Sylvan Inc. Announces Fourth Quarter and Year-End Results
SAXONBURG, Pa., March 26 /PRNewswire-FirstCall/ -- Three-Month
Comparison Sylvan Inc. (NASDAQ:SYLN) today reported net income of
$700,000, or $.14 per share, for the quarter ended December 28,
2003, as compared with $1,360,000, or $.25 per share, for the
fourth quarter of 2002. Consolidated operating income for the 2003
quarter decreased 58%, when compared with the corresponding 2002
quarter, reflecting an 11% decrease in operating incomefrom the
Spawn Products Segment, a 5% decrease in operating income from the
Fresh Mushrooms Segment and a 116% increase in unallocated
corporate expenses. Unallocated corporate expenses for the quarter
ended December 28, 2003 were $2,261,000, as compared with
$1,049,000 for the fourth quarter of 2002. The increase in
corporate expenses related to the company's previously announced
proposed merger between an affiliate of Snyder Associated
Companies, Inc. and Sylvan. The costs were composed primarilyof
fees for legal and financial advisory services. Unallocated
corporate expenses also included a net periodic pension expense of
$167,500 during the quarter from a pension plan of a former
subsidiary, as compared with a net periodic pension benefit of
$37,500 for the corresponding 2002 quarter. Segment Information
Three-Month Comparison (In thousands) Spawn Products Segment Fresh
Mushrooms Segment 2003 2002 % Change 2003 2002 % Change Net Sales
$17,873 $17,185 +4 $7,657 $6,758 +13 Operating Income 2,576 2,893
-11 836 879 -5 Spawn Products Segment Net sales of spawn and
spawn-related products increased 4%. The effect of a weaker U.S.
dollar on overseas sales increased net sales on a quarter-over-
quarter comparison by $1.7 million. Spawn product sales volume
decreased 2%, with a 2% decrease in both the American and overseas
markets. Sales of disease-control agents and nutritional
supplements decreased 15% and accounted for 16% of Sylvan's
consolidated net sales for the fourth quarter. The overseas U.S.
dollar-equivalent selling price was 16% higher during the fourth
quarter of 2003, as compared with the corresponding quarter of
2002, primarily due to the weakening of the U.S. dollar. Overseas
local currency selling prices decreased approximately 2%, due to
the loss of sales in higher-priced territories. The selling price
in the Americas decreased 4%, as a result of adjustments to the
pricing structure of some products in order to compete with the
lower-priced spawn offerings of other suppliers. Operating expenses
increased by $1.3 million, or 7%, when compared with the fourth
quarter of 2002, due to the effect of the weaker U.S. dollar.
Within operating expenses, cost of sales was 56% of net sales, as
compared with 54% for the corresponding 2002 quarter. Spawn
production in overseas markets was 3% lower than for the fourth
quarter of 2002, spreading costs that are primarily fixed in nature
over fewer units. Operating income, as a percentage of net sales,
was 14% for the fourth quarter of 2003, as compared with 17% for
the corresponding 2002 quarter. Operating income was positively
impacted by the weakening of the U.S. dollar, with an effect of
approximately $275,000. The company's bioproducts division recorded
net sales of $835,000 for the fourth quarter of 2003, as compared
with $325,000 for the fourth quarter of 2002. Bioproducts operating
income for the fourth quarter of 2003 was $120,000, as compared
with $5,000 for the fourth quarter of 2002. Fresh Mushrooms Segment
Net sales of fresh mushrooms increased to $7.7 million during the
2003 fourth quarter from $6.8 million for the corresponding quarter
of 2002. The number of pounds sold decreased less than 1% and the
average selling price per pound increased 7%. However, the average
selling price per pound included a price adjustment of $0.4 million
recorded in the fourth quarter of 2003. The adjustment was made in
accordance with the provisions of the marketing agreement that the
company has with its third-party marketer of its mushrooms and it
related to pounds sold over the past two years. Without this
adjustment, the average selling price for the fourth quarter of
2003 increased less than 1%, when compared with the fourth quarter
of 2002. The Fresh Mushrooms Segment's cost of sales was $5.5
million, or 72% of net sales, for the quarter ended December 28,
2003, as compared with $4.6 million, or 69%, for the 2002 fourth
quarter. The increase in the cost of sales percentage was related
primarily to increased purchases of fresh mushrooms from the
satellite farms for immediate resale to its third-party marketer.
