<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

   (Mark One)

   [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
       OF THE SECURITIES EXCHANGE ACT OF 1934.

       FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002 *

   [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934 FOR THE TRANSION PERIOD FROM _____ TO _____.
                        COMISSION FILE NUMBER 333-84486


                               LAND O'LAKES, INC.
             (Exact name of Registrant as specified in its charter)


            MINNESOTA                                     41-0365145
   (State or other jurisdiction of                       (IRS Employer
   incorporation or organization)                       Identification No.)


                           4001 LEXINGTON AVENUE NORTH
                          ARDEN HILLS, MINNESOTA 55126
              (Address of principal executive offices and zip code)


                                 (651) 481-2222
              (Registrant's telephone number, including area code)

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        No   X
    -----     ------


The number of shares of the registrant's common stock outstanding as of April
30, 2002: 1,163 shares of Class A common stock, 5,978 shares of Class B common
stock, 200 shares of Class C common stock, and 1,412 shares of Class D common
stock.

* Although Land O'Lakes is not currently required pursuant to Section 13
  or 15(d) of the Securities Exchange Act of 1934 to file this quarterly
  report, we are voluntarily filing this quarterly report on Form 10-Q.


<PAGE>



                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                                 PAGE
                                                                                                                 ----
<S>                                                                                                             <C>
 ITEM I. FINANCIAL STATEMENTS                                                                                     3
 LAND O'LAKES, INC.
 Financial Statements (unaudited) for the three months ended March 31, 2002 and 2001
 Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001...................................        3
 Consolidated Statements of Operations for the three months ended March 31, 2002 and 2001.................        4
 Consolidated Statements of Cash Flows for the three months ended March 31, 2002 and 2001.................        5
 Notes to Consolidated Financial Statements...............................................................        6
 LAND O'LAKES FARMLAND FEED LLC
 Financial Statements (unaudited) for the three months ended March 31, 2002  and 2001
 Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001...................................       17
 Consolidated Statements of Operations for the three months ended March 31, 2002 and 2001.................       18
 Consolidated Statements of Cash Flows for the three months ended March 31, 2002 and 2001.................       19
 Notes to Consolidated Financial Statements...............................................................       20

 ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...........       24

 ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......................................       46

 PART II.  OTHER INFORMATION

 ITEM 1.  LEGAL PROCEEDINGS...............................................................................       47

 ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K................................................................       48

 SIGNATURES...............................................................................................       49

</TABLE>

                                       2
<PAGE>


ITEM 1. FINANCIAL STATEMENTS

                               LAND O'LAKES, INC.

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>


                                                                      MARCH 31,    DECEMBER 31,
                                                                        2002           2001
                                                                    -------------  ------------
                                                                         ($ IN THOUSANDS)
                                                                            (UNAUDITED)
<S>                                                                <C>            <C>
                                             ASSETS
 Current assets:
   Cash and short-term investments.............................    $      13,801  $     130,169
   Receivables, net............................................          542,729        574,011
   Inventories.................................................          493,654        450,774
   Prepaid expenses............................................          109,528        185,490
   Other current assets........................................           26,691         27,038
                                                                   -------------  -------------
           Total current assets................................        1,186,403      1,367,482
 Investments...................................................          550,872        568,130
 Property, plant and equipment, net............................          660,393        675,277
 Goodwill, net.................................................          253,955        255,027
 Other intangibles, net........................................          103,123        108,987
 Other assets..................................................          123,594        116,475
                                                                   -------------  -------------
           Total assets........................................    $   2,878,340  $   3,091,378
                                                                   =============  =============

                                    LIABILITIES AND EQUITIES
 Current liabilities:
   Notes and short-term obligations............................    $      33,712  $      33,971
   Current portion of long-term debt...........................           57,681         19,546
   Accounts payable............................................          479,920        652,309
   Accrued expenses............................................          168,809        187,569
   Patronage refunds payable...................................           14,544         28,900
                                                                   -------------  -------------
           Total current liabilities...........................          754,666        922,295
 Long-term debt................................................        1,108,186      1,147,465
 Employee benefits and other liabilities.......................           82,706         82,801
 Deferred tax liabilities......................................           42,198         42,495
 Minority interests............................................           60,386         59,806
 Equities:
   Capital stock...............................................            2,292          2,305
   Member equities.............................................          799,668        805,860
   Retained earnings...........................................           28,238         28,351
                                                                   -------------  -------------
           Total equities......................................          830,198        836,516
                                                                   -------------  -------------
 Commitments and contingencies
 Total liabilities and equities................................    $   2,878,340  $   3,091,378
                                                                   =============  =============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       3
<PAGE>



                               LAND O'LAKES, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>


                                                           FOR THE THREE MONTHS ENDED
                                                                    MARCH 31,
                                                         -----------------------------
                                                              2002           2001
                                                         -------------- --------------
                                                               ($ IN THOUSANDS)
                                                                   (UNAUDITED)
<S>                                                       <C>            <C>
Net sales............................................     $  1,524,196   $  1,375,727
Cost of sales........................................        1,376,317      1,260,615
                                                          ------------   ------------
Gross profit.........................................          147,879        115,112
Selling and administration...........................          127,425         92,626
Restructuring and impairment charges (reversals).....            3,435           (966)
                                                          ------------   ------------
Earnings from operations.............................           17,019         23,452
Interest expense, net................................           17,547         11,752
Gain on sale of intangibles..........................           (4,184)            --
Equity in loss of affiliated companies...............            9,861             79
Minority interest in earnings of subsidiaries........              934          1,590
                                                          ------------   ------------
(Loss) earnings before income taxes..................           (7,139)        10,031
Income tax benefit...................................           (6,163)        (3,012)
                                                          ------------   ------------
Net (loss) earnings..................................     $       (976)  $     13,043
                                                          ============   ============
Applied to:
  Member equities
     Allocated patronage refunds.....................     $     11,574   $     13,104
     Deferred equities...............................          (12,086)        (1,314)
                                                          ------------   ------------
                                                                  (512)        11,790
  Retained earnings..................................             (464)         1,253
                                                          ------------   ------------
                                                          $       (976)  $     13,043
                                                          ============   ============
</TABLE>

          See accompanying notes to consolidated financial statements.



                                       4
<PAGE>



                               LAND O'LAKES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>


                                                                        FOR THE THREE MONTHS
                                                                           ENDED MARCH 31,
                                                                     ------------------------
                                                                         2002          2001
                                                                     ------------  ----------
                                                                          ($ IN THOUSANDS)
                                                                             (UNAUDITED)
<S>                                                                  <C>           <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
   Net (loss) earnings...........................................    $       (976) $    13,043
   Adjustments to reconcile net earnings to net cash used by
      operating activities:
      Depreciation and amortization..............................          27,504       21,267
      Bad debt expense...........................................             253          692
      Proceeds from patronage revolvement received...............             127          318
      Non-cash patronage income..................................            (923)        (625)
      Increase in other assets...................................            (824)      (1,175)
      Increase in other liabilities..............................          (1,208)         (49)
      Restructuring and impairment charges (reversals)...........           3,435         (966)
      Equity in loss of affiliated companies.....................           9,861           79
      Minority interests.........................................             934        1,590
      Other......................................................          (4,943)        (413)
   Changes in current assets and liabilities, net of
      acquisitions and divestitures:
      Receivables................................................          22,255      (60,356)
      Inventories................................................         (42,880)     (42,227)
      Other current assets.......................................          77,987      108,038
      Accounts payable...........................................        (172,389)     (62,299)
      Accrued expenses...........................................         (22,197)     (47,340)
                                                                     ------------  -----------
   Net cash used by operating activities.........................        (103,984)     (70,423)
 CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to property, plant and equipment....................         (17,674)     (18,302)
   Acquisitions, net of cash acquired............................              --      (13,300)
   Payments for investments......................................          (3,595)     (15,832)
   Proceeds from sale of investments.............................          21,009        1,623
   Proceeds from sale of property, plant and equipment...........           6,622          806
   Other.........................................................           3,121         (216)
                                                                     ------------  -----------
   Net cash provided (used) by investing activities..............           9,483      (45,221)
 CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase in short-term debt...................................          37,877      136,526
   Proceeds from issuance of long-term debt......................           1,688       24,575
   Payments on principal of long-term debt.......................         (41,734)     (24,124)
   Payments for redemption for member equities...................         (20,060)     (25,321)
   Other.........................................................             362           (6)
                                                                     ------------  -----------
   Net cash (used) provided by financing activities..............         (21,867)     111,650
                                                                     ------------  -----------
   Net decrease in cash..........................................        (116,368)      (3,994)
 Cash and cash equivalents at beginning of period................         130,169        3,994
                                                                     ------------  -----------
 Cash and cash equivalents at end of period......................    $     13,801  $        --
                                                                     ============  ===========
 Supplemental Disclosure of Cash Flow Information:
   Cash paid during period for:
      Interest, net of interest capitalized......................    $     16,924  $    16,075
      Income taxes paid (refunded)...............................    $     (7,080) $    18,097
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       5
<PAGE>



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           ($ IN THOUSANDS IN TABLES)
                                   (UNAUDITED)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    The unaudited consolidated financial statements reflect, in the opinion of
the management of Land O'Lakes, Inc. (the "Company"), all normal recurring
adjustments necessary for a fair statement of the financial position and results
of operations and cash flows for the interim periods. The statements are
condensed and, therefore do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. For furthur information, refer to the
audited consolidated financial statements and footnotes for the year ended
December 31, 2001 included in our Annual Report on Form 10-K. The results of
operations and cash flows for interim periods are not necessarily indicative of
results for a full year.

RECENT ACCOUNTING PRONOUNCEMENTS

    In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." Major provisions of these statements are as follows: all business
combinations must now use the purchase method of accounting, the pooling of
interests method of accounting is now prohibited; intangible assets acquired in
a business combination must be recorded separately from goodwill if they arise
from contractual or other legal rights or are separable from the acquired entity
and can be sold, transferred, licensed, rented or exchanged, either individually
or as a part of a related contract, asset or liability; goodwill and intangible
assets with indefinite lives are not amortized, but tested for impairment
annually, except in certain circumstances, and whenever there is an impairment
indicator; all acquired goodwill must be assigned to reporting units for
purposes of impairment testing and segment reporting. The Company has adopted
the provisions of SFAS 141 and certain provisions of SFAS 142 as of July 1,
2001, and the remaining provisions of SFAS 142 as of January 1, 2002. As
required by SFAS 142, the Company will perform step one of the impairment
testing of goodwill for the balances as of January 1, 2002 by June 30, 2002. The
Company will perform impairment tests annually and whenever events or
circumstances occur indicating that goodwill or other intangible assets might be
impaired. As of January 1, 2002, the Company is no longer amortizing goodwill,
except for goodwill related to the acquisition of cooperatives and the formation
of joint ventures.

    The following table presents a reconciliation of net earnings adjusted for
the exclusion of amortization of goodwill no longer required to be amortized,
net of income taxes:
<TABLE>
<CAPTION>

                                                         THREE MONTHS
                                                        ENDED MARCH 31,
                                                      -----------------
                                                       2002       2001
                                                      ------   ---------

<S>                                                   <C>      <C>
 Net (loss) earnings.............................     $ (976)  $  13,043
 Add back: Goodwill amortization, net of tax.....         --       1,210
                                                      ------   ---------
 Adjusted net (loss) earnings....................     $ (976)  $  14,253
                                                      ======   =========
</TABLE>


                                       6
<PAGE>

2.  GOODWILL AND OTHER INTANGIBLE ASSETS

    A summary of intangible assets follows:

<TABLE>
<CAPTION>
                                                       AS OF MARCH 31, 2002
                                                  -----------------------------
                                                  GROSS CARRYING    ACCUMULATED
                                                      AMOUNT       AMORTIZATION
                                                  --------------   ------------
<S>                                                  <C>            <C>
 Amortized intangible assets
   Trademarks..................................      $   4,678      $   (1,718)
   Patents.....................................         16,373            (529)
   Agreements not to compete...................          7,243          (4,297)
   Other.......................................          9,957          (5,547)
                                                     ---------      ----------
   Total.......................................      $  38,251      $  (12,091)
                                                     =========      ==========
 Unamortized intangible assets
   Trademarks..................................      $  76,963
                                                     =========
 Aggregate amortization expense:
   For three months ended March 31, 2002.......      $   1,504
 Estimated amortization expense:
   For year ended December 31, 2002............      $   6,016
   For year ended December 31, 2003............          4,420
   For year ended December 31, 2004............          3,822
   For year ended December 31, 2005............          3,415
   For year ended December 31, 2006............          3,393
</TABLE>

    The changes in the carrying amount of goodwill for the three months ended
March 31, 2002, are as follows:

<TABLE>
<CAPTION>

                                          DAIRY FOODS    FEED        SEED    SWINE   AGRONOMY      OTHER     TOTAL
                                          -----------    ----        ----    -----   --------      -----     -----

<S>                                       <C>        <C>         <C>       <C>      <C>        <C>       <C>
 Balance as of January 1, 2002.......     $ 40,285   $ 105,471   $ 19,696  $  701   $ 74,904   $ 13,970  $ 255,027
   Reallocation of purchase price ...           --       2,283      1,245      --         --         --      3,528
   Amortization expense.......                  --        (123)       (80)    (13)    (1,503)      (281)    (2,000)
   Goodwill written off related to
      sale of business unit....                 --      (2,600)        --      --         --         --     (2,600)
                                          --------   ---------   --------  ------   --------   --------  ---------
   Balance as of March 31, 2002           $ 40,285   $ 105,031   $ 20,861  $  688   $ 73,401   $ 13,689  $ 253,955
                                          ========   =========   ========  ======   ========   ========  =========
</TABLE>

    The Company adopted Emerging Issues Task Force (EITF) No. 00-25, "Vendor
Income Statement Characterization of Consideration to a Purchaser of the
Vendor's Products or Services," on January 1, 2002. EITF No. 00-25 deals with
the accounting for consideration paid from a vendor (typically a manufacturer or
distributor) to a retailer, including slotting fees, cooperative advertising
arrangements and buy-downs. The guidance in EITF 00-25 generally requires that
these incentives be classified as a reduction of sales. The impact of the
adoption decreased sales and selling and administration expense for the three
months ended March 31, 2002 and 2001 by $25.6 million and $21.8 million,
respectively.

     The Company adopted SFAS No. 144 as of January 1, 2001 and has applied its
provisions in these financial statements. The impact of the adoption did not
have a material effect on the consolidated financial statements.

3.  RECEIVABLES

    A summary of receivables is as follows:

<TABLE>
<CAPTION>

                                                           MARCH 31,   DECEMBER 31,
                                                             2002          2001
                                                         -----------  -------------
<S>                                                      <C>           <C>
Trade accounts.......................................    $   277,651   $   287,229
Notes and contracts..................................         42,107        50,626
Notes from sale of trade receivables (see Note 4)....        175,134       192,403
Other................................................         70,509        66,707
                                                         -----------   -----------
Less allowance for doubtful accounts.................         22,672        22,954
                                                         -----------   -----------
Total receivables, net...............................    $   542,729   $   574,011
                                                         ===========   ===========
</TABLE>

    A substantial portion of Land O'Lakes receivables is concentrated in the
agricultural industry. Collections of these receivables may be dependent upon
economic returns from farm crop and livestock production. The Company's credit
risks are continually reviewed, and management believes that adequate provisions
have been made for doubtful accounts.



                                       7
<PAGE>


4.  RECEIVABLES PURCHASE FACILITY

    In December 2001, the Company established a $100.0 million receivables
purchase facility with CoBank, ACB (CoBank). A wholly owned unconsolidated
special purpose entity (SPE) was established to purchase certain receivables
from the Company. CoBank has been granted an interest in the pool of receivables
owned by the SPE. The transfers of the receivables from the Company to the SPE
are structured as sales and, accordingly, the receivables transferred to the SPE
are not reflected in the consolidated balance sheet. However, the Company
retains credit risk related to the repayment of the notes receivable with the
SPE, which in turn is dependent upon the credit risk of the SPE's receivables
pool. Accordingly, the Company has retained reserves for estimated losses. The
Company expects no significant gains or losses from the facility. At March 31,
2002, $75.8 million was outstanding under this facility and $24.2 million
remained available. The total accounts receivable sold during the three months
ended March 31, 2002 was $654.1 million.

5.  INVENTORIES

    A summary of inventories is as follows:
<TABLE>
<CAPTION>

                           MARCH 31,   DECEMBER 31,
                             2002          2001
                         -----------  ------------
<S>                      <C>           <C>
 Raw materials......     $    50,267   $    81,923
 Work in process....          36,998        37,423
 Finished goods.....         406,389       331,428
                         -----------   -----------
 Total inventories..     $   493,654   $   450,774
                         ===========   ===========
</TABLE>

6.  INVESTMENTS

    A summary of investments is as follows:
<TABLE>
<CAPTION>

                                                               MARCH 31,   DECEMBER 31,
                                                                 2002          2001
                                                             -----------  -------------
<S>                                                          <C>           <C>
 CF Industries, Inc......................................    $   248,502   $   248,502
 Agriliance, LLC.........................................         74,840        84,030
 Ag Processing Inc.......................................         39,377        38,977
 MoArk LLC...............................................         47,743        47,593
 Advanced Food Products LLC..............................         26,037        27,487
 CoBank, ACB.............................................         21,799        21,549
 Melrose Dairy Proteins, LLC.............................         10,236         8,253
 PEC Mark II (Malta Cleyton).............................             --         7,681
 Universal Cooperatives..................................          6,196         6,196
 Prairie Farms Dairy, Inc................................          4,934         4,754
 Other -- principally cooperatives and joint ventures....         71,208        73,108
                                                             -----------   -----------
 Total investments.......................................    $   550,872   $   568,130
                                                             ===========   ===========
</TABLE>

7.  PROPERTY, PLANT AND EQUIPMENT

    A summary of property, plant and equipment is as follows:

<TABLE>
<CAPTION>
                                                   MARCH 31,    DECEMBER 31,
                                                      2002           2001
                                                 -------------  --------------
<S>                                              <C>            <C>
 Land and land improvements..................    $      51,918  $      51,818
 Buildings and building equipment............          295,603        311,499
 Machinery and equipment.....................          570,983        560,244
 Software....................................           33,000         38,438
 Construction in progress....................           67,218         56,769
                                                 -------------  -------------
 Total property, plant and equipment.........        1,018,722      1,018,768
 Less accumulated depreciation...............          358,329        343,491
                                                 -------------  -------------
 Total property, plant and equipment, net....    $     660,393  $     675,277
                                                 =============  =============
</TABLE>

                                       8
<PAGE>

8.  RESTRUCTURING AND IMPAIRMENT CHARGES

    For the three months ended March 31, 2002, the Company recorded
restructuring and impairment charges of $3.4 million in the feed segment. Of
this amount, $2.6 million represented severance and outplacement costs for 136
employees at the Ft. Dodge, IA office facility and other plant facilities and
$0.8 million represented a write down of certain plant assets to their estimated
fair value. $2.6 million of the charges were accrued as of March 31, 2002. For
the three months ended March 31, 2001, the Company recorded a reversal of $1.0
million for the sale of certain feed assets that had been written off in
December 2000 and to reflect the decision to continue to operate a plant
previously scheduled for shutdown.

9.  GAIN ON SALE OF INTANGIBLES

    For the three months ended March 31, 2002, the Company recorded a gain on
the sale to Potash Corporation of Saskatchewan of a customer list pertaining to
the feed phosphate distribution business.

10.  DEBT OBLIGATIONS

    The weighted average interest rate on short-term borrowings and notes
outstanding at March 31, 2002 and December 31, 2001 was 6.14% and 6.52%,
respectively.

    As of March 31, 2002, interest rates on the Term A Loan, the Term B Loan,
and the revolving credit facility were 4.25%, 5.25% and 4.24%, respectively.

11.  SEGMENT INFORMATION

    The Company operates in five segments, dairy foods, animal feed, crop seed,
swine and agronomy.

    The dairy foods segment produces, markets and sells products such as butter,
spreads, cheese, and other dairy related products. Products are sold under
well-recognized national brand names including LAND O LAKES, the Indian Maiden
logo and Alpine Lace, as well as under regional brand names such as New Yorker
and Lake to Lake.

    The animal feed segment consists primarily of a 92% ownership position in
Land O'Lakes Farmland Feed LLC. Land O'Lakes Farmland Feed LLC develops,
produces, markets and distributes animal feeds such as ingredient feed, formula
feed, milk replacers, vitamins and additives.

