13. Acquisitions, Mergers and Divestitures

Proceeds from divestitures in 2002 totaled $22.4 million. The Company divested its operations in Poland for $4.2 million in cash and $6.3 million in debt assumed, which resulted in a gain of $1.3 million. Net cash proceeds were $11.0 million from a divestiture of a seed coating business in Idaho and a seed inoculation business in Brazil, which resulted in a gain of $4.0 million. Other divestitures in 2002 resulted in net cash proceeds of $0.9 million and a loss of $0.3 million.

On October 11, 2001, the Company acquired 100% of the outstanding stock of Purina Mills, Inc. (Purina Mills). The Company contributed the stock to Land O'Lakes Farmland Feed LLC in exchange for increasing its ownership in the LLC from 73.7% to 92.0%. The results of operations of Purina Mills are included in the consolidated financial statements since that date. Purina Mills is a commercial and lifestyle feed company. This acquisition allowed the Company to diversify into lifestyle feed products.

The aggregate purchase price was approximately $359 million, net of cash acquired, of which $247 million represented cash payments for stock and acquisition costs and $112 million represented debt retirement. In connection with the acquisition, the Company refinanced certain existing bank financing arrangements and entered into new bank financing arrangements (see Note 8).

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition. At December 31, 2001 the Company was in the process of obtaining final third party valuations of certain assets; thus the allocation of the purchase price was subject to refinement. During 2002, the allocation of the purchase price was completed. As a result of final appraisals and resolutions of other contingencies outstanding at the date of the acquisition, goodwill was increased by $50.7 million with the most significant offset to property, plant and equipment.

At October 11, 2001
Current assets	$	92,486
Investments		10,430
Property, plant and equipment		218,913
Goodwill		86,872
Other intangibles		98,940
Other assets		32,892
Total assets acquired		540,533
Current liabilities		64,338
Other liabilities		117,638
Total liabilities assumed		181,976
Net assets acquired	$	358,557

Goodwill of $86.9 million was recognized and assigned to the Feed segment. None of the goodwill is expected to be deductible for tax purposes. Of the $98.9 million of acquired identifiable intangible assets, $77.0 million is not subject to amortization, and relates primarily to trade names and trademarks. The remaining intangible assets of $21.9 million have a weighted average useful life of approximately 12 years and consist of patents in the amount of $16.4 million with a 14 year weighted average useful life and contracts of $5.5 million with a 3 year weighted average useful life.

The following table summarizes the unaudited pro forma results of operations for the years ended December 31, 2001 and 2000 for the Company as if the Purina Mills acquisition had occurred on January 1, 2001 and 2000, respectively. The unaudited pro forma results of operations are for informational purposes only and do not purport to represent what the Company's results of operations would have been if the acquisition had actually occurred on those dates.

	Pro Forma Year Ended December 31
	2001		2000
Net sales	$	6,530,168	$	6,512,579
Net earnings	71,152		90,735

During 2000, Land O'Lakes completed acquisitions that required cash outlays of $101.1 million. The Company received $184.1 million of net cash proceeds from divestitures.

In January 2000, Land O'Lakes expanded its butter production capacity with the acquisition of Madison Dairy Produce Co. in Madison, Wisconsin. The Company broadened its seed operations during the year by acquiring the seed assets of several companies, including WilFarm LLC, Agro Distribution, Advanta Seeds, Inc. and AgriBioTech Inc. Other acquisitions in 2000 included the purchase of a cheese plant in Gustine, California and a feed mill in Neosho, Missouri.

In April 2000, the Company divested of a swine business in North Carolina for net cash proceeds of $4.4 million which resulted in a gain of $0.5 million. In July 2000, the Company sold its fluid dairy assets to Dean Foods Company for net proceeds of $179.7 million which resulted in a gain of $88.5 million.

In October 2000, the Company and Farmland entered into a new venture that combined both of their feed businesses into a single entity—Land O'Lakes Farmland Feed LLC. Land O'Lakes owned 69% of the venture at the date of combination and, as majority-owner, fully consolidates its operating activities.

All of the above acquisitions have been accounted for as purchases and accordingly the acquired assets and liabilities have been recorded at their estimated fair value at the date of acquisition. The operating results are included in the Consolidated Statements of Operations from the date of acquisition.