LAND O LAKES INC - 10-Q Quarterly Report

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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, 2003*

or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to ________________.

Commission file number 333-84486

LAND O'LAKES, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)

Minnesota 41-0365145
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

4001 Lexington Avenue North
Arden Hills, Minnesota 55112
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)

(651) 481-2222
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(Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X]

Indicate by check mark whether the registrant is an accelerated filer
(as defined in rule 12-b-2 of the Act). Yes [ ] No [X]

The number of shares of the registrant's common stock outstanding as of
July 31, 2003: 1,104 shares of Class A common stock, 4,950 shares of Class B
common stock, 192 shares of Class C common stock, and 1,140 shares of Class D
common stock.

Land O'Lakes, Inc. is a cooperative. Our voting and non-voting common
equity can only be held by our members. No public market for voting and
non-voting common equity of Land O'Lakes, Inc. is established and it is
unlikely, in the foreseeable future, that a public market for our voting and
non-voting common equity will develop.

We maintain a website on the Internet through which additional
information about Land O' Lakes, Inc. is available. Our website address is
www.landolakesinc.com. Our annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, press releases and earnings releases are
available, free of charge, on our website when they are released publicly or
filed with the SEC.

*Although Land O'Lakes, Inc. is not currently required to file this
Quarterly Report on Form 10-Q pursuant to Section 13 or 15(d), we are filing
voluntarily.

INDEX

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LAND O'LAKES, INC.

CONSOLIDATED BALANCE SHEETS

See accompanying notes to consolidated financial statements.

3

LAND O'LAKES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes to consolidated financial statements.

4

LAND O'LAKES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes to consolidated financial statements.

5

LAND O'LAKES, INC.

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

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The unaudited consolidated financial statements reflect, in the opinion
of the management of Land O'Lakes, Inc. (the "Company"), all normal, recurring
adjustments necessary for a fair statement of the financial position and results
of operations and cash flows for the interim periods. The statements are
condensed and therefore do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. For further information, refer to the
audited consolidated financial statements and footnotes for the year ended
December 31, 2002 included in our Annual Report on Form 10-K. The results of
operations and cash flows for interim periods are not necessarily indicative of
results for a full year.

RECENT ACCOUNTING PRONOUNCEMENTS

On January 1, 2003, the Company adopted Statement of Financial
Accounting Standards 146, "Accounting for Costs Associated with Exit or Disposal
Activities." The standard requires that a liability for a cost associated with
an exit or disposal activity be recognized and measured initially at fair value
when the liability is incurred. Under prior accounting literature, certain costs
for exit activities were recognized at the date a company committed to an exit
plan. The provisions of the standard are effective for exit or disposal
activities initiated after December 31, 2002.

On January 17, 2003, the FASB issued Interpretation No. 46,
"Consolidation of Variable Interest Entities, an Interpretation of ARB 51," (FIN
46). The primary objectives of FIN 46 are to provide guidance on the
identification and consolidation of variable interest entities, or VIEs, which
are entities for which control is achieved through means other than through
voting rights. FIN 46 is effective immediately for all new variable interest
entities created or acquired after January 31, 2003 and no later than July 1,
2003 for variable interest entities created or acquired prior to February 1,
2003. Accordingly, the Company adopted FIN 46 on July 1, 2003 and expects to
begin consolidating its joint venture in MoArk, LLC, an egg production and
marketing company, in the third quarter of 2003. The adoption of FIN 46 did not
have a material impact on the Company's results of operations and financial
condition.

In May, 2003, The FASB issued Statement of Financial Accounting
Standards 150, "Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity" The standard establishes
standards for how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and equity. It requires
that an issuer classify a financial instrument that is within its scope as a
liability (or an asset in some circumstances). The standard is effective for the
Company January 1, 2004, and the Company does not currently expect this standard
to have a material impact on its results of operations or financial position.
The Company already classifies its Capital Securities as long-term debt and the
related financing costs as interest expense.

2. RESTRICTED CASH

On March 28, 2003, Cheese & Protein International ("CPI"), a consolidated
joint venture, amended its lease for property and equipment relating to its
cheese manufacturing and whey processing plant in Tulare, California. The
amendment postponed the measurement of the fixed charge coverage ratio
requirement until March 2005. The amendment requires Land O'Lakes to maintain a
$20 million cash account (which may be replaced by a letter of credit at the
Company's option) to support the lease. The cash account or letter of credit
would only be drawn upon in the event of a CPI default, and would reduce amounts
otherwise due under the lease. The requirement would be lifted pending the
achievement of certain financial targets by CPI.

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3. RECEIVABLES

A summary of receivables is as follows:

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

4. RECEIVABLES PURCHASE FACILITY

In December 2001, the Company established a $100.0 million receivables
purchase facility with CoBank, ACB ("CoBank"). A wholly-owned, unconsolidated
qualifying special purpose entity ("QSPE") was established to purchase certain
receivables from the Company. CoBank has been granted an interest in the pool of
receivables owned by the QSPE. The transfers of the receivables from the Company
to the QSPE are structured as sales and, accordingly, the receivables
transferred to the QSPE are not reflected in the consolidated balance sheet.
However, the Company retains credit risk related to the repayment of the notes
receivable with the QSPE, which, in turn, is dependent upon the credit risk of
the QSPE's receivables pool. Accordingly, the Company has retained reserves for
estimated losses. The Company expects no significant gains or losses from the
facility. At June 30, 2003, $80.0 million was outstanding under this facility.
The total accounts receivable sold during the three months ended June 30, 2003
and 2002 were $571.9 million and $610.7 million, respectively. The total
accounts receivable sold during the six months ended June 30, 2003 and 2002 were
$1,244.7 million and $1,264.8 million, respectively.

5. INVENTORIES

A summary of inventories is as follows:

6. INVESTMENTS

A summary of investments is as follows:

7

7. GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL

The carrying amount of goodwill is as follows:

Goodwill decreases in Dairy Foods, Feed, Swine, Agronomy and Other were due
to amortization on joint ventures and cooperatives. The goodwill decrease of
$3.5 million in the Seed segment was related to amortization and
reclassifications.

OTHER INTANGIBLE ASSETS

Amortization expense for the three months ended June 30, 2003 and 2002 was
$1.2 million and $1.2 million, respectively. Amortization expense for the six
months ended June 30, 2003 and 2002 was $2.3 million and $2.5 million,
respectively. The estimated amortization expense related to other intangible
assets subject to amortization for the next five years will approximate $3.0
million annually. The weighted-average life of the intangible assets subject to
amortization is approximately 12 years.

8. RESTRUCTURING AND IMPAIRMENT CHARGES

RESTRUCTURING CHARGES

For the three months ended June 30, 2003, the Company recorded restructuring
charges of $1.5 million. Of this amount, Dairy Foods recorded a restructuring
charge of $0.6 million which represented severance costs as a result of the
planned closing of a facility in the Upper Midwest. Feed recorded a
restructuring charge of $0.6 million which represented severance costs related
to closing feed plants, and Seed recorded a restructuring charge of $0.3 million
for severance costs related to closing a facility.

For the six months ended June 30, 2003, the Company recorded restructuring
charges of $2.5 million. Of this amount, Dairy Foods recorded a restructuring
charge of $1.0 million which represented severance costs for 44 employees as a
result of closing a facility in the Upper Midwest and recorded $0.6 million for
the planned closure of another facility. Feed recorded a restructuring charge of
$0.6 million which represented severance costs related to closing feed plants,
and Seed recorded a restructuring charge of $0.3 million for severance costs
related to closing a facility.

For the three months ended June 30, 2002, the Company recorded restructuring
charges of $1.7 million. Of this amount, Dairy Foods recorded a restructuring
charge of $1.6 million which represented severance and outplacement

8

costs for 82 employees for the Faribault, MN plant closure. Feed recorded a
restructuring charge of $0.1 million which represented severance costs related
to closing feed plants.

For the six months ended June 30, 2002, the Company recorded restructuring
charges of $4.4 million. Of this amount, Feed recorded a restructuring charge of
$2.8 million which represented severance and outplacement costs for 136
employees at the Ft. Dodge, IA office facility and other feed plant facilities
and Dairy Foods recorded a restructuring charge of $1.6 million which
represented severance and outplacement costs for 82 employees for the Faribault,
MN plant closure.

A summary of restructuring activities and resulting reserve for the six
months ended June 30, 2003 is as follows:

IMPAIRMENT CHARGES

For the three months ended June 30, 2003 the Company recorded impairment
charges of $0.3 million in the Seed segment for the impairment of certain
assets. For the six months ended June 30, 2003 the Company recorded impairment
charges of $0.3 million in the Seed segment and $0.1 million in the Feed segment
for write downs of certain plant assets to their estimated fair value.

For the three months ended June 30, 2002 the Company recorded an impairment
charge of $2.2 million which was made up of a $1.3 million write-down of the
Faribault, MN plant and $0.9 million represented a write-down of certain feed
plant assets to their estimated fair value. For the six months ended June 30,
2002 the Company recorded an impairment charge of $2.9 million which was made up
of a $1.3 million write-down of the Faribault, MN plant and $1.6 million
represented a write-down of certain feed plant assets to their estimated fair
value.

9. GAIN ON LEGAL SETTLEMENTS

During the six months ended June 30, 2003 and 2002, the Company recognized
gains on legal settlements of $19.2 million and $32.7 million, respectively, of
which $10.3 million was recognized in the three months ended June 30, 2003, and
$32.7 million was recognized in the three months ended June 30, 2002. The gains
represent cash received from product suppliers against whom the Company alleged
certain price-fixing claims.

10. GAIN ON SALE OF INTANGIBLES

In the six months ended June 30, 2003, the Company recorded a $0.6 million
gain on the sale of a customer list relating to the divestiture of a joint
venture in Taiwan. In the six months ended June 30, 2002, the Company recorded a
$4.2 million gain on the sale of a customer list pertaining to the feed
phosphate distribution business.

11. LOSS (GAIN) ON DIVESTITURE OF BUSINESSES

For the six months ended June 30, 2003, the Company recorded a loss of $0.7
million on the divestiture of a Feed business in Taiwan. For the six months
ended June 30, 2002, the Company recorded a gain of $1.2 million primarily on
the divestiture of a Dairy Foods Poland business.

12. GAIN ON SALE OF INVESTMENT

For the three and six months ended June 30, 2003, the Company recorded gains
of $0.3 million and $0.8 million, respectively, on the sale of a Feed investment
in a swine joint venture.

9

13. DEBT OBLIGATIONS

In the six months ended June 30, 2003, the Company made payments on Term A
loan of $45.1 million and Term B loan of $26.5 million, of which $50.0 million
was a voluntary prepayment. The weighted average interest rates on short-term
borrowings and notes outstanding at June 30, 2003 and December 31, 2002 were
3.44% and 3.51%, respectively.

