SALINAS, Calif.--(BUSINESS WIRE)--Feb. 6, 2003--Monterey Pasta Company (Nasdaq:PSTA) today reported net income for the quarter ended December 29, 2002 of $860,000, or $0.06 per share, on net revenues of $15,254,000 based on 14.2 million primary and 14.5 million diluted shares outstanding. This compares with a net income of $1,273,000 for the quarter ended December 30, 2001 which resulted in earnings of $0.09 per share, based on 13.7 million primary and 14.4 million diluted shares outstanding. The 2002 net income results include a year-to-date adjustment for certain tax credits, while the 2001 net income was an adjusted number, which reflected taxation above statutory rates. Applying a consistent level of taxation to both years of approximately 40% results in proforma 2002 quarterly net income of $692,000 or $.05 per diluted share, while the proforma net income for 2001 would be $1,343,000 or $.09 per diluted share.
For the twelve months ended December 29, 2002, the Company reported net revenues of $61,679,000, yielding net income of $9,491,000 and earnings of $0.68 per share on 14.0 million primary shares outstanding, and $0.65 per share on 14.7 million diluted shares outstanding. This compares with net revenues for the twelve months ended December 30, 2001, of $56,987,000, with net income of $4,429,000, or earnings of $0.33 per share on 13.5 million primary and $.31 per share on 14.3 million diluted shares outstanding. The 2002 net income results include a one-time reversal of a deferred tax valuation account in the amount of $5.2 million. Applying a level of taxation to the 2002 net income, consistent with the 2001 rate of approximately 40%, results in a proforma year-to-date 2002 net income of $4,001,000 or $.27 per diluted share, which represents a 10% decrease from the 2001 results of $.31 per share.
Commenting on the results, Jim Williams, Chief Executive Officer and President, said, "We are happy to report our sixth consecutive profitable year, in spite of many challenges. One-time events including the unionization effort, which employees overwhelmingly rejected, and the search for a new President and transition expenses, impacted earnings per share by $.03. For the first time in five years sales growth was not double-digit, finishing at 8%. Among the factors responsible for the less than expected sales growth was a very slow economy, and slightly lower club store sales. In addition, an inventory system issue lasting over six months with our second largest customer had a substantial impact on club sales growth for the year and also effected the efficiency of promotional programs. The most significant sales and profit impact was to the second and fourth quarters."
Mr. Williams continued, "There were several significant good news items; first, retail sales, excluding the Emerald Valley Kitchen acquisition increased over 35%, and second, raw material costs are in great shape with dairy ingredients at very low levels, while the remainder of ingredients are close to historic levels. Third, the new plant expansion is complete and as sales grow in the future we are poised to be very cost-efficient."
Mr. Williams addressed the outlook for 2003 with these comments: "While growth rates over the next six months may be somewhat challenging, we are confident that the programs we are putting in place to increase same store-sales will pay dividends by the second half of the year. We are working on some distinctive new products, which are expected to have a significant impact on sales this year. These will be released around the beginning of the second quarter. In addition, we are working on innovative new label and package designs to enhance the impact of our product in the grocery case and foster increased consumer purchases. These new approaches will be staged throughout the next several months to maximize the impact, while minimizing the conversion expense. In summary, we believe the imperatives we are working on will provide the foundation to achieve the 10% annual sales growth target we communicated on December 17, as well as the $.31 to $.34 per share for 2003 earnings. However, more of the growth may be achieved in the last six months of the year.
Steve Brinkman, Chief Financial Officer, commented, "Our balance sheet is stronger than ever with nearly $7 million in our cash account, zero bank debt and excellent financial ratios, including a current ratio of 4.5 to 1. We are primed to move very quickly in the event a suitable acquisition presents itself."
Founded as a regional brand, Monterey Pasta now has national distribution in over 8,700 retail and club stores throughout the United States and selected regions of Canada, the Caribbean, Latin America, and Asia Pacific. Monterey Pasta manufactures USDA inspected, fresh gourmet refrigerated food products at its integrated 133,000 square foot corporate headquarters, distribution, and manufacturing facilities in Salinas, (Monterey County) CA.
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 current plant expansion program, risks associated with the timely and effective assimilation of the Emerald Valley Kitchen business, retention of key personnel and 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, its Quarterly Report on Form 10-Q for the first three Quarters of 2002, and its Proxy Statement filed June 17, 2002.