**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

**FORM 10-Q**

**x**                              QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

**forthe quarterly period ended**May 31, 2006;

**OR**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

**forthe transition period from          TO         **

**Golden Oval Eggs, LLC**

(Exact name of registrantas specified 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)

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. Yes xNo 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” in Rule 12b-2of 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 to Section 13or Section 15(d) of the Exchange Act.

Yes oNo x

As of July 14, 2006, there were 4,702,677 of theCompany’s Class A and 697,350 of the Company’s Class B units issuedand outstanding.

 

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** **

**TABLE OF CONTENTS**

GoldenOval Eggs, LLC

Form 10-Q

For The Quarter Ended May 31, 2006
| 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 |   | 7 |
| Item 3.          |       | Quantitative and Qualitative  Disclosures about Market Risk                                 |   | 11 |
| Item 4.          |       | Controls and Procedures                                                                     |   | 11 |
|             |       |                                                                                        |   |   |
| **Part II** | ** ** | **Other  Information**                                                                      |   |   |
| Item 1.          |       | Legal Proceedings                                                                           |   | 12 |
| Item 1A.         |       | Risk Factors                                                                                |   | 12 |
| Item  2.         |       | Unregistered  Sales of Equity Securities and Use of Proceeds                                |   | 12 |
| Item  3.         |       | Defaults  Upon Senior Securities                                                            |   | 12 |
| Item  4.         |       | Submission  of Matters to a Vote of Security Holders                                        |   | 12 |
| Item 5.          |       | Other  Information                                                                          |   | 12 |
| Item 6.          |       | Exhibits                                                                                    |   | 13 |
|             |       |                                                                                        |   |   |
| **Signatures**   | ** ** |                                                                                        |   | 14 |

###  

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**PART I.FINANCIAL INFORMATION**

**Item 1. Condensed FinancialStatements**

**GOLDENOVAL EGGS, LLC**

**ConsolidatedCondensed Balance Sheets**

**May 31,2006 and August 31, 2005**

**(InThousands)**

(Unaudited)
| ** **                                | ** ** | **May 31,  2006** | ** ** | **August 31,  2005** | ** ** |
|-------------------------------------------|------------|------------------------|------------|---------------------------|------------|
| Assets                                    |       |                   |       |                      |       |
| Current assets                            |       |                   |       |                      |       |
| Cash and cash  equivalents                |       | $                      | 225        |                      | $          | 690 |   |
| Accounts  receivable                      |       | 6,100                  |       | 4,809                     |       |
| Inventories                               |       | 11,998                 |       | 11,189                    |       |
| Restricted cash                           |       | 1,582                  |       | 917                       |       |
| Other current  assets                     |       | 2,230                  |       | 387                       |       |
| Total current assets                      |       | 22,135                 |       | 17,992                    |       |
|                                      |       |                   |       |                      |       |
| Property, plant and  equipment            |       |                   |       |                      |       |
|                                      |       |                   |       |                      |       |
| Land and land  improvements               |       | 11,497                 |       | 11,163                    |       |
| Buildings                                 |       | 38,807                 |       | 34,782                    |       |
| Equipment                                 |       | 59,226                 |       | 54,819                    |       |
| Construction in  progress                 |       | —                 |       | 6,502                     |       |
|                                      |       | 109,530                |       | 107,266                   |       |
| Accumulated  depreciation                 |       | (43,081                | )          | (37,652                   | )          |
| Total property, plant  and equipment, net |       | 66,449                 |       | 69,614                    |       |
|                                      |       |                   |       |                      |       |
| Other assets                              |       |                   |       |                      |       |
| Investments                               |       | 1,561                  |       | 1,529                     |       |
| Deferred  financing cost, net             |       | 1,609                  |       | 1,773                     |       |
| Note receivable                           |       | 77                     |       | 37                        |       |
| Total other assets                        |       | 3,247                  |       | 3,339                     |       |
| Total assets                              |       | $                      | 91,831     |                      | $          | 90,945 |   |

 

