 | 15 | 37,065 | 37,080 | |||||||||||||||||||||||||
Follow-on equity offering | 50,000,000 | 5,000 | 54,619,447 | 54,624,447 | |||||||||||||||||||||||||
Balance at December 31, 2014 | 223,577,853 | $ | 22,358 | $ | (398,672 | ) | $ | 203,125,494 | $ | (16,018,293 | ) | $ | 20,037,183 | $ | 206,768,070 | ||||||||||||||
FINANCIAL STATEMENT SCHEDULE I | |||||||||||||||||||||||||||||
DAQO NEW ENERGY CORP. | |||||||||||||||||||||||||||||
FINANCIAL INFORMATION OF PARENT COMPANY | |||||||||||||||||||||||||||||
STATEMENT OF CASH FLOWS | |||||||||||||||||||||||||||||
FOR THE YEARS ENDED DECEMBER 31, 2012, 2013 AND 2014 | |||||||||||||||||||||||||||||
(In U.S. dollars) | |||||||||||||||||||||||||||||
Year ended December 31, | |||||||||||||||||||||||||||||
2012 | 2013 | 2014 | |||||||||||||||||||||||||||
OPERATING ACTIVITIES | |||||||||||||||||||||||||||||
Net (loss) income | $ | (111,928,941 | ) | $ | (70,943,484 | ) | $ | 16,649,176 | |||||||||||||||||||||
Share of results of subsidiaries | 108,228,045 | 67,890,514 | (19,391,427 | ) | |||||||||||||||||||||||||
Share-based compensation | 2,249,834 | 1,881,401 | 1,792,819 | ||||||||||||||||||||||||||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||||||||||||||||||||||||
Prepaid expenses and other current assets | (31,207 | ) | 344,717 | (27,195 | ) | ||||||||||||||||||||||||
Changes in other current liabilities | 214,231 | 137,390 | (26,901 | ) | |||||||||||||||||||||||||
Amount due from related party | (210,523 | ) | — | 286,526 | |||||||||||||||||||||||||
Net cash used in operating activities | (1,478,561 | ) | (689,462 | ) | (717,002 | ) | |||||||||||||||||||||||
INVESTING ACTIVITIES | |||||||||||||||||||||||||||||
Capital contributed to subsidiaries | (4,811,175 | ) | — | (54,638,421 | ) | ||||||||||||||||||||||||
Cash collected from subsidiaries when liquidation | 4,390,250 | 71,503 | — | ||||||||||||||||||||||||||
Disposition of Nanjing Daqo | 4,778,657 | — | — | ||||||||||||||||||||||||||
Cash used in investing activities | 4,357,732 | 71,503 | (54,638,421 | ) | |||||||||||||||||||||||||
FINANCING ACTIVITIES | |||||||||||||||||||||||||||||
Repurchase of ordinary shares | (500,724 | ) | — | — | |||||||||||||||||||||||||
Proceeds from follow-on equity offering | — | — | 58,000,000 | ||||||||||||||||||||||||||
Issuance cost of ordinary shares | — | — | (3,375,553 | ) | |||||||||||||||||||||||||
Proceeds from options exercised | — | 135,171 | 37,080 | ||||||||||||||||||||||||||
Cash provided by financing activities | (500,724 | ) | 135,171 | 54,661,527 | |||||||||||||||||||||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 2,378,447 | (482,788 | ) | (693,896 | ) | ||||||||||||||||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 3,291,387 | 5,669,834 | 5,187,046 | ||||||||||||||||||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 5,669,834 | $ | 5,187,046 | $ | 4,493,150 | |||||||||||||||||||||||
Supplemental disclosure of cash flow information: | |||||||||||||||||||||||||||||
Disposition of Nanjing Daqo: | |||||||||||||||||||||||||||||
Total consideration | $ | 9,888,742 | $ | — | $ | — | |||||||||||||||||||||||
Less: amount due from Daqo Group | (5,110,085 | ) | — | — | |||||||||||||||||||||||||
Total cash consideration received | $ | 4,778,657 | $ | — | $ | — | |||||||||||||||||||||||
FINANCIAL STATEMENT SCHEDULE I | |||||||||||||||||||||||||||||
DAQO NEW ENERGY CORP. | |||||||||||||||||||||||||||||
Notes to Schedule I | |||||||||||||||||||||||||||||
1 | Schedule I has been provided pursuant to the requirements of Rule 12-04(a) and 5-04(c) of Regulation S-X, which require condensed financial information as to the financial position, changes in financial position and results of operations of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have been presented when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. | ||||||||||||||||||||||||||||
2 | The condensed financial information of Daqo New Energy Corp has been prepared using the same accounting policies as set out in the accompanying consolidated financial statements except that the equity method has been used to account for investments in its subsidiaries. | ||||||||||||||||||||||||||||
3 | Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the Consolidated Financial Statements of the Company. | ||||||||||||||||||||||||||||
4 | As of December 31, 2014, there were no material contingencies, significant provisions of long-term obligations, mandatory dividend or redemption requirements of redeemable stocks or guarantees of the Company, except for those which have been separately disclosed in the Consolidated Financial Statement, if any. |
SUMMARY_OF_PRINCIPAL_ACCOUNTIN1
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES [Abstract] | |||||||||||||
Basis of presentation | (a) Basis of presentation | ||||||||||||
The consolidated financial statements of the Group have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). | |||||||||||||
The accompanying consolidated financial statements have been prepared assuming that the Group will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Group's ability to generate cash flows from operations, and the Group's ability to arrange adequate financing arrangements, including the renewal or rollover of its bank borrowings, to support its working capital requirements. | |||||||||||||
As of December 31, 2014, the Group's current liabilities exceed its current assets by $274,118,480. While the Group had cash and cash equivalents of $ 7,068,483, and short-term bank borrowings of $ 90,443,007 will be due within one year. The current portion of long-term bank borrowings amounting to $ 69,360,869 is restricted to purchase fixed assets and required to be paid off upon due dates. Additionally, the Group has capital commitment of $20.4 million to be fulfilled in the next twelve months. | |||||||||||||
However, the Group regards the going concern assumption as appropriate considering the following plans and actions: | |||||||||||||
1. On March 6, 2015, the Group obtained a letter of financial support from Daqo Group which has committed to provide sufficient financial support to the Group to ensure the Group has the funds required to satisfy its obligations as they come due in the normal course during the twelve months ending December 31, 2015. Further, the support letter provides that Daqo Group will not require the Group to pay the amount owed to the Daqo Group and subsidiaries of Daqo Group, Daqo Solar, Daqo New Material and Xinjiang Daqo Investment. | |||||||||||||
2. In February 2015, the Group has obtained approximately $28.0 million through follow-on equity offering. | |||||||||||||
3. For the first time since 2012, the Group generated net income and positive cash flow from operations in 2014 amounting to $16.7 million and $45.6 million, respectively. | |||||||||||||
4. The Group has or is in the process of taking a number of cost reduction initiatives, including the new hydrochlorination system, technology improvement and polysilicon capacity expansion in Xinjiang. | |||||||||||||
5. The Group has performed a review of its cash flow forecasts for the twelve month period ending December 31, 2015, and believes that its operating cash flow will be positive during the twelve month period ending December 31, 2015. | |||||||||||||
6. As of March 31, 2015, the Company successfully rolled over, renewed or replaced with new loans by existing creditors totaling $30.6 million. While there can be no assurance, management believes they will be able to roll over or renew substantially all of the $90.4 million of short term loans outstanding as of December 31, 2014. | |||||||||||||
Based on the above factors, management believes that adequate sources of liquidity will exist to fund the Group's working capital and capital expenditures requirements, and to meet its short term debt obligations, other liabilities and commitments as they become due. | |||||||||||||
Basis of consolidations | (b) Basis of consolidations | ||||||||||||
The consolidated financial statements include the financial statements of the Group. All intercompany transactions and balances have been eliminated on consolidation. | |||||||||||||
Use of estimates | (c) Use of estimates | ||||||||||||
The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Management has made significant estimates in a variety of areas, including but not limited to allowance for doubtful accounts, inventories valuation, useful lives and residual values of long-lived assets, impairment for long lived assets, consolidation of Daqo New Material, valuation allowances for deferred tax assets, interest capitalization, warranty accrual and certain assumptions used in the computation of share-based compensation and related forfeiture rates. The Group revised the estimates of expected useful lives of property, plant and equipment on January 1, 2014, and please refers to Note 2 (i) for details. | |||||||||||||
Concentration of credit risk | (d) Concentration of credit risk | ||||||||||||
Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, accounts receivable and notes receivable. | |||||||||||||
The Group places its cash and cash equivalents in various financial institutions in the PRC. The Group believes that no significant credit risk exists as these banks are principally government-owned financial institutions with high credit ratings. | |||||||||||||
Accounts receivable represent those receivables derived in the ordinary course of business. The Group conducts credit evaluations of customers to whom credit terms are extended. The Group establishes an allowance for doubtful accounts mainly based on aging of the receivables and other factors surrounding the credit risk of specific customers. The allowance for doubtful accounts is $7,160,782 and $3,189,110 as of December 31, 2013 and 2014, respectively, based on the aging of the receivables and the Group's assessment of the customers' credit risk. | |||||||||||||
The following customers accounted for 10% or more of accounts receivable: | |||||||||||||
December 31, | |||||||||||||
Accounts | 2013 | 2014 | |||||||||||
receivable | |||||||||||||
Customer A | $ | 3,673,455 | $ | * | |||||||||
Customer B | $ | 1,225,831 | $ | * | |||||||||
Customer C | $ | 1,507,576 | $ | 2,213,393 | |||||||||
Customer D | $ | * | $ | 1,578,947 | |||||||||
Customer E | $ | * | $ | 1,330,145 | |||||||||
Customer F | $ | * | $ | 1,071,415 | |||||||||
* | Represents less than 10% | ||||||||||||
From time to time, certain accounts receivable balances are settled in the form of notes receivable. As of December 31, 2013 and 2014, notes receivable represents bank acceptance drafts that are non-interest bearing and due within 6 months. | |||||||||||||
Total sales of polysilicon to the Group's largest customers whose sales constitute over 10% of revenue accounted for approximately 25%, 30% and 23% of revenues for the years ended December 31, 2012, 2013 and 2014, respectively. The Group is substantially dependent upon the continued participation of these customers in order to maintain its total revenues. Significantly reducing the Group's dependence on these customers is likely to take time and there can be no guarantee that the Group will succeed in reducing that dependence. | |||||||||||||
Furthermore, all of the Group's long-term bank borrowings are guaranteed by Daqo Group, our related party, who has also committed to provide financial support to meet the Group's short term bank borrowings obligations, other liabilities and commitments as they become due (see Note 2(a)). The Group's access to credit is significantly reliant on Daqo Group's ability and willingness to continue to provide sufficient financial support. | |||||||||||||
Cash and cash equivalents | (e) Cash and cash equivalents | ||||||||||||
Cash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal and use, and which have maturities of three months or less when purchased. | |||||||||||||
Restricted cash | (f) Restricted cash | ||||||||||||
Restricted cash amounted to $8,826,110 and $22,169,236 as of December 31, 2013 and 2014, respectively, and are deposited in bank accounts as deposits for short-term letters of credit and notes issued by several banks for purchases of raw materials, plant and equipment. These deposits carry fixed interest rates and will be released when the related letters of credit or notes are settled by the Group. The Group considers the restricted cash balances as equivalent to an investment whose return of principal requires the satisfaction of conditions (i.e., settlement of letters of credit or notes) rather than a withdrawal demand. Therefore, deposits and withdrawals of principal balances in restricted cash accounts represent the creation or return of investment and, accordingly, the Group has presented such deposits and withdrawals as investing activities in the consolidated statements of cash flows. | |||||||||||||
Allowance for Doubtful Accounts | (g) Allowance for Doubtful Accounts | ||||||||||||
The Group determines its allowance for doubtful accounts by actively monitoring the financial condition of its customers to determine the potential for any nonpayment of trade receivables. In determining its allowance for doubtful accounts, the Group also considers other economic factors, such as aging trends. The Group believes that its process of specific review of customers combined with overall analytical review provides an effective evaluation of ultimate collectability of trade receivables. | |||||||||||||
Inventories | (h) Inventories | ||||||||||||
Inventories are stated at lower of cost or market. Costs are determined using weighted average costs. Costs comprise direct materials, direct labor and overhead costs incurred in bringing the inventories to their present location and condition. The Group writes down the cost of excess inventories to the estimated market value based on historical and forecasted demand. Estimated market value is measured as the estimated selling price of each class of inventory in the ordinary course of business less estimated costs of completion and disposal. The charges to inventory for the years ended December 31, 2012, 2013 and 2014 were $14,821,620, $ 29,905,734 and $175,568, respectively. | |||||||||||||
The Group has outsourced portions of its manufacturing process, including cutting ingots into wafers, and converting wafers into solar cells, to various third-party manufacturers. These outsourcing arrangements may or may not include transfer of title of the raw material inventory (ingots, wafers or cells) to the third-party manufacturers. | |||||||||||||
For those outsourcing arrangements in which title does not transfer, the Group maintains the inventory in the balance sheet as raw materials inventory while it is in physical possession of the third-party manufacturers. Upon receipt of the processed inventory from the third-party manufacturers, it is reclassified to work-in-progress inventory with the processing fee capitalized as cost of inventory. | |||||||||||||
