Ralcorp reports fiscal 1996 fourth quarter, year-end results.ST. LOUIS, Mo.--(BUSINESS WIRE)--Oct. 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 Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. 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 restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. 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 Recognized Loss The amount of loss reported for income tax purposes. Notes: You can defer recognizing some losses and then deduct the losses for the following year(s). 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. 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 The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting require the Company to write down the value of its private label cereal operating assets Operating Assets Another term for working capital. to levels deemed recoverable through future operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. . 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 oats, cereal plants of the genus Avena of the family Gramineae (grass family). Most species are annuals of moist temperate regions. The early history of oats is obscure, but domestication is considered to be recent compared to that of the other operations. -0-
Business Segment Information
Three Months Ended September 30,
Sales Operating Profit
1996 1995 1996 1995
Consumer Foods $ 210.7 $ 232.0 $ 22.0/a $ 21.8
Resort Operations 13.9 13.2 (8.9) (8.7)
Total $ 224.6 $ 245.2 $ 13.1 $ 13.1
Twelve Months Ended September 30,
Sales Operating Profit
1996 1995 1996 1995
Consumer Foods $ 892.0 $ 886.0 $ 67.3/a $ 95.5
Resort Operations 135.4 127.4 23.0 17.1
Total $1,027.4 $1,013.4 $ 90.3 $112.6
/a: Excluded from 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. Consumer Foods (excluding charges) Consumer Foods operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. was flat in this year s fourth quarter as significant cereal volume declines were offset by a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. adjustment to the advertising and promotion (A&P) accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. 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 Battle Creek, city (1990 pop. 53,540), Calhoun co., S Mich., at the confluence of the Kalamazoo and Battle Creek rivers; settled 1831, inc. as a city 1859. It is an agricultural trade center known for its cereals. benefits costs and a mutual decision by the Company and General Mills  This article or section may contain a proseline.Please help [ convert this timeline] into prose or, if necessary, a . to continue to support declining share brands. The Company had expected to discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: the fractional share Fractional share Stocks amounting to less than one full share, usually resulting from splits, acquisitions, exchanges, or dividend reinvestment programs. fractional share Less than one share of stock, that is, one-third or one-half a 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 (1) A person who breaks into a computer system without authorization, whose purpose is to do damage (destroy files, steal credit card numbers, plant viruses, etc.). Because a cracker uses low-level hacker skills to do cracking, the terms "cracker" and "hacker" have become and cookie cookie File or part of a file put on a Web user's hard disk by a Web site. Cookies are used to store registration data, to make it possible to customize information for visitors to a Web site, to target Web advertising, and to keep track of the products a user wishes to business due to strong volume improvements. 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. 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 This Chex Mix may contain original research or unverified claims. Please help Wikipedia by adding references. See the for details. This article has been tagged since September 2007. 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 Shredded Wheat is a breakfast cereal made from whole wheat. It comes in two sizes, bite sized (3/4 in x 1 in), and normal size, which are sometimes broken into small pieces before adding milk. cereals and crackers in early fiscal 1997. Resort Operations Resort Operations reported operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. 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 key·stone n. 1. Architecture The central wedge-shaped stone of an arch that locks its parts together. Also called headstone. 2. The central supporting element of a whole. 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. 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. -0-
RALCORP HOLDINGS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(in millions except per share data)
Three Months Ended Year Ended
September 30, September 30,
1996 1995 1996 1995
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 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 Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). in March 1995. Such provisions require recognition of an impairment loss when the sum of undiscounted expected future cash flows Expected future cash flows Projected future cash flows associated with an asset. are insufficient to cover the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. 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 Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. 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 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 Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). 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 the 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 head-quarters 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 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 oat member of the plant genus Avena in the family Poaceae. oats see avenasativa. oat grain seed of Avena sativa, and as 'oats' the favored grain for the feeding of horses. milling operations at its Cedar Rapids Cedar Rapids, city (1990 pop. 108,751), seat of Linn co., E central Iowa, on the Cedar River; inc. as a city 1856. The second largest city in Iowa, it is named for the surging rapids in the river. , 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 fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → 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 Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible 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 accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying related to prior periods for which it decided not to pursue collection. CONTACT: Ralcorp Holdings Inc. Patrick T. Farrell, 314/877-7095 |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion