form10q080510.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q

                                            (Mark One)
 
(X)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2010.
   
(  )
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO ____________.

Commission file number:     1-12619


Ralcorp Holdings, Inc.
(Exact name of registrant as specified in its charter)

 
Missouri
 
43-1766315
(State of Incorporation)
 
(I.R.S. Employer
   
Identification No.)
     
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)
 
Indicate by check mark whether the 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X)   No (   )
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes (X)   No (  )
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one):
Large accelerated filer (X)
Accelerated filer (  )
Non-accelerated filer (  )
Smaller reporting company (  )
 
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).  Yes (  )   No (X)
 
Number of shares of Common Stock, $.01 par value, outstanding as of August 4, 2010:  54,905,469
 
 
 

 
 
 

 

RALCORP HOLDINGS, INC.

INDEX

   
PAGE
PART I—FINANCIAL INFORMATION
 
     
Item 1.
Financial Statements
 
     
 
Condensed Consolidated Statements of Earnings
1
     
 
Condensed Consolidated Statements of Comprehensive Income
1
     
 
Condensed Consolidated Balance Sheets
2
     
 
Condensed Consolidated Statements of Cash Flows
3
     
 
Notes to Condensed Consolidated Financial Statements
4
     
Item 2.
Management’s Discussion and Analysis of Financial
 
 
Condition and Results of Operations
20
     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
29
     
Item 4.
Controls and Procedures
29
     
PART II—OTHER INFORMATION
 
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
30
     
Item 6.
Exhibits
30
     
SIGNATURES
30












(i)
 
 

 
 
 
 

 

PART I — FINANCIAL INFORMATION
 
Item 1.
Financial Statements.

RALCORP HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
(Dollars in millions except per share data)
 
   
Three Months Ended
   
Nine Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
                         
Net Sales
  $ 962.4     $ 994.0     $ 2,919.3     $ 2,908.7  
Cost of products sold
    (717.1 )     (720.2 )     (2,134.8 )     (2,129.2 )
Gross Profit
    245.3       273.8       784.5       779.5  
Selling, general and administrative expenses
    (141.0 )     (148.5 )     (429.1 )     (452.6 )
Interest expense, net
    (24.7 )     (23.0 )     (75.1 )     (72.9 )
Restructuring charges
    (.2 )     (.1 )     (1.0 )     (.4 )
Goodwill impairment loss
    -       -       (20.5 )     -  
(Loss) gain on forward sale contracts
    -       (24.5 )     -       17.6  
Gain on sale of securities
    -       28.0       -       43.8  
Earnings before Income Taxes
                               
  and Equity Earnings
    79.4       105.7       258.8       315.0  
Income taxes
    (26.4 )     (37.8 )     (91.9 )     (114.3 )
Earnings before Equity Earnings
    53.0       67.9       166.9       200.7  
Equity in earnings of Vail Resorts, Inc.,
                               
  net of related deferred income taxes
    -       6.9       -       9.8  
Net Earnings
  $ 53.0     $ 74.8     $ 166.9     $ 210.5  
                                 
Earnings per Share
                               
  Basic
  $ .97     $ 1.33     $ 3.02     $ 3.74  
  Diluted
  $ .95     $ 1.31     $ 2.98     $ 3.69  
                                 
See accompanying Notes to Condensed Consolidated Financial Statements.



RALCORP HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(Dollars in millions)
 
   
Three Months Ended
   
Nine Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
                         
Net Earnings
  $ 53.0     $ 74.8     $ 166.9     $ 210.5  
Other comprehensive (loss) income
    (13.1 )     32.2       1.3       (9.1 )
Comprehensive Income
  $ 39.9     $ 107.0     $ 168.2     $ 201.4  
                                 
See accompanying Notes to Condensed Consolidated Financial Statements.
 


 
 
1

 

RALCORP HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in millions)
 
 
 
June 30,
   
Sept. 30,
 
   
2010
   
2009
 
             
Assets
           
Current Assets
           
  Cash and cash equivalents
  $ 115.3     $ 282.8  
  Marketable securities
    10.0       12.0  
  Investment in Ralcorp Receivables Corporation
    117.7       134.4  
  Receivables, net
    137.4       135.9  
  Inventories
    359.9       365.9  
  Deferred income taxes
    9.4       10.6  
  Prepaid expenses and other current assets
    12.8       12.6  
    Total Current Assets
    762.5       954.2  
Property, Net
    954.5       911.9  
Goodwill
    2,408.0       2,386.6  
Other Intangible Assets, Net
    1,187.7       1,173.4  
Other Assets
    25.1       26.1  
    Total Assets
  $ 5,337.8     $ 5,452.2  
                 
Liabilities and Shareholders' Equity
               
Current Liabilities
               
  Accounts and notes payable
  $ 203.3     $ 240.4  
  Due to Kraft Foods Inc.
    -       13.6  
  Other current liabilities
    192.4       225.0  
    Total Current Liabilities
    395.7       479.0  
Long-term Debt
    1,521.7       1,611.4  
Deferred Income Taxes
    444.8       464.6  
Other Liabilities
    198.0       191.6  
    Total Liabilities
    2,560.2       2,746.6  
Shareholders' Equity
               
  Common stock
    .6       .6  
  Additional paid-in capital
    1,940.2       1,931.4  
  Common stock in treasury, at cost
    (349.8 )     (244.8 )
  Retained earnings
    1,226.2       1,059.3  
  Accumulated other comprehensive loss
    (39.6 )     (40.9 )
    Total Shareholders' Equity
    2,777.6       2,705.6  
    Total Liabilities and Shareholders' Equity
  $ 5,337.8     $ 5,452.2  
                 
See accompanying Notes to Condensed Consolidated Financial Statements.
 
