SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)
[ X ] Annual report  pursuant to section 13 or 15(d) of the Securities  Exchange
Act of 1934 for the fiscal year ended August 31, 2000 or

[   ] Transition   report  pursuant  to section  13 or 15(d)  of the  Securities
Exchange Act of 1934 for the transition period from _________ to _________.

                           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)

           Securities Registered Pursuant to Section 12(b) of the Act:

                                                   Name of each Exchange
        Title of Each Class                        on which Registered
        -----------------------                    ----------------------------

        Agribrands International, Inc.             New York Stock Exchange, Inc.
        Common Stock, par value $.01 per share

        Securities Registered Pursuant to Section 12(g) of the Act: None



     Indicate  by check mark  whether the  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  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]


<PAGE>

     The aggregate market value of the voting stock held by nonaffiliates of the
Registrant is  $423,643,137,  based upon the closing market price on November 1,
2000.  Excluded  from  this  figure is the  voting  stock  held by  Registrant's
Directors, who are the only persons known to Registrant who may be considered to
be its "affiliates" as defined under Rule 12b-2.

     The number of shares of Common Stock, $.01 par value, outstanding as of the
close of business on November 1, 2000: 9,813,851.

                      Documents Incorporated by Reference:

     None.


<PAGE>


                                TABLE OF CONTENTS

                                                                            Page
INTRODUCTION
         Forward Looking Statements                                            4
         Risk Factors                                                          4

PART I
    Item 1.  Business                                                         10
    Item 2.  Properties                                                       15
    Item 3.  Legal Proceedings                                                17
    Item 4.  Submission of Matters to a Vote of Security Holders              18

PART II
    Item 5.  Market for the Registrant's Common Equity and Related
               Stockholder Matters                                            19
    Item 6.  Selected Financial Data                                          20
    Item 7.  Management's Discussion and Analysis of Financial Condition
               And Results of Operations                                      21
    Item 7A. Quantitative and Qualitative Disclosures about Market Risk       35
    Item 8.  Financial Statements and Supplementary Data                      35
    Item 9.  Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure                            63

PART III
    Item 10. Directors and Executive Officers of the Registrant               64
    Item 11. Executive Compensation                                           69
    Item 12. Security Ownership of Certain Beneficial Owners and Management   74
    Item 13. Certain Relationships and Related Transactions                   76

PART IV
    Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K  77


<PAGE>

FORWARD-LOOKING STATEMENTS

     Certain statements under "Management's Discussion and Analysis of Financial
Condition and Results of  Operations,"  "Business"  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;  and (xi) changes in the economic or
financial  impact of, or failure to comply with,  government  regulations.  As a
result of the  foregoing  and other  factors,  no  assurance  can be given as to
future results,  levels of activity and achievements,  or as to 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.


RISK FACTORS

Company and Industry Specific Risks

Merger with Ralcorp Holdings, Inc.

     See Item 7 Management's  Discussion and Analysis of Financial Condition and
Results of Operations - Proposed Merger.

Limited Operating History as an Independent Company

     The  assets   associated   with  Ralston   Purina   Company's   ("Ralston")
international  animal  feeds  and  agricultural  products  business  were  first
contributed to Agribrands International, Inc. ("Agribrands" or the "Company") on
April 1, 1998 when the shares of  Agribrands  were  distributed  to the  Ralston
shareholders  (the  "Distribution").  As a  result,  Agribrands  has  a  limited
operating  history as an independent  company.  While the business  conducted by
Agribrands and its subsidiaries was profitable as part of Ralston,  and has been
profitable since the  Distribution,  there is no assurance that it will continue
to be operated  profitably as a stand-alone  public company.  In addition,  from
time to time, certain local operations of Agribrands have operated at a loss.

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Agribrands is no longer able to rely on Ralston for financial support or benefit
from its relationship  with Ralston to obtain credit or receive  favorable terms
for the purchase or sale of certain goods and services. In addition,  except for
certain transitional  services,  Agribrands is responsible for its own corporate
administrative services such as tax, treasury,  accounting,  and legal that were
previously provided by Ralston.

Obligations to Ralston

     Under agreements entered into with Ralston at the time of the Distribution,
Agribrands  has  agreed  to  indemnify  Ralston  against,  among  other  things,
liabilities  relating to the  operation  of the  Agribrands  business  and other
former  businesses   associated  with  Ralston's   international   animal  feeds
operations, or the ownership of the assets utilized in those businesses,  except
to the extent such were  assumed or retained  by  Ralston.  Agribrands  has also
agreed that  neither  Agribrands  nor its  subsidiaries  will enter into certain
transactions  for three  years  following  the  Distribution,  and to  indemnify
Ralston  and its  shareholders  as of the date of the  Distribution  against tax
liabilities  incurred  by reason of the  Distribution  being a taxable  event if
Agribrands engages in any of the restricted transactions.

Animal Feeds Industry

     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; restrictive quota policies and
trade  policies and tariffs;  production  difficulties,  including  capacity and
supply surpluses and constraints; 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.

Significant Competitive Activity

     There is substantial excess capacity in the animal feed business worldwide,
including the  countries in which the Company  operates.  The Company  currently
faces intense,  and as a result of consolidation may face increasingly  intense,
competition from large  multinational  and other  international as well as local
and regional feed manufacturers,  cooperatives,  single-owner establishments and
government feed companies. Some of these competitors are larger and have greater
financial  resources than  Agribrands,  and in some countries  cooperatives  and
government  feed  companies  may  have   significant   financial  and  political
advantages.  Because of limited technological or capital constraints on entry to
the animal feed  industry and the extremely  fragmented  nature of the industry,
new competitors with relatively modest return objectives can arise in any market
at any time. In addition,  lower priced  alternative  feed sources or methods of
feeding may be elected by  Agribrands'  customers  during times of weak economic
conditions affecting their markets and operations.

     Local  animal  production  industries  are  consolidating  as a  result  of
end-product price pressures and overcapacity,  and management expects this trend
to continue. The tendency of large producers to vertically integrate their

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<PAGE>

businesses by acquiring or constructing feed production  facilities has at times
led to  significantly  less  reliance  on  outside  suppliers  of  feed.  As the
consolidation of animal producers  continues,  competition is likely to increase
among  independent  feed  suppliers,   and  that  industry  is  also  likely  to
consolidate.

     Competition is based upon price,  product quality and efficiency,  customer
service and the  ability to identify  and  satisfy  animal  production  needs in
particular  countries.  The Company from time to time experiences price pressure
in certain of its markets as a result of competitors' pricing practices.  As the
Company  operates on an  international  basis and markets a broad line of animal
feeds and other agricultural  products,  it bears higher costs associated with a
multi-layered  distribution  system, a complex  production  system,  and tax and
financing obligations imposed by its international and multi-currency structure.
Such higher costs may restrict its ability to compete in  particular  markets on
the basis of price.

     Also, low commodity  prices may reduce the value of and demand for complete
feeds as livestock and poultry feeders switch to pre-mix or concentrate products
which are mixed with directly acquired  commodities.  A significant reduction in
demand  for  complete  feeds  could  materially  affect the  utilization  of the
Company's fixed assets thereby affecting its financial performance.

Raw Material Price Volatility

     Approximately  80%  of  the  cost  to  produce  feed  is  the  cost  of the
ingredients.  Since the majority of ingredients are commodities traded on global
markets,  cost positions are relatively  transparent  and the animal producer is
aware of the underlying  ingredient costs. The prices of raw materials,  such as
grain, grain products and protein ingredients,  are susceptible to fluctuations,
possibly  volatile,  due to weather  conditions,  crop  disease  or  pestilence,
government   regulations  (for  example,   regulation  of  genetically  modified
organisms,  "GMOs"),  economic  climate,  labor  disputes  or  other  unforeseen
circumstances.  Operating results may be affected by the price volatility of raw
materials which constitute a substantial component of the cost of goods sold for
the Company's  business.  The rapid  turnover of certain raw material  inventory
items and, for certain  products,  the ability to substitute  alternative  lower
cost ingredients to produce feeds with specified nutritional  characteristics at
a  lower  total  cost  may  provide  Agribrands  with  some  protection  against
fluctuating raw material prices.  Agribrands  believes that adequate supplies of
its  necessary  raw  materials  are  available at the present  time,  but cannot
predict future availability or prices of such products and materials. Agribrands
may from time to time hedge its  commodities  purchases or otherwise take market
positions  in various  ingredients.  Although  they would be  intended to ensure
supply  or  establish  ingredient  costs  for  anticipated  sales  volume,  such
transactions  may under  certain  circumstances  magnify the  adverse  effect of
unanticipated changes in market prices.

Non-Compete Agreements

     The Company has agreed with Ralston that,  until April 1, 2003, the Company
will not engage in the manufacture,  distribution or sale of foods for pets, pet
products,  pet supplies,  pet accessories,  litter or personal care products for
cats, dogs or other pets, subject to certain limited exceptions.  If the Company
does enter into any of those  businesses  following the restriction  period,  it
will not have the  right to use the  trademarks  "Purina"(R),  "Chow"(R)  or the
"Checkerboard"(R)  logo, on pet food products,  other than products produced for
Ralston or provided by Ralston.

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.  There is now a fixed  conversion  rate between their existing
currencies ("legacy currencies") and the Euro. The legacy currencies

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will 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.

Foreign Operations Risk

Worldwide Regulatory and Political Risk

     The Company has  operating  companies in 17 foreign  countries  outside the
United States and is subject to government regulation and political risk in each
market.  Because the Company operates primarily through its subsidiaries,  it is
subject to regulation by numerous common market, national and local governmental
entities and agencies  around the world.  Changes in the laws or  administrative
practices  relating to foreign  ownership  and  control,  local  employment  and
benefits,  air and water  quality,  noise  pollution,  underground  fuel storage
tanks,  waste  handling  and disposal as well as other  regulations  intended to
protect public health, the environment, currency exchange controls, alienability
of property, taxation or other matters in any jurisdiction could have a material
adverse  effect  on  the  operations  and  prospects  of  the  Company  in  such
jurisdiction  and as a whole.  Countries differ widely with respect to legal and
political  structure and stability and some of these countries lack stable legal
and regulatory systems.  For example,  many European  countries,  as well as the
European  Union,  have been very active in adopting and enforcing  food handling
regulations,  while many developing countries in which the Company operates have
not adopted or enforced  significant  regulation  relating to food  safety,  the
environment,   occupational  safety,   employment  practices  or  other  matters
extensively  regulated in the United States.  As such economies  develop,  it is
possible that new and expanded  regulations may increase the risk and expense of
doing business in these  countries.  Governmental  regulations may also restrict
the  ability  of the  Company's  operating  subsidiaries  to remit  funds to the
Company,  or impose minimum  requirements  as to the capital  structure of local
operating companies.

     In addition, the Company's operations may at times in the future be subject
to  expropriation,  confiscatory  taxation or price controls,  and political and
economic changes may damage operating and growth prospects by causing  political
and regulatory uncertainty or economic difficulties. For example, in Europe, any
failure of a country in which the Company  does  business  to join the  European
Union or the European  Monetary  Union may have a negative  effect on borrowing,
exchange  rates and  economic  stability in such  country,  and any delay in the
expansion or  development  of the European  Union may have a negative  effect on
borrowing, exchange rates and economic stability in Europe as a whole.

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Inflation and High Local Interest Rates

     Many countries have in the recent past experienced, and in some cases still
experience,  substantial  or at times  extremely  high  rates of  inflation  and
correspondingly  high  interest  rates.  Inflation,   hyperinflation  and  rapid
fluctuations  in  inflation  rates have had and may  continue  to have  negative
effects  on  the  currencies,   economies,  capital  markets  and  the  business
environment of certain  countries and could have an adverse effect on various of
the  Company's  operating  subsidiaries  and  investments  in  those  countries,
including an adverse effect on their ability to obtain financing.

Currency Fluctuations

     The monetary assets and liabilities of the Company's operating subsidiaries
are typically denominated in local currency. Consequently, their value in Dollar
terms  will  fluctuate  with  changes in the  exchange  rate  between  the local
currency and the Dollar.  Agribrands rarely hedges such exposures.  As a result,
the Company may  experience  economic  loss with  respect to its local  currency
exposures.  In  addition,  the  Company's  operating  subsidiaries  report their
results of operations  and financial  position in the local  currency  while the
Company  reports  its results of  operations  and other  financial  data in U.S.
Dollars.  Accordingly,  the Company's  reported  operating results and financial
position  are  affected  by changes in currency  exchange  rates  between  those
currencies  and  the  U.S.  Dollar.  For  example,  the  Company  experienced  a
significant  decline  in the  reported  value of its  investment  in its  Korean
operating subsidiary as a result of the sharp decline in the value of the Korean
Won during fiscal year 1998.  Many of the currencies of the countries  where the
Company  operates  have  experienced  steady  devaluations  relative to the U.S.
Dollar.  Sudden major  adjustments have occurred in the past, may again occur in
the future and could have a material adverse effect on the operating  results of
the Company.

U.S. Regulation of International Commerce

     The Company is subject to the Foreign Corrupt Practices Act ("FCPA"), which
generally prohibits U.S. companies and their intermediaries from bribing foreign
officials  for the  purpose of  obtaining  or keeping  business  or  licenses or
otherwise  obtaining  favorable  treatment.   Although  the  Company  has  taken
precautions  to  comply  with the  FCPA,  there  can be no  assurance  that such
precautions  will  protect  the  Company  against   liability  under  the  FCPA,
particularly  as a result of  actions  which may have been  taken in the past or
which may be taken in the  future by agents and other  intermediaries  for whose
actions  the  Company  may be held liable  under the FCPA.  In  particular,  the
Company  may be held  responsible  for  actions  taken by its local  agents even
though such agents may not be subject to the FCPA. Although these actions may be
customary under local practice, they may result in inadvertent violations of the
FCPA.  Any  determination  that the Company has  violated  the FCPA could have a
material adverse effect on the Company.

     Trade  sanctions  imposed by the United  States in  response  to  political
developments  may limit the  Company's  access to  suppliers  or  customers.  In
addition,  the Company may at times become  subject to  conflicting  obligations
under the laws of the United States and the laws of the  jurisdictions  in which
it operates,  including  circumstances  when trade  sanctions or boycotts may be
imposed by the laws of one  jurisdiction,  while laws of the other  jurisdiction
may expressly prohibit participation in such sanctions or boycott.

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<PAGE>

International Tax Risks

     Income earned and distributions of those earnings and other payments by the
Company's  operating  subsidiaries  are often subject to  withholding  and other
taxes  imposed  by the  jurisdictions  in which  such  entities  are  formed  or
operating.  In  general,  a United  States  corporation  may claim a foreign tax
credit  against  any  federal  income tax  expense  for local  currency  foreign
withholding taxes and foreign taxes paid directly by corporate entities in which
the  company  owns 10% or more of the voting  stock.  The  ability to claim such
foreign tax credits and to utilize net foreign  losses is,  however,  subject to
numerous  limitations,  and the ability of the Company to utilize  these credits
may be limited  because (i) tax rates are higher in certain  jurisdictions  than
the  comparable tax rates in the United States or (ii) the Company may not be in
a tax-paying position in the United States.  Intense focus by tax authorities on
intercompany transactions of international companies could lead to challenges of
the Company's tax treatment of such items which,  if sustained,  could  generate
tax liabilities material to a particular quarter or annual period.

Reporting Standards and Financial Data

     Companies  operating  overseas  are  subject to  accounting,  auditing  and
financial  standards and requirements that differ, in some cases  significantly,
from those applicable under U.S. GAAP. The Company's  ability to comply with the
informational  and filing  requirements  will  depend on the  timely  receipt of
accurate  and  complete  financial  and  other  information  from the  Company's
operating  subsidiaries.  The failure to receive  such  information  on a timely
basis could have a material adverse effect on the Company,  including preventing
it from  satisfying  its  informational  and filing  requirements.  Furthermore,
maintenance of adequate  internal  control systems may be made more difficult by
the  geographical   dispersion  and  autonomous   management  structure  of  the
Agribrands business.

Entering New Businesses and Markets

     Agribrands  anticipates  that it will continue to explore  opportunities to
enter new business segments in existing markets and new geographic  markets when
appropriate  opportunities  are  identified.  Opening new  business  segments or
markets  can result in  increased  earnings  for the  Company,  but not all such
ventures are likely to be successful,  which could have an adverse effect on the
overall operating results of the Company.

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<PAGE>
                                     PART I

ITEM 1.  Business

General

     The Company,  incorporated in Missouri, is a leading international producer
and  marketer  of a broad  line of  animal  feeds  and  other  agricultural  and
nutrition  products for hogs,  dairy cows,  beef cattle,  poultry  (broilers and
layers), rabbits, horses, shrimp and fish. The Company operates 70 manufacturing
plants in 17 countries outside the United States on four continents.  Management
believes that, among commercial  producers of complete animal feeds,  Agribrands
is the most  geographically  diversified  company of its type in the world,  and
that its local  operations  rank among the top three in share of the  commercial
animal feed market in most of the  countries in which it  operates.  The Company
acquired in July 2000 an animal  health  products  distribution  business in the
Philippines  and in  November  2000 an animal  feed  manufacturing  facility  in
Greenville, Mississippi.

     Agribrands business consists primarily of the international animal feed and
agricultural  products  businesses  conducted by Ralston prior to April 1, 1998,
when the shares of the Company  were  distributed  to the Ralston  shareholders.
Accordingly, the Company benefits from Ralston's over 100 years of experience in
the animal feeds and agricultural  products  industry,  during which time it has
built and  maintained  a leading  industry  position by  consistently  providing
high-quality,  research-proven  products and customer  service.  The Company has
more than thirty years' experience operating across four continents.

     The business segment and geographic  information appearing in Note 4 of the
Company's Notes to Financial Statements is incorporated herein by reference.

The Commercial Feed Industry

     Feed  costs  represent  the  largest  component  of the total cost to raise
animals used in the production of meat, fish, milk and eggs. The commercial feed
industry  provides feed and feed  components,  generally to  independent  animal
producers  who  then  market  fully-grown  animals,  fish,  milk or eggs to food
processing companies who finally supply retail food outlets and the consumer.

     The animal  production  industry is driven by human consumption of protein,
which  is  influenced  by  population  and  income.  In  developing   economies,
consumption of animal protein  generally rises with growth in disposable  income
as consumers shift to more animal-based  protein.  After per-capita  consumption
reaches  saturation,  growth or decline in  consumption  is driven by changes in
population.  The  commercial  animal  feed  industry  is driven by total  animal
production and economic development.  As an economy moves toward specialization,
animal  production   intensifies  and  competition  drives  out  inefficiencies.
Commercial  animal feed producers  provide the benefits of efficient  ingredient
procurement, value-added processing, and sophisticated formulation, which raises
the efficiency of animal production.  However,  as animal production  techniques
evolve,  even greater  efficiencies  can  sometimes  be gained by  concentrating
production of a particular  species of animal and  establishing  dedicated  feed
production as part of a vertically integrated system.

     Animal feed is produced  by  combining  grains and  proteins  with  desired
vitamins  and  minerals.  Animal  producers  can achieve  the desired  ration by
purchasing a complete feed or by acquiring and combining the components. Broadly
speaking,  commercial feed companies sell complete feeds  (ready-to-eat  rations
requiring no additional ingredients or processing),  concentrates (requiring the
addition of some ingredient or ingredients,  usually grain),  premixes  (vitamin
and mineral mix usually  requiring  the  addition of grains and  proteins),  and
supplements (select vitamins and minerals added to other rations to deliver

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targeted  nutrition).  The animal  producer  selects between these product types
based on the type of ration desired, availability of ingredients, and capability
to  process  the  ingredients  with  on-farm  equipment.  Substantial  levels of
premixes  are  produced  by large drug  companies  and sold to  commercial  feed
producers for processing with other ingredients.

     Complete feed products are bulky and expensive to transport.  Most complete
feeds and  concentrates  are sold within close  proximity of the producing  feed
mill. Where the local infrastructure is adequate,  large customers generally buy
product  in bulk,  which is  delivered  by truck  and  placed  directly  in bins
connected to the animal production unit.  Smaller customers  typically  purchase
bagged  product and are generally  served by  distribution  outlets  rather than
direct from the plant. In very low-intensity  farming areas and where commercial
feed is used as a supplement to other feed sources,  retailers  sometimes divide
bags into smaller units for sale.

     The feed  industry  around the world  prices on a  cost-plus-margin  basis.
Approximately  80% of the cost to produce  feed is the cost of the  ingredients.
Since the majority of ingredients are commodities traded on global markets, cost
positions are  relatively  transparent  and the animal  producer is aware of the
underlying  ingredient costs.  While decreased demand can place pressure on feed
producers' margins,  industry participants generally retain their narrow margins
and suffer volume  declines.  The greatest  impact of cyclical supply and demand
inequalities  is usually  borne by the animal  producer  who, when faced with an
end-product  price  less than the cost to raise an  animal,  reduces  production
until favorable economics return.

     Feed producers  generally  compete on the basis of cost per unit of feed or
projected  total cost of feeding to  achieve a  specific  animal  output.  Using
on-farm trial results,  producers of premium-priced feeds attempt to demonstrate
to the  farmer  that  the  additional  per-unit  cost of the  feed is more  than
compensated  by (1) the  reduced  amount of feed and time  required to produce a
market-ready  animal or output or (2) the  improved  quality of the end  product
which  itself  can be  sold  at a  premium.  The  producer  uses  this  data  to
demonstrate  that the farmer's  total profits are  increased  through use of the
more efficient, higher priced feed.

     Animal  nutrition  research is central to  development  of more  productive
feeds.   Research  provides   increasingly  precise  information  regarding  the
biological  factors that determine how nutritional  qualities of ingredients and
additives  are  processed  by  animals,  and the  effect  of feed  manufacturing
processes and ingredient  interactions on nutritional values. Feed manufacturers
use this knowledge on a regular basis to reformulate existing products using the
lowest cost combination of ingredients that can deliver the desired  nutritional
values. In addition,  research  knowledge is the basis of the development of new
products that deliver  enhanced  nutrition for  increased  animal  production or
improved end-product characteristics. The challenge for the feed manufacturer is
to develop new products whose increased value (in terms of the additional all-in
benefit  to  the  farmer)  exceeds  any  additional   costs  of  ingredients  or
processing.

Principal Products

     The Company sells primarily complete feeds, which constitute  approximately
80% of sales,  but also sells  concentrates,  premixes,  supplements  and animal
health  and  sanitation  products.  The  Company's  products  are  predominantly
value-added  premium offerings and are generally  marketed under the "Purina"(R)
and "Chow"(R) trademarks and the "Checkerboard"(R)  logo, and product names such
as "Promote", "Omolene"(R) and "Hi-Octane"(R).

                                       8
<PAGE>

Sources and Availability of Raw Materials

     Feed is  manufactured  by  processing a  combination  of grains,  proteins,
vitamins,  and minerals.  Approximately 80% of the total cost to produce feed is
the  cost  of  these   ingredients,   most  of  which  are   widely   traded  in
Dollar-denominated  global commodity markets. Large multinational drug companies
produce and sell globally the micro ingredients,  such as vitamins. Vitamins and
minerals are also available from brokers, distributors and local companies.

Organizational Structure

     The local markets served by Agribrands  vary  dramatically  with respect to
locally available ingredients, animal species being raised, climate, real estate
values  and  economic  conditions.  In  order  to  manage  effectively  in  this
environment,  day-to-day  operating  decisions  are made by local  managers with
extensive  experience  and with  knowledge  of local  factors,  who operate on a
highly  autonomous  basis.  Regional  and global  management  coordinate  global
research  efforts,  assist  with  U.S.-based  ingredient  purchasing  and market
surveillance,  consult on process  engineering  and major capital  additions and
leverage  the  considerable   cumulative   experience  of  the  organization  by
collecting and sharing management and  administrative  best practices across the
operating units.

Distribution Network

     Agribrands'   distribution   network   consists  of   approximately   4,000
independent  dealers,  most of whom sell the Company's  products on an exclusive
basis. The dealers are independent  wholesalers who sell to animal producers and
(particularly   where  animal   production  is  done  at  a  very  small  scale)
redistribute  to  thousands  of points of sale.  More than 70% of the  Company's
sales are made through these dealers, with the balance made through direct sales
primarily  to large  feeders.  The  Company  offers  assistance  to  dealers  in
establishing  sound  financial  and  business  practices,   including  training,
marketing  support,   promotional  materials,  and  formal  business  management
programs,  including  assistance in obtaining bank financing.  As a result,  the
Company enjoys a high level of dealer loyalty.

