<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 31, 1996
RALCORP HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Missouri 1-12766 43-1664297
(State or other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
800 Market Street, Suite 2900
St. Louis, MO 63101
(Address of principal (Zip Code)
executive offices)
(314) 877-7000
(Registrant's telephone number, including area code)
<PAGE> 2
Item 5. Other Events.
In a Press Release dated October 31, 1996, a copy of which is attached hereto
as Exhibit 99.1 and the text of which is incorporated by reference herein, the
Registrant announced earnings for its fourth quarter ended September 30, 1996.
Item 7. Financial Statements and Exhibits.
Exhibit 99.1 Press Release dated October 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RALCORP HOLDINGS, INC.
(Registrant)
Date: October 31, 1996 By: /s/ Joe R. Micheletto
---------------------------
Joe R. Micheletto
Chief Executive Officer
and President
<PAGE> 1
Exhibit 99.1
IMMEDIATE
PATRICK T. FARRELL
314/877-7095
RALCORP REPORTS FISCAL 1996
FOURTH QUARTER, YEAR-END RESULTS
ST. LOUIS, MO, OCTOBER 31, 1996 . . . Ralcorp Holdings, Inc., today
reported sales and earnings for its fourth quarter ended September 30, 1996,
of $224.6 million and $2.4 million, excluding a one-time asset impairment
charge against earnings to reflect a write down in the value of the Company's
private label cereal assets. That compares to $245.2 million and $2.9
million for the same quarter last year, also excluding a one-time charge.
For the full fiscal year, sales and earnings were $1,027.4 million and
$32.4 million, respectively, again excluding the fourth quarter asset
impairment charge as well as a cereal restructuring charge taken by the
Company in this year's third quarter. For the full year in fiscal 1995,
sales were $1,013.4 million and earnings were $47.0 million excluding a
one-time charge. Including the impairment charge and a separate
restructuring charge in the third quarter, the Company recognized losses of
$66.4 million in this year's fourth quarter, and $46.8 million for the year.
Earnings per share without the impairment charge were $.07 for this year's
fourth quarter. Earnings per share without the impairment and restructuring
charges were $.98 for fiscal year 1996, compared to $.09 for the fourth
quarter and $1.41 for the year in fiscal 1995, again excluding charges. On
a per share basis including one-time charges, the Company recognized losses
of $2.02 in the fourth quarter and $1.42 for the year. In fiscal 1995, the
Company recognized a fourth quarter loss per share of $.32 and earnings per
share of $1.00 for the year, including the fourth quarter one-time charge.
<PAGE> 2
FIRST ADD - RALCORP HOLDINGS
The Company announced today that it has taken a $109.5 million pre-tax
impairment charge ($68.8 million or $2.09 per share after tax) related to the
Company's private label ready-to-eat and hot cereal operations. Recent and
dramatic changes in the ready-to-eat cereal industry have resulted in
significant price reductions in the category and reduced the long-term cash
flow and earnings generating capabilities of the Company's private label
cereal operation. Generally accepted accounting principles require the
Company to write down the value of its private label cereal operating assets
to levels deemed recoverable through future operating cash flows.
In the third quarter of fiscal 1996, the Company also incurred a one-time
$20.7 million restructuring charge ($13.0 million or $.39 per share after
tax), to cover costs related to the partial closing of a cereal plant and the
elimination of approximately 290 jobs. In this year's fourth quarter, the
Company reversed $4.2 million of that charge ($2.6 million or $.08 per share
after tax), although the impact on earnings was offset by $4.0 million of
transaction fees related to the proposed sale of the Company's Resort
Operations. The charge taken in last year's fourth quarter was for $21.9
million ($13.6 million or $.41 per share after tax) which related to the
Company's hot cereal and industrial oats operations.
