DOANE PET CARE CO, 10-K405/A, 1999-05-06

DOANE PET CARE CO
10-K405/A, 1999-05-06
GRAIN MILL PRODUCTS

Previous: FIRST TRUST SPECIAL SITUATIONS TRUST SERIES 133, 497J, 1999-05-06

Next: ICC CAPITAL MANAGEMENT INC/, 13F-HR, 1999-05-06

<PAGE> 1

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

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-K/A

(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

[ ] 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 0-27818
---------------------
DOANE PET CARE COMPANY
(FORMERLY DOANE PRODUCTS COMPANY)
(Exact Name of Registrant as Specified in Its Charter)

<TABLE>
<S> <C>
DELAWARE 43-1350515
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
</TABLE>

HIGHWOODS PLAZA II
103 POWELL COURT, SUITE 200
BRENTWOOD, TN 37027
(Address of Principal Executive Office, Including Zip Code)

(615) 373-7774
(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. [X] Yes [ ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of February 28, 1999, registrant had outstanding 1,000 shares of common
stock.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

TABLE OF CONTENTS

PART I

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 10
Item 3. Legal Proceedings........................................... 10
Item 4. Submissions of Matters to a Vote of Security-Holders........ 10

PART II

Item 5. Market for Registrant's Common Stock and Related Stockholder 10
Matters.....................................................
Item 6. Selected Financial Data..................................... 11
Item 7. Management's Discussion and Analysis of Financial Condition 13
and Results of Operations...................................
Item 7A. Quantitative and Qualitative Disclosures about Market 20
Risk........................................................
Item 8. Financial Statements and Supplementary Data................. 21
Item 9. Changes in and Disagreements with Accountants on Accounting 21
and Financial Disclosure....................................

PART III

Item 10. Directors and Executive Officers of the Company............. 22
Item 11. Executive Compensation...................................... 24
Item 12. Security Ownership of Certain Beneficial Owners and 28
Management..................................................
Item 13. Certain Relationships and Related Transactions.............. 31

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 33
8-K.........................................................
Signatures............................................................ 36
Financial Information.........................................Appendix F-1
</TABLE>
<PAGE> 3

ITEM 1 -- BUSINESS

THE COMPANY

Doane Pet Care Enterprises, Inc., our parent corporation, was formed in
1995 by a group of investors led by Summit Capital, Inc. ("SCI"), DLJ Merchant
Banking Partners, L.P. ("DLJMB"), Chase Manhattan Investment Holdings, Inc.
("CMIHI") and certain members of existing management to acquire Doane Pet Care
Company ("Doane"), formerly known as Doane Products Company, for an aggregate
purchase price of $249.1 million, including existing indebtedness. Doane had
previously been a manufacturer of dry pet food for 37 years. Our parent's
principal asset and activities are its ownership of our common stock. Our parent
corporation has no other operations.

In April 1998, we acquired IPES IBERICA, S.A. ("IPES") for $26.2 million,
net of cash purchased of $1.9 million, and the assumption of indebtedness of
$1.9 million. In August 1998, Doane Pet Care Enterprises, Inc. acquired Windy
Hill Pet Food Holdings, Inc. and its subsidiaries ("Windy Hill") for
approximately 6.4 million shares of its common stock and the assumption of
$183.5 million of indebtedness. Windy Hill was a manufacturer of pet food
products based in Tennessee. In November 1998, Windy Hill was merged into Doane.

Windy Hill was formed in February 1995 by a group of investors led by
Dartford Partnership, L.L.C. to acquire substantially all of the assets and
liabilities of the pet food division of Martha White Foods, Inc. for $21.0
million. In April 1996, Windy Hill acquired the assets and liabilities
associated with certain pet food product lines of Heinz Inc. for a purchase
price of $52.5 million. In May 1997, Windy Hill acquired Hubbard Milling Company
for a net purchase price of $131.1 million. Subsequent to that acquisition,
Windy Hill sold the animal feed division of Hubbard for a sales price of
approximately $50.0 million, net of taxes. In February 1998, Windy Hill acquired
all of the assets of the AGP pet food division of Consolidated Nutrition, L.C.
for a purchase price of approximately $12.4 million. In April 1998, Windy Hill
acquired certain pet food assets and certain liabilities associated with the
NuPet Division of Nulaid Foods, Inc. for a purchase price of approximately $3.1
million. In June 1998, Windy Hill acquired Deep Run Packing Company, Inc. for a
net purchase price of approximately $16.4 million.

GENERAL

We are the largest manufacturer of dry pet food in the United States by
volume, producing approximately 26% of the total volumes sold in 1998 on a pro
forma basis. Pro forma is defined as if we acquired Windy Hill and its
respective acquisitions and IPES on January 1, 1998. We manufacture products for
store brands owned by retail customers, also known as private labels, contract
manufacture products for national branded pet food companies and produce and
sell products under regional brands owned by us.

We manufacture for our customers a full range of pet food products for both
dogs and cats, including dry, canned, semi-moist, soft dry, soft treats and dog
biscuits. We provide products that meet customer specifications across all
retail channels and price points, from super premium to value products.
Accordingly, we manufacture store brands for over 350 customers in the United
States, including the three largest mass merchandisers, the five largest grocery
companies and the largest national pet specialty retailer. We also manufacture
dry pet food and treats for five of the six largest national branded pet food
companies through co-manufacturing arrangements pursuant to which we produce,
package and ship a portion of those companies' products.

We have the most extensive manufacturing and distribution network in the
industry, providing us with certain operational, cost and competitive
advantages. We manufacture and distribute our products in the United States
through 32 combination manufacturing and distribution facilities and eight
additional distribution centers. We expect to open one additional manufacturing
and distribution facility in Clinton, Oklahoma in the second quarter of fiscal
1999. The number and strategic location of our facilities reduce distribution
expenses, which represent a meaningful portion of the delivered cost of pet food
due to its bulk and weight relative to its selling price. Our extensive network
can further reduce expenses by enabling certain of our customers to bypass their
distribution centers and deliver directly to their stores. Direct store delivery
service currently accounts for approximately 45% of our sales by volume.
1
<PAGE> 4

We have achieved strong internal growth. From 1992 to 1998, we increased
sales volumes at a compound annual growth rate of 9.3%, exclusive of
acquisitions. We believe our growth is primarily due to an increase in consumer
acceptance of dry products versus canned products and store brands versus
national brands. In addition, we have been the primary supplier of store brand
pet food to WalMart Stores Inc., including its Sam's Club division ("Wal*Mart"),
since 1970. We manufacture and distribute, under a direct store delivery
program, a variety of products for Wal*Mart including its store brand, Ol' Roy,
which is the largest selling brand of dry pet food in the United States by
volume. In 1998, sales of store brand products to Wal*Mart accounted for 36.5%
of our sales on a pro forma basis. Pro forma is defined as if Windy Hill and its
respective acquisitions and IPES were acquired on January 1, 1998.

THE PET FOOD INDUSTRY

The U.S. pet food industry is a $10.0 billion industry that has grown at a
compound annual rate of 4.2% from 1994 to 1998 in terms of sales. Growth in the
dry pet food and the biscuit and treats segments of the industry has exceeded
the growth of the overall pet food industry by capturing market share from other
segments, including canned pet food. Dry pet food sales have grown at a compound
annual rate of 6.4% since 1994 and accounted for approximately $5.7 billion of
sales in the industry in 1998. Sales of biscuits and treats have grown at a
compound rate of 4.5% per year since 1994 and accounted for approximately $1.3
billion of sales in 1998.

Improved product quality, consumer value and increased retailer support
have generally enabled store brands to outgrow the category in many traditional
branded categories, including pet food. Since 1994, the volume of sales of store
brand dry pet food has grown at a compound annual rate of 9.0% per year versus
the category, which has grown at 5.2% per year. The volume of sales of store
brand canned pet food over the same period has grown at a compound rate of 15.3%
per year versus the category, which has declined by 0.9%. Store brand dog
biscuits and treats have grown at a compound rate of 13.5% since 1994 with the
category growing at 4.5% per year. Sales of store brand pet food accounted for
in excess of 25% of the total pet food market in 1998 and have grown at a
compound annual growth rate in excess of 7% over the past five years. Store
brands have increased market share in each of the segments of the pet food
industry over the past five years. In 1998, store brands represented
approximately 38%, 31%, 24%, 18% and 16% of total sales volume of biscuits and
treats, dry dog, dry cat, canned dog and canned cat food, respectively. Store
brands today encompass a full range of pet food products at all price points
including economy, premium and super premium.

RECENT DEVELOPMENTS

Refinancing Transactions. In November 1998, we refinanced our capital
structure through the following series of transactions:

-- Windy Hill was merged into Doane;

-- Doane completed a cash tender offer for approximately $97 million
principal amount of our 10 5/8% Senior Notes due 2006;

-- Windy Hill completed a cash tender offer for $46 million principal
amount of its 9 3/4% Senior Subordinated Notes due 2007, which tender
offer was required by a change of control provision in the indenture
governing those notes;

-- Doane completed an exchange offer of $150 million principal amount of
our 9 3/4% Senior Subordinated Notes due 2007 for the remaining
approximately $63 million principal amount of our 10 5/8% Senior Notes
due 2006 and the remaining approximately $74 million principal amount of
Windy Hill's 9 3/4% Senior Subordinated Notes due 2007; and

-- Doane entered into a new senior credit facility with a syndicate of
financial institutions providing for total commitments of $345 million.
Doane borrowed $292 million under the senior credit facility to fund the
cash requirements of the refinancing transactions, repay borrowings
under and retire our previous credit facilities, repay other debt and
repay bridge financing incurred in connection with the tender offer for
Windy Hill's 9 3/4% Senior Subordinated Notes due 2007.
2
<PAGE> 5

Windy Hill Acquisition. In August 1998, Doane Pet Care Enterprises, Inc.
acquired Windy Hill for approximately 6.4 million shares of its common stock and
the assumption of $183.5 million of indebtedness. Windy Hill was a leading
manufacturer of pet food products for both dogs and cats, including dry, canned,
semi-moist, soft dry, soft treats and dog biscuits. With Windy Hill, we became
the largest manufacturer of dog biscuits in the United States. In 1997, Windy
Hill generated pro forma net sales of $304.0 million, EBITDA of $26.7 million
and a net loss before extraordinary item of $1.6 million. Pro forma is defined
as if Windy Hill had acquired its respective acquisitions on January 1, 1997.

The acquisition of Windy Hill strengthens our presence in the dry pet food
and dog biscuit market segments, provides revenue synergies and enhances our
position as a low-cost manufacturer and distributer of pet food products. We
believe the acquisition of Windy Hill provides the opportunity for revenue
growth by (1) enabling us to offer regional brands, semi-moist, soft dry and
canned pet food products to our traditional customer base and (2) enabling us to
offer soft treats and other specialized dry food products to Windy Hill's
traditional customer base. With the addition of Windy Hill's 19 plants, we
believe cost savings can be achieved through optimizing production schedules and
lowering distribution costs by reducing the distance products are shipped. The
acquisition of Windy Hill also provides us with the opportunity to achieve cost
savings by obtaining purchasing synergies and eliminating redundant overhead
functions.

IPES Acquisition. In April 1998, we acquired IPES for $26.2 million, net of
cash purchased of $1.9 million, and the assumption of indebtedness of $1.9
million. IPES, located in Spain, is a manufacturer of both store and regional
brands. In fiscal 1997, IPES had net sales of $21.1 million, EBITDA of $3.8
million and net income of $1.0 million. We believe that the acquisition of IPES,
together with our investment in the Italian manufacturer, Effeffe, S.p.a.,
provides us with a platform for growth in Europe.

STRATEGY

Our business objective is to increase revenues and earnings and to enhance
our leadership position within the pet food industry. The key elements of the
strategy to achieve our business objective are as follows:

Continue to be the Low Cost Quality Provider in the Pet Food Industry. We
believe we are the low cost provider of quality dry pet food. We believe our
position as the largest manufacturer of dry pet food provides us with certain
economies of scale, including production efficiencies and packaging purchasing
leverage. In addition, the number and strategic location of our facilities
enhances our position as the low cost provider by reducing transportation costs
for raw materials and finished goods. We also maintain in-house engineering,
machining and fabrication capabilities that enable us to design, construct and
maintain facilities on a cost-effective basis.

Leverage Distribution System. Our manufacturing and distribution network
enables us to service customers on a national basis and facilitates our direct
store delivery program, the scope of which we believe is unique in the industry.
In addition, we have developed capabilities that allow us to provide vendor
managed inventory services to certain key customers. Vendor managed inventory
allows us to communicate on-line with our customers, evaluate their inventory
status and place orders on their behalf. We intend to leverage our manufacturing
and distribution network by expanding sales of our full range of pet food
products to our existing customers. For example, we recently completed the
construction of a soft treat manufacturing facility, which will enable us to
offer soft treats to our traditional customer base, and we intend to expand
sales of certain products acquired in the acquisition of Windy Hill, including
semi-moist, soft dry, canned and regional brands to our existing customers.

Provide a Full Range of Pet Food Products. We offer customers a full range
of pet food products for both dogs and cats, including dry, canned, semi-moist,
soft dry, soft treats and dog biscuits. By offering a full range of products
under a variety of price points and brand formats, including store brands,
co-manufactured national brands and regional brands, we can be a significant
source for our customers' total pet food requirements. This enables customers to
realize administrative and distribution savings by aggregating a variety of
products and brands into a single shipment.

3
<PAGE> 6

Focus on Diversified Brand Formats. We believe that store, co-manufactured
national and regional brand formats offer significant growth opportunities.
Sales of store brands have exceeded the overall growth in the pet food industry.
We believe this growth will continue due to:

- an increased awareness of retailers concerning the advantages of store
brands, including enhanced margins and customer loyalty,

- improved quality, innovation and variety of store brand products and

- increasingly informed and value-conscious consumers.

We believe co-manufactured national brands offer growth opportunities as
national branded pet food companies increasingly take advantage of our low-cost
status, quality products and logistic and specialty product capabilities. We
believe that the regional brands acquired with the acquisition of Windy Hill
complement our existing product lines, and we intend to capitalize on demand for
such brands within our existing customer base.

Acquire Additional Pet Food Companies. To supplement our internal growth,
we have acquired eight pet food companies over the last four years. We believe
that substantial opportunities exist in the United States and abroad to acquire
additional pet food companies. We will continue to seek accretive acquisitions
that offer complementary product lines, geographic scope, additional
distribution channels and cost saving opportunities.

Expand International Presence. We believe substantial opportunities exist
to increase sales in international markets. We believe that the approximately
$9.3 billion European pet food market is particularly attractive due to the
strength and demand for store brand products and the strong growth of dry pet
food products. We are currently expanding our manufacturing and distribution
capabilities in Spain and Italy and intend to pursue acquisitions of additional
pet food companies and expand our product offerings. In addition, we believe
that an opportunity exists to expand export sales to the Pacific Rim and South
America.

PRODUCTS AND SERVICES

We provide our customers with comprehensive pet food category management
services designed to expand each customer's pet food product lines and to
improve the category's profitability. Category management services include:

- product development and testing,

- packaging design services and

- assistance in formulating pricing and marketing strategies in connection
with their store brand programs.

We sell our products as store brands owned by customers, also known as
private labels, and regional brands owned by us, and we also contract
manufacture products for national pet food companies. Our store brand program
involves the formulation and supply of a wide variety of high quality pet food
products, including dry, canned, semi-moist, soft dry and soft treats, as well
as dog biscuits, that are comparable in quality to, but lower in cost than,
competing branded pet food products. For national brand customers, we
manufacture dry pet food, treats and biscuits to our customers' specifications
and standards. The regional brands are used for economy priced products that are
generally marketed as a complement to customers' store brand programs.
Accordingly, we are able to provide customers with a single source for store
brands, certain co-manufactured national brands and regional brands. We are able
to ship all such product offerings together, giving customers the ability to
address a substantial portion of their pet food requirements from one source.

We manufacture dry pet food under approximately 350 store brands, including
Kirkland Signature, Retriever, Dura Life, Great Choice, Hy Vee, Ol' Roy, Exceed,
Maxximum Nutrition, Remarkable, Pathmark, Pet Club, PMI-Nutrition, Special Kitty
and Sportsman's Choice. We also co-manufacture branded pet food products for
national pet food companies in accordance with such companies' specifications
and standards. Our regional brands include Kozy Kitten(R), G. Whiskers(R), Trail
Blazer(R), and Tuffy's(R), which are sold to allow

4
<PAGE> 7

our customers to broaden their product offerings and to provide them with a
single source for their pet food requirements. We also have Bonkers(R) and Pet
Lovers(TM) branded treats available for our retailers.

In addition to our pet food products, we sell products manufactured by
third parties and maintain an engineering group. A description of each of our
product lines is set forth below:

Dry Pet Food Products. We are the largest manufacturer of dry pet food
products in the United States. We produce, market and distribute a wide
selection of high quality dry pet food products predominantly for dogs and cats.
The dog food product line includes high protein, chunk style, premium blended,
puppy food and gravy style products.

Biscuits and Treats. We are the largest manufacturer of dog biscuits in the
United States, and we are also a leading supplier of soft treats. Biscuits
undergo a different manufacturing process from dry pet food that primarily
involves baking rather than the use of extruders.

Semi-Moist, Soft Dry and Canned Pet Food. In connection with the
acquisition of Windy Hill, we have expanded our operations into the semi-moist,
soft dry and canned pet food segments. Semi-moist, soft dry and canned products
are distinguishable from dry pet food based on their higher moisture levels, the
manufacturing technology used to process such products and their higher costs of
packaging.

Non-Manufactured Products. Sales of non-manufactured products include sales
of cat litter, canned pet products and pet treats produced by third parties. We
receive these items at our manufacturing facilities and warehouses and aggregate
them with our products into truckload quantities for combined shipment to
certain customers. We provide this service as a part of our direct shipment
program and receive a handling fee for this service.

Engineering Services Group. Our engineering services group designs and
builds extruders, conveyors, dryers and other parts and equipment, including
replacement parts, for our pet food manufacturing facilities and for third
parties. The engineering services group also includes a repair staff that is
available to service and repair machinery and equipment at our production
facilities, giving us the ability to make timely repairs, thereby minimizing
downtime. Our in-house engineers generally design and supervise plant
construction, thereby reducing plant construction costs and ensuring consistent
manufacturing processes and quality control. We believe that our engineering
services group provides us services at a lower cost and more efficiently than
could be obtained from third parties.

SEASONALITY OF PET FOOD

Our sales are somewhat seasonal. We typically experience an increase in net
sales during the first and fourth quarters of each year, as is typical in the
pet food industry. The seasonality of the pet food business is generally
attributable to cooler weather, which results in increased dog food consumption.

SALES AND DISTRIBUTION

Our direct sales force seeks new accounts and works directly with mass
merchandisers, membership clubs, feed stores and specialty pet stores. We also
use independent food brokers. We generate new business through the expansion of
our product line and the development of new marketing programs to existing
customers.

Most of our products are distributed utilizing our customers'
transportation networks. Several of our largest customers utilize us as a
"just-in-time" supplier and maintain trailers at our manufacturing and
distribution facilities. The trailers are loaded and shipped either directly to
individual stores or to customers' distribution centers. Those customers that
ship product directly from our manufacturing facilities to their retail outlets
are able to reduce their inventory, freight and handling costs by avoiding
shipment to a customer distribution center. Those customers that use their own
transportation fleet are able to utilize their trucks that would otherwise be
empty to backhaul a load of pet food on return to their distribution center or
directly to another store. Our ability to ship directly to certain of our
customers is a key consideration in locating our manufacturing facilities and is
a significant competitive advantage.

5
<PAGE> 8

Our customers not utilizing their own fleet either arrange their own
transportation or have us arrange transportation on a contract basis through
common carriers. We do not own or operate any transportation equipment.

We have developed capabilities that allow us to provide vendor managed
inventory service to certain key customers. Vendor managed inventory allows us
to communicate on-line with our customers, evaluate their inventory status then
place the order for the customer. We utilize vendor managed inventory for both
direct store and warehouse deliveries. Vendor managed inventory benefits include
shorter lead-time, higher inventory turns and reduced out-of-stock positions.

CUSTOMERS

We manufacture store brands for over 350 customers. Store brand customers
include mass merchandisers such as Wal*Mart and Costco, specialty pet stores
such as PetsMart and grocery chains such as Safeway, Food Lion, Kroger, Publix,
Albertson's, Royal Ahold and Lucky's. In addition, we manufacture products for
farm and feed stores including Tractor Supply and Purina Mills and national
branded pet food companies such as Iams, Heinz, Kal-Kan, Hill's Pet Nutrition
and Nestle.

For the year ended December 31, 1998 on a pro forma basis, sales of store
brand products to Wal*Mart accounted for an aggregate of 36.5% of our net sales.
We have been the primary supplier of private label dry pet food products to
Wal*Mart since 1970 and to its Sam's Club division since 1990. We utilize a
computerized order and distribution system to ship product directly to virtually
all domestic Wal*Mart stores, a majority of which are located within 250 miles
of our facilities. The direct ship program, which reduces customer inventory,
handling and warehouse expenses, is enhanced by the number and strategic
locations of our facilities. We also offer direct shipment programs and
electronic data interchange systems to other customers who see these services as
a benefit.

COMPETITION

The pet food business is highly competitive. The companies that produce and
market the major national branded pet foods are national or international
conglomerates that are substantially larger than us and possess significantly
greater financial and marketing resources than us. The store brand pet food
products sold by our customers compete for access to shelf space with national
branded products on the basis of quality and price. National branded products
compete principally through advertising to create brand awareness and loyalty.
We experience price competition from national branded manufacturers. To the
extent that there is significant price competition from the national branded
manufacturers or such manufacturers significantly increase their presence in the
store brand segment, our operating results and cash flow could be adversely
affected. We also compete with regional branded manufacturers and other store
brand manufacturers.

We believe that we differentiate our company from the national branded dry
pet food manufacturers by offering comparable products at lower prices giving
retailers the opportunity for greater pet food category profitability. We
believe that we differentiate our company from other store brand dry pet food
manufacturers by offering higher quality products, national production and
distribution capabilities and a reputation for increasing customers' store brand
dry pet food sales.

RAW MATERIALS AND PACKAGING

The principal raw materials required for our manufacturing operations are
bulk commodity grains and foodstocks, including corn, soybean meal, wheat
middlings, meat and bone meal, and corn gluten meal. We generally purchase raw
materials one to three months in advance. We purchase the raw material
requirements of each of our manufacturing facilities locally due to the high
freight cost of transporting bulk commodity products. As a result, raw material
costs may vary substantially among manufacturing facilities due to local supply
and demand and varying freight costs. Raw materials are generally purchased from
large national commodity companies and local grain cooperatives. We do not
maintain long-term contracts with any of our suppliers; however, we believe that
alternative sources of supply are readily available.

6
<PAGE> 9

We manage the price risk created by market fluctuations by hedging portions
of our primary commodity products purchases, principally through exchange traded
futures and options contracts that are designated as hedges. The terms of such
contracts are generally less than one year. Settlement of positions are either
through financial settlement with the exchanges or via exchange for the physical
commodity, in which case we deliver the contract against the acquisition of the
physical commodity. Our hedging policy does not permit speculative commodity
trading. See Item 7 -- "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Overview."

Packaging is a material component of our raw material costs. We have five
main suppliers of packaging and believe that additional suppliers of packaging
are available. A majority of our requirements are not covered by long term
contracts with any of our packaging suppliers.

We generally price our pet food products based on the cost of raw
materials, packaging and certain other costs plus a conversion charge, which
includes a profit factor. We periodically adjust prices based on fluctuations in
raw material and packaging costs. There can be no assurance that future price
increases will be obtained in the event of increased raw material costs. See
Item 7 -- "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Overview" and "-- Inflation and Changes in Prices."

RESEARCH AND DEVELOPMENT

Our research and development department consists of a staff of chemists and
nutritionists, a central laboratory used for research and development and
laboratories at each of our production facilities used for quality control. We
are continually developing new products. The research and development department
formulates the mix of raw materials and vitamins and minerals and tests the
nutritional content of new products. Independent commercial kennels and
catteries are used for comparison taste tests to nationally branded products to
assure digestibility and palatability as well as to substantiate the nutritional
content of new products.

Quality control is an integral part of our research and development. We
maintain a program of testing raw materials to ensure nutritional adequacy and
to test for the presence of bacteria and other harmful substances. We
continuously test pet food production at each of our plants by analyzing the
finished pet food product against formulas and regulatory requirements.
Packaging is inspected to ensure print quality, proper dimensions and compliance
with labeling regulations.

