PacificHealth Laboratories' revenue rises 10% in 2009

PacificHealth Laboratories, Inc. (OTCBB: PHLI), a leading nutrition company, today reported financial results for the three months and year ended December 31, 2009.

Year Ended December 31 Financial Results

For the year ended December 31, 2009, revenues increased 10% to $7,995,194 compared to $7,235,991 for the same period in 2008. The Company recorded a net loss of $1,676,124, or $0.11 per share, for the year 2009 compared to a net loss of $1,994,353, or $0.15 per share, for the same period in 2008. In the fourth quarter of 2009, the Company made the decision to forgo marketing its FORZE GPS™ weight management product line as the Company was unable to generate enough sales in 2009 to make this product line viable in the foreseeable future. As a result, the Company recorded $81,050 in non-cash restructuring charges consisting of writing off property and equipment specific to the marketing efforts of FORZE GPS and also recorded a $491,172 reserve for inventory as the value of this inventory may never be realized. As a result of a change in estimate relating to revenue recognition in connection with sales to a major customer, in 2009 the Company recognized revenues of approximately $279,000 and reduced inventory by approximately $129,000 that was previously recorded as deferred revenue and inventory, respectively. In the third quarter of 2008, the Company restructured its operations to better support its base sports performance business. As part of this restructuring, a number of positions within the Company were eliminated and certain market sectors were exited. As a result, the Company recorded $472,069 in non-cash restructuring charges and reserved $84,669 of SATIATRIM^® finished goods as obsolete in the third quarter of 2008. In the fourth quarter of 2008, the Company also wrote off an additional $117,028 of finished goods and raw materials as obsolete.

Fred Duffner, President of PacificHealth said, “PHLI focused on two key areas in 2009. First, we focused on our core businesses with an emphasis on the sports specialty channel to drive new users of our Endurance products. This resulted in improving revenue by 10% during a challenging economic year with fourth quarter growth of 24%. We believe this will provide the foundation to continue to expand our consumer base and support future growth for the company. Second was the launch of innovation under the Forze GPS brand. We realized that PHLI could not support the continued cost of entry into this highly competitive market at this time and will therefore adjust our marketing investment for 2010.”

Three-Month Financial Results

Revenues in the fourth quarter of 2009 increased 24% to $1,198,230 compared to $969,991 for the same period in 2008. The Company recorded a net loss of $1,109,486, or $0.07 per share, compared to a net loss of $726,371, or $0.05 per share, for the same period in 2008. As noted above, in the fourth quarter of 2009, the Company recorded a restructuring charge of $81,050 and recorded a $491,172 reserve for inventory. In the fourth quarter of 2008, the Company also wrote off $117,028 of finished goods and raw materials as obsolete.