##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-Q
  þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    March 31, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934   Commission file number
    333-123614
  PAHC Holdings
    Corporation
 (Exact name of registrant as
    specified in its charter)
  Delaware

20-2297654(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   65 Challenger Road, Ridgefield Park, New Jersey 07660
 (Address
    of principal executive
    offices)             (Zip
    Code)
  (201) 329-7300
 (Registrants telephone
    number, including area code)
   þ o
  Rule 12b-2
  Large
    accelerated
    filer  o  Accelerated
    filer  o  Non-accelerated
    filer  þ  Rule 12b-2 o þ
    Class A Common Stock, $.10 par value: 12,600.00
 Class B Common Stock, $.10 par value: 11,888.50




---



##### 



PAHC
    HOLDINGS CORPORATION
  TABLE OF CONTENTS
  PagePART IFINANCIAL
    INFORMATIONItem 1.


Condensed
    Consolidated Financial Statements (Unaudited)


3Condensed
    Consolidated Balance Sheets


4Condensed
    Consolidated Statements of Operations and Comprehensive
    (Loss)


5Condensed
    Consolidated Statements of Changes in Stockholders
    Deficit


6Condensed
    Consolidated Statements of Cash Flows


7Notes to Condensed
    Consolidated Financial Statements


8Item 2.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


27Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk


36Item 4.


Controls and
    Procedures


36PART IIOTHER
    INFORMATIONItem 1.


Legal
    Proceedings


38Item 5.


Other
    Information


38Item 6.


Exhibits


38SIGNATURES


39EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-31.3: CERTIFICATIONEX-32: CERTIFCATIONS   2




---



##### Table of Contents



Form 10-Q Form 10-K and/or Form 10-Q Form 10-Q and/or
 PART I  FINANCIAL
    INFORMATION  Item 1.
    Condensed
    Consolidated Financial Statements (Unaudited) 3




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS  March 31,


June 30,2006


2005(Unaudited)(In thousands)ASSETSCurrent assetsCash and cash equivalents

$
10,230


$
13,597Accounts receivable, net


60,009



56,417Inventories


93,911



96,621Prepaid expenses and other current
    assets


10,832



12,787Total current assets


174,982



179,422Property, plant and equipment, net


48,972



49,960Intangibles, net


9,096



10,201Other assets


12,474



15,903Total assets

$
245,524


$
255,486LIABILITIES AND
    STOCKHOLDERS DEFICITCurrent liabilitiesLoans payable to banks

$



$
8,038Current portion of long-term debt


223



1,625Accounts payable


38,781



36,606Accrued expenses and other current
    liabilities


55,734



54,291Total current liabilities


94,738



100,560Long-term debt


210,682



207,192Other liabilities


23,231



21,465Total liabilities


328,651



329,217Commitments and contingenciesStockholders deficitPreferred stock


521



521Common stock


2



2Paid-in capital


860



860Accumulated deficit


(88,406
)


(76,786
)Accumulated other comprehensive
    incomeGain on derivative instruments,
    net of income taxes


79



123Cumulative foreign currency
    translation adjustment, net of income taxes


3,817



1,549Total stockholders deficit


(83,127
)


(73,731
)Total liabilities and
    stockholders deficit

$
245,524


$
255,486    4




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
    COMPREHENSIVE (LOSS)  Three Months Ended


Nine Months EndedMarch 31,


March 31,2006


2005


2006


2005(Unaudited)(In thousands)Net sales

$
100,905


$
90,255


$
293,211


$
269,169Cost of goods sold (includes
    Belgium Plant Transactions costs of $975 and $4,372 for the
    three months ended March 31, 2006 and 2005, respectively,
    and $10,211 and $13,908 for the nine months ended March 31,
    2006 and 2005, respectively)


76,442



71,504



229,343



214,682Gross profit


24,463



18,751



63,868



54,487Selling, general and
    administrative expenses


17,559



17,019



49,445



49,771Operating income


6,904



1,732



14,423



4,716Interest expense


8,513



7,658



24,577



19,557Interest (income)


(56
)


(44
)


(271
)


(102
)Other (income) expense, net


31



77



(2,561
)


(691
)Income (loss) from continuing
    operations before income taxes


(1,584
)


(5,959
)


(7,322
)


(14,048
)Provision for income taxes


1,591



773



4,298



699(Loss) from continuing operations


(3,175
)


(6,732
)


(11,620
)


(14,747
)Income from discontinued
    operations, net of income taxes






272







575Net (loss)


(3,175
)


(6,460
)


(11,620
)


(14,172
)Other comprehensive income (loss):Change in derivative instruments,
    net of income taxes


76



(27
)


(44
)


295Change in foreign currency
    translation adjustment, net of income taxes


2,482



(1,207
)


2,268



7,104Comprehensive (loss)

$
(617
)

$
(7,694
)

$
(9,396
)

$
(6,773
)Net (loss)


(3,175
)


(6,460
)


(11,620
)


(14,172
)Excess of the reduction of
    Series B and C preferred stock over total assets divested
    and costs and liabilities incurred on the Prince Transactions






4,000







4,973Dividends and equity value
    adjustment on Series C preferred stock






(3,582
)






(1,723
)Net (loss) attributable to common
    stockholders

$
(3,175
)

$
(6,042
)

$
(11,620
)

$
(10,922
)    5




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
    STOCKHOLDERS DEFICIT
    For the Three Months and Nine Months Ended March 31,
    2006  AccumulatedPreferred


Common








OtherStock


Stock


Paid-in


Accumulated


ComprehensiveSeries A


Class A


Class B


Capital


Deficit


Income (Loss)


Total(Unaudited)(In thousands)Balance as of June 30, 2005

$
521


$
1


$
1


$
860


$
(76,786
)

$
1,672


$
(73,731
)Change in derivative instruments,
    net of income taxes






















100



100Change in foreign currency
    translation adjustment, net of income taxes






















2,040



2,040Net (loss)


















(4,385
)






(4,385
)Balance as of September 30,
    2005

$
521


$
1


$
1


$
860


$
(81,171
)

$
3,812


$
(75,976
)Change in derivative instruments,
    net of income taxes






















(220
)


(220
)Change in foreign currency
    translation adjustment, net of income taxes






















(2,254
)


(2,254
)Net (loss)


















(4,060
)






