** **

** **

**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**WASHINGTON, D.C. 20549**

** **

**FORM 10-Q**

 
|   | **x**  | **Quarterly Report Pursuant to Section 13 or 15(d)  of the Securities Exchange Act of 1934**  |
|--------|--------|-----------------------------------------------------------------------------------------------|
|   |   |                                                                                          |
|   |   | **For the quarterly period ended January 31, 2009**                                           |
|   |   |                                                                                          |
|   |   | **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. 000-50111**

** **

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** **

**DAKOTA GROWERS PASTA COMPANY,INC.**

(Exactname of registrant as specified in its charter)

 

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

 

**One Pasta Avenue, Carrington, ND 58421**

(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)

 

Indicate bycheck mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. Yes xNo o

 

Indicate bycheck mark whether the registrant is a large accelerated filer, an acceleratedfiler, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “large accelerated filer,” “accelerated filer” and “smallerreporting company” in Rule 12b-2 of the Exchange Act.
|   | Large accelerated filer o | Accelerated filer o         |
|--------|--------------------------------|----------------------------------|
|   | Non-Accelerated filer x   | Smaller reporting company o |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).  Yes oNo x

 

As of March 17,2009, the Registrant had 10,192,413 shares of Common Stock, par value $0.01 pershare, outstanding.

 

 

 

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**PART I — FINANCIAL INFORMATION**

 

**ITEM 1.FINANCIAL STATEMENTS**

 

**DAKOTAGROWERS PASTA COMPANY, INC.**

**CONSOLIDATEDBALANCE SHEETS**

**(InThousands, Except Share Information)**

 
| ** **                                                                                                              | ** ** | **(Unaudited)**      | ** ** | ** **        | ** ** |
|-------------------------------------------------------------------------------------------------------------------------|------------|----------------------|------------|-------------------|------------|
| ** **                                                                                                              | ** ** | **January 31,** | ** ** | **July 31,** | ** ** |
| ** **                                                                                                              | ** ** | **2009**             | ** ** | **2008**          | ** ** |
| **ASSETS**                                                                                                              |       |                 |       |              |       |
|                                                                                                                    |       |                 |       |              |       |
| CURRENT ASSETS                                                                                                          |       |                 |       |              |       |
| Cash and cash  equivalents                                                                                              |       | $                    | 75         |              | $          | 125 |   |
|                                                                                                                    |       |                 |       |              |       |
| Trade accounts  receivable, less allowance for cash discounts and doubtful accounts of $1,234  and $1,294, respectively |       | 27,239               |       | 27,315            |       |
|                                                                                                                    |       |                 |       |              |       |
| Other  receivables                                                                                                      |       | 1,370                |       | 850               |       |
|                                                                                                                    |       |                 |       |              |       |
| Inventories                                                                                                             |       | 36,886               |       | 51,956            |       |
|                                                                                                                    |       |                 |       |              |       |
| Prepaid expenses                                                                                                        |       | 1,125                |       | 1,040             |       |
|                                                                                                                    |       |                 |       |              |       |
| Deferred income  taxes                                                                                                  |       | 1,053                |       | 1,053             |       |
|                                                                                                                    |       |                 |       |              |       |
| Total current  assets                                                                                                   |       | 67,748               |       | 82,339            |       |
|                                                                                                                    |       |                 |       |              |       |
| PROPERTY AND  EQUIPMENT                                                                                                 |       |                 |       |              |       |
| In service                                                                                                              |       | 133,710              |       | 132,815           |       |
| Construction in  progress                                                                                               |       | 317                  |       | 546               |       |
|                                                                                                                    |       | 134,027              |       | 133,361           |       |
| Less accumulated  depreciation                                                                                          |       | (69,046              | )          | (65,983           | )          |
|                                                                                                                    |       |                 |       |              |       |
| Net property and  equipment                                                                                             |       | 64,981               |       | 67,378            |       |
|                                                                                                                    |       |                 |       |              |       |
| INVESTMENT IN  COOPERATIVE BANK                                                                                         |       | 1,355                |       | 1,355             |       |
|                                                                                                                    |       |                 |       |              |       |
| INTANGIBLE  ASSETS, NET                                                                                                 |       | 2,488                |       | 2,590             |       |
|                                                                                                                    |       |                 |       |              |       |
| GOODWILL                                                                                                                |       | 8,381                |       | 8,381             |       |
|                                                                                                                    |       |                 |       |              |       |
| OTHER ASSETS                                                                                                            |       | 888                  |       | 925               |       |
|                                                                                                                    |       |                 |       |              |       |
|                                                                                                                    |       | $                    | 145,841    |              | $          | 162,968 |   |

 

(continued on next page)

 

2

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**DAKOTAGROWERS PASTA COMPANY, INC.**

**CONSOLIDATEDBALANCE SHEETS**

**(InThousands, Except Share Information)**

 
| ** **                                                                                                                                        | ** ** | **(Unaudited)**      | ** ** | ** **        | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------|------------|-------------------|------------|
| ** **                                                                                                                                        | ** ** | **January 31,** | ** ** | **July 31,** | ** ** |
| ** **                                                                                                                                        | ** ** | **2009**             | ** ** | **2008**          | ** ** |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**                                                                                                    |       |                 |       |              |       |
|                                                                                                                                              |       |                 |       |              |       |
| CURRENT  LIABILITIES                                                                                                                              |       |                 |       |              |       |
| Excess  outstanding checks over cash on deposit                                                                                                   |       | $                    | 3,343      |              | $          | 3,130 |   |
| Accounts payable                                                                                                                                  |       | 9,365                |       | 15,357            |       |
| Accrued  liabilities                                                                                                                              |       | 6,137                |       | 7,244             |       |
| Notes payable                                                                                                                                     |       | 18,400               |       | 25,750            |       |
| Current portion  of long-term debt                                                                                                                |       | 5,744                |       | 9,507             |       |
|                                                                                                                                              |       |                 |       |              |       |
| Total current  liabilities                                                                                                                        |       | 42,989               |       | 60,988            |       |
|                                                                                                                                              |       |                 |       |              |       |
| COMMITMENTS AND  CONTINGENCIES                                                                                                                    |       | —               |       | —            |       |
| LONG-TERM DEBT,  net of current portion                                                                                                           |       | 27,799               |       | 31,174            |       |
| DEFERRED INCOME  TAXES                                                                                                                            |       | 15,345               |       | 14,119            |       |
|                                                                                                                                              |       |                 |       |              |       |
| Total  liabilities                                                                                                                                |       | 86,133               |       | 106,281           |       |
|                                                                                                                                              |       |                 |       |              |       |
| STOCKHOLDERS’  EQUITY                                                                                                                        |       |                 |       |              |       |
|                                                                                                                                              |       |                 |       |              |       |
| Series D  delivery preferred stock, non-cumulative, $.01 par value, 11,340,841  authorized, 11,275,297 shares issued and outstanding         |       | 113                  |       | 113               |       |
| Series F  convertible preferred stock, non-cumulative, $.01 par value, 2,100,000 shares  authorized, 1,065,000 shares issued and outstanding |       | 11                   |       | 11                |       |
| Common stock,  $.01 par value, 75,000,000 shares authorized, 10,192,413 issued and  outstanding                                                   |       | 102                  |       | 102               |       |
| Additional  paid-in capital                                                                                                                       |       | 43,022               |       | 42,958            |       |
| Retained  earnings                                                                                                                                |       | 16,460               |       | 13,503            |       |
|                                                                                                                                              |       |                 |       |              |       |
| Total  stockholders’ equity                                                                                                                  |       | 59,708               |       | 56,687            |       |
|                                                                                                                                              |       |                 |       |              |       |
| Total  liabilities and stockholders’ equity                                                                                                  |       | $                    | 145,841    |              | $          | 162,968 |   |

 

SeeNotes to Consolidated Financial Statements

 

3

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**DAKOTAGROWERS PASTA COMPANY, INC.**

