UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended: June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-13403
AMERICAN ITALIAN PASTA COMPANY
(Exact name of Registrant as specified in its charter)
DELAWARE 84-1032638
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
4100 N. MULBERRY DRIVE, SUITE 200, KANSAS CITY, MISSOURI 64116
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (816) 584-5000
1000 ITALIAN WAY, EXCELSIOR SPRINGS, MISSOURI 64024
------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the Registrant has (1) filed all documents
and 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 such filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares outstanding as of July 26, 2000 of the Registrant's
Class A Convertible Common Stock was 18,360,686 and there were no shares
outstanding of the Class B Common Stock.
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AMERICAN ITALIAN PASTA COMPANY
FORM 10-Q
QUARTER ENDED JUNE 30, 2000
TABLE OF CONTENTS
Part I - Financial Information Page
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets at June 30, 2000 and
September 30, 1999. 3
Consolidated Statements of Income for the three
months ended June 30, 2000 and 1999. 4
Consolidated Statements of Income for the nine
months ended June 30, 2000 and 1999. 5
Consolidated Statement of Stockholders' Equity
for the nine months ended June 30, 2000. 6
Consolidated Statements of Cash Flows for the nine
months ended June 30, 2000 and 1999. 7
Notes to Consolidated Financial Statements 8-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-13
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 14
Part II - Other Information
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signature Page 16
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<TABLE>
<CAPTION>
AMERICAN ITALIAN PASTA COMPANY
CONSOLIDATED BALANCE SHEETS
JUNE 30, SEPTEMBER 30,
2000 1999
---- ----
(IN THOUSANDS)
<S> <C> <C>
ASSETS (UNAUDITED)
Current assets:
Cash and temporary investments $ 1,357 $ 3,088
Trade and other receivables 24,278 22,018
Prepaid expenses and deposits 4,848 3,952
Inventory 30,541 25,227
Deferred income taxes 1,948 1,031
-------- --------
Total current assets 62,972 55,316
Property, plant and equipment:
Land and improvements 7,159 6,953
Buildings 82,716 75,677
Plant and mill equipment 224,496 219,725
Furniture, fixtures and equipment 7,810 7,239
-------- --------
322,181 309,594
Accumulated depreciation (61,813) (51,156)
-------- --------
260,368 258,438
Construction in progress 39,679 7,686
-------- --------
Total property, plant and equipment 300,047 266,124
Other assets 2,044 782
-------- --------
Total assets $365,063 $322,222
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 11,138 $ 15,187
Accrued expenses 8,584 9,763
Income tax payable 212 --
Current maturities of long-term debt 1,544 1,144
-------- --------
Total current liabilities 21,478 26,094
Long-term debt 117,565 81,467
Deferred income taxes 19,952 12,931
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 18 18
Issued and outstanding shares - 18,360,686
and 17,638,254 at June 30, 2000 and
18,176,554 and 18,175,603 at September 30,
1999
Class B common stock, $.001 par value:
Authorized shares - 25,000,000 -- --
Issued and outstanding shares - none
Additional paid-in capital 177,685 175,030
Treasury stock, at cost, 722,432 and 951 (16,454) (26)
shares
Notes receivable from officers (61) (71)
Retained earnings 46,964 26,779
Accumulated other comprehensive income (loss) (2,084) --
-------- --------
Total stockholders' equity 206,068 201,730
-------- -------
Total liabilities and stockholders' equity $365,063 $322,222
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
AMERICAN ITALIAN PASTA COMPANY
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED
JUNE 30,
2000 1999
---- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Revenues $ 60,622 $ 55,278
Cost of goods sold 42,909 39,368
Plant expansion costs -- 34
- -- - --
Gross profit 17,713 15,876
Selling and marketing expense 3,836 4,076
General and administrative expense 1,475 1,433
----- -----
Operating profit 12,402 10,367
Interest expense, net 1,146 326
----- ---
Income before income tax expense 11,256 10,041
Income tax expense 3,996 3,534
----- -----
Net income $7,260 $ 6,507
===== =======
Earnings Per Common Share:
Net income per common share $ .40 $ .36
=== ===
Weighted-average common shares outstanding 17,933 18,099
Earnings Per Common Share - Assuming Dilution:
