PRESS RELEASE
Published on
Exhibit 99
[Midwest Grain Products Logo and Address]
News Release
FOR IMMEDIATE RELEASE: MIDWEST GRAIN REPORTS THIRD
QUARTER RESULTS
ATCHISON, Kan., May 8, 2001--Midwest Grain Products, Inc. (MWGP/NASDAQ)
reported today that while abnormally high energy costs had a negative impact on
the company's earnings for the third quarter of fiscal 2001, conditions
currently are much improved.
As anticipated in a previous report, skyrocketing natural gas prices caused
energy costs to soar in the quarter, which ended March 31. "However, although
still higher than they were a year ago, those costs are down from their peak
winter levels, helping pave the way for profitability in the fourth quarter,"
said Ladd Seaberg, president and chief executive officer. "Furthermore," he
said, "we are taking measures through our risk management program to better
protect against possibilities for future severe hikes in natural gas prices."
The company's third quarter results showed a net loss of $218,000, or 3 cents
per share, on sales of $55,434,000. That compares to net income of $1,607,000,
or 18 cents per share, on sales of $57,656,000 for the same period the prior
year. For the first nine months of fiscal 2001, the company had net income of
$1,111,000, or 13 cents per share, on sales of $172,220,000, compared to net
income of $3,921,000, or 42 cents per share, on sales of $172,593,000 for the
first nine months of fiscal 2000.
Decreased sales of the company's vital wheat gluten, the protein portion of
flour that is used heavily in many types of breads, was another factor that
contributed to the third quarter downturn, according to Seaberg. "We reduced
gluten production due to increased pricing pressures from subsidized European
Union (E.U.) producers," Seaberg said. "Because we are not experiencing any
improvement in this situation at present, we are maintaining a reduced but
steady production level," he added. Seaberg also emphasized that without the
existing quota on imports of wheat gluten, conditions in the U.S. market would
have deteriorated even more significantly due to much greater shipments of
artificially low priced gluten from the E.U.
The three-year-long quota, which went into effect on June 1, 1998, expires at
the end of this month. However, a two-year extension of the quota has been
unanimously recommended by the U.S. International Trade Commission. The
recommendation followed a request by the Wheat Gluten Industry Council of the
U.S. and is based on grounds that through circumvention and transshipments, E.U.
producers effectively prevented the domestic industry from receiving the full
extent of relief that the current quota intended. Action on the recommendation
now rests with the President, who has until May 31 to issue a decision.
"Granting extended relief would not only be justified, but would demonstrate
that this White House administration is a steadfast proponent of fair trade as
well as free trade, is supportive of small domestic industries such as ours, and
is genuinely interested in the economic well-being of rural America," Seaberg
said. "On the other hand, to deny the extension would be to deny U.S. businesses
the rights and means to correct trade inequities wrought by highly subsidized
and highly protected foreign competition," he added.
"The U.S. wheat gluten industry supports the idea of free trade for wheat
gluten and its co-product wheat starch," Seaberg said. "If the E.U. would open
its markets for these products, the quota could be dropped. However, as it now
stands, a complex subsidy scheme allows E.U. producers to send excess supplies
of low priced product into the U.S. at will, while using extraordinarily high
tariff barriers to prevent outside competition from entering their markets."
Seaberg explained that in pursuing the quota extension, the company "simply
is seeking time that was originally allotted to grow our sales of value-added
wheat proteins as well as wheat starch products to increasingly substantial
levels, and thereby offset the impact of the E.U.'s lopsided and government
provided competitive advantages in the traditional gluten market."
Third quarter sales of specialty wheat proteins, which range from dough
system enhancers, to personal care ingredients and bio-polymers, maintained
steady momentum and are showing strong signs of more accelerated growth in the
current quarter. Sales of wheat starch fell some from the same time a year ago,
but presently are strengthening as the result of increased demand. "We have made
much progress in both of these categories," Seaberg said. "Furthermore, the very
solid and aggressive marketing plans that we have in place should enable us to
continue to realize steady growth of these exciting products."
Midwest Grain's acquisition of an extrusion plant in Kansas City, Kan., this
past February boosts the company's plans for increased production and marketing
of its Wheatex products, a line of specialty textured wheat proteins that
enhance the flavor and texture of vegetarian and extended meat products. The
company has also dedicated a portion of the facility, which is operated as a
subsidiary called Kansas City Ingredient Technologies, to the production of its
wheat-based polymers.
As previously announced, the purchase of the Kansas City operation has
allowed the company to forego earlier plans to construct a Wheatex plant, a
project that would not have been completed until January or February of 2002.
The 80,000 square foot facility also offers additional opportunities for the
future production of Midwest Grain's specialty wheat protein and wheat starch
products, according to Seaberg.
Strengthened demand for the company's alcohol products pushed up third
quarter sales in that area compared to a year ago. "To keep Midwest Grain at the
technological forefront in the alcohol distillation industry, our Board of
Directors has just approved a $2.1 million distillery improvement project at our
Atchison plant," Seaberg announced. "The funds," he said, "will be used to
install equipment that should enhance both our food grade and fuel grade alcohol
production capabilities." The project is expected to be completed by early in
the third quarter of fiscal 2002.
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
or government officials. Any changes in the assumptions or factors could produce
materially different results than those predicted and could impact stock values.
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