American Italian Pasta Company Outlines Status of Audit Committee Investigation, Company Financial Statement Review and Pending
09 6월 2006 - 10:27PM
PR Newswire (US)
KANSAS CITY, June 9 /PRNewswire-FirstCall/ -- American Italian
Pasta Company (NYSE:PLB) reported today the status of the Company's
Audit Committee investigation, the Company's financial statement
review and the pending restatement of the Company's historical
financial statements. AUDIT COMMITTEE INVESTIGATION AND COMPANY
FINANCIAL STATEMENT REVIEW As announced in August 2005, in light of
certain matters brought to the attention of the Board of Directors
by management, the Company's Audit Committee commenced in July 2005
an internal investigation utilizing outside counsel and forensic
accountants. The Company has been advised by the Audit Committee
that substantial progress has been made in the investigation and
that it is now in its later stages. Concurrent with the Audit
Committee investigation, the Company has continued its own review
of its financial statements, which it commenced prior to the Audit
Committee investigation. The Company's review, which includes the
adjustments previously disclosed, is also in the later stages of
completion. To date, the Audit Committee investigation and the
Company's review have identified the following areas that will
require adjustments to the Company's financial statements: --
Inventory: -- Reserves for slow moving, damaged and obsolete
inventories -- Capitalization of certain overhead and logistics
costs -- Fixed assets: -- Capitalization of certain costs,
including internal labor and operating costs, plant start-up costs
and interest costs -- Depreciation expense -- Dispositions of fixed
assets -- Spare parts inventory -- Promotional allowances and
related customer deduction receivables -- Certain specific
historical transactions, including the recording of certain
customer arrangements and the recording of certain brand
acquisitions and related intangibles -- Various matters, including
adjustments identified in previous years audits that were deemed
immaterial at that time These adjustments will result in overall
reductions in pre-tax income and may be reflected as either (i)
prior period adjustments resulting in incremental income or expense
adjustments to the Company's previously filed financial statements,
(ii) adjustments to reflect changes in accounting methods from
those used in prior reporting periods, or (iii) incremental income
or expense in the Company's financial statements that have not yet
been filed for fiscal years 2005 and 2006. In addition, the
Company's financial statements will also include prior period
adjustments to correct the periods in which certain income or
expense items were originally recorded in prior reporting periods.
The financial statement impact and timing of these adjustments have
not yet been fully determined and are subject to completion of the
Audit Committee investigation and the Company's review of its
financial statements. However, the Company currently expects that
the adjustments could result in cumulative charges to pre-tax
income in the range of $53 to $65 million. All but approximately
$4.5 million of these cumulative charges are non-cash items. The
above adjustments do not include previously disclosed asset
impairment charges and other non-cash charges arising from business
performance and market place developments occurring subsequent to
the second quarter of fiscal 2005. Such charges are currently
comprised of asset impairment charges totaling approximately $70
million (relating to the Company's brands and fixed assets) and
inventory write-downs totaling approximately $6 million (relating
to low and reduced carb inventory and write-downs resulting from
changes in regulatory packaging requirements). In addition to the
areas of adjustment outlined above, the Company and the Audit
Committee advisors continue to review additional issues, including,
but not limited to, the capitalization of certain costs relating to
the original construction of the Company's Kenosha, Wis. and Italy
plants. The completion of the review of these areas could result in
adjustments to the Company's historical financial statements in
addition to the estimated adjustments noted above. RESTATEMENT OF
HISTORICAL FINANCIAL STATEMENTS In October 2005, the Company
announced that it had determined that certain of the Company's
historical financial statements should no longer be relied upon and
that as soon as practical after the conclusion of the Audit
Committee investigation, the Company anticipated restating the
affected financial statements. At that time, the Company concluded
that its previously issued audited consolidated financial
statements for the 2002, 2003 and 2004 fiscal years and its
unaudited consolidated financial statements for each of the fiscal
quarters during such years should no longer be relied upon. In
addition, the Company concluded that its unaudited financial
statements for the first two quarters of fiscal year 2005 should
not be relied upon. The Company has now concluded that its
financial statements for the additional historical periods of the
2000 and 2001 fiscal years should be restated. The Company is
continuing to work with the Audit Committee and its advisors and
with the Company's independent registered public accounting firm to
address the above described matters identified by the Company and
the Audit Committee investigation. The Company is dedicating
significant internal and external resources to the completion of
its historical financial statement review and restatement. However,
because of the significant number of issues to be addressed, the
complexity of the effort involved and the audit work to be
completed by the Company's independent registered public accounting
firm, the Company does not anticipate completing its restatement
and re-filings of financial statements before the fall of this year
and expects to be current in its delinquent filings in December
2006, when its fiscal year 2006 Form 10-K is due. CONTINUING
FINANCIAL REVIEW The Company's work to date with respect to the
restatement of historical financial statements and the other
adjustments discussed above, as well as the Company's expectations
as to the timing of the filing of restated and delinquent financial
statements, are subject to a number of limitations, including: --
The adjustments outlined above are estimates based upon the work
performed to date and are not necessarily projections of the final
total adjustments that may result from the continuing financial
review. Accordingly, the estimated adjustments continue to be
preliminary, partial and subject to change; -- The Audit Committee
investigation and the Company's review are not yet completed and
additional adjustments may result from the completion of the
investigation and review; -- The Company's independent registered
public accounting firm has not completed its audits or reviews of
the above adjustments and estimates and; -- Subsequent events or
future operational results could have an impact on the Company's
financial statements. 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 adjustments expected to
be reflected in the Company's financial statements, the expected
level of adjustments resulting from the internal investigation by
the Audit Committee the amount of impairment charges, and the
timing of the finalization of the Company's restated financials and
fiscal year 2005 and year-to-date fiscal year 2006 financial
statements, are all forward-looking and based on current
expectations. Actual future results or events could differ
materially from those anticipated by such forward-looking
statements. 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 timing of the
finalization of financial statement adjustments, and the
conclusions reached regarding financial reporting. In addition,
future operating results are impacted by a number of factors,
including but not limited to, our dependence on a limited number of
customers for a substantial portion of our revenue, our ability to
fully implement our restructuring program, our ability to obtain
necessary raw materials and minimize fluctuations in raw material
prices, the impact of the highly competitive environment in which
we operate, our reliance exclusively on a single product category,
our ability to attract and retain key personnel, and our ability to
cost-effectively transport our products. For additional discussion
of the principal factors that could cause actual results to be
materially different, refer to our report on Form 10-K dated
December 10, 2004 filed by the Company with the Securities and
Exchange Commission. The Company will not update any
forward-looking statements in this press release to reflect future
events. DATASOURCE: American Italian Pasta Company CONTACT: George
Shadid, EVP & Chief Financial Officer of American Italian Pasta
Company, +1-816-584-5621, Web site: http://www.aipc.com/
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