Net income per common share assuming dilution $ .40 $ .35
=== ===
Weighted-average common shares outstanding 18,323 18,675
====== ======
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
AMERICAN ITALIAN PASTA COMPANY
CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED
JUNE 30,
2000 1999
---- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Revenues $ 183,728 $ 158,994
Cost of goods sold 131,895 116,470
Plant expansion costs -- 114
-------- --------
Gross profit 51,833 42,410
Selling and marketing expense 12,101 10,821
General and administrative expense 4,647 4,225
----- -----
Operating profit 35,085 27,364
Interest expense, net 3,475 1,245
----- -----
Income before income tax expense 31,610 26,119
Income tax expense 11,425 9,479
------ -----
Net income $20,185 $16,640
====== ======
Earnings Per Common Share:
Net income per common share $ 1.11 $ .92
==== ===
Weighted-average common shares outstanding 18,166 18,090
====== ======
Earnings Per Common Share - Assuming Dilution:
Net income per common share assuming dilution $ 1.08 $ .90
==== ===
Weighted-average common shares outstanding 18,623 18,587
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
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<TABLE>
<CAPTION>
AMERICAN ITALIAN PASTA COMPANY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
CLASS A
CLASS NOTES
CLASS A A ADDITIONAL RECEIVABLE OTHER TOTAL
COMMON COMMON PAID-IN TREASURY FROM RETAINED COMPREHENSIVE STOCKHOLDERS
SHARES STOCK CAPITAL STOCK OFFICERS EARNING INCOME (LOSS) EQUITY
------ ----- ------- ----- -------- ------- ------------- ------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
September 30, 1999 18,176,554 $18 $175,030 $(26) $ (71) $26,779 -- $201,730
Paydown of
notes
receivable
from officers -- -- -- -- 10 -- -- 10
Issuance of
shares of
Class A common
stock to
option holders
& other
issuances 184,132 -- 2,655 -- -- -- -- 2,655
Purchase of
treasury stock -- -- -- (16,428) -- -- -- (16,428)
Net income -- -- -- -- -- 20,185 -- 20,185
Foreign
currency
translation
adjustment -- -- -- -- -- -- (2,084) (2,084)
--------- ---- -------- ------ ------ ------ ------- -------
Comprehensive
income 18,101
======
Balance at
June 30, 2000 18,360,686 $ 18 $177,685 $(16,454) $ (61) $46,964 $(2,084) $206,068
========== ==== ======= ======== ===== ====== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
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<TABLE>
<CAPTION>
AMERICAN ITALIAN PASTA COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED
JUNE 30,
2000 1999
---- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Operating activities:
Net income $20,185 $16,640
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization 11,762 9,581
Deferred income tax 6,103 398
Changes in operating assets and liabilities:
Trade and other receivables (2,260) (1,480)
Prepaid expenses and deposits (896) (2,533)
Inventory (5,314) 1,683
Accounts payable and accrued expenses (4,979) (2,156)
Income tax payable 1,576 4,178
Other (1,657) (472)
------- -----
Net cash provided by operating activities 24,520 25,839
Investing activities:
Additions to property, plant and equipment (46,907) (63,461)
-------- --------
Net cash used in investing activities (46,907) (63,461)
Financing activities:
Additions to deferred debt issuance costs (718) --
Proceeds from issuance of debt 37,578 34,000
Principal payments on debt and capital lease
obligations (1,080) (834)
Proceeds from issuance of common stock, net of
issuance costs 1,291 438
Purchases of Treasury Stock (16,428) --
Other 9 9
------ -----
Net cash provided by financing activities 20,652 33,613
------ ------
Net decrease in cash and temporary investments (1,731) (4,009)
Cash and temporary investments at beginning of
period 3,088 5,442
----- -----
Cash and temporary investments at end of period $ 1,357 $ 1,433
===== =====
</TABLE>
See accompanying notes to consolidated financial statements.
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AMERICAN ITALIAN PASTA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine-month periods ended June
30, 2000 are not necessarily indicative of the results that may be expected for
the year ended September 30, 2000. These financial statements should be read in
conjunction with the consolidated financial statements and footnotes thereto and
management's discussion and analysis thereof included in the Company's Annual
Report on Form 10-K for the year ended October 1, 1999 and management's
discussion and analysis included in Item 2 hereof.
