Exhibit 99.1
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AMERICAN ITALIAN PASTA COMPANY |NEWS
|RELEASE
Contact:
Paul R. Geist
EVP & Chief Financial Officer
816-584-5228
pgeist@aipc.com
|  |
For Immediate Release
AMERICAN ITALIAN PASTA COMPANY REPORTS FISCAL 2008 RESULTS
TOTAL REVENUE OF $569 MILLION; OPERATING INCOME OF $43 MILLION
WALT GEORGE PROMOTED TO CHIEF OPERATING OFFICER
KANSAS CITY, MO., December 10, 2008 -- American Italian Pasta Company
(NASDAQ:AIPC), the largest producer of dry pasta in North America, today
announced results for the fiscal year ended September 26, 2008 and the filing of
its Annual Report on Form 10-K for fiscal 2008 with the Securities and Exchange
Commission.
FISCAL 2008 FINANCIAL RESULTS
Revenues for the year increased $171.1 million, or 43.0%, to $569.2 million, led
by a 39.7% increase in revenue growth in the retail market and a 53.4% increase
in the institutional market. Net income for fiscal 2008 increased $13.8 million,
or 260%, to $19.1 million, or $0.99 per diluted share, versus net income of $5.3
million, or $0.28 per diluted share, in fiscal 2007. Revenues for the fourth
quarter increased $52.0 million, or 47.2%, to $162.1 million, led by a 46.4%
increase in the retail market and a 49.8% increase in the institutional market.
Net income for the fourth quarter increased $5.4 million, or 284%, to $7.3
million, or $0.36 per diluted share, versus a net income of $1.9 million, or
$0.10 per diluted share, in the fourth quarter of fiscal 2007.
"The strong results illustrate the expertise and hard work of our employees,
coupled with AIPC's strategic focus on the fast-growing customer brand pasta
markets," said Jack Kelly, president and CEO. "While we're proud of our
financial performance in fiscal 2008, much work remains to be done to profitably
grow our business in light of the economy and ongoing fluctuations in the cost
of raw materials that impact high-quality pasta manufacturing, adequate supply
and great customer service."
Operational Highlights
• Retail Revenues: Retail revenues increased $121.1 million, or 39.7%, to
$425.5 million for fiscal year 2008, from $304.4 million for fiscal year
2007. The revenue increase is primarily the result of a $117.0 million, or
38.4%, increase related to higher average selling prices, a $2.4 million,
or 0.8%, increase in volume, and a $1.7 million, or 0.1%, increase in
payments received
American Italian Pasta Co.,
December 10, 2008
Page 2
from the U.S. government under the Continued Dumping and Subsidy Offset Act
of 2000. Retail revenues increased $38.9 million, or 46.4%, to $122.7
million for the fourth quarter of 2008, from $83.8 million for the fourth
quarter of 2007. The revenue increase is primarily the result of higher
average selling prices of 48.4%, partly offset by volume decreases of 2.0%.
• Institutional Revenues: Institutional revenues increased $50.0 million, or
53.4%, to $143.7 million for fiscal year 2008, from $93.7 million for
fiscal year 2007. The revenue increase is primarily the result of a $53.5
million, or 57.1%, increase due to higher average selling prices, partly
offset by a $3.5 million, or 3.7%, decrease due to lower volume.
Institutional revenues increased $13.1 million, or 49.8%, to $39.4 million
for the fourth quarter of 2008, from $26.3 million for the fourth quarter
of 2007. The revenue increase is primarily the result of a $16.6 million,
or 63.2%, increase due to higher average selling prices, partly offset by a
$3.5 million, or 13.4%, decrease due to lower volume. The volume decrease
is primarily due to bid eligibility changes requiring small business
participation in certain government contracts.
• Cost of Goods Sold: Cost of goods sold increased $138.1 million, or 44.7%,
to $446.9 million for fiscal year 2008, from $308.8 million for fiscal year
2007. As a percentage of revenues, cost of goods increased to 78.5% for
fiscal year 2008, from 77.6% for fiscal year 2007. For the fourth quarter,
cost of goods sold increased $34.9 million, or 40.3%, to $121.3 million,
from $86.5 million for the prior year fourth quarter. As a percentage of
revenues, cost of goods decreased to 74.9% for the fourth quarter, from
78.6% for prior year fourth quarter. Our raw materials, transportation, and
other input costs were unfavorable to prior year and fourth quarter but the
effect of the increase was substantially offset by higher selling prices.