**CONSOLIDATEDSTATEMENTS OF OPERATIONS**

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

 
| ** **                                                                         | ** ** | **Three Months Ended** | ** ** |
|------------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                         | ** ** | **January 31,**             | ** ** |
| ** **                                                                         | ** ** | **2009**                         | ** ** | **2008** | ** ** |
| Net revenues  (net of discounts and allowances of $5,981 and $6,972, respectively) |       | $                                | 72,067     |   | $ | 61,990 |   |
|                                                                               |       |                             |       |   |   |
| Cost of goods  sold                                                                |       | 60,953                           |       | 55,852 |   |
|                                                                               |       |                             |       |   |   |
| Gross profit                                                                       |       | 11,114                           |       | 6,138 |   |
|                                                                               |       |                             |       |   |   |
| Marketing,  general and administrative expenses                                    |       | 5,361                            |       | 4,766 |   |
|                                                                               |       |                             |       |   |   |
| Operating income                                                                   |       | 5,753                            |       | 1,372 |   |
|                                                                               |       |                             |       |   |   |
| Other income  (expense)                                                            |       |                             |       |   |   |
| Interest and  other income                                                         |       | 385                              |       | 2,032 |   |
| Loss on  disposition of property, equipment and other assets                       |       | —                           |       | (9 | ) |
| Interest  expense, net                                                             |       | (404                             | )          | (1,001 | ) |
|                                                                               |       |                             |       |   |   |
| Income before  income taxes                                                        |       | 5,734                            |       | 2,394 |   |
|                                                                               |       |                             |       |   |   |
| Income tax  expense                                                                |       | 2,105                            |       | 933 |   |
|                                                                               |       |                             |       |   |   |
| Net income                                                                         |       | 3,629                            |       | 1,461 |   |
| Dividends on preferred  stock                                                      |       | 326                              |       | 283 |   |
|                                                                               |       |                             |       |   |   |
| Net earnings on  common stock                                                      |       | $                                | 3,303      |   | $ | 1,178 |   |
|                                                                               |       |                             |       |   |   |
| Net earnings per  common share                                                     |       |                             |       |   |   |
| Basic                                                                              |       | $                                | 0.32       |   | $ | 0.12 |   |
|                                                                               |       |                             |       |   |   |
| Diluted                                                                            |       | $                                | 0.28       |   | $ | 0.10 |   |
|                                                                               |       |                             |       |   |   |
| Weighted average  common shares outstanding                                        |       |                             |       |   |   |
| Basic                                                                              |       | 10,192                           |       | 10,192 |   |
|                                                                               |       |                             |       |   |   |
| Diluted                                                                            |       | 11,958                           |       | 11,958 |   |
|                                                                               |       |                             |       |   |   |
| Dividends per  common share                                                        |       | $                                | 0.20       |   | $ | 0.16 |   |

 

SeeNotes to Consolidated Financial Statements

 

4

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**DAKOTAGROWERS PASTA COMPANY, INC.**

**CONSOLIDATEDSTATEMENTS OF OPERATIONS**

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

 
| ** **                                                                           | ** ** | **Six Months Ended** | ** ** |
|--------------------------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                                           | ** ** | **January 31,**           | ** ** |
| ** **                                                                           | ** ** | **2009**                       | ** ** | **2008** | ** ** |
| Net revenues  (net of discounts and allowances of $13,099 and $14,153, respectively) |       | $                              | 159,213    |   | $ | 116,792 |   |
|                                                                                 |       |                           |       |   |   |
| Cost of goods  sold                                                                  |       | 139,472                        |       | 102,141 |   |
|                                                                                 |       |                           |       |   |   |
| Gross profit                                                                         |       | 19,741                         |       | 14,651 |   |
|                                                                                 |       |                           |       |   |   |
| Marketing,  general and administrative expenses                                      |       | 10,496                         |       | 9,536 |   |
|                                                                                 |       |                           |       |   |   |
| Operating income                                                                     |       | 9,245                          |       | 5,115 |   |
|                                                                                 |       |                           |       |   |   |
| Other income  (expense)                                                              |       |                           |       |   |   |
| Interest and  other income                                                           |       | 421                            |       | 2,114 |   |
| Loss on  disposition of property, equipment and other assets                         |       | —                         |       | (9 | ) |
| Interest  expense, net                                                               |       | (1,258                         | )          | (2,051 | ) |
|                                                                                 |       |                           |       |   |   |
| Income before  noncontrolling interests and income taxes                             |       | 8,408                          |       | 5,169 |   |
|                                                                                 |       |                           |       |   |   |
| Noncontrolling  interests                                                            |       | —                         |       | 202 |   |
|                                                                                 |       |                           |       |   |   |
| Income before  income taxes                                                          |       | 8,408                          |       | 5,371 |   |
|                                                                                 |       |                           |       |   |   |
| Income tax  expense                                                                  |       | 3,087                          |       | 2,094 |   |
|                                                                                 |       |                           |       |   |   |
| Net income                                                                           |       | 5,321                          |       | 3,277 |   |
| Dividends on  preferred stock                                                        |       | 326                            |       | 283 |   |
|                                                                                 |       |                           |       |   |   |
| Net earnings on  common stock                                                        |       | $                              | 4,995      |   | $ | 2,994 |   |
|                                                                                 |       |                           |       |   |   |
| Net earnings per  common share                                                       |       |                           |       |   |   |
| Basic                                                                                |       | $                              | 0.49       |   | $ | 0.29 |   |
|                                                                                 |       |                           |       |   |   |
| Diluted                                                                              |       | $                              | 0.42       |   | $ | 0.26 |   |
|                                                                                 |       |                           |       |   |   |
| Weighted average  common shares outstanding                                          |       |                           |       |   |   |
| Basic                                                                                |       | 10,192                         |       | 10,192 |   |
|                                                                                 |       |                           |       |   |   |
| Diluted                                                                              |       | 11,958                         |       | 11,958 |   |
|                                                                                 |       |                           |       |   |   |
| Dividends per  common share                                                          |       | $                              | 0.20       |   | $ | 0.16 |   |

 

SeeNotes to Consolidated Financial Statements

 

5

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**DAKOTAGROWERS PASTA COMPANY, INC.**

**CONSOLIDATEDSTATEMENTS OF CASH FLOWS**

**(InThousands)(Unaudited)**

 
| ** **                                                                             | ** ** | **Six Months Ended** | ** ** |
|----------------------------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                                             | ** ** | **January 31,**           | ** ** |
| ** **                                                                             | ** ** | **2009**                       | ** ** | **2008** | ** ** |
| OPERATING  ACTIVITIES                                                                  |       |                           |       |   |   |
| Net income                                                                             |       | $                              | 5,321      |   | $ | 3,277 |   |
| Adjustments to  reconcile net income to net cash from (used for) operating activities: |       |                           |       |   |   |
| Depreciation and  amortization                                                         |       | 3,287                          |       | 3,348 |   |
| Loss on disposition  of property, equipment and other assets                           |       | —                         |       | 9 |   |
| Noncontrolling  interests                                                              |       | —                         |       | (202 | ) |
| Deferred income  taxes                                                                 |       | 1,226                          |       | 831 |   |
| Stock-based  employee compensation                                                     |       | 64                             |       | 92 |   |
| Changes in  assets and liabilities                                                     |       |                           |       |   |   |
| Trade  receivables                                                                     |       | 76                             |       | (7,333 | ) |
| Other  receivables                                                                     |       | (520                           | )          | (717 | ) |
| Inventories                                                                            |       | 15,070                         |       | (8,259 | ) |
| Prepaid expenses                                                                       |       | (85                            | )          | 37 |   |
| Other assets                                                                           |       | 6                              |       | 1 |   |
| Accounts payable                                                                       |       | (5,992                         | )          | (40 | ) |
| Other accrued  liabilities                                                             |       | (1,107                         | )          | (215 | ) |
| NET CASH FROM  (USED FOR) OPERATING ACTIVITIES                                         |       | 17,346                         |       | (9,171 | ) |
|                                                                                   |       |                           |       |   |   |
| INVESTING  ACTIVITIES                                                                  |       |                           |       |   |   |
| Purchase of  interests in DNA Dreamfields                                              |       | —                         |       | (2,232 | ) |
| Purchases of  property and equipment                                                   |       | (665                           | )          | (1,278 | ) |
| Proceeds from  sale of property, equipment and other assets                            |       | —                         |       | 5 |   |
| Payments for  package design costs                                                     |       | (92                            | )          | (71 | ) |
| Proceeds from  other investments                                                       |       | —                         |       | 57 |   |
| NET CASH USED  FOR INVESTING ACTIVITIES                                                |       | (757                           | )          | (3,519 | ) |
|                                                                                   |       |                           |       |   |   |
| FINANCING  ACTIVITIES                                                                  |       |                           |       |   |   |
| Net change in  excess outstanding checks over cash on deposit                          |       | 213                            |       | 10,956 |   |
| Net change in  short-term notes payable                                                |       | (7,350                         | )          | 10,820 |   |
| Principal  payments on long-term debt                                                  |       | (7,138                         | )          | (7,124 | ) |
| Dividends paid  on common stock                                                        |       | (2,038                         | )          | (1,630 | ) |
| Dividends paid  on preferred stock                                                     |       | (326                           | )          | (283 | ) |
| NET CASH FROM  (USED FOR) FINANCING ACTIVITIES                                         |       | (16,639                        | )          | 12,739 |   |
|                                                                                   |       |                           |       |   |   |
| NET CHANGE IN  CASH AND CASH EQUIVALENTS                                               |       | (50                            | )          | 49 |   |
| CASH AND CASH  EQUIVALENTS, BEGINNING OF PERIOD                                        |       | 125                            |       | 89 |   |
| CASH AND CASH  EQUIVALENTS, END OF PERIOD                                              |       | $                              | 75         |   | $ | 138 |   |
|                                                                                   |       |                           |       |   |   |
| SUPPLEMENTAL  DISCLOSURES OF CASH FLOW INFORMATION                                     |       |                           |       |   |   |
| Cash payments  for                                                                     |       |                           |       |   |   |
| Interest (net of  amounts capitalized)                                                 |       | $                              | 1,549      |   | $ | 2,183 |   |
|                                                                                   |       |                           |       |   |   |
| Income taxes                                                                           |       | $                              | 3,330      |   | $ | 2,510 |   |
|                                                                                   |       |                           |       |   |   |
| SUPPLEMENTAL  DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES                 |       |                           |       |
| Purchase of  interests in DNA Dreamfields                                              |       |                           |       |   |   |
| Goodwill  reduction                                                                    |       |                           |       | $ | (8,273 | ) |
| Amortizable  intangibles                                                               |       |                           |       | 2,759 |   |
| Noncontrolling  interests reduction                                                    |       |                           |       | 7,746 |   |
|                                                                                   |       |                           |       |   |   |
|                                                                                   |       |                           |       | $ | 2,232 |   |

 

SeeNotes to Consolidated Financial Statements

 

6

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**DAKOTAGROWERS PASTA COMPANY, INC.**

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

The following notes should be read inconjunction with the notes to the financial statements for the year ended July 31,2008 as filed in the Company’s Form 10-K.

