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, 1995
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 August 10, 1995: 105,912,175.
<TABLE>
RALSTON PURINA COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in millions except per share data)
<CAPTION>
Quarter Ended Nine Months Ended
June 30, June 30,
1995 1994 1995 1994
---- ---- ---- -----
<S> <C> <C> <C> <C>
Net Sales $ 1,859.7 $ 1,724.1 $ 5,603.6 $ 5,921.1
--------- --------- --------- --------
Costs and Expenses
Cost of products sold 1,049.3 972.8 3,154.6 3,251.7
Selling, general and administrative 479.3 435.5 1,394.9 1,398.8
Advertising and promotion 162.4 157.9 481.6 635.5
Interest expense 52.8 55.2 148.5 169.0
Provision for restructuring 6.1 16.0 41.1 16.0
Other (income)/expense, net (6.9) 2.9 (4.8) 17.9
--------- --------- --------- --------
1,743.0 1,640.3 5,215.9 5,488.9
--------- --------- --------- --------
Earnings before Income Taxes and
Extraordinary Item 116.7 83.8 387.7 432.2
Income Taxes 48.5 39.0 167.0 181.3
--------- --------- --------- -------
Earnings before Extraordinary Item 68.2 44.8 220.7 250.9
Extraordinary Item-Loss on Early
Retirement of Debt (9.5)
--------- --------- --------- --------
Net Earnings 68.2 44.8 220.7 241.4
Preferred Stock Dividend,
net of taxes 4.8 4.9 14.4 15.4
--------- --------- --------- -------
Earnings Available to
Common Shareholders $ 63.4 $ 39.9 $ 206.3 $ 226.0
========= ========= ========= =======
Cash Dividends Declared per RAL
Stock Common Share $ 0.30 $ 0.30 $ 0.90 $ 0.90
========= ========= ========= =======
Pro Forma Earnings Per Share (assuming
one class of common stock)
Primary
Earnings before extraordinary
item $ 0.62 $ 0.39 $ 2.02 $ 2.30
Extraordinary item (0.09)
--------- --------- --------- --------
Net Earnings $ 0.62 $ 0.39 $ 2.02 $ 2.21
========= ========= ========= =======
Fully Diluted
Earnings before extraordinary
item $ 0.59 $ 0.38 $ 1.92 $ 2.18
Extraordinary item (0.08)
--------- --------- --------- --------
Net Earnings $ 0.59 $ 0.38 $ 1.92 $ 2.10
========= ========= ========= =========
</TABLE>
[FN]
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>
Quarter Ended Nine Months Ended
June 30, June 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Earnings (Loss) per Common Share
RAL Stock (based on RPG earnings
through May 15, 1995 and consolidated
Ralston earnings thereafter)
Primary
Earnings before extraordinary
item $ 0.63 $ 0.46 $ 2.15 $ 2.42
Extraordinary item (0.08)
--------- --------- -------- --------
Net earnings $ 0.63 $ 0.46 $ 2.15 $ 2.34
========= ========= ========= =======
Fully Diluted
Earnings before extraordinary
item $ 0.60 $ 0.45 $ 2.03 $ 2.29
Extraordinary item (0.07)
--------- --------- --------- -------
Net earnings $ 0.60 $ 0.45 $ 2.03 $ 2.22
========= ========= ========= =======
CBG Stock (through May 15, 1995):
Primary
Loss before extraordinary
item $ (0.02) $ (0.32) $ (0.45) $ (0.43)
Extraordinary item (0.04)
--------- --------- --------- --------
Net loss $ (0.02) $ (0.32) $ (0.45) $ (0.47)
========= ========= ======== ========
Fully Diluted
Loss before extraordinary
item $ (0.03) $ (0.32) $ (0.45) $ (0.44)
Extraordinary item (0.04)
--------- --------- --------- --------
Net loss $ (0.03) $ (0.32) $ (0.45) $ (0.48)
========= ========= ========= ========
</TABLE>
[FN]
See Accompanying Notes to Condensed Financial Statements.
<TABLE>
RALSTON PURINA COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Condensed)
(Dollars in millions)
<CAPTION>
June 30, Sept. 30,
1995 1994
<S> <C> <C>
Assets --------- ---------
Current Assets
Cash and cash equivalents $ 73.9 $ 126.0
Receivables, less allowance for doubtful
accounts of $36.0 and $29.2, respectively 840.7 829.1
Inventories
Raw materials and supplies 225.5 216.0
Work in process 102.4 101.5
Finished products 488.0 412.4
Other current assets 186.1 174.2
--------- ---------
Total Current Assets 1,916.6 1,859.2
--------- ---------
Investments and Other Assets 1,182.2 865.7
--------- ---------
Property at Cost 3,722.7 3,527.8
Accumulated depreciation 1,772.7 1,630.4
--------- ---------
1,950.0 1,897.4
--------- ---------
Total $ 5,048.8 $ 4,622.3
========= =========
Liabilities and Shareholders Equity
Current Liabilities
Current maturities of long-term debt $ 319.6 $ 288.1
Notes payable 735.3 454.3
Accounts payable 415.0 454.5
Other current liabilities 621.7 600.6
--------- ---------
Total Current Liabilities 2,091.6 1,797.5
--------- ---------
Long-Term Debt 1,538.5 1,594.6
--------- ---------
Deferred Income Taxes 59.8 72.5
--------- ---------
Other Liabilities 634.8 592.6
--------- ---------
Redeemable Preferred Stock 463.4 469.7
--------- ---------
Unearned ESOP Compensation (220.7) (260.2)
--------- ---------
Shareholders Equity
Preferred stock
Common stocks
RAL Stock 11.5 11.5
CBG Stock 2.1
Capital in excess of par value 143.7 108.7
Retained earnings 1,060.5 1,043.2
Cumulative translation adjustment (49.4) (58.7)
Common stocks in treasury, at cost
RAL Stock (471.1) (577.4)
CBG Stock (2.6)
Unearned portion of restricted stock (4.2) (4.3)
Value of RAL Stock held in Grantor Trust (209.6) (166.9)
--------- ---------
Total Shareholders Equity 481.4 355.6
--------- ---------
Total $ 5,048.8 $ 4,622.3
========= =========
</TABLE>
[FN]
See Accompanying Notes to Condensed Financial Statements.
<TABLE>
RALSTON PURINA COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Condensed)
(Dollars in millions)
<CAPTION>
<S> <C> <C>
Nine Months Ended
June 30,
1995 1994
Cash Flow from Operations --------- ---------
Net earnings $ 220.7 $ 241.4
Extraordinary item 9.5
Non-cash items included in income 216.5 225.6
Changes in assets and liabilities
used in operations (85.1) (201.0)
Other, net 14.1 13.3
--------- ---------
Net cash flow from operations 366.2 288.8
--------- ---------
Cash Flow from Investing Activities
Acquisition of businesses (358.0) (39.2)
Property additions, net (189.9) (203.7)
Other, net (17.2) 9.0
--------- ---------
Net cash provided (used) by investing activities (565.1) (233.9)
--------- ---------
Cash Flow from Financing Activities
Proceeds from issuance of debt for spin-off 370.0
Net cash flow provided (used) by debt 281.8 (172.0)
Treasury stock purchases (85.7)
Dividends paid (121.9) (125.8)
Other, net (7.4) 2.7
--------- ---------
Net cash provided (used) by financing activities 152.5 (10.8)
--------- ---------
Effect of Exchange Rate Changes on Cash (5.7) (28.8)
--------- ---------
Net Increase (Decrease) in Cash and
Cash Equivalents (52.1) 15.3
Cash and Cash Equivalents, Beginning of Period 126.0 57.9
--------- ---------
Cash and Cash Equivalents, End of Period $ 73.9 $ 73.2
========= =========
</TABLE>
[FN]
See Accompanying Notes to Condensed Financial Statements.
