Sylvan (NASDAQ:SYLN)
Historical Stock Chart
From Jul 2019 to Jul 2024
![Click Here for more Sylvan Charts. Click Here for more Sylvan Charts.](/p.php?pid=staticchart&s=N%5ESYLN&p=8&t=15)
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/