For those outsourcing arrangements in which title (including risk of loss) does transfer to the third-party manufacturer, the Group is contractually obligated to repurchase the processed inventory. To accomplish this, it enters into raw material sales agreements and processed inventory purchase agreements simultaneously with the third-party manufacturer. In such instances, where they are, in substance tolling arrangements, the Group retains the inventory in the consolidated balance sheets while it is in the physical possession of the third-party manufacturer. The cash received from the third-party manufacturer is recorded as a current liability on the balance sheet rather than revenue or deferred revenue. Upon receipt of the processed inventory, it is reclassified from raw materials to work-in-progress inventory and the processing fee paid to the third-party manufacturer is added to inventory cost. Cash payments for outsourcing arrangements which require prepayment for repurchase of the processed inventory are classified as current assets on the balance sheet. If there is no legal right of offset established by these arrangements, the associated assets and liabilities are presented separately on the balance sheet until the processed inventory is returned to the Group. | |||||||||||||
Property, plant and equipment | (i) Property, plant and equipment | ||||||||||||
Property, plant and equipment are recorded at cost less accumulated depreciation. Depreciation is recognized on a straight-line basis over the following estimated useful lives: | |||||||||||||
Buildings and plant | 30 years | ||||||||||||
Machinery and equipment | 15 years | ||||||||||||
Furniture, fixtures and equipment | 3-5 years | ||||||||||||
Motor vehicles | 6 years | ||||||||||||
The Group reassesses the reasonableness of the estimates of useful lives and residual values of long-lived assets when events or changes in circumstances indicate that the useful lives and residual values of a major asset or a major category of assets may not be reasonable. Factors that the Group considers in deciding when to perform an analysis of useful lives and residual values of long-lived assets include, but are not limited to, significant variance of a business or product line in relation to expectations, significant deviation from industry or economic trends, and significant changes or planned changes in the use of the assets. The analysis will be performed at the asset or asset category with the reference to the assets' conditions, current technologies, market, and future plan of usage and the useful lives of major competitors. | |||||||||||||
In 2013, the Group decided to relocate a majority of Chongqing's polysilicon assets to Xinjiang. As part of the decision to make significant investment to relocate the assets, the Group revisited the expectation as to the useful lives of these assets. Based on this review, the Group determined that the condition of its major assets, having now been in operations for a meaningful percentage of the original estimated lives, were in better condition, than the original useful life expectation had predicted, accordingly, the Group engaged an independent valuation firm to assist in reassessing the remaining economic useful life of the polysilicon assets in both Chongqing and Xinjiang. The analysis was completed in the first quarter of 2014. | |||||||||||||
Therefore, the Group revised the estimates of expected useful lives of long-lived assets from January 1, 2014. The useful lives of machinery and equipment were expended from 10 years to 15 years, while buildings and structures were expended from 20 years to 30 years. No changes were made to furniture, fixtures and equipment, or motor vehicles. During the year ended December 31, 2014, the change in useful lives reduced depreciation expense of approximately $18.7 million, a majority of which was recorded in "Total cost of revenues", accordingly the impact on net income and basic net income per share is $18.7 million and $0.09 per ordinary share respectively. | |||||||||||||
Costs incurred on construction are capitalized and transferred to property, plant and equipment upon completion, at which time depreciation commences. | |||||||||||||
Interest expense incurred for construction of property, plant, and equipment is capitalized as part of the cost of such assets. The Group capitalizes interest to the extent that expenditures to construct an asset have occurred and interest costs have been incurred. Interest expense capitalized for the years ended December 31, 2012, 2013 and 2014 was $7,245,747, $nil and $1,960,259 respectively. | |||||||||||||
Prepaid land use rights | (j) Prepaid land use rights | ||||||||||||
All land in the PRC is owned by the PRC government. The PRC government, according to PRC law, may sell the land use rights for a specified period of time. The Group's land use rights in the PRC are stated at cost less recognized lease expenses. Lease expense is recognized over the term of the agreement on a straight-line basis. The Group recorded lease expenses of $958,558, $781,706 and $628,052, for the years ended December 31, 2012, 2013 and 2014, respectively. | |||||||||||||
Impairment of long-lived assets | (k) Impairment of long-lived assets | ||||||||||||
The Group evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Factors that the Group considers in deciding when to perform an impairment review include, but are not limited to significant under-performance of a business or product line in relation to expectations, significant negative industry or economic trends, and significant changes or planed changes in the use of the assets. An impairment analysis is performed at the lowest level of identifiable independent cash flows for an asset or asset group. The Group makes subjective judgments in determining the independent cash flows that can be related to a specific asset group based on the asset usage model and manufacturing capabilities. The Group measures the recoverability of assets that will continue to be used in the operations by comparing the carrying value of the asset group to the estimate of the related total future undiscounted cash flows. If an asset group's carrying value is not recoverable through the related undiscounted cash flows, the impairment loss is measured by comparing the difference between the asset group's carrying value and its fair value. The Group determines the fair value of an asset or asset group utilizing estimated future discounted cash flows and incorporates assumptions that it believes marketplace participants would utilize. | |||||||||||||
During each of the three year ended December 31, 2012, 2013 and 2014, the impairment changes were $42,754,481, $158,424,827 and $nil, respectively. The impairment loss incurred during the year ended December 31, 2012 was related to the impairment of long-lived assets of the wafer business, and was triggered primarily by the significant decrease in average selling prices for wafers that was experienced in 2012. The impairment loss incurred during the year ended December 31, 2013 was related to the buildings and plant of polysilicon asset group in Chongqing Daqo and Daqo New Material, and was triggered primarily by the significant decrease in average selling prices for polysilicon and the Group's decision of relocating significant machinery and equipment located at Chongqing Daqo to Xinjiang Daqo as a part of its expansion plan. | |||||||||||||
Revenue recognition | (l) Revenue recognition | ||||||||||||
Product sales | |||||||||||||
The Group recognizes revenue when persuasive evidence of an arrangement exists, the sales price is fixed or determinable, delivery of the product has occurred, title and risk of loss have transferred to the customers and collectability of the receivable is reasonably assured. The majority of the sales contracts transfer title and risk of loss to customers upon receipt. Sales agreements for polysilicon and wafers typically do not contain product warranties except for return and replacement of defective products within a period generally ranging from 3 to 30 days from delivery. Sales agreements typically do not contain post-shipment obligations or other return or credit provisions. The Group may extend credit terms after assessing a number of factors to determine the customers' credit worthiness. | |||||||||||||
Customers frequently pay for products prior to the delivery of the products. Advance payments are recorded as advances from customers. | |||||||||||||
Service revenue | |||||||||||||
The Group also provides OEM services to customers, such as the provision of service to process polysilicon into ingots and wafers. The Group recognizes revenue when there is persuasive evidence of an arrangement, the service has been rendered, the sales price is fixed or determinable and collectability is reasonably assured. | |||||||||||||
Cost of revenues | (m) Cost of revenues | ||||||||||||
Cost of revenues consists of production related costs including costs of silicon raw materials, electricity and other utilities, consumables, direct labor, overhead costs, depreciation of property, plant and equipment, and manufacturing waste treatment processing fees. | |||||||||||||
Shipping and handling | (n) Shipping and handling | ||||||||||||
Costs to ship products to customers are recorded as selling expenses in the consolidated statements of operations. Costs to ship products to customers were $1,033,808, $1,901,384 and $2,054,786, respectively for the years ended December 31, 2012, 2013 and 2014. | |||||||||||||
Research and development expenses | (o) Research and development expenses | ||||||||||||
Research and development expenses include materials and utilities consumed in research and development activities, payroll and related costs and depreciation of property and equipment associated with the research and development activities, which are expensed when incurred. In the years ended December 31, 2013 and 2014, the Group incurred additional research and development expenses for its Xinjiang Phase II polysilicon facilities to achieve the targets for quality, capacity and cost during the pilot production period. | |||||||||||||
Government subsidies | (p) Government subsidies | ||||||||||||
The Group receives unrestricted cash subsidies from local government agencies. The government agencies use their discretion to determine the amount of the subsidies with reference to land use right fees, value-added tax and income taxes paid, bank loan interest expenses paid or electricity consumed by the Group, however, these subsidies do not represent tax refunds or reimbursements of expenditures. The subsidies are unrestricted as to use and can be utilized by the Group in any manner it deems appropriate. The Group has utilized, and expects to continue to utilize, these subsidies to fund general operating expenses. The Group records unrestricted cash government subsidies as other operating income in the consolidated statements of operations. Unrestricted cash government subsidies received for the years ended December 31, 2012, 2013 and 2014 were $9,250,296, $5,249,788 and $926,173, respectively. Government grants related to assets are recorded as long term liabilities and are recognized as an offset to depreciation expense on a straight-line basis over the useful life of the associated asset. The Group received government grants related to assets of $1,383,487, $1,172,160 and $113,735 during the years ended December 31, 2012, 2013 and 2014, respectively. | |||||||||||||
Income taxes | (q) Income taxes | ||||||||||||
Deferred income taxes are recognized for temporary differences between the tax bases of assets and liabilities and their reported amount in the consolidated financial statements, net operating loss carry-forwards and credits by applying enacted tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided in accordance with the laws of the relevant taxing authorities. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in which temporary differences are expected to be realized or settled. The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the statement of operations in the period of the enactment of the change. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on the characteristics of the underlying assets and liabilities, or the expected timing of their use when they do not relate to a specific asset or liability. | |||||||||||||
Share-based compensation | (r) Share-based compensation | ||||||||||||
The Group recognizes share-based compensation in the statement of operations based on the fair value of equity awards on the date of the grant, with compensation expense recognized over the period in which the grantee is required to provide service to the Group in exchange for the equity award. The Group has made an estimate of expected forfeiture and is recognizing compensation costs only for those equity awards expected to vest. The share-based compensation expenses have been categorized as either selling, general and administrative expenses, research and development expenses and cost of sales, depending on the job functions of the grantees. For the years ended December 31, 2012, 2013 and 2014, the Group recognized share-based compensation expense of $2,249,834, $1,881,401 and $1,792,819, respectively, which was classified as follows: | |||||||||||||
Year ended December 31, | |||||||||||||
2012 | 2013 | 2014 | |||||||||||
Selling, general and administrative expenses | $ | 2,018,817 | $ | 1,743,768 | $ | 1,544,078 | |||||||
Research and development expenses | 175,242 | 60,987 | 12,310 | ||||||||||
Cost of sales | 55,775 | 76,646 | 236,431 | ||||||||||
Total | $ | 2,249,834 | $ | 1,881,401 | $ | 1,792,819 | |||||||
Earnings (loss) per share | (s) (Loss) earnings per share | ||||||||||||
Basic (loss) earnings per ordinary share are computed by dividing the net (loss) net income attributable to ordinary shares by the weighted average number of ordinary shares outstanding during the year. | |||||||||||||
Diluted earnings per share is calculated by dividing net income attributable to ordinary shareholders as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary shares and dilutive ordinary share equivalents outstanding during the year. Diluted earnings per share is computed using the treasury stock method. During the years ended December 31, 2012, 2013 and 2014, the ordinary shares issuable upon the exercise of outstanding share options of nil, nil and 5,003,667 shares are included in the calculation of dilutive earnings per share. | |||||||||||||
Foreign currency translation | (t) Foreign currency translation | ||||||||||||
The reporting currency of the Company is the United States dollar (“U.S. dollar”). The functional currency of the Company is the U.S. dollar. Monetary assets and liabilities denominated in other currencies other than the U.S. dollar are translated into U.S. dollar at the rates of exchange in effect at the balance sheet dates. Transactions dominated in currencies other than the U.S. dollar during the year are converted into U.S. dollar at the applicable rates of exchange prevailing when the transactions occur. Transaction gains and losses are recorded in the statements of operations. | |||||||||||||