RALSTON PURINA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1995
(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 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
CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED IN
THE RALSTON PURINA COMPANY (THE COMPANY) ANNUAL REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED SEPTEMBER 30, 1994.
NOTE 2 - ON MAY 15, 1995, THE COMPANY EXCHANGED EACH OUTSTANDING SHARE
OF RALSTON-CONTINENTAL BAKING GROUP COMMON STOCK (CBG STOCK) FOR .0886
SHARES OF RALSTON-RALSTON PURINA GROUP COMMON STOCK (RAL STOCK) AS
PERMITTED BY RALSTON'S RESTATED ARTICLES OF INCORPORATION. THE
EXCHANGE REPRESENTED A 15% PREMIUM TO THE RELATIVE TRADING VALUES OF
THE CBG STOCK AND RAL STOCK FOR THE PERIOD MARCH 31 THROUGH APRIL 6,
1995, AS PROVIDED IN RALSTON'S ARTICLES.
UPON EXCHANGE OF THE CBG STOCK FOR RAL STOCK, THE CONVERSION RATIO
FOR THE COMPANY'S SERIES A 6.75% PREFERRED STOCK WAS ADJUSTED TO
REFLECT THAT RAL STOCK REMAINS THE COMPANY'S SOLE OUTSTANDING CLASS OF
COMMON STOCK. AS OF MAY 15, 1995, THE PREFERRED STOCK IS NOW
CONVERTIBLE INTO 2.29 SHARES OF RAL STOCK FOR EACH SHARE OF PREFERRED
STOCK. ALL OTHER TERMS AND PROVISIONS OF THE PREFERRED STOCK REMAIN
UNCHANGED.
NOTE 3 - PRIMARY EARNINGS PER SHARE ARE BASED ON THE AVERAGE NUMBER OF
SHARES OUTSTANDING DURING THE PERIOD, EXCLUDING 4,110,000 SHARES OF
RAL STOCK HELD BY RALSTON'S GRANTOR TRUST AT JUNE 30, 1995. FULLY
DILUTED EARNINGS PER SHARE ARE BASED ON THE AVERAGE NUMBER OF SHARES
USED FOR THE PRIMARY EARNINGS PER SHARE CALCULATION, 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
SHARES USED IN EARNINGS PER SHARE COMPUTATIONS WERE AS FOLLOWS:
<TABLE>
(IN MILLIONS)
<CAPTION>
QUARTER QUARTER NINE MONTHS NINE MONTHS
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994
------- ------- --------- ---------
<S> <C> <C> <C> <C>
PRO FORMA (ASSUMING
ONE CLASS OF COMMON STOCK)
PRIMARY: 101.9 102.2 101.9 102.5
FULLY DILUTED: 112.5 112.2 112.5 112.5
PRIMARY:
RAL STOCK 101.0 100.4 100.4 100.7
CBG STOCK (THROUGH 20.6 20.6 20.6 20.5
MAY 15, 1995)
FULLY DILUTED:
RAL STOCK 111.6 110.3 111.0 110.6
CBG STOCK (THROUGH 22.4 22.3 * 22.4 * 22.2
MAY 15, 1995)
</TABLE>
* DUE TO ANTI-DILUTION FOR THE QUARTER ENDED JUNE 30, 1994 AND FOR
THE NINE MONTHS ENDED JUNE 30, 1995, FULLY DILUTED EARNINGS PER
SHARE AS REPORTED ON THE STATEMENT OF EARNINGS IS REVISED TO EXCLUDE
ANTI-DILUTIVE SECURITIES FROM THE COMPUTATION.
NOTE 4 - AS OF JUNE 30, 1995, THERE WERE 101,894,000 SHARES OF RAL
STOCK OUTSTANDING, EXCLUSIVE OF 8,683,000 SHARES HELD IN TREASURY AND
4,110,000 GRANTOR TRUST SHARES. AT SEPTEMBER 30, 1994, THERE WERE
100,031,000 SHARES OF RAL STOCK AND 20,588,000 SHARES OF CBG STOCK
OUTSTANDING, EXCLUSIVE OF 10,620,000 RAL STOCK SHARES AND 270,000 CBG
STOCK SHARES HELD IN TREASURY AND 4,033,000 RAL STOCK SHARES HELD BY
THE GRANTOR TRUST.
NOTE 5 - OTHER (INCOME)/EXPENSE, NET FOR NINE MONTHS CONSISTS OF THE
FOLLOWING:
JUNE 30, JUNE 30,
1995 1994
--------- ---------
NET TRANSLATION AND EXCHANGE LOSS $9.8 $18.2
INVESTMENT INCOME (6.4) (10.2)
MISCELLANEOUS (INCOME)/EXPENSE (8.2) 9.9
--------- ---------
($4.8) $17.9
========= =========
NOTE 6 - INVESTMENTS AND OTHER ASSETS CONSISTS OF THE FOLLOWING:
JUNE 30, SEPT. 30,
1995 1994
--------- ---------
GOODWILL $558.9 $365.9
INTANGIBLE ASSETS 298.7 194.5
OTHER ASSETS 324.6 305.3
--------- ---------
$1,182.2 $865.7
========= =========
NOTE 7 - DURING THE QUARTER AND NINE MONTHS ENDED JUNE 30, 1995, THE
COMPANY RECORDED CHARGES OF $4.3, AFTER TAXES, AND $32.3, AFTER
TAXES, RESPECTIVELY, OR $.04 PER PRIMARY AND FULLY DILUTED SHARE FOR
THE QUARTER AND $.32 AND $.29 PER SHARE, RESPECTIVELY, FOR THE NINE
MONTHS, IN CONNECTION WITH ITS RESTRUCTURING OF ITS WORLDWIDE CARBON
ZINC BATTERY PRODUCTION CAPACITY AND CERTAIN ADMINISTRATIVE FUNCTIONS
ANNOUNCED IN NOVEMBER 1994.
ON A PRE-TAX BASIS, CHARGES FOR RESTRUCTURING FOR THE NINE MONTHS WERE
$41.1 AND CONSISTED OF TERMINATION BENEFITS OF $29.8, OTHER CASH EXIT
COSTS OF $3.3 AND NON-CASH CHARGES OF $8.0, PRIMARILY RELATED TO
ANTICIPATED LOSSES ON DISPOSAL OF LAND, BUILDINGS AND MACHINERY AND
EQUIPMENT.
DURING THE NINE MONTHS, 3 PLANTS WERE CLOSED AND 872 EMPLOYEES WERE
SEVERED IN CONNECTION WITH THE RESTRUCTURING PLAN. CASH EXIT COSTS
INCURRED IN THE QUARTER AND NINE MONTHS RELATED TO THE RESTRUCTURING
PLAN ANNOUNCED IN NOVEMBER 1994 WERE $17.8 AND $48.4, RESPECTIVELY.
THE COMPANY'S BAKERY PRODUCTS RESTRUCTURING PLAN ANNOUNCED IN JUNE 1994
PROVIDED FOR THE SEVERANCE OF 435 EMPLOYEES AT A COST OF $16.0,
PRE-TAX. THE PLAN WAS REVISED TO COVER ONLY 360 EMPLOYEES, AT A
PRE-TAX COST OF $14.6. AN ADJUSTMENT TO THE RESTRUCTURING PROVISION
OF $1.4, PRE-TAX, WAS RECORDED IN THE SECOND QUARTER. AS OF JUNE
30, 1995, 209 EMPLOYEES HAVE BEEN SEVERED UNDER THE PLAN WITH SPENDING
OF $8.0 IN 1995. CONTINENTAL BAKING COMPANY (CBC) WAS SOLD EFFECTIVE
JULY 22, 1995.
NOTE 8 - ON APRIL 7, 1995, THE COMPANY PURCHASED THE ASSETS OF GOLDEN
CAT CORPORATION, THE LEADING MANUFACTURER AND MARKETER OF BRANDED CAT
BOX FILLER IN THE UNITED STATES AND CANADA FOR $340. ALSO IN THE THIRD
QUARTER OF 1995, THE COMPANY ACQUIRED THE ASSETS OF A MEXICAN PET FOOD
COMPANY FOR $18.
