For the quarter ended March 31, 2009, unit sales increased 21% over the same period in FY 2008. The company’s net income attributable to common stockholders increased 67% to $1,951,786, or $0.07 per diluted share, during the second quarter of FY2009, compared with $1,165,936, or $0.04 per diluted share, in the corresponding period of the previous fiscal year.
Gross profit increased 46% to $3.9 million (53% of net revenues) in the most recent quarter, compared with $2.7 million (42% of net revenues) in the second quarter of FY2008. Operating income increased 172% to $2.3 million (31% of net revenues) in the three months ended March 31, 2009, compared with operating income of $0.8 million (13% of net revenues) in the quarter ended March 31, 2008.
We are very pleased to report quarterly operating earnings exceeding $2 million for the first time in the company’s history, stated O.B. Parrish, Chief Executive Officer of The Female Health company. The favorable financial results for the three and six months ended March 31, 2009 reflect the increasing impact of FC2 upon our operating results, as evidenced by the widening of the second quarter gross margin to 53% of net revenues from 42% in the prior-year quarter. FC2 accounted for 46% of unit sales for the six months ended March 31, 2009 vs. 39% for the same period in FY 2008. It is also important to note that the increase in unit shipments was greater than the 14% increase in second quarter revenues, due to the higher percentage of FC2 in our sales mix. FC2 sells at a lower price, but contributes a higher gross margin than the FC1 female condom.
The company expects significant quarter to quarter variations due to the receipt of large orders, production scheduling, and shipping of products.
For the six months ended March 31, 2009, the company’s net revenues increased 4% to $12.7 million, compared with $12.1 million in the six months ended March 31, 2008. Unit sales were up 16% for the first half of FY 2009 vs. the same period last year. For the six months ended March 31, 2009, net income attributable to common stockholders increased to $3.6 million, or $0.13 per diluted share, compared with $2.0 million, or $0.07 per diluted share, in the corresponding period of the previous fiscal year.
Gross profit increased 26% to $6.3 million (50% of net revenues) in the first six months of FY2009, compared with $5.0 million (42% of net revenues) in the first half of FY2008. Operating income increased 73% to $2.7 million (21% of net revenues) in the six months ended March 31, 2009, compared with operating income of $1.6 million (13% of net revenues) in the same period last year.
The company recorded a foreign currency transaction loss of $194,286 in the second quarter of FY2009, versus a foreign currency transaction loss of $5,053 in the quarter ended March 31, 2008. For the six months ended March 31, 2009, the company recorded a foreign currency transaction gain of $999,820, compared with a foreign currency transaction gain of $110,304 in the corresponding period of the previous fiscal year.
The company evaluates its ability to realize deferred tax assets on a regular basis. The net income attributable to common stockholders for the three and six months ended March 31, 2008, included a benefit for income taxes of $377,000, related to such evaluation.
The company has Federal and state net operating loss carryforwards of approximately $42 million and $22 million respectively, expiring in years 2009 to 2028. The company’s UK subsidiary, The Female Health company-UK plc. has UK net operating losses of approximately $65 million. The UK tax loss carryforwards can be carried forward indefinitely to offset future U.K. taxable income.
With the recent FDA approval of FC2, some of FHC’s major customers that require such approval will transition to the second generation product, which should further improve the company’s financial results, added Parrish. Growing global acceptance of the Female Condom, the only available barrier method initiated by women that allows them to protect themselves against HIV/AIDS and unintended pregnancy, is the basis for our growth. The Female Condom is now available in over 100 countries, and we believe it will play an increasingly important role in the global battle against HIV/AIDS in the future. The FC2 Female Condom is currently being distributed in 77 countries.
We are reaffirming our annual guidance for FY 2009 that unit sales should increase 20% to 25% and that operating earnings should rise 50% to 75% from last year’s $3,183,725 record level, concluded Parrish.
During the first half of FY 2009, the company generated $3.2 million in cash from operations. The company has no outstanding debt and $1.5 million in unused credit lines.
