424b3 Prospectus


 
Filed Pursuant to Rule 424(b)(3)
 
Registration No. 333-184867
 
Post Holdings, Inc.
Offer to Exchange
$1,025,000,000 7.375% Senior Notes due 2022
for $1,025,000,000 7.375% Senior Notes due 2022
that have been registered under the Securities Act of 1933
_______________________________
We are offering, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal (which together constitute the “exchange offer”), to exchange an aggregate principal amount of up to $1,025,000,000 of our new 7.375% Senior Notes due 2022, and the guarantees thereof, which we refer to as the “exchange notes”, for a like amount of our outstanding 7.375% Senior Notes due 2022, and the guarantees thereof, which we refer to as the “outstanding notes”, in a transaction registered under the Securities Act of 1933, as amended. An aggregate principal amount of $775,000,000 of outstanding notes were issued on February 3, 2012, and an additional aggregate principal amount of $250,000,000 of notes were issued on October 25, 2012. Following the completion of the exchange offer, all of the exchange notes issued in exchange of the outstanding notes will be fungible and share a single CUSIP number. The term “notes” refers to, collectively, the outstanding notes and the exchange notes.
Terms of the exchange offer:
•
We will exchange all outstanding notes that are validly tendered and not validly withdrawn prior to the expiration of the exchange offer.
•
You may withdraw tenders of outstanding notes at any time prior to the expiration of the exchange offer.
•
We believe that the exchange of outstanding notes for exchange notes will not be a taxable event for U.S. federal income tax purposes.
•
The form and terms of the exchange notes are identical in all material respects to the form and terms of the outstanding notes, except that (i) the exchange notes are registered under the Securities Act, (ii) the transfer restrictions and registration rights applicable to the outstanding notes do not apply to the exchange notes, and (iii) the exchange notes will not contain provisions relating to special interest relating to our registration obligations.
The exchange offer will expire at 5:00 p.m., New York City time, on January 7,  2013, unless we extend the offer. We will announce any extension by press release or other permitted means no later than 9:00 a.m. on the business day after the previously scheduled expiration of the exchange offer. You may withdraw any outstanding notes tendered until the expiration of the exchange offer.
Broker-dealers:
•
Broker-dealers receiving exchange notes in exchange for outstanding notes acquired for their own account through market-making or other trading activities must deliver a prospectus in any resale of the exchange notes.
•
Each broker-dealer that receives exchange notes for its own account under the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. The letter of transmittal states that by so acknowledging and delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.
•
This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for outstanding notes where the broker-dealer acquired such outstanding notes as a result of market-making activities or other trading activities.



•
We have agreed that, for a period of up to 180 days after the deadline for completion of the exchange offer, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”
The exchange notes will not be listed on the New York Stock Exchange or any other securities exchange.
For a discussion of factors you should consider in determining whether to tender your outstanding notes, see the information under “Risk Factors” beginning on page 16 of this prospectus.
_______________________________
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
_______________________________
The date of this prospectus is November 27, 2012.



We have not authorized anyone to give any information or to make any representations concerning the exchange offer except that which is in this prospectus. If anyone gives or makes any other information or representation, you should not rely on it. This prospectus is not an offer to sell or a solicitation of an offer to buy securities in any circumstances in which the offer or solicitation is unlawful. You should not interpret the delivery of this prospectus, or any sale of securities, as an indication that there has been no change in our affairs since the date of this prospectus. You should also be aware that information in this prospectus may change after this date.
We have filed with the Securities and Exchange Commission a registration statement on Form S-4 with respect to the exchange notes. This prospectus, which forms part of such registration statement, does not contain all the information included in the registration statement, including its exhibits and schedules. For further information about us and the notes described in this prospectus, you should refer to the registration statement and its exhibits and schedules. Statements we make in this prospectus about certain contracts or other documents are not necessarily complete. When we make such statements, we refer you to the copies of the contracts or documents that are filed as exhibits to the registration statement, because those statements are qualified in all respects by reference to those exhibits. The registration statement, including the exhibits and schedules, is available at the SEC’s website at www.sec.gov.
You may also obtain this information without charge by writing or telephoning us at the following address and telephone number:
Post Holdings, Inc.
2503 S. Hanley Road
St. Louis, Missouri 63141
(314) 644-7600
Attention: Corporate Secretary

If you would like to request copies of these documents, please do so by December 28, 2012 (which is five business days before the scheduled expiration of the exchange offer) in order to receive them before the expiration of the exchange offer.




TABLE OF CONTENTS
 
Page



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FORWARD LOOKING STATEMENTS
Forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, are made throughout this prospectus. These forward-looking statements are sometimes identified by the use of terms and phrases such as “believe,” “should,” “expect,” “project,” “estimate,” “anticipate,” “intend,” “plan,” “will,” “can,” “may,” or similar expressions elsewhere in this prospectus. Our results of operations and financial condition may differ materially from those in the forward-looking statements. Such statements are based on management’s current views and assumptions, and involve risks and uncertainties that could affect expected results. Those risks and uncertainties include but are not limited to the following:
•
the impact of our recently restated financial statements;
•
the impact of our separation from Ralcorp and risks relating to our ability to operate effectively as a stand-alone, publicly traded company, including, without limitation:
•
our high leverage and substantial debt, including covenants that restrict the operation of our business;
•
our ability to achieve benefits from our separation;
•
our obligations to indemnify Ralcorp Holdings, Inc., or Ralcorp, if the separation is taxable under certain circumstances; and
•
restrictions on our taking certain actions due to tax rules and indemnification obligations with Ralcorp;
•
changes in our cost structure, management, financing and business operations following the separation;
•
significant increases in the costs of certain commodities, packaging or energy used to manufacture our products;
•
our ability to continue to compete in our product market against manufacturers of both branded and private label cereal products and our ability to retain our market position;
•
our ability to maintain competitive pricing, successfully introduce new products or successfully manage our costs;
•
our ability to successfully implement business strategies to reduce costs;
•
impairment in the carrying value of goodwill or other intangibles;
•
the loss or bankruptcy of a significant customer;
•
allegations that our products cause injury or illness, product recalls and product liability claims and other litigation;
•
our ability to anticipate changes in consumer preferences and trends;
•
changes in consumer demand for ready-to-eat cereals;
•
our ability to service our outstanding debt or obtain additional financing;
•
disruptions in the U.S. and global capital and credit markets;
•
legal and regulatory factors, including changes in food safety, advertising and labeling laws and regulations;
•
disruptions or inefficiencies in our supply chain;
•
fluctuations in foreign currency exchange rates;
•
consolidations among the retail grocery and foodservice industries;
•
change in estimates in critical accounting judgments and changes to or new laws and regulations affecting our business;
•
losses or increased funding and expenses related to our qualified pension plan;
•
loss of key employees;


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•
labor strikes or work stoppages by our employees;
•
changes in weather conditions, natural disasters and other events beyond our control;
•
business disruptions caused by information technology failures; and
•
other risks and uncertainties included under “Risk Factors” in this prospectus.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations.




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INDUSTRY AND MARKET DATA
This prospectus includes industry and trade association data, forecasts and information that we have prepared based, in part, upon data, forecasts and information obtained from independent trade associations, industry publications and surveys and other independent sources available to us. Some data also are based on our good faith estimates, which are derived from management's knowledge of the industry and from independent sources. These third-party publications and surveys generally state that the information included therein has been obtained from sources believed to be reliable, but that the publications and surveys can give no assurance as to the accuracy or completeness of such information. Market share data is based on information from Nielsen and is referenced Food, Drug and Mass Merchandisers (“FDM”) or Expanded All Outlets Combined (“xAOC”). As of June 30, 2012, Nielsen changed the way it reports ready to eat cereal category volume and sales data from including only FDM to xAOC which includes FDM plus Walmart, club stores and certain other retailers.
TRADEMARKS AND SERVICE MARKS
The logos, trademarks, trade names, and service marks mentioned in this prospectus, including Honey Bunches of Oats®, Pebbles™, Post Selects®, Great Grains®, Spoon Size® Shredded Wheat, Post® Raisin Bran, Grape-Nuts®, and Honeycomb® are currently the property of, or are used with the permission of, Post or its subsidiaries. We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus may be registered in the United States and other jurisdictions. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company.
ABOUT THIS PROSPECTUS
Except as otherwise indicated or unless the context otherwise requires, all references to “we,” “our,” “us,” “Post” or the “Company” refer to Post Holdings, Inc., a Missouri corporation, together with its consolidated subsidiaries. References in this prospectus to “Ralcorp” refer to Ralcorp Holdings, Inc. and its consolidated subsidiaries (other than Post prior to the separation). References in this prospectus to the “separation” refer to the separation of Post from Ralcorp on February 3, 2012. “Post cereals business” refers to the branded ready-to-eat cereals business of Post or, if prior to the separation, of Ralcorp. All references to “we,” “our,” “us,” “Post” or the “Company” in the context of historical results refer to the Post cereals business.


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PROSPECTUS SUMMARY
 
The following summary highlights significant aspects of our business and this exchange offer, but it does not include all the information you should consider prior to deciding whether to exchange the original notes for the exchange notes. You should read this entire prospectus, the information set forth in “Risk Factors” and our financial statements and related notes, before deciding whether to exchange the original notes for the exchange notes.
 
The following is a summary of some of the information contained in this prospectus. This summary is included for convenience only and should not be considered complete. This summary is qualified in its entirety by the more detailed information contained elsewhere in this prospectus, which should be read in its entirety.
 
Our Company
 
We are a leading manufacturer, marketer and distributor of branded ready-to-eat cereals in the United States and Canada. We are the third largest seller of ready-to-eat cereals in the United States with a 10.3% share of retail sales (based on retail dollar sales) for the thirteen week period ended June 30, 2012, based on Nielsen's expanded All Outlets Combined (xAOC) information. Nielsen's xAOC is representative of Food, Drug, Mass (including Walmart), some Club retailers (Sam's & BJs), some Dollar retailers (Dollar General, Family Dollar & Fred's Dollar) and Military. Our products are manufactured through a flexible production platform consisting of four owned primary facilities and sold through a variety of channels such as grocery stores, mass merchandisers, club stores, and drug stores. We have a single operating segment and we manufacture and market products under several brand names, including Honey Bunches of Oats®, Pebbles™, Post Selects®, Great Grains®, Spoon Size® Shredded Wheat, Post® Raisin Bran, Grape-Nuts® and Honeycomb®.
 
For more than 115 years, Post has produced great tasting, high quality and nutritious cereal products that have defined the breakfast experience for generations of families. Post began in 1895, when Charles William (C.W.) Post made his first batch of “Postum,” a cereal beverage, in Battle Creek, Michigan. Two years later in 1897, Post introduced Grape-Nuts cereal, one of the first ready-to-eat cold cereals, which we continue to offer consumers today.
 
From 1925 to 1929, our predecessor, Postum Cereal Company, acquired over a dozen companies and expanded its product line to more than 60 products. The company changed its name to General Foods Corporation and over several decades introduced household names such as Post Raisin Bran (1942), Honeycomb (1965), Pebbles (1971) and Honey Bunches of Oats (1990). General Foods was acquired by Philip Morris Companies in 1985, and subsequently merged with Kraft Foods Inc. (“Kraft”) in 1989. In 2008, the Post cereals business was split off from Kraft and combined with Ralcorp. Post Holdings, Inc. was spun off from Ralcorp and became a separate, stand-alone company, effective February 3, 2012.
 
For the nine months ended June 30, 2012, Post generated net sales of $711.7 million, operating profit of $106.0 million and net earnings of $39.1 million. The Post cereals business generated net sales of $968.2 million, $996.7 million and $1,072.1 million and net (loss) income of $(424.3) million, as restated, $92.0 million and $101.1 million during the fiscal years ended September 30, 2011, 2010 and 2009, respectively.
 
We operate approximately 2.7 million square feet of owned manufacturing space across four primary facilities located in Battle Creek, Michigan; Jonesboro, Arkansas; Modesto, California; and Niagara Falls, Ontario. Our manufacturing locations are equipped with high-speed, highly automated machinery. Numerous locations have rail receiving capabilities for grains and bulk receiving capabilities for all major liquid raw materials. The Battle Creek location also has milling capability.
 
We distribute products through five distribution centers strategically-located in Battle Creek, Michigan; Columbus, Ohio; Olive Branch, Mississippi; Redlands, California; and Cedar Rapids, Iowa. We own and operate the Battle Creek center; the remaining four distribution centers are third-party owned and operated. We are currently supported by a demand and revenue management department responsible for the administration and fulfillment of customer orders.
 
On February 3, 2012, Post completed its legal separation from Ralcorp via a tax free spin-off, which we refer to in this prospectus as the spin-off. In the spin-off, Ralcorp shareholders of record on January 30, 2012, the record date for the distribution, received one share of Post common stock for every two shares of Ralcorp common stock held; additionally Ralcorp retained approximately 6.8 million unregistered shares of Post common stock. At the time of distribution Ralcorp entered into a series of third party financing arrangements that effectively resulted in the contribution of its net investment in Post in exchange for the aforementioned 6.8 million shares of Post common stock and a $900.0 million cash distribution which was funded through the incurrence of long-term debt by Post. See "Recent Developments" for further information.
 


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On February 6, 2012, Post began regular trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “POST” as an independent, public company.
 
Post was incorporated in Missouri on September 22, 2011. The address of our principal executive offices is 2503 S. Hanley Road, St. Louis, MO 63144. Our main telephone number at that address is (314) 644-7600.
 
Risk Factors
 
We are subject to a number of risks, including risks related to our business, the separation and the financing transactions. Among other risks, (i) we compete in a mature category with strong competition; (ii) we may be unable to anticipate changes in consumer preferences and trends, which could result in decreased demand for our products; (iii) a decline in demand for ready-to-eat cereals could adversely affect our financial performance; (iv) we have substantial debt and high leverage, which could adversely affect our business; (v) the agreements governing our debt, including our credit facilities and the indenture governing the notes, contain various covenants that impose restrictions on us that may affect our ability to operate our business; and (vi) our historical financial results as a business segment of Ralcorp and our unaudited pro forma condensed consolidated and condensed combined financial statements may not be representative of our results as a separate, stand-alone company.
 