Patents and Trademarks

     At the time of the Distribution, Ralston entered into a Trademark Agreement
with  Agribrands  pursuant  to  which  Ralston  assigned  to  Agribrands  all of
Ralston's rights in certain country specific  trademarks  associated solely with
the Agribrands business,  such as "Omolene"(R) and "Hi-Octane"(R) and granted to
Agribrands a perpetual license,  on a royalty-free  basis, to use the trademarks
"Purina"(R)  or "Chow"(R)  brands and the  "Checkerboard"  (R) logo, and certain
other  trademarks  with  respect to  agricultural  and certain  other  products,
subject  to the  rights  of  Purina  Mills,  Inc.  ("PMI")  referred  to  below.
Agribrands does not have the right to use such trademarks on pet products, other
than products produced for Ralston or provided by Ralston.

     The Company has agreed with Ralston that,  until April 1, 2003, the Company
will not engage in the manufacture,  distribution or sale of foods for pets, pet
products,  pet supplies,  pet accessories,  litter or personal care products for
cats, dogs or other pets, subject to certain limited exceptions.

     In 1986, Ralston sold the outstanding capital stock of its subsidiary,  PMI
which was engaged in the animal feed and agricultural  products  business in the
United States. In connection with that sale, PMI was granted a perpetual license
in the United States with respect to certain  significant  trademarks  which are
currently used by Agribrands outside of the United States.  Although  Agribrands
does  not  currently  compete  with  PMI  in the  United  States,  there  are no
restrictions  on  Agribrands'  right to expand  into the United  States  market,
subject to the exclusive rights of PMI to utilize such trademarks, trade names

                                       9
<PAGE>

and certain  proprietary  technologies in the United States. PMI may expand into
markets  outside  the  United  States,  subject to the  exclusive  rights of the
Company as described above, and has an animal feed business in the Philippines.

Seasonality of Business

     Sales  prices  and  volume  can  both  be  impacted  by  seasonal  factors.
Agricultural  product  sales  prices are directly  influenced  by changes in the
underlying  commodity  prices for the raw  materials  used to  formulate  animal
feeds.  Commodity  prices are usually at their lowest in the months  immediately
following the fall harvest.  Sales volume may fluctuate  somewhat  seasonally as
temperature  affects  caloric  intake and  breeding  cycles.  For  example,  the
Company's Mexican  subsidiary sells the vast majority of its shrimp feed between
June and October due to the nature of the shrimp  farming  cycle and location of
the customers.

     Currently,  seasonal  factors have a limited impact on the Company's  total
performance  in any given  period.  Seasonality  of  commodity  prices  does not
materially  affect  earnings  due to  the  industry  practice  of  pricing  at a
relatively constant margin over ingredient costs. With the possible exception of
shrimp feed sales,  seasonally  driven changes in sales volume do not materially
affect sales or earnings due to the  geographic and species  diversification  of
Agribrands' operations.

Competition

     The animal feed  business has  substantial  excess  capacity on a worldwide
basis,  including  excess capacity in the countries where the Company  operates.
The  Company  faces   competition  in  most  of  its  markets  from  other  feed
manufacturers, including, in certain countries, large multinational corporations
(such  as  Nutreco,   Ridley,  Cargill  and  Charoen  Pokphand),   cooperatives,
single-owner  establishments,  and  government  feed  companies.  Some of  these
competitors are larger and have greater financial resources than Agribrands, and
in  some  countries   cooperatives   and  government  feed  companies  may  have
significant financial and political advantages. Because of limited technological
or capital  constraints on entry into the animal feed business,  new competitors
with relatively modest return objectives can arise in any market at any time. In
addition,  less  effective  but lower priced feed sources  become an  attractive
alternative to Agribrands' products when livestock, poultry and other animal end
product  prices are low and customers are unwilling to pay a premium for quality
feeds.  Although  the  strength of  competitors  varies by  geographic  area and
product line,  Agribrands believes that no other commercial producer of complete
feeds  produces  and markets as broad a line of animal feed  products in as many
countries as Agribrands.

     Local animal  production  industries are  consolidating in concert with the
broader development of the local economies.  This trend is expected to continue.
In the past,  Agribrands  has been  successful  in evolving  with the sector and
generating sales to progressively  larger  producers.  However,  the tendency of
large  producers  to  vertically  integrate  their  businesses  by  acquiring or
constructing feed production  facilities has at times led to significantly  less
reliance on outside  suppliers of feed. As the consolidation of animal producers
continues,  competition is likely to increase among  independent feed suppliers,
and this industry is also likely to  consolidate.  Agribrands  believes that the
superiority of its products and its  reputation for service and knowledge  about
animal  nutrition  needs should allow it to  effectively  compete in the face of
such trends.

     Much of the  competition  in the  animal  feeds and  agricultural  products
industry centers around price, due to the commodity-like aspects of basic animal
feed. However,  Agribrands  believes that product quality,  customer service and
the  ability to identify  and  satisfy  animal  production  needs in  individual
markets are also significant competitive factors. Agribrands also believes it

                                       10
<PAGE>

has significant advantages due to its extensive dealer distribution network, its
nutritional  expertise,  its ability to convert its research and technology into
products  which meet the diverse  requirements  of its  customers  in  different
markets  under  different  economic  circumstances,  its high level of  customer
service,  the  responsiveness  of its  locally  autonomous  structure,  and  the
breadth, quality and efficacy of its product lines.

     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,  while at the same time maintaining aggressive pricing
and promotion of its products.

Research and Development

     Agribrands' research and engineering  development is coordinated  centrally
but conducted on a decentralized  basis in each of the three regions  (Americas,
Europe and Asia).  Fundamental research is conducted in cooperation with leading
agricultural research  universities,  institutes and commercial entities such as
Cornell  University  (U.S.A.),  Massey University (New Zealand),  INRA (France),
Lethbridge Research Center (Canada) and Guelph University  (Canada).  Agribrands
provides  funding  for  leading  edge  research  in  exchange  for the rights to
commercially apply the results.

     Research  projects  are selected  based on  priorities  established  by the
Agribrands'  research and  technology  team and an Agribrands  interdisciplinary
product  steering  group.  The  product  steering  group is  composed  of senior
management,  research, engineering,  operating personnel and specialists for key
animal species groups.

     The  Agribrands  research  team consists of  approximately  30 persons with
postgraduate or doctoral  degrees in animal  nutrition,  veterinary  medicine or
agricultural sciences. In fiscal year 2000, Agribrands expenditures for research
and development amounted to $6.4 million.

     During fiscal year 2000 the Company  brought a newly  developed  product to
market.  The product consists of a proprietary blend of enzymes to be applied to
feed ingredients using a patented  application  process. The product is intended
to improve ruminant animal (multiple  stomach animals,  such as cows) digestion.
The product and process  will be marketed  under the brand names  "PROMOTE"  and
"Natural Energy  Technology(TM)".  Enzymes are naturally occurring proteins that
are present in all living animals and act as catalysts in the digestive process.
Agribrands secured a license to utilize the patented  application process during
fiscal year 1999 from The Lethbridge Research Center in Alberta, Canada.

                                       11
<PAGE>

Governmental Regulation and Environmental Matters

     Agribrands'  operations  are subject to regulation by various common market
and local  governmental  entities  and  agencies,  national  and local  laws and
regulations  with  respect to  environmental  matters,  including  air and water
quality,  noise pollution,  underground  fuel storage tanks,  waste handling and
disposal  and other  regulations  intended  to  protect  public  health  and the
environment.  Many European countries,  as well as the European Union, have been
very  active  in  adopting  and  enforcing  environmental  regulations.  In many
countries  in  which  Agribrands  operates,   there  has  not  been  significant
governmental  regulation  relating  to  the  environment,  occupational  safety,
employment practices or other business matters routinely regulated in the United
States.  As such  economies  develop,  it is possible that new  regulations  may
increase  the risk and  expense of doing  business in such  countries.  Evolving
environmental and zoning  requirements have led to Agribrands  relocating two of
its Korean facilities from urban areas to industrial sites.

     While it is difficult to quantify with  certainty  the potential  financial
impact of actions regarding environmental matters, particularly remediation, and
future capital expenditures for environmental control equipment,  in the opinion
of management,  based upon the  information  currently  available,  the ultimate
liability  arising  from such  environmental  matters  will not have a  material
effect on  Agribrands'  financial  position  but could be  material  to  capital
expenditures or earnings.

Employees

     The Company,  as a whole,  employs 60  employees  in the United  States and
approximately  5,085 in foreign  jurisdictions.  Approximately 26% of Agribrands
international employees are represented by labor unions. The Company believes it
has good relations with its union and nonunion employees.


                                       12
<PAGE>

ITEM 2.  PROPERTIES

     Agribrands'   principal   properties  are  its  animal  feed  manufacturing
facilities.  Shown  below  are the  locations  of the  principal  facilities  of
Agribrands,  all of which,  except as  indicated,  are owned by its wholly owned
subsidiaries.  Agribrands'  facilities  in the  Peoples  Republic  of China  are
located on sites subject to long-term lease  agreements.  Due to restrictions on
foreign land ownership, Agribrands facilities in the Philippines are leased from
a company  which owns the sites.  Agribrands'  Philippine  affiliate  owns forty
percent of the shares of the leasing company. Agribrands leases the office space
in St. Louis County, Missouri where its principal executive offices are located.
Although a substantial  number of these  manufacturing  facilities are more than
twenty years old,  management  believes the Company's  facilities are adequately
maintained  and are  suitable  and  adequate for the purposes for which they are
used.  During the fiscal year ended August 31, 2000,  the  utilization  of these
facilities averaged  approximately 70% of capacity, and management believes that
existing capacity should be sufficient for anticipated needs.


<PAGE>

BRAZIL                                MEXICO
Canoas                                Cuautitlan
Inhumas                               Guadalajara
Maringa(3)                            Merida (2)
Paulinia                              Mexicali
Sao L. Mata                           Monterrey
Volta Redonda                         Obregon
                                      Salamanca
CANADA                                Tehuacan
Addison, Ontario
Courtice, Ontario (1)                 PEOPLE'S REPUBLIC OF CHINA
Drummondville, Quebec                 Fushun (2)
Palmerston, Ontario                   Langfang
St. Romuald, Quebec                   Nanjing (2)
Strathroy, Ontario                    Yantai (2)
Woodstock, Ontario
                                      PERU
COLOMBIA                              Arequipa (1)
Buga                                  Chiclayo (4)
Cartagena                             Lima
Fontibon (1)
Giron (1)                             PHILIPPINES
Medellin (1)                          Pulilan
Mosquera                              Villasis

EL SALVADOR                           PORTUGAL
Soyapango (1)                         Benavente (3)(4)
                                      Cantanhede
FRANCE
Courchelettes                         SPAIN
Limoges (2)                           Benavente, Zamora
Longue                                Dos Hermanas, Seville
Pommevic                              Marcilla, Navarra
St. Ybard (2)                         Merida, Badajoz
Sorcy                                 Silla, Valencia
                                      Torrejon, Madrid
GUATEMALA                             Uxes, La Coruna
Guatemala City
                                      TURKEY
HUNGARY                               Bolu
Kaposvar                              Gonen
Karcag                                Luleburgaz

ITALY                                 UNITED STATES
San Felice                            Greenville, MS (acquired in November 2000)
Sospiro
Spessa                                VENEZUELA
Termoli                               Barcelona
                                      Cabimas (2)
KOREA                                 Maracaibo
Kimhae                                Maracay
Kunsan                                Hatcheries - Valencia, Venezuela
Songtan

(1) Leased       (2) Joint Venture        (3) To be Divested        (4) Inactive


                                       13
<PAGE>

     In  addition  to  the  properties  identified  above,  Agribrands  and  its
subsidiaries own and/or operate sales offices,  regional offices,  laboratories,
storage facilities, distribution centers and terminals and related properties.


ITEM 3.  LEGAL PROCEEDINGS

     The Company is subject to legal  proceedings  and claims arising out of its
business  that  cover a wide  range  of  matters,  including  trade  regulation,
contracts,   environmental  issues,  product  liability,  patent  and  trademark
matters, and taxes.

     In September of 2000, a shareholder  suit was filed in the Circuit Court of
St. Louis County, Missouri against the Company and the individual members of the
Board of  Directors  alleging  that the  Directors  failed  to carry  out  their
fiduciary duties in recommending the merger with Ralcorp Holdings, Inc. which is
described  below under Item 7. The suit  requests:  (i) the  certification  of a
class  consisting of all of the  shareholders,  (ii)  injunctive  relief,  (iii)
attorneys  fees and  expenses,  and (iv) such other  relief that the Court deems
appropriate.  Agribrands has responded by denying the  allegations.  The Company
believes it has adequate insurance coverage for damages in excess of $2,500,000.
The Company is responsible for the costs of defense up to the deductible.

     In August, 1999, Agribrands (together with Cargill,  Incorporated, The Iams
Company and by subsequent  amended pleading Carl S. Akey,  Inc.,  Ralston Purina
Company and Ralcorp Holdings, Inc.) filed a complaint in the U.S. District Court
for the Northern District of Illinois against F.  Hoffman-LaRoche  Ltd., Hoffman
LaRoche Inc., Roche Vitamins Inc., BASF  Aktiengesellschaft,  BASF  Corporation,
Rhone-Poulenc  S.A.,  Rhone-Poulenc Inc.,  Rhone-Poulenc  Animal Nutrition Inc.,
Lonza A.G., Lonza, Inc., Takeda Chemical Industries, Ltd., Takeda Vitamin & Food
USA, Inc., EISAI Co. Ltd., EISAI Corporation of North America, EISAI U.S.A. Inc.
DAIICHI  Pharmaceutical  Co., Ltd., DAIICHI Fine Chemicals,  Inc., Chinook Group
Limited,  Chinook Group, Inc., DuCoa, L.P., E. I. Dupont De Nemours and Company,
DCV Inc.,  Bioproducts,  Inc., Roland Bronnimann,  Kuno Sommer, John W. Kennedy,
Robert Samuelson,  Lindell Hilling,  J. L. (Pete) Fischer and Antonio Felix. The
complaint  alleges that the defendants  conspired  globally to fix the prices of
vitamins and allocate  customers in support of such  arrangement in violation of
the U.S. antitrust laws. The defendants have admitted in criminal proceedings to
participating in such practices.  Agribrands believes that it will be successful
in  recovering  damages  arising  from these  practices.  When the Company  will
prevail and the amount of  recoverable  damages is difficult to determine due to
the multiple variables which will influence the determination of damages such as
period of time covered,  percent of overcharge,  purchasing  entity,  as well as
other issues and defenses which may be asserted by the defendants.  As of August
31, 2000, the Company has not  recognized  any gain in its financial  statements
for this matter.

     In  October  of  1997,  Agribrands'  wholly  owned  subsidiary,  Agribrands
Philippines,  Inc.  (formerly  Purina  Philippines,  Inc)  ("API"),  applied for
renewal of a warehouse license to store corn and rice and by-products  therefrom
at its Pulilan facility.  The Philippine  National Food Authority  ("NFA"),  the
governmental  agency  that  administers  the  Philippines  laws and  regulations
governing  the corn and rice  industry,  advised API by letter dated October 31,
1997,  that its  license  renewal  application  was  denied.  The  letter  cites
Philippines legislation and regulations that indicates that businesses operating
in the corn and rice industry cannot have more than 40% foreign ownership. Since
the NFA believes that API is in the corn and rice industry,  they have requested
API to file a  divestment  plan in order to comply with the 40% maximum  foreign
ownership  requirement.  API has appealed the denial of its license renewal, and
on January 23, 1998, API received notification that it may operate its warehouse
under a "provisional permit" pending the resolution of the appeal.

                                       14
<PAGE>

     In March of 2000,  the  Philippines  adopted an act which  repealed the law
restricting  foreign  participation in the corn and rice milling  industry.  The
effect of this act should  moot the NFA action  against  API.  API  through  its
counsel has filed a letter  requesting  confirmation  from the NFA that it would
drop its proceedings against API as a result of this change in the law. To date,
API has not received a response from the NFA to its request.  If the NFA were to
pursue its requirement  for divestment,  API would pursue its rights through the
Philippine legal system.

     Even if the API was required to file a  divestiture  plan,  it is expected,
based on previous  case  precedents,  that a plan would be  approved  that would
permit the necessary divestiture over a substantial period of time.

     Various tax, record keeping and labor claims have been asserted against the
Agribrands  business  in Brazil.  The claims  arose  principally  from  monetary
corrections  made in connection  with the institution of economic plans by prior
Brazilian  administrations  to  control  inflation  and other  statutory  filing
requirements.  The Company  believes that no individual  item is material to the
Company, and that it has adequately reserved for such claims in the aggregate.

     Many of the legal matters are in preliminary stages, involve complex issues
of law and fact and may proceed for  protracted  periods of time.  The amount of
the eventual liability, if any, from these proceedings cannot be determined with
certainty;  however,  in the opinion of  Agribrands  management,  based upon the
information  presently  known,  as well as upon the limitation of certain of its
liabilities under the Agreement and Plan of  Reorganization  between Ralston and
Agribrands for the spin-off of Agribrands, the ultimate liability of Agribrands,
if any,  arising from the pending  legal  proceedings,  as well as from asserted
legal claims and known  potential  legal claims which are probable of assertion,
taking into account established accruals for estimated  liabilities,  should not
be material to the  financial  position of  Agribrands  but could be material to
results of operations or cash flows for a particular quarter or annual period.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.






                                       15
<PAGE>
                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's  common stock is traded on the New York Stock  Exchange under
the symbol "AGX".  There were  approximately  10,439  shareholders  of record on
November 1, 2000.  The Company has not paid cash  dividends in 2000 and does not
intend to begin paying cash dividends in fiscal year 2001.

     The following table sets forth, for the twelve months ended August 31, 2000
and 1999,  and the five months ended August 31, 1998,  the range of high and low
sale prices of Agribrands common stock as reported on the NYSE Composite Tape.

                             AGRIBRANDS COMMON STOCK

                                             MARKET PRICES
                                          HIGH         LOW           DIVIDENDS
2000
Fourth Quarter                            $42.00      $36.25            --
Third Quarter                             $43.63      $36.38            --
Second Quarter                            $47.32      $35.63            --
First Quarter                             $53.38      $44.00            --

1999
Fourth Quarter                            $48.75      $34.06            --
Third Quarter                             $37.37      $30.94            --
Second Quarter                            $35.50      $26.69            --
First Quarter                             $31.69      $21.44            --

1998
Fourth Quarter                            $35.69      $29.13            --
Third Quarter (April 1 - May 31)          $42.69      $32.25            --



                                       16
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
                                                FIVE YEAR FINANCIAL SUMMARY
                                            (In millions except per share data)

                                                                        For the year ended August 31,
                                                  --------------------------------------------------------------------------
                                                      2000           1999            1998           1997           1996
                                                  -------------  -------------   -------------  -------------  -------------
<S>                                                  <C>            <C>             <C>            <C>            <C>

STATEMENT OF EARNINGS AND CASH FLOWS DATA:

Tons of feed product sold                                  4.8            5.0             5.2            5.1            4.8
Net sales                                            $ 1,193.1      $ 1,261.5       $ 1,410.1      $ 1,527.6      $ 1,401.3
Income over ingredient cost                              334.6          356.7           345.8          361.7          333.3

Depreciation and amortization                             25.2           24.8            21.2           21.9           20.4
Provisions for restructuring                               1.4            -               3.0            3.2            8.3
Gain on sale of property                                    -            (2.3)             -              -            (3.6)
Interest expense                                           3.0            8.0            12.0           10.9           13.0
Investment income                                         (9.1)         (10.2)           (5.2)          (4.2)          (3.6)
Foreign exchange (gain)/loss                              (0.1)           1.5            12.8            3.7            8.3

Earnings before income taxes                              66.9           70.4            34.2           33.1           24.9
Income taxes                                              21.9           26.4            20.4           24.4           14.0
Net earnings (a)(b)                                  $    45.0      $    44.0       $    13.8      $     8.7      $    10.9

Earnings per share:
       Basic (c)                                     $    4.46      $    4.16       $    1.29      $     .82      $    1.02
       Diluted (c)                                   $    4.33      $    4.11       $    1.29      $     .82      $    1.02


Weighted average shares outstanding:

       Basic (c)                                          10.1           10.6            10.7           10.7           10.7
       Diluted (c)                                        10.4           10.7            10.7           10.7           10.7


Cash provided (used) by:
       Operations                                    $    39.7      $   110.6       $    33.3      $    67.8      $   (18.3)
       Investing activities                              (26.1)         (25.5)          (62.8)         (38.5)         (36.1)
       Financing activities                              (15.6)         (43.9)          145.2          (21.1)          61.1


                                                                                 August 31,
                                                  --------------------------------------------------------------------------
                                                      2000           1999            1998           1997           1996
                                                  -------------  -------------   -------------  -------------  -------------

Balance Sheet Data:

Working capital                                      $   205.0      $   193.7       $   153.7      $    46.7      $    59.4
Net property                                             168.4          174.0           176.6          156.9          145.6
       Additions (during the period)                      22.3           25.9            44.6           44.1           28.5
       Depreciation (during the period)                   22.9           22.7            19.3           19.6           19.1
Total assets                                             581.6          573.5           578.4          481.2          497.8
Long-term debt                                            10.7           11.5            14.2           22.8           41.3
Shareholders' equity                                 $   393.5      $   373.3       $   339.4      $   198.1      $   190.3

<FN>
------------------------------------------------

                                       17
<PAGE>

(a)    After-tax provisions for restructuring reduced net earnings by $1.4 in the year ended August 31, 2000,  $1.7 in
       1998, $3.2 in 1997 and $7.2 in 1996.

(b)    After-tax gain on the sale of property increased net earnings by $1.5 in the year ended August 31, 1999,  $2.9 in
       1996 and $1.1 in 1995.

(c)    Assumes 10.7 million shares outstanding for all periods prior to the Distribution Date.

</FN>
</TABLE>














                                       18
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The  following  discussion  is a summary of the key factors  management
considers  necessary in reviewing  Agribrands  results of operations,  operating
segment results,  liquidity and capital resources. This discussion does not take
into account any  anticipated  effects of the proposed merger  described  below.
Management  has also  included  a  section  on key  measures  and  concepts  for
understanding the business.

     Proposed Merger

     On August 7, 2000,  the  Company  and Ralcorp  Holdings,  Inc.  ("Ralcorp")
announced  that they had entered into an Agreement  and Plan of  Reorganization,
dated as of August 7, 2000 (the  "Agreement"),  which  sets  forth the terms and
conditions of the proposed merger of equals of Agribrands and Ralcorp.  Pursuant
to the Agreement,  Agribrands and Ralcorp will form a holding company  ("Holding
Company")  which will acquire all of the common stock of Agribrands  and Ralcorp
through  mergers of separate  subsidiaries  of the holding company with and into
each of Agribrands and Ralcorp (the "Reorganization").  Upon consummation of the
Reorganization,  the  shareholders  of  Agribrands  will receive three shares of
Holding  Company  stock  for  each  share of  Agribrands  stock  exchanged.  The
shareholders of Ralcorp will receive one share of Holding Company stock for each
share of  Ralcorp  stock  exchanged.  Alternatively,  shareholders  may elect to
receive $39 in cash per Agribrands  share or $15 in cash per Ralcorp  share.  At
least 80% of each  company's  shares  will be  converted  into  stock of Holding
Company.  Any excess cash elections will be reduced on a pro rata basis. Because
Agribrands and Ralcorp  shareholders may elect to receive cash in lieu of shares
of the Holding  Company  common  stock,  the portion of the voting rights in the
Holding Company that will be held by former Agribrands and Ralcorp shareholders,
and thus the identity of the  acquiring  corporation  for  accounting  purposes,
cannot be determined at this time.

     Ralcorp was formed in 1994 through a spin-off from Ralston  Purina  Company
("Ralston"),  and  Agribrands  was spun off from  Ralston  in 1998.  William  P.
Stiritz,  Agribrands'  Chairman,  Chief  Executive  Officer  and  President,  is
Chairman of the Board of Ralcorp.  Joe R. Micheletto,  Chief Executive  Officer,
President  and a  director  of  Ralcorp,  is a member  of  Agribrands'  Board of
Directors.  The Board of Directors  of the Holding  Company is to consist of the
current directors of Ralcorp and Agribrands.

     The proposed  merger with Ralcorp is subject to approval by  two-thirds  of
the shareholders of each company,  receipt of a ruling from the Internal Revenue
Service  that the  merger  will not affect the  tax-free  status of  Agribrands'
spin-off from Ralston and customary regulatory approvals. The Agreement provides
that, if either party receives an unsolicited  acquisition offer which its Board
of Directors  considers to be a superior proposal,  that party may terminate the
Agreement  and  accept  the  superior  proposal,  upon  payment  of a $5 million
termination fee to the other party.

     A shareholder has filed a class action lawsuit seeking to enjoin the merger
and to secure  other  relief,  including  the  recovery of  attorneys'  fees and
expenses.  Another  shareholder  with  more than a five  (5%)  shareholding  has
objected  to the  merger in a letter  filed  with the  Securities  and  Exchange
Commission (the "SEC").

