<PAGE>   1




                                  UNITED STATES
                       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 June 30, 2001

                                       OR

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

                          Commission File No. 33-66606


                               PURINA MILLS, INC.
             (Exact name of registrant as specified in its charter)


           DELAWARE                                        76-0407288
(State or other jurisdiction of                          (I.R.S.Employer
incorporation or organization)                       Identification Number)


                               1401 S. HANLEY ROAD
                            ST. LOUIS, MISSOURI 63144
               (Address of principal executive offices) (Zip Code)

                                 (314) 768-4100
              (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 report(s)), and (2) has been subject to
such filing requirements for the past 90 days.

                             Yes  X     No
                                 ---       ---


                               Page 1 of 27 pages


<PAGE>   2


                               PURINA MILLS, INC.

                                Table of Contents
                       Form 10-Q for the Quarterly Period
                               Ended June 30, 2001


 PART I            FINANCIAL INFORMATION                                  PAGE
 ------            ---------------------                                  ----

 Item 1.           Financial Statements (Unaudited)

                      Consolidated Balance Sheets at June 30, 2001
                      and December 31, 2000                                3

                      Consolidated Statements of Operations for
                      the three months ended June 30, 2001 and 2000
                      and the six months ended June 30, 2001 and 2000      4

                      Consolidated Statements of Cash Flows for
                      the six months ended June 30, 2001 and 2000          5

                      Notes to Consolidated Financial Statements           6

 Item 2.           Management's Discussion and Analysis of
                      Financial Condition and Results of Operations       13

 Item 2a.          Quantitative and Qualitative Disclosure about
                      Market Risk                                         20

 PART II           OTHER INFORMATION
 -------           -----------------

 Item 2.           Legal Proceedings                                      21

 Item 4.           Submission of Matters to a Vote of Security Holders    21

 Item 6.           Exhibits and Reports on Form 8-K                       22

 SIGNATURE                                                                25

                                       2


<PAGE>   3





PURINA MILLS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 30, 2001 AND DECEMBER 31, 2000
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                          DECEMBER 31, 2000
                                                                                        (DERIVED FROM AUDITED
                                                                         JUNE 30, 2001  FINANCIAL STATEMENTS)
                                                                         -------------  ---------------------
<S>                                                                         <C>             <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                                   $   8,065       $  37,664
Accounts receivable, less allowance for doubtful accounts of $7,253 on
     June 30, 2001 and $7,390 on December 31, 2000                             22,418          33,009
Inventories                                                                    46,269          50,874
Prepaid expenses, deferred and other current assets                             8,003           7,555
Deferred income taxes                                                          13,787          13,787
                                                                            ---------       ---------
TOTAL CURRENT ASSETS                                                           98,542         142,889

Property, plant and equipment, net                                            202,363         209,498
Intangible assets, net                                                         36,698          40,097
Reorganization value in excess of amounts allocable to identifiable
     assets, net                                                               91,377          97,061
Notes receivable                                                                2,114           3,485
Other assets                                                                   30,852          29,227
                                                                            ---------       ---------
TOTAL ASSETS                                                                $ 461,946       $ 522,257
                                                                            =========       =========

LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable                                                            $  30,805       $  51,509
Customer advance payments                                                       2,218           7,600
Accrued expenses and interest payable                                          24,753          26,216
Current portion of long-term debt                                               1,439           1,439
                                                                            ---------       ---------
TOTAL CURRENT LIABILITIES                                                      59,215          86,764

Deferred income taxes                                                          65,747          69,656
Retirement obligations                                                         26,206          25,829
Other liabilities                                                               4,959             995
Long-term debt                                                                125,110         156,125
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value: 5,000,000 shares authorized, none
     issued or outstanding                                                         --              --
Common stock, $0.01 par value: 20,000,000 shares authorized,
     10,000,000 issued at June 30, 2001 and December 31, 2000                     100             100
Additional paid-in capital                                                    189,949         184,900
Retained deficit                                                               (6,476)         (1,281)
Accumulated other comprehensive loss                                           (2,864)           (831)
                                                                            ---------       ---------
TOTAL STOCKHOLDERS' EQUITY                                                    180,709         182,888
                                                                            ---------       ---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                                    $ 461,946       $ 522,257
                                                                            =========       =========
</TABLE>

(SEE ACCOMPANYING NOTES)


                                       3
<PAGE>   4


PURINA MILLS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                  POST-EMERGENCE      PRE-EMERGENCE    POST-EMERGENCE       PRE-EMERGENCE
'                                                  --------------      -------------    --------------       -------------
                                                   THREE MONTHS        THREE MONTHS      SIX MONTHS          SIX MONTHS
                                                       ENDED              ENDED             ENDED               ENDED
                                                   JUNE 30, 2001      JUNE 30, 2000     JUNE 30, 2001       JUNE 30, 2000
                                                   -------------      -------------     -------------       -------------
<S>                                                 <C>                <C>                <C>                <C>
NET SALES                                           $    199,648       $    195,349       $    427,558       $    414,546

COSTS AND EXPENSES:
Cost of products sold                                    158,214            156,405            340,751            329,164
Marketing, distribution and advertising                   22,901             20,690             45,648             43,196
General and administrative                                16,506             12,307             29,910             26,494
Amortization of intangibles                                4,425              6,783              8,842             13,575
Research and development                                   1,513              1,388              3,028              2,723
Restructuring expenses                                       752             16,388                752             24,924
Other (income) expense, net                                 (522)           (28,131)            (1,633)           (28,449)
                                                    ----------------------------------------------------------------------
                                                         203,789            185,830            427,298            411,627

OPERATING INCOME (LOSS)                                   (4,141)             9,519                260              2,919
Interest expense, net                                      2,836              3,524              5,632              9,759
                                                    ----------------------------------------------------------------------
Income (loss) before income taxes                         (6,977)             5,995             (5,372)            (6,840)
Income tax expense (benefit)                              (1,701)                --               (177)                --
                                                    ----------------------------------------------------------------------
Income (loss) before extraordinary item and
     revaluation of assets and liabilities
     pursuant to the adoption of fresh-start
     reporting                                            (5,276)             5,995             (5,195)            (6,840)
Extraordinary item-gain on extinguishment of
     debt, net of tax                                         --            159,359                 --            159,359
Revaluation of assets and liabilities
     pursuant to the adoption of fresh-start
     reporting                                                --              2,483                 --              2,483
                                                    ----------------------------------------------------------------------
NET INCOME (LOSS)                                   $     (5,276)      $    167,837       $     (5,195)      $    155,002
                                                    ----------------------------------------------------------------------

BASIC AND DILUTED NET INCOME (LOSS) PER COMMON
     SHARE                                          $      (0.53)                         $      (0.52)
Weighted average common shares outstanding            10,000,000                            10,000,000

   (SEE ACCOMPANYING NOTES)
</TABLE>


                                       4
<PAGE>   5





PURINA MILLS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                      POST-EMERGENCE    PRE-EMERGENCE
                                                                        SIX MONTHS        SIX MONTHS
                                                                           ENDED            ENDED
                                                                       JUNE 30, 2001    JUNE 30, 2000
                                                                       -------------    -------------
<S>                                                                      <C>               <C>
OPERATING ACTIVITIES:
Net income (loss)                                                        $  (5,195)        $ 155,002
Adjustment to reconcile net income (loss) to net cash provided by
operating activities:
     Gain on extinguishment of debt                                             --          (159,359)
     Gain on revaluation pursuant to fresh-start reporting                      --            (2,483)
     Depreciation and amortization                                          22,996            28,612
     (Gain) loss on asset disposition                                          311            (5,616)
     Provision for deferred taxes                                           (3,909)               --
     Compensation related to stock options and stock appreciation
         rights                                                              5,909                --
     Change in working capital                                             (12,403)           10,817
                                                                         ---------------------------
Net cash provided by operating activities                                $   7,709         $  26,973

INVESTING ACTIVITIES:
Sale of property, plant and equipment                                           84            15,757
Purchase of property, plant and equipment                                   (7,748)           (8,642)
Other                                                                        1,371             3,739
                                                                         ---------------------------
Net cash provided by (used in) investing activities                      $  (6,293)        $  10,854

FINANCING ACTIVITIES:
Proceeds from revolving credit facility                                         --           (87,471)
Repayment of term loans                                                    (31,000)          (15,550)
Capital contribution                                                            --            60,000
Other                                                                          (15)              251
                                                                         ---------------------------
Net cash used in financing activities                                    $ (31,015)        $ (42,770)

Increase (decrease) in cash and cash equivalents                           (29,599)           (4,943)
Cash and cash equivalents at beginning of period                            37,664            48,094
                                                                         ---------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                               $   8,065         $  43,151
                                                                         ===========================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
     Interest                                                            $   7,237         $  13,598
     Income taxes                                                            1,443               173
</TABLE>

(SEE ACCOMPANYING NOTES)



                                       5
<PAGE>   6


                       PURINA MILLS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

         On October 28, 1999 (the "Petition Date"), PM Holdings Corporation
("Holdings"), Purina Mills, Inc. ("Purina Mills") and certain of its
subsidiaries (the "Debtor") filed voluntary petitions for reorganization under
Chapter 11 of the United States Bankruptcy Code, as amended, with the United
States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court").
Purina Mills filed a Form 8-K on January 18, 2000 with the Securities and
Exchange Commission, which included a Plan of Reorganization (the "Plan") and a
disclosure statement. The Plan, as amended, was approved by the creditors,
confirmed by the Bankruptcy Court on April 5, 2000 and became effective on June
29, 2000 (the "Effective Date").

