SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1994
Commission File No. 1-4582
RALSTON PURINA COMPANY
---------------------------------------------------------
- - --
(Exact name of registrant as specified in its charter)
MISSOURI 43-0470580
----------------------------------------------------------
- - --
(State of Incorporation) (I.R.S. Employer Identification
No.)
CHECKERBOARD SQUARE, ST. LOUIS MISSOURI 63164
----------------------------------------------------------
- - --
(Address of principal executive offices) (Zip
Code)
(314) 982-1000
----------------------------------------------------------
- - --
(Registrant's telephone number, including area code)
Registrant (1) has filed all reports required to be filed by
Section 13
or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12
months, and (2) has been subject to such filing requirements for
the
past 90 days.
YES X NO
--- --
- - -
Number of shares of Ralston-Ralston Purina Group common stock,
$.10 par
value, outstanding as of the close of business on May 6, 1994
- - - 100,451,262.
Number of shares of Ralston-Continental Baking Group common
stock, $.10 par
value, outstanding as of the close of business on May 6, 1994
- - - 20,588,239.
PART I - FINANCIAL INFORMATION
A. Consolidated
<TABLE>
RALSTON PURINA COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in millions except per share data)
<CAPTION>
Three Months Ended Six
Months Ended
March 31,
March 31,
1994 1993 1994
1993
---- ---- ----
- - ----
<S> <C> <C> <C>
<C>
Net Sales $ 1,997.7 $1,913.4 $4,197.0
$4,090.9
---------- --------- --------
- - - --------
Costs and Expenses
Cost of products sold 1,105.3 1,043.4 2,278.9
2,210.2
Selling, general and
administrative 494.8 459.4 963.3
925.3
Advertising and promotion 209.0 214.9 477.6
477.4
Interest 57.5 60.3 113.8
118.9
Other (income)/expense, net 7.4 (2.5) 15.0
1.8
---------- --------- --------
- - - --------
1,874.0 1,775.5 3,848.6
3,733.6
---------- --------- --------
- - - --------
Earnings before Income Taxes,
Extraordinary Item and Cumulative
Effect of Accounting Changes 123.7 137.9 348.4
357.3
Income Taxes 51.3 55.3 142.3
142.4
---------- --------- ---------
- - --------
Earnings before Extraordinary Item
and Cumulative Effect of
Accounting Changes 72.4 82.6 206.1
214.9
Extraordinary Item - Loss on
Early Retirement of Debt (9.5) 0.0
(9.5) (6.8)
---------- --------- --------
- - - --------
Earnings before Cumulative Effect
of Accounting Changes 62.9 82.6 196.6
208.1
Cumulative Effect of Accounting
Changes:
Postretirement Benefits Other
Than Pensions
(171.9)
Income Taxes
(35.0)
---------- --------- --------
- - - --------
Net Earnings 62.9 82.6 196.6
1.2
Preferred Stock Dividend,
Net of Taxes 5.3 5.3 10.5
10.5
---------- --------- --------
- - - --------
Earnings (Loss) Available to
Common Shareholders $ 57.6 $ 77.3 $ 186.1
$ (9.3)
========== =========
========== =======
Cash Dividends Declared per
Common Share
RPG Stock $ 0.60 $ 0.60
Ralston Purina Co. $ 0.316
$ 0.316
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
<TABLE>
RALSTON PURINA COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (continued)
(Dollars in millions except per share data)
<CAPTION>
Three Months Ended
Six Months Ended
March 31,
March 31,
1994 1993
1994 1993
---- ----
- - ---- ----
<S> <C> <C> <C>
<C>
Earnings (Loss) per Common Share -
RPG Stock (pro forma in 1993):
Primary-
Earnings before extraordinary item and
cumulative effect of accounting changes $ 0.68 $ 0.71
$ 1.96 $ 1.54
Extraordinary item (0.08)
(0.08) (0.05)
Cumulative effect of accounting changes
(1.16)
--------- ----------
- - --------- ---------
Net Earnings $ 0.60 $ 0.71
$ 1.88 $ 0.33
========= ==========
========= =========
Fully Diluted-
Earnings before extraordinary item and
cumulative effect of accounting changes $ 0.65 $ 0.68
$ 1.84 $ 1.46
Extraordinary item (0.07)
(0.07) (0.05)
Cumulative effect of accounting changes
(1.06)
--------- ----------
- - --------- ---------
Net Earnings $ 0.58 $ 0.68
$ 1.77 $ 0.35
========= ==========
========= =========
CBG Stock (pro forma in 1993):
Primary-
Earnings before extraordinary item and
cumulative effect of accounting changes $ (0.10) $ 0.18
$ (0.11) $ 0.25
Extraordinary item (0.04)
(0.04) (0.03)
Cumulative effect of accounting changes
(2.30)
--------- ----------
- - --------- ---------
Net Earnings (Loss) $ (0.14) $ 0.18
$ (0.15) $ (2.08)
========= ==========
========= =========
Fully Diluted-
Earnings before extraordinary item and
cumulative effect of accounting changes $ (0.10) $ 0.15
$ (0.11) $ 0.22
Extraordinary item (0.04)
(0.04) (0.03)
Cumulative effect of accounting changes
(2.10)
--------- ----------
- - --------- ---------
Net Earnings (Loss) $ (0.14) $ 0.15
$ (0.15) $ (1.91)
========= ==========
========= =========
Ralston Purina Company Common Stock:
Primary-
Earnings before extraordinary item and
cumulative effect of accounting changes $ 0.75
$ 1.97
Extraordinary item
(0.06)
Cumulative effect of accounting changes
(2.00)
----------
- - ---------
Net Earnings (Loss) $ 0.75
$ (0.09)
==========
=========
Fully Diluted-
Earnings before extraordinary item and
cumulative effect of accounting changes $ 0.70
$ 1.83
Extraordinary item
(0.06)
Cumulative effect of accounting changes
(1.80)
----------
- - ---------
Net Earnings (Loss) $ 0.70
$ (0.03)
==========
=========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
<TABLE>
RALSTON PURINA COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Condensed)
(Dollars in millions)
<CAPTION>
March 31,
Sept. 30,
1994
1993
<S> <C>
<C>
Assets
Current Assets
Cash $ 32.4
$ 21.5
Marketable securities 229.6
36.4
Receivables, less allowance for doubtful
accounts of $31.0 and $31.2, respectively 755.2
763.2
Inventories -
Raw materials and supplies 209.8
232.6
Work in process 100.0
93.7
Finished products 413.0
477.4
Other current assets 205.2
171.2
----------
- - ----------
Total Current Assets 1,945.2
1,796.0
----------
- - ----------
Investments and Other Assets 869.9
944.3
----------
- - ----------
Property at Cost 3,416.4
3,941.8
Accumulated depreciation 1,507.9
1,610.2
----------
- - ----------
1,908.5
2,331.6
----------
- - ----------
Total $ 4,723.6
$ 5,071.9
==========
==========
Liabilities and Shareholders Equity
Current Liabilities
Current maturities of long-term debt $ 124.1
$ 98.4
Notes payable 480.3
401.3
Accounts payable 404.2
497.3
Other current liabilities 598.6
610.3
----------
- - ----------
Total Current Liabilities 1,607.2
1,607.3
----------
- - ----------
Long-Term Debt 1,804.9
2,054.5
----------
- - ----------
Deferred Income Taxes 120.1
149.5
----------
- - ----------
Other Liabilities 572.0
590.5
----------
- - ----------
Redeemable Preferred Stock 472.8
509.8
Unearned ESOP Compensation (285.4)
(309.5)
----------
- - ----------
Shareholders Equity
Preferred stock
Common stock
RPG Stock 11.5
11.5
CBG Stock 2.1
2.1
Capital in excess of par value 115.4
115.2
Retained earnings 1,150.0
1,159.3
Cumulative translation adjustment (71.2)
(70.1)
Common stock in treasury, at cost
RPG Stock (771.5)
(744.3)
CBG Stock (2.5)
Unearned portion of restricted stock (1.8)
(3.9)
----------
- - ----------
Total Shareholders Equity 432.0
469.8
----------
- - ----------
Total $ 4,723.6
$ 5,071.9
==========
==========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
<TABLE>
RALSTON PURINA COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Condensed)
(Dollars in millions)
<CAPTION>
Six
Months Ended
March
31,
1994
1993
<S> <C>
<C>
Cash Flow from Operations
Earnings before extraordinary item and
cumulative effect of accounting changes $ 206.1 $
214.9
Non-cash items included in income 168.9
142.8
Changes in operating assets and liabilities
used in operations (102.8)
(3.2)
Other, net 4.1
(20.1)
---------- -
- - ---------
Net cash flow from operations 276.3
334.4
---------- -
- - ---------
Cash Flow from Investing Activities
Acquisition of businesses (39.2)
Property additions, net (148.7)
(132.8)
Other, net (2.7)
4.2
---------- -
- - ---------
Net cash used by investing activities (190.6)
(128.6)
---------- -
- - ---------
Cash Flow from Financing Activities
Proceeds from issuance of debt for spin-off 370.0
Net cash flow used by debt (89.2)
(13.9)
Cash proceeds from sale of stock 2.7
2.8
Treasury stock purchases (71.7)
(9.7)
Dividends paid (79.2)
(80.6)
---------- -
- - ---------
Net cash provided (used) by financing activities 132.6
(101.4)
---------- -
- - ---------
Effect of Exchange Rate Changes on Cash (14.2)
(14.0)
---------- -
- - ---------
Net Increase in Cash and Cash Equivalents 204.1
90.4
Cash and Cash Equivalents, Beginning of Year 57.9
59.5
---------- -
- - ---------
Cash and Cash Equivalents, End of Period $ 262.0 $
149.9
==========
==========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
RALSTON PURINA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1994
(Dollars in millions except per share data)
Note 1 - The accompanying unaudited financial statements have
been prepared
in accordance with the instructions for Form 10-Q and do
not include
all of the information and footnotes required by
generally accepted
accounting principles for complete financial statements.