 
 
 

 
2

 
 
RALCORP HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in millions)
 
   
Nine Months Ended
 
   
June 30,
 
   
2010
   
2009
 
             
Cash Flows from Operating Activities
           
Net earnings
  $ 166.9     $ 210.5  
Adjustments to reconcile net earnings to net
               
  cash flow provided by operating activities:
               
  Depreciation and amortization
    116.7       106.7  
  Stock-based compensation expense
    11.9       10.0  
  Goodwill impairment loss
    20.5       -  
  Gain on forward sale contracts
    -       (17.6 )
  Gain on sale of securities
    -       (43.8 )
  Equity in loss of Vail Resorts, Inc.
    -       (15.4 )
  Deferred income taxes
    (22.4 )     (35.8 )
  Sale of receivables, net
    -       (50.0 )
  Other, net
    (6.3 )     138.6  
    Net Cash Provided by Operating Activities
    287.3       303.2  
                 
Cash Flows from Investing Activities
               
Business acquisitions, net of cash acquired
    (140.6 )     (54.9 )
Additions to property and intangible assets
    (86.4 )     (74.9 )
Proceeds from sale of property
    .5       -  
Purchases of securities
    (12.8 )     (10.7 )
Proceeds from sale or maturity of securities
    14.8       15.2  
    Net Cash Used by Investing Activities
    (224.5 )     (125.3 )
                 
Cash Flows from Financing Activities
               
Proceeds from issuance of long-term debt
    -       100.0  
Repayments of long-term debt
    (95.3 )     (147.2 )
Net borrowings under credit arrangements
    -       (22.0 )
Purchases of treasury stock
    (115.5 )     (1.0 )
Proceeds and tax benefits from exercise of stock awards
    8.2       13.3  
Changes in book cash overdrafts
    (28.3 )     (3.3 )
Other, net
    (.2 )     (.3 )
    Net Cash Used by Financing Activities
    (231.1 )     (60.5 )
                 
Effect of Exchange Rate Changes on Cash
    .8       .2  
                 
Net (Decrease) Increase in Cash and Cash Equivalents
    (167.5 )     117.6  
Cash and Cash Equivalents, Beginning of Period
    282.8       14.1  
Cash and Cash Equivalents, End of Period
  $ 115.3     $ 131.7  
                 
See accompanying Notes to Condensed Consolidated Financial Statements.
 
 
 
 

 
3

 
 
RALCORP HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in millions except per share data)


NOTE 1 – PRESENTATION OF CONDENSED FINANCIAL STATEMENTS

The accompanying unaudited historical financial statements of Ralcorp Holdings, Inc. (“Ralcorp” or the “Company”) 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.  These interim financial statements reflect all adjustments which are, in the opinion of management, necessary to fairly state the results for the periods presented.  All such adjustments are of a normal recurring nature.  Certain amounts for prior periods have been reclassified to conform to the current period’s presentation, including segment information.  Operating results for the periods presented are not necessarily indicative of the results for the full year.  These statements should be read in conjunction with the financial statements and notes for the year ended September 30, 2009 included in Exhibit 99.1 of the Company's Current Report on Form 8-K filed on April 5, 2010.  The significant accounting policies for the accompanying financial statements are the same as disclosed in Note 1 in that Exhibit.

NOTE 2 – RECENTLY ISSUED ACCOUNTING STANDARDS

Issued in December 2009, Accounting Standards Update (ASU) No. 2009-16 amends the ASC for the issuance of FAS 166, “Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140.”  The amendments in this ASU improve financial reporting by eliminating the exceptions for qualifying special-purpose entities from the consolidation guidance and the exception that permitted sale accounting for certain mortgage securitizations when a transferor has not surrendered control over the transferred financial assets.  In addition, the amendments require enhanced disclosures about the risks that a transferor continues to be exposed to because of its continuing involvement in transferred financial assets.  Comparability and consistency in accounting for transferred financial assets will also be improved through clarifications of the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting.  Also issued in December 2009, ASU 2009-17 amends the ASC for the issuance of FAS 167, “Amendments to FASB Interpretation No. 46(R).”  The amendments in this ASU replace the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity.  An approach that is expected to be primarily qualitative will be more effective for identifying which reporting entity has a controlling financial interest in a variable interest entity.  The amendments in this ASU also require additional disclosures about a reporting entity’s involvement in variable interest entities, which will enhance the information provided to users of financial statements.  These ASUs are effective for Ralcorp’s 2011 fiscal year.  We are still evaluating the impact, but despite required modifications of disclosures and presentations of amounts related to the Company’s sale of accounts receivable, we currently do not expect the adoption of these amendments to have a material impact on the Company’s financial statements.
 
 
 
 

 
4

 
 
NOTE 3 – ACQUISITIONS AND GOODWILL

Each of the following acquisitions was accounted for using the purchase method of accounting, whereby the results of operations of each of the following acquisitions are included in the statements of earnings from the date of acquisition.  The purchase price was allocated to acquired assets and liabilities based on their estimated fair values at the date of acquisition, and any excess was allocated to goodwill, as shown in the following table.  For the fiscal 2010 acquisitions of J.T. Bakeries, North American Baking, and Sepp’s Gourmet Foods, the allocations are subject to change pending the completion of certain valuations (primarily property, intangible assets, and deferred tax assets and liabilities).
 
   
Nine Months Ended
 
   
June 30,
 
   
2010
   
2009
 
Cash
  $ 2.2     $ -  
Receivables
    11.8       14.2  
Inventories
    7.0       20.3  
Other current assets
    2.1       .2  
Property
    50.5       8.1  
Goodwill
    42.9       14.8  
Other intangible assets
    42.7       16.7  
Total assets acquired
    159.2       74.3  
Accounts payable
    (10.6 )     (10.4 )
Other current liabilities
    (2.3 )     (4.6 )
Deferred income taxes
    (2.1 )     -  
Other liabilities
    (1.4 )     (.1 )
Total liabilities assumed
    (16.4 )     (15.1 )
Net assets acquired
  $ 142.8     $ 59.2  
                 
 
Fiscal 2010

On May 31, 2010, the Company acquired J.T. Bakeries Inc., a leading manufacturer of high quality private label and co-branded gourmet crackers in North America for customers in the U.S., Canada and Great Britain with annual net sales of approximately $40.  J.T. Bakeries will continue its operations in Kitchener, Ontario and is now part of Ralcorp’s Snacks, Sauces & Spreads segment.

