<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 5, 1998
Ralcorp Holdings, Inc.
(Exact name of registrant as specified in its charter)
Missouri 1-12619 43-1766315
(State or other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
800 Market Street, Suite 2900
St. Louis, MO 63101
(Address of principal (Zip Code)
executive offices)
(314) 877-7000
(Registrant's telephone number, including area code)
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Item 5. Other Events.
In press release dated November 5, 1998, a copy of which is attached hereto
as Exhibit 99.1 and the text of which is incorporated by reference herein, the
Registrant announced earnings for its fourth quarter ended September 30, 1998.
Item 7. Financial Statements and Exhibits.
Exhibit 99.1 Press Release dated November 5, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RALCORP HOLDINGS, INC.
(Registrant)
Date: November 5, 1998 By: /s/ T. G. Granneman
-------------------
Duly Authorized Signatory and
Chief Accounting Officer
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EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
Exhibit 99.1 Press Release dated November 5, 1998
Immediate
Daniel P. Zoellner
314/877-7052
RALCORP HOLDINGS REPORTS 1998 FOURTH QUARTER
AND FULL YEAR EARNINGS
ST. LOUIS, MO, NOVEMBER 5, 1998 Ralcorp Holdings, Inc. today reported net
sales and net earnings for the fourth quarter ended September 30, 1998 of
$155.3 million and $3.5 million, respectively. This net earnings figure
excludes an $18.7 million pre-tax ($11.6 after taxes) gain on the sale of the
Company's branded baby food subsidiary, the Beech-Nut Nutrition Corporation.
Comparable net sales and earnings for the same quarter last year were $144.7
million and $3.9 million, respectively, which excludes the favorable effect of
a $3.3 million ($2.1 million after tax) partial reversal of a restructuring
charge and the negative effect of a $1.1 million (non-taxable) adjustment to
the gain on sale of Ralcorp's branded foods business. Basic and diluted
earnings per share for the current year's fourth quarter were $.11, excluding
$.36 and $.35 per basic and diluted share, respectively, related to the gain
on sale of Beech-Nut. This compares to last year's fourth quarter basic and
diluted earnings per share of $.12, excluding the previously listed prior year
adjustments. The slight earnings decline relates to the continued operating
difficulties experienced by the Company's former branded baby food subsidiary,
Beech-Nut Nutrition Corporation, which was sold on September 10, 1998, but
remains in the Company's historical operating results through that date. In
addition, earnings from the Company's private label cereal division were off
from the prior year's fourth quarter primarily due to the effects of increased
promotional spending on the part of cereal competitors in the current year
period. These declines were partially offset by improved results from the
Company's private label cracker and cookie operation and initial operating
earnings from Ralcorp's snack nut subsidiary.
Unaudited pro forma results reflect net sales and net earnings of $129.8
million and $4.7 million, respectively, for the quarter ended September 30,
1998 compared to net sales of $111.9 million and net earnings of $4.5 million
for the same quarter of the prior year. Pro forma earnings per diluted share
for both quarterly periods was $.14. The top line sales improvement was
attributable primarily to sales of the newly acquired snack nut business and
was supported by slight sales growth from the cracker and cookie subsidiary.
The nearly 4.5 percent earnings increase reflects improved earnings from the
Company's cracker and cookie business, as well as the incremental operating
earnings in the current year period from the snack nut business. The results
from the cracker and cookie, and snack nut subsidiaries more than offset the
effects of the difficult operating environment experienced by the cereal
division in the current year quarter.
On a comparison of unaudited pro forma results for the year ended September
30, 1998 to unaudited pro forma results for the prior year, net sales were
$460.5 million and $383.0 million, respectively, an improvement of $77.5
million, or 20.2 percent. Pro forma net earnings for the current year were
$34.0 million, or $1.04 per basic share and $1.03 per diluted share, compared
to prior year pro forma net earnings of $7.8 million, or $.24 per basic share
and $.23 per diluted share. Included in the prior year pro forma results is a
$4.6 million ($2.9 million after tax) charge to cover certain
severance-related costs. Excluding this charge, prior year pro forma net
earnings would have been $10.7 million, or $.32 per share (basic and diluted).
The Company reported no unusual charges during the year ended September 30,
1998.
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The unaudited pro forma information assumes the divestitures of the Company's
branded cereal and snack mix business and ski resort operations were completed
as of the beginning of the prior year. Actual timing of these divestitures
occurred during the quarter ended March 31, 1997. The Company's ski resort
holdings were sold to Vail Resorts, Inc. on January 3, 1997 and the Company's
branded cereal and snack mix business was sold to General Mills, Inc. on
January 31, 1997. In addition, both current and prior year unaudited pro
forma information reflects the elimination of operating results related to the
Company's branded baby food subsidiary, the sale of which was completed on
September 10, 1998. Therefore, comparisons of unaudited pro forma results in
the current year to the unaudited pro forma results of the prior year may
provide a more meaningful analysis of operating results and trends.