Quincy also experienced higher employee benefit and utility costs
during the fourth quarter of 2003. The segment's operating income
for the quarter was $836,000, or 11% of net sales, and was 5% lower
than the amount reported for the fourth quarter of 2002. Year-End
Comparison Net income for the year ended December 28, 2003 was
$2,839,000, or $.55 per share, as compared with $4,669,000, or $.86
per share, for 2002. Consolidated operating income for 2003
decreased 37%, when compared with 2002. Operating income from the
Spawn Products Segment decreased 13% and operating income from the
Fresh Mushrooms Segment decreased 1%. Unallocated corporate
expenses for 2003 were $6,353,000, a 45% increase when compared
with $4,386,000 for 2002. This increase in corporate expenses is
attributed to the activities of the special committee of the
company's board of directors and the related proposed merger, along
with increased pension expense, as detailed below. During 2003, the
company incurred costs of approximately $1,400,000 related to the
activities of the company's special committee of independent
directors. Approximately $200,000 in comparable costs were incurred
in 2002 in the course of a comparable committee's evaluation of
strategic plans and business alternatives. The company recorded a
net periodic pension expense of $670,000 during 2003 from a pension
plan of a former subsidiary, as compared with a net periodic
pension benefit of $150,000 for 2002. This expense increase was
related to poor plan asset performance and a decrease in the
discount rate that was used to calculate the plan's benefit
liabilities. Segment Information Year-End Comparison (In thousands)
Spawn Products Segment Fresh Mushrooms Segment 2003 2002 % Change
2003 2002 % Change Net Sales $66,768 $63,996 +4 $29,544 $25,517 +16
Operating Income 9,186 10,567 -13 2,849 2,879 -1 Spawn Products
Segment Net sales of spawn and spawn-related products increased 4%.
The effect of a weaker U.S. dollar on overseas sales increased net
sales on a year-over-year comparison by $6.0 million. Spawn product
sales volume decreased 5%, with a7% decrease in overseas markets
and a less than 1% decrease in the Americas. Most of the volume
decrease in the overseas markets resulted from a reduction in sales
in France, due to challenging competitive conditions, and in the
United Kingdom, due to mushroom farm closures. Sales of
disease-control agents and nutritional supplements decreased 3% and
accounted for 16% of Sylvan's consolidated net sales for the year.
The overseas U.S. dollar-equivalent selling price was 17% higher
during 2003, as compared with 2002, primarily due to the weakening
of the U.S. dollar. Overseas local currency selling prices
decreased approximately 2%. The selling price in the Americas
decreased 5% as a result of adjustments to the pricing structure of
some products in order to compete with the lower- priced spawn
offerings of other suppliers. Operating expenses for 2003 increased
$4.8 million, or 8%, when compared with 2002, due to the effect of
a weaker U.S. dollar. Within operating expenses, cost of sales was
57% of net sales, as compared with 54% for the corresponding 2002
period. Spawn production in overseas markets for 2003 was 10% lower
than for 2002, spreading costs that are primarily fixed in nature
over fewer units. Inventory levels were also reduced in response to
the lower sales volumes. Operating income, as a percentage of net
sales, was 14% for 2003, as compared with 16.5% for 2002. Operating
income was positively impacted by the weakening of the U.S. dollar,
with an effect of approximately $880,000. The company's bioproducts
division recorded net sales of $2.7 million for the year ended
December 28, 2003, as compared with $1.3 million for 2002.
Operating income for 2003 was $584,000, as compared with an
operating loss of $267,000 for 2002. Fresh Mushrooms Segment Net
sales of fresh mushrooms increased during 2003 to $29.5 million, as
compared with $25.5 million for 2002. The number of pounds sold
increased 5% and the average selling price per pound increased 2%.