On May 31, 2010, the Company acquired North American Baking Ltd., a leading manufacturer of premium private label specialty crackers in North America with annual net sales of approximately $55.  North American Baking will continue its operations in Georgetown, Ontario and is now part of Ralcorp’s Snacks, Sauces & Spreads segment.

On June 25, 2010, the Company acquired Sepp’s Gourmet Foods Ltd., a leading manufacturer of frozen breakfast foods for the retail and foodservice sectors with annual net sales of approximately $30.  Sepp’s will continue its operations in Delta, British Columbia and in Richmond Hill, Ontario and is now part of Ralcorp’s Frozen Bakery Products segment.

The acquisitions discussed above will enhance the Company’s current product offerings.  The Company also expects to reduce costs through economies of scale.  The preliminary estimate of intangible assets consists of customer relationships with an estimated weighted average life of 12 years.  The assigned goodwill is not deductible for tax purposes.  Net sales and profit contribution included in the statements of earnings related to these three acquisitions were $8.7 and $.4, respectively, for both the quarter and nine months ended June 30, 2010.

In addition to the acquisitions discussed above, Ralcorp also acquired American Italian Pasta Company (AIPC) on July 27, 2010 as described in Note 19.  The Company expensed acquisition-related costs of $12.8 and $13.1 in the three and nine months ended June 30, 2010, respectively, primarily related to the acquisition of AIPC.

 

 
 
5

 

Fiscal 2009

On March 20, 2009, the Company acquired Harvest Manor Farms, LLC, a leading manufacturer of high quality private label and Hoody's branded snack nuts reported in Ralcorp’s Snacks, Sauces & Spreads segment.  The assigned goodwill is deductible for tax purposes.

Supplemental Pro Forma Information

The following pro forma information shows Ralcorp’s results of operations as though the acquisition date for all business combinations that occurred during fiscal 2009 or 2010 (including AIPC) had occurred as of October 1, 2008.  The pro forma data was derived by adding the pre-acquisition results of the acquirees (excluding costs related to the business combinations) to the historical results of Ralcorp and adjusting for the estimated pro forma effects of the amortization of intangible assets recognized in the business combinations and incremental interest expense on debt equal to the amount of the purchase price.  These pro forma results do not necessarily reflect the actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations.
 
   
Three Months Ended
   
Nine Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Net sales
  $ 1,115.0     $ 1,164.8     $ 3,431.7     $ 3,552.4  
Net earnings
    62.8       119.0       204.5       263.8  
Basic earnings per share
    1.15       2.11       3.71       4.69  
Diluted earnings per share
    1.13       2.08       3.65       4.62  
                                 
Goodwill

The changes in the carrying amount of goodwill by reportable segment (see Note 17) were as follows:

   
Branded
   
Other
   
Snacks,
   
Frozen
       
   
Cereal
   
Cereal
   
Sauces
   
Bakery
       
   
Products
   
Products
   
& Spreads
   
Products
   
Total
 
Balance, September 30, 2009
  $ 1,794.5     $ 47.2     $ 193.0     $ 351.9     $ 2,386.6  
Goodwill acquired
    -       -       33.1       9.8       42.9  
Impairment adjustment
    -       -       (20.5 )     -       (20.5 )
Purchase price allocation adjustment
    (.6 )     -       -       -       (.6 )
Currency translation adjustment
    -       -       (.4     -       (.4
Balance, June 30, 2010
  $ 1,793.9     $ 47.2     $ 205.2     $ 361.7     $ 2,408.0  
                                         
The Company’s reporting units are tested for impairment in the fourth fiscal quarter, after the annual forecasting process.  These tests are updated quarterly as needed.  In March 2010, a goodwill impairment loss of $20.5 ($12.9 after taxes, or $.23 per diluted share) was recognized in the Snacks, Sauces & Spreads segment related to the Linette chocolate reporting unit, resulting in an adjusted goodwill balance of zero for this reporting unit.  In the second quarter of fiscal 2010, factors culminating in the impairment included reduced sales to a major customer, the inability to quickly replace the lost volume, and changes in anticipated ingredient cost trends, leading to shortfalls in EBITDA (earnings before interest, income taxes, depreciation and amortization) relative to forecasts.  Estimated fair values of the reporting unit and its identifiable net assets were determined based on the best information available, including the results of valuation techniques such as EBITDA multiples (using 6 times) and expected present value of future cash flows based on revised forecasts (using discount rates of 10.5% to 12%).  These fair value measurements fell within Level 3 of the fair value hierarchy as described in Note 9.

 

 
 
6

 

NOTE 4 – PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company sponsors qualified and supplemental noncontributory defined benefit pension plans and other postretirement benefit plans for certain of its employees.  The following table provides the components of net periodic benefit cost for the plans.
 
   
Three Months Ended
   
Nine Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Pension Benefits
                       
  Service cost
  $ 1.7     $ 1.2     $ 5.0     $ 3.6  
  Interest cost
    3.2       3.1       9.8       9.3  
  Expected return on plan assets
    (4.0 )     (3.8 )     (12.0 )     (11.4 )
  Amortization of prior service cost
    .1       -       .3       .2  
  Amortization of net loss
    1.0       .1       2.9       .2  
  Net periodic benefit cost
  $ 2.0     $ .6     $ 6.0     $ 1.9  
                                 
Other Postretirement Benefits
                               
  Service cost
  $ .7     $ .7     $ 2.2     $ 2.2  
  Interest cost
    1.3       1.4       3.9       4.3  
  Amortization of prior service cost
    (.3 )     -       (1.0 )     -  
  Net periodic benefit cost
  $ 1.7     $ 2.1     $ 5.1     $ 6.5  
                                 
NOTE 5 – RESTRUCTURING CHARGES

Restructuring charges for the three and nine months ended June 20, 2010 and 2009 included residual costs related to the closure of the Frozen Bakery Products plant in Blue Island, IL, which was substantially completed in fiscal 2007.  The charges in the nine months ended June 30, 2010 included a related asset impairment charge of $.6.

