Ralston Purina Company

views updated May 17 2018

Ralston Purina Company

Checkerboard Square
St. Louis, Missouri 63164
U.S.A.
(314) 982-1000

Public Company
Incorporated: 1894 as Robinson-Danforth Commission Company
Employees: 56,219 (1989)
Sales: $6.66 billion (1989)
Stock Index: New York Midwest Pacific

Ralston Purina is largely the result of the vision of one man: William Henry Danforth. Danforth was so extremely hardworking, religious, and philanthropic, he might almost have been a caricature of the Protestant work ethic if he hadn’t done so well by it. Today Ralston Purina is the world’s largest producer of pet foods and dry cell battery products as well as the largest fresh-product wholesale baker in the United States.

William Henry Danforth was raised and educated in Charleston, Missouri. In 1892 Danforth earned a degree in mechanical engineering from Washington University in St. Louis, Missouri, and the following year he joined two church acquaintances in St. Louis in mixing and selling feed for mules and horses. The blend of oats and corn, billed as “cheaper than oats and safer than corn,” sold well among the farmers along the Mississippi River.

In 1894 the company incorporated as the Robinson-Danforth Commission Company and in 1896 Danforth bought control of the company. On the very day after the purchase was completed, the company’s new mill—on the site of what is now known as Checkerboard Square, the company’s headquarters—was destroyed by a tornado. With the help of a sympathetic banker, Danforth rebuilt, and the company continued to thrive.

In 1898 Danforth discovered a Kansas miller who had found a way to prevent wheat from turning rancid. Danforth introduced the miller’s hot breakfast cereal made from cracked wheat. A clever marketing strategist, Danforth persuaded a Dr. Ralston, the head of a string of faddish health clubs, to give the cereal his official sponsorship. The doctor agreed on the condition that it be renamed Ralston Cereal. To advertise the growing success of both the cereal and the feeds—now called Purina to signify purity—Danforth changed the name of his company in 1902 to Ralston Purina and adopted the familiar checkerboard logo, which began to appear on all of Ralston Purina’s packages.

The flamboyant Danforth, who wore the ubiquitous checkerboard design even on his jacket and socks, was viewed as a great leader by some but as a tyrant by others. He prohibited smoking anywhere on company premises and rewarded employees who subscribed to his philosophies and went to church regularly. He helped found the American Youth Foundation and the Christmas Carolers Association in St. Louis and served as president of each.

During World War I, Danforth went to France as a representative of the Young Men’s Christian Association to give the troops moral support. While there, he observed that soldiers referred to rations as “chow.” Returning home, he christened his animal feeds “chows” and, to clinch the custom, fined employees who continued to use the word “feed.”

Following the war Danforth visited England, where he was introduced to the concept of compressing feed into cubes. In 1921 he began using this technique in the United States. His pellet-shaped feed revolutionized the industry and is still common today.

Purina chow’s main competitor, then and for decades to come, was the individual farmer who had always fed his animals ordinary grain. In 1926 Danforth reluctantly purchased a research farm outside St. Louis at the behest of his son Donald Danforth, who had joined the company in 1920. At this facility new products were tested, including feeds with nongrain ingredients like animal by-products and vitamins. Innovative farm management and sanitation techniques were also tested there. While other feed companies were diversifying, Danforth was pouring his profits into Purina chows, buying up mills nationwide so that he could adapt his mixtures to the climate-related needs of farmers in each region. This tailoring was necessary in order to boost sales, and thus profits, in the low-margin livestock-feed industry.

By 1930 Ralston Purina’s sales had reached $60 million. With the advent of the Great Depression, however, farmers could no longer afford commercial feed, and that figure dropped by two-thirds within two years. To compensate for this loss, Danforth persuaded the country’s most popular cowboy, Tom Mix, to lend his name to the advertising for Ralston Cereal. Though the inexpensive yet nutritious cereal had long been losing money, it now began to generate a profit.

Meanwhile, Danforth continued to expand the operations of Purina Mills, and after 1933 sales were once again on the rise. Donald Danforth became president in 1932, while the older Danforth split his time between Ralston Purina and the running of the Danforth Foundation. Founded in 1927, the organization built chapels on college campuses and in hospitals and gave generously to the church and to colleges and universities.