     The Company and Ralcorp have filed a preliminary  joint proxy statement and
prospectus with the SEC.

     The  transaction is expected to be tax-free to  shareholders  to the extent
that they receive common stock of Holding  Company.  The combination is expected
to be accounted for using the purchase  method of accounting.  Completion of the
proposed merger is expected to occur during the third quarter of fiscal 2001.


                                       19
<PAGE>

     In connection with the proposed  merger,  the Company reviewed its employee
retention  plans and obtained  approval from the Board of Directors to implement
additional protections for certain employees in the event of a change in control
other than the merger with Ralcorp.  The additional  benefits  consist of: (i) a
headquarters  relocation benefit plan in which the St. Louis headquarters office
employees (other than individuals with management  continuity  agreements) would
be entitled to a minimum of six (6) months  compensation  in the event of a loss
of their employment due to the relocation of their job or the offices to outside
the St. Louis Metropolitan area within five years following a change in control;
(ii) extending the term of the separation  compensation due under the management
continuity agreements for the corporate officers and certain  vice-presidents by
an additional year following a change of control  (extends the  compensation due
to  corporate  officers  to three  years and to certain  vice-presidents  to two
years)  and  grant to  certain  other  key  employees  a  management  continuity
agreement having a term of one-year;  and (iii) indemnification of the corporate
officers,  vice-presidents and certain key employees with management  continuity
agreements  in the event that any taxes  become due under  Section 280 G (excess
parachute  tax) of the  United  States  Internal  Revenue  Code as a result of a
termination following a change in control.

     Description of the Business

     Agribrands  is a leading  international  producer  and  marketer of formula
animal  feeds and  other  agricultural  products.  Prior to April 1,  1998,  the
Company  was a  wholly-owned  subsidiary  of  Ralston.  On  that  date,  Ralston
distributed  the common stock of the Company to its  shareholders  in a tax-free
spin-off.  The Company is a successor to Ralston's  over 100 years of experience
in the animal feeds and agricultural  products  industry.  In 1986, Ralston sold
Purina Mills, Inc., its U.S. animal feeds and agricultural products business, to
an unrelated third party. Purina Mills is unrelated to Agribrands.

     The production and sale of animal feed was the primary  business of Ralston
when it was established in 1894. From that date until the Distribution,  Ralston
built  and  maintained   its  industry   position  by   consistently   providing
high-quality,  research-proven  products and  customer  service.  Although  this
business  originated in the United  States,  it expanded  throughout  the world,
entering the Americas (outside of the United States) in 1927, Europe in 1957 and
Asia in 1967. The Company now operates 70  manufacturing  plants in 17 countries
outside the United States, and has more than thirty years' experience  operating
across four  continents.  The primary  animal feed business of Agribrands is now
conducted almost exclusively outside the United States. In November of 2000, the
Company  purchased a manufacturing  facility located in Greenville,  Mississippi
for  approximately  $1.5  million.   This  facility  will  be  used  to  process
ingredients and manufacture  feed products  primarily for the Company's  foreign
affiliates.

                                       20
<PAGE>

                  REVIEW OF CONSOLIDATED RESULTS OF OPERATIONS

     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 of the United States, changes
in foreign  exchange rates in relation to the Dollar can have a material  impact
on the Company's reported results.

Net Sales

     Consolidated  net sales  decreased  $68.4 million or 5.4% in fiscal 2000 as
result of lower feed sales volume and lower average selling prices. Consolidated
sales volume declined  116,200 metric tons or 2.3% in 2000 as higher volume from
the Asia segment  partially offset declines in Europe and the Americas.  Average
selling prices  declined $8 per ton or 3.2% in 2000  reflecting  lower commodity
costs  relative  to  1999,  consistent  with  the feed  industry's  practice  of
adjusting prices to reflect changes in ingredient costs.  Consolidated net sales
decreased  $148.6  million or 10.5% in 1999 as result of both  lower  volume and
lower commodity costs.

Gross Profit

     Gross profit was $197.1 million in 2000 compared to $210.9 million in 1999,
a decrease of $13.8  million,  or 6.5%.  Gross profit  decreased  primarily as a
result of both lower volume and lower  margins in the  Americas and Europe.  The
decrease was mitigated to a large extent by better results from the Asia region.
In 1999,  gross profit  increased  $8.0 million or 3.9%  primarily due to higher
margins in all three regions.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses decreased $8.5 million or 5.9%
in 2000 due primarily to lower  expenses in Europe,  partially  offset by higher
expenses in the Americas. In 1999, selling,  general and administrative expenses
were flat  compared  to 1998 as lower  expenses  in Europe were offset by higher
expenses in the other regions, particularly in the Americas region.

Restructuring Activities

     In 2000,  Agribrands  recorded  provisions for restructuring  which reduced
earnings  before and after  income taxes and net earnings by $1.4 million (as no
tax benefit was  recognized).  These charges  provided for the termination of 37
production and administrative employees in connection with downsizing activities
in France and Colombia. As of August 31, 2000, 22 employees have been terminated
in connection with these charges. Beginning in 2001, these restructuring actions
are  expected to result in annual  pre-tax cost  savings of  approximately  $1.2
million.

     In 1998, Agribrands recorded provisions for restructuring,  associated with
the  streamlining of Agribrands'  operations in Europe,  which reduced  earnings
before  income  taxes  and  net  earnings  by $3.0  million  and  $1.7  million,
respectively.  The  restructuring  included  a $2.2  million  pre-tax  charge to
provide for the severance of approximately  40 employees,  all of whom have been
released as of August 31, 2000. The remaining pre-tax  restructuring  provisions
for 1998 were  primarily  related to impairment  charges  incurred in connection
with the closing of a plant in Italy.

                                       21
<PAGE>

Gain on Sale of Property

     In 1999,  Agribrands  realized a $1.8  million  gain on the sale of land in
Korea and a $0.5  million  gain on the sale of  property  in Spain.  The sale of
these assets is not expected to have a material impact on future operations.

Interest Expense and Other Income/Expense

     Interest  expense  decreased $5.0 million in 2000 as a result of both lower
average borrowings and lower interest rates in the markets where the Company had
outstanding borrowings.  Interest expense decreased $4.0 million in 1999 also as
a result of lower average borrowings and lower interest rates.

     Other  income/expense,  net, changed favorably by $0.5 million in 2000. The
Company  recorded a foreign  exchange gain of $0.1 million in 2000 versus a loss
of $1.5 million in 1999. Investment income was $1.1 million lower in 2000 mainly
as a result of increased  holdings of tax-free  securities  which have  slightly
lower nominal returns. In 1999, other income/expense,  net, changed favorably by
$18.8 million.  Foreign  exchange  losses were $1.5 million in 1999 versus $12.8
million in 1998. Investment income was $5.0 million higher in 1999 due to higher
levels of interest  bearing  investments.  Earnings for 1998 were also adversely
impacted  by a $2.5  million  charge  to  write  off  deferred  financing  costs
associated with a credit facility the Company elected not to close.

Net Earnings

     Net earnings were $45.0 million for the year ended August 31, 2000 compared
to $44.0 million in 1999 and $13.8 million in 1998. Income taxes,  which include
federal,  state and  foreign  taxes,  were  32.7%,  37.5%  and 59.6% of  pre-tax
earnings in 2000,  1999 and 1998,  respectively.  The effective tax rate in 2000
reflects  some unusual  items  including a $6.8  million  reduction in valuation
allowances  against  foreign tax credit  carryforwards  and other  deferred  tax
assets  in  the  United  States.  Due  to  recently   implemented  tax  planning
initiatives, the Company now believes it will generate sufficient foreign source
taxable  income in the United States to realize a tax benefit for these deferred
tax assets. In contrast,  the operations in Colombia,  France and Peru sustained
losses in 2000 for which no tax benefit  could be  recognized.  Excluding  these
unusual items, the Company's  effective tax rate in 2000 was  approximately  38%
which is  consistent  with the rate in 1999.  The effective tax rate in 1998 was
unfavorably  impacted  by both  losses  in  foreign  countries  for which no tax
benefit could be recognized and incremental taxes allocated by Ralston. See Note
10  of  the  Company's  Notes  to  Financial  Statements  for  more  information
concerning income taxes.



                                       22
<PAGE>

<TABLE>
<CAPTION>

                                                 REVIEW OF SEGMENT RESULTS
                                                   (Dollars in millions)
                                                                                            Corporate and
                                         Americas           Europe             Asia            Tradico        Consolidated
                                      ----------------  ---------------   ---------------  ----------------  ----------------
<S>                                       <C>                <C>             <C>               <C>              <C>

Year Ended August 31, 2000:

Net sales                                 $    548.6         $   284.7       $    358.7        $     1.1        $  1,193.1
Segment profitability*                    $     23.3         $    13.7       $     40.2        $   (15.1)           $ 62.1


Tons of feed product sold                  2,100,100         1,357,800        1,388,500              400         4,846,800
Income over ingredient cost **            $    138.9         $    92.4       $    103.4        $    (0.1)       $    334.6

Year Ended August 31, 1999:

Net sales                                 $    572.5         $   341.8       $    344.6        $     2.6        $  1,261.5
Segment profitability*                    $     33.4         $    15.6       $     33.0        $   (14.6)       $     67.4


Tons of feed product sold                  2,165,000         1,500,000        1,297,000            1,000         4,963,000
Income over ingredient cost **            $    147.3         $   115.0       $     94.5        $    (0.1)       $    356.7

Year Ended August 31, 1998:

Net sales                                 $    625.6         $   397.2       $    387.3              -          $  1,410.1
Segment profitability*                    $     33.5         $    11.9       $     28.2        $   (14.3)       $     59.3


Tons of feed product sold                  2,190,000         1,585,000        1,403,000              -           5,178,000
Income over ingredient cost **            $    145.2         $   115.2       $     85.4              -          $    345.8


</TABLE>

* Segment profitability  excludes provisions for restructuring and gains on sale
of property.

** 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 (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.

Americas

     Net sales in the Americas  segment  (which is fully  described in Note 4 of
the Company's Notes to Financial  Statements) decreased $23.9 million or 4.2% in
2000 and $53.1 million or 8.5% in 1999. The 2000 decline is primarily attributed
to a decrease in feed volume of 64,900 tons or 3.0%,  most of which  occurred in
Colombia  and  Mexico.  The  Company  lost  volume in Colombia as the local feed
market shrunk considerably in the face of an economic recession.  In Mexico, the
reduction in feed tonnage  occurred  mainly in the Company's hog and  profitable
shrimp lines. Favorable market prices for smaller shrimp and increased incidence
of shrimp  disease  (called  "white  spot")  along the  Pacific  coast of Mexico
accelerated the harvesting of fiscal 2000's farmed shrimp populations.  The 1999
decline in net sales for the  Americas  segment was  primarily a result of lower
ingredient  costs  everywhere  except in Colombia where a new value added tax on
certain ingredient purchases went into effect on January 1, 1999.

                                       23
<PAGE>
     Segment  profitability  decreased  $10.1  million or 30.2% in 2000 due to a
decline in income over  ingredient  cost  ("IOIC")  and an increase in operating
expenses. IOIC in the Americas declined $8.4 million largely due to lower volume
and lower  margins in  Colombia.  Operating  expenses  for 1999  included a $1.8
million  charge to settle a claim by a former  joint  venture  partner in Chile.
Excluding this unusual charge, operating expenses in the Americas increased $3.5
million in 2000  primarily due to higher  marketing and sales expenses in Brazil
and higher labor expenses in Mexico.  Segment  profitability stayed flat in 1999
compared to 1998 as a $2.1 million  improvement in IOIC was mostly offset by the
$1.8 million charge related to the claim in Chile.

Europe

     Net  sales in Europe  decreased  $57.1  million  or 16.7% in 2000 and $55.4
million or 13.9% in 1999.  The decline in net sales for both years resulted from
a  combination  of lower sales volume and lower  average  selling  prices.  Feed
volume declined 142,200 tons or 9.5% in 2000 with most of the decline  occurring
in Spain where favorable grazing conditions led to reduced demand for commercial
feed.  Volume  declined  85,000 tons in 1999 mainly as a result of the  December
1998 sale of an unprofitable  subsidiary of the Company's  operations in France.
Average  selling prices  declined $18 per ton or 8.0% in 2000 and $23 per ton or
9.1% in 1999. The lower selling prices reflect lower  ingredient  costs relative
to the prior year,  consistent  with the feed  industry's  practice of adjusting
prices to reflect changes in ingredient costs.

     Segment  profitability  decreased  $1.9  million or 12.2% in 2000.  IOIC in
Europe  decreased  $22.6  million or 19.7% in 2000 due to both lower feed volume
and lower  margins.  IOIC per ton  declined $9 per ton  primarily as a result of
translating  relatively  stable local currency margins at  significantly  weaker
exchange rates versus the U.S. Dollar.  The decline in IOIC was mostly offset by
lower  operating  expenses  which  reflect  the  lower  volumes  as  well as the
translation of local currency  expenses at significantly  weaker exchange rates.
Segment  profitability  increased  $3.7  million  or 31.1% in 1999 due to a $3.9
million reduction in operating expenses. The Europe segment's operating expenses
declined in 1999 as a result of cost savings from prior year  restructurings and
translation of local currency  costs at weaker foreign  currency  exchange rates
against the U.S. Dollar.

Asia

     Net sales in Asia increased  $14.1 million or 4.1% in 2000 due to a rise in
sales volume.  Feed volume in Asia increased  91,500 tons or 7.1% as a result of
successful new product and marketing initiatives. Sales efforts were enhanced by
higher prices for live hogs which improved  demand for hog feeds,  the segment's
largest  product line.  Average selling prices in Asia declined by $7 per ton or
2.8%  primarily  as a  result  of  lower  ingredient  costs.  Net  sales in Asia
decreased  $42.7 million or 11.0% in 1999 due to a  combination  of lower volume
and lower  ingredient  costs.  Volume in Asia  declined  106,000 tons or 7.6% in
1999.  Nearly all of the 1999 volume  decline  occurred in Korea,  where low hog
prices   following  the  1998   recession   reduced  demand  for  the  Company's
higher-price, higher-performance hog feeds.

     Segment  profitability  increased  $7.2  million  or 21.8% in 2000 and $4.8
million or 17.0% in 1999.  IOIC in Asia  increased  $8.9 million or 9.4% in 2000
and $9.1 million or 10.7% in 1999.  The increase in IOIC in 2000  reflected  the
increase  in  sales  volume  whereas  the  1999  increase  in IOIC  reflected  a
significant  movement toward pre-crisis (fiscal 1998) margins.  The increases in
IOIC for both years were partially offset by higher operating expenses. In 2000,
operating expenses in Asia increased $1.7 million due to an increase in variable
expenses and  depreciation  associated with recent capital  expenditures.  These
items were only  partially  offset by a decrease in the  provision  for doubtful
accounts due to the overall  improvement  in credit quality since the 1998 Asian
crisis. In 1999, operating expenses increased $4.3 million primarily as a result

                                       24
<PAGE>

of capital expenditures made in 1998 including the purchase of one plant and the
construction of another in China.

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 incorporated in Missouri in August 2000 in
anticipation  of the  acquisition  of a  manufacturing  facility in  Greenville,
Mississippi.  Over the course of fiscal year 2001 the activities of Tradico will
be  transferred  to  Tradico,   Inc.  In  fiscal  year  2000,  Tradico  recorded
intersegment sales of $121.0 million,  which have been fully eliminated from the
Corporate  and Tradico  results  presented  above.  Net sales to  non-affiliates
consisted  primarily of ingredient  sales  together with some  shipments of feed
products.

     In terms of  segment  profitability,  the  Corporate  and  Tradico  segment
recorded  losses  of $15.1  million  in 2000,  $14.6  million  in 1999 and $14.3
million in 1998.  These losses are primarily  related to  unallocated  corporate
administrative  items.   Tradico's  margins  on  intersegment  sales  have  been
allocated to the segment/region that purchased the goods.


                         LIQUIDITY AND CAPITAL RESOURCES

     Cash flow  from  operations  decreased  by $70.9  million  or 64.1% in 2000
primarily due to  unfavorable  changes in working  capital  items,  particularly
accounts  receivable and inventories.  Accounts receivable remained flat in 2000
but decreased by $16.4 million in 1999 primarily as a result of collecting $12.9
million  from Ralston  which was  outstanding  at August 31, 1998.  Consolidated
inventories increased by $17.9 million in 2000 but decreased by $12.7 million in
1999.  Inventories  (predominantly  raw  materials)  increased  in  2000  due to
strategic  wheat purchases made in Korea and lower sales volumes than planned in
Colombia and Mexico. Inventories decreased in 1999 due to lower volumes in Asia,
lower worldwide  commodity  prices and strategic grain purchases made by Mexican
operations in August 1998. Cash flow from operations  increased by $77.3 million
or 232.1% in 1999 due to  increased  cash  earnings  and  favorable  changes  in
working capital items as discussed above.

     Capital  expenditures,  primarily to replace or enhance existing production
facilities and equipment, were $22.3 million, $25.9 million and $44.6 million in
fiscal  years  2000,  1999 and  1998,  respectively.  While the  Company  has no
material  commitments for capital expenditures as of August 31, 2000, it expects
capital  expenditures  in fiscal  year 2001 to be at or near the level for 2000.
The Company  has a formal  review  procedure  for the  authorization  of capital
expenditures.  Anticipated  capital  expenditures are expected to be funded with
existing cash reserves as well as cash generated from operations.

     Agribrands is  continually  evaluating  new  investment  opportunities.  In
fiscal  year 2000,  Agribrands  invested  $1.7  million to  purchase  all of the
outstanding  common stock of Metrovet,  Inc., an animal health products  company
based in the Philippines. In 1998, Agribrands invested $16.6 million to purchase
businesses  in  Venezuela,  Italy and China.  Assuming  these  acquisitions  had
occurred as of September 1, 1998,  they would not have had a material  effect on
net  sales,  net  earnings  or  earnings  per share  during  any of the  periods
presented.

     Agribrands'  capital  expenditures  and  acquisitions  in fiscal  1998 were
partially  funded with  advances  from  Ralston.  Net proceeds from Ralston were
$141.9 million in 1998. Agribrands was spun off from Ralston in 1998 with

                                       25
<PAGE>

approximately   $105.0  million  of  cash  and  receivables   from  Ralston  and
approximately $80.0 million of debt.

     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 needs 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  increased its
short-term  borrowings from $18.5 million at August 31, 1999 to $27.8 million at
August 31, 2000. The Company's foreign  affiliates have established  uncommitted
credit lines with  several  lenders in order to assure  availability  of working
capital.  On August 31, 2000,  total  unused,  uncommitted  lines of credit were
approximately  $190  million.   This  includes   approximately  $80  million  of
uncommitted lines of credit for the Company's Korean subsidiary.

     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 August 31, 2000,  the Company had  purchased  855,052  shares
pursuant to this authorization at an average cost of $39.54 per share.

     Cash on hand, cash flow from operations and 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.

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 total cost to produce feed 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 often  established 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,  consolidated,  per  unit
Dollar-translated   IOIC  levels  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

                                       26
<PAGE>

losses  (see Note 2 of the  Company's  Notes to  Financial  Statements  for more
information  concerning  the  Company's  translation  procedures).  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.

     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 each of the three  years ended  August 31,
2000:

<TABLE>
                               Dollar-based EBITDA
                              (Dollars in Millions)

<CAPTION>
                                                                   Year ended August 31,
                                                         ----------------------------------------
                                                            2000           1999          1998
                                                         ----------     ----------    ----------
<S>                                                      <C>            <C>            <C>

Earnings before Income Taxes                             $   66.9       $   70.4       $  34.2
Adjustments:
o     Depreciation and amortization                          25.2           24.8          21.2
o     Interest expense                                        3.0            8.0          12.0
o     Investment income *                                    (9.1)         (10.2)         (5.2)
o     Provisions for restructuring                            1.4            -             3.0
o     Gain on sale of property                                -             (2.3)          -
                                                         ----------     ----------     ---------
EBITDA reported after translation under FAS 52           $   87.4       $   90.7       $  65.2

                                       27
<PAGE>

Adjustments to report EBITDA on a U.S. Dollar basis:
1)    Difference in cost of products sold                    (2.9)          (6.1)        (16.6)
2)    Reversal of foreign exchange (gain)/loss
      reported under FAS 52                                  (0.1)           1.5          12.8
3)    Dollar-based foreign exchange gain                      7.0            3.7          12.6
                                                         ----------     ----------     ---------
EBITDA reported on a U.S. Dollar basis                   $   91.4       $   89.8       $  74.0
                                                         ==========     ==========     =========

</TABLE>

* The Company  now  excludes  investment  income from its  reported  EBITDA.  In
previous  reports,  EBITDA did not reflect an adjustment for investment  income.
EBITDA is defined  as  earnings  before  taxes  adjusted  for  depreciation  and
amortization,  interest expense, investment income, provisions for restructuring
and gain on sale of property.  EBITDA is a measure of performance which is not a
defined term in GAAP and is not intended to be superior to GAAP information.

Explanation of adjustments to EBITDA:

1)   Difference  in cost of  products  sold-- The  operations  in Europe and the
     Americas  accounted for all of the adjustments to the cost of products sold
     in 2000 and 1999.  The  operations  in the Americas and Asia  accounted for
     nearly all of the adjustment in 1998.  Cost of sales was higher on a Dollar
     basis in all three  years as the  Dollar  strengthened  versus  most  other
     currencies during these years. Under Dollar-based  accounting,  inventories
     are initially recorded and maintained in Dollars.

2)   Reversal of foreign exchange  (gain)/loss  reported under FAS 52-- In 1999,
     GAAP-based  foreign exchange losses in Brazil were only partially offset by
     gains in Mexico and Korea. In 1998, the operations in Colombia,  Mexico and
     Korea  accounted  for  most of the  $12.8  million  foreign  exchange  loss
     reported under FAS 52.

3)   Dollar-based  foreign  exchange  gain-- In 2000,  most of the $7.0  million
     foreign exchange gain was generated in Europe where the Company carried net
     local  currency  denominated  liabilities.  As the Euro and other  European
     currencies   weakened   against  the  Dollar  during  fiscal  2000,   these
     liabilities decreased  significantly in Dollar terms resulting in a foreign
     exchange  gain. In 1999,  Dollar-based  foreign  exchange gains realized in
     Brazil,  Colombia, Italy and Mexico were only partially offset by losses in
     Korea and the Philippines. In 1998, nearly all of the $12.6 million foreign
     exchange  gain  was  generated  in  Asia  where  the  Company  carried  net
     obligations  denominated  in the  local  Asian  currencies.  As  the  local
     currencies  weakened  against  the  Dollar,  these  obligations   decreased
     significantly in Dollar terms resulting in a foreign exchange gain.

                   MARKET RISK SENSITIVITY AND INFLATION RISK

Commodity Price Risks

         The availability and price of agricultural products are subject to wide
fluctuations due to unpredictable factors such as weather conditions, government
regulations,  economic  climate or other unforeseen  circumstances.  The Company
utilizes  highly  correlative  and  effective  commodity  futures  contracts and
options to manage  certain of these  exposures.  The  Company  hedges  only firm
commitments or anticipated transactions, and Company policy prohibits the use of
commodity  derivatives  for  speculation.  The  potential  loss in fair value at
August  31,  2000  and  1999 of the  Company's  commodity  positions,  excluding
inventory on hand and fixed price  contracts,  resulting from a hypothetical 10%
adverse   change  in  commodity   prices  is  $0.1  million  and  $0.4  million,
respectively.

                                       28
<PAGE>

Interest Rate Risks

     At  August  31,  2000,  the  Company's  debt  portfolio  was  comprised  of
approximately  51% variable  rate debt and 49% fixed rate debt.  With respect to
the Company's  variable rate debt, a hypothetical 10% adverse change in interest
rates  would  have had an  unfavorable  impact  of  about  $0.2  million  on the
Company's  interest  expense for 2000.  With respect to the Company's fixed rate
debt  outstanding  at August 31,  2000,  a  hypothetical  10% adverse  change in
interest rates would have resulted in approximately a $0.2 million change in the
market value of the Company's fixed rate debt.

Foreign Currency Exchange Risks

     International  operations account for almost all of Agribrands' revenue and
operating income. Foreign currency accounting exposures arise from transactions,
including  firm  commitments  and  anticipated  transactions,  denominated  in a
currency other than an entity's functional currency and from foreign denominated
revenues and profits  translated  into U.S.  Dollars.  At a consolidated  level,
economic exposures to U.S. Dollar values of the Company's assets and liabilities
arise because many assets or liabilities  are  denominated  in local  currencies
subject to fluctuating rates of exchange with the Dollar.

