SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended November 30, 2000 Commission File No. 1-13479 AGRIBRANDS INTERNATIONAL, INC. ----------------------------------------------------------- (Exact name of registrant as specified in its charter) MISSOURI 43-1794250 ------------------------------------------------------------ (State of Incorporation) (I.R.S. Employer Identification No.) 9811 SOUTH FORTY DRIVE, ST. LOUIS MISSOURI 63124 ------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (314) 812-0500 ------------------------------------------------------------ (Registrant's telephone number, including area code) Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES: X NO: _____ Number of shares of Agribrands common stock, $.01 par value, outstanding as of the close of business on January 9, 2001: 9,813,851 --------- PART I - FINANCIAL INFORMATION AGRIBRANDS INTERNATIONAL, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management has included a section on key measures and concepts for understanding the business which follows the discussions of consolidated results of operations, segment results and liquidity and capital resources. Unless otherwise noted, all references to prices, costs and margins reflect U.S. Dollar results after translation of foreign currency financial statements in accordance with Statement of Financial Accounting Standards No. 52 (FAS 52). Because the Company operates predominantly outside the United States, changes in foreign exchange rates against the Dollar can have a material impact on the Company's reported results. Recent Events On December 1, 2000, the Company and Cargill, Incorporated ("Cargill") entered into an Agreement and Plan of Merger (the "Merger Agreement"), under which Cargill would acquire Agribrands in a cash merger at a price of $54.50 per share. Agribrands elected to terminate its prior merger agreement with Ralcorp Holdings, Inc. ("Ralcorp") and as a result, paid a $5 million termination fee to Ralcorp. The Merger Agreement has been approved by Agribrands' Board of Directors upon the unanimous recommendation of a committee of its independent directors. The transaction is expected to close in April 2001 and is subject to various conditions, including the approval by two-thirds of Agribrands' shareholders, receipt of a ruling from the Internal Revenue Service that the merger will not impact the tax-free treatment of Agribrands' 1998 spin-off from Ralston Purina, regulatory approvals and other customary conditions. Cargill may waive the requirement for the tax ruling. On January 9, 2001, the Company filed a preliminary proxy statement with the SEC to amend its preliminary proxy statement and prospectus filed by it and Ralcorp on September 29, 2000. REVIEW OF CONSOLIDATED RESULTS OF OPERATIONS Net Sales Consolidated net sales for the three months ended November 30, 2000 increased $1.1 million or 0.4% compared to the same period last year due to higher average selling prices in the Americas segment and to a lesser extent in the Asia segment. Average selling prices increased $6 per ton due to increased sales of premixes and other higher value feeds in Brazil and higher commodity costs in most parts of the world relative to the same periods last year. This is consistent with the feed industry's practice of adjusting prices to reflect changes in ingredient costs. Consolidated feed sales volume for the first quarter was down slightly at 23,900 metric tons or 1.9% compared to the same period last year. Gross Profit Gross profit was $56.6 million in the first quarter of fiscal 2001 compared to $60.6 million in the same period last year, a decrease of $4.0 million, or 6.6%. Gross profit decreased primarily as a result of both lower volume and lower margins in Europe. 2 Selling, General and Administrative Expenses Selling, general and administrative expenses increased $1.2 million or 2.9% in the three months ended November 30, 2000 due primarily to higher expenses in the Americas segment and the Corporate and Tradico segment, partially offset by lower expenses in Europe. Merger Expenses In the current quarter, Agribrands recorded a pre-tax charge of $6.2 million and an after-tax charge of $4.0 million for costs primarily associated with the terminated merger between Agribrands and Ralcorp, combined with some expenses related to the merger with Cargill. These charges included the accrual of a $5 million termination fee which was paid to Ralcorp in December 2000. Restructuring Activities In the current quarter, Agribrands recorded provisions for restructuring which reduced earnings before income taxes by $0.6 million and net earnings by $0.4 million. These charges represented primarily severance costs associated with the streamlining of Agribrands' operations in Spain. The restructuring provided for the termination of 14 production employees, all of whom have been released as of November 30, 2000. Beginning in fiscal 2002, these restructuring actions are expected to result in annual pre-tax cost savings of approximately $0.2 million. Interest Expense and Other Income/Expense Interest expense totaled $0.8 million for the three months ended November 30, 2000 compared to $0.9 million for the same period last year. Other income/expense, net changed unfavorably by $1.4 million for the three months ended November 30, 2000 compared to the same period last year. The Company recognized a $1.5 million foreign exchange loss in the first quarter of this year versus a $0.3 million foreign exchange gain in the first quarter of last year. In this year's first quarter, the currencies in Brazil, Canada, Mexico and Korea weakened somewhat versus the U.S. Dollar resulting in an exchange loss on U.S. Dollar debt carried in those countries. Investment income was $0.2 million lower in this year's first quarter mainly as a result of lower average cash balances during the current year. Net Earnings Net earnings were $4.9 million for the three months ended November 30, 2000 compared to $13.9 million for the same period last year. Income taxes, which include United States and foreign taxes, were 36.4% of pre-tax earnings for the current period and 33.8% for the same period last year. 3 REVIEW OF SEGMENT RESULTS (Dollars in millions)