In the
opinion of management, all adjustments, consisting only
of normal
recurring adjustments considered necessary for a fair
presentation,
have been included. Operating results for any quarter
are not
necessarily indicative of the results for any other
quarter or for
the full year. These statements should be read in
connection with
the financial statements and notes thereto included in
the Ralston
Purina Company's (the Company) Annual Report to
Shareholders for the
year ended September 30, 1993.
Note 2 - On July 30, 1993, the shareholders of the Company
approved a plan to
distribute to shareholders shares of a new class of
common stock,
Ralston-Continental Baking Group Common Stock (CBG
Stock), which is
intended to reflect separately the performance of the
Company's
fresh bakery products business (the CBG Group). As part
of this
plan, existing common stock was redesignated Ralston-
Ralston Purina
Group Common Stock (RPG Stock) and is intended to
reflect
separately the performance of the Company's other
businesses (the
RPG Group). The CBG Stock distributed to shareholders,
at a ratio
of one share for every five shares of existing common
stock,
represents a 55% interest in the business, assets and
liabilities of
the CBG Group and the RPG Group retains the remaining
45% interest.
<TABLE>
Note 3 - Primary earnings per share are based on the average
number of
shares outstanding during the period. Fully diluted
earnings per
share are based on the average number of outstanding
shares
adjusted for the dilutive effect of convertible
preferred stock,
stock options, convertible debentures and compensation
awards. The
earnings per share for the RPG Group and CBG Group for
the quarter
and six months ended March 31, 1993 are on a pro forma
basis as
the stock distribution described in Note 2 had not
occurred as of
that date. The shares and pro forma shares used in
earnings per
share computations were as follows:
<CAPTION>
Three Months Three Months Six Months
Six Months
March 31, 1994 March 31, 1993 March 31, 1994
March 31, 1993
-------------- -------------- --------------
- - - ---------------
<S> <C> <C> <C>
<C>
Primary:
RPG Stock 100,200,000 103,500,000 100,900,000
103,600,000
CBG Stock 20,400,000 20,700,000 20,500,000
20,700,000
Ralston Purina
Common Stock 103,500,000
103,600,000
Fully Diluted:
RPG Stock 110,300,000 113,400,000 110,900,000
113,500,000
CBG Stock 24,400,000 24,300,000 24,500,000
24,300,000
Ralston Purina
Common Stock 114,800,000
114,900,000
</TABLE>
RALSTON PURINA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1994
(Dollars in millions except per share data)
Note 4 - As of March 31, 1994, there were 100,794,000 shares of
RPG Stock
and 20,589,000 shares of CBG Stock outstanding, and at
September
30, 1993, there were 101,763,000 shares of RPG Stock and
20,694,000
shares of CBG Stock outstanding. These share figures
are exclusive
of shares held in treasury, which were 13,890,000 of RPG
Stock and
269,000 of CBG Stock at March 31, 1994, and 12,917,000
of RPG
Stock and 1,000 of CBG Stock at September 30, 1993.
Note 5 - Other (income)/expense, net for six months consists of
the
following:
March 31,
March 31,
1994
1993
----------- --
- - ---------
Translation and exchange (gain)/loss $14.5
$12.5
Investment income (6.1)
( 6.7)
Miscellaneous 6.6
( 4.0)
-------
- - -------
$15.0
$ 1.8
=======
=======
Note 6 - Investments and Other Assets consist of the following:
March 31,
September 30,
1994
1993
----------- --
- - ---------
Intangible Assets $571.9
$635.7
Other Assets 298.0
308.6
--------- -
- - --------
$869.9
$944.3
=========
=========
Note 7 - During the fourth quarter of fiscal 1993, the Company
elected to
adopt Statement of Financial Accounting Standards No.
106 -
"Employers' Accounting for Postretirement Benefits Other
Than
Pensions" (FAS 106) and Statement of Financial
Accounting Standards
No. 109 "Accounting for Income Taxes" (FAS 109) as of
the beginning
of the year. The three and six months ended March 31,
1993 have
been restated to reflect the accounting changes.
Note 8 - The extraordinary loss in fiscal 1994 was recognized in
conjunction with the retirement of $107.4 of debt that
had an
effective interest rate of 10.7%. The extraordinary
item in fiscal
1993 represents the loss on retirement of debt during
the quarter
ended December 31, 1992 consisting primarily of a
portion of the
Company's outstanding 9 1/2% and 9 3/8% debentures and
all remaining
7.7% debentures.
RALSTON PURINA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1994
(Dollars in millions except per share data)
Note 9 - On March 24, 1994, the Company's Board of Directors
declared a
dividend of $.30 per share of RPG Stock, payable on June
10, 1994 to
shareholders of record on May 16, 1994. RPG Stock
quarterly
dividends are normally declared in January, March, May
and
September.
Prior to the redesignation of Ralston Purina Company
Stock as RPG
Stock, dividends were declared on Ralston Purina Stock.
The
declaration of the March 1993 dividend was delayed until
May 1993.
Note 10- Coincident with the spin-off discussed in Note 11, the
Company
redeemed 334,109 shares of its Series A 6.75% Preferred
Stock at
its guaranteed minimum value. The shares were redeemed
by the
Company in connection with the cessation of
participation in the
Company's Savings Investment Plan by plan participants
employed by
Ralcorp following the spin-off. Following the
redemption, 4,265,891
shares of Preferred Stock remained issued and
outstanding and
continued to be held by the Company's ESOP. As of March
31, 1994,
the terms of the Preferred Stock required adjustment of
the
conversion ratio with respect to RPG Stock to reflect
the change in
the market value of the RPG Stock as a result of the
Ralcorp
spin-off. As of that date, the Preferred Stock is now
convertible
into 2.255 shares of RPG Stock and .4 shares of CBG
Stock for each
share of Preferred Stock. All other terms and
provisions of the
Preferred Stock remain unchanged.
Note 11- On March 31, 1994, the company effected a spin-off of
its private
label and branded cereal, baby food, crackers and
cookies, ski
resort and coupon redemption businesses (the
Distribution). One
share of stock of the new company, Ralcorp Holdings,
Inc.
(Ralcorp), was distributed for each three shares of RPG
Stock held
by shareholders. The Company's earnings and cash flows
through
March 31, 1994 reflect the operations of those
businesses.
The following pro forma data reflect the results of
operations for
each quarter in fiscal 1993 and the first two quarters
of fiscal
1994 of the Company as if the Distribution had occurred
as of the
beginning of such periods. Such data have been prepared
by
adjusting the historical statements for the effect of
costs,
expenses, assets and liabilities and the
recapitalization which
might have occurred had the Distribution been effected
as of the
dates indicated. This pro forma data may not
necessarily reflect
the consolidated results of operations that would have
existed had
the Distribution occurred on the dates indicated.
<TABLE>
RALSTON PURINA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1994
(Dollars in millions except per share data)
<CAPTION>
Pro Forma Financial Data
1994
-----------------------------
lst 2nd Six
Quarter Quarter Months
--------- --------- ---------
$1,936.1 $1,739.0 $3,675.1
<S> <C> <C> <C>
Net Sales (a) 895.3 766.6 1,661.9
Gross Profit (a) 52.6 53.8 106.4
Interest (b)
200.4 87.8 288.2
Earnings before Income Taxes
and Extraordinary Loss (a) 81.8 37.8 119.6
Income Taxes (c)
$118.6 $50.0 $168.6
Earnings before Extraordinary
Loss (a)
1993
-----------------------------------
- - ------------------------
lst 2nd Six 3rd
4th
Quarter Quarter Months
Quarter Quarter Year
--------- --------- --------- -----
- - ---- --------- ---------
$1,931.9 $1,685.3 $3,617.2
$1,672.2 $1,724.0 $7,013.4
Net Sales (a) 885.4 758.0 1,643.4
753.9 760.2 3,157.5
Gross Profit (a) 54.8 56.5 111.3
57.2 54.4 222.9
Interest (b)
Earnings before Income Taxes,
Extraordinary Loss and 196.0 112.6 308.6
91.1 108.2 507.9
Cumulative Effect of
Accounting Changes (a) 78.2 45.8 124.0
37.4 50.4 211.8
Income Taxes (c)
Earnings before Extraordinary $117.8 $66.8 $184.6
$53.7 $57.8 $296.1
Loss and Cumulative Effect
of Accounting Changes (a)
</TABLE>
(a) Excludes results of operations for Ralcorp.
(b) Reflects reduction of interest expense due to assumed debt
repayment by Ralston.
(c) Reflects the tax effect for the pro forma adjustments.
