**UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION**

 

**Washington, D.C. 20549**

 

**Form10-Q**

 

**(Mark one)**
| ý     | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                            | **QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|
| ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** **                                                                                    |
|       | **For the quarterly period ended  November 30. 2005**                                                                                                                                                                                                                                                                                                                                                                                                 |
|       | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **or**     |
| ** ** |
| o          | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                            | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
| ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** **                                                                                    |
|       | **For the transition period from                                    to                                  .** |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                               |  |

 

**Commission file number****000-51096**

 

**Golden Oval Eggs, LLC**

(Exactname of registrant as specified in its charter)

 
| **DELAWARE**                              | ** ** | **20-0422519**         |
|-------------------------------------------|------------|------------------------|
| (State or other  jurisdiction             |       | (I.R.S. employer       |
| of incorporation or  organization)        |       | identification number) |
|                                      |       |                   |
| **340  Dupont Avenue N.E.**               | ** ** | ** **             |
| **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) has filed 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)has been subject to such filing requirements for the past 90 days.  Yes ý No o

 

Indicate by check mark whether the registrant is anaccelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ýNo o

 

As of January 13, 2006,there were 4,688,965 units issued and outstanding.

 

 

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**TABLE OF CONTENTS**

 
| **PART I.**  | **FINANCIAL INFORMATION**                                                                   |       |
|--------------|---------------------------------------------------------------------------------------------|------------|
| Item 1.      | Financial Statements                                                                        |       |
| Item 2.      | Management’s Discussion and  Analysis of Financial Condition and Results of Operations |       |
| Item 3.      | Quantitative and Qualitative  Disclosures About Market Risk                                 |       |
| Item 4.      | Controls and Procedures                                                                     |       |
| ** **   | ** **                                                                                  | ** ** |
| **PART II.** | **OTHER INFORMATION**                                                                       | ** ** |
| Item 1.      | Legal Proceedings                                                                           |       |
| Item 2.      | Unregistered Sales of Equity  Securities and Use of Proceeds                                |       |
| Item 3.      | Defaults Upon Senior  Securities                                                            |       |
| Item 4.      | Submission of Matters to a  Vote of Security Holders                                        |       |
| Item 5.      | Other Information                                                                           |       |
| Item 6.      | Exhibits                                                                                    |       |
|         | Signatures                                                                                  |       |

 

ii

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**PART I.  FINANCIAL INFORMATION**

 

**Item 1.   Financial Statements.**

 

**GOLDEN OVAL EGGS, LLC**

 

**Consolidated Balance Sheets**

 

**November 30, 2005 and August 31, 2005**

 

**(In Thousands)**

 
| ** **                               | ** ** | **(Unaudited)  November 30,  2005** | ** ** | **(Audited)  August 31,  2005** | ** ** |
|------------------------------------------|------------|-------------------------------------|------------|---------------------------------|------------|
| Assets                                   |       |                                |       |                            |       |
| Current assets                           |       |                                |       |                            |       |
| Cash and cash equivalents                |       | $                                   | 540        |                            | $          | 690 |   |
| Accounts receivable                      |       | 6,259                               |       | 4,809                           |       |
| Inventories                              |       | 11,077                              |       | 11,189                          |       |
| Restricted cash                          |       | 1,253                               |       | 917                             |       |
| Other current assets                     |       | 321                                 |       | 387                             |       |
| Total current assets                     |       | 19,450                              |       | 17,992                          |       |
| Property, plant and equipment            |       |                                |       |                            |       |
| Land and land improvements               |       | 11,165                              |       | 11,163                          |       |
| Buildings                                |       | 37,584                              |       | 34,782                          |       |
| Equipment                                |       | 57,594                              |       | 54,819                          |       |
| Construction in progress                 |       | 1,828                               |       | 6,502                           |       |
|                                     |       | 108,171                             |       | 107,266                         |       |
| Accumulated depreciation                 |       | (39,448                             | )          | (37,652                         | )          |
| Total property, plant and equipment, net |       | 68,723                              |       | 69,614                          |       |
| Other assets                             |       |                                |       |                            |       |
| Investments                              |       | 1,505                               |       | 1,529                           |       |
| Deferred financing costs, net            |       | 1,718                               |       | 1,773                           |       |
| Note receivable                          |       | 37                                  |       | 37                              |       |
| Total other assets                       |       | 3,260                               |       | 3,339                           |       |
| Total assets                             |       | $                                   | 91,433     |                            | $          | 90,945 |   |

