Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 30, 2020 | Jun. 28, 2019 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Ever-Glory International Group, Inc. | ||
Entity Central Index Key | 0000943184 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Current Reporting Status | Yes | ||
Entity Shell Company | false | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Public Float | $ 12,700 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Common Stock, Shares Outstanding | 14,804,832 | ||
Entity File Number | 0-28806 | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation State Country Code | FL |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 48,551 | $ 47,012 |
Accounts receivable, net | 78,053 | 86,527 |
Inventories | 67,355 | 65,929 |
Value added tax receivable | 2,495 | 2,580 |
Other receivables and prepaid expenses | 7,497 | 10,204 |
Advances on inventory purchases | 9,681 | 6,420 |
Amounts due from related parties | 123 | 192 |
Total Current Assets | 213,755 | 218,864 |
NONCURRENT ASSETS | ||
Intangible assets, net | 4,729 | 4,962 |
Property and equipment, net | 28,812 | 28,445 |
Operating lease right-of-use assets | 53,379 | |
Deferred tax assets | 996 | |
Total Non-Current Assets | 87,916 | 33,407 |
TOTAL ASSETS | 301,671 | 252,271 |
CURRENT LIABILITIES | ||
Bank loans | 29,931 | 29,497 |
Accounts payable | 72,418 | 78,412 |
Accounts payable and other payables - related parties | 4,811 | 4,756 |
Other payables and accrued liabilities | 19,137 | 21,958 |
Value added and other taxes payable | 1,657 | 2,569 |
Income tax payable | 1,142 | 1,569 |
Current operating lease liabilities | 44,888 | |
Total Current Liabilities | 173,984 | 138,761 |
NONCURRENT LIABILITIES | ||
Deferred tax liabilities | 354 | |
Non-current operating lease liabilities | 8,537 | |
TOTAL LIABILITIES | 182,521 | 139,115 |
NOTE 13 COMMITMENTS AND CONTINGENCIES | ||
Stockholders' equity: | ||
Preferred stock ($0.001 par value, authorized 5,000,000 shares, no shares issued and outstanding) | ||
Common stock ($0.001 par value, authorized 50,000,000 shares, 14,801,770 and 14,798,198 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively) | 15 | 15 |
Additional paid-in capital | 3,640 | 3,627 |
Retained earnings | 106,328 | 105,914 |
Statutory reserve | 19,939 | 19,083 |
Accumulated other comprehensive loss | (4,330) | (3,578) |
Amounts due from related party | (4,932) | (10,354) |
Total equity attributable to stockholders of the Company | 120,660 | 114,707 |
Noncontrolling interest | (1,510) | (1,551) |
Total Equity | 119,150 | 113,156 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 301,671 | $ 252,271 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 14,801,770 | 14,798,198 |
Common stock, shares outstanding | 14,801,770 | 14,798,198 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||
SALES | $ 383,101 | $ 448,508 |
COST OF SALES | 264,330 | 301,153 |
GROSS PROFIT | 118,771 | 147,355 |
OPERATING EXPENSES | ||
Selling expenses | 80,180 | 91,439 |
General and administrative expenses | 35,123 | 39,811 |
Marketing related intangible asset impairment | 1,086 | |
Total operating expenses | 115,303 | 132,336 |
INCOME FROM OPERATIONS | 3,468 | 15,019 |
OTHER INCOME (EXPENSE) | ||
Interest income | 1,003 | 1,375 |
Interest expense | (1,222) | (1,989) |
Other income | 2,532 | 1,977 |
Total other income | 2,313 | 1,363 |
INCOME BEFORE INCOME TAX EXPENSE | 5,781 | 16,382 |
INCOME TAX EXPENSE | (4,562) | (4,942) |
NET INCOME | 1,219 | 11,440 |
Net loss attributable to the non-controlling interest | 51 | 568 |
NET INCOME ATTRIBUTABLE TO THE COMPANY | 1,270 | 12,008 |
NET INCOME | 1,219 | 11,440 |
Foreign currency translation loss | (660) | (6,084) |
COMPREHENSIVE INCOME | 559 | 5,356 |
Comprehensive loss attributable to the noncontrolling interest | 41 | 489 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY | $ 610 | $ 5,845 |
EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS: | ||
Basic and diluted | $ 0.09 | $ 0.81 |
Weighted average number of shares outstanding Basic and diluted | 14,801,770 | 14,798,198 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) | Common Stock | Additional paid-in capital | Retained Earnings Unrestricted | Retained Earnings Statutory reserve | Accumulated other Comprehensive income | Amounts due from related party | Total equity attributable to stockholders of the Company | Non-controlling Interest | Total |
Balance at Dec. 31, 2017 | $ 15,000 | $ 3,620,000 | $ 95,195,000 | $ 17,794,000 | $ 2,585,000 | $ (15,449,000) | $ 103,760,000 | $ (1,062,000) | $ 102,698,000 |
Balance, shares at Dec. 31, 2017 | 14,795,992 | ||||||||
Stock issued for compensation | $ 2 | 7,000 | 7,000 | 7,000 | |||||
Stock issued for compensation, shares | 2,206 | ||||||||
Net income (loss) | 12,008,000 | 12,008,000 | (568,000) | 11,440,000 | |||||
Transfer to reserve | (1,289,000) | 1,289,000 | |||||||
Net cash paid to related party under counter guarantee agreement | 5,095,000 | 5,095,000 | 5,095,000 | ||||||
Foreign currency translation gain | (6,163,000) | (6,163,000) | 79,000 | (6,084,000) | |||||
Balance at Dec. 31, 2018 | $ 15,000 | 3,627,000 | 105,914,000 | 19,083,000 | (3,578,000) | (10,354,000) | 114,707,000 | (1,551,000) | 113,156,000 |
Balance, shares at Dec. 31, 2018 | 14,798,198 | ||||||||
Stock issued for compensation | 13,000 | 13,000 | 13,000 | ||||||
Stock issued for compensation, shares | 3,572 | ||||||||
Net income (loss) | 1,270,000 | 1,270,000 | (51,000) | 1,219,000 | |||||
Transfer to reserve | (856,000) | 856,000 | |||||||
Net cash paid to related party under counter guarantee agreement | 5,422,000 | 5,422,000 | 5,422,000 | ||||||
Foreign currency translation gain | (752,000) | (752,000) | 92,000 | (660,000) | |||||
Balance at Dec. 31, 2019 | $ 15,000 | $ 3,640,000 | $ 106,328,000 | $ 19,939,000 | $ (4,330,000) | $ (4,932,000) | $ 120,660,000 | $ (1,510,000) | $ 119,150,000 |
Balance, shares at Dec. 31, 2019 | 14,801,770 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 1,219 | $ 11,440 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Intangible asset impairment loss | 1,086 | |
Depreciation and amortization | 8,239 | 6,664 |
Loss from sale of property and equipment | 9 | 108 |
Provision of bad debt allowance | 1,062 | 660 |
Provision for obsolete inventories | 2,804 | 3,324 |
Deferred income tax | (1,472) | (1,370) |
Stock-based compensation | 12 | 7 |
Changes in operating assets and liabilities | ||
Accounts receivable | 6,652 | (9,893) |
Inventories | (5,145) | (16,462) |
Value added tax receivable | 1,077 | 1,016 |
Other receivables and prepaid expenses | 2,394 | (5,659) |
Advances on inventory purchases | (3,395) | (3,698) |
Amounts due from related parties | 67 | (2,761) |
Accounts payable | (2,305) | 8,485 |
Accounts payable and other payables- related parties | 176 | 6,275 |
Other payables and accrued liabilities | (4,052) | 5,604 |
Value added and other taxes payable | (2,948) | (2,210) |
Income tax payable | (409) | (54) |
Net cash provided by operating activities | 3,985 | 2,562 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property and equipment | (8,675) | (12,182) |
Net cash used in investing activities | (8,675) | (12,182) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from bank loans | 59,528 | 64,006 |
Repayment of bank loans | (58,665) | (70,513) |
Repayment of loans from related party | 13,163 | 6,657 |
Advances to related party | (8,381) | (8,428) |
Interest income received from related party | 472 | 2,997 |
Net cash provided by (used in) financing activities | 6,117 | (5,281) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 2,316 | (963) |
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 3,743 | (15,864) |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD | 47,012 | 62,876 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | 48,551 | 47,012 |
Reconciliation of cash, cash equivalents and restricted cash reported within their consolidated balance sheets: | ||
Cash and Cash Equivalents | 48,551 | 47,012 |
Restricted cash (booked in other receivables and prepaid expenses) | 2,204 | |
Restricted cash and cash equivalents | 50,755 | 47,012 |
Cash paid during the period for: | ||
Interest | 1,222 | 1,755 |
Income taxes | $ 6,327 | $ 6,350 |
Organization and Basis Of Prese
Organization and Basis Of Presentation | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | NOTE 1 ORGANIZATION AND BASIS OF PRESENTATION Ever-Glory International Group, Inc. (the "Company"), together with its subsidiaries, is an apparel manufacturer, supplier and retailer in The People's Republic of China ("China or "PRC"), with a wholesale segment and a retail segment. The Company's wholesale business consists of recognized brands for department and specialty stores located in China, Europe, Japan and the United States. The Company's retail business consists of flagship stores and store-in-stores for the Company's own-brand products. The following are the Company's subsidiaries as of December 31, 2019: Perfect Dream Limited ("Perfect Dream"), a wholly-owned subsidiary of Ever-Glory, was incorporated in the British Virgin Islands in 2004. Ever-Glory International Group (HK) Ltd. ("Ever-Glory HK"), a wholly-owned subsidiary of Perfect Dream, was incorporated in Samoa in 2009. Ever-Glory HK is principally engaged in the import and export of apparel, fabric and accessories. Goldenway Nanjing Garments Co. Ltd. ("Goldenway"), a wholly-owned subsidiary of Perfect Dream, was incorporated in the PRC in 1993. Nanjing Catch-Luck Garments Co, Ltd. ("Catch-Luck"), a wholly-owned subsidiary of Perfect Dream, was incorporated in the PRC in 1995. Nanjing New-Tailun Garments Co. Ltd. ("New-Tailun'), a wholly-owned subsidiary of Perfect Dream, was incorporated in the PRC in 2006. Ever-Glory International Group Apparel Inc. ("Ever-Glory Apparel"), a wholly-owned subsidiary of Goldenway, was incorporated in the PRC in 2009. Shanghai LA GO GO Fashion Company Limited ("Shanghai LA GO GO"), a wholly-owned subsidiary of Ever-Glory Apparel, was incorporated in the PRC in 2008. Nanjing Tai Xin Garments Trading Company Limited ("Tai Xin"), a wholly-owned subsidiary of Ever-Glory Apparel, was incorporated in the PRC in 2012. Jiangsu LA GO GO Fashion Company Limited ("Jiangsu LA GO GO"), a joint venture of Ever-Glory Apparel and Catch-Luck, was incorporated in the PRC in 2013. Haian Tai Xin Garments Trading Company Limited ("Haian Tai Xin"), a wholly-owned subsidiary of Ever-Glory Apparel, was incorporated in the PRC in 2019. Shanghai Ya Lan Fashion Company Limited ("Ya Lan"), a wholly-owned subsidiary of Shanghai LA GO GO, was incorporated in the PRC in 2014. Xizang He Meida Trading Company Limited ("He Meida"), a wholly-owned subsidiary of Ever-Glory Apparel, was incorporated in the PRC in 2014. Tianjin LA GO GO Fashion Company Limited ("Tianjin LA GO GO"), a joint venture of Ever-Glory Apparel and Catch-Luck, was incorporated in the PRC in 2014. ChuzhouHuirui Garments Co. Ltd. ("Huirui"), a wholly-owned subsidiary of Ever-Glory Apparel, was incorporated in the PRC in 2014. Shanghai LA GO GO acquired 78% of the shares of Shanghai Yiduo Fashion Company Limited ("Shanghai Yiduo") in March 2015 (Note 4). Shanghai Yiduo was incorporated in the PRC in 2011. Ever-Glory Supply Chain Service Co., Limited ("Ever-Glory Supply Chain"), a wholly-owned subsidiary of Ever-Glory Apparel, was incorporated in Hongkong in 2017. Ever-Glory Supply Chain is principally engaged in the import and export of apparel, fabric and accessories. The Company's wholesale operations are provided primarily through the Company's PRC subsidiaries, Goldenway, Catch-Luck, New Tailun, Haian TaiXin, Ever-Glory Apparel, TaiXin, Huirui, the Company's Hongkong subsidiary, Ever-Glory Supply Chain and the Company's Samoa subsidiary, Ever-Glory HK. The Company's retail operations are provided through its subsidiaries, Shanghai LA GO GO, Jiangsu LA GO GO, Tianjin LA GO GO, Ya Lan, He Meida and 78% owned Shanghai Yiduo |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include Ever-Glory International Group, Inc. and its subsidiaries, and are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates and Assumptions In preparing the consolidated financial statements in conformity with GAAP, management makes certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the periods reported. Management believes that the estimates utilized in preparing the financial statements are reasonable and prudent based on the best information available at the time the estimates are made. Actual results could differ from these estimates. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and demand deposits with banks with original maturities within three months. Accounts Receivable, net The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and recorded based on management's assessment of the credit history of its customers and current relationships with them. The Company writes off accounts receivable when amounts are deemed uncollectible. As of December 31, 2019 and 2018, $1.0 million and $0.66 million of bad debt expense have been made in the consolidated financial statements respectively. The allowance for doubtful account balances as of December 31, 2019 and 2018 are $5.3 million and $5.9 million, respectively. Inventories Wholesale inventories are stated at lower of cost or net realizable value, cost being determined on a specific identification method. The Company manufactures products upon receipt of orders from its customers. All products must pass the customers' quality assurance procedures before delivery. Therefore, products are rarely returned by customers after delivery. Retail inventories are stated at the lower of average cost or net realizable value, cost being determined on a specific identification method. The Company records a provision for slow-moving or obsolete materials and finished goods aged more than two years. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Expenditures for additions, major renewals and betterments are capitalized and expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is provided on a straight-line basis, less estimated residual value, over the assets' estimated useful lives. The estimated useful lives are as follows: Property and plant 15-20 Years Leasehold improvements 10 Months - 2 Years Machinery and equipment 5-10 Years Office equipment and furniture 3-5 Years Motor vehicles 5 Years Land Use Rights All land in the PRC is owned by the government and cannot be sold to any individual or company. However, the government may grant a "land use right" to occupy, develop and use land. The Company records land use rights obtained as intangible assets at cost, which is amortized evenly over the grant period of 50 years. Impairment of long-lived assets Long-lived assets, property, equipment and land use rights held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, when undiscounted future cash flows will not be sufficient to recover an asset's carrying amount, the asset is written down to its fair value. There was no impairment of long-lived assets as of December 31, 2019, but intangible assets of $1.08 million were impaired as of December 31, 2018. Fair Value Accounting Accounting Standards Codification ("ASC") 820 " Fair Value Measurements and Disclosures Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). The fair value of forward exchange contracts is based on broker quotes, if available. If broker quotes are not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price at the reporting date for the residual maturity of the contract using a risk-free interest rate based on government bonds. At December 31, 2019 and 2018, the Company's financial assets (all Level 1) consist of cash placed with financial institutions that management considers to be of a high quality. Management has estimated that the carrying amounts of non-related party financial instruments approximate their fair values due to their short-term maturities. The fair value of amounts due from (to) related parties is not practicable to estimate due to the related party nature of the underlying transactions. As of December 31, 2019, the Company has no derivative liability subjects to recurring fair value measurement (Level 3) with the change in fair value recognized in earnings. As of December 31, 2018, the Company has the following derivative financial instruments measured at their fair value using Level 2 quoted prices provided by banks. The fair value of foreign currency swap contracts is determined by the variation of measurement date foreign exchange market rates and contract closing date predetermined foreign exchange rates. The Company has adopted ASC 825-10 " Financial Instruments Derivative Financial Instruments From time to time, the Company uses derivative financial instruments to manage its exposure to foreign currency risks arising from operational activities or on certain existing assets and liabilities. The Company does not hold or issue derivative instruments for trading purposes. The Company may enter into forward foreign exchange contracts, foreign exchange options, or foreign exchange currency swap contracts to manage exposure to certain foreign currency operating transactions. These instruments may offset a portion of the foreign currency re-measurement gains or losses, or changes in fair value. The Company may also enter into above similar derivative instruments to hedge the exposure to variability in the expected cash flows of forecasted transactions such as international sales or purchases that the Company expects to receive or commit to remit foreign currencies. In these cases, the Company designates these instruments as the cash flow hedges. The Company accounts for derivative and hedging activities in accordance with ASC 815, Derivatives and Hedging, as amended by ASU No. 2017-12. Derivative financial instruments are recognized initially at fair value and transaction costs are expensed immediately. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on re-measurement to fair value is recognized immediately in earnings when such instruments are designated as fair value hedges or ineffective portion of cash flow hedges. The accumulated gain or loss from effective portions of cash flow hedges are recorded in accumulated other comprehensive income/(loss) ("AOCI") until the hedged item is recognized in earnings. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. Operating Leases The Company adopted ASC No. 842, Leases effective January 1, 2019 to account for all Company's leases, All leases are recorded in the balance sheets. The lease liability is measured at present value of outstanding lease payments, both at commencement date and subsequently. The discount rate is generally the Company's incremental borrowing rate as the lessor's rate implicit in the lease is not readily determinable. The right-of-use (ROU) asset costs at commencement date consist of initial lease liability, any initial direct costs, and any lease payments made to the lessor at or before the commencement date, minus any lease incentives received. Subsequently, the carrying amount of ROU asset is derived from the carrying amount of the lease liability, plus unamortized direct costs and prepaid lease payments, and minus unamortized balance of lease incentives received. The annual amortization expenses will be recorded in consolidated statement of operations and allocating between cost of sales and operating expenses. Revenue and Cost Recognition The Company recognizes wholesale revenue from product sales, net of value-added taxes, upon delivery for local sales and upon shipment of the products for export sales, at such time title passes to the customer. Retail sales are recorded net of promotional discounts, rebates, and return allowances. Retail store sales are recognized at the time of the register receipt. Retail online sales are recognized when products are shipped and customers receive the products because the Company retains a portion of the risk of loss on these sales during transit. The Company's revenue recognition policy is in compliance with ASC 606, Revenue from Contracts with Customers (i) identification of the promised goods and services in the contract; (ii) determination of whether the promised goods and services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's performance obligations are transferred to customers at a point in time, typically upon delivery for local sales and upon shipment of the products for export sale. For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all product revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adopted rules. Cost of goods sold includes the direct raw material cost, direct labor cost, manufacturing overheads including depreciation of production equipment, and rent and commission due to department stores consistent with the revenue earned. Cost of goods sold excludes warehousing costs, which historically have not been significant. Local transportation charges and production inspection charges are included in selling expenses and totaled $3.2 million and $1.1 million in the years ended December 31, 2019 and 2018, respectively. Research and Development Costs Research and development costs are expensed as incurred. Research and development costs included in general and administrative expenses for the years ended December 31, 2019 and 2018 amounted to $1.0 million and $0.8 million, respectively. Government subsidies Government subsidies are recognized when received and when all the conditions for their receipt have been met. Subsidies that compensate the Company for expenses incurred are recognized as a reduction of expenses in the consolidated statements of operations. Subsidies that are not associated with expenses are recognized as other income. Four of the Company's PRC subsidiaries received government subsidies of $1.8 million and $1.2 million for the years ended December 31, 2019 and 2018, respectively, which was recorded in other income when subsidies were received and all the conditions were met. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. The Company has adopted ASC 740 " Income Taxes The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the years ended December 31, 2019 and 2018. The Company's effective tax rate differs from the PRC statutory rate primarily due to non-deductible expenses, temporary differences, and preferential tax treatment. The Company files income tax returns with the relevant government authorities in the U.S. and the PRC. Foreign Currency Translation and Other Comprehensive Income The reporting currency of the Company is the U.S. dollar. The functional currency of Ever-Glory, Perfect Dream, Ever-Glory HK and Ever-Glory Supply Chain is the U.S. dollar. The functional currency of Goldenway, New Tailun, Catch-luck, Haian TaiXin, Ever-Glory Apparel, Shanghai LA GO GO, Jiangsu LA GO GO, Tianjin LA GO GO, He Meida, Huirui, Yalan, Yiduo and Taixin is the Chinese RMB. For the subsidiaries whose functional currency is the RMB, all assets and liabilities are translated at the exchange rate on the balance sheet date; equity is translated at historical rates and items in the statement of income are translated at the average rate for the period. Translation adjustments resulting from this process are included in accumulated other comprehensive income (loss) in the statement of equity and amounted to ($4.34 million) and ($3.58 million) as of December 31, 2019 and 2018, respectively. Assets and liabilities at December 31, 2019 and 2018 were translated at RMB6.98 and RMB6.88 to $1.00 respectively. The average translation rates applied to income statement accounts and consolidated statements of cash flows for the years ended December 31, 2019 and 2018 were RMB6.90 and RMB6.61 to $1.00, respectively. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation gains or losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred and amounted a loss of $0.77 million and a loss of $1.20 million for the years ended December 31, 2019 and 2018, respectively. Earnings Per Share The Company reports earnings per share in accordance with ASC 260 "Earnings Per Share" Included in the calculation of basic EPS are shares of restricted common stock that have been issued by the Company, all of which are fully vested. Shares of restricted common stock whose issuance is contingent upon the attainment of specified earnings targets are considered outstanding and included in the computation of basic EPS as of the date that all necessary conditions have been satisfied, which is the date upon which the specified amount of earnings has been attained. These shares are to be considered outstanding and included in the computation of diluted EPS as of the beginning of the period in which the conditions are satisfied. If the specified amount of earnings has not been attained as of the end of the reporting period, the contingently issuable shares are excluded from the calculation of basic and diluted EPS. Unvested restricted shares to be issued (share-based compensation) under the 2014 Equity Incentive Plan are not included in basic weighted average number of shares but are considered to be outstanding as of the grant date for purposes of computing diluted earnings per share even though the shares are subject to vesting requirements. Segments The Company applies ASC 280 "Segment Reporting" (1) Wholesale apparel manufacture and sales (2) Retail sales of own-brand clothing Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" In October 2018, the FASB issued ASU No. 2018-17 "Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities" The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company's consolidated financial statements. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 3 INVENTORIES Inventories at December 31, 2019 and 2018 consisted of the following: December 31, December 31, (In thousands of Raw materials $ 1,468 $ 6,805 Work-in-progress 8,025 3,308 Finished goods 57,862 55,816 Total inventories $ 67,355 $ 65,929 Provision for obsolete inventories was $2.8 million and $3.3 million for the years ended December 31, 2019 and 2018, respectively. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 4 INTANGIBLE ASSETS Land use rights In 2006, the Company obtained a fifty-year land use right on 112,442 square meters of land in the Nanjing Jiangning Economic and Technological Development Zone. In 2014, the Company obtained a fifty-year land use right on 23,333 square meters of land in the Suzhou Kunshan Jinxi Tower Jinxing Road. In 2015, the Company obtained a fifty-year land use right on 33,427 square meters of land in the Tianjin Wuqing Development Zone. Land use rights at December 31, 2019 and 2018 consisted of the following: 2019 2018 (In thousands of Land use rights $ 5,456 $ 5,702 Less: accumulated amortization (727 ) (740 ) Land use rights, net $ 4,729 $ 4,962 Amortization expense was $0.12 million and $0.12 million for the years ended December 31, 2019 and 2018, respectively. Future expected amortization expense for land use rights is approximately $0.12 million for each of the next five years. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 5 PROPERTY AND EQUIPMENT The following is a summary of property and equipment at December 31, 2019 and 2018: 2019 2018 (In thousands of Property and plant $ 24,384 $ 27,829 Leasehold improvements 19,914 21,278 Equipment and machinery 2,448 2,451 Office equipment and furniture 7,567 3,102 Motor vehicles 2,048 1,112 56,361 55,772 Less: accumulated depreciation (28,330 ) (27,327 ) Construction-in-progress 781 - Property and equipment, net $ 28,812 $ 28,445 Depreciation expense was $8.11 million and $6.54 million for the years ended December 31, 2019 and 2018, respectively. |
Other Payables and Accrued Liab
Other Payables and Accrued Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