         The Plan provided, among other things, for the merger of Purina Mills
with and into Holdings prior to the effective date of the Plan. By operation of
the merger, Holdings succeeded to the business previously conducted by Purina
Mills and changed its name to Purina Mills, Inc. On May 19, 2000, Purina Mills
merged with and into Holdings with Holdings being the surviving corporation,
renamed as Purina Mills, Inc. (the "Company"). Subsequently, the Plan became
effective and the Company emerged from Chapter 11 as of the beginning of
business on June 30, 2000.

         As of the Effective Date, in accordance with AICPA Statement of
Position 90-7, Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code ("SOP 90-7"), the Company was required to adopt "fresh-start"
reporting and reflect the effects of such adoption in the financial statements
for the period through the Effective Date. In adopting fresh-start reporting,
the Company, with the assistance of its financial advisors, was required to
determine its reorganization value, which represents the fair value of the
entity before considering liabilities and approximates the amount a willing
buyer would pay for the net assets of the Company immediately after its
emergence from Chapter 11 status. The reorganization value of the Company was
determined by consideration of several factors, including the Company's
historical financial performance, its business plan and financial projections,
its fiscal 2000 budget, publicly available data of companies whose operations
are generally comparable to the operations of the Company and economic and
industry data trends. As a result of adopting "fresh-start" reporting, operating
results subsequent to the Effective Date are comparable to the operating results
prior to the Effective Date except for amortization of intangibles, interest
expense, restructuring expenses and income tax expense.

         As of the Effective Date, the Company was authorized to issue
20,000,000 shares of its $0.01 par value common stock. On or about August 15,
2000, October 30, 2000, January 30, 2001, May 11, 2001, and July 23, 2001, the
Company made distributions of cash and partial distributions of new common stock
of the Company to holders of claims that had been allowed to that date. The
Company issued 9,910,000 shares to holders of allowed unsecured claims and
90,000 shares to certain employees under the Company's Key Employee Retention
Program, of which 8,662,835 shares have been distributed and the remaining
1,337,165 shares being held in escrow by the transfer agent. Further
distributions will be made quarterly until all allowed claims have been
satisfied.


                                       6
<PAGE>   7

         The consolidated balance sheet at June 30, 2001 and the consolidated
statements of operations and cash flows for the periods ended June 30, 2001 and
2000 are unaudited and reflect all adjustments, consisting of normal recurring
items, restructuring charges, and the adoption of "fresh-start" reporting, which
management considers necessary for a fair presentation. Operating results for
the fiscal 2001 interim period are not necessarily indicative of results to be
expected for the fiscal year ending December 31, 2001. The consolidated balance
sheet at December 31, 2000 was derived from the Company's December 31, 2000
audited financial statements, but does not include all disclosures required by
accounting principles generally accepted in the United States of America.

         Although the Company believes the disclosures are adequate, certain
information and disclosures normally included in notes to annual financial
statements have been condensed or omitted as permitted by the rules and
regulations of the Securities and Exchange Commission. The accompanying
unaudited financial statements should be read in conjunction with the financial
statements for the year ended December 31, 2000, and the quarter ended March 31,
2001 contained in the Financial Statements on Form 10-K and Form 10-Q,
respectively.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The consolidated financial statements include the
accounts of the Company and its majority owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated. Investments in
affiliated companies, 20% through 50% owned, are accounted for using the equity
method.

Inventories: Carrying amounts of merchandise, materials, and animal inventories
are generally determined on a moving average cost basis and are stated at the
lower of cost or market. Effective July 1, 2001, the Company changed its method
of inventory valuation to standard costing. This change did not have a material
effect on the Company's financial results.

Intangible Assets (including Goodwill): Intangible assets represent the
Company's estimate of the value of such assets as of the Effective Date, in
accordance with the principles of SOP 90-7, less amortization since the
Effective Date. The intangible assets are amortized over their estimated period
of related benefit of one to ten years.

         Management periodically has and will continue to review the value of
its intangible assets to determine if impairment has occurred or whether changes
have occurred that would require a revision to the remaining useful life. In
making such determination, management evaluates the performance, on an
undiscounted basis, of the underlying operations or assets, which give rise to
such amount.

Reorganization Value in Excess of Amounts Allocable to Identifiable Assets: As a
result of adopting "fresh-start" reporting, the Company recorded reorganization
value in excess of amounts allocable to identifiable assets of approximately
$102.0 million as of the Effective Date. This intangible asset is being
amortized on a straight-line basis over a ten-year period.

Stock-Based Compensation: As allowed by Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, the Company
has elected to


                                       7
<PAGE>   8

account for its stock option plan under the intrinsic value-based method of
accounting prescribed by Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees (APB 25). Under APB 25, compensation expense is
recorded over the vesting period if the market price of the underlying stock on
the date of grant exceeds the exercise price of the option or if previously
issued options are repriced. The Company accounts for its stock appreciation
rights using variable plan accounting, and recognizes compensation expense based
on the amount that the market value of the Company's common stock exceeds the
exercise price.

Net Income (Loss) Per Share: Basic net income (loss) per common share is
computed using the weighted-average number of common shares outstanding during
the period. Diluted net income (loss) per common share is computed using the
weighted-average number of common and diluted common equivalent shares
outstanding during the period, so long as the inclusion of the common equivalent
shares would not be antidilutive. Dilutive common equivalent shares consist of
shares that may be issued under stock options, calculated under the treasury
stock method. The Company has omitted net income or loss per share information
for all periods prior to the Effective Date as the Company's capital structure
as an independent, publicly owned company did not exist prior to such date.

Revenue Recognition: Net sales and allowances for customer discounts are
generally recognized when products are shipped.

Adoption of Accounting Standards: The Financial Accounting Standards Board
issued SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities and SFAS No. 138, Accounting for Certain Instruments and Certain
Hedging Activity to amend SFAS No. 133. The Company adopted these statements
effective January 2001. Collectively, these statements establish accounting and
reporting standards requiring that certain derivative instruments be recognized
as assets and liabilities in the balance sheet, and unless designated as and
effective as a hedge, the change in fair value be recognized currently in
earnings. The Company utilizes interest rate swaps to hedge its exposure to
interest rate fluctuations, which are designated as cash flow hedges. The
effective portion of the change in fair value is charged to accumulated other
comprehensive income (loss) in the consolidated balance sheet until any deferred
hedging gains or losses are recorded in earnings.

         The Company also enters into futures contracts as considered necessary
to reduce risk associated with market price fluctuations of its commodity and
swine purchases and sales. Prior to December 31, 2000, gains and losses on these
futures contracts were recognized in the same period as such inventory was sold.
The Company does not meet the documentation and designation requirements of SFAS
133 and SFAS 138 and, accordingly, these derivative instruments do not qualify
for hedge accounting. The change in fair value on futures contracts subsequent
to December 31, 2000 are offset against the change in fair value of purchase and
sales commitments with the resulting net gain or loss recognized in current
earnings. During the three month and six month periods ended June 30, 2001, the
Company recognized a $1.9 million net gain, which was recorded as a reduction of
cost of product sold.

Future application of Accounting Standards: In July 2001, the Financial
Accounting Standards Board issued Statement No. 141, Business Combinations, and
Statement No. 142, Goodwill and


                                       8
<PAGE>   9

Other Intangible Assets. Statement 141 requires that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001.
Statement 141 also specifies criteria intangible assets acquired in a purchase
method business combination must meet to be recognized and reported apart from
goodwill. Statement 142 requires that goodwill, the reorganization value in
excess of amounts allocable to identifiable assets, and intangible assets with
indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with the provisions of Statement 142.
Statement 142 also requires that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment in accordance with SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of.

