UNITED STATESSECURITIES AND EXCHANGE
COMMISSIONWASHINGTON, D.C. 20549 FORM
10-Q x
  Quarterly Report Pursuant to Section 13 or 15(d) of the
  Securities ExchangeAct of 1934For the quarterly period ended April 30, 2001oro
  Transition Report Pursuant to Section 13 or 15(d) of the
  Securities ExchangeAct of 1934
  Commission
File No.33-99834  DAKOTA
GROWERS PASTA COMPANY(Exact name of
registrant as specified in its charter) North
  Dakota
  45-0423511(State
  of incorporation)
  (IRS
  Employer Identification No.)
 One Pasta Avenue, P.O. Box 21,
Carrington, ND 58421-0021(Address of
principal executive offices including zip code) (701) 652-2855(Registrants
telephone number, including area code) NOT APPLICABLE(Former name, former address and former fiscal year, if changed since last
report)    Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YesxNoo
  The
number of shares outstanding of the Registrants classes of common stock were
1,157 shares of membership stock, par value $125.00, and 11,253,121 of equity
stock, par value $2.50, as of June 14, 2001.   PART I - FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS

DAKOTA
GROWERS PASTA COMPANY
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Information)




(Unaudited)April 30,2001
  July
  31,2000ASSETSCURRENT ASSETSCash and cash equivalents
  $  -
  $1,725Short-term investments (restricted)
  1,974
  1,974Trade accounts receivable, less allowance
  for cash discounts and doubtful accounts of $548 and $348, respectively
  12,600
  12,890Other receivables
  626
  593Inventories
  22,409
  21,781Prepaid expenses
  1,328
  1,603Total current assets
  38,937
  40,566PROPERTY AND EQUIPMENTIn
  service
  115,933
  110,021Construction in process
  531
  2,560116,464
  112,581Less accumulated depreciation
  (32,222)
  (27,009)Net property and equipment
  84,242
  85,572INVESTMENT IN
  COOPERATIVE BANKS
  2,211
  2,037OTHER ASSETS
  7,816
  3,682$133,206
  $131,857

DAKOTA
GROWERS PASTA COMPANY
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Information)




(Unaudited)April 30,2001
  July
  31,2000LIABILITIES AND MEMBERS INVESTMENTCURRENT LIABILITIESNotes payable and current portion of
  long-term debt
  $15,998
  $4,979Excess outstanding checks over cash on
  deposit
  1,906
  0Accounts payable
  5,516
  4,104Accrued grower payments
  298
  1,287Accrued liabilities
  4,999
  5,107Total current liabilities
  28,717
  15,477COMMITMENTS AND
  CONTINGENCIESLONG-TERM DEBT, net of
  current portion
  48,360
  51,626DEFERRED INCOME TAXES
  3,856
  4,095Total liabilities
  80,933
  71,198REDEEMABLE PREFERRED
  STOCKSeries A, 6% non-cumulative, $100 par
  value, issued 633 and 733 shares, respectively
  63
  73Series B, 2% non-cumulative, $100 par
  value,issued 525 shares
  53
  53Total preferred stock
  116
  126MEMBERS INVESTMENTConvertible preferred stockSeries
  C, 6% non-cumulative, $100 par value, issued 924 shares
  92
  92Membership stock, $125 par value, issued1,157
  and 1,158 shares, respectively
  145
  145Equity stock, $2.50 par value, issued11,253,121
  shares
  28,133
  28,133Additional paid-in capital
  22,876
  22,876Accumulated allocated earnings
  4,596
  1,931Accumulated unallocated earnings
  (deficit)
  (3,685)
  7,356Total members investment
  52,157
  60,533Total liabilities and members
  investment
  $133,206
  $131,857See Notes to
  Consolidated Financial StatementsDAKOTA
GROWERS PASTA COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)(Unaudited)