During World War II, government regulations fostered tremendous growth in the meat and poultry industries, and farmers increasingly relied on commercially prepared feeds. Ralston Purina’s sales more than tripled and, despite price controls, net profits rose nearly 150%. Realizing that a farmer with disappointing returns was more likely to blame his feed than other contributing factors, the company began training its local salespeople in the basics of farm management, including breeding and sanitation. Thousands of Ralston Purina dealers became sources of valuable free advice.

Will Danforth soon came to be widely recognized as a public relations genius. Through its experimental farm, the company demonstrated to customers that the nutritional balance offered by Purina chows could produce bigger, healthier animals for less money. Groups toured the farm—at their own expense—led by guides who were well versed in the company’s overall philosophy and product line. After the tour, visitors attended a show, complete with chorus line, performed by amateurs from the general office in St. Louis. As more sophisticated feed supplements became available, Ralston Purina added them to its chows, while taking care to maintain the homespun image its customers had come to trust.

With the end of the war, the price of grains began to rise sharply. To raise the necessary operating capital, the Danforths reluctantly took their company public. By 1947 sales of Purina chows, milled in 27 plants nationwide, had topped $200 million.

In 1950 Ralston Purina began developing an appealing dog food for sale in grocery stores. Between 1947 and 1957 the nation’s canine population soared. Purina, which had been feeding hunting and farm dogs for 24 years, saw the opportunity to use its expertise to capture a high-growth, high profit margin industry. In 1957 Purina Dog Chow entered the market. Within 16 months it had become the market leader, a position Ralston Purina has never relinquished.

William Danforth died in 1955, and Donald Danforth took his place as chairman of the board. New president Raymond E. Rowland led the way in expanding outside the U.S. Under Rowland Ralston Purina became coowner of feed companies in France, West Germany, and Italy, and bought plants in Mexico, Guatemala, Colombia, Venezuela, and Argentina.

Despite a fire in January, 1962 that destroyed much of the company’s St. Louis plant, Ralston Purina continued to grow. Most of this expansion was in the consumer-goods sector. The company increased its penetration of the U.S. supermarket with Chex cereals and Purina Dog Chow. By the mid-1960s feeds represented only half of total sales, down from 90%. In 1963, Ralston Purina made its first major domestic acquisition when it bought the Van Camp Seafood Company, canners of Chicken-of-the-Sea tuna and salmon, for 1.9 million shares of stock.

Donald Danforth retired in 1963 as the company neared $1 billion in sales. The new president, R. Hal Dean, reorganized the chain of command. When Dean became chairman in 1968 he started a program of acquisitions with the purchase of Foodmaker, Inc., a restaurant franchising company. A hockey fan, he bought St. Louis’s ailing professional team, the Blues, and renamed their stadium the Checkerdome. Next Ralston Purina purchased Green Thumb, which sold houseplants, for $45 million; a wellknown life-sciences testing lab (to be merged with Ralston Purina’s own lab) named the WARF Institute; and the Bremner Biscuit Company. New products included Cookie Crisp, which broke records in the children’s cereal market. Between 1964 and 1974, the company’s sales more than tripled, and in 1976, Dun’s Review named Ralston Purina “one of the five best-managed companies this year.”

By 1979, however, there were signs of trouble. In one 18-month period, the company’s dog foods lost a quarter of their market share to competitors. Dean had opened dozens of new fast-food restaurants in the eastern United States only to find the market there already saturated. Houseplants weren’t selling, and too much capital had been invested in shrimp farms, tuna boats, a fledgling soy-isolate business, and packaged fresh mushrooms—all enterprises with minimal or unstable profits.

Ralston had acquired a reputation for keeping corporate information private. This secretive policy backfired in November, 1978 at a meeting of stock market analysts, when the company’s managers unwisely decided to withhold certain figures and disgruntled analysts went home with Ralston at the top of their sell lists. The company’s stock dropped 8% in two days.

Although Dean reorganized again and succeeded in selling off some of the company’s less-profitable acquisitions, by 1981 Ralston Purina’s earnings were dropping off. As Dean prepared to retire, the company took the unusual step of paying each of three outside directors a substantial sum to assist in finding a new president.

A month after William P. Stiritz was elected, in January, 1981, a Ralston Purina soybean-processing plant in Louisville, Kentucky leaked an explosive solvent into local sewers. The resulting explosion caused few injuries but cost the company over $40 million in reparations, plus an indictment and fine for failing to notify the proper officials of the leak.

