**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 10-Q**

**x****QUARTERLY REPORT PURSUANT TO SECTION 13 OR15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended May31, 2007;**

**OR**

**o****TRANSITION REPORT PURSUANT TO SECTION 13 OR15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**for the transition period from         TO**

**GoldenOval Eggs, LLC**

(Exact name of registrant asspecified in its charter)

| **Delaware**                                                    |   | **20-0422519**                           |
|-----------------------------------------------------------------|--------|------------------------------------------|
| (State or other  jurisdiction of incorporation or organization) |   | (I.R.S. employer  identification number) |
|                                                            |   |                                     |
| **1800  Park Avenue East**                                      |   | ** **                               |
| **Renville,  MN**                                               |   | **56284**                                |
| (Address of  principal executive offices)                       |   | (Zip code)                               |

 

Telephone: **(320) 329-8182**

(Registrant’s telephonenumber, including area code)

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.              Yesx No o

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer or a non-accelerated filer. Seedefinition of “accelerated filer” and “large accelerated filer” inRule 12b-2 of the Exchange Act.
| Large Accelerated Filer  o | Accelerated Filer o | Non-Accelerated Filer x |
|---------------------------------|---------------------|-------------------------|

 

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act.) 

Yes o  No x

Indicateby check mark if the registrant is not required to file reports pursuant toSection 13 or Section 15(d) of the Exchange Act.            Yes o No x

As of May 31, 2007, there were 4,733,527 of theCompany’s Class A Units and 697,350 of the Company’s Class B Unitsissued and outstanding.

 

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**TABLE OF CONTENTS**

Golden Oval Eggs,LLC

Form 10-Q

For The Quarter Ended May 31,  2007
| Description      | ** ** | ** **                                                                                  | ** ** | **Page** |
|------------------|------------|---------------------------------------------------------------------------------------------|------------|----------|
| **Part I**  | ** ** | **Financial Information**                                                                   |       |     |
| Item 1.          |       | Consolidated  Condensed Financial Statements                                                |       | 1        |
| Item 2.          |       | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |       | 9        |
| Item 3.          |       | Quantitative  and Qualitative Disclosures about Market Risk                                 |       | 14       |
| Item 4.          |       | Controls and  Procedures                                                                    |       | 14       |
|             |       |                                                                                        |       |     |
| **Part II** | ** ** | **Other Information**                                                                       |       |     |
| Item 1.          |       | Legal Proceedings                                                                           |       | 15       |
| Item  1A.        |       | Risk  Factors                                                                               |       | 15       |
| Item 2.          |       | Unregistered  Sales of Equity Securities and Use of Proceeds                                |       | 15       |
| Item 3.          |       | Defaults Upon Senior  Securities                                                            |       | 15       |
| Item 4.          |       | Submission of  Matters to a Vote of Security Holders                                        |       | 15       |
| Item 5.          |       | Other Information                                                                           |       | 16       |
| Item  6.         |       | Exhibits                                                                                    |       | 16       |
|             |       |                                                                                        |       |     |
| **Signatures**   |       |                                                                                        |       | 17       |

 

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**PART I.    FINANCIAL INFORMATION**

**Item1. Condensed Financial Statements**

**GOLDEN OVAL EGGS, LLC**

**ConsolidatedCondensed Balance Sheets**

**May 31, 2007 and August 31, 2006**

**(InThousands)**

(Unaudited)
| ** **                                | ** ** | **May 31,  2007** | ** ** | **August 31,  2006** | ** ** |
|-------------------------------------------|------------|------------------------|------------|---------------------------|------------|
| Assets                                    |       |                   |       |                      |       |
| Current assets                            |       |                   |       |                      |       |
| Cash and cash  equivalents                |       | $                      | 352        |                      | $          | 222 |   |
| Accounts  receivable                      |       | 18,479                 |       | 14,854                    |       |
| Inventories                               |       | 18,189                 |       | 16,005                    |       |
| Restricted cash                           |       | 1,476                  |       | 779                       |       |
| Other current  assets                     |       | 511                    |       | 1,076                     |       |
| Total current assets                      |       | 39,007                 |       | 32,936                    |       |
|                                      |       |                   |       |                      |       |
| Property, plant and  equipment            |       |                   |       |                      |       |
|                                      |       |                   |       |                      |       |
| Land and land  improvements               |       | 11,642                 |       | 11,553                    |       |
| Buildings                                 |       | 41,561                 |       | 40,669                    |       |
| Leasehold  improvements                   |       | 888                    |       | 860                       |       |
| Equipment                                 |       | 72,159                 |       | 72,312                    |       |
| Construction in  progress                 |       | 140                    |       | 57                        |       |
|                                      |       | 126,390                |       | 125,451                   |       |
| Accumulated  depreciation                 |       | (54,314                | )          | (45,622                   | )          |
| Total property, plant  and equipment, net |       | 72,076                 |       | 79,829                    |       |
|                                      |       |                   |       |                      |       |
| Other assets                              |       |                   |       |                      |       |
| Investments                               |       | 1,669                  |       | 1,576                     |       |
| Intangible  assets, net                   |       | 19,300                 |       | 20,724                    |       |
| Goodwill                                  |       | 22,858                 |       | 22,858                    |       |
| Note receivable                           |       | 136                    |       | 77                        |       |
| Total other assets                        |       | 43,963                 |       | 45,235                    |       |
|                                      |       |                   |       |                      |       |
| Total assets                              |       | $                      | 155,046    |                      | $          | 158,000 |   |

 