NOTE 9 - ON AUGUST 2, 1995, THE PARTIES SETTLED ALL CLAIMS AND
COUNTERCLAIMS IN THE ACTION ENTITLED SUNSHINE MILLS, INC. V. RALSTON
PURINA COMPANY, CV-93-P-0024-W, FILED IN THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF ALABAMA. EFFECTIVE JULY 22, 1995,
THE COMPANY SOLD ITS CBC SUBSIDIARY TO INTERSTATE BAKERIES CORPORATION
AND ITS WHOLLY OWNED SUBSIDIARY INTERSTATE BRANDS CORPORATION. UNDER
THE TERMS OF THE PURCHASE AND SALE AGREEMENT, LITIGATION AGAINST CBC
(OTHER THAN CERTAIN LAWSUITS CHALLENGING THE SALE) AND ENVIRONMENTAL
LIABILITIES ASSOCIATED WITH THE OPERATION OF CBC PRIOR TO CLOSING HAVE
BECOME THE OBLIGATION OF THE PURCHASERS, AND THE COMPANY SHALL BE
INDEMNIFIED BY THE PURCHASERS FOR ANY DAMAGES IT MAY INCUR AS A RESULT
OF SUCH MATTERS.
NOTE 10 - EFFECTIVE JULY 22, 1995, THE COMPANY SOLD CBC TO INTERSTATE
BAKERIES CORPORATION (IBC) AND ITS WHOLLY OWNED SUBSIDIARY, INTERSTATE
BRANDS CORPORATION, FOR $220 IN CASH AND 16,923,077 SHARES OF COMMON
STOCK OF IBC (THE IBC STOCK). AT CLOSING, THE PARTIES ENTERED INTO A
SHAREHOLDER AGREEMENT WHICH PROVIDES THAT, WITH CERTAIN LIMITED
EXCEPTIONS, FOR A PERIOD OF SIX YEARS, THE COMPANY WILL NOT ACQUIRE ANY
ADDITIONAL SHARES OF IBC STOCK. THE AGREEMENT ALSO PROVIDES THAT
WITHIN FIVE YEARS OF CLOSING, THE COMPANY'S OWNERSHIP OF IBC STOCK WILL
BE REDUCED TO NO MORE THAN 14.9% OF THE TOTAL OUTSTANDING SHARES. THE
COMPANY HAS REGISTRATION RIGHTS WITH RESPECT TO THE IBC STOCK, BUT THE
AGREEMENT PROVIDES THAT, WITH CERTAIN LIMITED EXCEPTIONS, THE COMPANY
MAY NOT SELL ANY OF THE IBC STOCK WITHOUT FIRST OFFERING THE SECURITIES
TO IBC. IBC ALSO HAS THE RIGHT, DURING THE FIFTH YEAR FOLLOWING
CLOSING, TO ACQUIRE ANY OF THE IBC STOCK THEN HELD BY THE COMPANY AT A
PRICE EQUAL TO 110% OF ITS THEN CURRENT MARKET PRICE. THE AGREEMENT
PROVIDES THAT THE COMPANY WILL VOTE THE SHARES OF IBC STOCK IN
ACCORDANCE WITH THE RECOMMENDATION OF IBC'S BOARD WITH RESPECT TO
SHAREHOLDER PROPOSALS AND NOMINATIONS TO THAT BOARD, AND WITH RESPECT
TO OTHER PROPOSALS, IN PROPORTION TO THE VOTES OF ALL OTHER
SHAREHOLDERS; PROVIDED, HOWEVER, THAT THE COMPANY MAY VOTE AS IT DEEMS
APPROPRIATE WITH RESPECT TO PROPOSALS FOR THE MERGER OF IBC, THE SALE
OF ALL IBC ASSETS, OR THE ISSUANCE OF ANY OTHER CLASS OF VOTING STOCK
OF IBC. THE AGREEMENT ALSO PROVIDES THAT THE COMPANY SHALL HAVE TWO
REPRESENTATIVES ON THE IBC BOARD OF DIRECTORS.
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). THE
COMPANY'S EARNINGS AND CASH FLOWS REFLECT THE OPERATIONS OF THOSE
BUSINESSES THROUGH MARCH 31, 1994.
NOTE 12 - AN EXTRAORDINARY LOSS WAS RECOGNIZED IN FISCAL 1994 IN
CONJUNCTION WITH THE RETIREMENT OF $107.4 OF DEBT THAT HAD AN EFFECTIVE
INTEREST RATE OF 10.7%.
NOTE 13 - THE FOLLOWING PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
REFLECT THE RESULTS OF OPERATIONS OF THE COMPANY FOR EACH QUARTER IN
FISCAL 1994 AND THE FIRST THREE QUARTERS IN FISCAL 1995 AS IF THE SALE OF
CBC, THE DISTRIBUTION AND THE CBG STOCK EXCHANGE HAD OCCURRED AS OF
OCTOBER 1, 1993. THE PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JUNE
30, 1995 IS PREPARED ASSUMING THAT THE SALE HAD OCCURRED AS OF THAT
DATE.
THE VALUE OF NET ASSETS OF CBC AT THE SALE DATE WILL DIFFER FROM THOSE
USED AT JUNE 30, 1995. THE COMPANY WILL RECORD A GAIN ON THE SALE IN ITS
FOURTH QUARTER OF FISCAL 1995. SUCH GAIN IS NOT EXPECTED TO DIFFER
MATERIALLY FROM THE GAIN OF $36.4 MILLION BASED ON THE JUNE 30, 1995 NET
ASSETS OF CBC.
PRO FORMA FINANCIAL STATEMENTS HAVE BEEN PREPARED BY ADJUSTING THE
HISTORICAL STATEMENTS FOR THE EFFECT OF REVENUES, EXPENSES, ASSETS AND
LIABILITIES AND THE RECAPITALIZATION WHICH MIGHT HAVE OCCURRED HAD THE
SALE OF CBC, THE DISTRIBUTION AND THE CBG STOCK EXCHANGE BEEN EFFECTED AS
OF THE DATES INDICATED. THESE PRO FORMA FINANCIAL STATEMENTS MAY NOT
NECESSARILY REFLECT THE CONSOLIDATED RESULTS OF OPERATIONS OR FINANCIAL
POSITION THAT WOULD HAVE EXISTED HAD THE SALE OF CBC, THE DISTRIBUTION AND
THE CBG STOCK EXCHANGE OCCURRED ON THE DATES INDICATED.
<TABLE>
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<CAPTION>
THIRD QUARTER NINE MONTHS
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES(A) $1,368.9 $1,223.2 $4,163.5 $3,930.9
-------- -------- -------- --------
COSTS AND EXPENSES
COST OF PRODUCTS SOLD(A) 800.3 716.5 2,416.4 2,254.8
SELLING, GENERAL AND
ADMINISTRATIVE(A) 263.9 218.0 741.2 675.6
ADVERTISING AND PROMOTION(A) 149.4 138.6 441.3 456.5
INTEREST EXPENSE(B) 50.1 52.5 140.4 153.5
PROVISION FOR RESTRUCTURING (A) 6.1 41.1
OTHER (INCOME)/EXPENSE, NET(C) (10.5) 4.6 (7.6) 15.8
-------- -------- -------- --------
1,259.3 1,130.2 3,772.8 3,556.2
-------- -------- -------- --------
EARNINGS BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM 109.6 93.0 390.7 374.7
INCOME TAXES(D) 44.2 43.7 167.0 159.7
-------- -------- -------- --------
EARNINGS BEFORE
EXTRAORDINARY ITEM $ 65.4 $ 49.3 $ 223.7 $ 215.0
======== ======== ======== ========
EARNINGS PER SHARE:
PRIMARY(E) $ 0.60 $ 0.44 $ 2.07 $ 1.97
FULLY DILUTED(E) $ 0.57 $ 0.43 $ 1.97 $ 1.89
AVERAGE SHARES OUTSTANDING USED
IN EARNINGS PER SHARE COMPUTATION
PRIMARY(E) 101.9 102.2 101.9 102.5
FULLY DILUTED(E,F) 111.3 111.0 111.2 111.3
</TABLE>
(A) EXCLUDES RESULTS OF OPERATIONS FOR CBC IN ALL PERIODS AND RESULTS OF
OPERATIONS FOR RALCORP FOR THE NINE MONTH 1994 PERIOD.