See accompanying notes toconsolidated condensed financial statements

1

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| ** **                                         | ** ** | **May 31,  2006** | ** ** | **August 31,  2005** | ** ** |
|----------------------------------------------------|------------|------------------------|------------|---------------------------|------------|
| Liabilities and  Members’ Equity              |       |                   |       |                      |       |
| Current liabilities                                |       |                   |       |                      |       |
| Revolving line  of credit                          |       | $                      | 888        |                      | $          | 2,724 |   |
| Accounts payable                                   |       | 2,630                  |       | 2,830                     |       |
| Accrued interest                                   |       | 530                    |       | 333                       |       |
| Accrued  compensation                              |       | 1,157                  |       | 1,449                     |       |
| Other current  liabilities                         |       | 957                    |       | 1,519                     |       |
| Current  maturities of long-term debt              |       | 5,634                  |       | 4,668                     |       |
| Total current  liabilities                         |       | 11,796                 |       | 13,523                    |       |
|                                               |       |                   |       |                      |       |
| Long-term debt, less  current maturities           |       | 45,822                 |       | 46,546                    |       |
|                                               |       |                   |       |                      |       |
| Members’ equity                               |       |                   |       |                      |       |
| Members’ equity                               |       | 33,298                 |       | 29,891                    |       |
| Non-controlling  interest in consolidated entities |       | 915                    |       | 985                       |       |
| Total members’ equity                         |       | 34,213                 |       | 30,876                    |       |
| Total liabilities and members’ equity         |       | $                      | 91,831     |                      | $          | 90,945 |   |

 

See accompanying notes toconsolidated condensed financial statements

2

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**GOLDEN OVAL EGGS,LLC**

**ConsolidatedCondensed Statements of Operations**

**Forthe Periods Ended May 31, 2006 and 2005**

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

**(Unaudited)**
| ** **                                                          | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|---------------------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                                          | ** ** | **May 31,**                 | ** ** | **May 31,**                | ** ** | **May 31,** | ** ** | **May 31,** | ** ** |
| ** **                                                          | ** ** | **2006**                         | ** ** | **2005**                        | ** ** | **2006** | ** ** | **2005** | ** ** |
| Net sales                                                           |       | $                                | 19,217     |                            | $          | 15,678 |   | $ | 57,332 |   | $ | 48,015 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Cost of goods sold                                                  |       | 16,220                           |       | 13,802                          |       | 47,215 |   | 38,599 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Gross profit                                                        |       | 2,997                            |       | 1,876                           |       | 10,117 |   | 9,416 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Operating expenses                                                  |       | 1,945                            |       | 2,078                           |       | 6,179 |   | 5,399 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Income (loss) from  operations                                      |       | 1,052                            |       | (202                            | )          | 3,938 |   | 4,017 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Other income (expense)                                              |       |                             |       |                            |       |   |   |   |   |
| Interest expense                                                    |       | (784                             | )          | (854                            | )          | (2,008 | ) | (3,153 | ) |
| Non-controlling  interest in income (loss) of consolidated entities |       | 24                               |       | (38                             | )          | 3 |   | (156 | ) |
| Other income                                                        |       | 240                              |       | 416                             |       | 727 |   | 648 |   |
| Total other expense                                                 |       | (520                             | )          | (476                            | )          | (1,278 | ) | (2,661 | ) |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Net income (loss)                                                   |       | $                                | 532        |                            | $          | (678 | ) | $ | 2,660 |   | $ | 1,356 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Weighted average  Class A units outstanding                    |       | 4,698                            |       | 4,582                           |       | 4,692 |   | 4,582 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Net income (loss) per  Class A unit, basic and diluted         |       | $                                | 0.11       |                            | $          | (0.15 | ) | $ | 0.57 |   | $ | 0.30 |   |
|                                                                |       |                             |       |                            |       |   |   |   |   |
| Distributions per unit                                              |       | $                                | —     |                            | $          | — |   | $ | — |   | $ | — |   |

 