 

**NOTE 1 - ORGANIZATION**

 

Dakota Growers Pasta Company, Inc.(“Dakota Growers” or “the Company”) is a North Dakota corporation that operatesa milling and pasta manufacturing facility in Carrington, North Dakota. TheCompany’s wholly-owned subsidiary, Primo Piatto, Inc. (“Primo Piatto”), aMinnesota corporation, operates a pasta manufacturing facility in New Hope,Minnesota.  DNA Dreamfields Company, LLC(“DNADreamfields”) became a wholly-owned subsidiary on September 21, 2007 (SeeNote 7).

 

**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 (“SEC”) for quarterly reporting. Accordingly, they do notinclude all the information and footnotes required by accounting principlesgenerally accepted in the United States of America for complete financialstatements. In the opinion of management, all adjustments (consisting of normalrecurring accruals) considered necessary for a fair presentation have beenincluded. Operating results for the three and six month periods ended January 31,2009 are not necessarily indicative of the results that may be expected for theyear ended July 31, 2009. The unaudited consolidated financial statementsincluded in this Form 10-Q should be read in conjunction with theconsolidated financial statements and footnotes included in the Company’s Form 10-Kfor the year ended July 31, 2008. The information contained in the balancesheet as of July 31, 2008 was derived from the Company’s audited annualreport for fiscal year 2008. Reclassifications have been made to facilitatecomparability with current presentation. Such reclassifications have no effecton the net results of operations.

 

The financial information presented hereinincludes the consolidated balance sheets and results of operations of the Company, Primo Piatto and DNADreamfields, which the Company began to consolidate in fiscal year 2005. Allmaterial inter-company accounts and transactions have been eliminated in thepreparation of the consolidated financial statements.

 

The Company recorded a $960,000 non-recurring pre-tax charge in itsfiscal second quarter ending January 31, 2008 to reflect the costsassociated with the withdrawal from the Central States Southeast and SouthwestAreas Pension Fund.

 

**NOTE 3 — NEW ACCOUNTING PRONOUNCEMENTS**

 

In September 2006,the Financial Accounting Standards Board (“FASB”) issued Statement of FinancialAccounting Standard (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS157”). SFAS 157 defines fair value, establishes a framework for measuring fairvalue and expands disclosure of fair value measurements. SFAS 157 applies underother accounting pronouncements that require or permit fair value measurementsand accordingly, does not require any new fair value measurements. SFAS 157 wasinitially effective for fiscal years beginning after November 15, 2007,and interim periods within those fiscal years. In February 2008, the FASBissued FASB Staff Position (“FSP”) FAS 157-2.  This FSP permitsa delay in the effective date of SFAS 157 to fiscal years beginning after November 15,2008, for nonfinancial assets and nonfinancial liabilities,  exceptfor items that are recognized or disclosed at fair value in the financialstatements on a recurring basis (at least annually). In October 2008, theFASB issued FSP FAS 157-3, “Determining the Fair Value of a Financial Assetwhen the Market for That Asset Is Not Active,” which clarifies the applicationof SFAS 157 for financial assets in a market that is not active. The adoptionof SFAS 157 did not have a material impact on the Company’s financialstatements.

 

7

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** **

**DAKOTAGROWERS PASTA COMPANY, INC.**

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

In February 2007, FASBissued SFAS 159, “The Fair Value Option for Financial Assets and FinancialLiabilities” (“SFAS 159”).  SFAS 159 provides companies with an option toreport selected financial assets and liabilities at fair value and establishespresentation and disclosure requirements designed to facilitate comparisonsbetween companies that choose different measurement attributes for similartypes of assets and liabilities.  SFAS 159 is effective for fiscal yearsbeginning after November 15, 2007.  The Company has elected not toapply the fair value option to the specified financial assets and liabilities,and accordingly, the adoption of SFAS No. 159 had no financial statementimpact.

 

InDecember 2007, FASB issued SFAS No. 141 (Revised 2007), “BusinessCombinations” (“SFAS 141R”). The objective of SFAS 141R is to improve therelevance, representational faithfulness, and comparability of the informationthat a reporting entity provides in its financial reports about a businesscombination and its effects. SFAS 141R requires an acquirer to recognize theassets acquired, the liabilities assumed, and any noncontrolling interest inthe acquiree at the acquisition date, measured at their fair values as of thatdate. SFAS 141R also requires the acquirer to recognize and measure thegoodwill acquired in a business combination or a gain from a bargain purchaseand how to evaluate the nature and financial effects of the businesscombination. SFAS 141R is effective for financial statements issued for fiscalyears beginning after December 15, 2008. The Company is in the process ofevaluating the impact, if any, that the adoption of SFAS 141R will have on itsfinancial statements.

 

InDecember 2007, FASB issued SFAS No. 160, “Noncontrolling Interests inConsolidated Financial Statements-an Amendment of ARB No. 51” (“SFAS160”). The objective of SFAS 160 is to improve the relevance, comparability,and transparency of the financial information that a reporting entity providesin its consolidated financial statements. SFAS 160 amends ARB No. 51 toestablish accounting and reporting standards for the noncontrolling interest ina subsidiary and for the deconsolidation of a subsidiary. SFAS 160 also changesthe way the consolidated income statement is presented, establishes a singlemethod of accounting for changes in a parent’s ownership interest in asubsidiary that do not result in deconsolidation, requires that a parentrecognize a gain or loss in net income when a subsidiary is deconsolidated andexpanded disclosures in the consolidated financial statements that clearlyidentify and distinguish between the interests of the parent’s owners and theinterest of the noncontrolling owners of a subsidiary. SFAS 160 is effectivefor financial statements issued for the fiscal years beginning on or after December 15,2008. The Company is in the process of evaluating the impact, if any, that theadoption of SFAS 160 will have on its financial statements.

 

In May 2008, FASBissued FASB Statement No. 162, “TheHierarchy of Generally Accepted Accounting Principles.” This statementidentifies the sources of accounting principles and the framework for selectingthe principles used in the preparation of financial statements ofnongovernmental entities that are presented in conformity with generallyaccepted accounting principles (“GAAP”) in the United States. This statementbecame effective 60 days following the SEC’s approval of the Public CompanyAccounting Oversight Board (“PCAOB”) amendments to AU Section 411, “The Meaning of Present Fairly in Conformitywith Generally Accepted Accounting Principles.” The adoption of thisstatement did not have a material impact on our financial statements.

 

In April 2008, FASBissued FASB Staff Position No. 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”).This FSP amends the factors that should be considered in developing renewal orextension assumptions used to determine the useful life of a recognizedintangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets.” The intent of this FSP isto improve the consistency between the useful life of a recognized intangibleasset under FASB Statement No. 142 and the period of expected cash flowsused to measure the fair value of the asset under FASB Statement No. 141R,and other U.S. generally accepted accounting principles. FSP 142-3 is effectivefor our interim and annual financial statements beginning in fiscal 2010. TheCompany is in the process of evaluating the impact, if any, that the adoptionof FSP 142-3 will have on its financial statements.

 

8

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** **

**DAKOTAGROWERS PASTA COMPANY, INC.**

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

**NOTE 4 — INVENTORIES**

 

Inventories are valued at lower of cost or market.Inventories as of January 31, 2009 include raw materials and packaging of$14,363,000 and finished goods of $22,523,000. Inventories at July 31,2008 include raw materials and packaging of $18,559,000 and finished goods of$33,397,000.

