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 2, 1999
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)
<PAGE>
Item 5. Other Events.
In a press release dated November 2, 1999, a copy of which is attached hereto as
Exhibit 99.1 and the text of which is incorporated by reference herein, the
registrant announced its results of operations for the period ended September
30, 1999.
Item 7. Financial Statements and Exhibits.
Exhibit 99.1 Press Release dated November 2, 1999
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 2, 1999 By: /s/ T. G. Granneman
-------------------
Duly Authorized Signatory and
Chief Accounting Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
Exhibit 99.1 Press Release dated November 2, 1999
Immediate
Daniel P. Zoellner
314/877-7052
RALCORP HOLDINGS REPORTS 1999 FOURTH QUARTER
AND FULL YEAR EARNINGS
ST. LOUIS, MO, NOVEMBER 2, 1999 Ralcorp Holdings, Inc. today reported improved
net sales and net earnings for the fourth fiscal quarter ended September 30,
1999. Net sales for the quarter ended September 30, 1999 were $177.0 million, a
nearly 14 percent increase over the same quarter of the prior year, which had
net sales of $155.3 million. Net earnings for the Company's fourth fiscal
quarter were $7.1 million, more than doubling the $3.5 million for the prior
year's fourth quarter, excluding an $18.7 million pre-tax ($11.6 million after
taxes) gain on the sale of the Company's branded baby food subsidiary, Beech-Nut
Nutrition Corporation (Beech-Nut).
On an earnings per share basis, basic and diluted earnings per share for the
current year's fourth quarter were $.23. This compares to last year's fourth
quarter basic and diluted earnings per share of $.11, which excludes $.36 and
$.35 per basic and diluted share, respectively, related to the gain on sale of
Beech-Nut. For the fourth quarter and for the full year in fiscal 1998,
Beech-Nut incurred operating losses which remain in the Company's historical
operating results through the date of sale, September 10, 1998.
Quarterly comparisons for Ralcorp's core food businesses (operating results
excluding equity earnings from the Company's investment in Vail Resorts, Inc.
and the prior year gain on sale of Beech-Nut) also improved. For the quarter
ended September 30, 1999, the Company's core food businesses recorded net
earnings of $8.6 million, a nearly 54 percent increase compared to $5.6 million
for the same prior year period. On a diluted earnings per share basis,
Ralcorp's core food businesses recorded $.28 for the current year's fourth
quarter versus $.17 for the comparable prior year period, an improvement of 64.7
percent.
Net sales for the full years ended September 30, 1999 and 1998 were $636.6
million and $582.9 million, respectively, a 9.2 percent improvement. Net
earnings improved nearly 13.8 percent to $36.4 million for the year ended
September 30, 1999 from $32.0 million for the prior year, exclusive of the
aforementioned gain on sale of Beech-Nut. The corresponding diluted earnings
per share were $1.15 in fiscal 1999 and $.97 in fiscal 1998, an 18.5 percent
improvement, again excluding the gain on sale of Beech-Nut.
The Company's core food operations recorded even more impressive operating gains
in the year-to-year comparisons. Net earnings for the core food businesses in
fiscal 1999 were $33.5 million, or approximately $1.06 per diluted share. These
figures represent improvements of more than 30 percent over the $25.4 million,
or $.77 per diluted share, recorded by the core food businesses in fiscal 1998.
The significantly improved quarterly and full year results can be attributed to
a number of positive factors. The Company's cereal business experienced renewed
sales and volume momentum after a relatively flat third fiscal quarter, and
again building on what was a solid first half of fiscal 1999. Results for the
quarter and full year were also boosted by favorable results from current year
acquisitions, especially compared to the prior year results of the now divested
baby food business. Acquisitions benefited Ralcorp's cracker and cookie and
snack nut operations, and also contributed the results of the mayonnaise and
salad dressings business. In addition, the Company's operating results continue
to be positively affected by its aggressive cost containment focus.