See accompanying notes to consolidated condensed financialstatements

3

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**GOLDEN OVAL EGGS,LLC**

**ConsolidatedCondensed Statements of Cash Flows**

**Forthe Periods Ended May 31, 2006 and 2005**

**(InThousands)**

**(Unaudited)**
| ** **                                                                                 | ** ** | **Nine Months Ended** | ** ** |
|--------------------------------------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                                                 | ** ** | **May 31,**                | ** ** | **May 31,** | ** ** |
| ** **                                                                                 | ** ** | **2006**                        | ** ** | **2005** | ** ** |
| Cash flows from  operating activities                                                      |       |                            |       |   |   |
| Net income                                                                                 |       | $                               | 2,660      |   | $ | 1,356 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities          |       |                            |       |   |   |
| Depreciation                                                                               |       | 5,541                           |       | 4,428 |   |
| Amortization                                                                               |       | 164                             |       | 172 |   |
| Stock issued as  Board of Directors Compensation                                           |       | 14                              |       | — |   |
| Gain on sale of  property, plant & equipment                                      |       | (9                              | )          | — |   |
| Loss on  retirement of bonds                                                               |       | —                          |       | 848 |   |
| Non-controlling  interest in income of consolidated entities, net of distributions         |       | (70                             | )          | 168 |   |
| Changes in  operating assets and liabilities                                               |       |                            |       |   |   |
| Accounts receivable                                                                        |       | (1,291                          | )          | 1,200 |   |
| Inventories                                                                                |       | (809                            | )          | (2,069 | ) |
| Other current  assets                                                                      |       | (1,843                          | )          | 723 |   |
| Accounts payable                                                                           |       | (200                            | )          | (825 | ) |
| Accruals and  other current liabilities                                                    |       | 76                              |       | (4,708 | ) |
| Net cash provided by  operating activities                                                 |       | 4,233                           |       | 1,293 |   |
|                                                                                       |       |                            |       |   |   |
| Cash flows from  investing activities                                                      |       |                            |       |   |   |
| Purchases of  property, plant and equipment                                                |       | (2,389                          | )          | (17,049 | ) |
| Proceeds from  sale of property, plant and equipment                                       |       | 22                              |       | 1 |   |
| Advances of  notes receivable                                                              |       | (40                             | )          | (14 | ) |
| Purchases of  investments in other cooperatives                                            |       | (32                             | )          | — |   |
| Retirement of  investment in other cooperatives                                            |       | —                          |       | 41 |   |
| Net cash used by  investing activities                                                     |       | (2,439                          | )          | (17,021 | ) |
|                                                                                       |       |                            |       |   |   |
| Cash flows from  financing activities                                                      |       |                            |       |   |   |
| Net decrease in  revolving line of credit                                                  |       | (1,836                          | )          | (27 | ) |
| Proceeds from  issuance of long-term debt                                                  |       | 3,000                           |       | 42,550 |   |
| Payments of  long-term debt                                                                |       | (2,758                          | )          | (22,813 | ) |
| Payments of  deferred financing costs                                                      |       | —                          |       | (1,469 | ) |
| Decrease  (increase) in restricted cash                                                    |       | (665                            | )          | 1,556 |   |
| Distributions to  patrons                                                                  |       | —                          |       | (10,263 | ) |
| Net cash provided  (used) by financing activities                                          |       | (2,259                          | )          | 9,534 |   |
| Net decrease in cash  and cash equivalents                                                 |       | (465                            | )          | (6,194 | ) |
| Cash and cash  equivalents - beginning of period                                           |       | 690                             |       | 7,642 |   |
| Cash and cash  equivalents - end of period                                                 |       | $                               | 225        |   | $ | 1,448 |   |
|                                                                                       |       |                            |       |   |   |
| Supplementary  disclosures of cash flow information                                        |       |                            |       |   |   |
| Cash paid during  the period for:                                                          |       |                            |       |   |   |
| Interest, net of  capitalized interest of $235 and $561 during 2006 and 2005, respectively |       | $                               | 2,799      |   | 2,086 |   |
| Supplementary  disclosures of non-cash transactions                                        |       |                            |       |   |   |
| Stock issued as  officer compensation                                                      |       | $                               | 649        |   | — |   |
| Stock issued as Board  of Directors compensation, net of $14 expensed in current year      |       | 84                              |       | — |   |

 

See accompanying notes to consolidated condensed financialstatements

4

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**GOLDENOVAL EGGS, LLC**

**Notesto Consolidated Condensed Financial Statements**

**May 31,2006 and August 31, 2005**

**(InThousands)**

1. Organization  Effective September 1, 2004, Golden OvalEggs, LLC (the “Company”) was organized as a Delaware limited liability companyas a result of a reorganization of Midwest Investors of Renville, Inc.(the “Cooperative”). The Cooperative was incorporated as a cooperative underthe laws of the state of Minnesota in March 1994. The Company operates asthe Cooperative’s successor and its operations are a continuance of theoperations of the Cooperative. The accompanying consolidated condensed financialstatements for all periods presented are those of the Company.

2. Basis ofPresentation  The accompanying consolidated condensed balancesheet as of August 31, 2005, which has been derived from auditedconsolidated financial statements, and the unaudited interim consolidatedcondensed financial statements at May 31, 2006 and for the three-month andnine-month periods ended May 31, 2006 and 2005 of Golden Oval Eggs, LLC(the “Company”) have been prepared in accordance with generally acceptedaccounting principles for interim financial reporting and Securities andExchange Commission rules and regulations. Certain information and footnotedisclosures have been condensed or omitted in accordance with those rules andregulations, although the Company believes that the disclosures made areadequate to make the information not misleading. The consolidated condensed financialstatements reflect all adjustments (consisting only of normal recurringadjustments) which are, in the opinion of management, necessary for a fairpresentation of the financial position and operating results for the interimperiods presented. It is suggested that these consolidated condensed financialstatements be read in conjunction with the consolidated financial statementsand notes thereto included in the Company’s latest Annual Report on Form 10-K.

3. The results of operations for the periods ended May 31,2006 and 2005 are not necessarily indicative of the results expected for thefull year.