With a series of major acquisitions and divestitures, Stiritz began to reshape the company’s product lines and priorities. While aggressively buying back the company’s own stock (between 1982 and 1988 the company bought back nearly 50 million shares), he started selling less-profitable subsidiaries, including the St. Louis Blues, its fleet of tuna boats, its fresh-mushroom operations, and its soybean-processing business.

At the same time, Stiritz bought up businesses with products complementary to Ralston’s own food and consumer items. In 1984 the company bought Continental Baking, makers of Wonder Bread and Hostess Cakes, for $475 million. With the bread industry too intensely competitive to offer much hope of an increase in market share, Purina expanded Continental’s line of baked snack products and succeeded in raising profit margins within two years.

In 1985 Ralston Purina shed its restaurant operations, selling Foodmaker for $450 million, and used the cash to help purchase Union Carbide Corporation’s battery division for $1.4 billion in June, 1986. Less than two weeks later Ralston Purina purchased Drake Bakeries, an important competitor in baked snacks, for $115 million. An antitrust action persuaded Stiritz to sell Drake in 1987. The company realized an after-tax gain of $43 million on the Drake sale.

With the company focusing increasingly on packaged consumer products, its U.S. animal-feed division, Purina Mills, was no longer in the mainstream of Ralston Purina’s business. In July, 1986 Purina chows found a new home with British Petroleum, which had been looking for a steady earner in the ever-fluctuating U.S. agricultural industry. And in 1988 the company sold its Van Camp Seafood division to a group of investors led by a privately held Indonesian concern for $260 million.

Although Ralston still owns the famous checkerboard logo and the Purina name, the sale of its animal-feeds business virtually severed the company from its origin as a provider of balanced nutrition for farm animals as well as for the farmer’s breakfast table. Ralston Purina presently controls 30% of both the dog food and cat food markets and both volume and share continue to rise modestly.

The company’s 1984 purchase of Continental Baking has decreased its dependence on pet foods while improving its position as a packaged-consumer-goods company. Ralston Purina now concentrates on human and pet foods like bakery products, dog and cat food, and cereals; other consumer products like batteries; and agricultural products (primarily livestock and poultry feeds outside North America). Today, Ralston’s bestseller among its baked products—which combined represent over 30% of total sales—is the Hostess Twinkie snack cake. Continental is also battling damage to its sweet baked-goods business by introducing products meant to appeal to health-conscious consumers.

Chairman and CEO William P. Stiritz’s modern management approach is typical of Ralston Purina’s tradition of progressive leadership—William Danforth may have delivered a weekly inspirational message to his employees for 40 years, but he also instituted a model benefits program years before such arrangements were standard. Today’s decentralized and trim management and staff constantly review and eventually divest underachieving operating units keep the company profitable. Ralston Purina’s continued success rests on the continuation of this cautious yet independent approach.

Principal Subsidiaries

Continental Baking Company; Bremner Biscuit Company; Eveready Battery Company, Inc.; Duquesne-Purina, S.A. (France) (68%); Ralston Purina Canada, Ltd.; Ralston Purina Overseas Battery Company, Inc.; Protein Technologies International, Inc.

Ralston Purina Company

views updated May 29 2018

Ralston Purina Company

Checkerboard Square
St. Louis, Missouri 63164
U.S.A.
(314) 982-1000
Fax: (314) 982-2134

Public Company
Incorporated: 1894 as Robinson-Danforth Commission
Company
Employees: 54,099
Sales: $5.76 billion
Stock Exchanges: New York Midwest Pacific
SICs: 2047 Dog and Cat Food; 3691 Storage Batteries; 2048 Prepared Feeds, Not Elsewhere Classified

The Ralston Purina Company leads the world in two ostensibly disparate categories, dry dog food and dry cell batteries. Over the course of the 20th century, the company evolved from a midwestern U.S. producer of animal feeds into a global consumer products company. Under the direction of Chairman, President and CEO William P. Stiritz from 1981 through the mid-1990s, Ralston shed its U.S. livestock feed business to concentrate on consumer goods, then spun off its grocery products to shareholders as Ralcorp Holdings. As of mid-1995, the company’s interests were focused on pet foods sold under the venerable Purina Chow brand as well as Eveready and Ener-gizer batteries and flashlights, which boasted 35 percent of the global battery market.

