Prolong International Corporation Reports Third-Quarter Results
10 November 1999
Prolong International Corporation Reports Third-Quarter Results
IRVINE, Calif.--Nov. 9, 1999--Prolong International Corporation (AMEX:PRL) today reported financial results for the third quarter ended Sept. 30, 1999.For the three months ended Sept. 30, 1999, the Company reported a net loss of $416,000, or $0.01 per diluted share, on net sales of $9.8 million, compared to net income of $484,000, or $0.02 per diluted share, on net sales of $9.7 million in the third quarter of 1998.
For the nine months ended Sept. 30, 1999 the Company reported a net loss of $2.1 million, or $0.07 per diluted share, on net sales of $31.5 million, compared to net income of $2.2 million, or $0.09 per diluted share, on net sales of $28.9 million in the first nine months of 1998.
Gross profit in the third quarter of 1999 as a percentage of sales was essentially unchanged at 74.6% versus 74.5% in the third quarter of 1998.
Operating results were negatively affected by an increase of approximately $1.4 million, or 28%, in selling and marketing expenses compared to the third quarter of 1998, due primarily to additional marketing allowances to retail customers that are part of the Company's program to build brand awareness and distribution.
Retail sales in the third quarter of 1999 were $8.4 million, or 86.1% of total sales, compared to $6.7 million, or 69.7% of total sales, in the comparable period a year ago. Direct response television sales (both appearance products and lubricants) were $811,000, or 8.3% of total sales, compared to $1.3 million (all lubricants), or 13.1% of total sales, in the third quarter of 1998.
"We are pleased that our year-to-date sales reflect a nine-month record for the fifth consecutive year," said Elton Alderman, President and CEO of Prolong International. "Although our operating results showed an improvement from the preceding quarter, several of our initiatives were not fully effective during the third quarter.
"A significant area under current evaluation and revision is our direct response sales programs, where we have reduced television airings in the fourth quarter. We hope to launch a new, fully integrated series of marketing and direct response programs in early 2000 with the goal of achieving maximum support to our channel partners."
Prolong International Corporation, through its operating subsidiaries, markets and distributes patented premium lubricants and appearance products for automotive, industrial and consumer applications. Its products are sold throughout the U.S. and in selected international markets under the brand names Prolong Super Lubricants(R) and Prolong Appearance Products.
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
(unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1999 1998 1999 1998
Net revenues $9,758,596 $9,662,580 $31,509,675 $28,911,150
Cost of goods sold 2,482,588 2,460,591 8,170,032 6,107,805
Gross profit 7,276,008 7,201,989 23,339,643 22,803,345
Selling and
marketing expenses 6,400,017 4,990,880 21,087,614 14,889,967
General and
administrative
expenses 1,379,843 1,337,663 5,195,419 4,063,476
Other income
(expense) (136,420) (26,295) (288,275) 25,541
Income (loss)
before taxes (640,272) 847,151 (3,231,665) 3,875,443
Provision (benefit)
for income taxes (224,000) 363,020 (1,131,000) 1,669,020
Net income (loss) $(416,272) $484,131 $(2,100,665) $2,206,423
Net income (loss)
per common share
Basic $(0.01) $0.02 $(0.07) $0.09
Diluted $(0.01) $0.02 $(0.07) $0.09
Weighted average
common shares
Basic shares
outstanding 28,445,835 25,464,575 28,445,835 25,464,525
Diluted shares
outstanding 28,445,835 25,561,864 28,445,835 25,862,128
Sept. 30, Dec. 31,
1999 1998
(unaudited) (audited)
Assets:
Cash and cash equivalents $1,228,845 $1,127,861
Accounts receivable, net 7,030,572 4,950,055
Inventories, net 3,078,345 2,915,249
Other current assets 2,381,565 2,760,139
Total current assets 13,719,327 11,753,304
Property and equipment, net 3,557,610 3,372,509
Intangible assets, net 7,163,341 7,543,354
Other assets 1,224,064 541,705
Total assets $25,664,342 $23,210,872
Liabilities and
stockholders' equity
Accounts payable $2,756,640 $1,878,418
Accrued expenses and other
current liabilities 1,160,600 1,502,114
Loans payable bank 3,985,000 0
Total current liabilities 7,902,240 3,380,532
Notes payable, noncurrent 2,342,432 2,376,005
Total stockholders' equity 15,419,670 17,454,335
Total liabilities and
stockholders' equity $25,664,342 $23,210,872