Salinas, (Monterey County) California-based Monterey Pasta Company (MPC) has posted net income for the Q1 ended 31 March 2002 of US$1.98m, compared to US$1.22m for the Q1 ended 1 April 2001.
Q1 net revenues reached US$16.06m, up from US$14.18m year on year. The 2002 net income number reflects a 12% 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 about 12% of net income because of the expected benefit from utilisation 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 US$1.38m.
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 US$16.92m for the Q1 up 15% on the US$14.73m for Q1 2001. After reclassification of the selling expenses, Q1 2002 sales were US$16.06m, an increase of 13% from the adjusted 2001 Q1 sales of US$14.18m.
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 Q1 2002, compared with 22.7% in Q1 2001. Operating income was 14.2%, up .4% compared with 13.8% for Q1 2001. 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%.
CEO and president Lance Hewitt 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 about 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 favourable weather conditions during the Q1 with warmer than normal temperatures over much of the nation, we still turned in a 15% sales growth compared with Q1 2001 sales before the selling expense reclassifications.”
“The record operating income,” continued Hewitt, “was achieved even with a significant investment in selling expenses including product demonstrations, which increased 37% compared with Q1 2001 to reflect support for the spring new product rollout and new distribution.”