Three Months Ended
  April 30,2001
  2000Net
  revenues (net of discounts and allowancesof $4,072 and $3,927, respectively)
  $34,100
  $35,209Cost
  of product sold
  32,122
  30,185Gross
  proceeds
  1,978
  5,024Marketing,
  general and administrative expenses
  2,258
  2,827Operating
  proceeds (loss)
  (280)
  2,197Other
  income (expense)Interest and other income
  89
  109Loss on sale of property and equipment
  -
  (45)Interest expense, net
  (901)
  (1,067)Income
  (loss) before income taxes
  (1,092)
  1,194Income
  tax benefit
  80
  742Net
  income (loss) from patronage and non-patronage business
  (1,012)
  1,936Dividends
  on preferred stock
  1
  1Net
  earnings (loss) from patronage and non-patronagebusiness available for members
  $(1,013)
  $1,935Average
  equity shares outstanding
  11,253
  11,183Net
  earnings (loss) from patronage and non-patronagebusiness per average equity share
  outstandingBasic
  $(0.09)
  $0.17See Notes to
  Consolidated Financial Statements

DAKOTA
GROWERS PASTA COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)(Unaudited)




Nine Months Ended
  April 30,2001
  2000Net
  revenues (net of discounts and allowancesof $13,473 and $13,507, respectively)
  $99,015
  $104,873Cost
  of product sold
  93,079
  88,416Gross
  proceeds
  5,936
  16,457Marketing,
  general and administrative expenses
  7,329
  7,781Operating
  proceeds (loss)
  (1,393)
  8,676Other
  income (expense)Interest and other income
  274
  392Loss on sale of property and equipment
  -
  (36)Interest expense, net
  (3,016)
  (3,453)Income
  (loss) before income taxes
  (4,135)
  5,579Income
  tax benefit
  239
  1,242Net
  income (loss) from patronage and non-patronage business
  (3,896)
  000Dividends
  on preferred stock
  14
  2Net
  earnings (loss) from patronage and non-patronagebusiness available for members
  $(3,910)
  $6,819Average
  equity shares outstanding
  11,253
  11,137Net
  earnings (loss) from patronage and non-patronagebusiness per average equity share
  outstandingBasic
  $(0.35)
  $0.61See Notes to
  Consolidated Financial Statements



DAKOTA
GROWERS PASTA COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)(Unaudited)




Nine Months Ended
  April 30,2001
  2000OPERATING
  ACTIVITIESNet income (loss)
  $(3,896)
  $6,821Add (deduct) non-cash itemsDepreciation and amortization
  6,625
  6,891Non-cash portion of patronage
  dividends
  (204)
  18Cooperative bank stock valuation
  adjustment
  -
  36Loss on sale of property and equipment
  -
  36Deferred income taxes
  (239)
  (811)Changes in assets and liabilitiesTrade receivables
  290
  2,725Other receivables
  (33)
  1,267Inventories
  (628)
  (4,331)Prepaid expenses
  59
  793Other assets
  -
  (361)Accounts payable
  1,412
  (1,205)Excess outstanding checks over cash
  deposits
  1,906
  1,193Growers payables
  (989)
  (819)Other accrued liabilities
  (108)
  (904)NET
  CASH FROM OPERATING ACTIVITIES
  4,195
  11,349INVESTING
  ACTIVITIESPurchases of property and equipment
  (3,886)
  (4,735)Proceeds from sale of property and
  equipment
  -
  127Receipts on note receivable
  -
  1,884Net purchase of short-term investments
  -
  (1,461)Payments for long-term prepaid marketing
  costs
  (5,038)
  (463)Payments for package design costs
  (259)
  (427)NET
  CASH USED IN INVESTING ACTIVITIES
  (9,183)
  (5,075)FINANCING
  ACTIVITIESNet change in short-term debt
  12,165
  3,875Payments on long-term debt
  (4,412)
  (7,518)Preferred stock issued
  -
  58Preferred stock retirements
  (10)
  (3)Dividends paid on preferred stock
  (14)
  (2)Memberships issued, net
  -
  1Options exercised
  -
  1,306Patronage distributions
  (4,466)
  (7,358)NET
  CASH FROM (USED IN) FINANCING ACTIVITIES
  3,263
  (9,641)