<PAGE>
<TABLE>
<CAPTION>
NET SALES BY DIVISION
Three Months Ended Year Ended
September 30, September 30,
---------------- ------------------
1999 1998 1999 1998
------- ------- -------- --------
<S> <C> <C> <C> <C>
Ralston Foods $ 78.0 $ 71.1 $ 297.1 $ 278.2
Bremner 45.4 42.2 173.7 157.6
Beech-Nut - 25.5* - 122.4*
------- ------- -------- --------
CONSUMER FOODS $ 123.4 $ 138.8 $ 470.8 $ 558.2
SNACK NUTS 35.7 16.5 124.2 24.7
MARTIN GILLET 17.9 - 41.6 -
------- ------- -------- --------
TOTAL $ 177.0 $ 155.3 $ 636.6 $ 582.9
======= ======= ======== ========
<FN>
* Represents net sales through September 10, 1998, the effective date of the
Company's sale of Beech-Nut.
</TABLE>
CONSUMER FOODS
- ---------------
Actual Consumer Foods sales declined $15.4 million, or 11.1 percent, for the
quarter and declined $87.4 million for the full year, as the prior year periods
include the sales of the now divested branded baby food business, Beech-Nut. On
a comparison of current year quarter sales to prior year quarter sales,
excluding the benefit of the branded baby food business, sales improved $10.1
million. Comparing sales of the current fiscal year to the same prior year
period, again excluding Beech-Nut, sales rose $35.0 million. Sales from Ralston
Foods, the Company's cereal business, improved 9.7 percent when comparing fourth
quarter results for fiscal years 1999 and 1998. Volume improvements in both
ready-to-eat and hot cereals and a slightly improved product mix were the key
factors driving this sales growth. Current year fourth quarter store brand
ready-to-eat cereal volume improved 7.9 percent, against volume declines in the
prior year fourth quarter of 8.2 percent. It was in the prior year's fourth
quarter that major branded cereal manufacturers significantly expanded
promotional activities. This emphasis on heavy promotional spending was evident
throughout fiscal 1999, as well. For the same comparative periods, the
Company's robust hot cereal volume growth was slowed to 1.9 percent, against
prior year fourth quarter hot cereal volume gains of 17.2 percent. Volume
comparisons for the full current and prior years also reflected solid
year-over-year improvement. Ready-to-eat cereal volume increased 2.1 percent in
a flat to slightly down category, and on top of a 3.3 percent volume improvement
last year. Hot cereal volume grew an impressive 17.5 percent for fiscal 1999,
following a year-over-year volume improvement of 6.3 percent for fiscal 1998.
Sales revenue increases were also achieved by the Bremner cracker and cookie
operation, which benefited in the current year from a full quarter and year of
sales revenue from Sugar Kake Cookie Inc. Sugar Kake, a primarily private label
cookie operation, was acquired in August 1998. Volumes for the pre-existing
cracker and cookie operation (excluding Sugar Kake) have been adversely affected
by the aggressive promotional activity of large branded cracker and cookie
manufacturers. Despite deep discounting by these branded product manufacturers,
overall volume levels in the current year's fourth quarter were even with the
same prior year quarter. In a comparison of full year periods, again excluding
the Sugar Kake acquisition, cracker and cookie volume declined 1.2 percent, as
volume gains in cookies were more than offset by volume declines in the lower
margin saltine and graham cracker lines.
<PAGE>
From an operating results perspective, Ralcorp's Consumer Foods segment recorded
operating profit of $13.9 million for the current quarter and $53.8 million for
the year ended September 30, 1999. This compares to operating profit of $8.9
million for the quarter ended September 30, 1998, including a $1.5 million
operating loss from the now divested branded baby food business, and $45.6
million for fiscal 1998, including a $1.1 million operating loss from Beech-Nut.
Ralston Foods' operating profit improved significantly in the quarter as a
result of increased ready-to-eat and hot cereal volume and continued operational
cost containment. For the year ended September 30, 1999, the Company's cereal
division benefited primarily from ready-to-eat and hot cereal and co-packing
volume gains, a product mix improvement and favorable material costs, while
maintaining a significantly lower cost base. Bremner's operating profit for the
quarter ended September 30, 1999 improved significantly from the same prior year
quarter. Factors contributing to this increase were significantly lower
ingredient costs, enhanced operating efficiencies and the additional operating
profit from Sugar Kake for the full fourth fiscal quarter of 1999. For the year
ended September 30, 1999, Bremner's operating profit improved due to the
addition of Sugar Kake's volume and operating profit for the full year. In
addition, the pre-existing Bremner operation benefited from lower ingredient
costs and improved production yields.
