<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>e16591_8k.txt
<DESCRIPTION>FORM 8-K
<TEXT>
--------------------------------------------------------------------------------

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM 8-K

                                   ----------

                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         Securities Exchange Act of 1934

       Date of Report (Date of earliest event reported) December 26, 2003

                        PHIBRO ANIMAL HEALTH CORPORATION
             (Exact name of registrant as specified in its charter)

           New York                   333-64641                 13-1840497
----------------------------   ------------------------   ----------------------
(State or other jurisdiction   (Commission File Number)       (IRS Employer
      of incorporation)                                   Identification Number)

                                One Parker Plaza
                           Fort Lee, New Jersey 07024
     ----------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (201) 944-6020
     ----------------------------------------------------------------------
              (Registrant's telephone number, including area code)

================================================================================

<PAGE>

Item 2. Acquisition or Disposition of Assets.

      Effective December 26, 2003 (the "Closing Date"), Phibro Animal Health
Corporation (formerly known as Philipp Brothers Chemicals, Inc., the "Company")
completed the divestiture of substantially all of the business and assets of its
subsidiary, The Prince Manufacturing Company ("PMC"), to a company ("Buyer")
formed by Palladium Equity Partners II, LP and certain of its affiliates (the
"Palladium Investors"), and the related reduction of the Company's preferred
stock held by the Palladium Investors (collectively the "Prince Transactions").

      Pursuant to definitive purchase and other agreements executed on and
effective as of the Closing Date, the Prince Transactions included the following
elements: (i) the transfer of substantially all of the business and assets of
PMC to Buyer; (ii) the reduction of the value of the Company's Preferred Stock
owned by the Palladium Investors from $72.2 million to $16.5 million (accreted
through the Closing Date) by means of the redemption of all of its shares of
Series B Preferred Stock and a portion of its Series C Preferred Stock; (iii)
the termination of $2.25 million in annual management advisory fees payable by
the Company to Palladium; (iv) a cash payment of $10 million to the Palladium
Investors in respect of the portion of the Company's Preferred Stock not
exchanged in consideration of the business and assets of PMC; (v) the agreement
of the Buyer to pay the Company for advisory fees for the next three years of $1
million, $500,000 and $200,000, respectively (which were pre-paid at closing by
the Buyer and satisfied for $1.3 million, the net present value of such
payments); and (vi) the Buyer agreed to supply manganous oxide and red iron
oxide products and to provide certain mineral blending services to the Company's
Prince Agriproducts subsidiary ("Prince Agri"). Prince Agri agreed to continue
to provide the Buyer with certain laboratory, MIS and telephone services, all on
terms substantially consistent with the historic relationship between Prince
Agri and PMC, and to lease to Buyer office space currently used by PMC in
Quincy, Illinois. The Company has an understanding to receive certain treasury
services from Palladium for $100,000 per year. Pursuant to definitive
agreements, the Company made customary representations, warranties and
environmental and other indemnities, agreed to a post-closing working capital
adjustment, paid $3.958 million in full satisfaction of all intercompany debt
owed to PMC, paid a closing fee to Palladium of $500,000, made certain capital
expenditure adjustments included as part of the intercompany settlement amount,
and agreed to pay for certain out-of-pocket transaction expenses. PMC retained
$414,000 of its accounts receivable. The Company established a $1 million letter
of credit escrow for two years to secure its working capital adjustment and
certain indemnification obligations. The Company agreed to indemnify the
Palladium Investors for a portion, at the rate of $0.65 for every dollar, of the
amount they receive in respect of the disposition of Buyer for less than $21
million, up to a maximum payment by the Company of $4 million (the "Backstop
Indemnification Amount"). The Backstop Indemnification Amount would be payable
on the earlier to occur of July 1, 2008 or six months after the redemption date
of all of the Company's Senior Secured Notes due 2007 if such a disposition
closes prior to such redemption and six months after the closing of any such
disposition if the disposition closes after any such redemption. The Company's
obligations with respect to the Backstop Indemnification Amount will cease if
the Palladium Investors do not close the disposition of Buyer by January 1,
2009. The definition of "Equity Value" in the Company's Certificate of
Incorporation was amended to reduce the multiple of trailing EBITDA payable in
connection with any future redemption of Series C Preferred to 6.0 from 7.5. The
amount of consideration paid and payable in connection with the Prince
Transactions and all matters in connection therewith was determined pursuant to
arm's length negotiations.


