Prolong International Corp. Reports Q4 and Year-End Results for 1998
24 March 1999
Prolong International Corp. Reports Fourth-Quarter and Year-End Results for 1998
IRVINE, Calif.--March 24, 1999--Prolong International Corp. (AMEX:PRL) Wednesday reported sales and earnings for the year ended Dec. 31, 1998.For the year, the company reported net income of $420,000, or $0.02 per diluted share, on record sales of $35.0 million, compared to net income of $2.1 million, or $0.08 per diluted share, on sales of $29.8 million in 1997.
For the quarter, the company reported a loss of $1.8 million, or $0.07 per diluted share, on sales of $6.1 million, compared to net income of $658,000, or $0.02 per diluted share, on sales of $9.0 million in the fourth quarter of 1997.
Elton Alderman, Prolong president and chief executive officer, attributed the lower than expected fourth-quarter results to a combination of factors, notably the company's decision to delay introduction of a second-generation super lubricants infomercial while accelerating introduction of a new line of automotive appearance products. "We believe that this strategy -- which involved foregoing immediate bottom-line results in the interests of diversifying our product line and expanding our distribution channels -- was the right one, as we anticipate that these will be the agents of growth in 1999 and beyond," said Alderman.
"Our decision to accelerate the introduction of our new line of automotive appearance products -- where we see an opportunity to open new distribution channels and leverage our brand name in a market that is estimated to exceed $500 million in annual sales -- resulted in substantially higher SG&A expenses in the fourth quarter. These included significant new product research and development expenses and other costs -- notably in the areas of marketing and personnel -- necessary to build the infrastructure that we anticipate will enable us to fully capitalize on the potential of the new automotive appearance products line. Concurrently, a scheduled reduction in the airing of our original infomercial -- which in its third year was losing much of its marketing effectiveness -- resulted in both lower direct response television (DRTV) sales and lower retail sales."
Alderman noted that selling, general, and administrative (SG&A) expenses in the fourth quarter also included non-television media expenses, promotional allowances, trade shows, ongoing advertising and motorsports-related marketing programs, and legal expenses. "Although the fourth-quarter initiatives put a damper on results for the year," concluded Alderman, "we believe they were vital to the successful introduction of the new automotive appearance products and are essential ingredients in our longer-term strategy of building global marketing and distribution capabilities that will support the future growth of the company."
For the 12-month period, sales from retail stores accounted for $25.4 million, or 73% of total sales, versus $11.4 million, or 38% of total sales, in 1997. DRTV sales were $5.6 million, or 16% of total sales, compared to $14.8 million, or 50% of total sales, in 1997. Other non-retail and international sales accounted for the balance of sales in 1998 and 1997.
For the quarter, sales from retail stores were $4.4 million, or 72% of total sales, compared to $4.6 million, or 51% of total sales, for the same period a year ago. DRTV sales were $1.0 million, or 16% of total sales, for the most recent period compared to $3.3 million, or 37% of total sales, in the fourth quarter of 1997. Other non-retail and international sales accounted for the balance of sales in the fourth quarters of 1998 and 1997.
Prolong International, through its operating subsidiaries, manufactures, markets and distributes a complete line of patented lubricant and proprietary automotive appearance 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 U.S. and in selected international markets.
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 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 Corp.
Summary Consolidated Statements of Operations
Three Months Ended Year Ended
Dec. 31, Dec. 31,
1998 1997 1998 1997
(unaudited) (audited)
Net sales $6,121,539 $8,963,653 $35,032,689 $29,846,795
Cost of sales 1,419,556 1,637,099 7,527,361 5,735,238
Gross profit 4,701,983 7,326,554 27,505,328 24,111,557
Selling
expenses 5,438,147 5,232,315 19,838,689 17,259,469
General and
administrative
expenses 1,958,725 1,187,675 6,022,201 3,523,200
Research and
development 221,106 0 710,531 0
Other income
(expense) (42,045) 64,002 (16,504) 241,029
Income (loss)
before taxes (2,958,040) 970,566 917,403 3,569,917
Provision (benefit)
for income
taxes (1,171,130) 312,355 497,890 1,437,364
Net income
(loss) (1,786,910) 658,211 419,513 2,132,553
Net income (loss)
per common share
Basic (7 cents) 2 cents 2 cents 8 cents
Diluted (7 cents) 2 cents 2 cents 8 cents
Weighted average
shares outstanding
Basic shares
outstanding 26,825,707 25,392,336 25,807,618 25,508,035
Diluted shares
outstanding 26,825,707 25,414,467 26,011,767 25,690,774
Summary Consolidated Balance Sheet
Dec. 31,
1998 1997
(audited)
Cash and cash equivalents $1,127,861 $6,180,983
Accounts receivable, net 4,950,055 3,880,571
Inventories, net 2,915,249 1,300,691
Other current assets 2,760,139 1,961,282
Total current assets 11,753,304 13,323,527
Non current assets 11,457,568 425,123
Total assets $23,210,872 $13,748,650
Accounts payable $1,878,418 $1,074,098
Accrued expenses 1,502,114 1,663,321
Income taxes payable -- 1,302,377
Total current liabilities 3,380,532 4,039,796
Notes payable, noncurrent 2,376,005 --
Shareholders' equity 17,454,335 9,708,854
Total liability and shareholders'
equity $23,210,872 $13,748,650