** **

**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**WASHINGTON, D.C. 20549**

 

**FORM 10-Q**

 

| ý | **Quarterly Report  Pursuant to Section 13 or 15(d) of the Securities Exchange****Act of  1934**  |
|--------|---------------------------------------------------------------------------------------------------|
|   | **For the quarterly  period ended April 30, 2002**                                                |
|   |                                                                                              |
|   | **or**                                                                                            |
|   |                                                                                              |
| o      | **Transition Report  Pursuant to Section 13 or 15(d) of the Securities Exchange****Act of  1934** |

 

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**Commission File No. 33-99834**

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**DAKOTA GROWERS PASTA COMPANY**(Exact name of registrant as specified inits charter)

 

| **North  Dakota**         |   | **45-0423511**                     |
|---------------------------|--------|------------------------------------|
| (State  of incorporation) |   | (IRS  Employer Identification No.) |

 

**OnePasta Avenue, P.O. Box 21, Carrington, ND 58421-0021**

(Addressof principal executive offices including zip code)

 

**(701)652-2855**

(Registrant’stelephone number, including area code)

 

**NOT APPLICABLE**

(Formername, former address and former fiscal year, if changed since last report)

 

 

Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.       YesýNo o

 

Thenumber of shares outstanding of the Registrant’s classes of common stock were1,147 shares of membership stock, par value $125.00, and 11,275,297 shares ofequity stock, par value $2.50, as of June 12, 2002.

 

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**PART I — FINANCIAL INFORMATION**

 

**ITEM 1.FINANCIAL STATEMENTS**

 

**DAKOTAGROWERS PASTA COMPANY**

**CONSOLIDATEDBALANCE SHEETS**

**(InThousands, Except Share Information)**

 
|                                                                                                              |   | **April 30,**

**2002** |    | **July 31,**

**2001** |   |
|-------------------------------------------------------------------------------------------------------------------|--------|-------------------------|---------|------------------------|--------|
|                                                                                                              |   | **(Unaudited)**         |    |                   |   |
| **ASSETS**                                                                                                        |   |                    |    |                   |   |
|                                                                                                              |   |                    |    |                   |   |
| CURRENT ASSETS                                                                                                    |   |                    |    |                   |   |
| Cash and cash equivalents                                                                                         |   | $                       | 940     |                   | $      | 3 |   |
|                                                                                                              |   |                    |    |                   |   |
| Short-term investments (restricted)                                                                               |   | 1,974                   |    | 1,974                  |   |
|                                                                                                              |   |                    |    |                   |   |
| Trade accounts receivable,less allowance for cash discounts and doubtful  accounts of $678 and $610, respectively |   | 12,532                  |    | 11,560                 |   |
|                                                                                                              |   |                    |    |                   |   |
| Other receivables                                                                                                 |   | 389                     |    | 1,138                  |   |
|                                                                                                              |   |                    |    |                   |   |
| Inventories                                                                                                       |   | 22,263                  |    | 21,050                 |   |
|                                                                                                              |   |                    |    |                   |   |
| Prepaid expenses                                                                                                  |   | 2,213                   |    | 1,602                  |   |
|                                                                                                              |   |                    |    |                   |   |
| Total current assets                                                                                              |   | 40,311                  |    | 37,327                 |   |
|                                                                                                              |   |                    |    |                   |   |
| PROPERTY AND EQUIPMENT                                                                                            |   |                    |    |                   |   |
| In service                                                                                                        |   | 106,466                 |    | 114,984                |   |
| Construction in process                                                                                           |   | 150                     |    | 108                    |   |
|                                                                                                              |   | 106,616                 |    | 115,092                |   |
| Less accumulated depreciation                                                                                     |   | (34,206                 | )       | (33,367                | )      |
|                                                                                                              |   |                    |    |                   |   |
| Net property and equipment                                                                                        |   | 72,410                  |    | 81,725                 |   |
|                                                                                                              |   |                    |    |                   |   |
| INVESTMENT IN COOPERATIVE BANKS                                                                                   |   | 2,350                   |    | 2,211                  |   |
|                                                                                                              |   |                    |    |                   |   |
| INTANGIBLE ASSETS                                                                                                 |   | 723                     |    | —                 |   |
|                                                                                                              |   |                    |    |                   |   |
| OTHER ASSETS                                                                                                      |   | 7,457                   |    | 7,395                  |   |
|                                                                                                              |   |                    |    |                   |   |
|                                                                                                              |   | $                       | 123,251 |                   | $      | 128,658 |   |

 

(continued on next page)

 

2

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**DAKOTAGROWERS PASTA COMPANY**

**CONSOLIDATEDBALANCE SHEETS**

**(InThousands, Except Share Information)**

 
|                                                                                                                                                                      |   | **April 30,**