Seeaccompanying notes to consolidated condensed financial statements

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| ** **                                        | ** ** | **May 31,  2007** | ** ** | **August 31,  2006** | ** ** |
|---------------------------------------------------|------------|------------------------|------------|---------------------------|------------|
| ** **                                        |
| Liabilities and Members’ Equity              |       |                   |       |                      |       |
| Current  liabilities                              |       |                   |       |                      |       |
| Revolving line of credit                          |       | $                      | 11,150     |                      | $          | 3,869 |   |
| Accounts payable                                  |       | 11,376                 |       | 7,665                     |       |
| Accrued interest                                  |       | 2,790                  |       | 812                       |       |
| Accrued compensation                              |       | 1,241                  |       | 1,485                     |       |
| Other current liabilities                         |       | 2,847                  |       | 2,877                     |       |
| Current maturities of long-term debt              |       | 9,461                  |       | 9,461                     |       |
| Total current  liabilities                        |       | 38,865                 |       | 26,169                    |       |
|                                              |       |                   |       |                      |       |
| Long-term debt,  less current maturities          |       | 87,898                 |       | 94,257                    |       |
|                                              |       |                   |       |                      |       |
| Members’ equity                              |       |                   |       |                      |       |
| Members’ equity                              |       | 27,302                 |       | 36,701                    |       |
| Non-controlling interest in consolidated entities |       | 981                    |       | 873                       |       |
| Total members’  equity                       |       | 28,283                 |       | 37,574                    |       |
| Total liabilities and  members’ equity       |       | $                      | 155,046    |                      | $          | 158,000 |   |

 

Seeaccompanying notes to consolidated condensed financial statements

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**GOLDEN OVAL EGGS, LLC**

**Consolidated Condensed Statements ofOperations**

**For the Periods Ended May 31, 2007and 2006**

**(InThousands, except per unit data)**

**(Unaudited)**
| ** **                                                          | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|---------------------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                                          | ** ** | **May 31,**                 | ** ** | **May 31,**                | ** ** | **May 31,** | ** ** | **May 31,** | ** ** |
| ** **                                                          | ** ** | **2007**                         | ** ** | **2006**                        | ** ** | **2007** | ** ** | **2006** | ** ** |
| Net sales                                                           |       | $                                | 53,035     |                            | $          | 19,217 |   | $ | 147,098 |   | $ | 57,332 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Cost of goods  sold                                                 |       | 47,025                           |       | 16,220                          |       | 134,001 |   | 47,215 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Gross profit                                                        |       | 6,010                            |       | 2,997                           |       | 13,097 |   | 10,117 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Operating  expenses                                                 |       | 4,750                            |       | 1,945                           |       | 15,822 |   | 6,179 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Income (loss)  from operations                                      |       | 1,260                            |       | 1,052                           |       | (2,725 | ) | 3,938 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Other income  (expense)                                             |       |                             |       |                            |       |   |   |   |   |
| Interest expense                                                    |       | (2,513                           | )          | (784                            | )          | (7,477 | ) | (2,008 | ) |
| Non-controlling  interest in income (loss) of consolidated entities |       | (22                              | )          | 24                              |       | (84 | ) | 3 |   |
| Other income                                                        |       | 255                              |       | 240                             |       | 853 |   | 727 |   |
| Total other  expense                                                |       | (2,280                           | )          | (520                            | )          | (6,708 | ) | (1,278 | ) |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Net income  (loss)                                                  |       | $                                | (1,020     | )                               | $          | 532 |   | $ | (9,433 | ) | $ | 2,660 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Weighted average  Members’ units outstanding                   |       | 5,420                            |       | 4,698                           |       | 5,420 |   | 4,692 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Net income  (loss) per Members’ unit, basic and diluted        |       | $                                | (0.19      | )                               | $          | 0.11 |   | $ | (1.74 | ) | $ | 0.57 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Distributions per unit                                              |       | $                                | —     |                            | $          | — |   | $ | — |   | $ | — |   |

 

Seeaccompanying notes to consolidated condensed financial statements

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**GOLDEN OVAL EGGS, LLC**

**ConsolidatedCondensed Statements of Cash Flows****For the Periods Ended May 31, 2007 and 2006**

(In Thousands)(Unaudited)
| ** **                                                                               | ** ** | **Nine Months Ended** | ** ** |
|------------------------------------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                                               | ** ** | **May 31,**                | ** ** | **May 31,** | ** ** |
| ** **                                                                               | ** ** | **2007**                        | ** ** | **2006** | ** ** |
| Cash flows from  operating activities                                                    |       |                            |       |   |   |
| Net income (loss)                                                                        |       | $                               | (9,433     | ) | $ | 2,660 |   |
| Adjustments to reconcile net income (loss) to net  cash provided by operating activities |       |                            |       |   |   |
| Depreciation                                                                             |       | 8,704                           |       | 5,541 |   |
| Amortization                                                                             |       | 1,424                           |       | 164 |   |
| Gain on sale of property, plant & equipment                                     |       | 2                               |       | (9 | ) |
| Non-controlling interest in income of consolidated  entities, net of distributions       |       | 108                             |       | (70 | ) |
| Changes in operating assets and liabilities                                              |       |                            |       |   |   |
| Accounts receivable                                                                      |       | (3,625                          | )          | (1,291 | ) |
| Inventories                                                                              |       | (2,184                          | )          | (809 | ) |
| Other current assets                                                                     |       | 565                             |       | (1,843 | ) |
| Accounts payable                                                                         |       | 3,711                           |       | (200 | ) |
| Accruals and other current liabilities                                                   |       | 1,738                           |       | 90 |   |
| Net cash  provided by operating activities                                               |       | 1,010                           |       | 4,233 |   |
|                                                                                     |       |                            |       |   |   |
| Cash flows from  investing activities                                                    |       |                            |       |   |   |
| Purchases of property, plant and equipment                                               |       | (958                            | )          | (2,389 | ) |
| Proceeds from sale of property, plant and equipment                                      |       | 5                               |       | 22 |   |
| Advance of note receivable                                                               |       | (59                             | )          | (40 | ) |
| Purchases of investment in other cooperatives                                            |       | (102                            | )          | (32 | ) |
| Retirement of investment in other cooperatives                                           |       | 9                               |       | — |   |
| Net cash used by  investing activities                                                   |       | (1,105                          | )          | (2,439 | ) |
|                                                                                     |       |                            |       |   |   |
| Cash flows from  financing activities                                                    |       |                            |       |   |   |
| Proceeds from issuance of long term debt                                                 |       | —                          |       | 3,000 |   |
| Net increase (decrease) in revolving line of credit                                      |       | 7,281                           |       | (1,836 | ) |
| Payments of long-term debt                                                               |       | (6,359                          | )          | (2,758 | ) |
| Decrease (increase) in restricted cash                                                   |       | (697                            | )          | (665 | ) |
| Net cash  provided (used) by financing activities                                        |       | 225                             |       | (2,259 | ) |
| Net increase  (decrease) in cash and cash equivalents                                    |       | 130                             |       | (465 | ) |
| Cash and cash  equivalents - beginning of period                                         |       | 222                             |       | 690 |   |
| Cash and cash  equivalents - end of period                                               |       | $                               | 352        |   | $ | 225 |   |