14. SEGMENT INFORMATION

The Company operates in five segments: Dairy Foods, Animal Feed, Crop Seed,
Swine and Agronomy.

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

The Animal Feed segment is made up of a 92% ownership position in Land
O'Lakes Farmland Feed LLC ("Land O'Lakes Farmland Feed"). Land O'Lakes Farmland
Feed develops, produces, markets and distributes animal feeds such as ingredient
feed, formula feed, milk replacers, vitamins and additives.

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

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

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

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

10

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15. CONSOLIDATING FINANCIAL INFORMATION

The Company has entered into financing arrangements which are guaranteed by
the Company and certain of its wholly-owned and majority-owned subsidiaries and
limited liability companies (the "Guarantor Subsidiaries"). Such guarantees are
full, unconditional and joint and several.

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

12

LAND O'LAKES, INC.

SUPPLEMENTAL CONSOLIDATING BALANCE SHEET
JUNE 30, 2003

13

LAND O'LAKES, INC.

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2003

14

LAND O'LAKES, INC.

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003

15

LAND O'LAKES, INC.

SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2003

16

LAND O'LAKES, INC.

SUPPLEMENTAL CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2002

17

LAND O'LAKES, INC.

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2002

18

LAND O'LAKES, INC.

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2002

19

LAND O'LAKES, INC.

SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2002

20

LAND O'LAKES FARMLAND FEED LLC

CONSOLIDATED BALANCE SHEETS

See accompanying notes to consolidated financial statements.

21

LAND O'LAKES FARMLAND FEED LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes to consolidated financial statements.

22

LAND O'LAKES FARMLAND FEED LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes to consolidated financial statements.

23

LAND O'LAKES FARMLAND FEED LLC

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

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The unaudited consolidated financial statements reflect, in the opinion of
the management of Land O'Lakes Farmland Feed LLC (the "Company"), all normal
recurring adjustments necessary for a fair statement of the financial position
and results of operations and cash flows for the interim periods. The statements
are condensed, therefore do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. For further information, refer to the
audited consolidated financial statements and footnotes for the year ended
December 31, 2002 included in our Annual Report on Form 10-K. The results of
operations and cash flows for interim periods are not necessarily indicative of
results for a full year.

RECENT ACCOUNTING PRONOUNCEMENTS

On January 1, 2003, the Company adopted Statement of Financial Accounting
Standards 146, "Accounting for Costs Associated with Exit or Disposal
Activities." The standard requires that a liability for a cost associated with
an exit or disposal activity be recognized and measured initially at fair value
when the liability is incurred. Under prior accounting literature, certain costs
for exit activities were recognized at the date a company committed to an exit
plan. The provisions of the standard are effective for exit or disposal
activities initiated after December 31, 2002.

2. RECEIVABLES

A summary of receivables is as follows:

3. RECEIVABLES PURCHASE FACILITY

In December 2001, the Company along with Land O'Lakes, Inc. ("Land O'Lakes")
established a $100.0 million receivables purchase facility with CoBank, ACB
("CoBank"). A wholly-owned unconsolidated qualifying special purpose entity,
Land O'Lakes Farmland Feed SPV, LLC, ("QSPE"), was established to purchase
certain receivables from the Company along with Land O'Lakes. CoBank has been
granted an interest in the receivables owned by the QSPE. The transfers of the
receivables from the Company to the QSPE are structured as sales and,
accordingly, the receivables transferred to the QSPE are not reflected in the
Company's consolidated balance sheet. However, the Company retains the credit
risk related to the repayment of the notes receivable with the QSPE, which in
turn is dependent upon the credit risk of the QSPE's receivables. Accordingly,
the Company has retained reserves for estimated losses. The Company expects no
significant gains or losses from the sale of the receivables. At June 30, 2003,
$80.0 million was outstanding under this facility. The total accounts receivable
sold during the three months ended June 30, 2003 and 2002 were $519.0 million
and $545.5 million, respectively. The total accounts receivable sold during the
six months ended June 30, 2003 and 2002 were $1,071.1 million and $1,125.2
million, respectively.

24

4. INVENTORIES

A summary of inventories is as follows:

5. INVESTMENTS

The Company's investments are as follows:

6. GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL

The change in the carrying amount of goodwill for the six months ended June 30,
2003, is as follows.

Balance as of January 1, 2003 .................................. $ 122,486
Amortization expense ......................................... (232)
---------
Balance as of June 30, 2003 .................................... $ 122,254
=========

OTHER INTANGIBLE ASSETS

Amortization expense for the three months ended June 30, 2003 and 2002 was
$0.7 million and $1.2 million, respectively. Amortization expense for the six
months ended June 30, 2003 and 2002 was $1.3 million and $1.8 million,
respectively. The estimated amortization expense related to other intangible
assets subject to amortization for the next five years will approximate $2.2
million annually. The weighted-average life of the intangible assets subject to
amortization is approximately 13 years.

25

7. RESTRUCTURING AND IMPAIRMENT CHARGES

RESTRUCTURING CHARGES

For the three and six months ended June 30, 2003, the Company recorded a
restructuring charge of $0.6 million which represented severance costs related
to closing feed plants.

For the six months ended June 30, 2002, the Company recorded restructuring
charges of $2.8 million representing severance and outplacement costs for 136
employees at the Ft. Dodge office and other plant facilities.

A summary of the restructuring reserve for the six months ended June 30,
2003 is as follows:

IMPAIRMENT CHARGES

For the six months ended June 30, 2003, the Company recorded impairment
charges of $0.1 million for write downs of certain plant assets to their
estimated fair value. For the three and six months ended June 30, 2002, the
Company recorded impairment charges of $1.0 million and $1.7 million,
respectively, for write downs of certain plant assets to their estimated fair
value.

8. GAIN ON LEGAL SETTLEMENTS

During the six months ended June 30, 2003, the Company recognized a gain on
legal settlements of $3.0 million, of which $2.1 was recognized in the three
months ended June 30, 2003. The gain represents cash received from product
suppliers against whom the Company alleged certain price-fixing claims.

9. GAIN ON SALE OF INTANGIBLE

In the six months ended June 30, 2002, the Company recorded a $4.2 million
gain on the sale of a customer list pertaining to the feed phosphate
distribution business.

10. GAIN ON SALE OF INVESTMENT

For the three and six months ended June 30, 2003, the Company recorded gains
of $0.3 million and $0.8 million, respectively, on the sale of a Feed investment
in a swine joint venture.

11. COMMITMENTS AND CONTINGENCIES

GUARANTEES OF PARENT DEBT

In November 2001, Land O'Lakes, which owns 92% of the Company, issued $350
million of senior notes, due 2011. These notes are guaranteed by certain
domestic, wholly-owned subsidiaries of Land O'Lakes, including the Company, and
by each domestic wholly-owned subsidiary of the Company.

This guarantee is a general unsecured obligation, ranks equally in right of
payment with all existing and future senior indebtedness of Land O'Lakes, is
senior in right of payment to all existing and future subordinated obligations
of Land O'Lakes, and is effectively subordinated to any secured indebtedness of
Land O'Lakes and its subsidiaries, including the Company, to the extent of the
value of the assets securing such indebtedness. The maximum potential amount of
future payments that the Company would be required to make is $350 million as of
June 30, 2003. Currently, the Company does not record a liability regarding the
guarantee. The Company has no recourse provision that would enable it to recover
amounts paid under the guarantee from Land O'Lakes or any other parties.

26

The notes are not guaranteed by certain majority-owned subsidiaries of the
Company (the "Non-Guarantors"). Summarized financial information of the
Non-Guarantors, which is consolidated in the financial statements of the
Company, as of and for the periods indicated, are as follows:

In November 2001, Land O'Lakes entered into new term facilities consisting
of a $325 million five-year Term Loan A facility and a $250 million seven-year
Term Loan B facility. These facilities are unconditionally guaranteed by certain
domestic, wholly-owned subsidiaries of Land O'Lakes, including the Company, and
by each domestic wholly-owned subsidiary of the Company. The maximum potential
payment related to this guarantee is $448 million as of June 30, 2003. The
Company does not currently record a liability related to the guarantee of the
Term Loans, and the Company has no recourse provisions that would enable it to
recover from Land O'Lakes or any other parties.

GUARANTEES OF PRODUCER LOANS

The Company guarantees certain loans to large producers financed by LOL
Finance Co. The loans totaled $13.2 million and $15.2 million at June 30, 2003
and December 31, 2002, respectively. Reserves for these guarantees of $0.7
million at both June 30, 2003 and December 31, 2002, are included in the
allowance for doubtful accounts. The maximum amount guaranteed by the Company is
$7.0 million with the remaining balance guaranteed by Land O'Lakes. There were
no write-offs related to producer loans for the six months ended June 30, 2003.
The Company would have recourse against the producer to partially off-set the
liability.

The Company also guarantees certain loans to producers and dealers financed
by third party lenders. The loans totaled $2.3 million and $2.4 million at June
30, 2003 and December 31, 2002, respectively. Reserves for these guarantees of
$0.5 million and $0.5 million at June 30, 2003 and December 31, 2002,
respectively, are included in the consolidated balance sheet. There were no
write-offs related to these loans in the six months ended June 30, 2003. The
maximum potential payment related to these guarantees is $1.0 million. The
Company has no recourse against the producer or dealer to partially off-set the
potential liability.

12. CONSOLIDATING FINANCIAL INFORMATION

Land O'Lakes has issued $350 million in senior notes which are guaranteed by
certain domestic wholly-owned and majority-owned subsidiaries of Land O'Lakes,
including the Company and the Company's domestic wholly-owned subsidiaries (the
"Guarantor Subsidiaries"). Such guarantees are full, unconditional and joint and
several. The Company's majority-owned subsidiaries are excluded from the
guarantee ("Non-Guarantor Subsidiaries").

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

During the first quarter of 2003, Nestle Purina PetCare Company consented to
the transfer of the trademark license from Purina Mills, LLC, a wholly-owned
limited liability company, to the Company. The Purina Mills, LLC financial
information has been combined with Land O'Lakes Farmland Feed LLC in the
following supplemental financial information.

27

LAND O'LAKES FARMLAND FEED LLC

SUPPLEMENTAL CONSOLIDATING BALANCE SHEET
JUNE 30, 2003

28

LAND O'LAKES FARMLAND FEED LLC

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2003

29

LAND O'LAKES FARMLAND FEED LLC

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003

30

LAND O'LAKES FARMLAND FEED LLC

SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2003

31

LAND O'LAKES FARMLAND FEED LLC

SUPPLEMENTAL CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2002

32

LAND O'LAKES FARMLAND FEED LLC

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2002

33

LAND O'LAKES FARMLAND FEED LLC

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2002

34

LAND O'LAKES FARMLAND FEED LLC

SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2002

35

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

You should read the following discussions of financial condition and results
of operations together with the financial statements and the notes to such
statements included elsewhere in this Form 10-Q.

