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Long-Term Debt

9 Months Ended

Feb. 26, 2012

15. LONG-TERM DEBT

On September 15, 2011, we repaid the entire principal balance of $342.7 million of our 6.75% senior notes, which were due on that date.

We consolidate the financial statements of Lamb Weston BSW. In the first quarter of fiscal 2011, we repaid $35.4 million of bank borrowings by our Lamb Weston BSW potato processing venture.

Net interest expense consisted of:


	Thirteen weeks ended						Thirty-nine weeks ended
	February 26, 2012			February 27, 2011			February 26, 2012			February 27, 2011
Long-term debt	$	51.7		$	56.5		$	160.5		$	173.1
Short-term debt		0.2			—			0.3			0.2
Interest income		(1.0	)		(2.5	)		(3.2	)		(41.3	)
Interest capitalized		(1.2	)		(2.4	)		(4.4	)		(9.4	)

	$	49.7		$	51.6		$	153.2		$	122.6

Included in net interest expense was $1.7 million and $39.0 million of interest income in the third quarter and first three quarters of fiscal 2011, respectively, from the payment-in-kind notes received in connection with the disposition of the trading and merchandising business in June 2008. These notes were repaid in full as of the end of fiscal 2011.

Our net interest expense for the third quarter and first three quarters of fiscal 2012 was reduced by $2.2 million and $7.7 million, respectively, due to the impact of the interest rate swap contracts entered into in the fourth quarter of fiscal 2010. Our net interest expense for the third quarter and first three quarters of fiscal 2011 was reduced by $3.1 million and $11.4 million, respectively, due to the impact of the interest rate swap contracts. The interest rate swaps effectively changed our interest rates on the senior long-term debt instruments maturing in fiscal 2012 and 2014 from fixed to variable. During the third quarter of fiscal 2011, we terminated the interest rate swap contracts and received proceeds of $31.5 million. The cumulative adjustment to the fair value of the debt instruments that were hedged (the effective portion of the hedge), is being amortized as a reduction of interest expense over the remaining lives of the debt instruments (through fiscal 2014).