Pyramid Breweries Inc. (Nasdaq:PMID), brewer of Pyramid Ales and Thomas Kemper Lagers and Sodas, today reported that second quarter profits were nearly four times greater than the prior year period -- with net income of $443,000, or $.06 per share, compared to $89,000, or $.01 per share in the second quarter of 1999.

Net sales increased 9% to $7.9 million for the quarter ended June 30, 2000, compared to $7.2 million for the second quarter of 1999. Sales gains reflect the strength of the Pyramid beer and Thomas Kemper soda brands, as well as increasing business at the Pyramid Alehouses.

EBITDA (earnings before income tax, depreciation and amortization) improved 40% to $1.1 million from $784,000 in the second quarter, driven by volume gains, gross margin improvements, and cost efficiencies. Gross margin increased to 27% of net sales during the quarter from 26% in 1999's second quarter.

"Results were strong across the board. All units of our company posted significant revenue gains, and improved margins fueled the stronger earnings performance. This quarter was Pyramid's seventh consecutive quarter of sales improvement over the prior year quarter," said Martin Kelly, President and CEO.

Pyramid's first half net income was $233,000, or $.03 per share, a dramatic improvement over the net loss of $381,000 or $.05 per share posted in the first half of last year. The turnaround is due to increased net sales (7%), improvements in gross margin and other income, and reductions in selling, general and administrative expenses. Through the first six months of 2000, EBITDA has increased by 48% versus 1999.

"Our year to date results reflect the impact of many of the changes we made in the fourth quarter of 1999, as well as our employees' continuing efforts to increase the efficiency and productivity of our assets and investments," Kelly noted. "We feel that we are well positioned to capitalize on the improving demographic trends in the specialty beverage category."

Increased patronage drove a 17% sales increase for the Alehouse Division in the second quarter, to $2.1 million. For the first half of the year, revenues in the Alehouse Division increased 12%, to $3.8 million, compared to $3.4 million in like period of 1999.

In the Beverage Division, volume increased 10% to 41,000 barrels during the second quarter. For the first half of 2000, total beverage volume increased 9% to 73,000 barrels. Thomas Kemper Soda has been especially strong, with second quarter shipments increasing 41%, and year to date shipments up over 43% versus 1999. The Pyramid brand has also experienced strong growth trends, posting shipment increases of 7% in the second quarter, and 6% on a six month basis. "We are delighted with the performance of our two key brands, which are benefiting from a streamlined portfolio, and more focused marketing and sales efforts," said Kelly. Overall beer shipments, dampened by the elimination of the Monx brand, and the retrenchment of the Thomas Kemper beer brand, increased by 2% in the quarter, and have increased by 1% on a year to date basis.

"The very favorable trends in so many areas make this an exciting time to be joining Pyramid," said Wayne Drury, who joined Pyramid as Chief Financial Officer on July 17. "Beer, soda and alehouse sales are all up over last year. The increased sales combined with reduced expenses have driven EBITDA and net income to new levels. In addition, Pyramid's strong cash position and debt-free balance sheet provide the ability to execute the growth strategy," said Drury.

Pyramid Breweries Inc. is one of the leading brewers of specialty, full-flavored beers and sodas, producing a variety of ales and lagers under the Pyramid and Thomas Kemper brand names. The company also brews four styles of old-fashioned sodas under the Thomas Kemper Soda Company label. Pyramid operates two local breweries and restaurants, the Pyramid Brewery & Alehouse in Seattle, Washington and the Pyramid Brewery & Alehouse in Berkeley, California. For more information, visit www.PyramidBrew.com.

Statements concerning future performance, developments or events, especially where concerning development and/or success of new Alehouse locations and any other guidance on future periods, constitute forward-looking statements which are subject to a number of risks and uncertainties which are described in the Company's filings with the Securities & Exchange Commission, press releases and other communications. Actual events and results may differ materially from stated expectations. These include, but are not limited to, success in finding new locations, market penetration, changes in consumer beverage preferences, successful marketing campaigns, and the ability to improve productivity and reduce expenses.