(4,060
)Balance as of December 31, 2005

$
521


$
1


$
1


$
860


$
(85,231
)

$
1,338


$
(82,510
)Change in derivative instruments,
    net of income taxes






















76



76Change in foreign currency
    translation adjustment, net of income taxes






















2,482



2,482Net (loss)


















(3,175
)






(3,175
)Balance as of March 31, 2006

$
521


$
1


$
1


$
860


$
(88,406
)

$
3,896


$
(83,127
)    6




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  Nine Months Ended
    March 31,2006


2005(Unaudited)(In thousands)OPERATING ACTIVITIESNet (loss)

$
(11,620
)

$
(14,172
)Adjustment for discontinued
    operations






(575
)(Loss) from continuing operations


(11,620
)


(14,747
)Adjustments to reconcile (loss)
    from continuing operations to net cash provided (used) by
    operating activities:Depreciation and amortization
    (includes accelerated depreciation from the Belgium Plant
    Transactions of $4,533 and $3,628 for the nine months ended
    March 31, 2006 and 2005, respectively)


11,849



11,586Amortization of deferred financing
    costs


3,050



2,256Deferred income taxes


(424
)


(202
)Net gain from sales of assets


(464
)


(789
)Effects of changes in foreign
    currency


(226
)


(760
)Other


(428
)


430Changes in operating assets and
    liabilities:Accounts receivable


(4,041
)


4,460Inventories


4,006



(16,378
)Prepaid expenses and other current
    assets


2,845



1,647Other assets


121



(618
)Accounts payable


2,104



(11,378
)Accrued expenses and other
    liabilities


2,858



9,895Accrued expenses: non-completed
    transaction






(3,970
)Accrued expenses: Belgium Plant
    Transactions


(1,608
)


10,280Cash provided (used) by
    discontinued operations






808Net cash provided (used) by
    operating activities


8,022



(7,480
)INVESTING ACTIVITIESCapital expenditures


(11,244
)


(5,098
)Proceeds from Belgium Plant
    Transactions


7,997



Proceeds from sales of assets


1,934



1,353Other investing


(106
)


(119
)Discontinued operations






(93
)Net cash (used) by investing
    activities


(1,419
)


(3,957
)FINANCING ACTIVITIESNet increase (decrease) in book
    overdrafts


(27
)


1,930Net (decrease) in short-term debt


(8,038
)


(7,049
)Proceeds from long-term debt






53,292Payments of long-term debt and
    capital leases


(2,005
)


(3,913
)Redemption of Series C
    preferred stock






(26,400
)Debt financing costs






(3,766
)Net cash provided (used) by
    financing activities


(10,070
)


14,094Effect of exchange rate changes on
    cash


100



66Net increase (decrease) in cash
    and cash equivalents


(3,367
)


2,723Cash and cash equivalents at
    beginning of period


13,597



5,568Cash and cash equivalents at end
    of period

$
10,230


$
8,291Supplemental Cash Flow InformationInterest paid

$
11,552


$
10,431Income taxes paid


2,814



1,130Capital lease additions


522



    7




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES
    TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 (In thousands)
  1.
    General  Principles
    of Consolidation and Basis of Presentation
          Form 10-K
  Risks,
    Uncertainties and Liquidity
  and/or 7 8
 8




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
             New
    Accounting Pronouncements
       9




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
     and/or and/or and/or and/or and/or
  2.
    Balance
    Sheet Information  As ofMarch 31, 2006


June 30, 2005Accounts receivable,
    netTrade accounts receivable

$
58,325


$
54,178Less: allowance for doubtful
    accounts


1,307



1,372Trade accounts receivable, net


57,018



52,806Other receivables


2,991



3,611Total

$
60,009


$
56,417InventoriesRaw materials

$
19,816


$
23,703Work-in-process


869



434Finished goods


73,226



72,484Total

$
93,911


$
96,621Property, plant and equipment,
    netLand

$
4,225


$
6,250Buildings and improvements


21,472



25,967Machinery and equipment


101,129



108,762126,826



140,979Less: accumulated depreciation


77,854



91,019Total

$
48,972


$
49,960 10




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
  As ofMarch 31, 2006


June 30, 2005Intangibles, netCost

$
14,918


$
14,907Less: accumulated amortization


5,822



4,706Total

$
9,096


$
10,201       3.
    Belgium
    Plant Transactions  cleaning-up
     11




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
     Belgium Plant Transactions
    CostsTwelve Months


Three Months Ended


Nine MonthsEnded


September 30,


December 31,


March 31,


Ended


CumulativeJune 30, 2005


2005


2005


2006


March 31, 2006


TotalIncremental depreciation

$
7,467


$
2,747


$
1,786


$



$
4,533


$
12,000Employee termination expenses


12,808



287



699







986



13,794Other transaction-related expenses


1,916



979



3,759



975



5,713



7,629Net (gain) on the curtailment and
    settlement of the pension plan










(432
)






(432
)


(432
)(Gain) on the sale of the Belgium
    Plant and excess land






(510
)


(79
)






(589
)


(589
)$
22,191


$
3,503


$
5,733


$
975


$
10,211


$
32,402           4.
    Discontinued
    Operations   12




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
     Three Months Ended


Nine Months EndedMarch 31, 2005


March 31, 2005Net sales

$
1,487


$
3,908Cost of goods sold


924



2,590Selling, general and
    administrative expenses


174



511Other expense


5



6Income before income taxes


384



801Provision for income taxes


112



226Income from operations

$
272


$
575Depreciation and amortization

$
105


$
309   5.
    Debt  Loans
    Payable to Banks
         13




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
   Long-Term
    Debt
  As ofMarch 31, 2006


June 30, 2005Senior secured notes due
    December 1, 2007

$
127,491


$
127,491Senior subordinated notes due
    June 1, 2008


48,029



48,029Senior secured notes due
    February 10, 2010


34,231



30,691Foreign bank loans


701



2,606Capitalized lease obligations and
    other


453



210,905



208,817Less: current maturities


223



1,625$
210,682


$
207,192       6.
    Employee
    Benefit Plans      Three Months Ended


Nine Months EndedMarch 31,


March 31,2006


2005


2006


2005Domestic Pension
    ExpenseService
    cost  benefits earned during the period

$
394


$
291


$
1,201


$
915Interest cost on benefit obligation


246



228



765



707Expected return on plan assets


(233
)