    The crop seed segment is a supplier and distributor of crop seed products in
the United States. A variety of crop seed is sold, including alfalfa, soybeans,
corn and forage and turf grasses.

    The swine segment has three programs, farrow-to-finish, swine aligned and
cost-plus. The farrow-to-finish program produces and sells market hogs. The
swine aligned program raises feeder pigs which are sold to local member
cooperatives. The cost-plus program provides minimum hog price guarantees to
producers in exchange for swine feed sales and profit participation.

    The agronomy segment consists primarily of the Company's 50% ownership in
Agriliance, LLC, which is accounted for under the equity method. Agriliance, LLC
markets and sells two primary product lines: crop protection (including
herbicides and pesticides) and crop nutrients (including fertilizers and
micronutrients).

    The Company allocates corporate administration expense to all of its
business segments, both directly and indirectly. Corporate staff functions that
are able to determine actual services provided to each segment allocate expense
on a direct and predetermined basis. All other corporate staff functions
allocate expense indirectly based on each segment's percent of total invested
capital. A majority of corporate administration expense is allocated directly.

                                       9
<PAGE>

<TABLE>
<CAPTION>

                                                  DAIRY FOODS     FEED       SEED        SWINE   AGRONOMY     OTHER   CONSOLIDATED
                                                  -----------     ----       ----        -----   --------     -----   ------------
<S>                                                <C>         <C>        <C>         <C>        <C>        <C>        <C>
FOR THE THREE MONTHS ENDED MARCH 31, 2002
  Net sales..............................          $731,128    $ 610,526  $ 155,703   $ 23,880   $     --   $  2,959   $1,524,196
  Cost of sales..........................           686,063      536,459    130,568     21,517         --      1,710    1,376,317
  Selling and administration.............            44,541       62,317     12,977      1,661      3,547      2,382      127,425
  Restructuring and impairment
    charges..............................                --        3,435         --         --         --         --        3,435
  Interest expense, net..................             4,358        8,029        973      1,385      2,087        715       17,547
  Gain on sale of intangibles............                --       (4,184)        --         --         --         --       (4,184)
  Equity in loss (earnings) of
    affiliated companies.................               530         (458)        96       (161)     9,806         48        9,861
  Minority interest in (loss) earnings
    of subsidiaries......................              (537)       1,399         --         --         --         72          934
                                                   --------    ---------  ---------   --------   --------   --------   ----------
  (Loss) earnings before income taxes              $ (3,827)   $   3,529  $  11,089   $   (522)  $(15,440)  $ (1,968)  $   (7,139)
                                                   ========    =========  =========   ========   ========   ========   ==========
FOR THE THREE MONTHS ENDED MARCH 31, 2001
  Net sales..............................          $756,352    $ 408,445  $ 181,818   $ 25,585   $     --   $  3,527   $1,375,727
  Cost of sales..........................           703,079      376,420    153,718     24,702          4      2,692    1,260,615
  Selling and administration.............            41,126       28,318     11,964      1,834      7,049      2,335       92,626
  Restructuring and impairment
    reversals............................                --         (966)        --         --         --         --         (966)
  Interest expense, net..................             4,924        1,137      2,357      1,656      1,552        126       11,752
  Equity in (earnings) loss of
    affiliated companies.................              (291)        (479)      (534)      (143)     3,544     (2,018)          79
  Minority interest in (loss) earnings
    of subsidiaries......................              (175)       1,772          1         --         --         (8)       1,590
                                                   --------    ---------  ---------   --------   --------   --------   ----------
  Earnings (loss) before income taxes....          $  7,689    $   2,243  $  14,312   $ (2,464)  $(12,149)       400   $   10,031
                                                   ========    =========  =========   ========   ========   ========   ==========
</TABLE>

12.  CONSOLIDATING FINANCIAL INFORMATION

    The Company issued $350 million in senior notes which are guaranteed by the
Company and certain of its wholly and majority owned subsidiaries (the
"Guarantor Subsidiaries"). Such guarantees are full, unconditional and joint and
several.

    The following supplemental financial information sets forth, on an
unconsolidated basis, balance sheet, statement of operations and cash flow
information for the Company, Guarantor Subsidiaries and the Company's other
subsidiaries (the "Non-Guarantor Subsidiaries"). The supplemental financial
information reflects the investments of the Company in the Guarantor and
Non-Guarantor Subsidiaries using the equity method of accounting.

    The "Majority Owned Consolidated Guarantor" column in the following
supplemental financial information represents Land O'Lakes Farmland Feed LLC
(LOLFF), excluding certain majority owned non-guarantors of LOLFF.


                                       10
<PAGE>



            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                               LAND O'LAKES. INC.

                    SUPPLEMENTAL CONSOLIDATING BALANCE SHEET
                                 MARCH 31, 2002
<TABLE>
<CAPTION>


                             LAND         CONSOLIDATED       MAJORITY
                          O'LAKES, INC.      WHOLLY            OWNED
                             PARENT           OWNED        CONSOLIDATED      NON-GUARANTOR
                             COMPANY       GUARANTORS        GUARANTOR       SUBSIDIARIES   ELIMINATIONS  CONSOLIDATED
                          ------------  --------------- ------------------  --------------  --------------------------
                                                            ($ IN THOUSANDS)
                                                              (UNAUDITED)
<S>                        <C>              <C>               <C>              <C>          <C>           <C>
                                                                 ASSETS
 Current assets:
   Cash and short-term
      investments.....     $     (911)      $   10,272        $  (6,168)       $  10,608     $       --    $   13,801
   Receivables, net...        532,524           31,821            97,625          51,285       (170,526)      542,729
   Inventories........        320,563           58,616           106,688           7,787             --       493,654
   Prepaid expenses...         98,344            3,587             6,581           1,016             --       109,528
   Other current
      assets..........         26,691               --                --              --             --        26,691
                           ----------       ----------        ----------       ---------     ----------    ----------
      Total current
        assets........        977,211          104,296           204,726          70,696       (170,526)    1,186,403
 Investments..........      1,050,496            3,596            30,588           1,597       (535,405)      550,872
 Property, plant and
   equipment, net.....        271,092           29,019           305,189          55,093             --       660,393
 Goodwill, net........        132,461           13,358           107,189             947             --       253,955
 Other intangibles....         (1,056)           2,360           101,490             329             --       103,123
 Other assets.........         60,492              449            27,221          47,160        (11,728)      123,594
                           ----------       ----------        ----------       ---------     ----------    ----------
      Total assets....     $2,490,696       $  153,078        $  776,403       $ 175,822     $ (717,659)   $2,878,340
                           ==========       ==========        ==========       =========     ==========    ==========

                                             LIABILITIES AND EQUITIES
 Current liabilities:
   Notes and short-term
      obligations.....     $       48       $    2,728        $   56,353       $  72,188     $  (97,605)   $   33,712
   Current portion of
      long-term debt..         57,734           72,398                17              59        (72,527)       57,681
   Accounts payable...        300,662           55,085           103,033          21,219            (79)      479,920
   Accrued expenses...        129,263            6,184            29,043           4,319             --       168,809
   Patronage refunds
      payable.........         14,544               --                --              --             --        14,544
                           ----------       ----------        ----------       ---------     ----------    ----------
      Total current
        liabilities...        502,251          136,395           188,446          97,785       (170,211)      754,666
 Long-term debt.......      1,087,215            9,802               384          22,828        (12,043)    1,108,186
 Employee benefits and
   other liabilities..         47,865                1            34,560             280             --        82,706
 Deferred tax
   liabilities........         41,640              551                --               7             --        42,198
 Minority interests...          6,663               --               792          13,335         39,596        60,386
 Equities:
   Capital stock......          2,292            1,084           505,039          58,311       (564,434)        2,292
   Member equities....        799,668               --                --              --             --       799,668
   Retained earnings..          3,102            5,245            47,182         (16,724)       (10,567)       28,238
                           ----------       ----------        ----------       ---------     ----------    ----------
      Total equities..        805,062            6,329           552,221          41,587       (575,001)      830,198
                           ----------       ----------        ----------       ---------     ----------    ----------
 Total liabilities and
   equities...........     $2,490,696       $  153,078        $  776,403       $ 175,822     $ (717,659)   $2,878,340
                           ==========       ==========        ==========       =========     ==========    ==========
</TABLE>



                                       11
<PAGE>



                               LAND O'LAKES, INC.

                SUPPLEMENTAL CONSOLIDATED STATEMENT OF OPERATIONS
                    FOR THE THREE MONTHS ENDED MARCH 31, 2002
<TABLE>
<CAPTION>


                                         LAND     CONSOLIDATED    MAJORITY
                                    O'LAKES, INC.    WHOLLY        OWNED
                                       PARENT         OWNED     CONSOLIDATED   NON-GUARANTOR
                                       COMPANY     GUARANTORS    GUARANTOR     SUBSIDIARIES    CONSOLIDATED
                                    ------------  ------------  -----------    ------------    ------------
                                                         ($ IN THOUSANDS)
                                                            (UNAUDITED)
<S>                                   <C>           <C>           <C>            <C>          <C>
 Net sales.....................       $ 856,762     $ 49,966      $589,953       $ 27,515     $1,524,196
 Cost of sales.................         789,136       43,843       518,138         25,200      1,376,317
                                      ---------     --------      --------       --------     ----------
 Gross profit..................          67,626        6,123        71,815          2,315        147,879
 Selling and administration.             58,236        6,122        58,832          4,235        127,425
 Restructuring and impairment
   charges.....................              --           --         3,435             --          3,435
                                      ---------     --------      --------       --------     ----------
 Earnings (loss) from
   operations..................           9,390            1         9,548         (1,920)        17,019
 Interest expense, net.........          17,411          993          (793)           (64)        17,547
 Gain on sale of intangible....              --           --        (4,184)            --         (4,184)
 Equity in loss (earnings) of
   affiliated companies........          10,064           --          (203)            --          9,861
 Minority interest in earnings
   (loss) of subsidiaries......           1,170           --           186           (422)           934
                                      ---------     --------      --------       --------     ----------
 (Loss) earnings before
   income taxes................         (19,255)        (992)       14,542         (1,434)        (7,139)
 Income tax (benefit) expense..          (6,453)         232          (402)           460         (6,163)
                                      ---------     --------      --------       --------     ----------
 Net (loss) earnings...........       $ (12,802)    $ (1,224)     $ 14,944       $ (1,894)    $     (976)
                                      =========     ========      ========       ========     ==========
</TABLE>


                                       12
<PAGE>



                               LAND O'LAKES, INC.

               SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
                    FOR THE THREE MONTHS ENDED MARCH 31, 2002
<TABLE>
<CAPTION>
                                                   LAND      CONSOLIDATED   MAJORITY
                                               O'LAKES, INC.    WHOLLY        OWNED
                                                  PARENT         OWNED    CONSOLIDATED   NON-GUARANTOR
                                                  COMPANY     GUARANTORS    GUARANTOR    SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
                                               ------------  ------------ ------------  -------------- --------------------------
                                                                               ($ IN THOUSANDS)
                                                                                   (UNAUDITED)
<S>                                              <C>           <C>          <C>            <C>           <C>           <C>
  CASH FLOWS FROM OPERATING ACTIVITIES:
    Net (loss) earnings....................      $ (12,802)    $ (1,224)    $ 14,944       $ (1,894)     $     --      $    (976)
    Adjustments to reconcile net (loss)
      earnings to net cash (used) provided
      by operating activities:
      Depreciation and amortization........         14,055        1,060       11,784            605            --         27,504
      Bad debt expense.....................            208           --           --             45            --            253
      Proceeds from patronage revolvement
        received...........................            127           --           --             --            --            127
      Non-cash patronage...................           (923)          --           --             --            --           (923)
      Increase (decrease) in other assets..          3,869          420       (6,124)           984            27           (824)
      Increase (decrease) in other
         liabilities.......................            732         (882)      (1,063)             5            --         (1,208)
      Restructuring and impairment charges.             --           --        3,435             --            --          3,435
      Equity in loss (earnings) of
        affiliated companies...............         10,064           --         (203)            --            --          9,861
      Minority interest....................          1,170           --          186           (422)           --            934
      Other................................         (6,989)          --        1,992             54            --         (4,943)
    Changes in current assets and
      liabilities, net of acquisitions and
      divestitures:
      Receivables..........................         11,446       (8,163)      39,324         (4,221)      (16,131)        22,255
      Inventories..........................        (44,447)      (1,228)         860          1,935            --        (42,880)
      Prepaid expenses and other current
         assets...........................          72,167        6,038         (316)            98            --         77,987
      Accounts payable.....................       (154,787)      (8,174)      (9,755)           330            (3)      (172,389)
      Accrued expenses.....................        (16,994)        (774)      (4,726)           297            --        (22,197)
                                                 ---------     --------     --------       --------      --------      ---------
    Net cash (used) provided by operating
      activities...........................       (123,104)     (12,927)      50,338         (2,184)      (16,107)      (103,984)
  CASH FLOWS FROM INVESTING ACTIVITIES:
    Additions to property, plant and
       equipment...........................        (13,298)        (312)      (2,928)        (1,136)           --        (17,674)
    Payments for investments...............         (3,475)          --           --           (144)           24         (3,595)
    Proceeds from sale of investments......         20,327           --          682             --            --         21,009
    Proceeds from sale of property, plant
      and equipment........................          6,527           --           95             --            --          6,622
    Other..................................          3,121           --           --             --            --          3,121
                                                 ---------     --------     --------       --------      --------      ---------
    Net cash provided (used) by investing
      activities...........................         13,202         (312)      (2,151)        (1,280)           24          9,483
  CASH FLOWS FROM FINANCING ACTIVITIES:
    Increase (decrease) in short-term debt.         37,518       12,919      (32,556)         3,928        16,068         37,877
    Proceeds from issuance of long-term debt         1,121           --          508             20            39          1,688
    Payments on principal of long-term debt        (40,111)        (122)        (189)        (1,312)           --        (41,734)
    Payments for redemption of member
       equities............................        (20,060)          --           --             --            --        (20,060)
    Other..................................         19,469        1,624      (21,091)           384           (24)           362
                                                 ---------     --------     --------       --------      --------      ---------
    Net cash (used) provided by financing
      activities...........................         (2,063)      14,421      (53,328)         3,020        16,083        (21,867)
                                                 ---------     --------     --------       --------      --------      ---------
    Net (decrease) increase in cash........       (111,965)       1,182       (5,141)          (444)           --       (116,368)
  Cash and cash equivalents at beginning of
    period.................................        111,054        9,090       (1,027)        11,052            --        130,169
                                                 ---------     --------     --------       --------      --------      ---------
  Cash and cash equivalents at end of period     $    (911)    $ 10,272     $ (6,168)      $ 10,608      $     --      $  13,801
                                                 =========     ========     ========       ========      ========      =========
</TABLE>


                                       13
<PAGE>



                               LAND O'LAKES, INC.

                    SUPPLEMENTAL CONSOLIDATING BALANCE SHEET
                                DECEMBER 31, 2001
<TABLE>
<CAPTION>

                               LAND       CONSOLIDATED        MAJORITY
                          O'LAKES, INC.      WHOLLY             OWNED
                             PARENT           OWNED         CONSOLIDATED      NON-GUARANTOR
                             COMPANY       GUARANTORS         GUARANTOR       SUBSIDIARIES  ELIMINATIONS   CONSOLIDATED
                          ------------  ---------------  ------------------  -------------- ------------   ------------
                                                          ($ IN THOUSANDS)
                                                             (UNAUDITED)
<S>                       <C>                <C>              <C>              <C>          <C>           <C>
                                                      ASSETS
 Current assets:
   Cash and short-term
      investments.....     $  111,054        $    9,090       $      (1,027)    $ 11,052     $       --   $  130,169
   Receivables, net...        552,951            23,659             136,949       47,109       (186,657)     574,011
   Inventories........        276,115            57,388             107,548        9,723             --      450,774
   Prepaid expenses...        168,486             9,625               6,265        1,114             --      185,490
   Other current assets        27,038                --                  --           --             --       27,038
                           ----------        ----------       -------------     --------     ----------   ----------
      Total current
        assets........      1,135,644            99,762             249,735       68,998       (186,657)   1,367,482
 Investments..........      1,047,711             3,596              50,751        1,453       (535,381)     568,130
 Property, plant and
   equipment, net.....        272,328            29,146             319,164       54,639             --      675,277
 Goodwill, net........        138,054            12,224             103,790          959             --      255,027
 Other intangibles....          3,484             2,669             102,503          331             --      108,987
 Other assets.........         73,403             2,111               4,521       48,141        (11,701)     116,475
                           ----------        ----------       -------------     --------     ----------   ----------
      Total assets....     $2,670,624        $  149,508       $     830,464     $174,521     $ (733,739)  $3,091,378
                           ==========        ==========       =============     ========     ==========   ==========

                                                   LIABILITIES AND EQUITIES
 Current liabilities:
   Notes and short-term
      obligations.....     $      270        $    2,701       $      88,902     $ 68,261     $ (126,163)  $   33,971
   Current portion of
      long-term debt..         19,995            59,506                  23           59        (60,037)      19,546
   Accounts payable...        436,177            61,786             133,872       20,550            (76)     652,309
   Accrued expenses...        142,820             6,959              33,769        4,021             --      187,569
   Patronage refunds
      payable.........         28,900                --                  --           --             --       28,900
                           ----------        ----------       -------------     --------     ----------   ----------
      Total current
        liabilities...        628,162           130,952             256,566       92,891       (186,276)     922,295
 Long-term debt.......      1,125,437             9,924                  65       24,121        (12,082)   1,147,465
 Employee benefits and
   other liabilities..         45,459             1,434              35,626          282             --       82,801
 Deferred tax liability        42,495                --                  --           --             --       42,495
 Minority interests...          5,494                --                 972       13,744         39,596       59,806
 Equities:
   Capital stock......          2,305             1,084             504,916       58,410       (564,410)       2,305
   Member equities....        805,860                --                  --           --             --      805,860
   Retained earnings..         15,412             6,114              32,319      (14,927)       (10,567)      28,351
                           ----------        ----------       -------------     --------     ----------   ----------
      Total equities..        823,577             7,198             537,235       43,483       (574,977)     836,516
                           ----------        ----------       -------------     --------     ----------   ----------
 Total liabilities and
   equities...........     $2,670,624        $  149,508       $     830,464     $174,521     $ (733,739)  $3,091,378
                           ==========        ==========       =============     ========     ==========   ==========
</TABLE>

                                       14
<PAGE>



                               LAND O'LAKES, INC.

               SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
                    FOR THE THREE MONTHS ENDED MARCH 31, 2001
<TABLE>
<CAPTION>

                                   LAND      CONSOLIDATED    MAJORITY
                               O'LAKES, INC.    WHOLLY         OWNED
                                  PARENT         OWNED     CONSOLIDATED   NON-GUARANTOR
                                  COMPANY     GUARANTORS     GUARANTOR    SUBSIDIARIES  CONSOLIDATED
                               ------------  ------------  -----------    ------------  ------------
                                                         ($ IN THOUSANDS)
                                                            (UNAUDITED)

<S>                              <C>           <C>           <C>            <C>          <C>
 Net sales.................      $ 902,972     $ 59,221      $390,116       $ 23,418     $1,375,727
 Cost of sales.............        834,189       48,265       356,054         22,107      1,260,615
                                 ---------     --------      --------       --------     ----------
 Gross profit..............         68,783       10,956        34,062          1,311        115,112
 Selling and administration         54,869        5,974        29,439          2,344         92,626
 Restructuring and impairment
   reversals...............             --           --          (966)            --           (966)
                                 ---------     --------      --------       --------     ----------
 Earnings (loss) from
   operations..............         13,914        4,982         5,589         (1,033)        23,452
 Interest expense, net.....          8,905        1,319         1,839           (311)        11,752
 Equity in loss (earnings) of
   affiliated companies....            471           --          (392)            --             79
 Minority interest in earnings
   (loss) of subsidiaries..          1,893           --            55           (358)         1,590
                                 ---------     --------      --------       --------     ----------
 Earnings (loss) before income
   taxes...................          2,645        3,663         4,087           (364)        10,031
 Income tax (benefit) expense       (4,759)       1,660           (27)           114         (3,012)
                                 ---------     --------      --------       --------     ----------
 Net earnings (loss).......      $   7,404     $  2,003      $  4,114       $   (478)    $   13,043
                                 =========     ========      ========       ========     ==========
</TABLE>



                                       15
<PAGE>



                               LAND O'LAKES, INC.

               SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
                    FOR THE THREE MONTHS ENDED MARCH 31, 2001
<TABLE>
<CAPTION>

                                                   LAND      CONSOLIDATED   MAJORITY
                                               O'LAKES, INC.    WHOLLY        OWNED
                                                  PARENT         OWNED    CONSOLIDATED   NON-GUARANTOR
                                                  COMPANY     GUARANTORS    GUARANTOR    SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
                                               ------------  ------------ ------------  -------------- --------------------------
                                                                               ($ IN THOUSANDS)
                                                                                   (UNAUDITED)
<S>                                              <C>           <C>          <C>            <C>           <C>           <C>
  CASH FLOWS FROM OPERATING ACTIVITIES:
    Net earnings (loss)....................      $   7,404     $  2,003     $  4,114       $   (478)     $     --      $ 13,043
    Adjustments to reconcile net earnings
      (loss) to net cash (used) provided
      by operating activities:
      Depreciation and amortization........         15,040        1,333        4,334            560            --        21,267
      Bad debt expense.....................            315           25          111            241            --           692
      Proceeds from patronage revolvement
        received...........................            318           --           --             --            --           318
      Non-cash patronage...................           (625)          --           --             --            --          (625)
      (Decrease) increase in other assets..        (53,412)         308          647            282        51,000        (1,175)
      Increase (decrease) in other
          liabilities......................          2,245           94         (156)             3        (2,235)          (49)
      Restructuring and impairment reversals            --           --         (966)            --            --          (966)
      Equity in losses (earnings) of
        affiliated companies...............            471           --         (392)            --            --            79
      Minority interest....................          1,893           --           55           (358)           --         1,590
      Other................................           (250)         231          489           (883)           --          (413)
    Changes in current assets and
       liabilities, net of acquisitions and
       divestitures:
      Receivables..........................         (8,932)     (15,474)     (20,567)        (2,957)      (12,426)      (60,356)
      Inventories..........................        (44,139)        (666)       3,758         (1,180)           --       (42,227)
      Prepaid expenses and other current
          assets...........................        101,802        3,682        2,760           (206)           --       108,038
      Accounts payable.....................        (49,703)       7,626      (13,729)         5,684       (12,177)      (62,299)
      Accrued expenses.....................        (21,875)      (2,602)     (22,742)          (121)           --       (47,340)
                                                 ---------     --------     --------       --------      --------      --------
    Net cash (used) provided by operating
      activities...........................        (49,448)      (3,440)     (42,284)           587        24,162       (70,423)
  CASH FLOWS FROM INVESTING ACTIVITIES:
    Additions to property, plant and
       equipment...........................         (8,783)        (103)      (4,517)        (4,899)           --       (18,302)
    Acquisitions, net of cash acquired.....        (13,300)          --           --             --            --       (13,300)
    Payments for investments...............        (19,774)          --         (197)        (2,953)        7,092       (15,832)
    Proceeds from sale of investments......          1,623           --           --             --            --         1,623
    Proceeds from sale of property, plant and
      equipment............................            806           --           --             --            --           806
    Other..................................           (216)          --           --             --            --          (216)
                                                 ---------     --------     --------       --------      --------      --------
    Net cash (used) provided by investing
      activities...........................        (39,644)        (103)      (4,714)        (7,852)        7,092       (45,221)
  CASH FLOWS FROM FINANCING ACTIVITIES:
    Increase (decrease) in short-term debt.        130,834           (1)      31,986            196       (26,489)      136,526
    Proceeds from issuance of long-term debt        21,811           --           --            437         2,327        24,575
    Payments on principal of long-term debt         (7,200)        (300)     (15,953)          (671)           --       (24,124)
    Payments for redemption of member
       equities............................        (25,321)          --           --             --            --       (25,321)
    Other..................................        (28,530)       4,590       25,964          5,062        (7,092)           (6)
                                                 ---------     --------     --------       --------      --------      --------
    Net cash provided (used) by financing
      activities...........................         91,594        4,289       41,997          5,024       (31,254)      111,650
                                                 ---------     --------     --------       --------      --------      --------
    Net increase (decrease) in cash........          2,502          746       (5,001)        (2,241)           --        (3,994)
  Cash and cash equivalents at beginning of
    period.................................          5,324         (546)     (11,675)        10,891            --         3,994
                                                 ---------     --------     --------       --------      --------      --------
  Cash and cash equivalents at end of period     $   7,826     $    200     $(16,676)      $  8,650      $     --      $     --
                                                 =========     ========     ========       ========      ========      ========
</TABLE>


                                       16
<PAGE>
s


                         LAND O'LAKES FARMLAND FEED LLC

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>


                                                                       MARCH 31,   DECEMBER 31,
                                                                         2002          2001
                                                                     -----------   -----------
                                                                            (UNAUDITED)
                                                                          ($ IN THOUSANDS)
<S>                                                                   <C>          <C>
                                             ASSETS
 Current assets:
   Cash and short-term investments..............................      $       --   $     3,019
   Receivables, net.............................................          86,857       119,063
   Inventories..................................................         110,982       113,559
   Prepaid expenses and other current assets....................           6,881         6,472
   Notes receivable-- Land O'Lakes, Inc.-- current..............          16,692            --
                                                                      ----------   -----------
           Total current assets.................................         221,412       242,113
 Investments....................................................          31,058        31,496
 Property, plant and equipment, net.............................         312,817       326,956
 Goodwill, net..................................................         108,136       104,749
 Intangible assets, net.........................................         101,819       100,663
 Other assets...................................................          28,553        27,640
                                                                      ----------   -----------
           Total assets.........................................      $  803,795   $   833,617
                                                                      ==========   ===========

                                    LIABILITIES AND EQUITIES
 Current liabilities:
   Notes and short-term obligations.............................      $    4,000   $     5,000
   Notes payable-- Land O'Lakes, Inc.-- current.................              --        29,210
   Accounts payable.............................................         109,073       117,074
   Accrued expenses.............................................          30,448        35,132
                                                                      ----------   -----------
           Total current liabilities............................         143,521       186,416
 Notes payable-- Land O'Lakes, Inc.-- noncurrent................          59,664        59,664
 Employee benefits and other liabilities........................          35,348        36,656
 Minority interests.............................................           2,679         2,919
 Equities:
   Contributed capital..........................................         515,044       515,044
   Retained earnings............................................          47,539        32,918
                                                                      ----------   -----------
           Total equities.......................................         562,583       547,962
                                                                      ----------   -----------
 Total liabilities and equities.................................      $  803,795   $   833,617
                                                                      ==========   ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       17
<PAGE>



                         LAND O'LAKES FARMLAND FEED LLC

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                             THREE MONTHS   THREE MONTHS
                                                                 ENDED          ENDED
                                                               MARCH 31,      MARCH 31,
                                                                 2002           2001
                                                            -------------  -------------
                                                                  ($ IN THOUSANDS)
                                                                     (UNAUDITED)
<S>                                                           <C>            <C>
  Net sales.............................................      $  603,423     $  403,535
  Cost of sales.........................................         530,595        372,167
                                                              ----------     ----------
  Gross profit..........................................          72,828         31,368
  Selling and administration............................          59,675         26,925
  Restructuring and impairment charges (reversals)......           3,435           (966)
                                                              ----------     ----------
  Earnings from operations..............................           9,718          5,409
  Interest (income) expense, net........................            (726)         1,772
  Gain on sale of intangible............................          (4,184)            --
  Equity in earnings of affiliated companies............            (203)          (301)
  Minority interest in earnings (loss) of subsidiaries..             210            (72)
                                                              ----------     ----------
  Net earnings..........................................      $   14,621     $    4,010
                                                              ==========     ==========
</TABLE>
          See accompanying notes to consolidated financial statements.



                                       18
<PAGE>



                         LAND O'LAKES FARMLAND FEED LLC

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                       THREE MONTHS   THREE MONTHS
                                                                           ENDED          ENDED
                                                                         MARCH 31,      MARCH 31,
                                                                           2002           2001
                                                                      -------------  -------------
                                                                            ($ IN THOUSANDS)
                                                                               (UNAUDITED)
<S>                                                                    <C>             <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
   Net earnings...................................................     $    14,621     $    4,010
   Adjustments to reconcile net earnings to net cash provided
      (used) by operating activities:
      Depreciation and amortization...............................          11,932          3,867
      Bad debt expense............................................              75            195
      Increase in other assets....................................          (4,217)          (616)
      (Decrease) increase in other liabilities....................          (1,308)        11,216
      Restructuring and impairment charges (reversals)............           3,435           (966)
      Equity in earnings of affiliated companies..................            (203)          (301)
      Minority interest in earnings (loss) of subsidiaries........             210            (72)
   Changes in current assets and liabilities, net of acquisitions
      and divestitures:
      Receivables.................................................          32,131          1,715
      Inventories.................................................           2,577          3,871
      Other current assets........................................            (409)         2,657
      Accounts payable............................................          (8,001)       (22,645)
      Accrued expenses............................................          (9,643)       (23,970)
                                                                       -----------     ----------
   Net cash provided (used) by operating activities...............          41,200        (21,039)
 CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to property, plant and equipment.....................          (2,493)        (3,264)
   Proceeds from investments......................................             641             --
   Proceeds from sale of property, plant and equipment............           4,535             92
                                                                       -----------     ----------
   Net cash provided (used) by investing activities...............           2,683         (3,172)
 CASH FLOWS FROM FINANCING ACTIVITIES:
   Decrease in short-term debt....................................          (1,000)            --
   Proceeds from note payable to Land O'Lakes, Inc................          98,348        111,311
   Payments on note payable to Land O'Lakes, Inc..................        (144,250)       (87,100)
                                                                       -----------     ----------
   Net cash (used in) provided by financing activities............         (46,902)        24,211
                                                                       -----------     ----------
   Net decrease in cash and short-term investments................          (3,019)            --
 Cash and short-term investments at beginning of period...........           3,019             --
                                                                       -----------     ----------
 Cash and short-term investments at end of period.................     $        --     $       --
                                                                       ===========     ==========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       19
<PAGE>



                         LAND O'LAKES FARMLAND FEED LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           ($ IN THOUSANDS IN TABLES)
                                   (UNAUDITED)

1.  SIGNIFICANT ACCOUNTING POLICIES

    The unaudited consolidated financial statements reflect, in the opinion of
the management of Land O'Lakes Farmland Feed LLC (the "Company"), all normal
recurring adjustments necessary for a fair statement of the financial position
and results of operations and cash flows for the interim periods. The statements
are condensed and, therefore do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. For furthur information, refer to the
audited consolidated financial statements and footnotes for the year ended
December 31, 2001 included in our Annual Report on Form 10-K. The results of
operations and cash flows for interim periods are not necessarily indicative of
results for a full year.

RECENT ACCOUNTING PRONOUNCEMENTS

    In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." Major provisions of these statements are as follows: all business
combinations must now use the purchase method of accounting, the pooling of
interests method of accounting is now prohibited; intangible assets acquired in
a business combination must be recorded separately from goodwill if they arise
from contractual or other legal rights or are separable from the acquired entity
and can be sold, transferred, licensed, rented or exchanged, either individually
or as a part of a related contract, asset or liability; goodwill and intangible
assets with indefinite lives are not amortized, but tested for impairment
annually, except in certain circumstances, and whenever there is an impairment
indicator; all acquired goodwill must be assigned to reporting units for
purposes of impairment testing and segment reporting. The Company has adopted
the provisions of these statements as of January 1, 2002. As required by SFAS
142, the Company will perform step one of the impairment testing of goodwill for
the balances as of January 1, 2002 by June 30, 2002. The Company will perform
impairment tests annually and whenever events or circumstances occur indicating
that goodwill or other intangible assets might be impaired. As of January 1,
2002, the Company is no longer amortizing goodwill except for goodwill related
to the acquisition of cooperatives and the formation of joint ventures.

    The following table presents a reconciliation of net earnings adjusted for
the exclusion of amortization of goodwill no longer required to be amortized,
net of income taxes:


<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED
                                                            MARCH 31,
                                                       ------------------
                                                        2002        2001
                                                        ----        ----

<S>                                                   <C>         <C>
 Net earnings....................................     $  14,621   $  4,010
 Add back: Goodwill amortization, net of tax.....            --        176
                                                      ---------   --------
 Adjusted net earnings...........................     $  14,621   $  4,186
                                                      =========   ========
</TABLE>


                                       20
<PAGE>


2.  GOODWILL AND OTHER INTANGIBLE ASSETS

    A summary of intangible assets follows:
<TABLE>
<CAPTION>

                                                      AS OF MARCH 31, 2002
                                                ------------------------------
                                                 GROSS CARRYING    ACCUMULATED
                                                     AMOUNT       AMORTIZATION
                                                 --------------   ------------
<S>                                                 <C>             <C>
Amortized intangible assets
  Trademarks..................................        $   877        $   (190)
  Patents.....................................         16,373            (529)
  Agreements not to compete...................          1,292            (346)
  Other.......................................         11,269          (3,890)
                                                      -------        --------
  Total.......................................        $29,811         $(4,955)
                                                      =======        ========
Unamortized intangible assets
  Trademarks..................................        $76,963
                                                      =======
Aggregate amortization expense:
  For three months ended March 31, 2002.......        $   600
Estimated amortization expense:
  For year ended December 31, 2002............        $ 2,895
  For year ended December 31, 2003............          2,895
  For year ended December 31, 2004............          2,895
  For year ended December 31, 2005............          2,895
  For year ended December 31, 2006............          2,895
</TABLE>

    The changes in the carrying amount of goodwill for the three months ended
March 31, 2002, are as follows:

   Balance as of January 1, 2002.........................           $104,749
     Reallocation of purchase price......................              3,510
     Amortization expense................................               (123)
                                                                    --------
     Balance as of March 31, 2002........................           $108,136
                                                                    ========

3.  RECEIVABLES

    A summary of receivables is as follows:
<TABLE>
<CAPTION>

                                                           MARCH 31,   DECEMBER 31,
                                                             2002          2001
                                                          ----------  ------------
<S>                                                        <C>          <C>
 Trade accounts.......................................     $22,338      $ 25,320
 Notes and contracts..................................       8,573         4,628
 Notes from sale of trade receivables (see Note 4)....      44,979        84,321
 Other................................................      20,291        13,879
                                                           -------      --------
                                                            96,181       128,148
 Less allowance for doubtful accounts.................       9,324         9,085
                                                           -------      --------
 Total receivables, net...............................     $86,857      $119,063
                                                           =======      ========
</TABLE>

4.  RECEIVABLES PURCHASE FACILITY

    In December 2001, Land O'Lakes, Inc., Land O'Lakes Farmland Feed LLC, and
Purina Mills, LLC established a $100.0 million receivables purchase facility
with CoBank, ACB (CoBank). A wholly owned unconsolidated special purpose entity,
Land O'Lakes Farmland Feed SPV, LLC, (SPE), was established to purchase certain
receivables from Land O'Lakes, Inc., Land O'Lakes Farmland Feed LLC, and Purina
Mills, LLC. CoBank has been granted an interest in the receivables owned by the
SPE. The transfers of the receivables from the Company to the SPE are structured
as sales and, accordingly, the receivables transferred to the SPE are not
reflected in the Company's consolidated balance sheet. However, Land O'Lakes,
Inc., Land O'Lakes Farmland Feed LLC, and Purina Mills, LLC retain the credit
risk related to the repayment of the notes receivable with the SPE, which in
turn is dependent upon the credit risk of the SPE's receivables. Accordingly,
the Company has retained reserves for estimated losses. The Company expects no
significant gains or losses from the sale of the receivables. At March 31, 2002
and December 31, 2001, there was $75.8 million outstanding under this facility
with $24.2 million available. The total accounts receivable sold by the Company
during the first three months of 2002 was $579.7 million.

                                       21
<PAGE>

5.  INVENTORIES

    A summary of inventories is as follows:

                                                MARCH 31,   DECEMBER 31,
                                                  2002          2001
                                              -----------   -----------
Raw materials.........................        $    78,107   $    63,435
Finished goods........................             32,875        50,124
                                              -----------   -----------
Total inventories.....................        $   110,982   $   113,559
                                              ===========   ===========

6.  INVESTMENTS

    The Company's investments are as follows:
<TABLE>
<CAPTION>

                                                      MARCH 31,   DECEMBER 31,
                                                        2002          2001
                                                     ----------  -------------
<S>                                                   <C>          <C>
Harmony Farms, LLC...........................         $   3,969    $   3,969
New Feeds, LLC...............................             3,100        3,214
Iowa River Feeds, LLC........................             2,605        2,648
Agland Farmland Feed, LLC....................             2,256        2,435
Pro-Pet, LLC.................................             2,570        2,362
Nutri-Tech Feeds, LLC........................             2,320        2,314
LOLFF SPV, LLC...............................             1,000        1,805
Northern Country Feeds, LLC..................             1,669        1,652
CalvaAlto Liquid, LLC........................             1,302        1,302
T-PM Holding Company.........................             1,290        1,290
Northern Colorado Feed, LLC..................             1,160        1,210
Strauss Feeds, LLC...........................             1,030        1,073
Nutrikowi, LLC...............................               876          783
Dakotaland Feeds, LLC........................               663          736
Other LLCs...................................             5,248        4,703
                                                      ---------    ---------
Total investments............................         $  31,058    $  31,496
                                                      =========    =========
</TABLE>

All of the above investments are accounted for under the equity method with the
exception of a portion of the investments under the caption "Other LLCs."

7.  PROPERTY, PLANT AND EQUIPMENT

    A summary of property plant and equipment is as follows:

                                                   MARCH 31,   DECEMBER 31,
                                                     2002          2001
                                                 -----------  -------------
 Land and land improvements..................    $    23,837   $    23,826
 Buildings and building equipment............        124,252       124,205
 Machinery and equipment.....................        241,277       247,186
 Construction in progress....................         12,138        13,019
                                                 -----------   -----------
                                                     401,504       408,236
 Less accumulated depreciation...............         88,687        81,280
                                                 -----------   -----------
 Total property, plant and equipment, net....    $   312,817   $   326,956
                                                 ===========   ===========

8.  RESTRUCTURING AND IMPAIRMENT CHARGES

    For the three months ended March 31, 2002, the Company recorded
restructuring and impairment charges of $3.4 million. Of this amount, $2.6
million represented severance and outplacement costs for 136 of employees at the
Ft. Dodge office and other plant facilities and $0.8 million represented a
write-down of certain impaired plant assets. $2.6 million of the charges were
accrued as of March 31, 2002. For the three months ended March 31, 2001, the
Company recorded a restructuring reversal of $1.0 million for the sale of
certain assets that had been written off in December 2000, and to reflect the
decision to continue to operate a plant previously scheduled for shutdown.


                                       22
<PAGE>

9.  GAIN ON SALE OF INTANGIBLES

    For the three months ended March 31, 2002, the Company recorded a gain on
the sale to Potash Corporation of Saskatchewan of a customer list pertaining to
the feed phosphate distribution business.

10.  RELATED PARTY TRANSACTIONS

    In accordance with the Management Services Agreement between Land O'Lakes,
Inc. and Farmland Industries (Farmland), Land O'Lakes, Inc. charges the Company
for corporate services such as legal, insurance administration, tax
administration, human resources, payroll and benefit administration, leasing,
public relations, credit and collections, accounting, and information technology
support. These costs totaled $1.7 million and $2.1 million for the quarters
ended March 31, 2002 and 2001, respectively.

    Payroll and benefit-related costs are paid directly by Land O'Lakes, Inc.
and reimbursed by the Company. These costs totaled $26.6 million and $26.1
million for the quarters ended March 31, 2002 and 2001, respectively.

    As part of the acquisition of Purina Mills on October 11, 2001, Land
O'Lakes, Inc. assumed certain liabilities, including a $59.7 million deferred
tax liability. The Company has established a noncurrent note payable for this
liability and, as future taxes relating to the deferred tax liability are paid
by Land O'Lakes, Inc., the Company will make a corresponding payment to Land
O'Lakes, Inc. This note is non-interest bearing and $59.7 million was
outstanding at March 31, 2002 and December 31, 2001.

    The Company has a $100 million revolving credit facility with Land O'Lakes,
Inc. which bears interest at LIBOR plus 260 basis points. The facility
terminates on October 31, 2002, and is renewable annually. The amount
outstanding under the revolving credit facility was $0.0 and $29.2 million at
March 31, 2002 and December 31, 2001, respectively.