RALSTON PURINA COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL INFORMATION
------------------------------------
On March 31, 1994, the Company effected a spin-off of its private
label
and branded cereal, baby food and crackers and cookie, ski resort
and
coupon redemption businesses (Ralcorp). The Company's earnings
and
cash flows through March 31, 1994, reflect the operations of
those
businesses.
Operating Results
Net earnings for the six months ended March 31, 1994 were $196.6
million, compared to $1.2 million for the same period in the
prior year.
Included in net earnings are extraordinary losses on the early
retirement of debt of $9.5 million, after taxes, in the current
six
months and $6.8 million, after taxes, in the prior year six
months.
Included in the six months ended March 31, 1993 are charges for
the
cumulative effect of changes in accounting for postretirement
benefits
other than pensions and income taxes totaling $206.9 million,
after
taxes. Exclusive of these items, earnings declined by $8.8
million on
slightly higher operating earnings more than offset by lower
returns on
other investments and a higher tax rate.
Second quarter net earnings, exclusive of the aforementioned
extraordinary item in the current quarter, decreased $10.2
million on
slightly lower operating earnings, lower returns on other
investments
and a higher tax rate.
Pro forma net earnings of the Company, exclusive of the Ralcorp
operations and exclusive of the effects of extraordinary items
and
accounting changes, were $50.0 million and $168.6 million for the
quarter and six months ended March 31, 1994, respectively,
compared to
$66.8 million and $184.6 million for the same periods in the
prior year.
Business Segments
Pet food sales for the quarter and six months ended March 31,
1994,
increased over the same periods of the prior year primarily on
favorable
domestic volume comparisons in the second quarter and higher
international volume in both the quarter and six months.
Domestic pet
food volume in the second quarter of 1993 was negatively impacted
by the
adoption of simplified promotional practices. Human foods sales
were
flat for the quarter and up slightly for the six months as the
contribution of the oats products business acquired in November
1993
and higher store brand volume were offset by volume declines in
branded
cereals and crackers and cookies.
Operating profit for pet foods increased for the quarter and
increased
slightly for the six months as higher domestic volume in the
second
quarter and higher international volume were partially offset by
higher domestic pet food ingredient costs. Human foods operating
profit declined for the quarter and six months primarily on
cracker and
cookie lower results related to plant relocation start-up.
Bakery product sales declined in the quarter and six months on
lower
volume and an unfavorable product mix in bread and lower thrift
store
volume. Operating profit for the quarter and six months declined
significantly as a result of the previously mentioned items. The
problems encountered in bread products and thrift stores have
exceeded
the benefits of a cost reduction plan currently underway.
Management
continues to challenge the way it conducts its business by
looking for
additional cost savings, other ways to strengthen volume and
other
opportunities to improve bottom line performance.
Battery product sales increased in the quarter and six months
over the
same periods of the prior year on the inclusion of rechargeable
operations acquired in August 1993 and higher volume in the Asia
Pacific
region, partially offset by substantial European sales declines.
Domestic sales were up for the six months as strong first quarter
alkaline volume growth was moderated by volume declines in the
second
quarter. Substantial declines in European sales resulted from
unfavorable currency exchange rates, an unfavorable product mix
and
significant carbon zinc volume declines. Operating profit for
the six
months increased slightly as improved domestic results and
contribution of rechargable operations were partially offset by
European results. For the quarter, European results and domestic
volume declines more than offset the rechargeable products'
contribution.
The Company continues to review world wide battery production
capacity
and its business structure in light of pervasive global trends,
including the continuing shift from carbon zinc to alkaline
products
and easing of trade restrictions in many regions.
Sales and operating profit of resort operations increased
significantly
reflecting the acquisition of Breckenridge resort. Sales for the
soy
protein products business increased on strong volume in food
protein
products. Operating profit of the soy protein products business
increased as higher volume was partially offset by higher raw
material
costs and unfavorable foreign currency exchange rates.
Sales for international agricultural products declined, primarily
in
the first quarter, as a result of unfavorable exchange rates and
volume
declines in Europe. Operating profit was flat as European
declines were
offset by improvements in most other areas of the world.
Consolidated Results of Operations
Cost of products sold as a percentage of sales for the six months
and
quarter, respectively, increased from 54.0% and 54.5% in the 1993
periods to 54.3% and 55.3% in the current periods. Increases in
the
quarter were primarily due to the inclusion of acquired
rechargeable
battery products which have generally lower margins and higher
pet food
ingredient costs. For the six months, factors affecting the
quarter
were partially offset by improvements in other battery products'
percentages.
Selling, general and administrative expenses were 23.0% and 22.6%
of
sales for the 1994 and 1993 six month periods, respectively.
Advertising and promotion expense for those periods was 11.4% and
11.7%
of sales, respectively. Other expense, net, increased by $13.2
million
primarily on lower returns on other investments.
Income taxes include federal, state and foreign taxes and were
40.8% of
earnings before income taxes for the six months ended March 31,
1994,
compared to 39.9% in the prior year, reflecting the 1% increase
in the
federal statutory rate.
Financial Condition
At March 31, 1994, debt as a percentage of total capitalization
was
80% compared to 79% at September 30, 1993. For the purpose of
this
ratio, guaranteed ESOP debt is treated as debt and redeemable
preferred stock and related unearned compensation are treated as
capital.
The Company's primary source of liquidity is cash flow generated
from
operations. For the six months ended March 31, 1994, cash flow
from
operations was $276.3 million compared to $334.4 million for the
six
months ended March 31, 1993. Changes in working capital in the
current
year account for the majority of the decline. Working capital
was
$338.0 million at March 31, 1994 compared to $188.7 million at
September
30, 1993, reflecting the cash flow from the Ralcorp spin-off.
Cash and
cash equivalents at March 31, 1994 were $262.0 million compared
to $57.9
million at September 30, 1993. Cash flows in the future will no
longer
include cash flows from Ralcorp operations.
Financing activities in the first six months of fiscal 1994
include the
retirement of $107.4 million of debt with an effective interest
rate
of 10.7%. Also in the current six months, the Company received
$370
million from new borrowings. In connection with the spin-off,
Ralcorp
assumed such debt and other debt totaling $400 million.
Coincident with the spin-off of Ralcorp on March 31, 1994, the
Company
redeemed 334,109 shares of its Series A 6.75% Preferred Stock at
its
guaranteed minimum value. The shares were redeemed by the
Company in
connection with the cessation of participation in the Company's
Savings
Investment Plan by plan participants employed by Ralcorp
following the
spin-off. 789,417 shares of RPG Stock and 161,582 shares of CBG
Stock
were issued in connection with the redemption.
As of May 9, 1994, approximately 2,410,300 shares of RPG Stock
remained
under the Board of Directors' authorization for the purchase of
up to 3
million shares of RPG Stock and approximately 3,757,900 shares of
CBG
Stock remained under the Board of Directors' authorization for
the
purchase of up to 4 million shares of CBG Stock.
A summary statement of cash flows for the six months ended March
31,
1994 and 1993 is presented in this report.
