Milling & Baking News - August 1, 2006 - 21

PASTA

industry

continue our successful efforts to grow and
improve our business. With the strategic
depth, research and development experience
and additional financial resources that Ebro
provides, we will be well positioned to harness the full potential of our company."
The transaction brought to a close what
could best be characterized as a failed seven-year episode as an independent company for New World Pasta. The company was
spun off early in 1999 from Hershey Co. to
a management-led team in a $450 million
transaction. It grew two years later with
a "fire sale" acquisition of the Creamette,
Prince and other brands for $43.1 million.
The brands, acquired from Borden Foods

Ronzoni Healthy Harvest, Barilla Plus and
Dreamfields were the three fastest growing
individual pasta brands in the most recent
tracked data from Information Resources, Inc.

Corp., had annual sales of $210 million.
In the years that followed, the company,
which has a 26% share in the U.S. dried
pasta market, struggled under the burden
of heavy debt and in the face of stiff competition from domestic competitors and Italian
imports. It filed for bankruptcy in May 2004
before emerging from Chapter 11 seven
months later with a new c.e.o.
This past month the company hired Peter Smith, a former StarKist Seafood executive, to take over as vice-president of sales
and marketing. His task: incorporate new
branding opportunities.
For its part, Ebro Puleva sees the addition of New World Pasta as an opportunity

22 / Milling & Baking News, August 1, 2006

perspective

PASTA

to create additional value for shareholders.
The acquisition is the first major step in the
company's "Strategic Plan 2006-2009" and
solidifies the company as the second-largest
pasta manufacturer in the world, trailing
only Barilla Holding S.p.A.
In financials released July 20, Ebro Puleva said the addition of New World Pasta
already has contributed €21 million ($26.6
million) to pasta division sales and €2.9 million to EBITDA in just over a month.

Barilla builds on success
While Ebro Puleva may be in second
place to Barilla, the Parma, Italy-based pasta maker has been active in its own right.
In what has been a common theme over the
past year, Barilla, like AIPC and New World
Pasta before it, changed c.e.o.s. In January,
Robert Singer was named c.e.o. and chief
financial officer, reporting directly to the
company's chairman, Guido Barilla.
Prior to joining Barilla, Mr. Singer worked
for two years as president of Abercrombie
& Fitch Co., a retail
apparel company. He
will now be charged
with overseeing a network of pasta brands
that posted U.S. sales
of $236,266,900 in the
52 weeks ended June
18, good enough for
16% growth over the
preceding 52-week
period,
according
to Information Resources, Inc. Among
the top three vendors
of dried spaghetti/
macaroni/pasta, only
Barilla posted year-overyear dollar and unit sales improvement in the period ended June 18.
Mr. Singer's appointment preceded by
only a couple months the company's expansion in the United States. Barilla America,
Inc. in March said it would build a new pasta
plant and distribution center in Avon, N.Y.
The plant, which required an $87.7 million investment from Barilla and $5.5 million from
Jacobson Warehouse Company, Inc., will be
Barilla's second in the United States and primarily will serve the Northeast. Barilla's other pasta facility is located at Ames, Iowa.
The company broke ground on the Avon
facility in June, with production expected to
start by mid-June 2007 and full operation in
place by late June 2009.

AIPC struggles to rebound
At AIPC, the future is murkier. At about
the same time New World Pasta was naming a new c.e.o. last December, AIPC's chief
executive for the past 13 years resigned. Tim

industry

perspective

Webster, who joined the company in April
1989 and led the company through numerous changes during his tenure, left amid a
lengthy investigation of the company's accounting practices.
In March, AIPC entered into a $295 million,
five-year senior credit facility, replacing a $290
million credit facility that would have expired
on Oct. 2. The company, which had been in default of its earlier credit, has been brought into
compliance with all its covenant requirements.
The company said at that time that the
long-term financing would strengthen its
capital structure and provide a stable platform from which to execute strategies and
business initiatives.
In mid-June, AIPC provided an update
on its accounting practices, saying it expects
to increase its cumulative charges against
earnings by between $53 million and $65
million. The company also said its probe
of three years of financial results has been
broadened to include two additional years.
The new charges are in addition to previously disclosed charges of $76 million
disclosed after the second quarter of fiscal
year 2005 (fiscal year begins Oct. 1). All but
about $4.5 million of the new charges are
non-cash items, AIPC said.
The earlier charges of $76 million comprised asset impairment charges of $70 million related to its brands and fixed assets
and inventory write-downs of $6 million,
related to low- or reduced-carbohydrate
pasta inventory and packaging stock.
AIPC said its audit committee work is
not expected to be completed and restated
earnings are not expected to be filed before
the fall of this year and said it "expects to be
current in its delinquent filings in December
2006, when its fiscal 2006 form 10-K is due."
If the company does not file by Dec. 31, the
New York Stock Exchange has said it will
delist the company's stock.
AIPC did provide a glimpse of financials
in June when it issued a limited review of
its financial results in the six months ended
March 31, 2006. Revenues for the period
were $197 million, down 1% from $199.2
million in the same period in fiscal 2005.
The information appeared to show some
stabilization in the company's sales, but also
indicated the prospective sale of significant
assets at great losses.
Also at that time, AIPC said it had received an offer of about $900,000 for its specialty pasta brands with the proposed sale
scheduled to close in July. As of July 27, that
sale still had not closed. Impairment charges
are expected to be about $4.3 million.
The company did, however, follow
through on its plans to divest its Kenosha,
Wis., pasta plant. AIPC in late June entered into a non-binding letter of intent to
sell the building and real estate for about
$6 million to ST Specialty Foods Inc. The

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