The following discussion and analysis of our financial condition and results of operations for the year endedDecember 31, 2021 should be read in conjunction with the Financial Statements and corresponding notes included in this annual Report on Form 10-K. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors and Special Note Regarding Forward-Looking Statements in this report. We use words such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "believe," "intend," "may," "will," "should," "could," "target", "forecast" and similar expressions to identify forward-looking statements. Overview Our Business
We are a retailer of branded fashion apparel and leading global apparel supply
chain solution provider based in
We classify our businesses into two segments: Wholesale and Retail. Our wholesale business consists of wholesale-channel sales made principally to domestically and international recognized brands, and department stores located throughoutEurope , theU.S. ,Japan andthe People's Republic of China ("PRC"). We focus on well-known, middle-to-high end casual wear, sportswear, and outerwear brands. Our retail business consists of retail-channel sales directly to consumers through retail stores located throughout the PRC as well as sales via online stores at Tmall, Dangdang mall, JD.com, VIP.com etc. Although we have our own manufacturing facilities, we currently outsource most of the manufacturing to our long-term contractors as part of our overall business strategy. We believe outsourcing allows us to maximize our production capacity and maintain flexibility while reducing capital expenditures and the costs of keeping skilled workers on production lines during slow seasons. We oversee our long-term contractors with our advanced management solutions and inspect products manufactured by them to ensure that they meet our high-quality control standards and timely delivery requirement. 29 Wholesale Business We conduct our original design manufacturing ("ODM") operations through seven wholly owned subsidiaries which are located in theNanjing Jiangning Economic and Technological Development Zone andShang Fang Town in theJiangning District inNanjing ,Jiangsu province,China , Chuzhou,Anhui province,China andSamoa :Ever-Glory International Group Apparel Inc. ("Ever-Glory Apparel"),Goldenway Nanjing Garments Company Limited ("Goldenway"),Nanjing New-Tailun Garments Company Limited ("New Tailun"),Nanjing Catch-Luck Garments Co., Ltd. ("Catch-Luck"),Nanjing Rui Lian Technology Company Limited ("Nanjing Rui Lian"),Haian Tai Xin Garments Trading Company Limited ("Haian Tai Xin"),Chuzhou Huirui Garments Co., Ltd. ("Huirui),Ever-Glory Supply Chain Service Co., Limited ("Ever-Glory Supply Chain") andEver-Glory International Group
(HK) Ltd. ("Ever-Glory HK"). Retail Business
We conduct our retail operations throughShanghai LA GO GO Fashion Company Limited ("LA GO GO"),Jiangsu LA GO GO Fashion Company Limited ("Jiangsu LA GO GO"),Tianjin LA GO GO Fashion Company Limited ("Tianjin LA GO GO"),Shanghai Ya Lan Fashion Company Limited ("Ya Lan"),Shanghai Yiduo Fashion Company Limited ("Shanghai Yiduo"),Nanjing Tai Xin Garments Trading Company Limited ("Tai Xin"), andXizang He Meida Trading Company Limited ("He Meida"). Business Objectives Wholesale Business
We believe the enduring strength of our wholesale business is mainly due to our consistent emphasis on innovative and distinctive product designs that stand for exceptional styling and quality. We maintain long-term, satisfactory relationships with a portfolio of well-known and mid-class global brands.
The primary business objective for our wholesale segment is to expand our portfolio into higher-class brands, expand our customer base and improve our profit. We believe that our growth opportunities and continued investment initiatives include:
? Expanding our global sourcing network; ? Expanding our overseas low-cost manufacturing base (outside of mainlandChina );
? Focusing on high value-added products and continuing our strategy to produce
mid-to-high end apparel; ? Continuing to emphasize product design and technology utilization; ? Seeking strategic acquisitions of international distributors that could enhance global sales and our distribution network; and
? Maintaining stable revenue increase in the markets while shifting focus to
higher margin wholesale markets such as mainlandChina . Retail Business The business objectives for our retail segment are to establish leading brands of women's apparel and to build a nationwide retail network inChina . As ofDecember 31, 2021 , we had 880 stores (including store-in-stores), including 109 stores were opened and 165 stores were closed in 2021. We expect to open additional 100 to 150 stores in 2022.
