<PAGE> 1
THIS DOCUMENT IS A COPY OF THE 10Q FILED ON AUGUST 15, 1994
PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION.
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 June 30, 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
------------------------------------------------------------
(Registrants 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 August 1, 1994 - 100,028,017.
Number of shares of Ralston-Continental Baking Group common stock, $.10 par
value, outstanding as of the close of business on August 1, 1994 - 20,588,262.
<PAGE> 2
<TABLE>
PART I - FINANCIAL INFORMATION
A. Consolidated
RALSTON PURINA COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $ 1,724.1 $ 1,874.4 $ 5,921.1 $ 5,965.3
------------ ------------ ------------ ------------
Costs and Expenses
Cost of products sold 972.8 1,024.3 3,251.7 3,234.5
Selling, general and administrative 435.5 473.7 1,398.8 1,399.0
Advertising and promotion 157.9 210.4 635.5 687.8
Interest 55.2 61.0 169.0 179.9
Provision for restructuring 16.0 - 16.0 -
Other (income)/expense, net 2.9 0.1 17.9 1.9
----------- ------------ ------------ ------------
1,640.3 1,769.5 5,488.9 5,503.1
----------- ------------ ------------ ------------
Earnings before Income Taxes,
Extraordinary Item and Cumulative
Effect of Accounting Changes 83.8 104.9 432.2 462.2
Income Taxes 39.0 42.6 181.3 185.0
----------- ------------ ------------ ------------
Earnings before Extraordinary Item
and Cumulative Effect of
Accounting Changes 44.8 62.3 250.9 277.2
Extraordinary Item-Loss on Early
Retirement of Debt - - (9.5) (6.8)
----------- ------------ ------------ ------------
Earnings before Cumulative Effect
of Accounting Changes 44.8 62.3 241.4 270.4
Cumulative Effect of Accounting
Changes:
Postretirement Benefits Other
Than Pensions - - - (171.9)
Income Taxes - - - (35.0)
----------- ------------ ------------ ------------
Net Earnings 44.8 62.3 241.4 63.5
Preferred Stock Dividend,
Net of Taxes 4.9 5.2 15.4 15.7
----------- ------------ ------------ ------------
Earnings Available to
Common Shareholders $ 39.9 $ 57.1 $ 226.0 $ 47.8
=========== ============ ============ ============
Cash Dividends Declared per
Common Share
RPG Stock $ 0.30 $ 0.90
Ralston Purina Co. $ 0.316 $ 0.632
<FN>
See Accompanying Notes to Condensed Financial Statements.
</TABLE>
<PAGE> 3
<TABLE>
RALSTON PURINA COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
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 $ 0.46 $ 0.49 $ 2.42 $ 2.03
Extraordinary item (0.08) (0.05)
Cumulative effect of accounting changes (1.16)
------- ------- ------- -------
Net Earnings $ 0.46 $ 0.49 $ 2.34 $ 0.82
======= ======= ======= =======
Fully Diluted-
Earnings before extraordinary item and
cumulative effect of accounting changes $ 0.45 $ 0.47 $ 2.28 $ 1.93
Extraordinary item (0.07) (0.05)
Cumulative effect of accounting changes (1.06)
------- ------- ------- -------
Net Earnings $ 0.45 $ 0.47 $ 2.21 $ 0.82
======= ======= ======= =======
CBG Stock (pro forma in 1993):
Primary-
Earnings (loss) before extraordinary item and
cumulative effect of accounting changes $(0.32) $ 0.29 $(0.43) $ 0.54
Extraordinary item (0.04) (0.03)
Cumulative effect of accounting changes (2.30)
------- ------- ------- -------
Net Earnings (Loss) $(0.32) $ 0.29 $(0.47) $(1.79)
======= ======= ======= =======
Fully Diluted-
Earnings (loss) before extraordinary item and
cumulative effect of accounting changes $(0.32) $ 0.25 $(0.43) $ 0.46
Extraordinary item (0.04) (0.03)
Cumulative effect of accounting changes (2.04)
------- ------- ------- -------
Net Earnings (Loss) $(0.32) $ 0.25 $(0.47) $(1.61)
======= ======= ======= =======
Ralston Purina Company Common Stock:
Primary-
Earnings before extraordinary item and
cumulative effect of accounting changes $ 0.55 $ 2.52
Extraordinary item (0.06)
Cumulative effect of accounting changes (2.00)
------- -------
Net Earnings $ 0.55 $ 0.46
======= =======
Fully Diluted-
Earnings before extraordinary item and
cumulative effect of accounting changes $ 0.52 $ 2.36
Extraordinary item (0.06)
Cumulative effect of accounting changes (1.80)
------- -------
Net Earnings $ 0.52 $ 0.50
======= =======
<FN>
See Accompanying Notes to Condensed Financial Statements.
</TABLE>
<PAGE> 4
<TABLE>
RALSTON PURINA COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(CONDENSED)
(DOLLARS IN MILLIONS)
<CAPTION>
June 30, Sept. 30,
1994 1993
-------------- -------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 23.9 $ 21.5
Marketable securities 49.3 36.4
Receivables, less allowance for doubtful
accounts of $ 30.0 and $ 31.2, respectively 768.1 763.2
Inventories -
Raw materials and supplies 213.1 232.6
Work in process 109.8 93.7
Finished products 449.4 477.4
Other current assets 192.2 171.2
---------- ----------
Total Current Assets 1,805.8 1,796.0
---------- ----------
Investments and Other Assets 868.1 944.3
---------- ----------
Property at Cost 3,452.3 3,941.8
Accumulated depreciation 1,541.0 1,610.2
---------- ----------
1,911.3 2,331.6
---------- ----------
Total $ 4,585.2 $ 5,071.9
========== ==========
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities
Current maturities of long-term debt $ 236.1 $ 98.4
Notes payable 422.9 401.3
Accounts payable 377.6 497.3
Other current liabilities 557.9 610.3
---------- ----------
Total Current Liabilities 1,594.5 1,607.3
---------- ----------
Long-Term Debt 1,660.2 2,054.5
---------- ----------
Deferred Income Taxes 113.7 149.5
---------- ----------
Other Liabilities 575.1 590.5
---------- ----------
Redeemable Preferred Stock 472.8 509.8
---------- ----------
Unearned ESOP Compensation (273.1) (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 115.1 115.2
Retained earnings 1,159.2 1,159.3
Cumulative translation adjustment (57.0) (70.1)
Common stock in treasury, at cost:
RPG Stock (784.9) (744.3)
CBG Stock (2.6)
Unearned portion of restricted stock (1.4) (3.9)
---------- ----------
Total Shareholders Equity 442.0 469.8
---------- ----------
Total $ 4,585.2 $ 5,071.9
========== ==========
<PAGE> 5
<FN>
See Accompanying Notes to Condensed Financial Statements.