Nine Months Ended
  April 30,2001
  2000NET
  CHANGE IN CASH AND CASH EQUIVALENTS
  (1,725)
  (3,367)CASH
  AND CASH EQUIVALENTS,BEGINNING OF PERIOD
  1,725
  3,425CASH
  AND CASH EQUIVALENTS,END OF PERIOD
  $ 
  -
  $58SUPPLEMENTAL
  DISCLOSURESOF CASH FLOW INFORMATIONCash payments forInterest
  $3,816
  $3,007Income taxes
  $9
  $546See Notes to
  Consolidated Financial Statements

DAKOTA
GROWERS PASTA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)




The following notes should be read in
conjunction with the notes to the financial statements for the year ended July
31, 2000 as filed in the Companys Form 10-K.

NOTE 1 - ORGANIZATION

Dakota
Growers Pasta Company (Dakota Growers, the Company or the Cooperative) is
organized as a farmers cooperative for purposes of manufacturing food for
human consumption from durum and other grain products. Net proceeds are
allocated to patrons who are members on the basis of their participation in the
Cooperative.

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

NOTE 2  FINANCIAL STATEMENT PRESENTATION

The unaudited consolidated financial
statements included herein as of April 30, 2001 and for the three and nine
month periods ended April 30, 2001 and 2000, have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Accordingly,
they do not include all the information and footnotes required by generally
accepted accounting principles. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended April 30, 2001 are not necessarily indicative of the results that
may be expected for the year ended July 31, 2001. The information included in
this Form 10-Q should be read in conjunction with Managements Discussion and
Analysis and the consolidated financial statements and footnotes included in
the Companys Form 10-K for the year ended July 31, 2000. The information
contained in the balance sheet as of July 31, 2000 was derived from the
Companys audited annual report for fiscal 2000. Reclassifications have been
made to facilitate comparability with current presentation. Such
reclassifications have no effect on the net results of operations.

The financial information presented
herein includes the consolidated balances and results of operations of Dakota
Growers Pasta Company and its wholly owned subsidiary. All significant
intercompany balances and transactions have been eliminated.

NOTE 3  INVENTORIES

Inventories are valued at lower of cost
or market. Inventories as of April 30, 2001 include raw materials of $6,095,000
and finished goods of $16,314,000. Inventories at July 31, 2000 include raw
materials of $5,329,000 and finished goods of $16,452,000.

NOTE 4  OTHER ASSETS

Other assets as of April 30, 2001 and
July 31, 2000 consisted of the following:

April 30,
  2001
  July 31,
  2000Package design costs - net
  $1,256
  $1,453Prepaid marketing costs
  6,302
  1,979Debt issuance costs
  160
  182Other
  98
  68$7,816
  $3,682NOTE 5  LOAN AGREEMENTS

In
December 2000, the Company renewed its $15 million seasonal line of credit with
CoBank. The available credit on the seasonal line was increased to $19 million
in January 2001. The seasonal loan has a variable interest rate and matures on
December 31, 2001. It is secured by property, equipment, and current assets of
the Company. The balance outstanding on the line of credit totaled $14,040,000
as of April 30, 2001.

As of April 30, 2001, the Company was not
in compliance with the consolidated funded debt to consolidated cash flow ratio
set forth in the first amendment to the note agreement with institutional
investors. The first amendment to the note agreement requires that the ratio of
consolidated funded debt to consolidated cash flow not exceed 3.00 to 1 for all
periods after January 31, 2001, in each case determined as of the end of each
fiscal quarter for the immediately preceding four fiscal quarters, treating
such period of four fiscal quarters as a single accounting period.

The Company is currently in discussions
with its lenders regarding a waiver and second amendment to the note agreement.