         The Company is required to adopt the provisions of Statement 141
immediately, and Statement 142 effective January 1, 2002. The Company's existing
reorganization value in excess of amounts allocable to identifiable assets and
intangible assets will continue to be amortized prior to the adoption of
Statement 142.

         Statement 141 requires that upon adoption of Statement 142, the Company
evaluate its existing intangible assets and reorganization value in excess of
amounts allocable to identifiable assets, and make any necessary
reclassifications in order to conform with the new criteria in Statement 141.
Upon adoption of Statement 142, the Company will be required to reassess the
useful lives and residual values of all recorded intangible assets, and make any
necessary amortization period adjustments by March 31, 2002. In addition, to the
extent an intangible asset is identified as having an indefinite useful life,
the Company will be required to test the intangible asset for impairment in
accordance with the provisions of Statement 142 by March 31, 2002. Any
impairment loss will be measured as of the date of adoption and recognized as
the cumulative effect of a change in accounting principle.

         In connection with the transitional impairment evaluation, Statement
142 requires the Company to assess whether there is an indication that
reorganization value in excess of amounts allocable to identifiable assets is
impaired as of the date of adoption. Statement 142 contains extensive guidance
on the manner in which this assessment is to be performed, and requires the full
assessment be completed no later than December 31, 2002. Any transitional
impairment loss will be recognized as the cumulative effect of a change in
accounting principle in the Company's statement of earnings. Because of the
extensive effort needed to comply with adopting Statements 141 and 142, it is
not practicable to reasonably estimate the impact of adopting these Statements
on the Company's financial statements at the date of this report, including
whether any transitional impairment losses will be required to be recognized as
a cumulative effect of a change in accounting principle.

Reclassifications: Certain reclassifications have been made to the prior period
consolidated financial statements to conform to the consolidated financial
statement presentation at June 30, 2001 and the six month period then ended.





                                       9
<PAGE>   10



3.  INVENTORIES

         Inventories consist of the following (in thousands):

                                          JUNE 30, 2001    DECEMBER 31, 2000
                                          -------------    -----------------
          Raw materials                      $30,369           $32,852
          Finished goods                      10,568            10,392
          Animals                              5,332             7,630
                                             -------           -------
                   Total                     $46,269           $50,874
                                             =======           =======

4.  LONG-TERM DEBT

         Long-term debt consists of the following (in thousands):

                                        JUNE 30, 2001    DECEMBER 31, 2000
                                        -------------    -----------------
          Term loan                       $ 125,000         $ 156,000
          Promissory notes                    1,439             1,439
          Other                                 110               125
                                          ---------         ---------
                                            126,549           157,564
          Less current portion               (1,439)           (1,439)
                                          ---------         ---------
                         Total            $ 125,110         $ 156,125
                                          =========         =========

Credit Facility: In connection with the consummation of the Plan, Purina Mills
entered into a new credit agreement ("the Credit Agreement") which provides for
secured borrowings from a syndicate of lenders consisting of (i) a term loan
facility providing for an aggregate of $175.0 million Tranche A Term Loan with a
maturity date of December 31, 2003 ("the Term Loan") and (ii) a $50.0 million
Revolving Credit Facility with a maturity date of December 31, 2002, with a
$30.0 million sub-limit for letters of credit, which is available to finance the
Company's ongoing working capital requirements. At June 30, 2001, $9.6 million
of the Revolving Credit Facility has been used for the issuance of letters of
credit for ordinary course business purposes of the Company and it subsidiaries.
There were no outstanding borrowings under the Revolving Credit Facility as of
June 30, 2001. Loans under the Credit Agreement bear interest at floating rates,
which are, at the Company's option, based either upon bank prime or Eurodollar
rates. Rates on outstanding borrowings averaged 7.47% at June 30, 2001.

         On September 22, 2000, the Company entered into a swap contract on
$100.0 million of the Term Loan, pursuant to requirements in the Credit
Agreement. The swap contract provides that the Company will pay interest on the
notional amount based on a fixed rate of 6.74% and will receive the three month
Eurodollar rate.

         During the three and six month periods ended June 30, 2001, the Company
voluntarily repaid $10.0 million and $31.0 million of its Term Loan,
respectively. As a result of such repayment, the outstanding balance of $125.0
million on the Term Loan is due on December 31, 2003. The Company is also
required to make mandatory repayments of the Term Loan in amounts equal to 50%
of Excess Cash Flow, as defined in the Credit Agreement. The next such payment
is scheduled to be paid March 2002, however, the Company does not anticipate any
additional payment to be due as a result of its voluntary prepayments during the
first six months


                                       10
<PAGE>   11

of 2001. Additionally, the Company is generally required to make mandatory
repayments of amounts received on the sale of assets unless reinvested within
specific time periods. Any repayments under the Term Loan are not available for
future re-borrowings.

5. COMMON STOCK

         Pursuant to the Plan, the Company issued 9,910,000 shares of common
stock to holders of allowed unsecured claims and 90,000 shares to certain
employees under the Company's Key Employee Retention Program. As of June 30,
2001 the Company had distributed 8,662,835 shares with the remaining 1,337,165
shares held in escrow by Wells Fargo Minnesota Bank, N.A., the transfer agent.
The remaining shares will be distributed to holders of unsecured claims as all
such claims are finalized in accordance with the Plan. All shares of the
Company's common stock outstanding prior to the Effective Date were cancelled.

6. STOCK COMPENSATION PLANS

         The Company applies APB 25 and related interpretations in accounting
for its stock options. Under the provisions of APB 25, compensation cost is
measured by the amount that the quoted market price of a company's stock exceeds
the exercise price. The measurement date for all awards is the first date on
which both the number of shares that an individual employee is entitled to
receive and the option or purchase price are known. If the measurement date
occurs on the grant date, the plan is referred to as a fixed plan, thus
compensation cost is fixed at the grant date. A plan is referred to as a
variable plan when compensation cost varies with the quoted market price of the
stock at the end of each accounting period until the measurement date.

         On June 12, 2001, the shareholders approved an amendment to the Purina
Mills, Inc. Equity Incentive Plan (the "Option Plan"). Under the terms of the
amended Option Plan, the exercise price per share for each grant to an optionee
was reduced to $12.50 per share on 50% of the option shares, $15.62 per share on
25% of the option shares and $18.75 per share on the remaining 25% of the option
shares. The approval of this amendment resulted in the Option Plan being
considered variable and thus $5.0 million of compensation expense was recognized
for the three month period ended June 30, 2001. At June 30, 2001, there were
1,000,000 options outstanding under the Option Plan.

         On June 12, 2001, the shareholders also approved the 2001 Non-Employee
Director and Key Employee Equity Incentive Plan (the "2001 Plan"). The 2001 Plan
provides that non-qualified stock options to purchase 0.5 million shares of the
Company's common stock may be granted. On June 12, 2001, each non-employee
director was granted the option to purchase 25,000 shares with an exercise price
$19.00 per share, the fair market value of the stock on the date of grant. The
options granted vest ratably over a three-year period and all options must be
granted before December 31, 2006. No compensation expense has been recognized
under this plan since there was no difference between the quoted market price of
the Company's common stock on the date of grant and the exercise price per
share. At June 30, 2001, there were 100,000 options outstanding under the 2001
Plan.


                                       11
<PAGE>   12

         In November, 2000, the Company established the 2000 Stock Appreciation
Rights Plan under which it is authorized to grant 300,000 stock appreciation
rights ("SARs") to key employees of the Company. Upon exercise of a SAR the
holder is entitled to receive cash equal to the amount by which the market value
of the Company's common stock on the exercise date exceeds the exercise price of
the SAR. The SARs vest ratably over a period of four years and 277,000 SARs are
outstanding at June 30, 2001. The exercise price of all outstanding SARs is
$12.50 per share, and none of the SARs were vested at June 30, 2001.
Compensation expense of $0.9 million was recognized during the three and six
month periods ended June 30, 2001.

7. OTHER COMPREHENSIVE INCOME

         In accordance with the provisions of SFAS No. 133, the Company recorded
a deferred hedging loss on designated cash flow hedges of $2.1 million, net of
$1.3 million tax, to accumulated other comprehensive income (loss) during the
six month period ended June 30, 2001.

