-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OzgO8sMSo603z2Ev9muYu4lG0LsbDph94QO73uQumlso2I3CPhIXjmtv8eIAIqja Fym6W9Te6pu0ifVUCZ1d8A== /in/edgar/work/20000727/0000922907-00-000147/0000922907-00-000147.txt : 20000921 0000922907-00-000147.hdr.sgml : 20000921 ACCESSION NUMBER: 0000922907-00-000147 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000727 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN ITALIAN PASTA CO CENTRAL INDEX KEY: 0000849667 STANDARD INDUSTRIAL CLASSIFICATION: [2090 ] IRS NUMBER: 841032638 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13403 FILM NUMBER: 679513 BUSINESS ADDRESS: STREET 1: 1000 ITALIAN WAY CITY: EXCELSIOR SPRINGS STATE: MO ZIP: 64024 BUSINESS PHONE: 8165026000 MAIL ADDRESS: STREET 1: 1000 ITALIAN WAY CITY: EXCELSIOR SPRINGS STATE: MO ZIP: 64024 10-Q 1 0001.txt AMERICAN ITALIAN PASTA COMPANY FORM 10-Q 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. Page 1 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 Page 2
AMERICAN ITALIAN PASTA COMPANY CONSOLIDATED BALANCE SHEETS JUNE 30, SEPTEMBER 30, 2000 1999 ---- ---- (IN THOUSANDS) 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.
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AMERICAN ITALIAN PASTA COMPANY CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED JUNE 30, 2000 1999 ---- ---- (IN THOUSANDS) (UNAUDITED) 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.
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AMERICAN ITALIAN PASTA COMPANY CONSOLIDATED STATEMENTS OF INCOME NINE MONTHS ENDED JUNE 30, 2000 1999 ---- ---- (IN THOUSANDS) (UNAUDITED) 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 ====== ======
See accompanying notes to consolidated financial statements. Page 5
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) 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 ========== ==== ======= ======== ===== ====== ======= =======
See accompanying notes to consolidated financial statements. Page 6
AMERICAN ITALIAN PASTA COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED JUNE 30, 2000 1999 ---- ---- (IN THOUSANDS) (UNAUDITED) 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 ===== =====
See accompanying notes to consolidated financial statements. Page 7 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. Page 8 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 Page 9 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. Page 10 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 Page 11 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 Page 12 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. Page 13 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. Page 14 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 Page 15 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 Page 16 EXHIBIT INDEX Exhibit No. Description 27 Financial Data Schedule. Page 17 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Balance Sheets at June 30, 2000; Statements of Operations for the nine months ended June 30, 2000; the Statements of Cash Flows for the nine months ended June 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND THE NOTES THERETO 1000 OCT-02-1999 9-MOS SEP-30-2000 JUN-30-2000 1357 0 24465 187 30541 62972 322181 61813 365063 21478 0 0 0 18 206050 365063 183728 183728 131895 143996 0 0 3475 31610 11425 20185 0 0 0 20185 1.11 1.08
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