Immediate
Thomas G. Granneman
314/877-7730
RALCORP HOLDINGS REPORTS THIRD QUARTER
AND NINE-MONTH 2000 EARNINGS
ST. LOUIS, MO, JULY 26, 2000 Ralcorp Holdings, Inc. (NYSE:RAH) today reported
net sales and net earnings for the third quarter ended June 30, 2000 of $172.1
million and $12.9 million, respectively, compared to $154.4 million and $12.1
million for the same quarter last year. On an earnings per share basis, the
Company reported basic and diluted earnings per share for the current year's
third quarter of $.43, up 13 percent from diluted earnings per share for last
year's third quarter of $.38.
For the nine-month periods ended June 30, 2000 and 1999, net sales were $550.2
million and $459.6 million, respectively, an increase of $90.6 million, or
nearly 20 percent. Net earnings for the current year's first nine months
improved 6.1 percent to $31.1 million, or $1.01 per diluted share, compared to
prior year nine-month net earnings of $29.3 million, or $.92 per diluted share.
The Company has made several strategic acquisitions and current fiscal year
results were positively affected by the operations of recently acquired
businesses. In addition, the Company's results were affected by certain
non-operating factors. Equity earnings from the Company's investment in Vail
Resorts, Inc. improved to $9.8 million in the third quarter from $7.0 million in
last year's third quarter. For the nine months ended June 30, 2000, the
Company's equity in the earnings of Vail was $8.2 million compared to $7.1
million in the prior year. In addition, changes in Ralcorp's stock price
resulted in favorable mark-to-market adjustments to the Company's deferred
compensation liability. These adjustments yielded pre-tax income of $.6 million
and $1.6 million for the quarter and nine months ended June 30, 2000,
respectively, compared to pre-tax income of $.4 million for last year's third
quarter and pre-tax expense of $.7 million for the nine months ended June 30,
1999.
<TABLE>
<CAPTION>
NET SALES BY SEGMENT Three Months Ended Nine Months Ended
(In Millions) June 30, June 30,
----------------------------- ------------------ ------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Ralston Foods $ 66.5 $ 68.8 $ 210.3 $ 219.1
Bremner 53.4 40.0 169.7 128.3
------- ------- ------- -------
Cereals, Crackers & Cookies 119.9 108.8 380.8 347.4
Snack Nuts & Candy 35.5 27.4 121.5 88.5
Mayonnaise & Dressings 16.7 18.2 48.7 23.7
------- ------- ------- -------
Total Net Sales $ 172.1 $ 154.4 $ 550.2 $ 459.6
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
OPERATING PROFIT BY SEGMENT Three Months Ended Nine Months Ended
(In Millions) June 30, June 30,
----------------------------- ------------------ ------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Cereals, Crackers & Cookies $ 11.7 $ 12.6 $ 42.2 $ 39.9
Snack Nuts & Candy 1.1 1.4 5.6 6.2
Mayonnaise & Dressings .8 .5 1.7 .9
------- ------- ------- -------
Total Operating Profit $ 13.6 $ 14.5 $ 49.5 $ 47.0
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CEREALS, CRACKERS & COOKIES
------------------------------
Third quarter and nine-month net sales for the Cereals, Crackers & Cookies
segment were up $11.1 million and $32.6 million, respectively, from last year.
This increase is due to the additional revenue acquired through the current year
purchases of Ripon Foods, Inc. and Cascade Cookie Company, which are operated as
part of Bremner, Ralcorp's cracker and cookie division. Ripon Foods, a cookie,
sugar wafer and breakfast bar producer, was acquired on October 4, 1999, and
Cascade, which produces cookies for in-store bakeries, was acquired on January
31, 2000. Third quarter cracker volumes of the pre-existing Bremner businesses
declined 5 percent from the prior year, primarily due to lower industry demand
in the saltines category. Nevertheless, cracker volumes for the nine-month
period were up slightly from last year due to strong sales in this year's first
fiscal quarter.
