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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED JANUARY 31, 2001
                                       OR
              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
             FOR THE TRANSITION PERIOD FROM __________ TO __________

                           COMMISSION FILE NO. 1-12641

                                RDO EQUIPMENT CO.
             (Exact name of registrant as specified in its charter)

                DELAWARE                             45-0306084
       (State of incorporation)          (I.R.S. Employer Identification No.)

                           2829 SOUTH UNIVERSITY DRIVE
                            FARGO, NORTH DAKOTA 58103
               (Address of principal executive offices) (Zip code)

       Registrant's telephone number, including area code: (701) 297-4288

          Securities registered pursuant to Section 12(b) of the Act:
                      CLASS A COMMON STOCK, $.01 PAR VALUE
         Name of exchange on which registered: NEW YORK STOCK EXCHANGE
        Securities registered pursuant to Section 12(g) of the Act: NONE

       Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. _X_ YES ___ NO

       Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]

       The aggregate market value of common equity held by persons other than
directors and officers was approximately $17 million as of March 31, 2001, based
on the last reported sale price at that date reported by the New York Stock
Exchange. At that date, 5,731,008 shares of Class A Common Stock and 7,450,492
shares of Class B Common Stock were outstanding for a total of 13,181,500 shares
of Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

       Portions of the proxy statement for the annual meeting to be held on June
5, 2001 ("Proxy Statement") are incorporated by reference in Part III.

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                         CAUTIONARY STATEMENT REGARDING
                  FUTURE RESULTS AND FORWARD-LOOKING STATEMENTS

           The future results of RDO Equipment Co. (the "Company"), including
results reflected in any forward-looking statement made by or on behalf of the
Company, will be impacted by a number of important factors. The factors
identified below in the section entitled "Certain Important Factors" are
important factors (but not necessarily all important factors) that could cause
the Company's actual future results to differ materially from those expressed in
any forward-looking statement made by or on behalf of the Company. Any
statements contained or incorporated by reference in this Form 10-K that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, words such as "may," "will," "expect,"
"believe," "anticipate," "estimate" or "continue" or comparable terminology are
intended to identify forward-looking statements. Forward-looking statements, by
their nature, involve substantial risks and uncertainties.

                                     PART I

ITEM 1.    BUSINESS.

GENERAL

           The Company specializes in the distribution, sale, service, rental
and finance of equipment and trucks to the agricultural, construction,
manufacturing, transportation and warehousing industries, as well as to public
service entities, government agencies and utilities. At the end of fiscal 2001,
the Company operated 53 retail stores in nine states - Arizona, California,
Minnesota, Montana, Nebraska, North Dakota, South Dakota, Texas and Washington.
Its stores include one of the largest network of Deere & Company ("Deere")
construction equipment dealerships and agricultural equipment dealerships in
North America.

           Deere, a leading manufacturer and supplier of construction and
agricultural equipment, is the primary supplier of new products sold by the
Company. Sales of new Deere products accounted for approximately 36% of the
Company's sales in fiscal 2001. No other supplier accounted for more than 10% of
the Company's new product sales in fiscal 2001. The Company's stores also offer
complementary products from other suppliers, used products, new and used parts,
product servicing, product rental, loans, leases and other related products and
services.

           For the fiscal year ended January 31, 2001, the Company's revenues
were generated from the following areas of business:

                  New equipment and truck sales.....................  54%
                  Used equipment and truck sales....................  17%
                  Product support (parts and service revenues)......  27%
                  Equipment rental..................................   1%
                  Financial services................................   1%

           The Company was incorporated in April 1968 and re-incorporated in
Delaware in January 1997. The Company's executive offices are located at 2829
South University Drive, Fargo, North Dakota 58103. The Company's phone number is
(701) 297-4288. References to the Company in this Form 10-K include its
subsidiaries.

           The Company's business is organized, managed, and internally reported
as a single segment. Business line sales information is contained in Note 14 of
the Company's financial statements on pages 50 and 51 of this report and is
incorporated in this item by reference.


