SHENZHEN, China, Aug. 14 /Xinhua-PRNewswire-FirstCall/ -- Winner Medical Group, Inc. , today reported financial results for the third fiscal quarter, ended June 30, 2006.
Net sales totalled $14.9 million during the third fiscal quarter of 2006, representing a 14% increase over net sales of $13.1 million reported during the third fiscal quarter of 2005. The increase in revenue was driven by an increase in manufacturing capacity and market expansion.
Net income for the third fiscal quarter of 2006 was $1.5 million, or $0.03 per basic and diluted share, compared to net income of $1.8 million, or $0.05 per basic and diluted shared, reported in the third fiscal quarter of 2005. The decrease in net income this quarter was primarily attributable to increases in the cost of labour, electricity, freight and fuel, and the appreciation of RMB. In addition, the company incurred expenses of approximately $400 thousand relating to US public company requirements.
''We are pleased with our third quarter results, which demonstrate strong top line performance in the face of a typically slow sales quarter,’' said Jianquan Li, Chief Executive Officer. ''Our existing products continue to produce solid sales, and new products, such as the self-adhesive bandage, are generating increased interest and demand. Moreover, our product mix continues to shift to higher margin products, with sterilized products now representing approximately 40% of total revenues.’'
The following table illustrates the sales revenues generated in the third fiscal quarter of 2006 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 3 Months Ended Percentage of 3 Months Ended Percentage of 06/30/2006 Total Revenues 06/30/2005 Total Revenues Europe $6.4 million 43 % $5.3 million 40 % Japan $4.2 million 28 % $3.5 million 27 % China $1.8 million 12 % $1.4 million 11 % North America/ South America $1.5 million 10 % $1.9 million 14 % Other $1.0 million 7 % $1.0 million 8 % TOTAL $14.9 million 100 % $13.1million 100 %
Gross profit for the third fiscal quarter was $4.4 million, or 29% of sales, which compares to gross profit of $4.3 million, or 33% of sales reported in the same period of last year.
Selling, General and Administrative expenses increased to $2.6 million in the third fiscal quarter of 2006, compared to $2.1 million for the comparable period last year. The increase in SG&A expenses is mainly due to costs associated with the company’s public listing in the United States. SG&A expenses also were impacted by the growth in sales volume, the expansion of the Winner sales force and increased freight costs.
Mr. Li concluded, ''While electricity, labor, fuel and freight cost increases continue to pressure margins, going forward we believe that the execution of the shift in our product mix to higher margin, sterilized products will help Winner Medical to combat these inflationary costs and deliver increased value to shareholders.’'
Winner Medical had cash and cash equivalents of $2.5 million as of June 30, 2006. The Company had working capital of $17.8 million, and stockholders’ equity improved to $50.4 million.
Nine Month Results
Net sales for the nine months ended June 30, 2006 totaled $47.2 million, representing a 19% increase over net sales of $39.8 million reported in the comparable period of last year. Sales to customers in Europe and Japan represented more than 60% of total revenues.
Net income for the nine months ended June 30, 2006 was $4.5 million, or $0.11 per basic and diluted share, compared to net income of $5.5 million, or $0.15 per basic and diluted share, recorded for the same period in fiscal 2005. The period-over-period decrease in net income is primarily attributable to a one-time gain of $1.05 million from the sale of the Company’s 60% equity interest in Winner Xishui, recorded in the first nine months of fiscal 2005, and costs of approximately $700 thousand relating to US public company requirements.
About Winner Medical
Winner Medical Group is a holding company comprised of 11 subsidiaries that are primarily engaged in the development, manufacturing and distribution of high-quality cotton disposable medical dressings and disposable products. The company’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 areas such as Japan, Germany, Italy, Holland, France, the United States, South America, Africa and the Middle East. The company is one of very few Chinese companies licensed by the U.S. Food and Drug Administration to ship finished, sterilized products directly to the US market. To learn more about Winner Medical Group, visit the company’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 Group, Inc. 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 Group, Inc. 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 Group, Inc.'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 Group, Inc.'s periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to Winner Medical Group, Inc. 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 Group, Inc. does not assume a duty to update these forward-looking statements.
