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 February 28, 2001 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 April 4, 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. Proposed Merger 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 around April 30, 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 is soliciting approval of the proposed merger with Cargill. In connection with the merger, Agribrands filed a proxy statement with the Securities and Exchange Commission and mailed the proxy statement to its shareholders on or about March 21, 2001. SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT BECAUSE IT CONTAINS IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the proxy statement and other documents filed by Agribrands with the Securities and Exchange Commission at the Securities and Exchange Commission's website at www.sec.gov. Shareholders of Agribrands may also obtain, at no cost, the proxy statement and other documents filed by Agribrands in connection with the merger by directing a request to Agribrands at 9811 South Forty Drive, St. Louis, Missouri 63124, attention Investor Relations. REVIEW OF CONSOLIDATED RESULTS OF OPERATIONS Net Sales Consolidated net sales decreased $9.9 million or 3.4% in the second quarter and $8.8 million or 1.5% in the six months ended February 28, 2001 as compared to the same periods last year. Net sales declined in both periods due to lower feed sales volume in the Americas and Europe segments. The decrease in consolidated net sales was mitigated somewhat by an increase in average selling prices of $10 per ton in the second quarter and $8 per ton in the six-month period. The increase in average selling prices reflected higher commodity costs 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 declined 87,400 metric tons or 7.3% in the second quarter and 111,000 tons or 4.6% in the six-month period. 2 Gross Profit Gross profit decreased $6.7 million, or 12.6%, to $46.6 million in the second quarter and decreased $10.7 million, or 9.4%, to $103.2 in the six months ended February 28, 2001 as compared to the same periods last year. The second quarter decrease reflects lower margins in Asia and lower volume in Europe. The six-month decrease reflects lower margins in Asia and both lower volume and lower margins in Europe. Selling, General and Administrative Expenses Selling, general and administrative expenses decreased $1.4 million or 3.5% in the second quarter and $0.2 million or 0.2% in the six months ended February 28, 2001 as compared to the same periods last year. The second quarter decrease was primarily due to lower expenses in the Europe and Asia segments, partially offset by higher expenses in the Americas. Merger Expenses In the second quarter, Agribrands recorded merger expenses which reduced earnings before income taxes and net earnings by $1.4 million and $0.9 million, respectively. In the six months ended February 28, 2001, the Company recorded merger expenses which reduced earnings before income taxes and net earnings by $7.6 million and $4.9 million, respectively. Merger expenses recorded in the second quarter include $1.1 million of compensation expense related to the increase in the Company's liability for stock appreciation rights (SARs). The Company recognizes compensation expense for SARs based on the amount that the Company's common share price exceeds the exercise price. Since the proposed merger with Cargill was announced, the Company's common share price increased from $43.81 on December 1, 2000 to $53.77 on February 28, 2001. Merger expenses for the six-month period also include the $5 million termination fee paid to Ralcorp. Restructuring Activities In the current quarter, Agribrands recorded provisions for restructuring which reduced earnings before income taxes and net earnings by $0.9 million and $0.5 million, respectively. In the six months ended February 28, 2001, the Company recorded provisions for restructuring which reduced earnings before income taxes and net earnings by $1.5 million and $0.9 million, respectively. These charges represented primarily severance costs associated with the streamlining of Agribrands' operations in Mexico and Spain. The restructurings provided for the termination of 27 administrative and production employees, all of whom have been released as of February 28, 2001. Beginning in fiscal 2002, these restructuring actions are expected to result in annual pre-tax cost savings of approximately $1.2 million. Interest Expense and Other Income/Expense Interest expense totaled $0.9 million and $1.7 for the second quarter and the six months ended February 28, 2001, respectively, compared to $0.6 million and $1.5 million for the same periods last year. The increases in interest expense for both periods were due to both slightly higher average borrowings and slightly higher average interest rates in the foreign markets where the Company had outstanding borrowings. Other income/expense, net changed unfavorably by $2.1 million in the second quarter and $3.5 million in the six months ended February 28, 2001 as compared to the same periods last year. The Company recognized a $1.1 million foreign exchange loss in the second quarter of this year versus a $1.3 million foreign exchange gain in the second quarter of last year. In this year's second quarter, the currencies in Brazil and Mexico weakened somewhat versus the U.S. Dollar resulting in an exchange loss on U.S. Dollar debt carried in those countries. However, in last year's second quarter, the Brazilian Real strengthened versus the U.S. Dollar resulting in an exchange gain on U.S. Dollar debt carried there. Investment income was $0.3 million higher in this year's 3 second quarter and $0.1 million higher in the six months ended February 28, 2001 despite a decrease in the level of interest bearing investments. This was mainly the result of increased holdings of taxable securities which provide slightly higher stated returns. Net Earnings Net earnings were $3.9 million and $8.8 million for the second quarter and six months ended February 28, 2001, respectively, compared to $11.0 million and $24.9 million for the same periods last year. Income taxes, which include United States and foreign taxes, were 40.0% and 38.0% of pre-tax earnings for the second quarter and the six months ended February 28, 2001, respectively, compared to 33.3% and 33.6% for the same periods last year. The higher effective rates in the current periods reflect foreign losses for which no tax benefit is expected to be realized. On the other hand, the lower effective rates in the prior periods reflect a reduction in valuation allowances against foreign tax credit carryforwards in the United States. In addition, a larger percentage of the Company's investment income in the prior periods was derived from tax-free securities.

