Prolong International Corporation Reports Profitable First Quarter Financial Results; Details Improvements in Financial Performance
IRVINE, Calif.--May 13, 2002--Prolong International Corporation (AMEX:PRL)(http://www.prolong.com), a consumer products holding company and parent of Prolong Super Lubricants, Inc., manufacturer and marketer of patented consumer automotive, commercial/industrial and household products, announced today financial results for the first quarter ended March 31, 2002.For the first quarter of 2002, the Company reported net income of $132,000, or $0.00 per diluted share, on net sales of $2.9 million, compared to a net income of $45,000, or $0.00 per diluted share, on net sales of $4.2 million in the same period a year ago.
Gross profit was $1.9 million, or 65.6% of net sales, compared to $2.8 million, or 68.5% of net sales, in the first quarter of 2001. The decrease in gross margins was attributed to a shift in product mix.
Selling and marketing expenses for the quarter were $1.0 million, or 35.5% of net sales, compared to $1.6 million or 37.8% of net sales for the comparable period a year ago. General and administrative expenses were $758,000 or 26.3% of net sales for the quarter, compared to $977,000 or 23.5% of net sales for the comparable period a year ago.
"We're very pleased with the return to profitability this quarter, proof that our intense efforts to manage expenses have taken hold," said Elton Alderman, President & CEO. "We have attained a historically low sales and marketing expense ratio, reduced our general and administrative expenses, and reduced personnel. We believe that the full benefits of our actions will be realized throughout the year, and we anticipate positive cash generation from operations during 2002."
"On the product front, we are pleased to report that fuel related product sales are on the increase and our two new products in this market, Prolong Fast-Fuel Octane Booster and Prolong Fast-Fuel Injector Cleaner, are showing significant strength in the automotive aftermarket," Mr. Alderman said.
"The Company's improving financial performance has enabled us to increase our product advertising efforts. For example, Prolong has print ads running in the May issues of 'Popular Science,' `Car & Driver' and `Road and Track' magazines, delivering 3.8 million Prolong advertisements per month to subscribers. We intend to increase our advertising effort each month as we grow our profitability," Mr. Alderman added.
"We also feel quite good about our balance sheet improvement," said Nicholas Rosier, CFO, as the Company reduced accounts payable by over $500,000, improved net working capital by over $200,000, and reduced inventory by over $50,000 during the first quarter. Prolong's CFO also noted that an independent appraisal of the Company's intangible assets, such as trademarks, patents and goodwill, as required by new accounting rules, shows that these assets have a current estimated fair market value that meets or exceeds their purchase price and have not depreciated in value. "This means that Prolong will not incur any write-off, while many other companies have been faced with significant charges due to this accounting change," Mr. Rosier said.
Thomas Billstein, COO, stated that: "Prolong will realize a net gain of approximately $1.2 million from the sale of its headquarters in Irvine, which Prolong has leased back, as soon as the new owners complete their refinance of the existing loans. This event will allow the Company to realize a significant decrease in debt and will substantially increase shareholders' equity, while our operations continue uninterrupted at the headquarters."
Prolong International Corporation (AMEX:PRL), a consumer products holding company headquartered in Irvine, California, through its operating subsidiaries, manufactures, markets and distributes a complete line of patented lubricant and proprietary automotive, commercial/industrial and household products. The Company's products are marketed and sold under the brand name Prolong Super Lubricants(R) and are used in automotive, industrial and consumer applications. Prolong products are sold throughout the United States at major chain stores and auto retailers and in international markets. More information about Prolong International Corporation and its products can be obtained at http://www.prolong.com.
Forward-Looking Statements
Certain statements in this news release that relate to financial results, projections, future plans, events, or performance, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended and involve significant risks and uncertainties, including, but not limited to, the following: competition, cost of components, product concentration and risk of declining selling prices. The Company's actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These risks and uncertainties, and certain other related factors, are discussed in the Company's Form 10-K, Form 10-Q and other filings with the Securities and Exchange Commission. These forward-looking statements are made as of the date of this release and the Company assumes no obligation to update such forward-looking statements.
PROLONG INTERNATIONAL CORPORATION
Consolidated Condensed Statements of Operations
Three Months Ended
March 31,
2002 2001
(unaudited) (unaudited)
Net sales $2,885,925 $4,151,945
Cost of sales 992,873 1,307,251
Gross profit 1,893,052 2,844,694
Selling and marketing expenses 1,025,144 1,569,927
General and administrative expenses 758,407 977,156
Other income (expenses), net (45,947) (116,910)
Income before extraordinary item
and provision for income taxes 63,554 180,701
Extraordinary item-gain from
forgiveness of debt, net of
income taxes of $68,400 94,924 --
Income before provision for income taxes 158,478 180,701
Provision for income taxes 26,600 136,141
Net income $ 131,878 $ 44,560
Net income per common share:
Basic $0.00 $0.00
Diluted $0.00 $0.00
Weighted average common shares:
Basic shares outstanding 29,789,598 28,438,903
Diluted shares outstanding 29,789,598 28,438,903
Consolidated Condensed Balance Sheets
March 31, December 31,
2002 2001
unaudited audited
Assets:
Cash and cash equivalents $27,432 $466,453
Accounts receivable, net 2,895,471 2,485,191
Inventories, net 637,331 691,921
Other current assets 1,046,155 1,054,140
Total current assets 4,606,389 4,697,705
Property and equipment, net 2,826,759 2,879,094
Intangible assets, net 6,539,714 6,558,007
Other assets 2,736,576 2,806,591
Total assets $16,709,438 $16,941,397
Liabilities and stockholders' equity:
Accounts payable $2,138,812 $2,647,266
Accrued expenses and other current
liabilities 608,588 470,177
Line of credit 1,802,283 1,728,868
Total current liabilities 4,549,683 4,846,311
Deposits under building sales contract 1,170,619 1,223,265
Notes payable, noncurrent 2,215,796 2,230,359
Total stockholders' equity 8,773,340 8,641,462
Total liabilities and stockholders'
equity $16,709,438 $16,941,397