SNACK NUTS
- -----------
The Company's snack nuts business, which consists of Nutcracker Brands, Inc.,
Flavor House Products, Inc. and, as of March 24, 1999, Southern Roasted Nuts of
Georgia, Inc., recorded net sales and operating profit for the quarter ended
September 30, 1999 of $35.7 million and $2.0 million, respectively. Net sales
for the year ended September 30, 1999 were $124.2 million, with a corresponding
operating profit of $8.2 million. Operating results for this segment were
negatively affected by a sharp increase in the cost of cashews. A worldwide
shortage of this commodity caused the cost to rise significantly above prior
year levels. While the management of this division has taken steps to mitigate
the impact of these higher costs, such steps were not sufficient to fully offset
the effect on operating margins. Despite this negative commodity issue, the
Snack Nuts segment continues to significantly grow its volume and improve its
customer base.
The prior year included just $24.7 million in net sales, which represented
primarily the operations of Flavor House since its acquisition on April 23,
1998. Nutcracker Brands, Inc. was acquired in early September 1998 and,
therefore, made minimal contribution to prior year operations.
Operations in the Snack Nuts segment are somewhat seasonal, with a higher
percentage of sales and operating profits recorded in the first fiscal quarter.
MARTIN GILLET
- --------------
Ralcorp Holdings began operating in mayonnaise and shelf-stable salad dressings
with the March 4, 1999 acquisition of Martin Gillet & Co., Inc. For the quarter
ended September 30, 1999, the operations of Martin Gillet resulted in $17.9
million in net sales and $.8 million of operating profit. Since its
acquisition, Martin Gillet's operations have recorded $41.6 million in net sales
and $1.7 million of operating profit.
The Company continues to work on the integration of Martin Gillet into the
Ralcorp business portfolio. As part of that effort, an extensive cost reduction
program has been initiated, which should benefit this division's operating
results in the future.
BUSINESS SEGMENTS - COMBINED
- -------------------------------
On a combined EBITDA (earnings before interest, taxes, depreciation and
amortization) basis, the Company recorded $78.1 million for the year ended
September 30, 1999, excluding the equity earnings from its Vail investment.
This represents a 31.7 percent improvement over the foods business EBITDA in the
prior year of $59.3 million, excluding the equity earnings from Vail and the
gain on sale of Beech-Nut.
<PAGE>
EQUITY INTEREST IN VAIL RESORTS, INC.
- ------------------------------------------
As a result of the sale of Ralcorp's resort operations to Vail Resorts, Inc.,
Ralcorp maintains an approximate 21.9 percent equity ownership interest in Vail.
Aberrant weather conditions during the peak ski season hurt the operating
results of Vail. These difficult weather conditions, plus timing issues
resulting from a fiscal year end change at Vail, combined to negatively affect
the Company's full year equity earnings from its investment in Vail.
For the three-month period ended September 30, 1999, however, the Company's
equity stake in Vail improved as a non-cash, pre-tax loss of $2.4 million was
recorded compared to a $3.3 million non-cash, pre-tax loss in the same prior
year period. In a comparison of full fiscal year periods ended September 30,
1999 and 1998, the Company recorded non-cash, pre-tax equity earnings of $4.7
million and $10.6 million, respectively. Due to the timing of a fiscal year end
change at Vail, the prior year equity income amounts represent the Company's
portion of Vail's operating results for only the period of October 1997 through
July 1998. The current year equity earnings are based on the full twelve-month
period of August 1998 through July 1999, a period that includes the historically
unprofitable ski months of August through October.
UNAUDITED PRO FORMA INFORMATION
- ----------------------------------
The accompanying Unaudited Pro Forma Combined Statements of Earnings reflect pro
forma information for the quarter and full year periods ended September 30,
1998. This information assumes the divestiture of Beech-Nut was completed as of
the beginning of the prior fiscal year and is provided for informational
purposes only. This unaudited pro forma financial information may not
necessarily reflect the actual results of operations that would have been
achieved.
See the attached schedules and notes for additional information on the quarter
and twelve-month results for both years.
NOTE: This press release may contain forward-looking statements as defined by
the Private Securities Litigation Reform Act of 1995. Any such forward-looking
statements are subject to various risks and uncertainties and are therefore
qualified by the Company's cautionary statements contained in its filings with
the Securities and Exchange Commission.