     Agribrands  periodically  enters into foreign exchange forward contracts to
mitigate  its economic  exposure to changes in exchange  rates.  Company  policy
allows foreign  currency  hedging  transactions  only for  identifiable  foreign
currency  exposures,  and  therefore,  Agribrands  does not enter  into  foreign
currency  contracts  for trading  purposes  where the  objective  is to generate
profits.  The potential  loss in fair value at August 31, 2000 and 1999 for such
net currency  positions  resulting  from a  hypothetical  10% adverse  change in
foreign currency exchange rates is $0.6 million and $0.8 million, respectively.

     Because of the U.S. Dollar  responsiveness  of the Company's  international
feed operations,  management does not believe that  fluctuations in the exchange
rate between the Dollar and a local currency materially impact the present value
of projected future  Dollar-translated cash flows from the local operation. As a
result,  Agribrands does not generally hedge the accounting  exposure of its net
investments in foreign  subsidiaries.  The net investment in Agribrands' foreign
subsidiaries and affiliates  translated into Dollars using the year-end exchange
rates is  approximately  $243 million and $228  million at August 31, 2000,  and
1999,  respectively.  The potential  accounting loss in value of Agribrands' net
investment in foreign  subsidiaries  resulting from a  hypothetical  10% adverse
change in quoted foreign currency  exchange rates at August 31, 2000 and 1999 is
approximately $22.1 million and $20.7 million, respectively.

Inflation

     Management  recognizes  that  inflationary  pressures  may have an  adverse
effect on Agribrands  through higher interest costs, asset replacement costs and
related  depreciation and higher material costs. In addition,  hyperinflationary
conditions have occurred in many of the countries in which Agribrands  operates.
Agribrands tries to minimize these effects through geographical diversification,
cost  reductions and  productivity  improvements  as well as price  increases to
maintain  reasonable profit margins.  As mentioned  earlier,  the exchange rates
between  the  U.S.   Dollar  and  other   currencies  are  related   closely  to
differentials  between the U.S.  and local  inflation  rates.  As a result,  the
Dollar-translated  profit  margins  of the  Company's  international  operations
generally   fluctuate   closely  around  long-term  norms,   particularly  on  a
consolidated basis.

                                       29
<PAGE>

Seasonality

     Sales  prices  and  volume  can  both  be  impacted  by  seasonal  factors.
Agricultural  product  sales  prices are directly  influenced  by changes in the
underlying  commodity  prices for the raw  materials  used to  formulate  animal
feeds.  Commodity  prices are usually at their lowest in the months  immediately
following the fall harvest.  Sales volume may fluctuate  somewhat  seasonally as
temperature  affects  caloric  intake and  breeding  cycles.  For  example,  the
Company's Mexican  subsidiary sells the vast majority of its shrimp feed between
June and October due to the nature of the shrimp farming cycle.

     Currently,  seasonal  factors have a limited impact on the Company's  total
performance  in any given  period.  Seasonality  of  commodity  prices  does not
materially  affect  earnings  due to  the  industry  practice  of  pricing  at a
relatively constant margin over ingredient costs. With the possible exception of
shrimp feed sales,  seasonally  driven changes in sales volume do not materially
affect sales or earnings due to the  geographic and species  diversification  of
Agribrands' operations.

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.

                            NEW ACCOUNTING STANDARDS

     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  will be  immaterial  to the
Company's results and financial position for fiscal 2001.

     Effective July 1, 2000, the Company adopted Financial  Accounting Standards
Board  Interpretation  No. 44 (FIN 44),  "Accounting  for  Certain  Transactions
Involving Stock Compensation". FIN 44 clarifies the accounting for modifications
to stock option plans.

                                       30
<PAGE>
                                     OUTLOOK

Long-Term Trends

     The  Company's  core animal feed business is generally  most  effective and
profitable  where  animal   production  is  less   concentrated  and  ingredient
availability  or cost is an issue  for  local  animal  production.  Where  these
circumstances  exist,  the Company has a high level of confidence in its ability
to deliver value.

     Of the markets Agribrands  already serves,  Asia continues to have the best
long-term  dynamics for the Company's  traditional  business.  Animal production
continues  to be widely  disbursed  and many  areas are  dependent  on  imported
ingredients.  In addition,  animal protein consumption in many locations remains
well below that of more  developed  nations  and is  increasing  with  growth in
discretionary  income.  If increased demand is met by expanding  existing animal
production  methods,  these  markets  potentially  represent  opportunities  for
substantial growth.  However, there is always the risk that pressure to increase
production  and reduce cost will  overcome the economic or  regulatory  barriers
that sustain the less concentrated production model.

     Animal  production  in  portions of Latin  America  and  Eastern  Europe is
similarly  well-suited  for growth and  profitability  in the  traditional  feed
industry,   and  (excluding   potential   political   instability)  the  Company
anticipates  economic-development  based growth from its  businesses  in Central
America, the Northern portions of South America, and Eastern Europe to continue.

     There are other markets around the world that hold great  potential for the
traditional  feed  business.  However,  it is difficult to foresee all variables
before  establishing a business and ventures into new territories often fail due
to  unexpected  conditions  or poor  execution.  In  fiscal  2000,  the  Company
cautiously entered Poland through an agreement to provide management services to
an existing feed business (with an option to purchase the business  later).  For
the time being,  management  believes  opportunities to grow or improve existing
operations should take precedence over further geographic expansion.

     The Company also competes in a number of markets where animal production is
much more highly  concentrated  and  inexpensive  ingredients  (versus the world
markets) are available  consistently  (particularly  parts of Western Europe and
North  America).  In these  markets,  the  Company's  traditional  model must be
adjusted  if it is to bring  meaningful  value  to much  more  efficient  animal
production  systems.  Agribrands  has  realized  varying  degrees  of success in
meeting this challenge and recognizes that production of certain species in some
locations no longer  provides an opportunity  for the Company unless it wants to
participate in integrated production systems directly.  Thus far, Agribrands has
generally chosen to avoid the risks associated with direct ownership of animals.
At the same time, there are invariably other species groups within these markets
whose  production  dynamics  (or because the  Company has  relevant  proprietary
technologies) continue to offer opportunities for growth or penetration.

     Almost  without  respect to geographic  boundaries,  certain  product lines
within the  Company's  business  appear likely to offer higher levels of growth.
The farmed fish industry, particularly shrimp farming, continues to grow rapidly
around the world,  as does the population of pleasure  horses among  high-income
segments of the  population.  Improvement  and  expansion  of product  lines and
marketing  for both of  these  species  are a  priority  in many of  Agribrands'
geographic  markets.  Because of the  similarities  in customer needs around the
world,  the Company is moving to provide more direct global  coordination of its
efforts to serve these species.

                                       31
<PAGE>

     In addition to efforts to grow the core animal feed  business,  the Company
is exploring  entry into related  lines of business  where its  technologies  or
distribution offer it a competitive advantage.  These include replication of the
Company's  successful Brazilian animal health products business to other markets
and sales of proprietary value added ingredients (under our Promote brand name).
Sales and profits from these  businesses  today are not  material to  Agribrands
consolidated  results, but are expected to grow at a much higher rate than those
of the Company's core businesses.

     Based on actions the Company is taking to improve its ability to respond to
local conditions, attractive dynamics in certain key markets, initiatives in its
most attractive  product lines and efforts to expand into related product lines,
management  believes the Company can achieve  long-term profit growth sufficient
to more than offset  declines in other areas where changes to animal  production
systems will, over time, reduce the value or viability of independently produced
commercial feed products.

Near-Term Operating Results

     Current operating  results can be significantly  influenced by the combined
effect of numerous  independent  environmental  and  cyclical  factors  (such as
general local economic conditions,  animal protein supply and demand imbalances,
weather and concerns  over food  safety) that may impact the local  agricultural
markets the Company serves. Therefore,  consolidated results can vary noticeably
from long-term trend lines.

     In 1999,  the majority of such factors acted to increase  earnings over the
probable long-term trend line. In 2000,  management  believes these factors were
neutral to  slightly  negative,  so that  consolidated  results  were quite near
hypothetical long-term trends.  However, the negative cyclical factors impacting
fiscal 2000 were most  prevalent at year-end  and,  absent new  factors,  can be
expected  to hold  earnings  below  long-term  trends for the first three to six
months of fiscal 2001.

Monetary Factors

     The  complexity  of  Agribrands'  international  structure  also  generates
variability  in  financial  costs  and  income.  In  particular,  exchange  rate
movements  and  changes to capital  structures  within  its  foreign  affiliates
generate  foreign  exchange  gains and losses.  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, Korea, Colombia
and Canada. As discussed  earlier,  management  believes it makes sense to focus
more on the Company's exposure to the change in the dollar value of net monetary
assets or  liabilities  in currencies  other than the U.S.  Dollar.  Agribrands'
exposed  position in this respect can also be significant 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,  Chinese
Renminbi, Colombian Pesos and Canadian Dollars.

     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% to 40% for the
foreseeable future.

                                       32
<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     See  MARKET  RISK   SENSITIVITY   AND  INFLATION   RISK  for   management's
quantitative and qualitative disclosure about market risk.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF MANAGEMENT

     The  management  of  Agribrands   International,   Inc.  has  prepared  the
accompanying  consolidated  financial  statements for the years ended August 31,
2000, 1999 and 1998 and is responsible for their integrity and objectivity.  The
statements  were prepared in conformity  with  accounting  principles  generally
accepted  in the  United  States of  America,  applying  certain  estimates  and
judgments as required.

     The Company  maintains  accounting  and internal  control  systems which it
believes  are  adequate  to  provide   reasonable   assurance  that  assets  are
safeguarded  against loss from  unauthorized  use or  disposition  and financial
records are reliable for  preparing  financial  statements.  The  selection  and
training  of  qualified  personnel,   the  establishment  and  communication  of
accounting and administrative policies and procedures,  and an extensive program
of internal audits, are important elements of these control systems.

     The Board of Directors,  through its Audit Committee  consisting  solely of
non-management directors, meets periodically with management,  internal auditors
and the  independent  accountants  to  discuss  audit  and  financial  reporting
matters.  Both the internal auditor and  PricewaterhouseCoopers  LLP have direct
access to the Audit Committee.

     The report of PricewaterhouseCoopers LLP appears below.




                                       33
<PAGE>


REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors of Agribrands International, Inc.:

     In our opinion, the accompanying consolidated balance sheet and the related
consolidated  statements of earnings, of cash flows, of shareholders' equity, of
comprehensive  income  (loss)  present  fairly,  in all material  respects,  the
financial  position of Agribrands  International,  Inc. and its  subsidiaries at
August 31,  2000 and 1999,  and the results of their  operations  and their cash
flows  for the  years  then  ended  in  conformity  with  accounting  principles
generally accepted in the United States of America.  These financial  statements
are the  responsibility of the Company's  management;  our  responsibility is to
express  an  opinion  on these  financial  statements  based on our  audits.  We
conducted our audits of these  statements in accordance with auditing  standards
generally  accepted in the United States of America,  which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

--------------------------------
PricewaterhouseCoopers LLP
St. Louis, Missouri

October 6, 2000



                                       34
<PAGE>


                         AGRIBRANDS INTERNATIONAL, INC.
                       CONSOLIDATED STATEMENT OF EARNINGS

                              Year Ended August 31

                   (Dollars in millions except per share data)
<TABLE>
<CAPTION>

                                                     2000             1999             1998
                                                  -----------     -----------      -----------

<S>                                               <C>             <C>              <C>
Net Sales                                         $  1,193.1      $  1,261.5       $  1,410.1
                                                  -----------     -----------      -----------
Costs and Expenses
     Cost of products sold                             996.0         1,050.6          1,207.2
     Selling, general and administrative               135.0           143.5            143.6
     Interest                                            3.0             8.0             12.0
     Provisions for restructuring                        1.4             -                3.0
     Gain on sale of property                            -              (2.3)             -
     Other (income)/expense, net                        (9.2)           (8.7)            10.1
                                                  -----------     -----------      -----------
                                                     1,126.2         1,191.1          1,375.9
                                                  -----------     -----------      -----------

Earnings before Income Taxes                            66.9            70.4             34.2
Income Taxes                                            21.9            26.4             20.4
                                                  -----------     -----------      -----------
Net Earnings                                      $     45.0      $     44.0       $     13.8
                                                  ===========     ===========      ===========

Earnings Per Share
     Basic                                        $     4.46      $     4.16       $     1.29
                                                  ===========     ===========      ===========
     Diluted                                      $     4.33      $     4.11       $     1.29
                                                  ===========     ===========      ===========

</TABLE>


The above financial  statement  should be read in conjunction  with the Notes to
Financial Statements.



                                       35
<PAGE>

                         AGRIBRANDS INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEET
                                    August 31
                              (Dollars in millions)

<TABLE>
<CAPTION>
                                                                     2000           1999
                                                                 -----------    -----------

<S>                                                              <C>            <C>
Assets
Current Assets
     Cash and cash equivalents                                   $    174.6     $    178.0
     Receivables, less allowance for doubtful accounts                 75.4           77.0
     Inventories                                                       96.6           81.3
     Other current assets                                               7.1           11.9
                                                                 -----------    -----------
       Total Current Assets                                           353.7          348.2
                                                                 -----------    -----------
Investments and Other Assets                                           59.5           51.3
Property, Plant and Equipment - net                                   168.4          174.0
                                                                 -----------    -----------
         Total                                                   $    581.6     $    573.5
                                                                 ===========    ===========
Liabilities and Shareholders' Equity
Current Liabilities
     Current maturities of long-term debt                        $      0.4     $      2.4
     Notes payable                                                     27.8           18.5
     Accounts payable and accrued liabilities                         116.0          125.1
     Income taxes                                                       4.5            8.5
                                                                 -----------    -----------
       Total Current Liabilities                                      148.7          154.5
                                                                 -----------    -----------

Long-Term Debt                                                         10.7           11.5
Deferred Income Taxes                                                   9.4           11.0
Other Liabilities                                                      19.3           23.2

Shareholders' Equity
     Common stock, $.01 par value, authorized
       50,000,000 shares                                                0.1            0.1
     Capital in excess of par value                                   419.5          419.5
     Retained earnings                                                 95.1           50.1
     Common stock in treasury, at cost                                (33.8)         (10.8)
     Accumulated other comprehensive loss                             (87.4)         (85.6)
                                                                 -----------    -----------
       Total Shareholders' Equity                                     393.5          373.3
                                                                 -----------    -----------
         Total                                                   $    581.6     $    573.5
                                                                 ===========    ===========

</TABLE>

The above financial  statement  should be read in conjunction  with the Notes to
Financial Statements.


                                       36
<PAGE>


                         AGRIBRANDS INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                              Year Ended August 31
                              (Dollars in millions)
<TABLE>
<CAPTION>

                                                                                       2000          1999          1998
                                                                                    -----------   -----------   -----------
<S>                                                                                   <C>           <C>           <C>
Cash Flow from Operations
    Net earnings                                                                      $  45.0       $  44.0       $  13.8
    Adjustments to reconcile net earnings to cash from operations:
      Depreciation and amortization                                                      25.2          24.8          21.2
      Foreign exchange (gain)/loss                                                       (0.1)          1.5          12.8
      Provision for doubtful accounts                                                     1.3           3.6           6.4
      Deferred income taxes                                                               2.4           1.9          (5.1)
      Gain on sale of property                                                            -            (2.3)          -
      Changes in assets and liabilities used in operations:
        Decrease (increase) in accounts receivable                                        0.3          16.4         (12.9)
        (Increase) decrease in inventories                                              (17.9)         12.7          (4.1)
        Decrease (increase) in other current assets                                       0.1           6.0          (1.2)
        (Increase) decrease in other assets                                              (5.3)          0.8           3.5
        (Decrease) increase in accounts payable and accrued liabilities                  (3.4)          1.7          (6.0)
        (Decrease) increase in income taxes payable                                      (3.7)         (0.4)          3.3
      Other, net                                                                         (4.2)         (0.1)          1.6
                                                                                    -----------   -----------   -----------
          Net cash provided by operations                                                39.7         110.6          33.3
                                                                                    -----------   -----------   -----------

Cash Flow from Investing Activities
    Acquisitions of businesses                                                           (1.7)          -           (16.6)
    Property additions                                                                  (22.3)        (25.9)        (44.6)
    Proceeds from the sale of property                                                    0.9           6.5           1.2
    Proceeds from the sale of Korean pet food business                                    2.0           -             -
    Purchase of key man life insurance                                                   (5.0)         (5.0)          -
    Other, net                                                                            -            (1.1)         (2.8)
                                                                                    -----------   -----------   -----------
          Net cash used by investing activities                                         (26.1)        (25.5)        (62.8)
                                                                                    -----------   -----------   -----------
Cash Flow from Financing Activities
    Proceeds from issuance of long-term debt                                              -            11.0          19.0
    Principal payments on long-term debt, including current maturities                   (2.7)        (16.8)        (32.4)
    Net increase (decrease) in notes payable                                             10.1         (27.3)         16.7
    Treasury stock purchases                                                            (23.0)        (10.8)          -
    Net transactions with Ralston                                                         -             -           141.9
                                                                                    -----------   -----------   -----------
          Net cash (used by) provided by financing activities                           (15.6)        (43.9)        145.2
                                                                                    -----------   -----------   -----------

Effect of Exchange Rate Changes on Cash and Cash Equivalents                             (1.4)         (1.2)         (9.7)
                                                                                    -----------   -----------   -----------
Net (Decrease) Increase in Cash and Cash Equivalents                                     (3.4)         40.0         106.0
Cash and Cash Equivalents, Beginning of Period                                          178.0         138.0          32.0
                                                                                    -----------   -----------   -----------
Cash and Cash Equivalents, End of Period                                              $ 174.6       $ 178.0       $ 138.0
                                                                                    ===========   ===========   ===========
</TABLE>

The above financial  statement  should be read in conjunction  with the Notes to
Financial Statements.



                                       37
<PAGE>


                         AGRIBRANDS INTERNATIONAL, INC.
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                        Three Years Ended August 31, 2000
                              (Dollars in millions)

<TABLE>
<CAPTION>
                                                                                                           Accumulated
                                       Ralston                 Capital in                    Common           Other
                                       Equity         Common   Excess of      Retained      Stock in      Comprehensive
                                     Investment       Stock    Par Value      Earnings      Treasury           Loss
                                     ------------   ---------  -----------   ----------   ------------   ---------------
<S>                                   <C>           <C>         <C>           <C>          <C>            <C>
Balance at August 31, 1997            $    198.1
Net earnings                                 7.7
Net transactions with Ralston              142.8
Translation adjustment                     (15.3)
                                     ------------
Balance at March 31, 1998                $ 333.3
Distribution to Ralston's
     shareholders                         (333.3)   $     .1    $  419.5      $     -      $      -       $    (86.3)
Net earnings                                 -            -          -             6.1            -              -
Translation adjustment                       -            -          -              -             -              -
                                     ------------   ---------  -----------   ----------   ------------   ---------------
Balance at August 31, 1998            $      -      $     .1    $  419.5      $    6.1     $      -       $    (86.3)
Net earnings                                 -            -          -            44.0            -              -
Treasury stock purchased                     -            -          -              -          (10.8)            -
Activity under stock plans                   -            -          -              -             -              -
Translation adjustment                       -            -          -              -             -              0.7
                                     ------------   ---------  -----------   ----------   ------------   ---------------
Balance at August 31, 1999            $      -      $     .1    $  419.5      $   50.1     $   (10.8)     $    (85.6)
Net earnings                                 -            -          -            45.0            -              -
Treasury stock purchased                     -            -          -              -          (23.0)            -
Activity under stock plans                   -            -          -              -             -              -
Translation adjustment                       -            -          -              -             -             (1.8)
                                     ------------   ---------  -----------   ----------   ------------   ---------------

Balance at August 31, 2000            $      -      $     .1    $  419.5      $   95.1     $   (33.8)     $    (87.4)
                                     ============   =========  ===========   ==========   ============   ===============


</TABLE>

The above financial  statement  should be read in conjunction  with the Notes to
Financial Statements.




                                       38
<PAGE>


                         AGRIBRANDS INTERNATIONAL, INC.
              CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
                              Year Ended August 31
                              (Dollars in millions)

                                              2000         1999         1998
                                            ----------   ----------   ----------
Net earnings                                $    45.0    $    44.0    $    13.8
Foreign currency translation adjustment          (1.8)         0.7        (15.3)
                                            ----------   ----------   ----------
Comprehensive Income (Loss)                 $    43.2    $    44.7    $    (1.5)
                                            ==========   ==========   ==========


The above financial  statement  should be read in conjunction  with the Notes to
Financial Statements.


                                       39
<PAGE>


                         AGRIBRANDS INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                   (Dollars in millions except per share data)

1.   BASIS OF PRESENTATION

     Effective   April   1,   1998   (the   "Distribution   Date"),   Agribrands
International,  Inc.  (the  "Company" or  "Agribrands")  became an  independent,
publicly owned company as a result of the distribution by Ralston Purina Company
("Ralston")  of the Company's  $.01 par value Common Stock to holders of Ralston
Common Stock at a distribution ratio of one for ten (the "Distribution").  Prior
to the Distribution, the Company was formed in 1997 as a wholly owned subsidiary
of Ralston  for the  purpose of  effecting  the  Distribution.  Included in this
transaction was the transfer of substantially  all of the assets and liabilities
related  to  the  animal  feeds  and  agricultural   products   businesses  (the
"Agribrands Businesses").  Ralston's international pet products businesses ("RPI
Consumer")  were not  included  in the  spin-off.  Ralston  did not  retain  any
ownership interest in the Company.

     Agribrands is one of the leading  international  producers and marketers of
animal feeds and, through its subsidiaries and joint venture partners,  operates
70 manufacturing  plants in 17 countries outside the United States. Its products
are marketed  outside the United  States  under the  "Purina"(R)  and  "Chow"(R)
trademarks  and the  "Checkerboard"(R)  logo through a network of  approximately
4,000 independent dealers, as well as an independent and a direct sales force.

     The  Balance  Sheets as of August 31,  2000 and 1999 and the  Statement  of
Earnings  for the  years  ended  August  31,  2000 and 1999 are  presented  on a
consolidated basis. The Statement of Earnings for the year ended August 31, 1998
includes the combined  results of operations of the Agribrands  Businesses under
Ralston for the seven months prior to the Distribution Date and the consolidated
results of  operations of the Company for the five month period ended August 31,
1998.

     RPI Consumer,  while not included in the accompanying financial statements,
generally operated within the same subsidiaries and affiliates as the Agribrands
Businesses  prior to the  Distribution  Date.  See  Note 13 for a more  complete
discussion.

     Certain  previously  reported  amounts have been  reclassified to make them
consistent with the current year presentation.

2.   SUMMARY OF ACCOUNTING POLICIES

     Agribrands'  significant  accounting policies,  which conform to accounting
principles  generally  accepted  in the  United  States  and  are  applied  on a
consistent basis among years, except as indicated, are described below:

     Principles  of  Consolidation  - These  financial  statements  include  the
accounts of Agribrands  and its  majority-owned  subsidiaries.  All  significant
intercompany   transactions   have  been  eliminated.   Minority   interests  in
consolidated subsidiaries are not material. Investments in affiliated companies,
20% through 50%-owned,  are carried at equity. Minority interests in earnings of
subsidiaries  and  Agribrands'  share  of the  net  earnings  of  unconsolidated
companies  carried at equity  are not  material  and are  included  in  selling,
general and administrative expenses.

     Foreign Currency  Translation - Financial  statements of foreign operations
where the  local  currency  is the  functional  currency  are  translated  using
exchange  rates in effect at period end for assets and  liabilities  and average
exchange rates during the period for results of operations.  Related translation


                                       40
<PAGE>

adjustments are reported as a separate component of Shareholders'  Equity. Gains
and losses  that result  from  foreign  currency  transactions  are  included in
earnings.

     For foreign operations where the U.S. Dollar is the functional currency and
for countries which are considered highly  inflationary,  translation  practices
differ in that inventories,  investments,  properties,  accumulated depreciation
and  depreciation  accounts are  translated at historical  rates of exchange and
related translation adjustments are included in earnings.

     Derivative  Financial  Instruments - All derivative  financial  instruments
held by the Company are  designated as hedges of existing  assets,  liabilities,
firm  commitments  or  identifiable  transactions.  They  have a high  degree of
correlation with the underlying  exposure and are highly effective in offsetting
underlying  price movements.  Accordingly,  gains and losses from changes in the
fair value of  derivatives  are deferred and included in the  measurement of the
related  transaction.  Losses are not deferred if it is estimated  that deferral
would lead to recognizing losses in later periods. If the underlying transaction
was no  longer  expected  to  occur,  any  gain  or  loss  would  be  recognized
immediately in the Statement of Earnings. See Note 5 for additional information.