The Company's ready-to-eat and hot cereal division, Ralston Foods, recorded
decreased sales for the three-month and nine-month periods, principally due to
lower volumes. Previously, Company management disclosed that a cereal
comanufacturing agreement was terminated effective December 31, 1999. The
reduction of volume related to this agreement was the primary factor in the
revenue decline at Ralston Foods. Importantly, Ralston Foods' base store brand
ready-to-eat cereal (RTE) volume declined less than 1 percent during the three
months ended June 30, 2000, outperforming the overall RTE cereal category.
Couple this minor volume decline with a favorable product mix and revenue
related to Ralston Foods' store brand RTE business actually improved
quarter-over-quarter. The Company's hot cereal volume declined 6 percent for
the seasonally slow quarter ended June 30, 2000. While the hot cereal volume
was off from the prior year third quarter, a continued product mix improvement
offset a significant portion of the volume decline. Volume comparisons for the
nine months ended June 30, 2000 reflected declines as store brand RTE cereal
volumes fell 1.6 percent from last year compared to a corresponding .2 percent
increase for the prior year period. Hot cereal volume for the same period was
down 6 percent from last year compared to a corresponding 23 percent increase
for the prior year period. The nine-month year-over-year revenue decline at
Ralston Foods, however, was primarily due to the loss of the comanufacturing
agreement.
From an operating results perspective, the Cereals, Crackers & Cookies segment
recorded third quarter operating profit down $.9 million from the prior year and
nine-month profit up $2.3 million. Bremner operating profit improved in both
the quarter and nine-month periods due to the current year cookie business
acquisitions, as well as favorable product mix and raw material and packaging
supply costs in the cracker operations. Ralston Foods' third quarter operating
profit decline more than offset the third quarter improvements at Bremner,
mainly because of the aforementioned loss of comanufacturing business and the
resulting unfavorable effect on production volume and plant efficiencies. The
Company previously disclosed that the loss of this comanufacturing agreement
could negatively impact diluted earnings per share for the last nine months of
fiscal 2000 in the range of $.08 to $.10 per share. While this range continues
to appear reasonable, the Company remains very active in its efforts to replace
this lost business via other comanufacturing opportunities, increased
distribution and new product emulations. For the nine-month period, Ralston
Foods reported lower operating profit, again driven principally by the reduction
of comanufacturing business. Offsetting a portion of this unfavorability was an
improved product mix and lower overall costs.
SNACK NUTS & CANDY
---------------------
Third quarter net sales for the Snack Nuts & Candy segment increased 30 percent,
reflecting incremental business from James P. Linette, Inc., as well as
significantly improved organic volumes. Linette, a chocolate candy
manufacturer, was acquired on May 1, 2000. For the year to date, the Company
also benefited from a full nine months of business from its acquisition of
Southern Roasted Nuts of Georgia. Southern Roasted Nuts was acquired in late
March 1999. The Georgia facility was closed the end of April 2000,
consolidating the operations of the three snack nut businesses into two
locations at Billerica, MA and Dothan, AL.
<PAGE>
Despite the improved volumes and net sales, Snack Nuts third quarter operating
profit fell $.3 million from last year as the segment continued to be negatively
impacted by high ingredient costs, as well as increased labor costs due to
initial inefficiencies related to the moving of production lines from the
Georgia plant to the other facilities. Management anticipates improved
ingredient costs and operating efficiencies for the Company's fourth quarter.
Furthermore, management believes fiscal 2001 operating profit will reflect
increased efficiencies from the combined nut facilities.
MAYONNAISE & DRESSINGS
------------------------
The Company's fiscal 2000 third quarter net sales and operating profit included
$16.7 million and $.8 million, respectively, from Martin Gillet, a maker of
private label mayonnaise and salad dressings. Martin Gillet's third quarter net
sales were down 8 percent from the prior year as a result of customer mix, with
higher comanufacturing and retail volume partially offset by lower foodservice
volume. Operating profit was up $.3 million for the third quarter, which
benefited from lower ingredient costs. For the nine months ended June 30, 2000,
net sales were $48.7 and operating profit was $1.7. Martin Gillet was acquired
at the beginning of March 1999, so prior year net sales and operating profit
included only $23.7 million and $.9 million, respectively, for Ralcorp's nine
months ended June 30, 1999.
