LONG-TERM DEBT

During the second and third quarters of fiscal 2014, we repurchased $43.0 million and $20.0 million, respectively, of 4.65% senior notes due in 2043 prior to maturity, resulting in a net gain of $2.4 million in the second fiscal quarter and $1.3 million in the third fiscal quarter.

Net interest expense consists of:



	Thirteen weeks ended						Thirty-nine weeks ended
	February 23, 2014			February 24, 2013			February 23, 2014			February 24, 2013
Long-term debt	$	98.2		$	70.9		$	297.3		$	177.8
Short-term debt	0.4			2.1			1.2			2.4
Interest income	(0.4		)	(0.9		)	(1.7		)	(2.4		)
Interest capitalized	(3.2		)	(1.5		)	(10.8		)	(4.5		)
	$	95.0		$	70.6		$	286.0		$	173.3

Net interest expense for the third quarter and first three quarters of fiscal 2014 was reduced by $3.1 million and $7.8 million, respectively, and $2.3 million and $6.8 million for the third quarter and first three quarters of fiscal 2013, respectively, due to the impact of the interest rate swap contracts (see Note 8).

The interest rate swaps entered into during fiscal 2010 effectively changed our interest rate on the senior long-term debt instrument maturing in fiscal 2014 from fixed to variable. During the second quarter of fiscal 2011, we terminated these interest rate swap contracts and received proceeds of $28.2 million. The cumulative adjustment to the fair value of the debt instrument that was hedged (the effective portion of the hedge) is being amortized as a reduction of interest expense over the remaining life of the debt instrument (through fiscal 2014). Net interest expense for the third quarter and first three quarters of fiscal 2014 was reduced by $2.4 million and $7.1 million, respectively. Our net interest expense for the third quarter and first three quarters of fiscal 2013 was reduced by $2.3 million and $6.8 million, respectively, due to the impact of the 2010 interest rate swap contracts.

During the third quarter of fiscal 2014, we entered into interest rate swap contracts to hedge the fair value of certain of our senior long-term debt instruments maturing in fiscal 2019 and 2020, effectively converting interest on this debt from fixed rate to floating rate. These swaps, which are designated as fair value hedges, reduced our interest expense by $0.7 million in the third quarter and first three quarters of fiscal 2014.

As a result of our acquisition of Ralcorp, the senior unsecured notes issued in exchange for senior notes issued by Ralcorp of $716.0 million and the senior notes issued by Ralcorp that remain outstanding of $33.9 million were recorded at fair value. The combined fair value adjustment on these notes was $163.8 million and is being amortized within interest expense over the life of the respective notes. Our net interest expense for the third quarter and first three quarters of fiscal 2014 was reduced by $1.8 million and $5.2 million, respectively, as a result of this amortization. Our net interest expense for the third quarter of fiscal 2013 was reduced by $0.3 million as a result of this amortization.