THE FEMALE HEALTH 

    COMPANY REPORTS:

  THIRD QUARTER RESULTS

POSTS FIRST TIME QUARTERLY OPERATING & NET INCOME

REVENUES INCREASE 67%

(August 15, 2001) – The Female Health Company (OTC BB FHCO) today reported revenues of $2,296,590 and net income of $11,756 for the three months ending June 30, 2001 compared to revenues of $1,377,932 and a net loss of $865,702 for the three months ended June 30, 2000.

Net revenues increased $919,658 for the current quarter or 67%, compared with the same period last fiscal year. The increase comes on the heels of the 21 percent revenue increase experienced during the first six months of fiscal 2001.  The higher sales volume for the third quarter was attributable to a substantial increase in shipments to both global and domestic customers.

The results were consistent with the expectations for the quarter.  The Company expects significant quarter to quarter variation due to the timing of receipt of large orders, subsequent production scheduling, and shipping of products. The results demonstrate the Female Health Company’s continued progress in executing its long-term strategies for growth. 

The Company posted operating income of $173,394 for the three-months ended June 30, 2001 compared to a $533,070 operating loss for the same period last year as a result of improved gross profit and a reduction of operating expenses compared to the same period last year.

Gross profit increased $501,382, or 319%, to $658,545 from $157,163 for the same period in the prior year.   The dramatic gain in gross profit is attributable to improved sales and a less than proportionate increase in cost of goods sold. Cost of goods sold increased 34% on a 67% increase in sales. Cost of goods sold as a percentage of sales was 71% compared to 89% for the same period last year.  As sale units increase, those manufacturing costs that are fixed in nature do not require additional costs to be incurred enabling production at a lower cost of goods sold per unit.

Total operating expenses for the three-months ended June 30, 2001 declined 30 percent to $485,151 from $690,233 for the same period last year.  The reduction was a result of a reduction of promotional, selling, general and administrative expenses during this period.

The net income for the third quarter of fiscal 2001 was a result of improvements in operating income/(loss) and a reduction of non-operating expenses.

The Company experienced a reduction of non-operating expense to $128,728 for the current quarter compared to $299,722 for the same period during the prior fiscal year.  This is a result of a smaller amount of non-cash expenses from the amortization of debt issuance costs and discounts on convertible debentures and notes payable than in the third quarter of the prior year. 

For the year to date period ending June 30, 2001, the Company posted revenues of $4,959,512, an increase of 26% over the same FY 2000 period.  A net loss of $1,076,133 or $0.07 per share was recorded compared to a net loss of $3,225,1119 or $0.26 a share for the prior year period.

The results reflect the Company’s previously announced strategy to act as a manufacturer supplying partners worldwide who assume virtually all marketing costs.  As volume increases, fixed overhead costs are covered without substantive increases in operating expenses.

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.

THE FEMALE HEALTH COMPANY

Unaudited Condensed Consolidated Income Statement

For the Three Months Ended For the Nine Months Ended
June 30, June 30,
2001 2000 2001 2000
NET REVENUES      2,296,590     1,377,932      4,959,512     3,923,425
GROSS PROFIT           658,545            157,163            960,534            311,209
Advertising and promotion               2,989              54,358            110,155            169,000
SG&A           482,162            635,875         1,463,584         2,085,001
Total Operating Expenses           485,151            690,233         1,573,739         2,254,001
       
OPERATING INCOME (LOSS) 173,394 (533,070 (613,205)        (1,942,792)
Amortization of debt issuance costs                    -                31,032                    -              245,676
Interest, net and other expense            128,728            268,690            363,199            937,561
Pretax Income (Loss)              44,666           (832,792)           (976,404)        (3,126,029)
Income taxes                    -                      -                      -                      -  
NET INCOME (LOSS)              44,666           (832,792)           (976,404)        (3,126,029)
Preferred dividends, Series 1              32,910              32,910              99,729              99,090
NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON STOCKHOLDERS              11,756           (865,702)        (1,076,133)        (3,225,119)
NET INCOME(LOSS) PER COMMON SHARE        0.00            (0.07)              (0.07)            (0.26)
Weighted average common shares       14,656,473       12,824,651       14,392,258       12,522,230

 

 

  THE FEMALE HEALTH COMPANY

Unaudited Condensed Consolidated Balance Sheet

For the Period Ended
June 30, June 30,
2001 2000
Cash and equivalents  $             468,920  $            395,806
Accounts receivable, net              1,323,721                553,720
Inventories, net                 367,744             1,173,794
Prepaid and other current assets                 250,038                255,949
Total Current Assets              2,410,423             2,379,269
Other non-current assets                 625,064                792,962
Net property, plant & equipment              1,060,375             1,549,838
TOTAL ASSETS  $          4,095,862  $          4,722,069
Notes payable, net of unamortized discount  $          1,281,956  $          1,163,522
Convertible debentures, net of unamortized discount                         -               1,358,911
Accounts payable                 333,227                502,535
Accrued expenses                 495,452                406,686
Preferred dividends payable                 100,543                100,043
Total current liabilities              2,211,178             3,531,697
Notes payable, net of unamortized discount                 598,471                         -  
Convertible debentures, net of unamortized discount                 450,000                         -  
Deferred gain on lease of facilty              1,254,530             1,442,800
Other long-term liabilities                         -                    41,512
Total liabilities              4,514,179             5,016,009
Total Stockholders' equity                (418,317)               (293,940)
TOTAL LIABILITIES AND EQUITY  $          4,095,862  $          4,722,069

Contacts:        Investors                        Business / Product               Global Program         

                        William R. Gargiulo, Jr.     Mary Ann Leeper, Ph.D.           Mitchell Warren

                        231.526.1244                     312.280.1119 x223                    845-353-8298