The financial records of the Company's PRC subsidiaries and VIE are maintained in Chinese Renminbi (“RMB”), which is their functional currency. Assets and liabilities are translated at the exchange rates at the balance sheet date. Equity accounts are translated at historical exchange rates. Revenues, expenses, gains and losses are translated at average rate of exchange prevailing during the periods presented. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive income in the statement of changes in equity and comprehensive income. | |||||||||||||
The RMB is not a freely convertible currency. The State Administration for Foreign Exchange of People's Republic of China, under the authority of the People's Bank of China, controls the conversion of RMB into foreign currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China foreign exchange trading system market. The Group's aggregate amount of cash and cash equivalents and restricted cash denominated in RMB amounted to $11,436,370 and $24,356,970 as of December 31, 2013 and 2014, respectively. | |||||||||||||
Comprehensive income | (u) Comprehensive income | ||||||||||||
Our financial statements include the Consolidated Statements of Comprehensive (Loss) Income as required by new accounting guidance, which we retrospectively adopted during 2012. As of December 31, 2013 and 2014, Accumulated Other Comprehensive Income was comprised entirely of foreign currency translation adjustments. | |||||||||||||
Fair value of financial instruments | (v) Fair value of financial instruments | ||||||||||||
The Group estimates fair value of financial assets and liabilities as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (also referred to as an exit price). The fair value measurement guidance establishes a hierarchy for inputs used in measuring fair value that gives the highest priority to observable inputs and the lowest priority to unobservable inputs. Valuation techniques used to measure fair value shall maximize the use of observable inputs. | |||||||||||||
• | Level 1—Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured. | ||||||||||||
• | Level 2—Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques. | ||||||||||||
• | Level 3—Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect the Group's own assumptions about the assumptions that market participants would use to price an asset or liability. | ||||||||||||
When available, the Group measures the fair value of financial instruments based on quoted market prices in active markets, valuation techniques that use observable market-based inputs or unobservable inputs that are corroborated by market data. Pricing information the Group obtains from third parties is internally validated for reasonableness prior to use in the consolidated financial statements. When observable market prices are not readily available, the Group generally estimates fair value using valuation techniques that rely on alternate market data or inputs that are generally less readily observable from objective sources and are estimated based on pertinent information available at the time of the applicable reporting periods. In certain cases, fair values are not subject to precise quantification or verification and may fluctuate as economic and market factors vary and the Group's evaluation of those factors changes. Although the Group uses its best judgment in estimating the fair value of these financial instruments, there are inherent limitations in any estimation technique. In these cases, a minor change in an assumption could result in a significant change in its estimate of fair value, thereby increasing or decreasing the amounts of the Group's consolidated assets, liabilities, shareholders' equity and net income or loss. | |||||||||||||
The Group's financial instruments include cash and cash equivalents, restricted cash, accounts receivable, other current assets, amount due from related parties, accounts payable, other current liabilities, payables for purchase of property, plant and equipment, amounts due to related parties and short-term and current portion of long-term bank borrowings. The carrying amounts of these short-term financial instruments approximate their fair values due to the short-term maturity of these instruments. | |||||||||||||
The fair values of the Group's plant and equipment and long-term bank borrowings as of December 31, 2013 and 2014 are estimated by discounted cash flow technique using an interest rate corresponding to debt with similar maturities and risks on the measurement date. | |||||||||||||
Variable Interest Entity | (w) Variable Interest Entity | ||||||||||||
The Group uses a qualitative approach in assessing the consolidation requirement for variable interest entities. The approach focuses on identifying which enterprise has the power to direct the activities that most significantly impact the variable interest entity's economic performance and which enterprise has the obligation to absorb losses or the right to receive benefits from the variable interest entity. In the event that the Group is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity will be included in the Group's Consolidated Financial Statements. | |||||||||||||
Noncontrolling interest | (x) Noncontrolling interest | ||||||||||||
The noncontrolling interest represents Daqo Group's equity interest in Daqo New Material. The Group classified the ownership interest in the consolidated entity held by a party other than the Group to noncontrolling interest in the consolidated financial statements. It also reported the consolidated net income at amounts that include the amounts attributable to both the parent and the noncontrolling interest on the face of the consolidated statements of operations and comprehensive income. On December 31, 2013, Daqo New Material was deconsolidated, therefore the noncontrolling interest was $nil as of December 31, 2013 and 2014. | |||||||||||||
Treasury Stock | (y) Treasury Stock | ||||||||||||
On July 9, 2012, the Company's Board of Directors authorized the Company to repurchase up to $5 million in aggregate value of its outstanding ordinary shares through open market or other legally permissible means prior to December 31, 2012 in accordance with applicable securities laws.. During the year ended December 31, 2012, the Company repurchased 2,836,670 shares for a total purchase price of $500,724. The Company has legal title to the shares, and no other party has the voting rights associated with these shares. | |||||||||||||
Recent accounting pronouncements | (z) Recent accounting pronouncements | ||||||||||||
On August 27, 2014, the FASB issued ASU 2014-15, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date of issuance of the entity's financial statements (or within one year after the date on which the financial statements are available to be issued, when applicable). Further, an entity must provide certain disclosures if there is “substantial doubt about the entity's ability to continue as a going concern.” The ASU is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The Group is in the process of evaluating the impact on its consolidated financial statements upon adoption. | |||||||||||||
In May 2014, the FASB issued a new pronouncement which affects any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts. In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (e.g. assets within the scope of Topic 360, Property, Plant, and Equipment, and intangible assets within the scope of Topic 350, Intangibles—Goodwill and Other) are amended to be consistent with the guidance on recognition and measurement (including the constraint on revenue) in this ASU. | |||||||||||||
The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: | |||||||||||||
Step 1: Identify the contract(s) with a customer. | |||||||||||||
Step 2: Identify the performance obligations in the contract. | |||||||||||||
Step 3: Determine the transaction price. | |||||||||||||
Step 4: Allocate the transaction price to the performance obligations in the contract. | |||||||||||||
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. | |||||||||||||
For a public entity, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. An entity should apply the amendments in this ASU using one of the following two methods: | |||||||||||||
1. Retrospectively to each prior reporting period presented and the entity may elect any of the following practical expedients: | |||||||||||||
For completed contracts, an entity need not restate contracts that begin and end within the same annual reporting period. | |||||||||||||
For completed contracts that have variable consideration, an entity may use the transaction price at the date the contract was completed rather than estimating variable consideration amounts in the comparative reporting periods. | |||||||||||||
For all reporting periods presented before the date of initial application, an entity need not disclose the amount of the transaction price allocated to remaining performance obligations and an explanation of when the entity expects to recognize that amount as revenue. | |||||||||||||
2. Retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. If an entity elects this transition method it also should provide the additional disclosures in reporting periods that include the date of initial application of: | |||||||||||||
The amount by which each financial statement line item is affected in the current reporting period by the application of this ASU as compared to the guidance that was in effect before the change. | |||||||||||||
The Group is in the process of evaluating the impact on its consolidated financial statements upon adoption. | |||||||||||||
SUMMARY_OF_PRINCIPAL_ACCOUNTIN2
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES [Abstract] | |||||||||||||
Schedule of Accounts Receivable | The following customers accounted for 10% or more of accounts receivable: | ||||||||||||
December 31, | |||||||||||||
Accounts | 2013 | 2014 | |||||||||||
receivable | |||||||||||||
Customer A | $ | 3,673,455 | $ | * | |||||||||
Customer B | $ | 1,225,831 | $ | * | |||||||||
Customer C | $ | 1,507,576 | $ | 2,213,393 | |||||||||
Customer D | $ | * | $ | 1,578,947 | |||||||||
Customer E | $ | * | $ | 1,330,145 | |||||||||
Customer F | $ | * | $ | 1,071,415 | |||||||||
* | Represents less than 10% | ||||||||||||
Schedule of Property, Plant and Equipment, Depreciation, Estimated Lives | Property, plant and equipment are recorded at cost less accumulated depreciation. Depreciation is recognized on a straight-line basis over the following estimated useful lives: | ||||||||||||
Buildings and plant | 30 years | ||||||||||||
Machinery and equipment | 15 years | ||||||||||||
Furniture, fixtures and equipment | 3-5 years | ||||||||||||
Motor vehicles | 6 years | ||||||||||||
Schedule of Share-Based Compensation Expenses | |||||||||||||
Year ended December 31, | |||||||||||||
2012 | 2013 | 2014 | |||||||||||
Selling, general and administrative expenses | $ | 2,018,817 | $ | 1,743,768 | $ | 1,544,078 | |||||||
Research and development expenses | 175,242 | 60,987 | 12,310 | ||||||||||
Cost of sales | 55,775 | 76,646 | 236,431 | ||||||||||
Total | $ | 2,249,834 | $ | 1,881,401 | $ | 1,792,819 |
EXIT_and_DISPOSAL_ACTIVITIES_T
EXIT and DISPOSAL ACTIVITIES (Tables) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
EXIT and DISPOSAL ACTIVITIES [Abstract] | ||||||
Schedule of Operating Results Reported as Discontinued Operations | The discontinued operations were retrospectively reflected for all the prior years presented in the consolidated statements of operations. The operating results reported as discontinued operations for the years ended December 31, 2012 are summarized as follows: | |||||
Year ended December 31, | ||||||
2012 | ||||||
Revenues | $ | 6,454,830 | ||||
Operating costs and expenses | (9,946,357 | ) | ||||
Loss from discontinued operations before income taxes | (3,491,527 | ) | ||||
Income tax benefit | — | |||||
Loss from discontinued operations | $ | (3,491,527 | ) |
ALLOWANCES_FOR_DOUBTFUL_RECEIV1
ALLOWANCES FOR DOUBTFUL RECEIVABLES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
ALLOWANCES FOR DOUBTFUL RECEIVABLES [Abstract] | |||||||||||||
Schedule of Allowances for Accounts Receivable | |||||||||||||
Year ended December 31, | |||||||||||||
2012 | 2013 | 2014 | |||||||||||
Beginning of the year | $ | 1,202,940 | $ | 1,592,467 | $ | 7,160,782 | |||||||
Allowances (Reversal) during the year | 359,733 | 5,482,019 | (3,823,744 | ) | |||||||||
Foreign exchange effect | 29,794 | 86,296 | (147,928 | ) | |||||||||
Closing balance | $ | 1,592,467 | $ | 7,160,782 | $ | 3,189,110 | |||||||
PREPAID_EXPENSE_AND_OTHER_CURR1
PREPAID EXPENSE AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
PREPAID EXPENSE AND OTHER CURRENT ASSETS [Abstract] | |||||||||
Schedule of Prepaid Expense and Other Current Assets | Prepaid expense and other current assets consist of the following: | ||||||||
December 31, | |||||||||
2013 | 2014 | ||||||||
Spare parts | $ | 6,264,805 | $ | 6,385,388 | |||||
Prepaid Value added tax (“VAT”) | 15,273,592 | 5,857,017 | |||||||
Prepaid insurance fee | 218,865 | 226,564 | |||||||
Others | 2,113,428 | 366,900 | |||||||
Total | $ | 23,870,690 | $ | 12,835,869 |
INVENTORIES_Tables
INVENTORIES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
INVENTORIES [Abstract] | |||||||||
Schedule of Inventories | Inventories consist of the following: | ||||||||
December 31, | |||||||||
2013 | 2014 | ||||||||
Raw materials | $ | 2,084,050 | $ | 1,362,944 | |||||
Work-in-process | 4,666,821 | 5,411,360 | |||||||
Finished goods | 3,749,385 | 2,807,480 | |||||||
Total | $ | 10,500,256 | $ | 9,581,784 |
PROPERTY_PLANT_AND_EQUIPMENT_N1
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
PROPERTY, PLANT AND EQUIPMENT, NET [Abstract] | |||||||||
Schedule of Property, Plant and Equipment, Net | Property, plant and equipment, net, consist of the following: | ||||||||
December 31, | |||||||||
2013 | 2014 | ||||||||
Cost | |||||||||
Buildings and plant | $ | 235,690,310 | $ | 233,230,935 | |||||
Machinery and equipment | 355,429,064 | 351,409,724 | |||||||
Furniture, fixtures and equipment | 21,329,752 | 18,469,913 | |||||||
Motor vehicles | 262,562 | 257,408 | |||||||
Less: Accumulated depreciation | (145,031,744 | ) | (169,264,463 | ) | |||||
Property, plant and equipment, net | $ | 467,679,944 | $ | 434,103,517 | |||||
Construction in process | 20,824,239 | 124,902,602 | |||||||
Total | $ | 488,504,183 | $ | 559,006,119 |
BORROWINGS_Tables
BORROWINGS (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
BORROWINGS [Abstract] | |||||||||
Schedule of Bank Borrowings | The Group's bank borrowings consisted of the following: | ||||||||
December 31, | |||||||||
