Prolong Announces Fourth-Quarter and Year-End Results
14 April 2000
Prolong International Corporation Announces Fourth-Quarter and Year-End Results; Anticipates Profitable First-Quarter 2000
IRVINE, Calif.--April 13, 2000--Prolong International Corporation (Amex:PRL) today reported that in its fourth quarter ended December 31, 1999 it incurred a net loss of $4.5 million, or $0.16 per diluted share, on net sales of $3.0 million.In the fourth quarter of 1998 the Company reported a net loss of $1.8 million, or $0.07 per diluted share, on net sales of $6.1 million.
For the year ended December 31, 1999 the Company reported a net loss of $6.6 million, or $0.23 per diluted share, on net sales of $34.5 million, compared to net income of $420,000, or $0.02 per diluted share, on net sales of $35.0 million in 1998.
Contributing to the fourth-quarter loss were lower than expected sales of lubricants and appearance products attributable in part to a decision to significantly reduce print advertising and direct response television advertising. The move was taken because the Company was not satisfied with the efficiency of its television commercials in what was a slower than anticipated selling quarter. Other factors in the loss were increased inventory obsolescence reserves for non-performing or slow-moving inventory pursuant to a decision in the fourth quarter to focus future selling efforts on core products; reserves against certain other assets; and unanticipated legal expenses.
"Contributing to the loss for the year were expenditures associated with the Company's strategic program to expand its distribution channels while diversifying its product offerings," said Elton Alderman, president and CEO of Prolong International Corporation. "In addition to increased outlays for television air time during our product selling season, these expenditures included additional sales allowances and marketing commitments to major automotive aftermarket retailers and mass merchandisers -- expenses that are a necessary part of gaining shelf space in an intensely competitive marketplace. As we have noted in the past, however, the expansion of our distribution systems -- while costly in the near term -- is an essential investment in the Company's long-term success, and we enter 2000 with most of these costs behind us.
"Also affecting last year's financial performance were higher-than-anticipated expenses associated with the program to diversify the Company's product lines through the introduction of a new line of automotive appearance products, notably costs associated with producing and airing an infomercial that we were not able to debut until rather late in the selling season, and which did not perform to expectations."
Alderman also reported that the Company has instituted a program by which it expects to significantly reduce selling, marketing, general and administrative expenses. The new program includes lower promotional and sponsorship payments, reduced sales allowances, more focused direct response television marketing expenses, and a reduction in legal expenses, as well as an across-the-board review of all line items. "With most of the program already in place," said Alderman, "the Company expects to return to profitability in the first quarter of 2000.
"We also expect to benefit from our initiative to expand sales of our lubricant products (to date targeted primarily at retail buyers) into commercial and industrial markets. In addition, we are rolling out a very aggressive professional installer program to meet the demand for Prolong products by the do-it-for-me segment of the consumer market."
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
Three Months Ended Year Ended
December 31, December 31,
1999 1998 1999 1998
(unaudited) (unaudited) (audited) (audited)
Net sales $ 2,961,240 $ 6,121,539 $ 34,470,915 $ 35,032,689
Cost of sales 2,330,554 1,419,556 10,500,586 7,527,361
Gross profit 630,686 4,701,983 23,970,329 27,505,328
Selling and
marketing
expenses 4,944,795 5,438,147 25,850,474 19,838,689
General and
administrative
expenses 2,449,902 1,958,725 7,645,321 6,022,201
Research and
development
expenses 123,362 221,106 305,297 710,531
Other income
(expense) (154,949) (42,045) (443,224) (16,504)
Income (loss)
before taxes (7,042,322) (2,958,040) (10,273,987) 917,403
Provision
(benefit) for
income taxes (2,562,926) (1,171,130) (3,693,926) 497,890
Net income
(loss) ($ 4,479,396) ($ 1,786,910) ($ 6,580,061) $ 419,513
Net income (loss)
per common share
Basic ($ 0.16) ($ 0.07) ($ 0.23) $ 0.02
Diluted ($ 0.16) ($ 0.07) ($ 0.23) $ 0.02
Weighted average
common shares
Basic shares
outstanding 28,445,835 26,825,707 28,445,835 25,807,618
Diluted shares
outstanding 28,445,835 26,825,707 28,445,835 26,011,767
Consolidated Condensed Balance Sheet
December 31, December 31,
1999 1998
(audited) (audited)
Assets:
Cash and cash equivalents $ 1,094,779 $ 1,127,861
Accounts receivable, net 2,747,459 4,950,055
Inventories, net 2,171,728 2,915,249
Other current assets 2,112,886 2,760,139
Total current assets 8,126,852 11,753,304
Property and equipment, net 3,554,176 3,372,509
Intangible assets, net 7,036,670 7,543,354
Other assets 2,661,950 541,705
Total assets $21,379,648 $23,210,872
Liabilities and stockholders' equity
Accounts payable $ 2,843,843 $ 1,878,418
Accrued expenses and other current
liabilities 1,256,572 1,502,114
Loans payable bank 3,985,000 0
Total current liabilities 8,085,415 3,380,532
Notes payable, noncurrent 2,327,048 2,376,005
Total stockholders' equity 10,967,185 17,454,335
Total liabilities and stockholders'
equity $21,379,648 $23,210,872