Actual net sales for the year ended September 30, 1998 were $582.9 million
compared to $739.7 million for the prior fiscal year. The significant decline
in net sales year-over-year is due to the prior year period including sales of
the Company's branded cereal and snack business through January 31, 1997 and
sales from the Company's ski resort operations through January 3, 1997.
Actual net earnings for the year ended September 30, 1998, were $32.0 million,
or $.97 per diluted share, including the operating loss from the now divested
baby food business but excluding the gain on sale of Beech-Nut. This compares
to net earnings for the prior year of $28.5 million, or $.86 per diluted
share. On a percentage basis, fiscal 1998 earnings per diluted share improved
12.8 percent over the prior year. Excluded from the fiscal 1997 net earnings
are two separate restructuring charges totaling $19.7 million pre-tax ($12.4
million after tax or $.37 per diluted share) and a one-time, tax-free gain on
the sale of the branded business of $515.4 million, or $15.52 per diluted
share.
<TABLE>
<CAPTION>
<BTB> Three Months Ended Year Ended
September 30, September 30,
------------------ -------------
1998 1997 1998 1997
--------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
Ralston Foods $ 71.1 $ 71.4 $ 278.2 $264.5*
Bremner 42.2 40.5 157.6 118.5
Beech-Nut 25.5 ** 32.8 122.4 ** 151.1
CONSUMER FOODS 138.8 144.7 558.2 534.1
--------- ------ --------- ------
SNACK NUTS 16.5 - 24.7 -
TOTAL $ 155.3 $144.7 $ 582.9 $534.1
========= ====== ======== ======
<FN>
* On a pro forma basis, reflecting elimination of sales related to the
branded cereal and snack business.
** Represents net sales through September 10, 1998, the effective date
of the Company's sale of Beech-Nut.
</TABLE>
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CONSUMER FOODS
- ---------------
Actual Consumer Foods sales declined $5.9 million, or 4 percent for the
quarter and declined $148.4 million for the full year, as the prior year
period includes the October 1996 through January 1997 sales of the now
divested branded cereal and snack business. Comparing sales of the current
fiscal year to the same prior year period, excluding the benefit of the
branded cereal and snack business, sales rose $24.1 million, or approximately
4.5 percent. The sales dollar decline for the quarter-to-quarter comparison
can be attributed primarily to the significant drop in sales from the
Company's branded baby food subsidiary, which was sold on September 10, 1998.
Partially offsetting the decline in baby food sales was an increase from the
Bremner cracker and cookie operation. Sales from the cereal division were
down slightly on a quarter-to-quarter basis, as domestic volume declines in
ready-to-eat cereals were only partially offset by reduced price promotions on
ready-to-eat cereals and a 17.2 percent volume improvement from on-going store
brand hot cereals. Domestic store brand ready-to-eat cereal volume declined
8.2 percent when comparing the current year fourth quarter to the very strong
volume gains recorded in the same prior year period. The year-to-year sales
dollar growth in the Consumer Foods segment, excluding the sold branded
business, was due primarily to the increase from the Bremner cracker and
cookie operation, which benefited in the current year from a full year of
integrating the Wortz Company. Wortz, a private label cracker and cookie
operation, was acquired on April 21, 1997. In addition, current year store
brand cereal sales improved over the prior year on volume increases of 3.3
percent and 6.3 percent for ready-to-eat and hot cereals, respectively.
Offsetting a good portion of the year-to-year Consumer Foods sales
improvement, was a $28.7 million sales dollar decline from Beech-Nut baby
foods. Current year sales for baby foods reflect only the period of October
1, 1997 through September 10, 1998, the date the sale of this subsidiary was
completed. The baby food business continued to be negatively effected by both
significant competitive pricing pressures and a declining category.
From an operating results perspective, Ralcorp's Consumer Foods segment
recorded an operating profit of $8.9 million for the current quarter and $45.6
million for the year ended September 30, 1998. The operating profit for the
year was significantly below the branded business-enhanced operating profit
level of the prior year, excluding a $19.7 million restructuring charge. The
operating profit for the current quarter represented a nearly 17 percent
decline from the same quarter of the prior year. On an EBITDA basis (earnings
before interest, taxes, depreciation and amortization) the Company recorded
$59.3 million for the year ended September 30, 1998, excluding the equity
earnings from its Vail Resorts, Inc. investment and the gain related to the
sale of Beech-Nut. Bremner operating profit improved considerably in both the
quarter and full year due primarily to the addition of Wortz, an improved
product mix and favorable ingredient costs. Ralston Foods operations weakened
when comparing fourth quarter periods. A decline from the strong volume
growth achieved in the prior year fourth quarter was the primary contributor
to the weaker results. The current year quarter for Ralston Foods was also
negatively affected by higher promotional spending in defense of certain trade
accounts, partially offset by improved production and raw material costs. A
comparison of current full year Ralston Foods operations to those of the prior
year, excluding the benefit of the branded business, reflected considerable
improvement due to volume gains in both ready-to-eat and hot cereals. In
addition, the Company's cereal division posted improved margins by maintaining
a substantially lower cost base and benefiting from lower raw material costs.