(218
)


(727
)


(676
)Amortization of initial
    unrecognized net transition (asset)






(1
)






(3
)Amortization of prior service cost


(34
)


(35
)


(108
)


(107
)Amortization of net actuarial loss


36







106



Net periodic pension
    expense  domestic

$
409


$
265


$
1,237


$
836Belgium Pension
    ExpenseService
    cost  benefits earned during the period

$
73


$
131


$
288


$
367Interest cost on benefit obligation


168



105



386



314Expected return on plan assets


(128
)


(84
)


(290
)


(263
)Amortization of prior service cost


4







5



Amortization of net actuarial loss






6



18



7Curtailment benefit










(508
)


Settlement charges










76



Net periodic pension (benefit)
    expense  Belgium

$
117


$
158


$
(25
)

$
425  14




---



##### Table of Contents





PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES




NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)


(Unaudited)


















|                                                           |  |                |        |   |               |   |        |  
|---------------------------------------------------------- |  | -------------- | ------ | - | ------------- | - | ------ | -
|                                                           |  | As of          |        |   | As of         |  
|                                                           |  | March 31, 2006 |        |   | June 30, 2005 |  
|                                                          
|Benefit obligation                                         |  | $              | 6,465  |   |               | $ | 11,264 |  
|Fair value of plan assets                                  |  |                | 5,031  |   |               |   | 7,408  |  
|                                                           |  |                |        |   |               |   |        |  
|Funded status of the plan                                  |  |                | (1,434 | ) |               |   | (3,856 | )
|Unrecognized net actuarial loss
    and prior service cost |  |                | 255    |   |               |   | 2,002  |  
|                                                           |  |                |        |   |               |   |        |  
|(Accrued) pension liability                                |  |                | (1,179 | ) |               |   | (1,854 | )
|                                                           |  |                |        |   |               |   |        |  





|   |              
|-- | -------------
|7. | Contingencies



Litigation














15



---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
     Environmental
    Remediation
    and/or
        8.
    Business
    Segments   16




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
    Three Months Ended


Nine Months EndedMarch 31,


March 31,2006


2005


2006


2005Net SalesAnimal Health & Nutrition

$
79,733


$
68,405


$
233,471


$
203,699Industrial Chemicals


10,264



13,412



31,992



40,047Distribution


10,908



8,438



27,748



25,423Corporate














$
100,905


$
90,255


$
293,211


$
269,169Operating IncomeAnimal Health & Nutrition

$
9,671


$
3,157


$
20,045


$
8,856Industrial Chemicals


(35
)


1,371



2,078



3,541Distribution


1,705



1,158



4,366



3,414Corporate


(4,437
)


(3,954
)


(12,066
)


(11,095
)$
6,904


$
1,732


$
14,423


$
4,716Depreciation and
    AmortizationAnimal Health & Nutrition

$
1,469


$
5,303


$
10,148


$
10,203Industrial Chemicals


668



374



1,466



1,190Distribution


6



6



18



14Corporate


70



63



217



179$
2,213


$
5,746


$
11,849


$
11,586   At


AtMarch 31,


June 30,2006


2005Identifiable AssetsAnimal Health & Nutrition

$
195,538


$
204,799Industrial Chemicals


21,522



21,473Distribution


9,680



8,092Corporate


18,784



21,122$
245,524


$
255,486  17




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
     Three Months Ended


Nine Months EndedMarch 31,


March 31,2006


2005


2006


2005Depreciation expense

$



$
3,095


$
4,533


$
3,628Employee termination and other
    transaction-related expenses


975



1,277



5,678



10,280$
975


$
4,372


$
10,211


$
13,908   9.
    Consolidating
    Financial Statements           18




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
   CONDENSED
    CONSOLIDATING BALANCE SHEET
 As of March 31, 2006
  U.S. Guarantor


Dutch


Belgium


Non-Guarantor


Consolidation


PAHC





Consolidation


HoldingsPAHC


Subsidiaries


Issuer


Guarantor


Subsidiaries


Adjustments


Consolidated


Holdings


Adjustments


ConsolidatedASSETSCurrent assetsCash and cash equivalents

$
567


$
844


$
81


$
484


$
7,776


$



$
9,752


$
478


$



$
10,230Accounts receivable, net


4,183



27,443







2,884



25,499







60,009











60,009Inventory


2,984



35,298







22,346



33,283







93,911











93,911Prepaid expenses and other


3,030



445



7



1,003



6,347







10,832











10,832Total current assets


10,764



64,030



88



26,717



72,905







174,504



478







174,982Property, plant &
    equipment, net


1,031



11,554







467



35,920







48,972











48,972Intangibles, net






3,508







1,182



4,406







9,096











9,096Other assets


9,617



721











896







11,234



1,240







12,474Investment in subsidiaries


103,088







(24,724
)






(1,007
)


(77,357
)






(48,865
)


48,865



Intercompany


10,775



103,298



30,847



(1,764
)


(20,818
)


(122,338
)














Total assets

$
135,275


$
183,111


$
6,211


$
26,602


$
92,302


$
(199,695
)

$
243,806


$
(47,147
)

$
48,865


$
245,524LIABILITIES AND
    STOCKHOLDERS EQUITY (DEFICIT)Current liabilitiesLoan payable to banks

$



$



$



$



$



$



$



$



$



$
Current portion of long-term debt


















223







223











223Accounts payable


1,950



23,067







644



13,120







38,781











38,781Accrued expenses and other


19,469



8,108



1,021



11,796



13,591







53,985



1,749







55,734Total current liabilities


21,419



31,175



1,021



12,440



26,934







92,989



1,749







94,738Long-term debt


151,236







24,284







931







176,451



34,231







210,682Other liabilities


11,485



5,461







4,900



1,385







23,231











23,231Intercompany debt






26,581



5,654



33,986



56,117



(122,338
)














Total liabilities


184,140



63,217



30,959



51,326



85,367



(122,338
)


292,671



35,980







328,651Stockholders equity (deficit)Preferred stock


521























521



521



(521
)


521Common stock


2



33















(33
)


2



2



(2
)


2Paid-in capital


27,260



108,383



21



52



(21
)


(108,435
)


27,260



860



(27,260
)


860Retained earnings (accumulated
    deficit)


(80,544
)


11,738



(28,696
)


(28,703
)