 

###### **NOTE 5 — LOAN AGREEMENTS**

###### ** **

The Company has a $45 million revolving credit facility with CoBankthat extends through January 13, 2010 and is collateralized by all assetsof the Company. Interest on the revolving line of credit is at the 7-day LIBORrate subject to performance adjustments depending upon the Company’s ratio oftotal debt to earnings before interest, taxes, depreciation and amortization or“EBITDA.” The higher the ratio the higher the adjustment to the 7-day LIBORrate within a range of 200 to 300 basis points above the 7-day LIBORrate.  Fixed interest rate options are also available. The balancesoutstanding under the revolving credit arrangements totaled $18.4 million and$25.8 million as of January 31, 2009 and July 31, 2008,respectively.  The Company had $26.6million and $19.2 million available for borrowings under the revolving line ofcredit as of January 31, 2009 and July 31, 2008, respectively.

 

During the second quarter of fiscal year 2009, the Company also enteredinto modifications to existing CoBank term loan agreements with respect to debtpreviously incurred by the Company. These modifications increased the performance pricing adjustmentschedule by 25 basis points.

 

The Company’s various debt agreements with CoBank and certaininstitutional note holders 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 January 31, 2009.

 

###### **NOTE 6 — EARNINGS PER SHARE**

 

Basic earningsper share (“EPS”) is calculated by dividing net earnings on Common Stock by theweighted average number of common shares outstanding during the period. DilutedEPS includes the effect of all potentially dilutive securities, such as stockoptions and convertible preferred stock. Prior to August 1, 2008, theCompany had not included nonvested stock options in the calculation of dilutedEPS.  Nonvested stock options have beenconsidered in the calculation of diluted EPS for the three and six monthperiods ended January 31, 2009 and 2008, as presented herein.

 

Dilutive securities, consisting of stock options and convertiblepreferred stock, included in the calculation of diluted weighted average commonshares totaled 1,766,000 for the three and six months ended January 31,2009 and 2008. The Series F Convertible Preferred Stock is included in thefully diluted EPS calculation and not included in the basic EPS calculation. Asthere is currently no established public trading market for the Company’sCommon Stock, the Company has assumed the proceeds from the exercise of stockoptions would reduce debt and, thus, interest expense.

 

9

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** **

**DAKOTAGROWERS PASTA COMPANY, INC.**

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

The componentsof basic earnings per share are as follows (in thousands, except per shareamounts):

 
| ** **                                         | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|----------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                         | ** ** | **January 31,**             | ** ** | **January 31,**           | ** ** |
| ** **                                         | ** ** | **2009**                         | ** ** | **2008**                       | ** ** | **2009** | ** ** | **2008** | ** ** |
| **Earnings per share - Basic** |       |                             |       |                           |       |   |   |   |   |
|                                               |       |                             |       |                           |       |   |   |   |   |
| Net earnings available to common  stockholders     |       | $                                | 3,303      |                           | $          | 1,178 |   | $ | 4,995 |   | $ | 2,994 |   |
|                                               |       |                             |       |                           |       |   |   |   |   |
| Basic weighted-average shares outstanding          |       | 10,192                           |       | 10,192                         |       | 10,192 |   | 10,192 |   |
|                                               |       |                             |       |                           |       |   |   |   |   |
| Earnings per share - Basic                         |       | $                                | 0.32       |                           | $          | 0.12 |   | $ | 0.49 |   | $ | 0.29 |   |

 

The components of diluted earnings per share are as follows (inthousands, except per share amounts):

 
| ** **                                                                     | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|--------------------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                                     | ** ** | **January 31,**             | ** ** | **January 31,**           | ** ** |
| ** **                                                                     | ** ** | **2009**                         | ** ** | **2008**                       | ** ** | **2009** | ** ** | **2008** | ** ** |
| **Earnings per share - Diluted**                           | ** ** | ** **                       | ** ** | ** **                     | ** ** | ** ** | ** ** | ** ** | ** ** |
|                                                                           |       |                             |       |                           |       |   |   |   |   |
| Net earnings available to common  stockholders                                 |       | $                                | 3,303      |                           | $          | 1,178 |   | $ | 4,995 |   | $ | 2,994 |   |
| Plus: Impact of interest expense on the  exercise of options, net of taxes (1) |       | 13                               |       | 29                             |       | 26 |   | 59 |   |
| Net earnings available to common  stockholders                                 |       | $                                | 3,316      |                           | $          | 1,207 |   | $ | 5,021 |   | $ | 3,053 |   |
|                                                                           |       |                             |       |                           |       |   |   |   |   |
| Diluted weighted-average shares  outstanding:                                  |       |                             |       |                           |       |   |   |   |   |
| Basic weighted-average shares outstanding                                      |       | 10,192                           |       | 10,192                         |       | 10,192 |   | 10,192 |   |
| Plus: Incremental shares from assumed  conversions                             |       |                             |       |                           |       |   |   |   |   |
| Options                                                                        |       | 701                              |       | 701                            |       | 701 |   | 701 |   |
| Convertible preferred shares                                                   |       | 1,065                            |       | 1,065                          |       | 1,065 |   | 1,065 |   |
| Diluted weighted-average shares outstanding                                    |       | 11,958                           |       | 11,958                         |       | 11,958 |   | 11,958 |   |
|                                                                           |       |                             |       |                           |       |   |   |   |   |
| Earnings per share - Diluted                                                   |       | $                                | 0.28       |                           | $          | 0.10 |   | $ | 0.42 |   | $ | 0.26 |   |

 

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(1) As there is currently no established public tradingmarket for the Company’s common stock, the Company has assumed the proceedsfrom the exercise of stock options would reduce debt and, thus, interestexpense.

 

**NOTE 7 — DNA DREAMFIELDS COMPANY, LLC**

 

Effective May 1, 2005, the Company’sownership in DNA Dreamfields increased to 46.7%. In conjunction with the Company’s increase in ownership in DNADreamfields and changes in the DNA Dreamfields operating agreement andother contractual arrangements, the Companydetermined that DNA Dreamfields was a variable interest entity under FASBInterpretation No. 46(R), “Consolidation of Variable Interest Entities,”and that the Company was the primary beneficiary. Therefore, effective May 1,2005, the Company began to include DNA Dreamfields in its consolidatedfinancial statements.

 

Effective September 21,2007, the Company acquired the remaining units of DNA Dreamfields, increasingits ownership to 100%.  Pursuant to theterms of the purchase agreement, the Company acquired the remaining units foran aggregate purchase price of $2.2 million. In conjunction with this purchase, the Company eliminated thenoncontrolling interests, recorded amortizable intangible assets (covenantsnot-to-compete and technology license) and reduced recorded goodwill associatedwith the buyout of DNA Dreamfields in the Company’s first quarter of fiscalyear 2008.

 

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** **

**DAKOTAGROWERS PASTA COMPANY, INC.**

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

###### **NOTE8 — DIVIDENDS**

###### ** **

On December 18, 2008, the Company’sBoard of Directors authorized the payment of non-periodic dividends of 1 centper share on its Series D Delivery Preferred Stock, 20 cents per share onits Common Stock and 20 cents per share on its Series F ConvertiblePreferred Stock, payable on January 7, 2009 to stockholders of record asof December 26, 2008.

 

On December 20, 2007, the Company’sBoard of Directors authorized the payment of non-periodic dividends of 1 centper share on its Series D Delivery Preferred Stock, 16 cents per share onits Common Stock and 16 cents per share on its Series F ConvertiblePreferred Stock, payable on January 15, 2008 to stockholders of record asof December 31, 2007.

 

**NOTE 9 — GOODWILL AND OTHER INTANGIBLE ASSETS**

 

In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets” goodwill and intangible assets with indefinite useful lives are to be tested for impairment at least annually. As of January 31, 2009, the value of goodwill was $8.4 million.

 

Amortizable intangible assets are amortized using the straight-line method over their estimated useful lives, which is the estimated period over which economic benefits are expected to be provided. In conjunction with the acquisition of the remaining units of DNA Dreamfields (See Note 7), the Company recorded amortizable intangible assets including covenants not-to-compete and a technology license.  The covenants not-to-compete totaling $112,000 are being amortized over 36 months. The technology license totaling $2.6 million is being amortized over its estimated useful life of approximately 16 years.

 
| ** **                           | ** ** | **As of January 31, 2009 (in thousands)** | ** ** |
|--------------------------------------|------------|-------------------------------------------------------------------------|------------|
| ** **                           | ** ** | **Gross Carrying**                                                 | ** ** | **Accumulated** | ** ** | **Net Carrying** | ** ** |
| ** **                           | ** ** | **Amount**                                                              | ** ** | **Amortization** | ** ** | **Amount** | ** ** |
|                                 |       |                                                                    |       |   |   |   |   |
| Covenants not-to-compete             |       | $                                                                       | 112        |   | $ | (50 | ) | $ | 62 |   |
| Technology license                   |       | 2,647                                                                   |       | (221 | ) | 2,426 |   |
|                                 |       |                                                                    |       |   |   |   |   |
| Total intangible assets              |       | 2,759                                                                   |       | (271 | ) | 2,488 |   |
|                                 |       |                                                                    |       |   |   |   |   |
| Goodwill                             |       | 8,381                                                                   |       | — |   | 8,381 |   |
|                                 |       |                                                                    |       |   |   |   |   |
| Total goodwill and intangible assets |       | $                                                                       | 11,140     |   | $ | (271 | ) | $ | 10,869 |   |

 

Amortization expense of intangible assets totaled $102,000 and $68,000 for the six months ended January 31, 2009 and 2008, respectively.