The multibillion-dollar company of the 1990s was largely the result of the vision of one man: William Henry Danforth. Danforth was so extremely hardworking, religious, and philanthropic, he might almost have been a caricature of the Protestant work ethic if he hadn’t done so well by it. Raised and educated in Charleston, Missouri, Danforth earned a degree in mechanical engineering from Washington University in St. Louis, Missouri, in 1892. Within a year of graduating, he joined two church acquaintances in St. Louis in mixing and selling feed for mules and horses. Their blend of oats and corn, billed as “cheaper than oats and safer than corn,” sold well among the farmers along the Mississippi River.

The company was incorporated as the Robinson-Danforth Commission Company in 1894. Danforth bought control of the company just two years later. On the very day after the purchase was completed, the company’s new mill was destroyed by a tornado. With the help of a sympathetic banker, Danforth rebuilt and the company resumed its pattern of growth. The site of the new mill would years later become company headquarters, known as Checkerboard Square.

In 1898 Danforth discovered a Kansas miller who had found a way to prevent wheat from turning rancid, giving credence to Danforth’s corporate slogan, “Where Purity is Paramount.” He introduced the miller’s hot breakfast cereal made from cracked wheat. A clever marketing strategist, Danforth persuaded Dr. Everett Ralston, the head of a chain of faddish health clubs, to give the cereal his official sponsorship. The doctor agreed on the condition that it be named after him. To take advantage of the growing success of both the cereal and the feeds, Danforth changed the name of his company in 1902 to Ralston Purina, “purina” representing a combination of“pure” and“farina” (grain). He introduced the red-and-white checkerboard logo in 1900 and used it to identify virtually everything related to the company, from delivery trucks, to packaging, to grain elevators. He even wore the ubiquitous checkerboard design on his jacket and socks.

Danforth’s expectation that his employees would ascribe to his own strict personal standards earned him the admiration of some and the derision of others. For example, he prohibited smoking anywhere on company premises and rewarded employees who subscribed to his philosophies and went to church regularly. Danforth made his expectations clear to his employees in a weekly inspirational address, and published a compendium of his ideals under the title I Dare You: Stand Tall, Think Tall, Smile Tall, Live Tall.

Danforth’s European travels during the first two decades of the 20th century served as sources of new technological and marketing ideas, as well as the subject of several published travelogues. During World War I, Danforth went to France as a representative of the Young Men’s Christian Association to give the troops moral support. While there, he observed that soldiers referred to rations as “chow.” Returning home, he christened his animal feeds “chows” and, to clinch the custom, fined employees who continued to use the word “feed.” Danforth visited England during the interwar period, where he was introduced to the concept of compressing feed into cubes. In 1921 he began using this technique in the United States. His pellet-shaped feed revolutionized the domestic industry and remained the standard throughout the remainder of the 20th century.

Purina Chow’s main competitor, then and for decades to come, was the individual farmer who had always fed his animals ordinary grain. In 1926 Danforth reluctantly purchased a research farm outside St. Louis at the behest of his son Donald Danforth, who had joined the company in 1920. At this facility new products were tested, including feeds with non-grain ingredients like animal by-products and vitamins. Innovative farm management and sanitation techniques were also tested there. While other feed companies diversified, Danforth poured his profits into Purina chows, buying up mills nationwide so that he could adapt his mixtures to the climate-related needs of farmers in each region. This local tailoring was a vital factor in his strategy to boost sales volume—and thus profits—in the low margin livestock feed industry.

By 1930 Ralston Purina’s sales had reached $60 million. With the advent of the Great Depression, however, farmers who could no longer afford commercial feed put their livestock back on a homemade diet. Within just two years, Ralston Purina’s sales plummeted by two-thirds. Danforth turned to marketing to save his company, persuading the country’s most popular cowboy balladeer, Tom Mix, to lend his name to the advertising for Ralston Cereal. Though the inexpensive, nutritious cereal had long been losing money, it soon began to generate a profit.

In spite of the dramatic decline in the animal feed business, Danforth continued to expand the operations of Purina Mills. His confidence paid off in 1933, when sales began to rebound. Donald Danforth succeeded his father as president in 1932, and the older Danforth divided the ensuing 20 years between Ralston Purina and the administration of the Danforth Foundation. Founded in 1927, this charitable organization built chapels on college campuses and in hospitals and gave generously to churches, colleges, and universities.