6,727



38,934



(80,544
)


(88,406
)


80,544



(88,406
)Accumulated other comprehensive
    income (loss)Gain on derivative instruments, net
    of income taxes


79



79















(79
)


79



79



(79
)


79Cumulative currency translation
    adjustment, net of income taxes


3,817



(339
)


3,927



3,927



229



(7,744
)


3,817



3,817



(3,817
)


3,817Total stockholders equity
    (deficit)


(48,865
)


119,894



(24,748
)


(24,724
)


6,935



(77,357
)


(48,865
)


(83,127
)


48,865



(83,127
)Total liabilities and
    stockholders equity (deficit)

$
135,275


$
183,111


$
6,211


$
26,602


$
92,302


$
(199,695
)

$
243,806


$
(47,147
)

$
48,865


$
245,524  19




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
   CONDENSED
    CONSOLIDATING STATEMENT OF OPERATIONS
 For the Three Months Ended March 31, 2006
  U.S. Guarantor


Dutch


Belgium


Non-Guarantor


Consolidation


PAHC





Consolidation


HoldingsPAHC


Subsidiaries


Issuer


Guarantor


Subsidiaries


Adjustments


Consolidated


Holdings


Adjustments


ConsolidatedNet sales

$
8,654


$
61,887


$



$
2,240


$
28,124


$



$
100,905


$



$



$
100,905Net
    sales  intercompany


265











3,837



2,863



(6,965
)














Cost of goods sold (includes
    Belgium Plant Transactions costs of $975)


6,523



46,518







5,788



24,578



(6,965
)


76,442











76,442Gross profit


2,396



15,369







289



6,409







24,463











24,463Selling, general and administrative
    expenses


5,398



7,637



7



766



3,719







17,527



32







17,559Operating income (loss)


(3,002
)


7,732



(7
)


(477
)


2,690







6,936



(32
)






6,904Interest expense


5,593







789



66



278







6,726



1,787







8,513Interest (income)


(10
)


(15
)










(28
)






(53
)


(3
)






(56
)Other (income) expense, net






598







(227
)


(340
)






31











31Intercompany interest and other


(6,053
)


5,133



(796
)


1,096



620



















(Profit) loss relating to
    subsidiaries


(1,579
)






1,412











167







1,359



(1,359
)


Income (loss) before income taxes


(953
)


2,016



(1,412
)


(1,412
)


2,160



(167
)


232



(3,175
)


1,359



(1,584
)Provision for income taxes


406



145











1,040







1,591











1,591Net income (loss)

$
(1,359
)

$
1,871


$
(1,412
)

$
(1,412
)

$
1,120


$
(167
)

$
(1,359
)

$
(3,175
)

$
1,359


$
(3,175
)  20




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
   CONDENSED
    CONSOLIDATING STATEMENT OF OPERATIONS
 For the Nine Months Ended March 31, 2006
  U.S. Guarantor


Dutch


Belgium


Non-Guarantor


Consolidation


PAHC





Consolidation


HoldingsPAHC


Subsidiaries


Issuer


Guarantor


Subsidiaries


Adjustments


Consolidated


Holdings


Adjustments


ConsolidatedNet sales

$
23,080


$
177,603


$



$
9,208


$
83,320


$



$
293,211


$



$



$
293,211Net
    sales  intercompany


380



48







24,068



8,527



(33,023
)














Cost of goods sold (includes
    Belgium Plant Transactions costs of $10,211)


16,801



134,066







35,387



76,112



(33,023
)


229,343











229,343Gross profit


6,659



43,585







(2,111
)


15,735







63,868











63,868Selling, general and administrative
    expenses


15,053



20,903



46



1,888



11,482







49,372



73







49,445Operating income (loss)


(8,394
)


22,682



(46
)


(3,999
)


4,253







14,496



(73
)






14,423Interest expense


16,754







2,367



115



(53
)






19,183



5,394







24,577Interest (income)


(78
)


(24
)










(157
)






(259
)


(12
)






(271
)Other (income) expense, net


1



347



(2
)


(171
)


(2,736
)






(2,561
)










(2,561
)Intercompany interest and other


(18,430
)


15,388



(2,390
)


3,287



2,145



















(Profit) loss relating to
    subsidiaries


(1,442
)






7,230











(5,788
)






6,165



(6,165
)


Income (loss) before income taxes


(5,199
)


6,971



(7,251
)


(7,230
)


5,054



5,788



(1,867
)


(11,620
)


6,165



(7,322
)Provision for income taxes


966



421











2,911







4,298











4,298Net income (loss)

$
(6,165
)

$
6,550


$
(7,251
)

$
(7,230
)

$
2,143


$
5,788


$
(6,165
)

$
(11,620
)

$
6,165


$
(11,620
)  21




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
   CONDENSED
    CONSOLIDATING STATEMENT OF CASH FLOWS
 For the Nine Months Ended March 31, 2006
  U.S. Guarantor


Dutch


Belgium


Non-Guarantor


Consolidation


PAHC





Consolidation


HoldingsPAHC


Subsidiaries


Issuer


Guarantor


Subsidiaries


Adjustments


Consolidated


Holdings


Adjustments


ConsolidatedOPERATING ACTIVITIESNet income (loss)

$
(6,165
)

$
6,550


$
(7,251
)

$
(7,230
)

$
2,143


$
5,788


$
(6,165
)

$
(11,620
)

$
6,165


$
(11,620
)Adjustments to reconcile net income
    (loss) to net cash provided (used) by operating activities:Depreciation and amortization
    (includes accelerated depreciation from the Belgium Plant
    Transactions of $4,533)


217



2,407







5,712



3,513







11,849











11,849Amortization of deferred financing
    costs


2,486























2,486



564







3,050Deferred income taxes


















(424
)






(424
)










(424
)Net gain from sales of assets






200







(589
)


(75
)






(464
)










(464
)Effects of changes in foreign
    currency






68







162



(456
)






(226
)










(226
)Other


13



3







(432
)


(12
)






(428
)










(428
)Changes in operating assets and
    liabilities:Accounts receivable


(1,000
)


(3,410
)






1,185



(816
)






(4,041
)










(4,041
)Inventory


(315
)


865







7,414



(3,958
)






4,006











4,006Prepaid expenses and other


1,280



350



(7
)


757



465







2,845











2,845Other assets


295



(174
)


