</TABLE>
<TABLE>
RALSTON PURINA COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(CONDENSED)
(DOLLARS IN MILLIONS)
<CAPTION>
Nine Months Ended
June 30,
1994 1993
--------- ---------
<S> <C> <C>
Cash Flow from Operations
Earnings before extraordinary item and
cumulative effect of accounting changes $ 250.9 $ 277.2
Non-cash items included in income 225.6 214.1
Changes in assets and liabilities
used in operations (201.0) 10.4
Other, net 13.3 (27.4)
--------- ---------
Net cash flow from operations 288.8 474.3
--------- ---------
Cash Flow from Investing Activities
Acquisition of businesses (39.2) (90.8)
Property additions, net (203.7) (197.2)
Other, net 9.0 (17.6)
--------- ---------
Net cash used by investing activities (233.9) (305.6)
--------- ---------
Cash Flow from Financing Activities
Proceeds from issuance of debt for spin-off 370.0 -
Net cash flow provided (used) by debt (172.0) 10.1
Cash proceeds from sale of stock 2.7 3.3
Treasury stock purchases (85.7) (10.3)
Dividends paid (125.8) (130.4)
--------- ---------
Net cash used by financing activities (10.8) (127.3)
--------- ---------
Effect of Exchange Rate Changes on Cash (28.8) (23.3)
--------- ---------
Net Increase in Cash and Cash Equivalents 15.3 18.1
Cash and Cash Equivalents, Beginning of Year 57.9 59.5
--------- ---------
Cash and Cash Equivalents, End of Period $ 73.2 $ 77.6
========= =========
<FN>
See Accompanying Notes to Condensed Financial Statements.
</TABLE>
<PAGE> 6
RALSTON PURINA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 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 Companys 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.
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, when the effects of
inclusion of such securities does not result in anti-dilution. The
earnings per share for the RPG Group and CBG Group for the quarter
and nine months ended June 30, 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:
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
June 30, 1994 June 30, 1993 June 30, 1994 June 30, 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Primary:
RPG Stock 100,400,000 103,500,000 100,700,000 103,600,000
CBG Stock 20,600,000 20,700,000 20,500,000 20,700,000
Ralston Purina
Common Stock 103,500,000 103,600,000
Fully Diluted:
RPG Stock 111,500,000 113,300,000 111,800,000 113,900,000
CBG Stock 25,400,000* 25,500,000 25,300,000* 25,500,000
Ralston Purina
Common Stock 114,700,000 114,800,000
<FN>
* Due to anti-dilution for the quarter and nine months ended June 25,
1994, fully diluted earnings per share as reported on the statement of
earnings is revised to exclude anti-dilutive securities from the
computation.
</TABLE>
<PAGE> 7
Note 4 - As of June 30, 1994, there were 100,426,000 shares of RPG Stock and
20,588,000 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 14,257,000 of RPG Stock and 270,000 of
CBG Stock at June 30, 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 nine months consists of the following:
<TABLE>
<CAPTION>
June 30, June 30,
1994 1993
---- ----
<S> <C> <C>
Translation and exchange loss $ 18.2 $ 18.2
Investment Income (10.2) (9.6)
Miscellaneous 9.9 (6.7)
------ ------
$ 17.9 $ 1.9
====== ======
</TABLE>
Note 6 - Investments and Other Assets consists of the following:
<TABLE>
<CAPTION>
June 30, September 30,
1994 1993
---- ----
<S> <C> <C>
Intangible Assets $ 565.2 $ 635.7
Other Assets 302.9 308.6
------- -------
$ 868.1 $ 944.3
======= =======
</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 nine months ended June 30, 1993 have been
restated to reflect the accounting changes.
Note 8 - The extraordinary loss in the second quarter of 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.
Note 9 - On May 26, 1994, the Company's Board of Directors declared a
dividend of $ .30 per share of RPG Stock, payable on September 9,
1994, to shareholders of record on August 15, 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 May 1993 dividend was delayed to accommodate the
declaration of separate dividends after the distribution of CBG stock
described in Note 2.
Note 10 - The $ 16 restructuring provision in the current quarter, $ 9.6 after
taxes, represents primarily termination benefits and related payroll
costs for 435 headquarters and field employees who have been or will
be laid off as part of the CBG Group's continuing cost reduction
program. The CBG Group expects annualized cost reductions of $ 23,
pre-tax, beginning in the fourth quarter of fiscal 1994, as a result
of these actions.
<PAGE> 8
Note 11 - Coincident with the spin-off discussed in Note 12, 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 12 - 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 the
nine months ended June 30, 1994 and the three and nine months ended
June 30, 1993 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.
<PAGE> 9
<TABLE>
RALSTON PURINA COMPANY
Pro Forma Consolidated Statement of Earnings
(in millions)
<CAPTION>
Nine Months
Ended
June 30, 1994
-------------
<S> <C> <C>
Net Sales (a) $ 5,399.2
-------------
Costs and Expenses
Cost of products sold (a) 2,986.0
Selling, general and administrative (a) 1,327.2
Advertising and promotion (a) 518.7
Interest (b) 161.6
Provision for restructuring 16.0
Other (income)/expense, net (a) 17.7
-------------
5,027.2
-------------
Earnings before Income Taxes
and Extraordinary Loss 372.0
Income Taxes (c) 158.6
-------------
Earnings before Extraordinary
Loss $ 213.4
=============
<CAPTION>
Three Months Nine Months
Ended Ended
June 30, 1993 June 30, 1993
------------- -------------
Net Sales (a) $ 1,672.2 $ 5,289.4
----------- -------------
Costs and Expenses
Cost of products sold (a) 918.3 2,892.1
Selling, general and administrative (a) 443.1 1,306.1
Advertising and promotion (a) 162.5 521.5
Interest (b) 57.2 168.5
Other (income)/expense, net (a) - 1.5
----------- -------------
1,581.1 4,889.7
----------- -------------
Earnings before Income Taxes,
Extraordinary Loss and
Cumulative Effect of
Accounting Changes 91.1 399.7
Income Taxes (c) 37.4 161.4
----------- -------------
Earnings before Extraordinary
Loss and Cumulative Effect
of Accounting Changes $ 53.7 $ 238.3
=========== =============
<FN>
(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.
</TABLE>
<PAGE> 10
RALSTON PURINA COMPANY AND SUBSIDIARIES
MANAGEMENTS 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, crackers and cookies, ski resort and
coupon redemption businesses (Ralcorp). The Companys earnings and
cash flows reflect the operations of those businesses through March 31,
1994.