~~REVIEW OF SEGMENT RESULTS (Dollars in millions)~~ Corporate and Americas Europe Asia ~~and~~ Tradico Consolidated ---------------- --------------- --------------- ---------------- ---------------- Quarter Ended ~~May~~November 3130, 2000: ~~---------------------------~~ Net sales $ 141.03 $ 6963.94 $ 8997.83 $- ~~0.5~~ $ ~~301~~302.20 ~~Operating~~Segment ~~profit~~profitability $ 57.80 $ 23.96 $ 108.04 $ (34.85) $ 14.95 Tons of feed product sold ~~535~~514,~~100~~400 ~~339~~315,~~200~~600 ~~350~~372,~~400~~200 ~~100~~- 1,~~224~~202,~~800~~200 Income over ingredient cost * $ 3437.5 $ 2120.92 $ 26.0 $ 0.21 $ 8283.68 Quarter Ended ~~May~~November 3130, 1999: ~~---------------------------~~ Net sales $ ~~145~~134.25 $ 8276.9 $ 8389.74 -$ 0.1 $ ~~311~~300.89 ~~Operating~~Segment ~~profit~~profitability $ 7.58 $ 4.35 $ 810.07 $ (3.73) $ 1619.17 Tons of feed product sold ~~544~~524,~~000~~700 ~~377~~358,000 ~~319~~343,000 -100 1,~~240~~225,~~000~~800 Income over ingredient cost * $ 35.15 $ 2826.04 $ 2426.05 - $ 87(0.1) ~~Nine~~$ ~~Months~~88.3 ~~Ended~~* ~~May~~The ~~31,~~commercial ~~2000:~~animal ~~-------------------------------~~feed ~~Net~~industry ~~sales~~generally $prices ~~404.9~~products $on ~~220.4~~the $basis ~~264.2~~of $aggregate ~~0.7~~ingredient $cost ~~890.2~~plus ~~Operating~~a ~~profit~~per-unit ~~$ 17~~margin.9 $As ~~10.4~~ingredient $prices ~~30.4~~fluctuate, $the ~~(10.6)~~changes $are ~~48.1~~generally ~~Tons~~passed ofon ~~feed~~to ~~product~~customers ~~sold~~through ~~1,569,000~~changes ~~1,049,200~~in ~~1,026,300~~the ~~300~~Company's ~~3,644,800~~product pricing. Income over ingredient cost *(which $is ~~102.1~~equal $to ~~71.9~~net $sales ~~77.7~~minus $the ~~0.2~~cost $of ~~251.9 Nine Months Ended May 31~~ingredients), ~~1999:~~rather ~~-------------------------------~~than ~~Net~~ sales $dollars, ~~432.6~~is $the ~~266.3~~key $indicator ~~256.0~~of -revenue $performance ~~954.9~~because ~~Operating~~of ~~profit~~the $distortions ~~23.3~~in $sales ~~14.7~~dollars $caused ~~25.9~~by $changes ~~(10.2)~~in $commodity 53prices.7 ~~Tons~~Management ofalso ~~feed~~monitors ~~product~~IOIC ~~sold~~per ~~1,626,000~~ton ~~1,145,000~~to ~~957,000~~evaluate -trends ~~3,728,000~~in ~~Income~~pricing ~~over~~and ~~ingredient~~relative ~~cost~~product * $ 108value.~~5 $ 89.5 $ 69.5 - $ 267.5~~