 

1

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| ** **                                         | ** ** | **(Unaudited)  November 30,  2005** | ** ** | **(Audited)  August 31,  2005** | ** ** |
|----------------------------------------------------|------------|-------------------------------------|------------|---------------------------------|------------|
| Liabilities  and Members’ Equity              |       |                                |       |                            |       |
| Current liabilities                                |       |                                |       |                            |       |
| Revolving line of credit                           |       | $                                   | 2,748      |                            | $          | 2,724 |   |
| Accounts payable                                   |       | 2,480                               |       | 2,830                           |       |
| Accrued interest                                   |       | 545                                 |       | 333                             |       |
| Accrued compensation                               |       | 1,150                               |       | 1,449                           |       |
| Other current liabilities                          |       | 816                                 |       | 1,519                           |       |
| Current maturities of long-term debt               |       | 5,168                               |       | 4,668                           |       |
| Total current liabilities                          |       | 12,907                              |       | 13,523                          |       |
|                                               |       |                                |       |                            |       |
| Long-term debt, less current maturities            |       | 45,426                              |       | 46,546                          |       |
|                                               |       |                                |       |                            |       |
| Members’ equity                               |       |                                |       |                            |       |
| Members’ equity                               |       | 32,123                              |       | 29,891                          |       |
| Non-controlling interest in consolidated  entities |       | 977                                 |       | 985                             |       |
| Total members’ equity                         |       | 33,100                              |       | 30,876                          |       |
| Total liabilities and members’ equity         |       | $                                   | 91,433     |                            | $          | 90,945 |   |

 

2

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**GOLDEN OVAL EGGS, LLC**

 

**Consolidated Statements of Operations**

 

**For the Three Month Periods Ended November 30, 2005 and 2004**

 

**(In Thousands, except per unit data)**

 

**(Unaudited)**

 
| ** **                                                   | ** ** | **November 30,  2005** | ** ** | **November 30,  2004** | ** ** |
|--------------------------------------------------------------|------------|------------------------|------------|------------------------|------------|
| Net sales                                                    |       | $                      | 19,033     |                   | $          | 17,295 |   |
| Cost of goods sold                                           |       | 15,183                 |       | 12,962                 |       |
| Gross profit                                                 |       | 3,850                  |       | 4,333                  |       |
| Operating expenses                                           |       | 2,116                  |       | 1,613                  |       |
| Income from operations                                       |       | 1,734                  |       | 2,720                  |       |
| Other income (expense)                                       |       |                   |       |                   |       |
| Interest expense                                             |       | (507                   | )          | (1,471                 | )          |
| Non-controlling interest in income in  consolidated entities |       | 5                      |       | (23                    | )          |
| Other income                                                 |       | 351                    |       | 124                    |       |
| Total other expense                                          |       | (151                   | )          | (1,370                 | )          |
| Net income                                                   |       | $                      | 1,583      |                   | $          | 1,350 |   |
| Weighted average members’ units outstanding             |       | 4,689                  |       | 4,582                  |       |
| Net income per member’s unit                            |       | $                      | 0.34       |                   | $          | 0.29 |   |
| Distributions per member’s unit                         |       | $                      | —     |                   | $          | — |   |

 

3

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**GOLDEN OVAL EGGS, LLC**

 

**Consolidated Statements of Cash Flows**

 

**For the Three Month Periods Ended November 30, 2005 and 2004**

 

**(In Thousands)**

 

