SHENZHEN, China, Feb. 14 /Xinhua-PRNewswire/ -- Winner Medical Group Inc. (OTC Bulletin Board: WMDG), today reported financial results for the first quarter of fiscal year 2007, ending December 31, 2006.
Consolidated sales for the first fiscal quarter were $15.9 million compared to $16.2 million reported in the first quarter of fiscal 2006, a decrease of 2%. Consolidated gross profit for the first quarter of fiscal year 2007 was $3.9 million, or 25% of net sales, compared to $4.4 million, or 27% reported for the first quarter of fiscal year 2006. The decrease in gross profit as a percentage of net sales was mainly due to the appreciation of Renminbi or “RMB” against the U.S. dollar and the increased cost of raw materials, labor and energy.
Net income for the first quarter was approximately $1.5 million, or $0.03 per basic and diluted share, compared to net income of approximately $1.6 million, or $0.04 per basic and diluted share, reported in the first quarter of last fiscal year.
Jianquan Li, Winner Medical’s chairman and chief executive officer, commented, “The decrease in revenue in the first quarter is primarily attributable our decision to terminate the production of some lower margin products and to transfer the production of lower margin products from the new, high-tech facility in Shenzhen to our facility in Chongyang and other facilities in the Hubei province. These production changes are consistent with our strategy to shift the product mix to higher margin, technology-driven products.
“Winner Medical remained profitable in the first quarter despite these changes in production and the termination of some small clients that were unprofitable or represented bad debt,” Mr. Li continued. “We believe these decisions along with our continued investment in the development of higher margin products provide the cornerstone for Winner Medical to continue to grow over the longer term. We remain focused on our long-term goals of capturing market share and penetrating existing and new markets through the introduction of groundbreaking products, such as the new PurCotton(TM) products and the cohesive (self-adhering) bandages. We believe this course of action, in addition to the current pipeline of opportunities, will enable Winner Medical to deliver revenue growth in the range of 10-15% for the full fiscal year 2007.”
The following table illustrates the sales revenues generated in the first quarter of fiscal year 2007 in the major geographic areas in which Winner Medical sells its products. The table also provides the percentage of total revenues generated in each region.
Sales by Region
(Sales in U.S. Dollars, in millions)
First Percentage First Percentage
Quarter of Total Quarter of Total
FY 2007 Revenues FY 2006 Revenues
Europe $6.08 38.27% $5.59 34.43%
Japan $4.69 29.53% $4.61 28.38%
North America $1.37 8.65% $2.01 12.38%
China $2.26 14.22% $1.91 11.82%
Other $1.48 9.33% $2.11 12.99%
TOTAL $15.88 100.00% $16.23 100.00%
As of December 31, 2006, Winner Medical had cash and cash equivalents of $2.1 million. As of the first quarter of this fiscal year, Winner Medical had working capital of $12.8 million and stockholders’ equity improved to approximately $54.5 million.
About Winner Medical
Winner Medical is a holding company comprised of eight wholly owned manufacturing and distribution facilities, two joint venture factories and one trading company. Winner Medical is primarily engaged in the development, manufacturing and distribution of high-quality cotton disposable medical dressings and disposable products. Winner Medical’s products include surgical dressings, dressing packs, wound care dressings, protective products, medical instruments, dental products and hygiene products for the institutional and home care markets. Winner Medical products are manufactured in China and sold domestically and abroad, in countries and areas such as Japan, Germany, Italy, the Netherlands, Australia, France, the United States, South America, Africa and the Middle East. Winner Medical is one of few Chinese companies licensed by the U.S. Food and Drug Administration to ship finished, sterilized products directly to the U.S. market. To learn more about Winner Medical, visit Winner Medical’s web site http://www.winnermedical.com .
Forward-Looking Statements
This press release contains certain statements that may include "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding Winner Medical and its subsidiary companies’ business strategy, plans and objective and statements of non-historical information. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although Winner Medical believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Winner Medical’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in Winner Medical’s periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to Winner Medical or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, Winner Medical does not assume a duty to update these forward-looking statements.