Americas Net sales in the Americas segment (which excludes the United States) increased $6.8 million or 5.1% for the three months ended November 30, 2000 compared to the same period last year. The increase in net sales was the result of higher average selling prices, which were only partially offset by a 2.0% decline in volume. Most of the change occurred in Brazil where its increased sales force focused selling efforts on higher value complete feeds and higher margin premixes resulting in increased net sales and IOIC of $5.4 million and $2.5 million, respectively. Segment profitability in the Americas decreased $0.8 million or 10.3% as increased operating expenses more than offset the improvement in IOIC for the region. Operating expenses increased to support the increased selling efforts in Brazil. Operating expenses also increased due to local inflationary increases in excess of the rate at which the local currencies weakened versus the U.S. Dollar. Europe Net sales in Europe decreased $13.5 million or 17.6% for the three months ended November 30, 2000 as compared to the same period last year. The decrease in net sales was due to a combination of lower volume and lower average selling prices. Feed volume declined by 42,400 tons or 11.8% as the entire region experienced difficult market conditions. Average selling prices for the Europe segment declined $14 per ton or 6.5% in the first quarter as higher average local currency selling prices were translated at significantly weaker foreign currency exchange rates. Segment profitability in the Europe segment decreased $0.9 million or 20.0%. IOIC in Europe decreased $6.2 million or 23.5% due to both lower feed volume and lower margins. The decline in IOIC was mostly offset by $5.3 million 4 lower operating expenses which reflect the translation of local currency expenses at significantly weaker exchange rates. Asia Net sales in the Asia segment increased $7.9 million or 8.8% for the three months ended November 30, 2000 compared to the same period last year. This increase is primarily due to increased feed volume in China where feed volume was up 26,500 tons or 79.2% over the same period last year. Positive response to recent sales initiatives combined with favorable animal farm prices in the China market have contributed to the increased sales in China. Segment profitability in the Asia segment decreased $2.3 million or 21.5%. IOIC in Asia decreased $0.5 million or 1.9% as the impact of deteriorating hog market conditions in Korea more than offset the improvement experienced in China. Segment profitability was also negatively impacted by a $1.8 million or 11.4% increase in operating expenses. Operating expenses increased reflecting the growth in China and the addition of an animal health business acquired last July in the Philippines. Corporate and Tradico The corporate and Tradico segment is located primarily in the United States. This segment contains certain corporate items which are not allocated to other segments. Tradico, a division within the Company, acquires and resells ingredients, equipment and feed products primarily to foreign affiliates. A subsidiary named "Tradico, Inc." was organized in Missouri in August 2000 and acquired a manufacturing facility in Greenville, Mississippi. In the first quarter of this fiscal year, Tradico recorded intercompany sales of $28.4 million. In terms of segment profitability, the corporate and Tradico segment recorded losses of $4.5 million and $3.3 million for the quarters ended November 30, 2000 and 1999, respectively. These losses are primarily related to unallocated corporate administrative items. The increase in unallocated corporate administrative expenses is partially the result of $0.5 million in litigation expenses incurred in the current quarter in connection with the Company's efforts to recover vitamin price fixing damages in a class action lawsuit. The remainder of the increase is due to inflationary increases and additional administrative & research personnel. Tradico's margins on intercompany sales have been allocated to the region/segment that purchased the goods. LIQUIDITY AND CAPITAL RESOURCES Cash flows from operations were $14.8 million and $16.3 million for the three months ended November 30, 2000 and 1999, respectively. The decrease in operating cash flows between the two periods primarily resulted from the decline in net earnings. Capital expenditures, primarily to replace or enhance existing production facilities and equipment, totaled $5.6 million and $6.5 million for the three months ended November 30, 2000 and 1999, respectively. The Company has no material commitments for capital expenditures as of November 30, 2000. Anticipated capital expenditures are expected to be funded with existing cash reserves as well as cash generated from operations. The Company's working capital requirements for inventories and receivables are influenced somewhat by seasonality, the availability of raw materials and changes in commodity costs, and as a result may fluctuate widely. Since its spin-off, the Company's operating units have generally financed their seasonal and other working capital requirements through intercompany loans and advances provided by the U.S. parent. Short-term borrowings provided by local foreign banks and branches of multinational banks are also utilized. The Company reduced its short-term borrowings from $27.8 million at August 31, 2000 to $19.2 million at November 30, 2000. 5 Cash on hand, cash flow from operations and local affiliate borrowings under various lines of credit are Agribrands' primary sources of liquidity. Management has a strong focus on cash flow and the effective use of excess cash flow. The combined operating, cash and equity position of Agribrands should continue to provide the capital flexibility necessary to fund future opportunities as well as to meet existing obligations. On September 25, 1998, the Company's Board of Directors authorized the purchase by the Company of up to 2,000,000 shares of Agribrands' common stock in open market transactions at management's discretion and depending on market conditions. As of November 30, 2000, the Company had purchased 855,052 shares pursuant to this authorization at an average cost of $39.54 per share. No purchases occurred during the three months ended November 30, 2000. KEY MEASURES AND CONCEPTS FOR UNDERSTANDING THE BUSINESS Dollar-Responsive Economics of International Feed Operations Feed is manufactured by processing a combination of grains, proteins, vitamins, and minerals. Approximately 80% of the Company's total costs is the cost of these ingredients, most of which are widely traded in Dollar-denominated global commodity markets. Excluding logistics costs, the Dollar values (and costs) of ingredients around the world are broadly comparable. Local currency prices for ingredients, therefore, typically adjust quickly to reflect changes in quoted dollar prices and changes in the exchange rate between the local currency and the Dollar. As raw materials inventories are replenished after an exchange rate change, new local currency ingredient costs are reflected in local currency feed prices. The margin added to ingredient costs is less responsive to exchange rate changes because industry pricing is influenced by local competitors. Nevertheless, exchange rates between the U.S. Dollar and other currencies (particularly in countries with systemic high inflation like many of those where the Company operates) are related closely to differentials between the U.S. and local inflation and interest rates. As a result, Dollar-translated IOIC levels of the Company's international operations generally fluctuate closely around long-term norms, particularly on a consolidated basis. Dollar-Based Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Management believes the required method of translating foreign currency financial statements for most of the Company's foreign affiliates (that is using the local currency as functional currency) can distort the economic impact of certain items, specifically costs of goods sold and foreign exchange gains and losses. Because the Company operates predominantly outside of the U.S., these distortions can have a disproportionate effect on reported results. For this reason, management believes it is important to understand the Company's operational results computed using the U.S. Dollar as the functional currency. Dollar-based accounting was required practice prior to the issuance of FAS 52 in 1981 and continues to be required for U.S. affiliates operating in hyper-inflationary environments. This exception is in recognition of the possible distortions of local-currency based accounting. "Hyper-inflationary" accounting is limited under FAS 52 to countries with cumulative inflation greater than 100% over three years. This fails to cover numerous countries (including those in which the Company generates the majority of its earnings) with consistently higher inflation than the U.S., whose currency values remain unstable (typically devaluing over time versus the Dollar). When exchange rates fluctuate, earnings results using U.S. Dollar-based accounting differ from results under local currency based accounting in three important ways. Under U.S. Dollar-based accounting: o Cost of goods sold is measured using the exchange rate at the time inventory was purchased rather than the exchange rate at the time finished product was sold. 6 o Foreign exchange gains and losses are computed on assets and liabilities denominated in currencies other than the Dollar instead of assets and liabilities denominated in currencies other than the local currency. o Depreciation is computed by applying the appropriate factor to the historical Dollar value of the asset rather than by applying the appropriate factor to the historical local currency value and translating the result at the current exchange rate. Because of its principal focus on cash flows, management uses Dollar-based EBITDA as a key determinant of awards for corporate management under its annual incentive plan. The following table provides a reconciliation of pre-tax earnings to Dollar-based EBITDA for the quarters ended November 30, 2000 and 1999: Dollar-based EBITDA (Dollars in millions) Quarter Ended November 30, ---------------------- 2000 1999 ---------- ---------- Earnings before Income Taxes $ 7.7 $ 21.0 Adjustments: o Depreciation and amortization 6.0 6.3 o Interest expense 0.8 0.9 o Investment income (2.3) (2.5) o Merger expenses 6.2 - o Provisions for restructuring 0.6 - ---------- ---------- EBITDA reported after translation under FAS 52 19.0 25.7 Adjustments to report EBITDA on a Dollar basis: 1) Difference in cost of products sold (2.4) (1.1) 2) Reversal of foreign exchange loss reported 1.5 0.3 under FAS 52 3) Dollar-based foreign exchange gain 1.5 1.5 ---------- ---------- EBITDA reported on a U.S. Dollar basis $ 19.6 $ 26.4 ========== ========== Explanation of adjustments to EBITDA: 1) Difference in cost of products sold. Cost of products sold was lower under FAS 52 in each period due to devaluation of the local currencies against the Dollar. Under Dollar-based accounting, inventories are initially recorded and maintained in Dollars. 2) Reversal of foreign exchange losses reported under FAS 52. In this year's first quarter, the Company reported a $1.5 million foreign exchange loss under FAS 52. Most of this exchange loss occurred in Brazil and Canada, where the Company carried U.S. Dollar denominated debt and the local currency devalued versus the Dollar. 3) Dollar-based foreign exchange gains and losses. If Agribrands had used Dollar-based accounting worldwide, it would have recognized a foreign exchange gain of $1.5 million in both the quarter ended November 30, 2000 and the quarter ended November 30, 1999. Much of these gains occurred in Europe and Asia, where the Company has net liabilities denominated in the local currencies. During each period as the local currency weakened, these liabilities decreased in Dollar terms resulting in a foreign exchange gain. 7 EUROPEAN ECONOMIC MONETARY UNION (EMU) On January 1, 1999, eleven of the European Union countries (including four countries where Agribrands' operations are located) adopted the Euro as their single currency, and there is now a fixed conversion rate between their existing currencies ("legacy currencies") and the Euro. Following the introduction of the Euro, the legacy currencies remain legal tender in the participating countries during the transition period from January 1, 1999 through January 1, 2002. Beginning on January 1, 2002, the European Central Bank will issue Euro-denominated bills and coins for use in cash transactions. On or before July 1, 2002, the participating countries will withdraw all legacy bills and coins and use the Euro as their legal currency. The Company's key financial information systems in Europe are equipped to process both Euro and legacy currency transactions during the transition period from January 1, 1999 through January 1, 2002; however, they are not ready to handle the July 1, 2002 withdrawal of all legacy currencies. Management is currently planning to modify the Company's key financial systems so they can handle the July 1, 2002 mandatory conversion to the Euro. The Company has not yet incurred any material costs related to the conversion, and future costs for replacing computer equipment and reprogramming existing systems are not expected to be material. The Company plans to complete system modifications and necessary testing by September 1, 2001. From a broader business perspective, conversion to the Euro may cause pricing disparities in different markets to narrow, lowering the Company's margins. Nevertheless, the Company believes the conversion to the Euro will not have a material impact on the Company's consolidated financial results. OUTLOOK It is difficult to forecast short-term operating results due to the number of environmental factors that may impact current results. Local agricultural markets are highly responsive to a number of variables including macro-economic conditions, weather, and current concerns over food and environmental safety. Typically, large and small changes in factors like these in locations where the Company operates will randomly influence consolidated earnings. Excluding merger expenses and restructuring charges, consolidated operating results for the quarter ended November 30, 2000 more closely matched the results of the previous three quarters than the results for the same period last year. Management expects consolidated operating results for the quarter ended February 28, 2001 to also fall below the comparative quarter for fiscal 2000. However, consolidated operating results for the latter half of the current fiscal year should meet or exceed results for the same period last year. Pre-tax earnings remain subject to volatility due, in particular, to foreign exchange gains and losses generated by volatile exchange rates and changing capital structures within the foreign affiliates. Currently, the Company's most significant exposures to foreign exchange gains and losses impacting net earnings are U.S. Dollar liabilities carried in Mexico, Brazil, Canada, Korea and Colombia. As discussed earlier, management focuses on the Company's exposure to the change in the dollar value of net monetary asset or liability positions in currencies other than the U.S. Dollar. These values can also be volatile as the cost of hedging these exposures often exceeds the likely benefit. The Company currently has significant net monetary asset or liability positions in Euros, Philippine Pesos, Chinese Renminbi, Canadian Dollars and Colombian Pesos. The Company's income tax position is quite complex due to the interaction between income taxes paid locally by its foreign affiliates, dividends and royalties received from its affiliates and the method for determining the credit the Company receives on its U.S. tax return for foreign income and withholding taxes. Based on current projections for these relevant items, management believes its global effective rate should remain around 35% for the foreseeable future. 8 FORWARD-LOOKING STATEMENTS & BUSINESS RISKS Certain statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Outlook" and elsewhere in this report constitute "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. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (which may use words or phrases such as "will likely result," "are expected to," "will continue," "anticipates," "expects," "estimates," "intends," "plans," "projects," and "outlook") are not historical facts and may be forward-looking. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, cost savings, performance or achievements of the Company, or industry results, to be materially different from any future results, levels of activity, cost savings, performance or achievements expressed or implied by such forward-looking statements, and accordingly, such statements should be read in conjunction with and are qualified in their entirety by reference to, such risks, uncertainties and other factors, which are described below and elsewhere in this report. Such factors include, among others, the following: (i) changing conditions or market trends in the animal feeds and agricultural products industries; (ii) general economic and business conditions, including a regional recession in any of the various regions of the world in which Agribrands operates; (iii) the ability of the Company to implement its business strategy and maintain and enhance its competitive strengths; (iv) the ability of the Company to recover its raw material costs in the pricing of its products, (v) political and economic instability in countries or regions where the Company's business is conducted, (vi) the level of demand for Agribrands' products,(vii) the ability of the Company to obtain financing for specific or general corporate purposes; (viii) actions of competitors and government entities; (ix) availability of key personnel; (x) industry capacity trends; (xi) changes in the economic or financial impact of, or failure to comply with, government regulations and (xii) changes brought about by e-commerce initiatives. As a result of the foregoing and other factors, no assurance can be given as to future results, levels of activity and achievements, and neither Agribrands nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. Any forward-looking statements contained herein speak solely as of the date as of which such statements are made, and Agribrands undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements were made or to reflect the occurrence of unanticipated events. The Company, as a supplier of animal feeds and other agricultural products, is subject to the risks and uncertainties associated with the animal production industry and the resulting fluctuations in demand for Agribrands' products. The animal production industry, and consequently the animal feeds industry, in a particular country can be negatively affected by a number of factors, including the following: the market price of livestock, poultry and other animals and their food products; alternative feed sources; changes in consumer demand for, and consumption of, grain, meat, fish, milk and eggs; outbreaks of diseases in humans or animals (such as BSE or "mad cow disease," foot and mouth disease or aviarian virus); real estate values; urban development; weather conditions; government farm programs; government regulations; tariffs, restrictive quota and trade policies; production difficulties, including capacity constraints and supply surpluses; and general economic conditions, either local, regional or global. In certain markets, the increasing nutritional efficiency of available feeds has resulted in lower volume demand for feeds. Profit pressure and overcapacity in various markets have led to consolidation of both the feed production and animal production industries in those markets. Larger animal producers have tended to integrate their business by acquiring or constructing feed production facilities to meet some or all of their feed requirements, and consequently have relied less on outside suppliers of animal feeds. 9 The animal feeds and agricultural products business is expected to remain highly competitive in the foreseeable future. Future growth opportunities are expected to depend on the Company's ability to implement its strategies for competing effectively in new, growing agricultural markets, maintaining effective cost controls, making strategic acquisitions, effectively managing customers changing preferences for complete feeds, concentrates or premixes, and developing and implementing methods for more efficient manufacturing and distribution operations, including development of e-commerce strategies, while at the same time maintaining aggressive pricing and promotion of its products. 10 AGRIBRANDS INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED) (Dollars in millions except per share data) Quarter Ended November 30, ----------------------------- 2000 1999 ------------- -------------- Net Sales $ 302.0 $ 300.9 ------------- -------------- Costs and Expenses Cost of products sold 245.4 240.3 Selling, general and administrative 42.1 40.9 Merger expenses 6.2 - Interest expense 0.8 0.9 Provisions for restructuring 0.6 - Other (income)/expense, net (0.8) (2.2) ------------- -------------- 294.3 279.9 ------------- -------------- Earnings before Income Taxes 7.7 21.0 Income Taxes 2.8 7.1 ------------- -------------- Net Earnings $ 4.9 $ 13.9 ============= ============== Earnings Per Share Basic $ .50 $ 1.34 ============= ============== Diluted $ .48 $ 1.29 ============= ============== See Accompanying Notes to Consolidated Financial Statements 11 AGRIBRANDS INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (Dollars in millions)