We believe that our growth opportunities and continued investment initiatives include:
? Building our retail brand to be recognized as a major player in the mid-to-high end women's apparel market inChina ; ? Expanding our retail network throughoutChina ;
? Improving our retail stores' efficiency and increasing same-store sales;
30
? Continuing to launch retail flagship stores in Tier-1 cities and increasing
our penetration and coverage in Tier-2 and Tier-3 cities; and ? Becoming a multi-brand operator. Seasonality of Business Our business is affected by seasonal trends, with higher levels of wholesale sales in our third and fourth quarters and higher retail sales in our first and fourth quarters. These trends primarily result from the timing of seasonal wholesale shipments and holiday periods in the retail segment. Collection Policy Wholesale business
For our new customers, we generally require orders placed to be backed by letters of credit. For our long-term and established customers with good payment track records, we generally provide payment terms between 30 to 180 days following the delivery of finished goods.
Retail business For store-in-store shops, we generally receive payments from the stores between 60 to 90 days following the date of the register receipt. For our own flagship stores, we receive payments on the same day of the register receipt. For sales from e-commerce platforms such as Tmall, Dangdang mall, JD.com, VIP.com and etc., we generally receive payments between 5 to 15 days following the date
of the register receipt. Global Economic Uncertainty Our business is dependent on consumer demand for our products. We believe that the significant uncertainty in the global economy and the slowdown of economies inthe United States andEurope have increased our clients' sensitivity to the cost of our products. We have experienced continued pricing pressure. If the global economic environment continues to be weak, these worsening economic conditions could have a negative impact on our sales growth and operating margins in our wholesale segment in 2022. In addition, economic conditions inthe United States and other foreign markets in which we operate could substantially affect our sales profitability, cash position and collection of accounts receivable. Global credit and capital markets have experienced unprecedented volatility and disruption. Business credit and liquidity have tightened in much of the world. Some of our suppliers and customers may face credit issues and could experience cash flow problems and other financial hardships. These factors currently have not had an impact on the timeliness of receivable collections from our customers. We cannot predict at this time how this situation will develop and whether accounts receivable may need to be allowed for or written off in the coming quarters. Despite the various risks and uncertainties associated with the current global economy, we believe our core strengths will continue to allow us to execute our strategy for long-term sustainable growth in revenue, net income and operating cash flow.
Summary of Critical Accounting Policies
We have identified critical accounting policies that, as a result of judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operation involved could result in material changes to our financial position or results of operations under different conditions or using different assumptions. 31 Revenue Recognition We recognize 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. We recognize wholesale revenue from manufacturing fees charged to buyers for the assembly of garments from materials provided by the buyers upon completion of the manufacturing process and shipment of the products for export sales. 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 we retain a portion of the risk of loss on these sales during transit. Our revenue recognition policy is in compliance with ASC 606, Revenue from Contracts with Customers that revenue is recognized when a customer obtains control of promised goods and is recognized in an amount that reflects the consideration that we expect to receive in exchange for those goods. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that we expect to receive in exchange for those goods. We apply the following five-step model in order to determine this amount: (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.
We only apply the five-step model to contracts when it is probable that we 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, we review the contract to determine which performance obligations we must deliver and which of these performance obligations are distinct. We recognize 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, our 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, we have 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.
Estimates and Assumptions In preparing our consolidated financial statements, we use estimates and assumptions that affect the reported amounts and disclosures. Our estimates are often based on complex judgments, probabilities and assumptions that we believe to be reasonable, but that are inherently uncertain and unpredictable. We are also subject to other risks and uncertainties that may cause actual results to differ from estimated amounts. Significant estimates in 2021 and 2020 include the assumptions used to value tax liabilities, derivative financial instruments, the estimates of the allowance for deferred tax assets, and the accounts receivable allowance, and impairment of long-lived assets and inventory write-offs.
Recently Issued Accounting Pronouncements
InJune 2016 , the FASB issued ASU No. 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments"; InNovember 2019 , the FASB issued ASU No. 2019-10 "Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates"; InMarch 2020 , the FASB issued ASU No. 2020-03 "Codification Improvements to Financial Instruments"; which modifies the measurement of expected credit losses of certain financial instruments. This ASU is effective for fiscal years and interim periods within those years beginning afterDecember 15, 2022 . The Company is currently assessing the impact of this ASU on its consolidated financial statements. 32
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.