4. Inventories  Pullet and layer heninventories are stated at the cost of production, which includes the costs ofthe chicks, feed, overhead and labor. Layer hen flock costs are capitalized tothe point at which the pullet goes into production and are amortized over theproductive lives of the flocks, generally 18 to 24 months. Feed, supplies andliquid egg inventories are stated at the lower of cost (first-in, first-out) ormarket. Inventories consisted of the following:
| ** **                | ** ** | **(Unaudited)  May 31,  2006** | ** ** | **(Audited)  August 31,  2005** | ** ** |
|---------------------------|------------|-------------------------------------|------------|--------------------------------------|------------|
| Hens and pullets          |       | $                                   | 10,032     |                                 | $          | 9,826 |   |
| Eggs and egg  products    |       | 178                                 |       | 191                                  |       |
| Feed, supplies  and other |       | 1,788                               |       | 1,172                                |       |
| Total inventories         |       | $                                   | 11,998     |                                 | $          | 11,189 |   |

5

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In December 2004,the Financial Accounting Standards Board (“FASB”) issued Statement of FinancialAccounting Standards (“SFAS”) No. 151, “Inventory Costs” which amended theguidance in Accounting Research Bulletin No. 43, Chapter 4, “InventoryPricing” to clarify the accounting for abnormal amounts of idle facilityexpense, freight, handling costs, and wasted material (spoilage). Thisstatement requires that those items be recognized as current-period chargesregardless of whether they meet the criterion of “so abnormal”. In addition,this statement requires that allocation of fixed production overhead to thecost of conversion be based on the normal capacity of the production facilities.This standard is effective for the Company’s fiscal year beginning September 1,2005. The adoption of SFAS No. 151 did not have a material impact on theCompany’s consolidated financial statements.

5. Financing Agreement  On September 13,2004, the Company entered into a credit agreement. The credit agreementincludes a $55,000 line of credit, of which $10,000 is a revolving line ofcredit and the remaining $45,000 is term debt. Effective November 30,2005, the Company and its’ lender signed the First Amendment to the abovecredit agreement. The effect of this amendment was to extend the terminationdate of the revolving line of credit to November 30, 2006 and to changecertain restrictive covenants. As of May 31, 2006 the Company was incompliance with all covenants in the credit agreement.

6. Stock BasedCompensation  On September 1,2005, 107,203 units, with a fair value of $649, were issued as payment forofficer bonuses earned during fiscal 2004 and 2005 per management employmentcontracts. These bonuses were previously recognized and accrued  at the time they were earned. On April 1,2006, 14,000 units, with a fair value of $98 were issued as Board of Directorscompensation earned during fiscal 2006 and 2005. This compensation wasrecognized and accrued during the periods in which it was earned. On December 16,2004, the FASB issued SFAS No. 123(R), “Share-Based Payment”, which is arevision of SFAS No. 123 and supersedes Accounting Principles BoardOpinion No. 25. SFAS No. 123(R) requires all share-basedpayments to employees, including grants of employee stock options, to be valuedat fair value on the date of grant, and to be expensed over the applicablevesting period. Pro forma disclosure of the income statement effects ofshare-based payments is no longer an alternative. SFAS No. 123(R) iseffective for all stock-based awards granted on or after July 1, 2005. Inaddition, companies must also recognized compensation expense related to anyawards that are not fully vested as of the effective date. Compensation expensefor the unvested awards will be measured based on the fair value of the awardspreviously calculated in developing the pro forma disclosures in accordancewith the provision of SFAS No. 123. On March 25, 2005, the SEC staffissued Staff Accounting Bulletin (“SAB”) 107, which summarizes the staff’sviews regarding the interaction between SFAS No. 123(R) and certainSEC rules and regulations and provides additional guidance regarding thevaluation of share-based payment arrangements for public companies. Inaddition, on April 15, 2005, the SEC amended Rule 4-01(a) ofRegulation S-X regarding the date the Company is required to comply with thestandard, which is March 1, 2006. The adoption of SFAS No. 123(R), asinterpreted by SAB 107, did not have a material impact on the Company’sconsolidated results of operations.

7. Use of Estimates  The preparation ofconsolidated condensed financial statements in conformity with accountingprinciples generally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect the reported amountsof assets and liabilities and the disclosure of contingent assets andliabilities at the date of the consolidated condensed financial statements andthe reported amounts of revenues and expenses during the reporting period. Actualresults could differ from those estimates.