For a thorough discussion of risk factors associated with our business, the separation and the financing transactions, see “Risk Factors” beginning on page 16.
 
Recent Developments
 
Stock Repurchase. On September 28, 2012 and October 3, 2012, Ralcorp consummated a debt for equity exchange pursuant to which Ralcorp delivered cash and 6,775,985 shares of Post common stock that it retained in connection with the spin-off to two investment banks in exchange for the discharge of a loan that Ralcorp had previously obtained from the investment banks or their affiliates. On September 28, 2012, Post repurchased 1.75 million shares of its common stock, at a price of $30.50 per share for an aggregate purchase price of approximately $53.4 million. These shares were a portion of the 6,775,985 Post shares that were retained by Ralcorp in connection with the spin-off of Post and disposed of by Ralcorp in the debt for equity exchange described above. As a result of this transaction, Ralcorp has no ownership interest in Post.
 
Credit Facility Amendment. We amended our credit agreement in connection with the $250 million of additional notes issued on October 25, 2012, to, among other things, permit the issuance of up to $1,025 million of indebtedness under the indenture for the notes (up from a maximum of $775 million), and to permit additional indebtedness (as defined in the credit agreement) so long as our Senior Secured Leverage Ratio (as defined in the credit agreement) is less than 2.5 to 1.0, and other conditions are satisfied. The amendment also increased our permitted maximum Consolidated Leverage Ratio (as defined in the credit agreement) to 5.75 to 1.00 beginning with the first quarter of the fiscal year ending September 30, 2013, and declining ratably at the beginning of each subsequent fiscal year to 5.00 to 1.00 for each quarter during the fiscal year ending September 30, 2016 (and remaining at 5.00 to 1.00 for all periods thereafter).
 
 
 
 



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THE EXCHANGE OFFER
 
On February 3, 2012, we issued $775 million aggregate principal amount of 7.375% Senior Notes due 2022, a portion of the outstanding notes to which the exchange offer applies, to Ralcorp. Ralcorp transferred the outstanding notes in exchange for the satisfaction and discharge of certain loan obligations of Ralcorp to certain financial institutions. These financial institutions then offered the outstanding notes to investors in reliance on exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable securities laws. On October 25, 2012 we issued an additional $250 million aggregate principal amount of 7.375% Senior Notes due 2022, the remaining portion of the outstanding notes to which the exchange offer applies, in reliance on exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable securities laws. In connection with the offerings of the outstanding notes, we entered into two separate registration rights agreements pursuant to which we agreed, among other things, to deliver this prospectus to you, to commence this exchange offer and to use our commercially reasonable efforts to complete the exchange offer on the earliest practicable date after the registration statement is declared effective, but in no event later than 30 business days or longer, if required by the federal securities laws, after the registration statement is declared effective. The summary below describes the principal terms and conditions of the exchange offer. Some of the terms and conditions described below are subject to important limitations and exceptions. See “The Exchange Offer” for a more detailed description of the terms and conditions of the exchange offer and “Description of the Exchange Notes” for a more detailed description of the terms of the exchange notes.
 
 
The Exchange Offer
We are offering to exchange up to $1,025 million aggregate principal amount of our 7.375% Senior Notes due 2022, which have been registered under the Securities Act, in exchange for your outstanding notes. The form and terms of these exchange notes are identical in all material respects to the outstanding notes. The exchange notes, however, will not contain transfer restrictions and registration rights applicable to the outstanding notes.
 
 
 
To exchange your outstanding notes, you must properly tender them, and we must accept them. We will accept and exchange all outstanding notes that you validly tender and do not validly withdraw. We will issue registered exchange notes promptly after the expiration of the exchange offer.
 
 
Resale of Exchange Notes
Based on interpretations by the staff of the SEC as detailed in a series of no-action letters issued to third parties, we believe that, as long as you are not a broker-dealer, the exchange notes offered in the exchange offer may be offered for resale, resold or otherwise transferred by you without compliance with the registration and prospectus delivery requirements of the Securities Act as long as:
 
 
 
Ÿ
you are acquiring the exchange notes in the ordinary course of your business;
 
 
 
 
Ÿ
you are not participating, do not intend to participate in and have no arrangement or understanding with any person to participate in a “distribution” of the exchange notes; and
 
 
 
 
Ÿ
you are not an “affiliate” of ours within the meaning of Rule 405 of the Securities Act.
 
 
 
If any of these conditions is not satisfied and you transfer any exchange notes issued to you in the exchange offer without delivering a proper prospectus or without qualifying for a registration exemption, you may incur liability under the Securities Act. Moreover, our belief that transfers of exchange notes would be permitted without registration or prospectus delivery under the conditions described above is based on SEC interpretations given to other, unrelated issuers in similar exchange offers. We cannot assure you that the SEC would make a similar interpretation with respect to our exchange offer. We will not be responsible for or indemnify you against any liability you may incur under the Securities Act.
 
 


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Any broker-dealer that acquires exchange notes for its own account in exchange for outstanding notes must represent that the outstanding notes to be exchanged for the exchange notes were acquired by it as a result of market-making activities or other trading activities and acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any offer to resell, resale or other retransfer of the exchange notes. However, by so acknowledging and by delivering a prospectus, such participating broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. During the period ending 180 days after the consummation of the exchange offer, subject to extension in limited circumstances, a participating broker-dealer may use this prospectus for an offer to sell, a resale or other retransfer of exchange notes received in exchange for outstanding notes which it acquired through market-making activities or other trading activities.
 
 
Expiration Date
The exchange offer will expire at 5:00 p.m., New York City time, on January 7, 2013, unless we extend the expiration date.
 
 
Accrued Interest on the Exchange
  Notes and the Outstanding Notes
The exchange notes will bear interest from the most recent date to which interest has been paid on the outstanding notes. If your outstanding notes are accepted for exchange, then you will receive interest on the exchange notes and not on the outstanding notes. Any outstanding notes not tendered will remain outstanding and continue to accrue interest (but not special interest) according to their terms.
 
 
Conditions
The exchange offer is subject to customary conditions. We may assert or waive these conditions in our sole discretion. If we materially change the terms of the exchange offer, we will re-solicit tenders of the outstanding notes. See “The Exchange Offer-Conditions to the Exchange Offer” for more information regarding conditions to the exchange offer.
 
 
Procedures for Tendering
  Outstanding Notes
Each holder of outstanding notes that wishes to tender its outstanding notes must either:
 
 
 
 
Ÿ
complete, sign and date the accompanying letter of transmittal or a facsimile copy of the letter of transmittal, have the signatures on the letter of transmittal guaranteed, if required, and deliver the letter of transmittal, together with any other required documents (including the outstanding notes), to the exchange agent; or
 
 
 
 
Ÿ
if outstanding notes are tendered pursuant to book-entry procedures, the tendering holder must deliver a completed and duly executed letter of transmittal or arrange with The Depository Trust Company, or DTC, to cause an agent's message to be transmitted with the required information (including a book-entry confirmation) to the exchange agent; or
 
 
 
 
Ÿ
comply with the procedures set forth below under “Guaranteed Delivery Procedures.”
 
 
 
Holders of outstanding notes that tender outstanding notes in the exchange offer must represent that the following are true:
 
 
 
Ÿ
the holder is acquiring the exchange notes in the ordinary course of its business;
 
 
 
 
Ÿ
the holder is not participating in, does not intend to participate in, and has no arrangement or understanding with any person to participate in a “distribution” of the exchange notes; and
 
 
 
 
Ÿ
the holder is not an “affiliate” of us within the meaning of Rule 405 of the Securities Act.
 
 


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Do not send letters of transmittal, certificates representing outstanding notes or other documents to us or DTC. Send these documents only to the exchange agent at the appropriate address given in this prospectus and in the letter of transmittal. We could reject your tender of outstanding notes if you tender them in a manner that does not comply with the instructions provided in this prospectus and the accompanying letter of transmittal. See “Risk Factors-There are significant consequences if you fail to exchange your outstanding notes” for further information.
 
 
Special Procedures for Tenders by
  Beneficial Owners of Outstanding
  Notes
If:
 
 
 
Ÿ
you beneficially own outstanding notes;
 
 
 
 
Ÿ
those notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee; and
 
 
 
 
Ÿ
you wish to tender your outstanding notes in the exchange offer,
 
 
 
 
please contact the registered holder as soon as possible and instruct it to tender on your behalf and comply with the instructions set forth in this prospectus and the letter of transmittal.
 
 
Guaranteed Delivery Procedures
If you hold outstanding notes in certificated form or if you own outstanding notes in the form of a book-entry interest in a global note deposited with the trustee, as custodian for DTC, and you wish to tender those outstanding notes but:
 
 
 
Ÿ
your outstanding notes are not immediately available;
 
 
 
 
Ÿ
time will not permit you to deliver the required documents to the exchange agent by the expiration date; or
 
 
 
 
Ÿ
you cannot complete the procedure for book-entry transfer on time,
 
 
 
you may tender your outstanding notes pursuant to the procedures described in “The Exchange Offer-Procedures for Tendering Outstanding Notes-Guaranteed Delivery.”
 
 
Withdrawal Rights
You may withdraw your tender of outstanding notes under the exchange offer at any time before 5:00 p.m. New York City time on the date the exchange offer expires. Any withdrawal must be in accordance with the procedures described in “The Exchange Offer-Withdrawal Rights.”
 
 
Effect on Holders of Outstanding
  Notes
As a result of making this exchange offer, and upon acceptance for exchange of all validly tendered outstanding notes, we will have fulfilled our obligations under the respective registration rights agreements. Accordingly, there will be no special interest payable under the respective registration rights agreements if outstanding notes were eligible for exchange, but not exchanged, in the exchange offer.
 
 
 
If you do not tender your outstanding notes or we reject your tender, your outstanding notes will remain outstanding and will be entitled to the benefits of the indenture governing the notes. Under such circumstances, you would not be entitled to any further registration rights under the respective registration rights agreements, except under limited circumstances, and special interest will not be payable. Existing transfer restrictions would continue to apply to the outstanding notes.
 
 
 
Any trading market for the outstanding notes could be adversely affected if some but not all of the outstanding notes are tendered and accepted in the exchange offer.
 
 


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Accounting Treatment
The exchange notes will be recorded at the same carrying value as the outstanding notes, as reflected in our accounting records on the date of exchange. Accordingly, we will recognize no gain or loss for accounting purposes upon the closing of the exchange offer. The expenses of the exchange offer will be expensed as incurred.
 
 
Material United States Federal Income
  Tax Considerations
Your exchange of outstanding notes for exchange notes will not be treated as a taxable event for U.S. federal income tax purposes. See “Material United States Federal Income Tax Considerations.”
 
 
Use of Proceeds
We will not receive any proceeds from the exchange offer or the issuance of the exchange notes.
 
 
Exchange Agent
Wells Fargo Bank, National Association is serving as the exchange agent in connection with the exchange offer. The address, telephone number and facsimile number of the exchange agent is set forth under “The Exchange Offer-Exchange Agent.”
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




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SUMMARY OF TERMS OF EXCHANGE NOTES
 
The form and terms of the exchange notes will be identical in all material respects to the form and terms of the outstanding notes, except that the exchange notes:
 
Ÿ
will have been registered under the Securities Act;
 
 
Ÿ
will not bear restrictive legends restricting their transfer under the Securities Act;
 
 
Ÿ
will not be entitled to the registration rights that apply to the outstanding notes; and
 
 
Ÿ
will not contain provisions relating to an increase in the interest rate borne by the outstanding notes under circumstances related to the timing of the exchange offer.
 
The exchange notes represent the same debt as the outstanding notes and are governed by the same indenture, which is governed by New York law. A brief description of the material terms of the exchange notes follows:
 
Issuer
Post Holdings, Inc.
 
 
Notes Offered
Up to $1,025,000,000 aggregate principal amount of 7.375% Senior Notes due 2022. An aggregate principal amount of $775,000,000 of outstanding notes were originally issued on February 3, 2012, and an additional aggregate principal amount of $250,000,000 of outstanding notes were originally issued on October 25, 2012. Following the completion of the exchange offer, all of the exchange notes issued in exchange of the outstanding notes will be fungible and share a single CUSIP number.
 
 
Maturity Date
The exchange notes will mature on February 15, 2022.
 
 
Interest Rate
We will pay interest on the exchange notes at an annual interest rate of 7.375%.
 
 
Interest Payment Dates
February 15 and August 15 of each year, which commenced August 15, 2012.
 
 
Subsidiary Guarantees
The exchange notes will be fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our existing and future domestic subsidiaries (other than immaterial subsidiaries or receivables finance subsidiaries). These guarantees are subject to release in limited circumstances (only upon the occurrence of certain customary conditions). As of the date of this prospectus our only domestic subsidiary (and therefore the only subsidiary guarantor) is Post Foods, LLC. Our foreign subsidiaries will not guarantee the exchange notes. Post's Canadian business, which is held by our sole foreign subsidiary, accounted for approximately 6% of our net sales to third parties for the nine months ended June 30, 2012 and held approximately 3% of our consolidated total assets as of June 30, 2012.
 
 
Ranking
The exchange notes and the subsidiary guarantees are unsecured, senior obligations. Accordingly, they will be:
 
 
 
Ÿ
equal in right of payment with all of our and the subsidiary guarantors' existing and future senior indebtedness;
 
 
 
 
Ÿ
senior in right of payment to any of our and the subsidiary guarantors' future subordinated indebtedness;
 
 
 
 
Ÿ
effectively subordinated to all of our and the subsidiary guarantors' existing and future secured indebtedness, including indebtedness under our credit facilities, to the extent of the value of the collateral securing such indebtedness; and
 
 
 
 
Ÿ
effectively subordinated to all of the existing and future indebtedness and other liabilities, including trade payables, of our non-guarantor subsidiaries (other than indebtedness and other liabilities owed to us or any guarantor).
 