###
<PAGE>
<TABLE>
<CAPTION>
RALCORP HOLDINGS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(in millions except per share data)
Three Months Ended Year Ended
September 30, September 30,
-------------------- --------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $ 177.0 $ 155.3 $ 636.6 $ 582.9
-------- -------- -------- --------
Costs and Expenses
Cost of products sold 132.3 108.1 467.5 386.0
Selling, general and
administrative 24.7 23.2 89.3 97.7
Advertising and promotion 6.0 14.8 24.8 58.1
Interest expense, net .6 .1 1.4 -
Equity in (earnings)
loss of Vail Resorts, Inc. 2.4 3.3 (4.7) (10.6)
Gain on sale of Beech-Nut - (18.7) - (18.7)
-------- -------- -------- --------
166.0 130.8 578.3 512.5
-------- -------- -------- --------
Earnings before Income Taxes 11.0 24.5 58.3 70.4
Income Taxes 3.9 9.4 21.9 26.8
-------- -------- -------- --------
Net Earnings $ 7.1 $ 15.1 $ 36.4 $ 43.6
======== ======== ======== ========
Basic Earnings per Share $ .23 $ .47 $ 1.17 $ 1.33
======== ======== ======== ========
Diluted Earnings per Share $ .23 $ .46 $ 1.15 $ 1.32
======== ======== ======== ========
Weighted Average Shares
Outstanding - Basic 30.8 32.3 31.1 32.7
Weighted Average Shares
Outstanding - Diluted 31.3 32.7 31.7 33.1
</TABLE>
<PAGE>
<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,
(Actual) (Pro Forma) (Actual) (Pro Forma)
--------------------- ---------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $ 177.0 $ 129.8 $ 636.6 $ 460.5
-------- -------- -------- --------
Costs and Expenses
Cost of products sold 132.3 93.4 467.5 321.5
Selling, general and
administrative 24.7 19.4 89.3 77.1
Advertising and promotion 6.0 6.5 24.8 20.7
Interest expense
(income), net .6 (.4) 1.4 (3.0)
Equity (earnings) loss
in Vail Resorts, Inc. 2.4 3.3 (4.7) (10.6)
-------- -------- -------- --------
166.0 122.2 578.3 405.7
-------- -------- -------- --------
Earnings before Income Taxes 11.0 7.6 58.3 54.8
Income Taxes 3.9 2.9 21.9 20.8
-------- -------- -------- --------
Net Earnings $ 7.1 $ 4.7 $ 36.4 $ 34.0
======== ======== ======== ========
Basic Earnings per Share $ .23 $ .15 $ 1.17 $ 1.04
======== ======== ======== ========
Diluted Earnings per Share $ .23 $ .14 $ 1.15 $ 1.03
======== ======== ======== ========
Weighted Average Shares
Outstanding - Basic 30.8 32.3 31.1 32.7
Weighted Average Shares
Outstanding - Diluted 31.3 32.7 31.7 33.1
<FN>
Notes:
1. On September 10, 1998, the Company 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, the Company recorded a $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 2 below, the accompanying
comparative unaudited pro forma combined statements of earnings reflect the
Company's results of operations without Beech-Nut results.
2. The accompanying unaudited pro forma combined statements of earnings for the
quarter and full year ended September 30, 1998 are presented to reflect the
results of operations assuming the sale of the Company's branded baby food
subsidiary, Beech-Nut Nutrition Corporation, had been completed as of the
beginning of the prior fiscal year. These unaudited pro forma statements of
earnings are for informational purposes only and may not necessarily reflect the
results of operations that would have been achieved, nor are they necessarily
indicative of future results of operations.
3. The weighted average shares outstanding used to compute earnings per share
(basic and diluted) for the quarters and years ended September 30, 1999 and 1998
are based on the weighted average number of shares of Ralcorp common stock
outstanding for the periods then ended. In addition, the calculation of diluted
earnings per share includes all other common stock equivalents.
4. Earnings per share (basic and diluted) are computed independently for each
of the periods presented, therefore, the sum of the earnings per share (basic
and diluted) amounts for the quarters may not total the year-to-date amount.
</TABLE>