8. ADDITIONAL MATTERS


         On January 17, 2001, Purina voluntarily initiated a limited product
recall at the Company's Gonzales, Texas plant. The recall involved one animal
feed product that was manufactured at the Company's plant and shipped to one
customer. Purina's quality assurance program detected the product formulation
variance in the handling of the animal feed ingredient, ruminant meat and bone
meal, which is not permitted in feed intended for ruminant animals. The 1,222
cattle which were fed the product have been purchased by Purina and will be used
for non-human food purposes in order to attempt to ensure that the meat will not
enter the human food supply. The Company estimates that its total costs
including the costs to remove and dispose of all ruminant meat and bone meal at
all its plants, before insurance recoveries, will approximate $1.5 to $3.5
million.

         On June 17, 2001, Purina Mills entered into a definitive merger
agreement with Land O'Lakes, Inc. and certain of its affiliates providing for
the merger of Purina Mills with and into an indirect subsidiary of Land O'Lakes,
Inc. A special meeting of Purina Mills stockholders to consider the adoption of
the merger agreement and the merger pursuant thereto is scheduled to be held on
September 5, 2001. Stockholders as of the record date of July 30, 2001 are
entitled to vote at the special meeting. The proxy statement relating to the
special meeting was mailed to Purina Mills stockholders on or about August 6,
2001.





                                       12
<PAGE>   13


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

RESULTS OF OPERATIONS

         You should read the following Management's Discussion and Analysis of
Financial Condition and Results of Operations together with the consolidated
financial statements and related notes included elsewhere in this report.
Certain statements in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These forward-looking statements are not
statements of historical or current facts, but rather are statements of our
current expectations, estimates and projections about our industry, business and
our future operating and financial performance. We use words such as
"anticipate," "believe," "plan," "estimate," "expect," "future," "intend," "are
expected to," "will continue" and variations of these words and similar
expressions to identify forward-looking statements. These statements are not
guarantees of future performance and are subject to risks, uncertainties and
other factors, some of which are beyond our control and difficult to predict and
could cause actual results to differ materially from those we anticipate in our
forward-looking statements. These risks and uncertainties include: (i) the
outcome of the special meeting of our stockholders to be held on September 5,
2001 to consider the adoption of the proposed merger with an indirect subsidiary
of Land O'Lakes, Inc.; (ii) whether or not the other various conditions to the
proposed merger are fulfilled and the merger is consummated; (iii) changing
conditions or market trends in the animal feeds and agricultural products
industries; (iv) general economic or business conditions, including its effect
on our customers; (v) fluctuation in commodity prices and our ability to recover
our raw material costs in the pricing of our products; (vi) consolidation in the
feed production and livestock production industries; (vii) our ability to
implement our business strategy; (viii) the level of demand for our products and
the actions of our competitors; and (ix) our ability to obtain financing for
specific or general corporate purposes. Readers are cautioned not to place undue
reliance on these forward-looking statements, which reflect our management's
view only as of the date of this report. Except as required by law, we undertake
no obligation to update any forward-looking statement, whether as a result of
new information, future events or otherwise.


Overview

         We develop, manufacture and market a comprehensive line of animal
nutrition products for dairy cattle, beef cattle, hogs, horses and poultry, as
well as specialty feeds for rabbits, zoo animals, birds, fish and pets. For the
six month period ended June 30, 2001, the product mix by volume was
approximately 26% for dairy cattle, 32% for beef cattle, 12% for hogs, 14% for
horses, 5% for poultry and 11% for all others.

         The feed industry generally prices products on the basis of aggregate
ingredient cost plus a dollar amount margin, rather than a gross profit
percentage. As ingredient prices fluctuate, the changes are generally passed on
to customers through weekly or monthly changes in our price lists. Feed tonnage
and total income over ingredient cost (IOIC), which is net sales minus cost of
ingredients, and gross profit (IOIC less manufacturing costs), rather than sales
dollars, are the key indicators of performance because of the distortions in
sales dollars caused by changes in commodity prices and product mix between
complete feed and concentrate products, to which customers add their own base
ingredients, such as corn and other grains. Historically, when the price of
grains has been relatively high, more of our customers have tended to purchase
complete rations and our sales volume has been higher; alternatively, when the
price of grains has been relatively low, more of our customers have tended to
use their own grains and mix them with our higher-margin concentrates, resulting
in lower sales volume but relatively higher overall unit margins.


                                       13
<PAGE>   14

         The following discussion compares the results of operations for the
three and six month periods ended June 30, 2001 to the comparable three and six
month periods ended June 30, 2000. As a result of adoption of "fresh-start"
reporting, the financial statements for periods subsequent to June 29, 2000 are
prepared on a different basis of accounting and are not comparable to the
financial statements for periods prior to June 29,2000, primarily with respect
to the amortization of intangibles, interest expense, restructuring expense and
income tax expense. To facilitate an understanding of the Company's operating
performance, the following discussion is presented on a traditional comparative
basis for all periods, with specific explanation provided for changes in results
of operations due to the effects of "fresh-start" reporting.

Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

         Higher commodity prices caused net sales to increase 2.2% in 2001 from
the 2000 period. Gross profit was $41.4 million for the three months ended June
30, 2001 compared to $38.9 million for the three months ended June 30, 2000, an
increase of 0.8% in our gross profit percentage to 20.7% for the 2001 period.
Average feed IOIC per ton was $76.54, an increase of $0.52 per ton above the
average for 2000. Overall volume decreased 1.8% and totaled 0.9 million tons for
the second quarter of 2001.

          Beef cattle volume increased slightly over the 2000 period as sales
volume in the grass cattle business was favorably affected by weather as well as
strong cattle economics. Dairy cattle tons decreased 7.3% from the prior year
due to continued lower feeding rates caused by low milk prices. Hog volume
decreased 1.8% from the prior year as a result of continuing market
consolidation, and a decline in industry productivity. Horse volume increased
3.5% over the 2000 period, resulting from continued market share growth in horse
product lines. Laying chicken and meatbird volume increased 13.9% from 2000
while specialty and other volume increased 1.9% over the 2000 period.

          Cost of products sold increased $1.8 million, or 1.2% from the
comparable 2000 period, due primarily to increased ingredient costs.
Manufacturing expenses were $0.8 million higher as compared to the three month
period ended June 30, 2000 primarily due to increased energy costs.

          Marketing, distribution and advertising costs increased $2.2 million
due to the recognition of compensation expense related to the stock-based
compensation plans. General and administrative expenses also increased $4.2
million from the 2000 period due primarily to the recognition of stock-based
compensation expense of $3.6 million related to the Equity Incentive and Stock
Appreciation Rights Plans under APB 25. Overall marketing, distribution,
advertising and general and administrative expenses were 19.8% of sales revenue,
16.8% excluding the recognition of stock-based compensation expense, in the
three month period ended June 30, 2001, as compared to 16.9% in the three month
period ended June 30, 2000.

         Intangible amortization expense decreased during 2001, as a result of
"fresh-start" reporting. All intangible assets were revalued on June 30, 2000
and are being amortized over their estimated useful lives. Our reorganization
value in excess of amounts allocable to identifiable assets upon the emergence
from bankruptcy is being amortized over 10 years, whereas goodwill was amortized
over five years during the comparable 2000 period.

         Research and development costs increased slightly compared with the
three month period ended June 30, 2000. Other (income) expense, net, for the
three month period ended June 30, 2001 relates to service fees for swine and
dairy management, the (income) loss on our equity investments and losses on
marketing arrangements. Other (income) expense for the three month period ended
June 30, 2000 also includes proceeds of $24.4 million received in settlement of
claims for excess charges of vitamin purchases in prior years, and a $3.3
million gain on the sale of our headquarters building.


                                       14
<PAGE>   15

         During the three month period ended June 30, 2001 restructuring
expenses were $0.8 million of severance expense relating to the Company's
continued cost management efforts. During the three month period ended June 30,
2000 restructuring expenses were $16.4 million including $9.6 million in
advisory and financing fees incurred in connection with the bankruptcy cases,
and $6.8 million for severance and compensation expense in connection with our
Key Employee Retention Plan.

         Interest expense for the second three months of 2001 decreased $0.7
million from the comparable 2000 period primarily as a result of our debt being
substantially reduced upon emergence from bankruptcy.

         For the second three months of 2000, we determined that we were not
likely to receive a tax benefit or incur any tax cost under our tax sharing
agreement with Koch Industries and thus recorded no tax benefit or expense. The
Company's effective income tax rate differed from the statutory rate during the
second three months of 2001 due to amortization of the reorganization value in
excess of amounts allocable to identifiable assets not being allowed as a tax
deduction.