Operating results at Beech-Nut were significantly down from both prior year
comparison periods. Beech-Nut recorded operating losses for the quarter- and
year-to-date periods ended September 10, 1998. Exclusive of the results from
Beech-Nut, the Company's Consumer Foods decline in operating profit on a
quarter-to-quarter basis is reduced to approximately 6 percent.
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SNACK NUTS
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The operating results of the Company's snack nut subsidiary were reported as a
separate operating segment. This segment is comprised of Flavor House, Inc.,
which was acquired in late April, 1998, and Nutcracker Brands, Inc., which was
acquired in early September, 1998. Based on the timing of these acquisitions,
there are no prior year comparisons. For the quarter ended September 30,
1998, the Company's snack nut business recorded sales of $16.5 million and a
corresponding operating profit of $1.0 million. For the five month period
during which the Company competed in the snack nut category sales were $24.7
million and operating profit was $.9 million. As mentioned previously, there
are no prior year comparisons.
Combining the Consumer Foods and Snack Nuts segments, exclusive of the
operating loss recorded by Beech-Nut, operating profit for the Company
improved nearly 3 percent when comparing fourth quarter periods.
EQUITY INTEREST IN VAIL RESORTS, INC.
- ------------------------------------------
Upon the sale of Ralcorp's resort operations to Vail Resorts, Inc. in January
1997, Ralcorp retained an equity ownership interest in Vail, which was
approximately 22 percent as of July 31, 1998. On November 6, 1997, Vail
announced a change in its fiscal year end from September 30 to July 31. As a
result, Ralcorp reports current year equity earnings on a two month time lag
and the Company's entire current fiscal year includes only ten months of
equity earnings from Vail.
The quarter ended September 30, 1998, was negatively affected by non-cash,
pre-tax equity losses of $3.3 million compared to a similar equity loss of
$3.2 million in the same prior year period. Because of the two month time
lag, Ralcorp's reporting for the current year quarter includes the normally
unprofitable months of May through July. The prior year fourth quarter equity
loss amount relates to the months of July 1997 through September 1997.
Through the year ended September 30, 1998, the Company's equity stake in Vail
Resorts resulted in non-cash, pre-tax earnings of $10.6 million compared to
$4.7 million during the same prior year period. Ralcorp's reporting through
September 30, 1998 includes Vail's results for only the period of October 1997
through July 1998 and the prior year's equity earnings reflects only the
months of January 1997 through September 1997 (the period subsequent to the
Vail transaction).
UNAUDITED PRO FORMA INFORMATION
- ----------------------------------
The accompanying Unaudited Pro Forma Combined Statement of Earnings reflects
pro forma information for the quarter and full year periods ended September
30, 1998 and 1997. This information assumes the divestitures of the Company's
branded baby food subsidiary, branded cereal and snack business and Resort
Operations were completed as of the beginning of the applicable periods
presented.
See attached schedules and notes for additional information on the quarter and
twelve month results for both years.