 
 


10

 
 
 
As of June 30, 2012, after giving effect to the completion of the offering of $250 million additional outstanding notes on October 25, 2012, we would have had approximately $1,197.8 million of aggregate principal amount of senior indebtedness outstanding (of which $172.8 million was secured), and an additional $174.5 million was available for borrowing under our revolving credit facility. As of the date of this prospectus, our non-guarantor subsidiary has no material indebtedness for borrowed money; however, the exchange notes will be effectively subordinated to the accounts payable, pension obligations and other liabilities of such subsidiary. See “Description of Certain Indebtedness.”
 
 
Optional Redemption
We may redeem some or all of the exchange notes at any time on or after February 15, 2017 at the redemption prices specified in this prospectus under “Description of the Exchange Notes - Optional Redemption,” plus accrued and unpaid interest, if any, to the date of redemption.
 
 
Offer to Purchase
If we experience a change of control triggering event, each holder of the exchange notes may require us to repurchase all or any part of such holder's exchange notes at a purchase price equal to 101% of the aggregate principal amount of the exchange notes repurchased, plus any accrued and unpaid interest, if any. See “Description of the Exchange Notes-Repurchase at the Option of the Holders-Offer to Repurchase upon Change of Control.”
 
 
Covenants
We will issue the exchange notes under the indenture among us, the subsidiary guarantor and the trustee. The indenture limits, among other things, our ability and the ability of our restricted subsidiaries to:
 
 
 
Ÿ
borrow money or guarantee debt;
 
 
 
 
Ÿ
create liens;
 
 
 
 
Ÿ
pay dividends on or redeem or repurchase stock;
 
 
 
 
Ÿ
make specified types of investments and acquisitions;
 
 
 
 
Ÿ
enter into or permit to exist contractual limits on the ability of our subsidiaries to pay dividends to us;
 
 
 
 
Ÿ
enter into new lines of business;
 
 
 
 
Ÿ
enter into transactions with affiliates; and
 
 
 
 
Ÿ
sell assets or merge with other companies.
 
 
 
Certain of these covenants are subject to suspension when and if the notes are rated at least “BBB-” by Standard & Poor's or at least “Baa3” by Moody's.
 
 
 
Each of the covenants is subject to a number of important exceptions and qualifications. See “Description of the Exchange Notes-Certain Covenants.”
 
 
No Prior Market
There is currently no established market for the exchange notes. Accordingly, we cannot assure you as to the development or liquidity of any market for the exchange notes. We do not intend to apply for listing of the exchange notes on any securities exchange.
 
 
Form and Denomination
The exchange notes will be issued in minimum denominations of $2,000 and $1,000 integral multiples in excess of $2,000. The exchange notes will be book-entry only and registered in the name of a nominee of DTC. Investors may elect to hold interests in the exchange notes through Clearstream Banking, S.A., or Euroclear Bank S.A./N.V., as operator of the Euroclear system, if they are participants in those systems or indirectly through organizations that are participants in those systems.
 
 


11

 
 
Use of Proceeds
We will not receive any proceeds from the exchange offer. Because the exchange notes have substantially identical terms as the outstanding notes, the issuance of the exchange notes will not result in any increase in our indebtedness. The exchange offer is intended to satisfy our obligations under the respective registration rights agreements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



12

 
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
 
The following table presents our summary historical and unaudited pro forma condensed consolidated and condensed combined financial data. The condensed consolidated statement of earnings data for the nine months ended June 30, 2012 and 2011 and the condensed consolidated balance sheet data as of June 30, 2012 are derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The condensed combined statement of operations data for each of the fiscal years ended September 30, 2011, 2010 and 2009 and the condensed combined balance sheet data as of September 30, 2011 and 2010 are derived from our audited combined financial statements, as restated, beginning on page F-1 of this prospectus.
 
The unaudited pro forma condensed combined statement of operations data for the year ended September 30, 2011, and the unaudited pro forma condensed consolidated statement of operations data for the nine months ended June 30, 2012, reflect our results as if the transactions described below had occurred as of October 1, 2010. The unaudited pro forma condensed consolidated balance sheet data as of June 30, 2012 reflects our financial position as if the $250 million of additional notes issued on October 25, 2012 had been issued as of June 30, 2012 and as if the stock repurchase that occurred on September 28, 2012 had also occurred on June 30, 2012. The transactions related to our separation from Ralcorp are contained in our historical unaudited condensed consolidated balance sheet at June 30, 2012. The unaudited pro forma condensed consolidated and condensed combined financial statement data has been prepared to reflect the separation and other transaction related items, including:
 
Ÿ
Post's separation from Ralcorp which was completed on February 3, 2012;
 
 
Ÿ
the incurrence of $950 million of indebtedness at the time of the separation from Ralcorp, consisting of $175 million aggregate principal amount of borrowings under senior credit facilities with lending institutions and $775 million in aggregate principal amount of senior notes;
 
 
Ÿ
the incurrence of $250 million face value of additional notes issued on October 25, 2012 at an issue price of 106% and estimated transaction expenses of $4.8 million;
 
 
Ÿ
the distribution on February 3, 2012 of approximately 27.5 million shares of our common stock to holders of Ralcorp common stock, 0.1 million shares of our restricted common stock to holders of Ralcorp restricted common stock and an additional approximate 6.8 million shares retained by Ralcorp;
 
 
Ÿ
our post-separation capital structure;
 
 
Ÿ
the February 3, 2012 settlement of intercompany account balances between us and Ralcorp through cash or contribution to equity; and
 
 
Ÿ
the repurchase of 1.75 million shares of our common stock for approximately $53.4 million which occurred on September 28, 2012.
 
The unaudited pro forma condensed consolidated and condensed combined financial data and other financial information are not necessarily indicative of our results of operations or financial condition had the separation and our post-separation capital structure been completed on the dates assumed. Also, they may not reflect the results of operations or financial condition which would have resulted had we been operating as an independent, publicly traded company during such periods. In addition, they are not necessarily indicative of our future results of operations or financial condition. Further information regarding the pro forma adjustments listed above can be found within the “Unaudited Pro Forma Condensed Consolidated and Condensed Combined Financial Statements” section of this prospectus.
 
The summary historical and unaudited pro forma financial information presented below should be read in conjunction with our audited combined financial statements and accompanying notes, as restated, “Unaudited Pro Forma Condensed Consolidated and Condensed Combined Financial Statements” and “Management's Discussion and Analysis of Financial Condition and Results of Operations, as restated,” each included elsewhere in this prospectus.
 
No pro forma adjustments have been included for the transition services agreement with Ralcorp, as we expect that the costs for the transition services agreement will be comparable to those included in our historical financial statements. Likewise, no pro forma adjustments have been included related to the tax allocation agreement, the employee matters agreement or certain commercial agreements between us and Ralcorp because we do not expect those adjustments to have a significant effect on our financial statements. The assumptions used and pro forma adjustments derived from such assumptions are based on currently available information and we believe such assumptions are reasonable under the circumstances.


13

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
June 30,
 
Year Ended September 30,
 
 
 
2012
Pro Forma
 
2012
Historical
 
2011 Historical
 
2011
Pro Forma
 
2011
Historical
(as restated)
 
2010
Historical
 
2009
Historical
 
 
 
(In millions, except per share amounts)
 
 
Statement of Operations Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales
$
711.7

 
$
711.7

 
$
730.4

 
$
968.2

 
$
968.2

 
$
996.7

 
$
1,072.1

 
 
Cost of goods sold
(392.9
)
 
(392.9
)
 
(381.6
)
 
(516.6
)
 
(516.6
)
 
(553.7
)
 
(570.8
)
 
 
Gross Profit
318.8

 
318.8

 
348.8

 
451.6

 
451.6

 
443.0

 
501.3

 
 
Selling, general and administrative expenses
(203.6
)
 
(202.8
)
 
(180.3
)
 
(243.2
)
 
(239.5
)
 
(218.8
)
 
(272.7
)
 
 
Amortization of intangible assets
(9.4
)
 
(9.4
)
 
(9.4
)
 
(12.6
)
 
(12.6
)
 
(12.7
)
 
(12.6
)
 
 
Impairment of goodwill and other intangible assets
—

 
—

 
(32.1
)
 
(566.5
)
 
(566.5
)
 
(19.4
)
 
—

 
 
Other operating expenses, net
(0.6
)
 
(0.6
)
 
(1.1
)
 
(1.6
)
 
(1.6
)
 
(1.3
)
 
(0.8
)
 
 
Operating profit (loss)
105.2

 
106.0

 
125.9

 
(372.3
)
 
(368.6
)
 
190.8

 
215.2

 
 
Intercompany interest expense
—

 
(17.7
)
 
(38.6
)
 
—

 
(51.5
)
 
(51.5
)
 
(58.3
)
 
 
Interest expense
(61.3
)
 
(26.5
)
 
—

 
(82.0
)
 
—

 
—

 
—

 
 
Other expense
—

 
4.7

 
—

 
—

 
(1.7
)
 
—

 
—

 
 
Loss on sale of receivables
—

 
(3.3
)
 
(8.7
)
 
—

 
(13.0
)
 
—

 
—

 
 
Equity in earnings of partnership
—

 
0.2

 
2.9

 
—

 
4.2

 
2.2

 
—

 
 
Earnings (loss) before income taxes
43.9

 
63.4

 
81.5

 
(454.3
)
 
(430.6
)
 
141.5

 
156.9

 
 
Income taxes
(17.5
)
 
(24.3
)
 
(26.2
)
 
14.6

 
6.3

 
(49.5
)
 
(55.8
)
 
 
Net earnings (loss)
$
26.4

 
$
39.1

 
$
55.3

 
$
(439.7
)
 
$
(424.3
)
 
$
92.0

 
$
101.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per Share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.81

 
$
1.14

 
$
1.61

 
$
(13.49
)
 
$
(12.33
)
 
$
2.67

 
$
2.94

 
 
Diluted
$
0.81

 
$
1.13

 
$
1.61

 
$
(13.49
)
 
$
(12.33
)
 
$
2.67

 
$
2.94

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statement of Cash Flows Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
$
46.9

 
$
43.8

 
 
 
$
58.7

 
$
55.4

 
$
50.6

 
 
Cash provided (used) by:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating activities
 
 
95.3

 
118.1

 
 
 
143.8

 
135.6

 
221.1

 
 
Investing activities
 
 
(22.3
)
 
(9.8
)
 
 
 
(14.9
)
 
(24.3
)
 
(36.7
)
 
 
Financing activities
 
 
8.5

 
(106.6
)
 
 
 
(132.1
)
 
(112.4
)
 
(183.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
 
September 30,
 
 
(In Millions)
 
 
 
 
 
 
2012 Pro Forma
 
2012
Historical
 
2011
Historical
(as restated)
 
2010
Historical
 
 
Balance Sheet Data
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
 
$
290.3

 
$
83.5

 
$
1.7

 
$
4.8

 
 
Working capital (excl. cash and cash equivalents)
 
 
 
39.5

 
39.0

 
(0.7
)
 
68.0

 
 
Total assets
 
 
 
2,975.1

 
2,763.5

 
2,723.2

 
3,348.0

 
 
Long-term intercompany debt (including current portion)
 
 
 
—

 
—

 
784.5

 
716.5

 
 
Long-term debt (including current portion)
 
 
 
1,212.8

 
947.8

 
—

 
—

 
 
Other liabilities
 
 
 
105.2

 
105.2

 
104.9

 
90.7

 
 
Total equity
 
 
 
 
1,230.6

 
1,284.0

 
1,434.7

 
2,061.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



14


 
 
 
 
 
 
RATIO OF EARNINGS TO FIXED CHARGES
 
 
 
 
 
 
 
The following table sets forth our ratio of earnings to fixed charges for the periods indicated:  
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended June 30,
 
Year Ended
September 30,
 
 
 
 
2012
 
2011
 
2010
 
2009
 
 
Ratio of earnings to fixed charges
2.4

 
--
(1) 
 
3.6

 
3.6

 
 
 
 
 
 
(1) 
For the year ended September 30, 2011, earnings were insufficient to cover fixed charges by $434.9 million.
 
 
 
 
 
 
For purposes of calculating the ratio of earnings to fixed charges, earnings represent income before income taxes and equity earnings from affiliates plus fixed charges. Fixed charges include interest expense, capitalized interest and our estimate of the interest component of rent expense.
 
 
 
 
 
 
The ratios presented above are based on our historical consolidated and combined financial statements. As described in Note 1 to our audited combined financial statements included in this prospectus, for periods prior to Post's spin-off from Ralcorp, the combined financial statements present the historical combined results of operations, comprehensive income, financial position and cash flows of the branded cereal business of Ralcorp, which included Post Foods, LLC and Post Foods Canada Corp., which now comprise the operations of Post.  All intercompany balances and transactions between Post entities have been eliminated. Transactions between Post and Ralcorp are included in the financial statements included in this prospectus.
 