American Italian Pasta Company (the "Company" or "AIPC") uses a 52/53 week
financial reporting cycle with a fiscal year which ends on the last Friday of
September or the first Friday of October. The Company's first three fiscal
quarters end on the Friday last preceding December 31, March 31, and June 30 or
the first Friday of the following month. For purposes of this Form 10-Q, the
third fiscal quarter of fiscal years 2000 and 1999 both included thirteen weeks
of activity and are described as the three month periods ended June 30, 2000 and
1999.
2. Stock Repurchase Plan
On March 20, 2000, the Company's Board of Directors authorized up to $25 million
to implement a common stock repurchase program of up to one million shares
during the next twelve months.
Purchases will be made from time to time on the open market or in negotiated
transactions, depending upon market conditions and other factors. Repurchased
common shares will be added to the Company's treasury shares to satisfy a
portion of the Company's existing stock option commitments.
On July 14, 2000, the Company's Board of Directors authorized an increase to its
share repurchase program to cover a total of 1.5 million shares, and to allocate
another $10.0 million to make these purchases.
As of July 26, 2000, the Company has purchased 948,000 shares at prices ranging
from $18.875 to $25.9375 per share.
3. Earnings Per Share
Dilutive securities, consisting of options to purchase the Company's Class A
common stock, included in the calculation of diluted weighted average common
shares were 390,000 and 457,000 shares for the three-month and nine-month
periods ended June 30, 2000, respectively, and 576,000 and 497,000 shares for
the three-month and nine-month periods ended June 30, 1999, respectively.
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A summary of the Company's stock option activity:
Number of Shares
Outstanding at September 30, 1999 1,944,708
Exercised (178,508)
Granted 520,050
Canceled/Expired (6,577)
-------
Outstanding at June 30, 2000 2,279,673
=========
4. Amendment to Credit Facility
On April 26, 2000, the Company completed an expansion to its revolving credit
facility with its bank group by adding a multi-currency feature. Available
credit under the expanded credit facility is $190 million compared with $140
million previously. The expanded facility eliminates the previously scheduled
step-downs of available credit in the agreement, and allows the Company to
borrow in dollars or up to $65.0 million in Euro equivalents. The Company's new
manufacturing facility in Italy provides the opportunity to borrow in Euros with
minimal net currency exposure at rates well below current dollar-denominated
rates.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The discussion set forth below, as well as other portions of this Quarterly
Report, contains statements concerning potential future events. Such
forward-looking statements are based upon assumptions by the Company's
management, as of the date of this Quarterly Report, including assumptions about
risks and uncertainties faced by the Company. Readers can identify these
forward-looking statements by their use of such verbs as expects, anticipates,
believes or similar verbs or conjugations of such verbs. If any management
assumptions prove incorrect or should unanticipated circumstances arise, the
Company's actual results could materially differ from those anticipated by such
forward-looking statements. The differences could be caused by a number of
factors or combination of factors including, but not limited to, those factors
identified in the Company's Current Report on Form 8-K dated October 29, 1997,
and amended November 2, 1999, which is hereby incorporated by reference and, any
amendments thereto and other matters disclosed in the Company's public filings.
This Form 8-K has been filed with the Securities and Exchange Commission (the
"SEC" or the "Commission") in Washington, D.C. and can be obtained by contacting
the SEC's public reference operations or obtaining it through the SEC's web site
on the World Wide Web at http://www.sec.gov. Readers are strongly encouraged to
consider those factors when evaluating any such forward-looking statement. The
Company will not update any forward-looking statements in this Quarterly Report
to reflect future events or developments.
Results of Operations
Third quarter fiscal 2000 compared to third quarter fiscal 1999.
REVENUES. Total revenues increased $5.3 million, or 9.7%, to $60.6 million
for the three-month period ended June 30, 2000, from $55.3 million for the
three-month period ended June 30, 1999. The increase for the three-month period
ended June 30, 2000 was primarily due to volume growth in ingredient and private
label customer volumes, offset by lower Mueller's, other retail, and contract
volumes. Retail and institutional revenues increased 12.5% and 2.5%,
respectively. Revenue growth of 9.7% exceeded volume growth of 7.2% due to
higher per unit Mueller's revenues and the absence of lower priced ingredient
volumes in the current quarter. Revenues for the current quarter were affected
by restructured private label programs which lowered both
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revenues and promotional expenses versus the prior year quarter. Management
expects continued increases in revenues as a result of both increasing Retail
volumes and Institutional volumes; however, increases will be partially offset
by higher growth rates of lower-priced Ingredient products, and may be impacted
by revenue pass throughs associated with durum wheat cost fluctuations.