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           During fiscal 2001, the Company was affected by various economic
conditions in all operating segments. The Company's agricultural operations,
adversely affected by a deteriorating agricultural economic climate during
fiscal 2000, showed signs of stability particularly in the Midwest. Higher
interest rates and a general economic slowdown, particularly in the second half
of the year affected the Company's construction operations. These conditions
provided for increased competitive pressures and a decline in unit market
potential in the Company's operating regions. During the year, the Company
reduced the work force of its construction operations to correlate with
anticipated levels of construction operations. The Company's truck operations
were adversely affected by higher fuel prices, driver shortages, interest rates
and inventory levels of used trucks in the industry. Due to these factors, the
Company approved a comprehensive plan to restructure management and to divest
itself of its entire truck division except for its North Dakota stores that have
been consistently profitable through the years. As a result of this plan, the
Company sold its truck dealership in Roseville, Minnesota and began aggressively
pursuing buyers for its truck operations in Dallas and Fort Worth, Texas and
Riverside, California. These actions are intended to allow the Company to
operate fewer business lines and focus on its core business lines.

CONSTRUCTION EQUIPMENT OPERATIONS

           The Company estimates that North American retail sales of new
construction equipment in its target product market in calendar 2000 totaled
over $7 billion. Deere is one of the leading suppliers of construction equipment
in North America for light to medium applications and offers a broad array of
products. The Company believes Deere has approximately 93 construction dealers
who operate approximately 413 main stores and sales and service centers in North
America. Each dealer within the Deere construction dealer system is assigned
designated geographic areas of responsibility within which it has the right to
sell new Deere construction products.

           The Company believes it is one of the largest Deere construction
equipment dealers in North America, both in number of stores and total
purchases, accounting for approximately seven percent of Deere's North American
construction equipment sales in calendar 2000. As of the end of fiscal 2001, the
Company operated 25 Deere construction equipment stores located in metropolitan
areas in Arizona, Southern California, Minnesota, Montana, North Dakota, South
Dakota and Central Texas.

           Customers of the Company's construction equipment stores are diverse
and include contractors for both residential and commercial construction,
utility companies, and federal, state and local government agencies. The
Company's stores provide a full line of equipment for light to medium size
applications and related product support to their customers. Primary products
include John Deere backhoes, excavators, crawler dozers and four-wheel-drive
loaders. More recently, the Company began handling new products being introduced
into the market by Deere including articulated dump trucks, large excavators,
compact excavators, and large construction dozers. The Company's construction
equipment stores also offer complementary equipment from other suppliers, as
well as used equipment primarily taken as trade-ins.

           The Company's construction equipment stores are located in areas with
significant construction activity, including Austin, Dallas/Fort Worth,
southeastern Los Angeles, Minneapolis/St. Paul, Phoenix, San Antonio and San
Diego. Each construction equipment store displays a broad array of new and used
equipment and has a series of fully equipped service bays to provide on-site
service and maintenance of construction equipment and well equipped service
trucks are maintained to handle in-the-field customer services.

           In addition to selling and servicing new and used construction
equipment, the Company engages in rent-to-purchase and rent-to-rent transactions
as part of its dealership activities. In connection with the sale to United
Rentals, Inc. of its 80 percent interest in RDO Rental Co., the Company agreed
to limit its construction equipment rental activities in certain portions of the
southwestern United States until February


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1, 2002. In general, these limitations do not impact activities historically
conducted by the Company (other than RDO Rental Co.) or activities consistent
with dealership operations.

AGRICULTURAL EQUIPMENT OPERATIONS

           The Company estimates that North American retail sales of new
agricultural equipment in its target product market in calendar 2000 totaled
over $10 billion. Deere is the leading supplier of agricultural equipment in
North America. Within the Deere agricultural dealer system, dealers are not
assigned exclusive territories, but are authorized to operate at specific store
locations. The Company believes Deere has approximately 1,200 agricultural
dealers that operate approximately 1,600 stores and parts and service centers in
North America.

           The Company believes it is the largest Deere agricultural equipment
dealer in North America, both in number of stores and total purchases,
accounting for approximately 1.4 percent of Deere's North American sales of
agricultural equipment, parts and attachments in calendar 2000. As of the end of
fiscal 2001, the Company operated 14 Deere agricultural equipment stores located
in Arizona, Southern California, Minnesota, North Dakota, South Dakota and
Washington.