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| Supplementary  disclosures of cash flow information                                        |   |   |   |   |   |
|--------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| Cash paid during the period for:                                                           |   |   |   |   |   |
| Interest, net of capitalized interest of $129 and  $235 during 2007 and 2006, respectively |   | $      | 7,682  |   | $      | 2,799 |   |
| Supplementary  disclosures of non-cash transactions                                        |   |   |   |   |   |
| Members units  issued to directors and officers (Note 4)                                   |   | $      | 177    |   | $      | 747 |   |

 

Seeaccompanying notes to consolidated condensed financial statements

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**GOLDEN OVAL EGGS, LLC**

**Notes to Consolidated CondensedFinancial Statements**

**May 31, 2007 and August 31, 2006**

**(In Thousands Except Unit Data)**

1.             Organization  Golden Oval Eggs, LLC (the “Company”) wasorganized as a Delaware limited liability company to effect the reorganizationof Midwest Investors of Renville, Inc. (the “Cooperative”) effective August 31,2004.  The Cooperative was incorporated as a cooperative under the laws ofthe state of Minnesota in March 1994. The Company operates as theCooperative’s successor and its operations are a continuance of the operationsof the Cooperative. The accompanying consolidated condensed financialstatements for all periods presented are those of the Company.

2.             Basis ofPresentation   The accompanyingconsolidated condensed balance sheet as of August 31, 2006, which has beenderived from audited consolidated financial statements, and the unauditedinterim consolidated condensed financial statements at  May 31, 2007 andfor the three-month periods ended May 31, 2007 and 2006 of the Company havebeen prepared in accordance with generally accepted accounting principles forinterim financial reporting and Securities and Exchange Commissionrules and regulations.  Certain information normally included infinancial statements and related footnotes prepared in accordance withgenerally accepted accounting principles has been condensed or omitted pursuantto the rules and regulations of the Securities and Exchange Commission. The consolidated condensed financial statements reflect all adjustments(consisting only of normal recurring adjustments) which are, in the opinion ofmanagement, necessary for a fair presentation of the financial position andoperating results for the interim periods presented. These consolidated condensedfinancial statements should be read in conjunction with Management’s Discussionand Analysis of Financial Condition and the consolidated financial statementsand notes thereto included in the Company’s Annual Report on Form 10-K forthe year ended August 31, 2006. The results of operations for the periods ended May 31, 2007 are not necessarily indicative of results to be expected forany other interim period or for the entire year.

3.             Inventories  Pullet and layer hen inventories are statedat the cost of production, which includes the costs of the chicks, feed,overhead and labor. Layer hen flock costs are capitalized to the point at whichthe pullet goes into production and are amortized over the productive lives ofthe flocks, generally 18 to 24 months. Feed, supplies and liquid egg and eggproducts inventories are stated at the lower of cost (first-in, first-out) ormarket. Inventories consisted of the following:
| ** **                | ** ** | **May 31,  2007** | ** ** | **August 31,  2006** | ** ** |
|---------------------------|------------|------------------------|------------|---------------------------|------------|
| ** **                |
| Hens and pullets          |       | $                      | 10,634     |                      | $          | 10,050 |   |
| Eggs and egg products     |       | 4,195                  |       | 3,409                     |       |
| Feed, supplies and  other |       | 3,360                  |       | 2,546                     |       |
| Total inventories         |       | $                      | 18,189     |                      | $          | 16,005 |   |

 

4.             Stock BasedCompensation  The Company has bonusand compensation plans in place for management.  Under these agreements managementmay receive up to 50% of certain performance bonuses in the form of Class AUnits.  The Company accrues for management bonuses during the year basedupon the estimated amount that will be earned by year-end.  Upon approvalby the Board of Managers, the bonuses are paid to management.  The numberof units to be issued is based upon the higher of the book or market value ofthe Class A Units at the time the bonus is awarded.  For the nine monthsended May 31, 2007 and 2006, a total of 20,895 and 107,203 Class A units were issued to management at a per unitvalue of $7.63 for 20,895 units  in 2007,and $6.05 for 107,203 units in 2006, respectively.

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The ClassA units are nontransferable and subject to forfeiture ratably over thefollowing three years.  The employee must be employed on the anniversarydate of issuance to avoid forfeiture.   In the event that terminationof the employee occurs the Company will record any forfeiture of units as a  reduction to compensation expense in theperiod in which the forfeiture occurs.  For the nine months ended May 31,2007 and 2006 there were forfeitures of 2,045 and 0.

Themembers of the Board of Managers are granted 2,000 Class A Units for each yearserved on the board following each year of service.  The Companyrecognizes compensation expense for these awards based upon the fair value onthe date they are granted.  For the nine months ended May 31, 2007 and2006 a total of 12,000 units  at a unitvalue of $2.60 and 14,000 units at a unit value of $7.02 were awarded.