8. Subsequent Event  On June 30,2006, the Company purchased certain assets and assumed certain liabilities ofMoark, LLC, Cutler at Abbeville, L.L.C., Hi Point Industries, LLC, L&W EggProducts, Inc., Norco Ranch, Inc. and Moark Egg Corporation(collectively, “Seller”) relating to the Seller’s business of manufacturing,marketing, selling and distributing liquid egg products for $60 million. Thepurchase price consisted of $38 million in cash, a $17 million promissory note,and $5 million paid by the issuance of 697,350 newly-created Class B units.Also on June 30, 2006, the Company entered into a new financing agreement,which amended the Company’s current financing agreement discussed in Note 5,and provided for a $93 million line of credit, of which $15 million is arevolving line of credit and the remaining $78 million is term debt. TheCompany is currently in the process of allocating the purchase price to theassets acquired and liabilities assumed.

6

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**Item 2. Management’sDiscussion and Analysis of Financial Condition and Results of Operations.**

**Forward-Looking Statements**

This report contains forward-looking statements basedupon assumptions by the management of Golden Oval Eggs, LLC (the “Company”, “GoldenOval” or “we”), a Delaware limited liability company, as of the date of thisQuarterly Report, including assumptions about risks and uncertainties faced bythe Company. When used in this report, the words “believe,” “expect,” “anticipate,”“will,” “estimate” and similar verbs or expressions are intended to identifysuch forward-looking statements. If management’s assumptions prove incorrect orshould unanticipated circumstances arise, the Company’s actual results coulddiffer materially from those anticipated. These differences could be caused bya number of factors or combination of factors including, but not limited to,those factors described in the “Risk Factors” section of the Company’s Form 10-Kfor the year ended August 31, 2005, as well as those identified in otherfilings with the Securities and Exchange Commission. Readers are strongly urgedto consider such factors when evaluating any forward-looking statement. TheCompany undertakes no obligation to update any forward-looking statements toreflect future events or developments.

**Summary**

Golden Oval Eggs, LLC (“we”, “us”, “our”, or the “Company”)is a Delaware limited liability company, primarily engaged in the business ofproducing, processing and distributing egg products. The Company operates twoin-line egg-breaking facilities, one in Renville, Minnesota and the other inThompson, Iowa and is currently ranked in the top 10 in the nation forproduction of shell eggs. We currently produce 93% of the shell eggs we break,with the remainder of our requirements for shell eggs purchased throughthird-party producers.

The Company’s output consists of liquid whole egg,liquid egg white and liquid egg yolk. The egg products produced by the Companyare sold on a direct basis to companies who further process the raw liquid egginto various finished egg products such as dried eggs, frozen, hard cooked,extended shelf-life liquid, pre-cooked egg patties, specialty egg products, etc.Institutional, food service, restaurants, and food manufacturers in turnpurchase these further processed products.

With the completion of the Thompson facility duringthe second quarter of fiscal 2006, the Company expects its production at it’sRenville and Thompson facilities to reach 220 million pounds in fiscal 2006 andshould reach 225 million pounds with a full year of production at the completedfacility. With the acquisition of the Moark facilities, the Company shouldproduce over 450 million pounds of egg products during fiscal year 2007.

The Company’s operating income or loss is materially affectedby wholesale liquid egg prices, which can fluctuate widely and are outside ofthe Company’s control. Liquid eggs are a commodity product and prices fluctuatein response to supply/demand factors. The Company also sells a portion of itsproducts under contracts at non-market prices. Depending upon marketcircumstances, the prices generated by the Company’s non-market volume tend tobe less or more than what the prevailing open market prices would generate.

The Company’s cost of production is materiallyaffected by feed costs, which average approximately 40% of the Company’s totalcosts. Approximately 60% of these feed costs are incurred in the procurement ofcorn and soybean meal. The cost of these ingredients is affected by a number ofsupply and demand factors such as crop production and weather, and otherfactors, such as the level of grain exports, over which the Company has nocontrol.

On May 23, 2006, the Company and GOECA, LP,entered into an Asset Purchase and Sale Agreement with Moark, LLC, Cutler atAbbeville, L.L.C., Hi Point Industries, LLC, L&W Egg Products, Inc.,Norco Ranch, Inc. and Moark Egg Corporation (collectively, “Seller”)relating to the Seller’s business of manufacturing, marketing, selling anddistributing liquid egg products. GOECA, LP is a newly-formed Californialimited partnership controlled by the Company. Moark, LLC is a subsidiary ofLand O’Lakes, Inc. Cutler at Abbeville, L.L.C., Hi Point Industries, LLC,L&W Egg Products, Inc., Norco Ranch, Inc. and Moark EggCorporation are all wholly-owned subsidiaries of MoArk, LLC. On June 30,2006, following the third quarter of fiscal 2006, the Company closed thetransactions contemplated by the Asset Purchase and Sale Agreement with theSeller and purchased certain assets and assumed certain liabilities relating toSeller’s liquid egg products business. The total purchase price of thistransaction was $60 million.