PART I - FINANCIAL INFORMATION
B. RPG Group
<TABLE>
RALSTON PURINA GROUP
COMBINED STATEMENT OF EARNINGS
(Dollars in millions except per share data)
<CAPTION>
Three Months Ended Six
Months Ended
March 31,
March 31,
1994 1993
1994 1993
<S> <C> <C> <C>
<C>
Net Sales $ 1,507.4 $1,416.5
$3,231.7 $3,107.7
---------- --------- ------
- - --- ---------
Costs and Expenses
Cost of products sold 862.9 802.0
1,807.0 1,726.8
Selling, general and
administrative 270.3 243.6
523.1 500.1
Advertising and promotion 188.3 193.1
434.7 432.9
Interest 50.3 53.0
100.0 104.7
Other (income)/expense, net 7.1 (1.4)
14.0 2.9
---------- --------- ------
- - --- ---------
1,378.9 1,290.3
2,878.8 2,767.4
---------- --------- ------
- - --- ---------
Earnings(Loss) Related to Retained
Interest in the CBG Group (2.5) 2.9
(2.6) (35.2)
---------- --------- ------
- - --- ---------
Earnings before Income Taxes,
Extraordinary Item and Cumulative
Effect of Accounting Changes 126.0 129.1
350.3 305.1
Income Taxes 52.7 50.6
143.6 135.9
---------- --------- ------
- - --- ---------
Earnings before Extraordinary Item
and Cumulative Effect of Accounting
Changes 73.3 78.5
206.7 169.2
Extraordinary Item - Loss on Early
Retirement of Debt (7.9) 0.0
(7.9) (5.7)
---------- --------- ------
- - --- ---------
Earnings before Cumulative Effect of
Accounting Changes 65.4 78.5
198.8 163.5
Cumulative Effect of Accounting
Changes:
Postretirement Benefits Other Than
Pensions
(130.7)
Income Taxes
10.4
---------- --------- ------
- - --- ---------
Net Earnings 65.4 78.5
198.8 43.2
Preferred Stock Dividend, Net of Tax 4.9 4.8
9.6 9.5
---------- --------- ------
- - --- ---------
Earnings After Preferred Stock
Dividends $ 60.5 $ 73.7 $
189.2 $ 33.7
========== =========
========= =========
Earnings per RPG Stock common share
(pro forma in 1993) -
Primary
Earnings before extraordinary item
and cumulative effect of
accounting changes $ 0.68 $ 0.71 $
1.96 $ 1.54
Extraordinary item (0.08)
(0.08) (0.05)
Cumulative effect of accounting
changes
(1.16)
---------- --------- ------
- - --- ---------
Net Earnings $ 0.60 $ 0.71 $
1.88 $ 0.33
========== =========
========= =========
Fully Diluted
Earnings before extraordinary item
and cumulative effect of
accounting changes $ 0.65 $ 0.68 $
1.84 $ 1.46
Extraordinary item (0.07)
(0.07) (0.05)
Cumulative effect of accounting
changes
(1.06)
---------- --------- ------
- - --- ---------
Net Earnings $ 0.58 $ 0.68 $
1.77 $ 0.35
========== =========
========= =========
Cash Dividends Declared per
Common Share $ 0.60 $
0.60
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
<TABLE>
RALSTON PURINA GROUP
COMBINED BALANCE SHEET
(Condensed)
(Dollars in millions)
<CAPTION>
March 31,
Sept. 30,
1994
1993
<S> <C>
<C>
Assets
Current Assets
Cash $ 32.4
$ 21.5
Marketable securities 188.1
35.9
Receivables, less allowance for doubtful
accounts of $27.5 and $27.9, respectively 660.0
673.2
Inventories -
Raw materials and supplies 162.5
185.7
Work in process 100.0
93.7
Finished products 406.1
469.0
Other current assets 177.1
142.2
----------
- - ----------
Total Current Assets 1,726.2
1,621.2
----------
- - ----------
Retained Interest in the CBG Group 23.2
27.4
----------
- - ----------
Investments and Other Assets 828.7
902.6
----------
- - ----------
Property at Cost 2,373.2
2,927.5
Accumulated depreciation 1,060.3
1,184.8
----------
- - ----------
1,312.9
1,742.7
----------
- - ----------
Total $ 3,891.0
$ 4,293.9
==========
==========
Liabilities and Shareholders Equity
Current Liabilities
Current maturities of long-term debt $ 98.1
$ 80.1
Notes payable 462.2
393.9
Accounts payable 316.2
392.0
Other current liabilities 480.7
503.7
----------
- - ----------
Total Current Liabilities 1,357.2
1,369.7
----------
- - ----------
Long-Term Debt 1,435.4
1,731.6
----------
- - ----------
Deferred Income Taxes 109.4
138.4
----------
- - ----------
Other Liabilities 369.7
386.0
----------
- - ----------
Redeemable Preferred Stock 430.2
463.9
----------
- - ----------
Unearned ESOP Compensation (214.0)
(232.1)
----------
- - ----------
RPG Group Equity 403.1
436.4
----------
- - ----------
Total $ 3,891.0
$ 4,293.9
==========
==========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
<TABLE>
RALSTON PURINA GROUP
COMBINED STATEMENT OF CASH FLOWS
(Condensed)
(Dollars in millions)
<CAPTION>
Six
Months Ended
March
31,
1994
1993
<S> <C>
<C>
Cash Flow from Operations
Net earnings before extraordinary item and
cumulative effect of accounting changes $ 206.7 $
169.2
Retained Interest in CBG Group's Earnings 2.6
35.2
Non-cash items included in income 130.1
108.3
Changes in operating assets and liabilities
used in operations
(96.4)
2.7
Other, net 4.2
(28.2)
---------- -
- - ---------
Net cash flow from operations 247.2
287.2
---------- -
- - ---------
Cash Flow from Investing Activities
Acquisition of businesses (39.2)
Property additions, net (104.4)
(100.9)
Other, net 4.9
4.2
---------- -
- - ---------
Net cash used by investing activities (138.7)
(96.7)
---------- -
- - ---------
Cash Flow from Financing Activities
Proceeds from issuance of debt for spin-off 370.0
Net payments on centrally managed debt (193.6)
(105.4)
Net payments on specifically attributed
long-term debt, including current maturities (11.4)
(4.4)
Net increase in specifically attributed notes
payable 46.6
94.8
Proceeds from the sale of stock 2.7
Treasury stock purchases (69.4)
Dividends paid (76.1)
Cash provided for corporate equity transactions
(85.9)
---------- -
- - ---------
Net cash provided (used) by financing activities 68.8
(100.9)
---------- -
- - ---------
Effect of Exchange Rate Changes on Cash (14.2)
(14.0)
---------- -
- - ---------
Net Increase in Cash and Cash Equivalents 163.1
75.6
Cash and Cash Equivalents, Beginning of Year 57.4
59.0
---------- -
- - ---------
Cash and Cash Equivalents, End of Period $ 220.5 $
134.6
==========
==========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
RALSTON PURINA GROUP
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1994
(Dollars in millions except per share data)
Note 1 - The accompanying unaudited financial statements have
been prepared
in accordance with the instructions for Form 10-Q and do
not include
all of the information and footnotes required by
generally accepted
accounting principles for complete financial statements.
In the
opinion of management, all adjustments, consisting only
of normal
recurring adjustments considered necessary for a fair
presentation,
have been included. Operating results for any quarter
are not
necessarily indicative of the results for any other
quarter or for
the full year. These statements should be read in
connection with
the financial statements of the RPG Group and notes
thereto included
in the Ralston Purina Company's (the Company) Annual
Report to
Shareholders for the year ended September 30, 1993.
Note 2 - On July 30, 1993, the shareholders of the Company
approved a plan to
distribute to shareholders shares of a new class of
common stock,
Ralston-Continental Baking Group Common Stock (CBG
Stock), which is
intended to reflect separately the performance of the
Company's
fresh bakery products business (the CBG Group). As part
of this
plan, existing common stock was redesignated Ralston-
Ralston Purina
Group Common Stock (RPG Stock) and is intended to
reflect separately
the performance of the Company's other businesses (the
RPG Group).
The CBG Stock distributed to shareholders, at a ratio of
one share
for every five shares of existing common stock,
represents a 55%
interest in the business, assets and liabilities of the
CBG Group
and the RPG Group retains the remaining 45% interest.
Holders of RPG Stock are common shareholders of the
Company.
Although the financial statements of the RPG Group and
the CBG Group
separately report the assets, liabilities and
shareholders equity of
the Company attributed to each group, this attribution
does not
affect legal title to such assets or responsibility for
such
liabilities. Financial impacts arising from the CBG
Group that
affect the consolidated results of operations or
financial position
of the Company could affect the results of operations or
financial
position of the RPG Group. Accordingly, the Company's
consolidated
quarterly financial information should be read in
connection with
the RPG Group financial information.
Note 3 - Primary earnings per share are based on 100,200,000
average RPG
Stock shares and 103,500,000 average pro forma RPG Stock
shares
for the quarter ended March 31, 1994 and 1993,
respectively.
Primary earnings per share are based on 100,900,000
average RPG
stock shares and 103,600,000 average pro forma RPG stock
shares for
the six months ended March 31, 1994 and 1993,
respectively. Fully
diluted earnings per share are based on the average
number of shares
outstanding adjusted for the dilutive effect of
convertible
preferred stock, stock options, convertible debentures
and deferred
compensation awards. The balances were 110,300,000
average RPG
Stock shares and 113,400,000 average pro forma RPG Stock
shares for
the quarters ended March 31, 1994 and 1993,
respectively. Fully
diluted earnings per share are based on 110,900,000
average RPG
stock shares and 113,500,000 pro forma RPG stock shares
for the six
months ended March 31, 1994 and 1993, respectively. The
earnings
per share for the quarter and six months ended December
31, 1993 are
on a pro forma basis as the stock distribution described
in Note 2
had not occurred as of that date.
<TABLE>
RALSTON PURINA GROUP
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1994
(Dollars in millions except per share data)
Note 4 - There were RPG Stock common shares outstanding of
100,794,000 at
March 31, 1994 and 101,763,000 at September 30, 1993,
exclusive of
13,890,000 and 12,917,000 RPG Stock treasury shares,
respectively.
Note 5 - Other (income)/expense, net for six months consists of
the
following:
<CAPTION>
March 31,
March 31,
1994
1993
---------- -
- - ---------
<S> <C>
<C>
Translation and exchange (gain)/loss $14.5
$12.5
Investment income (6.1)
(6.5)
Miscellaneous 5.6
(3.1)
---------- -
- - ---------
$14.0
$2.9
==========
==========
Note 6 - Investments and Other Assets consist of the following:
March 31,
Sept. 30,
1994
1993
---------- -
- - ---------
Intangible Assets $529.3
$594.4
Other Assets 299.4
308.2
---------- -
- - ---------
$828.7
$902.6
==========
==========
</TABLE>
Note 7 - During the fourth quarter of fiscal 1993, the Company
elected to
adopt Statement of Financial Accounting Standards No.
106 -
"Employers' Accounting for Postretirement Benefits Other
Than
Pensions" (FAS 106) and Statement of Financial
Accounting Standards
No. 109 - "Accounting for Income Taxes" (FAS 109) as of
the
beginning of the year. The three and six months ended
March 31,
1993 have been restated to reflect the accounting
changes.