NOTE 6 – FORWARD SALE CONTRACTS AND SALE OF SECURITIES

Between December 31, 2005 and December 31, 2006, Ralcorp entered into three forward sale contracts relating to 4.95 million shares of its Vail common stock.  As of June 4, 2009, all of the contracts were settled.  Ralcorp received cash under the discounted advance payment feature of the contracts, and amortization of the discounts (which totaled $1.2 and $5.1 for the three and nine months ended June 30, 2009) was included in “Interest expense, net” on the statements of earnings.  In addition to the unrealized non-cash gains or losses, the reported loss on these contracts of $24.5 for the three months ended June 30, 2009 and the reported gains of $17.6 for the nine months ended June 30, 2009, included charges (paid monthly) for certain related stock borrow costs incurred by the counterparty totaling negative $.1 and $3.0, respectively.

During the first nine months of fiscal 2009, Ralcorp sold 4,484,163 shares of Vail Resorts, Inc., including 4,393,263 shares delivered in settlement of forward sale contracts.  The $43.8 gain represents the difference between the $88.4 book value of the shares and the $168.5 net proceeds (primarily received on a discounted basis at the inception of the related forward sale contracts) less the $36.3 cumulative gain on the derivative component of the forward sale contracts.
 
 
 
 

 
7

 
 
NOTE 7 – EARNINGS PER SHARE

The weighted-average shares outstanding for basic and diluted earnings per share were as follows (in thousands):
 
   
Three Months Ended
   
Nine Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
                         
Weighted Average Shares
                       
  for Basic Earnings per Share
    54,624       56,140       55,030       56,099  
  Dilutive effect of:
                               
    Stock options
    290       406       323       455  
    Stock appreciation rights
    393       136       325       141  
    Restricted stock awards
    203       262       178       225  
Weighted Average Shares
                               
  for Diluted Earnings per Share
    55,510       56,944       55,856       56,920  
                                 
The following schedule shows stock appreciation rights (SARs) which were outstanding and could potentially dilute basic earnings per share in the future but which were not included in the computation of diluted earnings per share for the periods indicated because to do so would have been antidilutive (in thousands).
 
   
Nine Months Ended
   
Nine Months Ended
 
   
June 30, 2010
   
June 30, 2009
 
   
First
   
Second
   
Third
   
First
   
Second
   
Third
 
   
Quarter
   
Quarter
   
Quarter
   
Quarter
   
Quarter
   
Quarter
 
SARs at $56.56 per share
    405       -       -       435       435       405  
SARs at $66.07 per share
    504       504       504       538       538       508  
SARs at $65.45 per share
    25       -       -       25       25       25  
SARs at $58.79 per share
    8       8       8       -       -       8  
SARs at $56.27 per share
    390       -       -       -       -       -  
SARs at $57.14 per share
    13       -       -       -       -       -  
                                                 
NOTE 8 – DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING

In the ordinary course of business, the Company is exposed to commodity price risks relating to the acquisition of raw materials and supplies, interest rate risks relating to debt, and foreign currency exchange rate risks relating to its Canadian subsidiaries.  Authorized individuals within the Company may utilize derivative financial instruments, including (but not limited to) futures contracts, option contracts, forward contracts and swaps, to manage certain of these exposures by hedging when it is practical to do so.  The terms of these instruments generally do not exceed eighteen months for commodities, ten years for interest rates, and two years for foreign currency.  The Company is not permitted to engage in speculative or leveraged transactions and will not hold or issue financial instruments for trading purposes.

As of June 30, 2010, the Company’s derivative instruments consisted of commodity contracts (options, futures, and swaps) used as cash flow or fair value hedges on ingredient purchases, foreign currency forward contracts used as cash flow hedges on receipts of foreign currency-denominated accounts receivable, and forward-starting interest rate swaps used as cash flow hedges of interest payments on fixed-rate debt expected to be issued but not yet priced.  The Company has hedged approximately 30% to 60% of its needs related to wheat, corn, soy oil, and corrugated packaging over a six to twelve month period and approximately 90% of its natural gas and 30% of it diesel fuel needs for the next twelve months.  At June 30, 2010, the Company held foreign currency forward contracts with a total notional amount of $50.0 and forward-starting interest rate swaps related to prospective debt issuances totaling $450.0.  During the past several years, the Company was also party to interest rate contracts used as cash flow hedges of variable interest payments, as well as forward sale contracts relating to shares of Vail Resorts, Inc. common stock which were not designated as hedging instruments (see Note 6).

 

 
 
8

 

The following table shows the fair value and balance sheet location of the Company’s derivative instruments as of June 30, 2010, all of which were designated as hedging instruments under ASC Topic 815.
 
     
Fair Value
 
     
June 30,
   
Sept. 30,
 
 
Balance Sheet Location
 
2010
   
2009
 
Asset Derivatives
             
Foreign exchange contracts
Prepaid expenses and other current assets
  $ 2.1     $ 7.8  
Commodity contracts
Prepaid expenses and other current assets
    2.7       .2  
      $ 4.8     $ 8.0  
                   
Liability Derivatives
                 
Commodity contracts
Other current liabilities
  $ 3.2     $ 7.8  
Interest rate contracts
Other current liabilities
    5.2       .4  
      $ 8.4     $ 8.2  
                   
The following table illustrates the effect of the Company’s derivatives in ASC Topic 815 cash flow hedging relationships on the statements of earnings and other comprehensive income (OCI) for the three months ended June 30, 2010 and 2009.
 