OTHER PAYABLES AND ACCRUED LIABILITIES | NOTE 6 OTHER PAYABLES AND ACCRUED LIABILITIES Other payables and accrued liabilities at December 31, 2019 and 2018 consisted of the following: 2019 2018 (In thousands of Advance from customers $ 2,497 $ 976 Accrued wages and welfare 7,459 8,671 Other payables 9,181 12,311 Total other payables and accrued liabilities $ 19,137 $ 21,958 |
Bank Loans
Bank Loans | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
BANK LOANS | NOTE 7 BANK LOANS Bank loans represent amounts due to various banks and are generally due on demand or within one year. These loans can be renewed with the banks. Short term bank loans consisted of the following as of December 31, 2019, and 2018. December 31, December 31, Bank (In thousands of Industrial and Commercial Bank of China $ 18,629 $ 14,540 Nanjing Bank 6,449 5,089 China Minsheng Bank 2,866 2,908 Bank of Communications 1,426 2,893 HSBC 561 - Shanghai Pudong Development Bank - 2,613 China Everbright Bank Shanghai Pudong Development Bank - 1,454 $ 29,931 $ 29,497 In December 2019, Goldenway entered into a line of credit agreement with Industrial and Commercial Bank of China, which allows the Company to borrow up to approximately $5.7 million (RMB40.0 million). These loans are collateralized by the Company's property and equipment. As of December 31, 2019, Goldenway had borrowed $5.7 million (RMB40.0 million) from Industrial and Commercial Bank of China with an annual interest rate 3.26% and due on February 2020. In November 2018, Ever-Glory Apparel entered into a line of credit agreement for approximately $14.3 million (RMB100.0 million) with Industrial and Commercial Bank of China and collateralized by assets of Jiangsu Ever-Glory's equity investee, Nanjing Knitting, under a collateral agreement executed among Ever-Glory Apparel, Nanjing Knitting and the bank. As of December 31, 2019, Ever-Glory Apparel had borrowed $12.9 million (RMB 90.0 million) under this line of credit with annual interest rates ranging from 3.92% to 4.7% and due on from March to October 2020. As of December 31, 2019, approximately $1.4 million was unused and available under this line of credit. In August 2018, Goldenway entered into a line of credit agreement with Nanjing Bank, which allows the Company to borrow up to approximately $7.2 million (RMB50.0 million). These loans are guaranteed by Jiangsu Ever-Glory International Group Corp. ("Jiangsu Ever-Glory"), an entity controlled by Mr. Kang, the Company's Chairman and Chief Executive Officer. These loans are also collateralized by the Company's property and equipment. As of December 31, 2019, approximately $7.2 million was unused and available under this line of credit. In August 2018, Ever-Glory Apparel entered into a line of credit agreement for approximately $8.6 million (RMB60.0 million) with Nanjing Bank and guaranteed by Jiangsu Ever-Glory, Mr. Kang and Goldenway. As of December 31, 2019, Ever-Glory Apparel had borrowed $4.3 million (RMB30.0 million) from Nanjing Bank with an annual interest rates 5.0% and due on various dates from January to June 2020. As of December 31, 2019, approximately $4.3 million was unused and available under this line of credit. In June 2019, LA GO GO entered into a revolving line of credit agreement with Nanjing Bank, which allows the Company to borrow up to approximately $2.9 million (RMB20.0 million). The line of credit is guaranteed by Mr. Kang and Goldenway. As of December 31, 2019, LA GO GO had borrowed $2.1 million (RMB15.0 million) under this line of credit with an annual interest rate of 5.22% and due in June 2020. As of December 31, 2019, approximately $0.8 million was unused and available under this line of credit. In June 2018, LA GO GO entered into a line of credit agreement for approximately $2.9 million (RMB20.0 million) with China Minsheng Bank and guaranteed by Ever-Glory Apparel and Mr. Kang. As of December 31, 2019, LA GO GO had borrowed $2.9 million (RMB20.0 million) from China Minsheng Bank with an annual interest rate of 5.0% and due in November 2020. In November 2018, LA GO GO entered into a line of credit agreement for approximately $2.9 million (RMB20.0 million) with the Bank of Communications and guaranteed by Jiangsu Ever-Glory, Ever-Glory Apparel and Jiangsu LAGOGO. As of December 31, 2019, LA GO GO had borrowed $1.4 million (RMB10.0 million) from the Bank of Communications with an annual interest rate 5.0% and due on January 2020. As of December 31, 2019, approximately $1.5 million was unused and available under this line of credit. In September 2019, Ever-Glory Apparel entered into a line of credit agreement for approximately $5.7 million (RMB40.0 million) with the Shanghai Pudong Development Bank and guaranteed by Goldenway. As of December 31, 2019, approximately $5.7 million was unused and available under this line of credit. In January 2015, Ever-Glory Apparel and Goldenway collectively entered into a secured banking facility agreement for a combined revolving import facility, letter of credit, invoice financing facilities and a credit line for treasury products of up to $2.5 million with the Nanjing Branch of HSBC (China) Company Limited ("HSBC"). This agreement is guaranteed by the Company and Mr. Kang. As of December 2019, Ever-Glory Apparel had borrowed $0.6 million from HSBC with an annual interest rate of 3.0% and due in October 2018, and collateralized by approximately $0.7 million of accounts receivable from our wholesale customers. These bank loans are to be repaid upon receipt of payments from customers. As of December 31, 2019, approximately $1.9 million was unused and available under this line of credit. All bank loans are used to fund our daily operations. All loans have been repaid before or at maturity date. Total interest expense on bank loans amounted to $1.22 million and $1.99 million for the years ended December 31, 2019 and 2018, respectively. The annual average interest rate of bank loans was 4.60% and 4.59% for the years ended December 31, 2019 and 2018, respectively. |
Derivative Liability
Derivative Liability | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Liability | |
DERIVATIVE LIABILITY | NOTE 8 DERIVATIVE LIABILITY Foreign currency swap contracts During 2018, the Company had entered into four foreign currency swap contracts with three banks. Due to the increased demand of effective control on financial management for daily operations, Ever-Glory Apparel had entered into different foreign currency swap contracts to exchange $6.0 million for equivalent RMB with Bank of China in May, entered into a foreign currency swap contract to exchange $3.0 million for equivalent RMB with Industrial and Commercial Bank of China in June and entered into a foreign currency swap contract to exchange $6.0 million and $4.0 million for equivalent RMB with Shanghai Pudong Development Bank in July. The terms of three foreign currency contracts are both six months and the contract of $4.0 million with Shanghai Pudong Development Bank is three months. Ever-Glory Apparel and the banks swapped two currencies by same pre-determined exchange rate at the beginning and end of the contracts. During the period, the Company pays annual interest of 1.43% for the RMB received and receives no interest for the USD exchanged with the Bank of China and Industrial and Commercial Bank of China. The company pays annual interest of 0.98% for the RMB received and receives 0.0001% interest for the USD exchanged with Shanghai Pudong Development Bank. If the Company failed to execute the exchange at the expiration of contracts, the banks would sell the USD at the market rate then the difference in RMB will be converted into bank loan for the Company. As of December 31, 2018, the fair value of principal amounts are included in other receivable ($4.0 million plus unrealized gain) and other payables (equivalent RMB payables) in the consolidated balance sheets, and unrealized gain of $0.2 million for the year ended December 31, 2018 is recognized in the income from operations. This contract was settled in January 2019 and $0.16million of gain was recognized. At December 31, 2019, the Company did not have any foreign currency contracts. Forward foreign exchange contracts At December 31, 2019 and 2018, the Company did not have any outstanding derivative contracts. |
Income Tax
Income Tax | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | NOTE 9 INCOME TAX The Company's operating subsidiaries are governed by the Income Tax Law of the PRC concerning Foreign Investment Enterprises and Foreign Enterprises and various local income tax laws ("the Income Tax Laws"). All PRC subsidiaries, except for He Meida, are subject to income tax at the 25% statutory rate. He Meida incorporated in Xizang (Tibet) Autonomous Region is subject to income tax at 15% statutory rate. The local government has implemented an income tax reduction from 15% to 9% valid through December 31, 2019. Perfect Dream was incorporated in the British Virgin Islands (BVI), and under the current laws of the BVI dividends and capital gains arising from the Company's investments in the BVI are not subject to income taxes. Ever-Glory HK was incorporated in Samoa, and under the current laws of Samoa has no liabilities for income taxes. Ever-Glory Supply Chain Service Co., Limited was incorporated in Hongkong on December 27, 2017. Under the current laws of Hongkong, its income tax rate is 8.25% when its profit is under HKD 2.0 million and its income tax rate is 16.5% when its profit is over HKD 2.0 million. The PRC's Enterprise Income Tax Law imposes a 10% withholding income tax for dividends distributed by a foreign invested enterprise in PRC to its immediate holding company outside China; such distributions were exempted under the previous income tax law and regulations. A lower withholding tax rate will be applied if there is a tax treaty arrangement between mainland China and the jurisdiction of the foreign holding company. The foreign invested enterprise became subject to the withholding tax starting from January 1, 2008. Given that the undistributed profits of the Company's subsidiaries in China are intended to be retained in China for business development and expansion purposes, no withholding tax accrual has been made. After the tax liability adjustment resulted from the reevaluation of the Company's tax position (resulting in the company allocating substantially all of the earnings of the Samoan subsidiary to the PRC and reporting such earnings as taxable in the PRC), pre-tax income for the years ended December 31, 2019 and 2018 was taxable in the following jurisdictions: 2019 2018 (In thousands of PRC $ 6,032 $ 16,384 BVI (239 ) 18 Others (12 ) (20 ) $ 5,781 $ 16,382 The following table reconciles the PRC statutory rates to the Company's effective tax rate for the years ended December 31, 2019 and 2018, respectively: 2019 2018 (In thousands of PRC statutory rate 25.0 % 25.0 % Temporary difference between US GAAP and PRC tax accounting 57.8 6.6 Others (3.9 ) (1.4 ) Effective income tax rate 78.9 % 30.2 % Income tax expense for the years ended December 31, 2019 and 2018 is as follows: 2019 2018 (In thousands of Current $ 5,912 $ 7,115 Deferred (1,350 ) (2,173 ) Income tax expense $ 4,562 $ 4,942 The Company's deferred tax assets and liabilities arise from differences between US GAAP and PRC tax accounting for certain revenue and expense items, including timing of deduction of losses from allowances. The Company has not recorded U.S. deferred income taxes on approximately $107.9 million of its non-U.S. subsidiaries' undistributed earnings because such amounts are intended to be reinvested outside the United States indefinitely. The U.S. Tax Reform signed into law on December 22, 2017 significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. The Company measured the current and deferred taxes based on the provisions of the Tax legislation. After the Company's measurement, no deferred tax expense (income) relating to the Tax Act changes for the year ended December 31, 2019. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 10 EARNINGS PER SHARE Basic and diluted earnings per share for 2019 and 2018 were calculated as follows: 2019 2018 Weighted average number of common shares- Basic and diluted 14,801,770 14,796,947 Earnings per share - basic and diluted $ 0.09 $ 0.81 As of December 31, 2019 and 2018, there was no securities that could potentially dilute basic EPS and would be included in the calculation of diluted EPS. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 11 STOCKHOLDERS' EQUITY Stock Issued to Independent Directors On July 26, 2018, the Company issued 2,206 shares of Company's common stock to two of the Company's independent directors as compensation for their services rendered during the fourth quarter of 2017, and the first and second quarters of 2018 as directors. The shares issued in 2018 were valued at $3.39 per share, which was the average market price of the common stock for the five days before the grant date. On January 31, 2019, the Company issued 1,942 shares of Company's common stock to two of the Company's independent directors as compensation for their services rendered during the third and fourth quarter of 2018. The shares issued in 2019 were valued at $3.8 per share, which was the average market price of the common stock for the five days before the grant date. On July 26, 2019, the Company issued 1,630 shares of Company's common stock to two of the Company's independent directors as compensation for their services rendered during the first and second quarter of 2019. The shares issued in 2019 were valued at $3.04 per share, which was the average market price of the common stock for the five days before the grant date. Statutory Reserve Subsidiaries incorporated in China are required to make appropriations to reserve funds, comprising the statutory surplus reserve, statutory public welfare fund and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the People's Republic of China ("PRC GAAP"). Appropriations to the statutory surplus reserve are to be at least 10% of the after tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entities' registered capital. Appropriations to the statutory public welfare fund are 10% of the after tax net income determined in accordance with PRC GAAP. The statutory public welfare fund is established for the purpose of providing employee facilities and other collective benefits to the employees and is non-distributable other than in liquidation. Appropriations to the surplus reserve are made at the discretion of the Board of Directors. Effective January 1, 2006, the Company is only required to contribute to one statutory reserve fund at 10% of net income after tax per annum, and any contributions are not to exceed 50% of the respective companies' registered capital. As of December 31, 2019, New-Tailun, Tianjin La GO GO, Haian TaiXin, Huirui and Catch-Luck had fulfilled the 50% statutory reserve contribution requirement; therefore no further transfers are required for those entities. In 2019, Goldenway appropriated $0.21 million, Haian TaiXin appropriated $0.07 million, Ever-Glory Apparel appropriated $0.56 million and Jiangsu La GO GO appropriated $0.62 million to the statutory reserve. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12 RELATED PARTY TRANSACTIONS Mr. Kang is the Company's Chairman and Chief Executive Officer. Ever-Glory Enterprises (HK) Ltd. (Ever-Glory Enterprises) is the Company's major shareholder. Mr. Xiaodong Yan was Ever-Glory Enterprises' sole shareholder and sole director. Mr. Huake Kang, Mr. Kang's son, acquired 83% interest of Ever-Glory Enterprises and became its sole director in 2014. All transactions associated with the following companies controlled by Mr. Kang or his son are considered to be related party transactions, and it is possible that the terms of these transactions may not be the same as those that would result from transactions between unrelated parties. All related party outstanding balances are short-term in nature and are expected to be settled in cash. Other income from Related Parties Jiangsu Wubijia Trading Company Limited ("Wubijia") is an entity engaged in high-grade home goods sales and is controlled by Mr. Kang. Wubijia has sold their home goods on consignment in some Company's retail stores since the third quarter of 2014. During the years ended December 31, 2019 and 2018, the Company received $71,167 and $96,556 from the customers and paid $58,377 and $79,925 to Wubijia through the consignment, respectively. The net profit of $6,463 and $16,631 was recorded as other income during the years ended December 31, 2019 and 2018, respectively. Included in other income for the years ended December 31, 2019 and 2018 is rental income from EsC'Lav, the entity controlled by Mr. Kang under operating lease agreement with term though 2019. The rental income is $26,100 and $18,569 for the years ended December 31, 2019 and 2018, respectively. Other expenses due to Related Parties Included in other expenses for the years ended December 31, 2019 and 2018 are rental expenses due to entities controlled by Mr. Kang under operating lease agreements as follows: 2019 2018 (In thousands of Chuzhou Huarui $ 207 $ 217 EsC'Lav - 25 Kunshan Enjin 87 94 Total $ 294 $ 336 The Company leases Chuzhou Huarui and Kunshan Enjin's warehouse spaces because the locations are convenient for transportation and distribution. Purchases from, and Sub-contracts with Related Parties The Company purchased raw materials of $1.20 million and $1.44 million during the years ended 2019 and 2018, respectively, from Nanjing Knitting. In addition, the Company sub-contracted certain manufacturing work to related companies totaling $24.2 million and $25.0 million for the years ended December 31, 2019 and 2018, respectively. The Company provided raw materials to the sub-contractors and was charged a fixed fee for labor provided by the sub-contractors. Sub-contracts with related parties included in cost of sales for the years ended December 31, 2019 and 2018 are as follows: 2019 2018 (In thousands of Ever-Glory Vietnam $ 12,952 $ 14,718 Chuzhou Huarui 6,200 6,356 Fengyang Huarui 2,225 2,438 Nanjing Ever-Kyowa 1,534 1,566 Nanjing Knitting 1,201 - EsC'Lav 136 50 Total $ 24,248 $ 25,128 Accounts Payable – Related Parties The accounts payable to related parties at December 31, 2019 and 2018 are as follows: 2019 2018 (In thousands of Ever-Glory Vietnam $ 2,260 1,863 Fengyang Huarui 414 622 Nanjing Ever-Kyowa 386 580 Chuzhou Huarui 1,064 888 Nanjing Knitting 186 171 Jiangsu Ever-Glory 501 632 Total $ 4,811 $ 4,756 Amounts Due From Related Parties – Current Assets The amounts due from related parties at December 31, 2019 and 2018 are as follows: 2019 2018 (In thousands of Jiangsu Ever-Glory $ 123 $ 122 EsC'eLav - 70 Total $ 123 $ 192 Jiangsu Ever-Glory is an entity engaged in importing/exporting, apparel-manufacture, real-estate development, car sales and other activities. Jiangsu Ever-Glory is controlled by Mr. Kang. During 2019 and 2018, the Company and Jiangsu Ever-Glory purchased raw materials on behalf of each other in order to obtain cheaper purchase prices. The Company purchased raw materials on Jiangsu Ever-Glory's behalf and sold to Jiangsu Ever-Glory at cost for $2.0 million and $1.4 million during 2019 and 2018, respectively. Jiangsu Ever-Glory purchased raw materials on the Company's behalf and sold to the Company at cost for $2.0 million and $1.1 million during 2019 and 2018, respectively. Amounts Due From Related Party under Counter Guarantee Agreement In March 2012, in consideration of the guarantees and collateral provided by Jiangsu Ever-Glory and Nanjing Knitting, the Company agreed to provide Jiangsu Ever-Glory a counter guarantee in the form of cash of not less than 70% of the maximum aggregate lines of credit obtained by the Company. Jiangsu Ever-Glory is obligated to return the full amount of the counter-guarantee funds provided upon the expiration or termination of the underlying lines of credit and is to pay an annual interest at the rate of 6.0% of the amounts provided. As of December 31, 2019 and 2018, Jiangsu Ever-Glory had provided guarantees for approximately $33.0 million (RMB 230.0 million) and $33.0 million (RMB 230.0 million) of lines of credit obtained by the Company, respectively. Jiangsu Ever-Glory and Nanjing Knitting have also provided their assets as collateral for certain of these lines of credit. As of December 31, 2019 and 2018, the value of the collateral, as per appraisals obtained by the banks in connection with these lines of credit is approximately $29.4 million (RMB 205.5 million) and $29.9 million (RMB 205.5 million), respectively. Mr. Kang has also provided a personal guarantee for $14.5 million (RMB 100.0 million) and $14.5 million (RMB 100.0 million) at the years ended of December 31, 2019 and 2018, respectively. At December 31, 2018, $9.9 million (RMB 68.2 million) was outstanding due from Jiangsu Ever-Glory under the counter guarantee agreement. During the year ended December 31, 2019, an additional $8.4 million (RMB 57.8 million) was provided to and repayment of $13.5 million (RMB 93.3 million) was received from Jiangsu Ever-Glory under the counter-guarantee agreement. As of December 31, 2019, the amount of the counter-guarantee had decreased to $4.7 million (RMB 32.8 million) (the difference represents currency exchange adjustment of $0.4 million), which was 14.2% of the aggregate amount of lines of credit. This amount plus accrued interest of $0.3 million (2019) and $0.5 million (2018) have been classified as a reduction of equity, consistent with the guidance of SEC Staff Accounting Bulletins 4E and 4G. As of December 31, 2019 and 2018, the amount classified as a reduction of equity was $5.0 million and $10.4 million, respectively. Interest of 0.5% is charged on net amounts due from Jiangsu Ever-Glory at each month end. Since January 1, 2019, interest rate has changed to 0.3625% as the bank benchmark interest rate decreased. Interest income for the years ended December 31, 2019 and 2018 was approximately $0.3 million and $0.7 million, respectively. |
Commitment and Contingencies
Commitment and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENT AND CONTINGENCIES | NOTE 13 COMMITMENTS AND CONTINGENCIES Operating Lease Commitment The Company recognized operating lease liabilities and operating lease right-of-use assets on its balance sheets. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The company has leases with fixed payments for land-use-rights, warehouses and logistics centers, flagship stores, and leases with variable payments for stores within shopping malls ("shopping mall stores") in the PRC, which are classified as operating leases. Options to extend or renew are recognized as part of the lease liabilities and recognized as right of use assets. There are no residual value guarantees and no restrictions or covenants imposed by the leases. The followings are lists of leases: (i) the terms of Shanghai LAGOGO land use right and buildings are 34 years; (ii) the terms of Kunshan logistics center and Chuzhou logistics center are 5 years; (iii) the terms of flagship stores are 3 years. The lease term for shopping mall stores is commonly one year with options to extend or renew, and the rent is predetermined with a percentage of sales. The Company estimates the next 12 months rent for the shopping mall stores by annualizing current period rent calculated with the percentage of sales. Thus, the ROU assets and lease liabilities may vary significantly at different period ends. In the year ended December 31, 2019, the costs of the leases recognized in cost of revenues and general administrative expenses are $8.0 and $0.7 million, respectively. Cash paid for the operating leases including in the operating cash flows was $8.7 million. As of December 31, 2019, the Company has $53.4 million of right-of-use assets, $44.9 million in current operating lease liabilities and $8.5 million in non-current operating lease liabilities as of December 31, 2019. Future minimum lease payments for leases with initial or remaining noncancelable lease terms in excess of one year are as follows: Year ending December 31, (In thousands of U.S. Dollars) 2020 392 2021 392 2022 392 2023 406 2024 406 Thereafter 12,519 $ 14,507 Legal Proceedings On March 2019, Shanghai La Go Go Fashion Company Limited ("LA GO GO") filed a complaint against Shanghai Chijing Investment Management Co., Ltd. ("Shanghai Chijing") for unpaid rent of RMB2.45 million ($0.36 million) in the Shanghai People's Court (the "Court"). On July 2019, Shanghai Chijing filed a counterclaim against LA GO GO for RMB15.38 million ($2.17 million), alleging that LA GO GO had not fulfilled its corresponding obligations as a landlord. As a result, the Court has frozen the bank accounts of both Shanghai Chijing and LA GO GO. As of December 31, 2019, a total balance of RMB15.38 million ($2.2 million) was frozen in the bank accounts of LA GO GO. LA GO GO believes that Shanghai Chijing's counterclaim is frivolous and without merit, and is rigorously defending against the counterclaim. As of December 31, 2019, the company had booked this restricted cash in other receivables. On March 10, 2020, the Court entered a judgment in favor of LA GO GO and dismissed Shanghai Chijing's counterclaim. In addition to the foregoing, we may become subject to other legal proceedings that arise in the ordinary course of business and have not been finally adjudicated. Adverse decisions in any of the foregoing may have a material adverse effect on our results of operations, cash flows or our financial condition. |
Risks and Uncertainties
Risks and Uncertainties | 12 Months Ended |
Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
RISKS AND UNCERTAINTIES | NOTE 14 RISKS AND UNCERTAINTIES Economic and Political Risks The Company's results of operations could be adversely affected by general conditions in the global economy, including conditions that are outside of its control, such as the impact of health and safety concerns from the outbreak of COVID-19. The outbreak in China has resulted in the reduction of customer traffic and temporary closures of shopping malls as mandated by the provincial governments in various provinces of China from late January to March, which has adversely affected the company is the retail business with a decline in sales in February 2020. The Company's wholesale business is also significantly affected as the Company is facing a sharp decline in its order quantities. Some of the Company's wholesale clients are in the process of negotiating the cancellation or postponement of orders. Due to the Chinese factories' shutdowns and traffic restrictions during the outbreak in China and potential shutdowns and traffic restrictions in the countries where the Company's suppliers are located, The Company's supply chain and business operations of its suppliers may be affected. Disruptions from the closure of supplier and manufacturer facilities, interruptions in the supply of raw materials and components, personnel absences, or restrictions on the shipment of the Company's or its suppliers' or customers' products, could have adverse ripple effects on the Company's manufacturing output and delivery schedule. The Company could also face difficulties in collecting its accounts receivables due to the effects of COVID-19 on its customers and risk gaining a large amount of bad debt. Global health concerns, such as COVID-19, could also result in social, economic, and labor instability in the countries and localities in which the Company, its suppliers and customers operate. Although China has already begun to recover from the outbreak of COVID-19, the epidemic continues to spread on a global scale and there is the risk of the epidemic returning to China in the future, thereby causing further business interruption. While the potential economic impact brought by and the duration of COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect the Company's liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect the Company's business and the value of its common stock. If the Company's future sales continue to decline significantly, it may risk facing financial difficulties due to its recurring fixed expenses. The extent to which COVID-19 impacts the Company's operating is uncertain and cannot be predicted at this time, and it will depend on many factors and future developments, including new information about COVID-19 and any new government regulations which may emerge to contain the virus, among others. The majority of the Company's operations are conducted in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy. The Company's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation. Credit risks Management reviews the allowance for doubtful accounts each reporting period based on a detailed analysis of accounts receivable. In the analysis, management primarily considers the age of the customer's receivable and also considers the credit worthiness of the customer, the economic conditions of the customer's industry, and general economic conditions and trends, among other factors. If any of these factors change, the Company may also change its original estimates, which could impact the level of the Company's future allowance for doubtful accounts. If judgments regarding the collectability of accounts receivables are incorrect, adjustments to the allowance may be required, which would reduce profitability. Concentration risks For the Company's wholesale business, the Company had one customer which represented approximately 24.3% of the total revenues for the year ended December 31, 2019 and had one customer which represented approximately 20.9% of the total revenues for the year ended December 31, 2018. In 2019 and 2018, sales to our five largest customers generated approximately 47.3% and 46.5% of our total wholesale sales, respectively. For our wholesale business, purchases from our five largest contract manufacturers represented approximately 41.4% and 38.8% of finished goods purchases for the years ended December 31, 2019 and 2018, respectively. For the Company's retail business, the Company had five suppliers represented approximately 10.2%, 12.9%, 15.2%, 19.6% and 35.6% of the total raw materials purchased, respectively during 2019. For the Company's retail business, the Company had four suppliers represented approximately 24.0%, 18.2%, 15.1% and 13.9% of the total raw materials purchased, respectively during 2018. For the wholesale business, the Company relied on two manufacturers for 10.2% and 10.4% of total purchased finished goods, respectively during 2019. For the wholesale business, the Company relied on one manufacturer for 18.1% of total purchased finished goods, respectively during 2018. The Company's revenues for the years ended December 31, 2019 and 2018 were earned in the following geographic areas: 2019 2018 (In thousands of Mainland China $ 74,008 $ 89,269 Hong Kong China 26,126 38,106 Germany 3,510 6,748 United Kingdom 14,864 15,460 Europe-Other 22,158 30,747 Japan 18,901 7,583 United States 35,589 30,696 Total wholesale business 195,156 218,609 Retail business 187,945 229,899 Total $ 383,101 $ 448,508 Substantially all of the Company's long-lived assets are located in the PRC as of December 31, 2019 and 2018. |
Segments
Segments | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |
SEGMENTS | NOTE 15 SEGMENTS The Company reports financial and operating information in the following two segments: (a) Wholesale segment (b) Retail segment Wholesale segment Retail segment Total (In thousands of U.S. Dollars) December 31, 2019 Segment profit or loss: Net revenue from external customers $ 195,156 $ 187,945 $ 383,101 Income from operations $ 12,376 $ (8,908 ) $ 3,468 Interest income $ 969 $ 34 $ 1,003 Interest expense $ 897 $ 325 $ 1,222 Depreciation and amortization $ 979 $ 7,260 $ 8,239 Income tax expense $ 3,189 $ 1,373 $ 4,562 Segment assets: Additions to property, plant and equipment $ 1,254 $ 7,411 $ 8,665 Total assets $ 88,906 $ 212,765 $ 301,671 December 31, 2018 Segment profit or loss: Net revenue from external customers $ 218,609 $ 229,899 $ 448,508 Income from operations $ 12,071 $ 2,948 $ 15,019 Interest income $ 1,330 $ 45 $ 1,375 Interest expense $ 1,667 $ 322 $ 1,989 Depreciation and amortization $ 1,175 $ 5,489 $ 6,664 Income tax expense $ 3,337 $ 1,605 $ 4,942 Segment assets: Additions to property, plant and equipment $ 2,153 $ 10,029 $ 12,182 Total assets $ 98,493 $ 153,778 $ 252,271 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include Ever-Glory International Group, Inc. and its subsidiaries, and are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). All significant intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates and Assumptions | Use of Estimates and Assumptions In preparing the consolidated financial statements in conformity with GAAP, management makes certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the periods reported. Management believes that the estimates utilized in preparing the financial statements are reasonable and prudent based on the best information available at the time the estimates are made. Actual results could differ from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand and demand deposits with banks with original maturities within three months. |
Accounts Receivable, net | Accounts Receivable, net The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and recorded based on management's assessment of the credit history of its customers and current relationships with them. The Company writes off accounts receivable when amounts are deemed uncollectible. As of December 31, 2019 and 2018, $1.0 million and $0.66 million of bad debt expense have been made in the consolidated financial statements respectively. The allowance for doubtful account balances as of December 31, 2019 and 2018 are $5.3 million and $5.9 million, respectively. |
Inventories | Inventories Wholesale inventories are stated at lower of cost or net realizable value, cost being determined on a specific identification method. The Company manufactures products upon receipt of orders from its customers. All products must pass the customers' quality assurance procedures before delivery. Therefore, products are rarely returned by customers after delivery. Retail inventories are stated at the lower of average cost or net realizable value, cost being determined on a specific identification method. The Company records a provision for slow-moving or obsolete materials and finished goods aged more than two years. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Expenditures for additions, major renewals and betterments are capitalized and expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is provided on a straight-line basis, less estimated residual value, over the assets' estimated useful lives. The estimated useful lives are as follows: Property and plant 15-20 Years Leasehold improvements 10 Months - 2 Years Machinery and equipment 5-10 Years Office equipment and furniture 3-5 Years Motor vehicles 5 Years |
Land Use Rights | Land Use Rights All land in the PRC is owned by the government and cannot be sold to any individual or company. However, the government may grant a "land use right" to occupy, develop and use land. The Company records land use rights obtained as intangible assets at cost, which is amortized evenly over the grant period of 50 years. |
Impairment of long-lived assets | Impairment of long-lived assets Long-lived assets, property, equipment and land use rights held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, when undiscounted future cash flows will not be sufficient to recover an asset's carrying amount, the asset is written down to its fair value. There was no impairment of long-lived assets as of December 31, 2019, but intangible assets of $1.08 million were impaired as of December 31, 2018. |
Fair Value Accounting | Fair Value Accounting Accounting Standards Codification ("ASC") 820 " Fair Value Measurements and Disclosures Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). The fair value of forward exchange contracts is based on broker quotes, if available. If broker quotes are not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price at the reporting date for the residual maturity of the contract using a risk-free interest rate based on government bonds. At December 31, 2019 and 2018, the Company's financial assets (all Level 1) consist of cash placed with financial institutions that management considers to be of a high quality. Management has estimated that the carrying amounts of non-related party financial instruments approximate their fair values due to their short-term maturities. The fair value of amounts due from (to) related parties is not practicable to estimate due to the related party nature of the underlying transactions. As of December 31, 2019, the Company has no derivative liability subjects to recurring fair value measurement (Level 3) with the change in fair value recognized in earnings. As of December 31, 2018, the Company has the following derivative financial instruments measured at their fair value using Level 2 quoted prices provided by banks. The fair value of foreign currency swap contracts is determined by the variation of measurement date foreign exchange market rates and contract closing date predetermined foreign exchange rates. The Company has adopted ASC 825-10 " Financial Instruments |
Derivative Financial Instruments | Derivative Financial Instruments From time to time, the Company uses derivative financial instruments to manage its exposure to foreign currency risks arising from operational activities or on certain existing assets and liabilities. The Company does not hold or issue derivative instruments for trading purposes. The Company may enter into forward foreign exchange contracts, foreign exchange options, or foreign exchange currency swap contracts to manage exposure to certain foreign currency operating transactions. These instruments may offset a portion of the foreign currency re-measurement gains or losses, or changes in fair value. The Company may also enter into above similar derivative instruments to hedge the exposure to variability in the expected cash flows of forecasted transactions such as international sales or purchases that the Company expects to receive or commit to remit foreign currencies. In these cases, the Company designates these instruments as the cash flow hedges. The Company accounts for derivative and hedging activities in accordance with ASC 815, Derivatives and Hedging, as amended by ASU No. 2017-12. Derivative financial instruments are recognized initially at fair value and transaction costs are expensed immediately. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on re-measurement to fair value is recognized immediately in earnings when such instruments are designated as fair value hedges or ineffective portion of cash flow hedges. The accumulated gain or loss from effective portions of cash flow hedges are recorded in accumulated other comprehensive income/(loss) ("AOCI") until the hedged item is recognized in earnings. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. |
Operating Leases | Operating Leases The Company adopted ASC No. 842, Leases effective January 1, 2019 to account for all Company's leases, All leases are recorded in the balance sheets. The lease liability is measured at present value of outstanding lease payments, both at commencement date and subsequently. The discount rate is generally the Company's incremental borrowing rate as the lessor's rate implicit in the lease is not readily determinable. The right-of-use (ROU) asset costs at commencement date consist of initial lease liability, any initial direct costs, and any lease payments made to the lessor at or before the commencement date, minus any lease incentives received. Subsequently, the carrying amount of ROU asset is derived from the carrying amount of the lease liability, plus unamortized direct costs and prepaid lease payments, and minus unamortized balance of lease incentives received. The annual amortization expenses will be recorded in consolidated statement of operations and allocating between cost of sales and operating expenses. |
Revenue and Cost Recognition | Revenue and Cost Recognition The Company recognizes wholesale revenue from product sales, net of value-added taxes, upon delivery for local sales and upon shipment of the products for export sales, at such time title passes to the customer. Retail sales are recorded net of promotional discounts, rebates, and return allowances. Retail store sales are recognized at the time of the register receipt. Retail online sales are recognized when products are shipped and customers receive the products because the Company retains a portion of the risk of loss on these sales during transit. The Company's revenue recognition policy is in compliance with ASC 606, Revenue from Contracts with Customers (i) identification of the promised goods and services in the contract; (ii) determination of whether the promised goods and services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's performance obligations are transferred to customers at a point in time, typically upon delivery for local sales and upon shipment of the products for export sale. For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all product revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adopted rules. Cost of goods sold includes the direct raw material cost, direct labor cost, manufacturing overheads including depreciation of production equipment, and rent and commission due to department stores consistent with the revenue earned. Cost of goods sold excludes warehousing costs, which historically have not been significant. Local transportation charges and production inspection charges are included in selling expenses and totaled $3.2 million and $1.1 million in the years ended December 31, 2019 and 2018, respectively. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. Research and development costs included in general and administrative expenses for the years ended December 31, 2019 and 2018 amounted to $1.0 million and $0.8 million, respectively. |