WINNER MEDICAL GROUP INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) Three months ended Nine months ended June 30 June 30 2006 2005 2006 2005 (Unaudited) (Unaudited) US$ US$ US$ US$ Net sales 14,951,712 13,132,101 47,236,275 39,800,953 Cost of sales (10,596,058) (8,785,466)(34,993,729)(29,153,955) Gross profit 4,355,654 4,346,635 12,242,546 10,646,998 Other operating income, net (12,705) (36,161) 201,154 270,681 Selling, general and administrative expenses (2,633,463)(2,113,971) (7,361,512) (5,681,772) Income from operations 1,709,486 2,196,503 5,082,188 5,235,907 Gain on disposal of a subsidiary -- -- -- 1,049,239 Interest income 15,494 1,098 26,914 2,058 Interest expense (34,828) (110,013) (215,303) (338,050) Share of undistributed earnings in an equity investee (6,278) 7,907 10,618 10,858 Income before income taxes and minority interests 1,683,874 2,095,495 4,904,417 5,960,012 Income taxes (156,151) (270,410) (381,182) (443,440) Income before minority interests 1,527,723 1,825,085 4,523,235 5,516,572 Minority interests (9,551) 12,276 16,581 (31,131) Net income 1,518,172 1,837,361 4,539,816 5,485,441 Other comprehensive income Foreign currency translation difference 125,351 -- 326,333 -- Comprehensive income 1,643,523 1,837,361 4,866,149 5,485,441 Net income per stock - basic 0.03 0.05 0.11 0.15 - diluted 0.03 0.05 0.11 0.15 Weighted average common Stock outstanding - basic 44,673,136 36,991,105 42,505,944 36,991,105 - diluted 44,676,103 36,991,105 42,506,933 36,991,105 WINNER MEDICAL GROUP INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) June 30 September 30 2006 2005 (Unaudited) US$ US$ ASSETS Current assets: Cash and cash equivalents 2,530,657 2,650,867 Accounts receivable, less allowances for doubtful accounts of US$15,008 and US$12,643 at June 30, 2006 and September 30, 2005, respectively 7,804,695 8,257,923 Amounts due from affiliated companies 512,857 116,804 Inventories 11,972,856 10,476,534 Prepaid expenses and other 5,425,488 4,268,072 current assets Income taxes recoverable 27,576 57,649 Total current assets 28,274,129 25,827,849 Property, plant and equipment, net 32,312,090 26,834,824 Investment in an equity investee 1,020,474 1,009,318 Intangible assets, net 39,616 38,288 Prepaid expenses and deposits 235,112 219,125 Deferred tax assets 209,865 294,021 Total assets 62,091,286 54,223,425 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Short-term bank loans 2,876,582 8,773,881 Accounts payable 3,177,608 3,490,047 Accrued payroll and employee 1,128,053 1,150,036 Customer deposits 351,762 99,994 Other accrued liabilities 1,373,409 2,279,845 Amount due to a stockholder 1,539 168,817 Amounts due to affiliated companies 165,387 255,611 Dividend payable 856,304 1,872,750 Income taxes payable 583,807 576,157 Total current liabilities 10,514,451 18,667,138 Deferred tax liabilities 1,394 37,271 Total liabilities 10,515,845 18,704,409 Commitments and contingencies Minority interests 1,138,491 1,164,186 Stockholders’ equity: Common stock, par value $0.001 per share; authorized 495,000,000 stock, stock issued and outstanding June 30, 2006 - 44,677,171 shares; September 30, 2005 - 36,991,105 shares 44,677 36,991 Additional paid-in capital 30,229,133 19,020,848 Retained earnings 18,604,688 14,104,400 Statutory reserves 511,378 471,850 Accumulated other comprehensive income 1,047,074 720,741 Total stockholders’ 50,436,950 34,354,830 Total liabilities and stockholders’ equity 62,091,286 54,223,425 For more information, please contact: United States Richard Thomas Vice President Winner Medical Group Tel: +1-843-682-5001 Email: rthomas@winnermedical.com Kathy Price The Global Consulting Group Tel: +1-646-284-9430 Email: kprice@hfgcg.com Dixon Chen The Global Consulting Group Tel: +1-646-284-9403 Email: dchen@hfgcg.com Hong Kong Annie Chen Secretary of the Board for Winner Medical Group Email: annie.chen@winnermedical.com Anne Pang Citigate Dewe Rogerson - Hong Kong Tel: +852-2533-4605 Email: anne.pang@citigatedr-hk.com Henry Chow Citigate Dew Rogerson - Hong Kong Tel: +852-2533-4639 Email: henry.chow@citigatedr-hk.com
Winner Medical Group
CONTACT: United States: Richard Thomas, Vice President of Winner MedicalGroup, +1-843-682-5001 or rthomas@winnermedical.com , or Kathy Price,+1-646- 284-9430, or kprice@hfgcg.com , or Dixon Chen, +1-646-284-9403, ordchen@hfgcg.com , both of The Global Consulting Group; Hong Kong - AnnieChen, Secretary of the Board for Winner Medical Group,annie.chen@winnermedical.com , or Anne Pang, +852-2533-4605, oranne.pang@citigatedr-hk.com , or Henry Chow, +852-2533-4639, orhenry.chow@citigatedr-hk.com , both of Citigate Dew Rogerson - Hong Kong
Web site: http://www.winnermedical.com/