   
Amount of Gain
               
Location and Amount of
 
   
(Loss) Recognized
 
Location and Amount of
 
Gain (Loss) Recognized in Earnings
 
Derivatives in
 
in OCI
 
Gain (Loss) Reclassified from Accumulated
 
[Ineffective Portion and Amount
 
ASC Topic 815 Cash Flow
 
[Effective Portion]
 
OCI into Earnings [Effective Portion]
 
Excluded from Effectiveness Testing]
Hedging Relationships
 
2010
   
2009
 
Location
 
2010
   
2009
 
Location
 
2010
   
2009
 
Commodity contracts
  $ (.1 )   $ (9.9 )
Cost of products sold
  $ (3.3 )   $ (18.0 )
Cost of products sold
  $ (.1 )   $ (1.2 )
Foreign exchange contracts
    (1.2 )     6.0  
SG&A
    1.9       (.8 )
SG&A
    -       -  
Interest rate contracts
    (5.2 )     (.2 )
Interest expense, net
    (.1 )     (.6 )
Interest expense, net
    -       -  
    $ (6.5 )   $ (4.1 )     $ (1.5 )   $ (19.4 )     $ (.1 )   $ (1.2 )
                                                     
The following table illustrates the effect of the Company’s derivatives in ASC Topic 815 cash flow hedging relationships on the statements of earnings and other comprehensive income (OCI) for the nine months ended June 30, 2010 and 2009.

   
Amount of Gain
               
Location and Amount of
 
   
(Loss) Recognized
 
Location and Amount of
 
Gain (Loss) Recognized in Earnings
 
Derivatives in
 
in OCI
 
Gain (Loss) Reclassified from Accumulated
 
[Ineffective Portion and Amount
 
ASC Topic 815 Cash Flow
 
[Effective Portion]
 
OCI into Earnings [Effective Portion]
 
Excluded from Effectiveness Testing]
Hedging Relationships
 
2010
   
2009
 
Location
 
2010
   
2009
 
Location
 
2010
   
2009
 
Commodity contracts
  $ .3     $ (45.6 )
Cost of products sold
  $ (11.5 )   $ (37.6 )
Cost of products sold
  $ (.3 )   $ (.1 )
Foreign exchange contracts
    (.2 )     (.5 )
SG&A
    5.9       (4.7 )
SG&A
    -       -  
Interest rate contracts
    (5.2 )     (2.1 )
Interest expense, net
    (1.1 )     (1.4 )
Interest expense, net
    -       .1  
    $ (5.1 )   $ (48.2 )     $ (6.7 )   $ (43.7 )     $ (.3 )   $ -  
                                                     
The following table shows the effect of the Company’s derivatives not designated as hedging instruments under ASC Topic 815 on the statements of earnings for the three and nine months ended June 30, 2009.  There were no such derivatives as of June 30, 2010.
 
Derivatives Not Designated
     
Amount of Gain (Loss)
 
as Hedging Instruments
 
Location of Gain (Loss)
 
Recognized in Earnings
 
Under ASC Topic 815
 
Recognized in Earnings
 
Three Months
   
Nine Months
 
Equity contracts
 
Gain on forward sale contracts
  $ (24.5 )   $ 17.6  
                     
Approximately $2.9 of the net cash flow hedge losses reported in accumulated OCI at June 30, 2010 are expected to be reclassified into earnings within the next twelve months.  For gains or losses associated with commodity contracts, the reclassification will occur when the products produced with hedged materials are sold.  For gains or losses associated with foreign exchange contracts, the reclassification will occur as hedged foreign currency-denominated accounts receivable are received.  For gains or losses associated with interest rate swaps, the reclassification occurs on a straight-line basis over the term of the related debt.
 
 
 
 

 
9

 
Certain of the Company’s derivative instruments contain provisions that require the Company to post collateral when the derivatives in liability positions exceed a specified threshold, and others require collateral even when the

derivatives are in asset positions.  The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a liability position on June 30, 2010 was $3.0, and the related collateral required was $10.0.

NOTE 9 – FAIR VALUE MEASUREMENTS

The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis and the basis for that measurement according to the levels in the fair value hierarchy in ASC Topic 820:
 
   
June 30, 2010
   
September 30, 2009
 
   
Total
   
Level 1
   
Level 2
   
Total
   
Level 1
   
Level 2
 
Assets
                                   
Marketable securities
  $ 10.0     $ 10.0     $ -     $ 12.0     $ 12.0     $ -  
Derivative assets
    4.8       -       4.8       8.0       -       8.0  
Deferred compensation investment
    20.0       20.0       -       19.9       19.9       -  
    $ 34.8     $ 30.0     $ 4.8     $ 39.9     $ 31.9     $ 8.0  
Liabilities
                                               
Derivative liabilities
  $ 8.4     $ -     $ 8.4     $ 8.2     $ -     $ 8.2  
Deferred compensation liabilities
    28.1       -       28.1       29.6       -       29.6  
    $ 36.5     $ -     $ 36.5     $ 37.8     $ -     $ 37.8  
                                                 
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable.  Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions.  The fair value hierarchy consists of three levels:
Level 1 –
Inputs are quoted prices in active markets for identical assets or liabilities.
Level 2 –
Inputs are quoted prices of similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.
Level 3 –
Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The Company’s marketable securities consist of U.S. Treasury Bills.  Fair value for marketable securities is measured using the market approach based on quoted prices.  The Company utilizes the income approach to measure fair value for its derivative assets and liabilities (which include commodity options and swaps, interest rate swaps, and foreign currency forward contracts).  The income approach uses pricing models that rely on market observable inputs such as yield curves, currency exchange rates, and forward prices.  The fair value of the deferred compensation investment is invested primarily in mutual funds and is measured using the market approach.  This investment is in the same funds and purchased in substantially the same amounts as the participants’ selected investment options (excluding Ralcorp common stock equivalents), which represent the underlying liabilities to participants in the Company’s deferred compensation plans.  Deferred compensation liabilities are recorded at amounts due to participants in cash, based on the fair value of participants’ selected investment options (excluding certain Ralcorp common stock equivalents to be distributed in shares) using the market approach.