                                       1
<PAGE>

Item 7. Financial Statements and Exhibits

      (b) Pro forma financial information.

            Pro Forma consolidated financial statements of the Company giving
            effect to the Prince Transactions (see following page)

      (c) Exhibits

Exhibit 1         Purchase and Sale Agreement dated as of December 26, 2003 by
                  and among Phibro Animal Health Corporation ("PAHC"), Prince
                  MFG, LLC, ("Prince MFG"), The Prince Manufacturing Company
                  ("Prince" and together with PAHC and Prince MFG, the "Phibro
                  Parties"), Palladium Equity Partners II, L.P. ("PEP II"),
                  Palladium Equity Partners II-A, L.P., ("PEP II-A"), Palladium
                  Equity Investors II, L.P., ("PEI II", and together with PEP II
                  and PEP II-A, the "Investor Stockholders"), and Prince Mineral
                  Company, Inc. ("Buyer")

Exhibit 2         Environmental Indemnification Agreement dated as of December
                  26, 2003 between the Phibro Parties and Buyer

Exhibit 3         Amendment to Stockholders Agreement dated as of December 26,
                  2003 between PAHC, the Investor Stockholders and Jack Bendheim

Exhibit 4         Advisory Fee Agreement dated as of December 26, 2003 between
                  Buyer and PAHC*

Exhibit 5         Certificate of Incorporation of PAHC, as amended

Exhibit 6         Amended and Restated Management Services Agreement dated as of
                  October 21, 2003 between Palladium Capital Management, L.L.C
                  and PAHC*

----------
*     This Exhibit is a management compensatory plan or arrangement.


                                       2
<PAGE>

                        PHIBRO ANIMAL HEALTH CORPORATION
         INDEX TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                                                          Page
                                                                          ----
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
  as of September 30, 2003                                                  4

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
  for the Three Months Ended September 30, 2003                             5

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
  for the Year Ended June 30, 2003                                          6

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
  FINANCIAL STATEMENTS                                                    7 - 10


                                       3
<PAGE>

                PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES
           PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                            As of September 30, 2003
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                    Historical          Pro forma                Pro forma
                                                                     Balances          Adjustments                Balances
                                                                    ----------         -----------               ---------
                                                       ASSETS
<S>                                                                  <C>                <C>        <C>           <C>
CURRENT ASSETS:
      Cash and cash equivalents                                      $  26,917          $ (16,290) 2. (b)        $   3,839
                                                                                           (8,088) 2. (c)
                                                                                            1,300  2. (e)
      Trade receivables, less allowance for doubtful accounts
       of $1,466 historical and $1,466 pro forma                        54,324             (1,947) 2. (a)           52,377
      Other receivables                                                  4,541                 (3) 2. (a)            4,538
      Inventories                                                       94,389             (5,788) 2. (a)           88,601
      Prepaid expenses and other current assets                          9,117                (49) 2. (a)            9,068
                                                                     ---------          ---------                ---------

        TOTAL CURRENT ASSETS                                           189,288            (30,865)                 158,423

PROPERTY, PLANT AND EQUIPMENT, net                                      65,317             (2,725) 2. (a)           62,592

INTANGIBLES                                                              8,080                 --                    8,080

OTHER ASSETS                                                            13,531               (667) 2. (a)           12,864
                                                                     ---------          ---------                ---------
                                                                     $ 276,216          $ (34,257)               $ 241,959
                                                                     =========          =========                =========

                                         LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
      Cash overdraft                                                 $   2,417          $    (563) 2. (a)        $   1,854
      Loans payable to banks                                            38,750                 --                   38,750
      Current portion of long-term debt                                 23,828                 --                   23,828
      Accounts payable                                                  59,235             (2,639) 2. (a)           56,596
      Accrued expenses and other current liabilities                    48,965               (645) 2. (a)           49,620
                                                                                            1,300  2. (e)
                                                                     ---------          ---------                ---------
        TOTAL CURRENT LIABILITIES                                      173,195             (2,547)                 170,648

LONG-TERM DEBT                                                         102,880                 --                  102,880