 
 
 
 
 
 
 
 
 
 
 
 



15

RISK FACTORS
You should carefully consider the following risk factors, as well as other information set forth in this prospectus prior to participating in the exchange offer. The risks described below are not the only ones that we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also have a negative impact on our business operations.
Risks Relating to the Exchange Offer
There are significant consequences if you fail to exchange your outstanding notes.
We did not register the outstanding notes under the Securities Act or any state securities laws, nor do we intend to do so after the exchange offer. As a result, the outstanding notes may only be transferred in limited circumstances under the securities laws. If you do not exchange your outstanding notes in the exchange offer, you will lose your right to have the outstanding notes registered under the Securities Act, subject to certain limitations. If you continue to hold outstanding notes after the exchange offer, you may be unable to sell the outstanding notes. Outstanding notes that are not tendered or are tendered but not accepted will, following the exchange offer, continue to be subject to existing restrictions.
You cannot be sure that an active trading market for the exchange notes will develop.
We do not intend to apply for a listing of the exchange notes on any securities exchange. We do not know if an active public market for the exchange notes will develop or, if developed, will continue. If an active public market does not develop or is not maintained, the market price and liquidity of the exchange notes may be adversely affected. We cannot make any assurances regarding the liquidity of the market for the exchange notes, the ability of holders to sell their exchange notes or the price at which holders may sell their exchange notes. In addition, the liquidity and the market price of the exchange notes may be adversely affected by changes in the overall market for securities similar to the exchange notes, by changes in our financial performance or prospects and by changes in conditions in our industry.
You must follow the appropriate procedures to tender your outstanding notes or they will not be exchanged.
The exchange notes will be issued in exchange for the outstanding notes only after timely receipt by the exchange agent of the outstanding notes or a book-entry confirmation related thereto, a properly completed and executed letter of transmittal or an agent’s message and all other required documentation. If you want to tender your outstanding notes in exchange for exchange notes, you should allow sufficient time to ensure timely delivery. Neither we nor the exchange agent are under any duty to give you notification of defects or irregularities with respect to tenders of outstanding notes for exchange. Outstanding notes that are not tendered or are tendered but not accepted will, following the exchange offer, continue to be subject to the existing transfer restrictions. In addition, if you tender the outstanding notes in the exchange offer to participate in a distribution of the exchange notes, you will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. For additional information, please refer to the sections entitled “The Exchange Offer” and “Plan of Distribution” later in this prospectus.
The consummation of the exchange offer may not occur.
We are not obligated to complete the exchange offer under certain circumstances. See “The Exchange Offer—Conditions to the Exchange Offer.” Even if the exchange offer is completed, it may not be completed on the schedule described in this prospectus. Accordingly, holders participating in the exchange offer may have to wait longer than expected to receive their exchange notes.
You may be required to deliver prospectuses and comply with other requirements in connection with any resale of the exchange notes.
If you tender your outstanding notes for the purpose of participating in a distribution of the exchange notes, you will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes. In addition, if you are a broker-dealer that receives exchange notes for your own account in exchange for outstanding notes that you acquired as a result of market-making activities or any other trading activities, you will be required to acknowledge that you will deliver a prospectus in connection with any resale of those exchange notes.


16

Risks Related to the Notes
We have substantial debt and high leverage, which could have a negative impact on our financing options and liquidity position and prevent us from fulfilling our obligations under the exchange notes.
Our ability to meet expenses and debt service obligations will depend on our future performance, which will be affected by financial, business, economic and other factors, including potential changes in consumer preferences, the success of product and marketing innovation and pressure from competitors. If we do not generate enough cash to pay our debt service obligations, we may be required to refinance all or part of our existing debt, sell our assets, borrow more money or raise equity.
We have a substantial amount of debt. We had $947.8 million of total debt outstanding as of June 30, 2012 and $174.5 million of undrawn availability under our revolving credit facility, with $0.5 million in outstanding letters of credit. On a pro forma basis, giving effect to the sale of the $250 million additional notes issued on October 25, 2012, as of June 30, 2012, we would have $1,197.8 million in aggregate principal amount of total debt.

Our overall leverage and the terms of our financing arrangements could:
•
limit our ability to obtain additional financing in the future for working capital, capital expenditures and acquisitions;
•
make it more difficult for us to satisfy our obligations under the notes;
•
limit our ability to refinance our indebtedness on terms acceptable to us or at all;
•
limit our flexibility to plan for and to adjust to changing business and market conditions in the industry in which we operate, and increase our vulnerability to general adverse economic and industry conditions;  
•
require us to dedicate a substantial portion of our cash flow from operations to make interest and principal payments on our debt, thereby limiting the availability of our cash flow to fund future investments, capital expenditures, working capital, business activities and other general corporate requirements;
•
limit our ability to obtain additional financing for working capital, for capital expenditures, to fund growth or for general corporate purposes, even when necessary to maintain adequate liquidity, particularly if any ratings assigned to our debt securities by rating organizations were revised downward; and
•
subject us to higher levels of indebtedness than our competitors, which may cause a competitive disadvantage and may reduce our flexibility in responding to increased competition.
Our senior credit facilities bear interest at variable rates. If market interest rates increase, variable rate debt will create higher debt service requirements, which could adversely affect our cash flow.
Despite our substantial indebtedness level, we will still be able to incur substantial additional amounts of debt, which could further exacerbate the risks associated with our indebtedness.
We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of our credit facilities and the indenture governing the exchange notes do not fully prohibit us or our subsidiaries from doing so. For example, we had $174.5 million of undrawn availability under our revolving credit facility as of June 30, 2012, all of which is permitted to be drawn under the terms of our credit facilities and the indenture relating to the notes. If new debt is added to our current debt levels, the related risks we could face would be magnified.
The exchange notes will be effectively subordinated to the subsidiary guarantors’ and our secured debt. The exchange notes, and the guarantee of the exchange notes, are unsecured and therefore will be effectively subordinated to any of the subsidiary guarantors’ and our secured debt to the extent of the value of the assets securing that debt. Our credit facilities are secured by liens on substantially all our and our domestic subsidiaries’ assets. In the event of any distribution or payment of our assets in any foreclosure, dissolution, winding-up, liquidation, reorganization, or other bankruptcy proceeding, the assets which serve as collateral for any secured debt will be available to satisfy the obligations under the secured debt before any payments are made on the exchange notes. The exchange notes will be effectively subordinated to any borrowings under the credit facilities and other secured debt.
The indenture governing the exchange notes allows us to incur a substantial amount of additional secured debt.


17

The agreements governing our debt contain various covenants that limit our ability to take certain actions and also require us to meet financial maintenance tests, failure to comply with which could have a material adverse effect on us.
Our financing arrangements contain restrictions, covenants and events of default that, among other things, require us to satisfy certain financial tests and maintain certain financial ratios and restrict our ability to incur additional indebtedness and to refinance our existing indebtedness. The terms of these financing arrangements will, and any future indebtedness may, impose various restrictions and covenants on us that could limit our ability to pay dividends, respond to market conditions, provide for capital investment needs or take advantage of business opportunities by limiting the amount of additional borrowings we may incur. These restrictions may include compliance with, or maintenance of, certain financial tests and ratios, and may limit or prohibit our ability to, among other things:
•
borrow money or guarantee debt;
•
create liens;
•
pay dividends on or redeem or repurchase stock;
•
make specified types of investments and acquisitions;
•
enter into or permit to exist contractual limits on the ability of our subsidiaries to pay dividends to us;
•
enter into new lines of business;
•
enter into transactions with affiliates; and
•
sell assets or merge with other companies.
In addition, our credit facilities require us to comply with specific financial ratios and tests, under which we are required to achieve specific financial and operating results. These restrictions on our ability to operate our business could harm our business by, among other things, limiting our ability to take advantage of financing, merger and acquisition and other corporate opportunities.
Various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants. Failure to comply with any of the covenants in our existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions.
A breach of any of these covenants would result in a default under the credit facilities. In the event of any default, depending on the actions taken by the lenders under the credit facilities, we could be prohibited from making any payments on the notes. In addition, our lenders could elect to declare all amounts borrowed under the credit facilities, together with accrued interest thereon, to be due and payable. As a result of the priority afforded the credit facilities, we cannot assure you that we would have sufficient assets to pay debt then outstanding under the credit facilities and the notes. Any future refinancing of the credit facilities is likely to contain similar restrictive covenants. See “Description of Certain Indebtedness.”
A default would permit lenders to accelerate the maturity of the debt under these agreements and to foreclose upon any collateral securing the debt. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations, including our obligations under the exchange notes. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing.
To service our indebtedness and other cash needs, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.
Our ability to pay interest on the exchange notes, to satisfy our other debt obligations, and to fund any planned capital expenditures, dividends, and other cash needs will depend in part upon the future financial and operating performance of our subsidiaries and upon our ability to renew or refinance borrowings. Prevailing economic conditions and financial, business, competitive, legislative, regulatory and other factors, many of which are beyond our control, will affect our ability to make these payments.
In addition, prior to the repayment of the exchange notes, we may be required to refinance or repay our credit facilities. If we are unable to make payments or refinance our debt or obtain new financing under these circumstances, we may consider other options, including:
•
sales of assets;


18

•
sales of equity;
•
reduction or delay of capital expenditures, strategic acquisitions, investments and alliances; or
•
negotiations with our lenders to restructure the applicable debt.
Our business may not generate sufficient cash flow from operations and future borrowings may not be available to us under our credit facilities in an amount sufficient to enable us to pay our indebtedness, including the exchange notes, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, including the exchange notes, on or before maturity. We may not be able to refinance any of our debt, including the credit facilities, on commercially reasonable terms or at all.
Your right to receive payments on the exchange notes is effectively subordinated to the rights of our existing and future secured creditors. Further, the guarantees of the exchange notes are effectively subordinated to all of our subsidiary guarantors’ existing and future secured indebtedness. The exchange notes will also be structurally subordinated to the indebtedness of our non-guarantor subsidiaries.
Holders of our secured indebtedness and the secured indebtedness of the subsidiary guarantors have claims that are prior to your claims as holders of the exchange notes to the extent of the value of the assets securing that other indebtedness. Notably, we and the subsidiary guarantors are parties to our credit facilities, which are secured by liens on substantially all of our assets and the assets of the subsidiary guarantors. The exchange notes are effectively subordinated to all of that secured indebtedness. In the event of any distribution or payment of our assets in any foreclosure, dissolution, winding-up, liquidation, reorganization, or other bankruptcy proceeding, holders of secured indebtedness will have prior claim to those of our assets that constitute their collateral. Holders of the exchange notes will participate ratably with all holders of our unsecured indebtedness that is deemed to be of the same class as the exchange notes, and potentially with all of our other general creditors, based upon the respective amounts owed to each holder or creditor, in our remaining assets. In any of the foregoing events, we cannot assure you that there will be sufficient assets to pay amounts due on the exchange notes. As a result, holders of exchange notes may receive less, ratably, than holders of secured indebtedness. We had $172.8 million of total secured debt outstanding as of June 30, 2012 and $174.5 million of undrawn availability under our revolving credit facility.
In addition, the exchange notes are structurally subordinated to the indebtedness of our non-guarantor subsidiaries. Post’s Canadian business, which is held by our sole non-guarantor subsidiary, accounted for approximately 6% of our net sales to third parties for the nine months ended June 30, 2012 and held approximately 3% of our consolidated assets as of June 30, 2012. As of June 30, 2012 our non-guarantor subsidiary had no material indebtedness for borrowed money; however, the notes are effectively subordinated to the accounts payable, pension obligations and other liabilities of such subsidiary.
We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture.
Upon the occurrence of certain specific change of control events, we will be required to offer to repurchase all outstanding exchange notes at 101% of the principal amount thereof plus accrued and unpaid interest and special interest, if any, to the date of repurchase. However, it is possible that we will not have sufficient funds at the time of the change of control to make the required repurchase of exchange notes or that restrictions in our facilities will not allow such repurchases. In addition, certain important corporate events, such as leveraged recapitalizations that would increase the level of our indebtedness, would not constitute a “Change of Control” under the indenture. See “Description of the Exchange Notes—Repurchase at the Option of the Holders—Offer to Repurchase upon Change of Control.”
Noteholders may not be able to determine when a change of control giving rise to mandatory repurchase rights has occurred following a sale of “substantially all” of our and our restricted subsidiaries’ assets.
The definition of change of control in the indenture governing the notes includes a phrase relating to the direct or indirect sale, transfer, conveyance or other disposition of “all or substantially all” of our and our restricted subsidiaries’ assets, taken as a whole. There is no precise established definition of the phrase “substantially all” under applicable law. Accordingly, the ability of a noteholder to require us to repurchase the exchange notes as a result of a sale, transfer, conveyance or other disposition of less than all of our and our restricted subsidiaries’ assets to another individual, group or entity may be uncertain.


19

Our being subject to certain fraudulent transfer and conveyance laws may have adverse implications for the holders of the exchange notes.
The exchange notes are guaranteed by one of our subsidiaries. This guarantee may be subject to review under federal bankruptcy law or relevant state fraudulent conveyance laws if a bankruptcy proceeding is commenced by or on behalf of the subsidiary guarantor’s creditors. Under these laws, if in such a proceeding a court were to find that a subsidiary guarantor:
•
incurred its guarantee with the intent of hindering, delaying or defrauding current or future creditors; or
•
received less than reasonably equivalent value or fair consideration for incurring these guarantees and
—
was insolvent or was rendered insolvent by reason of such guarantee;
—
was engaged, or about to engage, in a business or transaction for which its remaining assets constituted unreasonably small capital to carry on its business; or
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intended to incur, or believed that it would incur, debts beyond its ability to pay these debts as they mature, as all of the foregoing terms are defined in or interpreted under the relevant fraudulent transfer or conveyance statutes;
then the court could void such subsidiary guarantee or subordinate such subsidiary’s guarantee to such subsidiary’s presently existing or future debt or take other actions detrimental to you.
The measure of insolvency for purposes of the foregoing considerations will vary depending upon the law of the jurisdiction that is being applied in any such proceeding. Generally, an entity would be considered insolvent if, at the time it incurred the debt:
•
it could not pay its debts or contingent liabilities as they become due;
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the sum of its debts, including contingent liabilities, is greater than its assets, at fair valuation; or
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the present fair saleable value of its assets is less than the amount required to pay the probable liability on its total existing debts and liabilities, including contingent liabilities, as they become absolute and mature.
We cannot assure you as to what standard a court would apply in order to determine whether a subsidiary guarantor was “insolvent” as of the date its guarantee was issued, and, regardless of the method of valuation, a court could determine that such subsidiary guarantor was insolvent on that date. A court could also determine, regardless of whether a subsidiary guarantor was insolvent on the date the subsidiary’s guarantee was issued, that the payments constituted fraudulent transfers on another ground.
The subsidiary guarantee could be subject to the claim that, since the subsidiary guarantee was incurred for our benefit, and only indirectly for the benefit of the subsidiary guarantor, the obligations of the subsidiary guarantor thereunder were incurred for less than reasonably equivalent value or fair consideration. A court could void a subsidiary guarantor’s obligation under its subsidiary guarantee, subordinate the subsidiary guarantee to the other indebtedness of a subsidiary guarantor, direct that holders of the notes return any amounts paid under a subsidiary guarantee to the relevant subsidiary guarantor or to a fund for the benefit of its creditors, or take other action detrimental to the holders of the notes. In addition, since the guarantee by the subsidiary guarantor is limited to the maximum amount that the subsidiary guarantor is permitted to guarantee under applicable law, the subsidiary guarantor’s liability under its guarantee could be reduced to zero, depending upon the amount of other obligations of such subsidiary guarantor. Also, you will lose the benefit of the guarantee if it is released under certain circumstances described under “Description of the Exchange Notes—Brief Description of the Notes and the Subsidiary Guarantees—The Subsidiary Guarantees.”
The subsidiary guarantee contains a provision intended to limit the guarantor’s liability to the maximum amount that it could incur without causing its guarantee to be a fraudulent transfer. However, this provision may not be effective to protect the guarantee from being avoided under fraudulent transfer law or may reduce or eliminate the subsidiary guarantor’s obligations to an amount that effectively makes its guarantee worthless.
If an active trading market does not develop for the exchange notes, you may not be able to resell them.
We do not intend to apply for the listing of the exchange notes on any securities exchange or automated interdealer quotation system. If no active trading market develops, you may not be able to resell your exchange notes at their fair market value or at all. Future trading prices of the exchange notes will depend on many factors, including, among other things, our ability to effect the exchange offer, prevailing interest rates, our operating results and the market for similar


