CHICAGO (December 28, 2000) – The Female Health Company (OTC BB: FHCO) today reported a 46 percent increase in net revenues for the fourth quarter ended September 30, 2000.  Revenues were $1,903,333, compared with $1,305,782 in the same period in 1999.  Unit sales for the period grew 21 percent to 2.8 million, up from 2.3 million in the same period last year.  The results were consistent with the company’s expectations for the quarter.

The company said the results demonstrate continued progress in executing its long-term strategies for growth, but that it expects to report continued significant quarter-to-quarter performance variation due to the timing of large orders, subsequent production scheduling and product shipments.

Net loss for the fourth quarter was $597,242, or $0.04 per diluted share, compared with a net loss of $740,950, or $0.07 per diluted share, for the same period in 1999. The lower net loss was the result of a decrease in non-operating interest expenses associated with the company’s issuance of convertible debentures during the latter part of the prior fiscal year

No new debt issuance occurred during the second half of the fiscal 2000 year.  The result was a smaller amount of debt issuance costs and amortization of discounts on convertible debentures and notes payables than in the fourth quarter of fiscal 1999.  The decrease in non-operating expenses was partially offset by reduced gross profit and increased operating expenses in the fourth quarter compared to the prior-year period 

“We are very excited about our progress in the quarter,” said Mary Ann Leeper, President and Chief Operating Officer.  “We achieved significant growth in total units sold, and at the same time improved operating efficiencies.  Our volumes indicate that female condoms are clearly gaining growing recognition in the U.S. and global public health sectors as an important component in HIV prevention strategies,” said Leeper.

For the twelve-month period ended September 30, 2000, the company reported net revenues of $5,766,868, a 22 percent increase over the prior-year’s net revenues of $4,715,477.  Fiscal 2000 unit sales grew 27 percent to 8.3 million, compared with 6.5 million in the prior year.  Higher sales volume was attributable to a substantial increase in shipments to international customers.

 Net loss for the fiscal year declined to $3,822,358, compared with a net loss of $3,884,228 for the prior fiscal year.  The company’s operating loss for fiscal 2000 declined 16 percent to $2,392,631 from $2,851,873 for the prior fiscal year. The reduction in the net operating loss was primarily due to gross margin improvements. The reduction of net loss between years was only 2 percent due to increases in non-operating interest expenses and amortization of debt issuance costs offsetting much of the gross margin gain

The cost of goods sold in fiscal 2000 grew 13 percent, less than the 22 percent revenue increase for the year.  International and global public sector business comprised 74 percent of the company’s total sales in the year, compared with 56 percent in the prior year.  The cost of goods sold per unit for the public sector business is lower due to greater efficiencies related to the sale of bulk-sized products.

Non-operating interest expense in fiscal 2000 increased $327,451, or 45 percent, to $1,051,853, compared to $724,312 for the prior year, due to the higher level of debt outstanding during the first three quarters of the fiscal year as a result of the issuance of convertible debentures during the latter part of fiscal 1999. As a result of the overlap of the debt period, the company incurred a larger amount of non-cash expenses during the 2000 fiscal year, primarily due to the amortization of discounts on convertible debentures.

The Female Health Company, based in Chicago, owns certain worldwide rights to The Female Condom including patents which have been issued in the United States, United Kingdom, Japan France, Italy, Germany, The People’s Republic of China, Canada, New Zealand, South Korea and Australia. The Female Condom is the only available product controlled by a woman that protects against sexually transmitted diseases including HIV/AIDS, and unintended pregnancy.   

“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, dial toll-free via fax,
1-800-PRO-INFO and enter company code “FHCO.”  Also, visit the Company’s Web site at www.femalehealth.com.