**(Unaudited)**

 
| ** **                                                                                 | ** ** | **November 30,  2005** | ** ** | **November 30,  2004** | ** ** |
|--------------------------------------------------------------------------------------------|------------|------------------------|------------|------------------------|------------|
| Cash flows from operating activities                                                       |       |                   |       |                   |       |
| Net income                                                                                 |       | $                      | 1,583      |                   | $          | 1,350 |   |
| Adjustments to reconcile net income to net  cash provided by operating activities          |       |                   |       |                   |       |
| Depreciation                                                                               |       | 1,828                  |       | 1,411                  |       |
| Amortization                                                                               |       | 55                     |       | 60                     |       |
| (Gain) loss on disposals of property, plant  and equipment                                 |       | (1                     | )          | —                 |       |
| Loss on retirement of bonds                                                                |       | —                 |       | 848                    |       |
| Non-controlling interest in income of  consolidated entities, net of distributions         |       | (8                     | )          | 56                     |       |
| Changes in  operating assets and liabilities                                               |       |                   |       |                   |       |
| Accounts  receivable                                                                       |       | (1,450                 | )          | 1,114                  |       |
| Inventories                                                                                |       | 112                    |       | (804                   | )          |
| Other  current assets                                                                      |       | 66                     |       | 471                    |       |
| Accounts  payable                                                                          |       | (350                   | )          | (1,586                 | )          |
| Accruals and  other current liabilities                                                    |       | (141                   | )          | (790                   | )          |
| Net cash  provided by operating activities                                                 |       | 1,694                  |       | 2,130                  |       |
| Cash flows  from investing activities                                                      |       |                   |       |                   |       |
| Purchases of  property, plant and equipment                                                |       | (945                   | )          | (6,586                 | )          |
| Proceeds  from sale of property, plant and equipment                                       |       | 9                      |       | 1                      |       |
| Retirement  of investment in other coops                                                   |       | 24                     |       | 54                     |       |
| Net cash  used by investing activities                                                     |       | (912                   | )          | (6,531                 | )          |
| Cash flows  from financing activities                                                      |       |                   |       |                   |       |
| Net increase  (decrease) in revolving line of credit                                       |       | 24                     |       | (27                    | )          |
| Proceeds  from issuance of long-term debt                                                  |       | —                 |       | 32,000                 |       |
| Payments of  long-term debt                                                                |       | (620                   | )          | (21,656                | )          |
| Payment of  deferred financing costs                                                       |       | —                 |       | (1,469                 | )          |
| Decrease  (increase) in restricted cash                                                    |       | (336                   | )          | 1,331                  |       |
| Distributions  to patrons                                                                  |       | —                 |       | (10,263                | )          |
| Net cash  used by financing activities                                                     |       | (932                   | )          | (84                    | )          |
| Net decrease  in cash and cash equivalents                                                 |       | (150                   | )          | (4,485                 | )          |
| Cash and  cash equivalents - beginning of period                                           |       | 690                    |       | 7,642                  |       |
| Cash and  cash equivalents - end of period                                                 |       | $                      | 540        |                   | $          | 3,157 |   |
|                                                                                       |       |                   |       |                   |       |
| Supplementary  disclosures of cash flow information                                        |       |                   |       |                   |       |
| Cash paid  during the period for:                                                          |       |                   |       |                   |       |
| Interest,  net of capitalized interest of $56 and $214 during 2005 and 2004,  respectively |       | $                      | 1,035      |                   | $          | 618 |   |
| Supplementary  disclosures of non-cash transactions                                        |       |                   |       |                   |       |
| Stock issued  as officer compensation                                                      |       | $                      | 649        |                   | $          | — |   |

 

4

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**GOLDEN OVAL EGGS, LLC**

 

**Selected Information – Substantially all Disclosures Requiredby**

 

**Accounting Principles Generally Accepted in the United Statesof America are not Included**

 

**November 30, 2005 and August 31, 2005**

 

**(In Thousands)**

 

1.          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 acooperative under the laws of the state of Minnesota in March 1994.  The Company operates as the Cooperative’ssuccessor and its operations are a continuance of the operations of theCooperative.  The accompanyingconsolidated financial statements for all periods presented are those of theCompany.