Six months Ended June 30, 2001 Compared to Six months Ended June 30, 2000

         Due to overall higher commodity prices, net sales increased 3.1% from
the 2000 period. Gross profit was $86.8 million for the six months ended June
30, 2001 compared to $85.4 million for the six months ended June 30, 2000.
Overall volume for the six months ended June 30, 2001 was 1.9 million tons
compared to 2.0 million tons for the comparable 2000 period, a decrease of 0.9%.
Average IOIC per ton was $73.30, a 1.3% decrease from the six-month period ended
June 30, 2000 due primarily to a slight decrease in margins in our livestock
feed business.

         Beef cattle volume increased 2.5% over the 2000 period due to improved
cattle economics. Dairy cattle tons decreased 8.1% from the prior year due to
low milk prices and lower commodity prices. Hog volume decreased 3.3% from the
prior year due additional market consolidation. Horse volume increased 4.2% over
the 2000 period. The Company has had continued success in growing this business
by aggressively marketing and promoting the product lines. Laying chicken and
meatbird volume increased 14.1% from 2000. Specialty and other volume decreased
1.2% from the 2000 period.

         Cost of products sold increased $11.6 million, or 3.5% from the
comparable 2000 period, due primarily to a $9.2 million increase in ingredient
costs. Manufacturing expenses increased $2.3 million over the amount for the
comparable 2000 period primarily as a result of increase energy costs.

         Marketing, distribution and advertising costs increased $2.5 million
due primarily to the recognition of compensation expense for stock-based plans.
General and administrative expenses increased $3.4 million from the 2000 period
due to the recognition of $3.6 million of stock-based compensation expense
related to the Equity Incentive and Stock Appreciation Rights Plans accounted
for under APB 25 and a $1.0 million loss recorded in connection with the product
recall at our Gonzales, Texas plant in January 2001, offset by a $1.2 million
decrease in other administrative costs due primarily to the consolidation of the
accounting and credit functions during 2000.

         Intangible amortization expense decreased during 2001 as a result of
"fresh-start" reporting. Goodwill was being amortized over five years on a
straight line basis during the first six months of 2000 and reorganization value
in excess of amounts allocable to identifiable assets is currently being
amortized on a straight line basis over ten years.

         Research and development costs increased slightly compared with the
2000 period. Other (income) expense, net for the six months ended June 30, 2001,
relates to service fees for swine and dairy management, the (income) loss on the
Company's equity investments and losses on marketing arrangements. Other
(income)


                                       15
<PAGE>   16

expense for the six months ended June 30, 2000 includes proceeds of $24.4
million received in settlement of claims for excess charges of vitamin purchases
in prior years. Additionally, the Company recorded a gain of $3.3 million from
the sale of its headquarters building.

         Restructuring expense for the six months ended June 30, 2001 of $0.8
million in severance expense relates to the Company's continued cost management
efforts. Restructuring expenses for the six months ended June 30, 2000 include
$13.8 million in advisory and financing fees incurred in connection with the
Reorganization Cases, $4.6 million for severance and moving costs and $6.5
million for compensation expense in connection with the Key Employee Retention
Plan.

         Interest expense for the six months ended June 30, 2001 decreased $4.1
million from the 2000 period primarily as a result of our debt being
substantially reduced upon emergence from bankruptcy.

         For the first six months of the year 2000, management had determined
that it was not likely to receive a tax benefit or incur any tax cost under its
tax sharing agreement with Koch Industries and thus recorded no tax benefit or
expense. The Company's effective income tax rate differed from the statutory
rate in 2001 due to amortization of the reorganization value in excess of
amounts allocable to identifiable assets not being allowed as a tax deduction.

         For the six month period ended June 30, 2000, the extraordinary gain on
extinguishment of debt represents the amount of unsecured liabilities of the
Debtor, as reflected on its balance sheet as of the Petition Date, for which
holders of such claims will be issued new common stock of the Company in full
satisfaction of such liabilities. The total of such liabilities less the
reduction in tax basis of the Company's assets as a result of the debt
extinguishment, at the applicable tax rate, less the value of the new common
stock issued to claim holders resulted in a net gain of $159.4 million.

         The income on the revaluation of the Company's assets and liabilities
pursuant to the adoption of "fresh-start" reporting totaled $2.5 million during
2000. This represents the Company's best estimate of the reorganization value of
the Company immediately after the Effective Date in excess of the net value of
the Company's assets after the consummation of the Plan, including the
extinguishment of debt.


SEASONALITY

         Our results of operations are seasonal, with a higher percentage of our
volume and earnings being generated during the first and fourth quarters of the
year. This seasonality is driven largely by weather conditions affecting our
beef cattle products. If the weather is particularly warm during the winter,
sales of feed for beef cattle may decrease as compared with normal seasonal
patterns because the cattle may be better able to graze under warmer conditions.
Other product lines are affected marginally by seasonal conditions, but these
conditions do not materially affect our overall quarter-by-quarter results of
operations. The seasonality of our businesses may have a material adverse affect
on our results of operations.


INFLATION

         Management recognizes that inflationary pressures may have an adverse
effect on the Company through higher asset replacement costs and related
depreciation and higher ingredient costs. The Company tries to minimize these
effects through cost reductions and productivity improvements as well as price
increases to maintain reasonable profit margins. It is management's view that
inflation has not had a significant impact on the consolidated operations in the
six months ended June 30, 2001.


                                       16
<PAGE>   17


LIQUIDITY AND CAPITAL RESOURCES

         For the six months ended June 30, 2001, net cash provided by operating
activities was $7.7 million compared to net cash provided by operating
activities of $27.0 million during the same period in 2000. The decrease in net
cash provided from the prior period results primarily from a significant
decrease in the Company's current obligations as compared to the prior year,
offset by a decrease in deferred tax liability of $3.9 million. Under Chapter
11, certain claims against the Company in existence prior to the filing of the
petitions for relief under the federal bankruptcy laws were stayed while the
Company continued business operations. These claims were reflected as
liabilities subject to compromise and as a result, the Company's current
liabilities including trade payables at December 31, 1999 were substantially
lower than such amount at December 31, 2000. Accordingly, the Company had a
significant decrease in working capital during the first six months of 2001
compared to an increase which occurred during the first six months of 2000.

         Net cash used in investing activities was $6.3 million for the first
six months of 2001, compared to net cash provided of $10.9 million for the six
month period ended June 30, 2000. The net cash provided by investing activities
in 2000 includes proceeds of $15.7 million primarily from the sale of the
Company's headquarters building.

         Net cash used in financing activities for the six months ending June
30, 2001 includes repayments on our term loan of $31.0 million. Net cash used in
financing activities in 2000 includes repayment in the prepetition revolving
credit facility of $87.5 million and the repayment of prepetition term loans of
$15.5 million, offset by the receipt of $60.0 million from Koch Industries
related to the negotiated settlement as provided in the plan of reorganization.

         At June 30, 2001, we had $8.1 million in cash and cash equivalents on
hand with $40.4 million available for borrowing under our new revolving credit
facility. We operate with a relatively low working capital level because a
majority of our sales are made on terms whereby customers receive a 3% discount
if payment is received immediately upon shipment of feed products, and raw
ingredients are normally purchased just prior to manufacturing and shipment.

         Liquidity needs have been and will continue to be met through
internally generated funds and, to the extent necessary, borrowings under our
revolving credit facility. Our ability to obtain additional financing in the
future for working capital, capital expenditures, acquisitions and general
corporate purposes, should we need to do so, may be affected by cash
requirements for debt service. Our credit agreement contains restrictive
covenants that, among other things and under various conditions, limit our
ability to incur additional indebtedness, to acquire (including a limitation on
capital expenditures) or dispose of assets or operations and to pay dividends.
Additionally, we are required to provide our lenders monthly financial reports
as to the results of our operations. The credit agreement also requires us to
make mandatory repayments of the term loan in amounts equal to 50% of Excess
Cash Flow (as defined in the Credit Agreement). No payment is due in 2001 due to
the voluntary prepayment of $19.0 in 2000 and no payment is expected to be due
in 2002 as a result of the $31.0 million voluntary prepayment on the term loan
during the first six months of 2001.

         We expect that capital expenditures during fiscal year 2001 will be
approximately $25.0 to $30.0 million which includes approximately $3.0 million
related to new or improved manufacturing systems at facilities where horse
products are manufactured to maintain these systems as ionophore free. Our
actual capital expenditures for the six months ended June 30, 2001 were $7.7
million. We may from time to time be required to make additional capital
expenditures in connection with the execution of our business strategies.