REVIEW OF SEGMENT RESULTS (Dollars in millions) Corporate and Americas Europe Asia Tradico Consolidated ---------------- --------------- --------------- ---------------- ---------------- Quarter Ended ~~November~~February 3028, ~~2000~~2001: ------------------------------- Net sales $ ~~141~~128.35 $ 6365.4 $ 9784.32 -$ 0.1 $ ~~302~~278.02 Segment profitability $ 74.02 $ 32.64 $ 85.46 $ (4.50) $ 148.52 Tons of feed product sold ~~514~~470,~~400~~700 ~~315~~290,~~600~~900 ~~372~~345,200 -100 1,~~202~~106,~~200~~900 Income over ingredient cost * $ 3733.54 $ 19.7 $ 20.1 $ - $ 73.2 Quarter Ended February 29, 2000: ------------------------------- Net sales $ 26129.4 $ 73.6 $ 85.0 $ 0.1 $ 83288.81 ~~Quarter~~Segment profitability $ 4.3 $ 3.0 $ 9.7 $ (3.5) $ 13.5 Tons of feed product sold 509,200 352,000 332,900 200 1,194,300 Income over ingredient cost * $ 32.1 $ 23.6 $ 25.2 $ 0.1 $ 81.0 Six Months Ended ~~November~~February 3028, ~~1999~~2001: ---------------------------------- Net sales $ ~~134~~269.58 $ 76128.98 $ 89181.45 $ 0.1 $ ~~300~~580.92 Segment profitability $ 711.82 $ 46.50 $ 1014.70 $ (38.35) $ 1922.7 Tons of feed product sold ~~524~~985,~~700~~100 ~~358~~606,~~000~~500 ~~343~~717,~~000~~400 100 12,~~225~~309,~~800~~100 Income over ingredient cost * $ 3570.9 $ 39.9 $ 46.1 $ 0.1 $ 157.0 Six Months Ended February 29, 2000: ---------------------------------- Net sales $ 263.9 $ 150.5 $ 26174.4 $ 260.52 $ (589.0 Segment profitability $ 12.1 $ 7.5 $ 20.4 $ (6.8) $ 8833.2 Tons of feed product sold 1,033,900 710,000 675,900 300 2,420,100 Income over ingredient cost * $ 67.6 $ 50.0 $ 51.7 $ - $ 169.3 * The commercial animal feed industry generally prices products on the basis of aggregate ingredient cost plus a per-unit margin. As ingredient prices fluctuate, the changes are generally passed on to customers through changes in the Company's product pricing. Income over ingredient cost or IOIC (which is equal to net sales minus the cost of ingredients), rather than sales dollars, is the key indicator of revenue performance because of the distortions in sales dollars caused by changes in commodity prices. Management also monitors IOIC per ton to evaluate trends in pricing and relative product value.