7

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**Results Of Operations**

*Net Sales.* Netsales for the third quarter of fiscal 2006 were $19.2 million, an increaseof $3.5 million, or 22.3%, as compared to net sales of $15.7 million for the thirdquarter of fiscal 2005. The increase in net sales was primarily due toincreased volume of product sold and a slightly higher average selling priceper pound during the third quarter of fiscal 2006. Pounds sold for thirdquarter 2006 were 54.5 million, an increase of 9.0 million pounds, or 19.8%, ascompared to the third quarter of fiscal 2005. The increase in production wasthe result of six new layer barns that were brought on at the Thompson facilityduring the third and fourth quarter of fiscal 2005, and first and secondquarters of 2006.  The Company’s averageselling price per pound for the third quarter of fiscal 2006 was $.325,compared to $.318 for the third quarter of fiscal 2005, an increase of $.007per pound, or 2.2%. The Company’s average selling price is the blended pricefor liquid whole eggs, liquid egg whites and liquid egg yolks.

Net sales for the first three quarters of fiscal 2006were $57.3 million, an increase of $9.3 million, or 19.4%, as compared to netsales of $48.0 million for the first three quarters of fiscal 2005. Theincrease in net sales in the first three quarters of fiscal 2006 was againprimarily the result of increased volume of sales offset by lower averageselling price per pound for the first three quarters of 2006 as compared to thesame period of 2005. Pounds sold during the first three quarters of fiscal 2006totaled 159.7 pounds, an increase of 28.6 million, or 21.8%, as compared to thefirst three quarters of fiscal 2005. The Company’s average selling price perpound was $.331 for the first three quarters of fiscal 2006, a decrease of $.007per pound, or 2.1%, as compared to $.339 for the first three quarters of fiscal2005. The decrease in average selling price is the result of an increasedsupply in the United States layer flocks.

*Cost of goods sold.*Costof goods sold for the third quarter of fiscal 2006 was $16.2 million, anincrease of $2.4 million, or 17.4%, as compared to the third quarter of fiscal2005.

Cost of goods sold for the first three quarters offiscal 2006 was $47.2 million, an increase of $8.6 million or 22.3%, ascompared to $38.6 million for the same period for fiscal 2005.

The increase in cost of goods sold in the third quarterand first three quarters of 2006 as compared to prior year periods was theresult of the additional barns added to the Thompson facility. Of the six barnsadded at the Thompson facility, two were added during the third quarter of2005, one was completed in the fourth quarter of 2005, two were completed inthe first quarter of 2006 and the last one was completed in the second quarterof fiscal 2006. The comparable periods of 2005 do not include this expense.

*Operating expenses.*Operatingexpenses for the third quarter of fiscal 2006 were $1.9 million, an increase of$.2 million, or 9.5%, as compared to the third quarter of fiscal 2005. Administrationsalaries and the cost of fringe benefits increased $.4 million in fiscal 2006as compared to fiscal 2005. This increase was the result of additionalemployees needed to handle the Company’s growth. Professional fees decreased$.5 million for the third quarter of 2006 as compared to the same period offiscal 2005. The decrease in professional fees was the result of an adjustmentto costs capitalized as a result of the Moark acquisition.

For the first three quarters of fiscal 2006, operatingexpenses were $6.2 million, an increase of $.8 million, or 14.8%, as comparedwith $5.4 million for fiscal 2005.  Salariesand fringe benefits increased $.7 million and professional fees increased $.1million for the first three quarters of fiscal 2006 versus the same period infiscal 2005. These categories increases were the result of the companies growth.

*Total other expense.*Totalother expense for the third quarter of fiscal 2006 was $.5 million, the same asthe third quarter of fiscal 2005. For the first three quarters of fiscal 2006,total other expense was $1.3 million, a decrease of $1.4 million as compared toan expense of $2.7 million for fiscal 2005. The Company wrote off the value ofthe bond issue costs associated with the 2000 bonds that were paid off in September 2004.The book value of those costs was $.8 million. The Company has recognized a $.9million gain associated with the interest rate collar during fiscal year 2006. Interestexpense for the first nine months of fiscal 2006 is $.3 million higher than thesame period of fiscal 2005. This increase is the result of the additional debtthat was taken on associated with the Thompson addition.

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*Income Taxes.  *As a limited liabilitycompany, the Company expects to be treated as a partnership for federal incometax purposes. 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*.  Net income for the third quarter ended May 31,2006 was $.5 million, or $.11 per basic and diluted Class A unit, comparedto net loss of ($.7) million, or ($.15) per basic and diluted Class A unitfor the quarter ended May 31, 2005. As a percent of net sales, net incomewas 2.6% for the quarter ended May 31, 2006, compared to net income of 4.5%for the quarter ended May 31, 2005.