-- Financial Tables Follow --
Winner Medical Group Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
(U.S. Dollars except per share amounts)
Three months ended
December 31
2006 2005
(Unaudited) (Unaudited)
Net sales $ 15,880,770 $ 16,234,128
Cost of sales (11,944,126) (11,834,833)
Gross profit 3,936,644 4,399,295
Other operating income, net 103,639 62,502
Selling, general and administrative
expenses (2,501,626) (2,574,895)
Income from operations 1,538,657 1,886,902
Interest income 5,662 4,454
Interest expense (72,259) (146,506)
Share of undistributed earnings in an
equity investee 56,546 10,422
Income before income taxes and
minority interests 1,528,606 1,755,272
Income taxes (28,399) (165,396)
Income before minority interests 1,500,207 1,589,876
Minority interests (5,637) 22,431
Net income $ 1,494,570 $ 1,612,307
Other comprehensive income
Foreign currency translation
difference 723,440 99,676
Comprehensive income 2,218,010 1,711,983
Net income per stock
- basic $ 0.03 $ 0.04
- diluted $ 0.03 $ 0.04
Weighted average number of shares
outstanding
- basic 44,677,171 38,237,615
- diluted 44,685,505 38,237,615
Winner Medical Group Inc.
Condensed Consolidated Balance Sheets
(U.S. Dollars)
December 31 September 30
2006 2006
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents 2,101,989 4,319,579
Accounts receivable, less
allowances for doubtful
accounts of US$14,976 and
US$20,347 at December 31,
2006 and September 30,
2006, respectively 8,531,138 7,513,013
Amounts due from affiliated
companies 318,597 480,900
Inventories 13,541,930 11,329,520
Prepaid expenses and other current
assets 4,588,794 6,182,472
Income taxes recoverable 33,627 7,533
Total current assets $ 29,116,075 $ 29,833,017
Property, plant and equipment, net 40,228,311 35,800,530
Investment in an equity investee 1,119,213 1,062,135
Intangible assets, net 37,896 38,731
Prepaid expenses and deposits 229,880 224,391
Deferred tax assets 198,148 195,610
Total assets $70,929,523 $ 67,154,414
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term bank loans 7,044,599 5,437,050
Accounts payable 4,910,697 4,196,874
Accrued payroll and employee
benefits 1,345,034 1,184,779
Customer deposits 363,822 269,965
Other accrued liabilities 1,720,522 2,379,849
Amount due to a stockholder -- 1,556
Amounts due to affiliated companies 180,703 203,999
Dividend payable 194,679 504,317
Income taxes payable 536,808 556,647
Total current
liabilities $ 16,296,894 $ 14,735,036
Deferred tax liabilities 4,467 4,410
Total liabilities $ 16,301,361 $ 14,739,446
Commitments and contingencies 144,680 149,496
Minority interests
Stockholders’ equity:
Common stock, par value $0.01 per
share; authorized 495,000,000 stock,
stock issued and outstanding
December 31, 2006 - 44,677,171 shares;
September 30, 2006 - 44,677,171 shares 44,677 44,677
Additional paid-in capital 30,237,197 30,237,197
Retained earnings 20,059,287 19,182,866
Statutory reserves 1,840,827 1,222,678
Accumulated other comprehensive
income 2,301,494 1,578,054
Total stockholders’
equity $ 54,483,482 $ 52,265,472
Total liabilities and
stockholders’ equity $ 70,929,523 $ 67,154,414
For more information, please contact:
Company - China
Annie Chen
Secretary of the Board
Tel: +86-755-2806-6858
Email: annie.chen@winnermedical.com
U.S. Investor Relations
Kathy Price / Dixon Chen
The Global Consulting Group
Tel: +1-646-284-9400
Email: kprice@hfgcg.com / dchen@hfgcg.com