OVERVIEW

We operate our business predominantly in the United States in five segments:
Dairy Foods, Animal Feed, Crop Seed, Swine and Agronomy. We have limited
international operations. We have investments in certain entities that are not
consolidated in our financial statements but are accounted for under the equity
or cost methods of accounting. For the six months ended June 30, 2003, the
earnings from our unconsolidated businesses amounted to $50.4 million, compared
to earnings of $34.4 million for the six months ended June 30, 2002. Our
investment in unconsolidated businesses amounted to $598.5 million on June 30,
2003 and $545.6 million on December 31, 2002. Cash flow from our investment in
unconsolidated businesses for the six months ended June 30, 2003 was $5.2
million, compared to $6.9 million for the six months ended June 30, 2002.
Agriliance and CF Industries constitute the most significant of our investments
in unconsolidated businesses, both of which are reflected in our agronomy
results. Our investment in, and earnings from, Agriliance and CF Industries were
as follows as of and for the six months ended:

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

CF Industries is an inter-regional cooperative involved in the manufacture
of crop nutrients, in which we have a 38% ownership interest based on our
product purchases. As a member, we are allowed to elect one board member out of
a total of nine. Agriliance is one of CF Industries' most significant customers.
CF Industries operates in a highly cyclical industry. The oversupply of nitrogen
in the industry since 1998 and recent unexpected high natural gas cost has
resulted in depressed prices and, consequently, depressed earnings. Studies are
currently under way to determine strategic steps to address the negative
earnings situation. Depending on the outcome of these studies, we may be
required to record an impairment charge for a portion of our investment in CF
Industries later in 2003. Since CF Industries is a cooperative, we only receive
earnings from our investment when the cooperative allocates and distributes
patronage to us. No patronage was allocated and distributed to us in the last
four years because CF Industries realized losses in those years. We anticipate
that no patronage allocations will occur until these losses have been recouped.
Our $249.5 million investment in CF Industries consists of approximately $150
million in noncash patronage income from prior periods (not distributed to us)
and approximately $100 million that was acquired as part of our Countrymark
acquisition in 1998 based on Countrymark's prior business with CF Industries.
Prior to the contribution of our agronomy assets to Agriliance, our agronomy
business earned patronage income on the business it conducted with CF
Industries. Since July 29, 2000, Land O'Lakes has been entitled to receive
patronage income for business that Agriliance transacts with CF Industries on
behalf of our members, primarily fertilizer purchases. We believe that these
sales are on terms comparable to those available to unaffiliated third parties.

36

Certain segments of our business are subject to seasonal fluctuations in
demand. In our Dairy Foods segment, butter sales typically increase in the fall
and winter months due to increased demand during holiday periods. Animal feed
sales tend to increase in the fourth and first quarter of each year because
cattle are less able to graze during cooler months. Most crop seed sales used to
occur in the first and second quarter of each year. However, we have seen a
trend toward selling more crop seed in the fourth and first quarter of each year
as a result of lower sales of proprietary brands and increased sales of
partnered seed brands. Agronomy product sales tend to be much higher in the
first and second quarter of each year, as farmers buy crop nutrients and crop
protection products to meet their seasonal needs.

FACTORS AFFECTING COMPARABILITY

Dairy and Agricultural Commodity Inputs and Outputs

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

Dairy Foods. Raw milk is the major commodity input for our Dairy Foods
segment. For the six months ended June 30, 2003, our raw milk input cost was
$727.7 million, or 59.0% of the cost of sales for our Dairy Foods segment.
Cream, butter and bulk cheese are also significant dairy foods commodity inputs.
Cost of sales for these inputs was $86.4 million for cream, $36.9 million for
butter and $110.5 million for bulk cheese for the six months ended June 30,
2003. Our dairy foods outputs, namely butter, cheese and nonfat dry milk, are
also commodities.

The minimum price of raw milk and cream is set monthly by Federal regulators
based on regional prices of dairy foods products produced. These prices provide
the basis for our raw milk and cream input costs. As a result, those dairy foods
products for which the sales price is fixed shortly after production, such as
most bulk cheese, are not usually subject to significant commodity price risk as
the price received for the output usually varies with the cost of the
significant inputs. For the six months ended June 30, 2003, bulk cheese, which
is generally sold the day made, represented $117.9 million, or 9.1% of our Dairy
Foods segment's net sales. Other products, such as private label butter, which
have significant net sales, are also generally sold shortly after they are made.

We also maintain significant inventories of butter and cheese for sale to
our retail and foodservice customers, which are subject to commodity price risk.
Because production of raw milk and demand for butter varies seasonally, we
inventory significant amounts of butter. Demand for butter is highest during the
fall and winter, when milk supply is lowest. As a result, we produce and store
excess quantities of butter during the spring when milk supply is highest. In
addition, we maintain some inventories of cheese for aging. For the six months
ended June 30, 2003, branded and private label retail, deli and foodservice net
sales of cheese and butter represented $467.7 million, or 35.9% of our Dairy
Foods segment's net sales.

We maintain a sizable dairy manufacturing presence in the Upper Midwest.
This region has seen significant declines in cow numbers. Since 1990, cow
numbers have declined 16% in Minnesota and 14% in Wisconsin. Over the same
period, the Minnesota/Wisconsin share of nationwide dairy manufacturing volume
has declined from 40% to 28%. This decline has put pressure on our Upper Midwest
milk input costs and has resulted in significant losses for the six months ended
June 30, 2003. We sold our Perham, MN plant in July 2003 and will continue to
explore additional initiatives to improve our Upper Midwest dairy infrastructure
in an effort to increase efficiencies and reduce costs.

Reduced margins on our mozzarella and whey products have had a negative
impact not only on our Upper Midwest operations but also on our Cheese & Protein
International LLC ("CPI") operations. Demand for mozzarella and whey has
softened which, together with anticipated increases in mozzarella capacity in
the industry, has placed downward pressure on the margins these products
generate. Mozzarella prices in the first half of 2003 were approximately $0.10
per pound lower than those in 2002. Commodity dried whey prices averaged $0.15
during the first half, compared to $0.20 last year. We expect that the reduced
margins will continue at least through 2003.

37

In addition, we increased our ownership position in CPI from 70% to 95% in
2002. The ownership share of Mitsui of Japan, our joint venture partner, was
decreased by a corresponding amount. In June 2003, we successfully concluded an
agreement which provides for Mitsui's continued participation in CPI. Under the
agreement, Mitsui contributed an additional $1.4 million to the venture in cash,
providing it with a current participation interest of approximately 4.9%. Under
the current agreement, Mitsui has the option to either contribute additional
equity for the Phase 2 Expansion to maintain its percentage interest or to allow
its percentage interest to be diluted. We expect that there will likely be no
further equity contributions from Mitsui. Mitsui will not have significant
control of the joint venture going forward, but will retain a put option for its
remaining interest which can be exercised beginning on December 31, 2004 and
which takes effect up to nine months following such notice. The put allows
Mitsui to sell its entire remaining interest to us at original cost, with no
interest thereon. This equates to $3.2 million plus any future equity
contributions which Mitsui may make. Mitsui may exercise the option earlier, but
only if certain specified actions are deliberately taken by CPI or Land O'Lakes
to Mitsui's material disadvantage. We do not expect that such a scenario will
occur.

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

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

As dairy production has shifted from the Upper Midwest to the western United
States, we have seen a change in our feed product mix, with lower sales of
complete feed and increased sales of simple blends. Complete feed is
manufactured feed which meets the complete nutritional requirements of animals,
whereas a simple blend is a blending of unprocessed commodities to which the
producer then adds vitamins to supply the animal's nutritional needs. This
change in product mix is a result of differences in industry practices. Dairy
producers in the western United States tend to purchase feed components and mix
them at the farm location rather than purchasing a complete feed product
delivered to the farm. Producers will purchase grain blends and concentrated
premixes from separate suppliers. This shift is reflected in increased sales of
simple blends in our Western feed region and sales increases in our subsidiaries
that manufacture premixes in the Western area. In addition, the increase in
vertical integration of swine and poultry producers has impacted our feed
product mix by increasing sales of lower-margin feed products.

We have seen continued erosion of commodity feed volumes, mainly related to
the low prices in swine and dairy markets, which has resulted in a liquidation
of herds and a resulting fall in feed volumes. In the first six months of 2003,
dairy feed volumes were down 10% compared to 2002, and there were also
reductions of 14% and 21%, respectively, in poultry and swine feed volumes. Some
of this volume reduction was deliberate, due to plant closings and rejection of
unprofitable sales opportunities. We expect lower volumes in dairy, poultry and
swine feed to continue for the remainder of the year. On the other hand, beef
livestock feed volumes have improved and are 2% higher for the six months ended
June 30, 2003 than the same period last year. With declines in dairy commodity
prices, livestock producers also shifted from higher margin branded feed
products to lower margin commodity feeds.

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

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

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Under the farrow-to-finish program, we produce and sell market hogs.
Historically, market hog price fluctuations have resulted in volatility in our
net sales and earnings. In order to mitigate this risk, we have committed to
sell substantially all of the market hogs we produce annually through 2005 under
a packer agreement. Under this packer agreement, we are paid market prices for
our hogs with a settlement based on the sales price of the pork products
produced from those hogs. This approach mitigates some of the volatility under
this program because market hog and pork product margins do not tend to move
together. We sell the balance of our market hogs on the open market. We sell
feeder pigs on the open market, as well, depending on sow farm performance and
finishing space limitations. For the six months ended June 30, 2003, we have
sold approximately 14% of our feeder pig volume on the open market.

Under the cost-plus program, we provide minimum hog price guarantees to
producers in exchange for swine feed sales and profit participation. We are in
the process of phasing out our existing cost-plus contracts and will not be
entering into new ones under the current structure. During the second quarter of
2003 we continued to reduce our hog exposure by offering our cost-plus producers
an early exit option. During the first six months of 2003, producers
representing about 100,000 hogs (39%) elected the early exit option, leaving
130,000 hogs on the cost-plus program. The majority of the remaining cost-plus
contracts will expire in late 2003 and early 2004, and the last cost-plus
contracts will expire in early 2005. The program incurred pretax losses of $1.9
million for the six months ended June 30, 2003 and $1.1 million for the six
months ended June 30, 2002.