         We believe that cash flow from operations and availability under our
revolving credit facility will provide adequate funds for our foreseeable
working capital needs, planned capital expenditures and debt service


                                       17
<PAGE>   18

obligations. Our ability to fund our operations and make planned capital
expenditures, to make scheduled debt payments, to refinance indebtedness and to
remain in compliance with all of the financial covenants under debt agreements
depends on our future operating performance and cash flow, which, in turn, are
subject to prevailing economic conditions and the risks discussed elsewhere in
this Management's Discussion and Analysis of Financial condition and Results of
Operations, many of which are beyond our control.


RECENT DEVELOPMENTS

         On June 17, 2001, Purina Mills entered into a definitive merger
agreement with Land O'Lakes, Inc. and certain of its affiliates providing for
the merger of Purina Mills with and into an indirect subsidiary of Land O'Lakes,
Inc. A special meeting of Purina Mills stockholders to consider the adoption of
the merger agreement and the merger pursuant thereto is scheduled to be held on
September 5, 2001. Stockholders as of the record date of July 30, 2001 are
entitled to vote at the special meeting. The proxy statement relating to the
special meeting was mailed to Purina Mills stockholders on or about August 6,
2001.


RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS

         In July 2001, the Financial Accounting Standards Board issued Statement
No. 141, Business Combinations, and Statement No. 142, Goodwill and Other
Intangible Assets. Statement 141 requires that the purchase method of accounting
be used for all business combinations initiated after June 30, 2001. Statement
141 also specifies criteria intangible assets acquired in a purchase method
business combination must meet to be recognized and reported apart from
goodwill. Statement 142 requires that goodwill, the reorganization value in
excess of amounts allocable to identifiable assets, and intangible assets with
indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with the provisions of Statement 142.
Statement 142 also requires that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment in accordance with SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of.

         The Company is required to adopt the provisions of Statement 141
immediately, and Statement 142 effective January 1, 2002. The Company's existing
reorganization value in excess of amounts allocable to identifiable assets and
intangible assets will continue to be amortized prior to the adoption of
Statement 142.

         Statement 141 requires that upon adoption of Statement 142, the Company
evaluate its existing intangible assets and reorganization value in excess of
amounts allocable to identifiable assets, and make any necessary
reclassifications in order to conform with the new criteria in Statement 141.
Upon adoption of Statement 142, the Company will be required to reassess the
useful lives and residual values of all recorded intangible assets, and make any
necessary amortization period adjustments by March 31, 2002. In addition, to the
extent an intangible asset is identified as having an indefinite useful life,
the Company will be required to test the intangible asset for impairment in
accordance with the provisions of Statement 142 by March 31, 2002. Any
impairment loss will be measured as of the date of adoption and recognized as
the cumulative effect of a change in accounting principle.

         In connection with the transitional impairment evaluation, Statement
142 requires the Company to assess whether there is an indication that
reorganization value in excess of amounts allocable to identifiable assets is
impaired as of the date of adoption. Statement 142 contains extensive guidance
on the manner in which this assessment is to be performed, and requires the full
assessment be completed no later than December 31, 2002. Any transitional
impairment loss will be recognized as the cumulative effect of a change in
accounting principle in the Company's statement of earnings.


                                       18
<PAGE>   19

         As of January 1, 2002, the Company expects to have unamortized
reorganization value in excess of amounts allocable to identifiable assets of
$86.4 million and unamortized identifiable intangible assets in the amount of
$33.0 million, each of which will be subject to the transition provisions of
Statements 141 and 142. Amortization expense related to reorganization value in
excess of amounts allocable to identifiable assets was $5.1 million and $5.1
million for the year ended December 31, 2000 and the six months ended June 30,
2001, respectively. Because of the extensive effort needed to comply with
adopting Statements 141 and 142, it is not practicable to reasonably estimate
the impact of adopting these Statements on the Company's financial statements at
the date of this report, including whether any transitional impairment losses
will be required to be recognized as a cumulative effect of a change in
accounting principle.


KEY MEASURES AND CONCEPTS FOR UNDERSTANDING THE BUSINESS

         Because one of the principal focuses of the Company is cash flow,
management uses earnings before interest expense, interest income, income taxes,
depreciation, amortization, gains or losses on fixed asset dispositions and
write-downs, restructuring costs, and other non-cash gains, losses or expenses
("EBITDAR") as a key measure for evaluating performance and compensating
management under its annual incentive plan. EBITDAR is also a principal
component of several covenants under the Credit Agreement. The following table
provides a reconciliation of operating income before taxes and extraordinary
items to EBITDAR.

<TABLE>
<CAPTION>
                 (Dollars in thousands)                 POST-EMERGENCE     PRE-EMERGENCE
                                                        --------------     -------------
                                                          SIX MONTHS        SIX MONTHS
                                                             ENDED             ENDED
                                                         JUNE 30, 2001     JUNE 30, 2000
                                                            --------         --------
<S>                                                         <C>              <C>
          OPERATING INCOME                                  $    260         $  2,919

          ADDBACK:
            Depreciation and amortization                     22,788           30,432
            Amortization of deferred financing costs              --             (602)
            (Gains) losses related to asset
               disposition and vitamin purchases
               claim settlement                                  106          (27,057)

          RESTRUCTURING AND OTHER NON-CASH CHARGES:
            Mark-to-market of derivative contracts            (1,858)              --
            Stock-based compensation expense                   5,908               --
            Restructuring expenses                               752           24,924
            Other                                              1,000               --
                                                            -------------------------

          EBITDAR                                           $ 28,956         $ 30,616
                                                            =========================
</TABLE>

         The other non-cash charges, mark-to-market of derivative contracts
represents the effect of adopting FAS 133 and the net fair value of futures
contracts offset against the fair value of purchases and sale commitments.
Stock-based compensation expense was recognized pursuant to variable plan
accounting under APB 25 and represents expense related to the Equity Incentive
and Stock Appreciation Rights Plans. Additionally, the "other" charge of $1.0
million represents a provision for losses related to the product recall at our
Gonzales, Texas plant.

         EBITDAR as presented may not be comparable to similarly titled measures
used by other companies, depending upon the treatment of non-cash and other
specific charges. When evaluating EBITDAR, investors should consider that
EBITDAR: (i) should not be considered in isolation but together with other
factors that may influence operating and investing activities, such as changes
in operating assets and liabilities and purchases of property and equipment;
(ii) is not a measure of performance calculated in accordance with accounting
principles generally accepted in the United States of America; (iii) should not
be construed as an


                                       19
<PAGE>   20

alternative or substitute for income from operations, net income or cash flows
from operating activities in analyzing the Company's operating performance,
financial position or cash flows; and (iv) should not be used as an indicator of
the Company's operating performance or as a measure of its liquidity.


OUTLOOK OF OPERATING RESULTS

         Based on current economic conditions in the agricultural markets,
especially those of most of our customers, we anticipate that earnings for the
year 2001 will remain relatively stable as compared to 2000. We believe that the
expected continued cash flow from operations plus the availability of $40.4
million under our revolving credit facility should position the Company to meet
its future cash needs, including estimated capital expenditures of $25.0 million
to $30.0 million for the year 2001.


ITEM 2a.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         Under our credit agreement, the term loan bears interest at floating
rates that are, at our option, based either upon bank prime or Eurodollar rates.
We primarily pay interest based on the Eurodollar rate. As a result, we are
subject to interest rate risk. To mitigate the impact of fluctuations in
interest rates, we utilize interest rate swaps to fix the rate on a portion of
our floating rate debt. The following table provides information about our term
loan that is subject to interest rate risk. For the term loan, the table
presents principal cash flows and applicable interest rates by expected maturity
dates.


<TABLE>
<CAPTION>
                 (Dollars in millions)                                                         FAIR MARKET VALUE AT
                                                2001     2002        2003        TOTAL            JUNE 30, 2001
                                                ----     ----        ----        -----            -------------
<S>                                            <C>     <C>        <C>         <C>                     <C>
                 Variable rate term debt
                 including current
                 portion:
                    Tranche A (1)              $    -  $    -     $  125.0    $  125.0                $124.4
                    Interest rate (2)
</TABLE>

                 (1)  During the first six months of 2001, the Company repaid an
                      additional $31.0 million of the term loan. Accordingly, as
                      of June 30, 2001, the total Tranche A term debt
                      outstanding was $125.0 million, with the a remaining
                      principal payment being due on December 31, 2003.

                 (2)  Eurodollar plus 2.75% (Average 7.47% on June 30, 2001).