~~Dollar~~November 30, August 31, 2000 2000 -~~based~~----------------- ~~EBITDA~~--------------- ~~(Dollars~~Assets in------ ~~millions)~~Current ~~Quarter~~Assets ~~Ended~~Cash ~~Nine~~and ~~Months~~cash ~~Ended~~equivalents ~~May~~$ ~~31,~~171.8 ~~May~~$ 31174.6 Receivables, less allowance for doubtful accounts 76.7 75.4 Inventories 90.3 96.6 Other current assets 8.7 7.1 ------------------ --------------- Total Current Assets 347.5 353.7 ------------------ --------------- ~~2000~~Investments ~~1999~~and ~~2000~~Other ~~1999~~Assets 62.0 59.5 Property at Cost 343.0 351.7 Accumulated Depreciation (182.2) (183.3) ------------------ --------------- 160.8 168.4 ------------------ --------------- ~~Earnings~~Total ~~before Income Taxes~~ $ 13570.93 $ 19581.86 $================== ~~51.4~~=============== $Liabilities ~~54.7~~and ~~Add:~~Shareholders' ~~Loss/(gain)~~Equity on------------------------------------ ~~sale~~Current ofLiabilities ~~property~~Current -maturities -of long-term ~~(0.5)~~debt ~~Provisions~~$ ~~for restructuring~~ 1.20 -$ 10.24 -Notes ~~Depreciation~~payable ~~and amortization 6~~19.2 527.98 ~~18.9~~Accounts ~~17.6~~payable ~~Interest~~and ~~expense~~accrued 0liabilities 116.84 1116.70 2Income taxes 4.35 64.95 ------------------ --------------- Total Current Liabilities 141.1 148.7 ------------------ --------------- ~~EBITDA~~Long-Term ~~reported~~Debt ~~under~~9.6 ~~FAS~~10.7 52Deferred ~~22.1~~Income ~~27.4~~Taxes 73and Other Liabilities 29.8 7828.7 ~~Adjustments~~Shareholders' toEquity ~~report~~Common ~~EBITDA~~stock on.1 ~~a Dollar basis:~~ .1) ~~Difference~~Capital in ~~cost~~excess of ~~sales~~par ~~for ingredient costs (1~~419.7)5 (0419.7)5 ~~(2.2)~~Retained (4earnings 100.0) 2)95.1 ~~Reversal~~Common ofstock ~~foreign~~in ~~exchange~~treasury, ~~loss/(gain)~~at ~~reported~~cost ~~1.1~~ (233.98) 0(33.~~1 0.6 under FAS 52 3~~8) ~~Dollar-based~~Accumulated ~~foreign~~other ~~exchange~~comprehensive ~~gain/(~~loss) 1(96.80) 2(87.8 4.8) ~~3.0~~ --------- ---------- --------- -------- ~~EBITDA~~Total ~~reported~~Shareholders' onEquity a389.8 U393.S.5 ~~Dollar~~------------------ ~~basis~~--------------- Total $ 23570.3 $ 26581.6 ~~$ 76.5 $ 78.3~~ ========= ========== ========= ========