ENVIRONMENTAL, REGULATORY AND SAFETY MATTERS; PRODUCT RECALL

We are subject to a broad range of federal, state, local and foreign
environmental laws and regulations, including those governing discharges to the
air and water, the storage of petroleum substances and chemicals, the handling
and disposal of solid or hazardous wastes, and the remediation of contamination
arising from spills and releases. Failure to comply with these laws and
regulations may result in the assessment of administrative, civil and criminal
penalties, permit revocation and modification as well as, in certain instances,
the issuance of injunctions. Aside from costs associated with the product recall
discussed below, we have not been subject to any material environmental
liabilities and compliance of our business and operations with environmental
laws and regulations has not had a material adverse effect on our capital
expenditures, earnings, or competitive position. Environmental laws and
regulations have changed substantially in recent years and we believe that the
trend of more expansive and more strict environmental legislation and
regulations will continue. While we believe we are in substantial compliance
with applicable environmental and public health laws, there can be no assurance
that additional costs for compliance will not be incurred in the future or that
such costs will not be material.

Our business involves the use of aboveground and underground storage tanks.
Under applicable laws and regulations, we are responsible for the proper use,
maintenance and abandonment of regulated storage tanks that we own or operate,
and for remediation of subsurface soils and groundwater impacted by releases
from such existing or abandoned aboveground or underground storage tanks.

We are also subject to laws and regulations governing remediation,
recycling, or disposal. The Comprehensive Environmental Response, Compensation
and Liability Act of 1980, also known as the
7
<PAGE> 10

"Superfund" law, and analogous state laws impose liability, without regard to
fault or the legality of the original conduct, on certain classes of persons who
are considered statutorily responsible for the release of a "hazardous
substance" into the environment. These persons include the owner or operator of
a facility where a hazardous substance release occurred and companies that
disposed or arranged for the disposal of hazardous substances. Persons who are
or were responsible for the releases of hazardous substances under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 may
be subject to joint, several and retroactive liability for the costs of
environmental response measures. In early April of 1999, we were notified by the
U.S. Environmental Protection Agency (the "EPA") that we are a potentially
responsible party with respect to the former PCB Treatment, Inc. facilities in
Kansas City, Missouri and Kansas City, Kansas. The EPA has alleged that Hubbard
Milling Company, a former dry dog food manufacturer that we acquired in 1998,
arranged for the disposal of a limited amount of polychlorinated biphenyls at
the sites in 1984. The EPA has conducted a preliminary investigation and a group
of previously-named potentially responsible parties has conducted an engineering
evaluation and cost analysis of environmental conditions on the sites, and such
group is currently evaluating possible methods of addressing the contamination
found within two structures and in the exterior soils on the sites. The EPA has
identified over 1,500 parties that sent materials containing polychlorinated
biphenyls to the sites and has estimated that the total weight of materials sent
to the sites for treatment and disposal was in excess of 25,000,000 pounds. We
believe that, given the number of other parties who sent polychlorinated
biphenyl materials to the sites together with the relatively small amount of
material containing polychlorinated biphenyls alleged to have been arranged for
disposal by Hubbard (allegedly approximately 3,220 pounds), our participation,
if any, in the cleanup of the sites would not have a material adverse effect on
our operations.

We currently own or lease, and in connection with our acquisition program
will in the future own or lease, properties that in some instances have been
used for pet food manufacturing or feed mill operations for many years. Although
we have utilized operating and disposal practices that were standard in the
industry at the time, in some locations environmentally sensitive materials were
spilled or released on or under the properties owned or leased by us or on or
under other locations where such materials were taken for disposal. In addition,
many of these properties have been operated by third parties whose use, handling
and disposal of such environmentally sensitive materials or similar wastes were
not under our control. These properties and the waste materials spilled,
released or otherwise found thereon may be subject to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the federal
Resource Conservation and Recovery Act, and analogous state laws. Under such
laws, we have been required to remove or remediate previously spilled or
released waste materials (including such materials spilled or released by prior
owners or operators), or property contamination (including groundwater
contamination caused by prior owners or operators), or to perform monitoring or
remedial activities to prevent future contamination (including releases from
underground storage tanks or aboveground bulk petroleum storage facilities).
Moreover, some of our manufacturing facilities are located within industrial
areas. It is possible that in the future additional environmental response costs
may be required for existing sites as well as any additional sites that may be
identified. In the past, nearby industries have suffered releases of hazardous
substances to the environment that are the subject of Comprehensive
Environmental Response, Compensation and Liability Act of 1980 investigations.
It is possible that these neighboring environmental activities may have impacted
some of our properties. We have not been advised, nor do we expect to be
advised, by any environmental agency that we are considered a potentially
responsible party for the neighboring environmental conditions, and we have no
reason to believe that such conditions would have a material adverse effect on
our company.

Our operations are subject to the federal Clean Air Act and comparable
state and local requirements. Regulations implementing the Clean Air Act require
the installation of pollution control devices on operating sources with air
emissions exceeding applicable threshold levels. As part of an overall
evaluation of our current operations, we are planning to install an air
scrubbing unit at one of our facilities, and are assessing whether to install
such a unit at another of our facilities. We do not expect the installation of
one or both of these units to have a material adverse impact on our operations.
It is possible that in the future additional air control devices may be
installed at other facilities of ours as necessary to satisfy existing or future
requirements.

The manufacturing and marketing of our products are subject to regulation
by federal regulatory agencies, including the Occupational Safety and Health
Administration, the Food and Drug Administration

8
<PAGE> 11

and the United States Department of Agriculture, and by various state and local
authorities. The Food and Drug Administration also regulates the labeling of our
products. Substantial administrative, civil, and criminal penalties may be
imposed for violations of the Occupational Safety and Health Administration,
Food and Drug Administration, and Department of Agriculture regulations, and
violations may be restrained through injunction proceedings. We procure and
maintain the necessary permits and licenses in order to operate our facilities
and consider our company to be in material compliance with applicable
Occupational Safety and Health Administration, Department of Agriculture, and
Food and Drug Administration requirements.

On October 30, 1998 we initiated a voluntary product recall for certain dry
dog food manufactured at our Temple, Texas plant. The recall covered dry dog
food manufactured at our Temple plant between July 1 and August 31, 1998 and did
not apply to dry dog food manufactured at other plants or to our dry cat food,
biscuits, treats or canned products. The recall resulted from reported sickness
and death of dogs in the State of Texas. These conditions were attributed to
elevated levels of aflatoxins in corn, which is an ingredient in dry dog food.
Aflatoxins are compounds produced from certain kinds of crop molds that can be
caused by extreme weather conditions such as drought and heat. We have an
extensive corn testing program for the detection of aflatoxins and that program
has been intensified since the problems were reported. We maintain insurance
against losses from illness or death of animals; however, the cost of the
product recall was not covered by insurance. We recorded a $3.0 million product
recall charge in the fourth quarter of fiscal 1998.

We believe that our operations are in material compliance with
environmental, safety and other regulatory requirements; however, we cannot
assure you that those requirements will not change in the future or that we will
not incur significant costs in the future (1) to comply with those requirements,
(2) to effect future recalls or (3) in connection with the effect of these
matters on our business.

Our pet food operations outside the United States are potentially subject
to similar foreign governmental controls and restrictions pertaining to the
environment. We believe that compliance with existing requirements of those
governmental bodies has not had a material adverse effect on our operations.

TRADEMARKS

Certain of our brands are protected by trademark registrations in the
United States and in certain foreign markets. We believe that our registered
trademarks are adequate to protect such brand names.

EMPLOYEES

As of January 31, 1999, we had approximately 2,453 employees, of which
approximately 272 were management and administrative personnel and approximately
2,181 were manufacturing personnel. Of this number, 396 employees in five of our
plants are represented by labor unions. The collective bargaining agreement with
respect to the Birmingham, Alabama plant covers 92 employees and expires on
January 20, 2001. The collective bargaining agreement with the Joplin, Missouri
plant covers 191 employees and expires on January 31, 2003. The collective
bargaining agreement with the Muscatine, Iowa plant covers 44 employees and
expires in December 1999. The collective bargaining agreement with respect to
the NuPet plant in Ripon, California covers 25 employees and expires in October
2000, subject to renewal for subsequent one-year terms. The collective
bargaining agreement with respect to the Lincoln, Nebraska plant covers 44
employees and expires in July 1999. We consider our relations with our employees
to be satisfactory.

FORWARD-LOOKING STATEMENTS AND RISK FACTORS

Certain of the statements set forth under Item 1 -- "Business" and Item
7 -- "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and elsewhere in this annual report on Form 10-K are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These statements:

- address activities, events or developments that we expect, believe,
anticipate or estimate will or may occur in the future;

9
<PAGE> 12

- are based on certain assumptions and analyses that we have made and that
we believe are reasonable; and

- are based on various risks and uncertainties, general economic and
business conditions, the business opportunities that may be presented to
and pursued by us from time to time, changes in laws or regulations and
other factors, many of which are beyond our control.

Any one of these factors, or any combination of these factors, could
materially affect our future results of operations and whether the
forward-looking statements ultimately prove to be accurate. These
forward-looking statements are not guarantees of our future performance, and our
actual results and future developments may differ materially from those
projected in the forward-looking statements.

ITEM 2 -- PROPERTIES

Our corporate headquarters are located in Brentwood, Tennessee. We own
combination manufacturing and distribution facilities in the following states:
one each in New York, Virginia, Indiana, Tennessee, South Carolina, Georgia,
Iowa, Oklahoma, Nebraska, Colorado and Texas; two each in Ohio, Wisconsin,
Minnesota, Missouri, Alabama and Kansas; and three each in Pennsylvania and
California. We also have a 50% joint interest in facilities located in Butler,
Missouri; Caldwell, Idaho; Hereford, Texas; and Italy. We are in the process of
building a state of the art facility in Clinton, Oklahoma. We also own a
facility in Spain. In addition, we own or lease eight warehouses.

Our manufacturing facilities are generally located in rural areas in
proximity to customers, raw materials and transportation networks, including
rail transportation. We believe the number and strategic locations of our
manufacturing facilities enhance our position as the low cost producer by
reducing freight costs for raw material and finished goods and facilitating
direct store delivery programs. The rural locations also minimize land and labor
costs. We believe we are able to construct new manufacturing facilities at a
lower cost than competitors due to our engineering services group that designs
and constructs most of the necessary production equipment.

ITEM 3 -- LEGAL PROCEEDINGS

We are not a party to any material pending legal proceedings, other than
ordinary routine litigation incidental to our business that we believe would not
have a material adverse effect on our financial condition or results of
operations.

ITEM 4 -- SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5 -- MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Doane's common stock is not registered under the Securities Act of 1933
and, therefore, is not traded on a securities exchange. All of the common stock
of Doane is owned by our parent, Doane Pet Care Enterprises, Inc. We did not
sell any unregistered equity securities in 1998.

10
<PAGE> 13

ITEM 6 -- SELECTED FINANCIAL DATA

The selected consolidated financial data presented below, except for pet
food sold, as of and for the years ended December 31, 1996, 1997 and 1998 are
derived from Doane's audited consolidated financial statements included
elsewhere in this annual report on Form 10-K. The selected consolidated
financial data presented below as of and for the year ended December 31, 1994,
the nine months ended September 30, 1995 and the three months ended December 31,
1995 are derived from Doane's consolidated financial statements not included in
this annual report on Form 10-K. The information set forth below is qualified in
its entirety and should be read in conjunction with Item 7 -- "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Doane's consolidated financial statements and notes thereto, included elsewhere
in this annual report on Form 10-K.

<TABLE>
<CAPTION>
PREDECESSOR(1) DOANE
---------------------------- ---------------------------------------------
THREE
NINE MONTHS MONTHS YEAR ENDED
YEAR ENDED ENDED ENDED DECEMBER 31,
DECEMBER 31, SEPTEMBER 30, DECEMBER 31, ------------------------------
1994 1995 1995 1996 1997 1998(2)
------------ ------------- ------------ -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................ $377,018 $303,633 $ 114,958 $513,217 $564,741 $686,663
Cost of goods sold....................... 308,622 247,394 97,184 446,776 482,896 554,447
-------- -------- --------- -------- -------- --------
Gross profit............................. 68,396 56,239 17,774 66,441 81,845 132,216
Operating expenses:
Promotion and distribution............. 23,007 17,675 6,484 26,480 31,876 45,039
Selling, general and administrative.... 11,550 8,558 2,660 11,512 14,384 26,266
Amortization of intangibles............ -- -- 1,017 3,538 3,601 6,468
Unusual items(3)....................... -- 9,440 -- -- -- --
Transition expenses(4)................. -- -- -- -- -- 7,043
Product recall(5)...................... -- -- -- -- -- 3,000
-------- -------- --------- -------- -------- --------
Income from operations............... 33,839 20,566 7,613 24,911 31,984 44,400
Interest expense, net.................... 2,494 3,611 5,806 22,471 22,463 31,136
Non-recurring finance charge(6).......... -- -- -- 4,815 -- 4,599
Other (income) expense, net.............. (11) (8) 29 (2) (102) 164
-------- -------- --------- -------- -------- --------
Income before taxes.................. 31,356 16,963 1,778 (2,373) 9,623 8,501
Income tax expense (benefit)............. 356 217 754 (855) 3,389 3,602
-------- -------- --------- -------- -------- --------
Income (loss) before extraordinary
item(7)................................ 31,000 16,746 1,024 (1,518) 6,234 4,899
Extraordinary item, net of tax(8)........ -- -- -- -- -- 26,788
-------- -------- --------- -------- -------- --------
Net income (loss).................. $ 31,000 $ 16,746 $ 1,024 $ (1,518) $ 6,234 $(21,889)
======== ======== ========= ======== ======== ========
OTHER DATA:
Cash flows provided by operating
activities............................. $ 39,250 $ 12,954 $ 2,711 $ 18,583 $ 20,972 $ 33,992
Cash flows provided by (used in)
investing activities................... 12,368 (3,677) (209,346) (11,489) (15,161) (65,300)
Cash flows provided by (used in)
financing activities................... (16,808) (20,568) 204,635 (8,644) (5,811) 34,432
EBITDA(9)................................ 38,613 24,364 10,063 30,449 43,216 57,514
Adjusted EBITDA(9)....................... 38,613 33,804 10,063 35,264 43,216 72,156
Depreciation and amortization expense.... 4,660 3,694 2,574 10,135 10,971 17,877
Capital expenditures(10)................. 12,159 4,224 1,297 7,901 14,437 23,327
Pet food sold (thousands of tons)........ 942 774 288 1,189 1,237 1,513
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......................................... $ 35,410 $ 38,894 $ 26,123 $ 25,645 $ 29,723
Total assets............................................ 142,710 309,584 338,293 338,184 709,068
Total debt.............................................. 68,436 209,738 206,603 200,410 459,170
Preferred stock......................................... -- 18,414 24,160 30,545 37,792
Stockholder's equity.................................... 31,759 40,111 33,247 33,946 69,294
</TABLE>

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

(1) Doane Pet Care Enterprises, Inc., our parent corporation, was formed by a
group of investors in 1995 to acquire Doane. For financial statement
purposes, the acquisition of Doane was accounted for as a purchase
acquisition effective October 1, 1995. The effects of the acquisition of
Doane have been reflected in Doane's consolidated assets and liabilities at
that date. As a result, Doane's consolidated
11
<PAGE> 14

financial statements for the periods subsequent to September 30, 1995 are
presented on the successor's new basis of accounting, while financial
statements for September 30, 1995 and prior periods are presented on the
predecessor's historical cost basis of accounting.

(2) Results for the year ended December 31, 1998 include the results of Windy
Hill for the period from August 3, 1998 to December 31, 1998 and the
results of IPES from April 18, 1998 to December 31, 1998.

(3) Represents non-recurring bonus payments to senior management in connection
with the acquisition of Doane.

(4) Represents certain non-recurring transition expenses in connection with the
acquisition of Windy Hill.

(5) Represents costs associated with a product recall in the fourth quarter of
1998. See Item 7 -- "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Commitments and Contingencies."

(6) Non-recurring finance charges represent $4,815 of interim bridge debt
financing costs that were incurred in conjunction with the issuance of the
senior notes in 1996 and $4,599 of interim bridge debt financing costs that
were incurred in conjunction with our refinancing transactions in 1998.

(7) Income (loss) before extraordinary items of Doane's predecessor does not
include any provision for federal income taxes. Prior to the acquisition of
Doane, Doane was organized as a subchapter S corporation. Consequently,
Doane did not pay federal, state or local income taxes except in those
states that did not recognize subchapter S status or that required the
payment of franchise taxes based on income.

(8) Represents charges associated with the early extinguishment of debt
incurred in connection with the refinancing transactions.

(9) EBITDA for any relevant period presented above is defined as income before
extraordinary items plus interest expense, net, income taxes, depreciation
and amortization. Adjusted EBITDA represents EBITDA as defined plus unusual
items, transition and product recall expenses and non-recurring finance
charges. EBITDA is not a measure recognized by generally accepted
accounting principles and should not be considered in isolation or as a
substitute for operating income, as an indicator of liquidity or as a
substitute for net cash provided by operating activities, which are
determined in accordance with generally accepted accounting principles.
EBITDA is included because management believes that certain investors may
find it useful. See Doane's consolidated financial statements and the notes
thereto included elsewhere in this annual report on Form 10-K.

(10) Capital expenditures exclude payments for acquisitions.

12
<PAGE> 15

ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

HISTORY OF THE COMPANY

Doane Pet Care Enterprises, Inc., our parent corporation, was formed in
1995 by a group of investors led by SCI, DLJMB, CMIHI and certain members of
existing management to acquire Doane for an aggregate purchase price of $249.1
million, including existing indebtedness. Doane had previously been a
manufacturer of dry pet food for 37 years. Our parent's principal asset and
activities are its ownership of the common stock of Doane. Our parent
corporation has no other operations.

In April 1998, we acquired IPES for $26.2 million, net of cash purchased of
$1.9 million, and the assumption of indebtedness of $1.9 million. In August
1998, Doane Pet Care Enterprises, Inc. acquired Windy Hill for approximately 6.4
million shares of its common stock and the assumption of $183.5 million of
indebtedness. Windy Hill was a manufacturer of pet food products based in
Tennessee. Windy Hill was merged into Doane in November 1998.

THE REFINANCING TRANSACTIONS

In November 1998, we refinanced our capital structure through the following
refinancing transactions:

-- Windy Hill was merged into Doane;

-- Doane completed a cash tender offer for approximately $97 million
principal amount of our senior notes;

-- Windy Hill completed a cash tender offer for $46 million principal
amount of its notes, which tender offer was required by a change of
control provision in the indenture governing those notes;

-- Doane completed the exchange offer of $150 million principal amount of
our senior subordinated notes for the remaining approximately $63
million principal amount of our senior notes and the remaining
approximately $74 million principal amount of Windy Hill notes; and

-- Doane entered into the senior credit facility with a syndicate of
financial institutions providing for total commitments of $345 million.
Doane borrowed $292 million under the senior credit facility to fund the
cash requirements of the refinancing transactions, repay borrowings
under and retire our previous credit facilities, repay other debt and
repay bridge financing incurred in connection with the tender offer for
the Windy Hill notes.

OVERVIEW

We are the largest manufacturer of dry pet food in the United States,
producing approximately 26% of the total volumes sold in 1998 on a pro forma
basis. Pro forma is defined as if we acquired Windy Hill and its respective
acquisitions and IPES on January 1, 1998. We manufacture products for store
brands owned by retail customers, also known as private labels, contract
manufacture products for national branded pet food companies and produce and
sell products under regional brands owned by us.

13
<PAGE> 16

We derive substantially all of our revenue from the sale of dry pet food
products. Historically, approximately 75% to 85% of pet food cost of goods sold
has been comprised of raw material and packaging costs with labor, insurance,
utilities and depreciation comprising the remainder. Historically, market prices
for commodity grains and food stocks have fluctuated in response to a number of
factors, including changes in U.S. government farm support programs, changes in
international agricultural and trading policies and weather conditions during
the growing and harvesting seasons.

We manage the price risk created by market fluctuations by hedging portions
of our primary commodity products purchases on an on-going and continuous basis,
principally through exchange traded futures and options contracts. We
implemented a hedging policy in 1996 that does not permit trading in commodities
not utilized by us. All futures and options activity is based on the projected
requirements of our company. The term of such contracts is generally less than
one year. Settlement of positions are either through financial settlement with
the exchanges or through exchange for the physical commodity in which case we
deliver the contract against the acquisition of the physical commodity.

We account for our futures and options contracts as hedges and gains and
losses are recognized in the period realized as part of the cost of products
sold. Our deferred net futures and options position is reported on the balance
sheet as a current asset for net loss positions and as a deferred credit for net
gain positions. In addition to futures and options, we also contract for future
physical procurement, in which case unrealized gains and losses are deferred to
the applicable accounting period. Typically, maturities vary and do not exceed
12 months. We have hedged over half of our corn and over 30% of our soybean meal
requirements through September 30, 1999. Corn and soybean meal are the two
principal commodities used by us in the manufacture of pet food. Unrealized
losses of $3.0 million were deferred on outstanding hedging contracts at
December 31, 1998. See Item 1 -- "Business -- Raw Materials and Packaging."

The sales and expenses of two of our subsidiaries are denominated in
foreign currencies. We may encounter exchange rate risk to the extent that the
values of such currencies fluctuate. We do not currently hedge, and do not
anticipate hedging, against adverse foreign currency fluctuations.

Operating expenses consist of promotion and distribution expenses and
selling, general and administrative expenses. Promotion and distribution
expenses are primarily (1) brokerage fees, (2) promotions, volume incentive
discounts and rebates paid to customers and (3) freight and distribution
expenses. Our selling, general and administrative expenses represent salaries
and related expenses, amortization expense and other corporate overhead costs.
These expenses typically do not increase proportionately with increases in
volume and product sales.

14
<PAGE> 17

RESULTS OF OPERATIONS

The following discussion is based on Doane's historical financial
statements and the notes thereto included elsewhere in this annual report on
Form 10-K.

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1997 1998
------------------ ------------------ ------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net sales.............................. $513,217 100.0% $564,741 100.0% $686,663 100.0%
Cost of goods sold..................... 446,776 87.1 482,896 85.5 554,447 80.7
-------- ----- -------- ----- -------- -----
Gross profit........................... 66,441 12.9 81,845 14.5 132,216 19.3
Operating expenses:
Promotion and distribution........... 26,480 5.2 31,876 5.6 45,039 6.6
Selling, general and
administrative..................... 11,512 2.2 14,384 2.6 26,266 3.9
Amortization of intangibles.......... 3,538 0.7 3,601 0.6 6,468 0.9
Transition expenses.................. -- -- -- -- 7,043 1.0
Product recall....................... -- -- -- -- 3,000 0.4
-------- ----- -------- ----- -------- -----
Income from operations............. 24,911 4.8 31,984 5.7 44,400 6.5
Interest expense, net.................. 22,471 4.4 22,463 4.0 31,136 4.6
Non-recurring finance charge........... 4,815 0.9 -- -- 4,599 0.7
Other (income) expense, net............ (2) -- (102) -- 164 --
-------- ----- -------- ----- -------- -----
Income (loss) before taxes......... (2,373) (0.5) 9,623 1.7 8,501 1.2
Income tax expense (benefit)........... (855) (0.2) 3,389 0.6 3,602 0.5
-------- ----- -------- ----- -------- -----
Income (loss) before extraordinary
item............................. (1,518) (0.3) 6,234 1.1 4,899 0.7
Extraordinary item, net of tax......... -- -- -- -- 26,788 3.9
-------- ----- -------- ----- -------- -----
Net income (loss).................. $ (1,518) (0.3)% $ 6,234 1.1% $(21,889) (3.2)%
======== ===== ======== ===== ======== =====
</TABLE>

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

Net Sales. Net sales for 1998 increased 21.6% to $686.7 million from $564.7
million in 1997. Included in this increase are $135.2 million in sales
attributable to the Windy Hill and IPES acquisitions. Excluding the Windy Hill
and IPES acquisitions, pet food net sales decreased 1.1% to $518.1 million for
1998 from $523.7 in 1997. Of this increase, the volume-related increases of 2.2%
were offset by price declines of 3.3% attributable to the pass-through of
certain raw material cost decreases to customers.

Gross profit. Gross profit for 1998 increased 61.5% to $132.2 million from
$81.8 million in 1997. Of this increase, (1) 42.8% was attributable to the Windy
Hill and IPES acquisitions, (2) 18.4% resulted from improvements in pet food
margins due to margin management efforts, automation savings, acquisition
synergies, improved product mix and reductions in certain raw material costs and
(3) approximately 2.4% was due to increased pet food tons sold. The increase in
gross profit was partially offset by a decrease in non-manufactured product
gross profit.