**2002** |    | **July 31,**

**2001** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|---------|------------------------|--------|
|                                                                                                                                                                      |   | **(Unaudited)**         |    |                   |   |
| **LIABILITIES AND MEMBERS’ INVESTMENT**                                                                                                                              |   |                    |    |                   |   |
|                                                                                                                                                                      |   |                    |    |                   |   |
| CURRENT LIABILITIES                                                                                                                                                       |   |                    |    |                   |   |
| Notes payable                                                                                                                                                             |   | $                       | —  |                   | $      | 8,100 |   |
| Current portion of long-term debt                                                                                                                                         |   | 8,651                   |    | 2,657                  |   |
| Accounts payable                                                                                                                                                          |   | 4,932                   |    | 4,400                  |   |
| Excess outstanding checks over cash on deposit                                                                                                                            |   | —                  |    | 1,072                  |   |
| Accrued grower payments                                                                                                                                                   |   | —                  |    | 969                    |   |
| Accrued liabilities                                                                                                                                                       |   | 5,409                   |    | 5,709                  |   |
|                                                                                                                                                                      |   |                    |    |                   |   |
| Total current liabilities                                                                                                                                                 |   | 18,992                  |    | 22,907                 |   |
|                                                                                                                                                                      |   |                    |    |                   |   |
| COMMITMENTS AND CONTINGENCIES                                                                                                                                             |   | —                  |    | —                 |   |
| LONG-TERM DEBT, net of current portion                                                                                                                                    |   | 39,584                  |    | 47,594                 |   |
| DEFERRED INCOME TAXES                                                                                                                                                     |   | 3,571                   |    | 3,777                  |   |
| OTHER LIABILITIES                                                                                                                                                         |   | 251                     |    | —                 |   |
|                                                                                                                                                                      |   |                    |    |                   |   |
| Total liabilities                                                                                                                                                         |   | 62,398                  |    | 74,278                 |   |
|                                                                                                                                                                      |   |                    |    |                   |   |
| REDEEMABLE PREFERRED STOCK                                                                                                                                                |   |                    |    |                   |   |
| Series A, 6% non-cumulative, $100 par value, 800 sharesauthorized, 500 and 600 shares issued and  outstanding as of April 30, 2002 and July 31, 2001, respectively        |   | 50                      |    | 60                     |   |
| Series B, 2% non-cumulative, $100 par value, 2,700 sharesauthorized, 525 shares issued and outstanding                                                                    |   | 53                      |    | 53                     |   |
|                                                                                                                                                                      |   |                    |    |                   |   |
| Total redeemable preferred stock                                                                                                                                          |   | 103                     |    | 113                    |   |
|                                                                                                                                                                      |   |                    |    |                   |   |
| MEMBERS’ INVESTMENT                                                                                                                                                  |   |                    |    |                   |   |
| Convertible preferred stock                                                                                                                                               |   |                    |    |                   |   |
| Series C, 6% non-cumulative, $100 par value, 15,000 sharesauthorized, 924 shares issued and outstanding as  of July 31, 2001                                              |   | —                  |    | 92                     |   |
| Membership stock, $125 par value, 2,000 shares authorized,1,147 and 1,156 shares issued and outstanding as  of April 30, 2002 and July 31, 2001, respectively             |   | 143                     |    | 144                    |   |
| Equity stock, $2.50 par value, 25,000,000 shares authorized,11,275,297 and 11,253,121 shares issued and  outstanding as of April 30, 2002 and July 31, 2001, respectively |   | 28,188                  |    | 28,133                 |   |
| Additional paid-in capital                                                                                                                                                |   | 22,913                  |    | 22,876                 |   |
| Accumulated allocated earnings                                                                                                                                            |   | 9,182                   |    | 4,596                  |   |
| Accumulated unallocated earnings (deficit)                                                                                                                                |   | 324                     |    | (1,574                 | )      |
|                                                                                                                                                                      |   |                    |    |                   |   |
| Total members’ investment                                                                                                                                            |   | 60,750                  |    | 54,267                 |   |
|                                                                                                                                                                      |   |                    |    |                   |   |
| Total liabilities and members’ investment                                                                                                                            |   | $                       | 123,251 |                   | $      | 128,658 |   |

 

See Notes to ConsolidatedFinancial Statements

 

3

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**DAKOTAGROWERS PASTA COMPANY**

**CONSOLIDATEDSTATEMENTS OF OPERATIONS**

**(InThousands, Except Per Share Amounts)(Unaudited)**

 
|                                                                                              |   | **Three  Months Ended**

**April 30,** |   |
|---------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|
| ** **                                                                                        |   | **2002**                               |   | **2001** |   |
| Net revenues (net of discounts and allowancesof $4,247 and $4,072, respectively)                  |   | $                                      | 37,668 |   | $ | 34,100 |   |
|                                                                                              |   |                                   |   |   |   |
| Cost of product sold                                                                              |   | 32,014                                 |   | 32,122 |   |
|                                                                                              |   |                                   |   |   |   |
| Gross proceeds                                                                                    |   | 5,654                                  |   | 1,978 |   |
|                                                                                              |   |                                   |   |   |   |
| Marketing, general and administrative expenses                                                    |   | 2,474                                  |   | 2,258 |   |
|                                                                                              |   |                                   |   |   |   |
| Operating proceeds (loss)                                                                         |   | 3,180                                  |   | (280 | ) |
|                                                                                              |   |                                   |   |   |   |
| Other income (expense)                                                                            |   |                                   |   |   |   |
| Interest income and other income (expense)                                                        |   | (49                                    | )      | 89 |   |
| Gain on sale of property, equipment and other assets                                              |   | 4                                      |   | — |   |
| Interest expense, net                                                                             |   | (755                                   | )      | (901 | ) |
|                                                                                              |   |                                   |   |   |   |
| Income (loss) before income taxes                                                                 |   | 2,380                                  |   | (1,092 | ) |
|                                                                                              |   |                                   |   |   |   |
| Income tax expense (benefit)                                                                      |   | 176                                    |   | (80 | ) |
|                                                                                              |   |                                   |   |   |   |
| Net income (loss) from patronageand non-patronage business                                        |   | 2,204                                  |   | (1,012 | ) |
| Dividends on preferred stock                                                                      |   | 1                                      |   | 1 |   |
|                                                                                              |   |                                   |   |   |   |
| Net earnings (loss) from patronage and non-patronagebusiness available for members                |   | $                                      | 2,203  |   | $ | (1,013 | ) |
|                                                                                              |   |                                   |   |   |   |
| Average equity shares outstanding                                                                 |   | 11,275                                 |   | 11,253 |   |
|                                                                                              |   |                                   |   |   |   |
| Net earnings (loss) from patronage and non-patronagebusiness per average equity share outstanding |   |                                   |   |   |   |
|                                                                                              |   |                                   |   |   |   |
| Basic                                                                                             |   | $                                      | 0.20   |   | $ | (0.09 | ) |

 

See Notes toConsolidated Financial Statements

 

 

4

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**DAKOTAGROWERS PASTA COMPANY**

**CONSOLIDATEDSTATEMENTS OF OPERATIONS**

**(InThousands, Except Per Share Amounts)(Unaudited)**

 
|                                                                                              |   | **Nine  Months Ended**

**April 30,** |    |
|---------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                                              |   | **2002**                              |    | **2001** |   |
| Net revenues (net of discounts and allowancesof $12,498 and $13,473, respectively)                |   | $                                     | 112,234 |   | $ | 99,015 |   |
|                                                                                              |   |                                  |    |   |   |
| Cost of product sold                                                                              |   | 95,679                                |    | 93,079 |   |
|                                                                                              |   |                                  |    |   |   |
| Gross proceeds                                                                                    |   | 16,555                                |    | 5,936 |   |
|                                                                                              |   |                                  |    |   |   |
| Marketing, general and administrative expenses                                                    |   | 7,285                                 |    | 7,329 |   |
|                                                                                              |   |                                  |    |   |   |
| Operating proceeds (loss)                                                                         |   | 9,270                                 |    | (1,393 | ) |
|                                                                                              |   |                                  |    |   |   |
| Other income (expense)                                                                            |   |                                  |    |   |   |
| Interest and other income                                                                         |   | 129                                   |    | 274 |   |
| Gain on sale of property, equipment and other assets                                              |   | 6                                     |    | — |   |
| Interest expense, net                                                                             |   | (2,895                                | )       | (3,016 | ) |
|                                                                                              |   |                                  |    |   |   |
| Income (loss) before income taxes                                                                 |   | 6,510                                 |    | (4,135 | ) |
|                                                                                              |   |                                  |    |   |   |
| Income tax expense (benefit)                                                                      |   | 17                                    |    | (239 | ) |
|                                                                                              |   |                                  |    |   |   |
| Net income (loss) from patronageand non-patronage business                                        |   | 6,493                                 |    | (3,896 | ) |
| Dividends on preferred stock                                                                      |   | 9                                     |    | 14 |   |
|                                                                                              |   |                                  |    |   |   |
| Net earnings (loss) from patronage and non-patronagebusiness available for members                |   | $                                     | 6,484   |   | $ | (3,910 | ) |
|                                                                                              |   |                                  |    |   |   |
| Average equity shares outstanding                                                                 |   | 11,275                                |    | 11,253 |   |
|                                                                                              |   |                                  |    |   |   |
| Net earnings (loss) from patronage and non-patronagebusiness per average equity share outstanding |   |                                  |    |   |   |
|                                                                                              |   |                                  |    |   |   |
| Basic                                                                                             |   | $                                     | 0.58    |   | $ | (0.35 | ) |

