<PAGE>
________________________________________________________________________________
________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 10-Q
____________________
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO______________.
COMMISSION FILE NUMBER 0-27116
PYRAMID BREWERIES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WASHINGTON 91-1258355
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
91 SO. ROYAL BROUGHAM WAY
SEATTLE WA 98134
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (206) 682-8322, EXT. 214
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __.
Common Stock, par value of $.01 per share: 8,211,453 shares of Common Stock
outstanding as of June 30, 1998
Pages 1 of 13 sequentially numbered pages.
1
<PAGE>
PYRAMID BREWERIES INC.
FORM 10-Q
FOR THE QUARTERLY AND SIX MONTH PERIOD ENDED JUNE 30, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Balance Sheets
June 30, 1998 and December 31, 1997...................................... 3
Statements of Operations
Three Month and Six Month periods ended June 30, 1998 and 1997........... 4
Statements of Cash Flows
Six Month periods ended June 30, 1998 and 1997........................... 5
Notes to Financial Statements.............................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................ 8
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................................... 10
SIGNATURE.................................................................. 11
EXHIBIT INDEX.............................................................. 12
Exhibit 27................................................................. 13
</TABLE>
2
<PAGE>
PART I
ITEM 1 -- FINANCIAL STATEMENTS
PYRAMID BREWERIES INC.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 4,888,787 $ 5,393,251
Accounts receivable, net 1,856,205 1,291,681
Inventories 1,124,320 1,110,756
Income taxes receivable -- 250,071
Current portion of deferred income
taxes 657,864 364,662
Prepaid expenses and other 468,567 562,602
----------- -----------
Total current assets 8,995,743 8,973,023
----------- -----------
Fixed assets, net 28,087,186 28,600,075
Deferred income taxes 367,188 101,449
Other assets 909,596 1,072,613
----------- -----------
Total assets $38,359,713 $38,747,160
=========== ===========
CURRENT LIABILITIES:
Accounts payable $ 888,783 $ 703,926
Accrued expenses 1,127,279 941,303
Refundable deposits 493,165 474,700
Restructuring reserve 11,106 354,148
----------- -----------
Total current liabilities 2,520,333 2,474,077
Deferred rent 692,599 573,589
----------- -----------
Total liabilities 3,212,932 3,047,666
----------- -----------
Preferred stock, 10,000,000 shares authorized,
none issued -- --
Common stock, $.01 par value; 40,000,000 shares authorized,
8,211,453 and 8,207,438 shares issued and outstanding 82,115 82,074
Additional paid-in capital 35,023,738 35,014,551
Retained earnings 40,928 602,869
----------- -----------
Total stockholders' equity 35,146,781 35,699,494
----------- -----------
Total liabilities and stockholders' equity $38,359,713 $38,747,160
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
PYRAMID BREWERIES INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Gross sales.................................. $7,510,552 $8,386,375 $13,719,500 $14,647,501
Less excise taxes............................ 487,556 560,912 847,323 1,017,895
---------- ---------- ----------- -----------
Net sales.................................. 7,022,996 7,825,463 12,872,177 13,629,606
Cost of sales................................ 5,182,756 5,722,243 9,940,339 10,001,376
---------- ---------- ----------- -----------
Gross margin............................... 1,840,240 2,103,220 2,931,838 3,628,230
Selling, general and administrative
expenses.................................... 2,024,850 2,040,104 4,182,040 4,201,799
---------- ---------- ----------- -----------
Operating (loss) income...................... (184,610) 63,116 (1,250,202) (573,569)
Other income, net............................ 324,279 45,933 408,764 131,035
---------- ---------- ----------- -----------
Income (loss) before income taxes............ 139,669 109,049 (841,438) (442,534)
Benefit (provision) for income taxes......... (66,282) (40,784) 279,497 148,682
---------- ---------- ----------- -----------
Net income (loss)............................ $ 73,387 $ 68,265 $ (561,941) $ (293,852)
========== ========== =========== ===========
Basic and diluted net income (loss) per share $ 0.01 $ 0.01 $ (0.07) $ (0.03)
========== ========== =========== ===========
Weighted average common shares