Note 8 - An extraordinary loss in fiscal 1994 was recognized in
conjuction
with the retirement of $89.4 of centrally managed debt
attributed to
the RPG Group that had an effective interest rate of
10.7%. The
extraordinary item in fiscal 1993 represents the loss on
retirement
of debt during the quarter ended December 31, 1992
consisting
primarily of a portion of the Company's outstanding 9
1/2% and 9
3/8% debentures and all remaining 7.7% debentures.
Note 9 - On March 24, 1994, the Company's Board of Directors
declared a
dividend of $.30 per share of RPG Stock, payable on June
10, 1994 to
shareholders of record on May 16, 1994. RPG Stock
quarterly
dividends are normally declared in January, March, May
and
September. Prior to the redesignation of Ralston Purina
Company
Stock as RPG Stock, dividends were declared on Ralston
Purina Stock.
RALSTON PURINA GROUP
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1994
(Dollars in millions except per share data)
Note 10 - Coincident with the spin-off discussed in Note 11, the
Company
redeemed 334,109 shares of its Series A 6.75% Preferred
Stock at
its guaranteed minimum value. The shares were redeemed
by the
Company in connection with the cessation of
participation in the
Company's Savings Investment Plan by plan participants
employed
by Ralcorp following the spin-off. 789,417 shares of
RPG Stock
were issued in connection with the redemption.
Following the
redemption, 4,265,891 shares of Preferred Stock
remained issued and
outstanding and continued to be held by the Company's
ESOP. As of
March 31, 1994, the terms of the Preferred Stock
required
adjustment of the conversion ratio with respect to RPG
Stock to
reflect the change in the market value of the RPG Stock
as a result
of the Ralcorp spin-off. As of that date, the
Preferred Stock is
now convertible into 2.255 shares of RPG Stock for each
share of
Preferred Stock. All other terms and provisions of the
Preferred
Stock remain unchanged.
Note 11 - On March 31, 1994, the company effected a spin-off of
its private
label and branded cereal, baby food, crackers and
cookies, ski
resort and coupon redemption businesses (the
Distribution). One
share of stock of the new company, Ralcorp Holding,
Inc.
(Ralcorp), was distributed for each three shares of RPG
Stock held
by shareholders. The Combined earnings and cash flows
through
March 31, 1994 reflect the results of operations of
those
businesses.
The following pro forma data reflect the results of
operations for
each quarter in fiscal 1993 and the first two quarters
of fiscal
1994 of the RPG Group as if the Distribution had
occurred as of the
beginning of such periods. Such data have been
prepared by
adjusting the historical statements for the effect of
costs,
expenses, assets and liabilities and the
recapitalization which
might have occurred had the Distribution been effected
as of the
dates indicated. This pro forma data may not
necessarily reflect
the combined results of operations that would have
existed had the
Distribution occurred on the dates indicated.
<TABLE>
RALSTON PURINA GROUP
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1994
(Dollars in millions except per share data)
<CAPTION>
Pro Forma Financial Data
1994
-----------------------------
lst 2nd Six
Quarter Quarter Months
--------- --------- ---------
<S> <C> <C> <C>
Net Sales (a) $1,460.5 $1,248.1 $2,708.6
Gross Profit (a) 649.8 518.7 1,168.5
Interest (b) 46.0 46.6 92.6
Earnings before Income Taxes
and Extraordinary Loss (a) 200.0 90.1 290.1
Income Taxes (c) 81.7 39.2 120.9
Earnings before Extraordinary
Loss (a) $118.3 $50.9 $169.2
Earnings per Share:
Primary (a) $1.12 $0.46 $1.59
Fully Diluted (a) $1.05 $0.45 $1.50
1993
---------------------------------
- - --------------------------
lst 2nd Six
3rd 4th
Quarter Quarter Months
Quarter Quarter Year
--------- --------- --------- ---
- - ------ --------- ---------
Net Sales (a) $1,445.1 $1,187.9 $2,633.0
$1,156.9 $1,234.4 $5,024.3
Gross Profit (a) 641.1 502.5 1,143.6
484.8 511.3 2,139.7
Interest (b) 47.9 49.2 97.1
49.9 48.5 195.5
Earnings before Income Taxes
and Extraordinary Loss and
Cumulative Effect of
Accounting Changes (a) 152.6 103.8 256.4
76.7 95.9 429.0
Income Taxes (c) 76.4 41.1 117.5
29.4 43.7 190.6
Earnings before Extraordinary
Loss and Cumulative Effect
of Accounting Changes $76.2 $62.7 $138.9
$47.3 $52.2 $238.4
Earnings per Share:
Primary (a)
Earnings before extraordinary
item and cumulative effect of
accounting changes $0.68 $0.56 $1.24
$0.41 $0.46 $2.12
Fully Diluted (a)
Earnings before extraordinary
item and cumulative effect of
accounting changes $0.65 $0.54 $1.19
$0.40 $0.45 $2.04
</TABLE>
(a) Excludes results of operations for Ralcorp.
(b) Reflects reduction of interest expense due to assumed debt
repayment by Ralston.
(c) Reflects the tax effect for the pro forma adjustments.
RALSTON PURINA GROUP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL INFORMATION
------------------------------------
On March 31, 1994, the Company effected a spin-off of its private
label
and branded cereal, baby food and crackers and cookie, ski resort
and
coupon redemption businesses (Ralcorp). The RPG Group's earnings
and
cash flows through March 31, 1994, reflect the operations of
those
businesses.
Operating Results
Net earnings for the six months ended March 31, 1994 were $198.8
million, compared to $43.2 million for the same period in the
prior
year. Included in net earnings are extraordinary losses on the
early
retirement of debt of $7.9 million, after taxes, in the current
six
months and $5.7 million, after taxes, in the prior year period.
Included in the six months ended March 31, 1993 are charges for
the
cumulative effect of changes in accounting for postretirement
benefits
other than pensions and income taxes of $159.2 million, after
taxes
(including the effects of such charges on the earnings related to
the
CBG Group retained interest of $38.9 million). Exclusive of
these
items, earnings for the six months declined by $1.4 million on
higher
operating earnings, more than offset by lower returns on other
investments, lower earnings related to the CBG Group retained
interest
and a higher tax rate.
Earnings per share, exclusive of the aforementioned items were
$1.96 and
$1.84, on a primary and fully diluted basis, respectively, for
the six
months ended March 31, 1994, compared to pro forma primary and
fully
diluted earnings per share of $1.92 and $1.80. Earnings per
share
comparisons benefited from fewer outstanding shares in the
current
period, reflecting stock repurchases.
For the quarter ended March 31, 1994, net earnings before
extraordinary
loss were $73.3 million compared to $78.5 million for the same
quarter
in 1993, reflecting factors previously mentioned. Earnings per
share on
a primary and fully diluted basis were $.68 and $.65,
respectively, in
the current quarter compared to $.71 and $.68 in the prior year.
Pro forma net earnings of the RPG Group, exclusive of the Ralcorp
operations and exclusive of the effects of extraordinary items
and
accounting changes (including the effects of the CBG Group
retained
interest), were $50.9 million and $169.2 million for the quarter
and six
months ended March 31, 1994, respectively, compared to $62.7
million and
$177.8 million for the same periods in the prior year. Pro forma
primary earnings per share on this basis were $.46 and $1.59 for
the
current quarter and six months, respectively, compared to $.56
and $1.62
in the 1993 periods.
Business Segments
Pet food sales for the quarter and six months ended March 31,
1994,
increased over the same periods of the prior year primarily on
favorable
domestic volume comparisons in the second quarter and higher
international volume in both the quarter and six months.
Domestic pet
food volume in the second quarter of 1993 was negatively impacted
by the
adoption of simplified promotional practices. Human foods sales
were
flat for the quarter and up slightly for the six months as the
contribution of the oats products business acquired in November
1993
and higher store brand volume were offset by volume declines in
branded
cereals and crackers and cookies.
Operating profit for pet foods increased for the quarter and
increased
slightly for the six months as higher domestic volume in the
second
quarter and higher international volume were partially offset by
higher
domestic pet food ingredient costs. Human foods operating profit
declined for the quarter and six months primarily on cracker and
cookie
lower results related to plant relocation start-up.
Battery product sales increased in the quarter and six months
over the
same periods of the prior year on the inclusion of rechargeable
operations acquired in August 1993 and higher volume in the Asia
Pacific
region, partially offset by substantial European sales declines.
Domestic sales were up for the six months as strong first quarter
alkaline volume growth was moderated by volume declines in the
second
quarter. Substantial declines in European sales resulted from
unfavorable currency exchange rates, an unfavorable product mix
and
significant carbon zinc volume declines. Operating profit for
the six
months increased slightly as improved domestic results and
contribution
of rechargable operations were partially offset by European
results.
For the quarter, European results and domestic volume declines
more than
offset the rechargeable products' contribution.
The Company continues to review world wide battery production
capacity
and its business structure in light of pervasive global trends,
including the continuing shift from carbon zinc to alkaline
products and
easing of trade restrictions in many regions.
Sales and operating profit of resort operations increased
significantly
reflecting the acquisition of Breckenridge resort. Sales for the
soy
protein products business increased on strong volume in food
protein
products. Operating profit of the soy protein products business
increased as higher volume was partially offset by higher raw
material
costs and unfavorable foreign currency exchange rates.