 

2.             In the opinion of management, theaccompanying unaudited consolidated financial statements contain alladjustments which are of a normal and recurring nature necessary to presentfairly the financial position of the Company as of November 30, 2005 and August31, 2005 and the results of its operations for the three month periods endedNovember 30, 2005 and 2004.

 

3.             The results of operations for the three monthperiods ended November 30, 2005 and 2004 are not necessarily indicative of theresults expected for the full year.

 

4.             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 atwhich the pullet goes into production and are amortized over the productivelives of the flocks, generally 18 to 24 months.  Feed, supplies and liquidegg inventories are stated at the lower of cost (first-in, first-out) ormarket.  Inventories consisted of the following:

 
| ** **               | ** ** | **(Unaudited)  November 30,  2005** | ** ** | **(Audited)  August 31,  2005** | ** ** |
|--------------------------|------------|-------------------------------------|------------|---------------------------------|------------|
| Hens and pullets         |       | $                                   | 9,888      |                            | $          | 9,826 |   |
| Eggs and egg products    |       | 158                                 |       | 191                             |       |
| Feed, supplies and other |       | 1,031                               |       | 1,172                           |       |
| Total inventories        |       | $                                   | 11,077     |                            | $          | 11,189 |   |

 

5.          On September 13, 2004, the Company enteredinto a new financing agreement. The new agreement includes a $55,000 line ofcredit, of which $10,000 is a revolving line of credit and the remaining$45,000 is term debt. Effective November 30, 2005, the Company and its’ lendersigned the First Amendment to the above credit agreement.  The effect of this amendment was to extendthe termination date of the revolving line of credit to November 30, 2006 andto change certain restrictive covenants. As of November 30, 2005 the Company was in compliance with all covenantsin the agreement.

 

6.             On September 1, 2005, 107,203 units, with afair value of $649, were issued as payment for officer bonuses earned duringfiscal 2004 and 2005 per management employment contracts.  These bonuses were previously accrued for atthe time they were earned.

 

7.             The preparation of consolidated financialstatements in conformity with accounting principles generally accepted in theUnited States of America requires management to make estimates and assumptionsthat affect the 

 

5

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reported amounts of assetsand liabilities and the disclosure of contingent assets and liabilities at thedate of the consolidated financial statements and the reported amounts ofrevenues and expenses during the reporting period.  Actual results coulddiffer from those estimates.

 

**Item 2.   Management’s Discussion and Analysis ofFinancial Condition and Results of Operations.**

 

This Management’s Discussionand Analysis of Financial Condition and Results of Operations (MD & A)should be read in conjunction with the MD & A included in the Company’sForm 10-K for the year ended August 31, 2005.

 

**Forward-LookingStatements**

 

This report contains forward-looking statements based upon assumptionsby the management of the Company as of the date of this Quarterly Report,including assumptions about risks and uncertainties faced by the Company. Whenused in this report, the words “believe,” “expect,” “anticipate,” “will,” “estimate”and similar verbs or expressions are intended to identify such forward-lookingstatements. If management’s assumptions prove incorrect or should unanticipatedcircumstances arise, the Company’s actual results could differ materially fromthose anticipated. These differences could be caused by a number of factors orcombination of factors including, but not limited to, those factors describedin the “Risk Factors” section of the Company’s Form 10-K for the yearended August 31, 2005.  Readers are strongly urged to consider suchfactors when evaluating any forward-looking statement. The Company undertakesno obligation to update any forward-looking statements in this report 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 of producing, processing and distributing eggproducts. The Company operates two in-line egg-breaking facilities, one inRenville, Minnesota and the other in Thompson, Iowa and is currently ranked inthe top 15 in the nation for production of shell eggs. We currently produce 93%of the shell eggs we break with the rest purchased through third-partyproducers. The Company was organized for the specific purpose of consummatingthe conversion of Midwest Investors of Renville, Inc., d/b/a “Golden Oval Eggs”,a Minnesota cooperative (the “Cooperative”), into a limited liability company.The conversion was completed effective August 31, 2004, with the Companybeing the surviving entity in the conversion. The Company operates as theCooperative’s successor and its operations are a continuance of the operationsof the Cooperative.

