AIPC updates finances, discusses durum market

by Eric Schroeder
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KANSAS CITY — American Italian Pasta Co. on Friday provided an update on certain financials for the third quarter and first nine months of fiscal 2007. While AIPC did not provide a net revenues figure for the third quarter, the company said it had sales of $287.6 million in the nine months ended June 29, up from $271.2 million in the first nine months of fiscal 2006.

Overall volume increased 0.9% in the nine months, compared with the first nine months of 2006.

Excluding liquidation sales of $400,000 and $1.5 million in the first nine months of fiscal years 2007 and 2006, respectively, revenue increased 6.5% and volume increased 2.4% in the first nine months of fiscal 2007.

For the third quarter of fiscal 2007, AIPC had total liquidity resources of $47.1 million, consisting of cash on hand of $19.6 million and $27.5 million available under the company’s $30 million revolving credit facility.

As of June 29, total debt outstanding was $244.4 million. Total debt, net of cash, was $224.8 million, compared with $239.3 million as of Sept. 29, 2006.

"We have continued to improve our operations with increased revenue and volume, while also driving cash flow and reducing the company’s net debt," said Jim Fogarty, chief executive officer. "While we face challenges in the durum wheat market, we believe our operational improvements provide a solid foundation for us to react to our escalating cost pressures and to continue to move our business forward."

AIPC also provided a brief update on the current market for durum wheat, a significant component of its overall production costs. The company said durum has been adversely affected by "recent adverse crop conditions in Europe, European supply contract defaults, and resulting increased demand from Europeans for North American supplies of durum."

The company also pointed to a relatively low supply of available durum stocks on a global basis.

"The result has been escalating durum costs for the industry," AIPC said. "The magnitude of such escalating costs is more severe than that experienced last year. The company will be seeking to offset this cost inflation through price increases and improved efficiencies; however, the potential impact on margins and earnings is currently difficult to predict and dependent on, among other things, the competitive market in which the company operates."

AIPC said it expects to wrap-up its internal preparation of financial statements and annual reports for the fiscal year ended Sept. 30, 2005, and Sept. 30, 2006, by the last half of this month.

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