Prolong Second Highest Quarterly Net Income in Company's History
IRVINE, Calif.--Aug. 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 second quarter ended June 30, 2002, including the second highest net income for a quarter in the Company's seven year operating history.For the second quarter of 2002, the Company reported net income of $899,000 or $0.03 per diluted share, on net sales of $2.5 million, compared to a net loss of $20,000, or $0.00 per diluted share, on net sales of $3.9 million in the same period a year ago.
Gross profit was $1.7 million, or 68.0% of net sales, compared to $2.8 million, or 70.4% of net sales, in the second quarter of 2001. The decrease in gross margins was attributable to a shift in product mix.
Selling and marketing expenses for the quarter were $983,000, or 39.5% of net sales, compared to $1.8 million, or 44.8% of net sales, for the comparable period a year ago. General and administrative expenses were $673,000, or 27.1% of net sales, for the quarter, compared to $914,000, or 23.3% of net sales, for the comparable period a year ago.
For the six months ended June 30, 2002, the Company reported net income of $1.03 million, or $0.03 per diluted share, on sales of $5.4 million, compared to net income of $25,000, or $0.00 per diluted share, on sales of $8.1 million in the first six months of 2001.
Net income results for the second quarter and the six-month period ended June 30, 2002 included the one-time net gain of $983,000 from the sale of Prolong International's corporate headquarters building and gains from the forgiveness of debt, net of applicable income taxes, of approximately $300,000 and $400,000, respectively.
"We're extremely pleased with the financial results for the second quarter and the first six months of the fiscal year," said Chairman and President Elton Alderman. "Selling and marketing expenses are in line with revenues and debt is down dramatically. The fact that Prolong is now financially stronger will allow us to move forward on initiatives that will accelerate our marketing efforts. Improvements in working capital have enabled us to go into production on new television advertisements, which we believe will add tremendous support to our product pull through at retail. Clearly, the results of our team effort are beginning to show, with back to back quarters of operating profit having been achieved."
"The Company continues to report major improvements in its balance sheet," said Nicholas Rosier, CFO, as Prolong reduced trade accounts payable by more than $1.5 million following completion of the Company's debt-restructuring program. The Company also reduced inventories by more than $175,000 and improved net working capital by more than $1.0 million. The completed sale and lease-back transaction of the Company's corporate headquarters building significantly reduced long-term debt, leaving a long-term debt balance of only $254,000. Total liabilities are $3.3 million at June 30th, compared to $8.3 million on January 1st, a reduction of $5.0 million over the last 6 months.
Thomas Billstein, Prolong COO, said: "the Company is very pleased with the contribution made by Waterstone Capital Partners LLC in advising management on the optimum path for improving its balance sheet. Working closely with Larry Hudson, Managing Partner of Waterstone Capital, Prolong has reduced its total accounts payable by 58% since the first of this year. We are very proud of our vendor relationships, and have received incredible support from almost every one of them, which I believe speaks to their confidence in the Prolong team and the quality of Prolong products."
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 consumer, automotive and industrial 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 words "estimate," "project," "potential," "intended," "expect," "anticipate," "believe" and similar expressions or words are intended to identify forward-looking statements. The Company's actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors and conditions. 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 Six Months Ended
June 30, June 30,
2002 2001 2002 2001
(unaudited)(unaudited) (unaudited)(unaudited)
Net sales $ 2,487,312 $ 3,929,116 $ 5,373,237 $ 8,081,061
Cost of sales 795,531 1,164,630 1,788,404 2,471,881
Gross profit 1,691,781 2,764,486 3,584,833 5,609,180
Selling and marketing
expenses 982,722 1,759,720 2,007,866 3,329,647
General and
administrative
expenses 673,131 914,033 1,431,538 1,891,189
Other income
(expenses), net 940,627 (142,988) 894,680 (259,898)
Income (loss) before
extraordinary item
and provision for
income taxes 976,555 (52,255) 1,040,109 128,446
Extraordinary item-gain
from forgiveness of
debt, net of income
taxes 311,552 - 406,476 -
Income (loss) before
provision for income
taxes 1,288,107 (52,255) 1,446,585 128,446
Provision (benefit) for
income taxes 389,400 (32,685) 416,000 103,456
Net income (loss) $ 898,707 $ (19,570) $ 1,030,585 $ 24,990
Net income (loss) per
common share:
Basic $0.03 $0.00 $0.03 $0.00
Diluted $0.03 $0.00 $0.03 $0.00
Weighted average common
shares:
Basic shares
outstanding 29,789,598 28,438,903 29,789,598 28,438,903
Diluted shares
outstanding 29,789,598 28,438,903 29,789,598 28,438,903
Consolidated Condensed Balance Sheets
June 30, December 31,
2002 2001
unaudited audited
Assets:
Cash and cash equivalents $ 98,449 $ 466,453
Accounts receivable, net 2,275,409 2,485,191
Inventories, net 515,864 691,921
Other current assets 1,040,047 1,054,140
Total current assets 3,929,769 4,697,705
Property and equipment, net 362,068 2,879,094
Intangible assets, net 6,521,422 6,558,007
Other assets 2,167,927 2,806,591
Total assets $ 12,981,186 $ 16,941,397
Liabilities and stockholders' equity:
Accounts payable $ 1,110,748 $ 2,647,266
Accrued expenses and other current
liabilities 546,601 470,177
Line of credit 1,397,608 1,728,868
Total current liabilities 3,054,957 4,846,311
Deposits under building sales contract - 1,223,265
Notes payable, noncurrent 254,182 2,230,359
Total stockholders' equity 9,672,047 8,641,462
Total liabilities and stockholders'
equity $ 12,981,186 $ 16,941,397