Historically, Purina Mills reported results of its swine business together
with its feed business. Accordingly, the portion of our swine business which we
acquired from Purina Mills in October 2001 is reported within our feed segment.
Purina Mills operates its swine business under the pass-through program and the
market risk sharing program. Under the pass-through program, we enter into
commitments to purchase weanling and feeder pigs from producers and generally
have commitments to immediately resell the animals to swine producers. The
market risk sharing program provides minimum price floors to producers for
market hogs. The price floor in our market risk sharing program floats with the
market price of hogs and the cost of swine feed. For the six months ended June
30, 2003, the Purina Mills swine business generated a loss of $0.7 million
compared to a loss of $1.4 million for the six months ended June 30, 2002.

39

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2003 AS COMPARED TO THREE MONTHS ENDED JUNE 30, 2002

NET SALES

Net sales for the three months ended June 30, 2003 decreased $23.8 million,
or 1.7%, to $1,396.0 million, compared to net sales of $1,419.8 million for the
three months ended June 30, 2002. Improved volumes in dairy foods were more than
offset by lower commodity prices and reduced volumes on livestock feeds,
particularly dairy and swine feeds.

Dairy Foods. Net sales for the three months ended June 30, 2003 decreased
$45.0 million, or 6.3%, to $665.3 million, compared to net sales of $710.3
million for the three months ended June 30, 2002. For the three months ended
June 30, 2003, average commodity prices for butter decreased by less than $0.01
per pound, while average commodity prices for cheese decreased $0.06 per pound
compared to the same period in 2002. The impact of these market price changes
decreased net sales of butter by $4.5 million and decreased net sales of cheese
by $6.0 million. Retail and foodservice butter volumes increased 8.2 million
pounds representing an increase in net sales of $14.2 million from the same
period last year. Private label butter volumes increased 0.9 million pounds
representing an increase in net sales of $4.7 million over the prior period.
Butter volume increases are primarily the result of the timing of the Easter
holiday season which was in the first quarter in 2002 and in the second quarter
in 2003. Bulk cheese sales decreased $0.4 million for the three month period
ended June 30, 2003, compared to the three months ended June 30, 2002. Retail
cheese volumes decreased 2.3 million pounds compared to the same period last
year due to intense competitive activities. This resulted in a decrease in sales
of $4.3 million. Deli cheese volumes decreased 2.5 million pounds from the prior
period, which resulted in a decrease in sales of $4.3 million.

41

Foodservice cheese sales increased 3.1 million pounds which resulted in an
increase in sales of $5.0 million over the prior period. Sales in 2003 under our
wholesale milk marketing program decreased $39.0 million, or 18.4%, to $172.9
million, compared to $211.9 million for the three months ended June 30, 2002.
Volume changes in other product categories accounted for the remaining sales
decrease of $10.4 million.

Animal Feed. Net sales for the three months ended June 30, 2003 increased
$6.5 million, or 1.1%, to $593.7 million, compared to net sales of $587.2
million for the three months ended June 30, 2002. Sales of livestock feeds
increased $1.0 million as increases in commodity prices and poultry product mix
changes offset volume decreases in dairy and swine feed. Sales of lifestyle feed
products decreased $1.8 million, primarily due to volume decreases in our pet
food and grass cattle feeds, partially offset by volume increases in horse, lab
and zoo feeds. Grass cattle feed sales were negatively impacted by a government
assistance program during the quarter. In certain drought-stricken states,
eligible producers received vouchers for non-fat dried milk to be traded for
cattle feeds or non-fat dried milk. Sales of animal health farm and ranch
products increased $13.4 million as we formed a new joint venture which handles
the sales of these products. Sales in our other wholly-owned and majority-owned
subsidiaries decreased by $10.3 million as they were impacted by lower volumes
resulting from poor industry economics. Ingredient sales increased $3.6 million
as a result of increasing commodity prices and product mix changes. We also
experienced a decrease of $0.6 million in animal milk and animal protein product
sales as volumes returned to historical levels compared to record volumes in the
same period of 2002. Sales in our international division declined $1.8 million
as we exited some of the businesses in the second half of 2002. Sales in other
categories increased $3.0 million.

Crop Seed. Net sales for the three months ended June 30, 2003 increased
$13.9 million, or 14.3%, to $111.1 million, compared to net sales of $97.2
million in the same period of 2002. Soybean sales increased $20.7 million in the
three months ended June 30, 2003, or 88.1%, as a result of increased volumes and
sales price. Volume growth and product mix in both proprietary and partnered
categories resulted in increased sales of corn of $8.3 million, or 45.4%, for
the three months ended June 30, 2003 as compared to the same period of 2002.
These increases were primarily due to increased emphasis on seed sales by
agricultural retailers. Alfalfa sales decreased $3.2 million, or 33.0%, due to
the timing of spring sales. Turf sales decreased $3.7 million due to continued
weakness in the market. Sales of inoculation/coatings decreased $3.8 million as
a result of selling the wholesale business last fall. Volume decreases in other
seed categories resulted in a sales decrease of $4.4 million.

Swine. Net sales for the three months ended June 30, 2003 increased $0.7
million, or 3.2%, to $22.5 million, compared to $21.8 million for the three
months ended June 30, 2002. The increase in average market hog prices of $7.65
per hundredweight to $43.77, compared to $36.12 for the prior-year period, along
with the increase in feeder pig prices increased sales by $3.4 million. We
signed a packer agreement, effective September 25, 2000, which ties the price we
receive for market hogs to the price that the packer receives for pork products.
For the three months ended June 30, 2003, this agreement decreased our sales by
$1.3 million, compared to the three months ended June 30, 2002. The number of
market hogs sold decreased by 9,212 and the number of feeder pigs sold decreased
by 20,697, with a corresponding sales decrease of $1.4 million.

COST OF SALES

Cost of sales for the three months ended June 30, 2003 decreased $24.8
million, or 1.9%, to $1,271.1 million, compared to cost of sales of $1,295.9
million for the three months ended June 30, 2002. Cost of sales as a percent of
net sales decreased 0.2 percentage points to 91.1% for the three months ended
June 30, 2003, compared to 91.3% for the three months ended June 30, 2002. This
decrease was driven primarily by ongoing cost control efforts and improvement in
milk input pricing, partially offset by continued competitive pressures on
commodity product prices. For the three months ended June 30, 2003, patronage
income from other cooperatives that was directly attributable to product
purchases amounted to $1.0 million, compared to $2.2 million for the three
months ended June 30, 2002. Our cost of sales was reduced by these amounts.

Dairy Foods. Cost of sales for the three months ended June 30, 2003
decreased $45.9 million, or 6.8%, to $626.1 million, compared to cost of sales
of $672.0 million for the three months ended June 30, 2002. For the three months
ended June 30, 2003, average butter market prices decreased less than $0.01 per
pound, while average cheese market prices decreased $0.06 per pound compared to
the same period in 2002. The impact of these market price changes decreased cost
of sales of butter by $8.5 million and decreased cost of sales of cheese by $5.7
million. Increased volumes of both branded butter and private label butter
increased cost of sales by $11.6 million and $4.4 million, respectively. Reduced
sales of bulk cheese resulted in decreased cost of sales of $4.8 million.

42

Reduced volumes of retail cheese and deli cheese resulted in decreased cost of
sales of $3.6 million and $3.5 million, respectively. Offsetting these
decreases in cheese volumes was an increase in the volume for foodservice
cheese. The increase in cost of sales for foodservice cheese was $4.5 million.
Lower milk input costs in the Upper Midwest and East resulted in decreased cost
of sales of $4.7 million. Cost of sales for the three months ended June 30,
2003 under our wholesale milk marketing program decreased $38.4 million, or
18.0%, to $174.5 million, compared to $212.9 million in the same period in
2002. Increased energy costs in 2003 increased cost of sales by $0.7 million,
as compared to 2002. Cost of sales for the CPI facility increased $0.3 million.
CPI began producing products in May of 2002. Volume changes in other
categories increased cost of sales by $3.8 million. Cost of sales as a percent
of net sales decreased 0.5 percentage points from 94.6% for the three months
ended June 30, 2002 to 94.1% for the three months ended June 30, 2003,
primarily due to decreased commodity input prices for butter and cheese.

Animal Feed. Cost of sales for the three months ended June 30, 2003
increased $9.7 million, or 1.9%, to $526.6 million, compared to $516.9 million
for the three months ended June 30, 2002. Cost of sales of livestock feeds
increased $5.7 million as commodity prices increased input costs and volume
decreases in dairy and swine feed sales due to poor producer economics were
slightly offset by increases in poultry feed Cost of sales of lifestyle feed
products increased $2.9 million as volume increases for horse, lab and zoo feeds
were somewhat offset by volume declines in pet food and grass cattle feed.
Commodity prices increased lifestyle input costs as well. Ingredient cost of
sales increased $3.8 million as a result of increased commodity prices and
changes in product mix. We also experienced a decrease of $1.0 million for
animal milk and animal protein products as volumes returned to historical levels
compared to record volumes in the same period of 2002. Cost of sales in our
international division declined $1.4 million as we exited some of the businesses
in the second half of 2002. Cost of sales for animal health farm and ranch
products increased $12.8 million as we formed a new joint venture which handles
the sales of these products. Cost of sales in our other wholly-owned and
majority-owned subsidiaries declined $10.1 million with decreased volumes as a
result of poor industry economics. Cost of sales in other categories increased
$4.4 million. Cost of sales decreased $1.6 million due to an increase in
patronage rebates from other inter-regional cooperatives. Cost of sales
decreased $5.4 million as we continue integration efforts in manufacturing and
distribution. Cost of sales as a percent of net sales increased 0.7 percentage
points from 88.0% for the three months ended June 30, 2002 to 88.7% for the
three months ended June 30, 2003. An unrealized hedging gain of $2.1 million for
the three months ended June 30, 2003 compared to an unrealized hedging gain of
$1.7 million for the three months ended June 30, 2002 decreased cost of sales by
$0.4 million.

Crop Seed. Cost of sales for the three months ended June 30, 2003 increased
$12.3 million, or 14.8%, to $95.4 million, compared to cost of sales of $83.1
million for the three months ended June 30, 2002. Continued volume growth in
both proprietary and partnered corn seed resulted in increased cost of sales of
$8.7 million, or 59.6%, over the prior-year period. Cost of sales for soybeans
increased $18.9 million, or 97.4%, due to an increase in sales volume. Cost of
sales for alfalfa decreased $2.8 million, or 30.4%, as a result of decreased
sales volumes. The sale of our wholesale inoculation/coatings business in 2002
reduced cost of sales for the three months ended June 30, 2003 by $2.0 million
compared to the three months ended June 30, 2002. Reduced turf sales decreased
cost of sales by $4.1 million. Volume declines and changes in product mix in
other seed categories accounted for a decrease in cost of sales of $6.8 million.
An unrealized hedging gain on soybean futures contracts of $0.5 million for the
three months ended June 30, 2003 compared to an unrealized hedging gain of $0.9
million for the three months ended June 30, 2002 increased cost of sales by $0.4
million. Cost of sales as a percent of net sales increased 0.4 percentage
points, from 85.5% for the three months ended June 30, 2002 to 85.9% for the
three months ended June 30, 2003.