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securities. We have been informed by the initial purchasers of the outstanding notes that they currently intend to make a market in the exchange notes after the exchange offer is completed. However, the initial purchasers may cease their market-making at any time.
We are a holding company. Substantially all of our business is conducted through our subsidiaries. Our ability to repay our debt, including the exchange notes, depends on the performance of our subsidiaries and their ability to make distributions to us.
We are a holding company and we conduct all of our operations through our subsidiaries. As a result, we rely on dividends, loans and other payments or distributions from our subsidiaries to meet our debt service obligations and enable us to pay interest and dividends. The ability of our subsidiaries to pay dividends or make other payments or distributions to us depends substantially on their respective operating results and is subject to restrictions under, among other things, the laws of their jurisdiction of organization (which may limit the amount of funds available for the payment of dividends), agreements of those subsidiaries, the terms of our financing arrangements and the terms of any future financing arrangements of our subsidiaries. See “Description of the Exchange Notes—Certain Covenants.”
Any decline in the ratings of our corporate credit could adversely affect the value of the exchange notes.
Any decline in the ratings of our corporate credit or any indications from the rating agencies that their ratings on our corporate credit are under surveillance or review with possible negative implications could adversely affect the value of the exchange notes. In addition, a ratings downgrade could adversely affect our ability to access capital.
The market price for the exchange notes (if any) may be volatile.
Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the exchange notes. The market for the exchange notes, if any, may be subject to similar disruptions. Any such disruptions may adversely affect the value of the exchange notes.
Many of the covenants in the indenture will not apply if the exchange notes are rated investment grade by both Moody’s and Standard & Poor’s.
Many of the covenants in the indenture will not apply to us if the exchange notes are rated investment grade by both Moody’s and Standard & Poor’s, provided at such time no default or event of default has occurred and is continuing. These covenants restrict, among other things, our ability to pay distributions, incur debt and to enter into certain other transactions. There can be no assurance that the exchange notes will ever be rated investment grade, or that, if they are rated investment grade, the exchange notes will maintain these ratings. Suspension of these covenants would allow us to engage in certain transactions that would not be permitted while these covenants were in force. To the extent the covenants are subsequently reinstated, any such action taken while the covenants were suspended would not result in an event of default under the indenture. See “Description of the Exchange Notes—Certain Covenants—Covenant Suspension.”
Risks Related to Our Business
We compete in a mature category with strong competition.
We compete in the ready-to-eat cereal category with competitors that represent larger shares of category sales. Our products face strong competition from competitors for shelf space and sales. Competition in our product categories is based on product innovation, product quality, price, brand recognition and loyalty, effectiveness of marketing, promotional activity and the ability to identify and satisfy consumer preferences. Some of our competitors have substantial financial, marketing and other resources, and competition with them in our various markets and product lines could cause us to reduce prices, increase marketing, or lose market share, any of which could have a material adverse effect on our business and financial results. This high level of competition by our competitors could result in a decrease in our sales volumes. In addition, increased trade spending or advertising or reduced prices on our competitors’ products may require us to do the same for our products, which could impact our margins and volumes. If we did not do the same, our revenue, profitability, and market share could be adversely affected.
We may be unable to anticipate changes in consumer preferences and trends, which could result in decreased demand for our products.
Our success depends in part on our ability to anticipate the tastes and eating habits of consumers and to offer products that appeal to their preferences. Consumer preferences change from time to time and can be affected by a number of different and unexpected trends. Our failure to anticipate, identify or react quickly to these changes and trends, and to introduce new and improved products on a timely basis, could result in reduced demand for our products, which would in turn cause our revenues and profitability to suffer. Similarly, demand for our products could be affected by consumer


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concerns regarding the health effects of nutrients or ingredients such as trans fats, sugar, processed wheat and corn or other product attributes.
A decline in demand for ready-to-eat cereals could adversely affect our financial performance.
We focus primarily on producing and selling ready-to-eat cereal products. Because of our product concentration, any decline in consumer demand or preferences, including diet-driven changes, for ready-to-eat cereals or any other factor that adversely affects the ready-to-eat cereal market could have a material adverse effect on our business, financial condition or results of operations. We could also be adversely affected if consumers lose confidence in the healthfulness, safety or quality of ready-to-eat cereals or ingredients. Adverse publicity about these types of concerns, whether or not valid, may discourage consumers from buying our products or cause production and delivery disruptions.
The restatement of our historical financial statements may have a material adverse effect on our stock price and our ability to meet third party obligations.
As a result of Ralcorp’s recent restatement of its financial statements for the fiscal year ended September 30, 2011 and the three months ended December 31, 2011, we also restated our historical financial statements for the same periods. While the circumstances leading to the restatement occurred before our spin-off from Ralcorp, any restatement may affect investor confidence in our financial disclosures and may result in a decline in stock price and stockholder lawsuits related to the restatement.
Although we have completed the restatement, we cannot guarantee that we will not receive inquiries from the Securities and Exchange Commission, or the SEC, or the New York Stock Exchange, or the NYSE, regarding our restated financial statements or matters relating thereto. Any future inquiries from the SEC or NYSE as a result of the restatement of our historical financial statements will, regardless of the outcome, likely consume a significant amount of our resources in addition to those resources already consumed in connection with the restatement itself. The delays caused by the restatement could also continue to impact our ability to meet third party time-sensitive contractual obligations.
We have identified a material weakness in our internal control over financial reporting, and if we are unable to achieve and maintain effective internal control over financial reporting, investors could lose confidence in our financial statements and our company, which could have a material adverse effect on our business and stock price.
In order to provide reliable financial reports and operate successfully as a publicly traded company, we must maintain effective control over our financial reporting. In connection with the restatement of certain of its financial statements, Ralcorp management determined that a material weakness in internal control over financial reporting existed as of September 30, 2011 and December 31, 2011 for Ralcorp. As a wholly-owned subsidiary of Ralcorp, the material weakness also existed at Post for these periods. On February 3, 2012, Post became a stand-alone independent public company through the completion of a tax free spin-off from Ralcorp. From that time forward Post’s management team became responsible for establishing its own disclosure controls and procedures and internal control over financial reporting.
We believe that this material weakness does not exist as of June 30, 2012. However, we can make no assurances that additional material weaknesses or significant deficiencies may not subsequently arise. If we fail to achieve and maintain effective internal control over financial reporting and disclosure controls and procedures, it could result in additional significant deficiencies or material weaknesses, cause us to fail to meet our periodic reporting obligations, result in material misstatements in our financial statements, restatement of financial statements, sanctions or investigations by regulatory authorities, or loss of investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the trading price of our stock.
Impairment in the carrying value of intangible assets could negatively impact our net worth. If our goodwill, indefinite-lived intangible assets, or other long-term assets become impaired, we will be required to record additional impairment charges, which may be significant.
The carrying value of intangible assets represents the fair value of goodwill, trademarks, trade names, and other acquired intangibles. Intangibles and goodwill expected to contribute indefinitely to our cash flows are not amortized, but our management reviews them for impairment on an annual basis or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Impairments to intangible assets may be caused by factors outside our control, such as increasing competitive pricing pressures, lower than expected revenue and profit growth rates, changes in industry EBITDA and revenue multiples, changes in discount rates based on changes in cost of capital (interest rates, etc.), or the bankruptcy of a significant customer. These factors, along with other internal and external factors, could negatively impact our net worth and could have a significant impact on our fair valuation determination, which could then result in a material impairment charge in our results of operations. During fiscal years 2011 and 2010 we have incurred impairment


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losses related to goodwill and trademark intangible assets, and we could have additional impairments in the future. See further discussion of these impairment losses in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, as restated, and Notes 2 and 4 to our audited combined financial statements, as restated, included in this prospectus.
Labor strikes or work stoppages by our employees could harm our business.
A significant number of our full-time production and maintenance employees are covered by collective bargaining agreements. A dispute with a union or employees represented by a union could result in production interruptions caused by work stoppages. If a strike or work stoppage were to occur, our results of operations could be adversely affected.
The labor contract for our Battle Creek, Michigan location, our largest facility, expired October 7, 2012 and is currently under negotiation. We signed an extension on October 17, 2012 which will extend the existing collective bargaining agreement through November 12, 2012. There can be no assurance that a new contract will be ratified on or prior to November 12, 2012. In the event of a work stoppage, we have contingency plans in place that would utilize the plant capabilities in conjunction with our ability to manufacture cereals in other locations to mitigate disruption to the business. However, there are limitations inherent in any plan to mitigate disruption to our business in the event of a work stoppage and, particularly in the case of a prolonged work stoppage, there can be no assurance that it would not have a material adverse effect on our results of operations.
Economic downturns could limit consumer demand for our products.
The willingness of consumers to purchase our products depends in part on general or local economic conditions. In periods of economic uncertainty, consumers may purchase more generic, private brand or value brands and may forego certain purchases altogether. In those circumstances, we could experience a reduction in sales of our products. In addition, as a result of economic conditions or competitive actions, we may be unable to raise our prices sufficiently to protect profit margins. Any of these events could have an adverse effect on our results of operations.
Commodity price volatility and higher energy costs could negatively impact profits.
The primary commodities used by our businesses include wheat, nuts (including almonds), sugar, edible oils, corn, oats, cocoa, and our primary packaging includes linerboard cartons and corrugated boxes. In addition, our manufacturing operations use large quantities of natural gas and electricity. The cost of such commodities may fluctuate widely and we may experience shortages in commodity items as a result of commodity market fluctuations, availability, increased demand, weather conditions, and natural disasters as well as other factors outside of our control. Higher prices for natural gas, electricity and fuel may also increase our production and delivery costs. Changes in the prices charged for our products may lag behind changes in our energy and commodity costs. Accordingly, changes in commodity or energy costs may limit our ability to maintain existing margins and have a material adverse effect on our operating profits. Due to the recent drought in the United States, pricing for certain commodities is expected to continue to rise, which may materially harm our business, financial condition and results of operations. If we fail to hedge and prices subsequently increase, or if we institute a hedge and prices subsequently decrease, our costs may be greater than anticipated or greater than our competitors’ costs and our financial results could be adversely affected.
If we pursue strategic acquisitions, divestitures or joint ventures, we may not be able to successfully consummate favorable transactions or successfully integrate acquired businesses.
From time to time, we may evaluate potential acquisitions, divestitures or joint ventures that would further our strategic objectives. With respect to acquisitions, we may not be able to identify suitable candidates, consummate a transaction on terms that are favorable to us, or achieve expected returns and other benefits as a result of integration challenges. With respect to proposed divestitures of assets or businesses, we may encounter difficulty in finding acquirers or alternative exit strategies on terms that are favorable to us, which could delay the accomplishment of our strategic objectives, or our divestiture activities may require us to recognize impairment charges. Companies or operations acquired or joint ventures created may not be profitable or may not achieve sales levels and profitability that justify the investments made. Our corporate development activities may present financial and operational risks, including diversion of management attention from existing core businesses, integrating or separating personnel and financial and other systems, and adverse effects on existing business relationships with suppliers and customers. Future acquisitions could also result in potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities and/or amortization expenses related to certain intangible assets and increased operating expenses, which could adversely affect our results of operations and financial condition.