OTHER LIABILITIES                                                       15,057                (74) 2. (a)           18,983
                                                                                            4,000  2. (d)
                                                                     ---------          ---------                ---------
        TOTAL LIABILITIES                                              291,132              1,379                  292,511
                                                                     ---------          ---------                ---------

COMMITMENTS AND CONTINGENCIES

REDEEMABLE SECURITIES:
      Series B and C preferred stock                                    69,868            (53,896) 2. (f)           15,972

STOCKHOLDERS' DEFICIT                                                  (84,784)            18,260  2. (g)          (66,524)
                                                                     ---------          ---------                ---------
                                                                     $ 276,216          $ (34,257)               $ 241,959
                                                                     =========          =========                =========
</TABLE>

  See notes to unaudited pro forma condensed consolidated financial statements


                                       4
<PAGE>

                PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES
      PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
                  For the Three Months Ended September 30, 2003
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                Historical             Pro forma                  Pro forma
                                                                 Results              Adjustments                  Results
                                                                ----------            -----------                 ---------
<S>                                                              <C>                   <C>       <C>               <C>
NET SALES                                                        $ 87,170              $ (5,683) 3. (a)            $ 81,487

COST OF GOODS SOLD                                                 66,006                (3,795) 3. (a)              62,211
                                                                 --------              --------                    --------

    GROSS PROFIT                                                   21,164                (1,888)                     19,276

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                                                       16,161                  (675) 3. (a)              14,698
                                                                                           (563) 3. (b)
                                                                                           (250) 3. (c)
                                                                                             25  3. (d)
                                                                 --------              --------                    --------
    OPERATING INCOME                                                5,003                  (425)                      4,578

OTHER:
    Interest expense                                                3,949                   348  3. (e)               4,297
    Interest (income)                                                (242)                   --                        (242)
    Other (income), net                                              (635)                   --                        (635)
                                                                 --------              --------                    --------
    INCOME FROM CONTINUING OPERATIONS
       BEFORE INCOME TAXES                                          1,931                  (773)                      1,158

PROVISION FOR INCOME TAXES                                            783                   (16) 3. (a)                 767
                                                                 --------              --------                    --------

    INCOME FROM CONTINUING OPERATIONS                            $  1,148              $   (757)                   $    391
                                                                 ========              ========                    ========
</TABLE>

  See notes to unaudited pro forma condensed consolidated financial statements


                                       5
<PAGE>

                PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES
      PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
                        For the Year Ended June 30, 2003
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                Historical             Pro forma                  Pro forma
                                                                 Results              Adjustments                  Results
                                                                ----------            -----------                 ---------
<S>                                                             <C>                    <C>        <C>             <C>
NET SALES                                                       $ 355,225              $ (22,332) 3. (a)          $ 332,893

COST OF GOODS SOLD                                                263,728                (16,178) 3. (a)            247,550
                                                                ---------              ---------                   --------

    GROSS PROFIT                                                   91,497                 (6,154)                    85,343

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                                                       66,360                 (2,575) 3. (a)             60,635
                                                                                          (2,250) 3. (b)
                                                                                          (1,000) 3. (c)
                                                                                             100  3. (d)
                                                                ---------              ---------                   --------

    OPERATING INCOME                                               25,137                   (429)                    24,708

OTHER:
    Interest expense                                               16,342                  1,391  3. (e)             17,733
    Interest (income)                                                 (86)                    --                        (86)
    Other expense, net                                              1,150                     --                      1,150
                                                                ---------              ---------                   --------

    INCOME FROM CONTINUING OPERATIONS
       BEFORE INCOME TAXES                                          7,731                 (1,820)                     5,911

PROVISION FOR INCOME TAXES                                         10,076                    (52) 3. (a)             10,024
                                                                ---------              ---------                   --------

    (LOSS) FROM CONTINUING OPERATIONS                           $  (2,345)             $  (1,768)                  $ (4,113)
                                                                =========              =========                   ========
</TABLE>

  See notes to unaudited pro forma condensed consolidated financial statements


                                       6
<PAGE>

                        PHIBRO ANIMAL HEALTH CORPORATION
   NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                                 (In Thousands)