NOTE 6  INCOME TAXES

The
Company is a non-exempt cooperative as defined by Section 1381(a)(2) of the
Internal Revenue Code (Code). Accordingly, net margins from business
transacted with its member patrons which are allocated, qualified, and paid as
prescribed in Section 1382 of the Code will be taxable to the members and not
to the Company. Net margins and member allocations are determined on the basis
of accounting used for financial reporting purposes. To the extent that net
margins are not allocated and paid as stated above or arise from business done
with non-members, the Company shall have taxable income subject to corporate
income tax rates. Cooperative organizations have 8 1⁄2 months after their fiscal
year end to make such allocations in the form of written notices of allocation
or cash.

The Company has recorded an income tax
benefit of $80,000 for the three months ending April 30, 2001 and $239,000 for
the nine months ending April 30, 2001 resulting from reductions in deferred tax
liabilities associated with differences between the book and tax basis of
property and equipment.

An income tax benefit of $742,000 was
recorded for the three months ending April 30, 2000 and $1,242,000 for the nine
months ended April 30, 2000. The $1,242,000 benefit for the nine months ended
April 30, 2000 consisted of a current benefit of $431,000 related to the
reclassification of approximately $2,000,000 of income from nonpatronage to
patronage for the year ended July 31, 1999. The reclassification was based on
cooperative income tax developments taking place in the second quarter of
fiscal year 2000. The remaining $811,000 of the income tax benefit for the nine
months ended April 30, 2000 related to reductions in deferred tax liabilities
associated with differences between the book and tax basis of property and
equipment.

NOTE 7  PATRONAGE BUSINESS

The
Companys business is conducted on a cooperative basis. The Company calculates
income from patronage sources based on income derived from bushels of durum
delivered by members. Non-patronage income is derived from the resale of pasta
purchased from non-members, the resale of semolina purchased from non-members,
certain amounts of interest income, rental income from Company assets and any
income taxes assessed on non-member business. The net loss allocable to
patronage business totaled $3,539,000 for the nine months ended April 30, 2001.This
compares to $6,317,000of net earnings allocable to patronage
business for the nine months ended April 30, 2000.

NOTE 8  EARNINGS (LOSS) PER SHARE

The
Company allocates its earnings (loss) and patronage distributions based on
patronage business (bushels of durum delivered, which approximates one bushel
of durum per equity share). For presentation purposes, it has calculated basic
net earnings (loss) per share by dividing earnings (loss) from patronage and
non-patronage business available for members (net income (loss) less preferred
dividends) by the weighted average number of equity shares effective and
outstanding during the period.

The
Company had convertible preferred stock and stock options for convertible
preferred stock outstanding during the periods presented. Fully diluted
earnings (loss) per share are calculated for the assumed conversion of these
dilutive securities. As the Companys stock is only traded in a small secondary
market through private transactions, the Company has assumed the proceeds from
the exercise of stock options would reduce debt and, thus, interest expense.
Fully diluted earnings (loss) per share are not presented, as the dilutive
effect of outstanding convertible preferred stock and stock options is not
material for the periods presented.

NOTE 9  DIVIDENDS

The
Board of Directors authorized a qualified patronage allocation of $4,466,000
($.4284 per bushel acquired or $.40 per average outstanding equity share) for
fiscal year 2000 at its November 2000 meeting. The total qualified patronage
allocation was paid in cash on November 30, 2000.  The Board also voted to allocate, on a non-qualified basis, the
remainder of the fiscal 2000 patronage earnings totaling $2,665,000. In taking
these actions, the Board of Directors rescinded the patronage allocations
authorized at the October 2000 meeting as reported in the Companys Form 10-K
for the year ended July 31, 2000.

NOTE 10  COMMITMENTS

The Company forward contracts for a
certain portion of its future durum wheat requirements. The Company had
outstanding commitments for grain purchases totaling $1,644,000 at April 30,
2001.