Promotion and distribution expenses. Promotion and distribution expenses
increased 41.3%, 39.9% of which was attributable to the Windy Hill and IPES
acquisitions, to $45.0 million for 1998 from $31.9 million in 1997. The balance
of the increase resulted from increases in variable sales promotions, incentive
discounts and brokerage costs on increased pet food tons sold.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased 83.2%, 45.6% of which was attributable to the
Windy Hill and IPES acquisitions, to $26.3 million for 1998 from $14.4 million
in 1997. The balance of the increase resulted from increases in (1) salaries and
related fringe benefits (22.7%), (2) professional fees for acquisitions that
were not consummated and information systems consulting (5.2%) and (3) insurance
and taxes for new facilities (3.2%). Salaries and related fringe benefits
increased due to the restructuring of the senior management team in 1997 and
1998, recognition of stock compensation expense and performance based bonuses.

Amortization of intangibles. Amortization of intangible expenses increased
79.6% to $6.5 million for 1998 from $3.6 million in 1997 primarily due to the
Windy Hill and IPES acquisitions (79.1%).

Transition expenses. Transition expenses represent $7.0 million of expenses
incurred in connection with the merger and integration of Windy Hill with Doane.
These costs include compensation for transitional

15
<PAGE> 18

personnel, severance and bonus expenses, relocation expenses, recruiting and
training expenses, systems conversion and other unique transition expenses.

Product recall. Product recall represents non-recurring costs of $3.0
million related to the product recall discussed in "-- Commitments and
Contingencies."

Income from operations. Income from operations, excluding the transition
and product recall costs, for 1998 increased 70.0% (39.3% of which was
attributable to the Windy Hill and IPES acquisitions) to $54.4 million (7.9% of
net sales) from $32.0 million (5.7% of net sales) in 1997. The balance of the
increase was principally due to improved pet food margins and increased pet food
tons sold, which were offset in part by the increase in selling, general and
administrative expenses.

Interest expense, net. Net interest expense for 1998 increased 38.2% to
$31.1 million from $22.5 million in 1997 primarily due to $206.0 million of debt
incurred in connection with the Windy Hill and IPES acquisitions.

Non-recurring finance charge. In 1998, $4.6 million in non-recurring
interim debt financing costs were written off concurrent with the issuance of
the senior subordinated notes.

Income (loss) before extraordinary item. Income before extraordinary item
for 1998 decreased to $4.9 million from $6.2 million in 1997. Excluding the
impact net of tax of the non-recurring finance charge, income before
extraordinary item for 1998 increased to $14.0 million from $6.2 million in
1997. The Windy Hill and IPES acquisitions represented $4.1 million of this
increase, and the balance was principally due to improved pet food margins and
increased pet food tons sold.

Extraordinary item, net of tax. The net amount of $26.8 million in 1998
represents costs of $42.8 million incurred in connection with our refinancing
transactions, which included tender premiums for our senior notes, change of
control costs for the Windy Hill notes and the write off of deferred financing
costs for all debt repaid in the refinancing transactions. These costs have been
partially offset by a $16.0 million tax benefit recognized by us.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

Net sales. Net sales for 1997 increased 10.0% to $564.7 million from $513.2
million in 1996. Pet food net sales increased 9.1% to $524.7 million for 1997
from $480.8 million in 1996. Of this amount, approximately 4.3% was due to
increases in tons sold, and the balance was principally the result of price
increases implemented in late 1996 to mitigate increases in raw material costs
that occurred throughout 1996. Net sales of non-manufactured products increased
in 1997 due to distribution of additional products that was partially offset by
a decrease in net sales of engineering products due to the focusing of the
Company's efforts on internal engineering projects at Everson, Pennsylvania,
Washington Court House, Ohio and Miami, Oklahoma.

Gross profit. Gross profit for 1997 increased 23.2% to $81.8 million from
$66.4 million in 1996. Of this amount, 16.8% represents improvements in pet food
margins due to the aforementioned price increases and reductions in the cost of
certain raw materials in the latter part of 1997. The balance of the gross
profit improvement was largely due to additional non-manufactured products
sales. Gross profit increased as a percentage of net sales to 14.5% for 1997
from 12.9% in 1996.

Promotion and distribution expenses. Promotion and distribution expenses
increased to $31.9 million in 1997 from $26.5 million in 1996 due to increases
in sales promotions, volume incentive discounts and brokerage costs resulting
from increased pet food tons sold.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased to $14.4 million in 1997 from $11.5 million in
1996 due to (1) increases in salaries and related fringe benefits associated
with annual wage increases, additional personnel and increased bonuses due to
improved performance, (2) increases in property taxes on new and expanded
facilities and (3) increases in expenses associated with the installation of new
information systems.

16
<PAGE> 19

Income from operations. Income from operations for 1997 increased 28.4% to
$32.0 million from $24.9 million in 1996. Income from operations as a percentage
of net sales increased to 5.7% for 1997 from 4.8% in 1996, due to improved pet
food margins and additional non-manufactured products sales.

Interest expense, net. Net interest expense remained unchanged at $22.5
million for 1997 and 1996. Interest expense reductions resulting from payments
on the term loan facility were largely offset by additional interest expense on
proceeds from the industrial development bonds that were used to finance the
construction of the new Miami, Oklahoma facility. Interest expense as a
percentage of net sales decreased to 4.0% in 1997 from 4.4% in 1996.

Net income. Net income for 1997 increased to $6.2 million from a net loss
of $1.5 million in 1996, primarily as a result of increased pet food margins and
additional non-manufactured products sales.

LIQUIDITY AND CAPITAL RESOURCES

We have historically funded our operations, capital expenditures and
working capital requirements from cash flow from operations, bank borrowings and
industrial development bonds. The acquisition of IPES was funded through bank
borrowings and the acquisition of Windy Hill was funded through the issuance of
common stock of our parent. We had working capital of $29.7 million at December
31, 1998. Net cash provided by operating activities was $18.6 million, $21.0
million and $34.0 million for the years ended December 31, 1996, 1997 and 1998,
respectively. Net cash provided by (used for) borrowings was approximately
$(9.0) million, $(6.7) million and $33.1 million, respectively, for the same
periods.

During the three-year period ended December 31, 1998, we spent $45.7
million on capital expenditures, of which $37.3 million was used to acquire and
construct additional manufacturing capacity, including new manufacturing
facilities, a renovated manufacturing facility and five new production lines in
existing facilities and $8.4 million was used to maintain existing manufacturing
facilities.

We expect that existing manufacturing facilities will not be sufficient to
meet our anticipated volume growth. We have continued to examine alternatives
for expanding our business either through construction of additional
manufacturing capacity or acquisition of manufacturing assets. Potential
acquisitions could include acquisitions of operating companies. We intend to
finance these expansions or acquisitions with borrowings under existing or
expanded credit facilities, or the issuance of additional equity.

On April 17, 1998, we acquired IPES for $26.2 million, net of cash
purchased of $1.9 million, and the assumption of indebtedness of $1.9 million.
We financed the IPES acquisition through non-recourse borrowings in Spain for
$21.3 million of the purchase price and borrowings under a credit facility for
the remainder.

On August 3, 1998, Doane Pet Care Enterprises, Inc. acquired Windy Hill for
approximately 6.4 million shares of its common stock and the assumption of
$183.5 million of indebtedness.

On November 12, 1998, Doane Pet Care Enterprises, Inc. merged Windy Hill
into Doane and we completed the refinancing transactions. As part of the
refinancing transactions, we entered into the senior credit facility, which
provides for total commitments of $345.0 million. As of December 31, 1998, we
had outstanding borrowings of $245.0 million under the term loan facility and
$32.0 million under the revolving credit and swingline facilities. In addition,
at that date there were $2.4 million of outstanding letters of credit under the
senior credit facility.

We are highly leveraged and have significant cash requirements for debt
service relating to the senior credit facility, the senior subordinated notes,
the IPES debt and industrial development bonds. Our ability to borrow is limited
by the senior credit facility and the limitations on the incurrence of
indebtedness in the indenture governing our senior subordinated notes. We
anticipate that our operating cash flow, together with amounts available to us
under our senior credit facility and new industrial development bonds, will be
sufficient to finance working capital requirements, debt service requirements
and capital expenditures through the 1999 fiscal year.

17
<PAGE> 20

RECENT ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities ("SFAS 133"), was issued by the
Financial Accounting Standards Board in June 1998. SFAS 133 standardizes the
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts. Under the standard, entities are required to carry
all derivative instruments in the statement of financial position at fair value.
The accounting for changes in the fair value (i.e., gains or losses) of a
derivative instrument depends on whether it has been designated and qualifies as
part of a hedging relationship and, if so, on the reason for holding it. If
certain conditions are met, entities may elect to designate a derivative
instrument as a hedge of exposures to changes in fair values, cash flows, or
foreign currencies. If the hedged exposure is a fair value exposure, the gain or
loss on the derivative instrument is recognized in earnings in the period of
change together with the offsetting loss or gain on the hedged item attributable
to the risk being hedged. If the hedged exposure is a cash flow exposure, the
effective portion of the gain or loss on the derivative instrument is reported
initially as a component of other comprehensive income (outside earnings) and
subsequently reclassified into earnings when the forecasted transaction affects
earnings. Any amounts excluded from the assessment of hedge effectiveness, as
well as the ineffective portion of the gain or loss, is reported in earnings
immediately. Accounting for foreign currency hedges is similar to the accounting
for fair value and cash flow hedges. If the derivative instrument is not
designated as a hedge, the gain or loss is recognized in earnings in the period
of change.

We will adopt SFAS 133 beginning in fiscal 2000. We have not determined the
impact that SFAS 133 will have on our financial statements and believe that the
determination will not be meaningful until closer to the date of initial
adoption.

YEAR 2000

We have conducted a comprehensive review of our computer software to
identify the systems that could be affected by the "year 2000" issue. The year
2000 issue results from computer programs being written using two digits, rather
than four, to define the applicable year. As a result, certain of our programs
that have time-sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This calculation could result in a major system
failure or miscalculations.

We have made an assessment of year 2000 compliance and reviewed our
business application software, which resulted in plans to either replace or
upgrade all essential business software at an estimated cost of $5.6 million. We
are currently reviewing our administrative hardware and software, which include
networks, communications and security systems, and the software related to
manufacturing equipment. We have implemented a program to confirm year 2000
compliance with all third parties with which we have material relationships.

As of December 31, 1998, we had incurred costs of approximately $3.0
million in connection with year 2000 compliance. We intend to test and verify
our year 2000 compliance projects by July 1999, including third party
compliance. We believe that a failure to complete our year 2000 compliance, or a
failure by parties with whom we have material relationships to complete their
year 2000 compliance, by December 31, 1999 could have a material adverse effect
on our financial condition and results of operations. We believe that we can
provide the resources necessary to ensure year 2000 compliance prior to the year
2000. However, if we are delayed in our year 2000 compliance, we may experience
a decrease in efficiency that could have a material adverse effect on our
results of operations. We also believe that a sufficient number of suppliers
exist if our current suppliers are delayed in their efforts to achieve year 2000
compliance thereby minimizing risk to us. We have developed contingency plans
that include moving production within our plant network, securing additional
ingredient storage facilities and transferring procurement to year 2000
compliant suppliers.

COMMITMENTS AND CONTINGENCIES

On October 30, 1998 we initiated a voluntary product recall for certain dry
dog food manufactured at our Temple, Texas plant between July 1 and August 31,
1998. The recall covered dry dog food manufactured at our Temple plant and did
not apply to dry dog food manufactured at other plants or our dry cat food,
biscuits,
18
<PAGE> 21

treats or canned products. The recall resulted from reported sickness and death
of dogs in the State of Texas. These conditions were attributed to elevated
levels of aflatoxins in corn, which is an ingredient in dry dog food. Aflatoxins
are compounds produced from certain kinds of crop molds that can be caused by
extreme weather conditions such as drought and heat. We have an extensive corn
testing program for the detection of aflatoxins and that program has been
intensified since the problems were reported. We maintain insurance against
losses from illness or death of animals; however, the cost of the product recall
was not covered by insurance. We recorded a $3.0 million product recall charge
in the fourth quarter of fiscal 1998.

We believe that our operations are in material compliance with
environmental, safety and other regulatory requirements; however, we cannot
assure you that these requirements will not change in the future or that we will
not incur significant costs in the future (1) to comply with these requirements,
(2) to effect future recalls or (3) in connection with the effect of these
matters on our business. See Item 1 -- "Business -- Environmental, Regulatory
and Safety Matters; Product Recall."

EURO

Effective January 1, 1999, eleven of the fifteen countries comprising the
European Union began a transition to a single monetary unit, the "Euro," which
is scheduled to be completed by July 1, 2002. We are currently considering
options to ensure that our European subsidiaries can operate effectively in the
Euro. Our subsidiaries in Italy and Spain may incur significant costs in
conversion of their systems to the Euro. We are unable to predict whether these
costs can be passed on to customers. The customers of our subsidiaries may also
begin conducting operations using the Euro prior to the completion of the
conversion of the systems of our subsidiaries. Delays in conversion could have a
material adverse effect on the results of the operations of these subsidiaries.
In addition, the introduction of the Euro may increase competition, as
manufacturers in other European countries become able to compete more easily in
our markets. We do not believe that the implementation of the Euro will have a
material effect on our operations or financial condition taken as a whole.

INFLATION AND CHANGES IN PRICES

Our financial results depend to a large extent on the cost of raw materials
and packaging and the ability of us to pass along to our customers increases in
these costs. Historically, market prices for commodity grains and food stocks
have fluctuated in response to a number of factors, including changes in U.S.
government farm support programs, changes in international agricultural and
trading policies and weather conditions during the growing and harvesting
seasons. Fluctuations in paper prices have resulted from changes in supply and
demand, general economic conditions and other factors. In the event of any
increases in raw materials costs, we may be required to increase sales prices
for our products in order to avoid margin deterioration. We cannot assure you of
the timing or extent of our ability to implement future price adjustments in the
event of increased raw material costs or of whether any price increases
implemented by us may affect the volumes of future shipments.

We manage the price risk created by market fluctuations by hedging portions
of our primary commodity product purchases, principally through exchange traded
futures and options contracts that are designated as hedges. The terms of these
contracts are generally less than one year. Settlement of positions are either
through financial settlement with the exchanges or through exchange for the
physical commodity in which case we deliver the contract against the acquisition
of the physical commodity. Our policy does not permit speculative commodity
trading. Although we manage the price risk of market fluctuations by hedging
portions of our primary commodity product purchases, we cannot assure you that
our results of operations will not be exposed to volatility in the commodity
market. See "-- Overview" and Item 1 -- "Business -- Raw Materials and
Packaging."

19
<PAGE> 22

OTHER EVENTS

Doane Pet Care Enterprises, Inc., our parent corporation, effected a
four-for-one stock split on April 8, 1999 pursuant to which each holder of a
share of its common stock received a dividend equal to three shares of common
stock. The share numbers presented in this annual report on Form 10-K reflect
the stock split.

ITEM 7A -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks. Market risk is the potential loss arising
from adverse changes in market prices and rates. We do not enter into derivative
or other financial instruments for trading or speculative purposes. Our market
risk could arise from changes in interest rates, commodity prices and foreign
currency exchange rates.

Interest rate risk. We are subject to market risk exposure related to
changes in interest rates. Accordingly, our net income is affected by changes in
interest rates. Assuming our current level of borrowings, a 100 basis point
increase in interest rates under these borrowings would decrease our 1998 pro
forma net income by approximately $1.7 million and our 1998 pro forma cash flow
from operations by approximately $2.8 million. In addition, such a change would
result in a decrease in the fair value of the debt at December 31, 1998 by
approximately $10.5 million. In the event of an adverse change in interest
rates, we could take action to mitigate our exposure. However, due to the
uncertainty of the actions that would be taken and their possible effects, this
analysis assumes no such actions. Furthermore, this analysis does not consider
the effects of the change in the level of overall economic activity that could
exist in such an environment.

We periodically use interest rate hedges, or swaps, to limit our exposure
to the interest rate risk associated with our floating rate long term foreign
debt, which was approximately 2,642 million peseta, or $18.6 million, at
December 31, 1998. Amounts received under swap agreements are recorded as a
reduction (addition) to interest expense. The deferred loss associated with the
contract was approximately $0.4 million at December 31, 1998. A 50 basis point
increase in foreign interest rates would increase the loss associated with this
contract by $0.2 million at December 31, 1998.

Commodity price risk. We manage price risk created by market fluctuations
by hedging portions of our primary commodity products purchases, which are corn
and soybean meal, principally through exchange traded futures and options
contracts that are designated as hedges. The terms of these contracts are
generally less than one year. Settlement of positions are either through
financial settlement with the exchanges or through exchange for the physical
commodity in which case we deliver the contract against the acquisition of the
physical commodity.

Our policy does not permit speculative commodity trading. Futures and
options contracts are accounted for as hedges, and gains and losses are
recognized in the period realized as part of the cost of products sold and in
the cash flows. The deferred net futures and options position is reported on the
balance sheet as a current asset for net loss positions and as a deferred credit
for net gain positions. In addition to futures and options, we also contract for
future physical procurement, in which case unrealized gains and losses are
deferred to the applicable accounting period. Typically, maturities vary and do
not exceed 12 months.

Deferred losses on these outstanding contracts were $3.0 million at
December 31, 1998. Based upon an analysis utilizing the actual derivative
contractual volumes and assuming a 10% adverse movement in commodity prices, the
potential decrease in the fair value of the derivative commodity instruments at
December 31, 1998 would not have a material adverse effect on our financial
position, results of operations or cash flows.

Foreign currency exchange risk. Our earnings and financial position are
effected by foreign exchange rate fluctuations. Except for our Spanish foreign
operations, which had 1998 sales of $17.8 million, we generally transact
business in U.S. dollars. We generally finance our peseta-denominated assets
with peseta currency borrowings, thereby reducing our exposure to the risk
associated with fluctuations in foreign currency rates. The translation
adjustment during 1998 was a gain of $0.5 million.

20
<PAGE> 23

ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is made to the information beginning on page F-1, which is filed
as a part of this annual report on Form 10-K.

ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

21
<PAGE> 24

PART III

ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The following table sets forth the names, ages and titles of the current
directors and executive officers of Doane and Doane Pet Care Enterprises, Inc.
Each of the members of the board of directors of Doane named below also serves
on the board of directors of Doane Pet Care Enterprises, Inc. The board of
directors of both Doane and Doane Pet Care Enterprises, Inc. is currently
composed of eight members. Certain of Doane's directors are designated pursuant
to an investors' agreement. See Item 13 -- "Certain Relationships and Related
Transactions -- Investors' Agreement." Officers serve at the discretion of the
board of directors. For information regarding employment agreements with the
executive officers of Doane, see "-- Employment and Termination Agreements."

<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
George B. Kelly............. 49 Chairman of the Board
Douglas J. Cahill*.......... 39 Chief Executive Officer, President and Director
Thomas R. Heidenthal*....... 47 Senior Vice President and Chief Financial Officer
F. Donald Cowan, Jr......... 53 Senior Vice President, Business Development and
Quality of Doane
Richard A. Hannasch......... 45 Vice President, Fulfillment of Doane
Richard D. Wohlschlaeger.... 46 Vice President, Sales and Marketing of Doane
David L. Horton............. 38 Vice President, Manufacturing and Engineering of
Doane
Terry W. Bechtel............ 56 Vice President, Co-Manufacturing (Sales) of Doane
Charles W. Dunleavy......... 54 Vice President and Managing Director, European
Operations of Doane
Joseph J. Meyers............ 37 Vice President and Chief Information Officer of
Doane
Philip K. Woodlief.......... 45 Vice President, Finance of Doane
Peter T. Grauer............. 53 Director
M. Walid Mansur............. 40 Director
Bob L. Robinson............. 61 Director
Jeffrey C. Walker........... 43 Director
Ray Chung................... 51 Director
Stephen C. Sherrill......... 45 Director
</TABLE>

- ------------------------------
* These executive officers hold the same positions at Doane and Doane Pet Care
Enterprises, Inc.

Set forth below is a brief description of the business experience of the
directors and executive officers of Doane and Doane Pet Care Enterprises, Inc.

George B. Kelly has been Chairman of the Board of Doane since October 1995
and Chairman of the Board of Doane Pet Care Enterprises, Inc. since June 1995.
Mr. Kelly has been the Chairman of the Board of SCI since July 1990. Mr. Kelly
currently is a director of Alegis Group, Inc., Billboard Acquisition Company,
LLC, Independent Gas Company Holdings and Sevenday International, Inc.

Douglas J. Cahill became Chief Operating Officer of Doane and Doane Pet
Care Enterprises, Inc. in September 1997, began serving as President of Doane
and Doane Pet Care Enterprises, Inc. in January 1998 and began serving as Chief
Executive Officer of Doane and Doane Pet Care Enterprises, Inc. in July 1998. He
has been a director of Doane and Doane Pet Care Enterprises, Inc. since
September 1998. Prior to joining us, Mr. Cahill served as President of Olin
Corporation's Winchester Division, Corporate Vice President of Olin Corporation
and held various other positions with Olin Corporation during the period from
July 1984 through September 1997.

22
<PAGE> 25

Thomas R. Heidenthal became Senior Vice President and Chief Financial
Officer of Doane and Doane Pet Care Enterprises, Inc. in March 1997. Prior to
joining us, Mr. Heidenthal served as Vice President Finance and Administration
of TA Instruments, Inc. from August 1990 to February 1997.

F. Donald Cowan, Jr. began serving as Senior Vice President, Business
Development and Quality of Doane in January 1999. Before joining Doane in August
1998 as Senior Vice President, Operations of Doane, he served as Vice President
of Operations for Windy Hill. Prior to joining Windy Hill in 1995, Mr. Cowan was
Vice President of Operations for Martha White Foods, Inc. From 1987 to 1995, Mr.
Cowan held various positions at Martha White Foods, Inc. including Vice
President of Operations.

Richard A. Hannasch joined Doane in October 1996, has served as Vice
President, Fulfillment since January 1999 and served as Vice President,
Strategic Planning from June 1998 to January 1999 and Vice President of
Marketing from November 1997 to January 1999. Prior to joining us, Mr. Hannasch
served as Director, Business Development for Ralston Purina Company's
International Division and held various other positions at Ralston Purina
Company from September 1978 to October 1996.

Richard D. Wohlschlaeger joined Doane in April 1993, has served as Vice
President, Sales and Marketing since January 1999 and served as Vice President,
Customer Development from November 1997 to January 1999. Prior to joining us,
Mr. Wohlschlaeger held various other positions at Ralston Purina Company from
March 1976 to April 1993, including Group Director, Trade Marketing and Eastern
Division Sales Director.

David L. Horton joined Doane in November 1997, has served as Vice
President, Manufacturing and Engineering since January 1999 and served as Vice
President, Fulfillment from November 1997 to January 1999. Prior to joining us,
Mr. Horton served as Vice President of Manufacturing and Engineering of Olin
Corporation's Winchester Division and held various other positions with Olin
Corporation from January 1984 to November 1997.

Terry W. Bechtel has served as Vice President, Co-Manufacturing (Sales) of
Doane since November 1997. Mr. Bechtel joined Doane in June 1973 and served as
Vice President, Administration from March 1990 until November 1997, and as Vice
President, Sales from September 1976 through February 1990.

Charles W. Dunleavy began serving as Vice President and Managing Director,
European Operations of Doane in February 1999. Before joining Doane in August
1998 as Vice President, Finance, he served as Vice President of Finance for
Windy Hill. Prior to joining Windy Hill in September 1997, Mr. Dunleavy was Vice
President of Operations for Hudson Technologies, Inc. from 1993 to 1997. From
1989 to 1993, Mr. Dunleavy was the Managing Partner of the Detroit office of BDO
Seidman, LLP, a public accounting firm.

Joseph J. Meyers became Chief Information Officer of Doane in August 1998
and began serving as Vice President of Doane in January 1999. Prior to joining
us, Mr. Meyers held various information technology positions at Realtime
Consulting, PricewaterhouseCoopers and Olin Corporation from 1992 to 1998.

Philip K. Woodlief has served as Vice President, Finance for Doane since
February 1999. Prior to joining us, Mr. Woodlief was an independent financial
consultant from June 1998 to January 1999. From April 1997 to May 1998 Mr.
Woodlief was Vice President and Corporate Controller of Insilco Corporation, a
diversified consumer and industrial products manufacturing company, and from
January 1989 to April 1997 he served as Corporate Controller of Insilco.

Peter T. Grauer has been a director of Doane and Doane Pet Care
Enterprises, Inc. since October 5, 1995 and has been a Managing Director of DLJ
Merchant Banking, Inc. since September 1992. Mr. Grauer is a director of Total
Renal Care Holdings Inc., Decision One Holdings, Inc., Nebco Evans Holdings,
Inc., Bloomberg L.P., Thermadyne Holdings, LLC and Formica Corporation.