Government subsidies | Government subsidies Government subsidies are recognized when received and when all the conditions for their receipt have been met. Subsidies that compensate the Company for expenses incurred are recognized as a reduction of expenses in the consolidated statements of operations. Subsidies that are not associated with expenses are recognized as other income. Four of the Company's PRC subsidiaries received government subsidies of $1.8 million and $1.2 million for the years ended December 31, 2019 and 2018, respectively, which was recorded in other income when subsidies were received and all the conditions were met. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. The Company has adopted ASC 740 " Income Taxes The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the years ended December 31, 2019 and 2018. The Company's effective tax rate differs from the PRC statutory rate primarily due to non-deductible expenses, temporary differences, and preferential tax treatment. The Company files income tax returns with the relevant government authorities in the U.S. and the PRC. |
Foreign Currency Translation and Other Comprehensive Income | Foreign Currency Translation and Other Comprehensive Income The reporting currency of the Company is the U.S. dollar. The functional currency of Ever-Glory, Perfect Dream, Ever-Glory HK and Ever-Glory Supply Chain is the U.S. dollar. The functional currency of Goldenway, New Tailun, Catch-luck, Haian TaiXin, Ever-Glory Apparel, Shanghai LA GO GO, Jiangsu LA GO GO, Tianjin LA GO GO, He Meida, Huirui, Yalan, Yiduo and Taixin is the Chinese RMB. For the subsidiaries whose functional currency is the RMB, all assets and liabilities are translated at the exchange rate on the balance sheet date; equity is translated at historical rates and items in the statement of income are translated at the average rate for the period. Translation adjustments resulting from this process are included in accumulated other comprehensive income (loss) in the statement of equity and amounted to ($4.34 million) and ($3.58 million) as of December 31, 2019 and 2018, respectively. Assets and liabilities at December 31, 2019 and 2018 were translated at RMB6.98 and RMB6.88 to $1.00 respectively. The average translation rates applied to income statement accounts and consolidated statements of cash flows for the years ended December 31, 2019 and 2018 were RMB6.90 and RMB6.61 to $1.00, respectively. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation gains or losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred and amounted a loss of $0.77 million and a loss of $1.20 million for the years ended December 31, 2019 and 2018, respectively. |
Earnings Per Share | Earnings Per Share The Company reports earnings per share in accordance with ASC 260 "Earnings Per Share" Included in the calculation of basic EPS are shares of restricted common stock that have been issued by the Company, all of which are fully vested. Shares of restricted common stock whose issuance is contingent upon the attainment of specified earnings targets are considered outstanding and included in the computation of basic EPS as of the date that all necessary conditions have been satisfied, which is the date upon which the specified amount of earnings has been attained. These shares are to be considered outstanding and included in the computation of diluted EPS as of the beginning of the period in which the conditions are satisfied. If the specified amount of earnings has not been attained as of the end of the reporting period, the contingently issuable shares are excluded from the calculation of basic and diluted EPS. Unvested restricted shares to be issued (share-based compensation) under the 2014 Equity Incentive Plan are not included in basic weighted average number of shares but are considered to be outstanding as of the grant date for purposes of computing diluted earnings per share even though the shares are subject to vesting requirements. |
Segments | Segments The Company applies ASC 280 "Segment Reporting" (1) Wholesale apparel manufacture and sales (2) Retail sales of own-brand clothing |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" In October 2018, the FASB issued ASU No. 2018-17 "Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities" The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company's consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of estimated useful life of property and equipment | Property and plant 15-20 Years Leasehold improvements 10 Months - 2 Years Machinery and equipment 5-10 Years Office equipment and furniture 3-5 Years Motor vehicles 5 Years |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | December 31, December 31, (In thousands of Raw materials $ 1,468 $ 6,805 Work-in-progress 8,025 3,308 Finished goods 57,862 55,816 Total inventories $ 67,355 $ 65,929 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of land use rights | 2019 2018 (In thousands of Land use rights $ 5,456 $ 5,702 Less: accumulated amortization (727 ) (740 ) Land use rights, net $ 4,729 $ 4,962 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | 2019 2018 (In thousands of Property and plant $ 24,384 $ 27,829 Leasehold improvements 19,914 21,278 Equipment and machinery 2,448 2,451 Office equipment and furniture 7,567 3,102 Motor vehicles 2,048 1,112 56,361 55,772 Less: accumulated depreciation (28,330 ) (27,327 ) Construction-in-progress 781 - Property and equipment, net $ 28,812 $ 28,445 |
Other Payables and Accrued Li_2
Other Payables and Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Summary of other payables and accrued liabilities | 2019 2018 (In thousands of Advance from customers $ 2,497 $ 976 Accrued wages and welfare 7,459 8,671 Other payables 9,181 12,311 Total other payables and accrued liabilities $ 19,137 $ 21,958 |
Bank Loans (Tables)
Bank Loans (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of short-term bank loans | December 31, December 31, Bank (In thousands of Industrial and Commercial Bank of China $ 18,629 $ 14,540 Nanjing Bank 6,449 5,089 China Minsheng Bank 2,866 2,908 Bank of Communications 1,426 2,893 HSBC 561 - Shanghai Pudong Development Bank - 2,613 China Everbright Bank Shanghai Pudong Development Bank - 1,454 $ 29,931 $ 29,497 |
Income Tax (Tables)
Income Tax (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Summary of pre-tax income in jurisdictions | 2019 2018 (In thousands of PRC $ 6,032 $ 16,384 BVI (239 ) 18 Others (12 ) (20 ) $ 5,781 $ 16,382 |
Summary of reconciliation of PRC statutory rates to the Company's effective tax rate | 2019 2018 (In thousands of PRC statutory rate 25.0 % 25.0 % Temporary difference between US GAAP and PRC tax accounting 57.8 6.6 Others (3.9 ) (1.4 ) Effective income tax rate 78.9 % 30.2 % |
Schedule of income tax expense | 2019 2018 (In thousands of Current $ 5,912 $ 7,115 Deferred (1,350 ) (2,173 ) Income tax expense $ 4,562 $ 4,942 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | 2019 2018 Weighted average number of common shares- Basic and diluted 14,801,770 14,796,947 Earnings per share - basic and diluted $ 0.09 $ 0.81 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Summary of other expenses due to related parties | 2019 2018 (In thousands of Chuzhou Huarui $ 207 $ 217 EsC'Lav - 25 Kunshan Enjin 87 94 Total $ 294 $ 336 |
Summary of sub-contracts with related parties | 2019 2018 (In thousands of Ever-Glory Vietnam $ 12,952 $ 14,718 Chuzhou Huarui 6,200 6,356 Fengyang Huarui 2,225 2,438 Nanjing Ever-Kyowa 1,534 1,566 Nanjing Knitting 1,201 - EsC'Lav 136 50 Total $ 24,248 $ 25,128 |
Summary of accounts payable to related parties | 2019 2018 (In thousands of Ever-Glory Vietnam $ 2,260 1,863 Fengyang Huarui 414 622 Nanjing Ever-Kyowa 386 580 Chuzhou Huarui 1,064 888 Nanjing Knitting 186 171 Jiangsu Ever-Glory 501 632 Total $ 4,811 $ 4,756 |
Summary of amounts due from related party current assets | 2019 2018 (In thousands of Jiangsu Ever-Glory $ 123 $ 122 EsC'eLav - 70 Total $ 123 $ 192 |
Commitment and Contingencies (T
Commitment and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of future minimum lease payments | Year ending December 31, (In thousands of U.S. Dollars) 2020 392 2021 392 2022 392 2023 406 2024 406 Thereafter 12,519 $ 14,507 |
Risks and Uncertainties (Tables
Risks and Uncertainties (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Schedule of Company's revenues as per geographic areas | 2019 2018 (In thousands of Mainland China $ 74,008 $ 89,269 Hong Kong China 26,126 38,106 Germany 3,510 6,748 United Kingdom 14,864 15,460 Europe-Other 22,158 30,747 Japan 18,901 7,583 United States 35,589 30,696 Total wholesale business 195,156 218,609 Retail business 187,945 229,899 Total $ 383,101 $ 448,508 |
Segments (Tables)
Segments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |
Summary of financial and operating information | Wholesale segment Retail segment Total (In thousands of U.S. Dollars) December 31, 2019 Segment profit or loss: Net revenue from external customers $ 195,156 $ 187,945 $ 383,101 Income from operations $ 12,376 $ (8,908 ) $ 3,468 Interest income $ 969 $ 34 $ 1,003 Interest expense $ 897 $ 325 $ 1,222 Depreciation and amortization $ 979 $ 7,260 $ 8,239 Income tax expense $ 3,189 $ 1,373 $ 4,562 Segment assets: Additions to property, plant and equipment $ 1,254 $ 7,411 $ 8,665 Total assets $ 88,906 $ 212,765 $ 301,671 December 31, 2018 Segment profit or loss: Net revenue from external customers $ 218,609 $ 229,899 $ 448,508 Income from operations $ 12,071 $ 2,948 $ 15,019 Interest income $ 1,330 $ 45 $ 1,375 Interest expense $ 1,667 $ 322 $ 1,989 Depreciation and amortization $ 1,175 $ 5,489 $ 6,664 Income tax expense $ 3,337 $ 1,605 $ 4,942 Segment assets: Additions to property, plant and equipment $ 2,153 $ 10,029 $ 12,182 Total assets $ 98,493 $ 153,778 $ 252,271 |
Organization and Basis Of Pre_2
Organization and Basis Of Presentation (Details) | Dec. 31, 2019 |
Percentage of retail operations ownership | 78.00% |
La Go Go [Member] | |
Business acquisition, percentage of voting interests acquired | 78.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Motor vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 5 years |
Maximum [Member] | Property and plant [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 20 years |
Maximum [Member] | Leasehold improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 2 years |
Maximum [Member] | Machinery and equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 10 years |
Maximum [Member] | Office equipment and furniture [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 5 years |
Minimum [Member] | Property and plant [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 15 years |
Minimum [Member] | Leasehold improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 10 months |
Minimum [Member] | Machinery and equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 3 years |
Minimum [Member] | Office equipment and furniture [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 3 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Textual) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)Segment | Dec. 31, 2018USD ($) | |
Summary of Significant Accounting Policies (Textual) | ||
Bad debt expense | $ 1,062 | $ 660 |
Land use right, useful life | 50 years | |
Description of provision recorded on inventory | The Company records a provision for slow-moving or obsolete materials and finished goods aged more than two years. | |
Impairment charges of long lived assets | ||
Inspection charges and selling expenses | $ 3,200 | 1,100 |
Research and development costs | 100 | 800 |
PRC received government subsidies | 1,800 | 1,200 |
Accumulated other comprehensive income | $ (4,330) | (3,578) |
Assets and liabilities translation rate, description | Assets and liabilities at December 31, 2019 and 2018 were translated at RMB6.98 and RMB6.88 to $1.00 respectively. | |
Average translation rate applied to income statement accounts and statement of cash flows, description | The average translation rates applied to income statement accounts and consolidated statements of cash flows for the years ended December 31, 2019 and 2018 were RMB6.90 and RMB6.61 to $1.00, respectively. | |
Gains or losses from exchange rate fluctuations | $ 770 | 1,200 |
Number of segments | Segment | 2 | |
Accounts Receivable [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Allowance for doubtful accounts | $ 5,300 | $ 5,900 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Schedule of inventories | ||
Raw materials | $ 1,468 | $ 6,805 |
Work-in-progress | 8,025 | 3,308 |
Finished goods | 57,862 | 55,816 |
Total inventories | $ 67,355 | $ 65,929 |
Inventories (Details Textual)
Inventories (Details Textual) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Inventories (Textual) | ||
Provision for obsolete inventories | $ 2,800 | $ 3,300 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Land use rights | $ 5,456 | $ 5,702 |
Less: accumulated amortization | (727) | (740) |
Land use rights, net | $ 4,729 | $ 4,962 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Dec. 31, 2015m² | Dec. 31, 2014m² | Dec. 31, 2006m² | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Intangible Assets (Textual) | |||||
Land use right, useful life | 50 years | ||||
Amortization expenses | $ 120 | $ 120 | |||
Expected amortization expense year one | 120 | ||||
Expected amortization expense year two | 120 | ||||
Expected amortization expense year three | 120 | ||||
Expected amortization expense year four | 120 | ||||
Expected amortization expense year five | 120 | ||||
Impairment marketing related intangible assets | $ 1,086 | ||||