Sales for international agricultural products declined, primarily
in
the first quarter, as a result of unfavorable exchange rates and
volume
declines in Europe. Operating profit was flat as European
declines were
offset by improvements in most other areas of the world.
Results of Operations
Cost of products sold as a percentage of sales for the six months
and
quarter, respectively, increased from 55.6% and 56.6% in the 1993
periods to 55.9% and 57.2% in the current periods. Increases in
the
quarter were primarily due to the inclusion of acquired
rechargeable
battery products which have generally lower margins and higher
pet food
ingredient costs. For the six months, factors affecting the
quarter
were partially offset by improvements in other battery products'
percentages.
Selling, general and administrative expenses were 16.2% and 16.1%
of
sales for 1994 and 1993 six month periods, respectively.
Advertising
and promotion expense for those periods was 13.5% and 13.9% of
sales,
respectively. Other expense, net, increased by $11.1 million
primarily
on lower returns on other investments.
Income taxes include federal, state and foreign taxes and were
41.0% of
earnings before income taxes for the six months ended March 31,
1994,
compared to 44.5% in the prior year. The income tax percentage
is
influenced by the inclusion of the RPG Group's loss related to
its
retained interest in the CBG Group, on an after tax basis, in the
computation of pre-tax earnings. Such impact is greatest in the
prior
year due to the large reported loss. The current year income
taxes
reflect a 1% increase in the federal statutory rate.
Financial Condition
The RPG Group's primary source of liquidity is cash flow
generated from
operations. For the six months ended March 31, 1994, cash flow
from
operations was $247.2 million compared to $287.2 million in the
six
months ended March 31, 1993. The decrease in cash flow is
primarily due
to changes in working capital. Working capital increased to
$369.0
million at March 31, 1994 compared to $251.5 million at September
30,
1993, reflecting the cash flow from the Ralcorp spin-off. Cash
and cash
equivalents at March 31, 1994 were $220.5 million compared to
$57.4
million at September 30, 1993. Cash flows of the RPG Group in
the
future will no longer include cash flows from Ralcorp operations.
Financing activities in the first six months of fiscal 1994
include the
retirement of $89.4 million of centrally managed debt attributed
to the
RPG Group with an effective interest rate of 10.7%. Also in the
current six months, the RPG Group received $370 million from new
borrowings. In connection with the spin-off, Ralcorp assumed
such debt
and other debt totaling $400 million.
Coincident with the spin-off of Ralcorp on March 31, 1994, the
Company
redeemed 334,109 shares of its Series A 6.75% Preferred Stock at
its
guaranteed minimum value. The shares were redeemed by the
Company in
connection with the cessation of participation in the Company's
Savings
Investment Plan by plan participants employed by Ralcorp
following the
spin-off. 789,417 shares of RPG Stock were issued in connection
with
the redemption.
As of May 9, 1994, approximately 2,410,300 shares of RPG Stock
remained under the Board of Directors' authorization for the
purchase of
up to 3 million shares of RPG Stock.
A summary statement of cash flows for the six months ended March
31,
1994 and 1993 is presented in this report.
PART I - FINANCIAL INFORMATION
C. CBG Group
<TABLE>
CONTINENTAL BAKING GROUP
COMBINED STATEMENT OF EARNINGS
(Dollars in millions except per share data)
<CAPTION>
13 Weeks Ended 26
Weeks Ended
Mar. 26, Mar. 27, Mar.
26, Mar. 27,
1994 1993 1994
1993
---- ---- ----
- - ----
<S> <C> <C> <C>
<C>
Net Sales $ 491.4 $ 499.2 $
967.4 $ 988.1
--------- --------- -------
- - -- ---------
Costs and Expenses
Cost of products sold 243.5 243.7
474.0 488.3
Selling, general and
administrative 224.5 215.8
440.2 425.2
Advertising and promotion 20.7 21.8
42.9 44.5
Interest 7.2 7.3
13.8 14.2
Other (income)/expense, net 0.3 (1.1)
1.0 (1.1)
--------- --------- -------
- - -- ---------
496.2 487.5
971.9 971.1
--------- --------- -------
- - -- ---------
Earnings (Loss) before Income Taxes,
Extraordinary Item and Cumulative
Effect of Accounting Changes (4.8) 11.7
(4.5) 17.0
Income Taxes (1.4) 4.7
(1.3) 6.5
--------- --------- -------
- - -- ---------
Earnings (Loss) before Extraordinary
Item and Cumulative Effect of
Accounting Changes (3.4) 7.0
(3.2) 10.5
Extraordinary Item - Loss on
Early Retirement of Debt (1.6)
(1.6) (1.1)
--------- --------- -------
- - -- ---------
Earnings (Loss) before Cumulative
Effect of Accounting Changes (5.0) 7.0
(4.8) 9.4
Cumulative Effect of Accounting
Changes:
Postretirement Benefits Other
Than Pensions
(41.2)
Income Taxes
(45.4)
--------- --------- -------
- - -- ---------
Net Earnings (Loss) (5.0) 7.0
(4.8) (77.2)
Preferred Stock Dividend, Net
of Taxes 0.4 0.5
0.9 1.0
--------- --------- -------
- - -- ---------
Earnings (Loss) after Preferred Stock
Dividend (5.4) 6.5
(5.7) (78.2)
--------- --------- -------
- - -- ---------
Earnings (Loss) Applicable to the RPG
Group's Retained Interest in the
CBG Group (2.5) 2.9
(2.6) (35.2)
--------- --------- -------
- - -- ---------
Earnings (Loss) After RPG Group's
Retained Interest $ (2.9) $ 3.6 $
(3.1) $ (43.0)
========= =========
========= =========
</TABLE>
<TABLE>
CONTINENTAL BAKING GROUP
COMBINED STATEMENT OF EARNINGS (Continued)
(Dollars in millions except per share data)
<CAPTION>
13 Weeks Ended 26
Weeks Ended
Mar. 26, Mar. 27, Mar.
26, Mar. 27,
1994 1993 1994
1993
---- ---- ----
- - ----
<S> <C> <C> <C>
<C>
Earnings (Loss) per CBG Stock Common
Share (pro forma in fiscal 1993) -
Primary
Earnings before extraordinary
item and cumulative effect of
accounting changes $ (0.10) $ 0.18 $
(0.11) $ 0.25
Extraordinary item (0.04)
(0.04) (0.03)
Cumulative effect of accounting
changes
(2.30)
--------- --------- -------
- - -- ---------
Net Earnings (Loss) $ (0.14) $ 0.18 $
(0.15) $ (2.08)
========= =========
========= =========
Fully Diluted
Earnings before extraordinary
item and cumulative effect of
accounting changes $ (0.10) $ 0.15 $
(0.11) $ 0.22
Extraordinary item (0.04)
(0.04) (0.03)
Cumulative effect of accounting
changes
(2.10)
--------- --------- -------
- - -- ---------
Net Earnings (Loss) $ (0.14) $ 0.15 $
(0.15) $ (1.91)
========= =========
========= =========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
<TABLE>
CONTINENTAL BAKING GROUP
COMBINED BALANCE SHEET
(Condensed)
(Dollars in millions)
<CAPTION>
March 26,
Sept. 25,
1994
1993
----
- - ----
<S> <C>
<C>
Assets
Current Assets
Marketable Securities $ 41.5 $
0.5
Receivables, less allowance for doubtful
accounts of $3.5 and $3.3, respectively 95.4
91.3
Inventories -
Raw materials and supplies 47.3
46.9
Finished products 6.9
8.4
Other current assets 28.1
29.0
---------- -
- - ---------
Total Current Assets 219.2
176.1
---------- -
- - ---------
Investments and Other Assets 61.4
60.1
---------- -
- - ---------
Property at Cost 1,043.2
1,014.3
Accumulated depreciation 447.6
425.4
---------- -
- - ---------
595.6
588.9
---------- -
- - ---------
Total $ 876.2 $
825.1
==========
==========
Liabilities and Shareholders Equity
Current Liabilities
Current maturities of long-term debt $ 26.0 $
18.3
Notes payable 18.1
7.4
Accounts payable 88.0
105.3
Other current liabilities 118.4
107.9
---------- -
- - ---------
Total Current Liabilities 250.5
238.9
---------- -
- - ---------
Long-Term Debt 369.5
322.9
---------- -
- - ---------
Deferred Income Taxes 10.7
11.1
---------- -
- - ---------
Other Liabilities 222.5
222.9
---------- -
- - ---------
Redeemable Preferred Stock 42.6
45.9
Unearned ESOP Compensation (71.4)
(77.4)
---------- -
- - ---------
CBG Group Equity 51.8
60.8
---------- -
- - ---------
Total $ 876.2 $
825.1
==========
==========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
<TABLE>
CONTINENTAL BAKING GROUP
COMBINED STATEMENT OF CASH FLOWS
(Condensed)
(Dollars in millions)
<CAPTION>
26 Weeks
Ended
Mar. 26,
Mar. 27,
1994
1993
----
- - ----
<S> <C>
<C>
Cash Flow from Operations
Earnings (Loss) before extraordinary item and
cumulative effect of accounting changes $ (3.2)
$ 10.5
Non-cash items included in income 38.8
34.5
Changes in operating assets and liabilities
used in operations (6.4)
(5.9)
Other, net (0.1)
8.1
----------
- - ----------
Net cash flow from operations 29.1
47.2
----------
- - ----------
Cash Flow from Investing Activities
Property additions, net (44.3)
(31.9)
Other, net (2.1)
----------
- - ----------
Net cash used by investing activities (46.4)
(31.9)
----------
- - ----------
Cash Flow from Financing Activities
Net proceeds from centrally managed debt 67.0
1.1
Treasury stock purchases (2.3)
Dividends paid (3.1)
Payment Attributed to Retained Interest (3.3)
Cash provided for corporate equity transactions
prior to distribution of CBG Stock
(1.6)
----------
- - ----------
Net cash provided (used) by financing activities 58.3
(0.5)
----------
- - ----------
Net Increase in Cash and Cash Equivalents 41.0
14.8
Cash and Cash Equivalents, Beginning of Period 0.5
0.5
----------
- - ----------
Cash and Cash Equivalents, End of Period $ 41.5
$ 15.3
==========
==========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
CONTINENTAL BAKING GROUP
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 26, 1994
(Dollars in millions except per share data)
Note 1 - The accompanying unaudited financial statements have
been prepared
in accordance with the instructions for Form 10-Q and do
not include
all of the information and footnotes required by
generally accepted
accounting principles for complete financial statements.