During World War II, government subsidies fostered tremendous growth in the meat and poultry industries, and farmers increasingly relied on commercially prepared feeds. Ralston Purina’s sales more than tripled and, despite price controls, net profits rose nearly 150 percent. Realizing that a farmer with disappointing returns was more likely to blame his feed than other contributing factors, the company began training its local salespeople in the basics of farm management, including breeding and sanitation. Thousands of Ralston Purina dealers became sources of valuable free advice.

With the end of the war, the price of grains began to rise sharply. To raise the operating capital necessary to purchase these raw materials, the Danforths reluctantly took their company public. By 1947 sales of Purina chows, milled in 27 plants nationwide, had topped $200 million.

Between 1947 and 1957 the nation’s canine population soared. Purina, which had been feeding hunting and farm dogs for 24 years, saw the opportunity to use its expertise to capture a high-growth, high-profit margin industry. The company undertook the development of an appealing food for domesticated dogs in 1950 and introduced its Purina Dog Chow in 1957. Within 16 months it had become the market leader, a position Ralston Purina never relinquished.

William Danforth’s death in 1955 heralded a new era of international expansion. Donald Danforth advanced to chairman of the board, and Raymond E. Rowland was elected president. Under Rowland, Ralston Purina acquired significant interests in feed companies in France, West Germany, and Italy, and bought plants in Mexico, Guatemala, Colombia, Venezuela, and Argentina.

In spite of a disastrous explosion and fire that destroyed much of the company’s St. Louis plant in January 1962, Ralston Purina continued to grow. Most of this expansion came from the consumer goods sector. The company increased its share of the American grocery shopper’s dollar through burgeoning sales of Chex breakfast cereals and Purina Dog Chow. An acquisition program initiated under R. Hal Dean, who became president upon Donald Danforth’s 1963 retirement, also augmented Ralston’s consumer goods interests. In 1963, the company exchanged 1.9 million of its own shares for ownership of the Van Camp Seafood Company, canners of Chicken-of-the-Sea tuna and salmon. By the mid-1960s, livestock feeds represented only half of total sales, down from 90 percent.

Dean’s acquisitive activities continued with the 1968 purchase of Foodmaker, Inc., a restaurant franchising company that included the Jack-in-the-Box hamburger chain. A hockey fan, Dean bought St. Louis’s ailing professional hockey team, the Blues, and renamed their stadium the Checkerdome. Next Ralston Purina purchased Green Thumb, which sold houseplants, for $45 million; a well-known life-sciences testing lab (to be merged with Ralston Purina’s own lab) named the WARF Institute; and the Bremner Biscuit Company. New products included Cookie Crisp, which broke records in the children’s cereal market. Between 1964 and 1974, the company’s sales more than tripled, and in 1976, Dun’s Review named Ralston Purina “one of the five best-managed companies this year.”

Moreover, Ralston Purina had earned a reputation for being closely held, and this policy backfired in November 1978 at a meeting of stock market analysts. When top executives imprudently decided to withhold certain figures, disgruntled analysts went home with Ralston Purina at the top of their sell lists. The company’s stock dropped eight percent in just two days.

Although Dean reorganized again and succeeded in selling off some of the company’s less-profitable acquisitions, Ralston Purina’s earnings were still dropping off in 1981. As Dean prepared to retire, the company took the unusual step of paying each of three outside directors a substantial sum to assist in finding a new president.

Their candidate was William P. Stiritz, a 47-year-old “maverick” who planned a drastic reorganization of his new employer. But first, he had to deal with a major industrial accident. Just one month after he was hired, in January 1981, a Ralston Purina soybean-processing plant in Louisville, Kentucky, leaked an explosive solvent into local sewers. The resulting explosion caused few injuries but cost the company over $40 million in reparations, plus an indictment and fine for failing to notify the proper officials of the leak.