2013 | 2014 | ||||||||
Short-term bank borrowings | $ | 68,821,014 | $ | 90,443,007 | |||||
Long-term bank borrowings, current portion | 50,049,843 | 69,360,869 | |||||||
Total borrowings, current | 118,870,857 | 159,803,876 | |||||||
Long-term bank borrowings, non-current portion | 134,870,287 | 77,336,160 | |||||||
Total | $ | 253,741,144 | $ | 237,140,036 | |||||
Schedule of Short-Term Borrowings | The Group's short-term bank borrowing consisted of the following: | ||||||||
December 31, | |||||||||
2013 | 2014 | ||||||||
Short-term bank borrowing guaranteed by Daqo Group and Mr. Guangfu Xu and Mr. Xiang Xu | $ | 28,080,770 | $ | 27,389,890 | |||||
Short-term bank borrowing guaranteed by Daqo Group and a third party | 11,562,670 | 11,278,190 | |||||||
Short-term credit bank borrowings | 29,177,574 | 51,774,927 | |||||||
Total | $ | 68,821,014 | $ | 90,443,007 | |||||
Schedule of Long-Term Bank Borrowings | December 31, | ||||||||
2013 | 2014 | ||||||||
Borrowing from China Construction Bank | $ | 7,102,783 | $ | 6,444,680 | |||||
Borrowing from Huaxia Bank | 35,679,096 | 25,778,720 | |||||||
Borrowing from Bank of China | 123,885,750 | 101,503,710 | |||||||
Borrowing from Chongqing Rural Commercial Bank | 18,252,501 | 12,969,919 | |||||||
Total | $ | 184,920,130 | $ | 146,697,029 | |||||
Schedule of Principal Maturities of Long-term Bank Borrowings | The principal maturities of these long-term bank borrowings as of December 31, 2014 are as follows: | ||||||||
31-Dec-14 | Amount | ||||||||
2015 | $ | 69,360,869 | |||||||
2016 | 40,279,250 | ||||||||
2017 | 37,056,910 | ||||||||
Total | $ | 146,697,029 |
ACCRUED_EXPENSES_AND_OTHER_CUR1
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES [Abstract] | |||||||||
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consist of the following: | ||||||||
December 31, | |||||||||
2013 | 2014 | ||||||||
Accrued payroll and welfare | $ | 2,588,312 | $ | 3,309,850 | |||||
Accrued professional fees | 624,825 | 576,786 | |||||||
Other tax payable | 1,378,963 | 2,263,055 | |||||||
Interest payable | 305,087 | 148,995 | |||||||
Government subsidy | 908,496 | — | |||||||
Contingent liability (Note 17) | — | 400,000 | |||||||
Others | 1,655,938 | 2,256,977 | |||||||
Total | $ | 7,461,621 | $ | 8,955,663 |
ADVANCES_FROM_CUSTOMERS_Tables
ADVANCES FROM CUSTOMERS (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
ADVANCES FROM CUSTOMERS [Abstract] | |||||||||
Schedule of Advances from Customers | Advances from customers consist of the following and is analyzed as long term and short term portion respectively: | ||||||||
December 31, | |||||||||
2013 | 2014 | ||||||||
Customer A* | $ | 15,987,573 | $ | 8,041,836 | |||||
Customer G | 4,220,355 | 2,405,619 | |||||||
Customer H | 2,996,550 | — | |||||||
Others | 1,937,418 | 262,747 | |||||||
Total | $ | 25,141,896 | $ | 10,710,202 | |||||
Less: Current portion of advances from customers | $ | 13,217,775 | $ | 7,308,535 | |||||
Long term advances from customers | $ | 11,924,121 | $ | 3,401,667 | |||||
* | Pursuant to the terms of the Group's revised supply agreement with this customer the Group will deliver monthly amounts of polysilicon, totaling no less than RMB2.4 million (equivalent of $0.4 million) from April 2014 to September 2016, or until such time as the advance has been fully utilized. |
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS [Abstract] | |||||||||||||||||||||||||
Schedule of Financial Instruments for which Fair Value Does not Approximate Carrying Value | The following table presents the financial instruments for which fair value does not approximate carrying value as of December 31, 2013 and 2014: | ||||||||||||||||||||||||
As of December 31, 2013 | As of December 31, 2014 | ||||||||||||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||||
Long-term bank borrowing | $ | 134,870,287 | $ | 124,047,823 | 77,336,160 | 71,422,148 | |||||||||||||||||||
Schedule of Nonrecurring Fair Value Measurements | The following table displays assets and liabilities that were measured at fair value on a non-recurring basis after initial recognition; | ||||||||||||||||||||||||
Year ended December 31, 2013 | |||||||||||||||||||||||||
Description | Carrying | Quoted Prices in | Significant | Significant | Total Losses | ||||||||||||||||||||
amount | Active Markets | Other | Unobservable | ||||||||||||||||||||||
for Identical | Observable | Inputs (Level 3) | |||||||||||||||||||||||
Assets (Level 1) | Inputs (Level 2) | ||||||||||||||||||||||||
Long-lived assets held and used | $ | 307,942,362 | $ | $ | 149,517,535 | $ | — | $ | 158,424,827 | ||||||||||||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
INCOME TAXES [Abstract] | |||||||||||||
Schedule of Income Tax Expenses | Income tax expenses comprise: | ||||||||||||
Year ended December 31, | |||||||||||||
2012 | 2013 | 2014 | |||||||||||
Current Tax Expenses (Benefit) | $ | (1,894,736 | ) | $ | (162,621 | ) | $ | — | |||||
Deferred Tax Expenses (Benefit) | 12,148,323 | 1,434,386 | — | ||||||||||
Total | $ | 10,253,587 | $ | 1,271,765 | $ | — | |||||||
Schedule of Deferred Tax Assets and Liabilities | The principal components of deferred income tax assets and liabilities are as follows: | ||||||||||||
December 31, | |||||||||||||
2013 | 2014 | ||||||||||||
Net operating loss carried forward | $ | 29,784,578 | $ | 27,349,606 | |||||||||
Inventory write-down | 1,531,750 | 26,141 | |||||||||||
Bad debt provision | 1,518,953 | 478,367 | |||||||||||
Government grants related to assets | 423,938 | 498,582 | |||||||||||
Long-lived asset impairment & depreciation | 23,083,996 | 21,009,037 | |||||||||||
Others | 290,652 | 748,018 | |||||||||||
Sub-total | 56,633,867 | 50,109,751 | |||||||||||
Valuation Allowance | (56,633,867 | ) | (50,109,751 | ) | |||||||||
Total | $ | - | $ | — | |||||||||
Deferred tax assets are analyzed as: | |||||||||||||
Current | $ | — | $ | — | |||||||||
Non-current | — | — | |||||||||||
Schedule of Changes of Valuation Allowance | Year ended December 31, | ||||||||||||
2012 | 2013 | 2014 | |||||||||||
Beginning balance | $ | — | $ | 37,682,733 | $ | 56,633,867 | |||||||
Additions (Reversal) | 37,238,701 | 56,697,096 | (5,168,917 | ) | |||||||||
Deconsolidation | — | (39,357,744 | ) | — | |||||||||
Foreign exchange effect | 444,032 | 1,611,782 | (1,355,199 | ) | |||||||||
Ending Balance | $ | 37,682,733 | $ | 56,633,867 | $ | 50,109,751 | |||||||
Schedule of Effective Income Tax Rate Reconciliation | The effective income tax rate of the Group is different from the expected PRC statutory rate as a result of the following items: | ||||||||||||
Year ended December 31, | |||||||||||||
2012 | 2013 | 2014 | |||||||||||
PRC Enterprise Income Tax | 25 | % | 25 | % | 25 | % | |||||||
Preferential income tax rate of a subsidiary | (9 | )% | (2 | )% | (9 | )% | |||||||
Effect of different reversal rate | 8 | % | 3 | % | 1 | % | |||||||
Additional tax deductions | — | % | (1 | )% | (8 | )% | |||||||
Non-deductible expenses | — | % | — | % | — | % | |||||||
Different tax rate in other jurisdictions | (1 | )% | — | % | 6 | % | |||||||
Changes in valuation allowance | (35 | )% | (26 | )% | — | % | |||||||
Tax credits | — | % | — | % | (15 | )% | |||||||
Prior year adjustment | 2 | % | — | % | — | % | |||||||
Effective tax rate | (10 | )% | (1 | )% | — | % |
SHARE_BASED_COMPENSATION_Table
SHARE BASED COMPENSATION (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||||||
SHARE BASED COMPENSATION [Abstract] | |||||||||||||||||||||||||||||||||
Schedule of Assumptions Used | The following assumptions were used in the Binomial option pricing model: | ||||||||||||||||||||||||||||||||
Year Ended December 31, 2013 | |||||||||||||||||||||||||||||||||
Options | Average | Exercise | Volatility | Dividend | Post- | ||||||||||||||||||||||||||||
granted | risk-free | multiple | rate | yield | vesting | ||||||||||||||||||||||||||||
rate of | forfeiture | ||||||||||||||||||||||||||||||||
return | rate | ||||||||||||||||||||||||||||||||
3-Apr-13 | 2.29% | 2.8 times | 51.78% | 0% | 3% | ||||||||||||||||||||||||||||
Year Ended December 31, 2014 | |||||||||||||||||||||||||||||||||
Options | Average | Exercise | Volatility | Dividend | Post- | ||||||||||||||||||||||||||||
granted | risk-free | multiple | rate | yield | vesting | ||||||||||||||||||||||||||||
rate of | forfeiture | ||||||||||||||||||||||||||||||||
return | rate | ||||||||||||||||||||||||||||||||
28-Jan-14 | 2.77% | 3.0-3.5 times | 93.00% | 0% | 3-9.5% | ||||||||||||||||||||||||||||
Summary of Stock Option Activity | A summary of the aggregate option activity and information regarding options outstanding as of December 31, 2014 is as follows: | ||||||||||||||||||||||||||||||||
Number of | Weighted | Weighted | Aggregate | ||||||||||||||||||||||||||||||
Options | Average | Average | Intrinsic | ||||||||||||||||||||||||||||||
Exercise | Remaining | Value | |||||||||||||||||||||||||||||||
Price | Contract Life | ||||||||||||||||||||||||||||||||
Options outstanding on January 1, 2014 | 6,371,250 | $ | 0.25 | ||||||||||||||||||||||||||||||
Granted | 6,274,166 | $ | 1.49 | ||||||||||||||||||||||||||||||
Forfeited | (112,500 | ) | $ | 1.49 | |||||||||||||||||||||||||||||
Expired | (7,500 | ) | $ | 1.49 | |||||||||||||||||||||||||||||
Exercised | (150,000 | ) | $ | 0.25 | |||||||||||||||||||||||||||||
Options outstanding on December 31, 2014 | 12,375,416 | $ | 0.87 | 7.23 | $ | 5,016,816 | |||||||||||||||||||||||||||
Options vested or expected to vest on December 31, 2014 | 8,693,171 | $ | 0.47 | 6.02 | $ | 5,763,445 | |||||||||||||||||||||||||||
Options exercisable on December 31, 2014 | 7,353,583 | $ | 0.51 | 6.07 | $ | 4,689,250 | |||||||||||||||||||||||||||
RELATED_PARTY_TRANSACTIONS_AND1
RELATED PARTY TRANSACTIONS AND BALANCES (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
RELATED PARTY TRANSACTIONS AND BALANCES [Abstract] | ||||||||||||||||
Schedule of Related Party Balances, Loans | December 31, | |||||||||||||||
2013 | 2014 | |||||||||||||||
Amount due from related party | ||||||||||||||||
Zhenjiang Daqo | $ | 6,898,980 | $ | 4,551,846 | ||||||||||||
Daqo Group | 6,465,561 | 5,110,085 | ||||||||||||||
Others | 51,911 | 325,037 | ||||||||||||||
Total | $ | 13,416,452 | $ | 9,986,968 | ||||||||||||
Schedule of Related Party Balances, Payables | ||||||||||||||||
December 31, | ||||||||||||||||
2013 | 2014 | |||||||||||||||
Amount due to related party | ||||||||||||||||
Daqo Solar | $ | 66,750,009 | $ | 54,275,617 | ||||||||||||
Xinjiang Daqo investment | 18,482,300 | 23,104,709 | ||||||||||||||
Daqo New Material | 449,988 | 4,950,746 | ||||||||||||||
Chongqing Daqo Tailai | - | 1,755,326 | ||||||||||||||
Nanjing Daqo Transformer | 18,546 | 1,595,659 | ||||||||||||||
Daqo Group | 461,796 | 1,339,128 | ||||||||||||||
Jiangsu Daqo | 46,437 | 1,200,018 | ||||||||||||||
Nanjing Daqo | 1,651,810 | - | ||||||||||||||
Nanjing Daqo Electric | 33,697 | 742,747 | ||||||||||||||
Others* | 643,207 | 734,201 | ||||||||||||||
Total | $ | 88,537,790 | $ | 89,698,151 | ||||||||||||
* | ||||||||||||||||
The remaining balance of amount due to related party of $734,201 as of December 31, 2014 was comprised of Zhenjiang Moeller, Intelligent Apparatus, Intelligent Software, Daqo Investment, Daqo Sailfar and Zhenjiang Daqo in the amount of $310,395, $302,807, $54,461, $5,360, $34, and $61,144, respectively. | ||||||||||||||||
Schedule of Related Party Transactions | -3 | The transactions with Daqo Group and its subsidiaries were as follows: | ||||||||||||||
Transaction | Year Ended December 31, | |||||||||||||||
Name of Related parties | Nature | 2012 | 2013 | 2014 | ||||||||||||
Daqo Group | Purchase-Fixed asset | 7,849,533 | — | 486,948 | ||||||||||||
Proceeds from interest free loans | — | 813,105 | 10,821,462 | |||||||||||||
Repayment of interest free loans | — | 813,105 | 8,115,813 | |||||||||||||
Disposition of 100% equity interest of Nan Jing Daqo | 9,888,742 | — | — | |||||||||||||
Zhenjiang Daqo | Sales | 2,799,428 | 13,471,866 | 9,554,320 | ||||||||||||
Daqo Solar | Sales | — | — | 9,595,680 | ||||||||||||
Prepayment received | 13,497,973 | — | — | |||||||||||||
Proceeds from interest free loans | — | 76,881,392 | 157,241,390 | |||||||||||||
Repayment of interest free loans | — | 28,379,678 | 166,231,092 | |||||||||||||
Nanjing Daqo | Sales | 80,126 | — | 112 | ||||||||||||
Proceeds from interest free loans | — | — | 973,898 | |||||||||||||
Repayment of interest free loans | — | — | 2,921,693 | |||||||||||||
Related party interest bearing loan | 1,584,820 | — | — | |||||||||||||
Interest charged | 40,611 | — | — | |||||||||||||
Xinjiang Daqo Investment | Prepayment received | 2,354,620 | — | — | ||||||||||||
Proceeds from interest free loans | — | 58,389,643 | 98,367,234 | |||||||||||||
Repayment of interest free loans | — | 40,193,785 | 93,219,846 | |||||||||||||
Daqo New Material | Proceeds from interest free loans | — | — | 7,729,501 | ||||||||||||
Repayment of interest free loans | — | — | 4,600,117 | |||||||||||||
Rental expense | — | — | 1,071,287 | |||||||||||||
Others subsidiaries under Daqo Group | Proceeds from interest free loans | — | — | 636 | ||||||||||||
Purchase-Fixed asset** | 202,556 | 157,742 | 6,714,476 | |||||||||||||
Purchase-Raw material | 5,282 | — | — | |||||||||||||
Total | Sales | $ | 2,799,427 | $ | 13,471,866 | $ | 19,150,112 | |||||||||
Disposition of 100% equity interest in Nanjing Daqo | $ | 9,888,742 | $ | — | $ | — | ||||||||||
Purchase-Fixed asset | $ | 8,052,089 | $ | 157,742 | $ | 7,201,424 | ||||||||||
Purchase-Raw material | $ | 5,282 | $ | — | $ | — | ||||||||||
Rental expense | $ | — | $ | — | $ | 1,071,287 | ||||||||||
Interest expense | $ | 40,611 | $ | — | $ | — | ||||||||||
Prepayment received* | $ | 15,852,593 | $ | — | $ | — | ||||||||||
Proceeds from interest free loans | $ | 1,584,820 | $ | 136,084,140 | $ | 275,134,122 | ||||||||||
Repayment of interest free loans | $ | — | $ | 69,386,568 | $ | 275,088,560 | ||||||||||
* | Prepayment has been considered a related party loan given there has been no deliveries since the prepayment was provided | |||||||||||||||
** | The transactions of $6,714,476 in 2014 were comprised of the purchase of fixed assets from Nanjing Daqo Electric, Nanjing Daqo Transformer, Jiangsu Daqo, Chongqing Daqo Tailai and Intelligence Apparatus in the amount of $763,856, $1,913,941, $1,165,346, $2,724,790 and $146,543, respectively. |
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
EARNINGS PER SHARE [Abstract] | |||||||||||||
Schedule of Calculation of Earnings Per Share | The calculation of earnings per share is as follows: | ||||||||||||
Year ended December 31, | |||||||||||||
2012 | 2013 | 2014 | |||||||||||
Numerator used in basic and diluted earnings per share: | |||||||||||||
Net (loss) income attributable to Daqo New Energy Corp. ordinary shareholders—basic and diluted | $ | (111,928,891 | ) | $ | (70,943,484 | ) | $ | 16,649,176 | |||||
Denominator used in basic and diluted earnings per share: | |||||||||||||