###
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<TABLE>
<CAPTION>
RALCORP HOLDINGS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(in millions except per share data)
Three Months Ended Year Ended
September 30, September 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net Sales $155.3 $144.7 $582.9 $739.7
Costs and Expenses
Cost of products sold 108.1 96.8 386.0 425.2
Selling, general and
administrative 23.2 24.7 97.7 126.5
Advertising and promotion 14.8 13.6 58.1 138.6
Interest expense(income),net .1 (.2) - 7.9
Gain on sale of Beech-Nut (18.7) (18.7)
Gain on Branded Sale - 1.1 - (515.4)
Restructuring charge - (3.3) 19.7
Equity (earnings) loss
in Vail Resorts, Inc. 3.3 3.2 (10.6) (4.7)
130.8 135.9 512.5 197.8
Earnings before Income Taxes 24.5 8.8 70.4 541.9
Income Taxes 9.4 3.9 26.8 10.4
Net Earnings $15.1 $4.9 $43.6 $531.5
Basic Earnings
per Common Share $.47 $.15 $1.33 $16.11
Diluted Earnings
per Common Share $.46 $.15 $1.32 $16.01
Weighted Average Shares
Outstanding - Basic 32.3 33.0 32.7 33.0
Weighted Average Shares
Outstanding - Diluted 32.7 33.2 33.1 33.2
</TABLE>
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<TABLE>
<CAPTION>
RALCORP HOLDINGS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF EARNINGS
(in millions except per share data)
Three Months Ended Year Ended
September 30, September 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net Sales $129.8 $111.9 $460.5 $383.0
Costs and Expenses
Cost of products sold 93.4 79.7 321.5 276.3
Selling, general and
administrative 19.4 19.2 77.1 82.0
Advertising and promotion 6.5 3.2 20.7 17.7
Interest expense (income), net (.4) (.8) (3.0) (3.3)
Restructuring charge - - 4.6
Equity (earnings) loss
in Vail Resorts, Inc. 3.3 3.2 (10.6) (7.0)
122.2 104.5 405.7 370.3
Earnings before Income Taxes 7.6 7.4 54.8 12.7
Income Taxes 2.9 2.9 20.8 4.9
Net Earnings $4.7 $4.5 $34.0 $7.8
Basic Earnings per
Common Share $.15 $.14 $1.04 $.24
Diluted Earnings per
Common Share $.14 $.14 $1.03 $.23
Weighted Average Shares
Outstanding - Basic 32.3 33.0 32.7 33.0
Weighted Average Shares
Outstanding - Diluted 32.7 33.2 33.1 33.2
<FN>
NOTES:
1. On September 10, 1998, the Company announced it completed the sale of its
branded baby food subsidiary, Beech-Nut Nutrition Corporation, to The Milnot
Company for $68 million in cash. As a result, during the current year's
fourth quarter the Company recorded an $18.7 million pre-tax gain on the sale
($11.6 after taxes or $.36 per basic share and $.35 per diluted share). In
addition, and as referred to in Note 4 below, the accompanying comparative
unaudited pro forma combined statements of earnings reflect the Company's
results of operations without Beech-Nut results.
2. During the quarter ended September 30, 1997, the Company recorded $1.1
million in net charges to the tax-free gain related to the sale of its branded
foods business to General Mills, Inc. on January 31, 1997. This finalized all
outstanding issues between the Company and General Mills, resulting in the
Company recording a $515.4 million tax-free gain for the 1997 fiscal year.
3. On January 3, 1997, the Company sold its Resort Operations and related
ski resort properties to Vail Resorts, Inc. in exchange for the assumption of
$165 million in Company debt and an equity interest in Vail.
<PAGE>6
4. The accompanying comparative unaudited pro forma combined statements of
earnings for the quarters and years ended September 30, 1998 and 1997 are
presented to reflect the results of operations assuming the sales of the
Company's Beech-Nut Nutrition Corporation, Resort Operations and branded
cereal and snack business had been completed as of the beginning of these
periods, as applicable. These unaudited pro forma statements of earnings are
for informational purposes only and may not necessarily reflect future results
of operations or what the results of operations would have been had the sale
transactions been completed during the periods shown.
5. Earnings for the fourth quarter of fiscal 1997 were favorably affected by
a $3.3 million ($2.1 million after taxes or $.06 per basic and diluted share)
adjustment to the previously recorded $18.4 million restructuring charge(see
Note 6). The Company had determined that based on payout experience, certain
components of the charge were overestimated and no longer required.
6. During the quarter ended March 31, 1997, the Company recorded an $18.4
million ($11.6 million after taxes or $.35 per basic and diluted share)
restructuring charge to cover severance payments to employees whose jobs were
eliminated as a result of the Company's sale of its branded cereal and snack
business. This charge also covers the payment of certain penalties related to
the early termination of information systems contracts and other costs related
to the disposition. The level of systems support included in these contracts
was no longer warranted after the branded cereal and snack business sale.
7. During the quarter ended December 31, 1996, the Company recorded a
restructuring charge to cover expenses related to the severance packages
received by certain separated employees. The amount of the charge was $4.6
million ($2.9 million after taxes) and reduced earnings per basic and diluted
share for the quarter by $.09.
8. The Company has adopted Statement of Financial Accounting Standards No.
128 - "Earnings per Share". By so doing, prior year earnings per share have
been restated to conform to the presentation required by FAS 128 of basic and
diluted earnings per share. The weighted average shares outstanding used to
compute earnings per common share (basic and diluted) for the three and twelve
month periods ended September 30, 1998 and 1997 are based on the weighted
average number of Ralcorp Stock shares outstanding for the periods then ended.
In addition, the calculation of diluted earnings per share includes all other
common stock equivalents.
9. Earnings per common share (basic and diluted) are computed independently
for each of the periods presented, therefore, the sum of the earnings per
common share (basic and diluted) amounts for the quarters may not total the
year-to-date.
</TABLE>