Below is a summary of stock activity pursuant to thesecompensation plans for the nine months ended:
| ** **           | ** ** | **May 31** | ** ** | **May 31** | ** ** |
|----------------------|------------|-----------------|------------|-----------------|------------|
| ** **           | ** ** | **2007**        | ** ** | **2006**        | ** ** |
| ** **           | ** ** | **Units**       | ** ** | **$**           | ** ** | **Units** | ** ** | **$** | ** ** |
| Issued to management |       | 20,895          |       | $               | 159        |   | 107,203 |   | $ | 649 |   |
| Issued to  directors |       | 12,000          |       | 31              |       | 14,000 |   | 98 |   |
| Forfeitures          |       | (2,045          | )          | (13             | )          | — |   | — |   |
| Total                |       | 30,850          |       | $               | 177        |   | 121,203 |   | $ | 747 |   |

 

5.             Use of Estimates  The preparation of consolidated condensedfinancial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities andthe disclosure of contingent assets and liabilities at the date of theconsolidated condensed financial statements and the reported amounts ofrevenues and expenses during the reporting period. Actual results could differmaterially from those estimates.

6.             Intangibles andGoodwill  On June 30, 2006, theCompany completed the MoArk Acquisition.  The purchase price consisted of$38,000 paid in cash, the issuance by the Company of a $17,000 promissory note,and $5,000 paid by the issuance of 697,350 newly-created Class B Units.The $17,000 promissory note contains a contingent warrant provision whichallows the note holder, at the Holder’s option, to exercise that number ofunits of membership interests equal to ten (10%) of the issued and outstandingunits of the Company, if the note has not been paid in full on or before theMaturity Date. Also on June 30, 2006, the Company entered into an amendedand restated credit agreement, as described in Liquidity and CapitalResources.  The Company has allocated the purchase price in accordancewith SFAS 141 “Business Combinations” and recorded $19,000 of intangible assetsto be amortized over the relevant life of the underlying assets, and $22,800 ingoodwill that is not amortized, but will be tested at least annually forimpairment under SFAS 142, “Goodwill and Other Intangible Assets.”  Duringthe quarter ended May 31, 2007, the Company considered whether an event hadoccurred or circumstances had changed that more likely than not would reducethe fair value of the Company below its carrying amount. Examples of suchevents or circumstances include:

a.             Asignificant adverse change in legal factors or in the business climate;

b.             Anadverse action or assessment by a regulator;

c.             Unanticipatedcompetition;

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d.             Aloss of key personnel; or

e.             Amore-likely-than-not expectation that a significant portion of the Company willbe sold or otherwise disposed of.

Aftersuch consideration, Management concluded that circumstances and events did notindicate that an interim test of goodwill recoverability was required.

7.             Contingencies  On March 29, 2007 the Attorney General of Iowa files a suit in relation to the Thompson,Iowa Waste Water Facility. Please refer to Item 1. Legal Proceedings under PartII of this Quarterly Report on Form 10-Q for a fuller description of legalproceedings involving the Company.

8.             CreditAgreement   Effective April 30, 2007, Golden Oval Eggs, LLC (the“Company”) and its two subsidiaries, GOECA, LP and Midwest Investors of Iowa, acooperative (collectively, the “Borrowers”) entered into a First Amendment toAmended and Restated Credit Agreement (the “Amendment”) with Metropolitan LifeInsurance Company, as a bank, CoBank, ACB and the other financial institutionsor entities that are signatories thereto (the “Lenders”).  CoBank, ACB is also the administrative agentfor the Lenders.

TheLenders and the Borrowers entered into an Amended and Restated Credit Agreementdated as of June 30, 2006 (the “Credit Agreement”).  The Amendment amends certain provisions ofthe Credit Agreement, including covenants relating to net worth, currentratios, working capital, leverage ratios, fixed charge coverage ratios.  By the Amendment, the Lenders also waiveddefaults of these covenants for the period ending February 28, 2007, as well ascertain other covenants relating to compliance with laws and environmentalmatters.  Further, the Amendment extendedthe termination date of the Credit Agreement from April 30, 2007 to March 1,2008. Please refer to 8K filed May 9, 2007 for details on Credit Agreement. 8Kfiled May 9, 2007 for details on Credit.

 

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**Item 2. Management’s Discussion andAnalysis of Financial Condition and Results of Operations.**

**Forward-Looking Statements**

ThisManagement’s Discussion and Analysis of Financial Condition and Results ofOperations contains, in addition to historical information, forward-lookingstatements that are based on current expectations, beliefs, intentions orfuture strategies of the management of Golden Oval Eggs, LLC (“we”, “us”, “our”,or the “Company”). When used in this Management’s Discussion and Analysis of FinancialCondition and Results of Operations or elsewhere in this Quarterly Report onForm 10-Q, the words “believe,” “expect,” “anticipate,” “will,” “estimate” andsimilar verbs or expressions are intended to identify such forward-lookingstatements.  If our management’s assumptions prove incorrect or shouldunanticipated circumstances arise, our actual results could differ materiallyfrom those anticipated. These differences could be caused by a number offactors or combination of factors including, but not limited to, those factorsdescribed in Part I, Item 1A. “Risk Factors” section of the Company’sAnnual Report on Form 10-K for the year ended August 31, 2006, aswell as those identified in other filings with the Securities and ExchangeCommission.  Readers are strongly urged to consider such factors whenevaluating any forward-looking statement. The Company undertakes no obligationto update any forward-looking statements to reflect future events ordevelopments.

Thefollowing is a discussion and analysis of our financial condition and resultsof operations as of and for the three month and nine months periods ended May31, 2007 and 2006. This section should be read in conjunction with thecondensed financial statements and related notes in Item 1 of this QuarterlyReport and our Annual Report on Form 10-K for the year ended August 31, 2006.

**Summary**

GoldenOval Eggs, LLC is a Delaware limited liability company, primarily engaged inthe business of producing, processing, marketing and distributing egg products.The Company operates seven production facilities in the United States.  OnJune 30, 2006, the Company closed its acquisition of certain assets of MoArk,LLC and its subsidiaries relating to the business of manufacturing, marketing,selling and distributing liquid egg products, as more fully described in theCompany’s Annual Report on Form 10-K for the year ended August 31, 2006. With the completion of the MoArk Acquisition, the Company moved into thefurther processed egg business.