See Accompanying Notes to Consolidated Financial Statements 12 AGRIBRANDS INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (Dollars in millions)

~~AGRIBRANDS~~Three ~~INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED) (Dollars in millions except per share data) Quarter Ended Nine~~ Months Ended ~~May~~November 3130, ~~May 31,~~ ------------------ ------------------- 2000 1999 ~~2000 1999~~ ------- --------- ------- --------- Cash Flow from Operations Net ~~Sales~~earnings $ ~~301~~4.29 $ ~~311~~13.89 $Non-cash ~~890~~items included in income Depreciation and amortization 6.20 $6.3 ~~954~~Foreign exchange loss 1.5 0.3 Provision for doubtful accounts 0.5 0.9 Deferred income taxes - 2.6 Changes in operating assets and liabilities used in operations 0.7 (7.7) Other, net 1.2 - ---------------- ---------------- Net cash provided by operations 14.8 16.3 ---------------- ---------------- ~~Costs~~Cash ~~and~~Flow ~~Expenses~~from ~~Cost~~Investing ofActivities ~~products~~Property ~~sold~~additions ~~252~~(5.6) (6.5) ~~261~~Proceeds from the sale of property 0.93 ~~741~~0.4 ~~796.3~~Purchase ~~Selling,~~of ~~general~~key ~~and~~man ~~administrative~~life ~~33.8~~insurance 33(2.85) ~~100~~(5.70) ~~104.9~~Other, ~~Interest~~net (0.82) 1(0.75) 2---------------- ---------------- Net cash used by investing activities (8.30) 6(11.96) ~~Provisions~~---------------- ~~for~~---------------- ~~restructuring~~Cash ~~1.2~~Flow from Financing Activities Proceeds from issuance of long-term 1debt 0.24 - ~~Gain~~Principal payments on ~~sale~~long-term ofdebt, ~~property~~including -current -maturities -(0.2) (0.53) ~~Other~~Net increase (~~income~~decrease)~~/expense,~~ ~~net~~in notes payable (18.01) (50.45) Treasury stock purchases - (60.8) ~~(7.4)~~ ------- --------- ------- --------- ~~287.3~~Net ~~292.0~~cash ~~838~~used by financing activities (7.89) ~~900~~(1.26) ------- --------- ------- --------- ~~Earnings~~Effect ~~before~~of ~~Income~~Exchange ~~Taxes~~Rate ~~13.9~~Changes ~~19.8~~on ~~51.4~~Cash ~~54.7~~and ~~Income~~Cash ~~Taxes~~Equivalents 4(1.57) 6(0.36) ~~17.1 22.3~~ ------- --------- ------- --------- Net ~~Earnings~~(Decrease) $Increase ~~9.4~~in $Cash ~~13.5~~and $Cash 34Equivalents (2.38) ~~$ 32~~2.45 ~~=======~~Cash ~~=======~~and ~~=======~~Cash ~~=======~~Equivalents, ~~Earnings~~Beginning ~~Per~~of ~~Share~~Period ~~Basic $~~ 174.956 ~~$ 1~~178.290 $---------------- ~~3.37~~---------------- $Cash ~~3.06~~and ~~=======~~Cash ~~=======~~Equivalents, ~~=======~~End ~~=======~~of ~~Diluted~~Period $ 171.928 $ 1180.275 ~~$ 3.27 $ 3.02~~ ======= ========= ======= =========