           The Company's agricultural equipment stores are a full-service
supplier to farmers, offering a broad range of farm equipment and related
products for the crops grown in each of their areas. As a result of the customer
mix and Deere's product offering, the core products include combines, tractors,
planting equipment and tillage equipment. The Company's agricultural equipment
stores also carry other harvesting and crop handling machinery, as well as lawn
and grounds care equipment. Certain locations also have the commercial work-site
products dealer agreement with John Deere Company, offering Deere skid steer
products. The sale of new Deere agricultural equipment is the primary focus of
the Company's agricultural equipment sales and accounts for a majority of new
equipment sales. A wide variety of additional agricultural equipment lines,
which complement the Deere products, are also offered according to local market
demand. The agricultural stores also sell used equipment, generally acquired as
trade-ins.

           The agricultural equipment stores are located in areas with
significant concentrations of farmers and typically serve customers within a 25
to 50 mile radius. Each store displays a broad array of new and used equipment
and has fully-equipped service bays to provide on-site service and maintenance
of agricultural equipment.

           The Company also conducts an agricultural equipment rental business
in California that it acquired during fiscal 1999. The Company believes that the
agricultural equipment rental business is a growing trend being driven primarily
by agricultural customers that are increasingly outsourcing their equipment
needs. Outsourcing allows producers to reduce their investment in non-core
assets and to convert equipment costs from fixed to variable, especially in the
western, southwestern and south central regions of the United States. The
Company believes that its dealerships and rental operations complement and
support each other.

TRUCK OPERATIONS

           The Company estimates that North American retail sales of heavy-duty
trucks in calendar 2000 exceeded $10 billion. Mack Trucks, Inc. ("Mack") and
Volvo AB ("Volvo") are leading suppliers of heavy-duty trucks in North America.
The Company believes Mack has approximately 129 dealers that operate
approximately 263 locations in the United States, while Volvo has approximately
128 dealers that operate approximately 204 locations in the United States. Each
Mack or Volvo truck dealer is assigned designated geographical areas of
responsibility within which it has the right to sell new trucks made by the
truck manufacturer.


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           The Company currently operates Mack truck centers in Fargo and Grand
Forks, North Dakota. Its Volvo truck centers are located in Riverside,
California; Fargo and Grand Forks, North Dakota; and Dallas, Ft. Worth and Waco,
Texas. The Company's truck centers in Fargo, Grand Forks, Dallas and Riverside
also sell and service GMC trucks; and its stores in Fargo, Grand Forks and
Fontana handle Isuzu trucks. The Company also conducts a used truck operation in
Fontana, California. The Company's truck centers are located in high truck
traffic areas on or near major highways.

           Trucks sold by the Company are generally classified as Class 4
through Class 8 by the American Automobile Manufacturers Association. Class 8
trucks have a minimum gross vehicle weight rating above 33,000 pounds, and are
primarily used for over-the-road and off-highway transportation of general
freight and various vocational applications including the hauling of
construction materials, logging, mining, petroleum, refuse, waste and other
specialty uses. Customers generally purchase these trucks for commercial
purposes that are outfitted to perform according to the user's specifications.

           The Company's truck centers display a broad array of new and used
trucks and have fully-equipped service bays to provide on-site service and
maintenance of trucks, including body shops.

MATERIAL HANDLING EQUIPMENT OPERATIONS

           The Company estimates that North American retail sales of lift trucks
in its target product market in calendar 2000 totaled approximately $5 billion.
Hyster Company (part of the material-handling group of NACCO Industries, Inc.)
("Hyster") is a leading supplier of lift trucks in North America. The Company
believes Hyster has approximately 50 geographic sales territories with
approximately 200 stores in North America. Each Hyster dealer is assigned
designated geographical areas of responsibility within which it has the right to
sell new Hyster lift trucks and parts. The Company is the designated Hyster lift
truck dealer for the upper Midwest - Minnesota, Nebraska, North Dakota, South
Dakota, western Iowa and northwestern Wisconsin.

           Hyster lift trucks (also referred to as forklift trucks or forklifts)
are used in a wide variety of business applications, including manufacturing and
warehousing. The principal categories of lift trucks include electric rider,
electric narrow-aisle and electric-motorized hand forklift trucks primarily for
indoor use and internal combustion engine forklift trucks for indoor or outdoor
use.