 TheCompany produces a wide range of egg products, from unpasteurized liquid eggs,further processed egg products for other food manufacturers, and finished goodsfor sale to retailers and food service customers.  Products are sold toother food manufacturers, restaurants, supermarkets and foodservicedistributors.

TheCompany produces less than half of its annual needs from eggs produced at layerbarns at the Company’s Renville, Minnesota and Thompson, Iowa facilities. The remainder is satisfied from purchases of eggs or liquid product in marketbased transactions.

TheCompany’s operating income or loss is materially affected by wholesale liquidegg prices and pricing of further processed products, each of which canfluctuate widely and are outside of the Company’s control. Liquid eggs are acommodity product and prices fluctuate in response to supply/demand factors.The Company also sells a portion of its products under contracts at non-marketprices. Depending upon market circumstances, the prices generated by theCompany’s non-market volume tend to be less or more than what the prevailingopen market prices would generate.

TheCompany’s cost of production is materially affected by feed, purchased egg andliquid egg costs, which averaged approximately 54% of the Company’s total costsin the first three quarters of fiscal year 2007 as compared to 48% for thefirst two quarters of fiscal 2007.  As a result of the MoArk acquisitionon June 30, 2006, feed alone has dropped from 34% of sales for the quarter endedMay 31, 2006, to 19% for the quarter ending May 31, 2007, reducing somewhat theCompany’s exposure to volatile corn and soybean 

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markets.Agricultural commodity prices influence purchased eggs and open market liquidegg prices although not necessarily in the same direction, to the same degreeor at the same time.

**Results of Operations**

Resultsof Operations — Third Quarter Fiscal Year 2007 Compared to Third Quarter FiscalYear 2006

*Net Sales**              *Net sales forthe third quarter of fiscal 2007 were $53.0 million, an increase of $33.8million, or 176% over the third quarter of the prior fiscal year.  Businessacquired in the MoArk acquisition accounted for $33.3 million, or 98% of theincrease.  The remainder of the increase or $0.5 million is from theCompany’s interest in United Mills, which is consolidated in the financialstatements, and is due to an increase in United Mills’ sales because of higherfeed costs .  Sales of liquid unpasteurized eggs from the facilities inplace prior to the MoArk acquisition were unchanged. Sales pounds from thosefacilities to outside parties declined by 20%, caused by increased utilizationof output in company owned facilities, offset by an increase in average sellingprices of 25.2%. Pounds sold in the third quarter of fiscal 2007 were 94.1million, an increase of 39.6 million, or 73% over the same period in the prior year. Pounds from the facilities acquired from MoArk accounted for 50.8 million ofthe increase, offsetting an 11.2 million pound decline in pounds sold to outsideparties from the Renville, Minnesota and Thompson, Iowa facilities as totalproduction declined approximately 9% due to reduced bird numbers, and moreproduction is used internally as an ingredient in the further processed plants. Shipments to company facilities are not accounted for as sales on aconsolidated basis.   The average selling price per pound for thequarter increased from $0.353 to $0.564, an increase of $0.211, or 59.8% overthe prior year same period, with $0.157 due to the inclusion of furtherprocessed products which command a higher selling price per pound in themarketplace, as well as overall strengthening in liquid whole egg prices at theRenville and Thompson locations, which accounted for $0.054 of the increase.

*Cost of Goods Sold**            *Cost of goodssold for the third quarter of fiscal 2007 was $47.0 million, an increase of$30.8 million or 190% of cost of goods sold for the third quarter of fiscal2006.  The majority of the increase was associated with the acquiredbusinesses.  Gross profit for the period doubled from $3.0 million a yearago to $6.0 million in the current period. Since the Company does not produce all of its liquid egg needs from itsown birds, it is a purchaser of eggs and liquid eggs in the market.  An increase in egg and liquid egg pricingthat increases sales also increases cost of goods, although notproportionately.  Costs did grow fasterthan sales, resulting in a decline in gross margin as a percentage of sales from15.6% in the third quarter 2006 to 11.3% in the current quarter.  Feedprices rose by more than 50% per ton, driven by higher corn and soybean mealcosts.  This impact of the increase was mitigated somewhat by the factthat as a result of the MoArk acquisition on June 30, 2006, feed alone hasdropped from 34% of sales for the third quarter of 2006 to 19% for the currentquarter.  The impact of higher feed costsat the Renville and Thompson facilities was $2.4 million unfavorable variance forthe quarter. In the acquired businesses, prices for carton eggs rose to veryhigh levels, and with them, the cost of eggs purchased for breaking as eggswere diverted to supermarkets and other users of carton eggs.  In contrastto the second quarter, the price of liquid eggs did move in relation to the costof purchased eggs, allowing the acquired facilities to capture the margin tocover the costs of converting the eggs into liquid, significantly improvingprofitability.

*Operating Expenses*           Operating expenses for the third quarter offiscal 2007 were $4.7 million, an increase of $2.8 million, or 144%, from thethird quarter of fiscal 2006.  As was the case in the first two quarters,the increase is primarily due to additional sales, management andadministrative expenses associated with the MoArk acquisition, as the majorityof the employees of the acquired facilities became Golden Oval employees. Additionally, marketing expenses, including the Land O’ Lakes licensed productstest market costs, are incremental in the current period. Amortization ofintangible assets and deferred financing costs associated with the MoArkAcquisition accounted for $0.4 million for the period.  Operating expensesdecreased as a percent of net sales from 10.1% from third quarter of fiscal2006 to 9.0% in the third quarter of fiscal 2007.

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*Incomefrom Operations*     Thecumulative effect of the events described above was to produce positive incomefrom operations of $1.3 million, and increase of $0.2 million, or 20% over samequarter last year. This is also the first quarter of the current fiscal year toreport an operating profit.

*Total Other Expense*          Total other expense increased from $0.5million to $2.3 million, an increase of $1.8 million for theperiod. Nearly all of the increase is due to interest expenses on higherdebt levels associated with the acquisition.

