-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KVAGJGNYg3qd5Ez0Ujg9S14kfOS1Mtar3ATw5e82H3FrcCt/IJfpPB9P7mjxqPVI bTzgs7rMnkbHSeN639PH+Q== 0000916002-97-000056.txt : 19971117 0000916002-97-000056.hdr.sgml : 19971117 ACCESSION NUMBER: 0000916002-97-000056 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MIDWEST GRAIN PRODUCTS INC CENTRAL INDEX KEY: 0000835011 STANDARD INDUSTRIAL CLASSIFICATION: GRAIN MILL PRODUCTS [2040] IRS NUMBER: 480531200 STATE OF INCORPORATION: KS FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-17196 FILM NUMBER: 97718454 BUSINESS ADDRESS: STREET 1: 1300 MAIN ST CITY: ATCHISON STATE: KS ZIP: 66002 BUSINESS PHONE: 9133671480 MAIL ADDRESS: STREET 1: 1300 MAIN STREET CITY: ATCHISON STATE: KS ZIP: 66002 10-Q 1 MIDWEST GRAIN PRODUCTS, INC. FORM 10Q - 9-30-97 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 30, 1997 - Commission File No. 0-17196 MIDWEST GRAIN PRODUCTS, INC. (Exact Name of Registrant as Specified in Its Charter) KANSAS 48-0531200 ------ ---------- (State or Other Jurisdiction of IRS Employer Incorporation or Organization) Identification No. 1300 Main Street, Atchison, Kansas 66002 ---------------------------------------- (Address of Principal Executive Offices and Zip Code) (913) 367-1480 -------------- (Registrant's Telephone Number, Including Area Code) 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 the filing requirements for at least the past 90 days. X YES NO --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common stock, no par value 9,700,172 shares outstanding as of November 1, 1997. INDEX PART I. FINANCIAL INFORMATION Page Item 1. Financial Statements --------------------- Independent Accountants' Review Report...................2 Condensed Consolidated Balance Sheets as of September 30, 1997 and June 30, 1997.....................3 Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 1997 and 1996.......5 Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 1997 and 1996.......6 Notes to Condensed Consolidated Financial Statements.....7 Item 2. Management's Discussion and Analysis of Financial ------------------------------------------------- Condition and Results of Operations.................. 8 ----------------------------------- PART II. OTHER INFORMATION Item 2. Legal Proceedings.................................... 12 ----------------- Item 4. Submission of Matters to a Vote of Security Holders.. 12 --------------------------------------------------- Item 6. Exhibits and Reports on Form 8-K..................... 12 -------------------------------- -1- Baird City Center Square Kurtz & 1100 Main Street, Suite 2700 http://www.bkd.com Dobson Kansas City, MO 64105-2112 Member of Certified Public Accountants 816 221-6300 Fax: 816 221-6380 Moores Rowland International Independent Accountants' Review Report -------------------------------------- Board of Directors and Stockholders Midwest Grain Products, Inc. Atchison, Kansas 66002 We have reviewed the condensed consolidated balance sheet of MIDWEST GRAIN PRODUCTS, INC. and subsidiaries as of September 30, 1997, and the related condensed consolidated statements of operations for the three month periods ended September 30, 1997 and 1996, and the related condensed consolidated statements of cash flows for the three month periods ended September 30, 1997 and 1996. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of June 30, 1997, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year then ended (not presented herein); and, in our report dated August 8, 1997, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of June 30, 1997, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. s/Baird, Kurtz & Dobson BAIRD, KURTZ & DOBSON Kansas City, Missouri October 22, 1997 -2- MIDWEST GRAIN PRODUCTS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands) ASSETS September 30, June 30, ------------- -------- 1997 1997 (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 412 $ 6,005 Receivables 26,485 26,276 Inventories 16,960 15,000 Prepaid expenses 1,496 988 Deferred income taxes 1,688 1,688 Income taxes receivable 1,138 227 ------------ ------------ Total Current Assets 48,179 50,184 ------------ ------------ PROPERTY AND EQUIPMENT, At cost 214,857 213,813 Less accumulated depreciation 102,560 99,099 ------------ ------------ 112,297 114,714 ------------ ------------ OTHER ASSETS 432 432 ------------ ------------ $ 160,908 $ 165,330 ============ ============ See Accompanying Notes to Condensed Consolidated Financial Statements - 3 - MIDWEST GRAIN PRODUCTS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Continued) (In Thousands) LIABILITIES AND STOCKHOLDERS' EQUITY September 30, June 30, 1997 1997 ---- ---- (Unaudited) CURRENT LIABILITIES Current maturities of long-term debt $ 2,273 Note payable--bank $ 1,000 Accounts payable 9,206 8,196 Accrued expenses 3,117 4,408 ------------ ------------ Total Current Liabilities 14,596 13,604 ------------ ------------ LONG-TERM DEBT 24,660 29,933 ------------ ------------ POST-RETIREMENT BENEFITS 6,339 6,245 ------------ ------------ DEFERRED INCOME TAXES 6,987 6,987 ------------ ------------ STOCKHOLDERS' EQUITY Capital