 

See Notes toConsolidated Financial Statements

 

5

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**DAKOTAGROWERS PASTA COMPANY**

**CONSOLIDATEDSTATEMENTS OF CASH FLOWS**

**(InThousands)(Unaudited)**

 
|                                                                                       |   | **Nine  Months Ended**

**April 30,** |   |
|--------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                                       |   | **2002**                              |   | **2001** |   |
| OPERATING ACTIVITIES                                                                       |   |                                  |   |   |   |
| Net income (loss)                                                                          |   | $                                     | 6,493  |   | $ | (3,896 | ) |
| Adjustments to reconcile net income (loss) to net cashfrom (used in) operating activities: |   |                                  |   |   |   |
| Depreciation and amortization                                                              |   | 6,645                                 |   | 6,625 |   |
| Undistributed patronage capital from cooperatives                                          |   | (139                                  | )      | (204 | ) |
| Gain on sale of property, equipment and other assets                                       |   | (6                                    | )      | — |   |
| Deferred income taxes                                                                      |   | (206                                  | )      | (239 | ) |
| Payments for long-term prepaid marketing costs                                             |   | (2,250                                | )      | (5,038 | ) |
| Changes in assets and liabilities:                                                         |   |                                  |   |   |   |
| Trade receivables                                                                          |   | (972                                  | )      | 290 |   |
| Other receivables                                                                          |   | 749                                   |   | (33 | ) |
| Inventories                                                                                |   | (1,213                                | )      | (628 | ) |
| Prepaid expenses                                                                           |   | 149                                   |   | 59 |   |
| Other assets                                                                               |   | 47                                    |   | — |   |
| Accounts payable                                                                           |   | 532                                   |   | 1,412 |   |
| Excess outstanding checks over cash deposits                                               |   | (1,072                                | )      | 1,906 |   |
| Grower payables                                                                            |   | (969                                  | )      | (989 | ) |
| Other accrued liabilities                                                                  |   | (300                                  | )      | (108 | ) |
|                                                                                       |   |                                  |   |   |   |
| NET CASH FROM (USED IN) OPERATING ACTIVITIES                                               |   | 7,488                                 |   | (843 | ) |
|                                                                                       |   |                                  |   |   |   |
| INVESTING ACTIVITIES                                                                       |   |                                  |   |   |   |
| Purchases of property and equipment                                                        |   | (446                                  | )      | (3,886 | ) |
| Proceeds from sale of property, equipment and other assets                                 |   | 5,053                                 |   | — |   |
| Purchase of intangible assets                                                              |   | (735                                  | )      | — |   |
| Payments for package design costs                                                          |   | (287                                  | )      | (259 | ) |
|                                                                                       |   |                                  |   |   |   |
| NET CASH FROM (USED IN) INVESTING ACTIVITIES                                               |   | 3,585                                 |   | (4,145 | ) |
|                                                                                       |   |                                  |   |   |   |
| FINANCING ACTIVITIES                                                                       |   |                                  |   |   |   |
| Net change in short-term debt                                                              |   | (8,100                                | )      | 12,165 |   |
| Payments on long-term debt                                                                 |   | (2,016                                | )      | (4,412 | ) |
| Preferred stock retirements                                                                |   | (10                                   | )      | (10 | ) |
| Dividends paid on preferred stock                                                          |   | (9                                    | )      | (14 | ) |
| Memberships issued                                                                         |   | 1                                     |   | — |   |
| Memberships retired                                                                        |   | (2                                    | )      | — |   |
| Patronage distributions                                                                    |   | —                                |   | (4,466 | ) |
|                                                                                       |   |                                  |   |   |   |
| NET CASH FROM (USED IN) FINANCING ACTIVITIES                                               |   | (10,136                               | )      | 3,263 |   |
|                                                                                            |        |                                       |        |  |  |  |  |

 

(continued on next page)

 

6

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**DAKOTAGROWERS PASTA COMPANY**

**CONSOLIDATEDSTATEMENTS OF CASH FLOWS**

**(InThousands)(Unaudited)**

 
|                                              |   | **Nine  Months Ended**

**April 30,** |   |
|---------------------------------------------------|--------|---------------------------------------|--------|
|                                              |   | **2002**                              |   | **2001** |   |
| NET CHANGE IN CASH AND CASH EQUIVALENTS           |   | 937                                   |   | (1,725 | ) |
|                                              |   |                                  |   |   |   |
| CASH AND CASH EQUIVALENTS,BEGINNING OF PERIOD     |   | 3                                     |   | 1,725 |   |
|                                              |   |                                  |   |   |   |
| CASH AND CASH EQUIVALENTS,END OF PERIOD           |   | $                                     | 940    |   | $ | — |   |
|                                              |   |                                  |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |   |                                  |   |   |   |
| Cash payments for                                 |   |                                  |   |   |   |
| Interest (net of amounts capitalized)             |   | $                                     | 3,348  |   | $ | 3,816 |   |
|                                              |   |                                  |   |   |   |
| Income taxes                                      |   | $                                     | 10     |   | $ | 9 |   |

 

See Notes toConsolidated Financial Statements

 

7

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**DAKOTAGROWERS PASTA COMPANY**

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

The following notes should be read in conjunctionwith the notes to the financial statements for the year ended July 31, 2001 asfiled in the Company’s Form 10-K.

 

**NOTE 1 — ORGANIZATION**

 

Dakota Growers Pasta Company (“Dakota Growers”, “theCompany” or “the Cooperative”) is organized as a farmers’ cooperative forpurposes of manufacturing food for human consumption from durum and other grainproducts. Net proceeds are allocated to patrons who are members on the basis oftheir participation in the Cooperative.