(B) REFLECTS REDUCTION OF INTEREST EXPENSE AT AN AVERAGE RATE OF 6.75%
ASSUMING DEBT REPAYMENT OF $160 BY THE COMPANY FROM A PORTION OF THE CBC
SALES PROCEEDS, AND REDUCTION OF INTEREST EXPENSE AT AN AVERAGE RATE
OF 3.9% ASSUMING DEBT REPAYMENT OF $370 BY THE COMPANY FROM THE
PROCEEDS OF DEBT ISSUED IN CONNECTION WITH THE RALCORP SPIN-OFF.
(C) EXCLUDES OTHER (INCOME)/EXPENSE OF CBC AND RALCORP. ALSO REFLECTS
THE COMPANY'S 46% SHARE OF IBC PRO FORMA EARNINGS (LOSS), AS FOLLOWS:
QUARTER NINE MONTHS
1995 $ 3.6 $ 3.2
1994 $ (2.3) $ .1
(D) REFLECTS THE APPLICABLE FEDERAL AND STATE STATUTORY TAX RATES FOR THE
PRO FORMA ADJUSTMENTS.
(E) REFLECTS EXCHANGE OF CBG STOCK FOR 1.8 MILLION SHARES OF RAL STOCK.
(F) REFLECTS REDEMPTION OF REDEEMABLE PREFERRED STOCK ALLOCATED TO CBC
PARTICIPANTS.
<TABLE>
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<CAPTION>
FOURTH 12
FIRST QUARTER SECOND QUARTER QUARTER MONTHS
1995 1994 1995 1994 1994 1994
-------- -------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
NET SALES(A) $1,513.1 $1,460.1 $1,281.5 $1,247.6 $1,303.9 $5,234.8
-------- -------- -------- -------- -------- -------
COSTS AND EXPENSES
COST OF PRODUCTS SOLD(A) 862.6 809.8 753.5 728.5 774.8 3,029.6
SELLING, GENERAL AND
ADMINISTRATIVE(A) 232.9 221.0 244.4 236.6 245.4 921.0
ADVERTISING AND PROMOTION(A) 162.6 178.2 129.3 139.7 149.5 606.0
INTEREST EXPENSE(B) 46.2 49.9 44.1 51.1 48.7 202.2
PROVISION FOR RESTRUCTURING(A) 22.9 12.1 83.9 83.9
OTHER (INCOME)/EXPENSE, NET(C) 0.6 2.9 2.3 8.3 2.5 18.3
-------- -------- -------- -------- -------- ------
1,327.8 1,261.8 1,185.7 1,164.2 1,304.8 4,861.0
-------- -------- -------- -------- -------- -------
EARNINGS BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM 185.3 198.3 95.8 83.4 (0.9) 373.8
INCOME TAXES(D) 79.2 79.3 43.6 36.7 26.4 186.1
-------- -------- -------- -------- -------- ------
EARNINGS BEFORE
EXTRAORDINARY ITEM $ 106.1 $ 119.0 $ 52.2 $ 46.7 $ (27.3) $ 187.7
======== ======== ======== ======== ======== =======
EARNINGS PER SHARE:
PRIMARY(E) $ 1.00 $ 1.11 $ 0.47 $ 0.41 $ (0.31) $ 1.66
FULLY DILUTED(E) $ 0.94 $ 1.04 $ 0.46 $ 0.40 $ (0.31) $ 1.62
AVERAGE SHARES OUTSTANDING USED
IN EARNINGS PER SHARE COMPUTATION
PRIMARY(E) 101.9 103.3 101.9 102.0 101.9 102.4
FULLY DILUTED(E,F) 111.0 112.8 111.3 111.7 111.0 111.3
</TABLE>
(A) EXCLUDES RESULTS OF OPERATIONS FOR CBC AND RALCORP.
(B) REFLECTS REDUCTION OF INTEREST EXPENSE AT AN AVERAGE RATE OF 6.75%
ASSUMING DEBT REPAYMENT OF $160 BY THE COMPANY FROM A PORTION OF THE CBC
SALES PROCEEDS, AND REDUCTION OF INTEREST EXPENSE AT AN AVERAGE RATE
OF 3.9% ASSUMING DEBT REPAYMENT OF $370 BY THE COMPANY FROM THE
PROCEEDS OF DEBT ISSUED IN CONNECTION WITH THE RALCORP SPIN-OFF.
(C) EXCLUDES OTHER (INCOME)/EXPENSE OF CBC AND RALCORP. ALSO REFLECTS
THE COMPANY'S 46% SHARE OF IBC PRO FORMA EARNINGS (LOSS), AS FOLLOWS:
1ST QUARTER 2ND QUARTER 4TH QUARTER 12 MONTHS
1995 $( .8) $ .4
1994 $ 4.0 $ (1.6) $(1.3) $(1.2)
(D) REFLECTS THE APPLICABLE FEDERAL AND STATE STATUTORY TAX RATES FOR THE
PRO FORMA ADJUSTMENTS.
(E) REFLECTS EXCHANGE OF CBG STOCK FOR 1.8 MILLION SHARES OF RAL STOCK.
(F) REFLECTS REDEMPTION OF REDEEMABLE PREFERRED STOCK ALLOCATED TO CBC
PARTICIPANTS.
<TABLE>
PRO FORMA CONSOLIDATED BALANCE SHEET
(CONDENSED)
(DOLLARS IN MILLIONS)
JUNE 30, 1995
<CAPTION>
AS PRO FORMA
REPORTED ADJUSTMENTS(A) PRO FORMA
---------- ------------ ----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $73.9 $73.9
RECEIVABLES, LESS ALLOWANCE
FOR DOUBTFUL ACCOUNTS 840.7 ($105.2) 735.5
INVENTORIES 815.9 (50.2) 765.7
OTHER CURRENT ASSETS 186.1 (27.4) 158.7
---------- ------------ ----------
TOTAL CURRENT ASSETS 1,916.6 (182.8) 1,733.8
---------- ------------ ----------
INVESTMENTS AND OTHER ASSETS 1,182.2 295.0 (B) 1,477.2
---------- ------------ ----------
PROPERTY AT COST 3,722.7 (1,107.1) 2,615.6
ACCUMULATED DEPRECIATION 1,772.7 (526.3) 1,246.4
---------- ------------ ----------
1,950.0 (580.8) 1,369.2
---------- ------------ ----------
TOTAL $5,048.8 ($468.6) $4,580.2
========== ============ ==========
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES
CURRENT MATURITIES OF
LONG-TERM DEBT $319.6 ($0.1) $319.5
NOTES PAYABLE 735.3 (160.0)(C) 575.3
ACCOUNTS PAYABLE AND
ACCRUED LIABILITIES 1,036.7 (122.7)(D) 914.0
---------- ------------ ----------
TOTAL CURRENT LIABILITIES 2,091.6 (282.8) 1,808.8
---------- ------------ ----------
LONG-TERM DEBT 1,538.5 (1.2) 1,537.3
DEFERRED INCOME TAXES 59.8 (4.0) 55.8
OTHER LIABILITIES 634.8 (157.0) 477.8
REDEEMABLE PREFERRED STOCK 463.4 (60.0)(E) 403.4
UNEARNED ESOP COMPENSATION (220.7) (220.7)
SHAREHOLDERS EQUITY 481.4 36.4 517.8
---------- ------------ ----------
TOTAL $5,048.8 ($468.6) $4,580.2
========== ============ ==========
</TABLE>
(A) TO ELIMINATE ASSETS AND LIABILITIES OF CBC.