121











121Accounts payable


267



2,758







(2,719
)


1,867







2,173



(69
)






2,104Accrued expenses and other


3,494



(1,237
)


804



(3,573
)


(1,472
)






(1,984
)


4,842







2,858Accrued expenses: Belgium Plant
    Transactions














(1,608
)










(1,608
)










(1,608
)Intercompany


5,681



(9,332
)


6,518



(6,768
)


9,689



(5,788
)






6,165



(6,165
)


Net cash provided (used) by
    operating activities


6,253



(952
)


64



(7,689
)


10,464







8,140



(118
)






8,022INVESTING ACTIVITIESCapital expenditures


(70
)


(1,619
)






(112
)


(9,443
)






(11,244
)










(11,244
)Proceeds from Belgium Plant
    Transactions














7,997











7,997











7,997Proceeds from sale of assets






1,655







42



237







1,934











1,934Other investing


(106
)






















(106
)










(106
)Net cash provided (used) by
    investing activities


(176
)


36







7,927



(9,206
)






(1,419
)










(1,419
)FINANCING ACTIVITIESNet (decrease) in book overdrafts






(27
)


















(27
)










(27
)Net (decrease) in short-term debt


(8,000
)














(38
)






(8,038
)










(8,038
)Payments of long-term debt


















(2,005
)






(2,005
)










(2,005
)Net cash (used) by financing
    activities


(8,000
)


(27
)










(2,043
)






(10,070
)










(10,070
)Effect of exchange rate changes on
    cash














(9
)


109







100











100Net increase (decrease) in cash and
    cash equivalents


(1,923
)


(943
)


64



229



(676
)






(3,249
)


(118
)






(3,367
)Cash and cash equivalents at
    beginning of period


2,490



1,787



17



255



8,452







13,001



596







13,597Cash and cash equivalents at end of
    period

$
567


$
844


$
81


$
484


$
7,776


$



$
9,752


$
478


$



$
10,230  22




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
   CONDENSED
    CONSOLIDATING BALANCE SHEET
    As of June 30, 2005
  U.S. Guarantor


Dutch


Belgium


Non-Guarantor


Consolidation


PAHC





Consolidation


HoldingsPAHC


Subsidiaries


Issuer


Guarantor


Subsidiaries


Adjustments


Consolidated


Holdings


Adjustments


ConsolidatedASSETSCurrent assetsCash and cash equivalents

$
2,490


$
1,787


$
17


$
255


$
8,452


$



$
13,001


$
596


$



$
13,597Accounts receivable, net


3,377



25,762







4,784



22,494







56,417











56,417Inventory


2,669



36,289







29,691



27,972







96,621











96,621Prepaid expenses and other


4,118



921







1,203



6,545







12,787











12,787Total current assets


12,654



64,759



17



35,933



65,463







178,826



596







179,422Property, plant &
    equipment, net


1,178



13,564







8,122



27,096







49,960











49,960Intangibles, net






3,827







1,339



5,035







10,201











10,201Other assets


12,303



796











971







14,070



1,833







15,903Investment in subsidiaries


101,464







(17,469
)










(83,995
)






(44,924
)


44,924



Intercompany


9,384



93,463



31,103



(1,427
)


(14,325
)


(118,198
)














Total assets

$
136,983


$
176,409


$
13,651


$
43,967


$
84,240


$
(202,193
)

$
253,057


$
(42,495
)

$
44,924


$
255,486LIABILITIES AND
    STOCKHOLDERS EQUITY (DEFICIT)Current liabilitiesLoan payable to banks

$
8,000


$



$



$



$
38


$



$
8,038


$



$



$
8,038Current portion of long-term debt


















1,625







1,625











1,625Accounts payable


1,683



20,327







3,320



11,207







36,537



69







36,606Accrued expenses and other


10,910



9,222



248



21,195



12,240







53,815



476







54,291Total current liabilities


20,593



29,549



248



24,515



25,110







100,015



545







100,560Long-term debt


151,236







24,284







981







176,501



30,691







207,192Other liabilities


10,078



5,364







1,856



4,167







21,465











21,465Intercompany debt






28,047



6,591



35,065



48,495



(118,198
)














Total liabilities


181,907



62,960



31,123



61,436



78,753



(118,198
)


297,981



31,236







329,217Stockholders equity (deficit)Preferred stock


521























521



521



(521
)


521Common stock


2



33















(33
)


2



2



(2
)


2Paid-in capital


27,260



108,383



21



52



1,537



(109,993
)


27,260



860



(27,260
)


860Retained earnings (accumulated
    deficit)


(74,379
)


5,188



(21,445
)


(21,473
)


6,074



31,656



(74,379
)


(76,786
)


74,379



(76,786
)Accumulated other comprehensive
    income (loss)Gain on derivative instruments, net
    of income taxes


123



123















(123
)


123



123



(123
)


123Cumulative currency translation
    adjustment, net of income taxes


1,549



(278
)


3,952



3,952



(2,124
)


(5,502
)


1,549



1,549



(1,549
)


1,549Total stockholders equity
    (deficit)


(44,924
)


113,449



(17,472
)


(17,469
)


5,487



(83,995
)


(44,924
)


(73,731
)


44,924



(73,731
)Total liabilities and
    stockholders equity (deficit)

$
136,983


$
176,409


$
13,651


$
43,967


$
84,240


$
(202,193
)

$
253,057


$
(42,495
)

$
44,924


$
255,486  23




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
   CONDENSED
    CONSOLIDATING STATEMENT OF OPERATIONS
    For the Three Months Ended March 31, 2005
  U.S. Guarantor


Dutch


Belgium


Non-Guarantor


Consolidation


PAHC





Consolidation


HoldingsPAHC


Subsidiaries


Issuer


Guarantor


Subsidiaries


Adjustments


Consolidated


Holdings


Adjustments


ConsolidatedNet sales

$
6,769


$
54,591


$



$
3,328


$
25,567


$



$
90,255


$



$



$
90,255Net
    sales  intercompany


44











9,787



2,115



(11,946
)














Cost of goods sold (includes
    Belgium Transactions costs of $4,372)


4,876



40,751







14,492



23,331



(11,946
)


71,504











71,504Gross profit


1,937



13,840







(1,377
)


4,351







18,751











18,751Selling, general and administrative
    expenses


4,929



7,520



8



736



3,826







17,019











17,019Operating income (loss)