           Shortly after its appointment as a Hyster dealer in fiscal 1999, the
Company acquired the operating assets of two companies engaged in the
distribution, sale, service and rental of material handling equipment with
stores located in Grand Island, Lincoln and Omaha, Nebraska and North Sioux
City, South Dakota. This acquisition provided the Company with an established
platform which complemented its Hyster operations, including aerial and
high-reach man lifts manufactured by Genie, Grove, Skyjack and Upright and other
equipment used to move, protect, store or control products and materials in
manufacturing and distribution.

           The Company conducts its material handling operations from nine
locations in the upper Midwest of which five locations are dedicated solely to
material handling equipment. The other locations consist of several of the
Company's agricultural and construction equipment stores in Minnesota and North
Dakota. Each store displays a variety of equipment for sale or rent, and has
fully-equipped service bays to provide on-site service and maintenance. Full
service trucks also provide mobile service to customers on site at their
businesses. Customers include commercial, manufacturing, trucking and
warehousing businesses, some of which have fleets of material handling equipment
to be maintained.


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USED EQUIPMENT AND TRUCKS

           The Company believes that an integral part of its operations is the
handling of used equipment and trucks. Accordingly, each of the Company's
divisions has established a management team to assist in the valuation and sale
of used products that the Company receives in trade and assist in the purchase
of used products for sale or rent by its dealerships. These activities include
the purchase and remarket on the open market of used equipment manufactured by
companies other than Deere such as Caterpillar Inc. ("Caterpillar"), Komatsu
Corporation ("Komatsu") and Volvo.

PARTS AND SERVICE

           The Company's stores offer a broad range of replacement parts and
fully equipped service and repair facilities for their respective product lines.
The Company believes that product support through parts and service is
increasingly important to its ability to attract and retain customers for its
operations. Each store includes service bays staffed by highly trained service
technicians. Technicians are also available to make on-site repairs of equipment
that cannot be brought in for service. The Company's service technicians receive
training from Deere and certain other suppliers, as well as additional on-site
training conducted by the Company. The construction equipment stores located in
Dallas, Texas; Minneapolis, Minnesota; and Riverside, California also operate
undercarriage shops for all makes and sizes of crawler equipment.

FINANCIAL SERVICES

           The Company's finance subsidiary, RDO Financial Services Co.,
provides equipment and truck loans and leases to the customers of the Company's
retail network. This subsidiary has developed strategic partnerships with
vendors of financial products, as well as additional services such as revolving
credit, farm land financing, extended warranties, credit life insurance and
casualty insurance, which are sold to the Company's customers.

           The Company believes that there is a growing trend in the equipment
and truck distribution business toward selling new and used products with
financing and service contracts. In addition, financing incentives are an
important element in the Company's selling efforts. Many customers want to
purchase products from retailers who can also provide financing and other
products and services of the types being offered by the Company.

INVENTORY AND ASSET MANAGEMENT

           The Company maintains substantial inventories of equipment, trucks
and parts in order to facilitate sales to customers on a timely basis. The
Company also is required to build its inventory of agricultural equipment and
parts in advance of its second and third fiscal quarters, which historically
have higher sales, to ensure that it will have sufficient inventory available to
meet the needs of its agricultural customers and to avoid shortages or delays.

           The Company maintains a database on sales and inventory, and has a
centralized real-time inventory control system. This system enables each store
to access the available inventory of the Company's other stores before ordering
additional items from the supplier. As a result, the Company minimizes its
investment in inventory while effectively and promptly satisfying its customers'
needs. Using this system, the Company also monitors inventory levels and mix in
its network and at each store and makes adjustments as needed in accordance with
its operating plan.


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INVENTORY FINANCING

           Having adequate equipment, trucks and parts inventories at each of
the Company's stores is important to meeting its customer needs and to its
sales. Accordingly, the Company attempts to maintain at each store, or have
readily available at other stores in its network, sufficient inventory to
satisfy anticipated customer needs. Inventory levels fluctuate throughout the
year and tend to increase before the primary sales seasons for agricultural
equipment. The cost of financing its inventory is an important factor affecting
the Company's results of operations. In its truck segment, the cost of floor
plan financing of truck inventories has a direct relationship to the volume of
retail loans and leases originated on behalf of the floor plan supplier.