(B) TO RECORD THE COMPANY'S 46% INTEREST IN IBC OF $298.3 (ASSUMING A
STOCK PRICE OF IBC COMMON STOCK OF $17.625 PER SHARE) AND GAIN ON
PENSION PLAN CURTAILMENT, OFFSET BY ELIMINATION OF CBC ASSETS.
(C) TO REFLECT REPAYMENT OF $160 DEBT BY THE COMPANY FROM A PORTION OF
THE PROCEEDS FROM SALE. UPON THE SALE, CERTAIN EMPLOYEES OF CBC MAY
ELECT TO RECEIVE EITHER A CASH OR RAL STOCK PAYOUT UNDER THE TERMS
OF THE RALSTON PURINA COMPANY SAVINGS INVESTMENT PLAN. FOR PURPOSES
OF THIS PRO FORMA BALANCE SHEET, IT IS ASSUMED ALL EMPLOYEES WILL
ELECT A CASH PAYOUT, TOTALING APPROXIMATELY $60, THEREBY REDUCING
TOTAL PROCEEDS AVAILABLE FOR DEBT REPAYMENT. THE ACTUAL PROCEEDS
AVAILABLE FOR DEBT REPAYMENT MAY BE LARGER.
(D) TO ELIMINATE LIABILITIES OF CBC AND RECORD LIABILITIES ARISING FROM
THE SALE.
(E) TO REFLECT REDEMPTION OF REDEEMABLE PREFERRED STOCK ALLOCATED TO CBC
PARTICIPANTS.
RALSTON PURINA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL INFORMATION
----------------------------------------------------------------
Operating Results
NET EARNINGS FOR THE NINE MONTHS ENDED JUNE 30, 1995 WERE $220.7 MILLION,
COMPARED TO $241.4 MILLION FOR THE SAME PERIOD IN THE PRIOR YEAR. DURING THE
NINE MONTHS ENDED JUNE 30, 1995, THE COMPANY RECORDED PROVISIONS FOR BATTERY
PRODUCTS RESTRUCTURING OF $32.3 MILLION, AFTER TAXES. NET EARNINGS FOR THE
NINE MONTHS ENDED JUNE 30, 1994 INCLUDED AN EXTRAORDINARY LOSS ON THE EARLY
RETIREMENT OF DEBT OF $9.5 MILLION, AFTER TAXES.
EFFECTIVE JULY 22, 1995, THE COMPANY SOLD ITS CONTINENTAL BAKING COMPANY
SUBSIDIARY. ON MAY 15, 1995, THE COMPANY EXCHANGED EACH OUTSTANDING SHARE OF
ITS RALSTON-CONTINENTAL BAKING GROUP COMMON STOCK (CBG STOCK) FOR SHARES OF ITS
RALSTON-RALSTON PURINA GROUP COMMON STOCK (RAL STOCK). ON MARCH 31, 1994, THE
COMPANY DISTRIBUTED ALL OF THE CAPITAL STOCK OF RALCORP HOLDINGS, INC. TO
HOLDERS OF THE RAL STOCK. PRO FORMA EARNINGS, ASSUMING THAT EACH OF THESE
EVENTS HAD OCCURRED ON OCTOBER 1, 1993, AND BEFORE THE CHARGES DESCRIBED IN THE
PRECEDING PARAGRAPH, INCREASED $41.0 MILLION IN THE CURRENT NINE MONTHS TO
$256.0 MILLION, COMPARED TO $215.0 MILLION FOR THE SAME PERIOD IN 1994,
PRIMARILY ON HIGHER OPERATING PROFIT, HIGHER RETURNS ON OTHER INVESTMENTS AND
LOWER INTEREST EXPENSE AND INCOME TAX RATE. EARNINGS PER SHARE FOR THE NINE
MONTHS ENDED JUNE 30, 1995, ON THIS BASIS, WERE $2.39 AND $2.26 ON A PRIMARY AND
FULLY-DILUTED BASIS, RESPECTIVELY, COMPARED TO $1.97 AND $1.89 IN THE PRIOR
YEAR.
FOR THE QUARTER ENDED JUNE 30, 1995, NET EARNINGS WERE $68.2 MILLION COMPARED TO
$44.8 MILLION FOR THE SAME QUARTER IN 1994. EXCLUSIVE OF PREVIOUSLY MENTIONED
CHARGES, PRO FORMA RESULTS IN THE CURRENT QUARTER WERE $69.7 MILLION, COMPARED
TO $49.3 MILLION IN THE THIRD QUARTER OF FISCAL 1994 ON HIGHER OPERATING PROFIT,
HIGHER RETURNS ON OTHER INVESTMENTS AND A LOWER INCOME TAX RATE. PRIMARY AND
FULLY-DILUTED EARNINGS PER SHARE ON THIS BASIS WERE $.64 AND $.61, RESPECTIVELY,
IN THE CURRENT QUARTER COMPARED TO $.44 AND $.43 IN THE PRIOR YEAR.
Business Segments
SALES FOR THE PET AND HUMAN FOODS SEGMENT FOR THE QUARTER AND NINE MONTHS,
EXCLUSIVE OF RESULTS OF SPUN-OFF BUSINESSES, INCREASED ON THE INCLUSION OF SALES
FROM GOLDEN CAT, ACQUIRED IN APRIL 1995, HIGHER VOLUME AND FAVORABLE DOMESTIC
PRODUCT MIX, PARTIALLY OFFSET BY LOWER DOMESTIC PRICES REFLECTING EXPANSION OF
SIMPLIFIED PROMOTION PRACTICES.
OPERATING PROFIT FOR THE NINE MONTHS, EXCLUSIVE OF SPUN-OFF BUSINESSES,
INCREASED ON HIGHER VOLUME AND FAVORABLE PRODUCT MIX AND INGREDIENT COSTS,
PARTIALLY OFFSET BY SPENDING FOR COST REDUCTION PROGRAMS. LOWER PRICES WERE
OFFSET BY REDUCTIONS IN ADVERTISING AND PROMOTION EXPENSE ASSOCIATED WITH THE
NEW PROMOTIONAL PRACTICES IN THE NINE MONTHS AND, TO A LESSER EXTENT, THE
QUARTER.
SALES OF THE BATTERY PRODUCTS SEGMENT INCREASED IN THE NINE MONTHS OVER THE SAME
PERIOD OF THE PRIOR YEAR PRIMARILY ON HIGHER ALKALINE VOLUME IN THE ASIA PACIFIC
REGION, FAVORABLE FOREIGN CURRENCY EXCHANGE IN EUROPE AND ASIA PACIFIC AND
HIGHER DOMESTIC ALKALINE VOLUME IN THE SECOND AND THIRD QUARTERS, PARTIALLY
OFFSET BY LOWER PRICES IN EUROPE. FIRST QUARTER 1995 DOMESTIC VOLUME WAS OFF
DUE TO LOWER SALES TO THE WAREHOUSE CLASS OF TRADE.
OPERATING PROFIT, EXCLUDING RESTRUCTURING CHARGES, FOR THE QUARTER INCREASED ON
IMPROVED RESULTS IN EUROPE AND INCREASES IN U.S. AND ASIA PACIFIC VOLUME,
PARTIALLY OFFSET BY DECLINES IN MEXICO AND AN UNFAVORABLE PRODUCT MIX IN THE
U.S. FOR THE NINE MONTHS, DOMESTIC DECLINES IN EARLIER QUARTERS WERE
SUBSTANTIALLY OFFSET BY INCREASES IN ASIA PACIFIC. EUROPE IMPROVED AS THIRD
QUARTER RESULTS MORE THAN OFFSET DECLINES IN THE FIRST HALF OF THE YEAR. THE
1995 QUARTER AND NINE MONTHS WERE ALSO FAVORABLY IMPACTED BY FOREIGN CURRENCY
EXCHANGE RATES.
