Ralcorp (NYSE: RAH) recently reported a drop in its third-quarter profits because of a higher impairment charge that took the gloss off a substantial increase in its revenue. The company also announced its intentions to buy Sara Lee's (NYSE: SLE) refrigerated dough business in a $545 million deal.

A brief look at the quarter
Revenue for the quarter increased to $1.17 billion, up 22% on a year-on-year basis. A string of acquisitions last year helped send revenue higher. But the company saw lower gross margins, declining from 25.5% to 24.7%.

Ralcorp also took an asset writedown charge of $32.1 million this quarter. This, coupled with higher costs, sent profits down to $28.3 million, 47% lower than a year ago.

Dough and spinoff
Both Ralcorp and Sara Lee have been looking to reinvent themselves after a series of uninspiring performances. Sara Lee is planning to spin off its food and beverage business into two separate entities.

As a part of its restructuring, Sara Lee agreed to sell its private brand refrigerated dough business to Ralcorp. This segment contributed more than $300 million in revenue last year, and Ralcorp expects it will add nearly $0.30 per share to its earnings annually. This deal will also make the Missouri-based company a private brand leader in the $1.8 billion refrigerated dough industry.

At the same time, Ralcorp has been trying to thwart ConAgra's (NYSE: CAG) attempts to acquire it. Ralcorp is planning to spin off its Post Foods cereal business and thus maybe spoil ConAgra's bid to take over the entire company.

The Foolish bottom line
If not for the one-time impairment charge, Ralcorp would have had a decent quarter. It saw positive growth in its revenue as it integrated new businesses into its fold. The deal with Sara Lee should also add to revenue and earnings going forward. Though it is a relatively small deal, it looks like a good one.

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