4 Americas Net sales in the Americas segment (which excludes the United States) decreased $0.9 million or 0.7% for the quarter ended February 28, 2001 as compared to the same period last year. The decrease in net sales was the result of a 7.6% decline in feed sales volume, which was mostly offset by higher average selling prices. For the six months ended February 28, 2001, net sales in the Americas increased $5.9 million or 2.2% mainly as a result of higher average selling prices, which were only partially offset by a 4.7% decline in volume. Brazil and Colombia accounted for most of the volume declines in the quarter and six months ended February 28, 2001. The Company's operations in Brazil have continued to focus their selling efforts on higher margin products. Increased prices and reduced discounts prompted the volume declines in Colombia. Average selling prices for the Americas segment increased $19 per ton in both the quarter and six months ended February 28, 2001, reflecting the activities in Brazil and Colombia as well as higher commodity costs. Segment profitability in the Americas decreased $0.1 million or 2.3% in the second quarter and $0.9 million or 7.4% in the six months ended February 28, 2001 as compared to the same periods last year. Income over ingredient cost (IOIC) for the region increased $1.3 million in the second quarter and $3.3 million in the six-month period mainly as a result of the increased selling efforts in Brazil. Nevertheless, segment profitability declined somewhat as higher operating expenses more than offset the improvement in IOIC for the region. Operating expenses increased both to support the increased selling efforts in Brazil and to account for 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 $8.2 million or 11.1% for the second quarter and $21.7 million or 14.4% in the six months ended February 28, 2001 as compared to the same periods last year. The second quarter decrease in net sales was due to a decline in feed sales volume, which was only partially offset by an increase in average selling prices. The decrease in net sales for the six-month period was related entirely to a decline in volume. Feed volume declined by 61,100 tons or 17.4% in the second quarter and 103,500 tons or 14.6% in the six month period as already difficult market conditions in the region were exacerbated by newly reported outbreaks of BSE or "mad cow disease." Favorable grazing conditions in Spain also reduced demand for commercial feed. Average selling prices for the Europe segment increased $16 per ton or 7.5% in the second quarter primarily as a result of higher ingredient costs. Segment profitability in the Europe segment decreased $0.6 million or 20.0% in the second quarter and $1.5 million or 20.0% in the six months ended February 28, 2001. IOIC decreased $3.9 million or 16.5% in the second quarter and $10.1 million or 20.2% in the six-month period primarily due to lower feed volume. The declines in IOIC were mostly offset by lower operating expenses which reflect both the reduction in volume and the translation of local currency expenses at weaker exchange rates. Asia Net sales in the Asia segment decreased $0.8 million or 0.9% for the quarter ended February 28, 2001 as compared to the same period last year. The decrease in net sales was the result of lower average selling prices, which were mostly offset by an increase in volume. For the six months ended February 28, 2001, net sales in Asia increased $7.1 million or 4.1% mainly as a result of 5 higher volume, which was only partially offset by lower average selling prices. In China, volumes increased 25,700 tons or 101.0% in the second quarter and 52,200 tons or 88.6% in the six-month period reflecting a positive response to recent sales initiatives combined with favorable animal prices in the China market. Average selling prices for the Asia segment declined $11 per ton or 4.5% in the second quarter and $5 per ton or 1.9% in the six month period primarily as a result of lower prices in Korea and the Philippines. As a result of a reduction in demand for hog feeds, the operations in Korea and the Philippines were unable to pass through higher ingredient costs to customers. Segment profitability in the Asia segment decreased $4.1 million or 42.3% in the second quarter and $6.4 million or 31.4% in the six months ended February 28, 2001. IOIC in Asia decreased $5.1 million or 20.2% in the second quarter and $5.6 million or 10.8% in the six month period as the impact of weak hog market conditions in Korea and the Philippines more than offset the improvement experienced in China. The second quarter decline in IOIC was partially offset by a $1.0 million decline in operating expenses which reflects the translation of local currency expenses at weaker exchange rates. 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 second quarter of this fiscal year, Tradico recorded intercompany sales of $23.6 million. In terms of segment profitability, the corporate and Tradico segment recorded losses of $4.0 million and $8.5 million in the quarter and six months ended February 28, 2001, respectively. These compare to losses of $3.5 million and $6.8 million in the quarter and six months ended February 29, 2000, respectively. These losses are primarily related to unallocated corporate administrative items. The second quarter increase in unallocated corporate administrative expenses is primarily related to operating expenses associated with the Greenville facility. The year-to-date increase in unallocated corporate administrative items reflects $0.5 million of litigation expenses incurred in the first quarter related to the Company's efforts to recover vitamin price fixing damages in a class action lawsuit. 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 $0.9 million and $20.3 million for the six months ended February 28, 2001 and February 29, 2000, 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 $9.2 million and $12.0 million for the six months ended February 28, 2001 and February 29, 2000, respectively. The Company has no material commitments for capital expenditures as of February 28, 2001. 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 $25.8 million at February 28, 2001. 6 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 February 28, 2001, 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 six months ended February 28, 2001. 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 products are sold. 7 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 and six months ended February 28, 2001 and February 29, 2000:

~~November 30, August 31, 2000 2000~~ Dollar-~~-----------------~~based ~~---------------~~EBITDA ~~Assets~~(Dollars ~~------~~in ~~Current~~millions) ~~Assets~~Quarter ~~Cash~~Ended ~~and~~Six ~~cash~~Months ~~equivalents~~Ended ~~$ 171.8 $ 174.6 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~~ ------------------ --------------- ~~Investments~~February ~~and~~28, ~~Other~~February ~~Assets~~29, ~~62.0~~February ~~59.5~~28, ~~Property~~February at29, ~~Cost~~2001 ~~343.0~~2000 ~~351.7~~2001 ~~Accumulated~~2000 ~~Depreciation (182.2) (183.3)~~ ---------------~~---~~ --------------- ~~160.8 168.4~~ ---------------~~---~~ --------------- ~~Total~~Earnings before Income Taxes $ ~~570~~6.35 $ ~~581~~16.65 ~~==================~~$ ~~===============~~14.2 ~~Liabilities~~$ ~~and~~37.5 ~~Shareholders'~~Adjustments: ~~Equity~~o ~~------------------------------------~~Depreciation ~~Current~~and ~~Liabilities~~amortization ~~Current~~5.8 ~~maturities~~6.4 of11.8 ~~long-term~~12.7 ~~debt~~o $Interest 1expense 0.9 0.6 $1.7 01.45 ~~Notes~~o ~~payable~~Investment 19income (2.6) (2.3) 27(4.9) (4.8) ~~Accounts~~o ~~payable~~Merger ~~and~~expenses ~~accrued liabilities 116~~1.4 ~~116~~- 7.06 ~~Income~~- ~~taxes~~o 4Provisions for restructuring 0.59 4- 1.5 - ----------------- ------------~~---~~ ~~Total Current Liabilities 141.1 148.7~~ ------------- ----- ------------~~---~~ ~~Long-Term~~EBITDA ~~Debt~~reported ~~9.6~~after ~~10.7~~translation ~~Deferred~~under ~~Income~~FAS ~~Taxes~~52 ~~and~~12.9 ~~Other~~21.2 ~~Liabilities 29~~31.89 2846.79 ~~Shareholders'~~Adjustments ~~Equity~~to ~~Common~~report ~~stock~~EBITDA .1on .a Dollar basis: 1) ~~Capital~~Difference in ~~excess~~cost of ~~par~~products ~~419~~sold (1.53) ~~419~~0.6 (3.7) (0.5) ~~Retained~~2) ~~earnings~~Reversal ~~100.0~~of ~~95.1~~foreign ~~Common~~exchange ~~stock~~loss/(gain) inreported ~~treasury,~~under atFAS ~~cost~~52 1.1 (331.83) 2.6 (331.80) ~~Accumulated~~3) ~~other~~Dollar-based ~~comprehensive~~foreign ~~loss~~exchange (~~96.0~~loss)/gain (871.42) 1.5 0.3 3.0 ---------------~~---~~ ------------~~---~~ ~~Total Shareholders' Equity 389.8 393.5~~ ------------- ----- ------------~~---~~ ~~Total~~EBITDA reported on a U.S. Dollar basis $ ~~570~~11.35 $ ~~581~~22.60 $ 31.1 $ 48.4 =============== ============ ============= =================