Weighted average number of ordinary shares outstanding used in computing earnings per share—basic | 175,067,343 | 173,068,420 | 206,349,976 | ||||||||||
Plus: share options | — | — | 5,003,667 | ||||||||||
Weighted average number of ordinary shares outstanding used in computing earnings per share—diluted | 175,067,343 | 173,068,420 | 211,353,643 | ||||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO DAQO NEW ENERGY CORP. PER ORDINARY SHARE—Basic | $ | (0.64 | ) | $ | (0.41 | ) | $ | 0.08 | |||||
NET (LOSS) INCOME ATTRIBUTABLE TO DAQO NEW ENERGY CORP. PER ORDINARY SHARE—Diluted | $ | (0.64 | ) | $ | (0.41 | ) | $ | 0.08 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||||
Schedule of Future Minimum Lease Payments | Future minimum lease payments are as follows: | ||||
Year ending December 31 | USDUSD | ||||
2015 | $ | 1,071,287 | |||
2016 | 1,071,287 | ||||
2017 | - | ||||
Total | $ | 2,142,574 |
VARIABLE_INTEREST_ENTITY_Table
VARIABLE INTEREST ENTITY (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
VARIABLE INTEREST ENTITY [Abstract] | ||||||||||||||
Schedule of Variable Interest Entities Financial Information | Daqo New Material leased all of its assets for use in the Group's operations before December 30, 2014. The revenues, operating costs and expenses and net income of the VIE are as follows: | |||||||||||||
Year ended December 31, | ||||||||||||||
2012 | 2013 | 2014 | ||||||||||||
Revenues | $ | 10,743,336 | $ | — | * | $ | * | |||||||
Operating costs and expenses | $ | 14,451,810 | $ | 150,147,024 | $ | * | ||||||||
Net income (loss) | $ | (3,708,474 | ) | $ | (150,147,024 | ) | $ | * | ||||||
* | ||||||||||||||
The lease term was amended at the beginning of 2013 and reduced the rent to $0 per month and was later terminated on December 30, 2013. |
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
SEGMENT INFORMATION [Abstract] | |||||||||||||||||
Summary of Financial Information by Segment | The following table summarizes the Group's revenue by segment: | ||||||||||||||||
Year ended December 31, 2012 | Polysilicon | Wafer | Elimination | Total | |||||||||||||
Revenue - External | $ | 73,450,807 | $ | 13,407,594 | $ | $ | 86,858,401 | ||||||||||
Revenue - Intersegment | 6,067,339 | — | (6,067,339 | ) | — | ||||||||||||
Total revenue | 79,518,146 | 13,407,594 | (6,067,339 | ) | 86,858,401 | ||||||||||||
Total Cost of revenue | 110,243,043 | 20,114,680 | (6,067,339 | ) | 124,290,384 | ||||||||||||
Gross loss | $ | (30,724,897 | ) | $ | (6,707,086 | ) | $ | — | $ | (37,431,983 | ) | ||||||
Year ended December 31, 2013 | Polysilicon | Wafer | Elimination | Total | |||||||||||||
Revenue - External | $ | 76,721,105 | $ | 32,278,700 | $ | - | $ | 108,999,805 | |||||||||
Revenue - Intersegment | 13,195,838 | - | (13,195,838 | ) | - | ||||||||||||
Total revenue | 89,916,943 | 32,278,700 | (13,195,838 | ) | 108,999,805 | ||||||||||||
Total Cost of revenue | 98,684,325 | 49,614,921 | (13,195,838 | ) | 135,103,408 | ||||||||||||
Gross loss | $ | (8,767,382 | ) | $ | (17,336,221 | ) | $ | - | $ | (26,103,603 | ) | ||||||
Year ended December 31, 2014 | Polysilicon | Wafer | Elimination | Total | |||||||||||||
Revenue – External | $ | 127,692,325 | $ | 54,879,527 | $ | - | $ | 182,571,852 | |||||||||
Revenue - Intersegment | 29,424,883 | - | (29,424,883 | ) | - | ||||||||||||
Total Revenue | 157,117,208 | 54,879,527 | (29,424,883 | ) | 182,571,852 | ||||||||||||
Total Cost of revenue | 119,703,550 | 47,861,811 | (28,256,850 | ) | 139,308,511 | ||||||||||||
Gross Profit | $ | 37,413,658 | $ | 7,017,716 | $ | (1,168,033 | ) | $ | 43,263,341 | ||||||||
Schedule of Revenues of Major Customers | The following customers accounted for 10% or more of revenues: | ||||||||||||||||
Year ended December 31, | |||||||||||||||||
2012 | 2013 | 2014 | |||||||||||||||
Customer I | $ | 21,749,284 | $ | * | $ | * | |||||||||||
Customer J | $ | * | $ | 19,644,488 | $ | 23,882,302 | |||||||||||
Customer C | $ | * | $ | * | $ | 18,210,196 | |||||||||||
Customer K | $ | * | $ | 13,471,873 | $ | * | |||||||||||
* | Represents less than 10% |
SUMMARY_OF_PRINCIPAL_ACCOUNTIN3
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Additional Information) (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Feb. 28, 2015 | 30-May-14 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Basis of presentation | |||||||
Working capital | ($274,118,480) | ||||||
Cash and cash equivalents | 7,068,483 | 7,831,084 | 6,679,024 | 92,697,098 | |||
Rolled over, renewed or replaced borrowings | 30,600,000 | ||||||
Short-term bank borrowings | 90,443,007 | ||||||
Current portion of long-term debt | 69,360,869 | 50,049,843 | |||||
Capital commitment | 20,400,000 | ||||||
Follow-on equity offering, net of issuance costs | 28,000,000 | 54,600,000 | 54,624,447 | ||||
Net income | 16,649,176 | -221,090,508 | -115,637,415 | ||||
Cash flow from operations | 45,619,729 | -16,525,817 | -10,307,234 | ||||
Restricted cash | |||||||
Restricted cash | 22,169,236 | 8,826,110 | |||||
Inventories | |||||||
Inventory write-down | 175,568 | 29,905,734 | 14,821,620 | ||||
Prepaid land use rights | |||||||
Lease Expenses | 628,052 | 781,706 | 958,558 | ||||
Impairment of long-lived assets | |||||||
Long-lived asset impairment | 158,424,827 | 42,754,481 | |||||
Shipping and handling | |||||||
Shipping and handling costs | 2,054,786 | 1,901,384 | 1,033,808 | ||||
Government subsidies | |||||||
Unrestricted cash government subsidies | 926,173 | 5,249,788 | 9,250,296 | ||||
Government grants related to assets | 113,735 | 1,172,160 | 1,383,487 | ||||
Earnings per share | |||||||
Ordinary shares from options included in calculation of dilutive earnings per share | 5,003,667 | ||||||
Foreign currency translation | |||||||
Aggregate amount of cash and cash equivalents and restricted cash denominated in RMB | 24,356,970 | 11,436,370 | |||||
Noncontrolling interest | |||||||
Noncontrolling interest | |||||||
Treasury Stock | |||||||
Share repurchase program, authorized amount | 5,000,000 | ||||||
Purchase price of treasury stock | 500,724 | ||||||
Common Stock Outstanding [Member] | |||||||
Basis of presentation | |||||||
Follow-on equity offering, net of issuance costs | 5,000 | ||||||
Net income | |||||||
Treasury Stock | |||||||
Number of shares repurchased | 2,836,670 |
SUMMARY_OF_PRINCIPAL_ACCOUNTIN4
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Concentration of Credit Risk) (Details) (USD $) | 12 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Concentration of credit risk | |||||
Accounts receivable, allowance for doubtful accounts | 3,189,110 | 7,160,782 | |||
Accounts receivable | 8,714,261 | 9,909,662 | |||
Sales [Member] | |||||
Concentration of credit risk | |||||
Concentration risk, percentage | 23.00% | 30.00% | 25.00% | ||
Customer A [Member] | |||||
Concentration of credit risk | |||||
Accounts receivable | [1] | 3,673,455 | |||
Customer B [Member] | |||||
Concentration of credit risk | |||||
Accounts receivable | [1] | 1,225,831 | |||
Customer C [Member] | |||||
Concentration of credit risk | |||||
Accounts receivable | 2,213,393 | 1,507,576 | |||
Customer D [Member] | |||||
Concentration of credit risk | |||||
Accounts receivable | 1,578,947 | [1] | |||
Customer E [Member] | |||||
Concentration of credit risk | |||||
Accounts receivable | 1,330,145 | [1] | |||
Customer F [Member] | |||||
Concentration of credit risk | |||||
Accounts receivable | 1,071,415 | [1] | |||
[1] | Represents less than 10% |
SUMMARY_OF_PRINCIPAL_ACCOUNTIN5
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Property, Plant and Equipment) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Property, plant and equipment | |||
Interest expense capitalized | $1,960,259 | $7,245,747 | |
Depreciation of property, plant and equipment | 28,007,943 | 52,250,595 | 37,371,791 |
Net (loss) income | 16,649,176 | -221,090,508 | -115,637,415 |
Basic income per share | $0.08 | ($0.41) | ($0.64) |
Service Life [Member] | |||
Property, plant and equipment | |||
Depreciation of property, plant and equipment | -18,700,000 | ||
Net (loss) income | $18,700,000 | ||
Basic income per share | $0.09 | ||
Buildings and plant [Member] | |||
Property, plant and equipment | |||
Estimated useful lives | 30 years | 20 years | |
Machinery and equipment [Member] | |||
Property, plant and equipment | |||
Estimated useful lives | 15 years | 10 years | |
Furniture, fixtures and equipment [Member] | Minimum [Member] | |||
Property, plant and equipment | |||
Estimated useful lives | 3 years | ||
Furniture, fixtures and equipment [Member] | Maximum [Member] | |||
Property, plant and equipment | |||
Estimated useful lives | 5 years | ||
Motor vehicles [Member] | |||
Property, plant and equipment | |||
Estimated useful lives | 6 years |
SUMMARY_OF_PRINCIPAL_ACCOUNTIN6
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Share-based Compensation) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation | $1,792,819 | $1,881,401 | $2,249,834 |
Selling, general and administrative expenses [Member] | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation | 1,544,078 | 1,743,768 | 2,018,817 |
Research and development expenses [Member] | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation | 12,310 | 60,987 | 175,242 |
Cost of sales [Member] | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation | $236,431 | $76,646 | $55,775 |
EXIT_and_DISPOSAL_ACTIVITIES_D
EXIT and DISPOSAL ACTIVITIES (Details) | 12 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Sep. 28, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 28, 2012 | Mar. 31, 2012 | |
USD ($) | USD ($) | USD ($) | Wages [Member] | Electricity fees [Member] | Selling, general and administrative expenses [Member] | Carrying Value [Member] | Significant Production Assets [Member] | Significant Production Assets [Member] | Nanjing Daqo [Member] | Nanjing Daqo [Member] | Nanjing Daqo [Member] | Nanjing Daqo [Member] | Nanjing Daqo [Member] | Nanjing Daqo [Member] | |
USD ($) | USD ($) | USD ($) | USD ($) | Carrying Value [Member] | Carrying Value [Member] | USD ($) | USD ($) | USD ($) | USD ($) | CNY | USD ($) | ||||
USD ($) | USD ($) | ||||||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||||
Equity interest held | 100.00% | ||||||||||||||
Total consideration received | $9,900,000 | 62,000,000 | |||||||||||||
Total (loss) discontinued operations | -2,392,228 | -2,392,228 | |||||||||||||
Gain on disposition | 1,099,299 | 1,099,299 | |||||||||||||
Net assets | 12,000,000 | ||||||||||||||
Reclassification of foreign currency translation gain from other comprehensive income | 1,099,299 | 1,099,299 | |||||||||||||
Total cash consideration received | 4,778,657 | ||||||||||||||
Operating results reported as discontinued operations: | |||||||||||||||
Revenues | 6,454,830 | ||||||||||||||
Operating costs and expenses | -9,946,357 | ||||||||||||||
Loss from discontinued operations before income taxes | -2,100,000 | -3,491,527 | |||||||||||||
Income tax benefit | |||||||||||||||
Loss from discontinued operations | -3,491,527 | ||||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||||
Carrying value of assets | 307,942,362 | 116,100,000 | 144,700,000 | ||||||||||||
Impairment charge | 158,424,827 | 42,754,481 | |||||||||||||
Employee termination costs | 800,000 | ||||||||||||||
Carrying value of assets relocated | 46,100,000 | ||||||||||||||
Carrying value of assets yet to be relocated | 70,000,000 | ||||||||||||||
Relocation costs | 500,000 | 800,000 | |||||||||||||
Expected relocation costs | 2,300,000 | ||||||||||||||
Maintenance expenses | $500,000 | $300,000 | $200,000 |
FOLLOWON_EQUITY_OFFERING_Detai
FOLLOW-ON EQUITY OFFERING (Details) (USD $) | 1 Months Ended | 12 Months Ended | |||
Feb. 28, 2015 | 30-May-14 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
FOLLOW-ON EQUITY OFFERING [Abstract] | |||||
America depositary shares (ADSs) issued, shares | 2,000,000 | ||||
Follow-on equity offering, net of issuance costs, shares | 50,000,000 | ||||
Issuance cost for ordinary shares | ($3,400,000) | ($3,375,553) | |||
Follow-on equity offering, net of issuance costs | $28,000,000 | $54,600,000 | $54,624,447 |
ALLOWANCES_FOR_DOUBTFUL_RECEIV2
ALLOWANCES FOR DOUBTFUL RECEIVABLES (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Analysis of allowances for accounts receivable is as follows: | |||
Beginning of the year | $7,160,782 | $1,592,467 | $1,202,940 |
Allowances (Reversal) during the year | -3,823,744 | 5,482,019 | 359,733 |
Foreign exchange effect | -147,928 | 86,296 | 29,794 |
Closing balance | 3,189,110 | 7,160,782 | 1,592,467 |
Allowances reversed during the period | $4,171,528 |
PREPAID_EXPENSE_AND_OTHER_CURR2
PREPAID EXPENSE AND OTHER CURRENT ASSETS (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
PREPAID EXPENSE AND OTHER CURRENT ASSETS [Abstract] | ||
Spare parts | $6,385,388 | $6,264,805 |
Prepaid Value added tax ("VAT") | 5,857,017 | 15,273,592 |
Prepaid insurance fee | 226,564 | 218,865 |
Others | 366,900 | 2,113,428 |
Total | $12,835,869 | $23,870,690 |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
INVENTORIES [Abstract] | |||
Raw materials | $1,362,944 | $2,084,050 | |
Work-in-process | 5,411,360 | 4,666,821 | |
Finished goods | 2,807,480 | 3,749,385 | |
Total | 9,581,784 | 10,500,256 | |
Inventory write-down | $175,568 | $29,905,734 | $14,821,620 |
PROPERTY_PLANT_AND_EQUIPMENT_N2
PROPERTY, PLANT AND EQUIPMENT, NET (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Property, Plant and Equipment [Line Items] | |||
Total | $559,006,119 | $488,504,183 | |
Depreciation of property, plant and equipment | 28,007,943 | 52,250,595 | 37,371,791 |
Long-lived asset impairment | 158,424,827 | 42,754,481 | |
Buildings and plant [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 233,230,935 | 235,690,310 | |
Machinery and equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 351,409,724 | 355,429,064 | |
Furniture, fixtures and equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 18,469,913 | 21,329,752 | |
Motor vehicles [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 257,408 | 262,562 | |
Depreciable Asset [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Less: Accumulated depreciation | -169,264,463 | -145,031,744 | |
Total | 434,103,517 | 467,679,944 | |
Construction in process [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Cost | $124,902,602 | $20,824,239 |
BORROWINGS_Schedule_of_Bank_Bo
BORROWINGS (Schedule of Bank Borrowings) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
BORROWINGS [Abstract] | ||
Short-term bank borrowings | $90,443,007 | $68,821,014 |
Long-term bank borrowings, current portion | 69,360,869 | 50,049,843 |
Total borrowings, current | 159,803,876 | 118,870,857 |
Long-term bank borrowings, non-current portion | 77,336,160 | 134,870,287 |
Total | $237,140,036 | $253,741,144 |
BORROWINGS_ShortTerm_Borrowing
BORROWINGS (Short-Term Borrowings) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Short-term Debt [Line Items] | ||
Short-term credit bank borrowings | $90,443,007 | $68,821,014 |