M. Walid Mansur has been a director of Doane and Doane Pet Care
Enterprises, Inc. since October 5, 1995. Mr. Mansur has served as the president
of Drafil Investments Inc. since 1990 and has been a managing director of Aspen
Venture Partners since 1993.

Bob L. Robinson joined Doane in August 1960 and served as President and
Chief Executive Officer from March 1992 until his resignation effective June 30,
1998. Mr. Robinson became a director of Doane and

23
<PAGE> 26

Doane Pet Care Enterprises, Inc. on October 5, 1995. Prior to being named
President and Chief Executive Officer, Mr. Robinson served as Executive Vice
President from January 1976 through February 1992.

Jeffrey C. Walker has been a director of Doane and Doane Pet Care
Enterprises, Inc. since April 1996. Mr. Walker has been Managing General Partner
of Chase Capital Partners, the private equity investment arm of The Chase
Manhattan Corporation, since 1988, and a General Partner thereof since 1984. Mr.
Walker is a director of the Monet Group, Inc., 800-Flowers, Guitar Center, House
of Blues and Domaine.

Ray Chung became a director of Doane and Doane Pet Care Enterprises, Inc.
in August 1998. He is a partner in Dartford Partnership, L.L.C. and an Executive
Vice President of Aurora Foods Inc. Mr. Chung previously served as Executive
Vice President and a director of Windy Hill. Mr. Chung served as a director,
Executive Vice President and Chief Financial Officer of Windmill Corporation
from 1989 to 1995 and as a director, Executive Vice President and Chief
Financial Officer of Wyndham Foods Inc. from 1985 to 1990. From May 1984 to
September 1985, Mr. Chung served as Vice President -- Finance for the Kendall
Company. Between 1981 and 1984, Mr. Chung served as Vice President -- Finance
for Riviana Foods, Inc. Both the Kendall Company and Riviana Foods, Inc. were
subsidiaries of the Colgate-Palmolive Company at the time.

Stephen C. Sherrill became a director of Doane and Doane Pet Care
Enterprises, Inc. in August 1998. He has been a Managing Director of Bruckmann,
Rosser, Sherrill & Co., Inc. since its formation in 1995. Bruckmann, Rosser,
Sherrill & Co., Inc. is the management company for Bruckmann, Rosser, Sherrill &
Co., L.P. Mr. Sherrill previously served as a director of Windy Hill. Mr.
Sherrill was an officer of Citicorp Venture Capital from 1983 through 1994.
Previously, he was an associate at the New York law firm of Paul, Weiss,
Rifkind, Wharton & Garrison. Mr. Sherrill is a director of Galey & Lord, Inc.,
Jitney-Jungle Stores of America, Inc., B&G Foods, Inc., HealthPlus Corporation,
Alliance Laundry Systems, L.L.C. and Mediq, Inc.

ITEM 11 -- EXECUTIVE COMPENSATION

The following table sets forth information with respect to the Chief
Executive Officer of Doane and certain other persons serving as executive
officers for the fiscal year ended December 31, 1998 who earned $100,000 or more
in combined salary and bonus during such year (collectively, the "Named
Executive Officers").

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) ------------
---------------------------------- SECURITIES
OTHER UNDERLYING
NAME AND PRINCIPAL POSITION FISCAL ANNUAL OPTIONS/SARS ALL OTHER
AT DOANE YEAR SALARY BONUS COMPENSATION (#) COMPENSATION
<S> <C> <C> <C> <C> <C> <C>
Douglas J. Cahill(2)......... 1998 $327,082 $424,000 $765,093(10) 100,000 $1,020,691(3)(4)(6)(11)
President and Chief 1997 91,667 100,000 55,170(12) 400,000 248,165(5)(6)
Executive Officer
Thomas R. Heidenthal......... 1998 199,583 166,950 7,757(12) -- 300,077(3)(4)(11)
Senior Vice President and 1997 145,833 93,000 18,838(12) 200,000 25,803(5)
Chief Financial Officer
Bob L. Robinson(7)........... 1998 183,000 800,000 794(12) -- 297,695(8)(9)
1997 366,000 569,294 -- -- 34,860(9)
1996 366,000 420,289 -- 500,000 33,200(9)
Richard D. Wohlschlaeger..... 1998 152,361 92,750 12,542(12) 38,000 148,739(3)(4)
Vice President, Sales 1997 116,616 40,000 -- -- --
and Marketing 1996 109,853 22,380 -- 38,000 --
Richard A. Hannasch.......... 1998 147,917 92,750 6,373(12) -- 183,714(3)(4)(11)
Vice President, Fulfillment 1997 108,627 40,000 -- -- 30,000(5)
1996 22,222 -- -- 72,000 --
David L. Horton.............. 1998 154,583 92,750 10,649(12) 60,000 147,821(3)(4)(11)
Vice President, 1997 14,071 -- -- -- 80,000(6)
Manufacturing
and Engineering
</TABLE>

24
<PAGE> 27

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

(1) Amounts exclude perquisites and other personal benefits because that
compensation did not exceed the lesser of $50,000 or 10% of the total
annual salary and bonus reported for each executive officer.

(2) Mr. Cahill served as Doane's Chief Operating Officer from September 1997 to
January 1998, became Doane's President in January 1998 and became Doane's
Chief Executive Officer in July 1998. Annual compensation amounts for 1997
represent compensation for the portion of 1997 of which Mr. Cahill was
employed by Doane.

(3) Includes bonuses received in connection with the Windy Hill acquisition as
follows: Mr. Cahill -- $750,000; Mr. Heidenthal -- $250,000; Mr.
Wohlschlaeger -- $100,000; Mr. Hannasch -- $150,000; and Mr.
Horton -- $100,000.

(4) Includes relocation expenses as follows: Mr. Cahill -- $88,916; Mr.
Heidenthal -- $45,914; Mr. Wohlschlaeger -- $48,739; Mr.
Hannasch -- $30,426; and Mr. Horton -- $44,533.

(5) Includes relocation expenses of $73,165 for Mr. Cahill, $25,803 for Mr.
Heidenthal and $30,000 for Mr. Hannasch.

(6) Includes sign-on bonuses as follows: Mr. Cahill -- $175,000 (in each of
1997 and 1998); and Mr. Horton -- $80,000.

(7) Mr. Robinson served as Doane's Chief Executive Officer until his
resignation effective June 30, 1998. Upon his resignation, options for
202,000 shares of common stock of Doane Pet Care Enterprises, Inc. were
terminated. See "-- Stock Option Exercises" and "-- Employment and
Termination Agreements."

(8) Includes compensation of $183,000 under Mr. Robinson's retirement agreement
dated June 30, 1998, supplemental retirement benefits of $60,745 under Mr.
Robinson's employment agreement and amounts vested under Doane's deferred
compensation plan set forth in footnote 9 below.

(9) Includes the following amounts vested under Doane's deferred compensation
plan: 1998 -- $53,950; 1997 -- $34,860; and 1996 -- $33,200.

(10) The amount shown includes $750,000, which is the difference between the
fair market value and the exercise price of options for 100,000 shares of
common stock of Doane Pet Care Enterprises, Inc. that Mr. Cahill received
and exercised in fiscal 1998, and $15,093 for gross up for taxes.

(11) Includes a company match and profit sharing contribution under our Savings
and Investment Plan as follows: Mr. Cahill -- $6,775; Mr.
Heidenthal -- $4,163; Mr. Hannasch -- $3,288; and Mr. Horton -- $3,288.

(12) Amount shown is gross up for taxes.

EMPLOYMENT AND RETIREMENT AGREEMENTS

Doane entered into employment agreements with Messrs. Cahill, Heidenthal,
Wohlschlaeger, Hannasch and Horton, effective January 1, 1998. The terms of
their employment agreements are substantially similar except for salary and
bonus amounts. Mr. Cahill's current base salary is $400,000 with a base bonus of
100% of base salary. Mr. Heidenthal's current base salary is $225,000 with a
base bonus of 70% of base salary and Messrs. Wohlschlaeger, Hannasch and
Horton's current base salary is $175,000 with a base bonus of 50% of base
salary. Earnings targets are established annually by our board of directors
under our annual bonus program. The base bonus is linked to achievement of
targeted earnings. There is no cap on additional bonuses in the employment
agreements. Each employment agreement provides for a term of two to three years
with automatic one year extensions. The agreements are subject to early
termination for cause without severance. The employment agreements for Messrs.
Wohlschlaeger, Hannasch and Horton provide (1) that terminations without cause
entitle the executive to receive severance payments equal to one year's base
salary and bonus and (2) for a one year non-competition agreement commencing
upon termination for any reason. The employment agreements of Messrs. Heidenthal
and Cahill contain similar provisions except that the severance and
non-competition terms are two years and three years, respectively. Pursuant to
his employment agreement, Mr. Cahill was paid a sign-on bonus of $175,000 in
1997 and an additional $175,000 in 1998.

25
<PAGE> 28

Doane entered into a retirement agreement with Mr. Robinson effective June
30, 1998 pursuant to which Mr. Robinson resigned from employment with Doane and
Doane Pet Care Enterprises, Inc. Pursuant to his retirement agreement, we paid
Mr. Robinson his base salary, at the rate in effect on his retirement date of
June 30, 1998, through December 31, 1998. We also paid Mr. Robinson an annual
bonus for 1998 in the amount of $800,000, which bonus was in lieu of any bonus
Mr. Robinson was entitled to receive under the terms of his employment agreement
with us effective as of September 1, 1994. Effective as of his retirement date,
options for 72,000 shares of the common stock of Doane Pet Care Enterprises,
Inc. issued under the terms of two stock option agreements dated November 1,
1996 became fully vested.

COMPENSATION OF DIRECTORS

No compensation is paid by us to our directors.

Certain directors of Doane and Doane Pet Care Enterprises, Inc. are
partners or directors of entities that received fees in connection with the
Windy Hill acquisition, the exchange offer for Doane's senior notes and Windy
Hill's notes, the tender offer for Doane's senior notes and the repayment of
bridge financing incurred in connection with the tender offer for the Windy Hill
notes. See Item 13 -- "Certain Relationships and Related Transactions."

STOCK OPTION AND STOCK PURCHASE PLANS

Effective as of November 1, 1996, our parent adopted its 1996 Management
Stock Purchase Plan and its 1996 Stock Option Plan, as amended. Under the 1996
Stock Option Plan, 3,000,000 shares are authorized for issuance and as of
February 28, 1999, options to acquire 544,620 shares of the common stock of
Doane Pet Care Enterprises, Inc. had been exercised and 1,669,600 shares were
reserved for issuance under the plan. The stock option and purchase plans are
intended to encourage certain of our employees to develop a sense of
proprietorship and personal involvement in the development and financial success
of our company.

Effective as of June 19, 1997, our parent adopted the 1997 Management Stock
Purchase Plan. Pursuant to the 1996 Management Stock Purchase Plan and the 1997
Management Stock Purchase Plan, 500,000 shares of common stock of Doane Pet Care
Enterprises, Inc. were sold for $2.50 per share to certain key employees,
including sales of 200,000 shares to Mr. Heidenthal, 46,000 shares to Mr.
Wohlschlaeger and 46,000 shares to Mr. Hannasch.

STOCK OPTION GRANTS

The following table sets forth, as of December 31, 1998, certain
information as to options granted in 1998 under the 1996 Stock Option Plan to
the Named Executive Officers. As of December 31, 1998, options for 498,000
shares of common stock of Doane Pet Care Enterprises, Inc. had been exercised by
the Named Executive Officers.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
NUMBER OF % OF TOTAL EXERCISE
SECURITIES OPTIONS PRICE
UNDERLYING OPTIONS GRANTED TO PER EXPIRATION
NAME GRANTED(#) EMPLOYEES SHARE DATE
<S> <C> <C> <C> <C>
Douglas J. Cahill............................... 100,000 27.3% $2.50 1999(1)
Richard D. Wohlschlaeger........................ 38,000 10.4 5.00 2008
David L. Horton................................. 60,000 16.4 5.00 2008
</TABLE>

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

(1) Mr. Cahill was issued 100,000 options on May 1, 1998 with a term of one
year, all of which he exercised on June 1, 1998.

26
<PAGE> 29

STOCK OPTION EXERCISES

The following table sets forth certain information with respect to
exercises by the Named Executive Officers of stock options during fiscal year
1998 and the number of shares underlying unexercised stock options held by those
officers as of December 31, 1998.

AGGREGATED OPTION EXERCISES IN LAST YEAR

<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING
SHARES UNEXERCISED OPTIONS
ACQUIRED ---------------------------
NAME ON EXERCISE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C>
Douglas J. Cahill........................................ 200,000 75,000 225,000
Thomas R. Heidenthal..................................... -- 64,800 135,200
Richard D. Wohlschlaeger................................. -- 24,776 51,224
Richard A. Hannasch...................................... -- 25,376 46,624
David L. Horton.......................................... -- 12,000 48,000
Bob L. Robinson*......................................... 298,000 0 0
</TABLE>

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

* Effective as of Mr. Robinson's retirement on June 30, 1998, options for 72,000
shares of common stock of Doane Pet Care Enterprises, Inc. issued under the
terms of two stock option agreements dated November 1, 1996 became fully
vested and his remaining unexercised options for 202,000 shares were
terminated.

OTHER COMPENSATORY ARRANGEMENTS

Employee Retirement Plan. On May 31, 1998, we terminated our employee
retirement plan. The retirement plan was a non-contributory, tax qualified plan
that provided retirement benefits based on the employee's tenure with Doane and
average monthly compensation. We are currently structuring a plan for
liquidating the retirement plan and anticipate providing a lump sum payment that
former plan participants may elect to contribute to the newly established
Savings and Investment Plan (see "-- 401(k) Plans") or to use to purchase
annuities.

401(k) Plans. As of June 1, 1998 we adopted our Savings and Investment Plan
for eligible employees not covered by collective bargaining arrangements and our
Savings and Investment Plan -- Union Plan for eligible union employees at the
Joplin, Missouri plant. The plans are intended to be qualified retirement plans
under the Internal Revenue Code. Both plans permit employee contributions
between 1% and 15% of pre-tax earnings subject to annual dollar limits set by
the IRS, an annual employer profit sharing contribution of $400 for each
eligible participant and a variety of investment options. The Savings and
Investment Plan also includes an employer matching contribution in an amount
equal to 50% of participant contribution, up to 6% of compensation. Vesting for
the employer match is 25% per year for each full year of service.

Windy Hill adopted the Windy Hill Pet Food Company, Inc. Profit Sharing and
Savings Plan on March 1, 1995, as amended. The plan is intended to be a
qualified plan under the Internal Revenue Code. It permits employee
contributions from 1% to 15% of pre-tax earnings subject to annual dollar limits
set by the IRS. Of this amount, we will match 50% of the first 6% of the
employee contribution. In addition, the plan provides for contribution to
participant accounts of amounts equal to 2 1/2% of the employee's compensation.

Non-Qualified Salary Continuation Agreements. Doane has entered into
agreements with all Named Executive Officers to provide benefits to those
employees or their beneficiaries in the event of the death of the employee or
retirement by the employee at age 65 or on or after age 55 with 20 years of
service with Doane. If the employee remains employed until age 65, the employee,
or the employee's beneficiary, will receive an annual retirement benefit payable
for 10 years in accordance with a specified formula. If the employee terminates
employment before age 65 but after age 55 and with 10 years of service with
Doane, the employee's retirement benefit will be reduced in accordance with
percentages specified in the agreement, depending upon the employee's age at
retirement ranging from 100% at age 65 to 55.8% at age 55.

27
<PAGE> 30

ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

All of our issued and outstanding shares of common stock are held by Doane
Pet Care Enterprises, Inc. As of February 28, 1999, we had 1,200,000 shares of
preferred stock issued and outstanding, 200,000 of which were held by CMIHI and
1,000,000 of which were held by qualified institutional buyers, as defined in
Rule 144A under the Securities Act of 1933. The following table sets forth
certain information regarding the beneficial ownership of Doane Pet Care
Enterprises, Inc.'s common stock as of February 28, 1999 by (i) each director,
(ii) each Named Executive Officer, (iii) each person who is known by Doane to
own beneficially 5% or more of the common stock of Doane Pet Care Enterprises,
Inc., (iv) all parties to the investors' agreement as a group and (v) all
directors and executive officers as a group. Unless otherwise indicated, each
person has sole voting and dispositive power over the shares indicated as owned
by that person. Certain of Doane Pet Care Enterprises, Inc.'s principal
stockholders are parties to the investors' agreement. See Item 13 -- "Certain
Relationships and Related Transactions -- Investors' Agreement."

<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK PERCENT OF
BENEFICIALLY OUTSTANDING
NAME OF BENEFICIAL OWNER(1) OWNED COMMON STOCK
--------------------------- ------------ ------------
<S> <C> <C>
Summit/DPC Partners, L.P.(2)............................ 2,880,000 15.7%
DLJMB(3)................................................ 4,514,928 19.7
CMIHI(4)................................................ 3,662,984 19.0
Bruckmann, Rosser, Sherrill & Co., L.P.(5).............. 3,061,317 16.6
Dartford Partnership, L.L.C.(6)(11)..................... 562,861 3.1
Windy Hill Pet Food Company, L.L.C.(7)(11).............. 2,372,607 12.9
PNC Capital Corp(11).................................... 648,045 3.5
Laura Hawkins Mansur(8)................................. 3,312,000 18.0
Peter T. Grauer(3)...................................... 4,514,928 19.7
George B. Kelly(2)...................................... 2,880,000 15.7
Jeffrey C. Walker(4).................................... 3,662,984 19.0
Ray Chung(6)(7)......................................... 2,733,837 14.9
Stephen C. Sherrill(5).................................. 3,061,317 16.6
M. Walid Mansur(8)...................................... 3,312,000 18.0
Bob L. Robinson(9)...................................... 1,098,000 6.0
Douglas J. Cahill(10)................................... 275,000 1.5
Thomas R. Heidenthal(10)................................ 264,800 1.4
Richard D. Wohlschlaeger(10)............................ 85,776 *
Richard A. Hannasch(10)................................. 86,376 *
David L. Horton(10)..................................... 27,000 *
All parties to the investors' agreement as a group...... 23,221,664 96.8
All executive officers and directors as a group(14
persons).............................................. 22,194,051 92.1
</TABLE>

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

* Represents less than one percent.

(1) The address of Summit/DPC Partners, L.P. ("Summit") and Mr. Kelly is 8
Greenway Plaza, Suite 714, Houston, Texas 77046. The address of DLJMB and
Mr. Grauer is 277 Park Avenue, New York, New York 10172. The address of
CMIHI and Mr. Walker is 380 Madison Avenue, 12th floor, New York, New York
10017. The address of Bruckmann, Rosser, Sherill & Co., L.P. ("BRS") and
Mr. Sherrill is 126 East 56th Street, New York, New York 10022. The address
of Dartford Partnership, L.L.C. ("Dartford"), Windy Hill Pet Food Company,
L.L.C. and Mr. Chung is 456 Montgomery, Suite 2200, San Francisco,
California 94109. The address of Mr. Robinson, Mr. Cahill, Mr. Heidenthal,
Mr. Wohlschlaeger, Mr. Hannasch, Mr. Horton, Laura Hawkins Mansur and Mr.
Mansur is 103 Powell Court, Suite 200, Brentwood, Tennessee 37027. The
address of PNC Capital Corp is 3150 CNG Tower, 625 Liberty Avenue,
Pittsburgh, Pennsylvania 15222.

(2) Summit is a limited partnership of which SCI serves as the general partner.
Mr. Kelly, a director of Doane, is Chairman of the Board and a stockholder
of SCI. Mr. Kelly may be deemed to beneficially

28
<PAGE> 31

own the shares indicated because of Mr. Kelly's affiliation with Summit.
Mr. Kelly disclaims beneficial ownership of these shares within the meaning
of Rule 13d-3 of the Exchange Act.

(3) All of the shares indicated as owned by DLJMB are shares that may be
acquired by DLJMB within 60 days pursuant to the exercise of warrants. Of
the shares indicated, warrants to purchase 2,126,748, 950,960, 55,136,
857,640 and 524,444 shares are held by DLJ Merchant Banking Partners, L.P.,
DLJ International Partners, C.V., DLJ Offshore Partners, C.V., DLJ Merchant
Banking Funding, Inc. and DLJ First ESC, L.P., respectively. DLJMB is a
limited partnership, the general partner of which is DLJ Merchant Banking,
Inc., an affiliate of DLJSC. Mr. Grauer is a director of Doane and serves
as a Managing Director of DLJ Merchant Banking, Inc. and, as such, may be
deemed to beneficially own such shares. Mr. Grauer disclaims beneficial
ownership of such shares within the meaning of Rule 13d-3 of the Exchange
Act.

(4) Represents shares held by CMIHI and related parties. Of the 3,662,984
shares indicated as owned by CMIHI, (i) 428,000 represent shares of Class A
Common Stock, (ii) 2,332,000 represent shares of Class B Common Stock and
(iii) 902,984 are shares issuable within 60 days upon exercise of warrants.
Mr. Walker, a director of Doane, is Managing General Partner of Chase
Capital Partners, an affiliate of CMIHI, and may be deemed to beneficially
own the shares indicated as owned by CMIHI. Mr. Walker disclaims beneficial
ownership of such shares within the meaning of Rule 13d-3 of the Exchange
Act.

(5) Includes shares held by BRS and certain other entities and individuals
affiliated with BRS. Of the 3,061,317 shares indicated as owned by BRS,
85,824 shares are beneficially owned by BRS and certain other entities and
individuals affiliated with BRS pursuant to such parties' interests in
Windy Hill Pet Food Company, L.L.C., including 1,654 shares beneficially
owned by Mr. Sherrill. Mr. Sherrill, a director of Doane, is a principal of
BRS and in addition to the 58,139 shares individually owned by him (and the
1,654 shares beneficially owned by him through his interest in Windy Hill
Pet Food Company, L.L.C.), he may be deemed to beneficially own 3,001,524
shares beneficially owned by BRS and certain other entities and individuals
affiliated with BRS. Mr. Sherrill disclaims beneficial ownership of 134,279
of such shares within the meaning of Rule 13d-3 of the Exchange Act.

(6) Of the 562,861 shares indicated as owned by Dartford, 201,631 shares are
beneficially owned by Dartford through its membership interest in Windy
Hill Pet Food Company, L.L.C. Dartford is the entity that controls Windy
Hill Pet Food Company, L.L.C. Mr. Chung, a director of Doane, is a partner
in Dartford and may be deemed to beneficially own the shares held by
Dartford.

(7) Windy Hill Pet Food Company, L.L.C. is controlled by Dartford. Mr. Chung, a
director of Doane, is a managing member of Windy Hill Pet Food Company,
L.L.C. and in addition to the 157,192 shares beneficially owned by him
pursuant to his interest in Windy Hill Pet Food Company, L.L.C., he may be
deemed to beneficially own an additional 2,215,415 shares beneficially
owned by Windy Hill Pet Food Company, L.L.C. and certain other entities and
individuals affiliated with Windy Hill Pet Food Company, L.L.C., other than
himself. Mr. Chung disclaims beneficial ownership of those 2,215,415 shares
within the meaning of Rule 13d-3 of the Exchange Act.

(8) Of the shares indicated as owned by Mr. and Mrs. Mansur, 1,400,000 are held
in Mr. Mansur's name, 1,612,000 are owned by Mrs. Mansur and 300,000 are
held in trust for their children. The shares held by Mrs. Mansur and the
Mansurs' children may be deemed to be beneficially owned by Mr. Mansur; Mr.
Mansur disclaims beneficial ownership of such shares within the meaning of
Rule 13d-3 of the Exchange Act. The shares held by Mr. Mansur and the
Mansur's children may be deemed to be beneficially owned by Mrs. Mansur;
Mrs. Mansur disclaims beneficial ownership of such shares within the
meaning of Rule 13d-3 of the Exchange Act.

(9) Of the shares indicated as owned by Mr. Robinson, 176,092 are held in Mr.
Robinson's name, 560,000 are held in a limited partnership of which Mr.
Robinson is the managing partner, 169,908 are held in trust for Mr.
Robinson, 169,908 are held in trust for Mr. Robinson's wife, Jeanine L.
Robinson, and 22,092 are held in Mrs. Robinson's name. The shares held by
the partnership and in Mr. Robinson's wife's trust may be deemed to be
beneficially owned by Mr. Robinson; Mr. Robinson disclaims beneficial
ownership of such shares within the meaning of Rule 13d-3 of the Exchange
Act.

29
<PAGE> 32

(10) Amounts include 75,000 options granted to Mr. Cahill, 64,800 options
granted to Mr. Heidenthal, 24,776 options granted to Mr. Wohlschlaeger,
25,376 options granted to Mr. Hannasch and 12,000 options granted to Mr.
Horton, all of which are exercisable within 60 days.

