Sylvan Inc. (Nasdaq: SYLN) today reported net income of $1.2 million, or $.21 per share, for the quarter ended April 1, 2001, as compared with $1.4 million, or $.25 per share, for the first quarter of 2000. Operating income decreased to $2.4 million from $2.8 million. The spawn products operating income was $2.9 million before corporate overhead, which met company expectations, and the fresh mushrooms operating income declined from $.7 million to $.5 million.

    Segment Information
(in thousands)
Spawn Products Segment Fresh Mushrooms Segment
2001 2000 % Change 2001 2000 % Change
Net Sales $15,625 $16,703 -6 $5,561 $6,096 -9
Operating Income 2,898 3,248 – 11 517 701 -26

Spawn product volume decreased by 5% from an extremely strong first quarter of 2000, reflecting a 13% decrease in the Americas and a 1% increase in Sylvan’s overseas markets. Most of the decrease in the Americas was due to the bankruptcy of a major customer in the United States. Sales of spawn- related products (nutritional supplements and disease-control agents) increased by 7% from period to period. Fresh mushrooms operating income decreased by 26% due to a 4% reduction in pounds sold, a lower average selling price, and the high fixed-cost nature of the business.

Sylvan Chairman and CEO Dennis C. Zensen commented, “The first quarter results from our spawn products segment met our expectations. Production inconsistencies at Quincy resulted in lower-than-anticipated operating profit for the first quarter, but output was back on plan in April. We continue to expect overall double-digit earnings per share growth for 2001.”

A leader in fungal technology, Sylvan Inc. is a preeminent worldwide producer and distributor of mushroom products, specializing in spawn (the equivalent of seed for mushrooms) and other spawn-related products and services, and is a major grower of fresh mushrooms in the United States.

The references made to the future performance of the company are “forward- looking statements” and are based on the company’s plans and its best estimate of future operating conditions, but they are inherently uncertain. Events could turn out to be significantly different from what is expected, depending upon such factors as pricing or product initiatives of the company’s competitors, loss of a major customer, competitive conditions in the U.S. mushroom market in general, or changes in currency and exchange risks. 

                         Sylvan Inc. and Subsidiaries

Condensed Consolidated Statements of Income
(Unaudited, in thousands – except share data)

Three Months Ended

April 1, 2001 April 2, 2000

Net sales $20,881 $22,459

Operating income 2,424 2,758

Interest expense 617 653

Other income (expense) (48) (52)

Income before income taxes 1,759 2,053

Net income 1,177 1,414

Diluted earnings per share 0.21 0.25

Diluted weighted average number of
shares 5,552,575 5,690,424

Condensed Consolidated Balance Sheet
April 1, 2001
(Unaudited, in thousands)

Assets Liabilities and Equity

Cash and equivalents $5,200 Short-term debt $2,349
Accounts receivable, net 11,308 Accounts payable 4,141
Inventories 11,094 Other current
liabilities 3,126
Other current assets 5,480 Total current
liabilities $9,616
Total current assets $33,082

Long-term debt 38,628
Other long-term
liabilities 6,319
Fixed assets, net 52,214 Minority interest 1,613
Other assets 18,354 Shareholders’
equity 47,474

Total liabilities
Total assets $103,650 and equity $103,650