See Accompanying Notes to Consolidated Financial Statements 13 AGRIBRANDS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions) Note 1 - SUBSEQUENT EVENT. On December 1, 2000, Agribrands and Cargill, Incorporated ("Cargill") entered into an Agreement and Plan of Merger (the "Merger Agreement"), under which Cargill would acquire Agribrands in a cash merger at a price of $54.50 per share. Agribrands elected to terminate its prior merger agreement with Ralcorp Holdings, Inc. ("Ralcorp") and as a result, paid a $5 million termination fee to Ralcorp. The Merger Agreement has been approved by Agribrands' Board of Directors upon the unanimous recommendation of a committee of its independent directors. The transaction is expected to close in April 2001 and is subject to various conditions, including the approval by two-thirds of Agribrands' shareholders, receipt of a ruling from the Internal Revenue Service that the merger will not impact the tax-free treatment of Agribrands' 1998 spin-off from Ralston Purina, regulatory approvals and other customary conditions. Cargill may waive the requirement for the tax ruling. Agribrands filed a preliminary proxy statement with the SEC on January 9, 2001 relating to the Cargill merger. Note 2 - UNAUDITED FINANCIAL STATEMENTS. The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles and applicable SEC guidelines pertaining to interim financial information. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year. These statements should be read in conjunction with the Company's financial statements and notes thereto for the year ended August 31, 2000. Certain previously reported amounts have been reclassified to make them consistent with the current year presentation. In particular, certain costs for fiscal 2000 have been reclassified from cost of products sold to selling, general and administrative expenses. In fiscal 2001, the Company changed its method of allocating costs to inventories and cost of goods sold to exclude certain items that are more appropriately classified as selling, general and administrative expenses. The effect of this change on inventory valuations at August 31, 2000 was immaterial. Note 3 - COMPREHENSIVE (LOSS)/INCOME: Quarter Ended November 30, --------------------------------- 2000 1999 --------------- ---------------- Net earnings $ 4.9 $ 13.9 Foreign currency translation adjustment (8.6) (0.2) --------------- ---------------- Comprehensive (loss)/income $ (3.7) $ 13.7 =============== ================ 14 Note 4 - BUSINESS SEGMENT INFORMATION. Sales, profitability and total assets are presented below for each of the Company's reportable segments along with a reconciliation of total segment profitability to total earnings before income taxes: Quarter Ended November 30, ------------------------------- 2000 1999 --------------- -------------- Net Sales - External: Americas $ 141.3 $ 134.5 Europe 63.4 76.9 Asia 97.3 89.4 Corporate and Tradico (U.S.) - 0.1 --------------- -------------- Total $ 302.0 $ 300.9 =============== ============== Net Sales - Intersegment: Americas $ - $ - Europe - - Asia - - Corporate and Tradico (U.S.) 28.4 22.8 --------------- -------------- Total $ 28.4 $ 22.8 =============== ============== Segment Profitability: Americas $ 7.0 $ 7.8 Europe 3.6 4.5 Asia 8.4 10.7 Corporate and Tradico (U.S.) (4.5) (3.3) --------------- -------------- 14.5 19.7 Merger expenses (6.2) - Provisions for restructuring (0.6) - Interest expense (0.8) (0.9) Other income/(expense), net 0.8 2.2 --------------- -------------- Earnings before Income Taxes $ 7.7 $ 21.0 =============== ============== Depreciation and Amortization: Americas $ 1.8 $ 1.8 Europe 1.7 1.9 Asia 2.3 2.4 Corporate and Tradico (U.S.) 0.2 0.2 --------------- -------------- Total $ 6.0 $ 6.3 =============== ============== November 30, August 31, 2000 2000 --------------- -------------- Total Assets: Americas $ 169.7 $ 175.5 Europe 92.6 93.5 Asia 148.3 162.2 Corporate and Tradico (U.S.) 159.7 150.4 --------------- -------------- Total $ 570.3 $ 581.6 =============== ============== 15 Note 5 - SUPPLEMENTAL BALANCE SHEET INFORMATION: November 30, August 31, 2000 2000 ------------ ---------- Receivables: Gross receivables $ 88.7 $ 87.5 Allowance for doubtful accounts (12.0) (12.1) ------------ ---------- $ 76.7 $ 75.4 ============ ========== Inventories: Raw materials and supplies $ 70.6 $ 77.0 Finished products 19.7 19.6 ------------ ---------- $ 90.3 $ 96.6 ============ ========== Investments and Other Assets: Goodwill, net of accumulated amortization of $ 26.5 $ 27.1 $9.1 at November 30 and $8.6 at August 31 Investments in affiliated companies 7.3 7.0 Cash surrender value of key man life insurance 12.5 10.0 Deferred charges and other assets 15.7 15.4 ------------ ---------- $ 62.0 $ 59.5 ============ ========== Accounts payable and accrued liabilities: Trade accounts payable $ 77.2 $ 72.2 Incentive compensation, salaries and vacations 11.4 14.2 Restructuring reserves 0.8 0.5 Other items 27.0 29.1 ------------ ---------- $ 116.4 $ 116.0 ============ ========== Note 6 - RESTRUCTURING. In the current quarter, Agribrands recorded provisions for restructuring which reduced earnings before income taxes by $0.6 million and net earnings by $0.4 million. These charges represented primarily severance costs associated with the streamlining of Agribrands' operations in Spain. The restructuring provided for the termination of 14 production employees, all of whom have been released as of November 30, 2000. Beginning in fiscal 2002, these restructuring actions are expected to result in annual pre-tax cost savings of approximately $0.2 million. The following table summarizes the activity within the restructuring reserves during the quarter ended November 30, 2000. Substantially all actions associated with the remaining reserves are expected to be completed by the end of the second quarter. Reserves at August 31, 2000 $ 0.5 Provision 0.6 Spending (0.3) ------------ Reserves at November 30, 2000 $ 0.8 ============ 16 Note 7 - OTHER (INCOME)/EXPENSE, NET: Quarter Ended November 30, ---------------------- 2000 1999 ---------- ---------- Foreign exchange loss $ 1.5 $ 0.3 Investment income (2.3) (2.5) ---------- ---------- $ (0.8) $ (2.2) ========== ========== Note 8 - COMMON STOCK. There were 9,813,851 shares of common stock outstanding at November 30, 2000 and August 31, 2000. Note 9 - EARNINGS PER SHARE. Basic earnings per share is based on the average number of common shares outstanding during the period. Diluted earnings per share is based on the average number of shares used for the basic earnings per share calculation, adjusted for the dilutive effect of stock options. The following table sets forth the computation of basic and diluted earnings per share: Quarter Ended November 30, ----------------------- 2000 1999 ---------- ---------- Numerator: Net earnings $ 4.9 $ 13.9 ========== ========== Denominator: Weighted average shares outstanding 9,813,851 10,368,308 Assumed conversion of stock options (1) 309,352 397,798 ---------- ---------- Weighted average shares - assuming dilution 10,123,203 10,766,106 ========== ========== Basic earnings per share (2) $ .50 $ 1.34 ========== ========== Diluted earnings per share (2) $ .48 $ 1.29 ========== ========== Note 10 - NEW ACCOUNTING STANDARD. Effective September 1, 2000, the Company adopted Statement of Financial Accounting Standards No. 133 (FAS 133), "Accounting for Derivative Instruments and Hedging Activities." FAS 133 establishes standards for recognition and measurement of derivatives and hedging activities. The transition adjustments resulting from the adoption of this Statement were immaterial to the Company's results of operations in the first quarter of fiscal 2001. Note 11 - DERIVATIVE FINANCIAL INSTRUMENTS. The Company currently uses forwards and options to manage foreign currency risk and futures and options to manage commodity price risk. Derivatives used by the Company have an initial term of less than one year. Beginning September 1, 2000, all derivative instruments are carried on the balance sheet at fair value as required by FAS 133; the effect of adoption was insignificant to the first quarter financial statements. The Company primarily uses 17 foreign exchange forward and option contracts to hedge recognized foreign currency denominated assets and liabilities. From time to time, the Company may designate a foreign exchange forward contract as a hedge of an unrecognized foreign currency denominated firm commitment. In that case, the changes in the fair value of the foreign exchange forward contract are recognized currently in earnings along with the offsetting changes in the fair value of the hedged firm commitment. For internal control reasons, Agribrands uses a centralized approach to commodity price risk management. The Company's commodity futures and options trades are conducted almost exclusively at the corporate level and with the Chicago Board of Trade. While Agribrands has considerable exposure to commodity prices, it does relatively little hedging due to complexities presented by the Company's foreign operations. Many of the Company's hedging transactions may not be eligible for hedge accounting on the basis of FAS 133's high effectiveness rule and the requirement that the party at risk be a party to the hedge. For these reasons, the Company has elected not to apply hedge accounting to any of its commodity hedges. Changes in the fair value of commodity futures and option contracts are recognized immediately in earnings on the cost of products sold line. PART II - OTHER INFORMATION There is no information required to be reported under any items except those indicated below. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits filed with this Report: 2.1 Agreement and Plan of Merger, dated as of December 1, 2000, between Agribrands International, Inc., Cargill, Incorporated and Abacus Acquisition Corp. (Filed as Exhibit 2.1 to Company's Form 8-K on December 4, 2000) 10.1 Second Amended Rights Agreement (b) Reports on Form 8-K: Current Report on Form 8-K filed October 26, 2000 relating to earnings press release 18 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AGRIBRANDS INTERNATIONAL, INC. ------------------------------------ Registrant By: /s/ David R. Wenzel ------------------------------------ David R. Wenzel Chief Financial Officer Date: January 10, 2001 19 EXHIBIT INDEX ------------- Exhibits -------- EX-10.1 Second Amended Rights Agreement. (Documents prepared on Edgar and provided electronically) 20