(2,992
)


6,320



(8
)


(2,113
)


525







1,732











1,732Interest expense


5,779







652



15



311







6,757



901







7,658Interest (income)


(3
)














(16
)






(19
)


(25
)






(44
)Other (income) expense, net






587







301



(811
)






77











77Intercompany interest and other


(6,847
)


5,176



(797
)


1,095



1,373



















Loss relating to subsidiaries


3,755







3,505











(7,260
)






5,856



(5,856
)


Income (loss) from continuing
    operations before income taxes


(5,676
)


557



(3,368
)


(3,524
)


(332
)


7,260



(5,083
)


(6,732
)


5,856



(5,959
)Provision (benefit) for income taxes


180



171







(19
)


441







773











773Income (loss) from continuing
    operations


(5,856
)


386



(3,368
)


(3,505
)


(773
)


7,260



(5,856
)


(6,732
)


5,856



(6,732
)Income from discontinued
    operations, net of income taxes


















272







272











272Profit relating to discontinued
    operations


272



















(272
)






272



(272
)


Net income (loss)

$
(5,584
)

$
386


$
(3,368
)

$
(3,505
)

$
(501
)

$
6,988


$
(5,584
)

$
(6,460
)

$
5,584


$
(6,460
)  24




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
   CONDENSED
    CONSOLIDATING STATEMENT OF OPERATIONS
    For the Nine Months Ended March 31, 2005
  U.S. Guarantor


Dutch


Belgium


Non-Guarantor


Consolidation


PAHC





Consolidation


HoldingsPAHC


Subsidiaries


Issuer


Guarantor


Subsidiaries


Adjustments


Consolidated


Holdings


Adjustments


ConsolidatedNet sales

$
20,165


$
167,837


$



$
7,556


$
73,611


$



$
269,169


$



$



$
269,169Net
    sales  intercompany


137



131







20,447



5,534



(26,249
)














Cost of goods sold (includes
    Belgium Plant Transactions costs of $13,908)


14,840



125,433







35,276



65,382



(26,249
)


214,682











214,682Gross profit


5,462



42,535







(7,273
)


13,763







54,487











54,487Selling, general and administrative
    expenses


14,197



21,555



14



2,102



11,903







49,771











49,771Operating income (loss)


(8,735
)


20,980



(14
)


(9,375
)


1,860







4,716











4,716Interest expense


15,980







1,951



38



687







18,656



901







19,557Interest (income)


(5
)


(4
)










(68
)






(77
)


(25
)






(102
)Other (income) expense, net


4



213







90



(998
)






(691
)










(691
)Intercompany interest and other


(20,781
)


15,562



(2,113
)


2,976



4,356



















Loss relating to subsidiaries


9,244







11,009











(20,253
)






13,871



(13,871
)


Income (loss) from continuing
    operations before income taxes


(13,177
)


5,209



(10,861
)


(12,479
)


(2,117
)


20,253



(13,172
)


(14,747
)


13,871



(14,048
)Provision (benefit) for income taxes


694



470







(1,470
)


1,005







699











699Income (loss) from continuing
    operations


(13,871
)


4,739



(10,861
)


(11,009
)


(3,122
)


20,253



(13,871
)


(14,747
)


13,871



(14,747
)Income from discontinued
    operations, net of income taxes


















575







575











575Profit relating to discontinued
    operations


575



















(575
)






575



(575
)


Net income (loss)

$
(13,296
)

$
4,739


$
(10,861
)

$
(11,009
)

$
(2,547
)

$
19,678


$
(13,296
)

$
(14,172
)

$
13,296


$
(14,172
)  25




---



##### Table of Contents



PAHC
    HOLDINGS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
   CONDENSED
    CONSOLIDATING STATEMENT OF CASH FLOWS
    For the Nine Months Ended March 31, 2005
  U.S. Guarantor


Dutch


Belgium


Non-Guarantor


Consolidation


PAHC





Consolidation


HoldingsPAHC


Subsidiaries


Issuer


Guarantor


Subsidiaries


Adjustments


Consolidated


Holdings


Adjustments


ConsolidatedOPERATING ACTIVITIESNet income (loss)

$
(13,296
)

$
4,739


$
(10,861
)

$
(11,009
)

$
(2,547
)

$
19,678


$
(13,296
)

$
(14,172
)

$
13,296


$
(14,172
)Adjustment for discontinued
    operations


(575
)














(575
)


575



(575
)


(575
)


575



(575
)Income (loss) from continuing
    operations


(13,871
)


4,739



(10,861
)


(11,009
)


(3,122
)


20,253



(13,871
)


(14,747
)


13,871



(14,747
)Adjustments to reconcile income
    (loss) from continuing operations to net cash provided (used) by
    operating activities:Depreciation and amortization
    (includes accelerated depreciation from the Belgium Plant
    Transactions of $3,628)


179



2,113







5,880



3,414







11,586











11,586Amortization of deferred financing
    costs


2,130























2,130



126







2,256Deferred income taxes


















(202
)






(202
)










(202
)Net gain from sales of assets






(777
)










(12
)






(789
)










(789
)Effects of changes in foreign
    currency






(554
)






(87
)


(119
)






(760
)










(760
)Other


289



37











104







430











430Changes in operating assets and
    liabilities:Accounts receivable


(392
)


2,066







(575
)


3,361







4,460











4,460Inventory


(428
)


2,772







(9,857
)


(8,865
)






(16,378
)










(16,378
)Prepaid expenses and other


1,656



631







(1,277
)


637







1,647











1,647Other assets


(2
)


(241
)










(375
)






(618
)










(618
)Accounts payable


(1,610
)


(8,573
)






(152
)


(1,043
)






(11,378
)










(11,378
)Accrued expenses and other


4,707



1,285



650



237



2,241







9,120



775







9,895Accrued expenses:non-completed transaction


(3,970
)






















(3,970
)










(3,970
)Accrued expenses: Belgium Plant
    Transactions














10,280











10,280











10,280Intercompany


2,274



(4,843
)


5,926



7,605



9,291



(20,253
)






13,871



(13,871
)


Cash provided by discontinued
    operations


















808







808











808Net cash provided (used) by
    operating activities


(9,038
)


(1,345
)


(4,285
)


1,045



6,118







(7,505
)