    The Company entered into a Feed Supply Agreement with Farmland whereby
Farmland agreed to purchase all of its feed and ingredients, excluding grain,
from the Company. Such sales are made at prices competitive with those available
from other suppliers. Sales to Farmland under the agreement totaled $1.1 million
and $1.7 million for the quarters ended March 31, 2002 and 2001, respectively.

    Sales with unconsolidated subsidiaries of the Company totaled $11.5 million
and $10.1 million for the quarters ended March 31, 2002 and 2001, respectively.


                                       23
<PAGE>



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

OVERVIEW

GENERAL

Segments

    We operate our business in five segments, dairy foods, animal feed, crop
seed, swine and agronomy, predominantly in the United States. We have limited
international operations, certain of which have recently been sold or are in the
process of being sold. Our dairy foods segment produces, markets and sells
butter, spreads, cheese and other dairy products. We operate our animal feed
segment principally through Land O'Lakes Farmland Feed LLC, our 92% owned joint
venture with Farmland Industries. Our animal feed segment develops, produces,
markets and distributes animal feed to both commercial and lifestyle customers.
The results of the animal feed business are consolidated in our financial
statements and the minority interest is eliminated. As a result of the Purina
Mills acquisition in October 2001, animal feed results for the three months
ended March 31, 2002 include Purina Mills swine marketing activities since
Purina Mills historically reported results of its swine business together with
its feed business. Our crop seed segment sells seed for a variety of crops,
including alfalfa, corn, soybeans and forage and turf grasses. Our swine segment
produces and markets both young feeder pigs and mature market hogs. Our agronomy
segment distributes crop nutrient and crop protection products. Historically,
our agronomy segment consisted primarily of the assets we contributed to
Agriliance, our unconsolidated joint venture. Since the contribution of those
assets to Agriliance at the end of July 2000, our investment has been accounted
for on the equity method through our agronomy segment, along with the agronomy
assets we retained. Our membership interest in CF Industries, an interregional
plant food manufacturing cooperative, is accounted for through this segment on a
cost basis. We also derive a portion of revenues and income from other related
businesses, which are insignificant to our overall results. We allocate
corporate administration expense to all five of our business segments using two
methodologies, direct usage for services for which we are able to track this
usage, such as payroll and legal, and invested capital for all other expenses. A
majority of these costs is allocated based on direct usage. We allocate these
costs to segments whether or not they are solely composed of investments and
joint ventures.

Principles of Consolidation

    We have numerous business activities that are not wholly-owned. The results
of Land O'Lakes Farmland Feed, Cheese & Protein International and other majority
owned businesses are fully consolidated. The minority owners' share in these
businesses is eliminated in our consolidated financial statements. Most of our
investments in joint ventures in which we have 50% or less of the governance
rights are accounted for under the equity method of accounting. These include
Agriliance, MoArk, Dairy Marketing Alliance and Advanced Food Products. When we
record equity income or loss from these joint ventures, we also allocate an
overhead charge on these investments. These charges are based upon our costs
rather than the fair market value of the services. In addition, we invest in
other cooperatives such as CF Industries, Ag Processing and CoBank, which are
accounted for on the cost basis method of accounting. Under this method,
patronage income, if any, from these cooperative investments is recorded in our
financial statements either as a reduction in cost of sales or, in the case of
CoBank, as a reduction in interest expense in the year in which the patronage
income is earned.

Unconsolidated Businesses

    We have investments in certain entities that are not consolidated in our
financial statements. For the three months ended March 31, 2002, losses from our
unconsolidated businesses amounted to $9.9 million, compared to a loss of $0.1
million for the three months ended March 31, 2001. Our investment in
unconsolidated businesses amounted to $550.9 million on March 31, 2002, and
$568.1 million on December 31, 2001. Cash flow from our investment in
unconsolidated businesses for the three months ended March 31, 2002 was $0.8
million, unchanged from $0.8 million for the three months ended March 31, 2001.

    Agriliance and CF Industries constitute the most significant of our
investments in unconsolidated businesses, both of which are reflected in our
agronomy results. Our investment in and earnings or losses from Agriliance,
beginning July 29, 2000, and CF Industries were as follows as of and for the
period ended:

                                       24
<PAGE>



                                                 MARCH 31,
                                              ---------------
                                               2002      2001
                                              ------    ------
                                               (IN MILLIONS)
  AGRILIANCE:
    Investment.........................       $ 74.8    $ 41.6
    Equity in earnings (loss)..........         (9.2)     (2.6)
  CF INDUSTRIES:
    Investment.........................       $248.5    $248.5
    Patronage income...................           --        --

We did not receive cash distributions from Agriliance or CF Industries during
these periods.

    Land O'Lakes, Cenex Harvest States Cooperatives ("CHS") and Farmland
Industries, Inc. contributed substantially all of their agronomy marketing
assets to Agriliance in July 2000. The agronomy marketing operations of Land
O'Lakes, CHS and Farmland were previously managed through various operating
entities. Land O'Lakes has a 50 percent equity ownership in Agriliance. The
other 50 percent ownership interest in Agriliance is owned by United Country
Brands (jointly owned by CHS and Farmland). Land O'Lakes provides certain
support services to Agriliance at competitive market prices. Agriliance was
billed $1.6 million and $2.2 million, respectively, for the three months ended
March 31, 2001 and 2002 for the support services. In addition, Land O'Lakes
purchases insignificant amounts of product from Agriliance. The fiscal year of
Agriliance ends on August 31. Unless otherwise indicated, references in this
Form 10-Q to the annual or quarterly results of Agriliance are presented on a
calendar year basis to conform with Land O'Lakes presentation. Agriliance funds
its operations from operating cash flows, an initial working capital
contribution on formation and borrowings from unaffiliated third parties.
Agriliance has entered into syndicated secured term and revolving credit
arrangements in an aggregate amount of $407 million as of August 31, 2001. Since
then, credit arrangements were renegotiated and as of March 31, 2002 amounted to
$325 million. In addition, Agriliance has entered into a $200 million
receivables securitization with CoBank. Neither Land O'Lakes nor any of the
restricted subsidiaries guarantee these obligations. Land O'Lakes does not have
an obligation to contribute additional capital to finance Agriliance's
operations.

    CF Industries is an inter-regional cooperative involved in the manufacture
of crop nutrients, in which we have a 34% ownership interest based on our
product purchases. As a member, we are allowed to elect one board member out of
a total of nine board members for CF Industries. Agriliance is one of CF
Industries' most significant customers. CF Industries operates in a highly
cyclical industry. The oversupply of nitrogen in the industry since 1998 has
resulted in depressed prices and, consequently, depressed earnings. Since CF
Industries is a cooperative, we only receive earnings from our investment when
the cooperative allocates and distributes patronage to us. No patronage was
allocated and distributed to us in the last three years because CF Industries
realized losses in those years. We anticipate that no patronage allocations will
occur until these losses have been recouped. Our $248.5 million investment in CF
Industries consists of approximately $150 million in noncash patronage income
from prior periods (not distributed to us) and approximately $100 million that
was acquired as part of our Countrymark acquisition in 1998 based on
Countrymark's prior business with CF Industries. Prior to the contribution of
our agronomy assets to Agriliance, our agronomy business earned patronage income
on the business it conducted with CF Industries. Since July 29, 2000, Land
O'Lakes has been entitled to receive patronage income for business that
Agriliance transacts with CF Industries on behalf of our members, primarily
fertilizer purchases. We believe these sales are on terms comparable to those
available to unaffiliated third parties.

    We have an investment in CoBank, an agricultural cooperative bank, which
amounted to $21.8 million on March 31, 2002, and $21.5 million on December 31,
2001. This investment constitutes less than one percent of CoBank's total
shareholder equity. We account for our investment in CoBank under the cost basis
method of accounting. The investment consists of an initial nominal cash amount
of $1,000 and equity additions based on a percentage (currently 11.5%) of our
five-year average loan volume. Since CoBank operates as a cooperative, we
receive patronage income from CoBank based on our annual loan volume with
CoBank. This patronage income reduces our interest expense. We believe these
loan transactions to be on terms comparable to those available to unaffiliated
third parties.

Critical Accounting Policies

    We utilize certain accounting measurements under applicable generally
accepted accounting principles, which involve the exercise of management's
judgment about subjective factors and estimates about the effect of matters
which are inherently uncertain. The following is a summary of those accounting
measurements which we believe are most critical to our reported results of
operations and financial condition.

                                       25
<PAGE>

    Inventory Valuation. Inventories are valued at the lower of cost or market.
Cost is determined on a first-in, first-out or average cost basis. Many of our
products, particularly in our dairy foods, animal feed and swine segments, use
dairy or agricultural commodities as inputs or constitute dairy or agricultural
commodity outputs. Consequently, our results are affected by the cost of
commodity inputs and the market price of outputs. Government regulation of the
dairy industry and industry practices in animal feed tend to stabilize margins
in those segments but do not protect against large movements in either input
costs or output prices. Such large movements in commodity prices could result in
significant write-downs to our inventories, which could have a significant
negative impact on our operating results.

    We use derivative commodity instruments, primarily futures contracts, in our
operations to lock in our ingredient input prices, primarily for our product
inputs such as milk, butter and soybean oil for dairy foods, soybean meal and
corn for animal feed, and soybeans for crop seed. The degree of our hedging
position varies from less than one percent for butter to nearly 100% for soybean
oil. In addition, purchase agreements with various vendors are used to varying
degrees to lock in input prices. This decreases our exposure to changes in
commodity prices. We do not use derivative commodity instruments for speculative
purposes. The futures contracts are not designated as hedges under Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." Accordingly, since the adoption of SFAS No.
133, effective January 1, 2001, the futures contracts are marked to market
(either Chicago Mercantile Exchange or Chicago Board of Trade) on the last day
of each month and unrealized gains and losses are recognized as an adjustment to
cost of sales. Prior to 2001, we did not mark our derivative commodity
instruments to market; instead, we recorded losses or gains only when realized.

    Allowance for Doubtful Accounts. We estimate our allowance for doubtful
accounts based on an analysis of specific accounts, an analysis of historical
trends, payment and write-off histories, current sales levels and the state of
the economy. Our credit risks are continually reviewed and management believes
that adequate provisions have been made for doubtful accounts. However,
unexpected changes in the financial strength of customers or changes in the
state of the economy could result in write-offs which exceed estimates and
negatively impact our financial results.

    Recoverability of Long-Lived Assets. We assess the recoverability of
goodwill and other long-lived assets annually or whenever events or changes in
circumstances indicate that expected future undiscounted cash flows might not be
sufficient to support the carrying amount of an asset. We deem an asset to be
impaired if a forecast of undiscounted future operating cash flows is less than
an asset's carrying amount. If an asset is determined to be impaired, the loss
is measured as the amount by which the carrying value of the asset exceeds its
fair value. Changes in our business strategies and/or changes in the economic
environment in which we operate may result in future impairment charges.

Cooperative Structure

    Land O'Lakes is incorporated in Minnesota as a cooperative corporation.
Cooperatives resemble traditional corporations in most respects, but with two
primary distinctions. First, a cooperative's common shareholders, its "members,"
either supply the cooperative with raw materials or purchase its goods and
services. Second, to the extent a cooperative allocates its earnings from member
business to its members and meets certain other requirements, it is allowed to
deduct this "qualified patronage income" or "patronage income" from its taxable
income. Patronage income is allocated in accordance with the amount of business
each member conducts with the cooperative.

    Cooperatives typically derive a majority of their business from members,
although they are allowed by the Internal Revenue Code to conduct non-member
business. Earnings from non-member business are retained as permanent equity by
the cooperative and taxed as corporate income in the same manner as a typical
corporation. Earnings from member business are either allocated to patronage
income or retained as permanent equity (in which case it is taxed as corporate
income) or some combination thereof.

    In order to obtain favorable tax treatment on allocated patronage income,
the Internal Revenue Code requires that at least 20% of each member's annual
allocated patronage income be distributed in cash. The portion of patronage
income that is not distributed in cash is retained by the cooperative and
allocated to member equities. Member equities may be distributed to members at a
later time as a "revolvement" as determined by our board of directors. The
cooperative's members must recognize the amount of allocated patronage income
(whether distributed to members or retained by the cooperative) in the
computation of their individual taxable income.

    Cooperatives are also allowed to designate patronage income as
"nonqualified" patronage income and allocate it to member equities. Unlike
qualified patronage income, the cooperative pays taxes on this nonqualified
patronage income as if it was derived from non-member business. The cooperative
may revolve the nonqualified patronage equity to members at some later date and
is




                                       26
<PAGE>

allowed to deduct those amounts from its taxable income at that time. When
nonqualified patronage income is revolved to the cooperative's members, the
revolvement must be included in the members' taxable income.

    For the fiscal year ended December 31, 2001, our net earnings from member
business were $73.3 million, excluding the portion (10% holdback) added to
permanent equity. Of this amount, $70.6 million was applied to allocated
patronage refunds and $2.7 million was applied to deferred equities. The $70.6
million of allocated patronage refunds consisted of an estimated $19.9 million
to be paid in cash in 2002 and $50.7 million to be retained as allocated member
equities and revolved at a later time, subject to approval by the board of
directors. The $2.7 million of deferred equities represent earnings from certain
member businesses that are held in an equity reserve account rather than being
allocated to members. We had net losses of $1.8 million applied to retained
earnings which represents permanent equity derived from non-member business, the
10% holdback of member earnings and income taxes.

    In 2001, we made payments of $46.9 million for the redemption of member
equities. This included $30.7 million for the cash patronage portion of the 2000
earnings allocated to members. It also included $16.2 million for the
revolvement of member equities previously allocated to members, and not paid as
cash patronage, and the revolvement of a portion of equities issued in
connection with the 1998 acquisitions of Dairyman's Cooperative Creamery
Association and certain assets of Countrymark Cooperative.

Wholesaling and Brokerage Activities

    Our dairy foods segment operates a wholesale milk marketing program. We
purchase excess raw milk over our production needs from our members and sell it
directly to other dairy processors. We generate losses or insignificant earnings
on these transactions; however, there are three principal reasons for doing
this: first, we need to sell a certain percentage of our raw milk to fluid dairy
processors in order to participate in the Federal market order system, which
lowers our input cost of milk for the manufacture of dairy products; second, it
reduces our need to purchase raw milk from sources other than members during
periods of low milk production in the United States (typically August, September
and October) and third, it ensures that our members have a market for the milk
that they produce during periods of high milk production. In the three months
ended March 31, 2002, we sold 1,479.7 million pounds of milk, which resulted in
$221.4 million of net sales or 30.3% of our dairy foods segment's net sales for
that period, with cost of sales exceeding net sales by $6.1 million.

    Our animal feed segment, in addition to selling its own products, buys and
sells or brokers for a fee soybean meal and other feed ingredients. We market
these ingredients to our local member cooperatives and to other feed
manufacturers, which use them to produce their own feed. Although this activity
generates substantial revenues, it is a very low-margin business. We are
generally able to obtain feed inputs at a lower cost as a result of our
ingredient merchandising business because of lower per unit shipping costs
associated with larger purchases and volume discounts. For the three months
ended March 31, 2002, ingredient merchandising generated net sales of $122.0
million, or 20.0% of total animal feed segment net sales, and a gross profit of
$3.5 million, or 4.7% of total animal feed segment gross profit.

Seasonality

    Certain segments of our business are subject to seasonal fluctuations in
demand. In our dairy foods segment, butter sales typically increase in the fall
and winter months due to increased demand during holiday periods. Animal feed
sales tend to increase in the fourth and first quarter of each year because
cattle are less able to graze during cooler months. Most crop seed sales occur
in the first and second quarter of each year. Agronomy product sales tend to be
much higher in the first and second quarter of each year, as farmers buy crop
nutrients and crop protection products to meet their seasonal needs.

FACTORS AFFECTING COMPARABILITY

Dairy and Agricultural Commodity Inputs and Outputs

    Many of our products, particularly in our dairy foods, animal feed and swine
segments, use dairy or agricultural commodities as inputs or constitute dairy or
agricultural commodity outputs. Consequently, our results are affected by the
cost of commodity inputs and the market price of commodity outputs. Government
regulation of the dairy industry and industry practices in animal feed tend to
stabilize margins in those segments but do not protect against large movements
in either input costs or output prices.

    Dairy Foods. Raw milk is the major commodity input for our dairy foods
segment. For the three months ended March 31, 2002, our raw milk input cost was
$452.8 million, or 66.0% of the cost of sales for our dairy foods segment.
Cream, butter and bulk cheese are also significant dairy foods commodity inputs.
Cost of sales for these inputs was $75.3 million for cream, $20.2 million for
butter


                                       27
<PAGE>

and $78.4 million for bulk cheese for the three months ended March 31, 2002. Our
dairy foods outputs, namely butter, cheese and nonfat dry milk, are also
commodities.

    The minimum price of raw milk and cream is set monthly by Federal regulators
based on regional prices of dairy foods products produced. These prices provide
the basis for our raw milk and cream input costs. As a result, those dairy foods
products for which the sales price is fixed shortly after production, such as
most bulk cheese, are not subject to significant commodity price risk as the
price received for the output varies with the cost of the significant inputs.
For the three months ended March 31, 2002, bulk cheese, which is generally sold
the day made, represented $67.8 million, or 9.3% of our dairy foods segment's
net sales. Other products, such as private label butter, which have significant
net sales, are also generally sold shortly after they are made.

    We also maintain significant inventories of butter and cheese for sale to
our retail and food service customers, which are subject to commodity price
risk. Because production of raw milk and demand for butter varies seasonally, we
inventory significant amounts of butter. Demand for butter is highest during the
fall and winter, when milk supply is lowest. As a result, we produce and store
excess quantities of butter during the spring when milk supply is highest. In
addition, we maintain some inventories of cheese for aging. For the three months
ended March 31, 2002, branded and private label retail, deli and foodservice net
sales of cheese and butter represented $237.9 million, or 32.5% of our dairy
foods segment's net sales.

    For the three months ended March 31, 2001, butter and cheese prices were
volatile. For the three months ended March 31, 2002, we saw seasonal declines in
pricing; yet pricing stayed well ahead of government support prices. However,
the net impact on operating results was not significant due to the use of
pricing practices, inventory policies and risk management.

    Animal Feed. The animal feed segment follows industry standards for feed
pricing. The feed industry generally prices products based on income over
ingredient cost ("IOIC") per ton of feed. This practice tends to mitigate the
impact of volatility in commodity ingredient markets on our animal feed profits.
As ingredient costs fluctuate, the changes are generally passed on to customers
through weekly or monthly changes in prices. Thus, the key indicator of business
performance in the animal feed segment is IOIC rather than net sales. Net sales
are considered a poor indicator as large fluctuations can occur from
period-to-period due to volatility in underlying commodity ingredient prices.

    We also enter into forward contracts to supply feed, which currently
represent approximately 20% of our feed output. When we enter into these
contracts, we also generally enter into forward input supply contracts to "lock
in" our IOIC.

    Changes in commodity grain prices also have an impact on the mix of products
we sell. When grain prices are relatively high, the demand for complete feed
rises since many livestock producers are also grain growers and will sell their
grain in the market and purchase complete feed as needed. When grain prices are
relatively low, these producers will feed their grain to their livestock and
purchase premixes and supplements to provide complete nutrition to their
animals. These fluctuations in product mix generally have minimal effects on our
operating results. Complete feed has a far lower margin per ton than supplements
and premixes. Thus, during periods of relatively high grain prices, although our
margins per ton are lower, we sell substantially more tonnage because the grain
portion of complete feed makes up the majority of its weight.

    Swine. We produce and market both young feeder pigs (approximately 45
pounds) and mature market hogs (approximately 260 pounds) under three primary
programs: swine aligned, farrow-to-finish and cost-plus.

    Under the swine aligned program, we own sows and raise feeder pigs that we
sell to our local member cooperatives under ten-year contracts. For the first
five years, we receive a fixed base price for our feeder pigs and are reimbursed
for feed costs. In years six through ten, the price is based on the cost of
production, plus a margin designed to achieve a target return on invested
capital. Since the price for the duration of the contract is not tied to the
live hog market, we do not have market risk on feeder pig prices. In addition,
there is no risk on corn or soybean meal prices since we are reimbursed for
actual feed costs. We do incur production risk if we do not produce enough
feeder pigs or if we do not produce them at a competitive cost.