         On September 22, 2000, the Company entered into a swap contract on
$100.0 million of amortizing debt under the Credit Agreement. The swap contract
provides that the Company will pay interest on the notional amount based on a
fixed rate of 6.74% and will receive the three month Eurodollar rate. Based on
interest rates at June 30, 2001, an increase in interest rate of 1.0% would
result in an increase in interest expense of $0.4 million after considering the
swap contract.



                                       20
<PAGE>   21



                           PART II - OTHER INFORMATION


ITEM 2.  LEGAL PROCEEDINGS


         The National Association of Securities Dealers ("NASD") conducted a
review of certain trading activity in Purina Mills common stock prior to the
Company's May, 2001 announcement that it had received an acquisition proposal
and its subsequent June 2001 announcement of a proposed transaction with Land
O'Lakes Inc. On August 2, 2001, the NASD issued a letter to the Company stating
that it concluded its review and referred the matter to the Securities and
Exchange Commission ("SEC") for whatever action, if any, it deems appropriate.
In addition, the SEC is conducting an investigation which Purina Mills believes
is focused on trading activity in Purina Mills common stock during the same
time period. On July 25, 2001, Purina Mills received a subpoena from the SEC in
this investigation. Purina Mills is cooperating with the SEC in this
investigation.


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

         The annual meeting of stockholders of Purina Mills was held on June 12,
2001. There were 8,498,396 shares of Common Stock entitled to vote at the
meeting and a total of 4,646,153 shares were represented at the meeting. The
following persons were elected to serve as directors of Purina Mills until the
2002 annual meeting of stockholders and until their successors are duly elected
and qualified: Robert A. Hamwee, Brad J. Kerbs, James J. Gaffney, Robert F.
Cummings, and Craig Scott Bartlett. Shareholders approved the Equity Incentive
Plan, as amended and restated with 3,298,469 votes cast for, 781,866 votes cast
against, 13,275 votes abstained, and 552,543 broker non-votes. The amended and
restated Equity Incentive Plan allowed setting the exercise price of all
outstanding options and future options at $12.50 per share on fifty percent of
the options granted, $15.62 per share on twenty-five percent of the options
granted and $18.75 per share on twenty-five percent of the options granted.
Shareholders also approved the 2001 Non-Employee Director and Key Employee
Equity Incentive Plan (the "2001 Plan"). The 2001 Plan provides for
non-discretionary grants of nonstatutory stock options and authorized issuance
of grants for 500,000 shares of common stock. There were 3,303,233 votes for,
456,379 votes against, 333,998 votes abstained, and 552,543 broker non-votes
cast for the 2001 Plan proposal. Shareholders also ratified KPMG, LLP as
independent auditors for 2001 by casting 4,311,937 votes for, 3,696 votes
against, 330, 520 votes abstained, and there were no broker non-votes.



                                       21
<PAGE>   22


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
 (a) Exhibits:

<TABLE>
<CAPTION>
  EXHIBIT                                                                                     PAGE NUMBER OR
   NUMBER                         DESCRIPTION                                          INCORPORATION BY REFERENCE TO
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                                              <C>
 2(a)      Second Amended Joint Plan of Reorganization of        Filed as Exhibit 2(a) to the General Form for Registration on Form
           Purina Mills, Inc., PM Holdings Corporation and its   10 of Purina Mills, Inc., Registration No. 033-66606 and
           Subsidiaries, dated February 22, 2000                 incorporated herein by reference

 2(b)      Form of Agreement and Plan of Merger among Koch       Filed as Exhibit 2(b) to the General Form for Registration on Form
           Agriculture Company, PM Holdings Corporation and      10 of Purina Mills, Inc., Registration No. 033-66606 and
           Purina Mills, Inc.                                    incorporated herein by reference

 2(c)      Agreement and Plan of Merger dated June 17, 2001      Filed as Exhibit 99.1 to the Form 8-K dated June 17, 2001 of
           among Land O'Lakes, Inc., LOL Holdings II, Inc.,      Purina Mills, Inc., Registration No. 033-66606 and incorporated
           LOL Holdings III, Inc. and Purina Mills, Inc.         herein by reference

 3(a)      Amended and Restated Certificate of Incorporation     Filed as Exhibit 3(a) to the General Form for Registration on Form
           of Purina Mills, Inc.                                 10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                 incorporated herein by reference

 3(b)      Amended and Restated By-Laws of Purina Mills, Inc.    Filed as Exhibit 3(b) to the General Form for Registration on Form
                                                                 10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                 incorporated herein by reference

 4(a)      Form of Stock Certificate for Common Stock            Filed as Exhibit 4(a) to the General Form for Registration on Form
                                                                 10/A, Amendment No. 1 of Purina Mills, Inc., Registration No.
                                                                 033-66606 and incorporated herein by reference

 4(b)      Form of Registration Rights Agreement among Purina    Filed as Exhibit 4(b) to the General Form for Registration on Form
           Mills, Inc. and certain holders of Common Stock       10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                 incorporated herein by reference

 4(c)      Form of Rights Agreement between Purina Mills, Inc.   Filed as Exhibit 4(c) to the General Form for Registration on Form
           and the Rights Agent thereunder.                      10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                 incorporated herein by reference

 4(d)      Form of Convertible Promissory Note between Purina    Filed as Exhibit 4(d) to the Quarterly Report for the quarterly
           Mills, Inc. and Houlihan Lokey Howard & Zukin         period ended June 30, 2000 on Form 10-Q of Purina Mills, Inc.
           Capital                                               Registration No. 033-66606 and incorporated herein by reference

 4(e)      Form of Convertible Promissory Note between Purina    Filed as Exhibit 4(e) to the Quarterly Report for the quarterly
           Mills, Inc. and Chanin Capital Partners               period ended June 30, 2000 on Form 10-Q of Purina Mills, Inc.
                                                                 Registration No. 033-66606 and incorporated herein by reference

 4(f)      Credit Agreement dated, as of June 28,2000 among      Filed as Exhibit 4(f) to the Quarterly Report for the quarterly
           Purina Mills, Inc. and certain of its lenders         period ended June 30, 2000 on Form 10-Q of Purina Mills, Inc.
                                                                 Registration No. 033-66606 and incorporated herein by reference

 4(g)      Form of Term Note, dated as of June 28, 2000, made    Filed as Exhibit 4(g) to the Quarterly Report for the quarterly
           by Purina Mills, Inc.                                 period ended June 30, 2000 on Form 10-Q of Purina Mills, Inc.
                                                                 Registration No. 033-66606 and incorporated herein by reference

 4(h)      Form of Lockup Agreement in respect of Common Stock   Filed as Exhibit 4(h) to the General Form for Registration on Form
           issued under key employee retention program           10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                 incorporated herein by reference

10(a)      Form of Tax Sharing Agreement by and among Koch       Filed as Exhibit 10(a) to the General Form for Registration on
           Industries, Inc. and PM Holdings Corporation et al.   Form 10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                 incorporated herein by reference

10(b)      Form of Koch Indemnity Agreement by and among         Filed as Exhibit 10(b) to the General Form for Registration on
           Purina Mills, Inc., Koch Industries, Inc. Koch        Form 10 of Purina Mills, Inc., Registration No. 033-66606 and
           Agriculture, et al.                                   incorporated herein by reference


  EXHIBIT                                                                                     PAGE NUMBER OR
</TABLE>



                                       22
<PAGE>   23

<TABLE>
<CAPTION>
   NUMBER                         DESCRIPTION                                          INCORPORATION BY REFERENCE TO
------------- ----------------------------------------------------- ---------------------------------------------------------------

<S>         <C>                                                   <C>
10(c)       Form of Director and Officer Indemnification          Filed as Exhibit 10(c) to the General Form for Registration on
            Agreement for Purina Mills, Inc.                      Form 10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                  incorporated herein by reference

10(d)       Form of Senior Executive Officer Employment           Filed as Exhibit 10(d) to the General Form for Registration on
            Agreement for Purina Mills, Inc.                      Form 10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                  incorporated herein by reference

10(e)       Form of Equity Incentive Plan                         Filed as Exhibit 10(e) to the General Form for Registration on
                                                                  Form 10/A, Amendment No. 1 of Purina Mills, Inc., Registration No.
                                                                  033-66606 and incorporated herein by reference

10(f)       License Agreement, dated as of October 1, 1986        Filed as Exhibit 10(f) to the General Form for Registration on
            between Ralston Purina Company and Purina Mills,      Form 10 of Purina Mills, Inc., Registration No. 033-66606 and
            Inc.                                                  incorporated herein by reference

10(g)       Form of Merger Escrow Agreement by and among Koch     Filed as Exhibit 10(g) to the General Form for Registration on
            Agriculture, Purina Mills, Inc. and Escrow Agent      Form 10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                  incorporated herein by reference

10(h)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and Brad J. Kerbs

10(i)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and Glenn W. Shields

10(j)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and James R. Emanuelson

10(k)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and Bradley D. Schu

10(l)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and David R. Hoogmoed

10(m)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and Mark S. Chenoweth

10(n)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and Rick L. Bowen

10(o)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and Darrell D. Swank
</TABLE>

--------------------
*    Filed herewith

(b)    Reports on Form 8-K:
             The Company filed a Report on Form 8-K dated May 8, 2001, in
       response to Item 5-Other Events. The Form 8-K included a press release
       announcing that it had received an acquisition proposal.