Interest rate on short-term bank borrowings | 6.80% | 6.40% |
Bank Facilities [Member] | ||
Short-term Debt [Line Items] | ||
Maximum borrowing capacity of credit line | 8,500,000 | 18,200,000 |
Debt Guaranteed by Daqo Group and Mr. Guangfu Xu and Mr. Xinag Xu [Member] | ||
Short-term Debt [Line Items] | ||
Short-term credit bank borrowings | 27,389,890 | 28,080,770 |
Debt Guaranteed by Daqo Group and Third Party [Member] | ||
Short-term Debt [Line Items] | ||
Short-term credit bank borrowings | 11,278,190 | 11,562,670 |
Short-term Credit Borrowings [Member] | ||
Short-term Debt [Line Items] | ||
Short-term credit bank borrowings | $51,774,927 | $29,177,574 |
BORROWINGS_LongTerm_Borrowings
BORROWINGS (Long-Term Borrowings) (Details) | Dec. 31, 2014 | Dec. 31, 2013 | Jan. 31, 2015 | Jan. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 |
USD ($) | China Construction Bank [Member] | China Construction Bank [Member] | China Construction Bank [Member] | China Construction Bank [Member] | Huaxia Bank [Member] | Huaxia Bank [Member] | Huaxia Bank [Member] | Huaxia Bank [Member] | Huaxia Bank [Member] | Huaxia Bank [Member] | Huaxia Bank [Member] | Huaxia Bank [Member] | Bank of China [Member] | Bank of China [Member] | Bank of China [Member] | Chongqing Rural Commercial Bank [Member] | Chongqing Rural Commercial Bank [Member] | Bank Facilities [Member] | Bank Facilities [Member] | Bank Facilities [Member] | Bank Facilities [Member] | Bank Facilities [Member] | Bank Facilities [Member] | Bank Facilities [Member] | Bank Facilities [Member] | Bank Facilities [Member] | Bank Facilities [Member] | ||
Facility Two [Member] | Facility Two [Member] | Facility Two [Member] | Facility Two [Member] | USD ($) | CNY | USD ($) | CNY | Facility One [Member] | Facility One [Member] | Facility Two [Member] | Facility Two [Member] | USD ($) | CNY | USD ($) | USD ($) | CNY | USD ($) | USD ($) | China Construction Bank [Member] | China Construction Bank [Member] | Huaxia Bank [Member] | Huaxia Bank [Member] | Bank of China [Member] | Bank of China [Member] | Chongqing Rural Commercial Bank [Member] | Chongqing Rural Commercial Bank [Member] | |||
USD ($) | CNY | USD ($) | CNY | USD ($) | CNY | USD ($) | CNY | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | ||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Initiation date of credit facility | 21-Jan-09 | 21-Jan-09 | 28-Sep-11 | 28-Sep-11 | 30-Sep-11 | 30-Sep-11 | 26-Oct-11 | 26-Oct-11 | |||||||||||||||||||||
Term of facility | 6 years | 6 years | 4 years | 4 years | 6 years | 6 years | 4 years | 4 years | |||||||||||||||||||||
Maximum borrowing amount of credit facility | $64,400,000 | 400,000,000 | $64,400,000 | 400,000,000 | $120,800,000 | 750,000,000 | $39,600,000 | 245,500,000 | |||||||||||||||||||||
Interest rate spread over rate issued by People's Bank of China | 5.00% | 5.00% | 10.00% | 10.00% | |||||||||||||||||||||||||
Amount drawn down | 64,400,000 | 400,000,000 | 61,200,000 | 380,000,000 | 20,900,000 | 130,000,000 | 40,300,000 | 250,000,000 | 120,800,000 | 750,000,000 | 39,600,000 | 245,500,000 | |||||||||||||||||
Amount repaid | 6,400,000 | 40,000,000 | 58,000,000 | 360,000,000 | 38,700,000 | 240,000,000 | 19,300,000 | 120,000,000 | 26,600,000 | 165,000,000 | |||||||||||||||||||
Fixed interest rate | 6.65% | 6.65% | 6.90% | 6.90% | |||||||||||||||||||||||||
Amount of collateral | 8,700,000 | 103,400,000 | |||||||||||||||||||||||||||
Amount available for future draw down | 3,200,000 | 20,000,000 | |||||||||||||||||||||||||||
Weighted average interest rate | 6.90% | 7.20% | |||||||||||||||||||||||||||
Long-term bank borrowings | $146,697,029 | $146,697,029 | $184,920,130 | $6,444,680 | $7,102,783 | $25,778,720 | $35,679,096 | $101,503,710 | $123,885,750 | $12,969,919 | $18,252,501 |
BORROWINGS_Schedule_of_Princip
BORROWINGS (Schedule of Principal Maturities of Bank Borrowings) (Details) (USD $) | Dec. 31, 2014 |
BORROWINGS [Abstract] | |
2015 | $69,360,869 |
2016 | 40,279,250 |
2017 | 37,056,910 |
Total | $146,697,029 |
ACCRUED_EXPENSES_AND_OTHER_CUR2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES [Abstract] | ||
Accrued payroll and welfare | $3,309,850 | $2,588,312 |
Accrued professional fees | 576,786 | 624,825 |
Other tax payable | 2,263,055 | 1,378,963 |
Interest payable | 148,995 | 305,087 |
Government subsidy | 908,496 | |
Contingent liability (Note 17) | 400,000 | |
Others | 2,256,977 | 1,655,938 |
Total | $8,955,663 | $7,461,621 |
ADVANCES_FROM_CUSTOMERS_Detail
ADVANCES FROM CUSTOMERS (Details) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | ||
USD ($) | USD ($) | Customer A [Member] | Customer A [Member] | Customer A [Member] | Customer G [Member] | Customer G [Member] | Customer H [Member] | Customer H [Member] | Others [Member] | Others [Member] | |||
USD ($) | CNY | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | |||||
Deferred Revenue Arrangement [Line Items] | |||||||||||||
Total | $10,710,202 | $25,141,896 | $8,041,836 | [1] | $15,987,573 | [1] | $2,405,619 | $4,220,355 | $2,996,550 | $262,747 | $1,937,418 | ||
Less: Current portion of advances from customers | 7,308,535 | 13,217,775 | |||||||||||
Long term advances from customers | 3,401,667 | 11,924,121 | |||||||||||
Supply commitment | $400,000 | 2,400,000 | |||||||||||
[1] | Pursuant to the terms of the Group's revised supply agreement with this customer the Group will deliver monthly amounts of polysilicon, totaling no less than RMB2.4 million (equivalent of $0.4 million) from April 2014 to September 2016, or until such time as the advance has been fully utilized. |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Long-lived asset impairment | $158,424,827 | $42,754,481 | |
Daqo New Material Co., Ltd. [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Long-lived asset impairment | 143,000,000 | ||
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Nonrecurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Long-lived assets held and used | |||
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Nonrecurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Long-lived assets held and used | 149,517,535 | ||
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Long-lived assets held and used | |||
Carrying Value [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Long-term bank borrowing | 77,336,160 | 134,870,287 | |
Long-lived assets held and used | 307,942,362 | ||
Fair Value [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Long-term bank borrowing | 71,422,148 | 124,047,823 | |
Long-lived assets held and used | $150,000,000 |
MAINLAND_CHINA_CONTRIBUTION_PL1
MAINLAND CHINA CONTRIBUTION PLAN AND PROFIT APPROPRIATION (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
MAINLAND CHINA CONTRIBUTION PLAN AND PROFIT APPROPRIATION [Abstract] | |||
Defined contribution plan expenses | $3,130,308 | $3,142,213 | $3,325,383 |
Appropriated from accumulated loss | 20,190,729 | 16,803,191 | |
Restrictions of statutory reserves | $182,840,330 | $124,814,365 |
INCOME_TAXES_Narrative_Details
INCOME TAXES (Narrative) (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Operating Loss Carryforwards [Line Items] | |
Expiration of net operating losses carried forward | 31-Dec-18 |
Xinjiang Daqo New Energy Co., Ltd. [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating losses carried forward, subject to expiration | 109,398,425 |
Chongqing Daqo New Energy Co., Ltd. [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating losses carried forward | 109,400,000 |
Deferred tax assets | 27,400,000 |
Net operating losses carried forward, subject to expiration |
INCOME_TAXES_Schedule_of_Incom
INCOME TAXES (Schedule of Income Tax Expenses) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
INCOME TAXES [Abstract] | |||
Current Tax Expenses (Benefit) | ($162,621) | ($1,894,736) | |
Deferred Tax Expenses (Benefit) | 1,434,386 | 12,148,323 | |
Total | $1,271,765 | $10,253,587 |
INCOME_TAXES_Schedule_of_Defer
INCOME TAXES (Schedule of Deferred Income Tax Assets and Liabilities) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Deferred tax assets: | ||||
Net operating loss carried forward | $27,349,606 | $29,784,578 | ||
Inventory write-down | 26,141 | 1,531,750 | ||
Bad debt provision | 478,367 | 1,518,953 | ||
Government grants related to assets | 498,582 | 423,938 | ||
Long-lived asset impairment & depreciation | 21,009,037 | 23,083,996 | ||
Others | 748,018 | 290,652 | ||
Sub-total | 50,109,751 | 56,633,867 | ||
Valuation Allowance | -50,109,751 | -56,633,867 | -37,682,733 | |
Total | ||||
Deferred tax assets are analyzed as: | ||||
Current | ||||
Non-current |
INCOME_TAXES_Schedule_of_Chang
INCOME TAXES (Schedule of Changes of Valuation Allowance) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
INCOME TAXES [Abstract] | |||
Beginning balance | $56,633,867 | $37,682,733 | |
Additions (Reversal) | -5,168,917 | 56,697,096 | 37,238,701 |
Deconsolidation | -39,357,744 | ||
Foreign exchange effect | -1,355,199 | 1,611,782 | 444,032 |
Ending balance | $50,109,751 | $56,633,867 | $37,682,733 |
INCOME_TAXES_Schedule_of_Effec
INCOME TAXES (Schedule of Effective Income Tax Rate) (Details) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Effective income tax rate: | |||
PRC Enterprise Income Tax | 25.00% | 25.00% | 25.00% |
Preferential income tax rate of a subsidiary | -9.00% | -2.00% | -9.00% |
Effect of different reversal rate | 1.00% | 3.00% | 8.00% |
Additional tax deductions | -8.00% | -1.00% | |
Non-deductible expenses | |||
Different tax rate in other jurisdictions | 6.00% | -1.00% | |
Changes in valuation allowance | -26.00% | -35.00% | |
Tax credits | -15.00% | ||
Prior year adjustment | 2.00% | ||
Effective tax rate | -1.00% | -10.00% |
INCOME_TAXES_Schedule_of_Effec1
INCOME TAXES (Schedule of Effect of Tax Holidays) (Details) (USD $) | 12 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
INCOME TAXES [Abstract] | |||
The aggregate dollar effect | $3 | ||
Per share effect-basic and diluted | $0.01 |
SHARE_BASED_COMPENSATION_Narra
SHARE BASED COMPENSATION (Narrative) (Details) (USD $) | 12 Months Ended | 0 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 28, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Ordinary shares authorized | 21,000,000 | |||
Share-based compensation | $1,792,819 | $1,881,401 | $2,249,834 | |
Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share options granted | 12,375,416 | 6,371,250 | ||
Granted | 6,274,166 | 140,000 | 1,190,000 | |
Weighted average fair value of stock options granted | $0.98 | $0.11 | $0.23 | |
Share-based compensation | 1,792,819 | 1,881,401 | 2,249,834 | |
Unrecognized compensation cost related to non-vested stock options | $4,700,682 | |||
Unrecognized compensation cost, recognition period | 2 years 11 months 19 days | |||
Employee Stock Option [Member] | Independent Directors [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted | 566,666 | |||
Vesting period for plan | 2 years | |||
Vesting installments during vesting period | 24 | |||
Exercise price | $1.49 | |||
Employee Stock Option [Member] | Independent Directors [Member] | Share-based Compensation Award, Tranche One [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 25.00% | |||
Employee Stock Option [Member] | Independent Directors [Member] | Share-based Compensation Award, Tranche Two [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 25.00% | |||
Employee Stock Option [Member] | Independent Directors [Member] | Share-based Compensation Award, Tranche Three [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 50.00% | |||
Employee Stock Option [Member] | Relevant Employees and Executive Officers [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted | 5,707,500 | |||
Vesting period for plan | 3 years | |||
Vesting installments during vesting period | 36 | |||
Exercise price | $1.49 | |||
Employee Stock Option [Member] | Relevant Employees and Executive Officers [Member] | Share-based Compensation Award, Tranche One [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 25.00% | |||
Employee Stock Option [Member] | Relevant Employees and Executive Officers [Member] | Share-based Compensation Award, Tranche Two [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 25.00% | |||
Employee Stock Option [Member] | Relevant Employees and Executive Officers [Member] | Share-based Compensation Award, Tranche Three [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 50.00% |
SHARE_BASED_COMPENSATION_Sched
SHARE BASED COMPENSATION (Schedule of Assumptions Used with Binomial Option Valuation Model) (Details) (Employee Stock Option [Member]) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2014 | |
Options Granted April 3, 2013 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Average risk-free rate of return | 2.29% | |
Exercise multiple | 2.8 | |
Volatility rate | 51.78% | |
Dividend yield | 0.00% | |
Post-vesting forfeiture rate | 3.00% | |
Options Granted January 28, 2014 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Average risk-free rate of return | 2.77% | |
Volatility rate | 93.00% | |
Dividend yield | 0.00% | |
Options Granted January 28, 2014 [Member] | Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise multiple | 3 | |
Post-vesting forfeiture rate | 3.00% | |
Options Granted January 28, 2014 [Member] | Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise multiple | 3.5 | |
Post-vesting forfeiture rate | 9.50% |
SHARE_BASED_COMPENSATION_Summa
SHARE BASED COMPENSATION (Summary of Stock Option Activity) (Details) (Employee Stock Option [Member], USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Employee Stock Option [Member] | |||
Number of Options | |||
Options outstanding | 6,371,250 | ||
Granted | 6,274,166 | 140,000 | 1,190,000 |
Forfeited | -112,500 | ||
Expired | -7,500 | ||
Exercised | -150,000 | ||
Options outstanding | 12,375,416 | 6,371,250 | |
Options vested or expected to vest | 8,693,171 | ||
Options exercisable | 7,353,583 | ||
Weighted Average Exercise Price | |||
Options outstanding | $0.25 | ||
Granted | $1.49 | ||
Forfeited | $1.49 | ||
Expired | $1.49 | ||
Exercised | $0.25 | ||
Options outstanding | $0.87 | $0.25 | |
Options vested or expected to vest | $0.47 | ||
Options exercisable | $0.51 | ||
Weighted Average Remaining Contract Life | |||
Options outstanding | 7 years 2 months 23 days | ||
Options vested or expected to vest | 6 years 7 days | ||
Options exercisable | 6 years 25 days | ||
Aggregate Intrinsic Value | |||
Options outstanding | $5,016,816 | ||
Options vested or expected to vest | 5,763,445 | ||
Options exercisable | $4,689,250 |
RELATED_PARTY_TRANSACTIONS_AND2
RELATED PARTY TRANSACTIONS AND BALANCES (Details) (USD $) | 12 Months Ended | ||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 28, 2012 | ||||
Related Party Transaction [Line Items] | |||||||
Sales | $19,150,112 | $13,471,866 | $2,799,427 | ||||
Interest expense | 40,611 | ||||||
Related party balances: | |||||||
Amount due from related parties | 9,986,968 | 13,416,452 | |||||