OPERATING RESULTS
Net earnings for the nine months ended June 30, 1994 were $ 241.4
million, compared to $ 63.5 million for the same period in the prior
year. Included in net earnings of the current year period are an
extraordinary loss on the early retirement of debt of $ 9.5 million,
after taxes, a provision for bakery products restructuring of $ 9.6
million, after taxes and net earnings related to spun-off operations of
$ 37.5 million. Included in the nine months ended June 30, 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, an extraordinary loss on the early
retirement of debt of $ 6.8 million, after taxes and net earnings
related to spun-off operations of $ 38.9 million. Exclusive of these
items, earnings declined by $ 15.3 million on lower earnings from
bakery operations and lower returns on other investments, partially
offset by improved operating earnings in other business segments.
Third quarter net earnings were $ 54.4 million in the current year,
exclusive of the restructuring provision, compared to $ 53.7 million in
the prior year, exclusive of results of spun-off operations.
BUSINESS SEGMENTS
Pet food sales for the quarter and nine months ended June 30, 1994
increased over the same periods of the prior year on higher domestic
and international volumes. Domestic pet food volume in 1993 was
negatively impacted by the retail trade's rationalization of
inventories. Operating profit for pet foods increased for the quarter
and for the nine months on sales increases, partially offset by higher
domestic pet food ingredient costs.
Bakery product sales declined in the quarter and nine months on lower
volume and an unfavorable product mix in bread, lower thrift store
volume and higher promotional sales discounts. Operating profit for
the quarter and nine months declined significantly as a result of the
previously mentioned items and the restructuring provision.
The problems encountered in the bread products and thrift stores have
thus far exceeded the benefits of cost reduction programs currently
underway. Management continues to
<PAGE> 11
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.
The restructuring provision in the current quarter covers severance and
related payroll costs for 435 headquarters and field employees who have
been or will be laid off as part of the continuing bakery products cost
reduction program. The Company expects annualized cost reductions of
$23,000,000, pre-tax, as a result of these actions, beginning in the
fourth quarter.
Battery products sales and operating profit increased in the quarter
and nine months over the same periods of the prior year on the
inclusion of rechargeable operations acquired in August 1993 and higher
alkaline volume in the North America and Asia Pacific regions,
partially offset by substantial European sales declines. European
operations declined on an unfavorable product mix and significant
declines in carbon zinc volume.
The Company is developing a plan to address 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 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 as a result of
volume declines and unfavorable exchange rates 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 nine months and
quarter, respectively, increased from 54.2% and 54.6% in the 1993
periods to 54.9% and 56.4% in the current periods. Increases in the
quarter and nine months were primarily due to lower bakery products
margins in the quarter, the inclusion of acquired rechargeable battery
products which have generally lower margins and higher pet food
ingredient costs, partially offset by improvements in other battery
products' percentages.
Selling, general and administrative expenses were 23.6% and 23.5% of
sales for the 1994 and 1993 nine month periods, respectively.
Advertising and promotion expense for those periods declined to 10.7%
from 11.5% of sales, respectively, primarily on declines in pet foods
and the exclusion of relatively higher expenses related to spun-off
human food businesses in the current quarter. Other expense, net
increased by $ 16.0 million primarily on lower returns on other
investments.
<PAGE> 12
Income taxes include federal, state and foreign taxes and were 41.9% of
earnings before income taxes for the nine months ended June 30, 1994,
compared to 40.0% in the prior year, due to a 1% increase in the
federal statutory rate and a higher tax rate related to foreign
operations.
FINANCIAL CONDITION
At June 30, 1994, debt as a percentage of total capitalization was 78%
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 nine months ended June 30, 1994, cash flow from
operations was $ 288.8 million compared to $ 474.3 million for the nine
months ended June 30, 1993. Changes in working capital in the current
year account for nearly all of the decline. An additional source of
liquidity is provided by cash and cash equivalents at June 30, 1994 of
$ 73.2 million. Cash flows after March 31, 1994 no longer include cash
flows from Ralcorp operations.
Financing activities in the first nine months of 1994 include the
retirement of $ 107.4 million of debt with an effective interest rate
of 10.7%. Also in the current nine 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. In connection with the redemption, 789,417 shares of RPG
Stock and 161,582 shares of CBG Stock were issued.
As of August 3, 1994, approximately 1,883,900 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 nine months ended June 30,
1994 and 1993 is presented in this report.
<PAGE> 13
<TABLE>
PART I - FINANCIAL INFORMATION
B. RPG Group
RALSTON PURINA GROUP
COMBINED STATEMENT OF EARNINGS
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 1,223.4 $ 1,359.7 $ 4,455.1 $ 4,467.4
----------- ----------- ----------- -----------
Costs and Expenses
Cost of products sold 717.3 778.7 2,524.3 2,505.5
Selling, general and administrative 215.5 255.0 738.6 755.1
Advertising and promotion 138.6 186.1 573.3 619.0
Interest 47.5 53.7 147.5 158.4
Other (income)/expense, net 2.0 0.7 16.0 3.6
----------- ----------- ----------- -----------
1,120.9 1,274.2 3,999.7 4,041.6
----------- ----------- ----------- -----------
Earnings (Loss) Related to Retained Interest
in the CBG Group (5.3) 5.0 (7.9) (30.2)
Earnings before Income Taxes,
Extraordinary Item and Cumulative
Effect of Accounting Changes 97.2 90.5 447.5 395.6
Income Taxes 46.3 34.6 189.9 170.5
----------- ----------- ----------- -----------
Earnings before Extraordinary Item
and Cumulative Effect of
Accounting Changes 50.9 55.9 257.6 225.1
Extraordinary Item-Loss on Early
Retirement of Debt - - (7.9) (5.7)
----------- ----------- ----------- -----------
Earnings before Cumulative Effect
of Accounting Changes 50.9 55.9 249.7 219.4
Cumulative Effect of Accounting
Changes:
Postretirement Benefits Other
Than Pensions - - - (130.7)
Income Taxes - - - 10.4
----------- ----------- ----------- -----------
Net Earnings 50.9 55.9 249.7 99.1
Preferred Stock Dividend, Net of Taxes 4.4 4.8 14.0 14.3
----------- ----------- ----------- -----------
Earnings after Preferred Stock Dividends $ 46.5 $ 51.1 $ 235.7 $ 84.8
=========== =========== =========== ===========
<FN>
See Accompanying Notes to Condensed Financial Statements.