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

Forward-Looking Statements

The following discussion contains
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 on assumptions by the
Companys management, as of the date of this Quarterly Report, and are subject
to risks and uncertainties, including those discussed in the Companys 2000
Form 10-K under Risk Factors, that could cause actual results to differ
materially from those anticipated. The Company cautions readers not to place
undue reliance on such forward-looking statements. The Company will not update
any forward-looking statements in the Quarterly Report to reflect future events
or developments.

Summary

Dakota Growers incurred a net loss of
$3.9 million for the nine months ended April 30, 2001, compared to net earnings
of $6.8 million for the corresponding period of the prior year. The net loss
resulted from lower sales volumes and competitive pricing within the dry pasta
industry combined with increased raw material, packaging, freight, and utility
costs.

The Company has increased prices, where
possible, to cover higher input costs. With excess capacity available in the
pasta industry, the Company was unable to implement price increases to fully
cover the higher costs that have been incurred. There have also been instances
whereby a major competitor has offered pricing below the Cooperatives current
cost of production, which has resulted in the loss of customers in certain
instances. As a result of the loss of certain customers, the Company has
reduced its labor force where necessary to match product demand levels.
Although the Company has experienced adverse operating results due to industry
overcapacity and competitive pricing, a favorable development occurred in late
February 2001 when the Company began shipping to a significant new retail
customer. Annualized volumes relating to this customer are expected to exceed
25 million pounds.

The Company continues to explore cost
reduction opportunities as well. The lasagna line installed at the New Hope,
Minnesota plant became operational in February 2001. This, combined with the
closure of the Minneapolis, Minnesota production facility in February 2001, has
reduced lasagna production costs. The Company is also implementing rail freight
programs and consolidating product in certain forward warehouse locations to
reduce logistics costs.

Results of Operations

Comparison of the Three Months Ended April 30, 2001 and 2000

Net Revenues.Net revenues totaled $34.1 million for the
quarter ended April 30, 2001, a decrease of $1.1 million, or 3.1%, from the
third quarter of fiscal 2000. The decrease was primarily due to lower sales
volumes, which were down 2.2% from the corresponding period of the prior year.

Revenues from the retail segment,
including co-pack operations, increased 4.9% on volume growth of 5.9%.
Foodservice revenues increased by 7.0%, mainly due to volume growth of 5.1%
resulting from increased product demand due to expansions and acquisitions made
by the Companys current customers. Ingredient revenues decreased 26.5%
resulting primarily from volume declines.

The Company markets semolina production
in excess of its own requirements as well as by-products of durum milling.
Revenues from semolina and by-product sales were relatively stable.



Cost of
Product Sold.Cost
of product sold increased 6.4% to $32.1 million. The $1.9 million increase
resulted mainly from higher input costs including raw materials, packaging, and
utilities. Gross margin as a percentage of net revenues decreased from 14.3% to
5.8% as a result of increased input costs combined with lower revenues.

Marketing,
General, and Administrative (MG&A) Expenses.MG&A expenses
decreased $569,000, or 20.1%, from the prior year mainly due to decreases in
internal marketing costs as well as consulting expenses. MG&A as a
percentage of net revenues decreased from 8.0% for the three months ended April
30, 2000 to 6.6% for the three months ended April 30, 2001.

Interest
Expense.Interest expense decreased by $166,000
primarily due to patronage refunds received from CoBank totaling $248,000 in
cash and patronage equity credited against interest expense for the three
months ending April 30, 2001. The patronage refunds were partially offset by higher
interest costs resulting from increases in average outstanding debt levels.

Income Taxes.The Company has recorded
an income tax benefit of $80,000 and $742,000 for the quarters ended April 30,
2001 and 2000, respectively, relating to the reduction in deferred tax
liabilities associated with differences between the book and tax basis of
property and equipment.

Net Income
(Loss).The net loss for the three months ended April
30, 2001 totaled $1.0 million, a decrease of $2.9 million from the $1.9 million
net income reported for the three months ended April 30, 2000. The drop in
earnings was due to the decreases in sales volumes combined with increases in
input costs noted above.