Explanation of adjustments to EBITDA: 1) Difference in cost of products sold. Cost of products sold was lower under FAS 52 in the current quarter and six months ended February 28, 2001 primarily due to devaluation of the Brazilian Real, the Korean Won and the Philippine Peso against the Dollar. Under Dollar-based accounting, inventories are initially recorded and maintained in Dollars. 2) Reversal of foreign exchange loss/gain reported under FAS 52. The Company reported foreign exchange losses under FAS 52 of $1.1 million and $2.6 million in the quarter and six months ended February 28, 2001, respectively. Most of these exchange losses occurred in Brazil and Mexico, where the Company carried U.S. Dollar denominated debt and the local currency devalued versus the Dollar. 3) Dollar-based foreign exchange losses and gains. If Agribrands had used Dollar-based accounting worldwide, it would have recognized a foreign exchange loss of $1.2 million in the quarter ended February 28, 2001. Most of this loss occurred in Europe, where the Company has net liabilities denominated in the local currencies. During the current quarter, the Euro strengthened versus the Dollar. Therefore, Euro-denominated liabilities decreased in Dollar terms resulting in a foreign exchange loss. 8 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 November 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 and six months ended February 28, 2001 were well below long-term trend lines. The disappointing earnings for the first half of the fiscal year reflect predominantly negative cyclical conditions across key markets. Current indications are that circumstances are improving in certain key markets like Mexico, Korea and the Philippines. As a result, consolidated operating results for the latter half of the current fiscal year should exceed results for the first half of the 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 Canada, Mexico, Colombia and Peru. 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, Canadian Dollars, Chinese Renminbi, Colombian Pesos and Philippine Pesos. 9 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. 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; (xii) changes brought about by e-commerce initiatives and (xiii) completion of the proposed merger with Cargill. 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. 10 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. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk is the potential loss arising from adverse changes in market rates and prices, such as commodity prices, interest rates and foreign currency exchange rates. Market risk information is disclosed in the Company's Form 10-K for the year ended August 31, 2000. Agribrands did not have any material changes in market risk from August 31, 2000 to February 28, 2001. 11