<TABLE>
<CAPTION>
Business Segment Information
----------------------------
Three Months Ended September 30,
--------------------------------
Sales Operating Profit
------------------------------ ---------------------------------
1996 1995 1996 1995
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Consumer Foods $ 210.7 $ 232.0 $ 22.0 <F*> $ 21.8
Resort Operations 13.9 13.2 (8.9) (8.7)
------------ ------------ ------------ ------------
Total $ 224.6 $ 245.2 $ 13.1 $ 13.1
============ ============ ============ ============
<PAGE> 3
SECOND ADD - RALCORP HOLDINGS
<CAPTION>
Twelve Months Ended September 30,
---------------------------------
Sales Operating Profit
------------------------------ ---------------------------------
1996 1995 1996 1995
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Consumer Foods $ 892.0 $ 886.0 $ 67.3 <F*> $ 95.5
Resort Operations 135.4 127.4 23.0 17.1
------------ ------------ ------------ ------------
Total $ 1,027.4 $ 1,013.4 $ 90.3 $ 112.6
============ ============ ============ ============
<FN>
<F*> Excluded from both the three and twelve month periods ended September 30, 1996 is a $109.5 million pre-tax
charge related to the impairment of assets associated with the Company's private label cereal operations.
Also excluded from the twelve month period ended September 30, 1996, is a $16.5 million net pre-tax,
charge related to the restructuring of the Company's cereal subsidiary.
</TABLE>
CONSUMER FOODS (EXCLUDING CHARGES)
Consumer Foods operating profit was flat in this year's fourth quarter as
significant cereal volume declines were offset by a favorable adjustment to
the advertising and promotion (A&P) accrual and the reversal of part of the
third quarter restructuring charge. The A&P accrual adjustment is due to
lower than anticipated redemption levels for in-ad trade coupon programs and
a shift by the Company to more volume-specific trade promotions that proved
less costly in light of declines in anticipated volumes. As previously
mentioned, the Company reversed $4.2 million of their $20.7 million third
quarter restructuring charge. The reversal of part of the previously
recorded charge was required because of lower than expected Battle Creek
benefits costs and a mutual decision by the Company and General Mills to
continue to support declining share brands. The Company had expected to
discontinue the fractional share brands in the third quarter.
Operating profit in baby food was down for the quarter due to increased
competitive activity and reduced volume, but this decline was partially
offset by improved operating profit in the cracker and cookie business due to
strong volume improvements.
THIRD ADD - RALCORP HOLDINGS
For the year, Consumer Foods operating profit was down 29.5 percent on
significantly lower cereal volume and higher advertising and promotion
spending, partially offset by improved volume performances in baby food,
crackers and cookies and branded snacks.
<PAGE> 4
Consumer Foods sales were off 9.2 percent for the quarter on significantly
lower cereal and lower baby food volume. For the year, Consumer Foods sales
were flat on significantly lower cereal volume, offset by volume gains in
baby food, crackers and cookies. Branded snacks recorded significant volume
improvements in both periods, as the Company continued to realize the
positive effects of last year's restage of its CHEX MIX line. A capital
project at the Company's Bremner manufacturing plant in Kentucky was
completed during the fourth quarter and should allow the Company to begin
producing and shipping private label shredded wheat cereals and crackers in
early fiscal 1997.
RESORT OPERATIONS
Resort Operations reported operating losses for the historically weak fourth
quarter in line with those of last year, but posted a record $23.0 million
operating profit for the year, up from $17.1 million last year due to
favorable weather conditions and increased skier visits. The three resorts
posted 2.7 million skier visits for the year, a five percent improvement
versus last year, and increased room nights. Keystone was the first Colorado
ski resort to open this season, with an October 21, 1996 opening, followed by
Breckenridge on October 25th, its earliest opening ever.
Resort Operations sales improved 5.3 percent in the quarter and 6.3 percent
for the year.
<PAGE> 5
FOURTH ADD - RALCORP HOLDINGS
PENDING SALES OF OPERATIONS
During the fourth quarter, the Company announced that it had reached
agreements to sell its Resort Operations and branded cereal and snack
business. The sales of Resort Operations and the branded cereal and snack
business, which are subject to government review, are anticipated to close
in late calendar 1996 and early calendar 1997, respectively. Once completed,
Ralcorp will continue to operate its Ralston Foods private label cereal,
Beech-Nut and Bremner businesses.
See attached schedule and notes for additional information on the 1996 and
1995 fourth quarters and years.
