Pyramid Breweries will initiate dividend payment and stock buyback

Modern Brewery Age, Dec 27, 1999

Given what the company called "successful cost reduction efforts, a strong cash position, and solid growth prospects," the Board of Directors of Pyramid Breweries Inc. last week declared the company's first regular quarterly cash dividend. The $.04 per common share dividend will be payable January 14, 2000 to shareholders of record on December 30, 1999.

The Board of Directors also authorized a stock buyback plan to repurchase up to $2 million of Pyramid's outstanding common stock from time to time on the open market.

"Paying a cash dividend, along with implementing a stock repurchase program, reflects our confidence in Pyramid's future prospects. These actions also reflect our commitment to improve returns for Pyramid shareholders," said Martin Kelly, president and chief executive officer. "At The current price, we believe Pyramid shares are significantly undervalued."

"We are confident Pyramid has the financial capacity to fund both internal and external growth opportunities," Kelly added. "Our strategy for the future includes growing our beverage portfolio in our core western markets, expanding our Alehouse Division through development of new properties and selected acquisitions, and continuing to improve our cost structure." Kelly also noted, "Historically, Pyramid has competed in the 'craft beer' category. Today, we are participating in a much larger, and more vibrant, specialty beer and beverage category. This broader consumer arena provides us with greater opportunities to develop our brands." Kelly joined Pyramid Breweries in August 1999 as chief operating officer, and was appointed CEO on December 9, 1999.

"We believe that a regular cash dividend, combined with the authorized stock purchase and the company's growth strategy add up to a compelling reason to own our stock," said Kelly.

Richard Denmark, v.p. and CFO noted, "At the current stock price, the full repurchase of $2 million in stock would equal about 18% of the company's approximately 8.2 million outstanding common shares, although we are not obligated to repurchase the entire amount authorized by the board. Recent sales trends in all three of our business segments (specialty beer, soda, and alehouses) have been positive, and we have made good progress in reducing Pyramid's cost structure," said Denmark.

"These trends, combined with our positive operating cash flow, significant cash on hand, no debt, and strong brands, have Pyramid Breweries well positioned to prosper in the new Millennium," he said.