outstanding................................. 8,211,055 8,207,935 8,210,156 8,206,296
========== ========== =========== ===========
Beer barrels shipped......................... 29,200 33,300 53,000 61,500
========== ========== =========== ===========
Soda barrels shipped......................... 7,500 7,200 13,300 8,500
========== ========== =========== ===========
Total barrels shipped........................... 36,700 40,500 66,300 70,000
========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
4
<PAGE>
PYRAMID BREWERIES INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1998 1997
------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Loss $ (561,941) $ (293,852)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,442,647 1,357,991
Loss (gain) on sale of fixed assets (1,971) 4,187
Deferred income taxes (558,941) 196,715
Realized loss on investments -- 153,313
Deferred rent 119,010 146,077
Restructuring reserve (343,042) --
Changes in operating assets and liabilities:
Accounts receivable (564,524) (473,588)
Inventories (13,564) (245,385)
Prepaid expenses and other (117,654) (330,925)
Income taxes receivable 250,071 (364,011)
Accounts payable and accrued expenses 370,833 (292,185)
Refundable deposits 18,465 159,156
----------- ----------
Net cash provided by operating activities 39,389 17,493
----------- ----------
INVESTING ACTIVITIES
Acquisition of Thomas Kemper Soda Company -- (575,802)
Acquisitions of fixed assets (746,224) (5,498,771)
Proceeds from sales of fixed assets 193,143 269,443
Purchases of investments -- (5,705,317)
Redemptions and sales of investments -- 12,167,790
----------- ----------
Net cash (used in) provided by investing activities (553,081) 657,343
----------- ----------
FINANCING ACTIVITIES
Proceeds from the sale of common stock 9,228 9,731
Principal payments on Thomas Kemper
Soda long-term debt -- (186,240)
Principal payments on Thomas Kemper
Soda capital leases -- (196,149)
----------- ----------
Net cash provided by (used in) financing activities 9,228 (372,658)
----------- ----------
Increase (decrease) in cash and cash
equivalents (504,464) 302,178
Cash and cash equivalents at beginning of period 5,393,251 300,487
----------- ----------
Cash and cash equivalents at end of period $ 4,888,787 $ 602,665
=========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
PYRAMID BREWERIES INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION:
Pyramid Breweries Inc. (the "Company"), a Washington corporation was
incorporated in 1984 and is engaged in the brewing, marketing and selling of
craft beers and premium sodas and in restaurant operations. The Company
operates breweries in Seattle, Washington and Berkeley, California. The Company
sells its beer through a network of selected independent distributors primarily
in Washington, Oregon and California under the Pyramid and Thomas Kemper brands.
Pyramid manufactures a line of hand-crafted sodas under the Thomas Kemper Soda
Company label which are sold primarily in Washington, Oregon and California. As
of June 30, 1998, the Company's products were distributed in 32 states, the
District of Columbia and Canada. The Company operates two restaurants adjacent
to its breweries under the Pyramid Brewery & Alehouse brand.
The accompanying condensed financial statements have been prepared by the
Company, without audit, in accordance with generally accepted accounting
principles for interim financial information and pursuant to the rules and
regulations of the Securities and Exchange Commission. With the exception of
the historical information contained herein, the matters described may contain
forward-looking statements that involve risks and uncertainties, including those
described under the caption entitled "Risk Factors and Forward-Looking
Statements" in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, filed with the Securities and Exchange Commission, and
elsewhere in the Company's periodic reports. In the opinion of management, the
accompanying unaudited financial statements contain all material adjustments,
consisting only of those of a normal recurring nature, considered necessary for
a fair presentation of the Company's financial position, results of operations
and cash flows at the dates and for the periods presented. The operating
results for the interim periods presented are not necessarily indicative of the
results expected for the full year.
2. COMPREHENSIVE INCOME:
The Company has adopted the Statement of Financial Accounting Standard No.
130, "Reporting Comprehensive Income" effective January 1, 1998. There were no
significant items of comprehensive income in the six month periods ended June
30, 1998 and 1997.