Swine. Cost of sales for the three months ended June 30, 2003 decreased $1.1
million, or 5.0%, to $21.0 million, compared to $22.1 million for the three
months ended June 30, 2002. Reduced unit sales decreased cost of sales by $1.6
million, partially offset by higher input costs for corn and soybean meal which
increased cost of sales by $0.6 million. An unrealized hedging gain decreased
cost of sales by $0.4 million for the three months ended June 30, 2003, compared
to an unrealized hedging gain of $0.3 million for the three months ended June
30,2002, resulting in a net decrease in cost of sales of $0.1 million. Cost of
sales as a percent of net sales decreased 8.1 percentage points from 101.4% for
the three months ended June 30, 2002 to 93.3% of sales for the three months
ended June 30, 2003, primarily due to the increase in hog market prices which
increased swine net sales.

SELLING, GENERAL AND ADMINISTRATION EXPENSE

Selling, general and administration expense for the three months ended June
30, 2003 decreased $13.9 million, or 11.2%, to $110.3 million, compared to
selling, general and administration expense of $124.2 million for the three

43

months ended June 30, 2002. The decrease was primarily due to spending
reductions associated with our ongoing cost control efforts as well as a gain on
the sale of a dairy facility. Selling, general and administration expense as a
percent of net sales decreased 0.8 percentage points from 8.7% for the three
months ended June 30, 2002 to 7.9% for the three months ended June 30, 2003.

RESTRUCTURING AND IMPAIRMENT CHARGES

For the three months ended June 30, 2003, we recorded restructuring and
impairment charges of $1.8 million, compared to $3.8 million for the three
months ended June 30, 2002. These charges related to the announced closure of
certain manufacturing facilities within various business units.

INTEREST EXPENSE

Interest expense for the three months ended June 30, 2003 was $16.9 million,
compared to $17.4 million for the three months ended June 30, 2002. Average debt
balances decreased by $76.3 million as compared to the three months ended June
30, 2002. CoBank patronage reduced interest expense by $0.4 million for the
three months ended June 30, 2003, compared to $0.1 million for the three months
ended June 30, 2002. Combined interest rates for borrowings, excluding CoBank
patronage, averaged 6.66% for the three months ended June 30, 2003, compared to
6.99% for the three months ended June 30, 2002. The impact of favorable interest
rates on the term loans was partially offset by approximately $1 million in
additional interest expense related to the CPI capital lease.

GAIN ON LEGAL SETTLEMENTS

In the fourth quarter of 1999, a class action lawsuit, alleging illegal
price fixing, was filed against various vitamin product suppliers. Initially, we
were a party to this action as a member of the class. In February 2000, however,
we decided to pursue our claims against the defendant outside the class action.
In December 2002, we reached settlements for $97 million with several defendants
against whom we claimed had illegally fixed the prices of various vitamin
products we purchased. As a result of these settlements, a gain on legal
settlements was recorded in December 2002 and net cash proceeds of $97 million
were received in January 2003. During the second quarter of 2003, we settled
with additional defendants and received approximately $3.1 million. When
combined with the settlement proceeds received from similar claims since the
commencement of these actions, we have received, cumulatively, approximately
$168 million from the settling defendants, which represents the vast majority of
our vitamin purchases. We continue to pursue similar claims against the
remaining defendants.

During the first quarter of 2003, we also settled a claim against certain
suppliers of methionine, an amino acid that we purchase and use in certain of
our products. We alleged that certain methionine suppliers had illegally engaged
in price fixing. During the second quarter we received $7.2 million from the
settling defendants. We do not expect to receive additional settlements based on
this claim.

As a result of the above settlements, we recorded a gain on legal
settlements of $10.3 million for the three months ended June 30, 2003 compared
to a gain on legal settlements of $32.7 million for the three months ended June
30, 2002.

GAIN ON SALE OF INVESTMENT

For the three months ended June 30, 2003, we recorded a $0.3 million gain on
the sale of an Animal Feed investment in a Purina Mills swine joint venture,
compared to no gain for the three months ended June 30, 2002.

GAIN ON SALE OF INTANGIBLE

For the three months ended June 30, 2003, we recorded a gain on sale of
intangible of $0.6 million on the sale of an Animal Feed customer list in
Taiwan. For the three months ended June 30, 2002, we did not record a gain on
sale of intangible.

44

LOSS OR GAIN ON DIVESTITURE OF BUSINESSES

For the three months ended June 30, 2003, we recorded a loss of $0.7 million
on the divestiture of our Animal Feed business in Taiwan. For the three months
ended June 30, 2002, we recorded a gain of $1.2 million primarily on the
divestiture of our Dairy Foods Poland business.

EQUITY IN EARNINGS OF AFFILIATED COMPANIES

For the three months ended June 30, 2003, equity in earnings of affiliated
companies was $51.4 million, compared to earnings of $44.2 million for the three
months ended June 30, 2002. Results for the three months ended June 30, 2003
included earnings from Agriliance and MoArk, LLC ("MoArk") of $46.8 million and
$1.6 million, respectively. We also recorded earnings from our Advanced Food
Products, LLC joint venture of $1.4 million for the three months ended June 30,
2003 compared to $1.2 million for the same period in the prior year. Results for
the three months ended June 30, 2002 included earnings from Agriliance of $48.3
million and a loss from MoArk of $5.3 million. Agriliance earnings decreased by
$1.5 million in the three months ended June 30, 2003 compared to the three month
ended June 30, 2002 primarily due to lower earnings in the crop protection and
retail distribution areas.

MINORITY INTEREST IN EARNINGS OR LOSS OF SUBSIDIARIES

For the three months ended June 30, 2003, we recorded minority interest in
earnings of subsidiaries of $1.4 million, compared to a loss of $1.0 million for
the three months ended June 30, 2002. Animal Feed recorded minority interest in
earnings of subsidiaries of $1.4 million for the three months ended June 30,
2003, compared to minority interest in earnings of subsidiaries of $1.0 million
for the three months ended June 30, 2002. Dairy Foods recorded no minority
interest in earnings of subsidiaries for the three months ended June 30, 2003,
compared to minority interest in loss of subsidiaries of $2.0 million for the
three months ended June 30, 2002.

INCOME TAXES

We recorded income tax expense of $11.8 million for the three months ended
June 30, 2003, compared to income tax expense of $9.3 million for the three
months ended June 30, 2002. The income tax expense resulted from member and
non-member earnings and from the gain on legal settlements.

NET EARNINGS

Net earnings decreased $3.6 million to $44.7 million for the three months
ended June 30, 2003, compared to net earnings of $48.3 million for the three
months ended June 30, 2002. The decrease in net earnings resulted primarily from
reduced margins in our Animal Feed operations as well as a lower gain on legal
settlements, partially offset by reduced selling, general and administration
expense.

SIX MONTHS ENDED JUNE 30, 2003 AS COMPARED TO SIX MONTHS ENDED JUNE 30, 2002

NET SALES

Net sales for the six months ended June 30, 2003 decreased $101.5 million,
or 3.4%, to $2,850.5 million, compared to net sales of $2,952.0 million for the
six months ended June 30, 2002. The decrease was primarily attributed to
declines in Dairy Foods sales and lower Animal Feed sales, partially offset by
sales increases in Crop Seed.

Dairy Foods. Net sales for the six months ended June 30, 2003 decreased
$140.2 million, or 9.7%, to $1,301.2 million, compared to net sales of $1,441.4
million for the six months ended June 30, 2002. For the six months ended June
30, 2003, average commodity prices for butter decreased $0.11 per pound, and
average commodity prices for cheese decreased $0.10 per pound compared to the
same period in 2002. The impact of these market price changes decreased net
sales of butter by $24.8 million and decreased net sales of cheese by $13.1
million. Retail and foodservice butter volumes increased 2.6 million pounds
representing an increase in net sales of $4.6 million from the same period last
year. Private label butter volumes increased 1.6 million pounds representing an
increase in net

45

sales of $2.3 million over the prior period. Bulk cheese sales decreased $13.6
million for the six months ended June 30, 2003, compared to the six months ended
June 30, 2002. Retail cheese volumes decreased 5.6 million pounds compared to
the same period last year due to intense competitive activities. This resulted
in a decrease in sales of $10.4 million. Deli cheese volumes decreased 1.4
million pounds from the prior year, which resulted in a decrease in sales of
$3.1 million. Foodservice cheese sales increased 6.8 million pounds which
resulted in an increase in sales of $10.2 million over the prior period. Sales
in the six months ended June 30, 2003 under our wholesale milk marketing program
decreased $67.2 million, or 15.5%, to $366.1 million, compared to $433.3 million
for the same period in 2002. Volume changes in other product categories
accounted for the remaining sales decrease of $25.1 million.

Animal Feed. Net sales for the six months ended June 30, 2003 decreased $9.5
million, or 0.8%, to $1,196.2 million, compared to net sales of $1,205.7 million
for the six months ended June 30, 2002. Sales of livestock feeds decreased $12.0
million, compared to the prior year period, as volume decreased in dairy and
swine feed due to continued unfavorable producer economics. Sales of lifestyle
feed products decreased $0.2 million, primarily due to volume decreases in pet
food and grass cattle feed, partially offset by volume increases in horse, lab
and zoo feeds. Ingredient sales increased $3.6 million as a result of increasing
commodity prices and product mix changes. We experienced a decrease of $2.5
million in animal milk and animal protein product sales as volumes returned to
historical levels compared to record volumes in the same period of 2002. Sales
of cophosphates declined $4.2 million as we exited this business in 2002. Sales
in our international division declined $7.6 million as we exited certain
businesses in the second half of 2002. Sales of animal health farm and ranch
products increased $16.3 million due to the formation of a joint venture which
handles the sale of these products. Sales in our other wholly-owned and
majority-owned subsidiaries decreased $6.9 million, primarily due to volume
declines as a result of unfavorable producer economics. Sales in other
categories increased $4.0 million.

Crop Seed. Net sales for the six months ended June 30, 2003 increased $50.1
million, or 19.8%, to $303.0 million, compared to net sales of $252.9 million
for the six months ended June 30, 2002. Volume growth and product mix in both
proprietary and partnered categories resulted in increased corn seed sales of
$35.5 million, or 43.2%. Soybean sales increased $27.9 million for the six
months ended June 30, 2003, or 40.0%, compared to the prior year period, as a
result of increased volumes and sales price. Alfalfa sales increased $1.7
million, or 6.3%, due to increased volumes. Sales of inoculation/coatings
decreased $7.5 million as a result of selling the wholesale business last fall.
Turf sales decreased $4.2 million due to continued weakness in the market.
Volume decreases in other seed categories resulted in a sales decrease of $7.5
million.