Comparison of the Nine Months Ended April 30, 2001 and 2000

Net Revenues.Net revenues totaled
$99.0 million for the nine months ended April 30, 2001. The decrease of $5.9
million, or 5.6%, from the nine months ended April 30, 2000 resulted from a
decline in pasta sales volumes combined with lower average selling prices.

Revenues from the retail segment,
including co-pack operations, decreased by 2.8%, primarily due to lower per
unit selling prices, which were down 3.5%. Foodservice revenues increased by
12.7% due to a volume increase of 5.5% resulting from expansions by the Companys
current customer base combined with increases in per unit selling prices.
Ingredient revenues decreased significantly, down 20.7% from the corresponding
period of the prior year, as a result of lower sales volumes.

Revenues from semolina sales were down
$1.0 million from the same period of the prior year primarily due to a
significant decline in sales volume. By-product sales were comparable to the
prior year on relatively steady volumes and per unit prices.

Cost of
Product Sold.Cost of product sold for the nine months
ended April 30, 2001 totaled $93.1 million, an increase of 5.3% from the
corresponding period of the prior year. The $4.7 million increase resulted
mainly from higher input costs including raw materials, packaging, freight and
utilities. Gross margin as a percentage of net revenues decreased from 15.7% to
6.0% resulting from increased input costs combined with lower revenues.

Marketing,
General, and Administrative (MG&A) Expenses.MG&A expenses decreased $452,000, or
5.8%, from the corresponding period of the prior year mainly due to decreases
in internal marketing costs as well as consulting expenses. MG&A as a
percentage of net revenues remained steady at 7.4%.

Interest
Expense.Interest expense decreased by $437,000,
primarily due to patronage refunds received from CoBank totaling $248,000 in
cash and patronage equity credited against interest expense during the third
quarter of fiscal 2001. The remainder of the decrease resulted from lower
average outstanding debt levels.

Income Taxes.The Company has recorded
an income tax benefit of $239,000 for the nine months ending April 30, 2001
resulting from reductions in deferred tax liabilities associated with
differences between the book and tax basis of property and equipment.

An income tax benefit of $1,242,000 for
the nine months ended April 30, 2000 consisted of a current benefit of  $431,000 related to a reclassification of
approximately $2,000,000 of income from nonpatronage to patronage for the year
ended July 31, 1999. The reclassification was based on cooperative income tax
developments taking place in the second quarter of fiscal year 2000. The
remaining $811,000 of the income tax benefit for the nine months ended April
30, 2000 related to reductions in deferred tax liabilities associated with
differences between the book and tax basis of property and equipment.

Net Income
(Loss).The
net loss for the nine months ended April 30, 2001 totaled $3.9 million compared
to net income of $6.8 million reported for the nine months ended April 30,
2000. The $10.7 million decrease in earnings was mainly due to the decreases in
sales volumes and prices combined with increases in input costs noted above.

Liquidity and Capital Resources

The Companys primary sources of
liquidity are cash provided by operations and short-term borrowings under its
line of credit.

The Company renewed its seasonal line of
credit for $15 million with CoBank (the Bank) in December 2000. The available
credit on the seasonal line was increased to $19 million in January 2001. The
balance outstanding on the line of credit totaled $14,040,000 as of April 30,
2001. Property, equipment, and current assets of the Company secure borrowings
against the line of credit.

The Companys long-term financing is
provided through various secured term loans and secured notes from both the
Bank and certain institutional investors. Variable interest rates on term and
seasonal loans are based on the lenders cost of funds, and are subject to an
adjustment (increase or decrease) depending on the Companys financial
condition. The CoBank loan agreement, which covers the seasonal line of credit
and various term loans, was renewed in December 2000.