The carrying amounts reported on the consolidated balance sheets for cash and cash equivalents, receivables and accounts payable approximate fair value because of the short maturities of these financial instruments.  The carrying amount of the Company’s variable rate long-term debt (Note 15) approximates fair value because the interest rates are adjusted to market frequently.  Based on the discounted amount of future cash flows, using Ralcorp’s incremental rate of borrowing for similar debt, the Company’s fixed rate debt (which had a carrying amount of $1,541.4 as of June 30, 2010 and $1,581.1 as of September 30, 2009) had an estimated fair value of $1,793.5 as of June 30, 2010 and $1,800.3 as of September 30, 2009.
 

 
 
 
 
10

 

NOTE 10 – SALE OF RECEIVABLES

The Company has an agreement to sell, on an ongoing basis, all of the trade accounts receivable of certain of its subsidiaries to a wholly owned, bankruptcy-remote subsidiary named Ralcorp Receivables Corporation (RRC).  As of June 30, 2010, the accounts receivable of the J.T. Bakeries, North American Baking, Sepp’s Gourmet Foods, Harvest Manor Farms, Post Foods, Bloomfield Bakers, Cottage Bakery, Western Waffles, and Medallion Foods businesses had not been incorporated into the agreement and were not being sold to RRC.  RRC can in turn sell up to $75.0 of ownership interests in qualifying receivables to a bank commercial paper conduit.  Ralcorp continues to service the receivables (with no significant servicing assets or liabilities) and remits collections to RRC, who remits the appropriate portion to the conduit as part of a monthly net settlement including the sale of an additional month of receivables.

RRC is a qualifying special purpose entity under ASC Topic 860, and the sale of Ralcorp receivables to RRC is considered a true sale for accounting, tax, and legal purposes.  Therefore, the trade receivables sold and the related commercial paper borrowings are not recorded on Ralcorp’s consolidated balance sheets.  However, the Company’s consolidated balance sheets reflect an investment in RRC that in substance represents a subordinated retained interest in the trade receivables sold.  RRC maintains the risk of credit losses up to the amount of its retained interest.  The investment in RRC is stated at carrying value, which approximates fair value.

As of June 30, 2010 and September 30, 2009, the outstanding balance of receivables sold to RRC (net of an allowance for doubtful accounts based on historical losses and the economic status of customers) was $117.7 and $134.4, respectively, and the Company elected not to sell any to the conduit, resulting in a retained interest of $117.7 and $134.4, respectively, reflected on the Company’s consolidated balance sheet as an “Investment in Ralcorp Receivables Corporation.”  Discounts related to the sale of receivables (based on contractual rates) totaled zero and $.1 in the three months ended June 30, 2010 and 2009, respectively (zero and $.6 for the corresponding nine month periods), and are included on the statements of earnings in selling, general and administrative expenses.  Cash received from or paid to the conduit is included in net cash flows from operating activities.

NOTE 11 – INVENTORIES

The reported value of inventories consisted of:
 
   
June 30,
   
Sept. 30,
 
   
2010
   
2009
 
Raw materials and supplies
  $ 145.8     $ 152.4  
Finished products
    218.1       217.0  
      363.9       369.4  
Allowance for obsolete inventory
    (4.0 )     (3.5 )
    $ 359.9     $ 365.9  
                 
NOTE 12 – PROPERTY, NET

The reported value of property, net, consisted of:

   
June 30,
   
Sept. 30,
 
   
2010
   
2009
 
Property at cost
  $ 1,575.3     $ 1,456.4  
Accumulated depreciation
    (620.8 )     (544.5 )
    $ 954.5     $ 911.9  
                 



 
 
11

 

NOTE 13 – OTHER INTANGIBLE ASSETS, NET

The reported value of other intangible assets, net, consisted of:
 
   
June 30,
   
Sept. 30,
 
   
2010
   
2009
 
Computer software
  $ 60.9     $ 55.2  
Customer relationships
    463.6       421.2  
Trademarks/brands
    816.0       816.0  
Other
    13.0       13.1  
      1,353.5       1,305.5  
Accumulated amortization
    (165.8 )     (132.1 )
    $ 1,187.7     $ 1,173.4  
                 
Amortization expense related to intangible assets was:
 
   
Three Months Ended
   
Nine Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Computer software
  $ 1.5     $ 1.8     $ 5.5     $ 4.2  
Customer relationships
    7.4       5.6       21.8       16.1  
Trademarks/brands
    1.6       3.2       4.9       9.5  
Other
    .6       .4       1.6       1.3  
    $ 11.1     $ 11.0     $ 33.8     $ 31.1  
                                 
For the intangible assets recorded as of June 30, 2010, total amortization expense of $44.8, $45.0, $44.5, $43.3, and $39.3 is scheduled for fiscal 2010, 2011, 2012, 2013, and 2014, respectively.

NOTE 14 – CONTINGENCIES

In May 2009, a customer notified the Company that it was seeking to recover out-of-pocket costs and damages associated with the customer’s recall of certain peanut butter-based products.  The customer recalled those products in January 2009 because they allegedly included ingredients that had the potential to be contaminated with salmonella.  The customer’s recall stemmed from the U.S. Food and Drug Administration and other authorities’ investigation of Peanut Corporation of America, which supplied the Company with peanut paste and other ingredients.  In accordance with the Company’s contractual arrangements with the customer, the parties have submitted these claims to mediation, which remains ongoing.  At the present time, the amount of liability, if any, associated with this issue cannot be determined with any certainty.  However, based upon present information, the Company does not believe that its ultimate liability, if any, arising from this claim will be material to the Company’s annual earnings, cash flows, or financial position.


