American Italian Pasta Company (NYSE: PLB) today published guidance on forecasted 2002 earnings, capital spending, and cash flow. The Company also released today its fourth quarter and full year fiscal 2001 results in a separate release.

Full Year Expectations

Looking at the full year, which ends September 27, 2002, the Company stated it expects fully diluted earnings per share will fall within a range of $2.09 to $2.15.

Full year volumes are expected to grow in the neighborhood of 18% to 23% with revenue growth of approximately 25% to 30%. Revenue growth is anticipated to be fueled by the annualization of the Borden brands acquisition, along with strong volume growth in the private label, branded outsourcing, and ingredient businesses, and in Europe.

In fiscal 2001, AIPC's brands represented approximately 30% of total net revenues. In 2002 this amount is expected to exceed 35% because of the July acquisition of seven pasta brands from Borden Foods. Branded pasta carries a higher gross margin percentage, but also higher marketing and selling expenses, than does non-branded pasta in the Company's product line-up. This acquisition will have the impact of increasing the Company's gross margins and marketing and selling expenses as a percentage of net revenues. Gross margins are expected to increase by 125 to 250 basis points, up from gross margins of 31.4% of net revenues in fiscal 2001. Selling and marketing expenses were 10.2% of net revenues in 2001, and are projected in the range of 12.5% to 14.5% of net revenues for fiscal 2002. Included in this projection, the Company expects to spend $2.0 to $4.0 million more than in fiscal 2001 on consumer marketing behind the Mueller's brand.

General and administrative expenses are expected to be between $11.5 and $12.5 million for the year. The increase, versus $9.3 million in fiscal 2001, is attributable primarily to the Company's recent acquisitions and first full year of operations in Italy.

Interest expense for the year is projected between $9.0 and $10.0 million. The increase over fiscal 2001 is due to higher debt associated primarily with the Company's recent acquisitions, partially offset by lower interest rates. The Company has $80.0 million of fixed rate debt with average rates of 4.65%, with the remainder consisting of floating rate debt.

The Company expects no change in income tax rates in fiscal 2002 from the current rate of 34.5%.

Using a share price of $45 to calculate the impact of outstanding options, there are approximately 18.7 million fully diluted shares outstanding.

Quarterly Projections

EPS developments by quarter are generally expected to be in line with prior year quarterly developments (i.e., as a percentage of full year EPS).

Net revenue growth is expected to be in excess of 40% in the first quarter, between 25% and 35% in the second and third quarters, and between 10% and 15% in the fourth quarter versus the comparable quarters of 2001. The Mueller's brand acquisition will annualize mid-first quarter and the acquisition of brands from Borden Foods will annualize early in the fourth quarter.

Expenses as a percentage of net revenues are generally expected to be consistent from quarter to quarter, with two exceptions. Marketing and selling expenses are projected to be slightly higher than the full-year range in the first and second quarters, and slightly lower than the full-year range in the third and fourth quarters, due to heavier investment in consumer marketing in the first half. Interest expense is forecasted at $2.6 to $3.0 in the first quarter and $2.2 to $2.4 million in the second through fourth quarters.

Cash Flow and Capital Expenditures

Operating cash flow is expected in a range of $55.0 to $60.0 million with capital expenditures in a range of $35.0 to $40.0 million, resulting in reduction to outstanding debt in the neighborhood of $20.0 to $25.0 million.

Approximately $8.0 million of capital expenditures planned for fiscal 2002 were triggered by the manufacturing capacity and requirements for the brands acquired from Borden Foods.

Founded in 1988 and based in Kansas City, Missouri, American Italian Pasta Company is the largest- and the fastest-growing producer and marketer of dry pasta in North America. The Company has four plants that are strategically located in Excelsior Springs, Missouri, Columbia, South Carolina, Kenosha, Wisconsin and Verolanuova, Italy. The Company has approximately 560 employees located in the United States and Italy.

The statements contained in this release are forward-looking and based on current expectations. Actual future results could differ materially from those anticipated by such forward-looking statements. The differences could be caused by a number of factors, included but not limited to our dependence on a limited number of customers for a substantial portion of our revenue, our ability to manage rapid growth, 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, reliance exclusively on a single product category, our limited experience in the branded retail pasta business, our ability to attract and retain key personnel, our ability to cost- effectively transport our products and the significant risks inherent in our recent international expansion. For additional discussion of the principal factors that could cause actual results to be materially different, refer to our Current Report on Form 10-K dated December 22, 2000, filed by the Company with the Securities and Exchange Commission (Commission file No. 001-13403), any amendments thereto and other matters disclosed in the Company's other public filings. The Company will not update any forward-looking statements in this press release to reflect future events.