The Female Health Company Reports:
FOURTH QUARTER
AND
FY 1999 RESULTS
CHICAGO (December 27, 1999) – The Female Health Company (OTC BB: FHCO) today reported fourth quarter net revenues of $1,305,782 for period ending September 30, 1999, compared with $1,410,727 in the same period in 1998. Unit sales of 2.3 Million for the quarter were consistent with company expectations and demonstrate the Female Health Company’s continued progress in executing its long-term strategies for growth.
International demand for female condoms continues to grow as a result of the product being introduced to additional countries as a part of the United Nations Joint Program on HIV/AIDS (UNAIDS). For the first quarter of fiscal 2000, orders in-house currently total 4.5 million units.
"We continue to see strong global momentum in terms of the number of countries establishing STD prevention programs using the female condom," said Mary Ann Leeper, president. "The number of countries with either established or experimental programs has grown from 13 in 1997 to 31 in 1999, which we believe bodes well for future demand for our products."
Net loss for the fourth quarter was $740,950 or $0.07 per diluted share, compared with a net loss of $685, 620 or $0.07 per diluted share, for the same period in 1998. The higher net loss was the result of a reduction of the inventory obsolescence reserve during the prior year’s forth quarter and an increase in interest expenses associated with the Company’s issuance of convertible debentures during the third quarter of the current fiscal year. The result is a larger amount of amortization of discounts on notes payable and convertible debentures.
For the 12 month period ended on September 30, 1999, net revenues totaled $4,715,477 while the net loss was $3,884,229 compared to net revenues of $5,451,399 and a net loss of 4,306,985 for the same 1998 period. Without the prior one year one-time $817,000 charge for Series 2 preferred dividend accretion, the Company would have experienced an increase in net loss principally related to decreased sales volume, a less than proportionate decline in cost of goods sold and higher nonoperating expenses. Lower sales volume was attributable to the timing of receipt of large orders and scheduling as various countries launch the product. The Company expects fluctuations to continue until female condom prevention programs are broadened in both developed and developing countries.
The fluctuations should become less variable as the expansion of the UNAIDS program reaches a critical number of countries and the logistics of implementing the prevention program is in place in these countries. Established programs now exist in four countries and experimental programs in 27 countries.
UNAIDS recently announced that the second phase of its partnership with the Female Health Company would start in fiscal 2000. UNAIDS stated "We plan to dramatically increase the number of women who have access to the product."
Further, at a special meeting of the United Nations General Assembly, a goal was established to reduce the HIV infection rates among 15-24 year-olds by 2005. A detailed plan to achieve this goal – which was recently directed by UN Secretary- general Kofi Annan at a meeting of the International Partnership Against AIDS in Africa – is expected to be completed by May 2000
Education and prevention are the only ways to achieve this goal. Currently there are only two products available that can prevent HIV/AIDS: the female condom and male condoms. The Female Health Company believes that the female condom will play a major role in the UN’s five-year plan.
In addition to the new UN Goal to reduce HIV/AIDS and expand UNAIDS programs, key events that will impact results in 2000 include the development of the national prevention plan in Brazil, the national consumer launch in Japan and the broadening of the private and public markets in France.
The decrease in costs and goods sold resulting from the decline in sales was offset, in part, by a change between years in the Company’s reserve for inventory obsolescence. During the 12 months ended September 30, 1998 a $853,266 reduction in the Company’s reserve for obsolescence occurred. The Company did not materially adjust inventory reserves during the same period this year.
Net interest expense and nonoperating expenses increased $469,408 to $860,523 from $391,115 in the prior fiscal year. As a result the Company incurring higher levels of debt in the current year principally due to the issuance of convertible debentures the Company experienced and increase in interest expenses.
