Milling & Baking News Corporate Profiles - 2014 - 10

Corporate Outlook

American Italian Pasta Co.
Company stresses
bottom line as
consumption declines

Fast Facts:
American Italian Pasta Co. will reduce
inventory and cut costs in a strategy
designed to post net income of $15
million to $18 million in 2005.
George D. Shadid was hired in August as executive vice-president and
chief financial officer.
The company will reduce the price of
its pasta that's lower in carbohydrates.
This pasta will be repositioned with
AIPC emphasizing its lower calorie
count and higher fiber content.
12

Milling & Baking News

imothy S. Webster, president
and chief executive officer, called
2004 the most challenging year
for American Italian Pasta Co. since the
company was founded in 1988.
After posting net income of
$41,299,000 in fiscal
2002 and $42,633,000
in fiscal 2003, AIPC's
net income for the fiscal year ended Oct. 4
plunged to $3 million.
In 2004, the low-carbohydrate trend brought
on
consumption
declines in the pasta
category. When AIPC introduced pasta lower in carbohydrates,
sales proved disappointing.
To reach more satisfying profitability
levels in 2005, AIPC plans to reduce inventory and implement price increases
and/or cost reductions in all of its strategic business units.
"After the most challenging year in the
company's history, our strategic plan is
focused on returning to several of our historical operating profiles and approaches
and performance characteristics, including greater profitability, higher margins
and lower production costs," Mr. Webster
said in an Oct. 28 conference call.
Reducing costs
Assuming that sales in the U.S. pasta
category will decline about 4% in 2005,
AIPC estimates revenue of $375 million
to $400 million in 2005, which compares to $417.4 million in fiscal 2004.
Thanks to planned cost savings, AIPC
still expects net income of $15 million
to $18 million in 2005. AIPC expects
to keep capital expenditures under $20
million in 2005. The plant in Kenosha,
Wis., will remain in a standby mode.
George D. Shadid will help oversee the

Baking & Snack Corporate Profiles

December 2004

cost-cutting moves. Kansas City-based
AIPC hired Mr. Shadid as its executive
vice-president and chief financial officer
in August. Formerly chief operating of-

ficer with Applebee's International, Inc.,
Mr. Shadid consulted with AIPC for several months before joining the company.
Low-carbohydrate strategy
The company in 2005 will reduce the
cost for its pasta lower in carbohydrates,
Mr. Webster said. The company will
reposition the pasta by emphasizing its
lower calorie count and higher fiber content while dialing down emphasis on carbohydrate reduction, Mr. Webster said.
In the fourth quarter of fiscal 2004,
AIPC spent $3.9 million in introductory
marketing of pasta lower in carbohydrates, but sales were nearly 50% less
than expected. The company in the
fourth quarter made no sales to Atkins
Nutritionals, Inc. for Atkins' proprietary
low-carbohydrate products.
The company announced plans in
June to eliminate 14% of its work force
and suspend operations at the Kenosha
plant. Temporarily halting production
in Excelsior Springs, Mo., for four
weeks in July and in Columbia, S.C.,
for more than a week in July reduced
inventory levels.

Milling & Baking News Corporate Profiles - 2014

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