For the three quarters ended May 31, 2006, netincome was $2.7 million, or $.57 per basic and diluted Class A unit,compared to $1.4 million, or $.30 per basic and diluted Class A unit forthe comparable period in fiscal 2005. As a percent of sales, the current fiscalperiod had a 4.7% net income, compared to a 2.9% for the same period last year.

As a result of the acquisition of the Moark liquid eggbusiness, the Company expects revenues in the fourth quarter of 2006 toincrease substantially as compared to the prior year period as the fourthquarter will include 2 months of Moark activity. Moark has historically soldover 200 million pounds of egg products at a value of over $125 million. The Companyexpects that this historical production will continue into the Company’s fiscalyear 2007. We also expect revenues to increase quarter to quarter during thefirst three quarters of fiscal year 2007 as we integrate the liquid eggbusiness with our existing business, but believe that revenues will remainlevel beginning with the fourth quarter of fiscal year 2007.

**Liquidity and Capital Resources**

The Company’s working capital at May 31, 2006 was$10.3 million compared to $4.5 million at August 31, 2005.   TheCompany’s current ratio was 1.9 at May 31, 2006 compared to 1.3 at August 31,2005. On September 13, 2004, the Company entered into a  credit agreement with CoBank ACB as lenderand agent, which was amended effective November 30, 2005. The  agreement gives the Company a $55 million lineof credit of which $10 million is a revolving line of credit and the remaining$45 million is term debt. The $10 million revolving line of credit iscollateralized by accounts receivable and inventories. This revolving creditline, which protects the Company from seasonal cash fluctuations, terminates onNovember 30, 2006. The $45 million term debt has a 10 year maturity and wasused to pay off the 2000 bonds and to fund the completed construction at theThompson site. All $45 million of the term debt has been drawn as of May 31,2006. The Company expects that cash flow from operations and proceeds from itsexisting credit lines will be sufficient to fund operations, to provideadequate capital expenditures for the current expansion, and to make distributionsto its members for at least the next 12 months. The Company may requiresignificant additional capital resources in order to proceed with potentialfuture expansions or to otherwise respond to competitive pressures in theindustry.

The Company’s long-term debt at May 31, 2006,including current maturities, was $51.5 million compared to $51.2 millionat August 31, 2005. As of May 31, 2006, $.8 million has been drawnagainst the revolving line of credit, compared to $2.7 million as of August 31,2005. Substantially all trade receivables and inventories collateralize theCompany’s line of credit and property, plant and equipment collateralize theCompany’s long-term debt under its loan agreements. The Company is required bycertain provisions of its loan agreements to maintain (1) a minimumtangible net worth of not less than $26.5 million plus 40% of earnings; (2) aminimum current ratio of not less than 1.25 to 1.0; (3) working capital ofno less than $7.0 million; (4) a leverage ratio of less than 6.50 to1.0; (5) a fixed charge coverage ratio no less than 1.15 to 1; and have acertain amount of product under contracts based on the current ratio of the Company.In addition, these provisions restrict the Company’s ability to makedistributions, create liens, incur indebtedness and sell assets and properties.As of May 31, 2006, the Company was in compliance with these covenants.

Net cash flow from operations was $4.2 millionfor the first three quarters of fiscal 2006.  Of total net cash flow for the first ninemonths of 2006, $2.4 million was used for the purchase of property, plant andequipment,  $1.8 million was used to pay down the Company’s revolving lineof credit, $2.8 million was used to pay off long-term debt and $.7 million wastransferred to the restricted cash account. At May 31, 2006, therestricted cash account included $.9 million, which will be used to retirelong-term debt and pay interest associated with the 1999 and 2001 bonds.  On

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September 1, 2005, we issued 107,203 Class Aunits to pay $.6 million in management bonuses. The management bonuses wereearned and accrued during fiscal years 2004 and 2005. On April 1,2006 equity was issued to pay $.1 million in Board of Directors compensation. TheBoard of Director’s compensation was earned and accrued during fiscal years2005 and 2006. In addition to cash flow from operations, the Company received $3.0million  from the final draw on the $45million term loan. The net effect of this activity was a decrease in cash of $.5million at May 31, 2006 as compared to August 31, 2005.