AGRIBRANDS INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (Dollars in millions) May 31, August 31, 2000 1999 ------------ ----------- Assets Current Assets Cash and cash equivalents $ 161.4 $ 174.5 Short-term investments 1.8 3.5 Receivables, less allowance for doubtful accounts 78.1 77.0 Inventories 98.2 81.3 Other current assets 5.5 4.6 ------------ ----------- Total Current Assets 345.0 340.9 ------------ ----------- Investments and Other Assets 55.0 51.3 Property at Cost 348.6 346.3 Accumulated Depreciation (180.6) (172.3) ------------ ----------- 168.0 174.0 ------------ ----------- Total $ 568.0 $ 566.2 ============ =========== Liabilities and Shareholders' Equity Current Liabilities Current maturities of long-term debt $ 0.4 $ 2.4 Notes payable 21.0 18.5 Accounts payable and accrued liabilities 120.8 125.1 Income taxes 5.3 8.5 ------------ ----------- Total Current Liabilities 147.5 154.5 ------------ ----------- Long-Term Debt 11.0 11.5 Deferred Income Taxes and Other Liabilities 27.1 26.9 Shareholders' Equity Common stock .1 .1 Capital in excess of par 419.5 419.5 Retained earnings 84.4 50.1 Accumulated other comprehensive loss (87.8) (85.6) Common stock in treasury, at cost (33.8) (10.8) ------------ ----------- Total Shareholders' Equity 382.4 373.3 ------------ ----------- Total $ 568.0 $ 566.2 ============ ===========

