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Case Status:    SETTLED
On or around 09/02/2008 (Date of order of final judgment)

Filing Date: August 12, 2005

The original complaint charges AIPC and certain of its present or former officers and directors with violations of the Securities Exchange Act of 1934. AIPC engages in the production and marketing of dry pasta in North America. According to the Complaint, the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the defendants failed to properly expense $6.6 million in promotional allowances and related customer deduction receivables during the Class Period; (2) that defendants failed to take timely write downs for spare parts inventory, which caused the Company to take a $5.4 million charge; (3) that defendants maintained inadequate reserves for slow moving, damaged and discontinued inventories; (4) that the Company failed to record $1.9 million in certain fixed asset retirements during the Class Period; (5) that as a result of this, the Company's financial results were in violation of generally accepted accounting principles ("GAAP"); (6) that the Company lacked adequate internal controls; and (7) that as a result of the above, the Company's financial results were materially inflated at all relevant times.

The complaint further alleges that on or around August 9, 2005, after the market closed, AIPC announced a $60.7 million charge and a Securities and Exchange Commission ("SEC") inquiry. More specifically, the Company stated the SEC was investigating it for various unspecified financial restatements and for transactions of the company's stock by outsiders in late 2004 and early 2005, for which the Company had received inquiries from the New York Stock Exchange and the Philadelphia Stock Exchange. Additionally, the Company stated that it was delaying the release of its full financial results for the third fiscal quarter ended July 1, 2005, and was also delaying the filing of its third quarter Form 10-Q with the SEC. Moreover, AIPC stated that its Audit Committee is conducting an internal investigation of certain accounting procedures and practices and certain other matters.

On news of this, shares of AIPC fell $7.66 per share, or 36.58 percent, to close at $13.28 per share on unusually high trading volume.

Beginning in August 2005, putative class and derivative actions were filed against Defendants in the United States District Court for the Western District of Missouri, alleging claims under the federal securities laws and/or derivative claims. These actions included: Stengle v. American Italian Pasta Co., 05-725-CV-W-ODS; Brody v. American Italian Pasta Co., 05-730-CV-W-ODS; Clark v. American Italian Pasta Co., 05-769-CV-W-ODS; Rothstein v.
Webster, 05-909-CV-W-ODS; Fasth v, Webster, 05-928-CV-W-ODS; Corallo v. Webster, 05-996-CV-W-ODS; and Firefighter's Pension System of the City ofKansas City, Missouri Trust v. Patterson , 05-1139-CV-W-ODS.

By order dated December 19, 2005, all of the putative class and derivative actions were consolidated into a single action and captioned In re American Italian Pasta Company Securities Litigation, No. 05-CV-0725-W-ODS.

On December 19, 2005, the Iron Workers Local 40, 361 and 417 Union Security Funds was appointed Lead Plaintiff to prosecute all class and derivative claims, and Pomerantz Haudek Block Grossman & Gross LLP was appointed sole Lead Counsel of all class and derivative claims.

A consolidated amended complaint was filed on January 19, 2006, alleging both class and derivative claims. With respect to the class claims, Lead Plaintiff asserted that Defendants issued false and misleading statements starting on January 23, 2002 and continuing through August 17, 2005, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. With respect to the derivative claims, it was asserted, among other things, that the Individual Defendants breached fiduciary duties owed to the Company.

On June 19, 2006, the Court denied motions by certain of the Defendants to dismiss the class claims (except against David B. Potter), but dismissed the derivative claims for failure to make a pre-suit demand. Other derivative lawsuits not consolidated with the Action are currently pending.

On March 26, 2007, the Court certified the class claims as a class action on behalf of all persons who purchased AIPC stock on or after January 23, 2002 and who continued to hold
such shares on August 9, 2005.

Discovery was underway at the time the Settling Parties entered into settlement negotiations. A trial date is set for September 2008. Proceedings with respect to Ernst remain pending.

On October 29, 2007, a Stipulation and Agreement of Settlement was filed establishing a settlement fund in the amount of $25,000,000, comprised of $11,000,000 in cash and $14,000,000 in AIPC common stock, to settle claims against American Italian and the individual defendants.

On February 12, 2008, District Judge Ortrie D. Smith approved the partial settlement and awarded Lead Counsel 25% of the Settlement Cash and Settlement Securities in fees for services rendered in connection with prosecution of this litigation, and $1,100,062.98 from the Settlement Cash as reimbursement for expenses.

On May 20, 2008, a Settlement Agreement was filed settling claims with defendant Ersnt & Young, LLP. On September 2, 2008, Judge Ortrie D. Smith approved the $3,500,000 cash settlement and further approved attorney’s fees in the amount of 25% of the settlement fund and $106,003.96 in reimbursement of expenses.

COMPANY INFORMATION:

Sector: Consumer Non-Cyclical
Industry: Food Processing
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: PLB
Company Market: New York SE
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: W.D. Missouri
DOCKET #: 05-CV-00725
JUDGE: Hon. Ortrie D. Smith
DATE FILED: 08/12/2005
CLASS PERIOD START: 10/25/2000
CLASS PERIOD END: 08/09/2005
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Dysart Taylor Lay Cotter & McMonigle, PC
    4420 Madison Ave, Dysart Taylor Lay Cotter & McMonigle, PC, MO 64111
    816.931.2700 ·
  2. Schiffrin & Barroway LLP
    3 Bala Plaza E, Schiffrin & Barroway LLP, PA 19004
    610.667.7706 610.667.7056 · info@sbclasslaw.com
No Document Title Filing Date
COURT: W.D. Missouri
DOCKET #: 05-CV-00725
JUDGE: Hon. Ortrie D. Smith
DATE FILED: 01/19/2006
CLASS PERIOD START: 01/23/2002
CLASS PERIOD END: 08/17/2005
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Pomerantz Haudek Block Grossman & Gross LLP (former Chicago)
    1 North LaSalle Street, Suite 2225, Pomerantz Haudek Block Grossman & Gross LLP (former Chicago), IL 60602
    312.377.1181 312.377.1184 · info@pomerantzlaw.com/
  2. Pomerantz Haudek Block Grossman & Gross LLP (Washington)
    1025 Connecticut Avenue NW Suite 1000, Pomerantz Haudek Block Grossman & Gross LLP (Washington), DC 20036
    202.327.5420 202.327.5422 · info@pomerantzlaw.com/
  3. Pomerantz LLP (New York)
    600 Third Avenue, Pomerantz LLP (New York), NY 10016
    212.661.1100 212.661.8665 · info@pomerantzlaw.com/
No Document Title Filing Date
No Document Title Filing Date