     Cash  Equivalents  are highly liquid  investments  with initial  maturities
generally of three months or less. At August 31, 2000, cash and cash equivalents
consisted  primarily of  commercial  paper,  money market funds and other highly
liquid investments.

     Inventories are valued generally at the lower of average cost or market.

     Property  at  Cost -  Expenditures  for  new  facilities  and  those  which
substantially  increase the useful  lives of the  property,  including  interest
during construction,  are capitalized.  Maintenance,  repairs and minor renewals
are expensed as incurred.  When properties are retired or otherwise disposed of,
the related cost and accumulated  depreciation are removed from the accounts and
gains or losses on the dispositions are reflected in earnings.

     Depreciation is generally provided on the straight-line basis by charges to
costs  or  expenses  at  rates  based  on  the  estimated  useful  lives  of the
properties.  Estimated  useful lives range from 3 to 15 years for  machinery and
equipment and 15 to 40 years for  buildings.  Depreciation  expense was $22.9 in
2000, $22.7 in 1999 and $19.3 in 1998.

     Goodwill, which is included in Investments and Other Assets, represents the
excess of cost over the fair value of the net  identifiable  assets of  acquired
businesses and is amortized evenly over periods of up to 25 years.

     Impairment of Long-Lived  Assets - The Company reviews  long-lived  assets,
including  goodwill,  for  impairment  whenever  events or changes  in  business
circumstances  indicate that the remaining  useful life may warrant  revision or
that the carrying amount of the long-lived  asset may not be fully  recoverable.
The  Company  performs  undiscounted  cash  flow  analyses  to  determine  if an
impairment  exists.  If an  impairment  is  determined  to  exist,  any  related
impairment charge is calculated based on fair value. Impairment losses on assets
to be disposed of, if any, are based on the  estimated  proceeds to be received,
less costs of disposal.

     Revenue is recognized when products are shipped to customers.  Risk of loss
generally  transfers to the customer  when  products are shipped from the plant.
Sales discounts, returns and allowances are included in net sales. The provision


                                       41
<PAGE>

for  doubtful  accounts  is included  in  selling,  general  and  administrative
expenses.

     Advertising Costs are expensed as incurred and were $12.1 in 2000, $13.9 in
1999 and $13.7 in 1998.

     Research  and  Development  Costs are expensed as incurred and were $6.4 in
2000, $7.0 in 1999 and $6.8 in 1998.

     Use of Estimates - The  preparation  of financial  statements in conformity
with  accounting  principles  generally  accepted in the United States  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements,  and the reported amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

     Income Taxes - Agribrands  follows the liability  method of accounting  for
income taxes.  Deferred  income taxes are recognized for the effect of temporary
differences  between financial and tax reporting.  No additional U.S. taxes have
been  provided  on earnings of foreign  subsidiaries  expected to be  reinvested
indefinitely.   Additional  income  taxes  are  provided,  however,  on  planned
repatriation of foreign earnings after taking into account  tax-exempt  earnings
and applicable foreign tax credits. Deferred tax assets are reduced by valuation
allowances  when, based on the weight of available  evidence,  it is more likely
than not that some or all of the deferred tax asset will not be realized.

     Earnings  per Share - Basic  earnings  per share are based on the  weighted
average number of shares  outstanding  during the year including  assumed shares
outstanding  of 10.7  million  for the period  prior to the  Distribution  Date.
Diluted  earnings per share are adjusted for the dilutive effect of common stock
equivalents. See Note 11 for additional information.

     New Accounting Standards - 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 will be
immaterial to the Company's results and financial position for fiscal 2001.

     Effective July 1, 2000, the Company adopted Financial  Accounting Standards
Board  Interpretation  No. 44 (FIN 44),  "Accounting  for  Certain  Transactions
Involving Stock Compensation". FIN 44 clarifies the accounting for modifications
to stock option plans.


                                       42
<PAGE>

3.   BUSINESS COMBINATIONS

     On August 7, 2000,  the  Company  and Ralcorp  Holdings,  Inc.  ("Ralcorp")
announced  that they had entered into an Agreement  and Plan of  Reorganization,
dated as of August 7, 2000 (the  "Agreement"),  which  sets  forth the terms and
conditions of the proposed merger of equals of Agribrands and Ralcorp.  Pursuant
to the Agreement,  Agribrands and Ralcorp will form a holding company  ("Holding
Company")  which will acquire all of the common stock of Agribrands  and Ralcorp
through  mergers of separate  subsidiaries  of the holding company with and into
each of Agribrands and Ralcorp (the "Reorganization").  Upon consummation of the
Reorganization,  the  shareholders  of  Agribrands  will receive three shares of
Holding  Company  stock  for  each  share of  Agribrands  stock  exchanged.  The
shareholders of Ralcorp will receive one share of Holding Company stock for each
share of  Ralcorp  stock  exchanged.  Alternatively,  shareholders  may elect to
receive $39 in cash per Agribrands  share or $15 in cash per Ralcorp  share.  At
least 80% of each  company's  shares  will be  converted  into  stock of Holding
Company. Any excess cash elections will be reduced on a pro rata basis.

     The proposed merger with Ralcorp is subject to two-thirds  approval by both
companies'  shareholders,  receipt of a ruling from the Internal Revenue Service
that the merger will not affect the tax-free status of Agribrands' spin-off from
Ralston, and customary regulatory  approvals.  The transaction is expected to be
tax-free to shareholders to the extent that they receive common stock of Holding
Company.  The  combination  is expected to be  accounted  for using the purchase
method of accounting.  Because Agribrands and Ralcorp  shareholders may elect to
receive cash in lieu of shares of the Holding Company common stock,  the portion
of the  voting  rights  in the  Holding  Company  that  will be  held by  former
Agribrands  and Ralcorp  shareholders,  and thus the  identity of the  acquiring
corporation,  cannot be  determined  at this time.  Completion  of the  proposed
merger is expected to occur  during the second  quarter of fiscal  2001.  In the
event that the Agreement is terminated, including but not limited due to a party
accepting  a  superior  offer,  one  of  the  parties  may  be  required  to pay
termination fees of $5 million to the other party.

     In July 2000,  Agribrands  purchased all of the outstanding common stock of
Metrovet,  Inc. from Metro Pacific Corporation for $1.7 million.  Metrovet, inc.
is an animal  health  products  distribution  company in the  Philippines.  This
acquisition  was accounted for using the purchase  method of accounting  and the
results of  operations  have been  included  in the  Consolidated  Statement  of
Earnings from the date of acquisition.  If the acquisition of Metrovet, Inc. had
occurred as of September 1, 1998, it would not have had a material impact on net
sales, net earnings or earnings per share for fiscal 1999 or fiscal 2000.



                                       43
<PAGE>



4.   BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION

     The Company and its subsidiaries are principally  engaged in the production
and sale of agricultural  animal feed. The Company's  chief  operating  decision
maker evaluates  segment  performance  based on operating  profit,  exclusive of
provisions for  restructuring  and gains on sale of property.  Financial  items,
such as  interest  income  and  expense  are  managed  on a global  basis at the
corporate level. The Company's businesses are organized by geographic area:

     o    The Americas segment  consists of the Company's  businesses in Brazil,
          Canada, Colombia, El Salvador, Guatemala, Mexico, Peru and Venezuela.

     o    The Europe  segment  consists of the  Company's  businesses in France,
          Hungary, Italy, Portugal, Spain and Turkey.

     o    The Asia segment  consists of the Company's  businesses in China,  the
          Philippines and South Korea.

     o    The Corporate and Tradico  segment is located  primarily in the United
          States.  This segment includes  certain  corporate items that were not
          allocated  to the other  segments.  It also  includes  Tradico,  which
          sources and resells ingredients,  equipment, and products primarily to
          foreign affiliates.  Tradico's margins on intersegment sales have been
          allocated to the segment that purchased the goods from Tradico.

     Summarized below is Agribrands'  business segment information for the years
ended August 31, 2000, 1999 and 1998.

                                             2000         1999         1998
                                           --------     --------     --------
Net Sales - External
      Americas                             $  548.6     $  572.5     $  625.6
      Europe                                  284.7        341.8        397.2
      Asia                                    358.7        344.6        387.3
      Corporate and Tradico (U.S.)              1.1          2.6          -
                                           --------     --------     --------
           Total                           $1,193.1     $1,261.5     $1,410.1
                                           ========     ========     ========

Net Sales - Intersegment
      Americas                             $    -       $    -       $    -
      Europe                                    -            -            -
      Asia                                      -            -            -
      Corporate and Tradico (U.S.)            121.0        102.0         92.9
                                           --------     --------     --------
           Total                           $  121.0     $  102.0     $   92.9
                                           ========     ========     ========

Depreciation & Amortization
      Americas                             $    7.4     $    7.9     $    6.8
      Europe                                    7.2          8.0          8.3
      Asia                                      9.8          8.1          5.9
      Corporate and Tradico (U.S.)              0.8          0.8          0.2
                                           --------     --------     --------
           Total                           $   25.2     $   24.8     $   21.2
                                           ========     ========     ========

                                       44
<PAGE>


                                               2000         1999         1998
                                             --------     --------     --------
Segment Profitability
       Americas                              $  23.3      $  33.4      $  33.5
        Europe                                  13.7         15.6         11.9
        Asia                                    40.2         33.0         28.2
        Corporate and Tradico (U.S.)           (15.1)       (14.6)       (14.3)
                                             --------     --------     --------
           Total                                62.1         67.4         59.3
      Provisions for restructuring              (1.4)         -           (3.0)
      Gain on sale of property                   -            2.3          -
      Interest expense                          (3.0)        (8.0)       (12.0)
      Other income/(expense), net                9.2          8.7        (10.1)
                                             --------     --------     --------
           Earnings before Income Taxes      $  66.9      $  70.4      $  34.2
                                             ========     ========     ========

Capital Expenditures
      Americas                               $  11.9      $  11.1      $  16.7
      Europe                                     4.6          5.6          7.7
      Asia                                       4.4          9.1         19.5
      Corporate and Tradico (U.S.)               1.4          0.1          0.7
                                             --------     --------     --------
           Total                             $  22.3      $  25.9      $  44.6
                                             ========     ========     ========

Total Assets
      Americas                               $ 175.5      $ 169.3      $ 188.7
      Europe                                    93.5        116.0        139.7
      Asia                                     162.2        144.5        132.5
      Corporate and Tradico (U.S.)             150.4        143.7        117.5
                                             --------     --------     --------
           Total                             $ 581.6      $ 573.5      $ 578.4
                                             ========     ========     ========


     Net  sales and  total  assets  for each of the  Company's  businesses  were
assigned to the  geographic  area where that business is located.  The Company's
operations are predominantly  located outsidethe United States with subsidiaries
located in 17 foreign countries on four continents. No single customer accounted
for more than 10% of sales.  Net sales  attributed  to South Korea were  $288.2,
$238.8  and  $281.4  in  the  years  ended  August  31,  2000,  1999  and  1998,
respectively.  Net sales attributed to Mexico were $145.5,  $154.3 and $162.0 in
the  years  ended  August  31,  2000,  1999 and  1998,  respectively.  Net sales
attributable to an individual  country,  other than South Korea and Mexico, were
not material for  disclosure.  Net property,  plant and equipment  attributed to
South  Korea were $42.8 and $43.4 in the years  ended  August 31, 2000 and 1999,
respectively.  Net property,  plant and equipment  attributable to an individual
country, other than South Korea, were not material for disclosure.



                                       45
<PAGE>



5.   FINANCIAL INSTRUMENTS

     Derivatives - The Company  currently uses forwards and option  contracts 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 a year,
and all  currently  hedged  transactions  are  expected to occur within the next
year.

     The following summarizes the notional transaction amounts, carrying amounts
and fair values for all outstanding derivatives, by risk category and instrument
type, at August 31:

<TABLE>
<CAPTION>

                                                2000                              1999
                                    ----------------------------     -----------------------------
                                    Notional  Carrying    Fair       Notional  Carrying     Fair
                                     Amount    Amount     Value       Amount    Amount      Value
                                    --------  --------  --------     --------  --------   --------
<S>                                  <C>       <C>       <C>          <C>       <C>        <C>
Foreign Currency:
  Forwards                           $  6.3    $ (0.1)   $ (0.2)      $  7.3    $  -       $ (0.1)
  Options                               -         -         -            -         -          -
                                    --------  --------  --------     --------  --------   --------
                                        6.3      (0.1)     (0.2)         7.3       -         (0.1)
                                    --------  --------  --------     --------  --------   --------
Commodity Price:
  Futures                               1.2       -         0.1          4.1       -         (0.2)
  Options                               0.1       -         -            0.5       -          -
                                    --------  --------  --------     --------  --------   --------
                                        1.3       -         0.1          4.6       -         (0.2)
                                    --------  --------  --------     --------  --------   --------
Total of outstanding derivatives     $  7.6    $ (0.1)   $ (0.1)      $ 11.9    $  -       $ (0.3)
                                    ========  ========  ========     ========  ========   ========
</TABLE>

     The fair value of  derivative  financial  instruments  is the  amount  that
Agribrands  would  receive  (or  pay)  to  terminate  the  specific  agreements,
considering  first,  quoted market prices of  comparable  agreements,  or in the
absence of quoted market  prices,  such factors as currency  exchange  rates and
remaining maturities.

     Concentration  of  Credit  Risk - The  Company  does  not  have a  material
concentration  of credit  risk.  Concentrations  of credit risk with  respect to
accounts receivable are limited due to the large number of customers,  generally
short payment terms and their dispersion across geographic areas.

     Nonderivative  Financial Instruments - Nonderivative  financial instruments
include cash and cash equivalents,  short-term  investments,  and short-term and
long-term debt. Due to the nature of cash  equivalents,  short-term  investments
and short-term  debt,  carrying  amounts on the balance sheet  approximate  fair
value.  At August 31, 2000 and 1999,  the fair value of long-term debt was $10.8
and $13.5,  respectively,  compared  to its  carrying  value of $11.1 and $13.9,
respectively.  Agribrands  has  long-term  debt in  numerous  countries  under a
variety of terms and  arrangements.  The fair value of the  Company's  long-term
debt has been  estimated  using quoted market prices for borrowing  arrangements
that are the same or similar to the major components of its long-term debt.



                                       46
<PAGE>




6.   INCENTIVE COMPENSATION PLANS

     Under terms of the Company's 1998 incentive stock plan, officers, directors
and  employees  may be  granted  non-qualified  stock  options to  purchase  the
Company's  common stock at no less than 100% of the market price on the date the
option is granted.  The plan also authorizes the issuance of stock  appreciation
rights (SARs) settled by cash payment. Options and SARs generally vest over five
years and have a maximum  term of 10 years.  A total of 0.8 million  shares were
available for future awards under the plan at August 31, 2000.

     There were  165,250 and  161,750  SARs  outstanding  at August 31, 2000 and
1999,  respectively.  The Company recognizes compensation expense for SARs based
on the amount that the Company's  common share price exceeds the exercise  price
and  the   percentage   of   vesting.   The  Company   recognized   compensation
(income)/expense  for SARs of $(0.1) and $0.7 in the years ended August 31, 2000
and 1999, respectively.  No compensation expense was recognized for SARs in 1998
because the exercise  prices of the SARs were  greater than the year-end  market
price of the common shares.

     The Company  applies APB  Opinion  No. 25 and  related  interpretations  in
accounting for its stock options.  Had compensation cost for the Company's stock
options  been  recognized  based on the fair  value on the grant  date under the
methodology  prescribed  by FAS 123, the Company's net earnings and earnings per
share  would  have  been  reduced  to the pro  forma  amounts  indicated  in the
following table.

                                            2000        1999       1998
                                          --------    --------   --------
Reported net earnings                      $ 45.0      $ 44.0     $ 13.8
Pro forma net earnings                       41.4        40.5       12.8

Reported diluted earnings per share        $ 4.33      $ 4.11     $ 1.29
Pro forma diluted earnings per share         3.99        3.78       1.20

     The fair value of options  granted  (which is amortized to expense over the
options  vesting period in determining the pro forma impact) is estimated on the
date of grant using the  Black-Scholes  option  pricing model with the following
weighted-average assumptions:


                                                      2000      1999      1998
                                                    --------  -------  --------
Risk-free interest rate                                6.7%      4.6%      5.7%
Expected life of option                             7 years   8 years  9 years
Expected volatility of Agribrands stock               30.0%     35.0%     30.0%
Expected dividend yield on Agribrands stock            0.0%      0.0%      0.0%

     The weighted  average fair value of options  granted during 2000,  1999 and
1998 is as follows:


                                                      2000      1999      1998
                                                   ---------  -------  ---------
Fair value of each option granted                  $   20.04  $ 10.85    $ 18.62
Total number of options granted                       23,500  646,250  1,122,500
                                                   ---------  -------  ---------
Total fair value of options granted (in millions)  $     0.5  $   7.0     $ 20.9
                                                   =========  =======  =========


                                       47
<PAGE>

     The following  summarizes  stock option plan activity during the year ended
August 31:

<TABLE>
<CAPTION>

                                             2000                     1999                      1998
                                     --------------------     ----------------------     ----------------------
                                                 Weighted                  Weighted                    Weighted
                                                 Average                    Average                     Average
                                                 Exercise                  Exercise                    Exercise
                                      Options      Price        Options       Price        Options       Price
                                     ----------  --------     ----------  ----------     ----------  ----------

<S>                                  <C>         <C>          <C>         <C>                        <C>
Outstanding at beginning of year     1,749,750   $  31.14     1,115,000   $  36.43            -      $    -
  Granted                               23,500      41.94       646,250      22.00       1,122,500       36.41
  Exercised                               (750)     30.06        (1,500)     30.06            -           -
  Cancelled                            (10,000)     31.25       (10,000)     29.85          (7,500)      34.25
                                     ----------               ----------                 ----------
Outstanding at end of year           1,762,500   $  31.29     1,749,750   $  31.14       1,115,000   $   36.43
                                     ==========               ==========                 ==========
Options exercisable at year end          1,500   $  30.06          -          -               -           -
                                     ==========               ==========                 ==========

</TABLE>

     A summary of stock options currently  outstanding and exercisable at August
31, 2000 is presented below:

                        Options Outstanding                 Options Exercisable
             -----------------------------------------      -------------------
                            Wtd. Avg.        Wtd. Avg.                Wtd. Avg.
Range of                    Remaining         Exercise                Exercise
Prices        Number          Life            Price         Number       Price
---------    ---------  -------------------  ---------      ------    ---------

$20 - $29      624,000       8 years           $ 21.69         500    $  21.69
$30 - $39    1,116,000       8 years           $ 36.44       1,000    $  34.25
$40 - $49       22,500       9 years           $ 41.94         -      $    -
             ---------                                      ------
$20 - $49    1,762,500       8 years           $ 31.29       1,500    $  30.06


                                       48
<PAGE>

7.   PENSION PLANS

     Certain  foreign  employees are covered by defined  benefit  pension plans,
some of which are required by local law or coordinated with government-sponsored
plans.  These plans generally provide  retirement or severance benefits based on
years  of  service  and  compensation.  In  addition,   substantially  all  U.S.
administrative employees participate in the Company's defined contribution plan.
The Company does not provide other postretirement defined benefits.

     Total  pension  expense  is  presented  below for the  Company's  principal
defined  benefit   pension  plans  (all  foreign)  and  the  Company's   defined
contribution plans for the three years ended August 31:

<TABLE>
<CAPTION>


                                                               2000       1999      1998
                                                              ------     ------    ------
<S>                                                           <C>        <C>       <C>
Defined benefit plans
     Service cost for benefits earned during the year         $ 2.0      $ 1.6     $ 1.6
     Interest cost on projected benefit obligation              2.1        2.0       2.3
     Assumed return on plan assets                             (1.9)      (1.6)     (2.6)
     Amortization of:
        Net actuarial (gain)/loss                               0.1        0.1      (0.1)
        Prior service cost                                      0.1        0.1       0.1
        Transition asset                                        -         (0.1)     (0.3)
     Other                                                      0.8        -         -
                                                              ------     ------    ------
Total costs for defined benefit plans                           3.2        2.1       1.0
Defined contribution plans                                      0.2        0.3       0.1
                                                              ------     ------    ------
            Total                                             $ 3.4      $ 2.4     $ 1.1
                                                              ======     ======    ======
</TABLE>

     The key actuarial  assumptions  used in determining  annual pension expense
for the  principal  defined  benefit  plans  reflect  weighted  averages for the
component  plans.  These plans are located in various  countries  throughout the
world, and the assumptions were determined based on local economic conditions in
these countries. The assumptions were as follows:

                                                      2000      1999      1998
                                                     ------    ------    ------
Discount rate                                         9.1%      9.2%      9.2%
Rate of increase of future compensation levels        7.3%      7.4%      7.4%
Long-term rate of return on assets                    9.9%      9.9%      9.4%

     The  following  tables  summarize  the  changes  in the  projected  benefit
obligation  and the change in fair  market  value of plan  assets for all of the
Company's principal defined benefit pension plans for the two years ended August
31:


                                       49
<PAGE>

                                                    2000      1999
                                                   ------    -------
Change in Projected Benefit Obligation (PBO):

PBO, beginning of year                             $ 24.3    $ 20.5
Service cost                                          2.0       1.6
Interest cost                                         2.1       2.1
Employee contributions                                0.2       0.2
Plan amendments                                       -         0.3
Actuarial gain/(loss)                                 2.5       1.3
Benefits paid                                        (5.2      (3.5)
Translation adjustment                                0.4       1.8
                                                   ------    -------
PBO, end of year                                   $ 26.3    $ 24.3
                                                   ======    =======

Change in Plan Assets:

Fair market value, beginning of year               $ 18.5    $ 14.6
Actual return on plan assets                          3.0       1.6
Employer contributions                                2.8       4.0
Employee contributions                                0.2       0.2
Benefits paid                                        (5.1      (3.4)
Translation adjustment                                0.5       1.5
                                                   ------    -------
Fair market value, end of year                     $ 19.9    $ 18.5
                                                   ======    =======

     The following table provides a  reconciliation  of the funded status of the
principal  defined benefit plans to the amounts  recognized in the balance sheet
at August 31:

                                                                2000       1999
                                                               -------   -------
Funded status - plan assets (under)/over benefit obligation    $ (6.4)   $ (5.8)
Unrecognized net loss                                             4.0       3.6
Unrecognized prior service cost                                   0.9       1.0
Unrecognized net asset at transition, net of amortization        (0.2)     (0.4)
                                                               -------   -------
Net pension liability                                          $ (1.7)   $ (1.6)
                                                               =======   =======

     The net pension  liability  disclosed  above does not include balance sheet
accruals for unfunded  defined  benefit plans of $9.0 and $12.3 as of August 31,
2000 and 1999,  respectively.  These accruals  approximate the actuarial present
value of vested  benefits  for these plans or  represent  accrual  amounts  that
comply with local regulations for required termination payments.

8.   PROVISIONS FOR RESTRUCTURING

     In 2000,  Agribrands  recorded  provisions for restructuring  which reduced
earnings  before income taxes and net earnings by $1.4.  These charges  provided
for the termination of 37 production and administrative  employees in connection
with the  downsizing of  Agribrands'  operations  in France and Colombia.  As of
August 31, 2000, 22 employees  have been  terminated  in  connection  with these
charges.

     In 1998, Agribrands recorded provisions for restructuring,  associated with
the  streamlining of Agribrands'  operations in Europe,  which reduced  earnings
before income taxes by $3.0 and net earnings by $1.7. The restructuring included


                                       50
<PAGE>

a $2.2 million pre-tax charge to provide for the severance of  approximately  40
employees,  all of whom were released by August 31, 1999. The remaining  pre-tax
restructuring  provisions for 1998 were primarily related to impairment  charges
incurred in connection with the closing of a plant in Italy.

     Components of the provisions for the years ended August 31 are as follows:

                                2000         1999        1998
                                -----        ----        -----
Severance                       $ 1.4        $  -        $ 2.2
Other cash costs                   -            -          0.1
Fixed asset writedown              -            -          0.7
                                -----        ----        -----
                                $ 1.4        $  -        $ 3.0
                                =====        ====        =====

     The following summarizes activity within the restructuring reserves:

                                                 2000      1999      1998
                                               -------    ------    ------
Balance at beginning of year                    $  -      $ 1.3     $ 1.4
Provision during year                             1.4        -        3.0
Spending/fixed asset writedown during year       (0.9)     (1.3)     (3.1)
                                               -------    ------    ------
Balance at end of year                          $ 0.5     $  -      $ 1.3
                                               =======    ======    ======


9.   OTHER (INCOME)/EXPENSE, NET

                                        2000        1999       1998
                                      --------    --------    -------
Foreign exchange (gain)/loss          $  (0.1)    $   1.5     $ 12.8
Investment income                        (9.1)      (10.2)      (5.2)
Financing fees                            -           -          2.5
                                      --------    --------    -------
                                      $  (9.2)    $  (8.7)    $ 10.1
                                      ========    ========    =======

     In 1998,  the  Company  incurred a $2.5 charge for fees  associated  with a
three-year  committed  credit  facility the Company elected to cancel before any
funds were borrowed.