DURING THE QUARTER AND NINE MONTHS ENDED JUNE 30, 1995, THE COMPANY RECORDED
CHARGES OF $4.3 MILLION, AFTER TAXES, AND $32.3 MILLION, AFTER TAXES,
RESPECTIVELY, OR $.04 PER PRIMARY AND FULLY-DILUTED SHARE FOR THE QUARTER AND
$.32 AND $.29 PER SHARE, RESPECTIVELY, FOR THE NINE MONTHS, IN CONNECTION WITH
THE RESTRUCTURING OF ITS WORLDWIDE CARBON ZINC BATTERY PRODUCTION CAPACITY AND
CERTAIN ADMINISTRATIVE FUNCTIONS ANNOUNCED IN NOVEMBER 1994.
ON A PRE-TAX BASIS, CHARGES FOR RESTRUCTURING FOR THE NINE MONTHS WERE $41.1
MILLION AND CONSISTED OF TERMINATION BENEFITS OF $29.8 MILLION, OTHER CASH EXIT
COSTS OF $3.3 MILLION AND NON-CASH CHARGES OF $8.0 MILLION, PRIMARILY RELATED TO
ANTICIPATED LOSSES ON DISPOSAL OF LAND, BUILDINGS AND MACHINERY AND EQUIPMENT.
DURING THE NINE MONTHS, 3 PLANTS WERE CLOSED AND 872 EMPLOYEES WERE SEVERED IN
CONNECTION WITH THE RESTRUCTURING PLAN. ACTIVITY RELATED TO THE RESTRUCTURING
PLAN DURING THE NINE MONTH PERIOD WAS AS FOLLOWS:
(MILLIONS)
----------
RESERVE BALANCE AT SEPTEMBER 30, 1994 $ 36.5
PROVISION RECORDED IN THE NINE MONTHS 41.1
CASH EXIT COSTS INCURRED DURING THE NINE MONTHS (48.4)
PORTION OF CURRENT PERIOD PROVISION
CLASSIFIED AS PROPERTY WRITEDOWNS (8.0)
INCREASE DUE TO TRANSLATION 2.8
------------
RESERVE BALANCE AT JUNE 30, 1995 $ 24.0
==========
SALES OF THE BAKERY PRODUCTS SEGMENT DECREASED FOR THE QUARTER AND NINE MONTHS
ON AN UNFAVORABLE PRODUCT MIX IN BREAD, LOWER SWEET BAKED GOODS VOLUME AND LOWER
THRIFT STORE VOLUME IN THE FIRST SIX MONTHS. OPERATING RESULTS, EXCLUSIVE OF
RESTRUCTURING CHARGES, DECLINED FOR THE NINE MONTHS ON SALES DECLINES COMBINED
WITH HIGHER MATERIAL AND LABOR COSTS, PRIMARILY IN THE FIRST SIX MONTHS,
PARTIALLY OFFSET BY COST REDUCTION ACTIONS. DUE TO COMPETITIVE CONDITIONS,
PRICE INCREASES COULD NOT BE TAKEN EARLY IN THE YEAR TO OFFSET HIGHER COSTS.
OPERATING RESULTS INCREASED IN THE THIRD QUARTER AS THE FAVORABLE IMPACT OF COST
REDUCTION ACTIONS EXCEEDED HIGHER MATERIAL AND LABOR COSTS.
SALES OF THE SOY PROTEIN PRODUCTS BUSINESS INCREASED ON STRONG VOLUME IN FOOD
PROTEIN PRODUCTS AND FAVORABLE FOREIGN CURRENCY EXCHANGE RATES. OPERATING
PROFIT INCREASED ON HIGHER SALES, INCREASED PRODUCTIVITY AND LOWER RAW MATERIALS
COSTS, PARTIALLY OFFSET BY HIGHER SELLING AND ADMINISTRATION COSTS.
SALES FOR INTERNATIONAL AGRICULTURAL PRODUCTS INCREASED ON HIGHER VOLUME AND
FAVORABLE FOREIGN CURRENCY EXCHANGE RATES IN MOST WORLD AREAS. OPERATING PROFIT
WAS DOWN FOR THE QUARTER AND FLAT FOR THE NINE MONTHS AS HIGHER SALES WERE
OFFSET BY ONE-TIME MANAGEMENT COSTS AND LOWER EARNINGS IN CENTRAL AND SOUTH
AMERICA.
Results of Operations
COST OF PRODUCTS SOLD AS A PERCENTAGE OF SALES (EXCLUSIVE OF SOLD AND SPUN-OFF
BUSINESSES) FOR THE NINE MONTHS INCREASED FROM 57.4% IN 1994 TO 58.0% IN THE
CURRENT YEAR. INCREASES WERE FROM SALES INCREASES IN SEGMENTS WITH RELATIVELY
HIGHER COST PERCENTAGES AND HIGHER PET AND HUMAN FOODS SEGMENT PERCENTAGES
ASSOCIATED WITH PRICE REDUCTIONS UNDER SIMPLIFIED PROMOTION PRACTICES, PARTIALLY
OFFSET BY IMPROVEMENTS IN SOY PROTEIN PRODUCTS. COST PERCENTAGES IN THE THIRD
QUARTER WERE 58.5% AND 58.6% OF SALES IN 1995 AND 1994, RESPECTIVELY, REFLECTING
IMPROVEMENTS IN BATTERY AND SOY PROTEIN PRODUCTS AND THE MARGIN CONTRIBUTION OF
THE ACQUIRED GOLDEN CAT OPERATIONS, NEARLY OFFSET BY UNFAVORABLE FACTORS CITED
FOR THE NINE MONTHS.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (EXCLUSIVE OF SOLD AND SPUN-OFF
BUSINESSES) WERE 17.8% AND 17.2% OF SALES FOR 1995 AND 1994 NINE MONTH PERIODS,
RESPECTIVELY. THE INCREASE WAS PRIMARILY DUE TO HIGHER COST REDUCTION AND
MARKET DEVELOPMENT SPENDING AND HIGHER PERCENTAGES IN PET FOODS DUE TO LOWER
PRICES ASSOCIATED WITH SIMPLIFIED PROMOTION PRACTICES. ADVERTISING AND
PROMOTION EXPENSE (EXCLUSIVE OF SOLD AND SPUN-OFF BUSINESSES) FOR THOSE PERIODS
WAS 10.6% AND 11.6% OF SALES, RESPECTIVELY, ON SIGNIFICANTLY LOWER DOMESTIC PET
FOOD PROMOTION EXPENSE ASSOCIATED WITH SIMPLIFIED PROMOTION PRACTICES AND SALES
INCREASES IN SEGMENTS WITH RELATIVELY LOWER COST PERCENTAGES. OTHER INCOME/
EXPENSE, NET, (EXCLUSIVE OF SOLD AND SPUN-OFF BUSINESSES) IMPROVED BY $23.4
MILLION FOR THE NINE MONTHS ON HIGHER RETURN ON OTHER INVESTMENTS AND LOWER
FOREIGN CURRENCY TRANSLATION AND EXCHANGE LOSSES.
INCOME TAXES INCLUDE FEDERAL, STATE AND FOREIGN TAXES AND WERE 43.1% OF EARNINGS
BEFORE INCOME TAXES FOR THE NINE MONTHS ENDED JUNE 30, 1995, COMPARED TO 41.9%
IN THE PRIOR YEAR. THE INCOME TAX PERCENTAGE IN 1995 IS INFLUENCED BY CERTAIN
RESTRUCTURING PROVISIONS WHICH DID NOT RESULT IN TAX BENEFITS DUE TO FOREIGN TAX
LOSS SITUATIONS.