Results of Operations The following table summarizes our results of operations for the years endedDecember 31, 2021 and 2020. The table and the discussion below should be read in conjunction with the consolidated financial statements and the notes thereto appearing elsewhere in this report. Year Ended December 31, 2021 2020 (in thousands of U.S. Dollars, except for percentages) Sales$ 330,978 100.0 %$ 267,354 100.0 % Gross Profit 100,952 30.5 91,213 34.1 Operating Expense 101,490 30.7 87,070 32.6 Income From Operations (538 ) (0.2 ) 4,143 1.5 Other Income 3,391 1.0 1,599 0.6 Income tax expense 2,945 0.9 2,469 0.9 Net Income $ (92 ) 0.0 % $ 3,273 1.2 % Revenue
The following table sets forth a breakdown of our total sales, by region, for
the years ended
Growth (Decrease) 2021 2020 in 2021 (In thousands % of (In thousands % of compared Wholesale business of U.S. dollars) total sales of U.S. dollars) total sales with 2020 Mainland China $ 71,325 21.6 % $ 29,055 10.8 % 145.5 % Hong Kong China 24,986 7.5 19,873 7.4 25.7 United Kingdom 7,428 2.2 8,753 3.3 (15.1 ) Europe-Other 23,418 7.1 19,950 7.5 17.4 Japan 17,075 5.2 11,406 4.3 49.7 United States 40,668 12.3 28,172 10.5 44.4 Total Wholesale business 184,900 55.9 117,209 43.8 57.8 Retail business 146,078 44.1 150,145 56.2 (2.7 ) Total sales $ 330,978 100.0 % $ 267,354 100.0 % 23.8 %
Total sales for the year ended
Sales generated from our wholesale business contributed 55.9% or$184.9 million of our total sales for the year endedDecember 31, 2021 , an increase of 57.8% compared with$117.2 million in the year endedDecember 31, 2020 . This increase was primarily attributable to increased sales in Mainland China,Hong Kong China , Europe-Other,Japan andUnited States . 33 Sales generated from our retail business contributed 44.3% or$146.1 million of our total sales for the year endedDecember 31, 2021 a decrease of 2.7% compared with$150.1 million in the year endedDecember 31, 2020 . This decrease was primarily due to a decrease in same store sales.
Total retail store square footage and sales per square foot for the years ended
2021 2020 Total store square footage 985,946 1,001,992 Number of stores 880 936 Average store size, square foot 1,120
1,071
Total store sales (in thousands of
$ 148 $ 150
Same-store sales and newly opened store sales for the years ended
2021 2020 (In thousands of U.S. dollars) Sales from stores opened for a full year$ 121,197 $ 120,181 Sales from newly opened store sales $ 5,611 $ 7,763 Sales from e-commerce platform$ 13,593 $ 15,348 Other* $ 5,677 $ 6,853 Total$ 146,078 $ 150,145
* Primarily sales from stores that were closed in the current reporting period.
We remodeled or relocated 137 stores in 2021, and plan to relocate or remodel an aggregate of 50 to 100 stores in 2022. Remodels and relocations typically drive incremental same-store sales growth. A relocation typically results in an improved, more visible and accessible location, and usually includes increased square footage. We believe we will continue to have opportunities for additional remodels and relocations beyond 2021. Same-store sales are calculated based upon stores that were open at least 12 full fiscal months in each reporting period and remain open at the end of each reporting period. Costs and Expenses
Cost of Sales and Gross Margin
Cost of goods sold includes the direct raw material cost, direct labor cost, and manufacturing overhead including depreciation of production equipment and rent, consistent with the revenue earned. Cost of goods sold excludes warehousing costs, which historically have not been significant. The following table sets forth the components of our cost of sales and gross profit both in amounts and as a percentage of total sales for the years endedDecember 31 , 2021and 2020. Growth (Decrease) in 2021 Year ended December 31, Compared 2021 2020 with 2020 (In thousands of U.S. dollars, except for percentages)
Net Sales for Wholesale Sales$ 184,900 100.0 %
$ 117,209 100.0 % 57.8 % Raw Materials 84,597 45.8 48,554 41.4 74.2 Labor 1,535 0.8 1,268 1.1 21.1
Outsourced Production Costs 60,879 32.9 37,027 31.6 64.4 Other and Overhead 607 0.3 620 0.5 (2.2 ) Total Cost of Sales for Wholesale 147,618 79.8 87,470 74.6 68.8 Gross Profit for Wholesale 37,282 20.2
29,740 25.4 25.4 Net Sales for Retail 146,078 100.0 150,145 100.0 (2.7 ) Production Costs 53,153 36.4 58,688 39.1 (9.4 ) Rent 29,255 20.0 29,984 20.0 (2.4 )
Total Cost of Sales for Retail 82,408 56.4 88,672 59.1 (7.1 ) Gross Profit for Retail 63,670 43.6
61,473 40.9 3.6 Total Cost of Sales 230,026 69.5 176,141 65.9 30.6 Gross Profit$ 100,952 30.5 %$ 91,213 34.1 % 10.7 % 34 Raw material costs for our wholesale business were 45.8% of our total wholesale business sales in 2021, compared with 41.4% in 2020. The increase was mainly due to higher raw material purchase prices.