           Floor plan financing from Deere and Deere Credit Services, Inc.
("Deere Credit") represents the primary source of financing for equipment
inventories, particularly for equipment supplied by Deere. Floor plan financing
of truck inventories is primarily supplied by Volvo Commercial Finance LLC The
Americas ("Volvo Finance"), General Motors Acceptance Corporation ("GMAC"), and
Associates Commercial Corporation ("The Associates"). Rental equipment on- and
off-balance sheet financing is primarily provided by Deutsche Financial Services
Corporation ("Deutsche Financial") and Deere Credit. All lenders generally
receive a security interest in the inventory or rental equipment being financed.

CUSTOMER FINANCING OPTIONS

           Financing options for customer purchases support the sales activities
of the Company. Financing for purchases by the Company's customers are available
through programs offered by the Company's finance subsidiary, by
manufacturer-sponsored sources (such as Deere Credit) and by major finance
companies (such as The Associates). The Company's finance subsidiary coordinates
arrangements for most of the Company's customers who request financing. The
Company does not grant extended payment terms.

PRODUCT WARRANTIES

           The manufacturer generally provides warranties for new products and
parts. The term and scope of these warranties vary greatly by manufacturer and
product. The manufacturer (such as Deere) pays the Company for repairs to
equipment under warranty. The Company generally sells used products "as is" and
without manufacturer's warranty, although manufacturers sometimes provide
limited warranties if the manufacturer's original warranty is transferable and
has not yet expired. The Company also sells a warranty product offered by Deere
on new and used equipment. The Company itself has not generally provided
additional warranties.

COMPETITION

           The Company's construction equipment stores compete with distributors
of equipment produced by manufacturers other than Deere, including Caterpillar,
CNH Global N.V. ("CNH") and Komatsu. The Company also faces competition from
distributors of manufacturers of specific types of construction equipment,
including JCB backhoes, Kobelco excavators, and Bobcat skid loaders. The
Company's agricultural equipment stores compete with distributors of equipment
from suppliers other than Deere, including Agco Corporation, Caterpillar and
CNH. The Company's agricultural equipment stores also compete with other Deere
agricultural dealerships. Competing Deere agricultural stores may be located in
close proximity to the Company's agricultural equipment stores.

           The Company's equipment rental operations compete with equipment
rental companies and dealers. Equipment rental businesses generally make
available for short-term rent used equipment manufactured by the foregoing
manufacturers, including those who are suppliers to the Company.


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           The Company's truck centers compete with distributors of trucks
produced by manufacturers other than Mack and Volvo, including Daimler Chrysler
AG (Freightliner and Sterling), Ford Motor Co., Navistar International Corp. and
Paccar Inc. (Peterbilt and Kenworth). The Company's material handling stores
compete with distributors of lift trucks produced by manufacturers other than
Hyster. Competitors include Clark Material Handling Company, Crown Equipment
Corporation, Nissan Motor Co., Toyota Motor Corp., another division of the NACCO
material handling group (Yale), and equipment rental companies that rent aerial
and high-reach man lifts, lift trucks and other material handling equipment.

           Competition among equipment and truck retailers is primarily based on
price, value, reputation, quality, design and performance of the products
offered by the retailer, the customer service and product servicing provided by
the retailer, and the accessibility of the retailer's stores. The Company
believes that its store locations, broad product lines, quality products,
product support and other customer and financial services enable it to compete
effectively.

BACKLOG

           In the current economic environment affecting all of the Company's
operating segments, all equipment and trucks are readily available from the
Company's manufacturers and there is no backlog of orders, which will not be
filled in fiscal 2002.

AGREEMENTS WITH MANUFACTURERS

           DEERE CONSTRUCTION DEALER AGREEMENTS. The Company has agreements with
Deere which authorize the Company to act as a dealer of Deere construction,
utility and forestry equipment (the "Construction Dealer Agreements"). The
Company's areas of responsibility for the sale of Deere construction equipment
are: (i) in the Midwest: most of Minnesota, Montana, North Dakota and South
Dakota, and small portions of Iowa and Wyoming; (ii) in the Southwest: Arizona
and part of Southern California; and (iii) in the South Central: Central Texas,
including the Austin, Dallas-Fort Worth and San Antonio metropolitan areas.