    Under the farrow-to-finish program, we produce and sell market hogs.
Historically, market hog price fluctuations have resulted in volatility in our
net sales and earnings. In order to mitigate this risk, we have committed to
sell substantially all of the market hogs we produce annually through 2005 to
IBP, inc. under a packer agreement. Under this packer agreement, we are paid
market prices for our hogs with a settlement based on the sales price of the
pork products produced from those hogs. This approach mitigates some of the
volatility under this program because market hog and pork product margins do not
tend to move together. We sell the balance of our market hogs on the open
market.

                                       28
<PAGE>

    Under the cost-plus program, we provide minimum hog price guarantees to
producers in exchange for swine feed sales and profit participation. We are in
the process of phasing out our existing cost-plus contracts and will not be
entering into new ones due to the significant adverse effects this program has
had on our results of operations. The program incurred pretax losses of $0.4
million and $0.5 million for the three months ended March 31, 2002 and March 31,
2001, respectively.

    Historically, Purina Mills reported results of its swine business together
with its feed business. Accordingly, the portion of our swine business which we
acquired from Purina Mills in October 2001 is reported within our feed segment
in the three months ended March 31, 2002. For the three months ended March 31,
2002, the Purina Mills swine business generated a loss of $0.7 million compared
to earnings of $0.8 million for the three months ended March 31, 2001.

Acquisitions/Joint Ventures/Divestitures

    We have engaged in various significant acquisitions, joint ventures and
divestitures since January 1, 1999. Each of the acquisitions was accounted for
as a purchase transaction. The Land O'Lakes Farmland Feed and Agriliance joint
ventures, our most significant joint ventures, involved the combination of
existing Land O'Lakes business units with those of our joint venture partners to
create new entities. Since its formation on October 1, 2000, we have
consolidated Land O'Lakes Farmland Feed. However, because we do not control
Agriliance, it is accounted for under the equity method.

    The following table lists each acquisition, joint venture and divestiture in
excess of $50 million in asset value since 1999.

<TABLE>
<CAPTION>
 YEAR     NAME                                     TRANSACTION                 TOTAL ASSETS
 ----     ----                                     -----------                 ------------
<S>       <C>                                      <C>                         <C>
 2001     Purina Mills........................     Acquisition for cash of     $540.5 million
                                                   stock of commercial and
                                                   lifestyle feed company
                                                   (October 2001)

 2000     Madison Dairy Produce Co............     Acquisition for cash of     $59.3 million
                                                   private label butter
                                                   company (January 2000)

          Fluid dairy assets..................     Divestiture for cash of     $112.2 million
                                                   fluid dairy assets
                                                   (July 2000)

          Land O'Lakes Farmland Feed..........     Joint venture with           $91.7 million
                                                   Farmland Industries         (our contribution)
                                                   involving transfer of
                                                   existing Land O'Lakes
                                                   animal feed business
                                                   (October 2000)

          Agriliance..........................     Joint venture with           $79.5 million
                                                   United Country Brands       (our contribution)
                                                   involving transfer of
                                                   certain Land O'Lakes
                                                   agronomy assets
                                                   (July 2000)

 1999     Terra Industries....................     Acquisition for cash of      $70.7 million
                                                   selected agronomy retail
                                                   distribution assets in
                                                   the eastern United States
                                                   (June 1999)

          Agro Distribution...................     Investment in joint          $50.0 million
                                                   venture with CHS
                                                   Cooperatives
                                                   (June 1999) formed to acquire
                                                   selected northern and
                                                   southern ag retail
                                                   distribution assets from
                                                   Terra Industries
</TABLE>

    In June 1999, certain of the northern and southern retail agronomy assets of
Terra Industries were acquired by Agro Distribution, our unconsolidated joint
venture with CHS Cooperatives, which was subsequently contributed to Agriliance.
The objective of this acquisition was to sell each retail agronomy location to
one or more of our local cooperative members. Nearly all of the northern
locations have been sold. We were unable to sell most of the southern locations
and decided in the fall of 2001 to continue to operate these southern retail
agronomy assets. Operation of these locations resulted in significant losses for
the three months ended March 31,



                                       29
<PAGE>

2002 and 2001. These losses were recorded through our investment in Agriliance
as equity in earnings or loss from affiliated companies. Agro Distribution's
losses on operation of these locations aggregated $9.2 million and $22.2 million
for the three months ended March 31, 2002 and March 31, 2001, with Land O'Lakes
recording 50% of these losses in equity in loss of affiliated companies.

    In October 2001, we acquired Purina Mills, Inc. The total purchase price of
the Purina Mills acquisition was $358.6 million. The acquisition added $86.9
million of goodwill and $98.9 million of other intangible assets to our balance
sheet. This acquisition resulted in a substantial increase in our leverage
(long-term debt, including Capital Securities, to capital) from 43.5% at
December 31, 2000 to 55.4% at March 31, 2002 and increased interest costs by
approximately $40 million annually. Given the nature of products sold by Purina
Mills and its distribution network, the Purina Mills business has a higher gross
margin rate and a higher rate of selling and administration expense as a percent
of sales than the Land O'Lakes Farmland Feed business. By the end of 2002, we
expect to have implemented programs that would enable us to generate recurring
annual cost savings of approximately $50 million as a result of the acquisition,
relative to costs that would have been incurred separately. In 2002, we expect
to generate approximately $25 million in savings, which are expected to be
essentially offset by plant closing, severance, employee relocation and
information technology integration costs of approximately $24 million.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED
                                                      MARCH 31,
                                     ------------------------------------------
                                             2001                  2002
                                     --------------------  --------------------
                                                   % OF                  % OF
                                     $ AMOUNT      TOTAL    $ AMOUNT     TOTAL
                                     --------      -----    --------     -----
                                                (DOLLARS IN MILLIONS)
C<S>                                   <C>          <C>      <C>          <C>
  NET SALES
  Dairy foods.....                    $  756.4     55.0     $  731.1     48.0
  Animal feed.....                       408.4     29.7        610.5     40.1
  Crop seed.......                       181.8     13.2        155.7     10.2
  Swine...........                        25.6      1.9         23.9      1.6
  Agronomy........                          --       --           --       --
  Other...........                         3.5      0.2          3.0      0.1
                                      --------     ----     --------     ----
     Total net sales                  $1,375.7              $1,524.2
                                      ========              ========
</TABLE>

<TABLE>
<CAPTION>

                                                    % OF                  % OF
                                                     NET                   NET
                                    $ AMOUNT        SALES   $ AMOUNT      SALES
                                    --------        -----   --------      -----
<S>                                   <C>          <C>      <C>          <C>
 COST OF SALES
  Dairy foods...............          $  703.1        93.0  $  686.1        93.8
  Animal feed...............             376.4        92.2     536.5        87.9
  Crop seed.................             153.7        84.5     130.6        83.9
  Swine.....................              24.7        96.5      21.5        90.0
  Agronomy..................                --          --        --          --
  Other.....................               2.7        77.1       1.6        53.3
                                      --------   ---------  --------    --------
      Total cost of sales...           1,260.6        91.6   1,376.3        90.3
  SELLING AND
    ADMINISTRATION EXPENSE
  Dairy foods...............              41.1         5.4      44.5         6.1
  Animal feed...............              28.3         6.9      62.3        10.2
  Crop seed.................              12.0         6.6      13.0         8.3
  Swine.....................               1.8         7.0       1.7         7.1
  Agronomy..................               7.0          --       3.5          --
  Other.....................               2.4        68.6       2.5        83.3
                                      --------   ---------  --------    --------
      Total selling and
        administration
        expense................           92.6         6.7     127.5         8.4
  Restructuring and impairment
    charges....................           (1.0)        0.1       3.4         0.2
                                      --------   ---------  --------    --------
  Earnings from operations.....           23.5         1.7      17.0         1.1
  Interest expense, net........           11.8         0.9      17.5         1.1
  Gain on sale of
    intangibles................             --          --      (4.2)        0.3
  Gain from divestiture of
    businesses.................             --          --        --          --
  Equity in (earnings) loss of
    affiliated companies.......            0.1          --       9.9         0.6
  Minority interest in (loss)
    earnings of subsidiaries...            1.6         0.1       0.9         0.1
  Earnings (loss) before
    income taxes and
    extraordinary item.........           10.0         0.7      (7.1)        0.5
  Income tax expense
    (benefit)..................           (3.0)        0.2      (6.1)        0.4
                                      --------   ---------  --------    --------
  Earnings (loss) before
    extraordinary item.........      $    13.0         0.9  $   (1.0)        0.1
                                      ========   =========  ========    ========
</TABLE>

                                       30
<PAGE>

THREE MONTHS ENDED MARCH 31, 2002 AS COMPARED TO THREE MONTHS ENDED MARCH 31,
2001

NET SALES

    Net sales for the three months ended March 31, 2002 increased $148.5
million, or 10.8%, to $1,524.2 million, compared to net sales of $1,375.7
million for the three months ended March 31, 2001. Excluding the effects of the
formation of the Advanced Food Products joint venture in March 2001, net sales
increased $162.2 million, or 11.9%, from $1,362.0 million for the three months
ended March 31, 2001 to $1,524.2 million for the three months ended March 31,
2002. The increase was primarily attributed to the acquisition of Purina Mills
in October 2001, partially offset by the impact of an early shipment of crop
seed products in the fourth quarter of 2001 that historically occurred in the
first quarter of each year and declines in dairy foods sales.

    Dairy Foods. Net sales for the three months ended March 31, 2002 decreased
$25.3 million, or 3.3%, to $731.1 million, compared to net sales of $756.4
million for the three months ended March 31, 2001. Excluding the effects of the
Advanced Food Products joint venture, net sales for the three months ended March
31, 2002 decreased $11.5 million, or 1.6%, from the three months ended March 31,
2001. Private-label butter and nonfat dry milk powder sales in the Western
Region decreased $13.4 million and $12.5 million, respectively. The decline in
butter sales was due to a combination of decreased market prices and volume
declines, while the decline in powder sales was due to changes in production
schedules at our dairy plants, which resulted in reduced powder byproduct
availability. During the three months ended March 31, 2002, average butter
market prices decreased $0.09 per pound, while average cheese market prices
increased $0.06 per pound. The impact of these market price changes decreased
net sales of butter by $6.4 million and increased net sales of cheese by $4.0
million. Retail butter prices remained high, which resulted in declines in sales
volumes as consumers shifted to substitute products or reduced consumption.
Butter and spreads volumes decreased 1.6 million pounds and 3.2 million pounds,
respectively, representing a decrease in net sales of $3.9 million and $2.4
million, respectively, from the same period last year. Deli cheese volumes
decreased 3.8 million pounds from the prior year and resulted in a reduction of
sales of $7.1 million. Sales for the three months ended March 31, 2002 under our
wholesale milk marketing program increased $21.0 million, or 10.5%, to $221.4
million, compared to $200.4 million for the three months ended March 31, 2001,
due to the formation of the Melrose, MN cheese joint venture in March 2001,
which contributed $24.1 million in incremental wholesale milk sales for the
three months ended March 31, 2002. Volume increases in exports, foodservice
cheese and other product categories accounted for the remaining sales increase
of $9.2 million.

    Animal Feed. Net sales for the three months ended March 31, 2002 increased
$202.1 million, or 49.5%, to $610.5 million, compared to net sales of $408.4
million for the three months ended March 31, 2001. The acquisition of Purina
Mills contributed $214.9 million in incremental sales. This increase was
partially offset by declines in Land O'Lakes Farmland Feed branded sales. Sales
of Land O'Lakes Farmland Feed branded beef feeds decreased $5.1 million,
primarily due to the effect of warmer than average winter weather. Sales in our
Land O'Lakes Farmland Feed Animal Health and Packaged Goods area decreased $5.0
million as a result of a realigned marketing arrangement with a large vendor
whereby we no longer record sales dollars, but rather a margin-based fee that
offsets cost of sales. Sales also decreased $3.5 million in our Land O'Lakes
Farmland Feed branded lifestyle product lines, reflecting customer anticipation
of a roll-out of a new product line beginning in April 2002. Swine sales in our
Land O'Lakes Farmland Feed branded products decreased $3.7 million as a result
of decreased volumes and depressed market prices for hog producers. Sales of
bulk phosphates decreased $3.1 million due to the sale of this business to a
third party. Sales in our dairy feeds area increased $4.1 million, driven by
strong sales of simple blends in our Western region. We also experienced an
increase of $3.8 million in our Animal Milk Products area as a result of strong
volumes. Finally, sales from ingredient merchandising decreased $2.6 million, or
2.1%, from $124.7 million for the three months ended March 31, 2001 to $122.0
million for the three months ended March 31, 2002.

    Crop Seed. Net sales for the three months ended March 31, 2002 decreased
$26.1 million, or 14.4%, to $155.7 million, compared to net sales of $181.8
million for the three months ended March 31, 2001. We shipped $42.0 million in
sales in the fourth quarter of 2001 that historically would have occurred in the
first quarter of 2002. These $42.0 million shipments included $28.5 million for
soybeans and $11.0 million for corn. An early fall harvest and mild winter
allowed us to ship product early in the season, and third-party suppliers also
provided incentives to customers to take seed product early. Strong volume
growth resulted in increased sales of corn of $9.7 million, or 14.9%, due to
early placement of product in the retail channels because of the mild winter
season, while sales of alfalfa decreased by $2.1 million, or 9.7%, due to the
continued glut in the alfalfa market. A change in billing for technology fees
collected on behalf of one of our third-party suppliers added $8.0 million to
sales and cost of sales. Growth in other seed categories accounted for the
remaining increase of $0.4 million.

                                       31
<PAGE>

    Swine. Net sales for the three months ended March 31, 2002 decreased $1.7
million, or 6.6%, to $23.9 million, compared to $25.6 million for the three
months ended March 31, 2001. The decrease was due mainly to lower sales volume,
partially offset by slightly higher market prices for hogs. The number of market
hogs sold decreased by 15,317 with a corresponding sales decrease of $1.8
million, and the total number of feeder pigs sold increased by 903 with minimal
impact on sales, resulting in a net decrease in sales of $1.8 million. Reduced
consumer demand decreased the average market price for the three months ended
March 31, 2002 to about $39.92 per hundredweight versus an average market price
of approximately $43.38 for the three months ended March 31, 2001. The decrease
in average market hog prices of $3.46 per hundredweight decreased sales by $0.6
million. The average price per feeder pig increased $0.08 from $50.24 for the
three months ended March 31, 2001 to $50.32 for the three months ended March 31,
2002, which increased sales by $0.2 million. This increase was due primarily to
the fact that we added more swine aligned contracts with a higher base price,
and the open market on feeder pigs was higher. We signed a packer agreement with
IBP, inc. effective September 25, 2000, which ties the price we receive for
market hogs to the price that the packer receives for pork products. For the
three months ended March 31, 2002, this agreement increased our sales by $0.5
million, since the agreement limits our downside as well as upside potential
from market price swings.

COST OF SALES

    Cost of sales for the three months ended March 31, 2002 increased $115.7
million, or 9.2%, to $1,376.3 million, compared to cost of sales of $1,260.6
million for the three months ended March 31, 2001. Cost of sales as a percent of
net sales decreased 1.3 percentage points to 90.3% for 2002, compared to 91.6%
for the prior year. The formation of the Advanced Food Products joint venture
impacted our reported results because we no longer consolidate its results in
our financial statements. Adjusting for the effects of this transaction, cost of
sales increased $128.2 million, or 10.3%, to $1,376.3 million for the three
months ended March 31, 2002, compared to cost of sales of $1,248.1 million for
the three months ended March 31, 2001. Cost of sales as a percentage of net
sales adjusted for the effects of this transaction decreased 1.3 percentage
points from 91.6% for the three months ended March 31, 2001 to 90.3% for the
three months ended March 31, 2002. The acquisition of Purina Mills added
significantly to our cost of sales, resulting in an increase of $176.6 million.
This increase was partially offset by lower cost of sales in seed, swine and
dairy foods. For the three months ended March 31, 2002, patronage income from
other cooperatives that was directly attributable to product purchases amounted
to $1.1 million, compared to $0.6 million for the three months ended March 31,
2001. Our cost of sales was reduced by these amounts.

    Dairy Foods. Cost of sales for the three months ended March 31, 2002
decreased $17.0 million, or 2.4%, to $686.1 million, compared to cost of sales
of $703.1 million for the three months ended March 31, 2001. Excluding the
effects of the formation of the Advanced Food Products joint venture, cost of
sales decreased $4.5 million to $686.1 million for the three months ended March
31, 2002, compared to $690.6 million for the three months ended March 31, 2001.
Cost of sales for private label butter and nonfat dry milk powder in the Western
region decreased $12.3 million and $13.5 million, respectively. Reduced sales of
butter and deli cheese resulted in decreased cost of sales of $8.9 million and
$5.5 million, respectively. Energy costs decreased by $1.4 million over the
prior year period. Milk input costs in the Upper Midwest were $4.0 million
higher than the same period last year. Cost of sales for the three months ended
March 31, 2002 under our wholesale milk marketing program increased $23.2
million, or 11.4%, to $227.4 million, compared to $204.2 million for the three
months ended March 31, 2001. This increase was due to the formation of the
Melrose, MN cheese joint venture in March 2001, which resulted in incremental
cost of sales of $25.3 million. Finally, cost of sales for exports, foodservice
cheese and other products increased $14.4 million over the prior-year period.
Cost of sales as a percent of sales increased 0.8 percentage points from 93.0%
for the three months ended March 31, 2001 to 93.8% for the three months ended
March 31, 2002. The corresponding margin decrease was due primarily to weak
sales volumes and higher milk input costs in the Upper Midwest.

    Animal Feed. Cost of sales for the three months ended March 31, 2002
increased $160.1 million, or 42.5%, to $536.5 million compared to $376.4 million
for the three months ended March 31, 2001. The acquisition of Purina Mills added
$177.2 million in cost of sales for the three months ended March 31, 2002. This
increase was slightly offset by a decrease in Land O'Lakes Farmland Feed branded
product lines. Land O'Lakes Farmland Feed branded beef feeds cost of sales
decreased $4.9 million, due to slower sales as a result of warm winter weather.
Land O'Lakes Farmland Feed Animal Health and Packaged Goods decreased $4.9
million driven by a realigned marketing arrangement whereby we no longer record
cost of sales dollars, but rather a margin-based fee that offsets cost of sales.
Land O'Lakes Farmland Feed branded lifestyle cost of sales declined $2.9 million
in anticipation of a new product line launch in April 2002. Cost of sales of
bulk phosphates decreased $2.9 million as we sold this business during the first
quarter of 2002. Land O'Lakes Farmland Feed branded swine cost of sales
decreased by $2.0 million. Cost of sales in our dairy feed area increased $4.2
million, primarily as a result of strong sales in our Western region. Cost of
sales in our Animal Milk Products area increased $2.8 million primarily due to
increased volumes. The remainder of the differences relates to small variances
in our other product lines. Cost




                                       32
<PAGE>


of sales as a percent of sales decreased 4.3 percentage points, from 92.2% in
the first quarter of 2001 to 87.9% in the same period of 2002. The decrease was
due primarily to higher margins on certain Purina Mills products, which carry a
comparatively higher margin than our traditional product lines. Cost of sales
was also decreased by cost reductions in our purchasing, manufacturing and
distribution area as a result of the integration of the Purina Mills operations.
Cost of sales decreased $2.4 million as a result of the decline in ingredient
merchandising sales. An unrealized hedging gain in the first quarter of 2002
related to corn and soybean meal futures contracts decreased cost of sales by
$2.2 million, compared to an increase from an unrealized hedging loss of $2.5
million in the first quarter of 2001. IOIC as a percent of cost of sales
increased to 25.3% in the first quarter of 2002 from 17.2% in the same period of
2001 due to the change in product mix and the change in unrealized hedging gains
and losses as noted above.

    Crop Seed. Cost of sales for the three months ended March 31, 2002 decreased
$23.1 million, or 15.0%, to $130.6 million, compared to cost of sales of $153.7
million for the three months ended March 31, 2001. Cost of sales decreased for
soybeans ($18.1 million), alfalfa ($3.1 million) and corn ($1.5 million),
primarily as a result of volume declines due to early shipment of $42.0 million
of product in the fourth quarter of 2001 that historically would have occurred
in the first quarter of 2002. This early shipment accounted for $36.1 million of
cost of sales and included $24.5 million for soybeans, $9.5 million for corn and
$2.1 million for alfalfa. Incremental sales growth and, consequently, an
increase in cost of sales in the first quarter partially offset the impact of
this loss of volume. In addition, a change in billing for technology fees
collected on behalf of one of our third-party suppliers increased sales and cost
of sales by $8.0 million. An unrealized hedging gain of $1.1 million for the
three months ended March 31, 2002 related to soybean futures contracts, compared
to an unrealized hedging gain of $0.3 million for the three months ended March
31, 2001, reduced cost of sales by $0.8 million. Cost of sales as a percent of
sales decreased 0.6 percentage points, from 84.5% for the three months ended
March 31, 2001 to 83.9% for the three months ended March 31, 2002, due to the
change in product mix.