Financial Condition
THE COMPANY'S PRIMARY SOURCE OF LIQUIDITY IS CASH FLOW GENERATED FROM
OPERATIONS. FOR THE NINE MONTHS ENDED JUNE 30, 1995, CASH FLOW FROM OPERATIONS
WAS $366.2 MILLION COMPARED TO $288.8 MILLION IN THE NINE MONTHS ENDED JUNE 30,
1994. THE INCREASE IN CASH FLOW IN THE CURRENT YEAR IS PRIMARILY DUE TO CHANGES
IN WORKING CAPITAL LAST YEAR, PARTIALLY OFFSET BY THE ABSENCE OF CASH FLOW FROM
RALCORP OPERATIONS WHICH WAS INCLUDED FOR THE FIRST SIX MONTHS OF 1994. CURRENT
LIABILITIES AT JUNE 30, 1995 EXCEEDED CURRENT ASSETS BY $175.0 MILLION, WHILE
CURRENT ASSETS EXCEEDED CURRENT LIABILITIES BY $61.7 MILLION AT SEPTEMBER 30,
1994. CASH AND CASH EQUIVALENTS AT JUNE 30, 1995 WERE $73.9 MILLION COMPARED TO
$126.0 MILLION AT SEPTEMBER 30, 1994.
ON APRIL 7, 1995, THE COMPANY PURCHASED THE ASSETS OF GOLDEN CAT CORPORATION,
THE LEADING MANUFACTURER AND MARKETER OF BRANDED CAT BOX FILLER IN THE UNITED
STATES AND CANADA FOR $340 MILLION. ALSO IN THE THIRD QUARTER OF 1995, THE
COMPANY ACQUIRED THE ASSETS OF A MEXICAN PET FOOD COMPANY FOR $18 MILLION.
ON MAY 26, 1995, THE COMPANY FILED A SHELF REGISTRATION STATEMENT FOR $400
MILLION PRINCIPAL AMOUNT OF DEBT SECURITIES. IN JUNE 1995, THE COMPANY ISSUED
$225 MILLION OF 7 7/8% FIXED RATE LONG-TERM DEBT. FINANCING ACTIVITIES IN THE
PRIOR YEAR NINE MONTHS INCLUDE THE RETIREMENT OF $107.4 MILLION OF DEBT WITH AN
EFFECTIVE INTEREST RATE OF 10.7%. ALSO IN THE FIRST NINE MONTHS OF 1994, THE
COMPANY RECEIVED $370 MILLION FROM NEW BORROWINGS WHICH, IN CONNECTION WITH THE
DISTRIBUTION OF THE STOCK OF RALCORP HOLDINGS, INC., WERE ASSUMED BY RALCORP.
RALCORP ALSO ASSUMED APPROXIMATELY $30 MILLION OF OTHER EXISTING DEBT OF THE
COMPANY.
ON MAY 15, 1995, THE COMPANY EXCHANGED EACH OUTSTANDING SHARE OF CBG STOCK FOR
.0886 SHARES OF RAL STOCK. EFFECTIVE JULY 22, 1995, THE COMPANY SOLD
CONTINENTAL BAKING COMPANY TO INTERSTATE BAKERIES CORPORATION (IBC) FOR $220
MILLION IN CASH AND 16,923,077 SHARES OF COMMON STOCK OF IBC.
AS OF AUGUST 2, 1995, APPROXIMATELY 1,781,700 SHARES REMAINED UNDER THE BOARD OF
DIRECTORS' AUTHORIZATION FOR THE PURCHASE OF UP TO 3 MILLION SHARES OF RAL
STOCK. IN ADDITION TO THIS AUTHORIZATION, IN CONNECTION WITH THE SALE OF CBC,
THE COMPANY ANTICIPATES CONVERSION OF APPROXIMATELY $60 MILLION OF UNALLOCATED
AND $60 MILLION OF ALLOCATED ESOP PREFERRED STOCK INTO RAL STOCK AND
CORRESPONDING REPURCHASE OF SUCH RAL STOCK FROM THE ESOP IN THE FOURTH QUARTER
OF 1995.
ON APRIL 18, 1995, THE COMPANY ANNOUNCED THAT IT HAS TERMINATED NEGOTIATIONS TO
SELL ITS INTERNATIONAL AGRIBUSINESS TO PM HOLDINGS CORPORATION.
PART II - OTHER INFORMATION
-----------------
There is no information required to be reported under any items except
those indicated below.
Item 1. Legal Proceedings.
-----------------
On August 2, 1995, the parties settled all claims and counterclaims in
the action entitled Sunshine Mills, Inc. v. Ralston Purina Company, CV-93-
P-0024-W,filed in the United States District Court for the Northern District of
Alabama, which matter was previously described in the Company's Annual Report on
Form 10K for the year ended September 30, 1994.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits filed with this Report:
(11) Statement, re: Computation of Per Share Earnings
(27) Financial Data Schedule
(b) Reports on Form 8-K
The Registrant filed a Report on Form 8-K on June 8, 1995,
presenting its Unaudited Pro Forma Consolidated Financial Information at, or for
the periods ended, March 31, 1995, assuming that the sale of its Continental
Baking Company subsidiary had occurred on that date.
The Registrant filed a Report on Form 8-K on June 14, 1995, filing,
as exhibits thereto, the Terms Agreement dated June 12, 1995 between the
Registrant, Lehman Brothers, BA Securities, Inc. and Salomon Brothers Inc.
relating to the issuance and sale pursuant to the Registrant's Registration
Statement on Form S-3, No. 33-59663, of $225,000,000 in aggregate principal
amount of the Company's 7-7/8% Debentures due June 15, 2025, and the Form of
those Debentures. An amended Form 8-K/A relating to the same matter was filed
on June 15, 1995.
The Registrant filed a Report on Form 8-K on July 24, 1995,
disclosing the completion of the sale of its Continental Baking Company
subsidiary and presenting Unaudited Pro Forma Consolidated Information at, or
for periods ended, June 30, 1995, reflecting the effect of such sale.
