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VLI Corp. Hopeful of First Profitable Year in History

October 09, 1987|VICKY CLEPPER | Times Staff Writer

VLI Corp. reported a profit of nearly $500,000 for the first nine months of 1987, raising the possibility that the Irvine-based company could achieve a profitable year for the first time in its 12-year history.

"Our No. 1 goal this year is profitability, and this positions us well to achieve our goal," said Robert A. Elliott, chairman and chief executive officer. He termed this a "turnaround year" for the personal-products company, which so far has posted just three profitable quarters.

VLI, whose major product is the Today contraceptive sponge and which has just introduced a condom to its line, reported net income of $423,330 for the third quarter, compared with a loss in the same period last year of $697,573. Sales for the quarter were at a record level of $6.5 million, up 28% from $5.1 million a year earlier.

For the first nine months, VLI reported net income of $459,638, compared with a loss of $3.3 million in the first nine months of 1986. Sales for the period rose 24% to $16.8 million from $13.5 million.

VLI's only other profitable quarters came in the first three months of 1984 and the first period of the current year. Heavy advertising and marketing costs have been blamed in the past for the company's losses. This year's profits can be attributed to a continuation of cost-cutting efforts and to additional sales, Elliott said.

To one analyst, the results may prove a bargaining chip in securing an acquisition partner. An announced merger with American Home Products was jeopardized last month when VLI's patent on its premier product, the Today sponge, was allowed to lapse. The fate of the merger rests with VLI's ability to regain the patent, which was lost when the company failed to pay a $150 renewal fee.

"The fact that they have generated a little profit will probably help consolidate their negotiating stance," said Jeff Kilpatrick, president of Newport Securities.

VLI, Elliott said, is proceeding on the assumption that the merger will go through, although the company doesn't expect a ruling on its patent-reinstatement petition until next month.

During the third quarter, VLI added two new items to its line of personal products: the condoms and an ovulation-predictor kit. Elliott said VLI is confident it will be able to "capture a significant portion" of the $160-million condom market.

The company also makes a lubricating agent and distributes a pregnancy test kit that, Elliott said, has a 7% market share after eight months in the marketplace.

James McCamant, editor of the Medical Technology Stock Letter, said VLI is "making progress. It's good to see that they are on track and doing what they said they were going to do."

As for the possibility of a profitable 1987, he added: "They certainly have the capacity to do it."

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