 

The ownership of membership stock, which signifiesmembership in the Cooperative, is restricted to producers of agriculturalproducts. The ownership of equity stock is restricted to members of theCooperative. Preferred stock may be held by persons who are not members of theCooperative.

 

The Company formed three wholly owned subsidiaries inJanuary 2002. Dakota Growers Restructuring Company, Inc, one of the whollyowned subsidiaries created by the Company, filed a Registration Statement onForm S-4 (File No. 333-81946) with the United States Securities and ExchangeCommission. The Form S-4 describes the proposed conversion of the Company froma North Dakota cooperative into a North Dakota corporation. The members of theCooperative approved the proposed conversion on May 23, 2002. The conversionwill be effected by a series of mergers, via the newly created wholly ownedsubsidiaries, as described within the S-4. When the conversion is completed, the Company’s wholly owned subsidiary,Dakota Growers Restructuring Company, Inc., will be the surviving entity,conducting the Company’s on-going business. Upon completion of the conversion, the surviving entity would adopt thename Dakota Growers Pasta Company, Inc. Please see the aforementioned Form S-4for more information regarding the conversion.

 

**NOTE 2 — FINANCIAL STATEMENT PRESENTATION**

 

The unaudited consolidated financial statements included herein havebeen prepared pursuant to the rules and regulations of the Securities andExchange Commission. Accordingly, they do not include all the information andfootnotes required by accounting principles generally accepted in the UnitedStates of America for complete financial statements. In the opinion ofmanagement, all adjustments (consisting of normal recurring accruals)considered necessary for a fair presentation have been included. Operatingresults for the three and nine month periods ended April 30, 2002 are notnecessarily indicative of the results that may be expected for the year endedJuly 31, 2002. The information included in this Form 10-Q should be read inconjunction with Management’s Discussion and Analysis and the consolidatedfinancial statements and footnotes included in the Company’s Form 10-K for theyear ended July 31, 2001. The information contained in the balance sheet as ofJuly 31, 2001 was derived from the Company’s audited annual report for fiscal2001. Reclassifications have been made to facilitate comparability with currentpresentation. Such reclassifications have no effect on the net results ofoperations.

 

The financial information presented herein includes the consolidatedbalances and results of operations of Dakota Growers Pasta Company and itswholly owned subsidiaries. All significant intercompany balances andtransactions have been eliminated.

 

**NOTE 3 — INVENTORIES**

 

Inventories are valued at lower of cost or market. Inventories as ofApril 30, 2002 include raw materials of $5,271,000 and finished goods of$16,992,000. Inventories at July 31, 2001 include raw materials of $5,710,000and finished goods of $15,340,000.

 

8

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**DAKOTA GROWERS PASTA COMPANY**

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

**(Unaudited)**

 

**NOTE 4 —INTANGIBLE ASSETS**

 

The Company acquired certain intangible assets for $735,000 during thethird quarter of fiscal year 2002. Such intangibles consisted mainly ofcustomer-based intangibles and covenants not to compete. The intangible assetsare being amortized on a straight-line basis over their five-year estimateduseful life. Amortization expense for the three months ended April 30, 2002totaled $12,000. Details relative to intangible assets are as follows (inthousands):

 
|                       |   | **Gross**

**Amount** |      | **Accumulated**

**Amortization** |   | ** **

**Net** |   |
|----------------------------|--------|-----------------------|-----------|-----------------------------------|--------|---------------------|--------|
|                       |   |                  |      |                              |   |                |   |
| Customer-based intangibles |   | $                     |  405 |                              | $      |  7             |   | $ |  398 |   |
| Covenants not to compete   |   | 330                   |      | 5                                 |   | 325                 |   |
|                       |   |                  |      |                              |   |                |   |
|                       |   | $                     |  735 |                              | $      |  12            |   | $ |  723 |   |

 

The estimated amortization expense for each of the fiscal years endingJuly 31 is as follows (in thousands):

 

| 2002       |   | $      | 49     |   |
|------------|--------|--------|--------|--------|
| 2003       |   | 147    |   |
| 2004       |   | 147    |   |
| 2005       |   | 147    |   |
| 2006       |   | 147    |   |
| Thereafter |   | 98     |   |
|       |   |   |   |
|       |   | $      | 735    |   |

 

###### **NOTE5 — LOAN AGREEMENTS**

 

On February 15, 2002, the Company secured a $19million revolving credit facility with CoBank covering the period from March 1,2002 through February 25, 2003. The revolving line has a variable interest ratenot to exceed CoBank’s National Variable Rate plus 1% and is secured byproperty, equipment, and current assets of the Company. There was no balanceoutstanding on the revolving line as of April 30, 2002. The balance outstandingunder the Company’s previous line of credit agreement totaled $8.1 million asof July 31, 2001.

 

The various debt agreements with the Bank andinstitutional investors obligate the Company to maintain or achieve certainamounts of equity and certain financial ratios and impose certain restrictionson the Company. The Company was in compliance with these financial covenants asof April 30, 2002. On January 24, 2002, the Company and CoBank entered into anamendment of the Master Loan Agreement, which requires the Company to maintaina debt service coverage ratio, measured at the end of each fiscal year, of 1.25to 1. The Company had previously been required to maintain a debt servicecoverage ratio of 1.50 to 1.

 

**NOTE 6 — STOCK OPTIONS**

 

In December 2001, the Board of Directors approved the issuance ofnon-qualified stock options for 2,045 shares of Series C convertible preferredstock with a total exercise price of $204,500. Each share of Series Cconvertible preferred stock may be converted into 24 shares of equity stock atthe option of the holder. The above options were unexercised as of April 30,2002 and are scheduled to expire on December 1, 2011, ten years after the grantdate.

 

9

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** **

**DAKOTAGROWERS PASTA COMPANY**

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

###### **NOTE7 — INCOME TAXES**

 

The Company is a non-exempt cooperative as defined by Section1381(a)(2) of the Internal Revenue Code (“Code”). Accordingly, net margins frombusiness transacted with its member patrons which are allocated, qualified, andpaid as prescribed in Section 1382 of the Code will be taxable to the membersand not to the Company. Net margins and member allocations are determined onthe basis of accounting used for financial reporting purposes. To the extentthat net margins are not allocated and paid as stated above or arise frombusiness done with non-members, the Company shall have taxable income subjectto corporate income tax rates. Cooperative organizations have 8 1⁄2 months aftertheir fiscal year end to make such allocations in the form of written noticesof allocation or cash.