1.    Basis of Presentation

      The pro forma condensed  consolidated  financial  statements are presented
for  illustrative  purposes  only,  giving effect to the  divestiture  of Prince
Manufacturing  Company ("PMC") as described and therefore are neither indicative
of the  operating  results  that might have been  achieved  had the  divestiture
occurred as of an earlier date nor  indicative  of operating  results  which may
occur in the future. In the opinion of management,  these statements include all
material  adjustments  necessary to reflect, on a pro forma basis, the effect of
the divestiture on the historical financial  information of Phibro Animal Health
Corporation (the "Company").  The condensed consolidated statement of operations
of the  Company  for the year ended June 30,  2003 is derived  from the  audited
financial  statements  of  the  Company.  All  other  financial  information  is
unaudited.  The unaudited pro forma condensed  consolidated financial statements
should be read in conjunction  with the  consolidated  financial  statements and
related notes contained in the Company's Annual Report on Form 10-K for the year
ended June 30, 2003,  and the  Company's  Quarterly  Report on Form 10-Q for the
quarter ended September 30, 2003.

      Effective  December 26, 2003 (the "Closing Date"),  the Company  completed
the  divestiture  of  substantially  all of the  business and assets of PMC to a
company  ("Buyer") formed by Palladium Equity Partners II, LP and certain of its
affiliates  (the  "Palladium  Investors"),  and  the  related  reduction  of the
Company's  preferred  stock held by the Palladium  Investors  (collectively  the
"Prince Transactions").

      Pursuant  to  definitive  purchase  and other  agreements  executed on and
effective as of the Closing Date, the Prince Transactions included the following
elements:  (i) the transfer of  substantially  all of the business and assets of
PMC to Buyer;  (ii) the reduction of the value of the Company's  Preferred Stock
owned by the Palladium  Investors from $72,184 to $16,517  (accreted through the
Closing  Date) by means  of the  redemption  of all of its  shares  of  Series B
Preferred  Stock  and a  portion  of its  Series C  Preferred  Stock;  (iii) the
termination of $2,250 in annual management  advisory fees payable by the Company
to  Palladium;  (iv) a cash  payment of $10,000 to the  Palladium  Investors  in
respect  of the  portion  of the  Company's  Preferred  Stock not  exchanged  in
consideration  of the business and assets of PMC; (v) the agreement of the Buyer
to pay the Company for advisory  fees for the next three years of $1,000,  $500,
and  $200,  respectively  (which  were  pre-paid  at  closing  by the  Buyer and
satisfied  for $1,300,  the net present  value of such  payments);  and (vi) the
Buyer  agreed  to supply  manganous  oxide and red iron  oxide  products  and to
provide certain mineral blending  services to the Company's Prince  Agriproducts
subsidiary ("Prince Agri").  Prince Agri agreed to continue to provide the Buyer
with certain laboratory,  MIS and telephone services, all on terms substantially
consistent  with the historic  relationship  between Prince Agri and PMC, and to
lease to Buyer  office  space  currently  used by PMC in Quincy,  Illinois.  The
Company has an understanding to receive certain treasury services from Palladium
for $100 per year. Pursuant to definitive agreements, the Company made customary
representations, warranties and environmental and other indemnities, agreed to a
post-closing working capital adjustment, paid $3,958 in full satisfaction of all
intercompany  debt owed to PMC,  paid a closing fee to Palladium  of $500,  made
certain capital  expenditure  adjustments  included as part of the  intercompany
settlement  amount,  and  agreed to pay for  certain  out-of-pocket  transaction
expenses. PMC retained $414 of its accounts receivable.  The Company established
a $1,000  letter of credit  escrow for two years to secure its  working  capital
adjustment  and  certain  indemnification  obligations.  The  Company  agreed to
indemnify the Palladium  Investors for a portion, at the rate of $0.65 for every
dollar,  of the amount they receive in respect of the  disposition  of Buyer for
less than  $21,000,  up to a  maximum  payment  by the  Company  of $4,000  (the
"Backstop Indemnification Amount"). The Backstop Indemnification Amount would be
payable  on the  earlier  to  occur  of July 1,  2008 or six  months  after  the
redemption date of all of the Company's  Senior Secured Notes due 2007 if such a
disposition  closes prior to such redemption and six months after the closing of
any such disposition if the disposition  closes after any such  redemption.  The
Company's obligations with respect to the Backstop  Indemnification  Amount will
cease if the  Palladium  Investors  do not  close  the  disposition  of Buyer by
January 1, 2009. The  definition of "Equity Value" in the Company's  Certificate
of  Incorporation  was amended to reduce the multiple of trailing EBITDA payable
in connection with any future  redemption of Series C Preferred to 6.0 from 7.5.
The  amount of  consideration  paid and  payable in  connection  with the Prince
Transactions and all matters in connection  therewith was determined pursuant to
arm's length negotiations.