Swine. Net sales for the six months ended June 30, 2003 decreased $2.0
million, or 4.4%, to $43.7 million, compared to $45.7 million for the six months
ended June 30, 2002. Reduced supply, caused in part by a reduction in the U.S.
breeding herd, increased the average market hog price for the six months ended
June 30, 2003 to $40.06 per hundredweight versus an average market price of
approximately $38.05 for the six months ended June 30, 2002. The average price
per feeder pig sold on the open market increased $6.16, from $40.84 for the six
months ended June 30, 2002 to $47.00 for the six months ended June 30, 2003. The
increase in average market hog prices of $2.01 per hundredweight along with the
increase in feeder pig prices increased sales by $2.0 million. We signed a
packer agreement, effective September 25, 2000, which ties the price we receive
for market hogs to the price that the packer receives for pork products. For the
six months ended June 30, 2003, this agreement decreased our sales by $1.1
million, compared to the six months ended June 30, 2002. The number of market
hogs sold decreased by 15,111 and the number of feeder pigs sold decreased by
24,013, with a corresponding sales decrease of $2.9 million.

COST OF SALES

Cost of sales for the six months ended June 30, 2003 decreased $80.1
million, or 3.0%, to $2,600.0 million, compared to cost of sales of $2,680.1
million for the six months ended June 30, 2002. The decrease was attributed to
lower Dairy Foods sales, partially offset by increased sales of Crop Seed
products. Cost of sales as a percent of net sales increased 0.4 percentage
points to 91.2% for the six months ended June 30, 2003, compared to 90.8% for
the same period in the prior year. For the six months ended June 30, 2003,
patronage income from other cooperatives that was directly attributable to
product purchases amounted to $1.5 million, compared to $3.3 million for the six
months ended June 30, 2002. Our cost of sales was reduced by these amounts.

Dairy Foods. Cost of sales for the six months ended June 30, 2003 decreased
$123.8 million, or 9.1%, to $1,234.2 million, compared to cost of sales of
$1,358.0 million for the six months ended June 30, 2002. For the six

46

months ended June 30, 2003, average butter market prices decreased $0.11 per
pound, while average cheese market prices decreased $0.10 per pound compared to
the same period in 2002. The impact of these market price changes decreased cost
of sales of butter by $25.1 million and decreased cost of sales of cheese by
$13.9 million for the six months ended June 30, 2003 compared to the same period
in 2002. Increased volumes of both branded butter and private label butter
increased cost of sales by $3.8 million and $2.2 million, respectively. Reduced
sales of bulk cheese resulted in decreased cost of sales of $18.3 million.
Reduced volumes of retail cheese and deli cheese resulted in decreased cost of
sales of $8.8 million and $2.5 million, respectively. Offsetting these decreases
in cheese volumes was an increase in the volumes for foodservice cheese. The
increase in cost of sales for foodservice cheese was $9.1 million. Lower milk
input costs in the Upper Midwest and East resulted in decreased cost of sales of
$3.3 million. Cost of sales for the six months ended June 30, 2003 under our
wholesale milk marketing program decreased $70.2 million, or 16.0%, to $368.6
million, compared to $438.8 million for the same period in 2002. Increased
energy costs in 2003 increased cost of sales by $1.1 million for the six months
ended June 30, 2003, as compared to the same period in 2002. Cost of sales for
the cheese and whey plant in Tulare, California that we operate as a joint
venture with Mitsui of Japan increased $5.2 million. It began producing products
in May of 2002. Volume changes in other categories decreased cost of sales by
$3.1 million. Cost of sales as a percent of net sales increased 0.7 percentage
points from 94.2% for the six months ended June 30, 2002 to 94.9% for the six
months ended June 30, 2003, primarily due to lower sales as a result of
decreased commodity prices for butter and cheese.

Animal Feed. Cost of sales for the six months ended June 30, 2003 decreased
$4.8 million, or 0.5%, to $1,056.6 million compared to $1,061.4 million for the
six months ended June 30, 2002. Cost of sales of livestock feeds increased $3.0
million as commodity prices increased input costs and volume decreases in dairy
and swine feed sales were slightly offset by increases in poultry feed. Producer
economics in the dairy and swine area continue to pressure IOIC. Cost of sales
of lifestyle feed products increased $5.1 million as volume increases for horse,
lab and zoo feeds were somewhat offset by volume declines in pet food and grass
cattle sales. In addition, we have seen commodity price increases that
negatively affected our cost of sales in these categories. Ingredient cost of
sales increased $3.8 million as a result of increased commodity prices and
changes in product mix. We also experienced a decrease of $3.5 million for
animal milk and animal protein products as volumes returned to historical levels
compared to record volumes in the same period of 2002. Cost of sales in our
international division declined $6.5 million for the six months ended June 30,
2003 compared to the same period in 2002, as we exited some of the businesses in
the second half of 2002. Cost of sales for animal health farm and ranch products
increased $15.9 million as we formed a new joint venture which handles the sale
of these products. Cost of sales in our other wholly-owned and majority-owned
subsidiaries decreased $8.4 million due to lower volumes resulting from poor
industry economics. Cost of sales in other categories increased $0.8 million.
Cost of sales decreased $1.1 million due to an increase in patronage rebates
from other inter-regional cooperatives. Cost of sales decreased $10.5 million as
we continue our efforts to integrate the Purina Mills businesses. Cost of sales
as a percent of net sales increased 0.3 percentage points from 88.0% for the six
months ended June 30, 2002 to 88.3% for the six months ended June 30, 2003.

Crop Seed. Cost of sales for the six months ended June 30, 2003 increased
$48.6 million, or 22.7%, to $262.3 million, compared to cost of sales of $213.7
million for the six months ended June 30, 2002. Continued volume growth in both
proprietary and partnered corn seed resulted in increased cost of sales of $35.1
million, or 50.9%, over the prior-year period. Cost of sales for soybeans
increased $24.2 million, or 40.0%, due to an increase in sales volume. Cost of
sales for alfalfa increased $3.6 million, or 16.9%, due to increased sales
volumes in an effort to decrease inventory levels. Cost of sales related to the
sale of our wholesale inoculation/coatings business reduced cost of sales by
$3.6 million. Reduced turf sales decreased cost of sales by $4.4 million. Volume
declines and changes in product mix in other seed categories accounted for a
decrease in cost of sales of $8.0 million. An unrealized hedging gain on soybean
futures contracts of $0.3 million for the six months ended June 30, 2003
compared to an unrealized hedging gain of $2.0 million for the six months ended
June 30, 2002 increased cost of sales by $1.7 million. Cost of sales as a
percent of net sales increased 2.1 percentage points, from 84.5% for the six
months ended June 30, 2002 to 86.6% for the six months ended June 30, 2003, due
to the change in product mix.

Swine. Cost of sales for the six months ended June 30, 2003 decreased $0.3
million, or 0.7%, to $43.3 million, compared to $43.6 million for the six months
ended June 30, 2002. Reduced unit sales decreased cost of sales by $2.5 million
and higher input costs increased cost of sales by $2.9 million. An unrealized
hedging gain decreased cost of sales by $1.4 million for the six months ended
June 30, 2003, compared to an unrealized hedging gain of $0.7 million for the
six months ended June 30, 2002, resulting in a net decrease in cost of sales of
$0.7 million. Cost of sales as a percent of net sales increased 3.7 percentage
points from 95.4% to 99.1% of sales, primarily due to

47

higher input costs for corn and soybean meal for the six months ending June 30,
2003, compared to the six months ending June 30, 2002.

SELLING, GENERAL AND ADMINISTRATION EXPENSE

Selling, general and administration expense for the six months ended June
30, 2003 decreased $21.5 million, or 8.5%, to $230.2 million, compared to
selling, general and administration expense of $251.7 million for the six months
ended June 30, 2002. The decrease was primarily due to spending reductions
associated with our ongoing cost control efforts as well as a gain on the sale
of a dairy facility. Selling, general and administration expense as a percent of
net sales decreased 0.4 percentage points from 8.5% for the six months ended
June 30, 2002 to 8.1% for the six months ended June 30, 2003.

RESTRUCTURING AND IMPAIRMENT CHARGES

For the six months ended June 30, 2003, Land O'Lakes recorded restructuring
and impairment charges of $2.9 million, compared to $7.3 million for the six
months ended June 30, 2002. These charges related to the announced closures of
certain manufacturing facilities within various business units.

INTEREST EXPENSE

Interest expense for the six months ended June 30, 2003 was $34.3 million,
compared to $34.9 million for the six months ended June 30, 2002. Average debt
balances decreased by $78.5 million as compared to the six months ended June 30,
2002. CoBank patronage reduced interest expense by $0.7 million for the six
months ended June 30, 2003 and 2002, respectively. Combined interest rates for
borrowings, excluding CoBank patronage, averaged 6.77% for the six months ended
June 30, 2003, compared to 6.97% for the six months ended June 30, 2002. The
impact of favorable interest rates on the term loans was partially offset by
approximately $2 million in additional interest expense related to the CPI
capital lease.

GAIN ON LEGAL SETTLEMENTS

In the fourth quarter of 1999, a class action lawsuit, alleging illegal
price fixing, was filed against various vitamin product suppliers. Initially, we
were a party to this action as a member of the class. In February 2000, however,
we decided to pursue our claims against the defendant outside the class action.
In December 2002, we reached settlements for $97 million with several defendants
against whom we claimed had illegally fixed the prices of various vitamin
products we purchased. As a result of these settlements, a gain on legal
settlements was recorded in December 2002 and net cash proceeds of $97 million
were received in January 2003. During 2003, we settled with additional
defendants and received approximately $8.8 million in the six months ended June
30, 2003. When combined with the settlement proceeds received from similar
claims since the commencement of these actions, we have received, cumulatively,
approximately $168 million from the settling defendants, which represents the
vast majority of our vitamin purchases. We continue to pursue similar claims
against the remaining defendants.

During the first quarter of 2003, we also settled a claim against certain
suppliers of methionine, an amino acid that we purchase and use in certain of
our products. We alleged that certain methionine suppliers had illegally engaged
in price fixing. For the six months ended June 30, 2003, we received $10.4
million from the settling defendants. When combined with the settlement proceeds
received from similar claims since the commencement of these actions, we have
received, cumulatively, approximately $12 million from the settling defendants.
We do not expect to receive additional settlements based on this claim.

As a result of the above settlements, we recorded a gain on legal
settlements of $19.2 million for the six months ended June 30, 2003 compared to
a gain on legal settlements of $32.7 million for the six months ended June 30,
2002.

