NEWS RELEASE
Published on
Exhibit 99
[MIDWEST GRAIN PRODUCTS LOGO AND ADDRESS]
NEWS RELEASE
FOR IMMEDIATE RELEASE: MIDWEST GRAIN REPORTS SIGNIFICANT
FIRST QUARTER EARNINGS IMPROVEMENT
ATCHISON, Kan., Nov. 6, 2001--Ladd Seaberg, president and chief executive
officer of Midwest Grain Products, Inc. (MWGP/Nasdaq) today announced that the
company's earnings performance in the first quarter of fiscal 2002 represented
"a significant positive turnaround" versus the same period the prior year.
Results for the quarter, which ended Sept. 30, show net income of $2,444,000, or
30 cents per common share, on sales of $54,294,000. That compares to the net
loss of $395,000, or 5 cents per common share, on sales of $58,297,000 that the
company experienced in the first quarter of fiscal 2001.
The first quarter earnings gain resulted primarily from strong demand for
the company's fuel grade alcohol, commonly known as ethanol, combined with
reduced energy costs and increased sales of specialty, value-added wheat
proteins, according to Seaberg. Income recognized from a previously announced
United States Department of Agriculture program to support the development of
products and markets for value-added wheat protein and wheat starch products
also contributed to the improvement, he noted.
Although high demand for Midwest Grain's alcohol products occurred mainly
in the fuel grade market, sales of food grade alcohol for industrial
applications also experienced modest growth compared to a year ago. A previously
announced $2.1 million distillery improvement project at the company's Atchison
plant is underway and is scheduled for completion in the third quarter of fiscal
2002. The project involves the installation of equipment that is designed to
enhance both food grade and fuel grade alcohol production capabilities.
Additionally, plans are in place for the installation of a new feed drier at
Midwest Grain's distillery operations in Pekin, Ill. Distillers feed is the
principal by-product of the company's alcohol production process. Scheduled to
be completed by the end of fiscal 2002 at a cost of $5 million, the new drier is
expected to improve the Pekin plant's alcohol production efficiencies.
Last month, Midwest Grain's Board of Directors approved an $8.3 million
expansion project that is designed to strengthen production and sales
capabilities for the company's specialty wheat proteins. The expansion will
occur at the company's Atchison plant and is slated for completion by July,
2002. This project will involve the installation of additional processing and
drying equipment for the production of specialty wheat proteins for bakery,
pasta and noodle and related food markets both domestic and foreign.
As previously announced, the cost of the protein expansion project is
expected to be offset by funds from the USDA program for value-added wheat
protein and wheat starch products. Implemented this past June and administered
by the USDA's Commodity Credit Corporation, the program was granted in lieu of
an extended quota on imports of foreign wheat gluten. Over the life of the
program, which is scheduled to end May 31, 2003, Midwest Grain is eligible for
nearly $26 million of the program total of $40 million. For the first 12 months
of the program, approximately $17.3 million has been allocated to the company.
The remaining amount is expected to become available starting next June. The
funds are to be used for capital, research, marketing and promotional costs
related to value-added wheat protein and starch products. Funds received will be
recognized in income during the period in which they are expended for a
permitted purpose. However, funds that are used for capital expenditure projects
will be recognized in income over the periods during which those projects are
depreciated. Funds are not intended to be used to reduce production and
marketing-related costs for commodity vital wheat gluten and wheat starches
which could extend the U.S. industry's participation in these markets.
-more-
ADD 1--MIDWEST GRAIN REPORTS
In recent years, Midwest Grain has created a variety of value-added
wheat-based ingredients for both edible and non-edible applications. These
include a line of textured wheat proteins called Wheatex, which enhances the
texture and flavor of vegetarian and extended meat products; a series of wheat
protein isolates marketed under the Arise brand name and used to improve dough
systems and pasta products; over 20 specialty and modified wheat proteins and
starches for personal care systems; and polymers made from a wheat protein/wheat
starch compound for use in the manufacture of biodegradable plastic-like
products.
"These ingredients as a whole continue to experience growth and hold great
promise for the future," Seaberg said. "We anticipate expanding these lines and
making additions to them in our mission to continually provide customers with
superior products derived from grain and other natural ingredients."
Due to increased pricing pressures from subsidized European Union
producers, the company has elected to reduce its production of vital wheat
gluten, the protein portion of flour that is used principally in many types of
bread. "Since the expiration of the import quota this past June, those pressures
have increased substantially," Seaberg said. "Therefore," he added, "unless
future conditions warrant otherwise, we plan to maintain a reduced presence in
the more traditional commodity-related wheat gluten and wheat starch markets. At
the same time, we will concentrate on growing our value-added products in the
specialty wheat protein and wheat starch areas."
Dramatic spikes in natural gas prices which drove up the company's energy
costs through most of fiscal 2001 continued to subside in the current year's
first quarter. "As I have stated previously, we expect our energy costs to
remain at lower, more reasonable levels in the coming months," Seaberg said. "I
must also reiterate that we have developed an effective risk management program
to analyze and respond to energy-related issues and events that could affect our
operations."
Saying that he feels the company's first quarter performance "is indicative
of the kind of progress Midwest Grain is capable of achieving," Seaberg
expressed optimism about the potential for further improvements ahead. "That
potential can be effectively realized," he said, "with the continuation of more
normal energy costs and reasonable grain costs combined with high demand for
alcohol products and growth in sales of our specialty wheat proteins and
starches."
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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