</TABLE>
<PAGE> 14
<TABLE>
RALSTON PURINA GROUP
COMBINED STATEMENT OF EARNINGS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Earnings (Loss) per RPG Stock Common Share -
(pro forma in 1993):
Primary-
Earnings before extraordinary item and
cumulative effect of accounting changes $ 0.46 $ 0.49 $ 2.42 $ 2.03
Extraordinary item (0.08) (0.05)
Cumulative effect of accounting changes (1.16)
-------- -------- -------- --------
Net Earnings $ 0.46 $ 0.49 $ 2.34 $ 0.82
======== ======== ======== ========
Fully Diluted-
Earnings before extraordinary item and
cumulative effect of accounting changes $ 0.45 $ 0.47 $ 2.28 $ 1.93
Extraordinary item (0.07) (0.05)
Cumulative effect of accounting changes (1.06)
-------- -------- -------- --------
Net Earnings $ 0.45 $ 0.47 $ 2.21 $ 0.82
======== ======== ======== ========
Cash Dividends Declared per Common Share $ 0.30 $ 0.90
<FN>
See Accompanying Notes to Condensed Financial Statements.
</TABLE>
<PAGE> 15
<TABLE>
RALSTON PURINA GROUP
COMBINED BALANCE SHEET
(CONDENSED)
(DOLLARS IN MILLIONS)
<CAPTION>
June 30, Sept. 30,
1994 1993
----------- -----------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 23.9 $ 21.5
Marketable securities 45.7 35.9
Receivables, less allowance for doubtful
accounts of $ 26.4 and $ 27.9, respectively 670.6 673.2
Inventories -
Raw materials and supplies 165.7 185.7
Work in process 109.8 93.7
Finished products 441.8 469.0
Other current assets 158.8 142.2
----------- -----------
Total Current Assets 1,616.3 1,621.2
----------- -----------
Retained Interest in CBG Group 17.9 27.4
----------- -----------
Investments and Other Assets 827.5 902.6
----------- -----------
Property at Cost 2,396.1 2,927.5
Accumulated depreciation 1,079.5 1,184.8
----------- -----------
1,316.6 1,742.7
----------- -----------
Total $ 3,778.3 $ 4,293.9
=========== ===========
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities
Current maturities of long-term debt $ 186.3 $ 80.1
Notes payable 412.7 393.9
Accounts payable 299.2 392.0
Other current liabilities 436.4 503.7
----------- -----------
Total Current Liabilities 1,334.6 1,369.7
----------- -----------
Long-Term Debt 1,320.3 1,731.6
----------- -----------
Deferred Income Taxes 106.0 138.4
----------- -----------
Other Liabilities 372.0 386.0
----------- -----------
Redeemable Preferred Stock 430.2 463.9
----------- -----------
Unearned ESOP Compensation (204.8) (232.1)
----------- -----------
RPG Group Equity 420.0 436.4
----------- -----------
Total $ 3,778.3 $ 4,293.9
=========== ===========
<FN>
See Accompanying Notes to Condensed Financial Statements.
</TABLE>
<PAGE> 16
<TABLE>
RALSTON PURINA GROUP
COMBINED STATEMENT OF CASH FLOWS
(CONDENSED)
(DOLLARS IN MILLIONS)
<CAPTION>
Nine Months Ended
June 30,
1994 1993
--------- ---------
<S> <C> <C>
Cash Flow from Operations
Earnings before extraordinary item and
cumulative effect of accounting changes $ 257.6 $ 225.1
Retained Interest in CBG Group's Earnings 7.9 30.2
Non-cash items included in income 176.9 161.3
Changes in assets and liabilities
used in operations (185.9) (4.4)
Other, net 10.9 (39.2)
--------- ---------
Net cash flow from operations 267.4 373.0
--------- ---------
Cash Flow from Investing Activities
Acquisition of businesses (39.2) (90.8)
Property additions, net (141.7) (144.0)
Other, net 17.0 (17.6)
--------- ---------
Net cash used by investing activities (163.9) (252.4)
--------- ---------
Cash Flow from Financing Activities
Proceeds from issuance of debt for spin-off 370.0 -
Net payments on centrally managed debt (237.4) (48.1)
Net proceeds from (payments on) specifically attributed
long-term debt, including current maturities (8.5) 4.2
Net increase in specifically attributed notes payable 15.3 93.9
Proceeds from the sale of stock 2.7 -
Treasury stock purchases (83.4) -
Dividends paid (121.2) -
Cash provided for corporate equity transactions - (132.1)
--------- ---------
Net cash used by financing activities (62.5) (82.1)
--------- ---------
Effect of Exchange Rate Changes on Cash (28.8) (23.3)
--------- ---------
Net Increase in Cash and Cash Equivalents 12.2 15.2
Cash and Cash Equivalents, Beginning of Year 57.4 59.0
--------- ---------
Cash and Cash Equivalents, End of Period $ 69.6 $ 74.2
========= =========
<FN>
See Accompanying Notes to Condensed Financial Statements.
</TABLE>
<PAGE> 17
RALSTON PURINA GROUP
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 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 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 quarter and nine months ended June 30, 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:
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
June 30, 1994 June 30, 1993 June 30, 1994 June 30, 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Primary:
RPG Stock 100,400,000 103,500,000 100,700,000 103,600,000
Fully Diluted:
RPG Stock 111,500,000 113,300,000 111,800,000 113,900,000
</TABLE>
Note 4 - There were RPG Stock common shares outstanding of 100,426,000 at
June 30, 1994 and 101,763,000 at September 30, 1993, exclusive of 14,257,000
and 12,917,000 RPG Stock treasury shares, respectively.
<PAGE> 18
Note 5 - Other (income)/expense, net for nine months consists of the following:
<TABLE>
<CAPTION>
June 30, June 30,
1994 1993
---- ----
<S> <C> <C>
Translation and exchange loss $ 18.2 $ 18.2
Investment income (10.0) (9.5)
Miscellaneous 7.8 (5.1)
------ -----
$ 16.0 $ 3.6
====== =====
</TABLE>
Note 6 - Investments and Other Assets consists of the following:
<TABLE>
<CAPTION>
June 30, September 30,
1994 1993
---- ----
<S> <C> <C>
Intangible Assets $ 522.9 $ 594.4
Other Assets 304.6 308.2
------- -------
$ 827.5 $ 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 nine months ended June 30, 1993 have been restated to
reflect the accounting changes.
Note 8 - The extraordinary loss in the second quarter of fiscal 1994 was
recognized in conjunction 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 May 26, 1994, the Company's Board of Directors declared a
dividend of $ .30 per share of RPG Stock, payable on September 9, 1994,
to shareholders of record on August 15, 1994. RPG 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.
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.
