SHENZHEN CITY, China, Dec. 19 /Xinhua-PRNewswire/ -- Winner Medical Group Inc. , today reported financial results for the fourth quarter and fiscal year ended September 30, 2006.
Revenues for the fourth fiscal quarter were $16.64 million compared to $18.56 million reported in the fourth quarter of fiscal 2005, a decrease of approximately 10%. Net income for the fourth quarter was $1.29 million, or $0.03 per basic and diluted share, compared to net income of $2.41 million, or $0.06 per basic and diluted share, reported in the fourth fiscal quarter last year.
The decrease in revenue in the fourth quarter is primarily attributable to increased competition for our traditional products, particularly in the North American and the European markets. The decrease in net income was attributable to the increased investments in R&D, increases in the cost of labor, electricity, freight and fuel and expenses of approximately $0.3 million associated with maintaining the Company's U.S. public reporting company status.
Revenues for fiscal year 2006 were $63.87 million compared to $58.36 million reported in fiscal year 2005, an increase of approximately 9%. Net income for the full fiscal year 2006 was $5.83 million, or $0.14 per basic and diluted share, compared to net income of $7.89 million, or $0.21 per basic and diluted share, reported for the full fiscal year 2005.
The following table illustrates the sales revenues generated in fiscal year 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 (Sales in U.S. Dollars, in millions) Fiscal Year Percentage of Fiscal Year Percentage of 2006 Total Revenues 2005 Total Revenues Europe $25.01 39.16 % $22.39 38.37 % Japan $16.65 26.06 % $15.12 25.91 % North America $7.62 11.93 % $7.50 12.85 % China $7.78 12.18 % $6.94 11.89 % Other $6.81 10.67 % $6.41 10.98 % TOTAL $63.87 100.00 % $58.36 100.00 %
As of September 30, 2006, Winner Medical had cash and cash equivalents of $4.3 million compared to $2.7 million reported in fiscal year 2005. As of the fiscal year end, Winner Medical had working capital of $15.1 million and stockholders' equity improved to $52.3 million.
Jianquan Li, Winner Medical's chairman and chief executive officer, commented, "Winner Medical continued to grow its business in fiscal 2006. Existing products produced solid sales throughout the year; however, we experienced intense competition for these products in the latter half of the year, particularly in North America and Europe. Our new products, including our technology driven self-adhesive bandage, were well received and we continue to see increased demand for them in all markets. Our product mix continues to shift to higher margin products, with sterilized products now representing approximately 40% of total revenues. We also continued to report positive bottom line results, despite a significant investment in R&D, higher overall operational costs and added expenses associated with our listing in the U.S. capital markets.
"Looking forward to fiscal year 2007, Winner Medical plans to continue to leverage its innovative technology to introduce new products into the market. Our first new product introduction will be the new PurCotton(TM) line of products, which are expected to officially enter the market after the first of the year. This product line has similar advantages as cotton gauze products -- absorbent, non-allergenic and biodegradable, but does not have the disadvantages -- microorganism attachment, fiber loss, shredding, and raw edges, etc. We are very excited about the PurCotton(TM) line of products, and believe it has the potential to be a true 'category killer'.
"In fiscal year 2007, we also plan to leverage several programs, including the implementation of our SAP ERP system, to optimize our operations and internal systems to maximize our efficiency and profitability. Another goal is to expand new business opportunities in North America and considerably increase the revenue contribution from that region," concluded Mr. Li.
