A great short a 13
Gum Tech International Reports
First Quarter 2000 Results; Net Sales Increased 64%
Over First Quarter 1999
PHOENIX, May 12 /PRNewswire/ -- Gum Tech International, Inc. (Nasdaq: GUMM -
news) today announced first quarter 2000 net sales of $4.02 million, an increase of over
64% from first quarter 1999 net sales of $2.45 million. The Company reported a net loss
to common shareholders for the quarter of $2.73 million, mainly attributable to a large
advertising campaign for Zicam(TM) in the quarter.
Net sales for the quarter attributable to gum operations were $915,000. The Gel Tech
LLC joint venture posted sales of $3.1 million for the first quarter.
``Overall, we are extremely pleased with our launch of Zicam(TM) Cold Remedy this cold
season,'' said William Hemelt, Gum Tech's Chief Financial Officer. ``Even though our
public relations campaign did not begin until November 1, 1999, and the cold season
peaked in early January, we realized sales of over $12 million this cold season. We believe
that we were successful in branding the Zicam(TM) name with a very successful public
relations campaign and a relatively short advertising campaign. We expect this branding of
Zicam(TM) Cold Remedy to contribute to the branding and sales of Zicam(TM) Allergy
Relief.''
``As noted previously, the cold season this year peaked extremely early and declined much
more rapidly than normal with a corresponding reduction in demand for cold remedy
products. In addition, after being in a back-order situation in November and early
December, we shipped a significant amount of product in late December and January. Due
to these two factors, the level of reorders in March was limited.''
``Due to increased advertising expenses of approximately $3.59 million targeted at the
Zicam(TM) Cold Remedy product, operating expenses rose substantially from fourth
quarter 1999, when we booked the majority of Zicam(TM) sales for this cold season.
Because of the backlog situation that arose from the high demand for Zicam(TM) in late
1999, we postponed our advertising campaign until this quarter when the product was
actually on the shelves. Since our reorders were limited, our advertising expenses relative to
sales this quarter appear high. However, we believe the advertising helped move product
off the shelves despite declining demand for cold remedy products, and, as importantly,
helped brand the product in preparation for next year.
``Also, we were pleased to announce during the quarter the results of additional clinical
work on Zicam(TM)'s efficacy. We are confident that results from other ongoing clinical
studies concerning Zicam(TM), performed by nationally respected researchers, will further
confirm the product's effectiveness. While we are ever mindful of the hazards of predicting
when independent clinical work will be completed, we anticipate that results from those
studies will be available before the next cold season.''
Hemelt continued, ``Although we do not anticipate significant growth from our existing gum
customers, we have made substantial progress on our nicotine gum and oral care product
opportunities. In fact, we anticipate finalizing the joint venture agreement with Swedish
Match in the near future. If successful, we believe that we will initiate manufacturing of
products for this joint venture in early 2001. In addition, we are moving forward steadily
with a major consumer products company to develop and market oral care gum products
and anticipate a significant development with respect to this opportunity before year-end.
When realized, these opportunities will result in significant growth in our gum operations.
Interest expense was significantly higher this quarter from the prior year period due to the
accelerated amortization of the remaining book interest charges associated with the
repayment of the Citadel financing. Also, the Company repaid the outstanding balance of its
term loan with Textron Financial Corp. Neither Gum Tech nor Gel Tech currently has any
outstanding debt. Gum Tech's cash position has improved over the last several months and
remains strong.
A summary of the Company's consolidated financial results for the first quarter 2000
follows:
2000 1999 1999
1st Qtr 4th Qtr 1st Qtr
($000's)
Net sales $4,016 $8,866 $2,446
Cost of sales 2,064 2,791 1,841
Gross profit 1,952 6,075 605
Operating expenses 5,100 2,793 951
Research and development 243 284 120
Income (Loss) from operations (3,391) 2,998 (466)
Interest and other income 92 57 9
Interest expense 409 482 110
Income (Loss) before taxes and
minority interest (3,708) 2,573 (568)
Income taxes 8 -- --
Minority interest in
Gel Tech LLC (1,000) 1,374 --
Preferred stock dividends 12 89 --
Net income (loss) to common
shareholders $(2,728) $1,110 $(568)
Net Income (Loss) per Share ($0.31) $0.13 ($0.08)
Average Shares Outstanding
(millions) 8.7 8.8* 7.0
*Fully diluted share basis
Gum Tech develops, manufactures and distributes specialty chewing gum products
designed to provide health benefits to customers. In addition, Gum Tech is a 60% owner of
Gel Tech LLC. Gel Tech LLC owns and markets Zicam(TM) Cold Remedy and
Zicam(TM) Allergy Relief, two homeopathic remedies for the common cold and allergy
relief. |