The various debt agreements with the Bank
and institutional investors obligate the Company to maintain or achieve certain
amounts of equity and certain financial ratios and impose certain restrictions
on the Company. As of April 30, 2001, the Company was not in compliance with
the consolidated funded debt to consolidated cash flow ratio set forth in the first
amendment to the note agreement with institutional investors. The first
amendment to the note agreement requires that the ratio of consolidated funded
debt to consolidated cash flow not exceed 3.00 to 1 for all periods after
January 31, 2001, in each case determined as of the end of each fiscal quarter
for the immediately preceding four fiscal quarters, treating such period of
four fiscal quarters as a single accounting period.  The Company is currently in discussions with its lenders
regarding a waiver and second amendment to the note agreement.

Operations generated $4.2 million of net
cash flow for the nine months ended April 30, 2001, compared to $11.3 million
generated for the corresponding period of the prior year. The decrease in net
cash provided by operations is primarily due to a decrease in net income offset
by lower working capital requirements for the corresponding periods.

Net cash used in investing activities
relates primarily to the construction and installation of milling and pasta
equipment and payments made under long-term marketing agreements. Net cash used
in financing activities totaled $9.2 million and $5.1 million for the nine
months ended April 30, 2001 and 2000, respectively. A majority of the pasta
equipment expenditures for the nine months ended April 30, 2001 related to the
installation of a lasagna line at the New Hope, Minnesota plant. The lasagna
line was completed and became operational in February 2001.

Net cash from financing activities
totaled $3.3 million for the nine months ended April 30, 2001, mainly from
borrowings on the seasonal line of credit offset by payments on long-term debt
and patronage distributions. The Board of Directors authorized a qualified
patronage allocation of $4,466,000 ($.4284 per bushel acquired or $.40 per
average outstanding equity share) for fiscal year 2000 at its November 2000
meeting. The total qualified patronage allocation was paid in cash on November
30, 2000.  The Board also voted to
allocate, on a non-qualified basis, the remainder of the fiscal 2000 patronage
earnings totaling $2,665,000. In taking these actions, the Board of Directors
rescinded the patronage allocations authorized at the October 2000 meeting as
reported in the Companys Form 10-K for the year ended July 31, 2000. Net cash
used in financing activities of $9.6 million for the nine months ended April
30, 2000 resulted mainly from patronage distributions and long-term debt
payments offset by amounts received upon the exercise of stock options and
borrowings on the seasonal line of credit.

The Company has current commitments for
$1.6 million in raw material purchases, primarily durum purchase commitments
from its members. The Company anticipates capital expenditures to total $4.0
million in fiscal year 2001. These expenditures are primarily for pasta line
upgrades and cost reduction projects. Commitments for monthly operating lease
payments for technology and other assets total $0.9 million, of which $0.5
million is due within one year.

Since April 30, 2001 net cash provided by
operating activities and the Companys available line of credit have been
sufficient to meet its capital and liquidity requirements. Management believes
those resources will be sufficient to meet capital and liquidity requirements
for the foreseeable future.

ITEM 3.  QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

The Company does not believe it is
subject to any material market risk exposure with respect to interest rates,
commodity prices, exchange rates, equity prices, or other market changes that
would require disclosure under this item.

PART II  OTHER INFORMATION

ITEM 4.  SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

None.

Reports on Form 8-K

None.

SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

DAKOTA
  GROWERS PASTA COMPANYBy:                     /s/ Timothy J. DoddTimothy J. Dodd,PRESIDENT AND GENERAL
  MANAGER,
  AND PRINCIPAL EXECUTIVE OFFICERDated:
  June14, 2001Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

Signature
  Title
  Date/s/ Timothy J. Dodd
  General Manager
  (Principal Executive Officer)June14, 2001Timothy J. Dodd/s/ Thomas P. Friezen
  Chief Financial
  Officer (Principal Financial Officer)June 14, 2001Thomas P. Friezen/s/ Edward O. Irion
  Vice President -
  Finance (Principal Accounting Officer)June 14, 2001Edward O. Irion