*Income Taxes*                       As a limited liability company,the Company expects to be treated as a partnership for federal income taxpurposes.  Therefore, the Company will pay no federal income tax andinstead, the Company’s members will include their pro-rata share of the Company’snet income as an item of income for the purposes of their own federal incometax returns.

*Net Income* (loss)                 Net income for the quarter ended May31, 2007 resulted in a loss of $(1.0) million, or $(0.19) per basic and dilutedmembers’ unit, as compared to a profit of $0.5 million, or $0.11 per unit forthe same period a year ago.

Resultsof Operations — Nine Months ended May 31, 2007 Compared to Nine Months endedMay 31, 2006

*Net Sales**              *Net sales forthe first nine months of fiscal 2007 were $147.1 million, an increase of $89.8million, or 157% over the first nine months of the prior fiscal year. Business acquired in the MoArk acquisition accounted for $89.8 million, or 100%of the increase.  A  $2.8 million  increase in salesattributable to the Company’s interest in United Mills, which is consolidatedin the financial statements, due to an increase in United Mills’ sales becauseof higher feed costs , is offset by a $2.8 million decrease in sales of liquidunpasteurized eggs from the facilities in place prior to the acquisition. Thedecline in sales pounds to outside parties of 14.3%, caused by increasedutilization of output in company owned facilities, is partially offset by anincrease in average selling prices of 10.5%. Pounds sold in the first ninemonths of fiscal 2007 were 292.6 million, an increase of 132.9 million, or83.2% over the same period year ago.  Pounds from the facilities acquiredfrom MoArk accounted for 155.7 million of the increase, offsetting a 22.8million pound decline in pounds sold to outside parties from the Renville,Minnesota and Thompson, Iowa facilities as total production declinedapproximately 14.3% due to reduced bird numbers, and more production being usedinternally as an ingredient in the further processed plants.  Shipments tocompany facilities are not accounted for as sales on a consolidated basis. The average selling price per pound for the first nine months of fiscal2007 increased from $0.359 to $0.503, an increase of $0.144, or 40.1% over theprior year same period, with $0.137 due to the inclusion of further processedproducts which command a higher selling price per pound in the marketplace, aswell as overall strengthening in liquid whole egg prices at the Renville andThompson locations, which accounted for $0.007 of the increase.

*Cost of Goods Sold*            Cost of goods sold for the first threequarters of fiscal 2007 was $134.0 million, an increase of $86.8 million or 184%of the figure for same of fiscal 2006 and slightly less than the amount thatsales increased, resulting in an increase of $3.0 million in gross profit onincreased sales.  The majority of the increase was associated with theacquired businesses.  Significant unfavorable cost pressures wereexperienced in the period.  Feed prices have risen by more than 33% perton, driven by higher corn and soybean meal costs, resulting in $5.5 million ofadditional feed expense at the Renville and Thompson facilities.  In theacquired businesses, two factors had a negative impact on results. First,prices for carton eggs rose to very high levels, and with them, the cost ofeggs purchased for breaking as eggs were diverted to supermarkets and otherusers of carton eggs.  Secondly, in the first half of the year the valueof the liquid eggs did not move simultaneously higher, thereby substantiallyreducing or eliminating the margin to cover the costs of converting the eggsinto liquid.  The acquired facilities typically captured this margin tobreak an egg before adding value, and as this margin shrank, results in theacquired facilities were adversely affected.  The decline in gross profitas a result of the cost pressures effectively accounted for the loss for theperiod.

*Operating Expenses**           *Operating expensesfor the first three quarters of fiscal 2007 were $15.8 million, an increase of$9.6 million, or 156%, from the same of fiscal 2006. The increase is primarilydue 

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toadditional sales, management and administrative expenses associated with theMoArk Acquisition, as the majority of the employees of the acquired facilitiesbecame Golden Oval employees.  Additionally, marketing expenses, includingthe Land O’ Lakes licensed products test market costs, are incremental in thecurrent period. Amortization of intangible assets and deferred financing costsassociated with the MoArk Acquisition accounted for $1.3 million for the period. Operating expenses were constant as a percent of net sales at 10.8%.

*Total Other Expense**          *Total other expenseincreased from $1.3 million to $6.7 million, an increase of $5.4 million forthe period.  Interest expenses on higher debt levels associated with theacquisition accounted for the entire $5.4 million.

*Income Taxes*                       As a limited liability company,the Company expects to be treated as a partnership for federal income taxpurposes.  Therefore, the Company will pay no federal income tax andinstead, the Company’s members will include their pro-rata share of the Company’snet income as an item of income for the purposes of their own federal incometax returns.

*Net Income* (loss)                 Net income for the nine months endedMay 31, 2007 resulted in a loss of $(9.4) million, or $(1.74) per basic anddiluted members’ unit, as compared to a profit of $2.7 million, or $0.57 perunit for the same period a year ago.

**Liquidity and Capital Resources**

TheCompany’s working capital at May 31, 2007 was $0.1 million compared to $6.8million at August 31, 2006.   The Company’s current ratio was 1.00 atMay 31, 2007 compared to 1.26 at August 31, 2006. On June 30, 2006, theCompany entered into an amended and restated credit agreement with CoBank ACBand the Metropolitan Life Insurance Company.  The amended and restatedcredit agreement provided for a $93.0 million line of credit, consisting of a$15.0 million revolving note terminating on April 30, 2007 and $78.0 million interm notes due beginning in 2014. The amended and restated credit agreementprovided $38.0 million in new debt to finance the MoArk acquisition and amendedcertain restrictive covenants contained in the prior agreement, asamended.    On April 30, 2007, the Companyentered into a first amendment to the existing credit agreement which renewedthe $15.0 million revolving note through March 1, 2008 and amended certaincovenants.  For the third quarter of2007, the Company was current on all interest and principal payments.  Further, for the quarter ending May 31, 2007the Company is required by certain provisions of its credit agreements tomaintain a minimum tangible net worth of not less than $28.0 millionplus 40% of earnings plus 100% of equity contributed after August 31,2006.  The Company met this covenant forthe third quarter of 2007.  For thesubsequent quarters of the term of the revolving line of credit, the Companymust meet the tangible net worth covenant described above, as well as covenantsrequiring a minimum current ratio of not less than 1.0 to 1.0; working capitalof no less than zero; a leverage ratio of less than 5.0 to 1.0; a fixed chargecoverage ratio no less than 1.00 to 1.

