Prolong International Corporation Reports Third Consecutive Profitable QuarterIRVINE, Calif.--Nov. 12, 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 third quarter ended September 30, 2002, its third consecutive profitable quarter.
For the third quarter of 2002, the Company reported net income of $30,600 or $0.00 per diluted share, on net sales of $2.6 million, compared to a net loss of $420,000, or $(0.01) per diluted share, on net sales of $2.9 million in the same period a year ago.
Gross profit was $1.7 million, or 64.5% of net sales, compared to $1.9 million, or 67.5% of net sales, in the third quarter of 2001. The decrease in gross margins was attributable to a shift in product mix.
Selling and marketing expenses for the quarter were $974,000, or 37.1% of net sales, compared to $1.4 million, or 48.9% of net sales, for the comparable period a year ago. General and administrative expenses were $639,000, or 24.3% of net sales, for the quarter, compared to $909,000, or 31.8% of net sales, for the comparable period a year ago.
For the nine months ended September 30, 2002, the Company reported net income of $1.06 million, or $0.03 per diluted share, on sales of $8.0 million, compared to a net loss of $395,000, or $0.01 per diluted share, on sales of $10.9 million in the same period a year ago.
Net income results for the nine-month period ended September 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 $406,000.
"We're very pleased with the financial results for the third quarter and the first nine 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 allows us to move forward on initiatives that will accelerate our marketing efforts. Based on our improvements in working capital, we have launched three new direct response television ads, which we believe will add tremendous support to our product pull through at retail."
Mr. Alderman emphasized that the Company is "reinvigorating its marketing and sales efforts in the industrial, commercial and international markets, which we believe has significant untapped opportunities for sales growth." Mr. Alderman further stated that "clearly, the results of our team effort are beginning to show, having achieved three consecutive quarters of operating profit."
"The Company continues to report major improvements in its balance sheet through the nine-month period ended September 30, 2002," said Nicholas Rosier, CFO, as Prolong reduced trade accounts payable by more than $1.6 million following completion of the Company's debt-restructuring program. The Company also reduced inventories by more than $172,000 and improved net working capital by more than $1.2 million. Total liabilities were $3.0 million at September 30th, compared to $8.3 million on January 1st, a reduction of $5.3 million over the last nine months.
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.
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 Nine Months Ended September 30, September 30, 2002 2001 2002 2001 (unaudited) (unaudited) (unaudited) (unaudited) Net sales $2,627,994 $2,858,222 $8,001,231 $10,939,283 Cost of sales 933,626 929,751 2,722,030 3,401,632 Gross profit 1,694,368 1,928,471 5,279,201 7,537,651 Selling and marketing expenses 974,343 1,397,081 2,982,209 4,726,728 General and administrative expenses 638,521 908,713 2,070,059 2,799,902 Other (expenses) income, net (30,933) (149,165) 863,747 (409,063) Income (loss) before extraordinary item and provision for income taxes 50,571 (526,488) 1,090,680 (398,042) Extraordinary item-gain from forgiveness of debt, net of income taxes. - - 406,476 - Income (loss) before provision for income taxes 50,571 (526,488) 1,497,156 (398,042) Provision (benefit) for income taxes 20,000 (106,392) 436,000 (2,936) Net income (loss) $30,571 $(420,096) $1,061,156 $(395,106) Net income (loss) per common share: Basic $0.00 ($0.01) $0.03 ($0.01) Diluted $0.00 ($0.01) $0.03 ($0.01) 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 September 30, December 31, 2002 2001 unaudited audited Assets: Cash and cash equivalents $82,164 $466,453 Accounts receivable, net 2,104,430 2,485,191 Inventories, net 519,246 691,921 Other current assets 1,226,197 1,054,140 Total current assets 3,932,037 4,697,705 Property and equipment, net 336,958 2,879,094 Intangible assets, net 6,503,129 6,558,007 Other assets 1,917,126 2,806,591 Total assets $12,689,250 $16,941,397 Liabilities and stockholders' equity: Accounts payable $1,010,475 $2,647,266 Accrued expenses and other current liabilities 591,457 470,177 Line of credit 1,107,209 1,728,868 Total current liabilities 2,709,141 4,846,311 Deposits under building sales contract - 1,223,265 Notes payable, noncurrent 277,491 2,230,359 Total stockholders' equity 9,702,618 8,641,462 Total liabilities and stockholders' equity $12,689,250 $16,941,397