Labor costs for our wholesale business accounted were 0.8% of our total wholesale business sales in 2021, compared with 1.1% of total wholesale business sales in 2020.
Outsourced production costs for our wholesale business were 32.9% of our total wholesale sales in 2021, compared with 31.6% in 2020. This increase in percentage was primarily attributable to higher outsourced labor costs.
Overhead and other expenses for our wholesale business accounted were 0.3% of our total wholesale business sales in 2021, compared with 0.5% of total wholesale business sales in 2020.
Gross profit for our wholesale business in 2021 was$37.3 million , an increase of 25.4% from 2020. As a percentage of total wholesale business sales, gross profit was 20.2% of our total wholesale business sales in 2021, compared with 25.4% in 2020. The decrease was mainly due to an increase in wholesale raw material prices and outsourced production costs. Production costs for our retail business for the year endedDecember 31, 2021 were$53.2 million compared with$58.7 million for the year endedDecember 31, 2020 . As a percentage of our total retail sales, production costs were 36.4% of our total retail sales for the year endedDecember 31, 2021 compared with 39.1% for the year endedDecember 31, 2020 . The decrease in amount was due to decrease in sales. Rent costs for our retail business for the year endedDecember 31, 2021 were$29.3 million compared with$30.0 million for the year endedDecember 31, 2020 . As a percentage of total retail sales, rent costs were 20.0% of our total retail sales for the year endedDecember 31, 2021 compared with 20.0% for the year endedDecember 31, 2020 . There were no significant changes. Gross profit for our retail business for the year endedDecember 31, 2021 was$63.7 million compared with$61.5 million for the year endedDecember 31, 2020 . Gross margin for our retail business for the year endedDecember 31, 2021 was 43.6% compared with 40.9% for the year endedDecember 31, 2020 . Total cost of sales for the year endedDecember 31, 2021 was$230.0million , a 30.6% increase compared with the year endedDecember 31, 2020 . As a percentage of total sales, total costs were 69.5% of total sales for the year endedDecember 31, 2021 , compared with 65.9% for the year endedDecember 31, 2020 . Total gross margin for the year endedDecember 31, 2021 was 30.5% compared with 34.1% for the year endedDecember 31, 2020 . We purchase the majority of our raw materials directly from numerous local fabric and accessories suppliers. Some of our customers also furnish us with raw materials so that we can manufacture their products. For our wholesale business, purchases from our five largest suppliers represented in aggregate approximately 20.4% and 18.2% of raw material purchases for the years endedDecember 31, 2021 and 2020, respectively. No single supplier provided more than 10% of our raw material purchases for the years endedDecember 31, 2021 and 2020. For our retail business, purchases from our five largest suppliers represented approximately 90.9% and 97.1% of raw material purchases for the year endedDecember 31, 2021 and 2020, respectively. Five suppliers provided approximately 34.4%, 19.1%, 18.6%, 10.6% and 8.2% of our raw material purchases for the year endedDecember 31, 2021 . Five suppliers provided approximately 34.6%, 19.8%, 16.0%, 15.9% and 10.8% of our raw material purchases for the year endedDecember 31, 2020 . We have not experienced difficulty in obtaining raw materials essential to our business, and we believe we maintain good relationships with our suppliers. 35 We also purchase finished goods from contract manufacturers. For our wholesale business, purchases from our five largest contract manufacturers represented approximately 45.3% and 45.1% of finished goods purchases for the year endedDecember 31 , 2021and 2020, respectively. One contract manufacturers provided approximately 27.0% of our finished goods purchases for the year endedDecember 31, 2021 . Two contract manufacturers provided approximately 12.6% and 11.2% of our finished goods purchases for the year endedDecember 31, 2020 . For our retail business, our five largest contract manufacturers represented approximately 22.6% and 13.4% of finished goods purchases for the year endedDecember 31, 2021 and 2020, respectively. No contract manufacturer provided more than 10% of our retail finished goods purchases for the years endedDecember 31, 2021 and 2020. We have not experienced difficulty in obtaining finished products from our contract manufacturers and we believe we maintain good relationships with our contract manufacturers.