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Unsuccessful implementation of business strategies to reduce costs may adversely affect our results of operations.
Many of our costs, such as raw materials, energy and freight, are outside our control. Therefore, we must seek to reduce costs in other areas, such as operating efficiency. If we are not able to complete projects which are designed to reduce costs and increase operating efficiency on time or within budget, our operating profits may be adversely impacted. In addition, if the cost-saving initiatives we have implemented or any future cost-saving initiatives do not generate the expected cost savings and synergies, our results of operations may be adversely affected.
Our inability to raise prices may adversely affect our results of operations.
Our ability to raise prices for our products may be adversely affected by a number of factors, including but not limited to industry supply, market demand and promotional activity by competitors. If we are unable to increase prices for our products as may be necessary to cover cost increases, our results of operations could be adversely affected. In addition, price increases typically generate lower volumes as customers then purchase fewer units. If these losses are greater than expected or if we lose distribution as a result of a price increase, our results of operations could be adversely affected.
Loss of a significant customer may adversely affect our results of operations.
A limited number of customer accounts represent a large percentage of our consolidated net sales. Our top ten customers represent approximately 56% of our net sales for fiscal year 2011, and our largest customer, Walmart, accounted for approximately 21% of our net sales in each of fiscal 2011, 2010 and 2009. The success of our business depends, in part, on our ability to maintain our level of sales and product distribution through high-volume food retailers, super centers and mass merchandisers. The competition to supply products to these high-volume stores is intense. Currently, we do not have long-term supply agreements with a substantial number of our customers, including our largest customers. These high-volume stores and mass merchandisers frequently reevaluate the products they carry. If a major customer elected to stop carrying one of our products, our sales may be adversely affected.
Consolidation among the retail grocery and foodservice industries may hurt profit margins.
Over the past several years, the retail grocery and foodservice industries have undergone significant consolidations and mass merchandisers are gaining market share. As this trend continues and such customers grow larger, they may seek to use their position to improve their profitability through improved efficiency, lower pricing, increased reliance on their own brand name products, increased emphasis on generic and other value brands, and increased promotional programs. If we are unable to respond to these requirements, our profitability or volume growth could be negatively impacted. Additionally, if the surviving entity is not a customer, we may lose significant business once held with the acquired retailer.
If our food products become adulterated, misbranded, or mislabeled, we might need to recall those items and may experience product liability claims if consumers are injured.
Selling food products involves a number of legal and other risks, including product contamination, spoilage, product tampering, allergens, or other adulteration. We may need to recall some or all of our products if they become adulterated, mislabeled or misbranded. This could result in destruction of product inventory, negative publicity, temporary plant closings and substantial costs of compliance or remediation. Should consumption of any product cause injury, we may be liable for monetary damages as a result of a judgment against us. In addition, adverse publicity, including claims, whether or not valid, that our products or ingredients are unsafe or of poor quality may discourage consumers from buying our products or cause production and delivery disruptions. Any of these events, including a significant product liability judgment against us, could result in a loss of consumer confidence in our food products. This could have an adverse effect on our financial condition, results of operations or cash flows.
Disruption of our supply chain could have an adverse effect on our business, financial condition and results of operations.
Our ability, including manufacturing or distribution capabilities, and that of our suppliers, business partners and contract manufacturers, to make, move and sell products is critical to our success. Damage or disruption to our or their manufacturing or distribution capabilities due to weather, including any potential effects of climate change, natural disaster, fire or explosion, terrorism, pandemics, strikes, repairs or enhancements at our facilities, or other reasons, could impair our ability to manufacture or sell our products. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, could adversely affect our business, financial condition and results of operations, as well as require additional resources to restore our supply chain.


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Termination of our material licenses would have a material adverse effect on our business.
We manufacture and market our Pebbles™ products in the United States, Canada and several other locations pursuant to a long-term intellectual property license agreement. This license gives us the exclusive right (subject only to an exception regarding the sale of similar products in amusement and theme parks) to use the Flintstones characters in connection with breakfast cereal and to sell all Pebbles™ branded cereal products in those regions. If we were to breach any material term of this license agreement and not timely cure the breach, the licensor could terminate the agreement. If the licensor were to terminate our rights to use the Flintstones characters or the Pebbles™ brand for this or any other reason, the loss of such rights could have a material adverse effect on our business.
Global capital and credit market issues could negatively affect our liquidity, increase our costs of borrowing, and disrupt the operations of our suppliers and customers.
U.S. and global credit markets have, from time to time, experienced significant dislocations and liquidity disruptions which caused the spreads on prospective debt financings to widen considerably. These circumstances materially impacted liquidity in the debt markets, making financing terms for borrowers less attractive, and in certain cases resulted in the unavailability of certain types of debt financing. Events affecting the credit markets have also had an adverse effect on other financial markets in the U.S., which may make it more difficult or costly for us to raise capital through the issuance of common stock or other equity securities or refinance our existing debt, sell our assets or borrow more money if necessary. Our business could also be negatively impacted if our suppliers or customers experience disruptions resulting from tighter capital and credit markets or a slowdown in the general economy. Any of these risks could impair our ability to fund our operations or limit our ability to expand our business or increase our interest expense, which could have a material adverse effect on our financial results.
Changing currency exchange rates may adversely affect our earnings and financial position.
We have operations and assets in the United States and Canada. Our consolidated financial statements are presented in U.S. dollars; therefore, we must translate our foreign assets, liabilities, revenue and expenses into U.S. dollars at applicable exchange rates. Consequently, fluctuations in the value of the Canadian dollar may negatively affect the value of these items in our consolidated financial statements. To the extent we fail to manage our foreign currency exposure adequately, we may suffer losses in value of our net foreign currency investment, and our consolidated results of operations and financial position may be negatively affected.
Violations of laws or regulations, as well as new laws or regulations or changes to existing laws or regulations, could adversely affect our business.
The food production and marketing industry is subject to a variety of federal, state, local and foreign laws and regulations, including food safety requirements related to the ingredients, manufacture, processing, storage, marketing, advertising, labeling, and distribution of our products as well as those related to worker health and workplace safety. Our activities, both in and outside of the United States, are subject to extensive regulation. In the U.S. we are regulated by, among other federal and state authorities, the U.S. Food and Drug Administration, U.S. Federal Trade Commission and the U.S. Departments of Commerce and Labor as well as by similar authorities abroad. Governmental regulations also affect taxes and levies, healthcare costs, energy usage, immigration and other labor issues, all of which may have a direct or indirect effect on our business or those of our customers or suppliers. In addition, we market and advertise our products and could be the target of claims relating to alleged false or deceptive advertising under federal, state, and foreign laws and regulations and may be subject to initiatives to limit or prohibit the marketing and advertising of our products to children. Changes in these laws or regulations or the introduction of new laws or regulations could increase the costs of doing business for us or our customers or suppliers or restrict our actions, causing our results of operations to be adversely affected. Further, if we are found to be out of compliance with applicable laws and regulations in these areas, we could be subject to civil remedies, including fines, injunctions, or recalls, as well as potential criminal sanctions, any of which could have a material adverse effect on our business.
As a publicly traded company, we are subject to changing rules and regulations of federal and state government as well as the stock exchange on which our common stock is listed. These entities, including the Public Company Accounting Oversight Board, the SEC and the NYSE, have issued a significant number of new and increasingly complex requirements and regulations over the course of the last several years and continue to develop additional regulations and requirements in response to laws enacted by Congress. Our efforts to comply with these requirements may result in an increase in expenses and a diversion of management’s time from other business activities.


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We may not be able to operate successfully if we lose key personnel, are unable to hire qualified additional personnel, or experience turnover of our management team.
We are highly dependent on our ability to attract and retain qualified personnel to operate and expand our business. If we lose one or more members of our senior management team, or if we fail to attract new employees, our business and financial position, results of operations or cash flows could be harmed.
Changes in weather conditions, natural disasters and other events beyond our control can adversely affect our results of operations.
Changes in weather conditions and natural disasters such as floods, droughts, frosts, earthquakes, hurricanes, fires or pestilence, may affect the cost and supply of commodities and raw materials, including tree nuts, corn syrup, sugar, corn and wheat. Additionally, these events can result in reduced supplies of raw materials and longer recoveries of usable raw materials. Competing manufacturers can be affected differently by weather conditions and natural disasters depending on the location of their suppliers and operations. Failure to take adequate steps to reduce the likelihood or mitigate the potential impact of such events, or to effectively manage such events if they occur, particularly when a product is sourced from a single location, could adversely affect our business and results of operations, as well as require additional resources to restore our supply chain.
We may experience losses or be subject to increased funding and expenses to our qualified pension plans, which could negatively impact profits.
We maintain a qualified defined benefit plan in the U.S. and Canada and we are obligated to ensure that the plans are funded in accordance with applicable regulations. In the event the stock market deteriorates, the funds in which we invest do not perform according to expectations, or the valuation of the projected benefit obligation increases due to changes in interest rates or other factors, we may be required to make significant cash contributions to these plans and recognize increased expense within our financial statements.
Technology failures could disrupt our operations and negatively impact our business.
We increasingly rely on information technology systems to process, transmit and store electronic information. For example, our production and distribution facilities and inventory management utilize information technology to increase efficiencies and limit costs. Furthermore, a significant portion of the communications between our personnel, customers and suppliers depends on information technology. Our information technology systems may be vulnerable to a variety of interruptions due to events beyond our control, including, but not limited to, natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers and other security issues. Such interruptions could negatively impact our business.
Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products and brands.
We consider our intellectual property rights, particularly our trademarks, but also our patents, trade secrets, copyrights and licenses, to be a significant and valuable aspect of our business. We attempt to protect our intellectual property rights through a combination of patent, trademark, copyright and trade secret laws, as well as licensing agreements, third party nondisclosure and assignment agreements and the policing of third party misuses of our intellectual property. Our failure to obtain or maintain adequate protection of our intellectual property rights, or any change in law or other changes that serve to lessen or remove the current legal protections for intellectual property, may diminish our competitiveness and could materially harm our business.
We face the risk of claims that we have infringed third parties’ intellectual property rights. Any claims of intellectual property infringement, even those without merit, could be expensive and time consuming to defend; cause us to cease making, licensing or using products that incorporate the challenged intellectual property; require us to redesign or rebrand our products or packaging, if feasible; divert management’s attention and resources; or require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property. Any royalty or licensing agreements, if required, may not be available to us on acceptable terms or at all. Additionally, a successful claim of infringement against us could result in our being required to pay significant damages, enter into costly license or royalty agreements or stop the sale of certain products, any of which could have a negative impact on our operating profits and harm our future prospects.


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We are subject to environmental laws and regulations that can impose significant costs and expose us to potential financial liabilities.
We are subject to extensive and frequently changing federal, state, local and foreign laws and regulations relating to the protection of human health and the environment, including those limiting the discharge and release of pollutants into the environment and those regulating the transport, use, treatment, storage, disposal and remediation of, and exposure to, solid and hazardous wastes and materials. Certain environmental laws and regulations can impose joint and several liability without regard to fault on responsible parties, including past and present owners and operators of sites, related to cleaning up sites at which hazardous wastes or materials were disposed or released. Failure to comply with environmental laws and regulations could result in severe fines and penalties by governments or courts of law. In addition, various current and likely future federal, state, local and foreign laws and regulations could regulate the emission of greenhouse gases, particularly carbon dioxide and methane. We cannot predict the impact that such regulation may have, or that climate change may otherwise have, on our business.
Future events, such as new or more stringent environmental laws and regulations, any new environmental claims, the discovery of currently unknown environmental conditions requiring response action, or more vigorous enforcement or a new interpretation of existing environmental laws and regulations, might require us to incur additional costs that could have a material adverse effect on our financial results.
Pending and future litigation may lead us to incur significant costs.
 We are, or may become, party to various lawsuits and claims arising in the normal course of business, which may include lawsuits or claims relating to contracts, intellectual property, product recalls, product liability, employment matters, environmental matters or other aspects of our business. In addition, we may in the future be subject to additional litigation or other proceedings or actions arising in relation to the recent restatement of our historical financial statements. The defense of these lawsuits may divert our management’s attention, and we may incur significant expenses in defending these lawsuits. In addition, we may be required to pay damage awards or settlements, or become subject to injunctions or other equitable remedies, that could have a material adverse effect on our financial position, cash flows or results of operations. The outcome of litigation is often difficult to predict, and the outcome of pending or future litigation may have a material adverse effect on our financial position, cash flows, or results of operations.
Risks Related to our Separation from Ralcorp
Our historical financial results as a business segment of Ralcorp and our unaudited pro forma condensed consolidated and condensed combined financial statements may not be representative of our results as a separate, stand-alone company.
Much of the historical financial information we have included in this prospectus has been derived from the consolidated financial statements and accounting records of Ralcorp (and, for periods before August 4, 2008, of Kraft). Accordingly, the historical and pro forma financial information does not necessarily reflect what our financial position, results of operations or cash flows would have been had we operated as a separate, stand-alone company during the periods presented or those that we may achieve in the future primarily as a result of the following factors:
•
Prior to the separation, our business was operated by Ralcorp as part of its broader corporate organization, rather than as an independent company. Ralcorp or one of its affiliates performed various corporate functions for us, including, but not limited to, legal, treasury, accounting, auditing, risk management, information technology, human resources, corporate affairs, tax administration, certain governance functions (including compliance with the Sarbanes-Oxley Act of 2002 and internal audit) and external reporting. Our historical and pro forma financial results include allocations of corporate expenses from Ralcorp for these and similar functions. These allocations are possibly less than the comparable expenses we incur as a separate publicly traded company;
•
Our pro forma financial information set forth under “Unaudited Pro Forma Condensed Consolidated and Condensed Combined Financial Statements” reflects changes that occurred in our funding and operations as a result of the separation. This pro forma condensed consolidated and condensed combined financial information may not reflect our costs as a separate, stand-alone company;
•
Prior to the separation, our business was integrated with the other businesses of Ralcorp. Historically, we have shared economies of scope and scale in costs, employees, vendor relationships and customer relationships. The loss of the benefits of doing business as part of Ralcorp could have an adverse effect on our results of operations and financial condition;