                                       51
<PAGE>


10.  INCOME TAXES

     The  provisions  for income taxes  consisted of the following for the years
ended August 31:
<TABLE>
<CAPTION>

                                                              2000          1999          1998
                                                            --------     ---------     ---------
<S>                                                          <C>          <C>           <C>
Currently payable:
     United States                                           $  3.1       $   2.1       $   1.7
     Foreign                                                   12.3          16.7          19.1
     Taxes on repatriation of foreign earnings                  4.1           5.7           4.7
                                                            --------     ---------     ---------
        Total current                                          19.5          24.5          25.5
                                                            --------     ---------     ---------
Deferred:
     United States                                             (2.9)          0.3          (0.2)
     Foreign                                                    5.3           1.6          (4.9)
                                                            --------     ---------     ---------
        Total deferred                                          2.4           1.9          (5.1)
                                                            --------     ---------     ---------
                                                             $ 21.9       $  26.4       $  20.4
                                                            ========     =========     =========

The source of pre-tax earnings was:
                                                              2000          1999          1998
                                                            --------     ---------     ---------
     United States                                           $ 26.2       $   6.2       $   1.2
     Foreign                                                   40.7          64.2          33.0
                                                            --------     ---------     ---------
        Total                                                $ 66.9       $  70.4       $  34.2
                                                            ========     =========     =========
</TABLE>

     A reconciliation of income taxes with the amounts computed at the statutory
federal rate follows:

<TABLE>
<CAPTION>
                                                              2000          1999          1998
                                                            --------     ---------     ---------
<S>                                                          <C>          <C>           <C>
Computed tax at federal statutory rate                       $ 23.4       $  24.6       $  12.0
Increases (decreases) in taxes resulting from:
  Foreign tax rates other than domestic rate                   (2.0)         (3.1)         (2.7)
  Taxes on repatriation of foreign earnings                     4.1           5.7           4.7
  U.S. foreign tax credits                                     (3.0)         (4.0)         (2.0)
  Provision for valuation allowance*                           (3.7)          0.2           3.0
  Incremental taxes allocated by Ralston                        -             -             1.1
  Other, net                                                    3.1           3.0           4.3
                                                            --------     ---------     ---------
                                                             $ 21.9       $  26.4       $  20.4
                                                            ========     =========     =========
</TABLE>

*    The provision for valuation allowance will not necessarily equal the change
     in valuation allowance due to the effect of changes in exchange rates.

                                       52
<PAGE>

     At August 31, deferred tax assets and deferred tax liabilities  recorded on
the balance sheet are as follows:

                                                       2000        1999
                                                     --------    --------
Deferred Tax Liabilities:
     Depreciation and property differences           $   6.3     $   7.1
     Inventory differences                               5.4         4.5
     Retirement plans                                    0.9         3.4
     Other tax liabilities, current                      0.2         0.6
     Other tax liabilities, non-current                 12.4        10.1
                                                     --------    --------
        Gross deferred tax liabilities               $  25.2     $  25.7
                                                     --------    --------

Deferred Tax Assets:
     Tax loss carryforwards                          $ (12.1)    $ (11.2)
     Accrued expenses                                   (5.8)       (7.2)
     Depreciation and property differences              (4.6)       (6.3)
     Tax credits                                        (2.5)       (6.1)
     Other tax assets, current                          (3.4)       (7.3)
     Other tax assets, non-current                      (3.1)       (3.6)
                                                     --------    --------
        Gross deferred tax (assets)                  $ (31.5)    $ (41.7)
                                                     --------    --------
     Valuation allowance                                13.3        19.7
                                                     --------    --------
Net deferred tax liabilities                         $   7.0     $   3.7
                                                     ========    ========

     Approximately  $0.1 of tax loss  carryforwards  and tax credits  expired in
2000.  Future  expiration  of tax loss  carryforwards  and tax  credits,  if not
utilized,  are as follows:  2001 - $0.2,  2002 - $1.0, 2003 - $2.6, 2004 - $3.5,
2005 - $2.9 and beyond - $4.4.  The  valuation  allowance  at August 31, 2000 is
primarily  attributed to certain tax loss  carryforwards  generated  outside the
United States.  If it becomes evident that sufficient future taxable income will
be available in the tax jurisdictions where these deferred tax assets exist, the
Company would release the valuation allowance accordingly.

     In 2000, the Company  reversed a $6.8 valuation  allowance that was carried
against  foreign tax credit  carryforwards  and other deferred tax assets in the
United  States at August 31,  1999.  Due to recently  implemented  tax  planning
initiatives, the Company now believes it will generate sufficient foreign source
taxable  income in the United States to realize a tax benefit for those deferred
tax assets.

     At August 31, 2000,  approximately  $100 of foreign subsidiary net earnings
was  considered  permanently  invested in those  businesses.  Accordingly,  U.S.
income taxes have not been provided for such earnings.  It is not practicable to
determine the amount of unrecognized  deferred tax  liabilities  associated with
such earnings.

     Prior to the Distribution Date, U.S. income tax payments, refunds, credits,
provision and deferred tax components were allocated to Agribrands in accordance
with  Ralston's tax  allocation  policy.  Such policy  allocated tax  components
included in the  consolidated  income tax return of Ralston to Agribrands to the
extent such components were generated by or related to Agribrands.  Tax payments
due on income earned prior to the Distribution  Date are the  responsibility  of
Ralston.

                                       53
<PAGE>

     Had Agribrands' income tax provision been calculated as if Agribrands was a
single, stand-alone U.S. taxpayer during periods prior to the Distribution Date,
the income tax  provision  would  have been lower by  approximately  $1.1 in the
seven months ended March 31, 1998.

11.  EARNINGS PER SHARE

     Basic  earnings per share ("EPS") is computed  using the average  number of
common  shares  outstanding  during the period.  Diluted EPS gives effect to the
dilution that would occur if stock options were exercised. Basic and diluted EPS
computations for the three years ended August 31 follow:

<TABLE>
<CAPTION>

                                                              2000         1999          1998
                                                         ------------  ------------  -----------
<S>                                                       <C>           <C>          <C>
  Numerator:
    Net earnings                                          $     45.0    $     44.0   $     13.8
                                                         ============  ============  ===========

  Denominator:
    Weighted average shares outstanding-basic             10,083,706    10,570,405   10,668,571
    Assumed conversion of stock options                      299,461       135,657        -
                                                         ------------  ------------  -----------
    Weighted average shares outstanding-diluted           10,383,167    10,706,062   10,668,571
                                                         ============  ============  ===========

  Basic earnings per share                                $     4.46    $     4.16   $     1.29

                                                         ============  ============  ===========
  Diluted earnings per share                              $     4.33    $     4.11   $     1.29
                                                         ============  ============  ===========
</TABLE>

     There  were   10,668,571   shares  of  common  stock   outstanding  at  the
Distribution   Date.  The  above  EPS  calculations   assume  10,668,571  shares
outstanding  for all periods prior to the  Distribution  Date.  Stock options to
purchase  22,500 and 1,107,500  shares of common stock were  outstanding  during
2000 and 1999, respectively, but were not included in the computation of diluted
EPS because the  exercise  prices of the options  were  greater than the average
market price of the common shares.


                                       54
<PAGE>

12.  PREFERRED AND COMMON STOCK

     At August 31, 2000,  10,000,000  shares of $.01 par value  preferred  stock
were  authorized  and unissued.  The  Company's  Board of Directors is expressly
authorized,  prior  to  issuance,  to set  preferences,  voting  powers,  annual
dividend rates (if any) and other terms and conditions relating to the shares.

     The  Company has been  authorized  to issue  50,000,000  shares of $.01 par
value  common stock as of August 31, 2000.  Activity  for the  Company's  common
stock for the years ended August 31 is summarized below:
<TABLE>
<CAPTION>

                                                         2000            1999            1998
                                                      -----------     -----------     ----------
<S>                                                    <C>            <C>             <C>
  Common Stock Issued
  Common stock issued at beginning of year            10,667,911      10,668,571           -
    Distribution to Ralston's shareholders                 -               -          10,668,571
    Shares cancelled                                       -                (660)          -
                                                      -----------     -----------     ----------
  Common stock issued at end of year                  10,667,911      10,667,911      10,668,571
                                                      -----------     -----------     ----------

  Common Stock in Treasury
  Treasury stock at beginning of year                   (288,606)          -               -
    Treasury stock purchased                            (566,204)       (288,848)          -
    Shares issued under stock plans                          750             242           -
                                                      -----------     -----------     ----------
  Treasury stock at end of year                         (854,060)       (288,606)          -
                                                      -----------     -----------     ----------

  Common Stock Outstanding                             9,813,851      10,379,305      10,668,571
                                                      ===========     ===========     ==========
</TABLE>

     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 for general  corporate  purposes.  At August 31, 2000,
there were 1,144,948 shares available for repurchase under this authorization.

     On March 19, 1998, the Board of Directors  declared a dividend of one share
purchase right ("Right") for each outstanding  share of common stock. Each Right
entitles a shareholder  of Agribrands  stock to purchase an additional  share of
Agribrands common stock at an exercise price of $125.00, subject to antidilution
adjustments.  Rights,  however,  may only be  exercised if a person or group has
acquired,  or  commenced  a public  tender for,  20% or more of the  outstanding
Agribrands  common  stock,  unless the  acquisition  is  pursuant to a tender or
exchange  offer for all  outstanding  shares of  Agribrands  common  stock and a
majority of the Board of  Directors  determines  that the price and terms of the
offer are  adequate  and in the best  interests of  shareholders  (a  "Permitted
Offer"). At the time that 20% or more of the outstanding Agribrands common stock
is actually  acquired  (other than in connection  with a Permitted  Offer),  the
exercise price of each Right will be adjusted so that the holder (other than the
person or member of the group  that made the  acquisition)  may then  purchase a
share of Agribrands  common stock at one-third of its then current market price.
If the  Company  merges with any other  person or group after the Rights  become
exercisable,  a holder of a Right may purchase,  at the exercise  price,  common
stock of the surviving  entity having a value equal to twice the exercise price.
If the  Company  transfers  50% or more of its assets or  earnings  power to any
other person or group after the Rights become  exercisable,  a holder of a Right


                                       55
<PAGE>

may purchase, at the exercise price, common stock of the acquiring entity having
a value equal to twice the exercise price.

     The  Company can redeem the Rights at a price of $.01 per Right at any time
prior  to the  time a  person  or  group  actually  acquires  20% or more of the
outstanding  Agribrands  common stock (other than in connection with a Permitted
Offer). In addition,  following the acquisition by a person or group of at least
20%, but not more than 50%, of the  outstanding  Agribrands  common stock (other
than in connection with a Permitted Offer),  the Company may exchange each Right
for one share of Agribrands  common stock.  The Company's Board of Directors may
amend  the terms of the  Rights at any time  prior to the time a person or group
acquires 20% or more of the outstanding  Agribrands  common stock (other than in
connection  with a  Permitted  Offer),  and may  amend  the  terms to lower  the
threshold for exercise of the Rights. If the threshold is reduced,  it cannot be
lowered to a percentage which is less than 10%, or, if any shareholder holds 10%
or more of the  outstanding  Agribrands  common stock at that time,  the reduced
threshold  must be greater than the  percentage  held by that  shareholder.  The
Rights will expire on March 31, 2008.

13.  RELATED PARTY ACTIVITY

     Prior to the Distribution Date, the Agribrands  Businesses and RPI Consumer
shared some general and  administrative  functions and distributed  some product
through a combined distribution  network.  Costs of these shared activities were
allocated to the Company based on utilization or other methods which  management
believes to be reasonable.  Total costs of these shared activities were $22.1 in
the seven months ended March 31, 1998. Of such costs,  allocations to Agribrands
were $19.1.

14.  LEGAL AND ENVIRONMENTAL MATTERS

     The Company is subject to legal  proceedings  and claims arising out of its
business  that  cover a wide  range  of  matters,  including  trade  regulation,
contracts,   environmental  issues,  product  liability,  patent  and  trademark
matters, and taxes.

     In September of 2000, a shareholder  suit was filed in the Circuit Court of
St. Louis County, Missouri against the Company and the individual members of the
Board of  Directors  alleging  that the  Directors  failed  to carry  out  their
fiduciary duties in recommending the merger with Ralcorp Holdings, Inc. The suit
requests:   (i)  the   certification  of  a  class  consisting  of  all  of  the
shareholders,  (ii) injunctive  relief,  (iii) attorneys fees and expenses,  and
(iv)  such  other  relief  that the  Court  deems  appropriate.  Agribrands  has
responded  by denying  the  allegations.  The Company  believes it has  adequate
insurance  coverage  for  damages  in  excess  of  $2,500,000.  The  Company  is
responsible for the costs of defense up to the deductible.

     In August, 1999, Agribrands (together with Cargill,  Incorporated, The Iams
Company and by subsequent  amended pleading Carl S. Akey,  Inc.,  Ralston Purina
Company and Ralcorp  Holding,  Inc.) have joined the case by further  subsequent
amended  pleading) filed a complaint in the U.S. District Court for the Northern
District of Illinois  against F.  Hoffman-LaRoche  Ltd.,  Hoffman  LaRoche Inc.,
Roche Vitamins Inc., BASF  Aktiengesellschaft,  BASF Corporation,  Rhone-Poulenc
S.A.,  Rhone-Poulenc  Inc.,  Rhone-Poulenc  Animal  Nutrition Inc.,  Lonza A.G.,
Lonza, Inc., Takeda Chemical Industries,  Ltd., Takeda Vitamin & Food USA, Inc.,
EISAI Co. Ltd., EISAI  Corporation of North America,  EISAI U.S.A.  Inc. DAIICHI
Pharmaceutical  Co., Ltd., DAIICHI Fine Chemicals,  Inc., Chinook Group Limited,
Chinook Group, Inc., DuCoa, L.P., E. I. Dupont De Nemours and Company, DCV Inc.,
Bioproducts,  Inc.,  Roland  Bronnimann,  Kuno Sommer,  John W. Kennedy,  Robert


                                       56
<PAGE>

Samuelson,  Lindell  Hilling,  J. L.  (Pete)  Fischer  and  Antonio  Felix.  The
complaint  alleges that the defendants  conspired  globally to fix the prices of
vitamins and allocate  customers in support of such  arrangement in violation of
the U.S. antitrust laws. The defendants have admitted in criminal proceedings to
participating in such practices.  Agribrands believes that it will be successful
in  recovering  damages  arising  from these  practices.  When the Company  will
prevail and the amount of  recoverable  damages is difficult to determine due to
the multiple variables which will influence the determination of damages such as
period of time covered,  percent of overcharge,  purchasing  entity,  as well as
other issues and defenses which may be asserted by the defendants.  As of August
31, 2000, the Company has not  recognized  any gain in its financial  statements
for this matter.

     In  October  of  1997,  Agribrands'  wholly  owned  subsidiary,  Agribrands
Philippines,  Inc.  (formerly  Purina  Philippines,  Inc)  ("API"),  applied for
renewal of a warehouse license to store corn and rice and by-products  therefrom
at its Pulilan facility.  The Philippine  National Food Authority  ("NFA"),  the
governmental  agency  that  administers  the  Philippines  laws and  regulations
governing  the corn and rice  industry,  advised API by letter dated October 31,
1997,  that its  license  renewal  application  was  denied.  The  letter  cites
Philippines'   legislation  and  regulations   that  indicates  that  businesses
operating  in the corn and rice  industry  cannot  have  more  than 40%  foreign
ownership.  Since the NFA  believes  that API is in the corn and rice  industry,
they have  requested  API to file a divestment  plan in order to comply with the
40% maximum foreign  ownership  requirement.  API has appealed the denial of its
license renewal, and on January 23, 1998, API received  notification that it may
operate its warehouse under a "provisional permit" pending the resolution of the
appeal.

                                       57
<PAGE>

     In March of 2000,  the  Philippines  adopted an act which  repealed the law
restricting  foreign  participation in the corn and rice milling  industry.  The
effect of this act should  moot the NFA action  against  API.  API  through  its
counsel has filed a letter  requesting  confirmation  from the NFA that it would
drop its proceedings against API as a result of this change in the law. To date,
API has not received a response from the NFA to its request.  If the NFA were to
pursue its requirement  for divestment,  API would pursue its rights through the
Philippine legal system.

     Even if the API was required to file a  divestiture  plan,  it is expected,
based on previous  case  precedents,  that a plan would be  approved  that would
permit the necessary divestiture over a substantial period of time.

     Various tax, record keeping and labor claims have been asserted against the
Agribrands  business  in Brazil.  The claims  arose  principally  from  monetary
corrections  made in connection  with the institution of economic plans by prior
Brazilian  administrations  to  control  inflation  and other  statutory  filing
requirements.

     Many of the legal matters are in preliminary stages, involve complex issues
of law and fact and may proceed for  protracted  periods of time.  The amount of
the eventual liability, if any, from these proceedings cannot be determined with
certainty;  however,  in the opinion of  Agribrands  management,  based upon the
information  presently  known,  as well as upon the limitation of certain of its
liabilities under the Agreement and Plan of  Reorganization  between Ralston and
Agribrands for the spin-off of Agribrands, the ultimate liability of Agribrands,
if any,  arising from the pending  legal  proceedings,  as well as from asserted
legal claims and known  potential  legal claims which are probable of assertion,
taking into account established accruals for estimated  liabilities,  should not
be material to the  financial  position of  Agribrands  but could be material to
results of operations or cash flows for a particular quarter or annual period.

15.  OTHER CONTINGENCIES AND COMMITMENTS

     Guarantees  - At August 31,  2000,  Agribrands  had third party  guarantees
outstanding in the aggregate  amount of  approximately  $7.3.  These  guarantees
relate to financial  arrangements  with customers,  suppliers and other business
relations.

     Other Commitments - Future minimum rental commitments under  noncancellable
operating leases in effect as of August 31, 2000 were: 2001 - $2.1, 2002 - $1.8,
2003 - $1.5,  2004 - $1.0,  2005 - $0.4  and  thereafter  - $0.5.  Total  rental
expense  for all  operating  leases  was $6.8 in 2000,  $6.2 in 1999 and $7.1 in
1998.

16.  NOTES PAYABLE

     Notes payable of $27.8 and $18.5 at August 31, 2000 and 1999, respectively,
had a weighted average interest rate of 9.0% and 10.3%, respectively.  At August
31, 2000,  substantially  all notes payable are denominated in local  currencies
and are due to banks.  Compensating  balance  arrangements  ensure future credit
availability  and  do  not  restrict  the  withdrawal  of  funds.   Under  these
arrangements,  Agribrands maintained compensating bank balances of $3.9 and $5.3
at August 31, 2000 and 1999, respectively.

                                       58
<PAGE>

     On August 31, 2000, total unused  uncommitted lines of credit to affiliates
of Agribrands were approximately $190.

17.  LONG-TERM DEBT

     The detail of long-term debt as of August 31 follows:
<TABLE>
<CAPTION>

                                                                            2000      1999
                                                                          --------   -------
<S>                                                                        <C>       <C>
Korean subsidiary, interest rate of 8.9%; due 2002                         $  7.1    $  6.7

Italian subsidiary, interest rate of 4.1% and 3.2% at August 31, 2000
and 1999, respectively; due in annual installments through 2004               2.1       2.5

Italian subsidiary, interest rate of 3.35% at August 31, 1999                 -         1.6

Other long-term debt with interest rates ranging from 1.0% to 19.5%
                                                                              1.9       3.1
                                                                          --------   -------
                                                                             11.1      13.9
Less: Current Maturities                                                     (0.4)     (2.4)
                                                                          --------   -------
                                                                           $ 10.7    $ 11.5
                                                                          ========   =======
</TABLE>

     Aggregate maturities of long-term debt are $8.3, $1.1, $0.8 and $0.1
for each of the years ending August 31, 2002 through 2005, respectively.


                                       59
<PAGE>

18.  SUPPLEMENTAL BALANCE SHEET INFORMATION

                                                                 August 31
                                                           -------------------
                                                            2000       1999
                                                           --------   --------
Receivables (current)
     Trade                                                 $  71.8    $  69.1
     Value added tax                                           5.3        5.1
     Other                                                    10.4       14.2
     Allowance for doubtful accounts                         (12.1)     (11.4)
                                                           --------   --------
                                                           $  75.4    $  77.0
                                                           ========   ========
Inventories
     Raw materials and supplies                            $  77.0    $  61.1
     Finished products                                        19.6       20.2
                                                           --------   --------
                                                           $  96.6    $  81.3
                                                           ========   ========
Investments and Other Assets
     Goodwill (net of accumulated amortization of          $  27.1    $  29.1
         $8.6 in 2000 and $6.5 in 1999)
     Investments in affiliated companies                       7.0        6.3
     Cash surrender value of key man life insurance           10.0        5.0
     Long-term receivable for value added tax                  4.3        4.6
     Deferred charges and other assets                        11.1        6.3
                                                           --------   --------
                                                           $  59.5    $  51.3
                                                           ========   ========
Property, Plant and Equipment - net
     Land                                                  $  11.9       11.8
     Buildings                                                79.4       81.9
     Machinery and equipment                                 250.8      249.1
     Construction in progress                                  9.6        3.5
                                                           --------   --------
                                                             351.7      346.3
     Accumulated depreciation                               (183.3)    (172.3)
                                                           --------   --------
                                                           $ 168.4     $174.0
                                                           ========   ========
Accounts Payable and Accrued Liabilities
     Trade accounts payable                                $  72.2    $  75.2
     Incentive compensation, salaries and vacations           14.2       15.4
     Restructuring reserves                                    0.5        -
     Other items                                              29.1       34.5
                                                           --------   --------
                                                           $ 116.0     $125.1
                                                           ========   ========


                                       60
<PAGE>


                                                                 August 31
                                                           -------------------
                                                            2000       1999
                                                           --------   --------
Other Liabilities
     Retirement and other employee benefits                $  14.6    $  18.1
     Minority interests                                        2.0        2.1
     Other                                                     2.7        3.0
                                                           --------   --------
                                                           $  19.3    $  23.2
                                                           ========   ========


19.  ALLOWANCE FOR DOUBTFUL ACCOUNTS
<TABLE>
<CAPTION>

                                                           2000      1999       1998
                                                         --------  --------  ---------
<S>                                                       <C>       <C>       <C>
Balance, beginning of year                                $ 11.4    $ 10.4    $   9.8
Provision charged to expense                                 1.3       3.6        6.4
Write-offs, less recoveries                                 (0.5)     (2.4)      (4.0)
Translation adjustment                                      (0.1)     (0.2)      (1.8)
                                                         --------  --------  ---------
Balance, end of year                                      $ 12.1    $ 11.4    $  10.4
                                                         ========  ========  =========

</TABLE>

20.  SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION
                                             2000      1999       1998
                                           --------  --------  ---------
Interest paid                               $  2.9    $  8.6    $  11.8
                                           ========  ========  =========
Income taxes paid                           $ 23.3    $ 24.8    $  22.6
                                           ========  ========  =========

                                       61
<PAGE>


                         AGRIBRANDS INTERNATIONAL, INC.
                         QUARTERLY FINANCIAL INFORMATION

                       (In millions except per share data)
                                   (Unaudited)

     The  results  of any  single  quarter  are not  necessarily  indicative  of
Agribrands'  results for the year.  The sum of the four  quarters'  earnings per
share will not necessarily equal the full year amount.

Fiscal 2000
<TABLE>
<CAPTION>

                                   First       Second      Third      Fourth         Full
                                  Quarter     Quarter     Quarter     Quarter        Year
                                 ----------  ----------  ----------  ----------   -----------

<S>                               <C>         <C>         <C>         <C>          <C>
Net sales                         $ 300.9     $ 288.1     $ 301.2     $ 302.9      $ 1,193.1
Gross profit                         53.7        46.4        48.7        48.3          197.1
Net earnings                         13.9        11.0         9.4        10.7           45.0

Diluted earnings per share           1.29        1.04         .92        1.06           4.33
</TABLE>

     Third  quarter 2000 net earnings  were reduced by $1.2 ($.12 per share) due
to provisions for  restructuring.  Fourth quarter 2000 net earnings were reduced
by $0.2 ($.02 per share) due to provisions for restructuring.