# # #
<PAGE> 6
<TABLE>
RALCORP HOLDINGS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(in millions except per share data)
<CAPTION>
Three Months Ended Year Ended
September 30, September 30,
--------------------------- -----------------------------
1996 1995 1996 1995
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 224.6 $ 245.2 $ 1,027.4 $ 1,013.4
--------- --------- ----------- -----------
Costs and Expenses
Cost of products sold 128.5 137.0 536.8 530.4
Selling, general and administrative 45.1 44.7 177.6 164.9
Advertising and promotion 44.1 52.1 233.3 213.2
Interest 6.6 7.0 26.8 28.2
Nonrecurring charges 109.5 21.9 109.5 21.9
Restructuring charge (4.2) - 16.5 -
--------- --------- ----------- -----------
329.6 262.7 1,100.5 958.6
--------- --------- ----------- -----------
(Loss) Earnings before Income Taxes (105.0) (17.5) (73.1) 54.8
Income Taxes (38.6) (6.8) (26.3) 21.4
--------- --------- ----------- -----------
Net (Loss) Earnings $ (66.4) $ (10.7) $ (46.8) $ 33.4
========= ========= =========== ===========
(Loss) Earnings per Common Share $ (2.02) $ (.32) $ (1.42) $ 1.00
========= ========= =========== ===========
Average Shares Outstanding 32.9 33.3 33.0 33.5
See accompanying notes
</TABLE>
NOTES:
1. In September 1996, the Company recorded a $109.5
million pre-tax impairment charge ($68.8 million
after taxes or $2.09 per common share) related to its
private label cereal and consumer hot cereal
operations. This charge was recorded under the
provisions of Statement of Financial Accounting
Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be
Disposed Of" (FAS 121), issued by the Financial
Accounting Standards Board in March 1995. Such
provisions require recognition of an impairment
loss when the sum of undiscounted expected future
cash flows are insufficient to cover the carrying
value of associated revenue producing long-lived
assets.
2. Earnings for the fourth quarter of fiscal 1996 were
favorably impacted by adjustments to advertising and
promotion accruals recorded earlier in the year.
Advertising and promotion expense for the current
year fourth quarter was $44.1 million compared to
fourth quarter of fiscal 1995 advertising and
promotion expense of $52.1 million. This advertising
and promotion accrual adjustment became necessary
when it was determined that redemption
<PAGE> 7
levels for in-ad coupon programs and cereal sales
volumes were below the expectations used to record
advertising and promotion expense in the previous
interim periods.
3. Earnings for the fourth quarter of fiscal 1996 were
negatively impacted by the recording of approximately
$4.0 million of certain transaction costs related to
the Company's proposed sale of its Resort Operations.
This impact on fourth quarter earnings was offset by
a $4.2 million adjustment to the Company's $20.7
million third quarter restructuring charge (see Note
5). The Company determined that the two components
of the restructuring charge estimated for branded
cereal product returns/reclamations and certain
employee benefits are no longer required.
4. The average shares outstanding used to compute
earnings (loss) per common share for the quarter and
twelve month periods ended September 30, 1996 and
1995 are based on the average number of shares of
Ralcorp Common Stock outstanding for the periods then
ended. Earnings (Loss) per common share is computed
independently for all periods presented, therefore,
the sum of earnings (loss) per common share amounts
for the quarters may not total year-to-date.
5. During the quarter ended June 30, 1996, the Company
recorded a pre-tax charge of $20.7 million ($13.0
million after taxes or $.39 per common share) to
recognize the costs related to the restructuring of
its ready-to-eat cereal subsidiary, Ralston Foods.
As a result of this restructuring plan, approximately
100 positions have been eliminated from the Ralston
Foods subsidiary and corporate support groups,
primarily at the Company's headquarters in St. Louis,
MO. In addition, the restructuring plan includes the
partial closing of the Ralston Foods production
facility in Battle Creek, MI, thereby reducing excess
production capacity in the Ralston Foods system
and eliminating approximately 190 jobs from the
production and administrative staffs at that
facility.
6. In September 1995, the Company decided to exit the
industrial oats business and close oat milling
operations at its Cedar Rapids, Iowa oats and hot
cereal facility. As a result of this decision, the
Company recorded in the fourth quarter of fiscal
1995, a nonrecurring pre-tax charge of $10.1 to cover
the costs to exit, consisting primarily of the excess
of carrying value of related fixed assets over fair
value less related disposition costs. In addition to
this exit-related charge, the Company also recorded a
nonrecurring pre-tax charge of $11.8 in fiscal 1995
representing the impairment of the remaining fixed
and intangible assets related to the consumer hot
cereal business. These charges were determined under
the provisions of FAS 121.
7. During the fourth quarter of fiscal year 1995, the
Company wrote off $1.5 million, net of taxes, of
small dollar accounts receivable related to prior
periods for which it decided not to pursue
collection.