3. INVENTORIES:
JUNE 30, DECEMBER 31,
1998 1997
---------- ------------
Raw Materials........... $ 627,266 $ 558,591
Finished Goods.......... 497,054 552,165
---------- ----------
$1,124,320 $1,110,756
========== ==========
Raw materials primarily include ingredients, flavorings and packaging
materials, as well as beer held in fermentation prior to the filtration and
packaging process. Finished goods include primarily product ready for shipment,
as well as promotional merchandise held for sale.
6
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4. FIXED ASSETS:
JUNE 30, DECEMBER 31,
1998 1997
----------- ------------
Brewery and retail equipment..... $17,063,607 $16,528,319
Furniture and fixtures........... 734,869 617,009
Leasehold improvements........... 13,638,244 13,594,538
Assets held for sale............. 387,484 559,690
----------- -----------
31,824,204 31,299,556
Less accumulated depreciation.... (3,737,018) (2,699,481)
----------- -----------
$28,087,186 $28,600,075
=========== ===========
5. THOMAS KEMPER SODA COMPANY ACQUISITION:
In March 1997, the Company acquired substantially all of the operating
assets and assumed certain liabilities of Thomas Kemper Soda Company, a
manufacturer of premium sodas located in Seattle, Washington. The total purchase
price was $1.7 million. The purchase price was paid with approximately $562,000
in cash during the first quarter of 1997, approximately $14,000 in cash during
the second quarter of 1997 and the assumption of approximately $1,138,000 of
liabilities at the date of acquisition. The acquisition was accounted for using
the purchase method of accounting. Accordingly, the purchased assets and assumed
liabilities were recorded at their estimated fair value at the date of
acquisition. The excess purchase price over the estimated fair values of the
assets acquired was $802,513 and will be amortized over 10 years. The results of
the acquired business have been included in the statement of income since the
date of acquisition.
6. COMMITMENTS AND CONTINGENCIES:
In June 1996, the Company, certain of its directors, former directors and
officers, were named as defendants in a securities class action lawsuit,
Steckman v. Hart Brewing Inc., et al., Case No. 961077, U.S. District Court,
Southern District of California. The lawsuit alleged that the prospectus for
the Company's December 1995 initial public offering failed to disclose certain
material information. In June 1998, the court entered an order and judgment
dismissing this lawsuit. The Company's insurance carrier refunded expenditures
on legal costs up to the deductible limit on the policy of $250,000. This was
offset by non-related legal expenses incurred in this quarter.
The Company is involved from time to time in claims, proceedings and
litigation arising in the ordinary course of business. The Company does not
believe that any such claim, proceeding or litigation, either alone or in the
aggregate, will have a material adverse effect on the Company's financial
position or results of operations.
7
<PAGE>
Item 2 -- Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain selected
unaudited operating data, expressed as a percentage of net sales.
SELECTED UNAUDITED OPERATING DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
--------------------------
% OF % OF
1998 NET SALES 1997 NET SALES
------------ ---------- ----------- ---------
<S> <C> <C> <C> <C>
Gross sales.......................... $7,510,552 $8,386,375
Less excise taxes.................... 487,556 560,912
----------- ----------
Net sales............................ 7,022,996 100.0 7,825,463 100.0
Cost of sales........................ 5,182,756 73.8 5,722,243 73.1
----------- --- --------- ---
Gross margin......................... 1,840,240 26.2 2,103,220 26.9
Selling, general and administrative.. 2,024,850 28.8 2,040,104 26.1
----------- --- --------- ---
Operating loss....................... (184,610) (2.6) 63,116 0.8
Other income, net.................... 324,279 4.6 45,933 0.6
----------- --- --------- ---
Income before income taxes........... 139,669 2.0 109,049 1.4
Provision for income taxes.......... (66,282) (1.0) (40,784) (0.5)
----------- --- --------- ---
Net income........................... $ 73,387 1.0 $ 68,265 0.9
=========== === ========== ===
Basic and diluted net income per