Tianjin Wuqing Development Zone [Member] | |||||
Intangible Assets (Textual) | |||||
Area of land square meters | m² | 33,427 | ||||
Land use right, useful life | 50 years | ||||
Suzhou Kunshan Jinxi Tower Jinxing Road [Member] | |||||
Intangible Assets (Textual) | |||||
Area of land square meters | m² | 23,333 | ||||
Land use right, useful life | 50 years | ||||
Technological Development Zone [Member] | |||||
Intangible Assets (Textual) | |||||
Area of land square meters | m² | 112,442 | ||||
Land use right, useful life | 50 years | ||||
Nanjing Jiangning Economic [Member] | |||||
Intangible Assets (Textual) | |||||
Area of land square meters | m² | 112,442 | ||||
Land use right, useful life | 50 years |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | $ 56,361 | $ 55,772 |
Less: accumulated depreciation | (28,330) | (27,327) |
Construction-in-progress | 781 | |
Property and equipment, net | 28,812 | 28,445 |
Property and plant [Member] | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | 24,384 | 27,829 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | 19,914 | 21,278 |
Equipment and machinery [Member] | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | 2,448 | 2,451 |
Office equipment and furniture [Member] | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | 7,567 | 1,112 |
Motor vehicles [Member] | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | $ 2,048 | $ 3,102 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property and Equipment (Textual) | ||
Depreciation expense | $ 8,110 | $ 6,540 |
Other Payables and Accrued Li_3
Other Payables and Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Advance from customers | $ 2,497 | $ 976 |
Accrued wages and welfare | 7,459 | 8,671 |
Other payables | 9,181 | 12,311 |
Total other payables and accrued liabilities | $ 19,137 | $ 21,958 |
Bank Loans (Details)
Bank Loans (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Schedule of short term bank loans | ||
Bank loans | $ 29,931 | $ 29,497 |
Industrial and Commercial Bank of China [Member] | ||
Schedule of short term bank loans | ||
Bank loans | 18,629 | 14,540 |
Nanjing Bank [Member] | ||
Schedule of short term bank loans | ||
Bank loans | 6,449 | 5,089 |
China Minsheng Bank [Member] | ||
Schedule of short term bank loans | ||
Bank loans | 2,866 | 2,908 |
Bank of Communications [Member] | ||
Schedule of short term bank loans | ||
Bank loans | 1,426 | 2,893 |
HSBC [Member] | ||
Schedule of short term bank loans | ||
Bank loans | 561 | |
Shanghai Pudong Development Bank [Member] | ||
Schedule of short term bank loans | ||
Bank loans | 2,613 | |
China Everbright Bank Shanghai Pudong Development Bank [Member] | ||
Schedule of short term bank loans | ||
Bank loans | $ 1,454 |
Bank Loans (Details Textual)
Bank Loans (Details Textual) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||||||
Nov. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Jan. 31, 2015 | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2019CNY (¥) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Nov. 30, 2018CNY (¥) | Aug. 31, 2018USD ($) | Aug. 31, 2018CNY (¥) | Jun. 30, 2018CNY (¥) | |
Ever Glory Apparel [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Unused line of credit | $ 1,400 | |||||||||||
Nanjing Bank [Member] | Mr. Kang and Goldenway [Member] | CNY [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit agreement amount | ¥ | ¥ 40,000 | |||||||||||
Nanjing Bank [Member] | Ever Glory Apparel [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit agreement amount | $ 2,000 | |||||||||||
Unused line of credit | 7,200 | |||||||||||
Borrowed loans from related party | 12,900 | |||||||||||
Nanjing Bank [Member] | Ever Glory Apparel [Member] | CNY [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Borrowed loans from related party | ¥ | 90,000 | |||||||||||
Nanjing Bank [Member] | LA GO GO [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit agreement amount | $ 2,900 | $ 2,900 | ||||||||||
Unused line of credit | $ 1,500 | $ 1,500 | ||||||||||
Line of credit extended maturity date | Jan. 1, 2020 | Jan. 1, 2020 | Jun. 30, 2020 | |||||||||
Line of credit annual interest rates | 5.00% | 5.00% | 5.22% | |||||||||
Borrowed loans from related party | $ 1,400 | $ 2,900 | $ 2,100 | |||||||||
Nanjing Bank [Member] | LA GO GO [Member] | CNY [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit agreement amount | ¥ | ¥ 20,000 | ¥ 20,000 | ||||||||||
Borrowed loans from related party | ¥ | 10,000 | ¥ 20,000 | ||||||||||
Nanjing Bank [Member] | Shanghai Chijing [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Borrowed loans from related party | 1,500 | |||||||||||
Industrial and Commercial Bank Of China [Member] | Goldenway [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit agreement amount | $ 7,200 | |||||||||||
Unused line of credit | 7,200 | |||||||||||
Borrowed loans from related party | $ 5,700 | |||||||||||
Industrial and Commercial Bank Of China [Member] | Goldenway [Member] | CNY [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Borrowed loans from related party | ¥ | ¥ 40,000 | |||||||||||
Industrial and Commercial Bank Of China [Member] | Ever Glory Apparel [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit agreement amount | 14,300 | 8,600 | ||||||||||
Industrial and Commercial Bank Of China [Member] | Ever Glory Apparel [Member] | Minimum [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit annual interest rates | 3.92% | |||||||||||
Industrial and Commercial Bank Of China [Member] | Ever Glory Apparel [Member] | Maximum [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit annual interest rates | 4.70% | |||||||||||
Industrial and Commercial Bank Of China [Member] | Ever Glory Apparel [Member] | CNY [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit agreement amount | ¥ | 100,000 | ¥ 60,000 | ||||||||||
Goldenway [Member] | Ever Glory Apparel [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit extended maturity date | Feb. 28, 2020 | |||||||||||
Line of credit annual interest rates | 3.92% | |||||||||||
Goldenway [Member] | Nanjing Bank [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit agreement amount | $ 7,200 | |||||||||||
Goldenway [Member] | Nanjing Bank [Member] | CNY [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit agreement amount | ¥ | ¥ 50,000 | |||||||||||
Goldenway [Member] | Shanghai Pudong Development Bank [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit agreement amount | $ 5,700 | |||||||||||
Unused line of credit | $ 5,700 | |||||||||||
Bank Of Communications [Member] | Nanjing Bank [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Due date of revolving line of credit agreement | March to October 2020 | |||||||||||
Line of credit annual interest rates | 4.57% | |||||||||||
China Minsheng Banking [Member] | Ever Glory Apparel [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit extended maturity date | Oct. 31, 2019 | |||||||||||
Line of credit annual interest rates | 4.79% | |||||||||||
LA GO GO [Member] | Ever Glory Apparel [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit agreement amount | $ 2,800 | |||||||||||
LA GO GO [Member] | Ever Glory Apparel [Member] | CNY [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit agreement amount | ¥ | ¥ 19,900 | |||||||||||
Mr. Kang and Goldenway [Member] | Ever Glory Apparel [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit extended maturity date | Jan. 31, 2020 | |||||||||||
Line of credit annual interest rates | 5.00% | |||||||||||
Borrowed loans from related party | $ 300 | |||||||||||
Mr. Kang and Goldenway [Member] | JiangsuEverGlory[Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Unused line of credit | 4,300 | |||||||||||
Borrowed loans from related party | $ 4,300 | |||||||||||
China Everbright Bank [Member] | Shanghai Pudong Development Bank [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit agreement amount | $ 4,000 | |||||||||||
Shanghai Pudong Development Bank [Member] | Shanghai Chijing [Member] | ||||||||||||
Bank Loans (Textual) | ||||||||||||
Line of credit annual interest rates | 4.60% | 4.59% | ||||||||||
Interest expense on bank loans | $ 1,220 | $ 1,990 | ||||||||||
Line of credit extended maturity date, description | Ever-Glory Apparel and Goldenway collectively entered into a secured banking facility agreement for a combined revolving import facility, letter of credit, invoice financing facilities and a credit line for treasury products of up to $2.5 million with the Nanjing Branch of HSBC (China) Company Limited ("HSBC"). This agreement is guaranteed by the Company and Mr. Kang. As of December 2019, Ever-Glory Apparel had borrowed $0.6 million from HSBC with an annual interest rate of 3.0% and due in October 2018, and collateralized by approximately $0.7 million of accounts receivable from our wholesale customers. These bank loans are to be repaid upon receipt of payments from customers. As of December 31, 2019, approximately $1.9 million was unused and available under this line of credit. |
Derivative Liability (Details)
Derivative Liability (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Liability (Textual) | |
Foreign currency swap contracts, description | Ever-Glory Apparel had entered into different foreign currency swap contracts to exchange $6.0 million for equivalent RMB with Bank of China in May, entered into a foreign currency swap contract to exchange $3.0 million for equivalent RMB with Industrial and Commercial Bank of China in June and entered into a foreign currency swap contract to exchange $6.0 million and $4.0 million for equivalent RMB with Shanghai Pudong Development Bank in July. The terms of three foreign currency contracts are both six months and the contract of $4.0 million with Shanghai Pudong Development Bank is three months. Ever-Glory Apparel and the banks swapped two currencies by same pre-determined exchange rate at the beginning and end of the contracts. During the period, the Company pays annual interest of 1.43% for the RMB received and receives no interest for the USD exchanged with the Bank of China and Industrial and Commercial Bank of China. The company pays annual interest of 0.98% for the RMB received and receives 0.0001% interest for the USD exchanged with Shanghai Pudong Development Bank. If the Company failed to execute the exchange at the expiration of contracts, the banks would sell the USD at the market rate then the difference in RMB will be converted into bank loan for the Company. As of December 31, 2018, the fair value of principal amounts are included in other receivable ($4.0 million plus unrealized gain) and other payables (equivalent RMB payables) in the consolidated balance sheets, and unrealized gain of $0.2 million for the year ended December 31, 2018 is recognized in the income from operations. |
Swap maturity date | Oct. 8, 2019 |
Income Tax (Details)
Income Tax (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of Pre-tax income in jurisdictions | ||
Pre-tax income | $ 5,781 | $ 16,382 |
PRC [Member] | ||
Summary of Pre-tax income in jurisdictions | ||
Pre-tax income | 6,032 | 16,384 |
BVI [Member] | ||
Summary of Pre-tax income in jurisdictions | ||
Pre-tax income | (239) | 18 |
Others [Member] | ||
Summary of Pre-tax income in jurisdictions | ||
Pre-tax income | $ (12) | $ (20) |
Income Tax (Details 1)
Income Tax (Details 1) - PRC [Member] | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of reconciliation of PRC statutory rates to the company's effective tax rate | ||
PRC statutory rate | 25.00% | 25.00% |
Temporary difference between US GAAP and PRC tax accounting | 57.80% | (1.40%) |
Others | (3.90%) | 6.60% |
Effective income tax rate | 78.90% | 30.20% |
Income Tax (Details 2)
Income Tax (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of income tax expense | ||
Current | $ 5,912 | $ 7,115 |
Deferred | (1,350) | (2,173) |
Income tax expense | $ 4,562 | $ 4,942 |
Income Tax (Details Textual)
Income Tax (Details Textual) $ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($) | Dec. 31, 2019HKD ($) | Dec. 31, 2018 | |
Income Tax (Textual) | |||
Effective income tax reduction, percent | 25.00% | 25.00% | |
Maximum [Member] | |||
Income Tax (Textual) | |||
Effective income tax reduction, percent | 15.00% | 15.00% | |
Minimum [Member] | |||
Income Tax (Textual) | |||
Effective income tax reduction, percent | 9.00% | 9.00% | |
Xizang (Tibet) [Member] | |||
Income Tax (Textual) | |||
PRC statutory rate | 15.00% | 15.00% | |
Non-U.S. subsidiaries [Member] | |||
Income Tax (Textual) | |||
U.S. deferred income taxes | $ 107,900 | ||
Income tax, description | The statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017 | The statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017 | |
He Meida [Member] | |||
Income Tax (Textual) | |||
Effective income tax reduction, percent | 25.00% | 25.00% | |
HKD [Member] | |||
Income Tax (Textual) | |||
Effective income tax reduction, percent | 16.50% | 16.50% | |
Income tax | $ 2,000 | ||
Profit | $ 2,000 | ||
PRC [Member] | |||
Income Tax (Textual) | |||
PRC statutory rate | 25.00% | 25.00% | 25.00% |
Income tax rate for dividends distribution | 10.00% | 10.00% | |
HONG KONG [Member] | |||
Income Tax (Textual) | |||
PRC statutory rate | 8.25% | 8.25% |
Earnings Per Share (Details)
Earnings Per Share (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Basic and diluted earnings per share | ||
Weighted average number of common shares- Basic and diluted | 14,801,770 | 14,798,198 |
Earnings per share - basic and diluted | $ 0.09 | $ 0.81 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jul. 26, 2019Directors$ / sharesshares | Jan. 31, 2019Directors$ / sharesshares | Jul. 26, 2018Directors$ / sharesshares | Dec. 31, 2019USD ($) | |
Goldenway [Member] | ||||
Stockholders' Equity (Textual) | ||||
Appropriations made to statutory reserve | $ 120 | |||
Haian TaiXin [Member] | ||||
Stockholders' Equity (Textual) | ||||
Appropriations made to statutory reserve | 70 | |||