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 very 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 United States Company Investor Relations Richard Thomas Kathy Price / Dixon Chen Vice President The Global Consulting Group Tel: +1(843)682-5001 Tel: +1(646)284-9430 / +1(646)284-9400 Email: rthomas@winnermedical.com Email: kprice@hfgcg.com / dchen@hfgcg.com Hong Kong Company Investor Relations Annie Chen Henry Chow Secretary of the Board Citigate Dewe Rogerson - Hong Kong Email: annie.chen@winnermedical.com Tel: +852 2533 4639 WINNER MEDICAL GROUP INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (U.S. Dollars, except per share amounts) Three months ended Fiscal year ended September 30 September 30 (UNAUDITED) (AUDITED) 2006 2005 2006 2005 Net sales $16,636,783 $18,556,176 $63,873,058 $58,357,129 Cost of sales (11,341,625) (12,905,708) (46,335,354) (42,059,663) Gross profit 5,295,158 5,650,468 17,537,704 16,297,466 Other operating income, net 82,183 25,436 283,337 296,117 Selling, general and administrative expenses (3,973,494) (3,149,002) (11,335,006) (8,830,775) Income from operations 1,403,847 2,526,902 6,486,035 7,762,808 Gain on disposal of a subsidiary - - - 1,049,239 Interest income 27,858 9,951 54,772 12,009 Interest expense (51,631) (132,726) (266,934) (470,776) Share of undistributed earnings in an equity investee 42,199 (1,750) 52,817 9,108 Income before income taxes and minority interests 1,422,273 2,402,376 6,326,690 8,362,388 Income taxes (135,453) (2,706) (516,635) (446,146) Income before minority interests 1,286,820 2,399,670 5,810,055 7,916,242 Minority interests 2,658 7,559 19,239 (23,572) Net income $1,289,478 $2,407,229 $5,829,294 $7,892,670 Other comprehensive income Foreign currency translation difference 530,980 720,741 857,313 720,741 Comprehensive income 1,820,458 3,127,970 6,686,607 8,613,411 Net income per stock - basic $0.03 $0.06 $0.14 $0.21 - diluted $0.03 $0.06 $0.14 $0.21 Weighted average common stock outstanding - basic 44,677,171 36,991,105 43,053,212 36,991,105 - diluted 44,677,171 36,991,105 43,061,546 36,991,105 WINNER MEDICAL GROUP INC. CONSOLIDATED BALANCE SHEETS (U.S. Dollars) September 30 September 30 2006 2005 (Audited) (Audited) ASSETS Current assets: Cash and cash equivalents $4,319,579 $2,650,867 Accounts receivable, less allowances for doubtful accounts of US$20,347 and US$12,643 at September 30, 2006 and 2005, respectively 7,513,013 8,257,923 Amounts due from affiliated companies 480,900 116,804 Inventories 11,329,520 10,476,534 Prepaid expenses and other current assets 6,182,472 4,268,072 Income taxes recoverable 7,533 57,649 Total current assets 29,833,017 25,827,849 Property, plant and equipment, net 35,800,530 26,834,824 Investment in an equity investee 1,062,135 1,009,318 Intangible assets, net 38,731 38,288 Prepaid expenses 224,391 219,125 Deferred tax assets 195,610 294,021 Total assets $67,154,414 $54,223,425 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term bank loans 5,437,050 8,773,881 Accounts payable 4,196,874 3,490,047 Accrued payroll and employee benefits 1,184,779 1,150,036 Customer deposits 269,965 99,994 Other accrued liabilities 2,379,849 2,279,845 Amount due to a stockholder 1,556 168,817 Amounts due to affiliated companies 203,999 255,611 Dividend payable 504,317 1,872,750 Income taxes payable 556,647 576,157 Total current liabilities 14,735,036 18,667,138 Deferred tax liabilities 4,410 37,271 Total liabilities $14,739,446 $18,704,409 Commitments and contingencies Minority interests 149,496 1,164,186 Stockholders' equity: Common stock, par value $0.001 per share; authorized 495,000,000 stock, stock issued and outstanding September 30, 2006 - 44,677,171 shares; September 30, 2005- 36,991,105 shares 44,677 36,991 Additional paid-in capital 30,237,197 19,020,848 Retained earnings 19,182,866 14,104,400 Statutory reserves 1,222,678 471,850 Accumulated other comprehensive income 1,578,054 720,741 Total stockholders' equity $52,265,472 $34,354,830 Total liabilities and stockholders' equity $67,154,414 $54,223,425
Winner Medical Group Inc.CONTACT: United States: Richard Thomas, Vice President, Winner MedicalGroup Inc., +1-843-682-5001, rthomas@winnermedical.com; Investor Relations- Kathy Price, +1-646-284-9430, kprice@hfgcg.com, or Dixon Chen,+1-646-284-9400, dchen@hfgcg.com, both for Winner Medical Group Inc.; HongKong - Annie Chen, Secretary of the Board, Winner Medical Group Inc.,annie.chen@winnermedical.com; Investor Relations - Henry Chow, CitigateDewe Rogerson - Hong Kong, annie.chen@winnermedical.com, +852-2533-4639,for Winner Medical Group Inc.