 

The Company’s outputconsists of liquid whole egg, liquid egg white and liquid egg yolk. The eggproducts produced by the Company are sold on a direct basis to companies whofurther process the raw liquid egg into various finished egg products such asdried eggs, frozen, hard cooked, extended shelf-life liquid, pre-cooked eggpatties, specialty egg products, etc. Institutional, food service, restaurants,and food manufacturers in turn purchase these further processed products.

 

The Company expects itsproduction to reach 220 million pounds in fiscal 2006 and to reach 225 millionpounds annually upon completion of the second phase of the Thompsonfacility.  The second phase, currently under construction, is expected tobe complete by February 2006.

 

The Company’s operatingincome or loss is materially affected by wholesale liquid egg prices, which canfluctuate widely and are outside of the Company’s control.  Liquid eggsare a commodity product and prices fluctuate in response to supply/demandfactors.  In an effort to mitigate that volatility, the Company sellsapproximately 60% of its products under contract at non-market prices. Depending upon market circumstances, the prices generated by the Company’snon-market volume tend to be less or more than what the prevailing open marketprices would generate.

 

The Company’s cost ofproduction is materially affected by feed costs, which average approximately40% of the Company’s total costs.  Approximately 60% of these feed costsare incurred in the procurement of corn and soybean meal.  The cost ofthese ingredients is affected by a number of supply and demand factors such ascrop production and weather, and other factors, such as the level of grainexports, over which the Company has no control.

 

6

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**Results ofOperations**

 

*Net Sales.*  Net salesfor the first quarter of fiscal 2006 were $19.0 million, an increase of$1.7 million, or 10.0%, as compared to net sales of $17.3 million for the firstquarter of fiscal 2005.  Although the volume of total eggs sold increasedduring the first fiscal 2006 quarter as compared to the first fiscal 2005quarter, the price per pound decreased.  Pounds sold for first quarter2006 were 51.6 million, an increase of 8.2 million pounds, or 18.9%, ascompared to first quarter 2005.  The increase in production was the resultof five new layer barns that were added at the Thompson facility since thefirst quarter of fiscal 2005.  The Company’s average selling price perpound for the first quarter of fiscal 2006 was $.342, compared to $.368 for thefirst quarter of fiscal 2005, a decrease of $.026 per pound, or 7.1%.  TheCompany’s average selling price is the blended price for liquid whole eggs,liquid egg whites and liquid egg yolks.  The decrease in the averageselling price is still a reflection of an oversupply of eggs.   The supply of eggs and the demand for themare starting to get more in line and liquid egg prices are getting closer toreflecting 10-year averages.

 

*Cost ofgoods sold.* Costof goods sold for the first quarter of fiscal 2006 was $15.2 million, anincrease of $2.2 million, or 17.1%, as compared to the first quarter offiscal 2005.  With the addition of the five new barns, feed usageincreased 23.7 million pounds during the first quarter of fiscal 2006 ascompared to the first quarter of fiscal 2005. The 24% increase in feed usage mirrored the increase in layers housed inthe new barns.  Despite the increasedfeed usage, total feed costs increased only $.2 million during the firstquarter of fiscal 2006 versus fiscal 2005 as the cost per pound of feed dropped16.4%.  This lower feed cost was theresult of lower corn and soybean meal prices. Based on the recent crop results, the Company should continue toexperience these lower feed costs for the next few months.  Shell eggs purchased from third parties to bebroken at our processing facilities increased $.4 million to $1.1 million inthe first quarter of fiscal 2006, as compared to $.7 million during the firstquarter of fiscal 2005. This increase was the result of higher market pricesfor these eggs.  The rest of the increasein cost of goods sold was the result of increased husbandry, processing andtransportation costs associated with the additional 5 new layer barns.

 

*Operatingexpenses.*Operatingexpenses for the first quarter of fiscal 2006 were $2.1 million, an increase of$.5 million, or 31.2%, as compared to the first quarter of fiscal 2005. Administration salaries and fringe benefits increased $.2 million whileprofessional fees ran $.3 million higher due to increased costs associated withpublic reporting.