Subsequent to the end ofthe third quarter of fiscal year 2006, the Company completed the purchase ofthe Moark liquid egg business as described above. In connection with theclosing, the Company and its subsidiary GOECA, LP, as buyer, paid the Sellerthe total purchase price of $60 million, consisting of $38 million in cash (ofwhich $1.5 million was paid as an earnest money deposit in connection with theexecution of the Asset Purchase and Sale Agreement), an additional $17 millionpaid by the Buyer in the form of a subordinated promissory note bearinginterest at a rate of 12% per year (the “Note”) issued to LOL and $5 millionpaid by issuance of 697,350 newly-created Class B Units. To facilitate thepayment of $36.5 million of the cash portion of the purchase price, the Companyentered into an Amended and Restated Credit Agreement dated as of June 30,2006 among the Company, Midwest Investors of Iowa, Cooperative, and GOECA, LP,the lenders from time to time party thereto, and CoBank ACB, as lender andagent (the “Credit Agreement”). The Credit Agreement amends and restates the creditagreement entered into on September 13, 2004 and amended effective November 30,2005, as discussed above. The Credit Agreement provides for a $93 million lineof credit, consisting of a $15 million revolving note that terminates on April 30,2007 and $78 million in term notes. Immediately following the closing of thepurchase transaction, the Company had outstanding $.1 million under therevolving note and $78 million in term notes. The covenants associated with theAmended and Restated Credit Agreement are substantially the same as thosecontained in the 2004 Credit Agreement. A description of the Credit Agreementmay be found under Item 1.01 of the Company’s Current Report on Form 8-Kdated June 30, 2006.

The Company expects thatas a result of the acquisition of the Moark liquid egg business, it will make certaincapital improvements to its facilities in the estimated amount of $4 millionduring the next fiscal year.

The Company expects thatcash flow from operations and proceeds from the Credit Agreement will besufficient to fund operations, to provide adequate capital expenditures for thecurrent expansion, and to make distributions to its members for at least thenext 12 months.

**Critical Accounting Policies andEstimates**

The above discussion and analysis of our results ofoperations and financial condition are based upon our consolidated financialstatements, which have been prepared in accordance with principles generallyaccepted in the United States. The preparation of these financial statementsrequires management to make estimates and judgments that affect the reportedamounts of assets, liabilities, revenues and expenses, and related disclosureof contingent 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 even thebest estimates and judgments may require adjustment. For a complete descriptionof the Company’s significant accounting policies, please see Note 1 to theconsolidated financial statements in the Company’s Annual Report on Form 10-Kfor the year ended August 31, 2005. There have been no changes to criticalaccounting policies identified in our Annual Report on Form 10-K forthe year ended August 31, 2005.

**Impact of Recently Issued AccountingPronouncements**

Please refer to Item 7, “Management’s Discussion andAnalysis of Financial Condition and Results of Operations”, in our AnnualReport form 10-K for the year ended August 31, 2005 for a discussionof the impact of recently issued accounting pronouncements. There were noaccounting pronouncements issued during the quarter ended May 31, 2006that we expect will have a material impact on our consolidated financialstatements.

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**Item 3. Quantitativeand Qualitative Disclosures About Market Risk**

There have been no material changes in the market riskreported in the Company’s Annual Report on Form 10-K for the fiscalyear ended August 31, 2005.

**Item 4. Controlsand Procedures**

**Evaluation of Disclosure Controls andProcedures**

The Company’s Chief Executive Officer, Dana Persson,and Chief Financial Officer, Doug Leifermann, have reviewed the Company’sdisclosure controls and procedures as of the end of the period covered by thisreport. Based upon this review, they have concluded that the Company’sdisclosure controls and procedures are effective.

**Changes in Internal Control OverFinancial Reporting**

There have been no changes in internal control overfinancial reporting that occurred during the fiscal quarter covered by thisreport that have materially affected, or are reasonably likely to materiallyaffect, the Company’s internal control over financial reporting.

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# **PART II.                OTHER INFORMATION**

**Item 1. LegalProceedings**

None.

**Item 1A.Risk Factors**

Not applicable.

**Item 2. UnregisteredSales of Equity Securities and Use of Proceeds**

None.

**Item 3. DefaultsUpon Senior Securities**

None.

**Item 4. Submissionof Matters to a Vote of Security Holders**

None.

**Item 5. OtherInformation**

None.

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**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**

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.
|                            | GOLDEN OVAL EGGS, LLC                         |
|---------------------------------|-----------------------------------------------|
|                            |                                          |
|                            | By:                                           | /s/ Dana Persson |
|                            | President and  Chief Executive Officer        |
|                            | (Principal  Executive Officer)                |
|                            |                                          |
|                            | By:                                           | /s/ Doug  Leifermann |
|                            | Vice President  and Chief Financial Officer   |
|                            | (Principal  Financial and Accounting Officer) |
|                            |                                          |
|                            |                                          |
| Date:   July 17, 2006 |                                          |

 

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