Selling, General and Administrative Expenses
Our selling expenses consist primarily of local transportation, unloading charges, product inspection charges, salaries for retail staff and decoration and marketing expenses associated with our retail business.
Our general and administrative expenses include administrative salaries, office expense, certain depreciation and amortization charges, repairs and maintenance, legal and professional fees, warehousing costs and other expenses that are not directly attributable to our revenues. Costs of our distribution network that are excluded from cost of sales consist of local transportation and unloading charges, and product inspection charges. Accordingly, our gross profit amounts may not be comparable to those of other companies who include these amounts in costs of sales. Increase (Decrease) in 2021 Year ended December 31, Compared 2021 2020 to 2020 (In thousands of U.S. dollars, except for percentages) Gross Profit$ 100,952 30.5 %$ 91,213 34.1 % 10.7 % Operating Expenses: Selling Expenses 63,074 19.1 55,894 20.9 12.8
General and Administrative Expenses 38,416 11.6 31,176 11.7 23.2 Total 101,490 30.7 87,070 32.6 16.6 (Loss) Income from Operations $ (538 ) (0.2 )%
$ 4,143 1.5 % (113.0 )%
Selling expenses for the year ended
General and administrative expenses for the year endedDecember 31, 2021 were$38.4 million a 23.2% increase compared with the year endedDecember 31, 2020 . As a percentage of total sales, general and administrative expenses accounted for 11.6% of total sales for the year endedDecember 31, 2021 , compared with 11.7% of total sales for the year endedDecember 31, 2020 . The increase was attributable to the increased salaries. 36
(Loss) Income from Operations
(Loss) income from operations for the year endedDecember 31, 2021 decreased 113.0% to($0.5) million loss from$4.1 million income for the year endedDecember 31, 2020 . (Loss) income from operations accounted for (0.2%) and 1.5% of our total sales during the year endedDecember 31, 2021 and 2020. Interest Expense
Interest expense was
Other Income
Other income was
Income Tax Expenses
Income tax expense for the year endedDecember 31, 2021 was$2.9million , a 19.2% increase compared to the same period of 2020. The increased income tax expenses are mainly due to some subsidiaries are profitable and there are higher income tax expenses but other subsidiaries are loss.
The Company's operating subsidiaries are governed by the Income Tax Law of the
PRC concerning
All PRC subsidiaries, except for He Meida, are subject to income tax at the 25% statutory rate.
HeMeida incorporated inXizang (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 throughDecember 31, 2020 .