Quincy experienced improved production yields on a square-foot
basis, due to the addition of new satellite growing facilities. The
cost of sales in the Fresh Mushrooms Segment was $21.5 million, or
73% of net sales, for 2003, as compared with $17.6 million, or 69%
of netsales, for 2002. The increase in the cost of sales percentage
relates primarily to increased purchases of fresh mushrooms from
the satellite farms for immediate resale to the third-party
marketer. Quincy also experienced higher employee benefit and
utility costs during 2003. The segment's operating income for 2003
was $2.8 million, or 10% of net sales, and was 1% lower than the
amount reported for 2002. CEO Comments Sylvan Chairman and CEO
Dennis C. Zensen commented, "Our business in the fourth quarter
continued the same trends that we experienced during the first
three quarters of 2003. Our bioproducts division performed well and
Quincy Farm's performance was stable, but the performance of our
spawn products operations continues to be hampered by mushroom farm
closures and very competitive market conditions." Proposed Merger
As previously announced on November 16, 2003, Sylvan entered into a
definitive agreement with Snyder Associated Companies, Inc. of
Kittanning, Pennsylvania, which will result in a merger between
Sylvan and a Snyder affiliate. The Sylvan board of directors, upon
the unanimous recommendation of its special committee of
independent directors, approved the merger and the agreement. The
merger is subject to certain conditions, including the approval by
a majority of the shareholders of Sylvan. Sylvan expects to be able
to convene a meeting of its shareholders for that purpose in the
second quarter of 2004 and, if approved by Sylvan's shareholders,
the transaction is expected to be completed shortly thereafter. The
merger agreement currently provides for a termination date of May
1, 2004 if the merger has not been completed by that date. The
company intends to discuss an extension of this date with Snyder
Associated Companies, Inc. About Sylvan A leader in fungal
technology, Sylvan Inc. is a preeminent worldwide producer and
distributor of products for the mushroom industry, specializing in
spawn (the equivalent of seed for mushrooms) and other
spawn-relatedproducts and services, and is a major grower of fresh
mushrooms in the United States. Conference Call Sylvan will not
conduct a conference call to discuss results for the fourth quarter
of 2003. SYLVAN INC. AND SUBSIDIARIES Condensed Consolidated
Statements of Income (In thousands except share data) Three Months
Ended Twelve Months Ended Dec. 28, 2003 Dec. 29, 2002 Dec. 28, 2003
Dec. 29, 2002 (Unaudited) (Unaudited) Net sales $25,197 $23,610
$94,988 $88,192 Operating costs and expenses: Cost of sales 15,498
13,865 59,467 52,109 Selling, administration, research and
development 7,042 5,649 23,660 21,381 Depreciation 1,506 1,374
6,179 5,642 24,046 20,888 89,306 79,132 Operating income 1,151
2,722 5,682 9,060 Interest expense 336 499 1,560 1,865 Other income
(expense) 297 (63) 417 (3) Income before income taxes 1,112 2,160
4,539 7,192 Income tax expense 359 746 1,498 2,406 Minority
interest 53 54 202 117 Net income $700 $ 1,360 $ 2,839 $ 4,669
Diluted earnings per share $0.14 $0.25 $0.55 $0.86 Equivalent
diluted shares 5,191,580 5,334,800 5,163,852 5,454,700 Condensed
Consolidated Balance Sheets (In thousands) Assets Dec. 28, Dec. 29,
Liabilities Dec. 28, Dec. 29, 2003 2002 and Equity 2003, 2002 Cash
and equivalents $5,849 $5,624 Short-term debt $110 $223 Accounts
receivable, net 15,901 14,399 Accounts payable 5,739 3,895
Inventories 12,514 11,425 Other current Other current liabilities
4,812 5,729 assets 3,336 2,989 Total current Total current
liabilities $10,661 $9,847 assets $37,600 $34,437 Long-term debt
33,548 38,162 Other long-term liabilities 10,438 9,794 Fixed
assets, Minority net 61,134 58,787 interest 2,195 1,741 Other
assets 15,131 13,582 Shareholders' equity 57,023 47,262 Total Total
liabilities assets $113,865 $106,806 and equity $113,865 $106,806
DATASOURCE: Sylvan Inc. CONTACT: Don Smith of Sylvan Inc.,
+1-724-352-7520 Web site: http://www.sylvaninc.com/
Copyright
Sylvan (NASDAQ:SYLN)
Historical Stock Chart
From Jul 2024 to Jul 2024
Sylvan (NASDAQ:SYLN)
Historical Stock Chart
From Jul 2023 to Jul 2024