share............................... $ 0.01 $ 0.01
=========== ==========
Weighted average common shares
outstanding......................... 8,211,055 8,207,935
=========== ==========
OPERATING DATA (IN BARRELS):
Beer barrels shipped................. 29,200 33,300
=========== ==========
Soda barrels shipped................. 7,500 7,200
=========== ==========
Total barrels shipped................ 36,700 40,500
=========== ==========
Annual beer production capacity
at period end....................... 172,000 267,000
=========== ==========
SIX MONTHS ENDED JUNE 30,
% OF % OF
1998 NET SALES 1997 NET SALES
------------ ---------- ------------ -----------
Gross sales.......................... $ 13,719,500 $ 14,647,501
Less excise taxes.................... 847,323 1,017,895
----------- -----------
Net sales............................ 12,872,177 100.0 13,629,606 100.0
Cost of sales........................ 9,940,339 77.2 10,001,376 73.4
----------- ----- ----------- -----
Gross margin........................ 2,93l,838 22.8 3,628,230 26.6
Selling, general and administrative.. 4,182,040 32.6 4,201,799 30.8
----------- ----- ----------- -----
Operating loss....................... (1,250,202) (9.8) (573,569) (4.2)
Other income, net.................... 408,764 3.2 131,035 1.0
----------- ----- ----------- -----
Loss before income taxes............. (841,438) (6.6) (442,534) (3.2)
Benefit for income taxes............. 279,497 2.2 148,682 1.0
----------- ----- ----------- -----
Net loss............................. $ (561,941) (4.4) $ (293,852) (2.2)
=========== ===== =========== =====
Basic and diluted net loss per
share............................... $ (0.07) $ (0.03)
=========== ===========
Weighted average common
shares outstanding.................. 8,210,156 8,206,296
=========== ===========
OPERATING DATA (IN BARRELS):
Beer barrels shipped................. 53,000 61,500
=========== ===========
Soda barrels shipped................. 13,300 8,500
=========== ===========
Total barrels shipped................ 66,300 70,000
=========== ===========
Annual beer production capacity
at period end....................... 172,000 267,000
=========== ===========
</TABLE>
8
<PAGE>
QUARTER ENDED JUNE 30, 1998 COMPARED TO QUARTER ENDED JUNE 30, 1997
Gross Sales. Gross sales decreased by 10.4% to $7,511,000 for the second
quarter ended June 30, 1998 from $8,386,000 in the same quarter of the prior
year. This decrease in gross sales was mainly the result of a decline in
wholesale craft beer sales and lower retail sales from the alehouses. These
decreases were partially offset by increased quarterly sales of Thomas Kemper
Sodas to $988,000 from $956,000 for the same quarter of the prior year.
Wholesale craft beer sales decreased 12.3% to $5,019,000 for the second quarter
of 1998 from $5,725,000 in the same quarter of the prior year which resulted
primarily from a 12.3% decline in wholesale craft beer sales to 29,200 barrels,
down from 33,300 barrels in the same quarter of the prior year. Retail sales
decreased 12.3% to $1,595,000 from $1,818,000 for quarters ended June 30,1998
and 1997, respectively. The product mix shifted slightly to a higher percentage
of draft sales (37% for the quarter ended June 30, 1998 versus 36% for the same
quarter of the prior year) which resulted in lower sales dollars per barrel
sold. Management expects the trend of a lower level of wholesale draft beer
sales to persist at least for the remainder of 1998. The Seattle Alehouse
business has been adversely affected by lower attendance at Seattle Mariner
baseball games and by the construction of the new baseball stadium adjacent to
the Alehouse. The construction may be more disruptive over the next year and
business may continue to be adversely impacted. However, the Alehouse should
benefit when the new stadium opens in July of 1999. Business at the Berkeley
Alehouse was also lower than the prior year due in part to poor weather in the
Northern California which has affected the restaurant business.
Excise Taxes. Excise taxes decreased to 6.9% of net sales for the second
quarter ended June 30, 1998 from 7.2% of net sales in the same quarter of the
prior year. The decrease in excise taxes as a percentage of net sales was due to
lower average federal excise tax rate resulting from lower beer barrels shipped
during the quarter ended June 30,1998.