 

*Totalother expense.* Totalother expense for the first quarter of fiscal 2006 was $.2 million, a decreaseof $1.2 million, or 89.0%, as compared to the first quarter of fiscal2005.  In September 2004, the Company entered into a new financingarrangement with CoBank.  As part of this arrangement, the Company paidoff the balance of the 2000 bonds.  Due to the extinguishment of thisdebt, the Company wrote off the value of the bond issue costs associated withthose bonds and recorded it as interest expense.  The net book value ofthose costs was $.8 million. Interest costs increased $.1 million in thefirst quarter of fiscal 2006 as compared to the first quarter of fiscal2005.  This increase was the result ofthe increase in long-term debt.  TheCompany is exposed to interest rate risk on its debt and enters into interestrate collar agreements to manage this risk. The Company has not elected to treat its interest rate collarderivatives as hedges and thus recognizes the changes in fair value of thederivative instruments as interest expense. During the first quarter of fiscal 2006, the Company recognized $.5 ofincome associated with the change in fair value of these instruments.

 

*NetIncome.*  As a result of the above, net income for the first quarter ended November 30,2005 was $1.6 million, or $.34 per unit, compared to net income of $1.4million, or $.29 per unit for the quarter ended November 30, 2004.  As apercent of net sales, net income was 8.3% for the quarter ended November 30,2005, compared to net income of 7.8% for the quarter ended November 30, 2004.

 

**Liquidityand Capital Resources**

 

The Company’s workingcapital at November 30, 2005 was $6.5 million, compared to $4.5 million atAugust 31, 2005.    The Company’s current ratio was 1.5 at November30, 2005, compared to 1.3 at August 31, 2005. On September 13, 2004, theCompany entered into a new financing agreement with CoBank.  The newagreement gave the Company a $55 million line of credit of which $10 million isa revolving line of credit and the remaining $45 

 

7

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million is termdebt. The revolving line of credit, which protects the Company fromseasonal cash fluctuations, terminates on November 30, 2006.  $42 million of the $45 million of term debthas been drawn as of November 30, 2005.  The final $3 million will bedrawn in January of 2006.  The Company expects that cash flow fromoperations and proceeds from its existing credit lines will be sufficient tofund operations, to provide adequate capital expenditures for the currentexpansion, and to make distributions to its members for at least the next 12months. The Company may require significant additional capital resources inorder to proceed with potential future expansions or to otherwise respond tocompetitive pressures in the industry.

 

The Company’s long-term debtat November 30, 2005, including current maturities, was $50.6 million,compared to $51.2 million at August 31, 2005. Substantially all tradereceivables and inventories collateralize the Company’s line of credit andproperty, plant and equipment collateralize the Company’s long-term debt underits loan agreements. The Company is required by certain provisions of its loanagreements to maintain (1) a minimum tangible net worth of not less than$26.5 million plus 40% of earnings; (2) a minimum current ratio of notless than 1.25 to 1.0; (3) working capital of not less than$2.0 million; (4) a leverage ratio of less than 6.5 to 1.0; and(5) a fixed charge coverage ratio no less than 1.15 to 1.  Inaddition, these provisions restrict the Company’s ability to makedistributions, create liens, incur indebtedness and sell assets and properties.As of November 30, 2005, the Company was in compliance with these covenants.

 

Net cash flow fromoperations was $1.7 million for the first quarter of fiscal2006.   $.9 million was used for the purchase of property, plant andequipment, $.6 was used to retire long-term debt and $.3 was transferred torestricted cash. The restricted cash account will later be used to retirelong-term debt.  The net effect of thisactivity was a reduction in cash of $.2 million since August 31, 2005.

 

Management believes thatnon-cash working capital levels are appropriate in the current businessenvironment and does not expect a significant increase or reduction of non-cashworking capital in the next 12 months.