Fiscal 1999
<TABLE>
<CAPTION>

                                  First        Second        Third      Fourth        Full
                                 Quarter      Quarter       Quarter     Quarter       Year

                                ----------  ------------  -----------  ----------  -----------
<S>                              <C>          <C>           <C>         <C>         <C>
Net sales                        $ 332.4      $ 310.7       $ 311.8     $ 306.6     $ 1,261.5
Gross profit                        58.7         50.0          49.9        52.3         210.9
Net earnings                        11.1          7.8          13.5        11.6          44.0

Diluted earnings per share          1.03          .72          1.27        1.08         4.11
</TABLE>

     Fourth  quarter  1999 net  earnings  include an  after-tax  gain on sale of
property of $1.2 ($.11 per share).

ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

     Not applicable.


                                       62
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     Pursuant to the Company's  Articles of Incorporation and Bylaws,  the Board
of Directors  consists of from three to twelve  individuals,  divided into three
classes of  approximately  equal  size,  each class to be elected  for a term of
three years.  The Company's Board has set the number of directors as seven.  The
following table sets forth information as to each member of the Company's Board.
The director's ages are as of August 31, 2000. Mr. Stiritz serves as Chairman of
the Board.
<TABLE>
<CAPTION>

                                Term
      Name            Age      Expires                        Information

<S>                    <C>      <C>          <C>
David R. Banks         63       2002         Mr.  Banks has been a  director  of  Agribrands  since  April  1998.  He has served as
                                             Chairman of the Board and Chief Executive Officer,  Beverly Enterprises,  Inc. (health
                                             care  services)  since  1990.  Mr.  Banks  is also a  director  of  Nationwide  Health
                                             Properties, Inc. and Ralston Purina Company.

Jay W. Brown           55       2002         Mr.  Brown has been a  director  of  Agribrands  since  April  1998.  He has served as
                                             Principal in Westgate Group,  LLC (private equity  investment  firm),  responsible for
                                             operational  management of portfolio companies since 1998. Mr. Brown was President and
                                             Chief  Executive  Officer,  Protein  Technologies  International,  Inc.  (soy  protein
                                             products)  from 1995 to 1998  (acquired  from  Ralston by E. I.  DuPont de Nemours and
                                             Company in 1997) and Vice  President,  Ralston  Purina  Company and Chairman and Chief
                                             Executive  Officer,  Continental  Baking Company (fresh bakery  products) from 1984 to
                                             1995. Mr. Brown is also a director of Jack In The Box Inc.

M. Darrell Ingram      67       2002         Mr.  Ingram has been a director of Agribrands  since April 1998.  He currently  serves
                                             as Non-Executive Chairman of First Financial Planners,  Inc. (privately held financial
                                             services  company).  Mr.  Ingram  formerly  served as Chairman  of the Board,  Red Fox
                                             Environmental  Services,  Inc.  (pollution  control  services).  Mr.  Ingram is also a
                                             director of Ralston Purina Company.

H. Davis McCarty       60       2003         Mr.  McCarty  has been a  director  of  Agribrands  since  April  1998.  He has been a
                                             private  consultant for agri business  marketing and strategic  planning since January
                                             1997.  Mr.  McCarty  served as  President,  Consolidated  Nutrition,  a subsidiary  of
                                             Archer Daniels Midland and AGP, Inc. from May 1993 to December 1996.


                                       63
<PAGE>

Joe R. Micheletto      63       2003         Mr.  Micheletto has been a director of Agribrands  since April 1998. He has been Chief
                                             Executive  Officer and President,  Ralcorp  Holdings,  Inc. (food company) since 1994.
                                             Mr. Micheletto is also a director of Energizer Holdings,  Inc., Ralcorp Holdings, Inc.
                                             and Vail Resorts, Inc.

Martin K. Sneider      57       2001         Mr.  Sneider has been a director  of  Agribrands  since  April 1998.  He is an Adjunct
                                             Professor of Retailing at Washington  University in St. Louis,  Missouri.  Mr. Sneider
                                             was President of Edison Brothers Stores,  Inc.  (specialty  retail) from 1987 to 1995.
                                             Mr.  Sneider  is  also a  director  of CPI  Corporation.  Edison  Brothers  filed  for
                                             protection  under  Chapter 11 of the Federal  Bankruptcy  Code in  November,  1995 and
                                             emerged from those  proceedings  in September  1997.  Mr.  Sneider had been  President
                                             until April, 1995.

William P. Stiritz     66        2001        Mr.  Stiritz  has  served as  Chairman  of the  Board,  Chief  Executive  Officer  and
                                             President of  Agribrands  since April 1998. He has served as Chairman of the Board and
                                             Chairman,  Management Strategy and Finance Committee of Energizer Holdings, Inc. since
                                             April 2000.  Mr.  Stiritz served as Chief  Executive  Officer and  President,  Ralston
                                             Purina  Company,  from 1982 to 1997.  Mr.  Stiritz is Chairman of the Board of Ralcorp
                                             Holdings,  Inc.  and  Ralston  Purina  Company,  and  serves  as a  director  of  Ball
                                             Corporation,  The  May  Department  Stores  Company,  Reinsurance  Group  of  America,
                                             Incorporated, Vail Resorts, Inc. and American Freightways Corporation.

</TABLE>

EXECUTIVE OFFICERS OF THE REGISTRANT

     The following is a list of all the executive  officers (9) of Agribrands as
of August 31, 2000.  All of these  officers  were elected by the Board and shall
serve in such  positions  until  their  successors  have been duly  elected  and
qualified.  There  are no  family  relationships  between  any of the  executive
officers.
<TABLE>
<CAPTION>

Name                      Age                Positions

<S>                        <C>               <C>
William P. Stiritz         66                Chairman of the Board,  Chief  Executive  Officer and  President of  Agribrands  since
                                             April 1998. Mr. Stiritz joined Ralston in 1963 and served as Chief  Executive  Officer
                                             and President of Ralston from 1982 until his retirement in 1997.

David R. Wenzel            37                Chief  Financial  Officer of  Agribrands  since April 1998.  Mr.  Wenzel served as the
                                             Chief Financial  Officer of Ralston's  international  agricultural  products  business
                                             since  1996.  He joined  Ralston's  Protein  Technologies  subsidiary  as  Director of
                                             Strategic  Planning in 1993 and in 1994  became  Director of  Corporate  Planning  for
                                             Ralston.  Prior to  joining  Ralston,  Mr.  Wenzel was a Manager,  Tax  Services,  for
                                             PricewaterhouseCoopers LLP in its St. Louis office.

                                       64
<PAGE>

Bill G. Armstrong          52                Chief  Operating  Officer of  Agribrands  since April 1998.  Mr.  Armstrong  served as
                                             Executive  Vice  President  of  Operations  of  Ralston's  international  agricultural
                                             products  business during 1997 and Regional Chief Executive  Officer - South Asia from
                                             1995 to 1997. He served as Managing Director of Ralston's  international  agricultural
                                             products Philippine operations from 1992 to 1995.

Kim Ki Yong                55                Chief  Operating  Officer - North Asia Region of Agribrands  since April 1998. Mr. Kim
                                             served as Regional  Chief  Executive  Officer - North Asia of Ralston's  international
                                             agricultural  products  business since 1995 and President and Chief Executive  Officer
                                             of Ralston's international agricultural products Korean operations from 1993 to 1995.

Eric M. Poole              55                Executive Vice  President,  Operations and  Manufacturing  since April 2000. Mr. Poole
                                             served as Chief  Operating  Officer - Europe Region of  Agribrands  from April 1998 to
                                             April 2000. He served as Vice  President - Americas Region of Ralston's  international
                                             agricultural products operations from 1993 to 1995; and as international  agricultural
                                             products Regional Chief Executive Officer - Europe from 1995 to 1998.

Michael J. Costello        48                Secretary and General  Counsel of Agribrands  since April 1998. Mr. Costello served as
                                             International  Counsel of Ralston's  international  animal and human foods  businesses
                                             from 1989 to 1998.

Robert W. Rickert, Jr.     49                Treasurer  of  Agribrands  since  April  1998.  Mr.  Rickert  served  as  Director  of
                                             International  Financial  Services of Ralston's  international  agricultural  products
                                             business from 1990 to 1998;  and Director of  International  Finance - Latin  America,
                                             Middle East,  and Africa of Ralston's  international  agricultural  products  business
                                             from 1988 to 1992.

Douglas W. Faust           39                Vice  President and  Controller of Agribrands  since March 2000.  Mr. Faust had served
                                             as  Controller  of  Agribrands  since  April  1998.  He  served as  Controller  of the
                                             international  agricultural  products  business  of Ralston  Purina from April 1997 to
                                             April 1998. Mr. Faust was Manager of Corporate  Accounting  with the Kellwood  Company
                                             from 1992 to April 1997.

                                       65
<PAGE>

John H. Ritzen             45                Vice President,  Market Operations and Business  Development of Agribrands since March
                                             2000. Mr. Ritzen had served as Vice  President and Director of Strategic  Alliances of
                                             Agribrands  since April 1998.  He served as Vice  President  and Director of Strategic
                                             Alliances for the international  agricultural products business of Ralston Purina from
                                             September  1997 to April 1998.  Prior to that he held the  position of Vice  President
                                             and  Managing  Director,   Asia/Pacific  for  Protein  Technologies  International,  a
                                             subsidiary of E. I. DuPont de Nemours and Company, from August 1995 to September 1997.

</TABLE>

BOARD OF DIRECTORS - COMMITTEES

                                                                    Nominating &
              Board Member                 Board        Audit       Compensation
--------------------------------------------------------------------------------
David R. Banks                                 X          X*              X
Jay W. Brown                                   X          X               X
M. Darrell Ingram                              X          X               X*
H. Davis McCarty                               X          X               X
Joe R. Micheletto                              X          X
Martin K. Sneider                              X          X               X
William P. Stiritz                             X*

Meetings held in fiscal year 2000              6          2               1

*Chairperson

AUDIT COMMITTEE REPORT

     The Audit Committee of the Board of Directors of Agribrands is comprised of
six  non-employee  directors.  Under newly  adopted  rules of the New York Stock
Exchange,  a director is prohibited from serving on the Audit Committee,  who is
employed  as an  executive  of another  corporation  where any of the  Company's
executives  serves on that  corporation's  Compensation  Committee.  Mr. Stiritz
currently serves on the Compensation  Committee of Ralcorp and Mr. Micheletto is
an executive  officer of that  company.  Mr.  Stiritz is a principal in Westgate
Group,  LLC and may have influence over the  compensation  of Mr. Brown,  also a
principal of Westgate  Group,  LLC. The new rules  provide that a serving  Board
member may continue to serve until their current term on the Board expires.  The
Audit  Committee  resolved that Messrs.  Brown and Micheletto  could continue to
serve on the Audit  Committee until the expiration of their current terms ending
in January, 2002 and in January,  2003,  respectively.  The remaining four Audit
Committee members are independent.

     The Audit  Committee  has a written  charter  which was amended this fiscal
year. The charter is included as an appendix to this document.

     During  meetings  of  the  Audit  Committee,  the  Committee  reviewed  and
discussed   the   audited    financial    statements    with    management   and
PricewaterhouseCoopers.  The Audit Committee believes that management  maintains
an  effective  system of internal  controls  which  results in fairly  presented
financial   statements.   Based  on  these  discussions,   the  Audit  Committee
recommended to the Board of Directors that the audited financial  statements for
fiscal year 2000 be included in Agribrands Annual Report on Form 10-K.

                                       66
<PAGE>

     The  discussions  with  PricewaterhouseCoopers  also  included  the matters
required  by  Statement  on  Accounting  Standards  No. 61. The Audit  Committee
received  from   PricewaterhouseCoopers   written  disclosures  and  the  letter
regarding its independence as required by Independence  Standards Board Standard
No. 1. This information was discussed with PricewaterhouseCoopers.

     The Audit Committee of Agribrands International, Inc.:

         David R. Banks                  H. Davis McCarty
         Jay W. Brown                    Joe R. Micheletto
         M. Darrell Ingram               Martin K. Sneider

     Nominating & Compensation  Committee:  Recommends to the Board nominees for
election as directors and executive officers. Makes recommendations to the Board
regarding  election of directors to  positions  on  committees  of the Board and
compensation and benefits for directors.  Sets the compensation of all corporate
officers and administers the Agribrands Non-Qualified Deferred Compensation Plan
and the Incentive Stock Plan,  including the granting of awards under the latter
plan.  Reviews  the  competitiveness  of  management  compensation  and  benefit
programs, and principal employee relations policies and procedures.  All members
are non-employee directors.

Director Compensation & Attendance

     Employee  directors receive no compensation  other than their normal salary
for serving on the Board or its Committees.  Non-employee  directors receive the
following fees for their service on the Board:

     o    Annual Retainer: $20,000

     o    Fee for Each Board Meeting: $1,000

     o    Fee for Each Committee Meeting: $1,000

     Directors  can elect to have these  amounts paid in cash,  or defer payment
until their retirement under the terms of the Deferred  Compensation Plan. Under
that  Plan,  any  non-management  director  may  elect to  defer,  with  certain
limitations, all retainers and fees until retirement or other termination of his
directorship.  Deferrals may be made in various  investment options which mirror
the  performance  of the  investment  funds  offered  by the  Company's  Savings
Investment Plan.

     The Company also pay the premiums on directors' and officers' liability and
travel accident insurance policies insuring directors.

     During fiscal year 2000,  all  directors  attended 75% or more of the Board
and Committee meetings on which they served.


                                       67
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

INTRODUCTION AND SUMMARY

     The following  tables and narrative text discuss the  compensation  paid in
fiscal year 2000 to the Named  Executive  Officers,  i.e.,  the Company's  Chief
Executive  Officer  and  President,  and the  Company's  four other most  highly
compensated officers (collectively, the "Named Executive Officers").

     The Summary Compensation Table set forth below also summarizes compensation
received by the Named  Executive  Officers  from the date of the spin-off of the
Company by Ralston Purina Company on April 1, 1998 through the end of the fiscal
year  1998,  that is,  for five  months  rather  than  for a full  fiscal  year.
Annualized salaries,  i.e., the salary amounts which would have been paid to the
Named  Executive  Officers  had they  been  paid for a full year at the rates in
effect from the spin-off date through the end of the fiscal year,  are reflected
in the "Salary" column.

     The full amount of bonuses the Company  paid at the end of fiscal year 2000
is reflected in the "Bonus"  column.  Management  has not  attempted to pro rate
bonuses based on the relationship between the period before the spin-off and the
period after the spin-off.


<TABLE>
<CAPTION>
                                                  SUMMARY COMPENSATION TABLE
                                                                                                Long Term
                                                                                               Compensation
                                                      Annual Compensation                        (Awards)
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                Securities
                                                                         Other Annual           Underlying       All Other
          Name and                                                       Compensation            Options       Compensation
     Principal Position        Year         Salary ($)    Bonus ($)            ($)                    (#)         ($)(1)
--------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>         <C>            <C>           <C>                    <C>               <C>
William P. Stiritz             2000        $    -         $    -        $ 72,082 (2)                   0       $291,580
Chairman of the Board,         1999        $    -         $    -        $ 67,220                 500,000       $309,186
Chief Executive Officer        1998        $    -         $    -        $ 30,593               1,000,000         $    -
and President

Bill G. Armstrong              2000        $238,333       $157,300      $    -                         0       $ 19,188
Chief Operating Officer        1999        $220,000       $143,000      $    -                    25,000       $ 16,292
                               1998        $200,000       $150,000      $    -                    10,000       $  2,423

Ki Yong Kim                    2000        $188,917 (3)   $116,020      $ 60,925 (3)(4)            5,000       $148,238 (3)
Chief Operating Officer        1999        $150,299       $ 99,968      $ 53,532                   5,000       $239,976
North Asia Region              1998        $117,036       $100,000      $ 28,468                  10,000       $ 38,568

Eric M. Poole                  2000        $195,227 (5)   $ 83,200      $ 42,433 (6)                   0       $ 17,200
Executive Vice President       1999        $239,828       $100,000      $161,227                   2,500       $ 12,238
Operations and                 1998        $211,753       $ 70,000      $133,364                   5,000       $  2,696
Manufacturing

David R. Wenzel                2000        $178,750       $ 99,825      $    -                         0       $ 15,711
Chief Financial Officer        1999        $165,000       $ 82,500      $    -                    25,000       $ 11,586
                               1998        $150,000       $ 90,000      $    -                    10,000       $  1,650

<FN>

(1)  The amounts shown in this column consist of the following:

                                       68
<PAGE>

     (i)  Matching contributions under the Company's Savings Investment Plan:

          o    Mr. Armstrong, $3,320

          o    Mr. Poole, $5,160

          o    Mr. Wenzel, $2,316

     (ii) Matching  contributions  under the  Company's  Non-Qualified  Deferred
          Compensation Plan:

          o    Mr. Armstrong, $7,868

          o    Mr. Poole, $4,040

          o    Mr. Wenzel, $5,395

     (iii)Profit sharing  contributions  under the Company's Savings  Investment
          Plan:

          o    Mr. Armstrong, $8,000

          o    Mr. Poole, $8,000

          o    Mr. Wenzel, $8,000

     (iv) Severance  accrual for Mr. Kim for 2000 pursuant to certain  severance
          arrangements  described  in  detail  on  page  72  under  the  heading
          "Severance Plan."

     (v)  Key Man Life  Insurance  premiums in the amount of $5,000,000  paid on
          the life of Mr. Stiritz having a potential value under certain funding
          and actuarial  assumptions  of $285,622.  This $102 million  insurance
          policy was entered  into to provide  Agribrands  with  flexibility  to
          respond to any crises or  perceived  crises  that might arise upon the
          unexpected death of the Company's Chief Executive Officer,  especially
          given the attention placed on the significance of his role at the time
          of the Spin-off.  The split-dollar  program allows additional  funding
          within the program to accrue  without tax and may provide a cash-value
          benefit to Mr. Stiritz at the end of the program.  The potential value
          to Mr.  Stiritz was computed  using a formula  required for disclosure
          purposes,  but,  without  additional  funding by us, it is not certain
          whether any benefit will actually accrue. Any potential future benefit
          for Mr. Stiritz (in the form of cash value at the end of year seven of
          the  program),  will be dependent on  investment  earnings  within the
          program and additional funding by Agribrands, if any. The amount shown
          for 1999 has been revised  from the amount  originally  presented,  to
          reflect changes in  management's  assumptions as to its future funding
          under the insurance  policy.  In addition,  a separate life  insurance
          premium in the amount of $5,958 was paid for Mr. Stiritz.

(2)  The amount shown in this item includes $32,150 for a company automobile for
     Mr. Stiritz.

(3)  The amounts  shown were  converted  to U. S.  Dollars from South Korean Won
     using the August 31, 2000  exchange  rate of 1108.75  South Korean Won to 1
     U.S. Dollar.

(4)  The amount shown in this item includes $33,281 of interest  foregone on key
     money deposit on residence for Mr. Kim.

(5)  The amount  shown  includes:  (i) salary of  $204,027,  (ii) $9,025 for the
     differential in the cost of living between the United States and Spain, and
     (iii) a U.S. paid premium of $13,908 for his undertaking an assignment in a
     foreign country; and excludes $31,733 tax equalization payment by Mr. Poole
     for the prior year.

(6)  The amount  shown in this item  (converted  to U.S.  Dollars  from  Spanish
     Pesetas using the August 31, 2000 exchange rate of 187.36  Spanish  Pesetas


                                       69
<PAGE>

     to 1 U.S. Dollar) includes expenses the Company incurred of: (1) $20,919 in
     connection with personal housing,  and (ii) $10,775 in connection  expenses
     related to a company automobile.

</FN>
</TABLE>


STOCK AWARDS
<TABLE>
<CAPTION>

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                                                                                            Potential Realizable Value at
                         Number of         % of Total                                         Assumed Annual Rates of
                        Securities        Options/SARs                                        Stock Price Appreciation
                        Underlying         Granted to       Exercise or                       for Option/SAR Term (2)
                       Options/SARs       Employees in       Base Price     Expiration      -----------------------------
Name                    Granted (#)        Fiscal Year       ($/Sh)(1)         Date            5%               10%
----                   ------------       ------------      -----------     ----------      --------         --------
<S>                        <C>               <C>            <C>             <C>              <C>              <C>
B. G. Armstrong                0                N/A              N/A            N/A               N/A              N/A

K. Y. Kim                  5,000 (3)         12.27%         $41.9375        1/27/10          $131,871         $334,188

E. M. Poole                    0                N/A              N/A            N/A               N/A              N/A

W. P. Stiritz                  0                N/A              N/A            N/A               N/A              N/A

D. R. Wenzel                   0                N/A              N/A            N/A               N/A              N/A


<FN>

(1)  Market price on date of grant.

(2)  Potential  realizable  value is calculated  based on an assumption that the
     price of the Common Stock  appreciates at the annual rates shown (5%, 10%),
     compounded annually,  from the date of grant of option until the end of the
     option term. The value is net of the exercise price but is not adjusted for
     the taxes that  would be due upon  exercise.  The  Company  has  elected to
     illustrate the potential realizable value using 5% and 10% assumed rates of
     appreciation  pursuant  to the rules of the SEC.  This  does not  represent
     management's  estimate or projection of future stock prices;  actual gains,
     if any,  upon future  exercise of any of these  options  will depend on the
     actual performance of the Common Stock.

(3)  Stock Appreciation Right granted is 100% exercisable on January 28, 2005.

</FN>
</TABLE>

                                       70
<PAGE>

                        FISCAL YEAR END OPTION/SAR VALUES

     The following table sets forth fiscal year-end  option/SAR values.  None of
the options  reflected in the table were exercisable on August 31, 2000, the end
of Agribrands  fiscal year. No  options/SARs  were exercised by any of the Named
Executive Officers listed below during fiscal year 2000.

<TABLE>
<CAPTION>

                                      Number of Securities                                 Value of Unexercised
                                     Underlying Unexercised                              In-the-Money Options/SARs
                                  Options/SARs at Year-End (#)       Exercise or              at Year-End ($)
                     Grant     -------------------------------       Base Price     ------------------------------
Name                 Date      Exercisable      Unexercisable           ($/Sh)       Exercisable      Unexercisable
----                 -------   -----------      -------------           ------       -----------      -------------
<S>                  <C>              <C>         <C>               <C>                <C>            <C>
B. G. Armstrong      5/29/98          0              10,000         $ 34.250           $    -         $   55,000

                     9/25/98          0              25,000           21.690                -            451,500

K. Y. Kim            5/29/98          0              10,000           34.250                -             55,000

                     9/25/98          0               5,000           21.690                -             90,300

                     1/28/00          0               5,000          41.9375                -                  0

E. M. Poole          5/29/98          0               5,000           34.250                -             27,500

                     9/25/98          0               2,500           21.690                -             45,150

W. P. Stiritz        5/12/98          0           1,000,000           36.680                -          3,070,000

                     9/25/98          0             500,000           21.690                -          9,030,000

D. R. Wenzel         5/29/98          0              10,000           34.250                -             55,000

                     9/25/98          0              25,000           21.690                -            451,500
</TABLE>

GRANTOR TRUST

     The Company has  established  and funded an  irrevocable  grantor  trust to
provide a source of funds to assist it in meeting its obligations  under certain
employee  benefit plans and programs in which the Named Executive  Officers,  as
well as other employees,  participate.  At the present time, assets of the trust
consist  primarily  of  funds  deposited  with the  trustee  for  investment  in
investment  options which mirror the performance of the investment funds offered
by the Company's Savings Investment Plan. If the Company defaults in its funding
obligations  under the  trust,  payment  of  obligations  under  such  plans and
programs  will  immediately  accelerate  unless  the  employee  elects  to defer
payment.

CHANGE-IN-CONTROL AND TERMINATION OF EMPLOYMENT ARRANGEMENTS

     The Company has entered  into  Management  Continuity  Agreements  with the
Named Executive Officers.  The agreements provide that the officers will receive
severance   compensation   in  the  event  of  their  voluntary  or  involuntary
termination after a change in control of Agribrands.  The compensation  provided
would be in the form of (i) a lump sum  payment  equal to the  present  value of
continuing  their  respective  salaries  and  bonuses  for  a  specified  period
following termination of employment, and (ii) the continuation of other employee
benefits for the same period. Due to the uncertainty of the merger with Ralcorp,
the Board of  Directors  reviewed  the  existing  arrangements  and approved the
enhancement  of the  severance  compensation  due upon a change in control.  The
amended Management  Continuity  Agreements provide that the compensation payment
period for the Named  Executive  Officers  shall be increased  from two years to
three years in the event of an involuntary  termination of employment (including
a  constructive  termination),  but remain one year in the event of a  voluntary
termination  of  employment,  which periods are subject to reduction for periods
the relevant  individual  remains  employed  following a change in control.  The


                                       71
<PAGE>

amended  Management  Continuity  Agreements  also indemnify the Named  Executive
Officers  from any taxes which may become due under  Section 280 G of the United
States Internal Revenue Code as a result of a termination  following a change in
control. No payments would be made if the Officer terminates  employment because
of death,  disability or normal  retirement,  or for cause.  Payments  would not
continue beyond the Officer's normal retirement date.

