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The Female Health Company Reports Record Fourth Quarter and FY2012 Operating Results
Date:12/4/2012

CHICAGO, Dec. 4, 2012 /PRNewswire/ --The Female Health Company (NASDAQ-CM: FHCO), which manufactures and markets the FC2 Female Condom, today reported its financial results for the fourth quarter and fiscal year ended September 30, 2012. The Company will host an investor conference call today at 11:00 a.m. Eastern Time to discuss these operating results (see details below).

(Logo: http://photos.prnewswire.com/prnh/20120712/MM39764LOGO)

"We are pleased with the outstanding results achieved by our Company in the fourth quarter and fiscal year ended September 30, 2012," noted O.B. Parrish, Chairman and Chief Executive Officer of The Female Health Company. "Fiscal 2012 operating results reflect increasing demand for the FC2 Female Condom. We believe the rising global demand for FC2 reflects a growing awareness of the dual protection that female condoms provide against unintended pregnancy as well as sexually transmitted infections, including HIV/AIDS.  FC2 makes an important contribution to saving lives and reducing healthcare costs, particularly in light of the fact that HIV/AIDS remains the leading cause of death worldwide among women 15 to 44 years of age."

For the three months ended September 30, 2012, unit sales increased 45% when compared with the fourth quarter of FY2011. Net revenues increased 39% to a record $9.9 million, compared with $7.1 million in the three months ended September 30, 2011. 

Gross profit increased 36% to $5.8 million, or 58.0% of net revenues, in the most recent quarter, compared with $4.2 million, or 59.5% of net revenues, in the fourth quarter of FY2011.

Operating expenses for the quarter ended September 30, 2012 increased 34% to $2.6 million, versus operating expenses of $1.9 million in the fourth quarter of FY2011.  The increase was primarily due to an accrual for fiscal year incentive payments based on the achievement of unit sales and operating income performance goals, along with increased spending on education and training.

Operating income increased 38% to a record $3.2 million in the three months ended September 30, 2012, compared with $2.3 million in the prior-year quarter.  The increase was primarily due to higher revenues.

The Company reported net income of $8.2 million, or $0.29 per diluted share, in the fourth quarter of FY2012, an 81% increase over net income of $4.5 million, or $0.16 per diluted share, in the fourth quarter of FY2011. The Company recorded a currency loss of $0.08 million and a currency gain of $0.01 million during the quarters ended September 30, 2012 and 2011, respectively.  The Company recorded a net tax benefit of $5.1 million in the fourth quarter versus a net tax benefit of $2.2 million in the prior-year quarter.

For the fiscal year ended September 30, 2012, unit sales increased 88% when compared with unit shipments in FY2011.  The Company shipped approximately 61.6 million FC2 Female Condoms to customers in FY2012, versus approximately 32.9 million FC2 Female Condoms in the previous fiscal year. Net revenues increased 89% to a record $35.0 million in FY2012, compared with $18.6 million in FY2011.

In the fiscal year ended September 30, 2012, gross profit increased 109% to $20.6 million, or 58.9% of net revenues, compared with $9.9 million, or 53.1% of net revenues, in the fiscal year ended September 30, 2011.

Operating expenses for the fiscal year ended September 30, 2012 increased 47% to $9.7 million, compared with operating expenses of $6.6 million in the fiscal year ended September 30, 2011.  The increase in operating expenses relates primarily to fiscal year incentive payments based on the achievement of unit sales and operating income performance goals, along with increased spending on education and training.

Operating income increased 232% to a record $10.9 million in the fiscal year ended September 30, 2012, compared with $3.3 million in FY2011. The increase was due to higher revenue and gross profit margins in FY2012.

The Company reported record net income of $15.3 million, or $0.53 per diluted share, in the fiscal year ended September 30, 2012, for an increase of 183% when compared with net income of $5.4 million, or $0.19 per diluted share, in the fiscal year ended September 30, 2011. The Company recorded currency losses of $0.15 million and $0.06 million in the fiscal years ended September 30, 2012 and 2011, respectively.  The Company recorded a net tax benefit for FY2012 of $4.5 million, versus $2.2 million in FY2011.  The Company has tax loss carryforwards of $24.6 million Federal, $12.4 million state and $64.3 million in the U.K., to offset future earnings.

During the fiscal year ended September 30, 2012, the Company generated positive cash flow from operations of approximately $10.4 million, paid two quarterly cash dividends of $0.05 per share each and two quarterly cash dividends of $0.06 per share each, self-funded plant capacity expansion, and maintained a debt-free balance sheet.  The amount of cash on the Company's balance sheet increased 25% during FY2012, to $5.3 million as of September 30, 2012, versus $4.2 million as of September 30, 2011.  The Company's annualized cash dividends of $0.24 at the current dividend rate provides shareholders with a current yield of 3.3% based upon the closing price of FHCO shares on December 3, 2012.

"As noted in previous press releases, timing issues regarding the receipt and shipment of large orders can significantly impact the Company's operating results, positively or negatively, illustrating the difficulty of providing specific revenue and operating income guidance," added Parrish. "Management intends to provide general comments each quarter regarding the Company's outlook, based on information available at the time.  The female condom is the only product where use is initiated by women that provides dual protection against HIV/AIDs and unintended pregnancy.  As a result we believe that following a record year in FY2012, the Company will experience continued revenue and operating income growth in fiscal 2013." 