 

**NOTE 10 — STOCK OPTIONS**

 

The Companyaccounts for share based payments in accordance with Statement of FinancialAccounting Standard No. 123 (revised 2004), “Share Based Payment” (“SFAS No. 123R”).Under SFAS No. 123R, the Company is required to recognize, as expense, theestimated fair value of all share based payments to employees. In accordancewith this standard, the Company has elected to recognize the compensation costof all service based awards on a straight-line basis over the vesting period ofthe award. Performance based awards are recognized

 

11

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** **

**DAKOTAGROWERS PASTA COMPANY, INC.**

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

ratably foreach vesting tranche. The Company recorded stock-based employee compensationexpense of $64,000 and $92,000 for the six months ended January 31, 2009and 2008, respectively.

 

The followingtables set forth information regarding stock options outstanding andexercisable:

 
| ** **                           | ** ** | **Options to purchase Series C Convertible Preferred Stock** | ** ** |
|--------------------------------------|------------|-------------------------------------------------------------------------------------------------|------------|
| ** **                           | ** ** | **Number of**                                                                              | ** ** | ** ** | ** ** | **Weighted** | ** ** | ** ** | ** ** |
| ** **                           | ** ** | **Series C**                                                                               | ** ** | **Option** | ** ** | **Average** | ** ** | ** ** | ** ** |
| ** **                           | ** ** | **Convertible**                                                                                 | ** ** | **Price** | ** ** | **Exercise** | ** ** | ** ** | ** ** |
| ** **                           | ** ** | **Preferred Shares**                                                                       | ** ** | **per Share** | ** ** | **Price** | ** ** | **Exercisable** | ** ** |
|                                 |       |                                                                                            |       |   |   |   |   |   |   |
| Outstanding at July 31, 2008    |       | 1,977                                                                                           |       | $100-$150 |   | $ | 117.35 |   | 1,977 |   |
| Exercised                            |       | —                                                                                          |       |   |   |   |   |   |   |
| Granted                              |       | —                                                                                          |       |   |   |   |   |   |   |
| Forfeited/Expired                    |       | —                                                                                          |       |   |   |   |   |   |   |
| Outstanding at January 31, 2009 |       | 1,977                                                                                           |       | $100-$150 |   | $ | 117.35 |   | 1,977 |   |

 
| ** **                           | ** ** | **Options to purchase Common Stock** | ** ** |
|--------------------------------------|------------|----------------------------------------------------------|------------|
| ** **                           | ** ** | ** **                                               | ** ** | ** ** | ** ** | **Weighted** | ** ** | ** ** | ** ** |
| ** **                           | ** ** | ** **                                               | ** ** | **Option** | ** ** | **Average** | ** ** | ** ** | ** ** |
| ** **                           | ** ** | **Number of**                                       | ** ** | **Price** | ** ** | **Exercise** | ** ** | ** ** | ** ** |
| ** **                           | ** ** | **Common Shares**                                   | ** ** | **per Share** | ** ** | **Price** | ** ** | **Exercisable** | ** ** |
|                                 |       |                                                     |       |   |   |   |   |   |   |
| Outstanding at July 31, 2008    |       | 653,013                                                  |       | $4.00-$6.25 |   | $ | 5.10 |   | 485,128 |   |
| Exercised                            |       | —                                                   |       |   |   |   |   |   |   |
| Granted                              |       | —                                                   |       |   |   |   |   |   |   |
| Forfeited/Expired                    |       | —                                                   |       |   |   |   |   |   |   |
| Outstanding at January 31, 2009 |       | 653,013                                                  |       | $4.00-$6.25 |   | $ | 5.10 |   | 584,832 |   |

 

A summary ofthe status of the Company’s issued but nonvested stock options as of July 31,2008, and changes during the six months ended January 31, 2009, ispresented below:

 
| ** **                            | ** ** | ** ** | ** ** | **Weighted-Average** | ** ** |
|---------------------------------------|------------|------------|------------|----------------------|------------|
| ** **                            | ** ** | **Common** | ** ** | **Grant-Date**       | ** ** |
| **Nonvested Stock Options** | ** ** | **Shares** | ** ** | **Fair Value**  | ** ** |
|                                  |       |       |       |                 |       |
| Nonvested at July 31, 2008       |       | 167,885    |       | $                    | 4.81       |   |
| Granted                               |       | —     |       |                 |       |
| Vested                                |       | (99,704    | )          | $                    | 4.68       |   |
| Forfeited/Expired                     |       | —     |       |                 |       |
| Nonvested at January 31, 2009    |       | 68,181     |       | $                    | 5.00       |   |

 

As of January 31,2009, there was approximately $72,000 of total unrecognized compensation costrelated to nonvested employee stock options.  That cost is expected to berecognized over a period of .75 years.

 

**NOTE 11 — CONTINUED DUMPING AND SUBSIDY OFFSET ACT OF 2000**

 

U.S. Customs and Border Protection (“Customs”)has distributed antidumping and countervailing duties assessed on certain pastaimported from Italy and Turkey to affected domestic producers pursuant to theContinued Dumping and Subsidy Offset Act of 2000 (the “Offset Act”), which wasenacted in October 2000. The Company

 

12

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** **

**DAKOTAGROWERS PASTA COMPANY, INC.**

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

received payments in the amount of $384,000and $2,200,000 in December 2008 and 2007, respectively, under the OffsetAct. These amounts have been classified as other income. The Company cannotreasonably estimate the potential amount, if any, that it may receive under theOffset Act in future periods as any such amount will be based upon futureevents over which the Company has little or no control, including but notlimited to federal legislation, the amount of expenditures by domestic pastaproducers and the amount of antidumping and countervailing duties collected byCustoms.  The Offset Act, also known asthe Byrd Amendment, has been repealed and therefore, duties assessed on pastaimports after September 30, 2007 will no longer be distributed to domesticproducers.  However, amounts collected(whether such collections occur before or after September 30, 2007)related to duties assessed on pasta entries prior to September 30, 2007,are expected to be available for future distribution to domestic producers.

 

###### **NOTE12 — COMMITMENTS**

 

The Companyforward contracts for a certain portion of its future durum wheat requirements.The Company had outstanding commitments for grain purchases totaling $20.5million as of January 31, 2009, related to forward purchase contracts.These contracts are set price contracts to deliver grain to the Company’s mill,and are not derivative in nature as they have no net settlement provision andare not transferable.

 

**NOTE 13 — RELATED PARTYTRANSACTIONS**

 

Jeffrey Topp, a director ofthe Company, sold wheat to the Company through an affiliated entity during thesix months ended January 31, 2009. Those sales totaled $554,000 at marketprices. The Company entered into a commitment to purchase wheat totaling$187,500 from Mr. Topp and/or his affiliated entity subsequent to January 31,2009.

 

13

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**ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS**

 

ThisManagement’s Discussion and Analysis of Financial Condition and Results ofOperations (“MD&A”) should be read in conjunction with the MD&Aincluded in the Company’s Form 10-K for the year ended July 31, 2008.

 

**Forward-Looking Statements**

 

Thefollowing discussion contains forward-looking statements. Such forward-lookingstatements include, among others, those statements including the words “expect,”“anticipate,” “believe,” “may” and similar expressions. Such statements arebased on assumptions by the Company’s management as of the date of thisQuarterly Report, and are subject to risks and uncertainties, including thosediscussed in the Company’s Form 10-K for the year ended July 31, 2008under “Risk Factors,” that could cause actual results to differ materially fromthose anticipated. The Company cautions readers not to place undue reliance onsuch forward-looking statements. The Company will not update any forward-lookingstatements in this Quarterly Report to reflect future events or developments.

 

**Summary**

 

Dakota Growers is the third largest pastamanufacturer in North America. The Company has two production plants, locatedin Carrington, North Dakota and New Hope, Minnesota, and generates a majorityof its revenues from manufacturing pasta for the retail store brand,foodservice and ingredient markets. The Company’s cost of goods sold consistsmainly of raw materials (primarily durum wheat), packaging, and manufacturingand distribution costs.  The Companycompetes through low cost production, high product quality, flexibility andcustomer service.

 

Netincome for the quarter ended January 31, 2009 totaled $3.6 millioncompared to $1.5 million for the quarter ended January 31, 2008.  Net income for the six months ending January 31,2009 totaled $5.3 million compared to $3.3 million for the six months ended January 31,2008.The Companyrecorded a $960,000 non-recurring pre-tax charge in its fiscal second quarterending January 31, 2008 to reflect the costs associated with thewithdrawal from the Central States Southeast and Southwest Areas Pension Fund. TheCompany paid dividends of $0.01 per share on its Series D DeliveryPreferred Stock, $0.20 per share on its Series F Convertible PreferredStock and $0.20 per share on its Common Stock during the second quarter offiscal year 2009. Net earnings perbasic common share, after the effect of dividends on preferred stock, were$0.32 per share for the quarter ended January 31, 2009, compared to $0.12per share for the quarter ended January 31, 2008. Net earnings per basiccommon share were $0.49 per share for the six months ended January 31,2009 and $0.29 per share for the six months ended January 31, 2008.