 

Income tax expense recorded for the three and nine month periods endedApril 30, 2002 represent current income taxes on non-patronage business offsetby reductions in deferred tax liabilities associated with differences betweenthe book and tax basis of property and equipment. Income tax benefit amountsshown for the three and nine months ended April 30, 2001 resulted fromreductions in deferred tax liabilities associated with differences between thebook and tax basis of property and equipment.

 

Upon completion of the conversion from a cooperative to a corporationas described in Note 1, the surviving North Dakota corporation will recorddeferred tax assets and liabilities for the tax effects of any temporary timingdifferences existing between income tax and financial reporting on the date ofthe change. Prior to the conversion, the Cooperative had not recorded deferredtaxes for temporary differences that were likely to be eliminated throughpatronage allocations. In recording such deferred tax assets and liabilitiesupon conversion to a corporation, the Company anticipates recording anonrecurring, non-cash income tax charge of approximately $6.5 million.

 

###### **NOTE8 — PATRONAGE BUSINESS**

 

The Company’s business is conducted on a cooperativebasis. The Company calculates income from patronage sources based on incomederived from bushels of durum delivered by members. Non-patronage income isderived from the sale of pasta manufactured from non-member durum or purchasedfrom non-members, the resale of semolina purchased from non-members, certainamounts of interest income and any income taxes assessed on non-memberbusiness. Net income allocable to patronage business totaled $6,137,000 for thenine months ended April 30, 2002, compared to a net loss allocable to patronagebusiness of $3,539,000 for the nine months ended April 30, 2001.

 

###### **NOTE9 — EARNINGS (LOSS) PER SHARE**

 

The Company allocates its earnings (loss) andpatronage distributions based on patronage business (bushels of durumdelivered, which approximates one bushel of durum per equity share). Forpresentation purposes, it has calculated basic net earnings (loss) per share bydividing earnings (loss) from patronage and non-patronage business available formembers (net income (loss) less preferred dividends) by the weighted averagenumber of equity shares effective and outstanding during the period.

 

The Company had convertible preferred stock and stockoptions for convertible preferred stock outstanding during the periodspresented. Fully diluted earnings (loss) per share are calculated for theassumed conversion of these dilutive securities. As the Company’s stock is onlytraded in a small secondary market through private transactions, the Companyhas assumed the proceeds from the exercise of stock options would reduce debtand, thus, interest expense. Fully diluted earnings (loss) per share are notpresented, as the dilutive effect of outstanding convertible preferred stockand stock options is not material for the periods presented.

 

10

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**DAKOTAGROWERS PASTA COMPANY**

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

**NOTE 10— SALE/LEASEBACK**

 

The Company entered into a sale/leasebacktransaction effective March 29, 2002, for certain pasta production equipment.Proceeds from the sale totaled $5 million. The lease, which is classified asoperating, sets forth an initial term of five years and calls for leasepayments of $72,000 per month. At the end of the initial lease term, theCompany may renew the lease at fair rental value, terminate the lease andsurrender the equipment with the payment of a 10% of equipment cost remarketingfee, or purchase the equipment for $1,750,000. The Company realized a gain on the sale of $255,000, which was deferredand will be amortized in proportion to the gross rentals charged to expenseover the five-year lease term. Minimum rentals required under the lease for thefiscal years ending July 31 are as follows (in thousands):

 

| 2002       |   | $      | 288    |   |
|------------|--------|--------|--------|--------|
| 2003       |   | 863    |   |
| 2004       |   | 863    |   |
| 2005       |   | 863    |   |
| 2006       |   | 863    |   |
| Thereafter |   | 576    |   |
|       |   |   |   |
|       |   | $      | 4,316  |   |

 

###### **NOTE11 — PATRONAGE ALLOCATION**

 

In April 2002, the Board of Directors voted toallocate, on a non-qualified basis, the net patronage earnings for the eightmonths ended March 31, 2002 offset by the patronage net loss for fiscal year2001, with the effectiveness of such non-qualified allocation being contingentupon the Cooperative’s members approving the conversion to a corporation (seeNote 1). The non-qualified patronage allocation totaled $4,586,000.

 

**NOTE 12— COMMITMENTS**

 

The Company forward contracts for a certain portion of its future durumwheat requirements. The Company had outstanding commitments for grain purchasestotaling $6,932,000 at April 30, 2002. These contracts are set price contractsto deliver to the Company’s mill, and are not derivative in nature as they haveno net settlement provision and are not transferable.

 

The Company entered into a co-packing agreement with New World PastaCompany on April 30, 2002, which includes co-pack product volume and pricingcommitments. The Company also has a commitment to pay $1.0 million under along-term customer marketing agreement by December 31, 2002.

 

11

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**ITEM 2.  MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

**Forward-Looking Statements**

 

The following discussioncontains forward-looking statements. Such forward-looking statements include,among others, those statements including the words “expect”, “anticipate”,“believe”, “may” and similar expressions. Such statements are based onassumptions by the Company’s management, as of the date of this QuarterlyReport, and are subject to risks and uncertainties, including those discussedin the Company’s 2001 Form 10-K under “Risk Factors”, that could cause actualresults to differ materially from those anticipated. The Company cautionsreaders not to place undue reliance on such forward-looking statements. The Companywill not update any forward-looking statements in the Quarterly Report toreflect future events or developments.

 

**Summary**

 

Dakota Growers PastaCompany is the third largest producer of dry pasta products in NorthAmerica.  The pasta industry identifiesdomestic dry pasta into two basic markets: retail and institutional. TheCompany recognizes the institutional market as being comprised of foodserviceand ingredient sales. We participate in each of the retail, foodservice andingredient markets. The Company has two production plants located inCarrington, North Dakota and New Hope, Minnesota.

 

Dakota Growers PastaCompany reported net earnings of $2.2 million for the three months ended April30, 2002, compared to the $1.0 million net loss incurred for the same period inthe prior year. Net earnings for the nine months ended April 30, 2002 were $6.5million, a $10.4 million increase over the $3.9 million net loss incurred forthe nine months ended April 30, 2001. Dakota Grower’s improved performance resultedfrom revenue growth combined with operational improvements, which reducedoperating costs and increased supply chain efficiencies. The increase inrevenues was driven primarily by volume growth in the foodservice and retailmarkets.

 

The Company formed threewholly owned subsidiaries in January 2002. Dakota Growers RestructuringCompany, Inc, one of the wholly owned subsidiaries created by the Company,filed a Registration Statement on Form S-4 (File No. 333-81946) with the UnitedStates Securities and Exchange Commission. The Form S-4 describes the proposedconversion of the Company from a North Dakota cooperative into a North Dakotacorporation. The members of the Cooperative approved the proposed conversion onMay 23, 2002. The conversion will be effected by a series of mergers, via thenewly created wholly owned subsidiaries, as described within the S-4.  When the conversion is completed, theCompany’s wholly owned subsidiary, Dakota Growers Restructuring Company, Inc.,will be the surviving entity, conducting the Company’s on-going business.  Upon completion of the conversion, thesurviving entity would adopt the name Dakota Growers Pasta Company, Inc. Pleasesee the aforementioned Form S-4 for more information regarding the conversion.