PAGE
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 14, 1995
PAGE
Exhibit Index
Exhibits
-----
EX-11 Computation of Earnings Per Share
(provided electronically)
EX-27 Financial Data Schedule
(provided electronically)
<TABLE>
RALSTON PURINA COMPANY
EXHIBIT 11
COMPUTATION OF PRO FORMA EARNINGS PER SHARE
ASSUMING ONE CLASS OF COMMON STOCK
(IN MILLIONS EXCEPT PER SHARE DATA)
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
<S> 1995 1994
<C> <C>
PRO FORMA EARNINGS PER COMMON SHARE OUTSTANDING ---------- ---------
EARNINGS BEFORE EXTRAORDINARY ITEM $220.7 $250.9
DIVIDEND ON SERIES A ESOP CONVERTIBLE
PREFERRED STOCK, NET OF TAX (14.4) (15.4)
---------- ----------
206.3 235.5
EXTRAORDINARY ITEM (9.5)
---------- ----------
NET EARNINGS $206.3 $226.0
========== ==========
WEIGHTED AVERAGE SHARES - PRIMARY
EARNINGS PER SHARE CALCULATION 101.9 * 102.5
========== ==========
EARNINGS PER COMMON SHARE OUTSTANDING
EARNINGS BEFORE EXTRAORDINARY ITEM $2.02 $2.30
EXTRAORDINARY ITEM (0.09)
---------- ----------
NET EARNINGS $2.02 $2.21
========== ==========
PRO FORMA EARNINGS PER SHARE ASSUMING FULL DILUTION
EARNINGS BEFORE EXTRAORDINARY ITEM $220.7 $250.9
ADJUSTMENTS TO NET EARNINGS TO REFLECT ASSUMED
ESOP PREFERRED STOCK CONVERSION (4.6) (5.2)
---------- ----------
216.1 245.7
EXTRAORDINARY ITEM (9.5)
---------- ----------
NET EARNINGS FOR FULLY DILUTED
EARNINGS PER SHARE CALCULATION $216.1 $236.2
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 101.9 * 102.5
CONVERTIBLE PREFERRED STOCK 9.4 9.8
DILUTIVE EFFECT OF STOCK OPTIONS 1.0 0.1
DILUTIVE EFFECT OF DEFERRED COMPENSATION AWARDS 0.2 0.1
---------- ----------
WEIGHTED AVERAGE SHARES - FULLY DILUTED
EARNINGS PER SHARE CALCULATION 112.5 112.5
========== ==========
EARNINGS PER SHARE ASSUMING FULL DILUTION
EARNINGS BEFORE EXTRAORDINARY ITEM $1.92 $2.18
EXTRAORDINARY ITEM (0.08)
---------- ----------
NET EARNINGS $1.92 $2.10
========== ==========
</TABLE>
[FN]
* EXCLUDES 4,110,000 SHARES HELD IN GRANTOR TRUST
<TABLE>
RALSTON PURINA COMPANY
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
(IN MILLIONS EXCEPT PER SHARE DATA)
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
1995 1994
<S> <C> <C>
EARNINGS PER COMMON SHARE OUTSTANDING * ---------- ----------
EARNINGS BEFORE EXTRAORDINARY ITEM $229.2 $257.6
DIVIDEND ON SERIES A ESOP CONVERTIBLE
PREFERRED STOCK, NET OF TAX (13.7) (14.0)
---------- ----------
215.5 243.6
EXTRAORDINARY ITEM (7.9)
---------- ----------
NET EARNINGS $215.5 $235.7
========== ==========
WEIGHTED AVERAGE SHARES - PRIMARY
EARNINGS PER SHARE CALCULATION 100.4 ** 100.7
========== ==========
EARNINGS PER COMMON SHARE OUTSTANDING
EARNINGS BEFORE EXTRAORDINARY ITEM $2.15 $2.42
EXTRAORDINARY ITEM (0.08)
---------- ----------
NET EARNINGS $2.15 $2.34
========== ==========
EARNINGS PER SHARE ASSUMING FULL DILUTION *
EARNINGS BEFORE EXTRAORDINARY ITEM $229.2 $257.6
ADJUSTMENTS TO NET EARNINGS TO REFLECT ASSUMED
ESOP PREFERRED STOCK CONVERSION (3.7) (4.3)
---------- ----------
225.5 253.3
EXTRAORDINARY ITEM (7.9)
---------- ----------
NET EARNINGS FOR FULLY DILUTED
EARNINGS PER SHARE CALCULATION $225.5 $245.4
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 100.4 ** 100.7
CONVERTIBLE PREFERRED STOCK 9.4 9.7
DILUTIVE EFFECT OF STOCK OPTIONS 1.0 0.1
DILUTIVE EFFECT OF DEFERRED COMPENSATION AWARDS 0.2 0.1
---------- ----------
WEIGHTED AVERAGE SHARES - FULLY DILUTED
EARNINGS PER SHARE CALCULATION 111.0 110.6
========== ==========
EARNINGS PER SHARE ASSUMING FULL DILUTION
EARNINGS BEFORE EXTRAORDINARY ITEM $2.03 $2.29
EXTRAORDINARY ITEM (0.07)
---------- ----------
NET EARNINGS $2.03 $2.22
========== ==========
</TABLE>
[FN]
* BASED ON RPG EARNINGS THROUGH MAY 15, 1995 AND CONSOLIDATED RALSTON EARNINGS
THEREAFTER
** EXCLUDES 4,110,000 SHARES HELD IN GRANTOR TRUST
<TABLE>
CONTINENTAL BAKING GROUP EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
(IN MILLIONS EXCEPT PER SHARE DATA)
<CAPTION>
34 WEEKS ENDED 39 WEEKS ENDED
MAY 15, JUNE 25,
1995 1994
<S> <C> <C>
LOSS PER COMMON SHARE OUTSTANDING ------------ --------------
LOSS BEFORE EXTRAORDINARY ITEM ($15.5) ($14.6)
DIVIDEND ON SERIES A ESOP CONVERTIBLE
PREFERRED STOCK, NET OF TAX (1.2) (1.4)
---------- ----------
(16.7) (16.0)
EXTRAORDINARY ITEM (1.6)
---------- ----------
NET LOSS ($16.7) ($17.6)
========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 20.6 20.5
SHARES ISSUABLE WITH RESPECT TO RPG GROUP'S
RETAINED INTEREST IN THE CBG GROUP 16.7 16.8
---------- ----------
WEIGHTED AVERAGE SHARES - PRIMARY
EARNINGS PER SHARE CALCULATION 37.3 37.3
========== ==========
LOSS PER COMMON SHARE OUTSTANDING
LOSS BEFORE EXTRAORDINARY ITEM ($0.45) ($0.43)
EXTRAORDINARY ITEM (0.04)
---------- ----------
NET LOSS ($0.45) ($0.47)
========== ==========
LOSS PER SHARE ASSUMING FULL DILUTION
LOSS BEFORE EXTRAORDINARY ITEM ($15.5) ($14.6)
ADJUSTMENTS TO NET LOSS TO REFLECT ASSUMED
ESOP PREFERRED STOCK CONVERSION (1.8) (2.4)
---------- ----------
(17.3) (17.0)
EXTRAORDINARY ITEM (1.6)
---------- ----------
NET LOSS FOR FULLY DILUTED
EARNINGS PER SHARE CALCULATION ($17.3) ($18.6)
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 20.6 20.5
SHARES ISSUABLE WITH RESPECT TO RPG GROUP'S
RETAINED INTEREST IN THE CBG GROUP 16.7 16.8
CONVERTIBLE PREFERRED STOCK 1.7 1.7
DILUTIVE EFFECT OF DEFERRED COMPENSATION AWARDS 0.1
---------- ----------
WEIGHTED AVERAGE SHARES - FULLY DILUTED
EARNINGS PER SHARE CALCULATION 39.1 39.0
========== ==========
LOSS PER SHARE ASSUMING FULL DILUTION
LOSS BEFORE EXTRAORDINARY ITEM ($0.44) ($0.44)
EXTRAORDINARY ITEM (0.04)
---------- ----------
NET LOSS ($0.44)* ($0.48)
========== ==========
</TABLE>
[FN]
* DUE TO ANTI-DILUTION AS COMPUTED ABOVE FOR THE 34 WEEKS ENDED MAY 15, 1995,
FULLY DILUTED EARNINGS PER SHARE AS REPORTED ON THE STATEMENT OF EARNINGS IS
REVISED TO EXCLUDE ANTI-DILUTIVE SECURITIES FROM THE COMPUTATION.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 6/30/95
RALSTON PURINA CO. BALANCE SHEET & STMT OF EARNINGS & IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STMTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS.
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 73,900
<SECURITIES> 0
<RECEIVABLES> 876,700
<ALLOWANCES> 36,000
<INVENTORY> 815,900
<CURRENT-ASSETS> 1,916,600
<PP&E> 3,722,700
<DEPRECIATION> 1,772,700
<TOTAL-ASSETS> 5,048,800
<CURRENT-LIABILITIES> 2,091,600
<BONDS> 1,538,500
<COMMON> 11,500
463,400
0
<OTHER-SE> 469,900
<TOTAL-LIABILITY-AND-EQUITY> 5,048,800
<SALES> 5,603,600
<TOTAL-REVENUES> 5,603,600
<CGS> 3,154,600
<TOTAL-COSTS> 3,154,600
<OTHER-EXPENSES> 1,912,800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 148,500
<INCOME-PRETAX> 387,700
<INCOME-TAX> 167,000
<INCOME-CONTINUING> 220,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 206,300
<EPS-PRIMARY> 2.02
<EPS-DILUTED> 1.92
<FN>
LOSS-PROVISION INCLUDED IN OTHER-EXPENSE ABOVE.
</TABLE>