~~Three~~AGRIBRANDS ~~Months~~INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED) (Dollars in millions except per share data) Quarter Ended ~~November~~Six ~~30,~~Months Ended ------------------------------~~-------~~ ~~2000 1999~~ ---------------- ---------------- ~~Cash~~February ~~Flow~~28, ~~from~~February ~~Operations~~29, ~~Net~~February ~~earnings~~28, $February ~~4.9~~29, $2001 ~~13.9~~2000 ~~Non-cash~~2001 ~~items~~2000 ~~included in income Depreciation and amortization 6.0 6.3 Foreign exchange loss 1.5 0.3 Provision for doubtful accounts 0.5 0.9 Deferred income taxes~~ - ~~2.6 Changes in operating assets and liabilities used in operations 0.7 (7.7) Other, net 1.2~~ - ----------~~------~~ -----------~~-----~~ ~~Net cash provided by operations 14.8 16.3~~ ------------~~----~~ ------------~~----~~ ~~Cash~~Net ~~Flow~~Sales ~~from~~$ ~~Investing~~278.2 ~~Activities~~$ ~~Property additions (5~~288.6)1 ~~(6.5)~~$ ~~Proceeds from the sale of property 0~~580.32 ~~0.4~~$ ~~Purchase of key man life insurance (2~~589.~~5) (5.~~0) ~~Other,~~Costs ~~net~~and ~~(0.2)~~Expenses ~~(0.5)~~ ------- --------- ------- --------- ~~Net~~Cost ~~cash~~of ~~used~~products bysold ~~investing~~231.6 ~~activities (~~234.8 477.0) ~~(11~~475.6)1 ~~----------------~~Selling, ~~----------------~~general ~~Cash~~and ~~Flow~~administrative ~~from~~38.4 ~~Financing~~39.8 ~~Activities~~80.5 ~~Proceeds~~80.7 ~~from~~Merger ~~issuance~~expenses of1.4 ~~long~~-~~term~~ ~~debt 0~~7.46 - ~~Principal~~Interest ~~payments~~expense on0.9 ~~long-term~~0.6 ~~debt,~~1.7 ~~including~~1.5 ~~current~~Provisions ~~maturities~~for (restructuring 0.2)9 (0- 1.3)5 ~~Net~~- ~~increase~~Other (~~decrease~~income)/expense, innet ~~notes~~(1.5) ~~payable~~ (83.16) (02.53) ~~Treasury stock purchases -~~ (05.8) ------- --------- -------- -------- ~~Net~~271.7 ~~cash~~271.6 ~~used by financing activities (7~~566.9)0 (1551.6)5 ------- --------- -------- -------- ~~Effect~~Earnings ofbefore ~~Exchange~~Income ~~Rate~~Taxes ~~Changes~~6.5 on16.5 ~~Cash~~14.2 ~~and~~37.5 ~~Cash~~Income ~~Equivalents~~Taxes (12.7)6 (05.5 5.4 12.6) ------- --------- -------- -------- Net ~~(Decrease)~~Earnings ~~Increase~~$ in3.9 ~~Cash~~$ ~~and~~11.0 ~~Cash~~$ ~~Equivalents (2~~8.8) 2$ 24.59 ~~Cash~~======= ~~and~~======== ~~Cash~~======== ~~Equivalents,~~======== ~~Beginning~~Earnings ofPer ~~Period~~Share ~~174~~Basic $ .640 ~~178~~$ 1.008 ~~----------------~~$ ~~----------------~~.90 ~~Cash~~$ ~~and~~2.42 ~~Cash~~======= ~~Equivalents,~~======== ~~End~~======== of======== ~~Period~~Diluted $ ~~171~~.838 $ ~~180~~1.504 $ .86 $ 2.34 ======= ========= ======== ========

See Accompanying Notes to Consolidated Financial Statements 12 AGRIBRANDS INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEET UNAUDITED) (Dollars in millions)

See Accompanying Notes to Consolidated Financial Statements 13 AGRIBRANDS INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (Dollars in millions)

See Accompanying Notes to Consolidated Financial Statements 14 AGRIBRANDS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions) Note 1 - PROPOSED MERGER. 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 around April 30, 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 mailed a proxy statement to shareholders on or around March 21, 2001. 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 INCOME/(LOSS):

15 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:

16 Note 5 - SUPPLEMENTAL BALANCE SHEET INFORMATION:

Note 6 - RESTRUCTURING. In the current quarter, Agribrands recorded provisions for restructuring which reduced earnings before income taxes and net earnings by $0.9 million and $0.5 million, respectively. In the six months ended February 28, 2001, the Company recorded provisions for restructuring which reduced earnings before income taxes and net earnings by $1.5 million and $0.9 million, respectively. These charges represented primarily severance costs associated with the streamlining of Agribrands' operations in Mexico and Spain. The restructurings provided for the termination of 27 administrative and production employees, all of whom have been released as of February 28, 2001. Beginning in fiscal 2002, these restructuring actions are expected to result in annual pre-tax cost savings of approximately $1.2 million. The following table summarizes the activity within the restructuring reserves during the quarter and six months ended February 28, 2001. Substantially all actions associated with the remaining reserves are expected to be completed by the end of the fiscal year.