                                       7
<PAGE>

                        PHIBRO ANIMAL HEALTH CORPORATION
   NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                                 (In Thousands)

      The  following  unaudited  pro  forma  condensed   consolidated  financial
statements give effect to the disposition of PMC. The accompanying unaudited pro
forma  condensed  consolidated  balance sheet reflects the  divestiture as if it
occurred at September 30, 2003. The  accompanying  unaudited pro forma condensed
consolidated  statements of operations  reflect the  divestiture of PMC as if it
occurred at the beginning of the earliest period presented.  The transaction has
been accounted for as a distribution  to the preferred  stockholders in exchange
for a  reduction  of the  redeemable  preferred  stock  held  by  the  Palladium
Investors. The excess amount of the reduction in redeemable preferred stock over
amounts distributed has been recorded as a contribution of capital.

      The Company's Odda Smelteverk  (Norway),  Carbide  Industries  (U.K.), and
Mineral Resource  Technologies,  Inc. (U.S.)  businesses have been classified as
discontinued operations in the historical financial statements.  These pro forma
condensed  consolidated  statements  of  operations  present only the results of
continuing operations.

2.    Pro  forma  Adjustments  -  Condensed  Consolidated  Balance  Sheet  as of
      September 30, 2003

      (a) To reflect the removal of the asset and liability accounts of PMC sold
      to the Buyer.

      (b) To reflect the cash paid for the Prince Transactions.

      (c) To reflect the transaction costs incurred.

      (d) To  reflect  the  contingent  backstop  indemnification  amount at the
      maximum potential amount payable.

      (e) To reflect the advisory fee prepaid to the Company by the Buyer.

      (f) To reflect the reduction of the Company's redeemable preferred stock.

      (g) To  reflect  the  excess  amount  of the  redeemable  preferred  stock
      reduction  over the book  value  of PMC  assets  divested  and  costs  and
      liabilities incurred:

          Series B & C Redeemable Preferred Stock:
          Accreted value at September 30, 2003 (pre-transaction)         $69,868
          Accreted value at September 30, 2003 (post-transaction)         15,972
                                                                         -------
          Amount of redeemable preferred stock reduction (2.(f))          53,896
                                                                         -------

          Assets Divested and Costs and Liabilities Incurred:
          PMC net assets sold (2.(a))                                      7,258
          Cash paid for reduction of redeemable preferred stock (2.(b))   10,000
          Intercompany debt payments (2.(b))                               3,958
          Working capital adjustments (2.(b))                              1,832
          Closing fee (2.(b))                                                500
          Transaction costs incurred (2.(c))                               8,088
          Contingent backstop indemnification amount (2.(d))               4,000
                                                                         -------
          Total assets divested and costs and liabilities incurred        35,636
                                                                         -------

          Excess amount contributed to capital (2.(g))                   $18,260
                                                                         =======


                                       8
<PAGE>

                        PHIBRO ANIMAL HEALTH CORPORATION
   NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                                 (In Thousands)

3.    Pro forma  Adjustments - Condensed  Consolidated  Statements of Operations
      for the Three Months ended  September 30, 2003 and for the Year Ended June
      30, 2003

      (a)   To reflect the removal of the income  statement  accounts of PMC for
            each period presented.

      (b)   To reflect the removal of the  management  fee paid to  Palladium by
            the Company.

      (c)   To reflect the  inclusion of advisory fee paid to the Company by the
            Buyer.

      (d)   To  reflect  the  inclusion  of the  treasury  services  fee paid to
            Palladium by the Company.

      (e)   To reflect  interest  expense on cash paid at 5.16%,  the  Company's
            average interest rate on its credit facility, plus pro rata discount
            related to the prepaid advisory fee.