• Gross profit: Gross profit increased $33.0 million, or 37.0%, to $122.3
million for fiscal year 2008, from $89.3 million for fiscal year 2007.
Gross profit, as a percentage of revenues, decreased to 21.5% during fiscal
2008, compared to 22.4% during fiscal 2007. Gross profit increased $17.1
million, or 72.6%, to $40.7 million for the fourth quarter of 2008, from
$23.6 million for the fourth quarter of 2007. Gross profit, as a percentage
of revenues, increased to 25.1% during the fourth quarter, compared to
21.4% during the fourth quarter of 2007.
• Selling and marketing expense: Selling and marketing expense increased $6.2
million, or 28.9%, to $27.7 million for fiscal year 2008, from $21.5
million for fiscal year 2007. Selling and marketing expense, as a
percentage of revenue, decreased to 4.9% for fiscal year 2008, from 5.4%
for fiscal year 2007. Selling and marketing expense increased $2.3 million,
or 37.5%, to $8.5 million for the fourth quarter of 2008, from $6.2 million
for the fourth quarter of 2007. Selling and marketing expense, as a
percentage of revenue, decreased to 5.2% for the fourth quarter of 2008,
from 5.6% for the fourth quarter of 2007.
• General and administrative expense: General and administrative expense
increased 39.1% to $46.7 million for fiscal year 2008, from $33.5 million
for fiscal year 2007. General and administrative expenses, as a percentage
of revenues, decreased to 8.2% for fiscal year 2008, from 8.4% for fiscal
year 2007. General and administrative expense increased 95.0% to $16.8
million for the fourth quarter of 2008, from $8.6 million for the fourth
quarter of 2007. General and administrative expenses, as a percentage of
revenues, increased to 10.4% for the fourth quarter of 2008, from 7.8% for
the fourth quarter of 2007. During fiscal year 2008, $17.5 million of
professional fees related to the restatement of historical financial
statements and pending legal matters were recorded, compared to $13.3
million during fiscal year 2007. Included in the
American Italian Pasta Co.,
December 10, 2008
Page 3
fourth quarter of fiscal 2008 amount is the monetary penalty of $7.5
million to the U.S. Department of Justice.
• Impairment of brands: We completed our annual review of fiscal year 2008
brand intangible values based on the 2009 fiscal year business plan and our
forecast available in the fourth quarter of fiscal year 2008. Based on our
review in the fourth quarter of fiscal 2008, we have recorded a $3.7
million non-cash impairment charge on two of our brands.
• Operating profit: Operating profit for fiscal year 2008 was $43.1 million,
an increase of $8.7 million, as compared to $34.4 million reported for
fiscal year 2007. Operating profit decreased as a percentage of revenues to
7.6% for fiscal year 2008, from 8.6% for fiscal year 2007. Operating profit
for the fourth quarter of 2008 was $11.0 million, an increase of $2.2
million, as compared to $8.8 million for the fourth quarter of 2007.
Operating profit decreased as a percentage of revenues to 6.8% for the
fourth quarter of 2008, from 8.0% for the fourth quarter of 2007.
WALT GEORGE PROMOTED TO CHIEF OPERATING OFFICER
The Company announced that Walt George has been named Chief Operating Officer.
Mr. George, who joined the Company in 2001, will continue his responsibility for
all manufacturing operations and will also manage the Company's institutional
business, including its food service and ingredient sales. "We are very pleased
to promote Walt into this position. He has and continues to lead improvements in
our supply chain and we are confident that his experience translates well to our
institutional business as we remain focused on delivering the highest level of
quality and service to our valued customers", added Mr. Kelly.
ABOUT AIPC
Founded in 1988 and based in Kansas City, Missouri, American Italian Pasta
Company is the largest producer of dry pasta in North America. The Company has
four plants that are located in Excelsior Springs, Missouri; Columbia, South
Carolina; Tolleson, Arizona and Verolanuova, Italy. The Company has
approximately 600 employees located in the United States and Italy.