On July 14, 2000, Ralcorp completed the purchase of the Red Wing Company, Inc.,
a leading manufacturer of private label shelf-stable wet filled type products
with sales of $348 million for its fiscal year ended April 29, 2000. Red Wing
and Martin Gillet will be operated as a single division of Ralcorp. On July 24,
2000, the Company announced that it expects to record a charge to fourth quarter
earnings of between $.04 and $.08 per diluted share related to the closure of
Martin Gillet's Baltimore facility.
BUSINESS SEGMENTS - COMBINED
-------------------------------
On a combined EBITDA basis (earnings before interest, taxes, depreciation and
amortization) the Company recorded $68.5 million for the nine months ended June
30, 2000, excluding the equity earnings from its Vail investment. This
represents a 17.7 percent improvement over the "food business" EBITDA in the
prior year's first nine months of $58.2 million.
Operations in the Snack Nuts segment are somewhat seasonal, with a higher
percentage of sales and operating profits expected to be recorded in the first
fiscal quarter. In addition, certain aspects of both the Company's cereal and
cracker and cookie businesses are also seasonal in nature. It is important to
note that operating results for any quarter are not necessarily indicative of
the results for any other quarter or for the full year.
EQUITY INTEREST IN VAIL RESORTS, INC.
------------------------------------------
Ralcorp continues to hold an approximate 21.8 percent equity ownership interest
in Vail Resorts, Inc. Vail Resorts operates on a fiscal year ending July 31;
therefore, Ralcorp reports its portion of Vail Resorts' operating results on a
two-month time lag. For the third quarter ended June 30, 2000, this investment
resulted in non-cash pre-tax earnings of $9.8 million, compared to $7.0 million
for last year's third quarter. Vail Resorts reported an increase in skier days
and a favorable skier visit mix in its third fiscal quarter this year, which
includes February, March and April. That quarter also included expected net
proceeds from a Reduced Skier Day Insurance Policy claim related to its second
fiscal quarter, which was hurt by both poor early season snowfall and a
significant decline in vacation travel around the New Years' holiday due to Y2K
concerns. Ralcorp's equity in the earnings of Vail Resorts, Inc. was up $1.1
million, or 15.5%, for the nine months ended June 30, 2000.
See the attached schedule and notes for additional information on the quarter
and nine-month results for both years.
NOTE: Information in this press release that includes information other than
historical data contains forward-looking statements as defined by the Private
Securities Litigation Reform Act of 1995. Any such forward-looking statements
are made based on information currently known and 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.
###
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<TABLE>
<CAPTION>
RALCORP HOLDINGS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(in millions except per share data)
Three Months Ended Nine Months Ended
June 30, June 30,
----------------- -----------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Sales $ 172.1 $ 154.4 $ 550.2 $ 459.6
------- ------- ------- -------
Costs and Expenses
Cost of products sold 131.4 114.6 417.8 335.2
Selling, general and administrative 22.9 21.2 69.5 64.6
Advertising and promotion 5.2 5.5 17.4 18.8
Interest expense, net 1.9 .5 4.3 .8
Equity in earnings of Vail Resorts, Inc. (9.8) (7.0) (8.2) (7.1)
------- ------- ------- -------
151.6 134.8 500.8 412.3
------- ------- ------- -------
Earnings before Income Taxes 20.5 19.6 49.4 47.3
Income Taxes 7.6 7.5 18.3 18.0
------- ------- ------- -------
Net Earnings $ 12.9 $ 12.1 $ 31.1 $ 29.3
======= ======= ======= =======
Basic Earnings per Share $ .43 $ .39 $ 1.03 $ .94
======= ======= ======= =======
Diluted Earnings per Share $ .43 $ .38 $ 1.01 $ .92
======= ======= ======= =======
Weighted Average Shares
Outstanding - Basic 29.9 31.1 30.2 31.2
Weighted Average Shares
Outstanding - Diluted 30.2 31.7 30.7 31.8
<FN>
Notes:
1. The weighted average shares outstanding used to compute earnings per share
(basic and diluted) for the quarters and nine-month periods ended June 30, 2000
and 1999 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.
2. 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.
3. Operating results for any quarter are not necessarily indicative of the
results for any other quarter or for the full year.
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