stock Preferred, 5% noncumulative, $10 par value; authorized 1,000 shares; issued and outstanding 437 shares 4 4 Common, no par; authorized 20,000,000 shares; issued 9,765,172 shares 6,715 6,715 Additional paid-in capital 2,485 2,485 Retained earnings 99,914 100,149 ------------ ------------ 109,118 109,353 Treasury stock, at cost Common; 1997 - 65,000 shares (792) (792) ------------- ------------- 108,326 108,561 ------------ ------------ $ 160,908 $ 165,330 ============ ============ See Accompanying Notes to Condensed Consolidated Financial Statements - 4 - MIDWEST GRAIN PRODUCTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (Unaudited) 1997 1996 ------------ ------- (in thousands, except per share amounts) NET SALES $ 57,623 $ 53,173 COST OF SALES 55,012 51,110 ---------- ---------- GROSS PROFIT 2,611 2,063 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,644 2,163 ---------- ---------- (33) (100) OTHER OPERATING INCOME 14 102 ---------- ---------- INCOME (LOSS) FROM OPERATIONS (19) 2 OTHER INCOME (EXPENSE) Interest (455) (725) Other 78 148 ---------- ---------- LOSS BEFORE INCOME TAXES (396) (575) CREDIT FOR INCOME TAXES (161) (229) ----------- ----------- NET LOSS $ (235) $ (346) =========== =========== EARNINGS (LOSS) PER COMMON SHARE $(.02) $(.04) ====== ====== See Accompanying Notes to Condensed Consolidated Financial Statements and Independent Accountants' Review Report - 5 - MIDWEST GRAIN PRODUCTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (Unaudited) 1997 1996 ------------- -------- (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (235) $ (346) Items not requiring (providing) cash: Depreciation 3,460 3,506 Gain on sale of equipment (20) Changes in: Accounts receivable (209) (6,353) Inventories (1,960) (1,430) Prepaid expenses (508) (452) Accounts payable 1,146 1,094 Accrued expenses (1,197) (429) Income taxes receivable (911) 154 ----------- ---------- Net cash used in operating activities (414) (4,276) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property and equipment (1,179) (62) Proceeds from sale of equipment 31 ---------- ---------- Net cash used in investing activities (1,179) (31) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Net advances (payments) on notes payable (4,000) 2,000 Net proceeds from issuance of long-term debt 2,000 ---------- ---------- Net cash provided by (used in) financing activities (4,000) 4,000 ----------- ---------- DECREASE IN CASH AND CASH EQUIVALENTS (5,593) (307) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 6,005 3,759 ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 412 $ 3,452 ========== ========== See Accompanying Notes to Condensed Consolidated Financial Statements and Independent Accountants' Review Report - 6 - MIDWEST GRAIN PRODUCTS, INC. NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED SEPTEMBER 30, 1997 (Unaudited) NOTE: GENERAL In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the Company's condensed consolidated financial position as of September 30, 1997, and the condensed consolidated results of its operations and its cash flows for the periods ended September 30, 1997 and 1996, and are of a normal recurring nature. See Independent Accountants' Review Report -7- MIDWEST GRAIN PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 1997 RESULTS OF OPERATIONS General - ------- The Company's net loss of $235,000 in the first quarter of fiscal 1998 principally resulted from a continued decrease in selling prices of vital wheat gluten due to severe competitive pressures from the European Union (E.U.) This decrease represented a 22% decline from the average selling price of gluten in the first quarter of fiscal 1997 and a nearly 6% drop from the average selling price in the fourth quarter of fiscal 1997. Due to the predatory pricing practices of subsidized E.U. producers, the Company has been unable to adjust the price of its gluten to levels that offset production costs. Profits from their highly subsidized and protected wheat starch business allow E.U. producers to unload huge surpluses of gluten, a co-product, at prices below U.S. production costs. Low U.S. tariff rates on wheat gluten make this country an attractive market for those surpluses, while high tariffs in Europe effectively prohibit non- E.U. member countries from competing in the wheat gluten and wheat starch markets there. In an effort to stem the tide of gluten imports from the E.U., the Wheat Gluten Industry Council of the U.S. has sought corrective action through various diplomatic measures and legal proceedings. The Council's latest initiative, which occurred on September 19, 1997, was the filing of a petition with the International Trade Commission (ITC) under Section 201 of the Trade Act of 1974. The Section 201 petition alleges serious injury to the U.S. wheat gluten industry from the increasing volume of subsidized imports. It asks for, among other things, the establishment of a four-year quota on a country-by country basis on all exports of wheat gluten to the U.S., allocated yearly and based on the average market share percentage for the years 1990-1992. Under Section 201, the ITC is