<PAGE> 19
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 Combined earnings and cash flows through June 30, 1994 reflect the
results of operations of those businesses.
The following pro forma data reflect the results of operations for the
nine months ended June 30, 1994 and the three and nine months ended June
30, 1993 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.
<PAGE> 20
<TABLE>
RALSTON PURINA GROUP
Pro Forma Combined Statement of Earnings
(Dollars in millions except per share data)
<CAPTION>
Nine Months
Ended
June 30, 1994
-------------
<S> <C> <C>
Net Sales (a) $ 3,932.0
---------
Costs and Expenses
Cost of products sold (a) 2,257.4
Selling, general and administrative (a) 667.0
Advertising and promotion (a) 456.5
Interest (b) 140.1
Other (income)/expense, net (a) 15.8
---------
3,536.8
---------
Loss related to retained interest in
the CBG Group (7.9)
---------
Earnings before Income Taxes
and Extraordinary Item 387.3
Income Taxes (c) 167.2
---------
Earnings before Extraordinary
Item $ 220.1
=========
Earnings per Share:
Primary (a)
Earnings before extraordinary item $ 2.05
Fully Diluted (a)
Earnings before extraordinary item $ 1.94
<CAPTION>
Three Months Nine Months
Ended Ended
June 30, 1993 June 30, 1993
------------- -------------
Net Sales (a) $ 1,156.9 $ 3,789.9
--------- ---------
Costs and Expenses
Cost of products sold (a) 672.1 2,161.5
Selling, general and administrative (a) 224.4 662.2
Advertising and promotion (a) 138.2 452.7
Interest (b) 49.9 147.0
Other (income)/expense, net (a) 0.6 3.2
--------- ---------
1,085.2 3,426.6
--------- ---------
Earnings (loss) related to retained interest
in the CBG Group 5.0 (30.2)
--------- ---------
Earnings before Income Taxes,
Extraordinary Item and Cumulative
Effect of Accounting Changes 76.7 333.1
Income Taxes (c) 29.4 146.9
--------- ---------
<PAGE> 21
Earnings before Extraordinary
Item and Cumulative Effect
of Accounting Changes $ 47.3 $ 186.2
========= =========
Earnings per Share:
Primary (a)
Earnings before Extraordinary Item and
Cumulative Effect of Accounting Changes $ 0.41 $ 1.66
Fully Diluted (a)
Earnings before Extraordinary Item and
Cumulative Effect of Accounting Changes $ 0.40 $ 1.59
<FN>
(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.
</TABLE>
<PAGE> 22
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, crackers and cookies, ski resort and
coupon redemption businesses (Ralcorp). The RPG Group's earnings and
cash flows reflect the operations of those businesses through March 31,
1994.
OPERATING RESULTS
Net earnings for the nine months ended June 30, 1994 were $ 249.7
million, compared to $ 99.1 million for the same period in the prior
year. Included in net earnings of the current year period are an
extraordinary loss on the early retirement of debt of $ 7.9 million,
after taxes and net earnings related to spun-off operations of $ 37.5
million. Included in the nine months ended June 30, 1993 are charges
for the cumulative effect of changes in accounting for postretirement
benefits other than pensions and income taxes totaling $ 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), an
extraordinary loss on the early retirement of debt of $ 5.7 million,
after taxes and net earnings related to spun-off operations of $ 38.9
million. Exclusive of these items, earnings declined by $ 5.0 million.
Earnings per share, exclusive of the aforementioned items were $ 2.05
and $ 1.94 on a primary and fully diluted basis, respectively, for the
nine months ended June 30, 1994, compared to pro forma primary and
fully diluted earnings per share of $ 2.04 and $ 1.93, respectively,
for 1993. Earnings per share comparisons benefited from fewer
outstanding shares in the current period, reflecting stock repurchases.
For the third quarter, net earnings were $ 50.9 million compared to
$55.9 million in 1993. Exclusive of results of spun-off operations,
1993 third quarter earnings were $ 47.3 million. Earnings per share on
a primary and fully diluted basis were $ .46 and $ .45, respectively,
in the current quarter compared to pro forma earnings per share of
$ .41 and $ .40 in the prior year.
BUSINESS SEGMENTS
Pet food sales for the quarter and nine months ended June 30, 1994
increased over the same periods of the prior year on higher domestic
and international volumes. Domestic pet food volume in 1993 was
negatively impacted by the retail trade's rationalization of
inventories. Operating profit for pet foods increased for the quarter
and for the nine months on sales increases, partially offset by higher
domestic pet food ingredient costs.
<PAGE> 23
Battery products sales and operating profit increased in the quarter
and nine months over the same periods of the prior year on the
inclusion of rechargeable operations acquired in August 1993 and higher
alkaline volume in the North America and Asia Pacific regions,
partially offset by substantial European sales declines. European
operations declined on an unfavorable product mix and significant
declines in carbon zinc volume.
The Company is developing a plan to address 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 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 as a result of
volume declines and unfavorable exchange rates 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 nine months and
quarter, respectively, increased from 56.1% and 57.3% in the 1993
periods to 56.7% and 58.6% in the current periods. Increases were
primarily due to the inclusion of acquired rechargeable battery
products which have generally lower margins and higher pet food
ingredient costs, partially offset by improvements in other battery
products' percentages.
Selling, general and administrative expenses were 16.6% and 16.9% of
sales for 1994 and 1993 nine month periods, respectively. Advertising
and promotion expense for those periods declined to 12.9% from 13.9% of
sales, respectively, primarily on declines in pet foods and the
exclusion of relatively higher expenses related to spun-off human food
businesses in the current quarter. Other expense, net increased by $
12.4 million primarily on lower returns on other investments.
Income taxes include federal, state and foreign taxes and were 42.4% of
earnings before income taxes for the nine months ended June 30, 1994,
compared to 43.1% 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 and a higher tax
rate related to foreign operations.
<PAGE> 24
FINANCIAL CONDITION
The RPG Group's primary source of liquidity is cash flow generated from
operations. For the nine months ended June 30, 1994, cash flow from
operations was $ 267.4 million compared to $ 373.0 million in the nine
months ended June 30, 1993. The decrease in cash flow is due to
changes in working capital, partially offset by higher earnings and
non-cash expenses. Cash and cash equivalents at June 30, 1994 were $
69.6 million compared to $ 57.4 million at September 30, 1993. Cash
flows of the RPG Group after March 31, 1994, no longer include cash
flows from Ralcorp operations.
Financing activities in the first nine 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 nine 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. In connection with the redemption, 789,417 shares of RPG
Stock were issued.
As of August 3, 1994, approximately 1,883,900 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 nine months ended June 30,
1994 and 1993 is presented in this report.
