Pasta maker American Italian Pasta Company has announced that it is delaying the release of its full financial results for the third fiscal quarter ended 1 July 2005, while it carries out an internal investigation.


The company said that its audit committee is “conducting an internal investigation of certain accounting procedures and practices and certain other matters.”


The company’s third quarter Form 10-Q, due on 10 August 2005, and the company’s previously planned 10 August, 2005 earnings release are being delayed until the audit committee has completed its review of the matters that are the subject of its internal investigation. The company will file its Form 10-Q as soon as is practicable but does not currently expect that it will be able to file within the five day extension period provided for under SEC Rule 12b-25.


While the company’s core operations were profitable in the third quarter, such operations did not meet internal expectations and were not consistent with the third quarter results contemplated in the full- year earnings guidance outlined earlier by the company. The company expects to record a significant net loss for the third quarter ended 1 July, 2005, leading to a net loss for the 2005 fiscal year.


The company’s audit committee has recently commenced an internal investigation, undertaken at the committee’s own initiative, of certain matters including: certain accounting procedures and practices including those relating to material weaknesses in internal controls identified by the company; financial statement adjustments and the circumstances surrounding such adjustments; and, certain transactions and possible past accounting errors and their causes. The audit committee has retained outside counsel to assist with its investigation and outside counsel has engaged forensic accountants. The company’s external auditors, Ernst & Young LLP, have been notified of the internal investigation. The company indicated that the investigation relates to transactions and other matters occurring as early as the company’s 2000 fiscal year.


The internal investigation has not yet been completed and the company indicated that financial statement adjustments might be necessary in addition to those outlined in this release. Until the internal investigation is completed by the audit committee and any financial statement adjustments and their causes are determined, the company’s third quarter results and any impact on prior period results cannot be finalized.


The company also said that in late 2004 and early 2005, it received inquiries from the Philadelphia and New York Stock Exchanges concerning trading activity in the company’s stock, by persons outside of the company, during time periods surrounding certain of the company’s public announcements. As is the routine practice of the exchanges, the staff of the SEC was advised of the inquiries. In March 2005, the company initiated contact with the SEC staff and began discussions with the staff regarding information relating to the exchange inquiries. The company has had ongoing discussions with and has voluntarily been providing relevant information to the SEC staff. These discussions and disclosures are in keeping with the company’s policy to assist and cooperate with inquiries by an exchange or government regulatory authority. Some of the issues under discussion with the SEC staff relate to certain of the subjects addressed below. The SEC staff’s review is ongoing and the company is continuing to cooperate with the staff’s efforts.