Pyramid Breweries Inc.
Selected Financial Data
Statements of Operations (Unaudited)

Three Months Ended June 30,
----------------------------------------------
% of % of
2000 Net Sales 1999 Net Sales
----------- --------- ----------- ---------
Gross sales $ 8,424,897 $ 7,738,483
Less excise taxes 506,298 489,272
----------- -----------
Net sales 7,918,599 100.0% 7,249,211 100.0%
Cost of sales 5,780,241 73.0% 5,364,444 74.0%
----------------------------------------------
Gross margin 2,138,358 27.0% 1,884,767 26.0%
Selling, general and
administrative expenses 1,914,792 24.2% 1,896,558 26.2%
----------------------------------------------
Operating income (loss) 223,566 2.8% (11,791) (0.2%)
Other income, net 219,431 2.8% 101,222 1.4%
----------------------------------------------
Income before income
taxes 442,997 5.6% 89,431 1.2%
Provision for income
taxes - - - -
----------------------------------------------
Net income $ 442,997 5.6% $ 89,431 1.2%
==============================================

Net income per share $0.06 $0.01
Weighted average
shares outstanding 7,924,514 8,229,376

Beer barrels shipped 30,000 29,400
Soda barrels shipped 11,000 7,800
----------- -----------
Total barrels shipped 41,000 37,200
=========== ===========

Six Months Ended June 30,
----------------------------------------------
% of % of
2000 Net Sales 1999 Net Sales
----------- --------- ----------- ---------
Gross sales $14,947,829 $13,965,965
Less excise taxes 861,743 846,861
----------- -----------
Net sales 14,086,086 100.0% 13,119,104 100.0%
Cost of sales 10,527,033 74.7% 9,993,331 76.2%
----------------------------------------------
Gross margin 3,559,053 25.3% 3,125,773 23.8%
Selling, general and
administrative expenses 3,637,759 25.8% 3,707,507 28.3%
----------------------------------------------
Operating loss (78,706) (0.5%) (581,734) (4.5%)
Other income, net 311,852 2.2% 201,171 1.5%
----------------------------------------------
Income (loss) before
income taxes 233,146 1.7% (380,563) (3.0%)
Provision for income
taxes - - - -
----------------------------------------------
Net income (loss) $ 233,146 1.7% $ (380,563) (3.0%)
==============================================
Net income (loss)
per share $0.03 ($0.05)
Weighted average
shares outstanding 8,036,612 8,226,262

Beer barrels shipped 53,500 53,100
Soda barrels shipped 19,500 13,600
----------- -----------
Total barrels shipped 73,000 66,700
=========== ===========

Pyramid Breweries Inc.
Selected Financial Data
Condensed Balance Sheets (Unaudited)

June 30, December 31,
2000 1999
------------ -----------
Current assets:
Cash and cash equivalents $6,199,109 $ 6,303,540
Other current assets 3,929,503 3,503,640
Fixed assets, net 21,894,587 22,739,439
Other non-current assets 766,154 1,162,981
----------- -----------
Total assets 32,789,353 33,709,600
=========== ===========

Current liabilities 2,936,817 2,835,523
Non-current liabilities 1,134,567 1,022,677
----------- -----------
Total liabilities 4,071,384 3,858,200

Total stockholders' equity 28,717,969 29,851,400

Total liabilities and
stockholders' equity $32,789,353 $33,709,600
=========== ===========

Pyramid Breweries Inc.
Selected Financial Data
Condensed Cash Flow Data (Unaudited)

Six months ended June 30,
2000 1999
----------- -----------
Net income (loss) $233,146 $ (380,563)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities --
Depreciation and amortization 1,263,656 1,400,242
(Gain) loss on sales of fixed
assets (5,518) 16,031
Deferred tax asset 170,879 --
Deferred rent 111,890 130,518
Restructuring charge -- (69,238)
Changes in operating assets and
liabilities (402,877) 195,203
----------- -----------
Net cash provided by operating
activities 1,371,176 1,292,193
Net cash used in investing
activities (92,073) (478,137)
Net cash (used in) provided by
financing activities (1,383,534) 28,942
----------- -----------
(Decrease) increase in cash and
cash equivalents $ (104,431) $ 842,998
=========== ===========