Gross Margin. Gross margin decreased to $1,840,000 for the second quarter
ended June 30, 1998 from $2,103,000 in the same quarter of the prior year. Gross
margin as a percentage of net sales declined to 26.2% for the second quarter
ended June 30, 1998 from 26.9% for the same quarter of the prior year. This
small decrease as a percentage of net sales was due primarily to the lower level
of beer sales.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $2,024,850 and $2,040,104 for the quarters ended
June 30, 1998 and 1997, respectively; however, selling, general and
administrative expenses increased as a percent of net sales to 28.8% from 26.1%
for the same quarter of the prior year. Current quarter selling, general and
administrative expenses included non-recurring costs related to new packaging
and promotional items for the Thomas Kemper beer brand and the upgrading of the
company's computer systems.
Other Income. Other income increased to $324,000 for the second quarter
ended June 30, 1998 from $46,000 for the second quarter of the prior year. The
increase in other income was due primarily to the successful outcome of a long-
standing securities lawsuit which resulted in the Company's insurers refunding
expenditures on legal costs of $250,000 in the current quarter ended June 30,
1998.
Net Income. Net income for the quarter ended June 30,1998 was $73,000, an
increase from $68,000 reported for the second quarter of the prior year. The
increase in net income was due mainly to the refunded expenditures on legal
costs of $250,000.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Gross Sales. Gross sales decreased 6.3% to $13,720,000 for the six month
period ended June 30, 1998 from $14,648,000 in the same six month period of the
prior year. This decrease in gross sales was mainly the result of a decline in
wholesale craft beer sales and lower retail sales from the alehouses. These
decreases were partially offset by increased sales of Thomas Kemper Sodas,
acquired in March of 1997, to $1,756,000 from $1,125,000 for the same period of
the prior year. Wholesale craft beer sales decreased 13.7% to $9,069,000 for the
six month period ended June, 1998 from $10,508,000 in the same period of the
prior year which resulted primarily from a 13.8% decline in wholesale craft beer
sales to 53,000 barrels, down from 61,500 barrels in the same period of the
prior year. Retail sales decreased 5.0% to $3,045,000 from $3,206,000 for six
months ended June 30,1998 and 1997, respectively. The product mix shifted
slightly to a lower percentage of draft sales (37% for the six months ended June
30, 1998 versus 38% for the same period of the prior year) which resulted in
slightly higher sales dollars per barrel sold. Management expects the trend of a
lower level of wholesale draft beer sales to persist at least for the remainder
of 1998. The Seattle Alehouse business has been adversely affected by lower
attendance at Seattle Mariner baseball games and by the construction of the new
baseball stadium adjacent to the Alehouse. The construction may be more
disruptive over the next year and business may continue to be adversely
impacted. However, the Alehouse should benefit when the new stadium opens in
July of 1999. Business at the Berkeley Alehouse was also lower than the prior
year due in part to poor weather in the Northern California which has affected
the restaurant business.
Excise Taxes. Excise taxes decreased to 6.6% of net sales for the six
month period ended June 30, 1998 from 7.5% of net sales for the same six month
period of the prior year. The decrease in excise taxes as a percentage of net
sales was due primarily to lower average federal excise tax rate resulting from
lower beer barrels shipped and a greater proportion of soda sales which do not
bear excise tax during the six month period ended June 30,1998.
Gross Margin. Gross margin decreased to $2,932,000 for the six month
period ended June 30, 1998 from $3,628,000 for the same six month period of the
prior year. Gross margin as a percentage of net sales declined to 22.8% for the
six month period ended June 30, 1998 from 26.6% for the same six month period of
the prior year. This decrease as a percentage of net sales was due to the lower
level of beer sales.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $4,182,000 and $4,202,000 for the six month periods
ended June 30, 1998 and 1997, respectively; however, selling, general and
administrative expenses increased as a percent of net sales to 32.6% from 30.8%
for the same six month period of the prior year. This increase was the result
of a sustained level of advertising and promotional expenditures compared to a
lower level of net sales.