              The Company filed a Report on Form 8-K dated May 29, 2001, in
       response to Item 5 - Other Events. The Form 8-K included a press release
       announcing the amendment of Purina Mills' stockholder rights agreement.

                 The Company filed a Report on Form 8-K dated June 17, 2001, in
       response to Item 5 - Other Events. The Form 8K included a press release
       announcing that Purina Mills had entered into an Agreement and Plan of
       Merger (the "Merger Agreement"), dated as of June 17, 2001 with Land
       O'Lakes, Inc., a Minnesota cooperative corporation, LOL Holdings II,
       Inc., a Delaware corporation and a wholly owned subsidiary of Land
       O'Lakes, Inc., and LOL Holdings III, Inc., a Delaware corporation and
       wholly owned subsidiary of LOL Holdings II, Inc.


                                       23
<PAGE>   24

                The Company filed a Report on Form 8-K dated July 24, 2001, in
       response to Item 5 - Other Events. The Form 8K included a press release
       announcing that Purina Mills' Board of Directors had set the date for the
       special meeting of Purina Mills stockholders for the purpose of voting to
       adopt the merger agreement and to approve the merger with Land O'Lakes.





















                                       24
<PAGE>   25



                                    SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                     PURINA MILLS, INC.



Date:  August 14, 2001               /s/Darrell D. Swank
                                     -------------------
                                     Darrell D. Swank
                                     Executive Vice President,
                                     Chief Financial Officer and Secretary




                                       25
<PAGE>   26


                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
  EXHIBIT                                                                                     PAGE NUMBER OR
   NUMBER                         DESCRIPTION                                          INCORPORATION BY REFERENCE TO
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                                              <C>
 2(a)      Second Amended Joint Plan of Reorganization of        Filed as Exhibit 2(a) to the General Form for Registration on Form
           Purina Mills, Inc., PM Holdings Corporation and its   10 of Purina Mills, Inc., Registration No. 033-66606 and
           Subsidiaries, dated February 22, 2000                 incorporated herein by reference

 2(b)      Form of Agreement and Plan of Merger among Koch       Filed as Exhibit 2(b) to the General Form for Registration on Form
           Agriculture Company, PM Holdings Corporation and      10 of Purina Mills, Inc., Registration No. 033-66606 and
           Purina Mills, Inc.                                    incorporated herein by reference

 2(c)      Agreement and Plan of Merger dated June 17, 2001      Filed as Exhibit 99.1 to the Form 8-K dated June 17, 2001 of
           among Land O'Lakes, Inc., LOL Holdings II, Inc.,      Purina Mills, Inc., Registration No. 033-66606 and incorporated
           LOL Holdings III, Inc. and Purina Mills, Inc.         herein by reference

 3(a)      Amended and Restated Certificate of Incorporation     Filed as Exhibit 3(a) to the General Form for Registration on Form
           of Purina Mills, Inc.                                 10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                 incorporated herein by reference

 3(b)      Amended and Restated By-Laws of Purina Mills, Inc.    Filed as Exhibit 3(b) to the General Form for Registration on Form
                                                                 10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                 incorporated herein by reference

 4(a)      Form of Stock Certificate for Common Stock            Filed as Exhibit 4(a) to the General Form for Registration on Form
                                                                 10/A, Amendment No. 1 of Purina Mills, Inc., Registration No.
                                                                 033-66606 and incorporated herein by reference

 4(b)      Form of Registration Rights Agreement among Purina    Filed as Exhibit 4(b) to the General Form for Registration on Form
           Mills, Inc. and certain holders of Common Stock       10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                 incorporated herein by reference

 4(c)      Form of Rights Agreement between Purina Mills, Inc.   Filed as Exhibit 4(c) to the General Form for Registration on Form
           and the Rights Agent thereunder.                      10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                 incorporated herein by reference

 4(d)      Form of Convertible Promissory Note between Purina    Filed as Exhibit 4(d) to the Quarterly Report for the quarterly
           Mills, Inc. and Houlihan Lokey Howard & Zukin         period ended June 30, 2000 on Form 10-Q of Purina Mills, Inc.
           Capital                                               Registration No. 033-66606 and incorporated herein by reference

 4(e)      Form of Convertible Promissory Note between Purina    Filed as Exhibit 4(e) to the Quarterly Report for the quarterly
           Mills, Inc. and Chanin Capital Partners               period ended June 30, 2000 on Form 10-Q of Purina Mills, Inc.
                                                                 Registration No. 033-66606 and incorporated herein by reference

 4(f)      Credit Agreement dated, as of June 28,2000 among      Filed as Exhibit 4(f) to the Quarterly Report for the quarterly
           Purina Mills, Inc. and certain of its lenders         period ended June 30, 2000 on Form 10-Q of Purina Mills, Inc.
                                                                 Registration No. 033-66606 and incorporated herein by reference

 4(g)      Form of Term Note, dated as of June 28, 2000, made    Filed as Exhibit 4(g) to the Quarterly Report for the quarterly
           by Purina                                             Mills, Inc. period ended June 30, 2000 on Form 10-Q of Purina
                                                                 Mills, Inc. Registration No. 033-66606 and incorporated herein
                                                                 by reference

 4(h)      Form of Lockup Agreement in respect of Common Stock   Filed as Exhibit 4(h) to the General Form for Registration on Form
           issued under key employee retention program           10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                 incorporated herein by reference

10(a)      Form of Tax Sharing Agreement by and among Koch       Filed as Exhibit 10(a) to the General Form for Registration on
           Industries, Inc. and PM Holdings Corporation et al.   Form 10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                 incorporated herein by reference

10(b)      Form of Koch Indemnity Agreement by and among         Filed as Exhibit 10(b) to the General Form for Registration on
           Purina Mills, Inc., Koch Industries, Inc. Koch        Form 10 of Purina Mills, Inc., Registration No. 033-66606 and
           Agriculture, et al.                                   incorporated herein by reference
</TABLE>



                                       26
<PAGE>   27



<TABLE>
<CAPTION>
  EXHIBIT                                                                               PAGE NUMBER OR
   NUMBER                  DESCRIPTION                                          INCORPORATION BY REFERENCE TO
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>
10(c)       Form of Director and Officer Indemnification         Filed as Exhibit 10(c) to the General Form for Registration on
            Agreement for Purina Mills, Inc.                     Form 10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                 incorporated herein by reference

10(d)       Form of Senior Executive Officer Employment          Filed as Exhibit 10(d) to the General Form for Registration on
            Agreement for Purina Mills, Inc.                     Form 10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                 incorporated herein by reference

10(e)       Form of Equity Incentive Plan                        Filed as Exhibit 10(e) to the General Form for Registration on
                                                                 Form 10/A, Amendment No. 1 of Purina Mills, Inc., Registration No.
                                                                 033-66606 and incorporated herein by reference

10(f)       License Agreement, dated as of October 1, 1986       Filed as Exhibit 10(f) to the General Form for Registration on
            between Ralston Purina Company and Purina Mills,     Form 10 of Purina Mills, Inc., Registration No. 033-66606 and
            Inc.                                                 incorporated herein by reference

10(g)       Form of Merger Escrow Agreement by and among Koch    Filed as Exhibit 10(g) to the General Form for Registration on
            Agriculture, Purina Mills, Inc. and Escrow Agent     Form 10 of Purina Mills, Inc., Registration No. 033-66606 and
                                                                 incorporated herein by reference

10(h)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and Brad J. Kerbs

10(i)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and Glenn W. Shields

10(j)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and James R. Emanuelson

10(k)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and Bradley D. Schu

10(l)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and David R. Hoogmoed

10(m)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and Mark S. Chenoweth

10(n)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and Rick L. Bowen

10(o)*      Amended employment agreement dated June 18, 2001
            between Purina Mills, Inc. and Darrell D. Swank
</TABLE>

--------------------
*    Filed herewith



                                       27