4.    Depreciation and Amortization

      The total  depreciation and  amortization  expense of PMC was $243 for the
three months  ended  September  30,  2003,  and $956 for the year ended June 30,
2003.

5.    Cash and Debt at December 31, 2003

      The Company  estimates  that its balance  sheet at December  31, 2003 will
include  cash of $4,500 and total debt of  $167,100.  The  balance of its credit
facility at December 31, 2003 will be $5,700 and is included in total debt.  The
Company's  balance sheet will also include accrued expenses of $2,010 related to
the PMC transaction and accrued expenses of $3,300 related to the refinancing of
certain of the Company's  debt,  as described  below in Note 6, both amounts are
expected to be paid during the quarter ended March 31, 2004.

6.    Refinancing

      On October 21, 2003 the Company issued 105,000 units consisting of $85,000
of 13% Senior Secured Notes due 2007 of PAHC (the "US Senior Notes") and $20,000
13% Senior Secured Notes due 2007 of Philipp Brothers  Netherlands III B.V. (the
"Dutch Senior Notes" and, together with the US Senior Notes, the "Senior Secured
Notes"), an indirect wholly-owned  subsidiary of PAHC (the "Dutch issuer").  The
Company used the proceeds from the issuance to: (i) repurchase  $51,971 of its 9
7/8% Senior Subordinated Notes due 2008 at a price equal to 60% of the principal
amount thereof,  plus accrued and unpaid interest;  (ii) repay its senior credit
facility of $34,888  outstanding at the repayment  date;  (iii)  satisfy,  for a
payment of  approximately  $29,315,  certain of its  outstanding  obligations to
Pfizer Inc., including: (a) $20,075 aggregate principal amount of its promissory
note plus  accrued  and unpaid  interest;  (b) $9,681 of accounts  payable,  (c)
$9,257 of accrued expenses; and (d) future contingent purchase price obligations
under  its  agreements  with  Pfizer  by which  the  Company  acquired  Pfizer's
medicated feed additive  business,  and; (iv) pay fees and expenses  relating to
the above transactions.

      The US  Senior  Notes  and the  Dutch  Senior  Notes  are  senior  secured
obligations  of each of PAHC and the Dutch issuer,  respectively.  The US Senior
Notes and the Dutch Senior Notes are guaranteed on a senior secured basis by all
PAHC's  domestic  restricted  subsidiaries,  and  the  Dutch  Senior  Notes  are
guaranteed on a senior secured basis by PAHC and by the restricted  subsidiaries
of the Dutch  issuer,  including  Phibro Animal Health  (Belgium)  SPRL.  The US
Senior Notes and related  guarantees are secured by substantially  all of PAHC's
assets and the assets of its domestic restricted  subsidiaries,  other than real
property and interests  therein.  The Dutch Senior Notes and related  guarantees
are secured by a pledge of all the accounts  receivable,  a security interest or
floating  charge on the inventory to the extent  permitted by applicable  law, a
mortgage on substantially all of the real property, of the Dutch issuer and each
of its  restricted  subsidiaries,  a pledge of 100% of the capital stock of each
subsidiary of the Dutch issuer, a pledge of the  intercompany  loans made by the
Dutch issuer to its restricted  subsidiaries and substantially all of the assets
of the U.S.  guarantors,


                                       9
<PAGE>

                        PHIBRO ANIMAL HEALTH CORPORATION
   NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                                 (In Thousands)

other than real property and  interests  therein.  The  indenture  governing the
Senior  Secured Notes provides for optional  make-whole  redemptions at any time
prior to June 1,  2005,  optional  redemption  on or  after  June 1,  2005,  and
requires the Company to make certain  offers to purchase  Senior  Secured  Notes
upon a change of control,  upon certain asset sales and from fifty percent (50%)
of excess cash flow (as such terms are defined in the indenture).

      Also,  on October 21, 2003,  the Company  entered  into a new  replacement
domestic senior working capital credit facility with Wells Fargo Foothill, Inc.,
providing  for a working  capital  line plus a letter  of credit  facility.  The
aggregate  amount of borrowings  under such working capital and letter of credit
facilities may not exceed $25,000,  and the aggregate amount of borrowings under
the working capital facility may not exceed $15,000.