Whilethe Company has collateral in excess of the cap used to determine availabilityon the revolving loan portion of its facility, the Company may require significantadditional capital resources in order to proceed with potential futureexpansions or to otherwise respond to competitive pressures in theindustry.   In addition, the Company may seek additional capital froman offering of its equity securities or by incurring additional indebtedness,or both.  No assurance can be given that additional working capital willbe obtained in an amount that is sufficient for the Company’s needs, in atimely manner or on terms and conditions acceptable to the Company or its members. The Company’s financing needs are based upon management estimates as tofuture revenue and expense. The Company’s business plan and its financing needsare also subject to change based upon, among other factors, market andindustry conditions, its ability to increase cash flow from operations andits ability to control costs and expenses.  The Company’s efforts to raiseadditional funds from the sale of equity may be hampered by the fact that theCompany’s securities are illiquid and are subject to restrictions ontransfer. The Company’s efforts to raise additional funds from incurringadditional indebtedness may be hampered by the fact that the Company hassignificant outstanding indebtedness and all of the Company’s assetsare pledged to its lenders to secure existing debt.  In addition, the covenants of the Company’scredit agreement restrict the Company’s ability to make distributions, createliens, incur indebtedness and sell assets and properties.

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TheCompany’s long-term debt at May 31, 2007, including current maturities, was$97.3 million compared to $103.7 million at August 31, 2006. Asof May 31, 2007, $11.1 million has been drawn against the $15.0 revolving lineof credit, compared to $3.9 million as of August 31, 2006. Substantially alltrade receivables and inventories collateralize the Company’s line of credit;  property, plant and equipment collateralizethe Company’s long-term debt under its credit agreement and the note issued toLand O’Lakes, Inc.

Withrespect to the improvements that will be required to the Thompson, Iowawastewater system (see Part II, Item 1 “Legal Proceedings”), the Company iscurrently estimating the cost of these improvements.  Management does notbelieve the cost of these improvements will adversely impact the liquidity orcapital resources of the Company.

Netcash flow from operations was $ 1.0 million for the first three quartersof fiscal 2007 compared to $4.2 million in the first three quarters of fiscal2006. Principal payments on long-term debt were $6.4 million and additions tofixed assets were $1.0 million.  There were no distributions to unitholders during the first three quarters of fiscal 2007.  An additional$0.7 million was added to restricted cash to provide for the principal paymenton the 1999 and 2001 bonds due in July 2007.  Effective September 1,2006, we issued 20,895 Class A units to pay $0.2 million in managementbonuses. The management bonuses were earned during fiscal year 2006. On May22, 2007, 12,000 Class A Units were issued to pay $0.03 million in Board ofManagers compensation. The Board of Managers’ compensation was earned and accruedduring fiscal years 2006 and 2007.

**Critical Accounting Policies and Estimates**

Theabove discussion and analysis of our results of operations and financialcondition are based upon our consolidated condensed financial statements, whichhave been prepared in accordance with accounting principles generally acceptedin the United 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 may change and eventhe best estimates and judgments may require adjustment. For a completedescription of the Company’s significant accounting policies, please see Note 1to the consolidated financial statements in the Company’s Annual Report onForm 10-K for the year ended August 31, 2006. There have been nochanges to critical accounting policies identified in our Annual Report onForm 10-K for the year ended August 31, 2006.

**Impact of Recently Issued Accounting Pronouncements**

Pleaserefer to Item 7, “Management’s Discussion and Analysis of Financial Conditionand Results of Operations”, in our Annual Report form 10-K for the year endedAugust 31, 2006 for a discussion of the impact of recently issuedaccounting pronouncements.

InSeptember 2006, the Financial Accounting Standards Board (“FASB”) issued FASBStatement No. 157, Fair Value Measurements (“FAS 157”).  FAS 157establishes a single authoritative definition of fair value, sets out aframework for measuring fair value, and expands on required disclosures aboutfair value measurement.  FAS 157 is effective for the Company on September1, 2008 and will be applied prospectively.  Management is currently evaluatingthe impact of FAS 157 on its consolidated financial statements.

InDecember 2004, the FASB issued SFAS Statement No. 123 (revised 2004), “Share-BasedPayment,” which is a revision of SFAS No. 123, “Accounting for Stock-BasedCompensation.” SFAS No. 123(R) supersedes APB Opinion No. 25, “Accounting forStock Issued to Employees”, and amends SFAS No. 95, “Statement of Cash Flows”.SFAS No. 123(R) requires all share-based payments to employees, includinggrants of employee stock options, restricted stock and performance-based sharesto be recognized in the income statement based on their fair values. SFAS No.123(R) also requires the benefits of tax deductions 

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inexcess of recognized compensation cost to be reported as a financing cash flow,rather than as an operating cash flow as required under current literature. Inthe first quarter of fiscal 2007, we adopted SFAS No. 123(R). SFAS No. 123(R) requires that entities recognize the services received in a share basedpayment transaction as services are received. The compensation cost for anaward of share- based employee compensation classified as equity  shall berecognized over the requisite service period The requisite service period forshare based bonuses awarded company management is four (4) years, the year thebonus was earned plus the subsequent three (3) year vesting period. The resultof adoption of  SFAS No. 123 (R) did nothave a material  impact on the consolidatedfinancial statements. No stock options were outstanding at the date of adoptionand none are currently outstanding.

InSeptember 2006, the SEC issued Staff Accounting Bulletin No. 108, Consideringthe Effects of Prior Year Misstatements when Quantifying Misstatements inCurrent Year Financial Statements (SAB 108). SAB 108 addresses the diversity inpractice in quantifying financial statement misstatements and establishes anapproach that requires quantification of financial statement misstatementsbased on the effects of the misstatements on a company’s financial statementsand related disclosures. SAB 108 is effective for fiscal years ending afterNovember 15, 2006. The adoption of SAB 108 has not had a material impact on ourfinancial position, results of operations or cash flows.

