Fungal technology leader Sylvan Inc. has reported net income of US$1.8m, or US$.32 per share (diluted), for the quarter ended 30 December 2001, as compared with US$2.4m, or US$.42 per share (diluted), for the quarter ended 31 December 2000.

The Q4 of 2000 included a one-time tax benefit of US$0.5m, or US$.09 per share, arising out of the merger of two of the company's subsidiaries.

Net sales for the Q4 of 2001 were US$22.1m, as compared with US$21.8m for the 2000 Q4. Spawn product volume decreased 3%, reflecting a 14% decrease in the Americas and a 3% increase in Sylvan's overseas markets. Average selling prices decreased 1% in the Americas and increased 1% in Sylvan's overseas markets. Sales of disease- control agents and nutritional supplements increased 1% and accounted for 17% of Sylvan's consolidated net sales. Operating income from the company's fresh mushroom business increased 44% to US$738,000, driven by a 6% increase in pounds sold. Mushroom average selling prices were equivalent to those of the prior year's Q4.

Sylvan also reported net income of US$5.8m, or US$1.05 per share (diluted), for the FY compared to US$6.7m, or US$1.18 per share (diluted) year on year. The 2000 amount includes a one-time tax benefit of US$0.5m, or US$.09 per share. Net sales for 2001 were US$85.9m, comparable to the US$85.9m for the prior year. Spawn product volume decreased 4%, reflecting a 16% decrease in the Americas and a 4% increase in Sylvan's overseas markets. Average selling prices decreased 4% in Sylvan's overseas markets due to the effect of a stronger US dollar and decreased less than 1% in the Americas.

The strengthening of the US dollar effectively reduced 2001 net sales by US$2.7m and 2001 operating income by US$225,000, as compared with 2000. Sales of disease-control agents and nutritional supplements increased 13% and accounted for 17% of Sylvan's consolidated net sales. Operating income from the company's fresh mushroom business increased 24% to US$2.6m in 2001, from US$2.1m in 2000. Pounds sold increased 3% and the average selling price per pound increased 1%.

Sylvan Chairman and CEO Dennis C. Zensen commented: "The excellent performance in our Fresh Mushrooms Segment and the success of the related satellite operations are encouraging. Our European spawn operations performed to expectations during the year, while our North American spawn unit experienced weaker results due to a significant number of mushroom farms closing, which reduced the size of the available market.

"The remaining mushroom farms are comparatively stronger than last year and are receiving a higher price for their product.

"For 2002, Sylvan expects to continue to generate strong cash flow. This should enhance our ability to repurchase Sylvan shares, pay down debt and invest in opportunities for long-term growth."