Prolong International Corp. Reports First-Quarter 2000 Results
11 May 2000
Prolong International Corp. Reports First-Quarter 2000 Results
IRVINE, Calif.--May 11, 2000--Prolong International Corp. (AMEX:PRL) today reported financial results for the quarter ended March 31, 2000.For the first quarter of 2000, the company reported net income of $640,800, or $0.02 per diluted share, on net sales of $7.8 million, compared with a net loss of $127,900, or $0.00 per diluted share, on net sales of $9.7 million in the same period a year ago.
Results reflect a slight increase in sales of lubricant products that was offset by a decrease of $1.7 million in sales of automotive appearance products compared with the first quarter of 1999, when substantial stocking orders at several major retailers coincided with the company's introduction of the new product line.
Gross profit was $6.0 million, or 77.7% of net sales, compared with gross profit of $7.1 million, or 72.7% of net sales, in the first quarter of 1999. The increase in gross margins was attributed primarily to a shift in product mix from appearance products to lubricants, which carry higher margins.
Elton Alderman, president and chief executive officer of Prolong International, said the company is pleased with the progress it has made in reducing overhead, both in dollar terms and as a percentage of sales.
"We have excellent products and a distribution system that is among the best in the industry; and with adjustments to manpower and the implementation of more cost-effective advertising and marketing programs that already have shown their worth, we believe that Prolong will have a profitable year," said Alderman.
"In addition to fine tuning the appearance products line, we anticipate further expansion of our core lubricants business into commercial, industrial and international markets. Also well under way is a program to enter the automotive service center and automobile dealership markets, where Prolong's products -- to date available primarily at retail or through direct-response television -- will now be offered in a full-service setting."
A decrease in selling and marketing expenses -- to $3.3 million, or 42.7% of net sales, from $5.6 million, or 57.2% of net sales, in the same period a year ago -- was credited primarily to lower expenses for endorsement and sponsorship payments, fewer promotional activities to enhance product awareness, lower expenditures for media and print advertising, and a decrease in purchases of television airtime.
General and administrative expenses were $1.4 million, or 18.4% of sales, compared with $1.7 million, or 17.0% of sales, in the first quarter of 1999, attributable primarily to a decrease in legal expenses.
Sales to retail distributors in the first quarter of 2000 were $6.9 million, or 88.9% of total sales, compared with $8.0 million, or 82.2% of total sales, for the same period a year ago. Direct-response television (DRTV) sales were $168,000, or 2.2% of total sales, for the most recent period compared with $1.1 million, or 10.8% of total sales, in the first quarter of 1999, a result of a strategic decision to evaluate other more cost-effective advertising programs. Other non-retail and international sales accounted for the balance of sales in the first quarters of 2000 and 1999.
PROLONG INTERNATIONAL CORP.
Consolidated Condensed Statements of Operations
Three Months Ended
March 31,
2000 1999
(unaudited) (unaudited)
Net sales $ 7,757,199 $ 9,749,872
Cost of sales 1,726,911 2,657,939
Gross profit 6,030,288 7,091,933
Selling and marketing expenses 3,312,551 5,573,895
General and administrative expenses 1,428,153 1,665,015
Other income (expense) (151,921) (48,914)
Income (loss) before taxes 1,137,663 (195,891)
Provision (benefit) for income taxes 496,843 (68,000)
Net income (loss) $ 640,820 $ (127,891)
Net income (loss) per common share
Basic $ 0.02 $ (0.00)
Diluted $ 0.02 $ (0.00)
Weighted average common shares
Basic shares outstanding 28,445,835 28,445,835
Diluted shares outstanding 28,574,054 28,445,835
Consolidated Condensed Balance Sheet
March 31, December 31,
2000 1999
(unaudited) (audited)
Assets:
Cash and cash equivalents $ 752,120 $ 1,094,779
Accounts receivable, net 5,308,212 2,747,459
Inventories, net 2,407,629 2,171,728
Other current assets 2,463,367 2,112,886
Total current assets 10,931,328 8,126,852
Property and equipment, net 3,458,718 3,554,176
Intangible assets, net 6,909,999 7,036,670
Other assets 530,106 2,661,950
Total assets $ 21,830,151 $ 21,379,648
Liabilities and stockholders' equity:
Accounts payable $ 3,127,102 $ 2,843,843
Accrued expenses and other
current liabilities 1,642,486 1,256,572
Line of credit 3,100,000 3,985,000
Total current liabilities 7,869,588 8,085,415
Notes payable, noncurrent 2,329,559 2,327,048
Total stockholders' equity 11,631,004 10,967,185
Total liabilities and
stockholders' equity $ 21,830,151 $ 21,379,648