SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 29, 1999
American Italian Pasta Company
(Exact name of registrant as specified in its charter)
Delaware 001-13403 84-1032638
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Address of principal executive offices: 1000 Italian Way, Excelsior Springs,
MO 64024
Registrant's telephone number, including area code: (816) 502-6000
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Not applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
See attached as an Exhibit to this Form 8-K a News Release released October
27, 1999 concerning the announcement of financial results and the
announcement of first international expansion.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit No. Document
----------- --------
(99) Additional Exhibits
99.1 Press Release issued by American Italian Pasta Company
dated October 27, 1999.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not applicable.
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SIGNATURE
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 hereunto duly authorized.
AMERICAN ITALIAN PASTA COMPANY
Date: October 29, 1999 By /s/ Warren B. Schmidgall
-----------------------------------------
Warren B. Schmidgall,
Senior Vice President and
Chief Financial Officer
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INDEX OF EXHIBITS
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Exhibit No. Description
- ----------- -----------
99.1 Press Release
PRESS RELEASE
AMERICAN ITALIAN PASTA COMPANY NEWS
- ------------------------------ RELEASE
Contact:
Linda Ward, Vice President - Investor Relations
and Corporate Communications
816/502-6211
AMERICAN ITALIAN PASTA COMPANY REPORTS RECORD
---------------------------------------------
FOURTH QUARTER AND FISCAL YEAR 1999 RESULTS
-------------------------------------------
AND ANNOUNCES FIRST INTERNATIONAL EXPANSION
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- Achieves record quarterly and annual net income, revenues, and
operating profits;
- Reports fourth quarter EPS of $.37 (up 32%)
- Strong volume gains in fiscal 1999 make AIPC the largest pasta
producer in North
America.
EXCELSIOR SPRINGS, MO (October 27, 1999) - American Italian Pasta
Company (NYSE.PLB) today reported record revenues, operating profits, net
income and earnings per share for its fourth quarter and fiscal year ended
October 1, 1999.
Timothy S. Webster, President and CEO, said, "I am excited to report
that AIPC continued its excellent record of strong performance during 1999.
The strength of our fourth quarter contributed to record full-year results,
allowing us to post our eleventh consecutive year of growth. I am extremely
pleased with the progress made this year. We achieved our aggressive growth
targets. We reduced costs, improved margins, and strengthened our management
team. We successfully completed three major capital expansions, including
the new Kenosha, WI plant, which has enabled us to achieve outstanding growth
in our ingredient business. We secured several new customers during the year
including a substantial supply relationship with Golden Grain. Thanks to our
superior fiscal 1999 performance, AIPC is now the largest volume producer of
pasta in North America."
Mr. Webster continued, "Also, we recently extended our supply agreement
with Sysco, our second largest customer, through June 2003. For the fourth
consecutive year, AIPC was named as one of Sysco's top ten suppliers. Sysco
chooses this special group from their 1,500 suppliers and to receive it four
years running is indeed an honor. "I'm also pleased to announce AIPC is
expanding internationally and will market Italian-made pasta, initially to
customers in the U.S., the U.K. and certain other pan-European markets. We
have a contract to purchase property near Milan, Italy. Upon closing, we
will immediately begin construction of a new pasta manufacturing facility.
The site is a former food processing plant built in 1987 and has been vacant
since 1997. Construction is expected to take about 12-18 months, at a total
cost of $35-$40 million. The facility will contain the latest pasta
manufacturing technology and will have an initial capacity of approximately
100 million pounds. We will begin supplying Italian-made product to certain
customers immediately through supply arrangements with current Italian
producers and will transfer to AIPC production once our new Italian plant is
operational. The process of building a solid "on-the-ground" organization in
Italy has already begun. We have added two Italian nationals with combined
experience in food processing of over forty years. We have prior experience
working with both of these individuals. Because many of the townspeople
worked in the plant when it was operational, we will have an experienced
workforce to draw from as well."
Horst W. Schroeder, AIPC's board chairman said, "An AIPC-owned and
managed Italian pasta manufacturing facility will allow us to participate in
additional target markets. The U.S. currently imports over 400 million
pounds of pasta from Italy representing approximately 8-10% of the market,
with significant presence in the Retail and Food Service markets. We believe
we can leverage our leadership position in these markets and build a
meaningful increase in sales without cannibalizing existing sales. A number
of structural changes to the European economy support our belief that this is
an unusual opportunity:
- standardization of food regulation and labeling in the European
Common Market.
