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Gum Tech International Reports Fourth Quarter 2000 Results; Zicam(TM) Cold Remedy Sales to Consumers Increase
PHOENIX, Feb. 26 /PRNewswire/ -- Gum Tech International Inc., (Nasdaq: GUMM - news) announced today that Zicam(TM) Cold Remedy sales to consumers in the first half of the 2000-2001 cold season increased 40 percent over last year's comparable period. The Company's net sales for the quarter were $5.0 million, down from the prior year's level due to the sizeable introductory shipments to retailers of Zicam(TM) Cold Remedy in late 1999 when distribution channels were initially being filled. For the year-ended December 31, 2000, the Company reported net sales of $13.3 million, versus $15.5 million in 1999.
``Given the substantially less severe cold season in the fourth quarter of 2000 than last year, the increase in consumer sales demonstrates significant improvement in Zicam's(TM) brand awareness. Our research indicates that, for the four-week period ended December 24, 2000, Zicam(TM) Cold Remedy moved up to among the top 20 selling products (per UPC) in the entire cough, cold, allergy and zinc category. Research also indicates that Zicam(TM) Cold Remedy has become the number one selling product in the alternative upper respiratory category for the same time period,'' said William Hemelt, Gum Tech's Chief Financial Officer.
``We anticipate that sales of Zicam(TM) Cold Remedy will continue to be strong throughout the second half of the 2000-2001 cold season. In fact, Company sales of Zicam(TM) Cold Remedy in the current quarter have already exceeded last year's first quarter sales. The current cold season had a slow build-up in the fourth quarter but is projected to continue at a relatively high level through the end of March. We believe our advertising campaign created substantial brand awareness that is driving sales and, in addition, our public relations efforts were successful in obtaining television and newspaper coverage of Zicam(TM) Cold Remedy across the country. We believe these factors will translate into higher sales of Zicam(TM) products, both to retailers and to the Company.''
The Company also noted increasing sales of Zicam(TM) Allergy Relief. ``It is clear that our marketing campaign to establish the Zicam(TM) brand name is having a beneficial impact on sales of Zicam(TM) Allergy Relief. We have managed to build a strong base for this product even during the off-season and plan to capitalize on this momentum going into the peak allergy seasons in the second and third quarters of 2001,'' said Mr. Hemelt.
Mr. Gary Kehoe, Gum Tech's President and Chief Operating Officer, added, ``We are extremely pleased by our progress in establishing the Zicam(TM) brand name. To have achieved this level of consumer support midway through our second season is remarkable.''
Regarding the Company's gum operations Mr. Kehoe added, ``We continue to be optimistic regarding the long term value of our research and development efforts in the gum industry. We are working with several new customers regarding research and development and/or contract manufacturing possibilities. The Swedish Match joint venture is moving forward with its efforts in the non-tobacco nicotine market. Also, we are continuing work relating to the Procter & Gamble research and development agreement that was announced in the fourth quarter.''
Gum Tech reported a net loss to shareholders of $2.3 million for the fourth quarter of 2000, or $0.26 per share. The decline in earnings from the same period last year principally reflects the impact of introductory shipments of Zicam(TM) Cold Remedy to retailers in 1999 and higher advertising expenses in fourth quarter 2000 associated with an aggressive campaign to promote brand awareness. These expenses were incurred primarily in the fourth quarter in order to promote the Zicam(TM) brand prior to the peak of the cold season. Advertising expenses for the first quarter of 2001 are projected to be slightly less than the comparable period last year. Mr. Hemelt noted that this advertising program was funded primarily through capital infusions by Gum Tech and Gel Tech's new 40% partner, Zensano, Inc., which enabled Gel Tech to avoid incurring significant new debt. Partially offsetting these impacts was income resulting from a $1.625 million payment from Procter & Gamble in connection with on going research and development work.
A summary of the Company's consolidated financial results for the fourth quarter 2000 and the year 2000 follows:
2000 1999 ($000's) 4th Qtr 4th Qtr 2000 1999
Net sales $4,999 $8,953 $13,378 $15,587 Cost of sales 2,278 3,061 7,152 7,612 Gross profit 2,721 5,892 6,226 7,975
Operating expenses 8,090 2,610 16,753 5,522 Research and development 75 284 782 664 Income (Loss) from operations (5,444) 2,998 (11,310) 1,789
Interest and other income 1,672 58 1,909 124 Interest expense 29 482 458 1,312 Income (Loss) before taxes and minority interest (3,801) 2,573 (9,859) 600
Income tax expense 0 0 9 0 Minority interest in Gel Tech LLC (1,491) 1,374 (2,667) 1,374 Preferred stock dividends 0 89 12 238 Net income (loss) to common shareholders $(2,311) $1,110 $(7,213) $(1,012)
Net income (loss) per share $(0.26) $.13 $(.81) $(0.14) Average shares outstanding (millions) 9.0 8.8 8.9 7.4
Gum Tech International, Inc. is an innovative nutrient and drug delivery technology company engaged in the development, manufacture and marketing of delivery systems for bioactive compounds. Gum Tech is the majority owner of Gel Tech LLC that markets Zicam(TM) Cold Remedy, a patented, revolutionary homeopathic remedy, and Zicam(TM) Allergy Relief, a homeopathic remedy designed to provide relief to allergy sufferers. In a study published in the October 2000 issue of the ENT - Ear, Nose & Throat Journal, Zicam(TM) Cold Remedy was shown to reduce the duration of the common cold by an average of 75% when taken at the onset of symptoms.
For additional information, please contact Lynn Romero, Manager of Investor Relations, 602-252-1617, ext. 320, lromero@gum-tech.com. Gum Tech is located at 246 East Watkins Street, Phoenix, Arizona 85004.
Gum Tech Forward Looking Statement Disclaimer:
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company's anticipated growth in business and future results of operations, the Company's anticipated growth in sales of Zicam(TM) Cold Remedy and Zicam(TM) Allergy Relief in this and subsequent quarters, projections regarding the duration of the current cold season, the effectiveness of the Company's marketing program regarding Zicam(TM) products, the Company's prospects regarding new customers for its gum products, and increased sales from its gum operations, and the Company's ability to capitalize on opportunities in the drug delivery market. These forward-looking statements are based on the Company's expectations and are subject to a number of risks and uncertainties, many of which cannot be predicted or quantified and are beyond the Company's control. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Factors that could cause actual results to differ materially from the Company's expectations include the possibility that sales of Zicam(TM) products will not be as strong as expected despite the Company's aggressive marketing campaign, the possibility that the current cold season will end sooner than projected which could negatively impact anticipated sales of Zicam(TM) Cold Remedy, the possibility that retailers' inventories may exceed consumer demand, the possibility that the development and introduction of new gum products by the Company and its joint venture partners will not be successful or will be delayed, the discovery and implementation of competing delivery systems that may prove more acceptable to the marketplace, and the possibility that estimated demand for products in the drug delivery market will not grow as quickly as anticipated. Other factors that could cause actual results to differ materially from the Company's expectations are described in the Company's reports filed pursuant to the Securities Exchange Act of 1934.
SOURCE: Gum Tech International Inc. |