 

**Results of Operations**

 

*Comparison of the Three Months Ended April 30, 2002 and 2001*

 

***Net Revenues. ***Netrevenues totaled $37.7 million for the three months ended April 30, 2002; anincrease of $3.6 million, or 10.5%, compared to the $34.1 million for the threemonths ended April 30, 2001. The increase was primarily due to higher salesvolumes.

 

Revenues from the retailmarket increased $1.5 million, or 7.1%, as a result of an 8.7% increase insales volumes offset slightly by lower per unit selling prices. Foodservice revenuesincreased $0.8 million, or 10.5%, primarily due to volume growth driven byexpansions and acquisitions by our customers. Ingredient revenues decreased $0.2million, or 4.0%, mainly as a result of a 4.3% decrease in sales volumes.

 

The Company markets semolina production inexcess of its own requirements as well as by-products of the durum millingprocess. Revenues from semolina and by-product sales increased $1.5 million forthe three months ended April 30, 2002, when compared to the same period of theprior year. The increase primarily resulted from higher sales volumes.

 

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***Cost of Product Sold.***Cost of product sold decreased $0.1 million, or 0.3%, to $32.0 million for thethree months ended April 30, 2002, compared to $32.1 million for the threemonths ended April 30, 2001. The decrease resulted from lower conversion costs,due to operational improvements, and logistics savings offset by revenuegrowth. Gross margin as a percentage of net revenues increased from 5.8% to15.0% as a result of these factors.

 

***Marketing, General, and Administrative (“MG&A”)Expenses.*** MG&A expenses forthe quarter ended April 30, 2002 increased $0.2 million, or 9.6%, from thequarter ended April 30, 2001. The increase resulted primarily from costsassociated with the conversion to a corporation. MG&A expenses as apercentage of net revenues were unchanged at 6.6%.

 

***Interest Expense.***Interest expense for the three months ended April 30, 2002, was $0.8 million,down slightly from the corresponding period of the prior year primarily due tolower average outstanding debt levels. Cash and equity patronage refundsreceived from CoBank totaling $228,000 and $248,000 have been netted againstinterest expense for the three months ended April 30, 2002 and 2001,respectively.

 

***Income Taxes.***Incometax expense for the three months ended April 30, 2002, totaling $176,000represents current income taxes on non-patronage business offset by reductionsin deferred tax liabilities associated with differences between the book andtax basis of property and equipment. The income tax benefit of $80,000 for thethree months ended April 30, 2001 resulted from reductions in deferred taxliabilities associated with differences between the book and tax basis ofproperty and equipment.

 

***Net Income.***Net income for the threemonths ended April 30, 2002 totaled $2.2 million compared to the $1.0 millionnet loss incurred for the three months ended April 30, 2001. The $3.2 millionincrease in net income resulted primarily fromincreased sales volumes combined with cost reductions as noted above.

 

*Comparison of the Nine Months Ended April 30, 2002 and 2001*

 

***Net Revenues.***Netrevenues increased $13.2 million, or 13.4%, to $112.2 million for the ninemonths ended April 30, 2002, from $99.0 million for the nine months ended April30, 2001. The increase for the nine-month period ended April 30, 2002 wasprimarily due to higher pasta sales volumes, which were up 7.3% combined withan increase in pasta per unit selling prices of 2.2%. Higher mill semolina andby-product sales volumes also contributed to the revenue increase.

 

Revenues from the retailmarket increased $6.1 million, or 10.0%, as a result of an 8.4% increase insales volumes combined with a small increase in per unit selling prices.Foodservice revenues increased $4.4 million, or 21.5%, primarily due to volumegrowth of 20.2% driven by expansions and acquisitions by our customers.Ingredient revenues decreased $1.6 million, or 13.7%, mainly as a result of a 14.4%decrease in sales volumes. The ingredient sales volume decline primarilyresulted from the loss of one customer in this market due to competitivepricing issues.

 

Revenues from semolina and by-product salesincreased $4.3 million for the nine months ended April 30, 2002, when comparedto the same period of the prior year. The increase primarily resulted fromhigher sales volumes.

 

***Cost of Product Sold.***Cost of product sold for the nine months ended April 30, 2002 totaled $95.7million; an increase of 2.8% compared to the $93.1 million reported for thenine months ended April 30, 2001. The $2.6 million increase resulted mainlyfrom revenue growth offset by lower conversion costs, due to operationalimprovements, and logistics savings. Gross margin as a percentage of netrevenues increased from 6.0% to 14.8% as a result of these factors.

 

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***Marketing, General, and Administrative (“MG&A”)Expenses.*** MG&A expenses forthe nine months ended April 30, 2002 totaled $7.3 million, essentiallyunchanged from the nine months ended April 30, 2001. MG&A expenses as apercentage of net revenues decreased from 7.4% to 6.5%.

 

***Interest Expense.***Interest expense for the nine months ended April 30, 2002, was $2.9 million, downslightly from the corresponding period of the prior year primarily due to loweraverage outstanding debt levels. Cash and equity patronage refunds receivedfrom CoBank totaling $228,000 and $248,000 have been netted against interestexpense for the nine months ended April 30, 2002 and 2001, respectively.

 

***Income Taxes.***Incometax expense for the nine months ended April 30, 2002, totaling $17,000represents current income taxes on non-patronage business offset by reductionsin deferred tax liabilities associated with differences between the book andtax basis of property and equipment. The income tax benefit of $239,000 for thenine months ended April 30, 2001 resulted from reductions in deferred taxliabilities associated with differences between the book and tax basis ofproperty and equipment.

 

***Net Income. ***Net income for the ninemonths ended April 30, 2002 was $6.5 million compared to the $3.9 million netloss incurred for the nine months ended April 30, 2001. The $10.4 millionincrease in net income resulted primarily fromhigher sales volumes combined with increased gross margins due to costreductions as noted above.

 

**Liquidity and Capital Resources**

 

Our primary sources ofliquidity are cash provided by operations and borrowings under our credit facility.Cash and cash equivalents totaled $940,000 as of April 30, 2002. Workingcapital as of April 30, 2002 totaled $21.3 million.