    Swine. Cost of sales for the three months ended March 31, 2002 decreased
$3.2 million, or 13.0%, to $21.5 million, compared to $24.7 million for the
three months ended March 31, 2001. Cost of sales as a percent of sales decreased
6.5 percentage points from 96.5% to 90.0% of sales. Reduced unit sales decreased
cost of sales by $1.7 million, while slightly higher cost of production
increased cost of sales by $0.2 million. Reduced volume in our cost-plus program
decreased cost of sales by $0.3 million. An unrealized hedging gain decreased
cost of sales by $0.4 million for the three months ended March 31, 2002,
compared to an unrealized hedging loss of $1.0 million for the three months
ended March 31, 2001, resulting in a net decrease in cost of sales of $1.4
million.

SELLING AND ADMINISTRATION EXPENSE

    Selling and administration expense for the three months ended March 31, 2002
increased $34.8 million, or 37.6%, to $127.5 million, compared to selling and
administration expense of $92.6 million for the three months ended March 31,
2001. Selling and administration expense as a percent of sales increased 1.7
percentage points from 6.7% for the three months ended March 31, 2001 to 8.4%
for the three months ended March 31, 2002. Excluding the effects of the
formation of our Advanced Food Products joint venture, selling and
administration expense increased $35.4 million, or 38.5%, to $127.4 million for
the three months ended March 31, 2002, compared to $92.0 million for the three
months ended March 31, 2001. The acquisition of Purina Mills in October 2001
contributed to the increase.

    Dairy Foods. Selling and administration expense for the three months ended
March 31, 2002 increased $3.4 million, or 8.3%, to $44.5 million, compared to
$41.1 million for the three months ended March 31, 2001. Selling and
administration expense as a percent of sales increased 0.7 percentage points
from 5.4% for the three months ended March 31, 2001 to 6.1% for the three months
ended March 31, 2002. Excluding the effects of the formation of the Advanced
Food Products joint venture, selling and administration expense increased $4.0
million, or 9.9%. This increase was primarily due to a timing-related decrease
in other income of $1.6 million, an increase in research and development
spending of $1.1 million and selling expense of $0.6 million, as well as a
slight increase in administration expense.

    Animal Feed. Selling and administration expense for the three months ended
March 31, 2002 increased $34.0 million, or 120.1%, to $62.3 million, compared to
$28.3 million for the three months ended March 31, 2001. Selling and
administration expense as a percent of sales increased 3.3 percentage points
from 6.9% for the three months ended March 31, 2001 to 10.2% for the three
months ended March 31, 2002. The majority of this increase was related to the
acquisition of Purina Mills, which contributed $27.9 million in increased
selling and administration expense. In addition, in the first quarter of 2002,
we incurred one-time integration costs of $2.3 million with none in the same
period in 2001. Selling and administration expense as a percent of IOIC
increased from 44.5% for the three months ended March 31, 2001 to 45.7% for the
three months ended March 31, 2002.

    Crop Seed. Selling and administration expense for the three months ended
March 31, 2002 increased $1.0 million, or 8.3%, to $13.0 million, compared to
$12.0 million for the three months ended March 31, 2001. The change is primarily
due to an increase in



                                       33
<PAGE>

advertising and promotion spending for customer recognition and brand awareness.
Selling and administration expense as a percent of sales increased 1.7
percentage points, from 6.6% for the three months ended March 31, 2001 to 8.3%
for the three months ended March 31, 2002.

    Swine. Selling and administration expense for the three months ended March
31, 2002 decreased $0.1 million, or 5.6%, to $1.7 million, compared to $1.8
million for the three months ended March 31, 2001 due to reduced staffing.
Selling and administration expense as a percent of sales increased from 7.0% for
the three months ended March 31, 2001 to 7.1% for the three months ended March
31, 2002.

    Agronomy. Selling and administration expense for the three months ended
March 31, 2002 decreased $3.5 million, or 50.0%, to $3.5 million, compared to
$7.0 million for the three months ended March 31, 2001. Selling and
administration expense for the three months ended March 31, 2002 included $0.1
million in losses recorded for eastern agronomy assets held for sale, compared
to losses of $3.3 million recorded for the three months ended March 31, 2001.
The decrease in losses was due to the fact that most of the eastern agronomy
assets have been sold.

RESTRUCTURING AND IMPAIRMENT CHARGES

    For the three months ended March 31, 2002, Land O'Lakes recorded
restructuring and impairment charges of $3.4 million, compared to a reversal of
a prior-year charge of $1.0 million for the three months ended March 31, 2001.
Animal feed recorded a $3.4 million restructuring and impairment charge, of
which $0.8 million was related to the write-down of certain impaired plant
assets to their estimated fair value, and $2.6 million was related to employee
severance and outplacement costs for 136 employees at various locations. The
2001 reversal of $1.0 million was for the sale of certain animal feed assets
that had been written off in December 2000 and to reflect the decision to
continue operating a plant previously scheduled for shutdown.

    We anticipate restructuring charges of approximately $14 million in 2002
related to the integration of Purina Mills into Land O'Lakes Farmland Feed. In
addition, we anticipate restructuring charges of approximately $9 million in
2002 related to the consolidation of dairy operations in the Upper Midwest and
California.

INTEREST EXPENSE

    Interest expense for the three months ended March 31, 2002 was $17.5
million, compared to $11.8 million for the three months ended March 31, 2001.
The $5.7 million, or 48.3%, increase primarily resulted from increased borrowing
to finance the Purina Mills acquisition. Average debt balances increased by
$280.7 million over the three months ended March 31, 2001. CoBank patronage
reduced interest expense by $0.6 million for the three months ended March 31,
2002, compared to $0.5 million for the three months ended March 31, 2001.
Combined interest rates for borrowings, excluding CoBank patronage, averaged
7.04% for the three months ended March 31, 2002, compared to 6.97% for the three
months ended March 31, 2001.

GAIN ON SALE OF INTANGIBLE

    For the three months ended March 31, 2002, we recorded a gain of $4.2
million on the sale to Potash Corporation of Saskatchewan of a customer list
pertaining to the feed phosphate distribution business.

EQUITY IN LOSS OR EARNINGS OF AFFILIATED COMPANIES

    For the three months ended March 31, 2002, equity in loss of affiliated
companies was $9.9 million, compared to a loss of $0.1 million for the three
months ended March 31, 2001. Results for the three months ended March 31, 2002
included a loss from Agriliance of $9.2 million and a loss from the Canadian
agronomy business of $0.6 million, driven by wet weather in the South and late
snowfalls in the northern United States. Results for the three months ended
March 31, 2001 primarily reflected a loss from Agriliance of $2.6 million,
essentially offset by earnings from MoArk of $2.0 and earnings from other
affiliated companies.

MINORITY INTEREST IN LOSS OR EARNINGS OF SUBSIDIARIES

    For the three months ended March 31, 2002, we recorded minority interest in
earnings of subsidiaries of $0.9 million, compared to earnings of $1.6 million
for the three months ended March 31, 2001. Minority interest in earnings of
animal feed related subsidiaries was $1.4 million, partially offset by minority
interest in the loss of other consolidated subsidiaries.

                                       34
<PAGE>

INCOME TAXES

    We recorded an income tax benefit of $6.2 million for the three months ended
March 31, 2002, compared to an income tax benefit of $3.0 million for the three
months ended March 31, 2001. The tax benefit resulted from member and non-member
losses, predominantly in our agronomy business.

NET EARNINGS

    Net earnings decreased $14.0 million to a net loss of $1.0 million for the
three months ended March 31, 2002, compared to net earnings of $13.0 million for
the three months ended March 31, 2001. Improved margins in animal feed, swine
and crop seed were more than offset by higher selling and administration
expense, increased equity in loss of affiliated companies, and higher interest
expense.

LIQUIDITY AND CAPITAL RESOURCES

    We rely on cash from operations, borrowings under our bank facilities and
bank term debt and other institutionally placed funded debt as the main sources
for financing working capital requirements, additions to property, plant and
equipment and to complete acquisitions and joint ventures. Other sources of
funding consist of leasing arrangements, a receivables securitization and the
sale of non-strategic assets. Total long-term debt was $1,108.2 million,
including $190.7 million in Capital Securities, as of March 31, 2002, and
$1,147.5 million, including $190.7 million in Capital Securities, as of December
31, 2001.

    Net cash used by operating activities was $104.0 million for the three
months ended March 31, 2002 and $70.4 million for the three months ended March
31, 2001. For the three months ended March 31, 2002, net cash used by operating
activities was $33.6 million more than for the three months ended March 31,
2001. This increase was primarily due to the acquisition of Purina Mills and
decreased earnings.

    Net cash flows provided (used) by investing activities was $9.5 million for
the three months ended March 31, 2002 and $(45.2) million for the three months
ended March 31, 2001. The change was primarily due to sales of selected assets
and a decrease in acquisition and investment spending subsequent to the Purina
Mills acquisition in October 2001.

    Net cash flows (used) provided by financing activities was $(21.9) million
for the three months ended March 31, 2002 and $111.7 million for the three
months ended March 31, 2001. For the three months ended March 31, 2002, we made
payments of $41.7 million on existing long-term debt and payments of $20.1
million for redemption of member equities. At the same time, we increased
short-term debt by $37.9 million to cover seasonal working capital needs. For
the three months ended March 31, 2001, we borrowed $136.5 million in short-term
debt and made payments of $25.3 million for redemption of member equities.

    Our principal liquidity requirements are to service our debt and meet our
working capital and capital expenditure needs. Following the Purina Mills
acquisition, we have significantly increased our leverage. As of March 31, 2002
we had $1,108.2 million outstanding in long-term debt, including $190.7 million
of Capital Securities, and $91.4 million outstanding in short-term debt. In
addition, as of March 31, 2002, $174.1 million was available under a $250
million revolving credit facility for working capital and general corporate
purposes, after giving effect to borrowings of $48.4 million and $27.5 million
of outstanding letters of credit, which reduce availability. Total equity as of
March 31, 2002 was $830.2 million.

    The principal term loans consist of a $325.0 million syndicated Term Loan A
Facility with a final maturity of five years and a $250.0 million syndicated
Term Loan B Facility with a final maturity of seven years. Each of these
facilities was fully drawn at closing of the Purina Mills acquisition on October
11, 2001. Our $250.0 million revolving credit facility terminates on June 28,
2004.

    Borrowings under the term loans and the revolving credit facility bear
interest at variable rates (either LIBOR or an Alternative Base Rate) plus
applicable margins. The margins are dependent upon Land O'Lakes credit ratings.

    The Term Loan A Facility is prepayable at any time without penalty. The Term
Loan B Facility is prepayable with a penalty of 3% during the first year, 2%
during the second year, 1% during the third year, and no penalty thereafter. The
term loans will be subject to mandatory prepayments, subject to certain limited
exceptions, in an amount equal to (1) 50% of excess cash flow of Land O'Lakes
and the restricted subsidiaries, (2) 100% of the net cash proceeds of asset
sales and dispositions of property of Land O'Lakes and the restricted
subsidiaries, if not reinvested, (3) 100% of any casualty or condemnation
receipts by Land O'Lakes and the restricted subsidiaries, if not used to repair
or replace assets, (4) 100% of joint venture dividends or distributions received
by Land O'Lakes or



                                       35
<PAGE>


the restricted subsidiaries, to the extent that they relate to the sale of
property, casualty or condemnation receipts, or the issuance of any equity
interest in the joint venture, (5) 100% of net cash proceeds from the sale of
inventory or accounts receivable in a securitization transaction to the extent
cumulative proceeds from such transactions exceed $100.0 million and (6) 100% of
net cash proceeds from the issuance of unsecured senior or subordinated
indebtedness issued by Land O'Lakes. In February 2002, we made a $33.8 million
prepayment on Term Loan A Facility and a $16.2 million prepayment on Term Loan B
Facility, of which 75% was mandatory and 25% was optional.

    The amortization schedules for the Term Loan A and Term Loan B Facilities
are provided below. (Schedules reflect the impact of the February 2002
prepayment.)


<TABLE>
<CAPTION>
                                           TERM LOAN A   TERM LOAN B
                                          ------------  ------------
<S>                                      <C>           <C>
  2002 (paid 2/22/02)...........          $33,782,609   $ 16,217,391
  2003..........................           54,337,200      2,116,744
  2004..........................           71,064,057      2,822,325
  2005..........................           94,752,077      2,822,325
  2006..........................           71,064,057      2,822,325
  2007..........................                   --      2,822,325
  2008..........................                   --    220,376,564
                                          -----------   ------------
       Total....................          $325,000,000  $250,000,000
                                          ============  ============
</TABLE>

    In November 2001, we issued $350 million of senior notes. These notes bear
interest at a fixed rate of 8 3/4% and mature on November 15, 2011. The notes
are callable beginning in year six at a redemption price of 104.375%. In years
seven and eight, the redemption price is 102.917% and 101.458%, respectively.
The notes are callable at par beginning in year nine.

    In 1998, Capital Securities in an amount of $200 million were issued by a
trust subsidiary of Land O' Lakes, and the net proceeds were used to acquire a
junior subordinated note of Land O'Lakes. The holders of these securities are
entitled to receive dividends at an annual rate of 7.45% until the securities
mature in 2028 and correspond to the payment terms of the junior subordinated
debentures which are the sole asset of the trust subsidiary. Interest payments
on the debentures can be deferred for up to five years, and the obligations
under the debentures are junior to all of our debt. As of March 31, 2002, the
outstanding balance of Capital Securities was $190.7 million.

    The credit agreements relating to the term loans and revolving credit
facility and the indenture relating to the 8 3/4% senior notes impose certain
restrictions on us, including restrictions on our ability to incur indebtedness,
make payments to members, make investments, grant liens, sell our assets and
engage in certain other activities. In addition, the credit agreements relating
to the term loans and revolving credit facility require us to maintain an
interest coverage ratio of at least 2.50 to 1. Our ratio was 3.83 to 1 as of
December 31, 2001 and 3.54 to 1 as of March 31, 2002. We are also required to
maintain a leverage ratio of no greater than 4.75 to 1. The actual leverage
ratio as of December 31, 2001 was 3.77 to 1 and 4.04 to 1 as of March 31, 2002.
The required leverage ratio steps down to 4.25 to 1 as of October 11, 2002 and
3.75 to 1 as of October 11, 2003 and remains constant thereafter. More detailed
descriptions of these covenants can be found in the credit agreements which are
attached as exhibits to our Form 10-K for the year ended December 31, 2001.

    Indebtedness under the term loans and revolving credit facility is secured
by substantially all of the material assets of Land O'Lakes and its wholly-owned
domestic subsidiaries (other than LOL Finance Co. and LOLFC, LLC) and Land
O'Lakes Farmland Feed and its wholly-owned domestic subsidiaries (other than LOL
Farmland Feed SPV, LLC), including real and personal property, inventory,
accounts receivable, intellectual property and other intangibles, other than
those receivables which have been sold in connection with our receivables
securitization. Indebtedness under the term loans and revolving credit facility
is also guaranteed by our wholly-owned domestic subsidiaries (other than LOL
Finance Co. and LOLFC, LLC) and Land O'Lakes Farmland Feed and its wholly-owned
domestic subsidiaries (other than LOL Farmland Feed SPV, LLC). The 8 3/4% senior
notes are unsecured but are guaranteed by the same entities which guaranty the
obligations under the term loans and revolving credit facility.

OFF-BALANCE SHEET ARRANGEMENTS

    In order to reduce overall financing costs, Land O'Lakes entered into a
revolving receivables securitization program with CoBank in December 2001 for up
to $100 million in advances against eligible receivables. Under this program,
Land O'Lakes, Land O'Lakes Farmland Feed LLC and Purina Mills, LLC sell feed,
seed and certain swine receivables to LOL Farmland Feed SPV, LLC, a limited
purpose wholly-owned subsidiary of Land O'Lakes Farmland Feed. This subsidiary
is a qualifying special purpose entity (QSPE) under applicable accounting rules.
The QSPE was established for the limited purpose of purchasing and obtaining
financing for these receivables. The transfers of the receivables to the QSPE
are structured as sales and, in accordance with applicable accounting rules,


                                       36
<PAGE>

these receivables are not reflected in the consolidated balance sheets of Land
O'Lakes Farmland Feed LLC or Land O'Lakes, Inc. The QSPE purchases the
receivables with a combination of cash initially received from CoBank, equal to
the present value of eligible receivables times the agreed advance rate; and
notes, equal to the unadvanced present value of the receivables. Land O'Lakes
and the other receivables sellers are subject to credit risk related to the
repayment of the QSPE notes, which in turn is dependent upon the ultimate
collection on the QSPE's receivables pool. Accordingly, we have retained
reserves for estimated losses. $75.8 million was initially drawn under this
securitization and was used to repay a $75 million bridge facility with CoBank.
A subsequent draw of $24.2 million was made April 1, 2002 and was used to pay
down outstanding borrowings under our revolving credit facility.

    In addition, we lease various equipment and real properties under long-term
operating leases. Total consolidated rental expense was $6.9 million for the
three months ended March 31, 2002 and $6.5 million for the three months ended
March 31, 2001. Most of the leases require payment of operating expenses
applicable to the leased assets. We expect that in the normal course of business
most leases that expire will be renewed or replaced by other leases. We are also
contingently liable for a $114 million synthetic lease entered into by Cheese
and Protein International, LLC, ("CPI"), a consolidated joint venture 70% owned
by Land O'Lakes, for the construction of a cheese and whey plant. The
construction of the plant has been financed by a special purpose entity. The
special purpose entity is not consolidated in Land O'Lakes financial statements
and we have accounted for this arrangement as an operating lease in accordance
with Statement of Financial Accounting Standards No. 13, "Accounting for
Leases," as amended. The base term of the lease commenced on March 31, 2002 and
expires on the fifth anniversary, unless we request and the lessor approves one
or more one-year base term extensions, which could extend the base term to no
more than ten years. The interest rate on the lease is LIBOR-based and actual
lease payments will vary with short-term interest rate fluctuations. Future
minimum lease payments under this lease are included in the table below. At the
conclusion of the lease term, CPI is obligated to pay the remaining lease
balance. In the event CPI defaults on its obligations under the lease, Land
O'Lakes could elect one of the following options: (i) assume the lease
obligations of CPI, (ii) purchase the leased assets, (iii) fully cash
collateralize the lease or (iv) nominate a replacement lessee to be approved by
the lessor. As of March 31, 2002, the amount of the contingent liability was
$94.3 million, the lease balance as of that date.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

    At March 31, 2002, we had certain contractual obligations, which required us
to make payments as follows:

                  PAYMENTS DUE BY PERIOD (AS OF MARCH 31, 2002)
<TABLE>
<CAPTION>

 CONTRACTUAL CASH OBLIGATIONS       TOTAL     1 YEAR    2-3 YEARS   4-5 YEARS  AFTER 5 YEARS
 ----------------------------    ----------   -------   ---------   ---------  -------------
                                                       (IN THOUSANDS)
<S>                              <C>          <C>       <C>          <C>        <C>
Revolving Credit
   Facility(1)...............    $       --  $     --   $     --    $      --    $     --
 Long-Term Debt(2)...........     1,165,867    57,681    163,552      150,854     793,780
 Operating Leases(3).........       226,307    27,040     51,108       43,713     104,446
                                 ----------   -------   --------     --------    --------
      Total Contractual
        Obligations..........    $1,392,174  $ 84,721   $214,660    $ 194,567    $898,226
                                 ==========  ========   ========    =========    ========
</TABLE>

----------
(1) Maximum $250 million facility, of which $174.1 million was available as of
    March 31, 2002. $27.5 million of this commitment was unavailable due to
    outstanding letters of credit.

(2) Term Loan A and Term Loan B Facilities are subject to certain mandatory
    prepayment obligations in certain events as explained above. See
    "Off-balance Sheet Arrangements" for information concerning our receivables
    securitization program.

(3) Includes lease payments under the synthetic lease identified  above, which
    is an off-balance sheet contingent liability. See "Off-balance Sheet
    Arrangements."

