Prolong International Corporation Reports Second Quarter 2003 Results
IRVINE, Calif.--Aug. 8, 2003--Prolong International Corporation (AMEX:PRL), http://www.prolong.com, a technology driven 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, 2003.The Company reported a net loss of $634,000 or $(0.02) per diluted share, on net sales of $2.0 million, compared to net income of $899,000 or $0.03 per diluted share, on net sales of $2.5 million in the same period a year ago. The net loss for the second quarter included a $300,000 non-cash expense related to increasing the reserve against the Company's deferred tax asset.
Gross profit was $1.3 million, or 64.3% of net sales, compared to $1.7 million, or 68.0% of net sales in the second quarter of 2002. The change in gross margins was attributable mainly to a shift in product mix. Selling and marketing expenses for the quarter were $958,000, or 47.1% of net sales, compared to $983,000, or 39.5% of net sales, for the comparable period a year ago. General and administrative expenses were $629,000, or 30.9% of net sales, compared to $673,000, or 27.1% of net sales, for the comparable period a year ago.
For the six months ended June 30, 2003, the Company reported a net loss of $876,000, including the $300,000 non-cash expense related to increasing the tax asset reserve account, or $(0.03) per diluted share, on sales of $4.2 million, compared to a net income of $1.03 million, or $0.03 per diluted share, on sales of $5.4 million for the same period in 2002. The 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 the Company's corporate headquarters building and gain from the forgiveness of debt, net of applicable income taxes, of approximately $312,000 and $406,000, respectively.
Elton Alderman, Prolong's President and CEO, said, "The conservative buying strategy of our major customers during the first six months of the year is hopefully behind us. We are seeing signs of an increase in orders at the start of the third quarter. We are after top line growth, and to achieve it, the Company has been planning, implementing and working on sales oriented initiatives."
Mr. Alderman outlined the Company's strategy: "We are targeting additional major accounts that do not yet carry Prolong products, with the goal of making them our customers by the first quarter of 2004. Also, the Company has established six regional representatives throughout the country who are intended to expand our grass roots selling effort. Their goal is to build sales in the do-it-for-me segment of the marketplace, with commercial customers and industrial users of Prolong products. They are armed with innovative niche marketing programs that we believe will create consistent and substantial sales in that market segment. Initial results of these programs have been encouraging. Finally, the International sales division continues to add distributors in foreign countries and Prolong is producing a new television commercial to promote sales at the retail level. Along with all of these separate selling initiatives, the Company has continued its research and development to develop new, innovative and proprietary problem solving products for Prolong's customers."
Prolong International Corporation, 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,
2003 2002 2003 2002
(unaudited) (unaudited) (unaudited) (unaudited)
Net revenues $2,033,852 $2,487,312 $4,221,913 $5,373,237
Cost of goods sold 725,304 795,531 1,477,171 1,788,404
Gross profit 1,308,548 1,691,781 2,744,742 3,584,833
Selling and marketing
expenses 958,057 982,722 1,814,660 2,007,866
General and
administrative
expenses 629,276 673,131 1,370,585 1,431,538
Other (expenses)
income, net (55,046) 940,627 (135,686) 894,680
(Loss) income before
extraordinary item
and provision for
income taxes (333,831) 976,555 (576,189) 1,040,109
Extraordinary item-
gain from
forgiveness of debt,
net of income taxes -- 311,552 -- 406,476
(Loss) income before
provision for income
taxes (333,831) 1,288,107 (576,189) 1,446,585
Provision for income
taxes 300,000 389,400 300,000 416,000
Net (loss) income $(633,831) $898,707 $(876,189) $1,030,585
Net (loss) income per
common share:
Basic ($0.02) $0.03 ($0.03) $0.03
Diluted ($0.02) $0.03 ($0.03) $0.03
Weighted average
common shares:
Basic shares
outstanding 29,789,598 29,789,598 29,789,598 29,789,598
Diluted shares
outstanding 29,789,598 29,789,598 29,789,598 29,789,598
Consolidated Condensed Balance Sheets
June 30, December 31,
2003 2002
(unaudited)
Assets:
Cash and cash equivalents $94,820 $261,623
Accounts receivable, net 1,770,930 1,622,414
Inventories, net 532,538 512,595
Other current assets 413,239 566,984
Total current assets 2,811,527 2,963,616
Property and equipment, net 283,595 329,985
Intangible assets, net 6,448,251 6,484,836
Other assets 1,607,762 1,871,247
Total assets $11,151,135 $11,649,684
Liabilities and stockholders' equity:
Accounts payable $893,502 $981,388
Accrued expenses and other current
liabilities 1,223,707 700,740
Line of credit 920,967 863,592
Total current liabilities 3,038,176 2,545,720
Notes payable, noncurrent 477,665 592,481
Total stockholders' equity 7,635,294 8,511,483
Total liabilities and stockholders'
equity $11,151,135 $11,649,684