SALINAS, Calif.--(BUSINESS WIRE)--May 2, 2002--
- -- Twentieth Straight Profitable Quarter; Quarterly Operating Income Sets New Record
- -- E.P.S at $.14; After Adjusting Net Income for Tax Rate Comparable to Q1 2001, E.P.S. at $.10
- -- Gross Profit at 41% Before Adjustment for New Accounting Rules Requiring Reclassification of Certain Selling Expenses to Reduce Net Revenues; 38% Gross Profit after Reclassification
Monterey Pasta Company (Nasdaq:PSTA) today reported net income for the quarter ended March 31, 2002 of $1,986,000, or $0.14 per share, on net revenues of $16,062,000, based on 14.6 million diluted shares outstanding. This compares with a net income of $1,225,000 for the quarter ended April 1, 2001, which resulted in earnings of $0.09 per share, on net revenues of $14,180,000, based on 14.2 million diluted shares outstanding. The 2002 net income number reflects a 12.0% combined State and Federal tax rate for book purposes, while the 2001 before tax income number was taxed for book purposes at 38.5%. The Company's tax liability for 2002 is expected to be approximately 12% of net income because of the expected benefit from utilization of net operating loss carryforwards. Adjusting the 2002 income before tax for the same the rates applicable in 2001 results in comparable net income of $1,388,000, and earnings per share of $.10, an increase of $.01 per share when compared with first quarter 2001.
Sales before reclassification of certain selling expenses as required by Emerging Issues Task Force Issue 01-09 ("Accounting for Consideration Given by a Vendor to a Customer or a Reseller of the Vendor's Products.") were $16,927,000 for the quarter as compared with $14,732,000 for first quarter 2001, an increase of 15%. After reclassification of the selling expenses, first quarter 2002 sales were $16,062,000, an increase of 13% from the adjusted 2001 first quarter sales of $14,180,000.
Gross profit was 37.9% compared with 36.4% for the prior year, an improvement of 1.5%. Selling general and administrative expenses were 23.7% in first quarter 2002, compared with 22.7% in first quarter 2001. Operating income was 14.2%, up .4% compared with 13.8% for first quarter 2001. To enable the investor to better understand the impact of the reclassifications in analyzing current versus historical performance, a table has been attached to this press release. The table presents the financial results for first quarters 2002 and 2001, both before and after reclassification of selling expenses. On a comparable basis with 2001, before reclassification of selling expenses, gross profit was 41.1% compared with 38.8% the prior year, Selling general and administrative expenses were 27.6% of sales compared with 25.6% the prior year, and operating income was 13.4% compared with 13.2%.
Commenting on the results, Lance Hewitt, Chief Executive Officer and President, said, "We are very pleased to record our highest quarterly operating income in the history of the Company. This was made possible by another excellent gross profit, which was approximately the same as the prior quarter, at 41% before the reclassification of selling expenses. We are also pleased with our sales. In spite of less than favorable weather conditions during the quarter with warmer than normal temperatures over much of the nation, we still turned in a 15% sales growth compared with first quarter 2001 sales before the selling expense reclassifications."
"The record operating income," continued Mr. Hewitt, "was achieved even with a significant investment in selling expenses including product demonstrations, which increased 37% compared with first quarter 2001 to reflect support for the spring new product rollout and new distribution."
Founded as a regional brand, Monterey Pasta now has national distribution in over 6,700 retail and club stores throughout the United States and selected regions of Canada. Monterey Pasta manufactures USDA inspected, healthy, fresh gourmet refrigerated food products at its integrated 130,000 square foot corporate headquarters, distribution, and manufacturing facilities in Salinas, (Monterey County) Calif.
This press release contains forward-looking statements that involve a number of uncertainties and risks that could cause actual results to differ materially from those discussed in the forward-looking statements. Risks that could cause actual results to differ materially from those discussed in the forward-looking statements, include risks associated with timely and cost-effective introduction of new products in the coming months, risks associated with accomplishing the anticipated results of the recently announced plant expansion program, retention of key personnel and retention of key management, the risks inherent in food production, and intense competition in the market in which the Company competes. Future projections are based on the assumption that we will continue to sell in existing retail and club stores and will continue to add new stores. For additional information regarding these and other risks, please read the Company's Annual Report on Form 10-K, for the year ended December 30, 2001 and its 2001 Proxy.