 
 
 
12

 

NOTE 15 – LONG-TERM DEBT

The reported value of long-term debt consisted of:
 
   
June 30, 2010
 
September 30, 2009
   
Balance
 
Rate
 
Balance
 
Rate
Fixed Rate Senior Notes, Series B
  $ 29.0       4.24 %   $ 58.0       4.24 %
Fixed Rate Senior Notes, Series C
    50.0       5.43 %     50.0       5.43 %
Fixed Rate Senior Notes, Series D
    42.9       4.76 %     53.6       4.76 %
Fixed Rate Senior Notes, Series E
    100.0       5.57 %     100.0       5.57 %
Fixed Rate Senior Notes, Series F
    75.0       5.43 %     75.0       5.43 %
Floating Rate Senior Notes, Series G
    -       n/a       50.0       0.86 %
Fixed Rate Senior Notes, Series I-1
    75.0       5.56 %     75.0       5.56 %
Fixed Rate Senior Notes, Series I-2
    25.0       5.58 %     25.0       5.58 %
Fixed Rate Senior Notes, Series J
    100.0       5.93 %     100.0       5.93 %
Fixed Rate Senior Notes maturing 2018
    577.5       7.29 %     577.5       7.29 %
Floating Rate Senior Notes maturing 2018
    20.0       2.98 %     20.0       2.98 %
Fixed Rate Senior Notes maturing 2020
    67.0       7.39 %     67.0       7.39 %
Fixed Rate Senior Notes maturing 2039
    300.0       6.63 %     300.0       6.63 %
Fixed Rate Senior Notes, Series 2009A
    50.0       7.45 %     50.0       7.45 %
Fixed Rate Senior Notes, Series 2009B
    50.0       7.60 %     50.0       7.60 %
Industrial Development Revenue Bond
    -       n/a       5.6       1.00 %
$400 Revolving Credit Agreement
    -       n/a       -       n/a  
Other
    .2    
Various
      .3    
Various
 
      1,561.6               1,657.0          
Less: Current portion
    (39.9 )             (45.6 )        
    $ 1,521.7             $ 1,611.4          
                                 
NOTE 16 – SHAREHOLDERS’ EQUITY

During the nine months ended June 30, 2010, the Company repurchased 2,000,000 shares of its common stock at a total cost of $115.5.  As of June 30, 2010, there were 8,571,224 shares in treasury and 54,905,411 shares outstanding.  As of September 30, 2009, there were 6,840,231 shares in treasury and 56,636,404 shares outstanding.

Accumulated other comprehensive loss decreased $1.3 during the nine months ended June 30, 2010 as a result of a $.5 increase in the foreign currency translation adjustment and a $1.6 net gain from cash flow hedging activities, offset by $.8 of related income tax adjustments.

NOTE 17 – SEGMENT INFORMATION

Effective October 1, 2009, the Company reorganized its management reporting to combine the businesses formerly included in separate Snacks and Sauces & Spreads segments into a single operating segment named Snacks, Sauces & Spreads.  In addition, the Company now provides separate information for Branded Cereal Products and Other Cereal Products (formerly combined as Cereals).  Management evaluates each segment’s performance based on its profit contribution, which is profit or loss from operations before income taxes, interest, costs related to restructuring activities, and other unallocated corporate income and expenses.  The following tables present information about the Company’s operating segments, which are also its reportable segments, including corresponding amounts for the prior year which have been revised to reflect the new segment structure.
 
 
 
 

 
13

 
   
Three Months Ended
   
Nine Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Net Sales
                       
  Branded Cereal Products
  $ 242.7     $ 264.8     $ 749.2     $ 800.5  
  Other Cereal Products
    197.6       211.3       585.8       598.7  
  Snacks, Sauces & Spreads
    359.9       355.8       1,067.4       979.5  
  Frozen Bakery Products
    162.2       162.1       516.9       530.0  
    Total
  $ 962.4     $ 994.0     $ 2,919.3     $ 2,908.7  
                                 
Profit Contribution
                               
  Branded Cereal Products
  $ 54.1     $ 68.3     $ 158.2     $ 177.0  
  Other Cereal Products
    22.0       27.6       68.2       71.1  
  Snacks, Sauces & Spreads
    35.9       35.6       123.9       89.6  
  Frozen Bakery Products
    17.5       18.7       62.1       49.1  
    Total segment profit contribution
    129.5       150.2       412.4       386.8  
    Interest expense, net
    (24.7 )     (23.0 )     (75.1 )     (72.9 )
  Restructuring charges
    (.2 )     (.1 )     (1.0 )     (.4 )
  Goodwill impairment loss
    -       -       (20.5 )     -  
  (Loss) gain on forward sale contracts
    -       (24.5 )     -       17.6  
  Gain on sale of securities
    -       28.0       -       43.8  
  Acquisition-related costs
    (12.8 )     -       (13.1 )     -  
  Post Foods transition and integration costs
    (.7 )     (13.2 )     (5.5 )     (28.1 )
  Stock-based compensation expense
    (2.4 )     (3.0 )     (11.9 )     (10.0 )
  Other unallocated corporate expenses
    (9.3 )     (8.7 )     (26.5 )     (21.8 )
    Earnings before income taxes
                               
      and equity earnings
  $ 79.4     $ 105.7     $ 258.8     $ 315.0  
                                 
Depreciation and Amortization
                               
  Branded Cereal Products
  $ 14.2     $ 8.0     $ 41.6     $ 37.1  
  Other Cereal Products
    5.3       5.2       15.8       15.4  
  Snacks, Sauces & Spreads
    9.0       8.3       25.9       22.8  
  Frozen Bakery Products
    9.1       9.0       26.8       26.6  
  Corporate
    1.7       2.1       6.6       4.8  
    Total
  $ 39.3     $ 32.6     $ 116.7     $ 106.7  
                                 