 

The Company’s net revenues increased 16.3% for thequarter ended January 31, 2009 and 36.3% for the six months ended January 31,2009 when compared to the same periods of the prior year.  The increases resulted primarily from higherpasta per unit selling prices and, to a lesser extent, higher mill salesprices. Benefits derived from higher selling prices were partially offset byhigher durum costs.  However, durumprices have declined during the first half of fiscal year 2009 when compared torecord high levels experienced during the latter portion of fiscal year 2008.

 

**Critical Accounting Policies**

 

Theaccompanying discussion and analysis of our results of operations and financialcondition are based upon our consolidated financial statements, which have beenprepared in accordance with accounting principles generally accepted in theUnited States. The preparation of these financial statements requiresmanagement to make estimates and judgments that affect the reported amounts ofassets, liabilities, revenues and expenses, and related disclosure ofcontingent assets and liabilities. These estimates form the basis for makingjudgments about the carrying values of assets and liabilities that are notreadily apparent from other sources. We base our estimates and judgments onhistorical experience and on various other assumptions that we believe arereasonable under the circumstances. However, future events are subject tochange and the best estimates and judgments may require adjustment. For acomplete description of the Company’s significant accounting policies, pleasesee Note 1 to the 

 

14

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consolidatedfinancial statements included in the Company’s Form 10-K for the yearended July 31, 2008. Our critical accounting policies are those that havemeaningful impact on the reporting of our financial condition and results, andthat require significant management judgment and estimates. These policiesinclude our accounting for (a) allowance for doubtful accounts, (b) inventoryvaluation, (c) asset impairment, and (d) income taxes.

 

*Allowance for Doubtful Accounts*

 

Weevaluate the collectibility of our accounts receivable based on a combinationof factors. In cases where we are aware of circumstances that may impair a specificcustomer’s ability to meet its financial obligations to us, we record aspecific allowance against amounts due to us, and thereby reduce the netrecognized receivable to the amount we reasonably believe will be collected.For all other customers, we recognize allowances for doubtful accounts based onthe length of time the receivables are past due and our historical experience.If the financial condition of our customers deteriorates, additional allowancesmay be required in the future that could have an adverse impact on our futureoperating results.

 

*InventoryValuation*

 

Inventories are stated atthe lower of cost or market, determined on a first-in, first-out (FIFO) basis,using product specific standard costs. The Company analyzes variances betweenactual manufacturing costs incurred and amounts absorbed at inventory standardcosts. Inventory valuations are adjusted for these variances as applicable. TheCompany regularly evaluates its inventories and recognizes inventory allowancesfor discontinued and slow-moving inventories based upon these evaluations.

 

*Asset Impairment*

 

Weare required to evaluate our long-lived assets, including goodwill, forimpairment and write down the value of any assets if they are determined to beimpaired. Evaluating the impairment of long-lived assets involves managementjudgment in estimating the future cash flows and fair values related to theseassets. Future events could cause management to conclude that impairmentindicators exist and that the value of certain long-lived assets is impaired.

 

*Income Taxes*

 

Indetermining income (loss) for financial statement purposes, management mustmake certain estimates and judgments in calculating tax liabilities and indetermining the recoverability of certain deferred tax assets. Deferred taxassets must be reduced by a valuation allowance if, based on the weight ofavailable evidence, it is more likely than not that some portion or all of therecorded deferred tax assets will not be realized in future periods. Managementbelieves it is likely that the deferred tax assets as of January 31, 2009will be realized through the generation of future taxable income and taxplanning strategies.

 

**Results of Operations**

 

*Comparison of the Three Months Ended January 31,2009 and 2008*

 

***Net Revenues.***Netrevenues totaled $72.1 million for the three months ended January 31,2009, an increase of $10.1 million, or 16.3%, compared to $62.0 million for thethree months ended January 31, 2008. Overall, pasta per unit selling prices increased 29.1% while pasta salesvolumes decreased 5.9%. Revenues from the retail market, a portion of whichincludes co-pack and government sales, increased $6.6 million, or 24.8%, due toa 30.7% increase in average selling prices offset by a 4.5% volume decline.Foodservice revenues increased $0.9 million, or 6.0%, due to a 19.6% increasein average selling prices offset by an 11.4% volume decline. Ingredientrevenues increased $4.1 million, or 33.8%, due to a 37.8% increase in averageselling prices offset by a 2.9% volume decline.

 

The Company marketssemolina production in excess of its own requirements as well as durum wheatflour, other flour blends and by-products of the durum milling process.Revenues from mill product sales totaled $6.5 million for the three monthsended January 31, 2009, a decrease of $1.5 million when compared to thesame period of the 

 

15

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prior year. The decreaseis primarily due to lower mill sales volumes, partially offset by higher perunit selling prices.

 

***Cost of Goods Sold.*** Cost of goods sold increased 9.1%, to$61.0 million for the three months ended January 31, 2009, compared to$55.9 million for the three months ended January 31, 2008. The increasewas primarily due to higher durum costs and, to a lesser extent, increasedcosts for other production inputs.  Grossprofit as a percentage of net revenues improved to 15.4% for the three monthsended January 31, 2009, from 9.9% for the three months ended January 31,2008.

 

The Company recorded a $960,000 non-recurringpre-tax charge in its fiscal second quarter ending January 31, 2008 toreflect the costs associated with the withdrawal from the Central StatesSoutheast and Southwest Areas Pension Fund.

 

***Marketing, General, and Administrative (“MG&A”) Expenses.*** MG&Aexpenses increased 12.5% to $5.4 million for the three months ended January 31,2009, compared to $4.8 million for the three months ended January 31,2008. The increase was primarily due to higher brokerage commission costsassociated with higher revenues and increased professional fees. MG&Aexpenses as a percentage of net revenues decreased to 7.4% for the three monthsended January 31, 2009, from 7.7% for the comparable quarter of the prioryear.

 

***Interest and Other Income.*** Interest andother income totaled $0.4 million for the three months ended January 31,2009, compared to $2.0 million for the three months ended January 31,2008. U.S. Customs and Border Protection (“Customs”) has distributedantidumping and countervailing duties assessed on certain pasta imported fromItaly and Turkey to affected domestic producers pursuant to the ContinuedDumping and Subsidy Offset Act of 2000 (the “Offset Act”), which was enacted inOctober 2000. The Company received payments in the amount of $0.4 millionand $2.2 million in December 2008 and 2007, respectively, under the OffsetAct. These amounts have been classified as other income. The Company cannotreasonably estimate the potential amount, if any, that it may receive under theOffset Act in future periods as any such amount will be based upon futureevents over which the Company has little or no control, including but notlimited to federal legislation, the amount of expenditures by domestic pastaproducers and the amount of antidumping and countervailing duties collected byCustoms.  The Offset Act, also known asthe Byrd Amendment, has been repealed and therefore, duties assessed on pastaimports after September 30, 2007 will no longer be distributed to domesticproducers.  However, amounts collected(whether such collections occur before or after September 30, 2007)related to duties assessed on pasta entries prior to September 30, 2007,are expected to be available for future distribution to domestic producers.

 

***Interest Expense.*** Interest expense for the three monthsended January 31, 2009 totaled $0.4 million, a decrease of $0.6 millionfrom $1.0 million for the corresponding period of the prior year. The decreaseis primarily related to lower interest rates.

 

***Income Taxes.***Income taxexpense for the three months ended January 31, 2009 and 2008 totaled $2.1million and $0.9 million, respectively, and reflects an effective corporateincome tax rate of approximately 37% and 39%, respectively.

 

***Net Income. ***Net income for the three months ended January 31,2009 totaled $3.6 million compared to net income of $1.5 million for the threemonths ended January 31, 2008.  Netearnings available to common stockholders for the three months ended January 31,2009 and January 31, 2008 totaled $3.3 million and $1.2 million,respectively, after reducing net income for dividends declared on Series DDelivery Preferred Stock and Series F Convertible Preferred Stock.

 

*Comparison of the Six Months Ended January 31,2009 and 2008*

 

***Net Revenues.***Netrevenues totaled $159.2 million for the six months ended January 31, 2009,an increase of $42.4 million, or 36.3%, compared to $116.8 million for the sixmonths ended January 31, 2008. Overall, pasta per unit selling prices increased 42.1% with foodserviceselling prices up 33.4%, retail selling prices up 42.6% and ingredient sellingprices up 58.1%.  Overall, total pastasales volumes decreased 0.9% with foodservice sales 

 

16

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and retail sales volumes down 9.8% and 3.7%, respectively,offset by an ingredient volume increase of 11.9%. The majority of the retailsales volume decline was related to lower co-pack sales volumes.