Investor Conference CallAs previously announced, the Female Health Company will host an investor conference call at 11:00 a.m. Eastern Time, today, December 4, 2012, to discuss its fourth quarter operating results and other topics of interest.  Shareholders and other interested parties may participate in the conference call by dialing 1-877-374-8416 (local or international participants dial 412-317-6716) and asking to be connected to "The Female Health Company" conference call, a few minutes before 11:00 a.m. EST. A replay of the conference call will be available one hour after the call through 9:00 a.m. EST on Tuesday, December 18, 2012 by dialing 877-344-7529 (local or international callers dial 412-317-0088) and entering the conference ID 10021755.About The Female Health CompanyThe Female Health Company, based in Chicago, Illinois, manufactures and markets the FC2 Female Condom® (FC2), which is available in the U.S. and approximately 138 other countries globally. The Company owns certain worldwide rights to the FC2 Female Condom®, including patents that have been issued by the U.S., the European Union, Canada, Australia, South Africa, Japan, The People's Republic of China, Spain, Mexico, Greece, Turkey and the African Regional Intellectual Property Organization (ARIPO), which includes Botswana, The Gambia, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Sierra Leone, Somalia, Sudan, Swaziland, Uganda, United Republic of Tanzania, Zambia and Zimbabwe.  FC2 patent applications are pending in various countries.  The FC2 Female Condom® is the only available FDA-approved product controlled by a woman that offers dual protection against sexually transmitted diseases, including HIV/AIDS, and unintended pregnancy. The World Health Organization (WHO) has cleared FC2 for purchase by U.N. agencies. 

"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995:The statements in this release which are not historical fact are "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements in this release include statements regarding underlying demand for FC2, the outlook for FY 2013 and the continuation of cash dividends in future periods.  These statements are 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, and are made as of the date of this release.  The Company assumes no obligation to update any forward-looking statements contained in this release as a result of new information or future events, developments or circumstances.  Such forward-looking statements are inherently subject to known and unknown risks and uncertainties.  The Company's actual results and future developments could differ materially from the results or developments expressed in, or implied by, these forward-looking statements.  Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to, the following:  product demand and market acceptance; competition in the Company's markets and the risk of new competitors and new competitive product introductions; the Company's reliance on its international partners in the consumer sector and on the level of spending on the female condom by country governments, global donors and other public health organizations in the global public sector; the economic and business environment and the impact of government pressures; risks involved in doing business on an international level, including currency risks, regulatory requirements, political risks, export restrictions and other trade barriers; the Company's production capacity, efficiency and supply constraints; and other risks detailed in the Company's press releases, shareholder communications and Securities and Exchange Commission filings, including the Company's Form 10-K for the year ended September 30, 2012.  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 visit the Company's website at www.femalehealth.com and www.femalecondom.org. To be added to the Company's e-mail alert list, please send an e-mail to FHCInvestor@femalehealthcompany.com.

(Financial Highlights Follow)

 The Female Health CompanyUnaudited Condensed Consolidated Balance Sheets September 30,20122011Cash

$
5,290,780$
4,249,324Certificate of deposit

-63,875Restricted cash

4,6824,526Accounts receivable, net

7,268,9172,305,473Income tax receivable

27,369-Inventories

1,458,1992,026,528Prepaid expenses and other current assets

624,268297,267Deferred income taxes

2,152,000800,000Total current assets

16,826,2159,746,993Other non-current assets

122,336116,360Plant and equipment, net

2,349,8761,979,438Deferred income taxes

11,148,0007,600,000Total assets

$
30,446,427$
9,442,791Accounts payable

$
,775,327$
,076,994Accrued expenses and other current liabilities

1,120,302846,591Accrued compensation

2,964,812369,825Total current liabilities

5,860,4412,293,410Deferred rent

90,902101,133Deferred grant income

82,650107,481Deferred income taxes

194,244188,177Total liabilities

6,228,2372,690,201Total stockholders' equity

24,218,19016,752,590Total liabilities and stockholders' equity

$
30,446,427$
9,442,791 The Female Health CompanyUnaudited Condensed Consolidated Income Statements Three Months Ended

September 30, 20122011Net revenues

$ 9,911,701$ 7,109,050Cost of sales

4,161,5372,881,697Gross profit

5,750,1644,227,353Operating expenses

2,564,7911,917,784Operating income

3,185,3732,309,569Interest and other (expense) income

(551)814Foreign currency transaction (loss) gain

(78,975)12,993Income before income taxes

3,105,8472,323,376Income tax benefit

(5,079,358)(2,191,342)Net income

$ 8,185,205$ 4,514,718Net income per basic common share outstanding

$ 0.29$ 0.17Basic weighted average common shares outstanding

28,180,00127,301,422Net income per diluted common share outstanding

$ 0.29$ 0.16Diluted weighted average common shares outstanding

28,678,08128,891,118 The Female Health CompanyUnaudited Condensed Consolidated Income Statements Year EndedSeptember 30,20122011Net revenues

$ 35,033,897$ 18,565,102Cost of sales

14,412,8848,699,912Gross profit

20,621,0139,865,190Operating expenses

9,681,0836,569,848Operating income

10,939,9303,295,342Interest and other income (expense)

362(2,109)Foreign currency transaction loss

(148,269)(61,258)Income before income taxes

10,792,0233,231,975Income tax benefit

(4,507,298)(2,167,076)Net income

$ 15,299,321$ 5,399,051Net income per basic common share outstanding

$ 0.55$ 0.20Basic weighted average common shares outstanding

27,693,72127,287,342Net income per diluted common share outstanding

$ 0.53$ 0.19Diluted weighted average common shares outstanding

28,933,14428,971,011 


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SOURCE The Female Health Company
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