Stiritz’s reorganization strategy included a series of major divestitures and acquisitions. Less-profitable subsidiaries, including the St. Louis Blues, the fleet of tuna boats, the fresh mushroom farms, and the soybean-processing business, were shed. In 1985 Ralston Purina sold its Foodmaker restaurant chain for $450 million. In 1988 the company sold its Van Camp Seafood division to a group of investors led by a privately held Indonesian concern for $260 million. Stiritz, whom a 1987 Fortune article characterized as a member of“the unsentimental school of executives who believe in running their companies like investment portfolios,” even sold the domestic livestock feed business upon which Ralston Purina was founded. Ralston Purina did, however, retain ownership of the famous checkerboard logo, the Purina name, its foreign animal-feeds business, and its pet food interests. In all, the divestitures had accounted for nearly half of the company’s sales, but a considerably smaller share of its profits.

In the meantime, Stiritz used the proceeds of these sales (along with a generous dose of long-term debt) to acquire businesses with products complementary to Ralston’s lines of food and consumer items. In 1984 the company bought Continental Baking, makers of Wonder Bread and Hostess snack cakes, for $475 million. With the bread industry too intensely competitive to offer much hope of an increase in market share, the new parent focused on expanding Continental’s line of baked snack products. Within two years, this strategy had succeeded in raising the division’s profit margins.

In June 1986, Ralston Purina purchased Union Carbide Corporation’s industry-leading Eveready Battery division for $1.4 billion. The $115 million acquisition of Drake Bakeries, an important competitor in baked snacks, however, drew an antitrust action. While Ralston was compelled to sell Drake in 1987, it was able to realize an after-tax gain of $43 million on the deal.

From 1982 to 1987, Ralston Purina’s sales climbed to $5.87 billion and its net income quadrupled to $526.7 million. Stiritz also boosted Ralston Purina’s shareholder value through a massive stock repurchase plan. From 1982 to 1991, the leader invested nearly $3 billion in the repurchase of almost half of the company’s outstanding shares. His organizational, operational, and strategic moves effected fabulous stock performance: the company’s adjusted share price multiplied from $5 to $60.

But a recession in the late 1980s and early 1990s, combined with trends in the pet food business, began to deflate Ralston Purina’s high-flying performance. Just as Stiritz’s acquisitive scheme to build up Ralston’s brand equity came to fruition, recession-battered consumers began to trade down to cheaper private-label products. Ironically, while some shoppers also sought out cheaper foods for their pets, others put their dogs and cats on “superpremium” diets. Influenced by these two trends, Ralston Purina’s earnings fell in five of the six years between 1987 and 1994.

The company responded to the challenges of the grocery industry by deftly exiting many of the affected businesses. It distributed 55 percent of its stake in Continental Baking to share-holders in 1993, and accepted a $560 million bid for the remaining shares early in 1995. Stiritz also created a separate subsidiary, Ralcorp Holdings, and spun it off to shareholders early in 1994. The new company combined Ralston Purina’s Chex and private-label cereal operations, its cookies and crackers business, the Beech-Nut baby food business it had acquired in 1989, and Colorado’s Breckenridge Ski Area. This series of divestitures left Ralston Purina with 15 percent less in annual sales and profits from 1993 to 1994, but was predicted to enable the company to concentrate on its two most profitable businesses, pet food and batteries.

While its reaction to competitive pressures in the pet food industry were judged tardy by some analysts, Ralston Purina attacked on both the premium and budget fronts in the early 1990s. Priced just slightly lower than superpremium leaders Science Diet and lams, the company’s Purina O.N.E. (Optimal Nutritional Effectiveness) brand dog and cat foods vaulted to the top of the supermarket pet food trade, and made significant inroads in the pet shop venue. Moreover, the company sought to appeal to the price-conscious pet owner with the introduction of Alley Cat brand cat food.

The Eveready Battery business proved a boon in the midst of Ralston’s other dilemmas. Promoted by the “Energizer Bunny” advertising campaign launched in 1989, Eveready’s Energizer brand gained about nine percentage points in domestic market share and 35 percent in worldwide sales from 1989 to 1991. The Energizer brand denoted Eveready’s transition from outdated zinc oxide batteries to the faster-growing, higher-margin alkaline category. Energizer’s 36.4 percent share of the American battery market mounted a serious challenge to Dura-cell’s 40.4 percent share. From its acquisition in 1986 to 1993, the division’s return on assets grew from nine to 14 percent, as CEO Stiritz rationalized operations. The leader also orchestrated geographic expansion through the acquisition of three European firms (including Great Britain’s Ever Ready) at a total cost of $480 million.