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Message from the Chairman and C.E.O.
Worldwide consensus builds for a unique form of protection women can control.
The demand for FC Female Condoms showed significant growth in 2008.
Two critical factors have increased the commitment of the global community to prevent further spread of the human immunodeficiency virus (HIV) and to control the acquired immune deficiency syndrome (AIDS) pandemic:
· First, the increasing feminization of HIV/AIDS. Nearly half of all new cases reported are among women. Sadly, in Sub-Saharan Africa, the rate frequently exceeds 60 percent.
· Second, consensus regarding the essential role FC Female Condom plays in preventing HIV/AIDS. Women at risk are increasingly demanding a method they can use for prevention. In addition, governments and global public agencies recognize disease prevention is much less costly than treatment, and is more humane given the long-term physical and emotional consequences endured by patients and families.
These dual developments generated growing demand for our products—FC Female Condom (FC1) and FC2 Female Condom (FC2)—that respond to urgent needs for improved female health. In FY2008, the Company supplied 34.7 million Female Condoms, up 34 percent from the previous fiscal year and nearly triple the number sold five years ago.
The Female Health Company continues to innovate and extend the protection globally. In January 2008 the Company submitted the FC2 premarket approval (PMA) application to the Food and Drug Administration (FDA). In December 2008, the OB-GYN Device Advisory Panel unanimously recommended that the FC2 PMA be approved. Final approval will be contingent on agreement with the FDA regarding FC2 product labeling.
FC Female Condoms were shipped to 93 countries in FY2008. To meet demand, FHC expanded FC2 manufacturing capacity in Malaysia. In addition, in conjunction with our partner Hindustan Latex Limited, a new FC2 manufacturing facility was brought on line in Kochi, India.
In FY 2008, FHC posted outstanding results:
· Revenues increased 33 percent and unit sales rose 34 percent.
· FHC operating earnings were $3.2 million, up 252 percent.
· Pretax earnings, excluding currency gains/losses, were $3.2 million, up 245 percent.
· Net income attributable to common shareholders, including currency gains and losses and tax benefits, totaled $4.8 million, an increase of 215 percent.
· The Company generated $4.2 million in cash from operations, and ended the fiscal year holding $2.1 million in cash, no debt and $1.5 million in unused credit lines.
· The Company’s Board increased the number of shares that can be repurchased to 2 million and extended the program through December 2009. As of January 19, 2009, the company has repurchased 1.5 million shares.
The Company’s strong financial position enables FHC to increase manufacturing capacity, broaden FC2 availability, and build greater Female Condom awareness and access by working closely with public health advocates, agencies and governments. Details of these partnerships, established throughout the world, are presented in this report.
Our successes, however, represent a fraction of the remarkable potential FC Female Condoms have to prevent sexually transmitted infections and contribute to improved women’s health. I thank our shareholders and dedicated employees for making these developments possible. With strong and continuing support, we strive to realize the full potential of the Female Condom, enhance shareholder value and increase protection for women worldwide.
O.B. Parrish
Chairman and Chief Executive Officer
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