In the
opinion of management, all adjustments, consisting only
of normal
recurring adjustments considered necessary for a fair
presentation,
have been included. Operating results for any thirteen
week period
are not necessarily indicative of the results for any
other thirteen
week period or for the full year. These statements
should be read
in connection with the financial statements of the CBG
Group and
notes thereto included in the Ralston Purina Company's
(the Company)
Annual Report to Shareholders for the year ended
September 30, 1993.
Note 2 - On July 30, 1993, the shareholders of the Company
approved a plan to
distribute to shareholders shares of a new class of
common stock,
Ralston-Continental Baking Group Common Stock (CBG
Stock), which is
intended to reflect separately the performance of the
Company's
fresh bakery products business (the CBG Group). As part
of this
plan, existing common stock was redesignated Ralston-
Ralston Purina
Group Common Stock (RPG Stock) and is intended to
reflect separately
the performance of the Company's other businesses (the
RPG Group).
The CBG Stock distributed to shareholders, at a ratio of
one share
for every five shares of existing common stock,
represents a 55%
interest in the business, assets and liabilities of the
CBG Group
and the RPG Group retains the remaining 45% interest.
Holders of CBG Stock are common shareholders of the
Company.
Although the financial statements of the RPG Group and
the CBG Group
separately report the assets, liabilities and
shareholders equity of
the Company attributed to each group, this attribution
does not
affect legal title to such assets or responsibility for
such
liabilities. Financial impacts arising from the RPG
Group that
affect the consolidated results of operations or
financial position
of the Company could affect the results of operations or
financial
position of the CBG Group. Accordingly, the Company's
consolidated
quarterly financial information should be read in
connection with
the CBG Group financial information.
Note 3 - Primary earnings per share are based on 20,400,000
average CBG
Stock shares and 20,700,000 average pro forma CBG Stock
shares for
the quarters ended March 26, 1994 and March 27, 1993,
respectively. Primary earnings per share are based on
20,500,000
average CBG stock shares and 20,700,000 average pro
forma CBG stock
shares for the six months ended March 26, 1994 and March
27, 1993,
respectively. Fully diluted earnings per share are
based on the
average number of shares outstanding adjusted for the
dilutive
effect of convertible preferred stock, stock options,
convertible
debentures and deferred compensation awards. The
balances were
24,400,000 average CBG Stock shares and 24,300,000
average pro
forma CBG Stock shares for the quarters ended March 26,
1994 and
March 27, 1993, respectively. Fully diluted earnings
per share are
based on 24,500,000 average CBG stock shares and
24,300,000 pro
forma CBG stock shares for the six months ended March
26, 1994 and
1993, respectively. The earnings per share for the
quarter and six
months ended March 27, 1993 are on a pro forma basis as
the stock
distribution described in Note 2 had not occurred as of
that date.
CONTINENTAL BAKING GROUP
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 26, 1994
(Dollars in millions except per share data)
Note 4 - There were CBG Stock common shares outstanding of
20,589,000 at
March 26, 1994 and 20,694,000 at September 25, 1993,
exclusive of
269,000 and 1,000 CBG Stock treasury shares,
respectively.
Note 5 - Other Liabilities consists of the following:
March 26, Sept.
25,
1994
1993
---------- -----
- - -----
Self-insurance reserves $112.5
$112.8
Other liabilities 110.0
110.1
---------- -----
- - -----
$222.5
$222.9
==========
==========
Note 6 - During the fourth quarter of fiscal 1993, the Company
elected to
adopt Statement of Financial Accounting Standards No.
106 -
"Employers' Accounting for Postretirement Benefits Other
Than
Pensions" (FAS 106) and Statement of Financial
Accounting Standards
No. 109 - "Accounting for Income Taxes" (FAS 109) as of
the
beginning of the year. The quarter and six months ended
March 27,
1993 has been restated to reflect the accounting
changes.
Note 7 - An extraordinary loss for the quarter ending March 26,
1994, was
recognized in conjunction with the retirement of $18.0
of centrally
managed debt attributed to the CBG Group that had an
effective
interest rate of 10.7%. The extraordinary item in
fiscal 1993
represents the loss on early retirement of debt during
the quarter
ended December 26, 1992 consisting primarily of the
Company's
outstanding 9 1/2% and 9 3/8% debentures and all
remaining 7.7%
debentures.
Note 8 - Coincident with the spin-off described in Note 11 of the
Company's
notes to condensed financial statements, the Company
redeemed
334,109 shares of its Series A 6.75% Preferred Stock at
its
guaranteed minimum value. The shares were redeemed by
the Company
in connection with the cessation of participation in the
Company's
Savings Investment Plan by plan participants employed by
Ralcorp
following the spin-off. The CBG Group's share of the
preferred
stock redemption was $3.3, which was funded by the
issuance of
161,582 shares of CBG Stock and $2.2 of additional
centrally managed
debt.
CONTINENTIAL BAKING GROUP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL INFORMATION
------------------------------------
Operating Results
The CBG Group incurred a net loss of $4.8 million for the 26
weeks ended
March 26, 1994 compared to a net loss of $77.2 million for the 26
weeks
ended March 27, 1993. Included in the net losses are
extraordinary
losses on the early retirement of debt of $1.6 million, after
taxes, in
the current year period and $1.1 million, after taxes, in the
prior year
period. Included in the net loss for the prior year were charges
for
the cumulative effect of changes in accounting for postretirement
benefits other than pensions and income taxes totaling $86.6
million,
after taxes. Exclusive of these items, earnings declined by
$13.7
million from $10.5 million in the prior year. Primary and fully
diluted
losses per share were $.11 in the current period compared to pro
forma
earnings per primary and fully diluted share of $.25 and $.22 in
the
prior year.
For the 13 weeks ended March 26, 1994, net loss, excluding the
aforementioned extraordinary loss, was $3.4 million, compared to
net
earnings of $7.0 million for the same quarter in the prior year.
Loss
per share before extraordinary item in the current quarter was
$.10 on
a primary and fully diluted basis, compared to pro forma earnings
per
share of $.18 and $.15, respectively, in the prior year.
Sales and gross profit declined for the 13 and 26 weeks ended
March 26,
1994, on lower volume and an unfavorable product mix in bread and
lower
thrift store volume. Selling, general and administrative
expenses
were 45.5% and 43.0% of sales in the current and prior 26 weeks,
respectively, primarily as a result of lower sales volume.
The problems encountered in the CBG Group's bread products and
thrift
stores have exceeded the benefits of a cost reduction plan
currently
underway. Management continues to challenge the way it conducts
its
business by looking for additional cost savings, other ways to
strengthen volume and other opportunities to improve bottom line
performance.
Financial Condition
Cash provided from operations is the CBG Group's primary source
of
liquidity and amounted to $29.1 million for the 26 weeks ended
March 26,
1994 compared to $47.2 million for the same period in the prior
year,
primarily on lower earnings before cumulative effect of
accounting
changes. Current liabilities in excess of current assets at
March 26,
1994 were $31.3 million compared to $62.8 million at September
25,
1993.
The Company manages most financial activities of the group on a
centralized, consolidated basis. The liquidity and capital
resources of
the Company provide financial and operating flexibility to each
group.
Specific components of centrally managed debt and assets (Net
Debt) are
attributed to each Group in proportion to the ratio of each
Group's
attributed Net Debt balance to the Company's total Net Debt. The
CBG
Group's centrally managed debt increased by $67.0 million in the
26
weeks ended March 26, 1994 while its cash and cash equivalents
increased
$41.0 million.
Financing activities in the first six months of fiscal 1994
include the
retirement of $18.0 million of centrally managed debt attributed
to
the CBG Group with an average interest rate of 10.7%.
As of February 3,1994, the Board of Directors of the Company
eliminated
CBG Stock dividends . In the future, dividend policy will be
considered
on a quarter by quarter basis.
