Discontinued Operations

6 Months Ended

Mar. 31, 2012

Discontinued Operations [Abstract]

Discontinued Operations

NOTE 4—DISCONTINUED OPERATIONS

On February 3, 2012, the Company separated its Post cereals business (formerly, the Branded Cereal Products segment) into a new, publicly traded company (Spin-Off) called Post Holdings, Inc. (Post). The Spin-Off was completed by a pro rata distribution of approximately 80.3% of the outstanding shares of Post common stock to holders of Ralcorp common stock. Each Ralcorp shareholder received one share of Post common stock for every two shares of Ralcorp common stock held on January 30, 2012, the record date for the distribution. For U.S. federal income tax purposes, the distribution of shares of Post common stock in the Spin-Off is tax-free to Ralcorp and its shareholders, except with respect to cash received by Ralcorp shareholders in lieu of a fractional share, and the Company received a ruling from the Internal Revenue Service regarding the tax-free nature of the Spin-Off. Ralcorp received a total of $900 in cash in the Spin-Off transactions, as described in Note 17.

The Company retained approximately 19.7% of the Post common stock outstanding at February 3, 2012, reported as "Investment in Post Holdings, Inc." and classified as available for sale. The Company's investment does not provide the Company the ability to influence the operating or financial policies of Post and accordingly does not constitute significant continuing involvement. Furthermore, while the Company is a party to a separation agreement and various other agreements relating to the separation, including a transition services agreement ("TSA"), a tax matters agreement, an employee matters agreement and certain other commercial agreements, the Company has determined that the continuing cash flows generated by these agreements, which are expected to be eliminated within two years, and its investment in Post common stock do not constitute significant continuing involvement in the operations of Post. Accordingly, the net assets, operating results, and cash flows of Ralcorp's Post cereals business are presented separately as discontinued operations for all periods presented through the date of the Spin-Off. No gain or loss was recognized in connection with the Spin-Off, but subsequent unrealized gains or losses on the Company's investment in Post common stock are recognized in other comprehensive income (see Note 10). No related deferred tax impact has been recorded because the Company intends to dispose of the Post common stock in a tax-free transaction within one year.

Post is now a stand-alone public company which separately reports its financial results. Due to differences between the basis of presentation for discontinued operations and the basis of presentation as a stand-alone company, the financial results of the Post cereals business included within discontinued operations for the Company may not be indicative of actual financial results of Post as a stand-alone company.

The results of the Post cereals business included in discontinued operations for the three and six months ended March 31, 2012 and 2011 are summarized in the following table. Post separation costs are primarily professional services fees directly related to the Spin-Off transactions.

	Three Months Ended March 31,						Six Months Ended March 31,
	2012			2011			2012			2011
Net sales	$	86.6		$	255.3		$	301.0		$	476.9
Post separation costs		(12.3	)		—			(15.0	)		—
Operating (loss) profit		(1.1	)		60.6			31.6			113.8
(Loss) earnings before income taxes		(1.1	)		60.6			31.6			113.8
Income taxes		(5.8	)		(21.8	)		(17.4	)		(41.0	)
(Loss) earnings from discontinued operations, net of income taxes		(6.9	)		38.8			14.2			72.8

Ralcorp continues to purchase and sell certain products from or to Post. The amounts of the intercompany revenues and costs associated with such activities before the Spin-Off were as follows:

	Three Months Ended March 31,						Six Months Ended March 31,
	2012			2011			2012			2011
Intercompany net sales	$	.3		$	—		$	1.0		$	—
Intercompany costs and expenses		(1.3	)		(3.7	)		(6.1	)		(5.6	)

During the second quarter, following the Spin-Off, Ralcorp recognized billings to Post of approximately $2.2 related to the TSA, which were included in "Other operating expenses, net" in the statement of earnings. Under the TSA, Ralcorp also collects and disburses cash on Post's behalf. As of March 31, 2012, Ralcorp's accounts payable include a net amount due to Post of $7.6.

At September 30, 2011, the major components of assets and liabilities of discontinued operations were as follows:

Current Assets
Receivables, net	$	60.8
Inventories		66.6
Deferred income taxes		3.9
Prepaid expenses and other current assets		4.0
Total Current Assets		135.3
Property, Net		412.1
Goodwill (Restated)		1,375.2
Other Intangible Assets, Net		748.6
Other Assets		.8
Total Assets	$	2,672.0
Current Liabilities
Accounts payable	$	28.8
Other current liabilities		30.9
Total Current Liabilities		59.7
Deferred Income Taxes		354.6
Other Liabilities		104.9
Total Liabilities	$	519.2