Change in amount due from related parties | -2,193,604 | 6,853,965 | -8,418,601 | ||||
Amount due to related party | 89,698,151 | 88,537,790 | |||||
Disposition of Subsidiary [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 9,888,742 | ||||||
Purchases of Fixed Assets [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Purchases | 7,201,424 | 157,742 | 8,052,089 | ||||
Prepayment Received [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | [1] | [1] | 15,852,593 | [1] | |||
Purchases of Raw Materials [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Purchases | 5,282 | ||||||
Rental Expenses [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Expense | 1,071,287 | ||||||
Cash Proceeds from Transactions [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 275,134,122 | 136,084,140 | 1,584,820 | ||||
Cash Payments for Transactions [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 275,088,560 | 69,386,568 | |||||
Daqo Group [Member] | |||||||
Related party balances: | |||||||
Amount due from related parties | 5,110,085 | 6,465,561 | |||||
Amount due to related party | 1,339,128 | 461,796 | |||||
Daqo Group [Member] | Proceeds From Interest Free Loans [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 10,821,462 | 813,105 | |||||
Daqo Group [Member] | Repayment of Interest Free Loans [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 8,115,813 | 813,105 | |||||
Daqo Group [Member] | Disposition of Subsidiary [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 9,888,742 | ||||||
Daqo Group [Member] | Purchases of Fixed Assets [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Purchases | 7,849,533 | ||||||
Zhengjiang Daqo Solar Co. Ltd [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Sales | 9,554,320 | 13,471,866 | 2,799,428 | ||||
Related party balances: | |||||||
Amount due from related parties | 4,551,846 | 6,898,980 | |||||
Amount due to related party | 61,144 | ||||||
Zhengjiang Daqo Solar Co. Ltd [Member] | Daqo Group [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity interest held | 100.00% | ||||||
Daqo Solar Co Ltd [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Sales | 9,595,680 | ||||||
Related party balances: | |||||||
Amount due to related party | 54,275,617 | 66,750,009 | |||||
Daqo Solar Co Ltd [Member] | Daqo Group [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity interest held | 100.00% | ||||||
Daqo Solar Co Ltd [Member] | Proceeds From Interest Free Loans [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 157,241,390 | 76,881,392 | |||||
Daqo Solar Co Ltd [Member] | Repayment of Interest Free Loans [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 166,231,092 | 28,379,678 | |||||
Daqo Solar Co Ltd [Member] | Prepayment Received [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 13,497,973 | ||||||
Daqo Xinjiang Investment Co., Ltd. [Member] | |||||||
Related party balances: | |||||||
Amount due to related party | 23,104,709 | 18,482,300 | |||||
Daqo Xinjiang Investment Co., Ltd. [Member] | Daqo Group [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity interest held | 100.00% | ||||||
Daqo Xinjiang Investment Co., Ltd. [Member] | Proceeds From Interest Free Loans [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 98,367,234 | 58,389,643 | |||||
Daqo Xinjiang Investment Co., Ltd. [Member] | Repayment of Interest Free Loans [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 93,219,846 | 40,193,785 | |||||
Daqo Xinjiang Investment Co., Ltd. [Member] | Prepayment Received [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 2,354,620 | ||||||
Daqo New Material [Member] | |||||||
Related party balances: | |||||||
Amount due to related party | 4,950,746 | 449,988 | |||||
Daqo New Material [Member] | Daqo Group [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity interest held | 100.00% | ||||||
Daqo New Material [Member] | Proceeds From Interest Free Loans [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 7,729,501 | ||||||
Daqo New Material [Member] | Repayment of Interest Free Loans [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 4,600,117 | ||||||
Daqo New Material [Member] | Rental Expenses [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 1,071,287 | ||||||
Chongqing Daqo Tailai [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity interest held | 100.00% | ||||||
Related party balances: | |||||||
Amount due to related party | 1,755,326 | ||||||
Chongqing Daqo Tailai [Member] | Purchases of Fixed Assets [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Purchases | 2,724,790 | ||||||
Daqo Transformer [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity interest held | 100.00% | ||||||
Related party balances: | |||||||
Amount due to related party | 1,595,659 | 18,546 | |||||
Daqo Transformer [Member] | Purchases of Fixed Assets [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Purchases | 1,913,941 | ||||||
Jiangsu Daqo [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity interest held | 100.00% | ||||||
Related party balances: | |||||||
Amount due to related party | 1,200,018 | 46,437 | |||||
Jiangsu Daqo [Member] | Purchases of Fixed Assets [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Purchases | 1,165,346 | ||||||
Nanjing Daqo Electric [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity interest held | 100.00% | ||||||
Related party balances: | |||||||
Amount due to related party | 742,747 | 33,697 | |||||
Nanjing Daqo Electric [Member] | Purchases of Fixed Assets [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Purchases | 763,856 | ||||||
Zhenjiang Klockner-Moeller Electrical Systems Co., Ltd [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity interest held | 100.00% | ||||||
Related party balances: | |||||||
Amount due to related party | 310,395 | ||||||
Nanjing Daqo [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Sales | 112 | 80,126 | |||||
Interest expense | 40,611 | ||||||
Related party balances: | |||||||
Amount due to related party | 1,651,810 | ||||||
Nanjing Daqo [Member] | Daqo Group [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity interest held | 100.00% | 100.00% | |||||
Nanjing Daqo [Member] | Proceeds From Interest Free Loans [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 973,898 | ||||||
Nanjing Daqo [Member] | Repayment of Interest Free Loans [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 2,921,693 | ||||||
Nanjing Daqo [Member] | Loan Extended [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 1,584,820 | ||||||
Other Subsidiaries of Daqo Group [Member] | |||||||
Related party balances: | |||||||
Amount due from related parties | 325,037 | 51,911 | |||||
Amount due to related party | 734,201 | [2] | 643,207 | [2] | |||
Other Subsidiaries of Daqo Group [Member] | Proceeds From Interest Free Loans [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Other transactions | 636 | ||||||
Other Subsidiaries of Daqo Group [Member] | Purchases of Fixed Assets [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Purchases | 6,714,476 | [3] | 157,742 | [3] | 202,556 | [3] | |
Other Subsidiaries of Daqo Group [Member] | Purchases of Raw Materials [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Purchases | 5,282 | ||||||
Nanjing Intelligent Apparatus Co., Ltd [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity interest held | 100.00% | ||||||
Related party balances: | |||||||
Amount due to related party | 302,807 | ||||||
Nanjing Intelligent Apparatus Co., Ltd [Member] | Purchases of Fixed Assets [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Purchases | 146,543 | ||||||
Nanjing Intelligent Software Co., Ltd. [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity interest held | 100.00% | ||||||
Related party balances: | |||||||
Amount due to related party | 54,461 | ||||||
Daqo Investment Co., Ltd [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity interest held | 100.00% | ||||||
Related party balances: | |||||||
Amount due to related party | 5,360 | ||||||
Shanghai Sailfar Electric Technology Co., Ltd. [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity interest held | 100.00% | ||||||
Related party balances: | |||||||
Amount due to related party | $34 | ||||||
[1] | Prepayment has been considered a related party loan given there has been no deliveries since the prepayment was provided | ||||||
[2] | The remaining balance of amount due to related party of $734,201 as of December 31, 2014 was comprised of Zhenjiang Moeller, Intelligent Apparatus, Intelligent Software, Daqo Investment, Daqo Sailfar and Zhenjiang Daqo in the amount of $310,395, $302,807, $54,461, $5,360, $34, and $61,144, respectively. | ||||||
[3] | The transactions of $6,714,476 in 2014 were comprised of the purchase of fixed assets from Nanjing Daqo Electric, Nanjing Daqo Transformer, Jiangsu Daqo, Chongqing Daqo Tailai and Intelligence Apparatus in the amount of $763,856, $1,913,941, $1,165,346, $2,724,790 and $146,543, respectively. |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Numerator used in basic and diluted earnings per share: | |||
Net income (loss) attributable to Daqo New Energy Corp. ordinary shareholders-basic | $16,649,176 | ($70,943,484) | ($111,928,891) |
Net income (loss) attributable to Daqo New Energy Corp. ordinary shareholders-diluted | $16,649,176 | ($70,943,484) | ($111,928,891) |
Denominator used in basic and diluted earnings per share: | |||
Weighted average number of ordinary shares outstanding used in computing earnings per share-basic | 206,349,976 | 173,068,420 | 175,067,343 |
Plus: share options | 5,003,667 | ||
Weighted average number of ordinary shares outstanding used in computing earnings per share - diluted | 211,353,643 | 173,068,420 | 175,067,343 |
NET (LOSS) INCOME ATTRIBUTABLE TO DAQO NEW ENERGY CORP. PER ORDINARY SHARE-Basic | $0.08 | ($0.41) | ($0.64) |
NET (LOSS) INCOME ATTRIBUTABLE TO DAQO NEW ENERGY CORP. PER ORDINARY SHARE-Diluted | $0.08 | ($0.41) | ($0.64) |
Outstanding employee options excluded from computation of diluted earnings per share | 6,154,166 | 6,371,250 | 7,179,500 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Capital commitments: | |||
Commitments outstanding for the purchase of property, plant and equipment | $34,800,000 | ||
Lease commitments: | |||
Lease expense | 1,071,287 | 164,811 | 580,724 |
2015 | 1,071,287 | ||
2016 | 1,071,287 | ||
2017 | |||
Total | 2,142,574 | ||
Legal Matter | |||
Damages claimed for breach of contract | 800,000 | ||
Best estimate of loss | 400,000 | ||
Contingent liability | $400,000 |
VARIABLE_INTEREST_ENTITY_Detai
VARIABLE INTEREST ENTITY (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||||
Apr. 14, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Variable Interest Entity [Line Items] | ||||||
Revenues | $182,571,852 | $108,999,805 | $86,858,401 | |||
Net income (loss) | 16,649,176 | -70,943,484 | -111,928,941 | |||
Variable Interest Entity Primary Beneficiary [Member] | ||||||
Variable Interest Entity [Line Items] | ||||||
Revenues | [1] | [1] | 10,743,336 | |||
Operating costs and expenses | [1] | 150,147,024 | 14,451,810 | |||
Net income (loss) | [1] | -150,147,024 | -3,708,474 | |||
Lease term | 3 years | |||||
Annual rental payment | $1,000,000 | |||||
[1] | The lease term was amended at the beginning of 2013 and reduced the rent to $0 per month and was later terminated on December 30, 2013. |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) (USD $) | 12 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||
Segment Reporting Information [Line Items] | ||||||
Revenue | $182,571,852 | $108,999,805 | $86,858,401 | |||
Total Cost of revenue | 139,308,511 | 135,103,408 | 124,290,384 | |||
Gross (loss) profit | 43,263,341 | -26,103,603 | -37,431,983 | |||
Polysilicon [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 127,692,325 | 76,721,105 | 73,450,807 | |||
Wafer [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 54,879,527 | 32,278,700 | 13,407,594 | |||
Operating Segments [Member] | Polysilicon [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 157,117,208 | 89,916,943 | 79,518,146 | |||
Total Cost of revenue | 119,703,550 | 98,684,325 | 110,243,043 | |||
Gross (loss) profit | 37,413,658 | -8,767,382 | -30,724,897 | |||
Operating Segments [Member] | Wafer [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 54,879,527 | 32,278,700 | 13,407,594 | |||
Total Cost of revenue | 47,861,811 | 49,614,921 | 20,114,680 | |||
Gross (loss) profit | 7,017,716 | -17,336,221 | -6,707,086 | |||
Elimination [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | -29,424,883 | -13,195,838 | -6,067,339 | |||
Total Cost of revenue | -28,256,850 | -13,195,838 | -6,067,339 | |||
Gross (loss) profit | -1,168,033 | |||||
Elimination [Member] | Polysilicon [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | -29,424,883 | -13,195,838 | -6,067,339 | |||
Elimination [Member] | Wafer [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | ||||||
Customer I [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | [1] | [1] | 21,749,284 | |||
Customer J [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 23,882,302 | 19,644,488 | [1] | |||
Customer C [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 18,210,196 | [1] | [1] | |||
Customer K [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | [1] | $13,471,873 | [1] | |||
[1] | Represents less than 10% |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) | 1 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | ||||||||||||
Feb. 28, 2015 | 30-May-14 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 28, 2014 | Jan. 28, 2014 | Jan. 12, 2015 | Feb. 28, 2015 | Jan. 31, 2015 | Jan. 31, 2015 | Jan. 12, 2015 | Jan. 12, 2015 | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Scenario, Previously Reported [Member] | Employee Stock Option [Member] | Employee Stock Option [Member] | Employee Stock Option [Member] | Independent Directors [Member] | Relevant Employees and Executive Officers [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | |
USD ($) | USD ($) | Employee Stock Option [Member] | Employee Stock Option [Member] | USD ($) | USD ($) | Pingan Bank [Member] | Pingan Bank [Member] | Employee Stock Option [Member] | Independent Directors [Member] | ||||||||
USD ($) | CNY | Employee Stock Option [Member] | |||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||
Options granted | 6,274,166 | 140,000 | 1,190,000 | 566,666 | 5,707,500 | 6,274,166 | 6,534,375 | 600,000 | |||||||||
Exercise price of options granted | $1.49 | $1.49 | $0.87 | ||||||||||||||
America depositary shares (ADSs) issued, shares | 2,000,000 | 1,540,000 | |||||||||||||||
Follow-on equity offering, net of issuance costs, shares | 50,000,000 | 38,500,000 | |||||||||||||||
Issuance cost for ordinary shares | ($3,400,000) | ($3,375,553) | ($2,100,000) | ||||||||||||||
Follow-on equity offering, net of issuance costs | 28,000,000 | 54,600,000 | 54,624,447 | 28,000,000 | |||||||||||||
Maximum borrowing amount of credit facility | 32,200,000 | 200,000,000 | |||||||||||||||