25







(7,480
)INVESTING ACTIVITIESCapital expenditures


(909
)


(1,626
)






(726
)


(1,837
)






(5,098
)










(5,098
)Proceeds from sale of assets






1,320











33







1,353











1,353Other investing


(119
)










(154
)


154







(119
)


(26,400
)


26,400



(119
)Discontinued operations


















(93
)






(93
)










(93
)Net cash (used) by investing
    activities


(1,028
)


(306
)






(880
)


(1,743
)






(3,957
)


(26,400
)


26,400



(3,957
)FINANCING ACTIVITIESNet increase in book overdraft






1,930



















1,930











1,930Net increase (decrease) in
    short-term debt


(7,083
)














34







(7,049
)










(7,049
)Proceeds from long-term debt


19,107







4,284







901







24,292



29,000







53,292Payments of long-term debt






(103
)










(3,810
)






(3,913
)










(3,913
)Proceeds from capital contribution
    from PAHC Holdings Corporation


26,400























26,400







(26,400
)


Redemption of Series C
    preferred stock


(26,400
)






















(26,400
)










(26,400
)Debt financing costs


(2,027
)






















(2,027
)


(1,739
)






(3,766
)Net cash provided (used) by
    financing activities


9,997



1,827



4,284







(2,875
)






13,233



27,261



(26,400
)


14,094Effect of exchange rate changes on
    cash






8







16



42







66











66Net increase (decrease) in cash and
    cash equivalents


(69
)


184



(1
)


181



1,542







1,837



886







2,723Cash and cash equivalents at
    beginning of period


136



801



17



212



4,402







5,568











5,568Cash and cash equivalents at end of
    period

$
67


$
985


$
16


$
393


$
5,944


$



$
7,405


$
886


$



$
8,291  26




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    General
    Belgium
    Plant Transactions
  cleaning-up
     27




---



##### Table of Contents



Belgium Plant Transactions
    CostsTwelve Months


Three Months Ended


Nine MonthsEnded


September 30,


December 31,


March 31,


Ended


CumulativeJune 30, 2005


2005


2005


2006


March 31, 2006


Total(in thousands)Incremental depreciation

$
7,467


$
2,747


$
1,786


$



$
4,533


$
12,000Employee termination expenses


12,808



287



699







986



13,794Other transaction-related expenses


1,916



979



3,759



975



5,713



7,629Net (gain) on the curtailment and
    settlement of the pension plan










(432
)






(432
)


(432
)(Gain) on the sale of the Belgium
    Plant and excess land






(510
)


(79
)






(589
)


(589
)$
22,191


$
3,503


$
5,733


$
975


$
10,211


$
32,402           Risks and
    Uncertainties
  and/or 7 8
   28




---



##### Table of Contents



Summary
    Consolidated Results of Continuing Operations
  Three Months Ended
    March 31,


Nine Months Ended
    March 31,2006


2005


2006


2005(In thousands)Net sales

$
100,905


$
90,255


$
293,211


$
269,169Belgium plant transaction costs


975



4,372



10,211



13,908Gross profit


24,463



18,751



63,868



54,487Selling, general and administrative


17,559



17,019



49,445



49,771Operating income


6,904



1,732



14,423



4,716Interest expense, net


8,457



7,614



24,306



19,455Other (income) expense, net


31



77



(2,561
)


(691
)Provision (benefit) for income
    taxes


1,591



773



4,298



699Loss from continuing operations

$
(3,175
)

$
(6,732
)

$
(11,620
)

$
(14,747
)   Comparison
    of Three Months Ended March 31, 2006 and 2005
  Net Sales
  Gross Profit
  Selling, General and Administrative Expenses
 29




---



##### Table of Contents



Operating Income
  Interest Expense, Net
  Other (Income) Expense, Net
  Income Taxes
  Comparison
    of Nine Months Ended March 31, 2006 and 2005
  Net Sales
  Gross Profit
  Selling, General and Administrative Expenses
  Operating Income
  Interest Expense, Net
  Other (Income) Expense, Net
 30




---



##### Table of Contents



Income Taxes
  Operating
    Segments
    Three Months Ended
    March 31,


Nine Months Ended
    March 31,2006


2005


2006


2005(In thousands)Net SalesAnimal Health & Nutrition

$
79,733


$
68,405


$
233,471


$
203,699Industrial Chemicals


10,264



13,412



31,992



40,047Distribution


10,908



8,438



27,748



25,423Total

$
100,905


$
90,255


$
293,211


$
269,169Operating IncomeAnimal Health & Nutrition
    Excluding Belgium Plant Transactions

$
10,646


$
7,529


$
30,256


$
22,764Belgium Plant Transactions


(975
)


(4,372
)


(10,211
)


(13,908
)Total


9,671



3,157



20,045



8,856Industrial Chemicals


(35
)


1,371



2,078



3,541Distribution


1,705



1,158



4,366



3,414Corporate expenses and adjustments


(4,437
)


(3,954
)


(12,066
)


(11,095
)Total

$
6,904


$
1,732


$
14,423


$
4,716   Operating
    Segments Comparison of Three Months Ended March 31, 2006
    and 2005
  Animal
    Health and Nutrition
  Net Sales
  Operating Income
 31




---



##### Table of Contents



Specialty
    Chemicals
  Industrial Chemicals
  Distribution
  Operating
    Segments Comparison of Nine Months Ended March 31, 2006 and
    2005
  Animal
    Health and Nutrition
  Net Sales
  Operating Income
  Specialty
    Chemicals
  Industrial Chemicals
  Distribution
  Discontinued
    Operations
   32




---



##### Table of Contents







|                                                 |  |                    |       |  |                   |   |       | 
|------------------------------------------------ |  | ------------------ | ----- |  | ----------------- | - | ----- | 
|                                                 |  | Three Months Ended |       |  | Nine Months Ended |  
|                                                 |  | March 31, 2005     |       |  | March 31, 2005    |  
|                                                 |  | (In thousands)     |      
|                                                
|Net sales                                        |  | $                  | 1,487 |  |                   | $ | 3,908 | 
|Cost of goods sold                               |  |                    | 924   |  |                   |   | 2,590 | 
|Selling, general and
    administrative expenses |  |                    | 174   |  |                   |   | 511   | 
|Other expense                                    |  |                    | 5     |  |                   |   | 6     | 
|                                                 |  |                    |       |  |                   |   |       | 
|Income before income taxes                       |  |                    | 384   |  |                   |   | 801   | 
|Provision for income taxes                       |  |                    | 112   |  |                   |   | 226   | 
|                                                 |  |                    |       |  |                   |   |       | 
|Income from operations                           |  | $                  | 272   |  |                   | $ | 575   | 
|                                                 |  |                    |       |  |                   |   |       | 
|Depreciation and amortization                    |  | $                  | 105   |  |                   | $ | 309   | 
|                                                 |  |                    |       |  |                   |   |       | 





Liquidity
    and Capital Resources




Net Cash Provided (Used) by Operating
    Activities.




