Kansas City, Mo., Sept. 15 - American Italian Pasta Company, the largest producer of dry pasta in North America, today announced that it has entered into separate settlement agreements with the U.S. Attorney for the Western District of Missouri on behalf of the Department of Justice and with the U.S. Securities and Exchange Commission to fully resolve the previously disclosed investigations of the Company relating primarily to historical accounting and financial reporting that occurred under prior management.
Under the agreement with the USAO, the Company agreed to acknowledge responsibility for the conduct of certain former officers and employees, to continue to cooperate with the USAO, and to pay a monetary penalty of $7.5 million. Under the settlement with the SEC, the Company agreed to a consent injunction requiring future compliance with federal securities laws. The SEC settlement involves no monetary penalty against the Company.
Beginning in July 2005, the Board of Directors, through its Audit Committee, conducted an extensive internal investigation, with the assistance of independent legal counsel and forensic accounting experts, into the Company's past accounting practices. Throughout the investigations, the Company cooperated fully with the government, issued restated financial reports, and instituted several governance reforms designed to prevent similar accounting and financial reporting issues from occurring again. In agreeing to the settlements, the U.S. Attorney and the SEC recognized the cooperation and remediation efforts of the Company and its Board of Directors.
"Today's announcement brings a welcome close to an unfortunate chapter in the otherwise proud history of our Company," said Jack Kelly, president and chief executive officer. "I am extremely grateful to our Board of Directors for their leadership in addressing this matter in a thorough and proactive manner," added Kelly, who joined the Company in November 2007 and was appointed the Company's president and CEO in January 2008. "I also am proud of the meaningful reforms our new senior management team and employees have implemented over the last three years to correct the past issues and restore AIPC to sound governance and financial practices."
Some of the reforms undertaken by the board and senior officers include: the appointment of a new team of senior leaders with a proven track record of integrity and business leadership; extensive efforts to significantly improve financial processes and controls; a restructured ethics policy; and the establishment of a compliance office.
"These settlements complete the process begun in July, 2005 and enable us to focus entirely on the future," said Bill Patterson, chairman of the AIPC Board of Directors. He pointed to milestones in the process, including the settlement of the federal securities class action lawsuit, the restatement of past financial reports, and the Company achieving current filing status with the SEC for its periodic financial reports.
"Our Board, executive team and all of our valued employees continue to demonstrate, in substantive and important ways, that even when faced with the toughest challenges, we have the ability and resolve to enhance our value proposition for customers and shareholders while making AIPC a great place to work," said Kelly. "We know that AIPC is best served by putting these issues behind us and allowing the entire organization to fully focus on meeting our customers' needs and growing our leadership position in the dynamic pasta market place."