(11) BRS, Dartford, Windy Hill Pet Food Company, L.L.C. and PNC Capital Corp
comprise the former shareholders of Windy Hill. Together they own 6,357,376
shares of common stock, or 34.5% of the outstanding shares of common stock.

30
<PAGE> 33

ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

INVESTORS' AGREEMENT

In connection with the Windy Hill acquisition, Doane Pet Care Enterprises,
Inc., Doane, Summit, SCI, CMIHI and an affiliate thereof, DLJMB and certain of
its affiliates, all of the stockholders of Windy Hill and certain other
stockholders of Doane entered into an investors' agreement. The investors'
agreement contains provisions concerning the governance of Doane Pet Care
Enterprises, Inc. and Doane, restrictions on the transferability of the
securities of Doane Pet Care Enterprises, Inc. and Doane acquired by the
stockholders and registration rights for those securities. The governance
provisions of the investors' agreement provide that the board of directors of
Doane and Doane Pet Care Enterprises, Inc. will consist of eight members, of
whom:

- one will be designated by DLJMB (the DLJMB designee),

- two will be designated by SCI on behalf of the Summit investors (each, a
Summit designee),

- one will be designated by CMIHI (the Chase designee),

- two will be the Windy Hill representatives designated on behalf of the
Windy Hill investors (each, a Windy Hill designee),

- one will be the chief executive officer of Doane Pet Care Enterprises,
Inc. and

- one will be designated by the mutual agreement of the DLJMB designee, as
long as a DLJMB designee then serves on the board of directors, and
George B. Kelly, as long as Mr. Kelly is one of the Summit designees, or
by either of the Summit designees if Mr. Kelly is not then one of the
Summit designees.

If at any time the number of shares of common stock of Doane Pet Care
Enterprises, Inc. owned of record by the Summit investors is less than 50% of
the number of shares of common stock of Doane Pet Care Enterprises, Inc. owned
as of August 3, 1998, the Summit investors will only have the right to designate
one individual. If at any time the number of shares of common stock of Doane Pet
Care Enterprises, Inc. owned of record by the Windy Hill investors is less than
50% of the number of shares of common stock of Doane Pet Care Enterprises, Inc.
owned as of August 3, 1998, the Windy Hill investors will only have the right to
designate one individual. Notwithstanding the foregoing, at any time any of
DLJMB's, CMIHI's, the Summit investors' or the Windy Hill investors' respective
percentage ownership is less than 5%, that person or group will not have the
further right to designate any individual to the boards of directors of Doane or
Doane Pet Care Enterprises, Inc. pursuant to the investors' agreement. In
addition, until the earlier of August 3, 1999 and the date the Windy Hill
investors no longer have the right to designate any individual to the boards of
directors of Doane and Doane Pet Care Enterprises, Inc., Windy Hill Pet Food
Company L.L.C. will have the right to designate one observer to the boards.

The investors' agreement also provides for certain registration rights for
the benefit of the stockholders. Doane Pet Care Enterprises, Inc. will not be
obligated to effect more than three demand registrations for the Summit
investors, collectively, three demand registrations for the DLJ entities,
collectively, three demand registrations for the Windy Hill investors,
collectively, and three demand registrations for CMIHI. Following the date Doane
Pet Care Enterprises, Inc. is eligible to use Form S-2 or S-3 for registration
of its securities, demand registrations on Form S-2 or S-3 for the DLJ entities,
CMIHI, the Summit investors and the Windy Hill investors will be unlimited. The
stockholders also have piggy-back registration rights if Doane Pet Care
Enterprises, Inc. proposes to register any of its common stock or warrants, or
if Doane proposes to register any of our preferred stock under the Securities
Act.

TRANSACTIONS WITH DLJMB AND ITS AFFILIATES

In 1995, DLJSC entered into a financial advisory agreement with Doane Pet
Care Enterprises, Inc. and Doane that will terminate upon completion of an
initial public offering by Doane Pet Care Enterprises, Inc. The financial
advisory agreement provides for an annual retainer fee of $100,000 plus
reimbursable expenses.

31
<PAGE> 34

In connection with our acquisition by our parent, DLJMB purchased 1,000,000
shares of our preferred stock and warrants to purchase 4,514,928 shares of
common stock of Doane Pet Care Enterprises, Inc. for an aggregate purchase price
of $25 million. In December 1997, DLJMB and certain of its affiliates sold their
shares of our preferred stock to DLJSC, who thereupon sold the shares to
qualified institutional buyers, as defined in Rule 144A under the Securities
Act. DLJMB is also a party to the investors' agreement described above. Mr.
Grauer, a Managing Director of DLJMB, is a member of the boards of directors of
Doane and Doane Pet Care Enterprises, Inc.

DLJMB is an affiliate of DLJSC and DLJ Capital Funding, Inc. ("DLJ
Capital"). DLJSC and DLJ Capital and their affiliates perform various investment
banking and commercial banking services from time to time for us and for Doane
Pet Care Enterprises, Inc. DLJ Capital serves as an agent bank and a lender to
us under our senior credit facility. DLJSC served as financial advisor to Doane
Pet Care Enterprises, Inc. in connection with the Windy Hill acquisition and
received fees of $1.0 million. DLJSC also served as dealer manager in connection
with the tender offer for our senior notes and for the exchange offer for our
senior notes and Windy Hill's notes. DLJ Bridge Finance, Inc., an affiliate of
DLJSC, also provided, together with an affiliate of CMIHI, a bridge loan to us
in connection with our refinancing transactions. DLJSC and DLJ Capital received
approximately $3.8 million in connection with our refinancing transactions.
DLJSC, DLJ Capital and their affiliates have received, and will receive,
customary compensation for acting in the foregoing capacities.

TRANSACTIONS WITH SCI

SCI is the general partner of Summit, which is the owner of 2,880,000
shares of common stock of Doane Pet Care Enterprises, Inc. In addition to
certain payments of fees and reimbursements for out-of-pocket expenses in
connection with our acquisition in 1995, SCI entered into a management advisory
agreement with Doane for a term of five years or until such time as Doane Pet
Care Enterprises, Inc. consummates an initial public offering of its common
stock resulting in the receipt by Doane Pet Care Enterprises, Inc. of at least
$35 million in gross proceeds, whichever is shorter, and pursuant to which Doane
will pay SCI an annual fee of $200,000 plus reimbursable expenses.

SCI received fees of $2.0 million in connection with the acquisition of
Windy Hill. SCI and Summit are also parties to the investors' agreement. In
accordance with the investors' agreement, SCI has designated Messrs. Kelly and
Mansur to the boards of directors of Doane and Doane Pet Care Enterprises, Inc.

TRANSACTIONS WITH CMIHI AND AFFILIATES

CMIHI is an affiliate of Chase Securities Inc. ("CSI") and The Chase
Manhattan Bank ("Chase"). CMIHI and an affiliate of CMIHI own:

- 200,000 shares of our preferred stock that will be repurchased by Doane
in connection with Doane Pet Care Enterprises, Inc.'s initial public
offering of common stock,

- 428,000 shares of Class A common stock of Doane Pet Care Enterprises,
Inc. and 2,332,000 shares of Class B (non-voting) common stock of Doane
Pet Care Enterprises, Inc. and

- warrants to purchase 902,984 shares of common stock of Doane Pet Care
Enterprises, Inc.

CMIHI received fees of $1,000,000 and CSI received fees of $500,000 in
connection with the acquisition of Windy Hill. In addition, CMIHI is a party to
the investors' agreement. In accordance with the investors' agreement, CMIHI has
designated Jeffrey C. Walker, the Managing General Partner of Chase Capital
Partners, which is an affiliate of CMIHI, to the boards of directors of Doane
and Doane Pet Care Enterprises, Inc.

CSI, Chase and their affiliates perform various investment banking and
commercial banking services from time to time for Doane and its affiliates.
Chase serves as an agent bank and a lender, and CSI served as a co-arranger, to
us under the senior credit facility. Chase also acted as agent bank and a lender
under Windy Hill's prior credit facility, which was repaid in connection with
our refinancing transactions. CSI acted as an
32
<PAGE> 35

initial purchaser of the May 1997 offering of the Windy Hill notes. CSI acted as
financial advisor to Windy Hill in connection with the acquisition of Windy
Hill. CSI also acted as dealer manager in connection with Doane's exchange offer
for its senior notes and Windy Hill's notes. An affiliate of CMIHI also
provided, together with an affiliate of DLJSC, a bridge loan to Doane in
connection with our refinancing transactions. CSI, Chase and their affiliates
received approximately $3.9 million in connection with the refinancing
transactions. CSI, Chase and their affiliates have received, and will receive,
customary compensation for acting in the foregoing capacities.

TRANSACTIONS WITH M. WALID MANSUR

M. Walid Mansur, a director of Doane and Doane Pet Care Enterprises, Inc.,
was paid $500,000 for services rendered in connection with our acquisition in
1995 and related financings. Mr. Mansur owns 1,400,000 shares of common stock of
Doane Pet Care Enterprises, Inc., Mr. Mansur's spouse, Laura Hawkins Mansur,
owns 1,612,000 shares of common stock of Doane Pet Care Enterprises, Inc. and
300,000 shares of common stock of Doane Pet Care Enterprises, Inc. are held in
trust for their children.

OTHER TRANSACTIONS

In addition to the fees paid to CMIHI, DLJSC and SCI in connection with the
acquisition of Windy Hill, Dartford received a fee of $3.0 million and BRS
received a fee of $1.0 million. BRS also was paid $500,000 at the closing of the
acquisition of Windy Hill, representing a deferred transaction fee earned by BRS
in connection with Windy Hill's acquisition of certain assets from Heinz Inc. in
April 1996.

We believe that the terms of the transactions described above were no less
favorable to us than could have been obtained from unaffiliated parties.

PART IV

ITEM 14. -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

(1) Financial Statements

(3) Exhibits

The following exhibits are filed as part of this report:

33
<PAGE> 36

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.1 -- Indenture dated November 12, 1998 between Doane Pet Care
Company and Wilmington Trust Company (incorporated by
reference to Exhibit 10.12 of Doane Pet Care Enterprises,
Inc.'s Registration Statement on Form S-1, Reg. No. 333-
61027 ("Enterprises' Form S-1"))
4.2 -- Registration Agreement among Doane Pet Care Company,
Donaldson, Lufkin & Jenrette Securities Corporation and
Chase Securities Inc. dated November 12, 1998
(incorporated by reference to Exhibit 4.2 to Doane Pet
Care Company's Registration Statement on Form S-4, Reg.
No. 333-70759 (the "Form S-4"))
9.1 -- Amended and Restated Investors' Agreement dated as of
August 3, 1998 among Doane Pet Care Company, Doane Pet
Care Enterprises, Inc., Summit Capital Inc., Summit/DPC
Partners, L.P., Chase Manhattan Investment Holdings,
Inc., Baseball Partners, DLJ Merchant Banking Partners,
L.P., DLJ International Partners, C.V., DLJ Offshore
Partners, C.V., DLJ Merchant Banking Funding, Inc., DLJ
First ESC, L.P., Dartford Partnership, L.L.C., Bruckmann,
Rosser, Sherrill & Co., L.P., PNC Capital Corp, Windy
Hill Pet Food Company, L.L.C. and certain other persons
named therein (incorporated by reference to Exhibit 9.1
of Enterprises' Form S-1)
9.2 -- First Amendment to First Amended and Restated Investors'
Agreement dated as of October 14, 1998 among Doane Pet
Care Company, Doane Pet Care Enterprises, Inc., Summit
Capital Inc., Summit/DPC Partners, L.P., Chase Manhattan
Investment Holdings, Inc., Baseball Partners, DLJ
Merchant Banking Partners, L.P., DLJ International
Partners, C.V., DLJ Offshore Partners, C.V., DLJ Merchant
Banking Funding, Inc., DLJ First ESC, L.P., Dartford
Partnership, L.L.C., Bruckmann, Rosser, Sherrill & Co.,
L.P., PNC Capital Corp, Windy Hill Pet Food Company,
L.L.C. and certain other persons named therein
(incorporated by reference to Exhibit 9.2 of the Form
S-4)
9.3 -- Second Amendment to First Amended and Restated Investor's
Agreement dated as of February 4, 1999 among Doane Pet
Care Company, Doane Pet Care Enterprises, Inc., Summit
Capital Inc., Summit/DPC Partners, L.P., Chase Manhattan
Investment Holdings, Inc., Baseball Partners, DLJ
Merchant Banking Partners, L.P., DLJ International
Partners, C.V., DLJ Offshore Partners, C.V., DLJ Merchant
Banking Funding, Inc., DLJ First ESC, L.P., Dartford
Partnership, L.L.C., Bruckmann, Rosser, Sherrill & Co.,
L.P., PNC Capital Corp, Windy Hill Pet Food Company,
L.L.C. and certain other persons named therein
(incorporated by reference to Exhibit 9.3 to Enterprises'
Form S-1)
*9.4 -- Third Amendment to First Amended and Restated Investors'
Agreement dated as of April 8, 1999 among Doane Pet Care
Company, Doane Pet Care Enterprises, Inc., Summit Capital
Inc., Summit/DPC Partners, L.P. Chase Manhattan
Investment Holdings, Inc., Baseball Partners, DLJ
Merchant Banking Partners, L.P., DLJ International
Partners, C.V., DLJ Offshore Partners, C.V., DLJ Merchant
Banking Funding, Inc., DLJ First ESC, L.P., Dartford
Partnership, L.L.C., Bruckmann, Rosser, Sherrill & Co.,
L.P., PNC Capital Corp, Windy Hill Pet Food Company,
L.L.C. and certain other persons named therein
10.1 -- Early Retirement Agreement and Release effective as of
June 30, 1998 between Doane Pet Care Company and Bob L.
Robinson (incorporated by reference to Exhibit 10.1 of
Enterprises' Form S-1)
10.2 -- Employment Agreement dated January 1, 1998, between Doane
Pet Care Company and Douglas J. Cahill (incorporated by
reference to Exhibit 10.3 to the 1997 Form 10-K)
</TABLE>

34
<PAGE> 37

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.3 -- Employment Agreement dated January 1, 1998, between Doane
Pet Care Company and Thomas R. Heidenthal (incorporated
by reference to Exhibit 10.4 to the 1997 Form 10-K)
10.4 -- Employment Agreement dated January 1, 1998, between Doane
Pet Care Company and Richard D. Wohlschlaeger
(incorporated by reference to Exhibit 10.4 to the Form
S-4)
10.5 -- Employment Agreement dated January 1, 1998, between Doane
Pet Care Company and Richard A. Hannasch (incorporated by
reference to Exhibit 10.5 to the Form S-4)
10.6 -- Employment Agreement dated January 1, 1998, between Doane
Pet Care Company and David L. Horton (incorporated by
reference to Exhibit 10.6 to the Form S-4)
10.7 -- Doane Pet Care Enterprises, Inc.'s 1996 Stock Option Plan
(incorporated by reference to Exhibit 10.7 to Doane Pet
Care Company's Annual Report on Form 10-K for the year
ended December 31, 1996)
10.8 -- First Amendment to Doane Pet Care Enterprises, Inc.'s
1996 Stock Option Plan (incorporated by reference to
Exhibit 10.8 to the 1997 Form 10-K)
10.9 -- Second Amendment to Doane Pet Care Enterprises, Inc.'s
1996 Stock Option Plan (incorporated by reference to
Exhibit 10.9 to the 1997 Form 10-K)
10.10 -- Termination and Dissolution Agreement, dated March 25,
1998, between Flint River Mills, Inc. and Windy Hill Pet
Food Company, Inc. (incorporated by reference to the
Quarterly Report of Windy Hill Pet Food, Inc. on Form
10-Q filed on May 12, 1998)
10.11 -- Revolving Credit and Term Loan Agreement dated as of
November 12, 1998 among Doane Pet Care Company, Doane Pet
Care Enterprises, Inc., The Chase Manhattan Bank, as
administrative agent, DLJ Capital Funding, Inc., as
syndication agent, and Mercantile Bank National
Association, as documentation agent, and the banks named
therein (incorporated by reference to Exhibit 10.13 of
Enterprises' Form S-1)
10.12 -- Employment Agreement dated February 15, 1999, between
Doane Pet Care Company and Philip K. Woodlief
(incorporated by reference to Exhibit 10.14 to
Enterprises' Form S-1)
21.1 -- List of subsidiaries of Doane Pet Care Company
(incorporated by reference to Exhibit 21.1 to the Form
S-4)
**27.1 -- Financial Data Schedule
</TABLE>

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

* Filed herewith.
** Previously filed.

(b) Reports on Form 8-K

On June 18, 1998, Doane filed a current report on Form 8-K in connection
with the execution of an Agreement and Plan of Merger dated June 10, 1998
between Doane, Doane Pet Care Enterprises, Inc., Windy Hill Pet Food Holdings,
Inc. and the other parties named therein. An amendment to the Form 8-K was filed
on August 13, 1998 to reflect the consummation of the merger pursuant to the
merger agreement, which occurred on August 3, 1998. The amended Form 8-K
contains pro forma financial statements for the combined company as of and for
the year ended December 31, 1997, and as of and for the three-month period ended
March 31, 1998.

35
<PAGE> 38

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

DOANE PET CARE COMPANY

By: /s/ THOMAS R. HEIDENTHAL

----------------------------------
Thomas R. Heidenthal
Senior Vice President
and Chief Financial Officer

Date: May 4, 1999

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf of the registrant
and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ GEORGE B. KELLY Chairman of the Board and May 4, 1999
- ----------------------------------------------------- Director
George B. Kelly

/s/ DOUGLAS J. CAHILL Chief Executive Officer, May 4, 1999
- ----------------------------------------------------- President and Director
Douglas J. Cahill (Principal Executive Officer)

/s/ THOMAS R. HEIDENTHAL Senior Vice President and Chief May 4, 1999
- ----------------------------------------------------- Financial Officer (Principal
Thomas R. Heidenthal Financial Officer and
Principal Accounting Officer)

/s/ PETER T. GRAUER Director May 4, 1999
- -----------------------------------------------------
Peter T. Grauer

/s/ M. WALID MANSUR Director May 4, 1999
- -----------------------------------------------------
M. Walid Mansur

/s/ BOB L. ROBINSON Director May 4, 1999
- -----------------------------------------------------
Bob L. Robinson

/s/ JEFFREY C. WALKER Director May 4, 1999
- -----------------------------------------------------
Jeffrey C. Walker

/s/ RAY CHUNG Director May 4, 1999
- -----------------------------------------------------
Ray Chung

/s/ STEPHEN C. SHERRILL Director May 4, 1999
- -----------------------------------------------------
Stephen C. Sherrill
</TABLE>

36
<PAGE> 39

INDEX TO FINANCIAL STATEMENTS

DOANE PET CARE COMPANY AND SUBSIDIARIES
Independent Auditors' Report.............................. F-2
Consolidated Balance Sheets as of December 31, 1997 and
1998................................................... F-3
Consolidated Statements of Income for the years ended
December 31, 1996, 1997 and 1998....................... F-4
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1997 and 1998....................... F-5
Consolidated Statements of Stockholder's Equity and
Comprehensive Income for the years ended December 31,
1996, 1997 and 1998.................................... F-6
Notes to Consolidated Financial Statements................ F-7
</TABLE>

F-1
<PAGE> 40

INDEPENDENT AUDITORS' REPORT

Board of Directors
Doane Pet Care Company:

We have audited the accompanying consolidated balance sheets of Doane Pet
Care Company and subsidiaries as of December 31, 1997 and 1998 and the related
consolidated statements of income, stockholder's equity and comprehensive income
and cash flows for each of the years in the three-year period ended December 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Doane Pet Care Company and
subsidiaries at December 31, 1997 and 1998, and the results of its operations
and its cash flows for each of the years in the three-year period ended December
31, 1998 in conformity with generally accepted accounting principles.

/s/ KPMG LLP

Houston, Texas
February 25, 1999

F-2
<PAGE> 41

DOANE PET CARE COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1997 1998
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ -- $ 3,349
Trade accounts receivable, net of allowances.............. 66,369 95,775
Inventories, net.......................................... 32,426 51,499
Deferred tax asset........................................ 1,252 3,749
Prepaid expenses and other current assets................. 2,298 17,131
-------- --------
Total current assets.............................. 102,345 171,503
Property, plant, and equipment, net......................... 99,994 206,353
Goodwill and other intangible assets, net................... 122,882 299,631
Due from parent............................................. -- 80
Other assets................................................ 12,963 31,501
-------- --------
Total assets...................................... $338,184 $709,068
======== ========

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current installments of long-term debt.................... $ 11,667 $ 12,889
Accounts payable.......................................... 42,422 79,013
Accrued liabilities....................................... 22,611 49,878
-------- --------
Total current liabilities......................... 76,700 141,780
Long-term debt, excluding current installments.............. 188,743 446,281
Other long-term liabilities................................. 4,081 9,160
Deferred tax liability...................................... 4,169 4,761
-------- --------
Total liabilities................................. 273,693 601,982
Senior Preferred Stock, 3,000 shares authorized, 1,200
shares issued............................................. 30,545 37,792
Stockholder's equity:
Common Stock, par value $.0001, 1,000 shares authorized
and issued............................................. 1 1
Additional paid-in capital................................ 41,674 105,669
Accumulated other comprehensive income.................... -- 489
Accumulated deficit....................................... (7,729) (36,865)
-------- --------
Total stockholder's equity........................ 33,946 69,294
-------- --------
Total liabilities and stockholder's equity........ $338,184 $709,068
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE> 42

DOANE PET CARE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Net sales.................................................. $513,217 $564,741 $686,663
Cost of goods sold......................................... 446,776 482,896 554,447
-------- -------- --------
Gross profit............................................... 66,441 81,845 132,216
Operating expenses:
Promotion and distribution............................... 26,480 31,876 45,039
Selling, general and administrative...................... 11,512 14,384 26,266
Amortization of intangibles.............................. 3,538 3,601 6,468
Transition expenses...................................... -- -- 7,043
Product recall........................................... -- -- 3,000
-------- -------- --------
Income from operations........................... 24,911 31,984 44,400
Interest expense, net...................................... 22,471 22,463 31,136
Non-recurring finance charge............................... 4,815 -- 4,599
Other (income) expense, net................................ (2) (102) 164
-------- -------- --------
Income (loss) before income taxes and
extraordinary loss............................. (2,373) 9,623 8,501
Income tax expense (benefit)............................... (855) 3,389 3,602
-------- -------- --------
Income (loss) before extraordinary loss.......... (1,518) 6,234 4,899
Extraordinary loss, net of income tax benefit.............. -- -- 26,788
-------- -------- --------
Net income (loss)................................ $ (1,518) $ 6,234 $(21,889)
======== ======== ========
Net loss applicable to common stock........................ (7,264) (151) (29,136)
Basic and diluted net income (loss) per common share:
Income (loss) before extraordinary loss.................. $ (1,518) $ 6,234 $ 4,899
Extraordinary loss....................................... -- -- (26,788)
Preferred stock dividends and accretion of preferred
stock................................................. (5,746) (6,385) (7,247)
-------- -------- --------
Net loss per common share................................ $ (7,264) $ (151) $(29,136)
======== ======== ========
Basic and diluted weighted average number of shares
outstanding.............................................. 1,000 1,000 1,000
======== ======== ========
</TABLE>

F-4
<PAGE> 43

DOANE PET CARE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
FOR THE YEARS ENDING DECEMBER 31, 1996, 1997 AND 1998

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $ (1,518) $ 6,234 $ (21,889)
Items not requiring (providing) cash:
Depreciation and amortization of intangibles............ 10,135 10,971 17,877
Extraordinary items..................................... -- -- 26,788
Non-recurring finance fees.............................. 4,815 -- --
Noncash interest expense................................ 1,022 1,170 1,564
Stock compensation expense.............................. -- -- 765
Loss on sale of property and equipment.................. 26 115 --
Deferred income tax expense (benefit)................... (855) 3,389 3,352
Equity in foreign joint venture......................... -- (186) (273)
Other................................................... 282 51 931
Changes in current assets and liabilities (excluding
amounts acquired):
Accounts receivable................................... (21,176) 1,910 (5,287)
Inventories........................................... (3,141) (1,689) 72
Prepaid expenses and other............................ (5,479) 3,818 (2,665)
Accounts payable...................................... 32,155 (8,881) 10,457
Accrued expenses...................................... 2,317 4,070 2,300
--------- -------- ---------
Net cash provided by operating activities.......... 18,583 20,972 33,992
--------- -------- ---------
Cash flows from investing activities:
Proceeds from sale of property and equipment.............. 26 39 72
Capital expenditures, including interest
capitalized............................................. (7,901) (14,437) (23,327)
Acquisition related payments.............................. (1,087) -- (31,907)
Investment in joint venture............................... (1,979) -- 371
Purchase of Industrial Development Bonds.................. -- -- (9,000)
Other..................................................... (548) (763) (1,509)
--------- -------- ---------
Net cash used in investing activities.............. (11,489) (15,161) (65,300)
--------- -------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt.................. 163,136 5,698 454,764
Payment for debt issuance costs........................... (5,909) (468) (11,356)
Payment for Refinancing Transactions...................... -- -- (28,353)
Net borrowings (repayments) under revolving credit
agreement............................................... 1,475 (1,475) 32,000
Principal payments on long-term debt...................... (167,746) (10,416) (400,533)
Dividend to Parent........................................ -- -- (13,449)
Capital contribution...................................... 400 850 1,359
--------- -------- ---------
Net cash provided by (used in) financing
activities....................................... (8,644) (5,811) 34,432
--------- -------- ---------
Effect of exchange rates on cash................... -- -- 225
--------- -------- ---------
Increase (decrease) in cash and cash equivalents... (1,550) -- 3,349
Cash and cash equivalents, beginning of period.............. 1,550 -- --
--------- -------- ---------
Cash and cash equivalents, end of period.................... $ -- $ -- $ 3,349
========= ======== =========
</TABLE>

See accompanying notes to financial statements.