GAIN ON SALE OF INVESTMENT

For the six months ended June 30, 2003, we recorded a $0.8 million gain
on the sale of an Animal Feed investment in a Purina Mills swine joint venture,
compared to no gain for the six months ended June 30, 2002.

48

GAIN ON SALE OF INTANGIBLE

For the six months ended June 30, 2003, we recorded a gain of $0.6 million
on the sale of an Animal Feed customer list in Taiwan. For the six months ended
June 30, 2002, we recorded a gain of $4.2 million on the sale to Potash
Corporation of Saskatchewan of a customer list pertaining to the feed phosphate
distribution business.

LOSS OR GAIN ON DIVESTITURE OF BUSINESSES

For the six months ended June 30, 2003, we recorded a loss of $0.7 million
on the divestiture of our Animal Feed business in Taiwan. For the six months
ended June 30, 2002, we recorded a gain of $1.2 million primarily on the
divestiture of our dairy foods Poland business.

EQUITY IN EARNINGS OF AFFILIATED COMPANIES

For the six months ended June 30, 2003, equity in earnings of affiliated
companies was $50.4 million, compared to earnings of $34.4 million for the six
months ended June 30, 2002. Results for the six months ended June 30, 2003
included earnings from Agriliance of $44.0 million, primarily driven by improved
fertilizer margins, lower selling, general and administration expense and lower
interest expense, partially offset by declines in nitrogen prices and fertilizer
volumes. We recorded earnings from MoArk of $4.3 million, driven by improved
market prices for eggs, in part as a result of a declining chick hatch and
changes in response to new animal welfare guidelines. Results for the six months
ended June 30, 2002 primarily reflected earnings from Agriliance of $39.1
million, partially offset by a loss from MoArk of $5.2 million.

MINORITY INTEREST IN LOSS OR EARNINGS OF SUBSIDIARIES

For the six months ended June 30, 2003, we recorded minority interest in
earnings of subsidiaries of $2.9 million, compared to a loss of $0.1 million for
the six months ended June 30, 2002. Minority interest in earnings of Animal Feed
related subsidiaries was $2.9 million for the six months ended June 30, 2003.
Results for the six months ended June 30, 2002 included minority interest in
earnings of Animal Feed related subsidiaries of $2.4 million, offset by minority
interest in loss of Dairy Foods related subsidiaries.

INCOME TAXES

We recorded income tax expense of $6.2 million for the six months ended June
30, 2003, compared to income tax expense of $3.2 million for the six months
ended June 30, 2002. The tax expense resulted from member and non-member
earnings and from the gain on legal settlements.

NET EARNINGS

Net earnings decreased $3.0 million, or 6.3%, to net earnings of $44.3
million for the six months ended June 30, 2003, compared to net earnings of
$47.3 million for the six months ended June 30, 2002. Lower selling, general and
administration expense and increased equity in earnings of affiliated companies
were more than offset by the $13.5 million decrease in gain on legal settlements
over the prior six-month period.

LIQUIDITY AND CAPITAL RESOURCES

We rely on cash from operations, borrowings under our bank facilities, bank
term debt and other institutionally placed funded debt as the main sources for
financing working capital requirements and additions to property, plant and
equipment as well as acquisitions and joint ventures. Other sources of funding
consist of leasing arrangements, a receivables securitization and the sale of
non-strategic assets. Total long-term debt was $973.0 million, including $190.7
million in Capital Securities, as of June 30, 2003 and $1,007.3 million,
including $190.7 million in Capital Securities, as of December 31, 2002.

Net cash provided by operating activities was $153.4 million for the six
months ended June 30,

49

2003, compared to net cash provided of $30.2 million for the six months ended
June 30, 2002. For the six months ended June 30, 2003, net cash provided by
operating activities was $123.2 million more than for the six months ended June
30, 2002. The proceeds from legal settlements of $115.9 million and the cash
generation from the revolving receivables securitization program were the
primary reasons for the change in cash provided by operating activities.

Net cash flows (used) provided by investing activities was ($47.4) million
for the six months ended June 30, 2003 and $0.8 million for the six months ended
June 30, 2002. The change was primarily due to an increase in restricted cash
and the sale of investments in 2002.

Net cash flows used by financing activities was $84.8 million for the six
months ended June 30, 2003 and $81.7 million for the six months ended June 30,
2002. For the six months ended June 30, 2003, we made payments of $73.1 million
on existing long-term debt and payments of $23.7 million for redemption of
member equities. At the same time, we increased short-term debt by $14.3 million
to cover seasonal working capital needs. For the six months ended June 30, 2002,
we made payments of $60.1 million on existing long-term debt and payments of
$36.5 million for redemption of member equities, while increasing our short-term
debt by $10.3 million to cover seasonal working capital needs.

Our principal liquidity requirements are to service our debt and meet our
working capital and capital expenditure needs. As of June 30, 2003 we had $973.0
million outstanding in long-term debt, including $190.7 million of Capital
Securities, and $118.0 million outstanding in short-term debt. In addition, as
of June 30, 2003, $217.7 million was available under a $250 million revolving
credit facility for working capital and general corporate purposes, after giving
effect to $32.3 million of outstanding letters of credit, which reduce
availability. The revolving credit facility had no borrowings on June 30, 2003.
Total equities as of June 30, 2003 were $933.9 million.

The principal term loans consist of a syndicated Term Loan A Facility with a
remaining balance of $243.2 million and an expiration date of October 10, 2006,
and a syndicated Term Loan B Facility with a remaining balance of $204.9 million
and an expiration date of October 10, 2008. Our $250.0 million revolving credit
facility terminates on June 28, 2004, and we expect to renew this facility by
the end of 2003.

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

The Term Loan A Facility is prepayable at any time without penalty. The Term
Loan B Facility is prepayable with a penalty of 2% through October 10, 2003, 1%
from October 11, 2003 through October 10, 2004 and no penalty thereafter. The
term loans are subject to mandatory prepayments, subject to certain limited
exceptions, in an amount equal to (1) 50% of excess cash flow of Land O'Lakes
and the restricted subsidiaries, (2) 100% of the net cash proceeds of asset
sales and dispositions of property of Land O'Lakes and the restricted
subsidiaries, to the extent not reinvested, (3) 100% of any casualty or
condemnation receipts by Land O'Lakes and the restricted subsidiaries, to the
extent not used to repair or replace assets, (4) 100% of joint venture dividends
or distributions received by Land O'Lakes or the restricted subsidiaries, to the
extent that they relate to the sale of property, casualty or condemnation
receipts, or the issuance of any equity interest in the joint venture, (5) 100%
of net cash proceeds from the sale of inventory or accounts receivable in a
securitization transaction and (6) 100% of net cash proceeds from the issuance
of unsecured senior or subordinated indebtedness issued by Land O'Lakes. During
the first six months of 2003, we made payments of $45.1 million on the Term Loan
A Facility and $26.5 million on the Term Loan B Facility, of which $21.6 million
was mandatory and $50.0 million was voluntary. In addition, during the month of
July we made a scheduled payment of $13.9 million on the Term Loan A Facility.

The amortization schedules for the Term Loan A and Term Loan B Facilities
are provided below.

50

In November 2001, we issued $350 million of senior notes. These notes bear
interest at a fixed rate of 8.75% and mature on November 15, 2011. The notes are
callable beginning in year six at a redemption price of 104.375%. In years seven
and eight, the redemption price is 102.917% and 101.458%, respectively. The
notes are callable at par beginning in year nine.

In 1998, Capital Securities in an amount of $200 million were issued by our
trust subsidiary, and the net proceeds were used to acquire a junior
subordinated note of Land O'Lakes. The holders of these securities are entitled
to receive dividends at an annual rate of 7.45% until the securities mature in
2028 and correspond to the payment terms of the junior subordinated debentures
which are the sole asset of the trust subsidiary. Interest payments on the
debentures can be deferred for up to five years, and the obligations under the
debentures are junior to all of our debt. As of June 30, 2003, the outstanding
balance of Capital Securities was $190.7 million.

The credit agreements relating to the term loans and revolving credit
facility and the indenture relating to the 8-3/4% senior notes impose certain
restrictions on us, including restrictions on our ability to incur indebtedness,
make payments to members, make investments, grant liens, sell our assets and
engage in certain other activities. In addition, the credit agreements relating
to the term loans and revolving credit facility require us to maintain an
interest coverage ratio of at least 2.50 to 1. Our ratio was 3.38 to 1 as of and
for the year ended December 31, 2002 and 4.33 to 1 as of and for the twelve
months period ended June 30, 2003. We are also required to maintain a leverage
ratio of no greater than 4.25 to 1. The actual leverage ratio as of December 31,
2002 was 3.85 to 1 and 2.80 to 1 as of June 30, 2003. The required leverage
ratio steps down to 3.75 to 1 as of October 11, 2003 and remains constant
thereafter.

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

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

OFF-BALANCE SHEET ARRANGEMENTS

In order to reduce overall financing costs, Land O'Lakes entered into a
revolving receivables securitization program with CoBank in December 2001 for up
to $100 million in advances against eligible receivables. Under this program,
Land O'Lakes, Land O'Lakes Farmland Feed and Purina Mills sell feed, seed and
certain swine receivables to LOL Farmland Feed SPV, LLC, a limited purpose
wholly-owned subsidiary of Land O'Lakes Farmland Feed. This subsidiary is a
qualifying special purpose entity ("QSPE") under applicable accounting rules.
The QSPE was established for the limited purpose of purchasing and obtaining
financing for these receivables. The transfers of the receivables to the QSPE
are structured as sales and, in accordance with applicable accounting rules,
these receivables are not reflected in the consolidated balance sheets of Land
O'Lakes Farmland Feed or Land O'Lakes. The QSPE purchases the receivables with a
combination of cash initially received from CoBank, equal to the present value
of eligible receivables multiplied by the agreed advance rate; and notes, equal
to the unadvanced present value of the receivables. Land O'Lakes and the other
receivables sellers are subject to credit risk related to the repayment of the
QSPE notes, which in turn is dependent upon the ultimate collection on the
QSPE's receivables pool. Accordingly, we have retained reserves for estimated
losses. As of June 30, 2003, $80 million was drawn under the securitization
facility.

In addition, we lease various equipment and real properties under long-term
operating leases. Total consolidated rental expense was $17.1 million for the
six months ended June 30, 2003, and $14.3 million for the six months

51

ended June 30, 2002. Most of the leases require payment of operating expenses
applicable to the leased assets. We expect that in the normal course of business
most leases that expire will be renewed or replaced by other leases.

