Related Party Transactions |
12 Months Ended |
|---|---|
Dec. 31, 2017 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions Disclosure [Text Block] |
RELATED PARTY TRANSACTIONS
The Company owns a 60% controlling interest in a joint venture formed with Swire. The joint venture arrangement involves Transition Services Agreements ("TSAs") with Swire, under which Swire provides administrative and information technology services to the joint venture. The Company continues to reduce its costs under the TSAs as it internalizes the back-office functions and related personnel, including the transition of the joint venture's systems to the Company's platform in the second quarter of 2017. The joint venture incurred service fees, valued under these TSAs at Swire's cost of $1,006,000, $3,294,000 and $5,974,000 for the years ended December 31, 2017, 2016 and 2015, respectively. These fees are included in SG&A expenses on the Consolidated Statements of Operations. In addition, the joint venture pays Swire sourcing fees related to the purchase of certain inventory. These sourcing fees are capitalized into inventories and charged to cost of sales as the inventories are sold. For the years ended December 31, 2017, 2016 and 2015, the joint venture incurred sourcing fees of $21,000, $71,000 and $396,000, respectively.
In 2014, both the Company and Swire funded long-term loans to the joint venture. The Company's loan has been eliminated in consolidation, while the Swire loan is reflected as a note payable to related party in the Consolidated Balance Sheets as of December 31, 2016. In June 2017, the Company repaid these loans, including the note with Swire in the principal amount of RMB 97,600,000 (USD 14,236,000), and as such, the balance on the Consolidated Balance Sheets is zero at December 31, 2017. Interest expense related to this note was $429,000, $1,041,000 and $1,099,000 for the years ended December 31, 2017, 2016 and 2015, respectively.
As of December 31, 2017 and 2016, payables to Swire for service fees and interest expense totaled $89,000 and $707,000, respectively, and were included in accounts payable on the Consolidated Balance Sheets.
Swire is also a third-party distributor of the Company's brands in certain regions outside of mainland China and purchases products from the Company under the Company's normal third-party distributor terms and pricing.
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