- a single European currency.
- continued consolidation of the European food retail trade and
- the significance of private label and control-label offerings to
European retailers."
Mr. Schroeder continued, "We believe significant opportunities exist in
this environment for AIPC to apply our U.S. market approach to the European
private label, food service and industrial pasta markets. Our approach is
characterized by high quality products at competitive costs, supported with
sophisticated marketing programs. The pasta-manufacturing expertise of our
American team combined with the international expertise of our Italian team
provides outstanding leadership for this new venture. I am extremely
confident our team can execute the Italian strategy and begin building a
significant international presence."
Mr. Webster added, "We expect our Italian plant to be fully utilizing
its Phase I capacity by the end of 2002, but we believe the long-term
potential for this business will greatly exceed Phase I capacity. Our
current estimates indicate the Italian facility could contribute $40-$50
million in sales and $0.13 - $0.16 in earnings per share to AIPC at Phase I
capacity. Given our strategy of building the volume first with purchased
product, we expect this initiative to be additive to earnings from day one."
Commenting on the completed fiscal year 1999, Mr. Schroeder said,
"AIPC's performance for both the fourth quarter and the full year reflects
this team's ability to plan and execute well. We continue to strengthen this
already solid group. They have demonstrated they can achieve aggressive
targets and have positioned the Company for more impressive growth in the
future."
Turning to AIPC's results for the quarter, Mr. Webster said: "This was
another quarter of outstanding financial results for AIPC. We achieved our
earnings targets, setting Company records for operating profits and earnings
per share, both up 32.1% over the comparable prior-year quarter. Revenues
totaled $61.2 million, an increase of 13.2%, on volume growth of 28.6%.
Volume gains were led by outstanding growth in both our ingredient business
with the new Kenosha facility and continued growth and expansion of our
private label business. All other areas of our business performed well and
in line with expectations."
Revenues for the quarter totaled $61.2 million, a $7.1 million or 13.2%
increase over the $54.0 million reported in the comparable fiscal 1998
period. The increase is primarily due to volume growth of 28.6% over the
prior year, offset by lower average selling prices. Retail and institutional
revenues increased by 12.6% and 15.0%, respectively. The pass-through of
lower durum wheat costs, along with changes in sales mix, created a 12.8%
reduction in average selling prices.
Gross profit for the quarter totaled $17.2 million, an increase of $3.1
million or 22.0% over the $14.1 million reported in fourth quarter 1998. The
increase is primarily attributable to revenue growth and lower per-unit
costs. The gross margin percentage for the fourth quarter was 28.1%,
increasing from 26.0% in the comparable 1998 quarter. This increase is
primarily due to lower raw material costs and lower operating costs per unit
in the current quarter.
Operating profit for the quarter totaled $11.8 million, an increase of
$2.9 million or 32.1% over the $8.9 million reported in the prior year
quarter. Operating profit as a percentage of revenues improved to 19.2%
versus the 16.5% reported in fourth quarter 1998. The increase is generally
due to higher gross profits and lower selling and administrative costs as a
percentage of sales.
Interest expense for the quarter totaled $853,000, an increase of
$218,000 over the $635,000 in the same period last year.
Income tax expense for the quarter totaled $4.0 million, an increase of
$1.0 million as compared to $3.0 million in the prior year quarter,
reflecting effective tax rates of 37.0% and 36.5%, respectively.
Net income for the quarter totaled $6.9 million, an increase of $1.6
million or 31.0% over the $5.3 million reported in the fourth quarter of
1998. Fourth quarter net income as a percentage of revenue improved to 11.2%
versus the 9.7% reported in 1998. Fourth quarter EPS (diluted) is $0.37 per
share, up $0.09 or 32.1% versus that reported in 1998.
Revenue for the fiscal year ended October 1, 1999, was $220.1 million, a
$30.8 million or 16.2% increase over fiscal year 1998. Net income was $23.5
million, a $5.9 million or 33.3% increase over last year's net income before
extraordinary loss. EPS (diluted) for the year was $1.26, up 28.6% over the
$.98 reported before extraordinary items for fiscal 1998.