Revenues for the Retail market were $44.5 million in the current period,
compared to $39.6 million for the three-month period ended June 30, 1999. Total
Retail pasta shipments were up 9.1% versus the prior period. Private Label
volume was up 14.2% offset by the reduction in other Retail shipments from the
prior year period.
Revenues for the Institutional market increased $0.4 million, or 2.5%, to
$16.1 million for the three-month period ended June 30, 2000, from $15.7 million
for the three-month period ended June 30, 1999. This increase was primarily a
result of increases in volumes of 3.5% offset by lower average selling prices,
due to changes in sales mix. The Ingredient business volume growth was 23.3%,
with much of the growth attributable to the ramp up of the Company's Ingredient
focused plant in Kenosha.
GROSS PROFIT. Gross profit increased $1.8 million, or 11.6%, to $17.7
million for the three-month period ended June 30, 2000, from $15.9 million for
the three-month period ended June 30, 1999. This increase is generally related
to the revenue growth and lower per unit costs because of volume and mix. This
resulted in gross profit as a percentage of revenues increasing to 29.2% for the
three-month period ended June 30, 2000 from 28.7% for the three-month period
ended June 30, 1999. The increase in gross profit as a percentage of revenues
relates to lower operating costs per unit, and favorable volume mix,
specifically lower Mueller's and contract volumes in the current quarter.
Management expects increases in gross profit to continue as a result of volume
and related revenue increases.
SELLING AND MARKETING EXPENSE. Selling and marketing expense decreased
$0.2 million, or 5.9%, to $3.8 million for the three-month period ended June 30,
2000, from $4.1 million for the three-month period ended June 30, 1999. Selling
and marketing expense as a percentage of revenues decreased to 6.3% for the
three-month period ended June 30, 2000, from 7.4% for the comparable prior year
period. The decrease in selling and marketing expense relates to the
restructured private label programs which lowered both revenues and promotional
expenses.
GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
increased $42,000, or 2.9%, to $1.5 million for the three-month period ended
June 30, 2000, from $1.4 million for the comparable prior year period. General
and administrative expense as a percentage of revenues decreased to 2.4% from
2.6%.
OPERATING PROFIT. Operating profit for the three-month period ended June
30, 2000, was $12.4 million, an increase of $2.0 million or 19.6% over the $10.4
million reported for the three-month period ended June 30, 1999, and increased
as a percentage of revenues to 20.5% for the three-month period ended June 30,
2000, from 18.8% for the three-month period ended June 30, 1999, due primarily
to improved gross margin performance and lower selling and marketing expenses.
INTEREST EXPENSE. Interest expense for the three-month period ended June
30, 2000, was $1.1 million, increasing $0.8 million from the $0.3 million
reported for the three-month period ended June 30, 1999. The increase is
attributable to higher debt levels, higher interest rates, and reduced interest
expense capitalization.
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INCOME TAX. Income tax expense for the three-month period ended June 30,
2000, was $4.0 million, increasing $0.5 million from the $3.5 million reported
for the three-month period ended June 30, 1999, and reflects an effective income
tax rate of approximately 35.5% and 35.2% respectively. Profits for the prior
year quarter benefited from a one-time adjustment to deferred taxes of $180,000.
This adjustment was attributable to the Company's estimated reduction in
effective income tax rates.
NET INCOME. Net income for the three-month period ended June 30, 2000, was
$7.3 million, increasing $0.8 million or 11.6% from the $6.5 million reported
for the three-month period ended June 30, 1999. Net income as a percentage of
revenues was 12.0% compared with 11.8% for the same period of 1999. Diluted
earnings per share were $0.40 per share for the three-month period ended June
30, 2000 compared to $0.35 per share in the comparable prior year period.
Nine months fiscal 2000 compared to nine months fiscal 1999.
REVENUES. Revenues increased $24.7 million, or 15.5%, to $183.7 million
for nine-month period ended June 30, 2000, from $159.0 million for the
nine-month period ended June 30, 1999. The increase for the nine-month period
ended June 30, 2000 was primarily due to volume growth in both the Retail and
Institutional markets with some offset from the pass through of lower durum
wheat costs. Management expects continued increases in revenues as a result of
both increasing Retail volumes and Institutional volumes; however, increases
will be partially offset by higher growth rates of lower priced Ingredient
products and may be impacted by revenue pass throughs associated with durum
wheat cost fluctuations.
