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Winner Medical Group Reports Second Quarter Fiscal 2007 Results

2007-05-16 09:36 719

SHENZHEN, China, May 15 /Xinhua-PRNewswire/ -- Winner Medical Group Inc.

(OTC Bulletin Board: WMDG), today reported financial results for the second

quarter of fiscal year 2007, ending March 31, 2007.

Consolidated sales for the second fiscal quarter were approximately $15.1

million compared to approximately $16.1 million reported in the second quarter

of fiscal 2006, a decrease of approximately 6%. Consolidated gross profit for

the second quarter of fiscal year 2007 was approximately $3.4 million, or 22%

of net sales, compared to approximately $3.5 million, or 22% reported for the

second quarter of fiscal year 2006.

Net income for the second quarter was approximately $1.2 million, or $0.03

per basic and diluted share, compared to net income of approximately $1.4

million, or $0.03 per basic and diluted share, reported in the second quarter

of last fiscal year.

Jianquan Li, Chairman and Chief Executive Officer of Winner Medical,

remarked, "The second fiscal quarter is typically our slowest quarter (from a

revenue standpoint) because we shut down for approximately 20 days each

February to enable employees to return to their families for the celebration

of the Chinese New Year. In addition, revenues this quarter were hindered due

to our decision to transfer or terminate the production of some lower margin

products. As I noted last quarter, 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 second quarter despite the

changes in production. Moreover, regardless of the external environment, we

have chosen to increase investment in the development of innovative new

products, such as PurCotton and another new nonwoven product line that is 70%

cotton and 30% polyester. We expect these products will gradually supersede

our gauze products (PurCotton) and our traditional synthetic nonwoven products

(70/30 product), and we believe these new products will give us leverage in

market share, sales and profitability in the future."

Mr. Li concluded, "The second quarter performance, albeit less than we

would like, reinforces our conviction that Winner Medical has the right

strategy. Regardless of the business environment, we try to stay focused on

our long-term goals: market and product expansion for long-term growth."

The following table illustrates the sales revenues generated in the second

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)

Second Quarter Percentage of Second Quarter Percentage of

FY 2007 Total Revenues FY 2006 Total Revenues

Europe $5.29 million 35% $5.43 million 34%

Japan $3.32 million 22% $4.07 million 25%

North America $2.15 million 14% $1.08 million 7%

China $1.96 million 13% $1.85 million 12%

Other $2.40 million 16% $3.61 million 22%

TOTAL $15.12 million 100% $16.04 million 100%

As of March 31, 2007, Winner Medical had cash and cash equivalents of

approximately $4.2 million. As of the second quarter of this fiscal year,

Winner Medical had working capital of approximately $13.3 million and

stockholders' equity improved to approximately $56.2 million.

Six Month Results

Net sales for the six months ended March 31, 2007 totaled approximately

$31.0 million, representing a 4% decrease over net sales of approximately

$32.3 million reported in the comparable period of last year. Sales to

customers in Europe and Japan represented more than 62% of total revenues.

Net income for the six months ended March 31, 2007 was approximately $2.7

million, or $0.06 per basic and diluted share, compared to net income of

approximately $3.0 million, or $0.07 per basic and diluted share, recorded for

the same period in fiscal 2006.

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 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.

Contacts

Company - China U.S. Investor Relations

Annie Chen Kathy Price / Dixon Chen

Secretary of the Board The Global Consulting Group

Tel: +86 (755) 2806 6858 Tel: +1 (646) 284-9400

Email: annie.chen@winnermedical.com Email: kprice@hfgcg.com /

dchen@hfgcg.com

WINNER MEDICAL GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(U.S. Dollars, except per share amounts)

Three months ended Six months ended

March 31 March 31

2007 2006 2007 2006

(Unaudited) (Unaudited)

US$ US$ US$ US$

Net sales 15,117,911 16,050,435 30,998,681 32,284,563

Cost of sales (11,745,435) (12,562,837) (23,689,561) (24,397,670)

Gross profit 3,372,476 3,487,598 7,309,120 7,886,893

Other operating

income, net 207,912 151,357 311,551 213,859

Selling, general and

administrative

expenses (2,527,498) (2,153,154) (5,029,124) (4,728,049)

Income from

operations 1,052,890 1,485,801 2,591,547 3,372,703

Interest income 4,647 6,966 10,308 11,420

Interest expense (105,102) (33,968) (177,361) (180,474)

Equity in earnings

of 50 percent or

less owned persons 28,999 6,474 85,545 16,896

Income before income

taxes and minority

interests 981,434 1,465,273 2,510,039 3,220,545

Income taxes 224,551 (59,635) 196,152 (225,031)

Income before

minority interests 1,205,985 1,405,638 2,706,191 2,995,514

Minority interests (15,110) 3,752 (20,747) 26,183

Net income 1,190,875 1,409,390 2,685,444 3,021,697

Other comprehensive

income

Foreign currency

translation

difference 525,374 101,306 1,248,814 200,982

Comprehensive income 1,716,249 1,510,696 3,934,258 3,222,679

Net income per stock

- basic 0.03 0.03 0.06 0.07

- diluted 0.03 0.03 0.06 0.07

Weighted average

common stock

outstanding

- basic 44,677,171 44,636,371 44,677,171 41,401,835

- diluted 44,677,171 44,636,371 44,677,171 41,401,835

WINNER MEDICAL GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars)

March 31 September 30

2007 2006

(Unaudited)

US$ US$

ASSETS

Current assets:

Cash and cash equivalents 4,232,127 4,319,579

Accounts receivable, less allowances

for doubtful accounts of US$15,118

and US$20,347 at March 31, 2007 and

September 30, 2006, respectively 7,409,424 7,513,013

Amounts due from affiliated companies 347,475 480,900

Inventories 13,078,445 11,329,520

Prepaid expenses and other current

assets 4,339,129 6,182,472

Income taxes recoverable 31,190 7,533

Total current assets 29,437,790 29,833,017

Property, plant and equipment, net 41,402,647 35,800,530

Investment in an equity investee 1,147,680 1,062,135

Intangible assets, net 36,905 38,731

Prepaid expenses and deposits 232,055 224,391

Deferred tax assets 200,023 195,610

Total assets 72,457,100 67,154,414

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Short-term bank loans 8,404,231 5,437,050

Accounts payable 4,222,098 4,196,874

Accrued payroll and employee benefits 1,182,354 1,184,779

Customer deposits 200,355 269,965

Other accrued liabilities 1,656,324 2,379,849

Amount due to a stockholder - 1,556

Amounts due to affiliated companies 167,046 203,999

Dividend payable - 504,317

Income taxes payable 240,735 556,647

Total current liabilities 16,073,143 14,735,036

Deferred tax liabilities 4,510 4,410

Total liabilities 16,077,653 14,739,446

Commitments and contingencies

Minority interests 159,817 149,496

Stockholders' equity:

Common stock, par value $0.001 per

share; authorized 495,000,000 stock,

stock issued and outstanding

March 31, 2007 - 44,677,171 shares;

September 30, 2006 - 44,677,171 shares 44,677 44,677

Additional paid-in capital 30,257,097 30,237,197

Retained earnings 21,191,966 19,182,866

Statutory reserves 1,899,022 1,222,678

Accumulated other comprehensive income 2,826,868 1,578,054

Total stockholders' equity 56,219,630 52,265,472

Total liabilities and

stockholders' equity 72,457,100 67,154,414

Source: Winner Medical Group Inc.
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