Exhibit 99.1
Winner Medical Group Reports First Quarter Fiscal 2007 Results
Shenzhen, China - February 14, 2007 - Winner Medical Group Inc. (OTCBB: 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™ 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 Quarter FY 2007 | | Percentage of Total Revenues | | First Quarter FY 2006 | | Percentage of Total 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 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.
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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 |
- 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)
| | | | | | |
| | | (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 stockhoders' equity | | $ | 70,929,523 | | $ | 67,154,414 | |