      Borrowings  under the  replacement  domestic  senior  credit  facility are
subject to a borrowing base formula based on  percentages  of eligible  domestic
receivables and domestic inventory.  Under the replacement credit facility,  the
Company may choose between two interest rate options:  (i) the  applicable  base
rate as  defined  plus  0.50% and (ii) the LIBOR  rate as  defined  plus  2.75%.
Indebtedness  under  the  replacement  credit  facility  is  secured  by a first
priority  lien on  substantially  all of the  Company's  assets  and  assets  of
substantially  all  of the  Company's  domestic  subsidiaries.  The  Company  is
required  to pay an  unused  line fee of  0.375% on the  unused  portion  of the
replacement  credit  facility,  a monthly  servicing fee and standard  letter of
credit fees to issuing banks.  Borrowings under the replacement  credit facility
are available until, and are repayable no later than, October 31, 2007, although
borrowings must be repaid by June 30, 2007 if the maturity of the Senior Secured
Notes has not been extended, as required by the credit facility, by that date.

      Pursuant to the terms of an intercreditor agreement, the security interest
securing  the Senior  Secured  Notes and the  guarantees  made by the  Company's
domestic  restricted  subsidiaries  are  subordinated  to a  lien  securing  the
replacement domestic senior credit facility.

      The Company believes that, through the refinancings referred to above, the
liquidity  issues mentioned in the Company's June 30, 2003 Annual Report on Form
10-K have been resolved.  The Company's replaced senior bank credit facility and
its note  payable  to Pfizer  were to mature in  November  2003 and March  2004,
respectively.  The effect of the above refinancing transactions will be included
in the December 31, 2003 financial statements and have not been reflected in the
pro forma information included in this Form 8-K.

7.    Other Information

      Statements  made in this Form 8-K may contain  forward-looking  statements
made pursuant to the safe harbor provisions of the Securities  Litigation Act of
1995. Such statements  involve certain risks and uncertainties  that could cause
results to differ materially from those in the forward-looking statements.

      Information on potential  risks and  uncertainties  may be found under the
captions  "Liquidity and Refinancing  Risks" and "Other Risks and Uncertainties"
in Note 2 of the Notes to  Consolidated  Financial  Statements  included  in the
Company's  Annual  Report on Form 10-K for the year ended June 30, 2003, as well
as under the caption "Certain Factors Affecting Future Operating  Results" under
Item 7 of such Annual Report.


                                       10
<PAGE>

                                   SIGNATURES

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

                                               PHIBRO ANIMAL HEALTH CORPORATION

                                               By: /s/ Richard G. Johnson
                                                   -----------------------------
                                                   Richard G. Johnson,
                                                   Chief Financial Officer

Dated: January 12, 2004


                                       11
<PAGE>

                                  Exhibit Index

Exhibit No.       Description
-----------       -----------

Exhibit 1         Purchase and Sale  Agreement  dated as of December 26, 2003 by
                  and among Phibro Animal Health  Corporation  ("PAHC"),  Prince
                  MFG, LLC,  ("Prince MFG"),  The Prince  Manufacturing  Company
                  ("Prince"  and together  with PAHC and Prince MFG, the "Phibro
                  Parties"),  Palladium  Equity  Partners  II, L.P.  ("PEP II"),
                  Palladium Equity Partners II-A, L.P., ("PEP II-A"),  Palladium
                  Equity Investors II, L.P., ("PEI II", and together with PEP II
                  and PEP II-A, the "Investor Stockholders"), and Prince Mineral
                  Company, Inc. ("Buyer")

Exhibit 2         Environmental  Indemnification  Agreement dated as of December
                  26, 2003 between the Phibro Parties and Buyer

Exhibit 3         Amendment to  Stockholders  Agreement dated as of December 26,
                  2003 between PAHC, the Investor Stockholders and Jack Bendheim

Exhibit 4         Advisory Fee  Agreement  dated as of December 26, 2003 between
                  Buyer and PAHC*

Exhibit 5         Certificate of Incorporation of PAHC, as amended

Exhibit 6         Amended and Restated Management Services Agreement dated as of
                  October 21, 2003 between Palladium Capital  Management,  L.L.C
                  and PAHC*

----------
*     This Exhibit is a management compensatory plan or arrangement.


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</DOCUMENT>