AIPC is based in Excelsior Springs, MO, near Kansas City. Founded in
1988, the Company is the largest and one of the fastest-growing producers and
marketers of pasta in North America. AIPC has rapidly established a
significant market presence in North America by developing strategic customer
relationships with food industry leaders that have substantial pasta
requirements. The Company's approximately 550 employees produce more than 80
dry pasta shapes in vertically integrated milling, production and
distribution facilities, strategically located in Excelsior Springs, MO;
Columbia, SC and Kenosha, WI.
The statements contained in this release regarding a manufacturing
facility in Italy and international business expansion are forward looking
and based on current expectations. Actual future results could differ
materially from those anticipated by such forward-looking statements. The
differences could be caused by a number of factors included but not limited
to those factors identified in a Current Report on Form 8-K dated October 29,
1997, filed by the Company with the Securities and Exchange Commission
(Commission file No. 001-13403), any amendments thereto and other matters
disclosed in the Company's other public filings. The Company will not update
any forward-looking statements in this press release to reflect future
events. For more information, please refer to Form 10-Q filed by the Company
with the Securities and Exchange Commission (Commission file No. 001-13403)
dated July 28, 1999. The Company expects to file Form 10-K with the
Securities and Exchange Commission (Commission file No. 001-13403) in
December 1999.
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AMERICAN ITALIAN PASTA COMPANY
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Consolidated Statements of Income
---------------------------------
(Unaudited)
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(in thousands, except per share amounts)
----------------------------------------
Year Ended Year Ended
September 30, September 30,
1999 1998
Revenues
Retail $ 160,174 134,504
Institutional 59,975 54,886
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Total Revenues 220,149 189,390
Cost of goods sold 160,449 140,110
Plant expansion costs 130 1,606
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Gross profit 59,570 47,674
Selling and marketing expense 14,855 12,984
General and administrative expense 5,580 4,948
----------------------------
Operating profit 39,135 29,742
Interest expense, net 2,098 1,539
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Income before income tax expense and
extraordinary item 37,037 28,203
Income tax provision 13,519 10,557
----------------------------
Income before extraordinary loss 23,518 17,646
Extraordinary loss, net of tax -- 2,332
----------------------------
Net income $ 23,518 $ 15,314
============================
Earnings Per Common Share:
Income per common share before
extraordinary item $ 1.30 $ 1.03
Extraordinary Item:
Loss per common share due to early
extinguishment of long-term debt,
net of income taxes -- 0.14
----------------------------
Net income per common share $ 1.30 $ 0.89
============================
Weighted average common shares
outstanding 18,108 17,223
============================
Earnings Per Common Share - Assuming
Dilution:
Income per common share
before extraordinary item $ 1.26 $ 0.98
Extraordinary item:
Loss per common share due to early
extinguishment of long-term debt, net
of income taxes -- 0.13
-----------------------------
Net income per common share $ 1.26 0.85
=============================
Weighted average common shares outstanding 18,621 17,937
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AMERICAN ITALIAN PASTA COMPANY
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Consolidated Statements of Income
---------------------------------
(Unaudited)
-----------
(in thousands, except per share amounts)
----------------------------------------
Three Months Three Months
Ended Ended
September 30, September 30,
1999 1998
Revenues
Retail $ 45,479 40,403
Institutional 5,676 13,632
Total Revenues 61,155 54,035
Cost of goods sold 43,979 39,915
Plant expansion costs 16 54
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Gross profit 17,160 14,066
Selling and marketing expense 4,034 3,839
General and administrative expense 1,355 1,318
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Operating profit 11,771 8,909
Interest expense, net 853 635
----------------------------
Income before income tax expense 10,918 8,274
Income tax provision 4,040 3,024
----------------------------
Net income $ 6,878 $ 5,250
----------------------------
Earnings Per Common Share:
Net Income per common share $ 0.38 $ 0.29
Weighted average common shares
outstanding 18,147 18,061
----------------------------
Earnings Per Common Share - Assuming
Dilution:
Net income per common share $ 0.37 $ 0.28
Weighted average common shares
outstanding 18,723 18,705
----------------------------