 

On February 15, 2002, the Company secured a $19million revolving credit facility with CoBank covering the period from March 1,2002 through February 25, 2003. The revolving line has a variable interest ratenot to exceed CoBank’s National Variable Rate plus 1% and is secured byproperty, equipment, and current assets of the Company. There was no balanceoutstanding on the revolving line as of April 30, 2002. The balance outstandingunder the Company’s previous line of credit agreement totaled $8.1 million asof July 31, 2001.

 

The Company’s long-termfinancing is provided through various secured term loans and secured notes fromboth the Bank and certain institutional investors. Variable interest rates onterm and seasonal loans are based on the lender’s cost of funds. Debt servicerequirements will be increasing beginning in fiscal year 2003 in relation toprevious years as minimum principal payments due on long-term debt total $9.3million for fiscal 2003, $10.0 million for fiscal 2004 and $7.2 million forfiscal 2005. The first principal payment on the institutional senior securednotes totaling $3,571,000 is due August 1, 2002.

 

The various debtagreements with the Bank and institutional investors obligate the Company tomaintain or achieve certain amounts of equity and certain financial ratios andimpose certain restrictions on the Company. The Company was in compliance withthese financial covenants as of April 30, 2002 and the date of this filing. OnJanuary 24, 2002, the Company and CoBank entered into an amendment of theMaster Loan Agreement, which requires the Company to maintain a debt servicecoverage ratio, measured at the end of each fiscal year, of 1.25 to 1. TheCompany had previously been required to maintain a debt service coverage ratioof 1.50 to 1.

 

Net cash provided byoperating activities totaled $7.5 million for the nine months ended April 30,2002, compared to net cash used in operating activities totaling $0.8 for thenine months ended April 30, 2001. The increase in net cash provided byoperations was primarily due to an increase in net income and a decrease inpayments made under long-term marketing agreements.

 

Net cash from investingactivities totaled $3.6 million for the nine months ended April 30, 2002, andresulted primarily from proceeds received on the sale of certain pastaproduction equipment under a sale/leaseback transaction, offset by paymentsmade for milling and pasta equipment, intangible assets and package designcosts.

 

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 Net cash used in investing activities totaled$4.1 million for the nine months ended April 30, 2001. A majority of the pastaequipment expenditures for the nine months ended April 30, 2001 related to theinstallation of a lasagna line at the New Hope, Minnesota plant. The lasagnaline was completed and became operational in February 2001.

 

Net cash used infinancing activities totaled $10.1 million for the nine months ended April 30,2002, mainly related to payments made on our credit facility and long-termdebt. Net cash from financing activities totaled $3.3 million for the ninemonths ended April 30, 2001; mainly from borrowings on the credit facilityoffset by payments for long-term debt service and patronage distributions. TheBoard of Directors authorized a qualified patronage allocation of $4,466,000($.4284 per bushel acquired or $.40 per average outstanding equity share) forfiscal year 2000 at its November 2000 meeting. The total qualified patronageallocation was paid in cash on November 30, 2000.

 

In April 2002, the Boardof Directors voted to allocate, on a non-qualified basis, the net patronageearnings for the eight months ended March 31, 2002 offset by the patronage netloss for fiscal year 2001, with the effectiveness of such non-qualifiedallocation being contingent upon the Cooperative’s members approving theconversion to a corporation (the members of the Cooperative approved theconversion to a corporation on May 23, 2002). The non-qualified patronageallocation totaled $4,586,000.

 

The Company has currentcommitments for $6.9 million in raw material purchases, primarily durumpurchase commitments from its members. The Company anticipates capitalexpenditures to total approximately $2.0 million in fiscal year 2002. Theseexpenditures are primarily for pasta line upgrades and cost reduction projects.The Company also has a commitment to pay $1.0 million under a long-termcustomer marketing agreement by December 31, 2002. The Company completed asale/leaseback transaction for certain pasta production equipment on March 29,2002. That transaction generated $5 million in available funds, which weanticipate using to secure and expand the Company’s sales efforts. Commitmentsunder this lease as of April 30, 2002 totaled $4.2 million of which $0.9million is due within one year. Commitments for all monthly operating leasepayments totaled $4.9****million, of which $1.2 million is duewithin one year. The Company entered into a co-packing agreement with New WorldPasta Company on April 30, 2002, which includes co-pack product volume andpricing commitments.

 

Management believes thatnet cash currently available and to be provided by operating activities, alongwith its available line of credit, will be sufficient to meet the Company’sexpected capital and liquidity requirements for the foreseeable future.

 

**ITEM 3.  QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

 

Market risk is the riskof loss to future earnings, to fair values or to future cash flows that mayresult from changes in the price of a financial instrument. The value of afinancial instrument may change as a result of changes in interest rates, commodityprices, exchange rates, equity prices, and other market changes. Market risk isattributed to all market-risk sensitive financial instruments, includinglong-term debt.

 

The Company does notbelieve it is subject to any material market risk exposure with respect tointerest rates, commodity prices, exchange rates, equity prices, or othermarket changes that would require disclosure under this item.

 

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**PART II— OTHER INFORMATION**

 

**ITEM 4.  SUBMISSION OFMATTERS TO A VOTE OF SECURITY HOLDERS**

 

A Special Meeting washeld on May 23, 2002 to vote upon the proposed conversion of Dakota GrowersPasta Company from a cooperative into a North Dakota corporation. The Company’smembers approved the proposal by a vote of 693 in favor and 146 opposed.

 

In conjunction with theapproval of the conversion of Dakota Growers Pasta Company (sometimes referredto as “the North Dakota cooperative” herein) from a cooperative to a NorthDakota corporation, the members approved and ratified:

 

•      A Second Amended and Restated Plan ofMerger (the “Plan of Merger”) by and between Dakota Growers Pasta Company, aNorth Dakota cooperative and Dakota Growers Pasta Restructuring Cooperative, anewly-formed Colorado cooperative.

 

•      The Second Amended and RestatedTransaction Agreement (the “Transaction Agreement”), dated as of April 18,2002, by and among the current North Dakota cooperative, the Coloradocooperative, Dakota Growers Corporation, a newly-formed Colorado corporationand Dakota Growers Restructuring Company, Inc., a newly-formed North Dakotacorporation, but solely to the extent that the Transaction Agreement relates tothe proposed merger described in the Plan of Merger specified above.

 

•      An amendment to the current “GrowersAgreement” adopted by the Board of Directors, the effect of which is toterminate the Growers Agreement upon the approval and consummation of anymerger transaction (or series of transactions) in which the North Dakotacooperative is not the surviving entity and in which the surviving entity’sgoverning documents do not require the delivery of durum wheat as a conditionof ownership in such entity.

