USA: Pyramid Breweries announced the strongest fourth quarter sales performance

Pyramid Breweries Inc. announced on March 10 the strongest fourth quarter sales performance in Pyramid's history. Gross sales revenue for the quarter ended December 31, 2005 was $12.4 million, representing overall growth of 11%, or $1.2 million, as compared to the fourth quarter a year ago, driven primarily by sales growth of 19% in the core Pyramid Brand Family. Net loss for the quarter improved 64% to $531,000 or ($0.06) per share, compared to $1.5 million or ($0.17) per share a year ago.

"A strong craft beer market and our investment in sales and marketing resources in the beverage division earlier in the year have contributed to significant top line volume and revenue growth," stated John Lennon, CEO. "2005 can be characterized as a year in which we laid a foundation for growth by leveraging our flagship brand, Pyramid HefeWeizen Beer."

Annual sales topped $50.0 million for the year ended December 31, 2005, for the first time in Pyramid's history, reaching an all time high of $50.9 million, an increase of $8.7 million over prior year's sales of $42.2 million, primarily resulting from the 15% annual volume growth in the Pyramid Brand Family. Also contributing to the increase was a full year of sales of the MacTarnahan's Brand Family, acquired in the 2004 asset purchase agreement with the Portland Brewing Company. The Company's net loss for the full year improved by 61% to $1.1 million or ($0.12) per share, an overall improvement of $1.7 million or $0.20 per share, as compared to the prior year net loss of $2.7 million. Excluding the impact of a $415,000 gain realized in the third quarter on the sale of excess production equipment, the net loss for the year on a pro forma basis was $1.5 million, representing an improvement of $1.3 million or 46% over the prior year and a $0.15 per share improvement.

The growth in the beverage segment, driven by a 26% increase in shipments to 230,500 barrels for the year, resulted from increases in beer sales attributable to strong craft beer category sales in key West Coast markets, improving brand health and increasing volume gains realized from the core Pyramid Brand Family. "In addition to continuing beverage sales volume increases," said Lennon, "the significant reduction in net loss is attributed to cost reduction initiatives that we began to implement in January 2005 including the consolidation of our brewing facilities which improved our cost structure, plant capacity utilization and operating efficiency, offset by increases in sales and general and administrative costs."

In 2005, while the craft beer market was up an estimated 9% according to a February 16, 2006 press release by the Brewers Association (a Boulder, CO-based trade association for U.S. craft brewers), the Pyramid Brand Family shipments increased 15% for the year to 139,000 barrels. Additionally, during the fourth quarter, Pyramid emerged as the #1 Craft Brand Family in IRI consumption ranking in Seattle based on Information Resources Inc. ("IRI") Reports (IRI is a leading provider of enterprise market information), and has maintained double digit off-premise volume growth during the year.

"While benefiting from strong consumer interest and resurgence in craft beer, Pyramid cultivated a vision to focus on our award-winning lines of 'Refreshingly Unfiltered' wheat beers, with our core emphasis on Pyramid HefeWeizen," said John Lennon. "This vision appears to have paid off as evidenced by our record setting sales performance for the fourth quarter and for the year. While we have made solid progress during the year, we are far from satisfied by our bottom line performance and we will be undertaking measures to improve the company's profitability."


Financial Position and Operating results for the year ended December 31, 2005 included:

-- Cash and accounts receivable: Cash and account receivable totaled $3.3 million as of December 31, 2005, an increase of $1.1 million over prior year.

-- Beverage division net sales: Net sales for the beverage division increased 27% to $33.0 million, driven by increases in beverage sales volume.

-- Alehouse division net sales: Net sales for the alehouse division increased 10% to $15.4 million, due primarily to the addition of the Portland Taproom, which contributed an additional $2.0 million during the year.

-- Volume: Shipments of Pyramid Brand Family beer increased 15% to 139,000 barrels, and shipments of Thomas Kemper brand soda increased 11% to 45,100 barrels.

-- EBITDA: EBITDA improved dramatically to $2.4 million, an increase of $2.2 million compared to $187,000 in 2004.

The timing of the earnings release is later than the typical release date because the Company needed the additional time to finalize the 2005 financial results and complete all appropriate year-end reporting requirements.

Pyramid Breweries Inc. is a leading brewer of specialty, full-flavored beers and sodas, now produced mainly under the Pyramid, MacTarnahan's and Thomas Kemper brand names. The Pyramid Family now includes five breweries, located in Seattle, Washington; Portland, Oregon; and Berkeley, Walnut Creek and Sacramento, California, as well as five adjoining restaurants. For more information, visit www.PyramidBrew.com.

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