CPI CAPITAL LEASE

Cheese & Protein International LLC ("CPI"), a consolidated joint venture of
Land O'Lakes, leases the real property and certain equipment relating to its
cheese manufacturing and whey processing plant in Tulare, California ("the
Lease"). The Lease is accounted for as a capital lease in our financial
statements, and as of June 30, 2003 the lease balance was $103.7 million. The
Lease base term commenced on April 30, 2002 and expires on the fifth
anniversary, unless CPI requests, and the lessor approves, one or more one-year
base term extensions, which could extend the base term to no more than ten
years. We have entered into a Support Agreement in connection with the Lease.
Pursuant to this agreement, we can elect one of the following options in the
event CPI defaults on its obligations under the Lease: (i) assume the
obligations of CPI, (ii) purchase the leased assets, (iii) fully cash
collateralize the Lease, or (iv) nominate a replacement lessee to be approved by
the lessor. The lease agreement requires among other things, that CPI maintain
certain financial ratios including minimum tangible net worth and a minimum
fixed charge coverage ratio. In addition, CPI is restricted as to borrowings and
changes in ownership.

On March 28, 2003, the Lease contract was amended. The amendment postponed
the measurement of the fixed charge coverage ratio until March 2005. In
addition, Land O'Lakes established a $20 million cash account (which may be
replaced with a letter of credit, at our option) which supports the lease. The
cash account or letter of credit would only be drawn upon in the event of a CPI
default, and would reduce amounts otherwise due under the lease. This support
requirement will be lifted when certain financial targets are achieved by CPI.
The lease payments are disclosed below based on current lease rates, an assumed
interest rate of 6% and a five-year lease term. The actual lease payments will
vary with short-term interest rate fluctuations, as interest per the lease
agreement is based on LIBOR. At the conclusion of the lease term, CPI is
obligated to pay the remaining lease balance.

CONTRACTUAL OBLIGATIONS

At June 30, 2003, we had certain contractual obligations, which require us
to make payments as follows:

PAYMENTS DUE BY PERIOD (AS OF JUNE 30, 2003)

- ----------

(1) Maximum $250 million facility, of which $217.7 million was available as of
June 30, 2003. A total of $32.3 million of this commitment was unavailable
due to outstanding letters of credit.

(2) Refer to Term Loan A and Term Loan B obligations in certain events as
explained in "Liquidity and Capital Resources." See "Off-balance Sheet
Arrangements" for information concerning our receivables securitization
program.

(3) Amount represents the present value of future minimum lease payments for the
CPI capital lease.

We expect our total capital expenditures to be approximately $90 million to
$100 million in 2003. Of such amounts, we currently estimate that a minimum
range of $35 million to $45 million of ongoing maintenance capital expenditures
is required each year. We had $35.0 million in capital expenditures for the six
months ended June 30, 2003, compared to $34.8 million in capital expenditures
for the six months ended June 30, 2002. We estimate that our total depreciation
and amortization expense will be approximately $100 million to $110 million in
2003. We had $54.0 million in depreciation and amortization expense for the six
months ended June 30, 2003, compared to $52.4 million for the six months ended
June 30, 2002.

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In 2003 we expect our total cash payments to members, subject to Board
approval, to be at least $24 million for revolvement, cash patronage and estates
and age retirements.

RECENT ACCOUNTING PRONOUNCEMENTS

On January 1, 2003, we adopted Statement of Financial Accounting Standards
146, "Accounting for Costs Associated with Exit or Disposal Activities." The
standard requires that a liability for a cost associated with an exit or
disposal activity be recognized and measured initially at fair value when the
liability is incurred. Under prior accounting literature, certain costs for exit
activities were recognized at the date a company committed to an exit plan. The
provisions of the standard are effective for exit or disposal activities
initiated after December 31, 2002.

On January 17, 2003, the FASB issued Interpretation No. 46, "Consolidation
of Variable Interest Entities, an Interpretation of ARB 51," (FIN 46). The
primary objectives of FIN 46 are to provide guidance on the identification and
consolidation of variable interest entities, or VIEs, which are entities for
which control is achieved through means other than through voting rights. FIN 46
is effective immediately for all new variable interest entities created or
acquired after January 31, 2003 and no later than July 1, 2003 for variable
interest entities created or acquired prior to February 1, 2003. Accordingly, we
adopted FIN 46 on July 1, 2003 and expect to begin consolidating our joint
venture in MoArk, LLC, an egg production and marketing company, in the third
quarter of 2003. The adoption of FIN 46 did not have a material impact on our
results of operations or financial condition.

In May, 2003, The FASB issued Statement of Financial Accounting Standards
150, "Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity" The standard establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. It requires that an issuer classify a financial
instrument that is within its scope as a liability (or an asset in some
circumstances). The standard is effective for us January 1, 2004, and we do not
currently expect this standard to have a material impact on our results of
operations or financial position. The Company already classifies its Capital
Securities as long-term debt and the related financing costs as interest
expense.

FORWARD-LOOKING STATEMENTS

This Form 10-Q for the three months ended June 30, 2003 includes
forward-looking statements. These forward-looking statements can be identified
by the use of forward-looking terminology such as "believes," "expects," "may,"
"will," "could," "should," "seeks," "pro forma," "as adjusted," "anticipates,"
"intends," or other variations thereof, including their use in the negative, or
by discussions of strategies, plans or intentions. Although we believe that our
plans, intentions and expectations reflected in, or suggested by, such
forward-looking statements are reasonable, you should be aware that actual
results could differ materially from those projected by the forward-looking
statements. Because actual results may differ, readers are cautioned not to
place undue reliance on forward-looking statements. We assume no obligation to
update such forward-looking statements or to update the reasons that actual
results could differ materially from those anticipated in such forward-looking
statements.

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

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

o DESPITE OUR SUBSTANTIAL LEVERAGE, WE ARE ABLE TO INCUR MORE DEBT, WHICH
MAY INTENSIFY THE RISKS ASSOCIATED WITH OUR SUBSTANTIAL LEVERAGE.

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

o IF CHEESE & PROTEIN INTERNATIONAL, LLC DEFAULTS ON ITS LEASE, THE
COMPANY MAY BE REQUIRED TO ASSUME CPI'S OBLIGATION UNDER THE LEASE.

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

o COMPETITION IN THE INDUSTRY MAY REDUCE OUR SALES AND MARGINS.

o AN OVERSUPPLY OF FOOD PROTEIN IN THE U.S. MARKET COULD CONTINUE TO
REDUCE OUR NET SALES AND CASH FLOWS.

o CHANGES IN THE MARKET PRICES OF THE DAIRY AND AGRICULTURAL COMMODITIES
THAT WE USE AS INPUTS AS WELL AS THE PRODUCTS WE MARKET MAY CAUSE OUR
OPERATING PROFIT AND THE LIKELIHOOD OF RECEIVING DIVIDENDS FROM OUR
JOINT VENTURES TO DECREASE.

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

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

o A CONTINUATION OF THE DEPRESSED OPERATING RESULTS OF CF INDUSTRIES COULD
LEAD TO AN IMPAIRMENT OF OUR INVESTMENT IN CF INDUSTRIES.

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

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

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

For a discussion of additional factors that could cause actual results to
differ materially from the anticipated results or other expectations expressed
in our forward-looking statements, see the discussion of risk factors set forth
in our Annual Report on Form 10-K for the year ended December 31, 2002.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For the six months ended June 30, 2003 the Company did not experience
significant changes in market risk exposures that materially affect the
quantitative and qualitative disclosures presented in the Company's Annual
Report on Form 10-K for the year ended December 31, 2002.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

As of the end of the period covered by this report, the Company conducted an
evaluation, under the supervision and with the participation of the principal
executive officer and principal financial officer, of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation,
the principal executive officer and principal financial officer concluded that
the Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms. There was no change in the Company's internal control over financial
reporting during the Company's most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

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(b) Changes in internal controls.

There were no significant changes made in our internal controls during the
period covered by this report or in other factors that could significantly
affect these controls subsequent to the date of their evaluation and there were
no corrective actions with regard to significant deficiencies or material
weaknesses.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are currently and from time to time involved in litigation incidental to
the conduct of our business. The damages claimed against us in some of these
cases are substantial. In July 2003, an Ohio alpaca producer filed a lawsuit
against the Company in which it is alleged that the Company manufactured and
sold animal feed that caused the death of, or damage to, certain of its alpacas.
It is possible that additional lawsuits or claims relating to this matter could
be brought against the Company. Although the amount of liability that may result
from these matters cannot be ascertained, we do not currently believe that, in
the aggregate, they will result in liabilities material to our consolidated
financial condition, future results of operations or cash flow.

In December 2002, we reached settlements with additional defendants against
whom we claimed had illegally fixed the prices for various vitamin and
methionine products we purchased. As a result of the settlements, we received
net proceeds of approximately $97 million in January 2003. Additional proceeds
received in the six months ended June 30, 2003 total $19.2 million. When
combined with the settlement proceeds received from similar claims settled since
the commencement of these actions, we have received cumulatively approximately
$180 million from the settling defendants. These claims that have been settled
represent the vast majority of our vitamin and methionine purchases. We continue
to pursue similar claims against several other defendants. With respect to the
remaining claims, we anticipate a Minnesota trial in 2004.

In a letter dated January 18, 2001, we were identified by the United States
Environmental Protection Agency ("EPA") as a potentially responsible party for
the hazardous waste located at the Hudson Refinery Superfund Site in Cushing,
Oklahoma. The letter invited us to enter into negotiations with the EPA for the
performance of a remedial investigation and feasibility study in connection with
the site and also demanded that we reimburse the EPA approximately $8.9 million
for remediation expenses already incurred at the site. We have responded to the
EPA denying any responsibility. No further communication has been received from
the EPA.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

EXHIBIT DESCRIPTION
------- -----------

3.1 Restated Articles of Incorporation of Land O'Lakes, Inc., as
amended, August 1998.(1)

3.2 By-Laws of Land O'Lakes Inc., as amended, February 2003(2)

4.1 Credit Agreement among Land O'Lakes, Inc., the Lenders party
thereto and The Chase Manhattan Bank, dated as of October
11, 2001.(1)

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

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

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

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

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

55

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

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

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

31.1 Certification Pursuant to 15 U.S,C. Section 7241, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2 Certification Pursuant to 15 U.S,C. Section 7241, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

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

(2) Incorporated by reference to the identical exhibit to the Company's Form
10-Q for the quarterly period ended March 31, 2003, filed on April 14,
2003.

* Filed electronically herewith

(b) REPORTS ON FORM 8-K

On April 24, 2003 the Company furnished a Report on Form 8-K to report
the filing of a press release containing the Company's first quarter
earnings information.

On July 24, 2003 the Company furnished a Report on Form 8-K to report
the filing of a press release containing the Company's second quarter
earnings information.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on the 14th day of August, 2003.

LAND O'LAKES, INC.

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

57