Perfect Dream was incorporated in the
Ever-Glory HK was incorporated in
Ever-Glory Supply Chain Service Co., Limited was incorporated in Hongkong onDecember 27, 2017 . Under the current laws of Hongkong, its income tax rate is 8.25% when its profit is underHKD 2.0 million and its income tax rate is 16.5% when its profit is overHKD 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 outsideChina ; 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 mainlandChina and the jurisdiction of the foreign holding company. The foreign invested enterprise became subject to the withholding tax starting fromJanuary 1, 2008 . Given that the undistributed profits of the Company's subsidiaries inChina are intended to be retained inChina for business development and expansion purposes, no withholding tax accrual has been made. NewU.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the "U.S. Tax Reform"), was signed into law onDecember 22, 2017 . TheU.S. Tax Reform modified theU.S. Internal Revenue Code by, among other things, reducing the statutoryU.S. federal corporate income tax rate from 35% to 21% for taxable years beginning afterDecember 31, 2017 ; limiting and/or eliminating many business deductions; migrating theU.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 eliminatingU.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. Taxpayers may elect to pay the one-time transition tax over eight years, or in a single lump-sum payment. 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 endedDecember 31, 2021 . 37
Net (Loss) Income attributable to the Company
Net loss for the year endedDecember 31, 2021 was($0.09) million , a decrease of 102.8% compared with net income from the same period in 2020. Our basic and diluted earnings per share were ($0.01 ) and$0.22 for the years endedDecember 31, 2021 and 2020, respectively. Summary of Cash Flows Summary cash flows information for the years endedDecember 31, 2021 and 2020 is as follows: 2021 2020 (In thousands of U.S. dollars) Net cash(used in) provided by operating activities$ (17,009 ) $ 40,456 Net cash used in investing activities$ (12,207 ) $ (10,955 ) Net cash provided by financing activities $ 2,776$ 33,919
Net cash used in provided by operating activities was$17.0 million for the year endedDecember 31, 2021 , compared with net cash provided by$40.5 million during the year endedDecember 31, 2020 . The change was primarily due to increase in accounts receivable and more inventories purchased this year. Net cash used in investing activities was$12.2 million for the year endedDecember 31, 2021 compared with$11.0 million during the year endedDecember 31, 2020 . This increase was mainly due to the increase in purchase of property and equipment and remodeling expenditure in 2021. Net cash provided by financing activities was$2.8 million for the year endedDecember 31, 2021 compared with net cash provided by$33.9 million during the year endedDecember 31, 2020 . The decrease was primarily because we received less loan proceeds from and repaid more loans to the banks this year. During the year endedDecember 31, 2021 , we repaid$71.8 million of bank loans and received bank loan proceeds of$73.3 million . Also, under the counter-guarantee agreement, we received$3.8 million from and paid$0.7 million to the related party during the year endedDecember 31, 2021 .
Liquidity and Capital Resources
As ofDecember 31, 2021 we had cash and cash equivalents of$56.6 million , other current assets of$194.2 million and current liabilities of$199.8 million . We presently finance our operations primarily from cash flows from operations and bank loans and we anticipate that these will continue to be our primary sources of funds to finance our short-term cash needs. Bank Loans
FromMarch 2020 toJuly 2020 , Ever-Glory Apparel entered into a certificate of three-year time deposit of$29.8million (RMB190.0 million ) with the Shanghai Pudong Development Bank with annual interest rates ranging from 3.75% to 3.99%. From July toNovember 2021 , Ever-Glory Apparel pledged the certificate of three-year time deposit to the Shanghai Pudong Development Bank andEver-Glory Apparel had borrowed$29.8 million (RMB 190.0 million ) under this line of certificate with an annual interest rate from 2.60% to 2.90% and due between June toNovember 2022 . InDecember 2020 , Goldenway entered into a certificate of three-year time deposit of$17.2 million (RMB110.0 million ) with the Shanghai Pudong Development Bank with an annual interest rate of 3.85%. From February toJuly 2021 , Goldenway pledged the certificate of three-year time deposit to the Shanghai Pudong Development Bank and Goldenway had borrowed$9.4 million (RMB 60.0 million ) under this line of certificate with an annual interest rate from 2.90% to3.40% and due between February toJune 2022 . InApril 2020 , Goldenway entered into a line of credit agreement with Industrial and Commercial Bank of China, which allows the Company to borrow up to approximately$6.3 million (RMB40.0 million ). These loans are collateralized by the Company's property and equipment. As ofDecember 31, 2021 , Goldenway had borrowed$6.3 million (RMB40.0 million ) from Industrial and Commercial Bank of China with an annual interest rate 4.57% and due inAugust 2022 . InJuly 2019 , Ever-Glory Apparel entered into a line of credit agreement for approximately$15.7 million (RMB100.0 million ) with Industrial and Commercial Bank of China, which is collateralized by assets of Jiangsu LA GO GO ,Tianjin LA GO GO andJiangsu Ever-Glory , under a collateral agreement executed among Ever-Glory Apparel, Jiangsu LA GO GO , Tianjin LA GO GO ,Jiangsu Ever-Glory and the bank. As ofDecember 31, 2021 , Ever-Glory Apparel had borrowed$15.7 million (RMB 100.0 million ) under this line of credit with annual interest rates ranging from 3.92% to 4.35% and due between January toOctober 2022 . InApril 2020 , Goldenway entered into a line of credit agreement withNanjing Bank , which allows the Company to borrow up to approximately$7.1 million (RMB45.0 million ). These loans are collateralized by the Company's property
and equipment. 38 InJune 2021 , Goldenway entered into a margin contract withNanjing Bank . Goldenway had borrowed$4.7 million (RMB 30.0 million ) under this contract for$0.9 million (RMB 6.0 million ) was restricted with an annual interest rate 3.36% and due inJune 2022 . InSeptember 2021 , Goldenway entered into another margin contract withNanjing Bank . Goldenway had borrowed$3.1 million (RMB 20.0 million ) under this contract for$0.6 million (RMB 4.0 million ) was restricted with an annual interest rate 3.44% and due inSeptember 2022 .