AGRIBRANDS INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (Dollars in millions) Nine Months Ended May 31, ------------------- 2000 1999 -------- --------- Cash Flow from Operations Net earnings $ 34.3 $ 32.4 Non-cash items included in income Depreciation and amortization 18.9 17.6 Foreign exchange loss 0.1 0.6 Provision for doubtful accounts 1.4 2.6 Deferred income taxes 2.7 4.1 Gain on sale of property - (0.5) Changes in operating assets and liabilities used in operations (26.7) 35.8 Other, net (3.5) .4 -------- --------- Net cash provided by operations 27.2 93.0 -------- --------- Cash Flow from Investing Activities Property additions (16.0) (21.7) Proceeds from the sale of property 0.8 2.7 Proceeds from sale of Korean pet food business 2.0 - Purchase of key man life insurance (5.0) (5.0) Other, net 1.5 (1.2) -------- --------- Net cash used by investing activities (16.7) (25.2) -------- --------- Cash Flow from Financing Activities Proceeds from issuance of long-term debt - 8.4 Principal payments on long-term debt, including current maturities (2.4) (15.2) Net increase (decrease) in notes payable 3.0 (19.9) Treasury stock purchases (23.0) (5.8) -------- --------- Net cash used by financing activities (22.4) (32.5) -------- --------- Effect of Exchange Rate Changes on Cash and Cash Equivalents (1.2) (0.4) -------- --------- Net (Decrease) Increase in Cash and Cash Equivalents (13.1) 34.9 Cash and Cash Equivalents, Beginning of Period 174.5 136.5 -------- --------- Cash and Cash Equivalents, End of Period $ 161.4 $ 171.4 ======== =========

Quarter Ended Nine Months Ended May 31, May 31, ---------------- ----------------- 2000 1999 2000 1999 -------- ------ ------- -------- Net earnings $ 9.4 $ 13.5 $ 34.3 $ 32.4 Foreign currency translation adjustment (2.4) 0.9 (2.2) 1.5 -------- ------ ------- -------- Comprehensive income $ 7.0 $ 14.4 $ 32.1 $ 33.9 ======== ====== ======= ========

Quarter Ended Nine Months Ended May 31, May 31, ---------------- ----------------- 2000 1999 2000 1999 ------- ------- ------- ------- Net Sales - External: Americas $ 141.0 $ 145.2 $ 404.9 $ 432.6 Europe 69.9 82.9 220.4 266.3 Asia 89.8 83.7 264.2 256.0 Corporate and Tradico (U.S.) 0.5 - 0.7 - ------- ------- ------- ------- Total $ 301.2 $ 311.8 $ 890.2 $ 954.9 ======= ======= ======= =======

Quarter Ended Nine Months Ended May 31, May 31, ------------------ ------------------ 2000 1999 2000 1999 -------- -------- -------- -------- Net Sales - Intersegment: Americas $ - $ - $ - $ - Europe - - - - Asia - - - - Corporate and Tradico (U.S.) 32.0 30.4 86.6 71.4 -------- -------- -------- -------- Total $ 32.0 $ 30.4 $ 86.6 $ 71.4 ======== ======== ======== ======== Operating Profit: Americas $ 5.8 $ 7.5 $ 17.9 $ 23.3 Europe 2.9 4.3 10.4 14.7 Asia 10.0 8.0 30.4 25.9 Corporate and Tradico (U.S.) (3.8) (3.7) (10.6) (10.2) -------- -------- -------- -------- 14.9 16.1 48.1 53.7 Provisions for restructuring (1.2) - (1.2) - Gain on sale of property - - - 0.5 Interest expense (0.8) (1.7) (2.3) (6.9) Other income/(expense), net 1.0 5.4 6.8 7.4 -------- -------- -------- -------- Earnings before Income Taxes $ 13.9 $ 19.8 $ 51.4 $ 54.7 ======== ======== ======== ======== Depreciation and Amortization: Americas $ 1.8 $ 1.8 $ 5.5 $ 5.5 Europe 1.7 2.0 5.4 6.1 Asia 2.5 1.9 7.4 5.4 Corporate and Tradico (U.S.) 0.2 0.2 0.6 0.6 -------- -------- -------- -------- Total $ 6.2 $ 5.9 $ 18.9 $ 17.6 ======== ======== ======== ========

May 31, August 31, 2000 1999 ------------- -------------- Total Assets: Americas $ 171.3 $ 169.3 Europe 103.0 116.0 Asia 154.2 144.5 Corporate and Tradico (U.S.) 139.5 136.4 ------------- -------------- Total $ 568.0 $ 566.2 ============= ==============

May 31, August 31, 2000 1999 ----------- ------------ Receivables: Gross receivables $ 90.1 $ 88.4 Allowance for doubtful accounts (12.0) (11.4) ----------- ----------- $ 78.1 $ 77.0 =========== ===========

May 31, August 31, 2000 1999 --------- ---------- Inventories: Raw materials and supplies $ 76.2 $ 61.1 Finished products 22.0 20.2 --------- ---------- $ 98.2 $ 81.3 ========= ========== Investments and Other Assets: Goodwill, net of accumulated amortization of $ 27.6 $ 29.1 $7.9 at May 31 and $6.5 at August 31 Investments in affiliated companies 6.8 6.3 Cash surrender value of key man life insurance 10.0 5.0 Deferred charges and other assets 10.6 10.9 --------- ---------- $ 55.0 $ 51.3 ========= ========== Accounts payable and accrued liabilities: Trade accounts payable $ 79.9 $ 75.2 Incentive compensation, salaries and vacations 13.7 15.4 Restructuring reserves 0.5 - Other items 26.7 34.5 --------- ---------- $ 120.8 $ 125.1 ========= ==========

Quarter Ended Nine Months Ended May 31, May 31, ----------------- ------------------- 2000 1999 2000 1999 ------- ------- -------- -------- Foreign exchange loss/(gain) $ 1.1 $ (2.9) $ 0.1 $ 0.6 Investment income (2.1) (2.5) (6.9) (8.0) ------- ------- -------- -------- $ (1.0) $ (5.4) $ (6.8) $ (7.4) ======= ======= ======== ========

Quarter Ended Nine Months Ended May 31, May 31, -------------------------- -------------------------- 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Numerator: Net earnings $ 9.4 $ 13.5 $ 34.3 $ 32.4 =========== =========== =========== =========== Denominator: Weighted average shares outstanding 9,942,416 10,504,726 10,174,498 10,603,807 Assumed conversion of stock options (1) 230,133 147,752 317,505 116,358 ----------- ----------- ----------- ----------- Weighted average shares - assuming dilution 10,172,549 10,652,478 10,492,003 10,720,165 =========== =========== =========== =========== Basic earnings per share (2) $ .95 $ 1.29 $ 3.37 $ 3.06 =========== =========== =========== =========== Diluted earnings per share (2) $ .92 $ 1.27 $ 3.27 $ 3.02 =========== =========== =========== ===========

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