required to complete an investigation and hearings and make a recommendation to President Clinton by March 19, 1998. The President is then required to act within 60 days after receipt of the ITC recommendation. While the Company is hopeful that the actions of the Wheat Gluten Industry Council will ultimately result in the creation of a more level playing field, no assurance can be given as to when or if any relief will be granted. Due to the intensity of current competitive conditions, the Company has strategically limited its production of wheat gluten to amounts necessary to maintain a stable customer base and for the production of other wheat products. In addition, the Company has intensified efforts to develop additional modified wheat gluten products that may be marketed in niches that will be less affected by foreign competition. In the event the ITC and the President fail to provide the U.S. wheat gluten industry with any relief pursuant to the section 201 petition, and if the E.U. continues to export gluten at current or lower price levels and in the quantities anticipated by new E.U. production facilities that are under construction and that have been announced, then the Company believes that (a) the Company will not be able to profitably market current wheat gluten products, (b) that it will continue to produce only that amount of gluten necessary to produce premium and modified wheat starches profitably, (c) that losses generated from the unprofitable production of gluten are expected to be absorbed by the Company's other operations, although there is no certainty that the Company will be successful in that regard, and (d) that other U.S. gluten plants will probably be forced to suspend operations or be permanently shut down. -8- MIDWEST GRAIN PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) THREE MONTHS ENDED SEPTEMBER 30, 1997 Conditions in the Company's premium wheat starch market remained favorable in the first quarter, resulting in increased production and sales. The largest percentage of this increase occurred in sales of regular wheat starch, which generally is sold at a lower value than the Company's modified and specialty varieties. As a result, the average per unit sales price for wheat starch during the first quarter was down compared to the same period a year ago. Favorable conditions also continued to exist in the Company's alcohol markets in the first quarter, resulting in increased production of both food grade and fuel grade alcohol compared to the first quarter of fiscal 1997. Alcohol prices decreased, however, due primarily to the effects of lower prices for corn and milo, the principal raw materials used in the Company's alcohol production process. The production increase was realized as the result of greater utilization of distillery capacity at the Company's Pekin, Illinois plant. Alcohol production at that facility was halted for a time during last year's first quarter due to a maintenance and repair shutdown. As the result of this year's first quarter rise in alcohol production, unit sales of distillers feed, the principal by- product of the distillation process, grew substantially compared to a year ago. With consistently lower grain costs, a realization of stable energy costs and improved production efficiencies, the Company expects to strengthen its competitive abilities and improve profitability in the alcohol and wheat starch markets going forward. Sales - ----- Net sales in the first quarter of fiscal 1998 were approximately $4,450,000 higher than sales in the first quarter of fiscal 1997. The increase principally resulted from increased sales of fuel grade alcohol due to an over 420% rise in units sold. The realization of higher sales in this category occurred from increased utilization of distillery capacity at the Company's Pekin, Illinois plant, where production was temporarily halted during a maintenance and repair shutdown during the last year's first quarter. Sales of beverage alcohol in this year's first quarter were approximately even with sales for the same period a year ago. Although unit sales of beverage alcohol increased nearly 26%, the selling price of this product dropped as the result of lower raw material costs for corn and milo. Sales of food grade industrial alcohol fell below last year's first quarter level due to a reduction in the selling price and a 33% decline in units sold. Sales of distillers' feeds, a by-product of the alcohol production process, rose approximately 17% due to a substantial increase in units sold. Wheat gluten sales declined approximately 15% from sales in the first quarter of fiscal 1997 despite a modest increase in unit output. Selling prices for this product fell substantially in the face of extreme competitive pressures from the European Union. Sales of wheat starch increased just slightly compared to a year ago, although the amount of units sold rose by nearly 28%. The higher volume sales of wheat starch were largely offset by reduced selling prices due principally to a higher proportion for non-specialty, commodity-type applications. -9- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) THREE