When used in this release, the words "anticipate," "projected," "believe,"
"estimate," and "expect" and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying these
statements. The statements by the Company regarding the pasta market, cost of
goods, and financial performance are forward looking. If any of the Company's
assumptions prove incorrect or should unanticipated circumstances arise, the
Company's actual results could materially differ from those anticipated by such
forward-looking statements. For a discussion of factors that could cause actual
results to materially differ from those anticipated, see the risk factors set
forth in item 1A of the Company's Form 10-K for the fiscal year ended September
26, 2008. The Company will not update any forward-looking statements in this
press release to reflect future events.
# # #
American Italian Pasta Co.,
December 10, 2008
Page 4
AMERICAN ITALIAN PASTA COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended (unaudited) Year Ended
--------------------- ------------------- ------------------- ------------------
September 26, 2008 September 28, 2007 September 26, 2008 September 28, 2007
------------------ ------------------ ------------------ ------------------
Revenues $ 162,061 $ 110,066 $ 569,196 $ 398,122
Cost of goods sold 121,328 86,462 446,891 308,819
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Gross profit 40,733 23,604 122,305 89,303
Gross profit as a percent of revenues 25.1% 21.4% 21.5% 22.4%
Selling and marketing expense 8,477 6,166 27,727 21,503
General and administrative expense 16,830 8,630 46,663 33,548
Impairment charges to brands 3,654 - 3,654 -
(Gain) loss related to long-lived assets 795 (41) 1,139 (109)
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Operating profit 10,977 8,849 43,122 34,361
Operating profit as a percent of revenues 6.8% 8.0% 7.6% 8.6%
Interest expense, net 5,534 7,206 26,240 29,421
Other (income) expense, net (132) (50) 92 (245)
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Income before income taxes 5,575 1,693 16,790 5,185
Income tax benefit (1,720) (160) (2,321) (163)
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Net income $ 7,295 $ 1,853 $ 19,111 $ 5,348
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EARNINGS PER COMMON SHARE
Net income per common share $ 0.37 $ 0.10 $ 1.00 $ 0.29
Weighted-average common shares outstanding 19,507 18,677 19,118 18,673
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EARNINGS PER COMMON SHARE - ASSUMING DILUTION
Net income per common share $ 0.36 $ 0.10 $ 0.99 $ 0.28
Weighted-average common shares outstanding
(including dilutive securities) 20,127 18,929 19,384 18,951
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American Italian Pasta Co.,
December 10, 2008
Page 5
AMERICAN ITALIAN PASTA COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
September 26, 2008 September 28, 2007
ASSETS
Current assets:
Cash and cash equivalents $ 38,623 $ 16,635
Short-term investments 2,370 -
Trade and other receivables, net 49,197 38,279
Inventories 66,026 44,443
Other current assets 5,819 7,629
Deferred income taxes 2,126 2,381
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Total current assets 164,161 109,367
Property, plant and equipment, net 303,503 316,109
Brands 79,769 83,282
Other assets 5,591 19,205
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Total assets $ 553,024 $ 527,963
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 29,541 $ 19,195
Accrued expenses 37,258 31,523
Other 99 1,181
Short term debt and current maturities of long term debt 24,913 1,963
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Total current liabilities 91,811 53,862
Long term debt, less current maturities 217,000 240,000
Income tax payable 1,783 -
Deferred income taxes 34,054 35,286
Litigation settlement - 26,500
Other long term liabilities 2,405 397
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Total liabilities 347,053 356,045
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value:
Authorized shares - 10,000,000 - -
Issued and outstanding shares - none
Class A common stock, $.001 par value:
Authorized shares - 75,000,000 22 21
Issued and outstanding shares - 22,454,145 and 20,259,060, respectively, a
September 26, 2008 and 20,832,627 and 18,674,628, respectively, at September
28, 2007
Class B common stock, par value $.001
Authorized shares - 25,000,000; Issued and outstanding - none - -
Additional paid-in capital 261,772 247,492
Treasury stock, 2,195,085 shares in 2008 and (52,076) (52,029)
2,157,999 shares in 2007, at cost
Accumulated other comprehensive income 16,728 15,352
Accumulated deficit (20,475) (38,918)
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Total stockholders' equity 205,971 171,918
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Total liabilities and stockholders' equity $ 553,024 $ 527,963
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