F-5
<PAGE> 44

DOANE PET CARE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

<TABLE>
<CAPTION>
COMMON ACCUMULATED
STOCK OTHER
------ PAID-IN ACCUMULATED COMPREHENSIVE
SHARES AMOUNT CAPITAL DEFICIT INCOME TOTAL
------ ------ -------- ----------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1995............................. 1,000 $ 1 $ 40,424 $ (314) $ -- $ 40,111
Net loss.............................................. -- -- -- (1,518) -- (1,518)
Preferred stock dividends............................. -- -- -- (4,670) -- (4,670)
Accretion of preferred stock.......................... -- -- -- (1,076) -- (1,076)
Stock rights exercised................................ -- -- 400 -- -- 400
------ --- -------- -------- ---- --------
Balances, December 31, 1996............................. 1,000 1 40,824 (7,578) -- 33,247
Net income............................................ -- -- -- 6,234 -- 6,234
Preferred stock dividends............................. -- -- -- (5,308) -- (5,308)
Accretion of preferred stock.......................... -- -- -- (1,077) -- (1,077)
Stock rights exercised................................ -- -- 850 -- -- 850
------ --- -------- -------- ---- --------
Balances, December 31, 1997............................. 1,000 1 41,674 (7,729) -- 33,946
Comprehensive income (loss):
Net loss............................................ -- -- -- (21,889) -- (21,889)
Comprehensive income, unrealized gain on foreign
currency translation.............................. -- -- -- -- 489 489
--------
Total comprehensive loss....................... (21,400)
Preferred stock dividends............................. -- -- -- (6,170) -- (6,170)
Accretion of preferred stock.......................... -- -- -- (1,077) -- (1,077)
Stock compensation expense............................ -- -- 765 -- -- 765
Dividend to Parent.................................... -- -- (13,449) -- -- (13,449)
Capital contribution.................................. -- -- 1,359 -- -- 1,359
Capital contribution related to Windy Hill merger..... -- -- 75,320 -- -- 75,320
------ --- -------- -------- ---- --------
Balances, December 31, 1998............................. 1,000 $ 1 $105,669 $(36,865) $489 $ 69,294
====== === ======== ======== ==== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 45

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31, 1996, 1997 AND 1998

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Doane Pet Care Company ("Company" or "Doane"), formerly Doane Products
Company, manufactures dry and canned pet foods and operates a machine shop and a
structural steel fabrication plant. The Company extends unsecured credit in the
form of current accounts receivable, principally to large distributors and
retailers throughout the United States, with credit extended to one customer
approximating 70%, 65% and 50% of accounts receivable at December 31, 1996,
1997, and 1998, respectively.

Principles of Consolidation

On October 5, 1995, Doane Pet Care Enterprises, Inc. ("Parent" or
"Enterprises") acquired the Company. The accompanying consolidated financial
statements for December 31, 1996, 1997, and 1998, include the accounts of the
Company and its wholly-owned subsidiaries. All inter-company transactions and
balances have been eliminated. The Company is accounting for its 50% investment
in a foreign joint venture under the equity method of accounting.

Basis of Presentation

Certain reclassifications have been made to previously reported
consolidated financial statements to conform with the fiscal 1998 presentation.

52-Week Fiscal Year

For the years ended December 31, 1996, 1997 and 1998, the Company's fiscal
year end was a calendar year end. Effective January 1, 1999, the Company has
implemented a fiscal year that ends on the Saturday nearest to the end of
December.

Cash and Cash Equivalents

The Company considers all liquid investments with original maturities of
three months or less to be cash equivalents. Cash equivalents consist primarily
of repurchase agreements and certificates of deposit.

Inventories

Inventories are valued at the lower of cost or market. Cost is determined
using the first-in, first out cost method.

Property and Equipment

Property and equipment are depreciated over the estimated useful life of
each asset ranging from three to forty years. Annual depreciation is computed
using the straight-line method.

In fiscal 1996, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 121, Accounting for the Impairment of
Long-lived Assets and for Long Lived Assets to be Disposed Of (SFAS 121).
Long-lived assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable. When such assets are
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the asset exceeds the fair value of the
asset. The adoption of SFAS 121 did not have a material impact on the Company's
consolidated financial statements.

F-7
<PAGE> 46
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Income Taxes

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial carrying amounts
of existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect of a change in tax rates on deferred tax
assets and liabilities is recognized in income in the period that includes the
enactment date.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets include goodwill, trademarks and
certain identifiable intangible assets. Goodwill represents the excess of the
purchase price over the fair value of the net assets acquired. Trademarks and
goodwill are being amortized over thirty and forty years using the straight-line
method, respectively. Other intangible assets, primarily software, are being
amortized using the straight-line method over periods ranging from four to five
years. The Company's policy is to periodically evaluate such costs to determine
whether there has been any impairment in value. The measurement of possible
impairment is based primarily on the ability to recover the balance of the
goodwill from expected future operating cash flows on an undiscounted basis.
Accumulated amortization of goodwill and other intangible assets was $7,300 and
$13,039 at December 31, 1997 and 1998, respectively.

Financial Instruments

Fair value of cash, accounts receivable, accounts payable and accrued
liabilities approximate book value at December 31, 1997 and 1998. Fair value of
debt is based upon market value, if traded, or discounted at the estimated rate
the Company would incur currently on similar debt.

Recognition of Revenue

Revenue is recognized at the time the product is shipped.

Commodity Hedges

The Company manages price risk created by market fluctuations by hedging
portions of its primary commodity products purchases, principally through
exchange traded futures and options contracts which are designated as hedges.
The terms of such contracts are generally less than one year. Settlement of
positions are either through financial settlement with the exchanges or via
exchange for the physical commodity in which case the Company delivers the
contract against the acquisition of the physical commodity.

The Company's policy does not permit speculative commodity trading. Futures
and options contracts are accounted for as hedges, and gains and losses are
recognized in the period realized as part of the cost of products sold and in
the cash flows. The deferred net futures and options position is reported on the
balance sheet as a current asset for net loss positions and as a deferred credit
for net gain positions. In addition to futures and options, the Company also
contracts for future physical procurement, in which case unrealized gains and
losses are deferred to the applicable accounting period. Typically, maturities
vary and do not exceed twelve months.

Deferred losses on these outstanding contracts were $917 and $3,022 at
December 31, 1997 and 1998, respectively.

F-8
<PAGE> 47
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Interest Rate Hedges

The Company periodically uses interest rate hedges (swaps) to limit its
exposure to the interest rate risk associated with its floating rate long term
foreign debt. Amounts received under swap agreements are recorded as a reduction
(addition) to interest expense.

Use of Estimates in Preparation of Financial Statements

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Net Income (Loss) Per Common Share

In 1997, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 128, "Earnings per Share", which simplifies the
computation of earnings per share ("EPS"). All prior period earnings per share
amounts have been restated to conform to SFAS 128 requirements. Basic EPS is
calculated based upon the weighted average number of common shares of common
stock outstanding during the period after decreasing (increasing) net income
(loss) by unpaid cumulative preferred stock dividends and the accretion of the
preferred stock. SFAS 128 also requires a diluted EPS computation if a company's
capital structure includes common stock equivalents. The Company is not required
to compute diluted EPS as there are no common stock equivalents. The following
table summarizes the calculation of net income (loss) and, basic and dilutive
weighted average number of shares outstanding for purposes of computing net
income (loss) per common share:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1996 1997 1998
------- ------- --------
<S> <C> <C> <C>
Numerator:
Income (loss) before extraordinary loss..................... $(1,518) $ 6,234 $ 4,899
Less:
Extraordinary loss........................................ -- -- (26,788)
Preferred stock dividends and accretion of preferred
stock.................................................. (5,746) (6,385) (7,247)
------- ------- --------
Net loss applicable to common stock......................... $(7,264) $ (151) $(29,136)
======= ======= ========
Denominator:
Basic and diluted weighted average number of shares
outstanding............................................... 1,000 1,000 1,000
======= ======= ========
</TABLE>

Recent Accounting Pronouncements

F-9
<PAGE> 48
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the derivative instrument is reported initially as a component of other
comprehensive income (outside earnings) and subsequently reclassified into
earnings when the forecasted transaction affects earnings. Any amounts excluded
from the assessment of hedge effectiveness, as well as the ineffective portion
of the gain or loss, is reported in earnings immediately. Accounting for foreign
currency hedges is similar to the accounting for fair value an cash flow hedges.
If the derivative instrument is not designated as a hedge, the gain or loss is
recognized in earnings in the period of change.

The Company will adopt SFAS 133 beginning in fiscal 2000. The Company has
not determined the impact that SFAS 133 will have on its financial statements
and believes that such determination will not be meaningful until closer to the
date of initial adoption.

(2) ACQUISITIONS

Ipes Iberica, S.A. Acquisition

On April 17, 1998 Doane purchased 100% of the outstanding stock of Ipes
Iberica, S.A. ("Ipes") for $26.2 million, net of cash acquired. IPES is a
private label pet food manufacturer located in Spain with 1997 net sales of
$21.1 million. The transaction was financed through a $20.9 million non recourse
facility provided by the HSBC Investment Bank, Plc. in Spain, and $7.4 million
from the Company's Senior Credit Facility. This transaction has been accounted
for as a purchase with the purchase price and direct acquisition costs allocated
based on the fair value of assets acquired and liabilities assumed. Goodwill of
approximately $15.1 million was recorded in connection with this transaction.
The goodwill is being amortized over 40 years on a straight line basis.

Windy Hill Pet Food Holdings Inc. ("Holdings") Acquisition

On August 3, 1998, the Parent acquired Holdings for approximately 6.4
million shares of its common stock valued at $63,574 and the assumption of
$183.5 million of indebtedness. Holdings was liquidated into the Parent at the
date of acquisition. Windy Hill Pet Food Company, Inc. ("Windy Hill"), a
wholly-owned subsidiary of Holdings, was merged into the Company in November
1998 in connection with the Refinancing Transactions as discussed in Note 3.
Windy Hill was a leading manufacturer of pet food products for both dogs and
cats, including dry, canned, semi-moist, soft dry, soft treats and dog biscuits.
With Windy Hill, the Company became the largest manufacturer of dog biscuits in
the United States. This acquisition has been accounted for as a purchase with
the purchase price and direct acquisition costs allocated based on the fair
value of assets acquired and liabilities assumed. The allocation of the purchase
price is preliminary because estimates were made regarding the fair value of
certain assets and liabilities for which the Company is obtaining valuation
information either from sale transactions, or internal studies. The Company has
recorded an estimated accrual associated with such valuations at December 31,
1998. The final determination of the fair values is expected to be completed no
later than the second quarter of 1999, and any resulting changes to the
estimate, which are not expected to be material, will be recorded as an
adjustment to Goodwill. Goodwill of approximately $59.4 million was recorded in
connection with this transaction. The goodwill is being amortized over 40 years
on a straight-line basis.

F-10
<PAGE> 49
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The unaudited pro forma information below has been prepared assuming Windy
Hill and Ipes were acquired January 1, 1997:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------------
1997 1998
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net sales................................................... $885,681 $865,346
Income before income taxes
and extraordinary loss.................................... 10,841 1,388
Income before extraordinary loss............................ $ 5,963 $ (1,965)
======== ========
</TABLE>

These pro forma results have been prepared for comparative purposes only
and do not purport to be indicative of the results of operations which would
have resulted had the acquisition occurred on the date indicated. The pro forma
results reflect certain adjustments for amortization, interest expense, fixed
overhead, and general and administrative expenses.

(3) EXCHANGE OFFER AND REFINANCING TRANSACTIONS

In November 1998, the Company refinanced its capital structure pursuant to
the following series of transactions collectively referred to herein as the
"Refinancing Transactions."

-- Windy Hill was merged into Doane, the Parent's principal operating
subsidiary;

-- Doane completed a cash tender offer for approximately $97 million
principal amount of its 10 5/8% Senior Notes due 2006;

-- Doane completed an exchange offer (the "Exchange Offer") of $150 million
principal amount of its 9 3/4% Senior Subordinated Notes due 2007 for
the remaining approximately $63 million principal amount of Senior Notes
and the remaining approximately $74 million principal amount of Windy
Hill Notes; and

-- Doane entered into a new senior credit facility with a syndicate of
financial institutions providing for total commitments of $345 million.
Doane borrowed $292 million under the Senior Credit Facility to fund the
cash requirements of the Refinancing Transactions, repay borrowings
under and retire its previous credit facilities, repay other debt and
repay a bridge financing incurred in connection with the tender offer
for the Windy Hill Notes.

As a result of the Exchange Offer and Refinancing Transactions, an
extraordinary loss of $26,788, net of tax, was recorded due to the early
extinguishment of debt. The extraordinary loss consists of the write-off of
deferred financing costs associated with the extinguished debt and associated
fees and expenses.

F-11
<PAGE> 50
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(4) INVENTORIES

Inventories consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1998
------- -------
<S> <C> <C>
Raw materials............................................... $ 8,449 $13,349
Packaging materials......................................... 10,735 22,003
Finished goods.............................................. 13,242 16,147
------- -------
$32,426 $51,499
======= =======
</TABLE>

(5) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1998
------- --------
<S> <C> <C>
Land........................................................ $ 4,037 $ 7,627
Buildings and improvements.................................. 29,439 56,394
Machinery and equipment..................................... 76,442 149,131
Furniture and fixtures...................................... 2,536 4,421
Automotive equipment........................................ 1,016 1,257
Construction in progress.................................... 1,972 18,320
------- --------
115,442 237,150
Less accumulated depreciation............................... 15,448 30,797
------- --------
$99,994 $206,353
======= ========
</TABLE>

(6) GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
Goodwill.................................................... $130,182 $249,931
Trademarks.................................................. -- 61,990
Other intangibles........................................... -- 749
-------- --------
130,182 312,670
Less accumulated amortization.......................... 7,300 13,039
-------- --------
$122,882 $299,631
======== ========
</TABLE>

F-12
<PAGE> 51
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(7) ACCRUED LIABILITIES

Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1998
------- -------
<S> <C> <C>
Salaries and commissions.................................... $ 4,714 $ 9,883
Accrued interest............................................ 6,223 5,541
Rebates and other promotions................................ 9,064 17,747
Acquisition related accruals................................ -- 5,734
Worker's comp............................................... 1,296 1,840
Health insurance............................................ 410 1,454
Real estate/franchise taxes................................. 792 944
Other....................................................... 112 6,735
------- -------
$22,611 $49,878
======= =======
</TABLE>

(8) LONG-TERM DEBT

Long-term debt consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
Bank revolving credit facility.............................. $ 775 $ 32,000
Bank term loans............................................. 33,937 245,000
Senior subordinated notes................................... 160,000 146,996
Industrial development revenue bonds........................ 5,698 9,783
Foreign subsidiaries........................................ -- 25,391
-------- --------
200,410 459,170
Less current maturities..................................... (11,667) (12,889)
-------- --------
$188,743 $446,281
======== ========
</TABLE>

Bank loans

In November 1998, the Company entered into the Senior Credit Facility with
a syndicate of banks and other institutional investors, as lenders, and Chase,
as administrative agent, DLJ Capital Funding, Inc. ("DLJ Capital"), as
syndication agent, and Mercantile Bank National Association, as documentation
agent. DLJ Capital and CSI served as the co-arrangers of the Senior Credit
Facility. The Senior Credit Facility consists of a $245.0 million term loan
facility (the "Term Loan Facility") and a $100.0 million revolving
credit/swingline facility (the "Revolving Credit Facility") with a $10 million
sub limit for issuance of letters of Credit ($2.4 million outstanding at
December 31, 1998). Loans under the Senior Credit Facility will bear interest
at: (i) the prime rate of the administrative agent (or, if higher, the secondary
market rate for certificates of deposit plus 1% or the federal funds rate plus
0.5%) plus a specified margin based on the type of loan and the then current
ratio of senior debt to EBITDA (the "Applicable Margin") or (ii) the Eurodollar
rate plus the Applicable Margin. The Company will also pay certain fees with
respect to the Senior Credit Facility. The Term Loan Facility bore interest at
9.14% and the Revolving Credit Facility bore interest at 8.39% during the period
in 1998 when the borrowings were outstanding. The Term Loan Facility consists of
three traunches with terms between six and one-half years and eight years,
unless terminated sooner upon an event of default. The principal amount under
the Term Loan Facility shall be repaid in quarterly installments starting March
31, 1999, as follows: (i) approximately $11.7 million in each of the calendar
years 1999 and 2000, (ii) approximately $14.2 million in each of the calendar
years 2001, 2002, 2003 and 2004, (iii) $85.8 million in the calendar year 2005
and (iv) $79.0 million in 2006. The Revolving Credit Facility has a term of six
and one-half years. At December 31, 1998, the Company had approximately $65,600
available under the Revolving Credit Facility.

F-13
<PAGE> 52
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company and certain restricted subsidiaries are required to guarantee
amounts outstanding under the Senior Credit Facility. The indebtedness incurred
pursuant to the Senior Credit Facility is secured by a first priority lien on
substantially all of the material assets of the Company and its restricted
domestic subsidiaries. The Senior Credit Facility contains certain financial and
other covenants usual and customary for a secured credit agreement. The Company
was in compliance with these covenants at December 31, 1998.

In connection with the Refinancing Transactions (see Note 3), the Company
repaid borrowings under and retired its previous bank credit facility ("Prior
Bank Facility"). The Prior Bank Facility, as amended, provided for an aggregate
principal amount of loans of up to $85,000 consisting of $60,000 in aggregate
principal amount of term loans and a $25,000 revolving credit facility.

The Prior Bank Facility was to mature on September 30, 2001 and was due in
quarterly installments in increasing amounts, ranging from $2,100 to $3,700.

Indebtedness under the Prior Bank Facility bore interest at a rate based,
at the Company's option, upon (i) the Base Rate plus 1.50% with respect to Base
Rate Loans and (ii) the LIBOR Rate for one, two, three or six months plus 2.75%
with respect to LIBOR Rate Loans. The revolving credit facility bore interest at
9.5%, 9.3% and 9.26% for the years ended December 31, 1996, 1997 and 1998,
respectively. The term loans bore interest at a weighted average rate of 7.95%,
8.44% and 8.11% for the years ended December 31, 1996, 1997 and 1998,
respectively.

The Prior Bank Facility was secured by substantially all of the assets of
the Company and a pledge of all of the Company's common stock.

Senior Subordinated Notes, Net of Discount

On November 12, 1998, the Company issued $150 million in aggregate
principal amount of its 9 3/4% Senior Subordinated Notes due May 15, 2007 with
interest payable semiannually. The Senior Subordinated Notes are general
unsecured obligations and are subordinated in right of payment to all senior
indebtedness and senior in right of payment to any current or future
indebtedness of the Company that, by its terms, is subordinated to the Senior
Subordinated Notes. The payment of obligations of each subsidiary guarantor are
subordinated to the payment of senior indebtedness of such subsidiary guarantor.

The Company may redeem the Senior Subordinated Notes at any time on or
after May 15, 2002, in whole or in part, at the option of the Company, at the
redemption prices set forth below, plus accrued and unpaid interest, if any, to
the redemption date:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C> <C>
2002...................................................... 104.875%
2003...................................................... 103.250%
2004...................................................... 101.625%
2005 and thereafter....................................... 100.000%
</TABLE>

In addition, prior to May 15, 2000 the Company may redeem up to 35% of the
aggregate principal amount of the Senior Subordinated Notes with the proceeds of
one more Equity Offerings (as defined in the Note Indenture), at a redemption
price equal to 109.75% of the principal amount thereof, plus accrued and unpaid
interest, if any, provided, however, that at least 65% in aggregate principal
amount of the Senior Subordinated Notes remain outstanding immediately after
each such redemption. At any time prior to May 15, 2002, the Senior Subordinated
Notes may also be redeemed in whole, but not in part, at the option of the
Company upon the occurrence of a Change in Control (as defined in the Note
Indenture) at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium (as defined in the Note Indenture) and the unpaid
accrued interest, if any, to the date of redemption. Upon a Change in Control,
holders of the Senior Subordinated Notes may require the Company to purchase all
or a portion of the Senior

F-14
<PAGE> 53
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Subordinated Notes at a purchase price equal to 101% of their principal amount
plus accrued interest, if any. The Senior Subordinated Notes have certain
covenants that have restrictions on dividends, distributions, indebtedness,
affiliate transactions and lines of business. In connection with the Refinancing
Transactions, the Company retired its Senior Notes that were originally due on
March 1, 2006 and bore interest at 10.625% per annum, payable semiannually. The
Senior Notes were issued in 1996 in connection with a debt refinancing, which
resulted in a $4,815 nonrecurring finance charge to write off interim debt
issuance costs.

Industrial Development Revenue Bonds

On March 12, 1997 the Company issued the 7.25% $6,000 Ottawa County Finance
Authority Industrial Development Revenue Bonds (the "Miami Bonds"). The Miami
Bonds are subject to mandatory redemption prior to maturity, in part, at a
redemption price of 100% of the principal amount thereof, plus accrued interest
to the redemption date, in varying principal amounts on June 1 of each year from
2007 through 2017. The Miami Bonds are general secured obligations of the
Company and ranking on a parity in right of payment with all other senior
indebtedness of the Company.

On July 24, 1998, the Company issued the 6.25% $9,000 Oklahoma Development
Finance Authority, Industrial Development Revenue Bonds, Series 1998 (Doane
Products Company Clinton, Oklahoma Project) (the "Clinton Bonds") through the
Oklahoma Development Finance Authority. At December 31, 1998 $4,087 had been
drawn down by the Company. The Clinton Bonds are subject to mandatory redemption
prior to maturity, in part, at a redemption price of 100% of the principal
amount thereof, plus accrued interest to the redemption date, in varying
principal amounts on July 15 of each year from 2018 through 2023. The Clinton
Bonds are general obligations of the Company and rank on parity in right of
payment with all other senior indebtedness of the Company. On July 24, 1998, the
Clinton Bonds were purchased by the Company's wholly owned subsidiary,
Doane/Windy Hill Joint Venture Corp., formerly DPC Funding Corp. It is
anticipated that such entity will attempt to sell the Clinton Bonds.

Foreign Subsidiaries Debt

Debt of foreign subsidiaries consists of peseta denominated borrowings from
HSBC Investment Bank Plc, for which the Midland Bank Plc, Branch in Spain is the
Facility agent. The borrowings are comprised of Tranche A, $17.6 million
(2,500,000,000 pesetas) amortizing over seven years, and Tranche B, $1.0 million
(142,000,000 pesetas) payable in full at the end of its eight year term. The
interest rates were 5.5625% and 6.5625% on Tranche A and B respectively and will
adjust with changes in MIBOR (Madrid Inter-Bank Offer Rate). The borrowings
under the Tranche B loan may be increased up to $4.2 million (600,000,000
pesatas) under certain circumstances.

Doane Pet Care Spain also entered into an interest rate swap starting
October 1998 for the notional amount of approximately $18,600, decreasing over
the three-year term of the hedge. The resulting fixed rate MIBOR is 4.495%.