<PAGE> 25
<TABLE>
PART I - FINANCIAL INFORMATION
C. CBG Group
CONTINENTAL BAKING GROUP
COMBINED STATEMENT OF EARNINGS
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<CAPTION>
13 Weeks Ended 39 Weeks Ended
June 25, June 26, June 25, June 26,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $ 500.9 $ 517.4 $ 1,468.3 $ 1,505.5
------- ------- --------- ---------
Costs and Expenses
Cost of products sold 255.7 248.3 729.7 736.6
Selling, general and administrative 220.0 218.7 660.2 643.9
Advertising and promotion 19.3 24.3 62.2 68.8
Interest 7.7 7.3 21.5 21.5
Provision for restructuring 16.0 - 16.0 -
Other (income)/expense, net 0.9 (0.6) 1.9 (1.7)
------- ------- --------- ---------
519.6 498.0 1,491.5 1,469.1
------- ------- --------- ---------
Earnings (Loss) before Income Taxes,
Extraordinary Item and Cumulative
Effect of Accounting Changes (18.7) 19.4 (23.2) 36.4
Income Taxes (7.3) 8.0 (8.6) 14.5
------- ------- --------- ---------
Earnings (Loss) before Extraordinary Item
and Cumulative Effect of
Accounting Changes (11.4) 11.4 (14.6) 21.9
Extraordinary Item-Loss on Early
Retirement of Debt - - (1.6) (1.1)
------- ------- --------- ---------
Earnings (Loss) before Cumulative Effect
of Accounting Changes (11.4) 11.4 (16.2) 20.8
Cumulative Effect of Accounting
Changes:
Postretirement Benefits Other
Than Pensions - - - (41.2)
Income Taxes - - - (45.4)
------- ------- --------- ---------
Net Earnings (Loss) (11.4) 11.4 (16.2) (65.8)
Preferred Stock Dividend, Net of Taxes 0.5 0.4 1.4 1.4
------- ------- --------- ---------
Earnings (Loss) after Preferred Stock Dividend (11.9) 11.0 (17.6) (67.2)
------- ------- --------- ---------
Earnings (Loss) Applicable to the RPG Group's
Retained Interest in the CBG Group (5.3) 5.0 (7.9) (30.2)
------- ------- --------- ---------
Earnings (Loss) after RPG Group's Retained Interest $ (6.6) $ 6.0 $ (9.7) $ (37.0)
======= ======= ========= =========
<FN>
See Accompanying Notes to Condensed Financial Statements.
</TABLE>
<PAGE> 26
<TABLE>
CONTINENTAL BAKING GROUP
COMBINED STATEMENT OF EARNINGS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<CAPTION>
13 Weeks Ended 39 Weeks Ended
June 25, June 26, June 25, June 26,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Earnings (Loss) per CBG Stock Common Share -
(pro forma in 1993):
Primary-
Earnings (loss) before extraordinary item and
cumulative effect of accounting changes $ (0.32) $ 0.29 $ (0.43) $ 0.54
Extraordinary item (0.04) (0.03)
Cumulative effect of accounting changes (2.30)
-------- ------ -------- --------
Net Earnings (Loss) $ (0.32) $ 0.29 $ (0.47) $ (1.79)
======== ====== ======== ========
Fully Diluted-
Earnings (loss) before extraordinary item and
cumulative effect of accounting changes $ (0.32) $ 0.25 $ (0.43) $ 0.46
Extraordinary item (0.04) (0.03)
Cumulative effect of accounting changes (2.04)
-------- ------ -------- --------
Net Earnings (Loss) $ (0.32) $ 0.25 $ (0.47) $ (1.61)
======== ====== ======== ========
<FN>
See Accompanying Notes to Condensed Financial Statements.
</TABLE>
<PAGE> 27
<TABLE>
CONTINENTAL BAKING GROUP
COMBINED BALANCE SHEET
(CONDENSED)
(DOLLARS IN MILLIONS)
<CAPTION>
June 25, Sept. 25,
1994 1993
-------- ---------
<S> <C> <C>
ASSETS
Current Assets
Marketable securities $ 3.6 $ 0.5
Receivables, less allowance for doubtful
accounts of $ 3.6 and $ 3.3, respectively 97.5 91.3
Inventories -
Raw materials and supplies 47.4 46.9
Finished products 7.6 8.4
Other current assets 33.4 29.0
--------- ---------
Total Current Assets 189.5 176.1
--------- ---------
Investments and Other Assets 61.7 60.1
--------- ---------
Property at Cost 1,056.2 1,014.3
Accumulated depreciation 461.5 425.4
--------- ---------
594.7 588.9
--------- ---------
Total $ 845.9 $ 825.1
========= =========
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities
Current maturities of long-term debt $ 49.8 $ 18.3
Notes payable 10.2 7.4
Accounts payable 78.4 105.3
Other current liabilities 121.5 107.9
-------- ---------
Total Current Liabilities 259.9 238.9
-------- ---------
Long-Term Debt 339.9 322.9
-------- ---------
Deferred Income Taxes 7.7 11.1
-------- ---------
Other Liabilities 224.2 222.9
-------- ---------
Redeemable Preferred Stock 42.6 45.9
-------- ---------
Unearned ESOP Compensation (68.3) (77.4)
-------- ---------
CBG Group Equity 39.9 60.8
-------- ---------
Total $ 845.9 $ 825.1
======== =========
<FN>
See Accompanying Notes to Condensed Financial Statements.
</TABLE>
<PAGE> 28
<TABLE>
CONTINENTAL BAKING GROUP
COMBINED STATEMENT OF CASH FLOWS
(CONDENSED)
(DOLLARS IN MILLIONS)
<CAPTION>
39 Weeks Ended
June 25, June 26,
1994 1993
-------- --------
<S> <C> <C>
Cash Flow from Operations
Earnings (Loss) before extraordinary item and
cumulative effect of accounting changes $ (14.6) $ 21.9
Non-cash items included in income 48.7 52.7
Changes in assets and liabilities
used in operations (15.1) 14.8
Other, net 2.4 11.9
-------- -------
Net cash flow from operations 21.4 101.3
-------- -------
Cash Flow from Investing Activities
Property additions, net (62.0) (53.2)
Other, net (2.5) -
-------- -------
Net cash used by investing activities (64.5) (53.2)
-------- -------
Cash Flow from Financing Activities
Net proceeds from (payments on) centrally managed debt 56.4 (39.9)
Treasury stock purchases (2.3) -
Dividends paid (4.6) -
Payment attributed to retained interest (3.3) -
Cash provided for corporate equity transactions
prior to distribution of CBG Stock - (5.3)
-------- -------
Net cash provided (used) by financing activities 46.2 (45.2)
-------- -------
Net Increase in Cash and Cash Equivalents 3.1 2.9
Cash and Cash Equivalents, Beginning of Period 0.5 0.5
-------- -------
Cash and Cash Equivalents, End of Period $ 3.6 $ 3.4
======== =======
<FN>
See Accompanying Notes to Condensed Financial Statements.