InFebruary 2007, the FASB issued SFAS No. 159, Establishing the Fair Value Optionfor Financial Assets and Liabilities, to permit all entities to choose to electto measure eligible financial instruments at fair value. SFAS No. 159 appliesto fiscal years beginning after November 15, 2007, with early adoptionpermitted for an entity that has also elected to apply the provisions of SFASNo. 157, Fair Value Measurements. An entity is prohibited from retrospectivelyapplying SFAS No. 159, unless it chooses early adoption. Management iscurrently evaluating the impact of SFAS No. 159 on its consolidated financialstatements.

**Item 3. Quantitative and QualitativeDisclosures About Market Risk**

Therehave been no material changes in the market risk reported in the Company’sAnnual Report on Form 10-K for the fiscal year ended August 31, 2006.

**Item 4. Controls and Procedures**

**Evaluation of Disclosure Controls and Procedures**

TheCompany’s Chief Executive Officer, Dana Persson, and  Chief Financial Officer, Thomas A. Powell,have reviewed the Company’s disclosure controls and procedures as of the end ofthe period covered by this report. Based upon this review, they have concludedthat the Company’s disclosure controls and procedures are effective.

**Changes in Internal Control Over Financial Reporting**

Therehave been no changes in internal control over financial reporting that occurredduring the fiscal quarter covered by this report that have materially affected,or are reasonably likely to materially affect, the Company’s internal controlover financial reporting.

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**PART II.    OTHERINFORMATION**

**Item1. Legal Proceedings**

As previously disclosed,three notices of violation were issued against us by the Iowa Department ofNatural Resources regarding alleged violations at our Thompson, Iowa facilityof National Pollution Discharge and Elimination System (“NPDES”) permit limitsfor biochemical oxygen demand, total suspended solids, and ammonianitrogen.  Two additional notices ofviolation have since been issued on the same matter.  On December 5, 2006, the Iowa EnvironmentalProtection Commission referred the matter to the Iowa Attorney General.

On March 29, 2007, theIowa Attorney General’s office filed suit against Golden Oval Eggs, LLCrequesting civil penalties and injunctive relief from further permitviolations. We have received an extension from the Iowa District Court forWinnebago County until August 31, 2007 to submit our answer, which will allowtime for us to negotiate a consent decree with the State of Iowa. We arecurrently negotiating the terms of the consent decree with the Iowa AttorneyGeneral’s office, and we expect the terms to include an obligation by us tomake improvements to the wastewater treatment system to prevent further permitviolations on an agreed-upon timeline, as well as the amount of civil penalties.In addition, management has begun a competitive bidding process forimprovements to the wastewater treatment system and our Board of Managers hasestablished a preliminary budget for capital improvements spending.  At this time, the cost associated with theinterim solution, permanent improvement to the wastewater treatment facility,compliance with the NPDES permit, and the amount of penalty or fine imposed bythe Iowa Attorney General cannot be estimated, however they may be significant,both individually and in the aggregate.

**Item 1A. Risk Factors**

Notapplicable.

**Item 2. Unregistered Sales of EquitySecurities and Use of Proceeds**

None.

**Item 3. Defaults Upon SeniorSecurities**

None.

**Item 4. Submission of Matters to aVote of Security Holders**

The Company’s Annual Meeting of Members was held onApril 4, 2007. Of the 4,721,527 Class A Units and 697,350 Class B Unitsoutstanding and entitled to vote at the meeting as of February 28, 2007,

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2,198,651 Class A Units and no Class B Units werepresent, either in person or by ballot. The following describes the matersconsidered by the Company’s members at the Annual Meeting, as well as theresults of the votes cast at the Annual Meeting.

Proposal 1: Election of two managers to serve on theCompany’s Board of Managers for terms expiring at the Annual Meeting of theCompany’s Members to be held in 2010 or until such manager’s successor iselected and shall qualify.
| Nominees       | ** ** | **Votes For** | ** ** | **Votes Withheld** | ** ** |
|----------------|------------|--------------------|------------|-------------------------|------------|
|           |       |               |       |                    |       |
| Rodney Hebrink |       | 2,060,139          |       | 138,512                 |       |
|           |       |               |       |                    |       |
| Paul Wilson    |       | 2,025,672          |       | 172,976                 |       |

 

The terms of Messrs. Chris Edgington, MarvinBreitkreutz, Mark Chan, Howard Dahlager and James N. Reith continued after theAnnual Meeting although Mr. Reith resigned as a manager effective April 19,2007.

**Item 5. Other Information**

None.

**Item 6. Exhibits**
| Exhibit  No. | ** ** | **Description**                                                                                                                             |
|--------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------|
|         |       |                                                                                                                                        |
| 31.1         |       | Certification of the Chief Executive Officer  pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the  Exchange Act.        |
|         |       |                                                                                                                                        |
| 31.2         |       | Certification of the Chief Financial Officer  pursuant to pursuant to Rule 13a-14(a) or Rule 15d-14(a) of  the Exchange Act. |
|         |       |                                                                                                                                        |
| 32           |       | Certification of the Chief Executive Officer and  Chief Financial Officer pursuant to 18 U.S.C. Section 1350                           |

 

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**SIGNATURES**

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized.
|                            | GOLDEN OVAL EGGS, LLC                 |
|----------------------------|---------------------------------------|
|                       |                                  |
|                       | By:                                   | /s/ Dana Persson |   |
|                       | President and Chief Executive Officer |
|                       | (Principal Executive Officer)         |
|                       |                                  |
|                       | By:                                   | /s/ Thomas A. Powell |   |
|                       | Vice President and Chief Financial    |
|                       | Officer                               |
|                       | (Principal Financial and Accounting   |
|                       | Officer)                              |
|                       |                                  |
| Date:  July  16, 2007 |                                  |
|                            |                                       |  |  |  |

 

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