Coincident with the spin-off of the Company's cereal, baby food,
cookie
and cracker, ski resort and coupon processing businesses
(Ralcorp) on
March 31, 1994, the Company redeemed 334,109 shares of its Series
A
6.75% Preferred Stock at its guaranteed minimum value. The
shares were
redeemed by Company in connection with the cessation of
participation in
the Company's Savings Investment Plan by plan participants
employed by
Ralcorp following the spin-off. The CBG Group's share of the
preferred
stock redemption was $3.3 million, which was funded by the
issuance of
161,582 shares of CBG Stock and $2.2 million of additional
centrally
managed debt.
As of May 9, 1994, approximately 3,757,900 shares of CBG Stock
remained
under the Board of Directors' authorization for the purchase of
up to 4
million shares of CBG Stock.
A summary statement of cash flows for the six months ended March
31,
1994 and 1993 is presented in this report.
PART II - OTHER INFORMATION
-----------------
There is no information required to be reported under any items
except
those indicated below.
Item 1. Legal Proceedings.
-----------------
The Company and the plaintiff in the Alpo Petfoods, Inc. v.
Ralston Purina Company lawsuit have agreed to a settlement of all
disputed claims.
On March 21, 1994, the U.S. Environmental Protection Agency
("EPA"), Region IX, issued a Notice of Violation pursuant to
Section 113 of the Clean Air Act to Continental Baking Company
concerning the construction of an oven at its Sacramento bakery
in 1985. An amount of fines or penalties was not specified by
the EPA in the Notice.
On May 3, 1994, the State of California issued a summons and
criminal complaint in the Municipal Court for the State of
California, County of Sacramento, against Continental Baking
Company alleging violation of the California Health and Safety
Code for failure to report a release of a hazardous material at
its Sacramento bakery.
In the opinion of management, based on the information
presently known, the ultimate liability for the two matters
reported above, together with liability for all other pending
legal proceedings, asserted legal claims, and known potentional
legal claims which are probable of assertion, taking into account
established accruals for estimated liabilities, should not be
material.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits filed with this Report:
(11) Statement, re: Computation of Per Share
Earnings.
(b) Reports on Form 8-K
The Registrant filed a Report on Form 8-K on February 8,
1994, to file its press release dated February 3, 1994,
disclosing the Company's first quarter earnings per share, the
operating profit for its Eveready battery business and its pet
food businesses, for fiscal 1993, and the results of the election
of directors at Ralston's Annual Meeting of Shareholders.
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.
RALSTON PURINA COMPANY
----------------------
Registrant
By JAMES R. ELSESSER
----------------------
James R. Elsesser
Vice President and Chief
Financial Officer
Date: May 13, 1994
Exhibit Index
Exhibits
-----
EX-11 Computation of Earnings Per Share
(provided electronically)
PAGE 1 Exhibit 11
<TABLE>
RALSTON PURINA COMPANY AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(in millions, except per share data)
<CAPTION>
6 Months
Ended
Mar. 31,
1993
----------
<S> <C>
EARNINGS PER COMMON SHARE OUTSTANDING
Earnings before extraordinary item and
cumulative effect of accounting changes $ 214.9
Dividend on Series A ESOP convertible
preferred stock, net of tax (10.5)
----------
$ 204.4
Extraordinary item (6.8)
Cumulative effect of accounting changes (206.9)
----------
Net earnings (loss) $ (9.3)
==========
Weighted average shares - primary
earnings per share calculation 103.6
==========
Earnings (loss) per common share outstanding:
Earnings before extraordinary item and
cumulative effect of accounting changes $ 1.97
Extraordinary item (0.06)
Cumulative effect of accounting changes (2.00)
----------
Net loss $ (0.09)
==========
EARNINGS PER SHARE ASSUMING FULL DILUTION
Earnings before extraordinary item and
cumulative effect of accounting changes $ 214.9
Adjustments to earnings to reflect assumed
ESOP preferred stock conversion (4.2)
Extraordinary item (6.8)
Cumulative effect of accounting changes (206.9)
----------
Net earnings (loss) for fully diluted earnings
per share calculation $ (3.0)
==========
Wtd. average number of common shares outstanding 103.6
Convertible preferred stock 10.7
Dilutive effect of stock options 0.5
Shares issuable on conversion of debentures
Dilutive effect of deferred compensation awards 0.1
----------
Weighted average shares - fully diluted
earnings per share calculation 114.9
==========
Earnings (loss) per share assuming full dilution:
Earnings before extraordinary item and
cumulative effect of accounting changes $ 1.83
Extraordinary item (0.06)
Cumulative effect of accounting changes (1.80)
----------
Net loss $ (0.03)
==========
</TABLE>
<PAGE>
PAGE 2
<TABLE>
RALSTON PURINA GROUP
COMPUTATION OF EARNINGS PER SHARE
(in millions, except per share data)
<CAPTION>
Pro
Forma
6 Months 6 Months
Ended Ended
Mar. 31, Mar. 31,
1994 1993
--------- ---------
<S> <C> <C>
EARNINGS PER COMMON SHARE OUTSTANDING
Earnings before extraordinary item and
cumulative effect of accounting changes $ 206.7 $ 169.2
Dividend on Series A ESOP convertible
preferred stock, net of tax (9.6) (9.5)
--------- ---------
$ 197.1 $ 159.7
Extraordinary item (7.9) (5.7)
Cumulative effect of accounting changes (120.3)
--------- ---------
Net earnings $ 189.2 $ 33.7
========= =========
Weighted average shares - primary
earnings per share calculation 100.9 103.6
========= =========
Earnings per common share outstanding:
Earnings before extraordinary item and
cumulative effect of accounting changes $ 1.96 $ 1.54
Extraordinary item (0.08) (0.05)
Cumulative effect of accounting changes (1.16)
--------- ---------
Net earnings $ 1.88 $ 0.33
========= =========
EARNINGS PER SHARE ASSUMING FULL DILUTION
Earnings before extraordinary item and
cumulative effect of accounting changes $ 206.7 $ 169.2
Adjustments to earnings to reflect assumed
ESOP preferred stock conversion (2.3) (3.7)
Extraordinary item (7.9) (5.7)
Cumulative effect of accounting changes (120.3)
--------- ---------
Net earnings for fully diluted earnings
per share calculation $ 196.5 $ 39.5
========= =========
Wtd. average number of shares outstanding 100.9 103.6
Convertible preferred stock 9.6 9.5
Dilutive effect of stock options 0.3 0.3
Shares issuable on conversion of debentures
Dilutive effect of deferred compensation awards 0.1 0.1
--------- ---------
Weighted average shares - fully diluted
earnings per share calculation 110.9 113.5
========= =========
Earnings per share assuming full dilution:
Earnings before extraordinary item and
cumulative effect of accounting changes $ 1.84 $ 1.46
Extraordinary item (0.07) (0.05)
Cumulative effect of accounting changes (1.06)
--------- ---------
Net earnings $ 1.77 $ 0.35
========= =========
</TABLE>
<PAGE>
PAGE 3
<TABLE>
CONTINENTAL BAKING GROUP
COMPUTATION OF EARNINGS PER SHARE
(in millions, except per share data)
<CAPTION>
Pro Forma
26 Weeks 26 Weeks
Ended Ended
Mar. 26, Mar. 27,
1994 1993
---------- ----------
<S> <C> <C>
EARNINGS (LOSS) PER COMMON SHARE OUTSTANDING
Earnings before extraordinary item and
cumulative effect of accounting changes $ (3.2) $ 10.5
Dividend on Series A ESOP convertible
preferred stock, net of tax (0.9) (1.0)
---------- ----------
$ (4.1) $ 9.5
Extraordinary item (1.6) (1.1)
Cumulative effect of accounting changes (86.6)
---------- ----------
Net loss $ (5.7) $ (78.2)
========== ==========
Wtd. average number of shares outstanding 20.5 20.7
Shares issuable with respect to RPG Group's
retained interest in the CBG Group 16.8 16.9
---------- ----------
Weighted average shares - primary
earnings per share calculation 37.3 37.6
========== ==========
Earnings (loss) per common share outstanding:
Earnings before extraordinary item and
cumulative effect of accounting changes $ (0.11) $ 0.25
Extraordinary item (0.04) (0.03)
Cumulative effect of accounting changes (2.30)
---------- ----------
Net loss $ (0.15) $ (2.08)
========== ==========
EARNINGS PER SHARE ASSUMING FULL DILUTION
Earnings (loss) before extraordinary item and
cumulative effect of accounting changes $ (3.2) $ 10.5
Adjustments to earnings to reflect assumed
ESOP preferred stock conversion (1.6) (1.8)
Extraordinary item (1.6) (1.1)
Cumulative effect of accounting changes (86.6)
---------- ----------
Net earnings (loss) for fully diluted
earnings per share calculation $ (6.4) $ (79.0)
========== ==========
Wtd. average number of common shares outstanding 20.5 20.7
Shares issuable with respect to RPG Group's
retained interest in the CBG Group 16.8 16.9
Convertible preferred stock 4.0 3.6
Dilutive effect of stock options
Dilutive effect of deferred compensation awards
---------- ----------
Weighted average shares - fully diluted
earnings per share calculation 41.3 41.2
========== ==========
Earnings (loss) per share assuming full dilution:
Earnings before extraordinary item and
cumulative effect of accounting changes $ (0.11) $ 0.22
Extraordinary item (0.04) (0.03)
PAGE 4
Cumulative effect of accounting changes (2.10)
---------- ----------
Net loss $ (0.15) $ (1.91)
========== ==========
</TABLE>