Net Cash Provided (Used) by Investing
    Activities.




Net Cash Provided (Used) by Financing
    Activities.




Working Capital and Capital
    Expenditures.








Liquidity.






33



---



##### Table of Contents















and/or 7 8








|                                                                             |  |                |        |  |                   |   |         |                   |  |   |              |  |  |       |       |  |  |   |         | 
|---------------------------------------------------------------------------- |  | -------------- | ------ |  | ----------------- | - | ------- | ----------------- |  | - | ------------ |  |  | ----- | ----- |  |  | - | ------- | 
|                                                                             |  | Within 1 Year  |        |  | Over 1 to 3 Years |   |         | Over 3 to 5 Years |  |   | Over 5 Years |  |  | Total |      
|                                                                             |  | (In thousands) |       
|                                                                            
|Loans payable to banks                                                       |  | $              |       |  |                   | $ |        |                   |  | $ |             |  |  | $     |      |  |  | $ |        | 
|Long-term debt (including current
    portion)                               |  |                | 223    |  |                   |   | 210,682 |                   |  |   |             |  |  |       |      |  |  |   | 210,905 | 
|Long-term debt
    (payment-in-kind
    notes)                             |  |                |       |  |                   |   | 7,257   |                   |  |   |             |  |  |       |      |  |  |   | 7,257   | 
|Interest payments                                                            |  |                | 21,954 |  |                   |   | 24,470  |                   |  |   |             |  |  |       |      |  |  |   | 46,424  | 
|Lease commitments                                                            |  |                | 1,407  |  |                   |   | 2,352   |                   |  |   | 1,682        |  |  |       | 1,078 |  |  |   | 6,519   | 
|Acquisition of rights                                                        |  |                | 350    |  |                   |   | 550     |                   |  |   |             |  |  |       |      |  |  |   | 900     | 
|Employee termination payments
    relating to the Belgium Plant Transactions |  |                | 10,333 |  |                   |   |        |                   |  |   |             |  |  |       |      |  |  |   | 10,333  | 
|Payments to GSK relating to the
    Belgium Plant Transactions               |  |                | 2,670  |  |                   |   | 3,642   |                   |  |   | 607          |  |  |       |      |  |  |   | 6,919   | 
|                                                                             |  |                |        |  |                   |   |         |                   |  |   |              |  |  |       |       |  |  |   |         | 
|Total contractual obligations                                                |  | $              | 36,937 |  |                   | $ | 248,953 |                   |  | $ | 2,289        |  |  | $     | 1,078 |  |  | $ | 289,257 | 
|                                                                             |  |                |        |  |                   |   |         |                   |  |   |              |  |  |       |       |  |  |   |         | 







34



---



##### Table of Contents



Critical
    Accounting Policies
    Form 10-K
  New
    Accounting Pronouncements
    Quantitative
    and Qualitative Disclosure About Market Risk
    Form 10-K
  Certain
    Factors Affecting Future Operating Results
  Forward-Looking
    Statements
  Form 10-Q
   35




---



##### Table of Contents




    our substantial leverage and potential inability to service our
    debt
    our dependence on distributions from our subsidiaries
    risks associated with our international operations and
    significant foreign assets
    our dependence on our Israeli operations
    competition in each of our markets
    potential environmental liability
    potential legislation affecting the use of medicated feed
    additives
    extensive regulation by numerous government authorities in the
    United States and other countries
    our reliance on the continued operation and sufficiency of our
    manufacturing facilities, including the transition of
    virginiamycin production to our Brazil facility
    our reliance upon unpatented trade secrets
    the risks of legal proceedings and general litigation expenses
    potential operating hazards and uninsured risks
    the risk of work stoppages
    our dependence on key personnel        Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk  Form 10-Q.
  Item 4.
    Controls
    and Procedures  Rule 15d-15(e)
 36




---



##### Table of Contents



37




---



##### Table of Contents



PART II  OTHER
    INFORMATION  Item 1.
    Legal
    Proceedings    Item 5.
    Other
    Information    Item 6.
    Exhibits  Exhibit No.

Description31
.1

Certification of Gerald K.
    Carlson, Chief Executive Officer, required by
    Rule 15d-14(a)
    of the Act.31
.2

Certification of Jack C. Bendheim,
    Chairman of the Board, required by
    Rule 15d-14(a)
    of the Act.31
.3

Certification of Richard G.
    Johnson, Chief Financial Officer, required by
    Rule 15d-14(a)
    of the Act.32


Section 1350 Certifications
    of PAHC Holdings Corporation.  38




---



##### Table of Contents



SIGNATURES  Pursuant to the requirements of the Securities Exchange Act
    of 1934, the registrant has duly caused this report to be signed
    on its behalf by the undersigned, thereunto duly authorized.
    By:
    /s/  JACK C. BENDHEIM  Jack C. Bendheim
 Chairman of the Board
    By:
    /s/  GERALD K. CARLSON  Gerald K. Carlson
 Chief Executive Officer
    By:
    /s/  RICHARD G. JOHNSON  Richard G. Johnson
 Chief Financial Officer
 (Principal Financial Officer and
 Principal Accounting Officer)
   39




---



##### Table of Contents



EXHIBIT
    INDEX
  Exhibit No.

Description31
.1

Certification of Gerald K.
    Carlson, Chief Executive Officer, required by
    Rule 15d-14(a)
    of the Act.31
.2

Certification of Jack C. Bendheim,
    Chairman of the Board, required by
    Rule 15d-14(a)
    of the Act.31
.3

Certification of Richard G.
    Johnson, Chief Financial Officer, required by
    Rule 15d-14(a)
    of the Act.32


Section 1350 Certifications
    of PAHC Holdings Corporation.