Annual Maturities of Long-Term Debt

Aggregate annual maturities of long-term debt at December 31, 1998 were:

<TABLE>
<CAPTION>
DECEMBER 31,
1998
------------
<S> <C>
1999........................................................ $ 12,889
2000........................................................ 14,186
2001........................................................ 17,054
2002........................................................ 17,072
Thereafter.................................................. 397,969
</TABLE>

F-15
<PAGE> 54
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(9) FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value at December 31 of financial instruments, other
than current assets and liabilities, follows:

<TABLE>
<CAPTION>
1997 1998
----------------------- -----------------------
ESTIMATED ESTIMATED
BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Debt:
Revolving credit facility.............. $775 $775 $32,000 $32,000
Bank term loan......................... 33,937 33,937 245,000 245,000
Senior subordinated notes.............. 160,000 160,000 146,996 152,800
Other.................................. 5,698 5,698 35,174 35,174
--------- --------- --------- ---------
$200,410 $200,410 $459,170 $464,974
========= ========= ========= =========
Hedges:
Interest rate (asset).................. $-- $-- $-- $400
Commodities (asset)...................... 1,321 404 4,711 1,689
--------- --------- --------- ---------
$1,321 $404 $4,711 $2,089
========= ========= ========= =========
</TABLE>

(10) SENIOR PREFERRED STOCK

The Senior Preferred Stock has an initial liquidation preference of $25.00
per share (aggregate initial liquidation preference is $30,000). The Senior
Preferred Stock was recorded at the net proceeds of $17,075 after deducting
$12,925 paid to the Company for 1,354,478 warrants that were issued in
conjunction with the Senior Preferred Stock. The excess of the liquidation
preference over the carrying value is being accreted quarterly over a twelve
year period ended September 30, 2007 by a direct reduction to retained earnings.

Dividends on the Senior Preferred Stock are payable quarterly at the rate
of 14.25% per annum per share. Dividends on the Senior Preferred Stock accrete
to the liquidation value of the Senior Preferred Stock and, at the option of the
holders of a majority of the shares of Senior Preferred Stock, may be paid
through the issuance of additional shares of Senior Preferred Stock on each
dividend payment date through September 30, 2000. The Company does not expect to
pay dividends on the Senior Preferred Stock in cash for any period prior to
September 30, 2000. Cumulative dividends on Senior Preferred Stock that have not
been paid at December 31, 1997 and 1998, are $11,047 and $17,217, respectively,
and are included in the carrying amount of the Senior Preferred Stock. As of
December 31, 1997, and 1998, the cumulative accretion to redemption value and
cumulative dividends on the Senior Preferred Stock are $2,422 and $3,499,
respectively and $11,047 and $17,217, respectively.

F-16
<PAGE> 55
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Subsequent to September 30, 1998, and prior to September 30, 2000, the
Company is not precluded from purchasing in whole or in part the Senior
Preferred Stock on the open market at prevailing market prices. On and after
September 30, 2000, the Company may, at its option, redeem the Senior Preferred
Stock in whole or in part at redemption prices per share set forth below,
together with accrued and unpaid dividends:

<TABLE>
<CAPTION>
YEAR PERCENT OF
BEGINNING LIQUIDATION
SEPTEMBER 30, VALUE
- ------------- -----------
<S> <C> <C>
2000............................................................... 107.125%
2001............................................................... 105.700
2002............................................................... 104.275
2003............................................................... 102.850
2004............................................................... 101.425
2005............................................................... 100.000
2006............................................................... 100.000
</TABLE>

The Company will be required to redeem all outstanding shares of Senior
Preferred Stock on September 30, 2007 at 100% of the then liquidation value,
together with accrued and unpaid dividends.

In the event of a change of control, as defined, the holders of Senior
Preferred Stock have the right to require the Company to redeem such Senior
Preferred Stock, in whole or in part, at a price equal to 101% of the then
liquidation value together with any unpaid dividends.

The terms of the Senior Preferred Stock prohibit (i) the payment of
dividends on securities ranking on a parity with or junior to the Senior
Preferred Stock and (ii) redemption, repurchase or acquisition of any Junior
Securities with certain exceptions, in each case, unless full cumulative
dividends have been paid on the Senior Preferred Stock.

Holders of the Senior Preferred Stock have limited voting rights customary
for preferred stock, and the right to elect two additional directors upon
certain events such as the Company failing to declare and pay dividends on any
six consecutive dividend payment dates.

(11) COMMON STOCK

The Parent's Common Stock consists of two classes, Class A and Class B. The
Class A and Class B Common Stock are identical in all respects except that the
Class B Common Stock has no voting rights. The Class B Common Stock is
convertible into shares of Class A Common Stock at any time at the option of the
holder thereof. Each holder of Class A Common Stock is entitled to one vote for
each share of Class A Common Stock held of record on all matters submitted to a
vote of stockholders. The holders of Class A Common Stock do not have cumulative
voting rights in the election of directors. The holders of Common Stock have no
preemptive, subscription, redemptive or conversion rights, except that holders
of Class B Common Stock may, at their option, convert their shares into Class A
Common Stock.

(12) STOCK OPTION PLAN

Effective November 1, 1996, the Company's parent, Enterprises, adopted a
management stock option plan, as amended. Certain employees of the Company are
covered under this plan, and each stock option granted allows for the purchase
of one share of Enterprises common stock. The options vest based on the
attainment of certain performance levels as defined by the plan.

F-17
<PAGE> 56
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company and its parent have elected to continue to follow APB Opinion
No. 25 to account for stock awards granted to employees; however, if the Company
adopted SFAS 123 to account for stock awards granted to employees, the Company's
net income and earnings per share for the years ended December 31, 1996, 1997
and 1998 would have been reduced as follows:

<TABLE>
<CAPTION>
1996 1997 1998
---------------------- ---------------------- ----------------------
AS REPORTED PROFORMA AS REPORTED PROFORMA AS REPORTED PROFORMA
----------- -------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Net loss............... $(7,264) $(7,359) $ (151) $ (481) $(29,136) $(29,980)
Basic and diluted
earnings
per common share..... (7,264) (7,359) (151) (481) (29,136) (29,980)
</TABLE>

Pro forma information regarding net income and earnings per common share
has been determined as if the Company had accounted for its employee stock
options under the minimum value method of SFAS 123 under the assumptions of a
risk free rate of 5.75% and an expected life of options of 6 years. The Company
has no present plans to pay dividends on its Common Stock. The effects of
applying SFAS 123 as calculated above may not be representative of the effects
on reported net income for future years.

For the year ended December 31, 1998, the Company recorded compensation
expense of $765 as an addition to additional paid-in-capital in connection with
1998 stock option grants under the plan. No compensation expense was recorded in
fiscal 1996 and 1997 for grants in those years.

(13) LEASES

The Company leases certain facilities, machinery and equipment under
operating lease agreements with varying terms and conditions. Future annual
minimum lease payments under these leases are summarized as follows:

<TABLE>
<S> <C>
1999........................................................ $ 2,181
2000........................................................ 2,631
2001........................................................ 2,762
2002........................................................ 2,857
2003........................................................ 2,897
Thereafter.................................................. 5,919
-------
$19,247
=======
</TABLE>

Rent expense was $552 for the year ended December 31, 1998.

(14) TRANSITION EXPENSES

Transition expenses for 1998 represent the non-recurring transition
expenses incurred in connection with the acquisition and integration of Windy
Hill with the Company follow:

<TABLE>
<S> <C>
Relocation expense.......................................... $2,571
Merger/Relocation bonuses................................... 2,016
Severance................................................... 943
Professional fees........................................... 819
Travel...................................................... 348
Miscellaneous............................................... 346
------
$7,043
======
</TABLE>

The relocation expense represents liabilities incurred to relocate
personnel from the former Doane corporate office to merged corporate
headquarters. Merger bonuses were paid to Doane personnel in connection with the
acquisition. Professional fees represent costs for consultants in human
resources,

F-18
<PAGE> 57
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

employment, law, accounting and information systems to assist in the transition.
As of December 31, 1998, $2.6 million of these expenses were accrued and
expected to be paid in the next six months.

(15) INCOME TAXES

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1996 1997 1998
----- ------ --------
<S> <C> <C> <C>
Total taxes before extraordinary loss:
Current -- foreign........................................ $ -- $ -- $ 250
----- ------ --------
Deferred:
Federal................................................ (855) 3,084 2,790
State and local........................................ -- 305 524
Foreign................................................ -- -- 38
----- ------ --------
(855) 3,389 3,352
----- ------ --------
Total before extraordinary loss............................. (855) 3,389 3,602
Tax benefit related to extraordinary loss................... -- -- (16,001)
----- ------ --------
Total income taxes (benefit)...................... $(855) $3,389 $(12,399)
===== ====== ========
</TABLE>

Income before income tax by domestic and foreign source follows (in
thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1996 1997 1998
------- ------ ------
<S> <C> <C> <C>
Domestic.................................................... $(2,373) $9,623 $6,995
Foreign..................................................... -- -- 1,506
------- ------ ------
$(2,373) $9,623 $8,501
======= ====== ======
</TABLE>

Income tax expense differs from the amount computed by applying the Federal
statutory rate to pretax income due to the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1996 1997 1998
------- ------ ------
<S> <C> <C> <C>
Computed "expected" tax expense (benefit)................... $ (807) $3,272 $2,890
State and local taxes....................................... -- -- 341
Goodwill amortization....................................... -- -- 661
Meals and entertainment, other.............................. (48) 117 (290)
------- ------ ------
$ (855) $3,389 $3,602
======= ====== ======
</TABLE>

F-19
<PAGE> 58
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The tax effects of temporary differences that give rise to the significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1996 and 1997 are presented below:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
CURRENT DEFERRED
Deferred tax assets:
Accounts receivable....................................... $ 40 $ 544
Inventory................................................. 291 618
Accruals and provisions................................... 921 2,587
-------- --------
Current deferred tax asset........................ $ 1,252 $ 3,749
======== ========
NONCURRENT DEFERRED
Deferred tax assets -- net operating loss carryforwards..... $ 10,093 $ 27,506
Deferred tax liabilities:
Tax over book amortization.................................. (5,751) (12,364)
Difference between book and tax basis of property and
equipment................................................. (8,511) (19,903)
-------- --------
(14,262) (32,267)
Net noncurrent deferred tax liability....................... (4,169) (4,761)
-------- --------
Total net deferred tax asset (liability).......... $ (2,917) $ (1,012)
======== ========
</TABLE>

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which these temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in working this assessment. Based upon the
historical taxable income and projections for future taxable income over the
periods which the deferred tax assets are deductible, management believes it is
more likely than not the Company will realize the benefits of these deductible
differences at December 31, 1998.

At December 31, 1998, the Company has net operating loss carryforwards for
federal income tax purposes of approximately $68,319 which are available to
offset future taxable income through 2013.

(16) EMPLOYEE BENEFIT PLANS

The Company has three defined benefit, noncontributory pension plans. The
Doane plan covers substantially all non-bargaining employees (terminated on May
31, 1998). Benefits under the Doane plan are based on the employee's
compensation during the five most highly compensated consecutive years during
the ten years preceding normal retirement date. The Company has two plans
covering hourly and salaried employees of the former Hubbard Milling Company.
The Company's funding policy for these plans is to make the minimum annual
contribution required by applicable regulations. The disclosure for all of the
Company's defined benefit, noncontributory plans are aggregated in the following
footnote.

F-20
<PAGE> 59
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Net periodic pension cost for the Company's defined benefit pension plans
consisted of the following components for the years ended:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Service cost (benefits) earned................. $1,059 $1,276 $ 520
Interest cost on projected benefit
obligation................................... 781 903 867
Actual return on plan assets................... (906) (1,914) (1,391)
Net amortization and deferral.................. 71 983 204
------ ------ -------
Net periodic pension cost...................... $1,005 $1,248 $ 200
====== ====== =======
</TABLE>

Assumptions used by the Company in the determination of pension plan
information consisted of the following as of:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Discount rate............................................... 7.0% 7.0% 6.75%
Rate of increase in compensation levels..................... 5.5% 5.5% 5.5%
Expected long-term rate of return on plan assets............ 7.5% 7.5% 7.5%
</TABLE>

The following table sets forth the plan's funded status and amounts
recognized in the accompanying balance sheets as of:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits........................................... $ (8,936) $(30,817)
======== ========
Accumulated benefits...................................... $ (9,192) $(31,270)
======== ========
Projected benefits........................................ $(14,818) $(31,270)
Plan assets at fair value................................. 14,557 36,641
-------- --------
Projected benefit obligation in excess of plan
assets.......................................... (261) 5,371
Items not yet recognized in earnings:
Unrecognized net loss (gain).............................. (1,144) 674
Unrecognized net asset at December 31, 1986, being
recognized over 14.49 to 17.95 years................... 313 --
-------- --------
Pension asset (liability) recognized in the
balance sheet................................... $ (1,092) $ 6,045
======== ========
</TABLE>

F-21
<PAGE> 60
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table reconciles the beginning and ending balances of the
accumulated post retirement pension obligation as of:

<TABLE>
<CAPTION>
<S> <C>
Projected benefit obligation, December 31, 1996............. $13,060
Service cost.............................................. 1,276
Interest cost............................................. 904
Benefits paid............................................. (286)
Actuarial gain............................................ (136)
-------
Projected benefit obligation, December 31, 1997............. 14,818
Increase due to assumption charge......................... 302
Service costs............................................. 520
Interest cost............................................. 866
Benefits paid............................................. (605)
Actuarial gain............................................ 580
Effect of plan termination................................ (741)
Business combination...................................... 15,530
-------
Projected benefit obligation, December 31, 1998............. $31,270
=======
</TABLE>

The following table reconciles the beginning and ending balances of plan
assets as of:

<TABLE>
<CAPTION>
<S> <C>
Plan assets, December 31, 1996.............................. $12,586
Employer contributions.................................... 343
Actual return............................................. 1,914
Benefits paid............................................. (286)
-------
Plan assets, December 31, 1997.............................. 14,557
Employer contributions.................................... 14
Actual return............................................. 1,391
Benefits paid............................................. (606)
Business combination...................................... 21,285
-------
Plan assets, December 31, 1998.............................. $36,641
=======
</TABLE>

On October 1, 1995, the Company adopted SFAS 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions. The Company sponsors two defined
contribution postretirement plans that provide medical coverage for eligible
retirees and their dependents of Doane and the former Hubbard Milling Company
(as defined in the plans). The following sets forth the plans' funded status
reconciled with the amount shown in the Company's consolidated balance sheets
and consolidated statements of income on an accrual basis rather than a
pay-as-you-go (cash) basis as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1997 1998
------ ------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees and dependents..................................... $ 824 $3,166
Fully eligible active plan participants..................... 343 274
Other active plan participants.............................. 329 295
Unrecognized net gain....................................... 73 22
------ ------
Accrued postretirement benefit cost......................... $1,569 $3,757
====== ======
</TABLE>

F-22
<PAGE> 61
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1997 1998
------ ------ ------
<S> <C> <C> <C>
Net periodic postretirement benefit cost included the
following components:
Service cost -- benefits attributed to service during
the period.......................................... $ 17 $ 18 $ 16
Interest cost on accumulated postretirement benefit
obligation.......................................... 104 102 157
------ ------ ------
Net periodic postretirement benefit cost....... $ 121 $ 120 $ 173
====== ====== ======
</TABLE>

The following table reconciles the beginning and ending balances of the
accumulated post retirement pension obligation as of:

<TABLE>
<S> <C>
Projected benefit obligation, December 31, 1996............. $1,497
Service costs............................................. 18
Interest costs............................................ 102
Benefits paid............................................. (48)
------
Projected benefit obligation, December 31, 1997............. 1,569
Service costs............................................. 16
Interest costs............................................ 157
Benefits paid............................................. (138)
Business combination...................................... 2,153
------
Projected benefit obligation, December 31, 1998............. $3,757
======
</TABLE>

For measurement purposes per capita claims costs for participants over age
65 were assumed to increase at 7.07%, 6.50% and 6.00% annually for 1996, 1997
and 1998 respectively; the rate used to calculate the net periodic
postretirement benefit cost was assumed to decrease gradually to 2001 at the
annual rates of 4.50%, 4.00% and 3.75% for physical years ending December 31,
1996, December 31, 1997 and December 31, 1998 respectively: The rate used to
calculate the accumulated postretirement benefit obligation was assumed to
decrease gradually to 2001 at the notes of 4.00%, 4.00% and 3.75% as of December
31, 1996, December 31, 1997 and December 31, 1998 respectively. The medical cost
trend rate assumption has a significant effect on the amounts reported. To
illustrate, increasing the assumed medical cost trend rates by 1 percentage
point in each year would increase the accumulated postretirement benefit
obligation as of December 31, 1998 by $384 and the aggregate of the service and
interest cost components of net periodic postretirement benefit cost for the
year ended 1998 by $36.

The weighted-average discount rate used in determining the net periodic
postretirement benefit cost was 7.50%, 7.00% and 7.00% for physical years ending
December 31, 1996, December 31, 1997 and December 31, 1998 respectively. The
weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.00%, 7.00% and 6.75% as of December 31,
1996, December 31, 1997 and December 31, 1998 respectively.

As of June 1, 1998 the Company adopted the Doane Products Company Savings
and Investment Plan for eligible employees not covered by collective bargaining
arrangements and the Doane Products Company Savings and Investment Plan -- Union
Plan for eligible union employees at the Joplin, Missouri plant. The plans are
intended to be qualified retirement plans under the Internal Revenue Code. Both
plans permit employee contributions between 1% and 15% of pre-tax earnings
subject to annual dollar limits set by the IRS, an annual employer profit
sharing contribution of $400 for each eligible participant and a variety of
investment options. The Doane Products Company Savings and Investment Plan also
includes an employer matching contribution in an amount equal to 50% of
participant contribution, up to 6% of compensation. Vesting for the employer
match is 25% per year for each full year of service. For the year ended December
31, 1998, the Company contributed $666 to the Doane Products Company Savings and
Investment Plan.
F-23
<PAGE> 62
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Windy Hill adopted the Windy Hill Pet Food Company, Inc. Profit Sharing and
Savings Plan on March 1, 1995, as amended. The plan is intended to be a
qualified plan under the Internal Revenue Code. It permits employee
contributions from 1% to 15% of pre-tax earnings subject to annual dollar limits
set by the IRS. Of this amount, the Company will match 50% of the first 6% of
the employee contribution. In addition, the plan provides for employer
contribution to participant accounts of amounts equal to 2 1/2% of the
employee's compensation. For 1998, the Company contributed $542 towards the
Windy Hill Pet Food Company, Inc. Profit Sharing and Savings Plan.

(17) DEFERRED COMPENSATION AGREEMENTS AND SALARY CONTINUATION PLAN

The Company has deferred compensation agreements with two individuals which
provide, upon retirement, annual payments to be paid over ten consecutive years.
The liability is approximately $1,150 and $1,254 at December 31, 1997 and 1998,
respectively.

The Company also has a salary continuation plan in which there were
twenty-two and twenty-nine participants at December 31, 1997 and 1998,
respectively. Participants in the plan, who reach age fifty-five and have ten
years of service with the Company, become vested as to benefits which are
payable in ten equal annual installments after retirement. The Company has
recorded an expected future liability equal to the present value of future
payments under this plan. The liability is approximately $1,362 and $1,539 at
December 31, 1997 and 1998, respectively.

(18) MAJOR CUSTOMER

For the years ended December 31, 1996, 1997 and 1998, the same customer
accounted for approximately 63%, 61% and 52.0%, respectively, of the Company's
net sales. The Company does not have a long-term contract with this customer.

(19) RELATED PARTY TRANSACTIONS

The Company has a management advisory agreement with Summit Capital Inc.
(SCI) and Donaldson, Lufkin & Jenrette Securities Corporation (DLJ), both
stockholders of the Company and each has a member who are directors of the
Company, in which the Company pays SCI and DLJ an annual fee of $200,000 and
$100,000, respectively; such agreements terminate upon the consummation of an
initial public offering of our parent. In addition, the Company paid SCI, DLJ,
Chase Manhattan Investment Holdings Inc. and Chase Securities, Inc. both
affiliates of the Chase Manhattan Bank (collectively "Chase") Dartford
Partnership, L.L.C. and BRS, stockholders of the Company and each has members
who are directors of the Company, fees of $2.0 million, $1.0 million, $1.5
million, $3.0 million and $1.5 million in connection with the Windy Hill
acquisition. In connection with the Refinancing Transactions, DLJ and Chase
received fees of $3.8 million and $3.9 million, respectively.

F-24
<PAGE> 63
DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(20) ADDITIONAL CASH FLOW INFORMATION

The following is additional cash flow information for the years ended
December 31, 1996, 1997 and 1998.

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest paid (net of amounts capitalized)............ $21,028 $21,924 $ 27,202
Income taxes paid (refunded).......................... 351 -- (299)
Schedule of non cash investing and financing activities:
Exchange notes........................................ -- -- 137,000
Capital contribution.................................. -- -- 75,320
</TABLE>

(21) COMMITMENTS AND CONTINGENCIES

On October 30, 1998 the Company initiated a voluntary product recall for
certain dry dog food manufactured at its Temple, Texas plant. The recall covered
dry dog food manufactured at its Temple plant between July 1 and August 31, 1998
and did not apply to dry dog food manufactured at other plants or the Company's
dry cat food, biscuits, treats or canned products. The recall resulted from
reported sickness and death of dogs in the State of Texas. These conditions were
attributed to elevated levels of aflatoxins in corn which, is an ingredient in
dry dog food. Aflatoxins are compounds produced from certain kinds of crop molds
that can be caused by extreme weather conditions such as drought and heat. The
Company has an extensive corn testing program for the detection of aflatoxins
and that program has been intensified since the problems were reported. The
Company maintains insurance against losses from illness or death of animals;
however, the cost of the product recall was not covered by insurance. The
Company recorded a $3.0 million product recall charge in the fourth quarter of
fiscal 1998.

The Company is party, in the ordinary course of business, to other claims
and litigation. In management's opinion, the resolution of such matters is not
expected to have a material impact on the financial condition or results of
operations of the Company.

(22) QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
1998 QUARTER QUARTER QUARTER QUARTER
---- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales.......................................... $144,307 $140,843 $176,511 $225,002
Gross profit....................................... 24,340 24,768 33,970 49,138
Net income (loss).................................. 3,279 2,474 222 (27,864)
</TABLE>

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
1997 QUARTER QUARTER QUARTER QUARTER
---- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales.......................................... $141,741 $137,215 $132,445 $153,340
Gross profit....................................... 19,016 18,885 20,623 23,321
Net income......................................... 995 481 1,905 2,853
</TABLE>

The prior quarters have been restated due to the revised valuation of the
stock of the Company's parent.

