Market Digest

American Italian Pasta Company (Pink Sheets: AITP), the largest producer of dry pasta in North America, today announced results for the fiscal year ended September 28, 2007. With this filing, the Company is current with its annual SEC reporting requirements.

RESTATEMENT PROCESS COMPLETE

“We are pleased to now be current on all of our annual filings and to have the entire restatement process behind us as we continue to lead the company in an exciting and positive direction,” said Jack Kelly, CEO of AIPC. “More importantly, we are excited to share that the execution of our business plan is bearing fruit. Our operational performance and financial results reported for fiscal 2007 show significant improvement in operating profit and net income over the prior year.”

FISCAL 2007 FINANCIAL RESULTS

Revenues for the year increased $31.1 million, or 8.5%, to $398.1 million, led by a 13.4% increase in revenue growth in the retail market which was partially offset by a 4.9% decrease in the institutional market. Net income for fiscal 2007 increased $35.7 million to $5.3 million, or $.28 per diluted share, versus a net loss of $30.4 million, or $1.65 loss per share, in fiscal 2006.

Operational Highlights

* Retail Revenues: The Company’s retail revenues increased $35.9 million, or 13.4%, to $304.4 million for the fiscal year ended September 28, 2007, from $268.5 million for the fiscal year ended September 29, 2006. Revenues increased $15.4 million, or 5.7%, due to volume increase and increased $20.2 million, or 7.5%, due to higher average selling prices. Revenues increased by $0.3 million due to an increase in payments received from the U.S. Government under the Continued Dumping and Subsidy Offset Act of 2000.

* Institutional Revenues: The Company’s institutional revenues (which include the food service channel) decreased $4.8 million, or 4.9%, to $93.7 million for fiscal year ended September 28, 2007 from $98.5 million for the fiscal year ended September 29, 2006. Revenues decreased $5.9 million, or 6.0%, due to volume losses and increased $1.1 million, or 1.1%, due to higher average selling prices and changes in sales mix.

* Cost of Goods Sold: Raw materials and other production costs were unfavorable to the prior year, but the effect of the increase was offset by higher selling prices, allowing the Company to maintain its gross margin at 22.4% for fiscal year 2007. Cost of goods sold in 2007 includes $0.8 million provision of inventory obsolescence, which was a reduction of $0.6 million from $1.4 million in fiscal year 2006.

* Loss on disposition of brands and trademarks: During fiscal 2006, the Company sold its Mrs. Leeper’s and Eddie’s Spaghetti brands and recorded a loss on disposition of brands and trademarks of $4.7 million. There was no such loss in fiscal 2007.

* Loss on long lived assets: During fiscal 2006, the Company permanently closed and sold its Kenosha, Wisconsin facility. The plant and certain equipment was sold and a pre-tax loss of $15.6 million was recorded. In addition, certain pasta lines and packaging equipment considered unnecessary for production planning were taken out of service. These assets were disposed or written down to their fair market value. In fiscal 2007, the Company recorded a $0.1 million gain.

As a result of minor year-end adjustments, the audited financial results described in this release differ slightly from those unaudited results previously reported for fiscal 2007.

Liquidity and Capital Resources

The Company stated that it is currently in compliance with the covenants of its credit facility. Projected future borrowing levels do not exceed the facility’s available commitment. Absent any significant increases in historic levels of professional fees or indemnification obligations, the Company believes cash available through future operations and its existing credit facility will be sufficient to meet expected capital and liquidity needs in the foreseeable future.

CEO COMMENTS

“Through the efforts of our outstanding employees and with the support and confidence of our customers, AIPC has made significant progress and, indeed, is entering a new chapter with optimism and anticipation,” Mr. Kelly continued. “We have significantly strengthened our operations, grown revenues, increased volume, and increased profitability — even in the face of significant challenges — and made financial integrity and strong corporate governance top priorities.

“As we look ahead, we will continue to focus on building upon these successes, capitalizing on our strengths and identifying growth areas and opportunities to deliver even more value to our customers,” he added.

Source: American Italian Pasta Company

Web site: http://www.aipc.com/