Unaudited Condensed Consolidated Balance Sheet
For the Period Ended
September 30,
September 30,
1999
1998
Cash and equivalents
$ 570,709
$ 1,480,287
Accounts receivable, net
1,572,455
1,138,274
Inventories, net
1,015,202
925,425
Prepaid and other current assets
477,482
395,293
Total Current Assets
3,635,848
3,939,279
Note receivable
-
-
Other non-current assets
914,013
1,090,020
Net property, plant & equipment
1,957,282
2,529,595
TOTAL ASSETS
$6,507,143
$ 7,558,894
Notes payable, net of unamortized discount
$1,184,624
$ 837,139
Convertible debentures, net of unamortized discount
$ 819,355
-
Accounts payable
612,043
473,979
Accrued expenses
424,192
614,819
Debt due within one year
-
626,066
Preferred dividends payable
73,553
147,635
Total current liabilities
3,113,767
2,699,638
Unaudited Condensed Consolidated Income Statement
For the Quarter Ended
For the Twelve Months Ended
For the 9 Month Ended
September 30,
September 30,
June 30,
1999
1998
1999
1998
1999
1998
NET REVENUES
$ 1,305,782
$ 1,410,727
$ 4,715,477
$ 5,451,399
(735,922)
$ 3,409,695
$4,040,672
-13.5%
GROSS PROFIT (LOSS)
494,821
219,533
116,730
178,030
(378,090)
(41,503)
Advertising and promotion
32,534
62,399
251,867
433,820
219,333
371,421
SG&A
692,100
730,102
2,890,860
2,895,109
2,198,761
2,165,006
Total Operating Expenses
724,634
792,501
3,142,727
3,328,929
2,418,094
2,536,427
OPERATING LOSS
(229,813)
(572,968)
(3,025,997)
(3,150,899)
(2,796,184)
(2,577,930)
Interest, net and other expense
479,272
81,703
724,314
206,417
245,042
124,714
Pretax loss
(709,085)
(654,671)
(3,750,311)
(3,357,316)
(3,041,226)
(2,702,644)
Income taxes
-
-
-
-
NET LOSS
(709,085)
(654,671)
(3,750,311)
#
(3,357,316)
(3,041,226)
(2,702,644)
Preferred dividends accreted,
Series 2
-
-
-
817,000
817,000
Preferred dividends, Series 1
31,865
30,949
133,919
132,669
102,054
101,720
NET LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS
(740,950)
(685,620)
(3,884,230)
(4,306,985)
(3,143,280)
(2,804,364)
NET LOSS PER COMMON SHARE
$ (0.07)
$ (0.07)
$ (0.36)
$ (0.43)
$ 0.30
$ 0.37
Weighted average common shares
11,396,093
10,415,757
10,890,173
9,971,493
10,719,690
9,821,778
The Female Health Company, based in Chicago, Ill. owns certain worldwide rights to the female condom including patents which have been issued in the United States, United Kingdom, Japan, France, Italy, Germany, Spain, the People’s Republic of China, Canada, New Zealand, South Korea and Australia. The female condom is the only product controlled by women that helps to prevent STDs including HIV/AIDS and unintended pregnancy. The female condom is made of polyurethane, which is strong and unlikely to rip or tear during use or cause allergic reactions. It is manufactured in a state of the art facility in London, England.
"Safe Harbor" Statement under the Private Securities Litigation Reform Action of 1995: The statements in this release which are not historical fact are forward-looking statements based upon the Company’s current plans and strategies, and reflect the Company’s current assessment of the risks and uncertainties related to its business, including such things as product demand and market acceptance; the economic and business environment and the impact of governmental regulations, both in the United States and abroad; the effects of competitive products and pricing pressures; currency risks; capacity;
efficiency and supply constraints; and other risks detailed in the Company’s press releases, shareholder communication and Securities and Exchange Commission filings.
Actual events affecting the Company and the impact of such events on the Company’s operations may vary from those currently anticipated.
For more information about The Female Health Company toll-free via fax,
dial 1-800-PRO-INFO and enter company code "FHCO."
Also, visit the Company's web site, www.femalehealth.com.
# #
Contacts: Investors Product Media
William R. Gargiulo, Jr. Mary Ann Leeper,Ph.D. Desta Davis
231.526.1244 312.280.1119 312.397.6070
If you have any questions or comments, please send them to us info@femalehealth.com