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•
Generally, our working capital requirements and capital for our general corporate purposes, including advertising and trade promotions, research and development and capital expenditures, have historically been satisfied as part of the corporate-wide cash management policies of Ralcorp. In connection with the separation, we incurred substantial indebtedness, as discussed above; and
•
The cost of capital for our business may be higher than Ralcorp’s cost of capital prior to the separation because Ralcorp’s cost of debt prior to the separation may have been lower than ours following the separation.
We may be unable to achieve some or all of the benefits that we expected to achieve from our separation from Ralcorp.
By separating from Ralcorp there is a risk that our company may be more susceptible to market fluctuations and other adverse events than we would have been if we were still a part of Ralcorp. As part of Ralcorp we were able to enjoy certain benefits from Ralcorp’s operating diversity and purchasing and borrowing leverage. We may not be able to achieve some or all of the benefits that we expected to achieve as a stand-alone, independent company.
Potential liabilities may arise due to fraudulent transfer considerations, which would adversely affect our financial condition and our results of operations.
In connection with the separation, Ralcorp undertook financing transactions which, along with the separation and the financing transactions involving us, may be subject to federal and state fraudulent conveyance and transfer laws. If a court were to determine under these laws that, at the time of the separation, any entity involved in these transactions or the separation:
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was insolvent;
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was rendered insolvent by reason of the separation;
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had remaining assets constituting unreasonably small capital; or
•
intended to incur, or believed it would incur, debts beyond its ability to pay these debts as they matured,
the court could void the separation, in whole or in part, as a fraudulent conveyance or transfer. The court could then require our shareholders to return to Ralcorp some or all of the shares of our common stock issued pursuant to the separation, or require Ralcorp or us, as the case may be, to fund liabilities of the other company for the benefit of creditors. The measure of insolvency will vary depending upon the jurisdiction whose law is being applied. Generally, however, an entity would be considered insolvent if the fair value of its assets were less than the amount of its liabilities or if it incurred debt beyond its ability to repay the debt as it matures.
We may have a significant indemnity obligation to Ralcorp if the separation and/or certain related transactions are treated as a taxable transaction.
We are party to a Tax Allocation Agreement with Ralcorp, which sets out each party’s rights and obligations with respect to federal, state, local and foreign taxes for periods before and after the separation (including taxes that may arise if the separation and/or certain related transactions do not qualify for tax-free treatment under the Internal Revenue Code of 1986, as amended, or the “Code”) and related matters such as the filing of tax returns and the conduct of the parties in IRS and other audits.
Ralcorp received a private letter ruling from the IRS to the effect that, among other things, the separation and certain related transactions qualify for tax-free treatment under the Code. In addition, Ralcorp obtained an opinion from its legal counsel substantially to the effect that, among other things, the separation and certain related transactions qualify for tax-free treatment under the Code. The private letter ruling from the IRS is not binding on the IRS if the factual representations or assumptions made in the letter ruling request are untrue or incomplete in any material respect. Furthermore, the IRS will not rule on whether a distribution satisfies certain requirements necessary to obtain tax-free treatment under the Code. Rather, the ruling is based upon representations by Ralcorp that these conditions have been satisfied, and any inaccuracy in such representations could invalidate the ruling.
The opinion of counsel referred to above addressed all of the requirements necessary for the separation and certain related transactions to obtain tax-free treatment under the Code, relied on the IRS private letter ruling as to matters covered by the ruling, and was based on, among other things, certain assumptions and representations made by Ralcorp and us, which if incorrect or inaccurate in any material respect would jeopardize the conclusions reached by counsel in such opinion. The opinion is not binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion.
Notwithstanding receipt by Ralcorp of the private letter ruling and opinion of counsel, the IRS could determine that the separation and/or certain related transactions should be treated as taxable transactions if it determines that any of the


28

representations, assumptions or undertakings that were included in the request for the private letter ruling is false or has been violated or if it disagrees with the conclusions in the opinion that are not covered by the IRS ruling. Furthermore, events subsequent to the distribution could cause Ralcorp to recognize gain on the separation, including as a result of Section 355(e) of the Code.
Pursuant to the Tax Allocation Agreement, in certain cases, we will be required to indemnify Ralcorp for taxes resulting from the separation and/or certain related transactions not qualifying for tax-free treatment for United States federal income tax purposes. Pursuant to the Tax Allocation Agreement, we will be required to indemnify Ralcorp for losses and taxes of Ralcorp resulting from the breach of certain covenants made by us and for certain taxable gain that could be recognized by Ralcorp, including as a result of certain acquisitions of our stock or assets. If we are required to indemnify Ralcorp under the circumstances set forth in the Tax Allocation Agreement, we may be subject to substantial liabilities, which could materially adversely affect our financial position. Our indemnification obligations to Ralcorp are not limited by any maximum amount.
The tax rules applicable to the separation and our indemnification obligations contained in the Tax Allocation Agreement may restrict us from taking certain actions, engaging in certain corporate transactions or from raising equity capital beyond certain thresholds for a period of time after the separation.
The distribution of Post would be taxable to Ralcorp if such distribution was part of a “plan or series of related transactions” pursuant to which one or more persons acquire directly or indirectly stock representing a 50% or greater interest (by vote or value) in Ralcorp or Post. Under current U.S. federal income tax law, acquisitions that occur during the four-year period that begins two years before the date of the distribution are presumed to occur pursuant to a plan or series of related transactions, unless it is established that the acquisition is not pursuant to a plan or series of transactions that includes the distribution. U.S. Treasury regulations currently in effect generally provide that whether an acquisition and a distribution are part of a plan is determined based on all of the facts and circumstances, including, but not limited to, specific factors described in the U.S. Treasury regulations. In addition, the U.S. Treasury regulations provide several “safe harbors” for acquisitions that are not considered to be part of a plan.
These rules and our indemnification obligations contained in the Tax Allocation Agreement limit our ability during the two-year period following the distribution to enter into certain transactions that may be advantageous to us and our shareholders, particularly issuing equity securities to satisfy financing needs, repurchasing equity securities, disposing of certain assets, engaging in mergers and acquisitions and, under certain circumstances, acquiring businesses or assets with equity securities or agreeing to be acquired.
Our ability to operate our business effectively may suffer if we do not establish our own financial, administrative and other support functions in order to operate as a separate, stand-alone company, and the transition services Ralcorp has agreed to provide may not be sufficient for our needs.
Prior to the separation, we relied on financial, administrative and other resources, including the business relationships, of Ralcorp to support the operation of our business. Ralcorp is providing us with certain transition services for up to 24 months following the separation, but we may not be able to adequately replace those resources or replace them at the same cost. We may not be able to successfully put in place the financial, operational and managerial resources necessary to operate independently within the time periods prescribed by the Transition Services Agreement. Unanticipated delays in transitioning from the services Ralcorp provides could lead to duplicative costs and other inefficiencies. Any failure or significant downtime in our own financial or administrative systems or in Ralcorp’s financial or administrative systems during the transition period could impact our results or prevent us from performing other administrative services and financial reporting on a timely basis and could materially harm our business, financial condition and results of operations.
The agreements we have entered into with Ralcorp involve conflicts of interest and therefore may have materially disadvantageous terms to us.
We have entered into certain agreements with Ralcorp, including the Separation and Distribution Agreement, Tax Allocation Agreement, Employee Matters Agreement and Transition Services Agreement which set forth the main terms of the separation and provide a framework for our initial relationship with Ralcorp following the separation. The terms of these agreements and the separation were determined at a time when we were still part of Ralcorp and therefore involve conflicts of interest. Accordingly, such agreements may not reflect terms that could have been reached on an arm’s-length basis between unaffiliated parties, which could have been materially more favorable to us.


29

We may incur material costs and expenses as a result of our separation from Ralcorp, which could adversely affect our profitability.
As a result of our separation from Ralcorp, we may incur costs and expenses greater than those we incurred prior to the separation. These increased costs and expenses may arise from various factors, including financial reporting, costs associated with complying with federal securities laws (including compliance with the Sarbanes-Oxley Act of 2002), tax administration, and legal and human resources related functions, and it is possible that these costs will be material to our business.
Our business, financial condition and results of operations may be adversely affected if we are unable to negotiate terms that are as favorable as those Ralcorp has received when we replace contracts after the separation.
Prior to completion of the separation, certain functions (such as purchasing, information systems, customer service, logistics and distribution) for our business generally had been performed under Ralcorp’s centralized systems and, in some cases, under contracts that were also used for Ralcorp’s other businesses and which were not assigned to us. We may not be able to negotiate terms that are as favorable as those Ralcorp received as we replace these contracts with our own agreements.
If we are unable to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or our internal control over financial reporting is not effective, the reliability of our financial statements may be questioned, and our stock price may suffer.
Section 404 of the Sarbanes-Oxley Act of 2002 requires any company subject to the reporting requirements of the U.S. securities laws to do a comprehensive evaluation of its and its consolidated subsidiaries’ internal control over financial reporting. To comply with this statute, we will eventually be required to document and test our internal control procedures, our management will be required to assess and issue a report concerning our internal control over financial reporting, and our independent auditors will be required to issue an opinion on their audit of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act of 2002. If our management cannot favorably assess the effectiveness of our internal control over financial reporting or our auditors identify material weaknesses in our internal controls, investor confidence in our financial results may weaken, and our stock price may suffer.



30

USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. Because the exchange notes have substantially identical terms as the outstanding notes, the issuance of the exchange notes will not result in any increase in our indebtedness. The outstanding notes surrendered in exchange for the exchange notes will be retired and canceled and cannot be reissued. The exchange offer is intended to satisfy our obligations under the respective registration rights agreements.
 




31

SELECTED HISTORICAL CONDENSED CONSOLIDATED AND CONDENSED COMBINED FINANCIAL DATA
The following table presents our selected historical condensed consolidated and condensed combined financial data. The statement of operations data and statement of cash flows data for the fiscal years ended September 30, 2011, 2010 and 2009 and the balance sheet data as of September 30, 2011 and 2010 are derived from our audited combined financial statements included elsewhere in this prospectus. The summary consolidated balance sheet information as of June 30, 2012 and the summary consolidated statement of operations information for the nine months ended June 30, 2012 and 2011 have been derived from our unaudited condensed consolidated and condensed combined financial statements, which are included elsewhere in this prospectus. The statement of operations data for the two months ended September 30, 2008 and the seven months ended August 4, 2008 and the balance sheet data as of September 30, 2009 and September 30, 2008 are derived from our unaudited combined financial statements that are not included in this prospectus. The statement of operations data and statement of cash flows data for the year ended December 29, 2007 and the balance sheet data as of December 29, 2007 are derived from our audited combined financial statements that are not included in this prospectus.
The selected historical condensed consolidated and condensed combined financial and other operating data presented below should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes, our audited combined financial statements and accompanying notes, as restated, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations, as restated” included elsewhere in this prospectus. Our consolidated and combined financial information may not be indicative of our future performance and does not necessarily reflect what our financial position and results of operations would have been had we operated as an independent, publicly traded company during the periods presented, including changes in our operations and capitalization as a result of the separation from Ralcorp. For more information regarding these changes, see “Unaudited Pro Forma Condensed Consolidated and Condensed Combined Financial Statements” included elsewhere in this prospectus.


32

 
Nine Months Ended June 30,
 
Year Ended September 30,
 
Two Months Ended Sept. 30,
 
Seven Months Ended Aug. 4,
 
Year Ended Dec. 29,
(In millions)
2012
 
2011
 
2011
 
2010
 
2009
 
2008(e)
 
2008(f)
 
2007(f)
Statement of Operations Data
 
 
 
 
(as restated) (c)
 
 
 
 
 
 
 
 
 
 
Net sales
$
711.7

 
$
730.4

 
$
968.2

 
$
996.7

 
$
1,072.1

 
$
184.6

 
$
657.4

 
$
1,102.7

Cost of goods sold(a)
(392.9
)
 
(381.6
)
 
(516.6
)
 
(553.7
)
 
(570.8
)
 
(127.1
)
 
(370.4
)
 
(639.5
)
Gross profit
318.8

 
348.8

 
451.6

 
443.0

 
501.3

 
57.5

 
287.0

 
463.2

Selling, general and administrative expenses(b)
(202.8
)
 
(180.3
)
 
(239.5
)
 
(218.8
)
 
(272.7
)
 
(43.7
)
 
(150.6
)
 
(267.0
)
Amortization of intangible assets
(9.4
)
 
(9.4
)
 
(12.6
)
 
(12.7
)
 
(12.6
)
 
(2.2
)
 
—

 
—

Impairment of goodwill and other intangible assets(c)
—

 
(32.1
)
 
(566.5
)
 
(19.4
)
 
—

 
—

 
—

 
—

Other operating expenses, net
(0.6
)
 
(1.1
)
 
(1.6
)
 
(1.3
)
 
(0.8
)
 
—

 
(2.4
)
 
(15.2
)
Operating profit (loss)
106.0

 
125.9

 
(368.6
)
 
190.8

 
215.2

 
11.6

 
134.0

 
181.0

Interest expense
(44.2
)
 
(38.6
)
 
(51.5
)
 
(51.5
)
 
(58.3
)
 
(9.6
)
 
—

 
—

Other income (expense)
4.7

 
—

 
(1.7
)
 
—

 
—

 
—

 
—

 
—

Loss on sale of receivables(d)
(3.3
)
 
(8.7
)
 
(13.0
)
 
—

 
—

 
—

 
—

 
—

Equity in earnings of partnership
0.2

 
2.9

 
4.2

 
2.2

 
—

 
—

 
—

 
—

Earnings (loss) before income taxes
63.4

 
81.5

 
(430.6
)
 
141.5

 
156.9

 
2.0

 
134.0

 
181.0

Income taxes
(24.3
)
 
(26.2
)
 
6.3

 
(49.5
)
 
(55.8
)
 
(1.4
)
 
(48.9
)
 
(64.3
)
Net earnings (loss)
$
39.1

 
$
55.3

 
$
(424.3
)
 
$
92.0

 
$
101.1

 
$
0.6

 
$
85.1

 
$
116.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per Share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
1.14

 
$
1.61

 
$
(12.33
)
 
$
2.67

 
$
2.94

 
$
0.02

 
N/A
 
N/A
Diluted
$
1.13

 
$
1.61

 
$
(12.33
)
 
$
2.67

 
$
2.94

 
$
0.02

 
N/A
 
N/A
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statement of Cash Flows Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
$
46.9

 
$
43.8

 
$
58.7

 
$
55.4

 
$
50.6

 
$
9.8

 
$
20.3

 
$
35.2

Cash provided (used) by:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating activities
95.3

 
118.1

 
143.8

 
135.6

 
221.1

 
 
 
 
 
141.3

Investing activities
(22.3
)
 
(9.8
)
 
(14.9
)
 
(24.3
)
 
(36.7
)
 
 
 
 
 
(19.6
)
Financing activities
8.5

 
(106.6
)
 
(132.1
)
 
(112.4
)
 
(183.3
)
 
 
 
 
 
(121.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
83.5

 
 
 
$
1.7

 
$
4.8

 
$
5.7

 
$
3.2

 
 
 
$ —

Working capital (excl. cash and cash equivalents)
39.0

 
 
 
(0.7
)
 
68.0

 
39.5

 
(180.1
)
 
 
 
70.1

Total assets
2,763.5

 
 
 
2,723.2

 
3,348.0

 
3,368.1

 
3,504.6

 
 
 
918.5

Debt, including short-term portion
947.8

 
 
 
784.5

 
716.5

 
716.5

 
716.5

 
 
 
—

Other liabilities
105.2

 
 
 
104.9

 
90.7

 
78.3

 
69.6

 
 
 
9.9

Total equity
1,284.0

 
 
 
1,434.7

 
2,061.7

 
2,023.3

 
1,811.3

 
 
 
636.7


.