   
June 30,
   
Sept. 30,
                 
     2010      2009                  
Assets
                               
  Branded Cereal Products
  $ 3,288.2     $ 3,351.7                  
  Other Cereal Products
    269.8       269.5                  
  Snacks, Sauces & Spreads
    707.5       604.0                  
  Frozen Bakery Products
    739.2       723.9                  
    Total segment assets
    5,004.7       4,949.1                  
  Cash and cash equivalents
    115.3       282.8                  
  Investment in Ralcorp Receivables Corporation
    117.7       134.4                  
  Other unallocated corporate assets
    100.1       85.9                  
    Total
  $ 5,337.8     $ 5,452.2                  
                                 
 
 
 
 

 
14

 
 
NOTE 18 – CONDENSED FINANCIAL STATEMENTS OF GUARANTORS

On August 14, 2009, the Company issued $300.0 of 6.625% Senior Notes maturing 2039.  The notes are fully and unconditionally guaranteed on a joint and several basis by most of Ralcorp’s domestic subsidiaries (Guarantor Subsidiaries), each of which is wholly owned, directly or indirectly, by Ralcorp Holdings, Inc. (Parent Company).  In addition, such securities are collateralized by 65% of the stock of Ralcorp’s indirectly wholly owned foreign operating subsidiaries.  The notes are not guaranteed by the foreign subsidiaries and a few of Ralcorp’s wholly owned domestic subsidiaries (Non-Guarantor Subsidiaries).
 
Set forth below are condensed consolidating financial statements presenting the results of operations, financial position, and cash flows of the Parent Company, the Guarantor Subsidiaries on a combined basis, and the Non-Guarantor Subsidiaries on a combined basis, along with the eliminations necessary to arrive at the information for Ralcorp Holdings, Inc. on a consolidated basis.  Eliminations represent adjustments to eliminate investments in subsidiaries and intercompany balances and transactions between or among the Parent Company, the Guarantor Subsidiaries, and the Non-Guarantor Subsidiaries.  For this presentation, investments in subsidiaries are accounted for using the equity method of accounting.
 

CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS
 
   
Three Months Ended June 30, 2010
 
   
Parent
   
Guarantor
   
Non-Guarantor
             
   
Company
   
Subsidiaries
   
Subsidiaries
   
Eliminations
   
Consolidated
 
                               
Net Sales
  $ 119.0     $ 824.7     $ 48.3     $ (29.6 )   $ 962.4  
Other intercompany revenues
    .4       1.4       10.8       (12.6 )     -  
Cost of products sold
    (91.9 )     (609.6 )     (45.2 )     29.6       (717.1 )
Gross Profit
    27.5       216.5       13.9       (12.6 )     245.3  
Selling, general and administrative expenses
    (40.0 )     (107.7 )     (5.9 )     12.6       (141.0 )
Interest (expense) income, net
    (25.5 )     .3       .5       -       (24.7 )
Restructuring charges
    (.2 )     -       -       -       (.2 )
(Loss) Earnings before Income Taxes and Equity Earnings
    (38.2 )     109.1       8.5       -       79.4  
Income taxes
    14.1       (37.2 )     (3.3 )     -       (26.4 )
(Loss) Earnings before Equity Earnings
    (24.1 )     71.9       5.2       -       53.0  
Equity in earnings of subsidiaries
    77.1       1.2       -       (78.3 )     -  
Net Earnings
  $ 53.0     $ 73.1     $ 5.2     $ (78.3 )   $ 53.0  
                                         
                                         
   
Three Months Ended June 30, 2009
 
   
Parent
   
Guarantor
   
Non-Guarantor
                 
   
Company
   
Subsidiaries
   
Subsidiaries
   
Eliminations
   
Consolidated
 
                                         
Net Sales
  $ 134.4     $ 838.9     $ 48.9     $ (28.2 )   $ 994.0  
Other intercompany revenues
    .5       1.4       8.0       (9.9 )     -  
Cost of products sold
    (101.8 )     (605.9 )     (40.7 )     28.2       (720.2 )
Gross Profit
    33.1       234.4       16.2       (9.9 )     273.8  
Selling, general and administrative expenses
    (42.3 )     (104.8 )     (11.3 )     9.9       (148.5 )
Interest (expense) income, net
    (23.8 )     (.2 )     1.0       -       (23.0 )
Restructuring charges
    (.1 )     -       -       -       (.1 )
Loss on forward sale contracts
    -       (24.5 )     -       -       (24.5 )
Gain on sale of securities
    -       28.0       -       -       28.0  
(Loss) Earnings before Income Taxes and Equity Earnings
    (33.1 )     132.9       5.9       -       105.7  
Income taxes
    12.3       (47.7 )     (2.4 )     -       (37.8 )
(Loss) Earnings before Equity Earnings
    (20.8 )     85.2       3.5       -       67.9  
Equity in earnings of subsidiaries
    95.6       (.3 )     -       (95.3 )     -  
Equity in earnings of Vail Resorts, Inc.,
                                       
net of related deferred income taxes
    -       6.9       -       -       6.9  
Net Earnings
  $ 74.8     $ 91.8     $ 3.5     $ (95.3 )   $ 74.8  

 
 
 

 
15

 
 
   
Nine Months Ended June 30, 2010
 
   
Parent
   
Guarantor
   
Non-Guarantor
             
   
Company
   
Subsidiaries
   
Subsidiaries
   
Eliminations
   
Consolidated
 
                               
Net Sales
  $ 382.4     $ 2,491.0     $ 139.9     $ (94.0 )   $ 2,919.3  
Other intercompany revenues
    1.3       4.4       50.3       (56.0 )     -  
Cost of products sold
    (282.2 )     (1,818.9 )     (127.7 )     94.0       (2,134.8 )
Gross Profit
    101.5       676.5       62.5       (56.0 )     784.5  
Selling, general and administrative expenses