Revenues for the Retail market increased $17.2 million, or 15.0%, to
$131.9 million for the nine-month period ended June 30, 2000, from $114.7
million for the nine-month period ended June 30, 1999. The increase primarily
reflects gains in private label volumes which are partially offset by decreases
in average sales prices related to the pass through of lower durum wheat costs.
Revenues for the Institutional market increased $7.6 million, or 17.1%, to
$51.9 million for the nine-month period ended June 30, 2000, from $44.3 million
for the nine-month period ended June 30, 1999. The primary increase in revenues
was due to volume growth of 32.3%. The pass through of lower durum wheat costs,
along with changes in sales mix generated by rapid growth in Ingredient revenues
and a significant increase in contract volume, created an 11.5% reduction in
average selling prices.
GROSS PROFIT. Gross profit increased $9.4 million, or 22.2%, to $51.8
million for the nine-month period ended June 30, 2000, from $42.4 million for
the nine-month period ended June 30, 1999. This increase is generally related to
the revenue growth. Gross profit as a percentage of revenues increased to 28.2%
for the nine-month period ended June 30, 2000 from 26.7% for the nine-month
period ended June 30, 1999. The increase in gross profit as a percentage of
revenues relates to lower raw material costs, and lower operating costs per unit
in the current nine-month period compared to the prior period. Management
expects increases in gross profit to continue as a result of volume and related
revenue increases.
SELLING AND MARKETING EXPENSE. Selling and marketing expense increased
$1.3 million, or 11.8%, to $12.1 million for the nine-month period ended June
30, 2000, from $10.8 million for the nine-month period ended June 30, 1999. The
increase relates primarily to increased selling and promotional expenses
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associated with higher private label sales volumes and additional private label
customers. Selling and marketing expense as a percentage of revenues was 6.6%
for the nine-month period ended June 30, 2000, down from 6.8% for the comparable
prior year period.
GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
increased $0.4 million, or 10.0%, to $4.6 million for the nine-month period
ended June 30, 2000, from $4.2 million for the comparable prior year period.
General and administrative expense as a percentage of revenues was 2.5% for the
nine-month period ended June 30, 2000, up from 2.7% for the comparable prior
year period.
OPERATING PROFIT. Operating profit for the nine-month period ended June
30, 2000, was $35.1 million, an increase of $7.7 million or 28.2% over the $27.4
million reported for the nine-month period ended June 30, 1999, and increased as
a percentage of revenues to 19.1% for the nine-month period ended June 30, 2000,
from 17.2% for the nine-month period ended June 30, 1999 as a result of the
factors discussed above.
INTEREST EXPENSE. Interest expense for the nine-month period ended June
30, 2000, was $3.5 million, increasing $2.2 million from the $1.2 million
reported for the nine-month period ended June 30, 1999. The increase is
attributable to higher debt levels, higher interest rates and reduced interest
expense capitalization.
INCOME TAX. Income tax expense for the nine-month period ended June 30,
2000, was $11.4 million, increasing $1.9 million from the $9.5 million reported
for the nine-month period ended June 30, 1999, and reflects an effective income
tax rate of approximately 36.1% and 36.3%, respectively. Profits for the prior
year nine-month period benefited from a one-time adjustment to deferred taxes of
$180,000. This adjustment was attributable to the Company's estimated reduction
in effective income tax rates.
NET INCOME. Net income for the nine-month period ended June 30, 2000, was
$20.2 million, increasing $3.5 million or 21.3% from the $16.6 million reported
for the nine-month period ended June 30, 1999. Diluted earnings per common share
were $1.08 per share for the nine-month period ended June 30, 2000 compared to
$.90 per share for the nine-month period ended June 30, 1999.
Financial Condition and Liquidity
The Company's primary sources of liquidity are cash provided by operations
and borrowings under its credit facility. Cash and temporary investments totaled
$1.4 million, and net working capital totaled $41.5 million at June 30, 2000.
The Company's net cash provided by operating activities totaled $24.5 million
for the nine-month period ended June 30, 2000 compared to $25.8 million for the
nine-month period ended June 30, 1999. The decrease in the net cash provided by
operations was due primarily to higher working capital utilized in the period
offset by higher operating income in the current period.