17 Note 7 - OTHER (INCOME)/EXPENSE, NET:

Note 8 - COMMON STOCK. There were 9,813,851 shares of common stock outstanding at February 28, 2001 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:

Note 10 - INVESTMENTS IN MARKETABLE SECURITIES. On December 12, 2000, the Company purchased $6.0 million of Pacific Gas & Electric Company commercial paper which matured on February 28, 2001. Agribrands initially classified this investment as held-to-maturity because it had the positive intent and ability to hold the security until maturity. However, Pacific Gas & Electric Company defaulted on all of its commercial paper which matured on February 28, 2001. As a result of this default, the Company has reclassified its investment in Pacific Gas & Electric Company commercial paper as available-for-sale at February 28, 2001. The bid price for Pacific Gas & Electric utility commercial paper as of February 28th was 82% of accreted value. The Company 18 believes this represents a temporary decline in the fair value of the security below its amortized cost because the issues that led to the default are being addressed by the State of California, the utilities, and Federal agencies. The primary issue causing the default on payments is the failed effort at electric utility deregulation in California. The State of California is in the process of a large bond offering to assist California utilities with their outstanding obligations. ^ The State of California Public Utility Commission has increased utility rates to further support the utilities. Pacific Gas & Electric Company has indicated that it will continue to pay interest on all defaulted maturities until payment of the defaulted amount can be made in full. However, there is no assurance Pacific Gas & Electric Company will make the payments or refrain from seeking protection from creditors in bankruptcy or other proceedings. Investments in marketable securities at February 28, 2001 include shares of various mutual fund securities which are on deposit in a trust to support key man split dollar life insurance. Under terms of the trust agreement, the shares of various mutual fund securities are available for sale at the discretion of Agribrands. The trust agreement limits Agribrands' gross proceeds at the time of the sale to its original cost basis. At February 28, 2001, the original cost basis and aggregate fair value of the mutual fund securities were $12.5 million and $11.8 million, respectively. Available-for-sale securities are carried at fair value, which is based on quoted market prices. The difference between the fair value and cost basis of these securities, net of tax, is shown as a separate component within Accumulated Other Comprehensive Loss in the shareholders equity section of the Consolidated Balance Sheet. The table below shows the aggregate fair value, gross unrealized holding loss, tax benefit, and net unrealized holding loss for the Company's available-for-sale securities as of February 28, 2001.

Note 11 - DERIVATIVE FINANCIAL INSTRUMENTS. 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. The Company currently uses derivative instruments, primarily foreign exchange forward contracts and commodity futures contracts, to manage certain foreign exchange rate and commodity price risks that are inherent to its business operations. Derivatives used by the Company have an initial term of less than one year. Company policy allows for the use of derivatives only for identifiable exposures, and therefore, the Company does not enter into derivative instruments for trading purposes where the objective is to generate profits. Beginning September 1, 2000, all derivative instruments are carried on the balance sheet at fair value as required by FAS 133 with changes in value being reflected in current period operating results. Since its adoption of FAS 133, the Company has elected not to apply hedge accounting to any of its derivatives. 19 With respect to foreign exchange risk, the Company's objective is to limit potential losses in earnings or cash flows from adverse foreign currency exchange rate movements. The Company's foreign currency exposures arise from transactions denominated in a currency other than an entity's functional currency. The Company primarily uses foreign exchange forward contracts to offset the transaction gains and losses on recognized foreign currency denominated assets and liabilities. The Company does not apply hedge accounting to such arrangements because the transaction gains and losses on the foreign currency denominated assets and liabilities are naturally offset to a great extent in the income statement by the losses and gains on the derivative. For internal control reasons, Agribrands uses a centralized approach to commodity price risk management. The Company uses commodity futures contracts with the objective of reducing commodity price risks related to raw material requirements for commodities such as corn, wheat and soybean meal. 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: None (b) Reports on Form 8-K: Current Report on Form 8-K filed December 4, 2000 which incorporated under Item 5, Other Events, the Agreement and Plan of Reorganization, dated December 1, 2000 by and among Cargill, Agribrands and Abacus and a joint press release, dated December 4, 2000, describing the Company's announcement regarding the signing of the merger agreement. 20 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: April 4, 2001 21

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