Ever Glory Apparel [Member] | ||||
Stockholders' Equity (Textual) | ||||
Appropriations made to statutory reserve | 560 | |||
Jiangsu La GO GO [Member] | ||||
Stockholders' Equity (Textual) | ||||
Appropriations made to statutory reserve | $ 620 | |||
Two Independent Directors [Member] | ||||
Stockholders' Equity (Textual) | ||||
Description of appropriations to the statutory surplus reserve | Appropriations to the statutory surplus reserve are to be at least 10% of the after tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entities' registered capital. | |||
Description of appropriations to the statutory public welfare fund | Appropriations to the statutory public welfare fund are 10% of the after tax net income determined in accordance with PRC GAAP. | |||
Condition to contribute to statutory fund reserve, description | Effective January 1, 2006, the Company is only required to contribute to one statutory reserve fund at 10% of net income after tax per annum, and any contributions are not to exceed 50% of the respective companies' registered capital. | |||
Common stock shares issued to independent directors | shares | 1,630 | 1,942 | 2,206 | |
Average market price of the common stock for the five days before the grant date | $ / shares | $ 3.04 | $ 3.8 | $ 3.39 | |
Number of days used to calculation average market price of common stock, description | Five days before the grant date. | Five days before the grant date. | Five days before the grant date. | |
Number of directors | Directors | 2 | 2 | 2 | |
Percentage of registered capital contributed to statutory reserve as per PRC law | 50.00% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of other expenses due to related parties | ||
Total | $ 294 | $ 336 |
Chuzhou Huarui [Member] | ||
Summary of other expenses due to related parties | ||
Total | 207 | 217 |
EsC'Lav [Member] | ||
Summary of other expenses due to related parties | ||
Total | 25 | |
Kunshan Enjin [Member] | ||
Summary of other expenses due to related parties | ||
Total | $ 87 | $ 94 |
Related Party Transactions (D_2
Related Party Transactions (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Sub-contracts with related parties | ||
Total | $ 24,248 | $ 25,128 |
Chuzhou Huarui [Member] | ||
Sub-contracts with related parties | ||
Total | 6,200 | 6,356 |
Fengyang Huarui [Member] | ||
Sub-contracts with related parties | ||
Total | 2,225 | 2,438 |
Nanjing Ever-Kyowa [Member] | ||
Sub-contracts with related parties | ||
Total | 1,534 | 1,566 |
Ever-Glory Vietnam [Member] | ||
Sub-contracts with related parties | ||
Total | 12,952 | 14,718 |
Nanjing Knitting [Member] | ||
Sub-contracts with related parties | ||
Total | 1,201 | |
EsCeLav [Member] | ||
Sub-contracts with related parties | ||
Total | $ 136 | $ 50 |
Related Party Transactions (D_3
Related Party Transactions (Details 2) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Summary of accounts payable - related parties | ||
Total | $ 4,811 | $ 4,756 |
Ever-Glory Vietnam [Member] | ||
Summary of accounts payable - related parties | ||
Total | 2,260 | 1,863 |
Fengyang Huarui [Member] | ||
Summary of accounts payable - related parties | ||
Total | 414 | 622 |
Nanjing Ever-Kyowa [Member] | ||
Summary of accounts payable - related parties | ||
Total | 386 | 580 |
Chuzhou Huarui [Member] | ||
Summary of accounts payable - related parties | ||
Total | 1,064 | 888 |
Nanjing Knitting [Member] | ||
Summary of accounts payable - related parties | ||
Total | 186 | 171 |
Jiangsu Ever-Glory [Member] | ||
Summary of accounts payable - related parties | ||
Total | $ 501 | $ 632 |
Related Party Transactions (D_4
Related Party Transactions (Details 3) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Summary of amounts due from related parties | ||
Total | $ 123 | $ 192 |
Jiangsu Ever-Glory [Member] | ||
Summary of amounts due from related parties | ||
Total | 123 | 122 |
Esc'elav [Member] | ||
Summary of amounts due from related parties | ||
Total | $ 70 |
Related Party Transactions (D_5
Related Party Transactions (Details Textual) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | |
Related Party Transactions (Textual) | ||||
Net income (loss) | $ 1,270 | $ 12,008 | ||
Sub-contracts with related parties | 24,248 | 25,128 | ||
Outstanding due from Jiangsu Ever-Glory | $ 4,932 | 10,354 | ||
Acquired interest | 6.00% | 6.00% | ||
Amounts due from related party under counter guarantee agreement, description | At December 31, 2018, $9.9 million (RMB 68.2 million) was outstanding due from Jiangsu Ever-Glory under the counter guarantee agreement. During the year ended December 31, 2019, an additional $8.4 million (RMB 57.8 million) was provided to and repayment of $13.5 million (RMB 93.3 million) was received from Jiangsu Ever-Glory under the counter-guarantee agreement. As of December 31, 2019, the amount of the counter-guarantee had decreased to $4.7 million (RMB 32.8 million) (the difference represents currency exchange adjustment of $0.4 million), which was 14.2% of the aggregate amount of lines of credit. This amount plus accrued interest of $0.3 million (2019) and $0.5 million (2018) have been classified as a reduction of equity, consistent with the guidance of SEC Staff Accounting Bulletins 4E and 4G. As of December 31, 2019 and 2018, the amount classified as a reduction of equity was $5.0 million and $10.4 million, respectively. Interest of 0.5% is charged on net amounts due from Jiangsu Ever-Glory at each month end. Since January 1, 2019, interest rate has changed to 0.3625% as the bank benchmark interest rate decreased. Interest income for the years ended December 31, 2019 and 2018 was approximately $0.3 million and $0.7 million, respectively. | At December 31, 2018, $9.9 million (RMB 68.2 million) was outstanding due from Jiangsu Ever-Glory under the counter guarantee agreement. During the year ended December 31, 2019, an additional $8.4 million (RMB 57.8 million) was provided to and repayment of $13.5 million (RMB 93.3 million) was received from Jiangsu Ever-Glory under the counter-guarantee agreement. As of December 31, 2019, the amount of the counter-guarantee had decreased to $4.7 million (RMB 32.8 million) (the difference represents currency exchange adjustment of $0.4 million), which was 14.2% of the aggregate amount of lines of credit. This amount plus accrued interest of $0.3 million (2019) and $0.5 million (2018) have been classified as a reduction of equity, consistent with the guidance of SEC Staff Accounting Bulletins 4E and 4G. As of December 31, 2019 and 2018, the amount classified as a reduction of equity was $5.0 million and $10.4 million, respectively. Interest of 0.5% is charged on net amounts due from Jiangsu Ever-Glory at each month end. Since January 1, 2019, interest rate has changed to 0.3625% as the bank benchmark interest rate decreased. Interest income for the years ended December 31, 2019 and 2018 was approximately $0.3 million and $0.7 million, respectively. | ||
JiangsuWubijia Trading Company Limited [Member] | ||||
Related Party Transactions (Textual) | ||||
Company received amount from related party | $ 71,167 | 96,556 | ||
Amount paid through the consignment | 58,377 | 79,925 | ||
Net income (loss) | 6,463 | 16,631 | ||
Rental income | 26,100 | 18,569 | ||
JiangsuEverGlory[Member] | ||||
Related Party Transactions (Textual) | ||||
Purchase of raw material | 12,000 | |||
Sub-contracts with related parties | 24,200 | 14,000 | ||
Company sold raw materials | 20,000 | 11,000 | ||
Lines of credit | 29,400 | 29,900 | ||
Guarantee on lines of credit | 14,500 | 14,500 | ||
Repayment received under counter guarantee | $ 33,000 | $ 33,000 | ||
Acquired interest | 70.00% | 70.00% | ||
JiangsuEverGlory[Member] | CNY [Member] | ||||
Related Party Transactions (Textual) | ||||
Purchase of raw material | ¥ | ¥ 14,400 | |||
Sub-contracts with related parties | ¥ | ¥ 2,000 | 25,000 | ||
Lines of credit | ¥ | 205,500 | 205,500 | ||
Guarantee on lines of credit | ¥ | 10,000 | 10,000 | ||
Repayment received under counter guarantee | ¥ | ¥ 230,000 | ¥ 23,000 |
Commitment and Contingencies (D
Commitment and Contingencies (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Summary of future minimum lease payments | |
2020 | $ 392 |
2021 | 392 |
2022 | 392 |
2023 | 406 |
2024 | 406 |
Thereafter | 12,519 |
Total | $ 14,507 |
Commitment and Contingencies _2
Commitment and Contingencies (Details Textual) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Jul. 31, 2019USD ($) | Jul. 31, 2019CNY (¥) | Mar. 31, 2019USD ($) | Mar. 31, 2019CNY (¥) | |
Commitment and Contingencies (Textual) | ||||||
Commitment and contingencies, description | (i) the terms of Shanghai LAGOGO land use right and buildings are 34 years; (ii) the terms of Kunshan logistics center and Chuzhou logistics center are 5 years; (iii) the terms of flagship stores are 3 years. | |||||
Revenues | $ 383,101 | $ 448,508 | ||||
General administrative expenses | 35,123 | 39,811 | ||||
Current operating lease liabilities | 44,888 | |||||
Kunshan Enjin [Member] | ||||||
Commitment and Contingencies (Textual) | ||||||
Revenues | 80,000 | |||||
General administrative expenses | 700 | |||||
Right-of-use assets and lease liabilities | 53,400 | |||||
Current operating lease liabilities | 44,900 | |||||
Non-current operating lease liabilities | 8,500 | |||||
Total balance | 15,380 | |||||
LA GO GO [Membr] | ||||||
Commitment and Contingencies (Textual) | ||||||
Unpaid rent | $ 360 | |||||
LA GO GO [Membr] | RMB [Member] | ||||||
Commitment and Contingencies (Textual) | ||||||
Unpaid rent | ¥ | ¥ 2,450 | |||||
Shanghai Chijing [Member] | ||||||
Commitment and Contingencies (Textual) | ||||||
Counter claim | $ 2,170 | |||||
Shanghai Chijing [Member] | RMB [Member] | ||||||
Commitment and Contingencies (Textual) | ||||||
Counter claim | ¥ | ¥ 15,380 | |||||
Total balance | $ 2,200 |
Risks and Uncertainties (Detail
Risks and Uncertainties (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues earned in geographic areas | ||
Revenues | $ 383,101 | $ 448,508 |
Total wholesale business [Member] | ||
Revenues earned in geographic areas | ||
Revenues | 195,156 | 218,609 |
Retail Business [Member] | ||
Revenues earned in geographic areas | ||
Revenues | 187,945 | 229,899 |
Mainland China [Member] | ||
Revenues earned in geographic areas | ||
Revenues | 74,008 | 89,269 |
Hong Kong China [Member] | ||
Revenues earned in geographic areas | ||
Revenues | 26,126 | 38,106 |
Germany [Member] | ||
Revenues earned in geographic areas | ||
Revenues | 3,510 | 6,748 |
United Kingdom | ||
Revenues earned in geographic areas | ||
Revenues | 14,864 | 15,460 |
Europe-Other [Member] | ||
Revenues earned in geographic areas | ||
Revenues | 22,158 | 30,747 |
Japan [Member] | ||
Revenues earned in geographic areas | ||
Revenues | 18,901 | 7,583 |
United States [Member] | ||
Revenues earned in geographic areas | ||
Revenues | $ 35,589 | $ 30,696 |
Risks and Uncertainties (Deta_2
Risks and Uncertainties (Details Textual) | 12 Months Ended | |
Dec. 31, 2019suppliermanufacturercustomer | Dec. 31, 2018suppliermanufacturercustomer | |
Supplier one [Member] | ||
Risks and Uncertainties (Textual) | ||
Concentration risk, percentage | 10.20% | 24.00% |
Supplier two [Member] | ||
Risks and Uncertainties (Textual) | ||
Concentration risk, percentage | 12.90% | 18.20% |
Supplier three [Member] | ||
Risks and Uncertainties (Textual) | ||
Concentration risk, percentage | 15.20% | 15.10% |
Supplier four [Member] | ||
Risks and Uncertainties (Textual) | ||
Concentration risk, percentage | 19.60% | 13.90% |
Number of suppliers | supplier | 4 | |
Supplier five [Member] | ||
Risks and Uncertainties (Textual) | ||
Concentration risk, percentage | 35.60% | |
Number of suppliers | supplier | 5 | |
Wholesale business [Member] | ||
Risks and Uncertainties (Textual) | ||
Concentration risk, percentage | 41.40% | 38.80% |
Number of manufacturers | 5 | 5 |
Manufacturer Two [Member] | ||
Risks and Uncertainties (Textual) | ||
Concentration risk, percentage | 10.20% | |
Number of manufacturers | 2 | |
Manufacturer One [Member] | ||
Risks and Uncertainties (Textual) | ||
Concentration risk, percentage | 10.40% | 18.10% |
Number of manufacturers | 1 | |
Revenues [Membe] | ||
Risks and Uncertainties (Textual) | ||
Concentration risk, percentage | 47.30% | 46.50% |
Number of customer | customer | 5 | 5 |
Revenues [Membe] | Wholesale business [Member] | ||
Risks and Uncertainties (Textual) | ||
Concentration risk, percentage | 24.30% | 20.90% |
Number of customer | customer | 1 | 1 |
Segments (Details)
Segments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Segment profit or loss: | ||
Net revenue from external customers | $ 383,101 | $ 448,508 |
Income from operations | 3,468 | 15,019 |
Interest income | 1,003 | 1,375 |
Interest expense | 1,222 | 1,989 |
Depreciation and amortization | 8,239 | 6,664 |
Income tax expense | 4,562 | 4,942 |
Segment assets: | ||
Additions to property, plant and equipment | 8,665 | 12,182 |
Total assets | 301,671 | 252,271 |
Wholesale Segment [Member] | ||
Segment profit or loss: | ||
Net revenue from external customers | 195,156 | 218,609 |
Income from operations | 12,376 | 12,071 |
Interest income | 969 | 1,330 |
Interest expense | 897 | 1,667 |
Depreciation and amortization | 979 | 1,175 |
Income tax expense | 3,189 | 3,337 |
Segment assets: | ||
Additions to property, plant and equipment | 1,254 | 2,153 |
Total assets | 88,906 | 98,493 |
Retail Segment [Member] | ||
Segment profit or loss: | ||
Net revenue from external customers | 187,945 | 229,899 |
Income from operations | (8,908) | 2,948 |
Interest income | 34 | 45 |
Interest expense | 325 | 322 |
Depreciation and amortization | 7,260 | 5,489 |
Income tax expense | 1,373 | 1,605 |
Segment assets: | ||
Additions to property, plant and equipment | 7,411 | 10,029 |
Total assets | $ 212,765 | $ 153,778 |
Segments (Details Textual)
Segments (Details Textual) | 12 Months Ended |
Dec. 31, 2019Segment | |
Segments (Textual) | |
Number of segments | 2 |