 

**CriticalAccounting Policies**

 

The accompanying discussionand analysis of our results of operations and financial condition are basedupon our consolidated financial statements, which have been prepared inaccordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to makeestimates and judgments that affect the reported amounts of assets,liabilities, revenues and expenses, and related disclosure of contingent assetsand liabilities.  These estimates form the basis for making judgmentsabout the carrying values of assets and liabilities that are not readilyapparent from other sources.  We base our estimates and judgments onhistorical experience and on various other assumptions that we believe are reasonableunder the circumstances.  However, future events are subject to change andthe 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 Form 10-K for theyear ended August 31, 2005.  There have been no changes to criticalaccounting policies identified in our Annual Report on Form 10-K for the yearended August 31, 2005.

 

**Impact ofRecently Issued Accounting Pronouncements**

 

 Please refer to Item7, “Management’s Discussion and Analysis of Financial Condition and Results ofOperations”, in our Annual Report on Form 10-K for the year ended August 31,2005 for a discussion of the impact of recently issued accountingpronouncements.  There were no accounting pronouncements issued during thequarter ended November 30, 2005 that we expect will have a material impact onour consolidated financial statements.

 

**Item 3. Quantitative and Qualitative Disclosures AboutMarket Risk**

 

There have been no materialchanges in the market risk reported in the Company’s Annual Report on Form 10-Kfor the fiscal year ended August 31, 2005.

 

8

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**Item 4. Controls and Procedures**

 

***Evaluation of Disclosure Controls and Procedures***

 

The Company’s ChiefExecutive Officer, Dana Persson, and Chief Financial Officer, Doug Leifermann,have reviewed the Company’s disclosure controls and procedures as of the end ofthe period covered by this report. Based upon this review, these officersbelieve that the Company’s disclosure controls and procedures are effective inensuring that material information related to the Company is made known to themby others within the Company.

 

***Changes in Internal Controls***

 

There were no changes in theCompany’s internal control during the Company’s fiscal first quarter endedNovember 30, 2005 that have materially affected or are reasonable likely tomaterially affect the Company’s internal control over financial reporting.

 

9

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**PART II.OTHER INFORMATION**

 

**Item 1. Legal Proceedings**

 

None.

 

**Item 2. Unregistered Sales of Equity Securities andUse of Proceeds**

 

None.

 

**Item 3. Defaults Upon Senior Securities**

 

None.

 

**Item 4. Submission of Matters to a Vote of SecurityHolders**

 

None.

 

**Item 5. Other Information**

 

On November 30, 2005, theCompany made and entered into the First Amendment to the Credit Agreement withits lenders.  The Credit Agreement,signed on September 13, 2004, gave the Company a $55 million line ofcredit of which $10 million is a revolving line of credit and theremaining $45 million is term debt. A copy of the amendment is attached asExhibit 10.1to this report.

 

**Item 6. Exhibits**

 
| 10.1 |   | First Amendment to Credit  Agreement dated as of November 30, 2005 by and between Golden Oval Eggs, LLC,  Midwest Investors of Iowa, Cooperative, CoBank, ACB, and Metropolitan Life  Insurance Company, et al. |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1 |   | Certification of the Chief  Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of  2002.                                                                                                  |
| 31.2 |   | Certification of the Chief  Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of  2002.                                                                                                  |
| 32.1 |   | Certification of the Chief  Executive Officer pursuant to 18 U.S.C. Section 1350                                                                                                                           |
| 32.2 |   | Certification of the Chief  Financial Officer pursuant to 18 U.S.C. Section 1350                                                                                                                           |

 

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**SIGNATURES**

 

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

 
|   | GOLDEN  OVAL EGGS, LLC                                   |
|--------|----------------------------------------------------------|
|   |                                                     |
|   |                                                     |
|   | By:                                                      | /s/ Dana Persson |
|   |                                                     |   |
|   |                                                     | Dana  Persson, President, Chief Executive Officer |
|   |                                                     | (Principal Executive Officer) |
|   |                                                     |
|   | Dated:  January 16, 2006                                 |
|   |                                                     |
|   |                                                     |
|   | By:                                                      | /s/ Doug Leifermann |
|   |                                                     |
|   | Doug  Leifermann, Vice President/Chief Financial Officer |
|   | (Principal Financial and Accounting Officer)             |
|   |                                                     |
|   | Dated:  January 16, 2006                                 |
|        |                                                          |  |  |

 

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