 

Dakota Growers PastaCompany formed three wholly-owned subsidiaries to effectuate the conversion:Dakota Growers Pasta Restructuring Cooperative, a Colorado cooperative, DakotaGrowers Corporation, a Colorado corporation and Dakota Growers RestructuringCompany, Inc., a North Dakota corporation. With the approval of the Plan ofMerger between the North Dakota cooperative and the Colorado cooperative,immediately after the consummation of the merger and without further action bymembers of the North Dakota cooperative, the Colorado cooperative will mergewith and into the Colorado corporation and, immediately thereafter, theColorado corporation will merge with and into the North Dakota corporation.

 

As a result of themergers:

 

•      The North Dakota corporation will be thesurviving entity.

 

•      Members of the North Dakota cooperativewill become shareholders of the North Dakota corporation and receive:

 

•      twenty-five shares of Common Stock of theNorth Dakota corporation for each share of the North Dakota cooperative’sMembership Stock they hold as of the effective date of the merger;

 

•      a number of shares of common stock, $.01par value per share (the “Common Stock”), of the North Dakota corporation equalto the number of shares of the North Dakota cooperative’s Equity Stock theyhold as of the effective date of the merger;

 

•      a number of shares of Series D Delivery PreferredStock, $.01 par value per share, of the North Dakota corporation equal to thenumber of shares of the North Dakota cooperative’s Equity Stock they hold as ofthe effective date of the merger;

 

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•      holders of Non-Qualified Written Noticesof Allocation (a form of members’ equity that represents patronage income thatwas allocated among the members of the cooperative as non-cash patronagedividends) will receive one share of Common Stock of the North Dakotacorporation for every $7.36 of Non-Qualified Written Notices of Allocation heldin their name in the records of the North Dakota cooperative;

 

•      to the extent that they hold Series A 6%Redeemable Non-Cumulative Preferred Stock or Series B 2% RedeemableNon-Cumulative Preferred Stock of the North Dakota cooperative as of theeffective date of the merger, an equal number of shares of Series A 6%Redeemable Cumulative Preferred Stock, $100 par value per share, or Series B 2%Redeemable Non-Cumulative Preferred Stock, $100 par value per share, asapplicable, of the North Dakota corporation; and

 

•      holders of options to purchase Series C 6%Convertible Non-Cumulative Preferred Stock of the North Dakota cooperative asof the effective date of the merger will receive options to purchase a likenumber of Series C 6% Convertible Non-Cumulative Preferred Stock of the NorthDakota corporation.

 

For more informationregarding the conversion from a North Dakota cooperative to a North Dakotacorporation please refer to the Registration Statement on Form S-4 (File No.333-81946) filed with the United States Securities and Exchange Commission byDakota Growers Restructuring Company, Inc.

 

**ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K**

 

**Exhibits**

 

10.1         MasterLease Agreement dated March 6, 2002 and related Schedule A dated March 29, 2002between the Company and Farm Credit Leasing Services Corporation.

 

*10.2       Co-packingAgreement dated April 30, 2002 between the Company and New World Pasta Company.

 

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* - Portions of this exhibithave been deleted from the publicly filed document and have been filedseparately with the Commission pursuant to a request for confidentialtreatment.

 

**Reports on Form 8-K**

 

The Company filed a Form8-K on February 11, 2002 announcing that on February 1, 2002, Dakota GrowersRestructuring Company, Inc, a wholly owned subsidiary of Dakota Growers PastaCompany (the “Company”), filed a Registration Statement on Form S-4 with theUnited States Securities and Exchange Commission. The S-4 describes the proposedconversion of the Company from a North Dakota cooperative into a North Dakotacorporation. Subject to the approval of the members of the Company, theproposed conversion will be effected by a series of mergers as described withinthe S-4.  If the proposed conversion iscompleted, the Company’s wholly owned subsidiary, Dakota Growers RestructuringCompany, Inc., would be the surviving entity, conducting the Company’s on-goingbusiness.  Upon completion of the conversion,the surviving entity would adopt the name Dakota Growers Pasta Company, Inc.

 

The Company filed a Form8-K/A on February 28, 2002, which included the Plan of Merger between DakotaGrowers Pasta Company and Dakota Growers Pasta Restructuring Cooperative, theTransaction Agreement, Articles of Incorporation of Dakota GrowersRestructuring Company, Inc. and Bylaws of Dakota Growers Restructuring Company,Inc. related to the proposed conversion noted above.

 

The Company filed a Form8-K on February 28, 2002 announcing that on February 27, 2002, pursuant to Rule425 under the Securities Act of 1933, Dakota Growers Pasta Company (“Company”)filed with the Securities and Exchange Commission a letter from Thomas Friezen,the Chief Financial Officer of the Company, to Pam Muslin at Farmers Union. TheLetter to Farmers Union filed under Rule 425 of the Securities Act of 1933 wasincluded.

 

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The Company filed a Form8-K on May 28, 2002, which included a press release issued by the Company onMay 23, 2002, announcing that its members approved converting the Cooperativeto a corporation, as well as its earnings for its third quarter ended April 30,2002.

 

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**SIGNATURES**

 

Pursuantto the requirements of Section 13 or 15(d) of the Securities Exchange Act of1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized.

 
|   | DAKOTA GROWERS PASTA  COMPANY    |
|--------|----------------------------------|
|   |                             |
|   |                             |
|   |                             | /s/  Timothy J. Dodd |
|   | By:                              |   |
|   |                             |
|   | Timothy  J. Dodd,                |
|   | PRESIDENT  AND GENERAL MANAGER,  |
|   | AND  PRINCIPAL EXECUTIVE OFFICER |
|   |                             |
|   | Dated: June 14, 2002             |

 

Pursuantto the requirements of the Securities Exchange Act of 1934, this report hasbeen signed below by the following persons on behalf of the registrant and inthe capacities and on the dates indicated.

 
| **Signature**          |   | **Title**                 |   | **Date**       |
|------------------------|--------|---------------------------|--------|----------------|
|                   |   |                      |   |           |
| /s/  Timothy J. Dodd   |   |                      |   |           |
|                   |   | General  Manager          |   |           |
| Timothy  J. Dodd       |   | (Principal  Executive     |   | June  14, 2002 |
|                   |   | Officer)                  |   |           |
|                   |   |                      |   |           |
| /s/  Thomas P. Friezen |   |                      |   |           |
|                   |   | Chief  Financial Officer  |   |           |
| Thomas  P. Friezen     |   | (Principal  Financial     |   | June  14, 2002 |
|                   |   | Officer)                  |   |           |
|                   |   |                      |   |           |
| /s/  Edward O. Irion   |   |                      |   |           |
|                   |   | Vice  President - Finance |   |           |
| Edward  O. Irion       |   | (Principal  Accounting    |   | June  14, 2002 |
|                   |   | Officer)                  |   |           |

 

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