Amount guaranteed by the Company | $6,500,000 | 40,000,000 |
FINANCIAL_STATEMENT_SCHEDULE_I1
FINANCIAL STATEMENT SCHEDULE I (BALANCE SHEET) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Current assets: | ||||
Cash and cash equivalents | $7,068,483 | $7,831,084 | $6,679,024 | $92,697,098 |
Prepaid expenses and other current assets | 12,835,869 | 23,870,690 | ||
Amount due from related party | 9,986,968 | 13,416,452 | ||
Total current assets | 121,949,234 | 91,144,427 | ||
TOTAL ASSETS | 710,131,219 | 610,199,543 | ||
Current liabilities: | ||||
Accrued expenses and other current liabilities | 8,955,663 | 7,461,621 | ||
Amount due to related party | 89,698,151 | 88,537,790 | ||
Total current liabilities | 396,067,715 | 299,123,874 | ||
EQUITY | ||||
Ordinary shares; $0.0001 per value 500,000,000 shares authorized as of December 31, 2013 and 2014; 175,714,103 and 225,864,103 shares issued as of December 31, 2013 and 2014, respectively and 173,427,853 and 223,577,853 shares outstanding as of December 31, 2013 and 2014, respectively | 22,358 | 17,343 | ||
Additional paid in capital | 203,125,494 | 146,676,163 | ||
Retained accumulated losses | -16,018,293 | -32,667,469 | ||
Accumulated other comprehensive income | 20,037,183 | 23,699,196 | ||
Treasury stock | -398,672 | -398,672 | ||
Total Daqo New Energy Corp. shareholders' equity | 206,768,070 | 137,326,561 | ||
TOTAL LIABILITIES AND EQUITY | 710,131,219 | 610,199,543 | ||
Ordinary shares: | ||||
Ordinary shares, par value | $0.00 | $0.00 | ||
Ordinary shares, shares authorized | 500,000,000 | 500,000,000 | ||
Ordinary shares, shares issued | 225,864,103 | 175,714,103 | ||
Ordinary shares, shares outstanding | 223,577,853 | 173,427,853 | ||
Parent Company [Member] | ||||
Current assets: | ||||
Cash and cash equivalents | 4,493,150 | 5,187,046 | 5,669,834 | 3,291,387 |
Prepaid expenses and other current assets | 204,682 | 177,487 | ||
Amount due from related party | 5,110,085 | 5,110,085 | ||
Total current assets | 9,807,917 | 10,474,618 | ||
Investments in subsidiaries, net | 197,571,399 | 127,203,565 | ||
TOTAL ASSETS | 207,379,316 | 137,678,183 | ||
Current liabilities: | ||||
Accrued expenses and other current liabilities | 324,720 | 351,622 | ||
Amount due to related party | 286,526 | |||
Total current liabilities | 611,246 | 351,622 | ||
EQUITY | ||||
Ordinary shares; $0.0001 per value 500,000,000 shares authorized as of December 31, 2013 and 2014; 175,714,103 and 225,864,103 shares issued as of December 31, 2013 and 2014, respectively and 173,427,853 and 223,577,853 shares outstanding as of December 31, 2013 and 2014, respectively | 22,358 | 17,343 | ||
Additional paid in capital | 203,125,494 | 146,676,163 | ||
Retained accumulated losses | -16,018,293 | -32,667,469 | ||
Accumulated other comprehensive income | 20,037,183 | 23,699,196 | ||
Treasury stock | -398,672 | -398,672 | ||
Total Daqo New Energy Corp. shareholders' equity | 206,768,070 | 137,326,561 | ||
TOTAL LIABILITIES AND EQUITY | $207,379,316 | $137,678,183 | ||
Ordinary shares: | ||||
Ordinary shares, par value | $0.00 | $0.00 | ||
Ordinary shares, shares authorized | 500,000,000 | 500,000,000 | ||
Ordinary shares, shares issued | 240,714,103 | 175,714,103 | ||
Ordinary shares, shares outstanding | 223,577,853 | 173,427,853 |
FINANCIAL_STATEMENT_SCHEDULE_I2
FINANCIAL STATEMENT SCHEDULE I (STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
OPERATING EXPENSES | |||
Research and development | ($1,486,978) | ($3,391,012) | ($4,130,533) |
Total operating expenses | -11,228,385 | -174,527,577 | -51,085,911 |
(Loss) income from operations | 32,034,956 | -200,631,180 | -88,517,894 |
Interest income | 324,118 | 149,752 | 990,117 |
Net (loss) income attributable to Daqo New Energy Corp. ordinary shareholders | 16,649,176 | -70,943,484 | -111,928,941 |
Other comprehensive (loss) income: | |||
Comprehensive (loss) income attributable to Daqo New Energy Corp. shareholders | 12,987,163 | -66,795,294 | -109,722,759 |
Parent Company [Member] | |||
OPERATING EXPENSES | |||
General and administrative | -2,738,085 | -2,979,454 | -3,528,728 |
Research and development | -12,310 | -76,646 | -175,242 |
Total operating expenses | -2,750,395 | -3,056,100 | -3,703,970 |
(Loss) income from operations | -2,750,395 | -3,056,100 | -3,703,970 |
Interest income | 8,144 | 3,130 | 3,074 |
NET LOSS BEFORE SHARE OF RESULTS OF SUBSIDIARIES | -2,742,251 | -3,052,970 | -3,700,896 |
Equity in (losses) earnings of subsidiaries | 19,391,427 | -67,890,514 | -108,228,045 |
Net (loss) income attributable to Daqo New Energy Corp. ordinary shareholders | 16,649,176 | -70,943,484 | -111,928,941 |
Other comprehensive (loss) income: | |||
Foreign currency translation adjustments | -3,662,013 | 4,148,190 | 2,206,182 |
Total other comprehensive income | -3,662,013 | 4,148,190 | 2,206,182 |
Comprehensive (loss) income attributable to Daqo New Energy Corp. shareholders | $12,987,163 | ($66,795,294) | ($109,722,759) |
FINANCIAL_STATEMENT_SCHEDULE_I3
FINANCIAL STATEMENT SCHEDULE I (STATEMENT OF CHANGES IN EQUITY) (Details) (USD $) | 1 Months Ended | 12 Months Ended | |||
Feb. 28, 2015 | 30-May-14 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Condensed Financial Statements, Captions [Line Items] | |||||
Balance | $137,326,561 | $340,877,413 | $452,026,227 | ||
Net income (loss) | 16,649,176 | -70,943,484 | -111,928,941 | ||
Share-based compensation | 1,792,819 | 1,881,401 | 2,249,834 | ||
Options Exercised | 37,080 | 135,171 | |||
Repurchase | -500,724 | ||||
Deconsolidation of Daqo New Material Co., Ltd. | 9,980,051 | ||||
Deconsolidation of Nanjing Daqo New Energy Co., Ltd | -1,099,299 | ||||
Follow-on equity offering, net of issuance costs | 28,000,000 | 54,600,000 | 54,624,447 | ||
Follow-on equity offering, net of issuance costs, shares | 50,000,000 | ||||
Balance | 206,768,070 | 137,326,561 | 340,877,413 | ||
Ordinary shares [Member] | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Balance | 17,343 | 17,288 | 17,571 | ||
Balance, shares | 173,427,853 | 172,877,433 | 175,714,103 | ||
Share-based compensation | |||||
Options Exercised | 15 | 55 | |||
Options Exercised, shares | 150,000 | 550,420 | |||
Repurchase | -283 | ||||
Repurchase, shares | -2,836,670 | ||||
Deconsolidation of Daqo New Material Co., Ltd. | |||||
Follow-on equity offering, net of issuance costs | 5,000 | ||||
Follow-on equity offering, net of issuance costs, shares | 50,000,000 | ||||
Balance | 22,358 | 17,343 | 17,288 | ||
Balance, shares | 223,577,853 | 173,427,853 | 172,877,433 | ||
Treasury Stock [Member] | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Balance | -398,672 | -494,928 | |||
Share-based compensation | |||||
Options Exercised | 96,256 | ||||
Repurchase | -494,928 | ||||
Deconsolidation of Daqo New Material Co., Ltd. | |||||
Deconsolidation of Nanjing Daqo New Energy Co., Ltd | |||||
Follow-on equity offering, net of issuance costs | |||||
Balance | -398,672 | -398,672 | -494,928 | ||
Additional paid in capital [Member] | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Balance | 146,676,163 | 144,755,902 | 142,511,581 | ||
Share-based compensation | 1,792,819 | 1,881,401 | 2,249,834 | ||
Options Exercised | 37,065 | 38,860 | |||
Repurchase | -5,513 | ||||
Deconsolidation of Daqo New Material Co., Ltd. | |||||
Deconsolidation of Nanjing Daqo New Energy Co., Ltd | |||||
Follow-on equity offering, net of issuance costs | 54,619,447 | ||||
Balance | 203,125,494 | 146,676,163 | 144,755,902 | ||
Retained earnings (accumulated losses) [Member] | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Balance | -32,667,469 | 38,276,015 | 150,204,956 | ||
Share-based compensation | |||||
Options Exercised | |||||
Repurchase | |||||
Deconsolidation of Daqo New Material Co., Ltd. | |||||
Deconsolidation of Nanjing Daqo New Energy Co., Ltd | |||||
Follow-on equity offering, net of issuance costs | |||||
Balance | -16,018,293 | -32,667,469 | 38,276,015 | ||
Accumulated other comprehensive income [Member] | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Balance | 23,699,196 | 19,551,006 | 18,444,123 | ||
Share-based compensation | |||||
Options Exercised | |||||
Repurchase | |||||
Deconsolidation of Daqo New Material Co., Ltd. | |||||
Deconsolidation of Nanjing Daqo New Energy Co., Ltd | -1,099,299 | ||||
Follow-on equity offering, net of issuance costs | |||||
Balance | 20,037,183 | 23,699,196 | 19,551,006 | ||
Parent Company [Member] | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Balance | 137,326,561 | 202,105,283 | 311,178,231 | ||
Net income (loss) | 16,649,176 | -70,943,484 | -111,928,941 | ||
Other comprehensive income | -3,662,013 | 4,148,190 | 2,206,182 | ||
Share-based compensation | 1,792,819 | 1,881,401 | 2,249,834 | ||
Options Exercised | 37,080 | 135,171 | |||
Repurchase | -500,724 | ||||
Deconsolidation of Daqo New Material Co., Ltd. | |||||
Deconsolidation of Nanjing Daqo New Energy Co., Ltd | -1,099,299 | ||||
Follow-on equity offering, net of issuance costs | 54,624,447 | ||||
Balance | 206,768,070 | 137,326,561 | 202,105,283 | ||
Parent Company [Member] | Ordinary shares [Member] | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Balance | 17,343 | 17,288 | 17,571 | ||
Balance, shares | 173,427,853 | 172,877,433 | 175,714,103 | ||
Net income (loss) | |||||
Other comprehensive income | |||||
Share-based compensation | |||||
Options Exercised | 15 | 55 | |||
Options Exercised, shares | 150,000 | 550,420 | |||
Repurchase | -283 | ||||
Repurchase, shares | -2,836,670 | ||||
Deconsolidation of Daqo New Material Co., Ltd. | |||||
Deconsolidation of Nanjing Daqo New Energy Co., Ltd | |||||
Follow-on equity offering, net of issuance costs | 5,000 | ||||
Follow-on equity offering, net of issuance costs, shares | 50,000,000 | ||||
Balance | 22,358 | 17,343 | 17,288 | ||
Balance, shares | 223,577,853 | 173,427,853 | 172,877,433 | ||
Parent Company [Member] | Treasury Stock [Member] | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Balance | -398,672 | -494,928 | |||
Net income (loss) | |||||
Other comprehensive income | |||||
Share-based compensation | |||||
Options Exercised | 96,256 | ||||
Repurchase | -494,928 | ||||
Deconsolidation of Daqo New Material Co., Ltd. | |||||
Deconsolidation of Nanjing Daqo New Energy Co., Ltd | |||||
Balance | -398,672 | -398,672 | -494,928 | ||
Parent Company [Member] | Additional paid in capital [Member] | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Balance | 146,676,163 | 144,755,902 | 142,511,581 | ||
Net income (loss) | |||||
Other comprehensive income | |||||
Share-based compensation | 1,792,819 | 1,881,401 | 2,249,834 | ||
Options Exercised | 37,065 | 38,860 | |||
Repurchase | -5,513 | ||||
Deconsolidation of Daqo New Material Co., Ltd. | |||||
Deconsolidation of Nanjing Daqo New Energy Co., Ltd | |||||
Follow-on equity offering, net of issuance costs | 54,619,447 | ||||
Balance | 203,125,494 | 146,676,163 | 144,755,902 | ||
Parent Company [Member] | Retained earnings (accumulated losses) [Member] | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Balance | -32,667,469 | 38,276,015 | 150,204,956 | ||
Net income (loss) | 16,649,176 | -70,943,484 | -111,928,941 | ||
Other comprehensive income | |||||
Share-based compensation | |||||
Options Exercised | |||||
Repurchase | |||||
Deconsolidation of Daqo New Material Co., Ltd. | |||||
Deconsolidation of Nanjing Daqo New Energy Co., Ltd | |||||
Balance | -16,018,293 | -32,667,469 | 38,276,015 | ||
Parent Company [Member] | Accumulated other comprehensive income [Member] | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Balance | 23,699,196 | 19,551,006 | 18,444,123 | ||
Net income (loss) | |||||
Other comprehensive income | -3,662,013 | 4,148,190 | 2,206,182 | ||
Share-based compensation | |||||
Options Exercised | |||||
Repurchase | |||||
Deconsolidation of Daqo New Material Co., Ltd. | |||||
Deconsolidation of Nanjing Daqo New Energy Co., Ltd | -1,099,299 | ||||
Balance | $20,037,183 | $23,699,196 | $19,551,006 |
FINANCIAL_STATEMENT_SCHEDULE_I4
FINANCIAL STATEMENT SCHEDULE I (STATEMENT OF CASH FLOWS) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Operating activities: | |||
Net income (loss) | $16,649,176 | ($70,943,484) | ($111,928,941) |
Share-based compensation | 1,792,819 | 1,881,401 | 2,249,834 |
Adjustments to reconcile net income to net cash used in operating activities: | |||
Prepaid expenses and other current assets | 10,217,835 | 29,616 | -15,042,913 |
Amount due from related party | 2,193,604 | -6,853,965 | 8,418,601 |
Net cash (used in) provided by operating activities | 45,619,729 | -16,525,817 | -10,307,234 |
Investing activities: | |||
Net cash used in investing activities | -90,589,032 | -30,696,113 | -102,922,470 |
Financing activities: | |||
Repurchase of ordinary shares | -500,724 | ||
Proceeds from follow-on equity offering | 58,000,000 | ||
Insurance cost for follow-on equity offering | -3,375,553 | ||
Proceeds from options exercised | 37,080 | 135,171 | |
Net cash provided by financing activities | 44,271,754 | 48,826,684 | 27,143,830 |
Net (decrease) increase in cash and cash equivalents | -762,601 | 1,152,060 | -86,018,074 |
Cash and cash equivalents at the beginning of the year | 7,831,084 | 6,679,024 | 92,697,098 |
Cash and cash equivalents at the end of the year | 7,068,483 | 7,831,084 | 6,679,024 |
Parent Company [Member] | |||
Operating activities: | |||
Net income (loss) | 16,649,176 | -70,943,484 | -111,928,941 |
Share of results of subsidiaries | -19,391,427 | 67,890,514 | 108,228,045 |
Share-based compensation | 1,792,819 | 1,881,401 | 2,249,834 |
Adjustments to reconcile net income to net cash used in operating activities: | |||
Prepaid expenses and other current assets | -27,195 | 344,717 | -31,207 |
Changes in other current liabilities | -26,901 | 137,390 | 214,231 |
Amount due from related party | 286,526 | -210,523 | |
Net cash (used in) provided by operating activities | -717,002 | -689,462 | -1,478,561 |
Investing activities: | |||
Capital contributed to subsidiaries | -54,638,421 | -4,811,175 | |
Cash collected from subsidiaries when liquidation | 71,503 | 4,390,250 | |
Disposition of Nanjing Daqo | 4,778,657 | ||
Net cash used in investing activities | -54,638,421 | 71,503 | 4,357,732 |
Financing activities: | |||
Repurchase of ordinary shares | -500,724 | ||
Proceeds from follow-on equity offering | 58,000,000 | ||
Insurance cost for follow-on equity offering | -3,375,553 | ||
Proceeds from options exercised | 37,080 | 135,171 | |
Net cash provided by financing activities | 54,661,527 | 135,171 | -500,724 |
Net (decrease) increase in cash and cash equivalents | -693,896 | -482,788 | 2,378,447 |
Cash and cash equivalents at the beginning of the year | 5,187,046 | 5,669,834 | 3,291,387 |
Cash and cash equivalents at the end of the year | 4,493,150 | 5,187,046 | 5,669,834 |
Supplemental disclosure of cash flow information: | |||
Total consideration | 9,888,742 | ||
Less: amount due from Daqo Group | -5,110,085 | ||
Total cash consideration received | $4,778,657 |