MONTHS ENDED SEPTEMBER 30, 1997 Cost of Sales - ------------- The cost of sales in the first quarter of fiscal 1998 increased by approximately $3.9 million compared to the cost of sales in the first quarter of fiscal 1997. This occurred primarily as the result of higher energy costs as the per unit cost of natural gas increased and more energy was required to satisfy increased production needs. Higher maintenance and repair costs, principally associated with the Company's distillery operation in Pekin, Illinois, also contributed to the cost of sales increase. Raw material costs in the first quarter of fiscal 1998 were approximately even with the raw material costs for the same period in the prior year as the larger volume of grain required for increased production was offset by lower per unit grain prices. In connection with the purchase of raw materials, principally corn and wheat, for anticipated operating requirements, the Company enters into commodity contracts to reduce the risk of future grain price increases. These contracts are accounted for as hedges and, accordingly, gains and losses are deferred and recognized in cost of sales as part of product cost when contract positions are settled and as related products are sold. For the first quarter of fiscal 1998, raw material costs included a net gain of $606,000 on contracts settled during the quarter compared to a net loss of $649,000 for the same period in fiscal 1997. Selling, General and Administrative Expenses - -------------------------------------------- Selling, general and administrative expenses in the first quarter of fiscal 1998 increased by approximately $481,000 due mainly to employee-related costs. These costs were partially offset by reduced commissions. The consolidated effective income tax rate is consistent for all periods. The general effects of inflation were minimal. Net Loss - -------- As the result of the foregoing factors, the Company experienced a net loss of $235,000 in the first quarter of fiscal 1998 compared to a net loss of $346,000 in the first quarter of fiscal 1997. -10- MIDWEST GRAIN PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) THREE MONTHS ENDED SEPTEMBER 30, 1997 LIQUIDITY AND CAPITAL RESOURCES The following table is presented as a measure of the Company's liquidity and financial condition: September 30, June 30, 1997 1997 ----------------------- (in thousands) Cash and cash equivalents $ 412 $ 6,005 Working capital 33,583 36,580 Amounts available under lines of credit 33,000 29,000 Note payable and long-term debt 26,933 30,933 Stockholders' equity 108,326 108,561 The Company continues to maintain a strong working capital position and a relatively low debt-to-equity ratio. Continued strong cash flows have allowed the Company to further reduce its debt by $4 million during the first quarter. The cash management measures adopted two years ago, including stringent cost controls, suspended quarterly dividends to stockholders and flexible production, purchasing and marketing strategies, remain in effect. At September 30, 1997, the Company had $3.3 million committed to improvements and replacements of existing equipment. Management believes its strong financial position and available lines of credit, combined with the strategies which continue to be implemented, position it to take advantage of a return to more favorable conditions. FORWARD-LOOKING INFORMATION This report 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" 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, energy costs, product pricing, competitive environment and related market 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. -11- MIDWEST GRAIN PRODUCTS, INC. PART II OTHER INFORMATION Item 2. Legal Proceedings The Wheat Gluten Industry Council of the United States has filed a Petition with the United State Trade Representative (the "USTR") under Section 301 of the Trade Act of 1974 and a petition with the International Trade Commission of the United States (the "ITC," a commission appointed by the President) under section 201 of the Trade Act of 1974. The petitions seek to alleviate alleged damage to the U.S. wheat gluten industry by Subsidized foreign imports of wheat gluten from the E.U. The proceedings are described under 'Vital Wheat Gluten -- Competition-Vital Wheat Gluten' under Item 1 in the Company's Form 10-K for the year ended June 30, 1997, and under "RESULTS OF OPERATIONS - General" in Item 2 of Part I of this report . Item 4. Submission of Matters to a Vote of Security Holders The annual meeting of stockholders of the Company was held on October 9, 1997. The following actions were taken at the meeting: 1. F. D. "Fran" Jabara was elected to the office of Group A Director for a term expiring in 2000 with 8,719,261 votes for his election and 133,300 votes withheld. 2. Daryl R. Schaller, Ph.D. was elected to the office of Group A Director for a term expiring in 2000 with 8,739,533 votes for his election and 113,028 votes withheld. 3. Michael Braude was elected to the office of Group B Director for a term expiring in 2000 with 423 votes for his election and 0 votes withheld. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (15) Letter from independent public accountants pursuant to paragraph (d) of Rule 10-01 of Regulation S-X (incorporated by reference to Independent Accountants' Review Report at page 2 hereof). (20) Letter to stockholders for the three months ended September 30, 1997. (27) Financial data schedule. (b) Reports on Form 8-K The Company has filed no reports on Form 8-K during the quarter ended September 30, 1997. -12- MIDWEST GRAIN PRODUCTS, INC. SIGNATURES Pursuant to the requirements 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. MIDWEST GRAIN PRODUCTS, INC. s/ Ladd M. Seaberg By _________________________________ Date: November 13, 1997 Ladd M. Seaberg, President and Chief Executive Officer s/Robert G. Booe By _________________________________ Date: November 13, 1997 Robert G. Booe, Vice President and Chief Financial Officer -13- EX-20 2 EXHIBIT 20 - LETTER TO STOCKHOLDERS Exhibit 20 November 11, 1997 Dear Stockholder: While our earnings for the first quarter of fiscal 1998 were negatively affected by a further decline in wheat gluten selling prices, our cash position was bolstered by increased sales of alcohol products. As a result, we were able to reduce our debt to approximately $26 million during the quarter. Since the end of the quarter, debt has been reduced an additional $1 million. The fall in gluten prices was caused by the predatory pricing practices of subsidized producers from the European Union (E.U.), who continue their program of unloading excess gluten in the U.S. market. Due principally to this factor, our Company experienced a first quarter net loss of $235,000, or $0.02 per share, on sales of $57,623,000. For the first quarter of fiscal 1997, we had a net loss of $346,000, or $0.04 per share, on sales of $53,173,000. To reduce the severity of E.U.'s damaging tactics, and yet maintain a stable customer base, we have stayed with our strategy to limit our production of wheat gluten until conditions allow otherwise. At the same time, we are taking part in a recently launched initiative under Section 201 of the Trade Act of 1974 in an effort to help put an end to this unfair situation. On September 19, the Wheat Gluten Industry Council of the United States filed a petition with the International Trade Commission (ITC) that asks for the establishment of a four-year quota for each country exporting gluten to the U.S. The ITC has up to four months from September 19 to review the situation and make an injury determination. Within six months of the filing, the ITC must deliver its remedy recommendation to President Clinton. The President then must act on the ITC recommendation by May 18, 1998. Although the establishment of quotas under Section 201 would provide only temporary relief, it would give us and other U.S. wheat gluten producers time to bring stability back to the marketplace while seeking a more lasting solution. This conceivably could be accomplished through U.S. government consultations with the E.U. pursuant to the 1996 Grains Agreement, as well as the GATT negotiations in the year 2000. As we wage our battle on the gluten front, we are continuing to make strides in optimizing our alcohol production capabilities at both of our plants. This is reflected by the increased alcohol production and sales we experienced in the first quarter compared to the same period a year ago. We also experienced increased sales of our premium wheat starch, with the largest percentage of that increase occurring in sales of our non-modified varieties. Sales of our modified wheat starches, which have been developed for unique, value-added uses, remain steady and we continue to work with customers in matching these special ingredients to functional needs in new product formulations. Much time and effort are being spent as well toward the development and marketing of our modified wheat gluten products, which can be used to replace other grain-based and/or animal-based proteins in both food and non-food applications. We expect these ingredients to eventually become very important products for Midwest Grain, both in terms of revenue and in helping to shape our Company into a less commodity-oriented, more value-added producer. Sincerely, s/Ladd M. Seaberg Ladd M. Seaberg President and CEO EX-27 3 EXHIBIT 27 - FINANCIAL DATA SCHEDULE
5 EXHIBIT 27 MIDWEST GRAIN PRODUCTS, INC. FINANCIAL DATA SCHEDULE THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MIDWEST GRAIN PRODUCTS, INC. CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND CONSOLIDATED BALANCE SHEET AS AT SEPTEMBER 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000835011 MIDWEST GRAIN PRODUCTS, INC. 1,000 3-MOS JUN-30-1998 JUL-1-1997 SEP-30-1997 412 0 26,485 285 16,960 48,179 214,857 102,560 160,908 14,596 24,660 6,715 0 4 101,607 160,908 57,623 57,623 55,012 57,656 14 0 (455) (396) (161) (235) 0 0 0 (235) (.02) (.02) Reflects Receivables less Allowances. Reflects retained earnings and additional paid in captial less cost of Treasury Stock. Reflects cost of sales and selling, general & administrative expenses.
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