 

The Company marketssemolina production in excess of its own requirements as well as durum wheatflour, other flour blends and by-products of the durum milling process.Revenues from mill product sales totaled $13.8 million and $13.6 million forthe six months ended January 31, 2009 and 2008, respectively.

 

***Cost of Goods Sold.*** Cost of goods sold increased 36.5% to$139.5 million for the six months ended January 31, 2009, compared to$102.1 million for the six months ended January 31, 2008.  The increase was primarily due to higherdurum costs and to a lesser extent other input costs.  Gross profit as a percentage of net revenueswas relatively unchanged at 12.4% for the six months ended January 31,2009 compared to 12.5% for the six months ended January 31, 2008.

 

The Company recorded a $960,000 non-recurringpre-tax charge in its fiscal second quarter ending January 31, 2008 toreflect the costs associated with the withdrawal from the Central StatesSoutheast and Southwest Areas Pension Fund.

 

***Marketing, General, and Administrative (“MG&A”) Expenses.*** MG&Aexpenses increased $1.0 million, or 10.1%, to $10.5 million for the six monthsended January 31, 2009, compared to $9.5 million for the six months ended January 31,2008. The increase was primarily related to higher brokerage commission costsassociated with higher revenues as well as increased compensation costs andhigher professional fees.  MG&Aexpenses as a percentage of net revenues decreased to 6.6% for the six monthsended January 31, 2009, from 8.2% for the comparable period of last year.

 

***Interest and Other Income.*** Interestand other income totaled $0.4 million for the six months ended January 31,2009, compared to $2.1 million for the six months ended January 31, 2008.Substantially all of the amounts relate to payments received by the Company in December 2008and 2007 under the Offset Act.

 

***Interest Expense.*** Interest expense for the six monthsended January 31, 2009 and 2008 totaled $1.3 million and $2.1 million,respectively. The decrease was primarily related to lower interest rates.

 

***Noncontrolling Interests. ***Noncontrollinginterests reflect the portion of the DNA Dreamfields net loss allocable toother members of DNA Dreamfields and totaled $0.2 million for the six monthsended January 31, 2008.

 

***Income Taxes. ***Income tax expense for thesix months ended January 31, 2009 totaled $3.1 million, compared to $2.1million for the six months ended January 31, 2008, and reflects aneffective corporate income tax rate of approximately 37% and 39%, respectively.

 

***Net Income. ***Net income for the six months ended January 31,2008 totaled $5.3 million compared to $3.3 million for the six months ended January 31,2008.  Net earnings available to commonstockholders for the six months ended January 31, 2009 totaled $5.0million compared to $3.0 million for the six months ended January 31,2008, after reducing net income for dividends declared on preferred stock.

 

**Liquidity and Capital Resources**

 

TheCompany’s primary sources of liquidity are cash provided by operations andborrowings under its revolving credit facility. Working capital as of January 31,2009 totaled $24.8 million, compared to $21.4 million as of July 31, 2008.

 

The Company has a $45 million revolving credit facility with CoBankwhich extends through January 13, 2010. Interest on the revolving line ofcredit is at the 7-day LIBOR rate subject to performance adjustments dependingupon the Company’s ratio of total debt to earnings before interest, taxes,depreciation and amortization or “EBITDA.” The higher the ratio the higher theadjustment to the 7-day LIBOR rate within a range of 200 to 300 basis pointsabove the 7-day LIBOR rate.  Fixed interest rate options are alsoavailable. The primary purpose of the revolving credit facility is to financeinventory and receivables. The balances outstanding under the revolving creditarrangements totaled $18.4 million and $25.8 million as of January 31,2009 and July 31, 2008, 

 

17

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respectively.  The Company had$26.6 million and $19.2 million available for borrowings under the revolvingline of credit as of January 31, 2009 and July 31, 2008,respectively.

 

Duringthe second quarter of fiscal year 2009, the Company also entered intomodifications to existing CoBank term loan agreements with respect to debtpreviously incurred by the Company. These modifications increased the performance pricing adjustmentschedule by 25 basis points.

 

TheCompany’s various debt agreements with CoBank and certain institutionalinvestors obligate the Company to maintain or achieve certain amounts of equityand certain financial ratios and impose certain restrictions on the Company.The Company was in compliance with these financial covenants as of January 31,2009 and the date of this filing.

 

Netcash provided from operating activities totaled $17.3 million for the sixmonths ended January 31, 2009, compared to net cash used for operatingactivities of $9.2 million for the six months ended January 31, 2008.Significant items contributing to this net increase included a decrease ininventories offset partially bychanges in accounts payable.

 

Net cash used for investing activities totaled$0.8 million and $3.5 million for the six months ended January 31, 2009and 2008, respectively.  A majority ofthe net cash used for investing activities for the six months ended January 31,2008 related to the purchase of the remaining interests in DNA Dreamfields.

 

Netcash used for financing activities totaled $16.6 million for the six monthsended January 31, 2009 compared to net cash provided from financingactivities of $12.7 million for the six months ended January 31,2008.  The $16.6 million of net cash usedfor financing activities for the six months ended January 31, 2009included a net decrease in short-term notes payable of $7.4 million and $7.1million in scheduled payments on long-term debt.  The Company paid dividends of $0.1 million($0.01 per share) on its Series D Delivery Preferred Stock, $0.2 million($0.20 per share) on its Series F Convertible Preferred Stock and $2.0million ($0.20 per share) on its Common Stock during the second quarter offiscal year 2009. The Company paid dividends of $0.1 million ($0.01 per share)on its Series D Delivery Preferred Stock, $0.2 million ($0.16 per share)on its Series F Convertible Preferred Stock and $1.6 million ($0.16 pershare) on its Common Stock during the second quarter of fiscal year 2008.

 

The following table summarizesthe Company’s contractual obligations as of January 31, 2009 (inthousands):

 
| ** **                             | ** ** | ** ** | ** ** | **Payments**              | ** ** | **Payments**       | ** ** | **Payments**       | ** ** | **Payments**       | ** ** |
|----------------------------------------|------------|------------|------------|---------------------------|------------|--------------------|------------|--------------------|------------|--------------------|------------|
| ** **                             | ** ** | ** ** | ** ** | **Due in Less** | ** ** | **Due in**    | ** ** | **Due in**    | ** ** | **Due After** | ** ** |
| ** **                             | ** ** | **Total**  | ** ** | **Than 1 Year** | ** ** | **1-3 Years** | ** ** | **4-5 Years** | ** ** | **5 Years**   | ** ** |
| Contractual Obligations           |       |       |       |                      |       |               |       |               |       |               |       |
|                                   |       |       |       |                      |       |               |       |               |       |               |       |
| Long-term debt                         |       | $          | 33,543     |                      | $          | 5,744              |       | $                  | 17,249     |               | $          | 10,550 |   | $ | — |   |
| Interest on  long-term obligations (1) |       | 2,641      |       | 879                       |       | 1,470              |       | 290                |       | 2                  |       |
| Durum purchase  obligations            |       | 20,471     |       | 20,471                    |       | —             |       | —             |       | —             |       |
| Warehouse  obligations                 |       | 4,281      |       | 1,690                     |       | 2,314              |       | 277                |       | —             |       |
| Operating leases                       |       | 997        |       | 520                       |       | 477                |       | —             |       | —             |       |
|                                   |       |       |       |                      |       |               |       |               |       |               |       |
|                                   |       | $          | 61,933     |                      | $          | 29,304             |       | $                  | 21,510     |               | $          | 11,117 |   | $ | 2 |   |

 

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(1) Based oninterest rates as of January 31, 2009

 

The Company forward contracts for a certain portion of its future durumwheat requirements. At January 31, 2009, the Company had outstandingcommitments for grain purchases totaling $20.5 million related to forwardpurchase contracts. These contracts are set price contracts to deliver grain tothe Company’s mill and are not derivative in nature as they have no netsettlement provision and are not transferable.

 

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Managementbelieves that net cash currently available and to be provided by operatingactivities, along with amounts available under the Company’s line of credit,will be sufficient to meet the Company’s expected capital and liquidityrequirements for the foreseeable future.

 

**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

 

Market risk is the potentialloss to future earnings, fair values or cash flows resulting from adversechanges in interest rates, commodity prices, exchange rates, equity prices andother market changes.

 

The Company is exposed tomarket risk from changes in interest rates. For fixed rate debt, interest ratechanges affect the fair value of financial instruments but do not impactearnings or cash flows. Conversely, for variable rate debt, interest ratechanges generally do not affect the fair market value but do impact futureearnings and cash flows, assuming other factors are held constant. A majorityof the balances outstanding under the Company’s current debt agreements aresubject to variable interest rates.

 

The Company is exposed to certain fluctuationsin commodity prices. The Company forward contracts for a certain portion of itsfuture wheat requirements. These contracts are set price contracts to delivergrain to the Company’s mill, and are not derivative in nature as they have nonet settlement provision and are not transferable.