    We expect that our total capital expenditures will be approximately $90
million in 2002 and approximately $96 million in 2003. Of such amounts, we
currently estimate that a minimum range of $35 million to $45 million of ongoing
maintenance capital expenditures is required each year. We had $17.7 million in
capital expenditures for the three months ended March 31, 2002, compared to
$18.3 million in capital expenditures for the three months ended March 31, 2001.

    We expect that funds from operations and available borrowings under our
revolving credit facility and receivables securitization facility will provide
sufficient working capital to operate our business, to make expected capital
expenditures and to meet foreseeable liquidity requirements, including debt
service on the term debt, the revolving credit facilities and the 8 3/4% senior
notes.

                                       37
<PAGE>

FORWARD - LOOKING STATEMENTS

         This Form 10-Q for the first quarter ended March 31, 2002 includes
"forward-looking statements" that can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"could," "should," "seeks," "pro forma," "as adjusted," "anticipates," "intend,"
or other variations thereof, including their use in the negative, or by
discussions of strategies, plans or intentions. Although we believe that our
plans, intentions and expectations reflected in or suggested by such
forward-looking statements are reasonable, you should be aware that actual
results could differ materially from those projected by the forward-looking
statements. For a discussion of factors that could cause actual results to
differ materially from the anticipated results or other expectations expressed
in our forward-looking statements, see the discussion of risk factors set forth
below. Because actual results may differ, readers are cautioned not to place
undue reliance on forward-looking statements. We assume no obligation to update
such forward-looking statements or to update the reasons that actual results
could differ materially from those anticipated in such forward-looking
statements.

RISK FACTORS

SUBSTANTIAL LEVERAGE -- OUR SUBSTANTIAL LEVERAGE COULD ADVERSELY AFFECT OUR
ABILITY TO FULFILL OUR OBLIGATIONS UNDER OUR DEBT OBLIGATIONS AND OPERATE OUR
BUSINESS.

    We are highly leveraged and have significant debt service obligations. As of
March 31, 2002, after eliminating intercompany activity, our aggregate
outstanding indebtedness was $1,199.6 million, excluding unused commitments, and
our total equity was $830.2 million. For the year ended December 31, 2001,
giving pro forma effect to the acquisition of Purina Mills as of January 1,
2001, our interest expense would have been $73.3 million. We may incur
additional debt from time to time to finance strategic acquisitions, investments
and alliances, capital expenditures or for other purposes, subject to the
restrictions contained in our debt agreements.

    Our substantial debt could have important consequences to persons holding
our outstanding indebtedness, including the following:

o     we will be required to use a substantial portion of our cash flow from
      operations to pay principal and interest on our debt, thereby reducing the
      availability of our cash flow to fund working capital, capital
      expenditures, strategic acquisitions, investments and alliances and other
      general corporate requirements;

o     our interest expense could increase if interest rates in general increase
      because a substantial portion of our debt will bear interest at floating
      rates;

o     our substantial leverage will increase our vulnerability to general
      economic downturns and adverse competitive and industry conditions and
      could place us at a competitive disadvantage compared to those of our
      competitors which are less leveraged;

o     our debt service obligations could limit our flexibility to plan for, or
      react to, changes in our business and the dairy and agricultural
      industries;

o     our level of debt may restrict us from raising additional financing on
      satisfactory terms to fund working capital, capital expenditures,
      strategic acquisitions, investments and joint ventures and other general
      corporate requirements;

o     our level of debt may prevent us from raising the funds necessary to
      repurchase all of our 8 3/4 senior notes due 2011 tendered to us upon the
      occurrence of a change of control, which would constitute an event of
      default under the senior notes; and

o     our failure to comply with the financial and other restrictive covenants
      in our debt instruments could result in an event of default that, if not
      cured or waived, could cause our debt to become due immediately and permit
      our lenders to enforce their remedies.

See "Item 3.  Quantitative and Qualitative Disclosures about Market Risk."

ABILITY TO SERVICE DEBT -- SERVICING OUR INDEBTEDNESS REQUIRES A SIGNIFICANT
AMOUNT OF CASH, AND OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND
OUR CONTROL.

                                       38
<PAGE>

    We expect to obtain the cash to make payments on our debt, the New Credit
Facilities and to fund working capital, capital expenditures, strategic
acquisitions, investments and joint ventures and other general corporate
requirements from our operations. Our ability to generate cash is subject to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control. We cannot assure investors that our
business will generate sufficient cash flow from operations, that we will
realize currently anticipated cost savings, net sales growth and operating
improvements on schedule, or at all, or that future borrowings will be available
to us under our credit facilities, in each case, in amounts sufficient to enable
us to service our indebtedness or to fund our other liquidity needs. If we
cannot service our indebtedness, we will have to take actions such as reducing
or delaying capital expenditures, strategic acquisitions, investments and joint
ventures, selling assets, restructuring or refinancing our indebtedness or
seeking additional equity capital, which may adversely affect our membership and
affect their willingness to remain members. These remedies may not be effected
on commercially reasonable terms, or at all. In addition, the terms of existing
or future indebtedness agreements, including the credit agreements relating to
the New Credit Facilities and the indenture, may restrict us from adopting any
of these alternatives. See "Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations."

ADDITIONAL BORROWING CAPACITY -- DESPITE OUR SUBSTANTIAL LEVERAGE, WE WILL BE
ABLE TO INCUR MORE DEBT, WHICH MAY INTENSIFY THE RISKS ASSOCIATED WITH OUR
SUBSTANTIAL LEVERAGE.

    The agreements governing our debt will permit us, subject to certain
conditions, to incur a significant amount of additional indebtedness. In
addition, we may incur additional debt under our $250.0 million revolving credit
facility, of which approximately $174.1 million was available to us as of March
31, 2002. If we incur additional debt, the risks associated with our substantial
leverage, including our ability to service our debt, could intensify.

RESTRICTIVE COVENANTS IN OUR DEBT INSTRUMENTS -- RESTRICTIONS IMPOSED BY OUR
DEBT AGREEMENTS LIMIT OUR ABILITY TO FINANCE FUTURE OPERATIONS OR CAPITAL NEEDS
OR ENGAGE IN OTHER BUSINESS ACTIVITIES THAT MAY BE IN OUR INTEREST.

    The terms of our current debt agreements impose, and the terms of any future
debt may impose, operating and other restrictions on us and certain of our
subsidiaries. In addition, the agreements governing our outstanding credit
facilities also require us to achieve specified financial and operating results
and maintain compliance with specified financial ratios.

    The restrictions contained in our debt agreements could:

     o   limit our ability to plan for or react to market conditions or meet
         capital needs or otherwise restrict our activities or business plans;
         and

     o   adversely affect our ability to finance our operations, strategic
         acquisitions, investments or alliances or other capital needs or to
         engage in other business activities that would be in our interest.

    A breach of any of these restrictive covenants or our inability to comply
with the required financial ratios could trigger cross default provisions in the
agreements governing our other debt. If a default occurs, certain of our debt
agreements allow the lenders to declare all borrowings outstanding, together
with accrued interest and other fees, to be immediately due and payable which
would result in an event of default under the indenture governing our senior
notes and a termination event under the agreements governing our receivables
securitization. Lenders will also have the right in these circumstances to
terminate any commitments they have to provide further borrowings. If we are
unable to repay outstanding borrowings when due, those lenders will also have
the right to proceed against the collateral, including our available cash,
granted to them to secure the indebtedness. If this debt was to be accelerated,
our assets may not be sufficient to repay in full that indebtedness and our
other indebtedness. If not cured or waived, such default could give our lenders
the right to enforce other remedies that would interrupt the operation of our
business.

CHANGES IN CONSUMER PREFERENCES AND DISTRIBUTION CHANNELS COULD DECREASE OUR
REVENUES AND CASH FLOW.

     We are subject to the risks of:

     o   evolving consumer preferences and nutritional and health-related
         concerns; and

     o   changes in food distribution channels, such as consolidation of the
         supermarket industry and other retail outlets that result in a smaller
         customer base and intensify the competition for fewer customers.

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<PAGE>

    To the extent that consumer preference evolves away from products that we
produce for health or other reasons, and we are unable to create new products
that satisfy new consumer preferences, there will be a decreased demand for our
products. There has been a recent trend toward consolidation among food
retailers which we expect to continue. As a result, these food retailers are
selecting product suppliers who can meet their needs nationwide. If we are not
selected by these food retailers for one or more of our products, our sales
volumes could be significantly reduced. In addition, national distributors or
regional food brokers could choose not to carry our products. Because of the
high degree of consolidation of national food distributors, the decision of a
single such distributor not to carry our products could have a serious impact on
our revenues. Any shift in consumer preferences away from our products could
decrease our revenues and cash flow and impair our ability to fulfill our
obligations under our debt obligations and operate our business.

COMPETITION IN THE INDUSTRY MAY REDUCE OUR SALES AND MARGINS.

    Our business segments operate in highly competitive industries. In addition,
some of our business segments compete with companies that have greater capital
resources, research and development staffs, facilities, diversity of product
lines and brand recognition than ours. Increased competition as to any of our
products could result in reduced prices which would reduce our sales and
margins.

    Our competitors may succeed in developing new or enhanced products which are
better than ours. These companies may also prove to be more successful in
marketing and selling their products than we are with ours.

OUR OPERATING RESULTS FLUCTUATE BY SEASON AND ARE AFFECTED BY EXTREME WEATHER
CONDITIONS.

    Our operating results within many of our segments are affected by seasonal
fluctuations of our sales and operating profits. There is significantly
increased demand for butter in the months prior to Thanksgiving and Christmas.
Because our supply of milk is lowest at this time, we produce and store surplus
quantities of butter in the months preceding the increase in demand for butter.
As a result, we are subject both to the risk that butter prices may decrease and
that increased demand for butter may never materialize, resulting in decreased
net sales.

    Our animal feed sales are seasonal, with a higher percentage of sales
generated during the fourth and first quarters of the year. This seasonality is
driven largely by weather conditions affecting sales of our beef cattle
products. If the weather is particularly warm during the winter, then sales of
feed for beef cattle may decrease because the cattle may be better able to graze
under warmer conditions.

    The sales of crop seed and crop nutrient and crop protection products are
dependent upon the planting and growing season, which varies from year to year,
resulting in both highly seasonal patterns and substantial fluctuations in our
quarterly sales and operating profits. Most sales of our seed products and of
Agriliance's agronomy products are in the first half of the year during the
spring planting season in the United States. If the spring is particularly wet,
farmers will not apply crop nutrient and crop protection products because they
will be washed away and ineffective if applied.

    Live hog and wholesale pork prices are also affected by seasonal factors.
Because of production times for hogs, there are generally fewer hogs available
in the second quarter, causing live hog and wholesale pork prices to be higher
at these times. Conversely, there are generally more hogs available in the
fourth quarter, which generally causes live hog and wholesale pork prices to be
lower on average during these months.

    In addition, severe weather conditions and natural disasters, such as
floods, droughts, frosts or earthquakes, or adverse growing conditions, diseases
and insect-infestation problems may reduce the quantity and quality of
commodities available for processing by us. For example, dairy cows produce less
milk when subjected to extreme weather conditions, including hot and cold
temperatures. A significant reduction in the quantity or quality of commodities
harvested or produced due to adverse weather conditions, disease, insect
problems or other factors could result in increased processing costs and
decreased production, with adverse financial consequences to us.

INCREASED ENERGY AND GAS COSTS COULD INCREASE OUR EXPENSES AND REDUCE OUR
PROFITABILITY.

    We require a substantial amount of electricity, natural gas and gasoline to
manufacture, store and transport our products. The prices of electricity,
natural gas and gasoline fluctuate significantly over time. Many of our products
compete based on price and we may not be able to pass on increased costs of
production, storage or transportation to our customers. As a result, increases
in the cost of electricity, natural gas or gasoline could substantially harm our
business and results of operations. For instance, prices for natural




                                       40
<PAGE>

gas, a key component in the manufacture of fertilizer, increased from
approximately $2.50 per million Btu in January 2000 to approximately $10.00 per
million Btu in January 2001. Depending upon the type of fertilizer produced, a
one dollar increase in the price of gas can result in increased fertilizer costs
ranging from $11.70 to $33.50 per ton. Agriliance was not able to pass on the
entire increase in fertilizer costs to customers, therefore Agriliance's margins
on fertilizer products were lower than they would have been had natural gas and
fertilizer costs remained constant. In addition, the higher sales price of
fertilizer resulted in a reduction of expected sales volume.

    Our dairy business requires a continuous supply of energy to refrigerate raw
materials and finished products. Our largest dairy processing facility is
located in California, which recently experienced an energy crisis that
disrupted our dairy processing operations and increased our expenses. As a
result of blackouts at our Tulare, California plant, to date we have been forced
to dispose of approximately one million pounds of milk (which represents
approximately 10% of one day's throughput at that plant). Although we have added
electrical generating capacity at the Tulare plant, future blackouts at this or
other plants may result in the interruption of our processing operations and the
loss of perishable ingredients and products which could result in substantial
financial losses.

OUTBREAKS OF DISEASE CAN REDUCE OUR NET SALES AND OPERATING MARGINS.

    The productivity and profitability of our businesses depend on animal and
crop health and on disease control.

    We face the risk of outbreaks of mad cow disease, which could lead to the
destruction of beef cattle and dairy cows and decreased demand for dairy and
beef products. If this occurs, we would also face reduced milk supply and
increased cost to produce our dairy products, which could reduce our sales and
operating margins. In addition, we could have decreased demand for our feed
products as dairy and beef producers decrease their herd sizes due to decreased
demand for dairy and beef products.

    We face the risk of outbreaks of foot-and-mouth disease, which could lead to
a massive destruction of cloven-hoofed animals such as dairy cattle, beef
cattle, swine, sheep and goats and significantly reduce the demand for meat
products. Because foot-and-mouth disease is highly contagious and destructive to
susceptible livestock, any outbreak of foot-and-mouth disease could result in
the widespread destruction of all potentially infected livestock. Our feed
operations could suffer as a result of decreased demand for feed products. If
this happens, we could also have difficulty procuring the milk we need for our
dairy operations and incur increased cost to produce our dairy products, which
could reduce our sales and operating margins. In addition, we may be prevented
from selling or transporting hogs.

    Outbreaks of plant diseases and pests could destroy entire crops of plants
for which we sell crop seed. If this occurs, the crops grown to produce seed
could also be destroyed, resulting in a shortage of crop seed available for us
to sell for the next planting season. In addition, there may be decreased demand
for our crop seed from farmers who choose not to plant those species of crops
affected by these diseases or pests. These shortages and decreased demand could
reduce our sales.

CHANGES IN THE MARKET PRICES OF THE DAIRY AND AGRICULTURAL COMMODITIES THAT WE
USE AS INPUTS AS WELL AS THE PRODUCTS WE MARKET MAY CAUSE OUR OPERATING PROFIT
TO DECREASE.

    Many of our products, particularly in our dairy foods, animal feed and swine
segments, use dairy or agricultural commodities as inputs or constitute dairy or
agricultural commodity outputs. Consequently, increased cost of commodity inputs
and decreased market price of commodity outputs may reduce our operating profit.

    We are major purchasers of commodities used as inputs in our dairy foods
segment, namely milk, cream, butter and bulk cheese. Our dairy food outputs,
namely butter, cheese and nonfat dry milk, are also commodities. We inventory a
significant amount of the cheese and butter products we produce for sale to our
customers at a later date and at the market price on that date. For example, we
build significant butter inventories in the spring when milk supply is highest
for sale to our retail customers in the fall when butter demand is highest. If
the market price we receive at the time we sell our products is less than the
market price on the day we made the products, we will have lower (or negative)
margins which may have a material adverse impact on our results of operations.
In addition, we maintain significant inventories of cheese for aging and face
the same risk with respect to these products.

    In 1999, our earnings were significantly impacted by the dramatic declines
in the price of cheese and butter, which caused significant devaluations of our
inventory of cheese products and, to a lesser extent, butter. Based on data from
the Chicago Mercantile Exchange, commodity block cheese prices began the year at
$1.90 per pound and finished at $1.20 per pound, and commodity butter prices
began at $1.43 per pound and finished at $0.88 per pound. These declining
commodity prices occurred throughout the year as we were building our inventory
necessary during the peak sales periods of fall and winter. The resulting $62.1
million inventory write-




                                       41
<PAGE>

down partially accounted for the decrease in earnings of the dairy foods
segment, as compared with 1998.

    The animal feed segment follows industry standards for feed pricing. The
feed industry generally prices products on the basis of income over ingredient
cost ("IOIC") per ton of feed. This practice mitigates the impact of volatility
in commodity ingredient markets on our animal feed margins. However, if our
commodity input prices were to increase dramatically, we may be unable to pass
these prices on to our customers, who may find alternative feed sources at lower
prices or may exit the market entirely. This increased expense could reduce our
profitability.

    We have ownership interests in swine. In recent years, the market for hogs
and wholesale pork has been the subject of extreme market fluctuations as a
result of a number of factors, including industry expansion, processor capacity
and consumer demand. In December 1998, the price of hogs hit its lowest point in
nearly forty years, resulting in the price we received for a finished hog being
substantially less than the cost to produce the hog. The prices for weanling and
feeder pigs also decreased dramatically. As a result, in the fiscal years ended
December 31, 2000 and 1999, on a pro forma basis, we experienced operating
losses in the swine production business of approximately $8.3 million and $42.0
million, respectively. The Purina Mills portion of these losses was largely
responsible for Purina Mills filing for bankruptcy.

    During the fiscal years ended December 31, 2000 and 1999, a large portion of
these losses were attributable to our cost-plus contracts (or comparable
contracts of Purina Mills), which guarantee swine producers certain minimum
prices for feeder pigs. Although we do not intend to renew or extend these
contracts, which expire over time, we may continue to incur losses under these
contracts until the last one expires in 2005.

DECREASE IN MILK SUPPLY COULD DECREASE OUR SALES AND INCREASE OUR COST OF
PRODUCTION.

    We operate 14 dairy facilities which are located in different regions of the
United States. Milk production in certain regions, including the Midwest and
Northeast is decreasing as smaller producers in these regions have ceased milk
production and larger producers in the West have increased milk production. A
producer, whether a member or a non-member, may decide not to supply milk to us
or may decide to stop supplying milk to us when the term of its contractual
obligation expires. Where milk production in the Midwest and Northeast is not
sufficient to fully support our operations, or where producers decide not to
supply us with milk, we may not be able to operate our plants, may be forced to
transport milk from a distance or may be forced to pay higher prices for our
milk supply. This could result in our inability to meet customer demand and
cause a decrease in sales. In addition, our costs of production would be
increased due to increased transportation costs or increased costs for our milk
supply. In the first quarter of 2002, our cost of sales for our dairy foods
increased due to higher milk supply costs resulting from increased competition
for decreased milk production in the Midwest.

WE OPERATE THROUGH JOINT VENTURES IN WHICH OUR RIGHTS TO EARNINGS AND TO CONTROL
THE JOINT VENTURE ARE LIMITED.

    We produce, market and sell products through numerous joint ventures with
unaffiliated third parties. Our feed and agronomy businesses are primarily
operated through joint ventures.

    The terms of each joint venture are different, but our joint venture
agreements generally contain:

     o   restrictions on our ability to transfer our ownership interest in the
         joint venture;

     o   no right to receive distributions without the unanimous consent of the
         members of the joint venture; and

     o   noncompetition arrangements restricting our ability to engage
         independently in the same line of business as the joint venture.

In addition to these restrictions, in connection with the formation of some of
our joint ventures, we have entered into purchase or supply agreements which
require us to purchase a minimum amount of the products produced by the joint
venture or supply a minimum amount of the raw materials used by the joint
venture. The day-to-day operations of some of our joint ventures are managed by
us through a management contract and others are managed by other joint venture
members. As a result, we do not have day-to-day control over certain of these
companies. See "Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations" for a discussion of our material joint
ventures.

AGRILIANCE'S BUSINESS MAY BE ADVERSELY AFFECTED BY AGRILIANCE'S DEPENDENCE UPON
ITS SUPPLIERS.

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<PAGE>

    Agriliance relies on a limited number of suppliers for the agronomy products
it sells. In 2001, approximately 58% of Agriliance's crop protection products
were sourced from three suppliers. In addition, Agriliance procures
approximately 80% of its fertilizer needs from CF Industries and Farmland
Industries. In the event Agriliance is unable to purchase its agronomy products
on favorable terms from these suppliers, Agriliance may be unable to find
suitable alternatives to meet its product needs.