Cash used in investing activities principally relates to the Company's
investments in pasta production, distribution and milling assets. Capital
expenditures were $46.9 million for the nine-month period ended June 30, 2000
compared to $63.5 million in the comparable prior fiscal year period. The
decrease in spending for the nine-month period ended June 30, 2000 was a result
of the Company's completion in 1999 of its third plant in Kenosha, Wisconsin,
and its 1999 South Carolina and Missouri capital expansion
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programs. Currently, the Company is in the process of completing a fourth plant
in Verolanuova, Italy, and plans to spend approximately $35-40 million, of which
19.4 million has been spent to date. The Company anticipates completion of this
project during the fiscal year ending September 30, 2001. Additionally, the
Company plans to spend approximately $25 million in fiscal year 2000, primarily
for cost savings and maintenance projects, of which approximately $21 million
has been spent to date. The Company anticipates completion of these projects
during the year ending September 30, 2000.
Net cash provided by financing activities was $20.7 million for the
nine-month period ended June 30, 2000 compared to net cash provided of $33.6
million for the nine-month period ended June 30, 1999. The $20.7 million in 2000
is the result of borrowings to fund the capital expansion programs and the stock
repurchase programs. The Company had treasury stock purchases totaling $16.4
million during the nine-month period ended June 30, 2000.
The Company currently uses cash to fund capital expenditures, repayments of
debt, working capital requirements, and its stock repurchase program. The
Company expects that future cash requirements will continue to be principally
for capital expenditures, repayments of indebtedness, working capital
requirements, and its stock repurchase program.
The Company has current commitments for $14.0 million in raw material
purchases for fiscal year 2000 and has approximately $2.5 million in capital
expenditures remaining under the above referenced capital expansion programs.
The Company anticipates the capital expansion programs will be fully funded by
the end of fiscal year 2001. The Company expects to fund these commitments from
operations and borrowings under its revolving credit facility.
On April 26, 2000, the Company completed an expansion to its revolving credit
facility with its bank group by adding a multi-currency feature. Available
credit under the expanded credit facility is $190 million compared with $140
million previously. The expanded facility eliminates the previously scheduled
step-downs of available credit in the agreement, and allows the Company to
borrow in dollars or up to $65.0 million in Euro equivalents. The Company's new
manufacturing facility in Italy provides the opportunity to borrow in Euros with
minimal net currency exposure at rates well below current dollar-denominated
rates.
At this time, the current and projected borrowings under the credit facility
do not exceed the facility's available commitment. The facility matures at the
end of fiscal year 2002. The Company anticipates that any borrowing outstanding
at that time will be satisfied with funds from operations or will be refinanced.
The Company currently has no other material commitments.
Management believes that net cash provided by operating and financing
activities will be sufficient to meet the Company's expected capital and
liquidity needs for the foreseeable future.
Year 2000 Compliance
The Company completed all Year 2000 readiness work and experienced no
significant problems.
The Company incurred expenses of approximately $330,000 in fiscal year 1998
and approximately $250,000 in fiscal year 1999, to resolve the Company's Year
2000 compliance issues. All expenses incurred in connection with Year 2000
compliance were expensed as incurred, other than acquisitions of new software or
hardware, which were capitalized.
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The Company does not expect to incur any material expenditures in the future
related to Year 2000 issues.
The Company does not believe it has any continued exposure to the Year 2000
issues.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's principal exposures to market risk associated with financial
instruments relate to interest rate risk associated with variable rate
borrowings and foreign currency exchange rate risk associated with borrowings
demoniniated in foreign currency. The Company's exposure to interest rate risk
on their variable rate long-term debt is not material.
The Company has operations in Italy. The functional currency for this
operation is the Lira. At June 30, 2000, long-term debt includes foreign
subsidiary obligations of 47.4 million Euros ($43.5 million) under a credit
facility which bears interest at a variable rate based upon the Euribor rate.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-------------------------------
Not applicable
Item 2. Changes in Securities
-------------------------------
Not applicable
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
-------------------------------
Not applicable
Item 5. Other Information
-------------------------------
Not applicable
Item 6. Exhibits and Reports on Form 8-K
-------------------------------
(a) Exhibits.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
None
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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.
American Italian Pasta Company
July 26, 2000 /S/ Timothy S. Webster
------------------------- ----------------------
Date Timothy S. Webster
President and Chief Executive Officer
(Principal Executive Officer)
July 26, 2000 /S/ Warren B. Schmidgall
------------------------- ------------------------
Date Warren B. Schmidgall
Executive Vice President and Chief
Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
27 Financial Data Schedule.
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