33






Summary Quarterly Financial Information is presented in the following table. (Unaudited)

 
For the year ended September 30, 2011
 
 
Q1
 
Q2
 
Q3
 
Q4
 
 
 
 
 
 
 
 
(as restated)
 
Revenue
$
223.7

 
$
259.0

 
$
247.7

 
$
237.8

 
Gross profit
109.8

 
125.1

 
113.9

 
102.8

 
Net income (loss)
24.6

 
29.1

 
1.6

 
(479.6
)
(c)
Basic earnings (loss) per share
$
0.72

 
$
0.85

 
$
0.05

 
$
(13.98
)
(c)
Diluted earnings (loss) per share
$
0.72

 
$
0.85

 
$
0.05

 
$
(13.98
)
(c)
 
 
 
 
 
 
 
 
 
 
For the year ended September 30, 2010
 
 
Q1
 
Q2
 
Q3
 
Q4
 
Revenue
$
249.1

 
$
262.8

 
$
244.9

 
$
239.9

 
Gross profit
106.1

 
114.5

 
105.9

 
116.5

 
Net income
21.8

 
27.0

 
25.2

 
18.0

 
Basic earnings per share
$
0.63

 
$
0.78

 
$
0.73

 
$
0.52

 
Diluted earnings per share
$
0.63

 
$
0.78

 
$
0.73

 
$
0.52

 
_______
(a)
In the nine months ended June 30, 2012 and the nine months ended June 30, 2011 and the year ended September 30, 2011, Post incurred a loss of $0.6 million, $3.5 million and $7.1 million, respectively, on economic hedges that did not meet the criteria for cash flow hedge accounting. For more information, see Note 10 of “Notes to Combined Financial Statements.” Post also incurred $1.3 million, $2.1 million, and $.8 million of costs recorded in cost of goods sold related to the transitioning of Post into Ralcorp operations during the fiscal years ended September 30, 2010 and 2009 and the two months ended September 30, 2008, respectively (see (b) below). In addition, acquisition accounting for the Post acquisition resulted in a one-time allocation of purchase price to acquired inventory of $23.4 million which was recognized in cost of goods sold in the two months ended September 30, 2008.
(b)
In the year ended September 30, 2011, Post incurred $2.8 million of costs reported in selling, general and administrative expense related to the separation of Post from Ralcorp. No separation costs were incurred during the nine months ended June 30, 2011; however, during the nine months ended June 30, 2012, Post incurred $10.4 million of costs to separate and transition Post operations into a separate stand-alone entity. In addition, Post incurred $6.4 million, $29.5 million, and $6.9 million of costs reported in selling, general and administrative expense, related to the transitioning of Post into Ralcorp operations during the fiscal years ended September 30, 2010 and 2009 and the two months ended September 30, 2008, respectively. For more information, see Note 16 of “Notes to Combined Financial Statements.”
(c)
For information about the restatement and the impairment of goodwill and other intangible assets, see “Critical Accounting Policies and Estimates” and Notes 1, 2 and 4 of “Notes to Combined Financial Statements.”
(d)
In fiscal 2011, Post began selling certain of its receivables to Ralcorp pursuant to a Ralcorp accounts receivable securitization program. For more information, see Note 8 of “Notes to Combined Financial Statements.” During December 2011, Post discontinued its participation in the Ralcorp accounts receivable securitization program.
(e)
Ralcorp (Successor) acquired Post from Kraft (Predecessor) on August 4, 2008 and changed its fiscal year end to September 30. The data for the two months ended September 30, 2008 represents results for the post-acquisition (Successor) period from August 4, 2008 to September 30, 2008. As a result of the acquisition and the application of purchase accounting, the basis of Post’s assets and liabilities were adjusted to fair value as of the acquisition date.
(f)
The data in these columns represents pre-acquisition financial information based on the fiscal calendar of Kraft (Predecessor).


34

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED AND CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated and condensed combined financial statements should be read in conjunction with our audited combined financial statements and accompanying notes, as restated, and our unaudited consolidated financial statements and accompanying notes and “Management's Discussion and Analysis of Financial Condition and Results of Operations”, as restated, which are included in this prospectus.
The following unaudited pro forma condensed consolidated and condensed combined financial statements are based upon the historical consolidated financial statements of Post Holdings, Inc. as of and for the nine months ended June 30, 2012 and the historical combined financial information of the Post cereals business for the fiscal year ended September 30, 2011. The unaudited pro forma condensed combined statement of operations for the fiscal year ended September 30, 2011 has been derived from the audited historical combined financial statements, as restated, of the Post cereals business. The unaudited pro forma condensed consolidated statement of operations for the nine months ended June 30, 2012 has been derived from the unaudited historical consolidated financial statements of Post Holdings, Inc. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2012 has been derived from the historical unaudited condensed consolidated balance sheet of Post Holdings, Inc. as of that date. Our historical financial statements include allocations of certain expenses from Ralcorp, which may not be representative of the costs we have incurred, or will incur in the future, as an independent, publicly traded company.
The unaudited pro forma condensed combined statement of operations for the year ended September 30, 2011, and the unaudited pro forma condensed consolidated statement of operations for the nine months ended June, 2012, reflect our results as if the transactions described below had occurred as of October 1, 2010. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2012 reflects our financial position as if the $250 million of additional notes issued on October 25, 2012 had been issued on June 30, 2012 and as if the stock repurchase that occurred on September 28, 2012 had also occurred on June 30, 2012. The transactions related to our separation from Ralcorp are contained in our historical unaudited condensed consolidated balance sheet at June 30, 2012. The unaudited pro forma condensed consolidated and condensed combined financial statements have been prepared to reflect the separation and other transaction related items, including:
•
Post's separation from Ralcorp which was completed on February 3, 2012;
•
the incurrence of $950 million of indebtedness at the time of the separation from Ralcorp, consisting of $175 million aggregate principal amount of borrowings under senior credit facilities with lending institutions and $775 million in aggregate principal amount of senior notes;
•
the incurrence of $250 million face value of additional notes issued on October 25, 2012 at an issue price of 106% and estimated transaction expenses of $4.8 million;
•
the distribution on February 3, 2012 of approximately 27.6 million shares of our common stock to holders of Ralcorp common stock, and an additional approximate 6.8 million shares initially retained by Ralcorp;
•
our post-separation capital structure;
•
the February 3, 2012 settlement of intercompany account balances between us and Ralcorp through cash or contribution to equity; and
•
the repurchase of 1.75 million shares of our common stock for approximately $53.4 million which occurred on September 28, 2012.
No pro forma adjustments have been included for the transition services agreement with Ralcorp, as we expect that the costs for the transition services agreement will be comparable to those included in our historical financial statements. Likewise, no pro forma adjustments have been included related to the tax allocation agreement, the employee matters agreement or certain commercial agreements between us and Ralcorp because we do not expect those adjustments to have a significant effect on our financial statements. The assumptions used and pro forma adjustments derived from such assumptions are based on currently available information and we believe such assumptions are reasonable under the circumstances.
The operating expenses reported in our historical condensed consolidated and condensed combined statements of operations include allocations of certain Ralcorp costs. These costs include allocation of Ralcorp corporate costs, including information technology, procurement, credit, treasury, legal, finance and other functions. We estimate that our corporate general and administrative expenses will be approximately $15 million annually, excluding non-cash expenses for stock compensation and depreciation and amortization, as a result of additional costs required to function as an independent publicly traded company. In addition, we estimate we will incur non-recurring expenses of approximately $15-20 million associated with the transition to an independent public company during the 24-month period beginning on


35

the date of the separation from Ralcorp. We have not adjusted the accompanying unaudited pro forma condensed consolidated and condensed combined statements of operations to reflect these costs and expenses.
The unaudited pro forma condensed consolidated and condensed combined financial statements are not necessarily indicative of our results of operations or financial condition had our separation from Ralcorp and our anticipated post-separation capital structure been completed on the dates assumed. Also, they may not reflect the results of operations or financial condition which would have resulted had we been operating as an independent, publicly owned company during such periods.

Unaudited Pro Forma Condensed Consolidated and Condensed Combined Statement of Operations
(In millions except share and per share data)
 
Nine Months Ended June 30, 2012
 
Year Ended September 30, 2011
 
 
 
Historical
 
Pro Forma Adjustments
 
Pro Forma
 
 
Historical
 
Pro Forma Adjustments
 
Pro Forma
 
 
 
 
 
 
 
 
 
(as restated)
 
 
 
 
 
Net Sales   
$
711.7

 
$
—

 
$
711.7

 
 
$
968.2

 
$
—

 
$
968.2

 
Cost of goods sold
(392.9
)
 
—

 
(392.9
)
 
 
(516.6
)
 
—

 
(516.6
)
 
Gross Profit   
318.8

 
—

 
318.8

 
 
451.6

 
—

 
451.6

 
Selling, general and administrative expenses
(202.8
)
 
(0.8
)
(a)
(203.6
)
 
 
(239.5
)
 
(3.7
)
(a)
(243.2
)
 
Amortization of intangible assets
(9.4
)
 
—

 
(9.4
)
 
 
(12.6
)
 
—

 
(12.6
)
 
Impairment of goodwill and other intangible assets
—

 
—

 
—

 
 
(566.5
)
 
—

 
(566.5
)
 
Other operating expenses, net
(0.6
)
 
—

 
(0.6
)
 
 
(1.6
)
 
—

 
(1.6
)
 
Operating Profit (Loss)   
106.0

 
(0.8
)
 
105.2

 
 
(368.6
)
 
(3.7
)
 
(372.3
)
 
Intercompany interest expense
(17.7
)
 
17.7

(b)
—

 
 
(51.5
)
 
51.5

(b)
—

 
Interest expense
(26.5
)
 
(34.8
)
(b)
(61.3
)
 
 
—

 
(82.0
)
(b)
(82.0
)
 
Other income (expense)
4.7

 
(4.7
)
(b)
—

 
 
(1.7
)
 
1.7

(b)
—

 
Loss on sale of receivables
(3.3
)
 
3.3

(a)
—

 
 
(13.0
)
 
13.0

(a)
—

 
Equity in earnings of partnership
0.2

 
(0.2
)
(c)
—

 
 
4.2

 
(4.2
)
(c)
—

 
Earnings (Loss) before Income Taxes   
63.4

 
(19.5
)
 
43.9

 
 
(430.6
)
 
(23.7
)
 
(454.3
)
 
Income taxes
(24.3
)
 
6.8

(d)
(17.5
)
 
 
6.3

 
8.3

(d)
14.6

 
Net Earnings (Loss)   
$
39.1

 
$
(12.7
)
 
$
26.4

 
 
$
(424.3
)
 
$
(15.4
)
 
$
(439.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (Loss) per Share
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
1.14

 
 
 
$
0.81

 
 
$
(12.33
)
 
 
 
$
(13.49
)
 
Diluted
$
1.13

 
 
 
$
0.81

 
 
$
(12.33
)
 
 
 
$
(13.49
)
 
Weighted-average Shares Outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
34.3

 
(1.8
)
(e)
32.5

(e)
 
34.4

 
(1.8
)
(e)
32.6

(e)
Diluted
34.5

 
(1.8
)
(e)
32.7

(e)
 
34.4

 
(1.8
)
(e)
32.6

(e)

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated and Condensed Combined Financial Information.
 











36




Unaudited Pro Forma Condensed Consolidated Balance Sheet
(In millions)

 
June 30, 2012
 
Historical
 
Pro Forma Adjustments
 
Pro Forma
Assets

 
 
 
 
Current Assets
 
 
 
 
 

     Cash and cash equivalents
$
83.5

 
$
206.8

(f)
$
290.3

     Accounts receivable, net
58.2

 
—

 
58.2

     Receivable from Ralcorp
4.5

 
—

 
4.5

     Inventories
77.7

 
—

 
77.7

     Deferred income taxes
3.1

 
—

 
3.1

     Prepaid expenses and other current assets
6.6

 
0.5

(g)
7.1

          Total Current Assets
233.6

 
207.3

 
440.9

Property, net
409.4

 
—

 
409.4

Goodwill
1,366.4

 
—

 
1,366.4

Other intangible assets, net
739.2

 
—

 
739.2

Other assets
14.9

 
4.3

(g)
19.2

          Total Assets
$
2,763.5

 
$
211.6

 
$
2,975.1

 
 
 
 
 
 
Liabilities and Equity
 

 
 

 
 

Current Liabilities
 

 
 

 
 

     Current portion of long-term debt
$
13.1

 
$
—

 
$
13.1

     Accounts payable
34.7

 
—

 
34.7

     Other current liabilities
63.3

 
—

 
63.3

          Total Current Liabilities
111.1

 
—

 
111.1

Long-term debt
934.7

 
265.0

(h)
1,199.7

Deferred income taxes
328.5

 
—

 
328.5

Other liabilities
105.2

 
—

 
105.2

          Total Liabilities
1,479.5

 
265.0

 
1,744.5

Equity
 

 
 

 
 

     Common stock
0.3

 
—

 
0.3

     Additional paid-in capital
1,271.3

 
—

 
1,271.3

     Treasury stock
—

<