</TABLE>
<PAGE> 29
CONTINENTAL BAKING GROUP
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 25, 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 tittle
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 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, when the effects of
inclusion of such securities does not result in anti-dilution. The
earnings per share for the quarter and nine months ended June 30, 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:
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
June 30, 1994 June 30, 1993 June 30, 1994 June 30, 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Primary:
CBG Stock 20,600,000 20,700,000 20,500,000 20,700,000
Fully Diluted:
CBG Stock 25,400,000* 25,500,000 25,300,000* 25,500,000
<FN>
* Due to anti-dilution for the quarter and nine months ended June 25,
1994, fully diluted earnings per share as reported on the statement of
earnings is revised to exclude anti-dilutive securities from the
computation.
</TABLE>
<PAGE> 30
Note 4 -There were CBG Stock common shares outstanding of 20,588,000 at
June 25, 1994 and 20,694,000 at September 25, 1993, exclusive of
270,000 and 1,000 CBG Stock treasury shares, respectively.
Note 5 - Other Liabilities consists of the following:
<TABLE>
<CAPTION>
June 25, September 25,
1994 1993
---- ----
<S> <C> <C>
Self-insurance reserves $ 110.5 $ 112.8
Other liabilities 113.7 110.1
------- -------
$ 224.2 $ 222.9
======= =======
</TABLE>
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 nine months ended June 26, 1993 have 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 - The $ 16 restructuring provision in the current quarter, $ 9.6
after taxes, represents primarily termination benefits and related
payroll costs for 435 headquarters and field employees who have been or
will be laid off as part of the CBG Group's continuing cost reduction
program. The CBG Group expects annualized cost reductions of $ 23,
pre-tax, beginning in the fourth quarter of fiscal 1994, as a result of
these actions.
Note 9 - Coincident with the spin-off described in Note 12 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.
<PAGE> 31
CONTINENTAL BAKING GROUP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL INFORMATION
------------------------------------
OPERATING RESULTS
The CBG Group incurred a net loss of $ 16.2 million for the 39 weeks
ended June 25, 1994 compared to a net loss of $ 65.8 million for the 39
weeks ended June 26, 1993. Included in the net loss for the current
year period is a provision for restructuring of $ 9.6 million, after
taxes, and an extraordinary loss on the early retirement of debt of
$ 1.6 million, after taxes. The prior year period net loss included
charges for the cumulative effect of changes in accounting for
postretirement benefits other than pensions and income taxes totaling
$ 86.6 million, after taxes and an extraordinary loss on the early
retirement of debt of $ 1.1 million, after taxes. Exclusive of these
items, earnings declined by $ 26.9 million from $ 21.9 million in the
prior year. Primary and fully diluted losses per share on such basis
were $ .17 in the current period compared to pro forma earnings per
primary and fully diluted share of $ .54 and $ .46 in the prior year.
For the 13 weeks ended June 25, 1994, net loss, excluding the
aforementioned restructuring provision, was $ 1.8 million compared to
net earnings of $ 11.4 million for the same quarter in the prior year.
Loss per share in the current quarter, exclusive of the restructuring
provision, was $ .06 on a primary and fully diluted basis, compared to
pro forma earnings per share of $ .29 and $ .25, respectively, in the
prior year.
Sales declined for the 13 and 39 weeks ended June 25, 1994 on lower
volume and an unfavorable product mix in bread and lower thrift store
volume and higher promotional sales discounts. Cost of products sold as
a percentage of sales for the nine months and quarter, respectively,
increased from 48.0% and 48.9% in the 13 and 39 week periods in 1993 to
51.0% and 49.7% in the current periods. Lower sales was the primary
cause of the decline in the first two quarters of 1994. Additionally,
in the current quarter, price increases failed to cover higher
ingredient and operating costs. Selling, general and administrative
expenses increased from 42.8% of sales to 45.0% in the current 39 weeks
reflecting the impact of lower sales and the CBG Group's high fixed cost
distribution system.
The problems encountered in the CBG Group's bread products and thrift
stores have thus far exceeded the benefits of cost reduction programs
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.
The restructuring provision in the current quarter covers severance and
related payroll costs for 435 headquarters and field employees who have
been or will be laid off as part of
<PAGE> 32
the CBG Group's continuing cost reduction program. The CBG Group expects
annualized cost reduction of $23,000,000, pre-tax, as a result of these
actions, beginning in the fourth quarter.
FINANCIAL CONDITION
Cash provided from operations was $ 21.4 million for the 39 weeks ended
June 25, 1994 compared to $ 101.3 million for the same period in the
prior year. The decline resulted from lower earnings before cumulative
effect of accounting changes and changes in working capital. Current
liabilities in excess of current assets at June 25, 1994 were $ 70.4
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 $ 56.4 million in the 39
weeks ended June 25, 1994.
Financing activities in the first nine 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 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 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 August 3, 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 nine months ended June 30,
1994 and 1993 is presented in this report.
<PAGE> 33
PART II - OTHER INFORMATION
-----------------
There is no information required to be reported under any items except
those indicated below.
Item 1. Legal Proceedings
-----------------
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. No fines or
penalties were specified in the EPA's notice. Continental has responded
to the Notice and the EPA is currently reviewing its position on the
matter.
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. Continental
paid a $15,000 civil fine and the matter has been dismissed.
On December 11, 1992, Continental was served with a subpoena by the
San Francisco office of the Antitrust Division of the U.S. Department of
Justice requiring it to produce records to a federal grand jury. The
investigation related principally to bidding procedures for sales of
bread products to school districts and governmental institutions.
Continental responded to the subpoena by submitting the requested
documents. In early 1994 the Antitrust Division returned the submitted
documents and indicated they would take no further action at that time.
In the opinion of management, the ultimate liability for all such
matters, together with the liability for all other pending legal
proceedings, asserted legal claims and known potential 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) No reports on Form 8-K were filed by the Company during the
quarter ended June 30, 1994.