F-25
<PAGE> 64

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 -- Certificate of Incorporation of Doane Pet Care Company
(incorporated by reference to Exhibit 3.1 to Doane Pet
Care Company's Registration Statement on Form S-1, Reg.
No. 33-98110 (the "Form S-1"))
3.2 -- Certificate of Amendment to Certificate of Incorporation
of Doane Pet Care Company (incorporated by reference to
Exhibit 3.2 to Doane Pet Care Company's Annual Report on
Form 10-K for the year ended December 31, 1997 (the "1997
Form 10-K"))
3.3 -- Bylaws of Doane Pet Care Company (incorporated by
reference to Exhibit 3.2 to the Form S-1)
4.1 -- Indenture dated November 12, 1998 between Doane Pet Care
Company and Wilmington Trust Company (incorporated by
reference to Exhibit 10.12 of Doane Pet Care Enterprises,
Inc.'s Registration Statement on Form S-1, Reg. No. 333-
61027 ("Enterprises' Form S-1"))
4.2 -- Registration Agreement among Doane Pet Care Company,
Donaldson, Lufkin & Jenrette Securities Corporation and
Chase Securities Inc. dated November 12, 1998
(incorporated by reference to Exhibit 4.2 to Doane Pet
Care Company's Registration Statement on Form S-4, Reg.
No. 333-70759 (the "Form S-4"))
9.1 -- Amended and Restated Investors' Agreement dated as of
August 3, 1998 among Doane Pet Care Company, Doane Pet
Care Enterprises, Inc., Summit Capital Inc., Summit/DPC
Partners, L.P., Chase Manhattan Investment Holdings,
Inc., Baseball Partners, DLJ Merchant Banking Partners,
L.P., DLJ International Partners, C.V., DLJ Offshore
Partners, C.V., DLJ Merchant Banking Funding, Inc., DLJ
First ESC, L.P., Dartford Partnership, L.L.C., Bruckmann,
Rosser, Sherrill & Co., L.P., PNC Capital Corp, Windy
Hill Pet Food Company, L.L.C. and certain other persons
named therein (incorporated by reference to Exhibit 9.1
of Enterprises' Form S-1)
9.2 -- First Amendment to First Amended and Restated Investors'
Agreement dated as of October 14, 1998 among Doane Pet
Care Company, Doane Pet Care Enterprises, Inc., Summit
Capital Inc., Summit/DPC Partners, L.P., Chase Manhattan
Investment Holdings, Inc., Baseball Partners, DLJ
Merchant Banking Partners, L.P., DLJ International
Partners, C.V., DLJ Offshore Partners, C.V., DLJ Merchant
Banking Funding, Inc., DLJ First ESC, L.P., Dartford
Partnership, L.L.C., Bruckmann, Rosser, Sherrill & Co.,
L.P., PNC Capital Corp, Windy Hill Pet Food Company,
L.L.C. and certain other persons named therein
(incorporated by reference to Exhibit 9.2 of the Form
S-4)
9.3 -- Second Amendment to First Amended and Restated Investor's
Agreement dated as of February 4, 1999 among Doane Pet
Care Company, Doane Pet Care Enterprises, Inc., Summit
Capital Inc., Summit/DPC Partners, L.P., Chase Manhattan
Investment Holdings, Inc., Baseball Partners, DLJ
Merchant Banking Partners, L.P., DLJ International
Partners, C.V., DLJ Offshore Partners, C.V., DLJ Merchant
Banking Funding, Inc., DLJ First ESC, L.P., Dartford
Partnership, L.L.C., Bruckmann, Rosser, Sherrill & Co.,
L.P., PNC Capital Corp, Windy Hill Pet Food Company,
L.L.C. and certain other persons named therein
(incorporated by reference to Exhibit 9.3 to Enterprises'
Form S-1)
</TABLE>
<PAGE> 65

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
*9.4 -- Third Amendment to First Amended and Restated Investors'
Agreement dated as of April 8, 1999 among Doane Pet Care
Company, Doane Pet Care Enterprises, Inc., Summit Capital
Inc., Summit/DPC Partners, L.P. Chase Manhattan
Investment Holdings, Inc., Baseball Partners, DLJ
Merchant Banking Partners, L.P., DLJ International
Partners, C.V., DLJ Offshore Partners, C.V., DLJ Merchant
Banking Funding, Inc., DLJ First ESC, L.P., Dartford
Partnership, L.L.C., Bruckmann, Rosser, Sherrill & Co.,
L.P., PNC Capital Corp, Windy Hill Pet Food Company,
L.L.C. and certain other persons named therein
10.1 -- Early Retirement Agreement and Release effective as of
June 30, 1998 between Doane Pet Care Company and Bob L.
Robinson (incorporated by reference to Exhibit 10.1 of
Enterprises' Form S-1)
10.2 -- Employment Agreement dated January 1, 1998, between Doane
Pet Care Company and Douglas J. Cahill (incorporated by
reference to Exhibit 10.3 to the 1997 Form 10-K)
10.3 -- Employment Agreement dated January 1, 1998, between Doane
Pet Care Company and Thomas R. Heidenthal (incorporated
by reference to Exhibit 10.4 to the 1997 Form 10-K)
10.4 -- Employment Agreement dated January 1, 1998, between Doane
Pet Care Company and Richard D. Wohlschlaeger
(incorporated by reference to Exhibit 10.4 to the Form
S-4)
10.5 -- Employment Agreement dated January 1, 1998, between Doane
Pet Care Company and Richard A. Hannasch (incorporated by
reference to Exhibit 10.5 to the Form S-4)
10.6 -- Employment Agreement dated January 1, 1998, between Doane
Pet Care Company and David L. Horton (incorporated by
reference to Exhibit 10.6 to the Form S-4)
10.7 -- Doane Pet Care Enterprises, Inc.'s 1996 Stock Option Plan
(incorporated by reference to Exhibit 10.7 to Doane Pet
Care Company's Annual Report on Form 10-K for the year
ended December 31, 1996)
10.8 -- First Amendment to Doane Pet Care Enterprises, Inc.'s
1996 Stock Option Plan (incorporated by reference to
Exhibit 10.8 to the 1997 Form 10-K)
10.9 -- Second Amendment to Doane Pet Care Enterprises, Inc.'s
1996 Stock Option Plan (incorporated by reference to
Exhibit 10.9 to the 1997 Form 10-K)
10.10 -- Termination and Dissolution Agreement, dated March 25,
1998, between Flint River Mills, Inc. and Windy Hill Pet
Food Company, Inc. (incorporated by reference to the
Quarterly Report of Windy Hill Pet Food, Inc. on Form
10-Q filed on May 12, 1998)
</TABLE>
<PAGE> 66

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.11 -- Revolving Credit and Term Loan Agreement dated as of
November 12, 1998 among Doane Pet Care Company, Doane Pet
Care Enterprises, Inc., DLJ Capital Funding, Inc., as
syndication agent, Mercantile Bank National Association,
as documentation agent, and The Chase Manhattan Bank, as
administrative agent, and the banks named therein
(incorporated by reference to Exhibit 10.13 of
Enterprises' Form S-1)
10.12 -- Employment Agreement dated February 15, 1999, between
Doane Pet Care Company and Philip K. Woodlief
(incorporated by reference to Exhibit 10.14 to
Enterprises' Form S-1)
21.1 -- List of subsidiaries of Doane Pet Care Company
(incorporated by reference to Exhibit 21.1 to the Form
S-4)
**27.1 -- Financial Data Schedule
</TABLE>

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

* Filed herewith.
** Previous filed.

<PAGE> 1
EXHIBIT 9.4

THIRD AMENDMENT TO FIRST AMENDED
AND RESTATED INVESTORS' AGREEMENT

This Third Amendment to the First Amended and Restated Investors'
Agreement (this "Agreement") dated as of April 8, 1999, is entered into by and
among (i) Doane Pet Care Enterprises, Inc., formerly known as DPC Acquisition
Corp. (the "Company"), (ii) Doane Pet Care Company formerly known as Doane
Products Company ("Doane"), (iii) Summit Capital Inc. ("Summit"), (iv)
Summit/DPC Partners, L.P. ("Summit/DPC"), (v) Chase Manhattan Investment
Holdings, Inc. ("Chase"), (vi) DLJ Merchant Banking Partners, L.P., DLJ
International Partners, C.V., DLJ Offshore Partners, C.V., DLJ Merchant Banking
Funding, Inc., DLJ First ESC, L.L.C., (each of the foregoing in this clause
(vi), a "DLJ Entity," and collectively, the "DLJ Entities"), (vii) Dartford
Partnership, L.L.C. ("Dartford"), (viii) Bruckmann, Rosser, Sherrill & Co., L.P.
("BRS"), (ix) PNC Capital Corp ("PNC"), (x) Windy Hill Pet Food Company, L.L.C.
("Windy Hill L.L.C."), (xi) Baseball Partners and (xii) the other Persons listed
on the signature pages hereto.

W I T N E S S E T H :

WHEREAS, certain stockholders and warrantholders of the Company are
parties to or bound by that certain First Amended and Restated Investors'
Agreement dated as of August 3, 1998, as amended to date (the "Original
Agreement");

WHEREAS, the parties hereto wish to reflect that the DLJ Entities will no
longer be a party to the governance provisions contained herein but will remain
subject to the provisions in Article 5 and Article 7; and

WHEREAS, the undersigned, constituting the holders of more than 75% of
the shares of Common Stock of the Company (including the Warrants on an "as-if
exercised" basis) desire to amend the Original Agreement on the terms of this
Agreement and, except as amended by this Agreement, ratify the terms of the
Original Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in exchange for the mutual
covenants herein, the parties hereto agree as follows:

AGREEMENTS

1. Defined Terms. Capitalized terms used in this Agreement that are not
defined herein shall have the meanings given to them in the Original Agreement.

2. Amendments. From and after the IPO Closing Date (as defined below), the
Original Agreement shall be amended as follows:

<PAGE> 2

(a) Section 1.1(a) is amended by adding the following defined terms:

"BYLAWS" means the bylaws of the Company, as amended or
restated from time to time.

"CLASS I DIRECTOR" means any director of the Board then
serving in one of the Board positions specified as a "Class I"
position by the Bylaws of Company.

"CLASS II DIRECTOR" means any director of the Board then
serving in one of the Board positions specified as a "Class II"
position by the Bylaws of Company.

"CLASS III DIRECTOR" means any director of the Board then
serving in one of the Board positions specified as a "Class III"
position by the Bylaws of Company.

"IPO CLOSING DATE" means the date on which an Initial Public
Offering is consummated.

"SHAREHOLDER" means each Person (other than the Company or
Doane) who shall be a party to this Agreement, whether in
connection with the execution and delivery hereof as of the date
hereof, pursuant to Section 7.3 or otherwise, or bound by this
Agreement by reason of being a party to the Original Agreement, in
each case, so long as such Person shall beneficially own any
Securities; provided, however, that the term "Shareholder" shall
not include and shall not create benefits or obligations with
respect to any of the DLJ Entities other than such benefits and
obligations provided in Article 5 and Article 7.

(b) Section 2.1(a) is hereby amended in its entirety to provide as
follows:

"(a) From and after the IPO Closing Date, the Board shall consist
of eight members or such greater number as is established in
accordance with the Bylaws, and the Company shall take such action
as is necessary to cause the following persons to be nominated, in
accordance with the Bylaws, to stand for election to serve as
directors in the positions (i.e., as Class I Directors, Class II
Directors or Class III Directors) specified below:

(i) (A) at any time the Summit-Investors own of record 50%
or more of the number of shares of Common Stock owned
thereby as of August 3, 1998 (in each case, disregarding
stock splits, recapitalizations and similar adjustments in
number of shares and stock dividends), two individuals
designated by Summit on behalf of the Summit-Investors, and,
as long as the Board is classified, of such two individuals,
one shall stand for election as a Class III Director and the
second individual shall stand for election as a

-2-
<PAGE> 3
Class II Director (each such person, a "SUMMIT-INVESTOR
DESIGNEE") and (B) at any time the Summit-Investors own of
record less than 50% of the number of shares of Common Stock
owned thereby as of August 3, 1998 (disregarding stock
splits, recapitalizations, and similar adjustments in
number of shares and stock dividends) and the
Summit-Investors' Percentage Ownership is 5% or more, one
individual designated by Summit on behalf of the
Summit-Investors and, so long as the Board is classified,
such individual shall stand for election as a Class III
Director;

(ii) (A) at any time the Windy Hill Investors own of
record (or beneficially by reason of the record ownership of
IBJ Whitehall Bank & Trust Company (formerly IBJ Schroder
Bank & Trust Company) ("IBJ")) 50% or more of the number of
shares of Common Stock owned thereby as of August 3, 1998
(in each case, disregarding stock splits, recapitalizations
and similar adjustments in number of shares and stock
dividends), one individual designated by Windy Hill L.L.C.,
which individual shall stand for election as a Class II
Director, and one individual designated by BRS, which
individual shall stand for election as a Class I Director
(such two designees collectively referred to as the "Windy
Hill Designees" or individually as a "Windy Hill Designee")
and (B) at any time the Windy Hill Investors own of record
(or beneficially by reason of the record ownership of IBJ
less than 50% of the number of shares of Common Stock owned
thereby as of August 3, 1998 (in each case, disregarding
stock splits, recapitalizations and similar adjustments in
number of shares and stock dividends) and the Windy Hill
Investors' Percentage Ownership is 5% or more, the Windy
Hill Representative (which, the Windy Hill Investors hereby
agree, shall initially be Ray Chung) shall be nominated to
stand for election and, so long as the Board is classified,
the Windy Hill Representative shall stand for election to
serve as a Class II Director;

(iii) at any time the Chase Percentage Ownership is 5% or
greater, one individual shall be designated by Chase (the
"CHASE DESIGNEE") to stand for election and, so long as the
Board is classified, the Chase Designee shall stand for
election to serve as a Class III Director;

(iv) the chief executive officer of the Company shall be
designated to stand for election and, so long as the Board
is classified, the chief executive officer shall stand for
election to serve as a Class II Director; and

(v) in addition to the individuals contemplated above, at
any time the Summit-Investors' Percentage Ownership is 5% or
more, one individual designated by George B. Kelly (so long
as Mr. Kelly serves as a member of the Board) or, if Mr.
Kelly is not then serving on the Board, designated by the
Summit-Investor Designee or Designees then serving on the
Board, to stand for election to serve as a Class II Director
(the "Kelly Designee").

-3-
<PAGE> 4

Director positions for which a nominee is not specified in
accordance with the preceding provisions of this Section 2.2(a)
shall be specified in accordance with the Bylaws; provided, the
initial nominees for such positions shall be nominated by a
majority of the other individuals nominated or designated in
accordance with the preceding provisions of this Section 2.2(a),
or in the absence of such majority, by the Chairman of the Board.

At the Company's request, each Shareholder entitled to vote
for the election of directors to the Board shall vote its
Securities and execute written consents to increase the Board size
and to elect independent directors to accommodate the requirements
for listing the Securities on any national securities exchange or
market system on which the Board determines that the Securities
shall be listed or included or to include at least two individuals
who are "Non-Employee Directors" for purposes of, and as such term
is referred to in, Rule 16b-3 of the Exchange Act. Each
Shareholder entitled to vote for the election of directors to the
Board agrees that it will vote its Securities or execute consents,
as the case may be, and take all other reasonable action
(including taking reasonable steps to cause the Company to call a
special meeting of shareholders) in order to ensure that the
composition of the Board is as set forth in this Section 2.1(a).
The parties to this Agreement acknowledge and agree that, due to
the existence of stockholders entitled to vote for the election of
directors that are not parties to this Agreement, the right to
designate an individual pursuant to this Section 2.1(a) and the
obligations of the Shareholders to vote for or consent to any
individual designated in accordance with this Section 2.1(a) may
not be sufficient to ensure that such individual shall be elected
to the Board."

"Removal and Resignation.

(a) Each Shareholder agrees that it will not vote any of
its Securities in favor of the removal of any director who
shall have been designated or nominated pursuant to Section
2.1(a) unless (i) such removal shall be for Cause (as
defined below) or (ii) the Person(s) entitled to designate
or nominate such director shall have consented to or
requested such removal in writing (and, in the case of any
such request, such Shareholder shall vote its Securities in
favor of such removal). Removal for "Cause" shall mean
removal of a director because of such director's (A) willful
and continued failure substantially to perform his duties
with the Company in his established position, (B) willful
conduct which is injurious to the Company or any of its
Subsidiaries, monetarily or otherwise, (C) conviction for,
or guilty plea to, a felony or a crime involving moral
turpitude, (D) abuse of illegal drugs or other controlled
substances or habitual intoxication or (E) willful breach of
this Agreement.

(b) (i) At any time there are two Summit-Investor
Designees serving on the Board when (A) the Summit-Investors
own of record less than 50% of the

-4-
<PAGE> 5
number of shares of Common Stock owned thereby as of August
3, 1999 (disregarding stock splits, recapitalizations and
similar adjustments in the number of shares and stock
dividends) and (B) the Summit-Investors' Percentage
Ownership is 5% or greater, upon the request of a majority
of the other directors, the Summit-Investors shall use their
commercial best efforts to cause one of the two
Summit-Investor Designees to resign, and the resigning
Summit-Investor Designee shall be the individual identified
by George B. Kelly or, if Mr. Kelly fails to identify the
resigning Summit-Investor Designee, the resigning
Summit-Investor Designee shall be the Summit-Investor
Designee that is not Mr. Kelly or (ii) at any time there are
any Summit-Investor Designees serving on the Board when the
Summit-Investors' Percentage Ownership is less than 5%, upon
the request of a majority of the other directors of the
Board, the Summit-Investors shall use their commercial best
efforts to cause each Summit-Investor Designee and the Kelly
Designee to resign from the Board;

(c) (i) At any time there are two Windy Hill Designees
serving on the Board when (A) the Windy Hill Investors own
of record (or beneficially by reason of the record ownership
of IBJ) less than 50% of the number of shares of Common
Stock owned thereby as of August 3, 1999 (disregarding stock
splits, recapitalizations and similar adjustments in the
number of shares and stock dividends) and (B) the Windy Hill
Investors' Percentage Ownership is 5% or greater, upon the
request of a majority of the other directors, the Windy Hill
Investors shall use their commercial best efforts to cause
one of the two Windy Hill Investor Designees to resign, and
the resigning Windy Hill Designee shall be the individual
identified by the Windy Hill Representative or, if the Windy
Hill Representative fails to identify the resigning Windy
Hill Designee, the resigning Windy Hill Designee shall be
the Windy Hill Designee that is not the Windy Hill
Representative or (ii) at any time there are any Windy Hill
Designees serving on the Board when the Windy Hill
Investors' Percentage Ownership is less than 5%, upon the
request of a majority of the other directors of the Board,
the Windy Hill Investors shall use their commercial best
efforts to cause each Windy Hill Designee to resign from the
Board;

(d) at any time the Chase Designee is serving on the
Board when Chase's Percentage Ownership is less than 5%,
upon the request of a majority of the other directors of the
Board, Chase shall use its commercial best efforts to cause
the Chase Designee to resign from the Board;

(d) Section 2.3 is hereby amended in its entirety to provide as
follows:

2.3 Vacancies. The Shareholders recognize that under the terms
of the certificate of incorporation and the bylaws that any
vacancy in the Board, whether arising through death, resignation,
or removal of a director, or through an increase in the number of
directors of any class, shall be filled by the majority vote of
the remaining

-5-

<PAGE> 6

directors, although less than a quorum, or by a sole remaining
director. In the event of such vacancy, each Shareholder entitled
to vote for the election of directors to the Board agrees that it
will use commercial best efforts to cause its Board nominee, if
any and if then serving on the Board, to fill any such vacancy in
the following manner:

(a) any vacancy created by the death, disability,
retirement, resignation or removal of any individual (a
"Former Director") designated under clauses (i), (ii), (iii)
or (v) of Section 2.1(a) shall be filled by the applicable
person or persons that designated the Former Director so
long such person or persons remains entitled to designate an
individual under the applicable clause of Section 2.1(a);
and

(b) any vacancy created by an increase in the number of
directors of any class shall be filled in accordance with
the Bylaws."

(e) A new Section 7.12 is hereby added to the Original Agreement and
shall provides in its entirety as follows:

"7.12 Termination of Certain Rights and Obligations.
Notwithstanding anything to the contrary in the Original
Agreement, as amended, none of the DLJ Entities shall have any
rights or obligations, and will not be considered a "Shareholder"
under this Agreement other than with respect to (a) obligations or
liabilities arising from a breach, if any, of any DLJ Entity that
occurred prior to the IPO Closing Date, (b) rights and obligations
under Article 5 to the extent relating to registration rights and
(c) rights and obligations under Article 7."

3. Terminology. The phrases "as of the date of this Agreement" and "the date
hereof," when used in the text of the Original Agreement, refer to August 3,
1998.

4. Ratification. Except as expressly set forth herein, the terms and
provisions of the Original Agreement, as amended prior to the date hereof, are
hereby ratified and confirmed.

5. Miscellaneous. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

-6-
<PAGE> 7

DOANE PET CARE ENTERPRISES, INC.

By: /s/ THOMAS R. HEIDENTHAL
---------------------------------
Name: Thomas R. Heidenthal
-------------------------------
Title: Senior V.P. & C.F.O.
------------------------------

DOANE PET CARE COMPANY

By: /s/ THOMAS R. HEIDENTHAL
---------------------------------
Name: Thomas R. Heidenthal
-------------------------------
Title: Senior V.P. & C.F.O.
------------------------------

SUMMIT CAPITAL INC.

By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------

CHASE MANHATTAN INVESTMENT
HOLDINGS, INC.

By: /s/ JEFFREY C. WALKER
---------------------------------
Name: Jeffrey C. Walker
-------------------------------
Title: CEO
------------------------------

BASEBALL PARTNERS

By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------

SUMMIT/DPC PARTNERS, L.P.

BY: SUMMIT CAPITAL, INC.,
its General Partner

By:
---------------------------------
Name: George B. Kelly
Title: Chairman

-7-

<PAGE> 8

DLJ MERCHANT BANKING PARTNERS, L.P.,
a Delaware Limited Partnership

BY DLJ MERCHANT BANKING, INC.
Managing General Partner

By: /s/ PETER GRAUER
---------------------------------
Name: Peter Grauer
-------------------------------
Title: Managing Director
------------------------------

DLJ INTERNATIONAL PARTNERS, C.V.

BY: DLJ MERCHANT BANKING, INC.
Advisory General Partner

By: /s/ PETER GRAUER
--------------------------
Name: Peter Grauer
------------------------
Title: Managing Director
-----------------------

DLJ OFFSHORE PARTNERS, C.V.

BY: DLJ MERCHANT BANKING, INC.
Advisory General Partner

By: /s/ PETER GRAUER
--------------------------
Name: Peter Grauer
------------------------
Title: Managing Director
-----------------------

DLJ FIRST ESC, L.L.C.

By: /s/ PETER GRAUER
---------------------------------
Name: Peter Grauer
-------------------------------
Title: Managing Director
------------------------------

DLJ MERCHANT BANKING FUNDING, INC.

By: /s/ PETER GRAUER
---------------------------------
Name: Peter Grauer
-------------------------------
Title: Managing Director
------------------------------

THE ROSENTHAL 1989 TRUST

By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------

-8-

<PAGE> 9

By: /s/ DICK H. WEBER
---------------------------------------
Dick H. Weber

By: /s/ TERRY W. BECHTEL
---------------------------------------
Terry W. Bechtel

By:
---------------------------------------
Bob L. Robinson

ROBINSON MANAGEMENT L.P.

By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------

BOB L. ROBINSON GRANTOR RETAINED
ANNUITY TRUST

By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------

JEANINE L. ROBINSON GRANTOR RETAINED
ANNUITY TRUST

By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------

By:
---------------------------------------
Roy E. Hess

By:
---------------------------------------
Earl R. Clements

-9-

<PAGE> 10

By:
---------------------------------------
J. David Heaney

By: /s/ LAURA HAWKINS MANSUR
---------------------------------------
Laura Hawkins Mansur

By: /s/ WALID MANSUR
---------------------------------------
Walid Mansur

THE KAREEM ROBERT MANSUR TRUST

By: /s/ WALID MANSUR, TRUSTEE
---------------------------------------
Walid Mansur, Trustee

THE SARA SELMA MANSUR TRUST

By: /s/ WALID MANSUR, TRUSTEE
---------------------------------------
Walid Mansur, Trustee

THE LEILA MARIAM MANSUR TRUST

By: /s/ WALID MANSUR, TRUSTEE
---------------------------------------
Walid Mansur, Trustee

By:
---------------------------------------
Gary L. Rosenthal

By:
---------------------------------------
Lee H. Rosenthal

By:
---------------------------------------
Ferd A. Rosenthal

-10-

<PAGE> 11

The following signatories are the "Windy Hill Investors." Each of the
Windy Hill Investors and IBJ are parties to an escrow and pledge agreement dated
August 3, 1998 pursuant to which IBJ, as escrow and collateral agent, is the
record holder of all shares of Common Stock beneficially owned by the Windy Hill
Investors. Each of the undersigned Windy Hill Investors, as evidenced by its
signature below, hereby directs IBJ to enter into this Agreement.

DARTFORD PARTNERSHIP, L.L.C.

By: /s/ RAY CHUNG
---------------------------------
Name: Ray Chung
-------------------------------
Title: Executive Vice President
------------------------------

BRUCKMANN, ROSSER, SHERRILL & CO., L.P.

By: /s/ STEPHEN C. SHERRILL
---------------------------------
Name: Stephen C. Sherrill
-------------------------------
Title: Managing Director
------------------------------

PNC CAPITAL CORP

By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------

WINDY HILL PET FOOD COMPANY L.L.C.

By: /s/ RAY CHUNG
---------------------------------
Name: Ray Chung
-------------------------------
Title: Executive Vice President
------------------------------

------------------------------------
Robert V. Dale

------------------------------------
F. Donald Cowan, Jr.

-11-

<PAGE> 12

------------------------------------
Donald L. Gadd

------------------------------------
Henry G. Hurd, Jr.

------------------------------------
Ben W. McCrory

------------------------------------
Vaughn R. Oakley

------------------------------------
Charles Dunleavy

-12-

<PAGE> 13

BCB PARTNERSHIP, BRUCE C. BRUCKMANN,
DONALD J. BRUCKMANN, PAUL D. KAMINSKI,
NAZ PARTNERSHIP, HAROLD O. ROSSER, H.
VIRGIL SHERRILL, STEPHEN C. SHERRILL,
NANCY A. ZWENG, ELIZABETH MCSHANE,
BEVERLY PLACE, BY THE FOLLOWING
PERSONS:

By: /s/ STEPHEN C. SHERRILL
-------------------------------------
Stephen C. Sherrill, Attorney-in-Fact

By: /s/ STEPHEN C. SHERRILL
------------------------------------
Stephen C. Sherrill, Individually

IBJ WHITEHALL BANK & TRUST COMPANY,
as escrow and collateral agent and
record holder for the shares of Common
Stock beneficially owned by the Windy
Hill Investors set forth above.

By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------

-13-