     In connection  with the proposed merger of Agribrands with Ralcorp which is
described  above  under  "Management's  Discussion  And  Analysis  Of  Financial
Condition  And Results Of  Operations--Proposed Merger",  Messrs.  Armstrong and
Wenzel were granted  three-year  employment  agreements.  The agreements provide
that upon the  completion  of the  merger  the  executive  will  hold  specified
positions  with the new Holding  Company  and will be entitled to the  following
compensation:

o    a salary equal to the greater of the executive's current salary or a salary
     granted by the Holding Company Board of Directors  after  completion of the
     merger;

o    an annual bonus in an amount that is the greater of their  current  minimum
     bonus or a bonus granted by the Holding  Company  Board of Directors  after
     completion of the merger;

o    an  executive  level  benefits  program  including  stock  based  awards as
     determined by the Holding Company Board of Directors; and

o    participation  under such  pension  plan,  health  insurance,  401(k) plan,
     vacation,  holiday  and  other  programs  in  effect  from time to time for
     salaried executives of the Holding Company.

     The employment agreements also provide that the executive may be terminated
at any time without "cause" but if such  termination  occurs prior to the end of
the term,  the  executive  will be entitled to receive his base salary,  minimum
bonuses and employee benefits through the end of the term. Notwithstanding these
provisions,  the Holding  Company will be entitled to terminate  any  employment
agreement  immediately  and without  notice if the executive  engages in certain
specified conduct, including the refusal, without cause, to perform his assigned
duties,  the open criticism in the media of the company and the participation in
any  conduct  that the  Holding  Company  Board of  Directors  determines  to be
inimical to or contrary to the best interest of the Holding  Company.  Upon such
termination, the Holding Company will be obligated to pay the executive his base
salary prorated to the date of the termination event.

     Agribrands  existing agreements with its executive officers governing stock
options and stock  appreciation  rights provide that upon a change in control of
Agribrands all terms,  conditions,  restrictions  and limitations in effect with
respect to any  unexercised  awards lapse and no other terms and conditions will
be applied, and any unexercised, unvested, unearned or unpaid shares become 100%
vested.  The Company intends to secure the consent of its executive  officers to
the waiver of the acceleration of these rights in respect of the proposed merger
with  Ralcorp.   Mr.  Stiritz  has  already  agreed  in  writing  to  waive  the
acceleration  of his stock options in connection  with the proposed  merger with
Ralcorp.

SEVERANCE PLAN

     Agribrands Korean affiliate,  in accordance with Korean Labor Law, provides
lump sum severance  payments to employees upon  termination  of employment.  The
Korean affiliate offers an enhanced severance plan for its executive officers in
lieu of the Korean-mandated obligation. This severance plan is partially funded.
Mr. Kim, as the chief executive officer of the Korean affiliate, participates in
this severance plan. His severance  accrual is calculated based upon his current
salary (consisting of salary, bonus and certain benefits),  years of service and
a multiplier based on position within the Korean  affiliate.  For the purpose of
calculating this severance benefit, Mr. Kim had, as of August 31, 2000, 27 years
of credited service,  calculated to the nearest year.  Credited service is based
upon  employment by the Company's  Korean  affiliate and includes the period the
affiliate was owned by Ralston, its former parent corporation.  Earnings used in
calculating   benefits  under  the  severance  plan  previously   described  are


                                       72
<PAGE>

approximately  equal to amounts  included in the Salary and Bonus columns in the
Summary  Compensation Table on page 68. If Mr. Kim's employment with us had been
terminated  as of the end of fiscal year 2000,  his lump-sum  severance  payment
would have been $1,121,173 pursuant to this severance plan.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                       OWNERSHIP OF AGRIBRANDS SECURITIES

     The table  below lists the persons  known by us to  beneficially  own 5% or
more of the Company's Common Stock as of November 1, 2000.

<TABLE>
<CAPTION>

            Name and Address of                Number of Shares          % of Shares      Explanatory
             Beneficial Owner                 Beneficially Owned         Outstanding         Notes
            -------------------               ------------------         -----------      -----------
<S>                                               <C>                       <C>              <C>
Southeastern Asset Management, Inc.               1,137,384                 11.59%           (A)
6410 Poplar Ave., Suite 900
Memphis, TN  38119

Highbridge Capital Management, LLC                  775,000                  7.90%           (B)
767 Fifth Avenue
New York, NY  10153

Greenlight Capital LLC                              608,400                  6.20%           (C)
420 Lexington Ave., Suite 875
New York, NY  10170

Third Point Management Company
277 Park Avenue, 27th Floor                         505,400                  5.15%           (D)
New York, NY  10019

<FN>

(A)  Based on information  contained in Amendment No. 2 to Schedule 13G filed by
     Southeastern Asset Management, Inc. ("Southeastern"), an investment adviser
     registered  under  Section 203 of the  Investment  Advisors Act of 1940, O.
     Mason  Hawkins,  Chairman  of the  Board  and Chief  Executive  Officer  of
     Southeastern  and Longleaf  Partners  Small-Cap  Fund, a series of Longleaf
     Partners Funds Trust  ("Longleaf"),  an investment company registered under
     Section 8 of the  Investment  Company Act of 1940 on February 9, 2000.  The
     reporting persons have reported that, they owned in the aggregate 1,137,384
     shares.  Southeastern  has sole voting power with respect to 101,384 of the
     shares and shared  voting power with  Longleaf with respect to 1,015,400 of
     such shares and no voting power with  respect to 20,600 of such shares.  In
     addition,  Southeastern has sole dispositive  power with respect to 121,984
     of such shares and shared  dispositive  power with Longleaf with respect to
     1,015,400 of such shares. Mr. Hawkins has disclaimed  beneficial  ownership
     of all 1,137,384 of such shares.

(B)  Based on information  contained in Schedule 13D filed by Highbridge Capital
     Management,   LLC   ("Highbridge   Management")   and  Highbridge   Capital
     Corporation  (Highbridge  Capital") on August 18, 2000.  Each of Highbridge
     Capital and Highbridge  Management has shared voting power over all 775,000
     shares and shared dispositive power over all 775,000 shares.

                                       73
<PAGE>

(C)  Based on information contained in Schedule 13G which was filed with the SEC
     on April 14, 2000 by (i) Greenlight Capital LLC ("Greenlight");  (ii) David
     Einhorn;  and (iii)  Jeffrey  A.  Keswin.  Messrs.  Einhorn  and Keswin are
     principals of  Greenlight,  which company  provides  investment  management
     services to private individuals and institutions.  Each of Greenlight,  Mr.
     Einhorn and Mr.  Keswin have  reported that they have sole voting power and
     sole dispositive power with respect to all 608,400 shares.

(D)  Based on information contained in Schedule 13D which was filed with the SEC
     on September 15, 2000 by Daniel S. Loeb and Third Point Management  Company
     L.L.C ("Third  Point").  Each of Mr. Loeb and Third Point has shared voting
     power over all 505,400 shares and shared dispositive power over all 505,400
     shares.
</FN>
</TABLE>

           COMMON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
                                                         Options
       Directors                          Shares       Exercisable                       % of
          and                          Beneficially       Within                        Shares
   Executive Officers                     Owned          60 Days      Total         Outstanding(A)
----------------------------------------------------------------------------------------------------
<S>                                    <C>                 <C>          <C>               <C>
David R. Banks                            470              0               470            *
Jay W. Brown                            2,976              0             2,976            *
M. Darrell Ingram                       1,366 (B)          0             1,366            *
H. Davis McCarty                          921 (C)          0               921            *
Joe R. Micheletto                         100              0               100            *
Martin K. Sneider                       1,000              0             1,000            *
William P. Stiritz                     41,155 (D)          0            41,155            *
Bill G. Armstrong                       1,003 (E)          0             1,003            *
Ki Yong Kim                             2,000              0             2,000            *
Eric M. Poole                             750              0               750            *
David R. Wenzel                           725              0               725            *

All Officers and Directors             52,836              0            52,836            *
</TABLE>

     "Beneficial  Ownership"  includes  those  shares a  director  or  executive
officer has the power to vote or transfer,  as well as shares owned by immediate
family  members that reside with the  director or officer.  The table above also
indicates  shares  that may be  obtained  within  60 days upon the  exercise  of
options. An asterisk in the column listing the percentage of shares beneficially
owned  indicates the person owns less than 1% of the Common Stock as of November
1, 2000.

(A)  The  number of shares  outstanding  is the sum of (1) the  number  actually
     outstanding  on  November  1, 2000,  and (2) the number of shares of Common
     Stock  which  would  be  issued  if  all  options  listed  in  the  Options
     Exercisable Within 60 Days column were exercised.

(B)  Includes 26 shares of Common Stock held by Mr. Ingram's wife.

(C)  Includes 492 shares of Common Stock held in Mr.  McCarty's  wife's trust of
     which he serves as co-trustee.

(D)  Includes  4,615 shares of Common Stock owned by Mr.  Stiritz's wife and 934
     shares of Common Stock owned by Mr.  Stiritz's son. Mr.  Stiritz  disclaims
     beneficial ownership of shares of Common Stock owned by his wife and son.


                                       74
<PAGE>

(E)  Includes 3 shares of Common Stock owned by Mr. Armstrong's wife.


             Section 16(a) BENEFICIAL OWNERSHIP COMPLIANCE Reporting

     The  Company's  executive  officers and  directors  are required  under the
Securities  Exchange  Act of 1934 to file  reports of  ownership  and changes in
ownership  of common  stock of the  Company  with the  Securities  and  Exchange
Commission and the New York Stock Exchange. Copies of those reports must also be
furnished to the Company.

     Based solely on a review of the copies of reports  furnished to the Company
and written  representations  that no other reports were  required,  the Company
believes that during the preceding  year all filing  requirements  applicable to
executive  officers  and  directors  have been  complied  with,  except that one
transaction by Mr.  Micheletto was reported late and the initial Form 3 filed on
behalf of Mr. Ritzen  omitted shares held by him when he was elected a corporate
officer.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On August 7, 2000,  the  Company  and Ralcorp  Holdings,  Inc.  ("Ralcorp")
announced  that they had entered into an Agreement  and Plan of  Reorganization,
dated as of August 7, 2000 (the  "Agreement"),  which  sets  forth the terms and
conditions of the proposed merger of equals of Agribrands and Ralcorp.  Pursuant
to the Agreement,  Agribrands and Ralcorp will form a holding company  ("Holding
Company")  which will acquire all of the common stock of Agribrands  and Ralcorp
through  mergers of separate  subsidiaries  of the holding company with and into
each of Agribrands and Ralcorp (the "Reorganization").  Upon consummation of the
Reorganization,  the  shareholders  of  Agribrands  will receive three shares of
Holding  Company  stock  for  each  share of  Agribrands  stock  exchanged.  The
shareholders of Ralcorp will receive one share of Holding Company stock for each
share of  Ralcorp  stock  exchanged.  Alternatively,  shareholders  may elect to
receive $39 in cash per Agribrands  share or $15 in cash per Ralcorp  share.  At
least 80% of each  company's  shares  will be  converted  into  stock of Holding
Company.  Any excess cash  elections  will be reduced on a pro rata  basis.  See
Proposed Merger on page 19 for additional information.

     Ralcorp was formed in 1994 through a spin-off from Ralston  Purina  Company
("Ralston"),  and  Agribrands  was spun off from  Ralston  in 1998.  William  P.
Stiritz,  the Company's  Chairman,  Chief  Executive  Officer and President,  is
Chairman  of the Board of Ralcorp and  Chairman of the Board of Ralston.  Joe R.
Micheletto,  Chief Executive Officer,  President and a director of Ralcorp, is a
member of Agribrands  Board of Directors.  The Board of Directors of the Holding
Company is to consist of the current directors of Ralcorp and Agribrands.

                                       75

<PAGE>

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1.)  Financial Statements

     The  following  financial  statements  are filed as a part of this document
under Item 8. Financial Statements and Supplementary Data.

         Consolidated  Statement  of Earnings - for years ended August 31, 2000,
         1999 and 1998

         Consolidated Balance Sheet - for years ended August 31, 2000 and 1999

         Consolidated Statement of Cash Flows - for years ended August 31, 2000,
         1999 and 1998

         Consolidated Statement of Shareholders' Equity - for years ended August
         31, 2000, 1999, 1998, 1997 and 1996

         Consolidated  Statement of Comprehensive Income (loss)- for years ended
         August 31, 2000, 1999, 1998 and 1997

         Notes to Consolidated Financial Statements

         Report of Independent Accountants

(a)(2.)  Financial Statement Schedules

     All financial  statement  schedules have been included in the  consolidated
financial statements or are either not applicable or not significant.

(a)(3.)  Exhibits  (Listed by numbers corresponding to the Exhibit Table of Item
601 in Regulation S-K)

2.1      Agreement and Plan of  Reorganization  (Filed as Exhibit (10)(i) to the
         Company's 10-Q filed for the Quarter Ending February 28, 1998)

3.1      Articles of Incorporation of Agribrands  International,  Inc. (Filed as
         Exhibit 3.1 to the Company's Amendment No. 1 to Registration  Statement
         on Form 10 dated February 9, 1998)

3.2      Bylaws of Agribrands  International,  Inc. (Filed as Exhibit 3.2 to the
         Company's  Amendment No. 1 to  Registration  Statement on Form 10 dated
         February 9, 1998)

4.1      Rights Agreement (Filed as Exhibit 4.1 to the Company's Amendment No. 1
         to Registration Statement on Form 10 dated February 9, 1998)

10.1     Technology Transfer and License Agreement (Filed as Exhibit (10)(ii) to
         the Company's Form 10-Q for the Period Ending February 28, 1998)

10.2     Trademark  Agreement (Filed as Exhibit  (10)(iii) to the Company's Form
         10-Q for the Period Ending February 28, 1998)

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<PAGE>

10.3     Credit  Agreements  (Long and Short Term) (Filed as Exhibit (10)(iv) to
         the Company's Form 10-Q for the Period Ending February 28, 1998)

10.4     Tax Sharing Agreement (Filed as Exhibit 2.2 to the Company's  Amendment
         No. 3 to Registration Statement on Form 10 dated March 19, 1998)

10.5     Bridging Agreement (Filed as Exhibit 2.3 to the Company's Amendment No.
         3 to Registration Statement on Form 10 dated March 19, 1998)

*10.6    Incentive Stock Plan (Filed as Exhibit 10.1 to the Company's  Amendment
         No. 3 to Registration Statement on Form 10 dated March 19, 1998)

*10.7    Form of  Management  Continuity  Agreement  (Filed as Exhibit 10 to the
         Company's  Amendment No. 3 to  Registration  Statement on Form 10 dated
         February 9, 1998)

*10.8    Non-Qualified  Deferred Compensation Plan (Filed as Exhibit 10.2 to the
         Company's  Amendment No. 3 to  Registration  Statement on Form 10 dated
         March 19, 1998)

*10.9    Form of  Non-Qualified  Stock Option Agreement dated May 12, 1998, with
         Chief  Executive  Officer  of the  Company  (Filed as  Exhibit  10.1 to
         Company's Form 10-Q for the Period Ending May 31, 1998)

*10.10   Form of  Non-Qualified  Stock Option Agreement dated May 29, 1998, with
         certain executive officers of the Company (Filed as Exhibit 10.2 to the
         Company's Form 10-Q for the Period Ending May 31, 1998)

10.11    First Amendment to Agreement and Plan of  Reorganization  dated May 29,
         1998 (Filed as Exhibit 10.11 to the Company's  Form 10-K for the fiscal
         year ended August 31, 1998)

*10.12   Form of Notice of Stock Appreciation Right dated May 29, 1998 (Filed as
         Exhibit  10.12 to the  Company's  Form 10-K for the  fiscal  year ended
         August 31, 1998)

*10.13   Form of Indemnification Agreement between the Company and its Directors
         (Filed as Exhibit 10.13 to the Company's  Form 10-K for the fiscal year
         ended August 31, 1998)

*10.14   Form of Indemnification Agreement between the Company and its executive
         officers  (Filed as Exhibit  10.14 to the  Company's  Form 10-K for the
         fiscal year ended August 31, 1998)

*10.15   Financial Planning Reimbursement Program (Filed as Exhibit 10.15 to the
         Company's Form 10-K for the fiscal year ended August 31, 1998)

*10.16   Form of Split Dollar Life Insurance  Agreement  (Filed as Exhibit 10.16
         to the Company's Form 10-K for the fiscal year ended August 31, 1998)

*10.17   Form of letter  amending  the May 29, 1998  Non-Qualified  Stock Option
         Agreements  (Filed as Exhibit 10.17 to the Company's  Form 10-K for the
         fiscal year ended August 31, 1998)

10.18    Form of Separation Agreement with Gonzalo Dal Borgo dated April 7, 1999
         (Filed as Exhibit 10.1 to the Company's Form 10-Q for the period ending
         May 31, 1999)

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<PAGE>

10.19    Agreement  and Plan of  Reorganization,  dated as of  August  7,  2000,
         between the  Registrant and Ralcorp  Holdings,  Inc.  (incorporated  by
         reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K
         filed August 8, 2000)

*10.20   Form of Non-Qualified  Stock Option Agreements dated September 25, 1998
         with Directors of the Registrant

*10.21   Form of Employment  Agreement  with Bill G.  Armstrong  dated August 7,
         2000

*10.22   Form of Employment Agreement with David R. Wenzel dated August 7, 2000

10.23    Letter Waiving Vesting of Company Options from William P. Stiritz dated
         August 7, 2000

*10.24   Form of Amended Management Continuity Agreement and Tax Indemnification
         Agreement dated November 15, 2000

21       Subsidiaries of the Company

23       Consent of PricewaterhouseCoopers LLP

27       Financial Data Schedule

*        Denotes a management contract or compensatory plan or arrangement.

(b)      Reports on Form 8-K.

         On August 8, 2000 Agribrands filed a Current Report on Form 8-K.




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<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, as amended, Agribrands International, Inc. has duly caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                           AGRIBRANDS INTERNATIONAL, INC.


                                           /s/ William P. Stiritz
                                           -------------------------------------
                                           William P. Stiritz
                                           Chairman of the Board,
                                           Chief Executive Officer and President

Date:  November 28, 2000


     KNOW ALL MEN BY THESE PRESENTS, that the below-named directors and officers
of Agribrands International,  Inc. whose signature appears below constitutes and
appoints  Michael J. Costello and William P. Stiritz and each of them,  his true
and lawful  attorney-in-fact  and agent,  with full  power of  substitution  and
resolution,  for  him  and in his  name,  place,  and  stead,  in  any  and  all
capacities, to sign any and all amendments to this report, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange  Commission,  granting unto said  attorneys-in-fact  and
agents full power and  authority  to do and perform each and every act and thing
requisite and  necessary to be done in and about the  premises,  as fully and to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming  all that said  attorneys-in-fact  and agents or their  substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, as
amended,  this report has been signed by the following  persons on behalf of the
registrant and in the capacities and on the dates indicated.


SIGNATURE                    TITLE                             DATE

/s/ William P. Stiritz
-------------------------    Chairman of the Board,            November 28, 2000
William P. Stiritz           Chief Executive Officer,
                             and President

/s/ David R. Wenzel
-------------------------    Chief Financial Officer           November 28, 2000
David R. Wenzel

/s/ Douglas W. Faust
-------------------------    Controller                        November 28, 2000
Douglas W. Faust

/s/ David R. Banks
-------------------------    Director                          November 28, 2000
David R. Banks


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<PAGE>

/s/ Jay W. Brown
-------------------------    Director                          November 28, 2000
Jay W. Brown

/s/ M. Darrell Ingram
-------------------------    Director                          November 28, 2000
M. Darrell Ingram

/s/ H. Davis McCarty
-------------------------    Director                          November 28, 2000
H. Davis McCarty

/s/ Joe R. Micheletto
-------------------------    Director                          November 28, 2000
Joe R. Micheletto

/s/ Martin K. Sneider
-------------------------    Director                          November 28, 2000
Martin K. Sneider


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<PAGE>

                                                                Appendix A

                             Audit Committee Charter

Purpose:
-------

The  Audit  Committee  of the  Board of  Directors  shall  assist  the  Board in
fulfilling its responsibilities with respect to:

1.   the integrity of the financial statements of the Company;

2.   compliance by the Company with legal and regulatory requirements; and

3.   the  independence  and  performance of the Company's  internal and external
     auditors.

Composition of Audit Committee:
------------------------------

1.   The Audit Committee shall consist of at least three (3) members,  including
     a  chairman,  all of whom shall be members  of the Board.  Except  that the
     Committee  may appoint as Secretary,  an individual  who is not a member of
     the Board.

2.   Each member of the Audit Committee shall:

     a.   be  financially  literate  or willing to become  financially  literate
          within a reasonable period following appointment to the Committee.  At
          least one (1) member of the Audit Committee  shall possess  accounting
          or related financial management expertise;

     b.   be independent from management and the Company.  A former employee may
          not serve until three (3) years  following  termination  of employment
          with the Company;

     c.   be free of business  relationships with the Company,  unless the Board
          determines   in  its  exercise  of   independent   judgment  that  the
          relationship  does not  interfere  with the  individual's  exercise of
          independent judgment (subject to transitional rules);

     d.   not be  employed  as an  executive  of another  corporation  where any
          Company executive serves on that corporation's compensation committee;
          and

     e.   not be an  immediate  family  member of an  executive  officer  of the
          Company.


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<PAGE>


Quorum:
------

A majority of the members of the Audit Committee  shall  constitute a quorum for
all purposes and the act of a majority of the members  present at any meeting at
which a quorum is present shall be the act of the Committee.

Responsibilities:
----------------

The responsibilities of the Committee shall be as follows:

1.   To  recommend  annually  to the  Board  of  Directors  the  appointment  of
     independent public  accountants to examine the financial  statements of the
     Company and its subsidiaries;

2.   To meet with  representatives  of the  independent  public  accountants and
     internal auditor to review the annual audit risk assessment, proposed audit
     plans (internal and external),  the scope of audits, fees therefor, and the
     results of audits made;

3.   To review any matters and  recommendations  communicated to it from time to
     time by the independent public accountants and the internal auditor;

4.   To review all audit related and non-audit  services rendered to the Company
     or its  subsidiaries  by the independent  public  accountants and the costs
     therefor;

5.   Review with management and the independent public  accountants,  the annual
     financial  statements and results of the  independent  accountant's  audit,
     including  the  independent   accountants'  judgment  on  the  quality  and
     consistent application of accounting principles, disclosures and underlying
     estimates in the annual financial  statements prior to filing with the SEC.
     Based upon this  review,  recommend  to the full  Board that the  company's
     financial statement be included in the Form 10-K;

6.   To review the  adequacy  of Company  policies  and  principles  followed on
     financial and accounting  practices,  internal  controls,  internal audits,
     financial  risks,  legal  compliance,   ethical  and  responsible  business
     conduct, and review the results and the adequacy of programs and procedures
     for compliance with such policies.

7.   To  meet  with  management,   the  internal  auditor  and  the  independent
     accountants,  either  telephonically  or in person,  to review the  interim
     financial  statements and results of the independent  accountants'  review,
     including  the  independent   accountant's  judgment  on  the  quality  and
     consistent application of accounting principles, disclosures and underlying
     estimates in the interim financial statements prior to filing with the SEC,
     if any member of the  Committee,  management,  the internal  auditor or the
     independent public  accountants have identified any material  accounting or
     reporting  issues  which  should be  considered  by the  Committee so as to
     reduce the  likelihood of  restatements  or other  year-end  adjustments or
     which would enhance the reliability of the financial information therein.

8.   To consider for approval any material  change in  accounting  principles by
     the Company and its subsidiaries and report and make recommendations to the
     Board of Directors with respect to any such change;

9.   To  periodically  meet with or receive  reports  from  principal  corporate
     officers and/or the internal auditor and/or independent public

                                       82
<PAGE>

     accountants  and  to  take  appropriate   action  with  respect  to  legal,
     regulatory,   environmental,   new  or  proposed  auditing,  accounting  or
     reporting standards;

10.  To review the independence of the public accountants, by receiving not less
     frequently than annually a formal written statement of the relationships or
     services supplied by the independent public accountants that may impact the
     objectivity and independence of the independent public accountants,  and to
     recommend appropriate acti7on for the Board of Directors to take to satisfy
     itself of the outside auditor's independence; and

11.  Prepare the report  required to be included in the  Company's  annual proxy
     statement.

Annual Review:
-------------
This Charter shall be reviewed by the Audit  Committee not less  frequently than
annually  and when the  composition  of Audit  Committee  changes.  Submit  this
Charter for  approval of the full Board at least  every three  years.  Following
each review but not less frequently than annually, the Secretary shall file with
the New York Stock Exchange the Written Affirmation.



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