A LOSS OF OUR COOPERATIVE TAX STATUS COULD INCREASE OUR TAX LIABILITY.

    Subchapter T of the Internal Revenue Code sets forth rules for the tax
treatment of cooperatives. As a cooperative, we are not taxed on earnings from
member business that we deem to be patronage income allocated to our members.
However, we are taxed as a typical corporation on the remainder of our earnings
from our member business (those earnings which we have not deemed to be
patronage income) and on earnings from nonmember business. If we were not
entitled to be taxed as a cooperative, our tax liability would be significantly
increased.

OUR LIMITED ACCESS TO EQUITY MARKETS COULD ADVERSELY AFFECT OUR ABILITY TO
OBTAIN ADDITIONAL EQUITY CAPITAL.

    As a cooperative, we may not sell our common stock in the traditional equity
markets. In addition, our articles of incorporation and by-laws contain
limitations on dividends and liquidation preferences of any preferred stock we
issue. These limitations restrict our ability to raise equity capital and may
adversely affect our ability to compete with entities that do not face similar
restrictions.

WE MAY NOT SUCCESSFULLY IMPLEMENT THE STRATEGIES RELATING TO OUR RECENT
ACQUISITIONS OR ACHIEVE THE ANTICIPATED BENEFITS FROM THESE ACQUISITIONS.

    In addition to the acquisition of Purina Mills, we have added more than 20
joint ventures and acquisitions over the past five years. However, Purina Mills
represents our largest acquisition to date. The integration and consolidation of
Purina Mills as well as the other acquisitions into our business require
substantial management, financial and other resources. Such integration involves
a number of significant risks, including:

     o   unforeseen liabilities;

     o   unanticipated problems with the quality of the assets of the acquired
         businesses;

     o   loss of customers;

     o   personnel turnover;

     o   loss of relationships with suppliers or service providers; and

     o   diversion of management's attention from other aspects of our business.

    The effects of these risks and our inability to integrate and manage Purina
Mills and the other acquired businesses successfully or to achieve a substantial
portion of the anticipated cost savings from these acquisitions in the timeframe
we anticipate, could have a material adverse effect on our business, financial
condition or results of operations. See "Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations."

OUR OPERATIONS ARE SUBJECT TO NUMEROUS LAWS AND REGULATIONS, EXPOSING US TO
POTENTIAL CLAIMS AND COMPLIANCE COSTS THAT COULD ADVERSELY AFFECT OUR BUSINESS.

    We are subject to Federal, state and local laws and regulations relating to
the manufacturing, labeling, packaging, health and safety, sanitation, quality
control, fair trade practices, and other aspects of our business. In addition,
zoning, construction and operating permits are required from governmental
agencies which focus on issues such as land use, environmental protection, waste
management, and the movement of animals across state lines. These laws and
regulations may, in certain instances, affect our ability to develop and market
new products and to utilize technological innovations in our business. In
addition, changes in these rules might increase the cost of operating our
facilities or conducting our business which would adversely affect our finances.

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<PAGE>

    Our dairy business is affected by Federal price support programs and federal
and state pooling and pricing programs to support the prices of certain products
we sell. Federal and certain state regulations help ensure that the supply of
raw milk flows in priority to fluid milk and soft cream producers before
producers of hard products such as cheese and butter. In addition, as a producer
of dairy products, we participate in the Federal market order system and pay
into regional "pools" for the milk we use based on the amount of each class of
dairy product we produce and the price of those products. If any of these
programs was no longer available to us, the prices we pay for milk could
increase and reduce our profitability.

    In addition, as a manufacturer of food and animal feed products, we are
subject to the Federal Food, Drug and Cosmetic Act and regulations issued
thereunder by the Food and Drug Administration ("FDA"). The pasteurization of
our milk and milk products is also subject to inspection by the United States
Department of Agriculture. Several states also have laws that protect feed
distributors or restrict the ability of corporations to engage in farming
activities. These regulations may require us to alter or restrict our operations
or cause us to incur additional costs in order to comply with the regulations.

INABILITY TO PROTECT OUR TRADEMARKS AND OTHER PROPRIETARY RIGHTS COULD DAMAGE
OUR COMPETITIVE POSITION.

    We rely on patents, copyrights, trademarks, trade secrets, confidentiality
provisions and licensing arrangements to establish and protect our intellectual
property. Any infringement or misappropriation of our intellectual property
could damage its value and could limit our ability to compete. We may have to
engage in litigation to protect our rights to our intellectual property, which
could result in significant litigation costs and require a significant amount of
management's time.

    We license our LAND O LAKES and the Indian Maiden logo trademarks to certain
of our joint ventures and other third parties for use in marketing certain of
their products. We have invested substantially in the promotion and development
of our trademarked brands and establishing their reputation as high-quality
products. Actions taken by these parties may damage our reputation and our
trademarks' value.

    We believe that the recipes and production methods for our dairy and spread
products and formulas for our feed products are trade secrets. In addition, we
have amassed a large body of knowledge regarding animal nutrition and feed
formulation which we believe to be proprietary. Because most of this proprietary
information is not patented, it may be more difficult to protect. We rely on
security procedures and confidentiality agreements to protect this proprietary
information, however such agreements and security procedures may be insufficient
to keep others from acquiring this information. Any such dissemination or
misappropriation of this information could deprive us of the value of our
proprietary information.

    Purina Mills, LLC, a wholly-owned subsidiary of Land O'Lakes Farmland Feed
licenses the trademarks Purina, Chow and the "Checkerboard" Nine Square Logo
under a perpetual, royalty-free license from Nestle Purina PetCare Company.
Under the terms of the license agreement, Nestle Purina PetCare Company retains
primary responsibility for protecting the licensed trademarks from infringement.
If Nestle Purina PetCare Company fails to assert its rights to the licensed
trademarks, Purina Mills may be unable to stop such infringement or cause them
to do so. Any such infringement of the licensed trademarks, or of similar
trademarks of Nestle Purina PetCare Company, could result in a dilution in the
value of the licensed trademarks.

OUR BRAND NAMES COULD BE CONFUSED WITH NAMES OF OTHER COMPANIES WHO, BY THEIR
ACT OR OMISSION, COULD ADVERSELY AFFECT THE VALUE OF OUR BRAND NAMES.

    Purina Mills' products are generally marketed under the trademarks Purina,
Chow and the "Checkerboard" Nine Square Logo under a perpetual, royalty-free
license from Nestle Purina PetCare Company. Nestle Purina PetCare Company
markets widely recognized products under the same trademarks and has given other
unaffiliated companies the right to market products under these trademarks. A
competitor of ours, Cargill, licenses from Nestle Purina PetCare Company the
right to market the same types of products which we sell under these trademarks
in countries other than the United States. Acts or omissions by Nestle Purina
PetCare Company or other unaffiliated companies may adversely affect the value
of the Purina, Chow and the "Checkerboard" Nine Square Logo trademarks and the
demand for our products. Third-party announcements or rumors about these
unaffiliated companies could also have these negative effects.

PRODUCT LIABILITY CLAIMS OR PRODUCT RECALLS COULD ADVERSELY AFFECT OUR BUSINESS
REPUTATION AND EXPOSE US TO INCREASED SCRUTINY BY FEDERAL AND STATE REGULATORS.

    The sale of food products for human consumption involves the risk of injury
to consumers and the sale of animal feed products involves the risk of injury to
those animals as well as human consumers of those animals. Such hazards could
result from:

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<PAGE>

     o   tampering by unauthorized third parties;

     o   product contamination (such as listeria and salmonella) or spoilage;

     o   the presence of foreign objects, substances, chemicals, and other
         agents;

     o   residues introduced during the growing, storage, handling or
         transportation phases; or

     o   improperly formulated products which either do not contain the proper
         mixture of ingredients or which otherwise do not have the proper
         attributes.

    Some of the products we sell are produced for us by third parties, or
contain inputs manufactured by third parties, and such third parties may not
have adequate quality control standards to assure that such products are not
adulterated, misbranded, contaminated or otherwise defective. In addition, we
license our LAND O LAKES brand for use on products produced and marketed by
third parties, for which we receive royalties. We may be subject to claims made
by consumers as a result of products manufactured by these third parties which
are marketed under our brand names.

    Consumption of our products may cause serious health-related illnesses and
we may be subject to claims or lawsuits relating to such matters. Even an
inadvertent shipment of adulterated products is a violation of law and may lead
to an increased risk of exposure to product liability claims, product recalls
and increased scrutiny by federal and state regulatory agencies. Such claims or
liabilities may not be covered by our insurance or by any rights of indemnity or
contribution which we may have against others in the case of products which are
produced by third parties. In addition, even if a product liability claim is not
successful or is not fully pursued, the negative publicity surrounding any
assertion that our products caused illness or injury could have a material
adverse effect on our reputation with existing and potential customers and on
our brand image. In the past, we have voluntarily recalled certain of our
products in response to reported or suspected contamination. If we determine to
recall any of our products, we may face material consumer claims.

OUR BUSINESS IS SUBJECT TO THE RISK OF ENVIRONMENTAL LIABILITY AND WE COULD BE
NAMED AS A RESPONSIBLE OR POTENTIALLY RESPONSIBLE PARTY.

    Many of our current and former facilities have been in operation for many
years and, over that time, we and other operators of those facilities have
generated, used, stored, or disposed of substances or wastes that are or might
be considered hazardous under applicable environmental laws, including chemicals
and fuel stored in underground and above-ground tanks, animal wastes and large
volumes of wastewater discharges. As a result, the soil and groundwater at or
under certain of our current and former facilities may have been contaminated,
and we may be required to make material expenditures to investigate, control and
remediate such contamination.

    We have been identified as a potentially responsible party under the federal
Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA")
at several national priority list sites and currently have unresolved liability
with respect to the past disposal of hazardous substances at several of our
current and former facilities and waste disposal facilities operated by third
parties. CERCLA may impose joint and several liability on owners, operators and
users of a facility for the costs of investigation and remediation of
contaminated properties, regardless of fault or the legality of the original
disposal.

    In addition, federal and state environmental authorities have proposed new
regulations and attempted to apply certain existing regulations for the first
time to agricultural operations. These regulations could result in significant
restraints on some of our operations, particularly our swine operations, and
could require us to spend significant amounts of money to bring these operations
into compliance.

STRIKES OR WORK STOPPAGES BY OUR UNIONIZED WORKERS COULD DISRUPT OUR BUSINESS.

    At May 1, 2002, approximately 27% of our employees were covered by
collective bargaining agreements, some of which are due to expire within the
year. Our inability to negotiate acceptable contracts with the unions upon
expiration of these contracts could result in strikes or work stoppages and
increased operating costs as a result of higher wages or benefits paid to union
members or replacement workers. If the unionized workers were to engage in a
strike or work stoppage, or other nonunionized operations were to become
unionized, we could experience a significant disruption of our operations or
higher ongoing labor costs.

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<PAGE>

THERE IS NO ASSURANCE THAT OUR SENIOR MANAGEMENT TEAM OR OTHER KEY EMPLOYEES
WILL REMAIN WITH US.

    We believe that our ability to successfully implement our business strategy
and to operate profitably depends on the continued employment of our senior
management team and other key employees. If members of the management team or
other key employees become unable or unwilling to continue in their present
positions, the operation of our business would be disrupted and we may not be
able to replace their skills and leadership in a timely manner to continue our
operations as currently anticipated. We operate generally without employment
agreements with, or key person life insurance on the lives of, our key
personnel.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

COMMODITY RISK

    In the ordinary course of business, we are subject to market risk resulting
from changes in commodity prices associated with dairy and other agricultural
markets. See "Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation --- Overview -- Factors Affecting
Comparability -- Dairy and Agricultural Commodity Inputs and Outputs." To manage
the potential negative impact of price fluctuations, we engage in various
hedging and other risk management activities.

    As part of our trading activity, we utilize futures and option contracts
offered through regulated commodity exchanges to reduce risk on the market value
of our inventories and our fixed or partially fixed purchase and sale contracts.
We do not utilize hedging instruments for speculative purposes.

    Certain commodities cannot be hedged with futures or option contracts
because such contracts are not offered for these commodities by regulated
commodity exchanges. Inventories and purchase contracts for those commodities
are hedged with forward sales contracts to the extent practical so as to arrive
at a net commodity position within the formal position limits set by us and
deemed prudent for each of those commodities. Commodities for which future
contracts and options are available are also typically hedged first in this
manner, with futures and options used to hedge within position limits that
portion not covered by forward contracts.

    The notional or contractual amount of futures contracts provides an
indication of the extent of our involvement in such instruments for the dates
and the periods provided below, but does not represent exposure to market risk
or future cash requirements under certain of these instruments. A summary of our
futures contracts follows:

<TABLE>
<CAPTION>
                                            AT MARCH 31,
                              ---------------------------------------
                                      2002                 2001
                              --------------------  -----------------
                               NOTIONAL     FAIR    NOTIONAL     FAIR
                                AMOUNT      VALUE    AMOUNT     VALUE
                               --------     -----   --------    -----
                                             (IN THOUSANDS)
<S>                           <C>         <C>       <C>         <C>
 Commodity futures contracts
   Commitments to purchase.   $  65,417   $ 3,896   $  47,622   $(1,442)
   Commitments to sell.....     (42,469)    1,167     (33,565)     (733)
                              ---------   -------   ---------   -------
     Total outstanding
       derivatives.........   $  22,948   $ 5,063   $  14,057   $(2,175)
                              =========   =======   =========   =======
</TABLE>

<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED MARCH 31,
                                -----------------------------------------------
                                          2002                    2001
                                ----------------------- -----------------------
                                             REALIZED                 REALIZED
                                NOTIONAL       GAINS      NOTIONAL      GAINS
                                 AMOUNT       (LOSSES)    AMOUNT       (LOSSES)
                               ----------   ----------- -----------   ---------
                                                (IN THOUSANDS)
<S>                              <C>          <C>        <C>            <C>
   Commodity futures contracts
     Total volume of exchange
       traded contracts:
     Commitments to purchase.    $  83,094    $   (45)   $  52,759      $(422)
     Commitments to sell.....    $ (90,050)   $(1,606)   $ (54,181)     $(677)
</TABLE>

INTEREST RATE RISK

    We are exposed to changes in interest rates. As of December 31, 2001 and
March 31, 2002, we had $575 million and $573 million, respectively, in debt
outstanding under the credit agreements relating to the term loans and revolving
credit facility, all of which is variable rate debt. Interest rate changes
generally do not affect the market value of this debt but do impact the amount
of our interest payments and, therefore, our future earnings and cash flows,
assuming other factors are held constant. Holding other variables constant,
including levels of indebtedness as of March 31, 2002, a one-percentage point
increase in interest rates would have an



                                       46
<PAGE>

estimated negative impact on pretax earnings and cash flows for the next twelve
months of approximately $5.7 million.

INFLATION RISK

    Inflation is not expected to have a significant impact on our business,
financial condition or results of operations. We generally have been able to
offset the impact of inflation through a combination of productivity
improvements and price increases.

RECENT ACCOUNTING PRONOUNCEMENTS

    In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." Major provisions of these statements are as follows: all business
combinations must now use the purchase method of accounting, the pooling of
interests method of accounting is now prohibited; intangible assets acquired in
a business combination must be recorded separately from goodwill if they arise
from contractual or other legal rights or are separable from the acquired entity
and can be sold, transferred, licensed, rented or exchanged, either individually
or as a part of a related contract, asset or liability; goodwill and intangible
assets with indefinite lives are not amortized, but tested for impairment
annually, except in certain circumstances, and whenever there is an impairment
indicator; all acquired goodwill must be assigned to reporting units for
purposes of impairment testing and segment reporting. Land O'Lakes has adopted
the provisions of SFAS 141 and certain provisions of SFAS 142 as of July 1,
2001, and the remaining provisions of SFAS 142 as of January 1, 2002. As
required by SFAS 142, Land O'Lakes will perform step one of the impairment
testing of goodwill for the balances as of January 1, 2002 by June 30, 2002.
Land O'Lakes will perform impairment tests annually and whenever events or
circumstances occur indicating that goodwill or other intangible assets might be
impaired. As of January 1, 2002, we are no longer amortizing goodwill, except
for goodwill related to the acquisition of cooperatives and the formation of
joint ventures. The following table presents a reconciliation of net earnings
adjusted for the exclusion of amortization of goodwill no longer required to be
amortized, net of income taxes:

                                               THREE MONTHS ENDED
                                                    MARCH 31,
                                              -------------------
                                                2002        2001
                                              --------    -------

  Net (loss) earnings....................      $ (976)    $ 13,043
  Add back: Goodwill amortization,
  net of  tax............................          --        1,210
                                               ------     --------
  Adjusted net (loss) earnings...........      $ (976)    $ 14,253
                                               ======     ========

    Land O'Lakes adopted Emerging Issues Task Force (EITF) No. 00-25, "Vendor
Income Statement Characterization of Consideration to a Purchaser of the
Vendor's Products or Services," on January 1, 2002. EITF No. 00-25 deals with
the accounting for consideration paid from a vendor (typically a manufacturer or
distributor) to a retailer, including slotting fees, cooperative advertising
arrangements and buy-downs. The guidance in EITF 00-25 generally requires that
these incentives be classified as a reduction of sales. The impact of the
adoption decreased sales and selling and administration expense for the three
months ended March 31, 2002 and 2001 by $25.6 million and $21.8 million,
respectively.


PART II.  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         We are currently subject to various legal actions arising in the normal
course of business, none of which are expected to have a material effect on our
results of operations, financial condition or cash flow.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      EXHIBITS

 EXHIBIT
   NO.                       DESCRIPTION
 -------                     -----------
  3.1        Restated Articles of Incorporation of Land O'Lakes, Inc., as
             amended, August 1998. (1)

  3.2        By-Laws of Land O'Lakes Inc., as amended, December 2000. (1)

                                       47
<PAGE>
 EXHIBIT
   NO.                       DESCRIPTION
 -------                     -----------
  4.1        Credit Agreement among Land O'Lakes, Inc., the Lenders party
             thereto and The Chase Manhattan Bank, dated as of October
             11, 2001. (1)

  4.2        First Amendment dated November 6, 2001 to the Credit
             Agreement dated October 11, 2001. (1)

  4.3        Second Amendment dated February 15, 2002 to the Credit
             Agreement dated October 11, 2001. (1)

  4.4        Guarantee and Collateral Agreement among Land O'Lakes, Inc.
             and certain of its subsidiaries and The Chase Manhattan
             Bank, dated as of October 11, 2001. (1)

  4.5        Indenture dated as of November 14, 2001, among Land O'Lakes,
             Inc. and certain of its subsidiaries, and U.S. Bank,
             including Form of 8 3/4% Senior Notes due 2011 and Form of
             8 3/4% Senior Notes due 2011. (1)

  4.6        Registration Rights Agreement dated November 14, 2001 by and
             among Land O'Lakes, Inc. and certain of its subsidiaries,
             J.P. Morgan Securities Inc., SPP Capital Partners, LLC,
             SunTrust Robinson Capital Markets, Inc., Tokyo-Mitsubishi
             International plc and U.S. Bancorp Piper Jaffray, Inc. (1)

  4.7        Purchase Agreement by and between Land O'Lakes, Inc., and
             certain of its subsidiaries, J.P. Morgan Securities Inc.,
             SPP Capital Partners, LLC, SunTrust Robinson Capital
             Markets, Inc., Tokyo-Mitsubishi International plc and U.S.
             Bancorp Piper Jaffray, Inc., dated as of November 8, 2001. (1)

  4.8        Form of Old Note (included in Exhibit 4.5). (1)

  4.9        Form of New Note (included in Exhibit 4.5).  (1)

 10.1        Amendment dated February 4, 2002 to Employment Agreement
             between John Prince and Land O'Lakes, Inc. (2)

------------

(1)  Incorporated by reference to the identical exhibit to the Company's
     Registration Statement on Form S-4 filed March 18, 2002.

(2)  Incorporated by reference to Exhibit 10.16 to the Company's Registration
     Statement on Form S-4 filed March 18, 2002.


         (b) REPORTS ON FORM 8-K            NONE


                                       48
<PAGE>


                                   SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Arden Hills,
State of Minnesota, on the 15th day of May, 2002.

                              LAND O'LAKES, INC.

                              By           /s/  DANIEL KNUTSON
                                ---------------------------------------------
                                              Daniel Knutson
                                            Senior Vice President
                                         and Chief Financial Officer
                                 (Principal Financial and Accounting Officer)




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