<PAGE> 34
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: August 15, 1994
<PAGE> 35
Exhibit Index
Exhibits
--------
EX-11 Computation of Earnings Per Share
(provided electronically)
<PAGE> 1
<TABLE>
Exhibit 11
RALSTON PURINA COMPANY AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(in millions, except per share data)
<CAPTION>
9 Months
Ended
June 30,
1993
----------
<S> <C>
EARNINGS PER COMMON SHARE OUTSTANDING
Earnings before extraordinary item and
cumulative effect of accounting changes $ 277.2
Dividend on Series A ESOP convertible
preferred stock, net of tax (15.7)
---------
$ 261.5
Extraordinary item (6.8)
Cumulative effect of accounting changes (206.9)
---------
Net earnings $ 47.8
=========
Weighted average shares - primary
earnings per share calculation 103.6
=========
Earnings per common share outstanding:
Earnings before extraordinary item and
cumulative effect of accounting changes $ 2.52
Extraordinary item (0.06)
Cumulative effect of accounting changes (2.00)
---------
Net earnings $ 0.46
=========
EARNINGS PER SHARE ASSUMING FULL DILUTION
Earnings before extraordinary item and
cumulative effect of accounting changes $ 277.2
Adjustments to earnings to reflect assumed
ESOP preferred stock conversion (6.3)
Extraordinary item (6.8)
Cumulative effect of accounting changes (206.9)
---------
Net earnings for fully diluted earnings
per share calculation $ 57.2
=========
<PAGE> 2
Wtd. average number of common shares outstanding 103.6
Convertible preferred stock 10.8
Dilutive effect of stock options 0.3
Shares issuable on conversion of debentures
Dilutive effect of deferred compensation awards 0.1
---------
Weighted average shares - fully diluted
earnings per share calculation 114.8
=========
Earnings per share assuming full dilution:
Earnings before extraordinary item and
cumulative effect of accounting changes $ 2.36
Extraordinary item (0.06)
Cumulative effect of accounting changes (1.80)
---------
Net earnings $ 0.50
=========
</TABLE>
<PAGE> 3
<TABLE>
Exhibit 11
RALSTON PURINA GROUP
COMPUTATION OF EARNINGS PER SHARE
(in millions, except per share data)
<CAPTION>
Pro
Forma
9 Months 9 Months
Ended Ended
June 30, June 30,
1994 1993
-------- --------
<S> <C> <C>
EARNINGS PER COMMON SHARE OUTSTANDING
Earnings before extraordinary item and
cumulative effect of accounting changes $ 257.6 $ 225.1
Dividend on Series A ESOP convertible
preferred stock, net of tax (14.0) (14.3)
------------ ----------
$ 243.6 $ 210.8
Extraordinary item (7.9) (5.7)
Cumulative effect of accounting changes (120.3)
------------ ----------
Net earnings $ 235.7 $ 84.8
============ ==========
Weighted average shares - primary
earnings per share calculation 100.7 103.6
============ ==========
Earnings per common share outstanding:
Earnings before extraordinary item and
cumulative effect of accounting changes $ 2.42 $ 2.03
Extraordinary Item (0.08) (0.05)
Cumulative effect of accounting changes (1.16)
------------ ----------
Net Earnings $ 2.34 $ 0.82
============ ==========
EARNINGS PER SHARE ASSUMING FULL DILUTION
Earnings before extraordinary item and
cumulative effect of accounting changes $ 257.6 $ 225.1
Adjustments to earnings to reflect assumed
ESOP preferred stock conversion (3.2) (5.5)
Extraordinary item (7.9) (5.7)
Cumulative effect of accounting changes (120.3)
------------ ----------
Net earnings for fully diluted earnings
per share calculation $ 246.5 $ 93.6
============ ==========
<PAGE> 4
Wtd. average number of shares outstanding 100.7 103.6
Convertible preferred stock 10.8 10.1
Dilutive effect of stock options 0.1 0.1
Shares issuable on conversion of debentures 0.1
Dilutive effect of deferred compensation awards 0.1 0.1
------------ ----------
Weighted average shares - fully diluted
earnings per share calculation 111.8 113.9
============ ==========
Earnings per share assuming full dilution:
Earnings before extraordinary item and
cumulative effective of accounting changes $ 2.28 $ 1.93
Extraordinary item (0.07) (0.05)
Cumulative effect of accounting changes (1.06)
------------ ----------
Net earnings $ 2.21 $ 0.82
============ ==========
</TABLE>
<PAGE> 5
<TABLE>
Exhibit 11
CONTINENTAL BAKING GROUP
COMPUTATION OF EARNINGS PER SHARE
(in millions, except per shar data)
<CAPTION>
Pro Forma
39 Weeks 39 Weeks
Ended Ended
June 25, June 26,
1994 1993
---- ----
<S> <C> <C>
EARNINGS PER COMMON SHARE OUTSTANDING
Earnings (loss) before extraordinary item and
cumulative effect of accounting changes $ (14.6) $ 21.9
Dividend on Series A ESOP convertible
preferred stock, net of tax (1.4) (1.4)
--------- ---------
$ (16.0) $ 20.5
Extraordinary item (1.6) (1.1)
Cumulative effect of accounting changes (86.6)
--------- ---------
Net loss $ (17.6) $ (67.2)
========= =========
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 17.0
--------- ---------
Weighted average shares - primary
earnings per share calculation 37.3 37.7
========= =========
Earnings per common share outstanding:
Earnings (loss) before extraordinary item and
cumulative effect of accounting changes $ (0.43) $ 0.54
Extraordinary item (0.04) (0.03)
Cumulative effect of accounting changes (2.30)
--------- ---------
Net loss $ (0.47) $ (1.79)
========= =========
EARNINGS PER SHARE ASSUMING FULL DILUTION
Earnings (loss) before extraordinary item and
cumulative effect of accounting changes $ (14.6) $ 21.9
Adjustments to earnings (loss) to reflect assumed
ESOP preferred stock conversion (2.4) (2.5)
Extraordinary item (1.6) (1.1)
Cumulative effect of accounting changes (86.6)
--------- ---------
Net loss for fully diluted
earnings per share calculation $ (18.6) $ (68.3)
========= =========
<PAGE> 6
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 17.0
Convertible preferred stock 4.8 4.8
Dilutive effect of stock options
Dilutive effect of deferred compensation awards
--------- ---------
Weighted average shares - fully diluted
earnings per share calculation 42.1 42.5
========= =========
Earnings per share assuming full dilution:
Earnings (loss) before extraordinary item and
cumulative effect of accounting changes $ (0.40) $ 0.46
Extraordinary item (0.04) (0.03)
Cumulative effect of accounting changes (2.04)
--------- ---------
Net loss $ (0.44)* $ (1.61)
========= =========
<FN>
* Due to anti-dilution as computed above for the 39 weeks ended June 25, 1994, fully diluted earnings per share as
reported on the statement of earnings is revised to exclude anti-dilutive securities from the computation.
</TABLE>