 

**ITEM 4T. CONTROLS AND PROCEDURES**

 

***Evaluation of DisclosureControls and Procedures***

 

As required by Rule 13a-15(b) under the Securities ExchangeAct of 1934 (the “Exchange Act”), we conducted an evaluation, under thesupervision and with the participation of our management, including our ChiefExecutive Officer and Chief Financial Officer (together the “CertifyingOfficers”), of the effectiveness of the design and operation of our disclosurecontrols and procedures as of January 31, 2009, the end of the periodcovered by this report. Based upon that evaluation, the Certifying Officersconcluded that our disclosure controls and procedures were effective as of January 31,2009 to provide reasonable assurance that information required to be disclosedin our Exchange Act reports is recorded, processed, summarized and reportedwithin the time periods specified in the SEC’s rules and forms and thatsuch information is accumulated and communicated to our management, includingour Certifying Officers, as appropriate, to allow for timely decisionsregarding required disclosure.

 

***InherentLimitations on Effectiveness of Controls***

 

Management is responsiblefor establishing and maintaining adequate internal control over financialreporting to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for externalpurposes in accordance with U.S. generally accepted accounting principles.Internal control over financial reporting includes those policies andprocedures that (i) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions anddispositions of assets; (ii) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financialstatements in accordance with U.S. generally accepted accounting principles,and that receipts and expenditures are being made only in accordance withauthorizations of the management and the Board; and (iii) providereasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use or disposition of Company assets that could have a materialeffect on the financial statements.

 

Management personnel,including the Certifying Officers, recognize that our internal control overfinancial reporting cannot prevent or detect all error and all fraud. A controlsystem, no matter how well designed and operated, can provide only reasonable,not absolute, assurance that the control system’s objectives will be met. Thedesign of a control system must reflect the fact that there are resourceconstraints, and the benefits of controls must be considered relative to theircosts. Further, because of the inherent limitations in all control systems, noevaluation of controls can provide absolute assurance that misstatements due toerror or fraud will not occur or that all control issues and instances offraud, if any, have been detected. The design of any system of controls isbased in part on certain assumptions about the likelihood of future events, andthere can be no assurance that any design will succeed in achieving its statedgoals under all potential future conditions.

 

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***Changes in Internal Controlsover Financial Reporting***

 

Therewere no changes in the Company’s internal controls over financial reportingduring the Company’s fiscal quarter ended January 31, 2009 thathave materially affected, or are reasonably likely to materially affect, theCompany’s internal control over financial reporting.

 

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**PART II — OTHER INFORMATION**

 

**ITEM 1A. RISK FACTORS**

 

Therehave been no material changes from the risk factors disclosed in Part I,Item 1A, of the Company’s Annual Report on Form 10-K for the fiscal yearended July 31, 2008.

 

**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OFSECURITY HOLDERS**

 

TheAnnual Meeting of Stockholders of the Company was held on January 10,2009. The following proposals were presented for stockholder consideration atthe Annual Meeting:

 
| · | The  election of four directors to serve as Class I directors.                                               |
|--------|-------------------------------------------------------------------------------------------------------------------|
| · | Approval  of the appointment of Eide Bailly LLP as the Company’s independent auditors  for fiscal year 2009. |

 

Atthe Annual Meeting, the Company’s stockholders elected each of the Company’s nomineesnamed in its Proxy Statement, dated December 9, 2008, to serve asdirectors on the Board of Directors of the Company.  Following are the results for the election ofdirectors:

 
| ** **               | ** ** | **Shares Voted For** | ** ** | **Shares Withheld** | ** ** |
|--------------------------|------------|--------------------------------|------------|--------------------------|------------|
| Class I  directors: |       |                           |       |                     |       |
|                     |       |                           |       |                     |       |
| John S.  Dalrymple III   |       | 6,055,695                      |       | 205,165                  |       |
| James F. Link            |       | 5,947,478                      |       | 313,382                  |       |
| John D  Rice, Jr.   |       | 6,058,630                      |       | 202,230                  |       |
| Michael T.  Tokarz       |       | 6,056,936                      |       | 203,924                  |       |

 

Thenewly elected Class I directors, John S. Dalrymple III, James F. Link,John D. Rice, Jr. and Michael T. Tokarz, will serve three year termsending with the annual meeting in 2012. Roger A. Kenner, Eugene J. Nicholas,Richard Thompson and Jeffrey O. Topp will continue serving as directors untilthe annual meeting in 2010.  Allyn K. Hart,Curtis R. Trulson and Michael E. Warner will continue serving as directorsuntil the annual meeting in 2011.

 

Inaddition, the stockholders approved the appointment of Eide Bailly LLP as theCompany’s independent auditors for fiscal year 2009, as follows:

 
| Shares Voted For      |   | 6,237,951 |   |
|-----------------------|--------|-----------|--------|
| Shares Voted  Against |   | 10,703    |   |
| Shares Abstained      |   | 12,206    |   |

 

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**ITEM 6. EXHIBITS**

 
| **Exhibits** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                             |
|--------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 3.1          |       | Second Amended and Restated Articles of  Incorporation of the Company, formerly Dakota Growers Restructuring  Company, Inc. (Incorporated by reference to Exhibit 3.1 from the  Company’s Pre-Effective Amendment No. 2 to Form S-4 Registration  Statement, File No. 333-81946, dated April 19, 2002).                             |
|         |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 3.2          |       | Second Amended and Restated Bylaws of the  Company, formerly Dakota Growers Restructuring Company, Inc.  (Incorporated by reference to Exhibit 3.3 from the Company’s  Pre-Effective Amendment No. 2 to Form S-4 Registration Statement,  File No. 333-81946, dated April 19, 2002).                                                |
|         |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 3.3          |       | Certificate of Designation of Series E  Junior Participating Preferred Stock of the Company, formerly Dakota Growers  Restructuring Company, Inc. (Incorporated by reference to  Exhibit 3.2 from the Company’s Pre-Effective Amendment No. 2 to  Form S-4 Registration Statement, File No. 333-81946, dated  April 19, 2002). |
|         |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 3.4          |       | Certificate of Designation of Series F  Convertible Preferred Stock of the Company (Incorporated by reference to  Exhibit 3.1 from the Company’s Current Report on Form 8-K, File  No. 000-50111, filed with the SEC February 15, 2007).                                                                                                 |
|         |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 10.1         |       | Statused Revolving Credit Supplement between  the Company and CoBank, ACB (Incorporated by reference to Exhibit 10.1  from the Company’s Current Report on Form 8-K, File No. 000-50111,  filed with the SEC January 16, 2009).                                                                                                               |
|         |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 10.2         |       | Non-Revolving Credit Supplement between the  Company and CoBank, ACB (Incorporated by reference to Exhibit 10.2 from  the Company’s Current Report on Form 8-K, File No. 000-50111, filed  with the SEC January 16, 2009).                                                                                                                    |
|         |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 10.3         |       | Multiple  Advance Term Loan Supplement, Loan No. RIE539T07A between the Company  and CoBank, ACB (Incorporated by reference to Exhibit 10.3 from the  Company’s Current Report on Form 8-K, File No. 000-50111, filed  with the SEC January 16, 2009).                                                                                   |
|         |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 10.4         |       | Multiple  Advance Term Loan Supplement, Loan No. RIE539T06B between the Company  and CoBank, ACB (Incorporated by reference to Exhibit 10.4 from the  Company’s Current Report on Form 8-K, File No. 000-50111, filed  with the SEC January 16, 2009).                                                                                   |
|         |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 31.1         |       | Certification  of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002 (Exchange Act Rule 13a-14(a) or 15d-14(a)).                                                                                                                                                                                                        |
|         |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 31.2         |       | Certification  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002 (Exchange Act Rule 13a-14(a) or 15d-14(a)).                                                                                                                                                                                                        |
|         |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 32.1         |       | Certification of Chief Executive Officer  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).                                                                                                                                                                                                                                |
|         |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 32.2         |       | Certification of Chief Financial Officer  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.  Section 1350).                                                                                                                                                                                                                               |

 

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**SIGNATURES**

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized.

 
|   | DAKOTA  GROWERS PASTA COMPANY, INC. |
|--------|-------------------------------------|
|   | (Registrant)                        |

 

 
| **Signature**       | ** ** | **Title**                             | ** ** | **Date**            |
|---------------------|------------|---------------------------------------|------------|---------------------|
| ** **          | ** ** | ** **                            | ** ** | ** **          |
|                |       |                                  |       |                |
| /s/ Timothy J. Dodd |       | President and Chief Executive Officer |       |                |
| Timothy J. Dodd     |       | (Principal Executive                  |       | March 17, 2009 |
|                |       | Officer)                              |       |                |
|                |       |                                  |       |                |
|                |       |                                  |       |                |
| /s/ Edward O. Irion |       | Chief Financial Officer               |       |                |
| Edward O. Irion     |       | (Principal Financial and              |       | March 17, 2009 |
|                |       | Accounting Officer)                   |       |                |

 

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