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Exhibit 99
FOR IMMEDIATE RELEASE: MIDWEST GRAIN REPORTS FIRST QUARTER RESULTS
ATCHISON, Kan., November 2, 2000--Midwest Grain Products, Inc. (MWGP)
reported today that higher energy costs combined with non-recurring expenses
related to the start-up of new distillery equipment at the company's Atchison,
Kan., plant had a negative impact on earnings in the first quarter of fiscal
2001. However, the company expects profitability to return in the second
quarter, according to Ladd Seaberg, president and chief executive officer.
For this year's first quarter, which ended Sept. 30, the company
incurred a net loss of $395,000, or 5 cents per share, on sales of $58,297,000.
For the same period the prior year, the company had net income of $751,000, or 8
cents per share, on sales of $54,975,000. The company's earnings before
interest, taxes, depreciation and amortization in the current year's first
quarter was $2,967,000 compared to $5,009,000 in the first quarter of fiscal
2000.
"Despite the disappointing start in fiscal 2001, I remain highly
optimistic about our ability to show positive earnings as the year progresses,"
Seaberg said. "Furthermore," he added, "I maintain great confidence in our
long-term growth strategies, which focus on strengthening our position as the
leading producer and marketer of value-added proteins and starches derived from
wheat."
Seaberg noted that the recent addition of Mike Trautschold as executive
vice president of marketing and sales is already proving to be "a sound move"
toward reaching the company's goals. Trautschold, who was hired by Midwest Grain
in September, previously held key marketing positions at Schwan's Sales
Enterprises, ConAgra, Inc., and Oscar Mayer, a division of Kraft General Foods.
"Mike brings a vast amount of experience to this newly created position at
Midwest Grain," Seaberg said. "His astute awareness and understanding of market
dynamics, his outstanding managerial and analytical skills, and his ability to
develop solid action plans are all qualities that will help move our sales and
marketing programs to higher levels of success."
The increased energy costs, which the company experienced in the first
quarter, were caused by a dramatic rise in natural gas prices. Since then,
natural gas prices have declined modestly. In addition, the company presently is
using less expensive fuel oil to satisfy a major portion of its total energy
needs at its Atchison plant. The installation of new distillery equipment at the
Atchison plant consisted principally of new distillation columns to replace
older units. "While the entire plant was temporarily shut down during the final
installation of this new equipment in late August, our operational efficiencies
have since returned to their more desired levels," Seaberg said. "In fact," he
went on, "our alcohol production efficiencies have improved rather noticeably as
planned, and we are now able to provide the food grade beverage and industrial
alcohol markets with an even higher purity, high quality product."
Seaberg said the distillery equipment came on line just as the company
began to experience heightened demand in the beverage sector. "The timing of
this project could not have been better," he said. "Because we took the
necessary steps when we did, we are now in a great position to meet the
increased needs of the market." Additionally, he said, demand for the company's
fuel grade alcohol has risen even more sharply, raising production levels and
selling prices in the current quarter. The heightened demand for fuel grade
alcohol, or ethanol as it is commonly known, has resulted partially from the
Environmental Protection Agency's (EPA) proposal to phase out MTBE, a
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synthetically-derived fuel oxygenate that has shown to be harmful to
groundwater.
Demand for the company's specialty wheat proteins continues to show
gradual improvement. However, first quarter sales of the company's vital wheat
gluten decreased compared to the same period a year ago due to a lull in demand
and resulting pricing pressures in that market. According to Seaberg, those
pressures could have been more drastic in the quarter had President Clinton not
decided to allocate imports of foreign wheat gluten on a quarterly rather than
an annual basis with the start of the third year of a three-year-long quota on
June 1. The President additionally added Poland to the list of countries which
are subject to the quota after determining that dramatically increased gluten
imports from that nation "have impaired the effectiveness" of the quota. In the
12-month period prior to June 1, 1998, when the quota was implemented, less than
500,000 pounds of wheat gluten entered the U.S. from Poland. In the second year
of the quota, which ended May 31, 2000, that amount rose to 13.1 million pounds,
or nearly 8 percent of all imports.
As previously announced, a dispute panel of the World Trade
Organization (WTO) has challenged the U.S. safeguards decision under which the
quota was implemented. The WTO challenge is being appealed by the U.S. Trade
Representative in a process that could extend through December, 2000.
"Meanwhile, the ruling has no impact on the quota," Seaberg noted. "Therefore,
we expect conditions in the wheat gluten market to remain unchanged at this
time."
Seaberg reiterated that conditions continue to "look highly positive
and encouraging" for the company's value-added wheat proteins and starches.
"These exciting products remain on a good upward growth spiral, among them our
unique series of dough enhancement and conditioning systems for frozen and baked
breads," he said. "Our value-added, wheat-based ingredients represent the
cornerstone of our future, a future which currently looks very bright, thanks as
well to the improvements we are experiencing in our alcohol markets, our
improved efficiencies, strengthened marketing efforts and relatively low raw
material costs for grain."
Seaberg also announced that a new three-year labor agreement with the
company has been ratified at the company's Pekin, Ill., plant by Local 4D of the
United Food and Commercial Workers International Union. The new agreement is in
effect through Oct. 31, 2003. A three-year contract with the union's local at
the company's Atchison plant was ratified in September, 1999.
This news release contains forward-looking statements as well as historical
information. Forward-looking statements are identified by or are associated with
such words as "intend," "believe," "estimate," "expect," "anticipate,"
"hopeful," "should," "may" and similar expressions. They reflect management's
current beliefs and estimates of future economic circumstances, industry
conditions, company performance and financial results and are not guarantees of
future performance. The forward- looking statements are based on many
assumptions and factors, including those relating to grain prices, gasoline
prices, energy costs, product pricing, competitive environment and related
marketing conditions, operating efficiencies, access to capital and actions of
governments. Any changes in the assumptions or factors could produce materially
different results than those predicted and could impact stock values.
