PLB American Italian Pasta

KANSAS CITY, Mo., Dec. 15 /PRNewswire-FirstCall/ -- American Italian Pasta Company (NYSE:PLB), the largest producer and marketer of dry pasta in North America, today provided an update on the progress of the restatement of its historical financial statements and its compliance with NYSE requirements. The Company also updated its liquidity and its response to increasing durum costs. RESTATEMENT PROCESS As previously announced, the Audit Committee's legal advisors completed their fact finding investigation and, with the forensic accountants, are reviewing the information obtained in the investigation. The Company has also substantially completed its review of historical accounting matters and is finalizing its conclusions and preparing its fiscal year 2005 financial statements and restatements of its financial statements for fiscal year 2004 and prior periods. The information is being reviewed by the Company's independent registered public accounting firm. The Company is continuing to marshal all available resources and anticipates it will file its annual report on Form 10-K for the fiscal year ended September 30, 2005 by the end of January 2007. The Company filed with the SEC yesterday a Form 12b-25 stating that the Company's annual report on Form 10-K for the fiscal year ended September 29, 2006, was not filed by its due date of December 31, 2006. The Company continues to believe that its 2006 Form 10-K will be completed and filed by the end of March 2007. NYSE COMPLIANCE On June 23, 2006, the Company received a trading extension from the New York Stock Exchange of up to six months, through December 31, 2006, to complete and file its Annual Report on Form 10-K for the year ended September 30, 2005 with the Securities and Exchange Commission. The extension was subject to review by the NYSE on an ongoing basis. The Company has notified the NYSE that it will not meet the extended date of December 31, 2006. The NYSE has notified the Company that it will suspend trading in the Company's shares prior to the opening of trading on Wednesday, December 20, 2006, and that under NYSE Rule 802.01E the NYSE will move forward with the initiation of suspension and delisting procedures. The Company will appeal that decision through the process provided under the NYSE rules. The Company has been advised that its shares are immediately eligible for quotation on the Pink Sheets, an electronic quotation service for securities traded over-the-counter, effective with the open of business on Wednesday, December 20, 2006. As a result, we expect no interruption of trading in our shares. The NYSE procedures will have no impact on the Company's $295 million, five-year credit facility or covenants attendant thereto. "AIPC has been working diligently with our independent auditors to thoroughly review all of the Company's financial statements for certain periods," said Jim Fogarty, AIPC's CEO. "We have made substantial progress toward concluding this intensive review process and are doing everything possible to ensure both a prompt completion and the accuracy and credibility of the historical balance sheet we will move forward with. As to changes in our stock trading venue, we will continue to pursue appropriate alternatives for the trading of our common shares, but more importantly we are focused on returning to timely filing status and continuing to improve our business." LIQUIDITY As we previously announced, as of fiscal year end September 29, 2006, the Company had total debt outstanding on September 29, 2006 of $262.3 million. Total debt, net of cash, was $239.3 million; reflecting a reduction in net debt of $28.2 million during fiscal 2006. Total debt outstanding on December 13, 2006 was $254.3 million. Total debt, net of cash was $229.7 million, reflecting a further reduction in net debt of $9.6 million from fiscal year end September 29, 2006. We note that this included our receipt of anti-dumping income of approximately $3.0 million from the U.S. government under the Continued Dumping and Subsidy Offset Act of 2000. As of December 13, 2006, the Company had total liquidity resources of $52.3 million, consisting of cash on hand of $24.6 million and $27.7 million in availability under the Company's $30 million revolving credit facility. DURUM COST IMPACT As previously reported, durum costs have risen dramatically in recent months. The price of durum, which constitutes approximately one-third of the Company's cost of goods sold, has risen approximately 34% since December 2005. To address these substantial cost increases, the Company has been implementing price increases in its non-branded business and recently has advised its branded customers that it will implement price increases in its retail branded products effective February 2007, consistent with the competitive market in which the Company operates. The Company believes price increases will not fully offset the negative impact of increased durum costs on the Company's cost of goods sold during the fiscal year 2007, but believes it will achieve that goal on a longer term basis. In addition to pricing, the Company also is pursuing business growth, further improvements in its cost structure, and other business enhancements to assist in the offset of this durum inflation. "AIPC has made significant strides over the past year," Mr. Fogarty added. "We have been executing our strategic business plan, improving our operations and continuing to provide outstanding service to our customers. We obtained a new credit facility, stabilized our revenue base, reduced our net debt, strengthened our liquidity, produced strong cash flow and have been able to respond to durum inflation by beginning to introduce price increases in line with the competitive market. With the support of our leadership team, dedicated employees, lenders, customers and suppliers, we are looking to the future." ABOUT AIPC Founded in 1988 and based in Kansas City, Missouri, American Italian Pasta Company is the largest producer and marketer 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," "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 timing of filing of its 2005 and 2006 Forms 10-K, future compliance with NYSE listing requirements, and durum costs and pasta price increases are forward-looking. Actual results or events could differ materially. The differences could be caused by a number of factors, including, but not limited to, the completion and findings of the Audit Committee investigation, the Company's review of its financial statements, a review and/or audit of the Company's financial statements by its independent registered public accounting firm, the SEC staff review, the conclusions reached regarding financial reporting, and durum market prices and pasta market competitive factors. The Company will not update any forward- looking statements in this press release to reflect future events. DATASOURCE: American Italian Pasta Company CONTACT: Paul Geist, Vice President & Corporate Controller, +1-816-584-5611 Web site: http://www.aipc.com/

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