Other Income, net. Other income, net increased to $409,000 for the six
month period ended June 30,1998 from $131,000 for the same six month period of
the prior year. The increase in other income was due primarily to the successful
outcome of a long-standing securities lawsuit which resulted in the Company's
insurers refunding expenditures on legal costs of $250,000 in the current six
month period ended June 30, 1998.
Net Loss. The net loss for the six month period ended June 30, 1998 was
($562,000), as compared to net loss of ($294,000) reported for the same period
of the prior year. The increase in net loss was primarily the result of a lower
gross margin from wholesale beer sales.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, the Company had working capital of $6,475,000 compared to
$6,499,000 at December 31, 1997. The working capital balance resulted primarily
from the net unused proceeds of the Offering and cash flow from operations.
Net cash provided by operating activities during the period ended June 30,
1998 was approximately $40,000 due primarily to the net income for the quarter.
Net cash used in investing activities for the period ended June 30, 1998 was
$553,000. Funds were used mainly to purchase system software and to complete the
installation of soda production equipment at the Berkeley Brewery.
The Company has a $15.0 million line of credit (the Line of Credit) for
short-term operating needs. The Line of Credit revolves through April 30, 1999,
during which time the payments are interest only. At that date, any outstanding
balance will be due in full. Borrowings under the Line of Credit will accrue
interest, at the Company's option, at either the bank's prime rate or at LIBOR
plus 100 basis points. Up to $5 million of the line of credit may be used to
finance acquisitions. Amounts used to finance acquisitions may be converted to a
four-year fully amortizing term loan, with an additional option to fix the rate
of interest at the bank's prime rate plus 125 basis points.
Future capital requirements may vary depending on such factors as the cost
of acquisition of businesses, brands, and real estate in the markets selected
for future expansion. Capital expenditures in 1998 are expected to be less than
1997 expenditures. Planned projects include the continued upgrading of brewery
equipment and facilities in the Seattle Brewery and the installation of a new
computer system. While there can be no assurance that current expectations will
be realized and plans are subject to change upon further review, the Company
believes that its cash reserves, together with cash from operations and
borrowings under the Line of Credit, will be sufficient for the Company's
working capital needs during 1998.
The Company's future cash requirements and cash flow expectations are
closely related to its expansion plans. The Company generally expects to meet
future financing needs through cash on-hand, cash flow from operations and, to
the extent required and available, additional bank borrowings.
RISK FACTORS AND FORWARD LOOKING STATEMENTS
Pyramid Breweries Inc. does not provide forecasts of future financial
performance. However this report does contain forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, which are
subject to the "safe harbor" created by that section. There are numerous
important factors that could cause results to differ materially from those
anticipated by some of the statements made by the Company. Investors are
cautioned that all forward-looking statements involve a high degree of risk and
uncertainty. Additional information concerning those and other factors is
contained in the Company's Securities and Exchange Commission filings including
its Form 10-K for the year ended December 31, 1997.
PART II. -- OTHER INFORMATION
ITEM 5. OTHER INFORMATION
A shareholder who intends to present a proposal at the Company's next
annual meeting, other than pursuant to Rule 14a-8 under the Securities Exchange
Act of 1934, must provide the Company notice of such intention by at least April
7, 1999, or mangement of the Company will have discretionary voting authority at
the 1999 annual meeting with respect to such proposal without any discussion of
the matter in the Company's proxy statement.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
The following exhibits are filed as part of this report.
3.1* Amended and Restated Articles of Incorporation
3.2* Amended and Restated Bylaws
27 Financial Data Schedule
*Incorporated by reference to the exhibits filed as part of the Company's
Registration Statement on Form S-1 (File No. 33-97834).
(B) REPORTS ON FORM 8-K
None filed during the quarter ended June 30, 1998.
ITEMS 1,2,3 and 4 OF PART II ARE NOT APPLICABLE AND HAVE BEEN OMITTED
10
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Seattle,
State of Washington, on August 13, 1998.
PYRAMID BREWERIES INC.
By: /s/ RICHARD DENMARK
-------------------------------
Richard Denmark, Vice President
and Chief Financial Officer
DATE: August 13, 1998
11
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
-----------
27 Financial Data Schedule
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
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