All bank loans are used to fund our daily operations. All loans have been repaid before or at maturity date.
Capital Commitments
We have a continuing program for the purpose of improving our manufacturing facilities and extending our retail stores. We anticipate that cash flows from operations and borrowings from banks will be used to pay for these capital commitments.
Uses of Liquidity
Our cash requirements for the next year will be primarily to fund daily operations and the growth of our business, some of this being used to fund new stores.
Sources of Liquidity Our primary sources of liquidity for our short-term cash needs are expected to be from cash flows generated from operations, and cash equivalents currently on hand. We believe that we will be able to borrow additional funds if necessary. We believe our cash flows from operations together with our cash and cash equivalents currently on hand will be sufficient to meet our needs for working capital, capital expenditure and other commitments for the next year. No assurance can be made that additional financing will be available to us if required, and adequate funds may not be available on terms acceptable to us. If funding is insufficient at any time in the future, we will develop or enhance our products or services and expand our business through our own cash flows
from operations. As ofDecember 31, 2021 we had access to approximately$38.4 million in lines of credit, of which approximately$9.4 million was unused and available. These credit facilities do not include any covenants. We have agreed to provideJiangsu Ever-Glory a counter-guarantee of not more than 70% of the maximum aggregate lines of credit and borrowings guaranteed byJiangsu Ever-Glory and collateralized by the assets ofJiangsu Ever-Glory under agreements executed between the Company,Jiangsu Ever-Glory and the banks. The maximum aggregate lines of credit and available borrowings was approximately$9.4 million (RMB 60.0 million ) and approximately$0.0 (RMB 0.0 million ) was provided toJiangsu Ever-Glory as the counter guarantee as ofDecember 31, 2021 .
Foreign Currency Translation Risk
Our operations are, for the most part, located in the PRC, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility in foreign exchange rates betweenthe United States dollar and the Chinese RMB. Most of our sales are in dollars. During 2003 and 2004, the exchange rate of RMB to the dollar remained constant atRMB 8.26 to the dollar. OnJuly 21, 2005 , the Chinese government adjusted the exchange rate fromRMB 8.26 to 8.09 to the dollar. From that time, the RMB continued to appreciate against theU.S. dollar. As ofDecember 31, 2021 , the market foreign exchange rate had increased toRMB 6.38 toone U.S. dollar . We are continuously negotiating price adjustments with most of our customers based on the daily market foreign exchange rates, which we believe will reduce our exposure to exchange rate fluctuations in the future and will pass some of the increased cost to our customers.
In addition, the financial statements of Goldenway, New-Tailun, Catch-Luck, Haian TaiXin, Ever-Glory Apparel, Taixin, He Meida, Huirui, Shanghai LA GO GO, Yalan, Shanghai Yiduo, Tianjin LA GO GO and Jiangsu LA GO GO (whose functional currency is RMB) are translated into US dollars using the closing rate method. The balance sheet items are translated into US dollars using the exchange rates at the respective balance sheet dates. The capital and various reserves are translated at historical exchange rates prevailing at the time of the transactions while income and expenses items are translated at the average exchange rate for the period. All translation adjustments are included in accumulated other comprehensive income in the statement of equity. The foreign currency translation income for the year endedDecember 31, 2021 and 2020 was$8.2 million and$4.6 million , respectively.
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