           Pursuant to the Construction Dealer Agreements, the Company is
required, among other things, to maintain suitable facilities, provide competent
management, actively promote the sale of construction equipment in the
designated areas of responsibility, fulfill the warranty obligations of Deere,
maintain inventory in proportion to the sales potential in each area of
responsibility, provide service and maintain sufficient parts inventory to
service the needs of its customers, maintain adequate working capital, and
maintain stores only in authorized locations. Deere is obligated to make
available to the Company any finance plans, lease plans, floor plans, parts
return programs, sales or incentive programs or similar plans or programs it
offers to other dealers. Deere also provides the Company with promotional items
and marketing materials prepared by Deere for its construction equipment
dealers. The Construction Dealer Agreements also entitle the Company to use John
Deere trademarks and tradenames, with certain restrictions.

           DEERE AGRICULTURAL DEALER AGREEMENTS. The Company has non-exclusive
dealership agreements with Deere for each of its Deere agricultural equipment
stores, each of which authorizes the Company to act as a dealer in Deere
agricultural equipment (the "Agricultural Dealer Agreements") at a specific
authorized store location. The terms of the Agricultural Dealer Agreements are
substantially the same as the Construction Dealer Agreements. The Deere
agricultural equipment stores also offer John Deere lawn and grounds equipment,
for which the Company has entered into non-exclusive Lawn and Garden Dealer
Agreements containing substantially the same terms as the Agricultural Dealer
Agreements.


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           DEERE DEALERSHIP AGREEMENTS - OTHER PROVISIONS. The Company operates
its Deere construction and agricultural stores pursuant to its agreements with
Deere, including Deere's customary construction or agricultural dealership
agreements for each of the Company's construction areas of responsibility and
agricultural store locations. These agreements impose a number of restrictions
and obligations on the Company with respect to its operations, including a
prohibition on carrying construction products, which are competitive with Deere
products, and an obligation to maintain suitable facilities. In addition, the
Company must provide competent management, actively promote the sale of Deere
equipment in the Company's designated areas of responsibility, fulfill the
warranty obligations of Deere, provide service and maintain sufficient parts
inventory to service the needs of its customers. The Company must also maintain
inventory in proportion to the sales potential in each of the Company's
designated areas of responsibility, maintain adequate working capital, and
maintain stores only in authorized locations. Under an agreement with Deere, the
Company cannot engage in discussions to acquire other Deere dealerships without
Deere's prior written consent, which Deere may withhold in its sole discretion.
There can be no assurance that any such consent will be given by Deere. In
addition, Deere has the right to have input into the selection of the Company's
management personnel, including managers of the Company's Deere equipment
stores, and to have input with respect to the selection of nominees to the
Company's Board of Directors and the removal of directors. The prior consent of
Deere is required for the opening of any Deere equipment store within the
Company's designated areas of responsibility and for the acquisition of any
other Deere dealership. With respect to the Company, the Company's Deere
construction equipment dealerships (construction operations), and the Company's
agricultural equipment dealerships (agricultural operations), a minimum
equity-to-asset ratio of 25% must be maintained. As of January 31, 2001, the
equity-to-asset ratio for the Company, construction operations, and agricultural
operations were 30%, 31%, and 39%, respectively. The Company is prohibited from
paying any dividends and may not effect any stock repurchase. The Company may
not repay or discharge its indebtedness for any subordinate loans, make any
other distributions to owners, make acquisitions or initiate new business
without complying with certain financial ratios related to minimum
equity-to-assets levels and tangible net worth ratios before and after such
actions. In the event of Mr. Offutt's death, Deere has the right to terminate
the Company's dealer appointments upon the occurrence of a "change of control."

           The Company's Deere dealer appointments are not exclusive. Deere
could appoint other dealers in close proximity to the Company's existing stores.
Deere can reduce the areas of responsibility assigned to the Company's
construction equipment dealerships upon 120 days prior written notice. In
addition, the dealer agreements can be amended at any time without the Company's
consent, so long as the same amendment is made to the dealer agreements of all
other Deere dealers. Deere also has the right to sell directly to federal, state
or local governments, as well as national accounts. To the extent Deere appoints
other dealers in the Company's markets, reduces the areas of responsibility
relating to the Company's construction equipment stores, or amends the dealer
agreements or directly sells substantial amounts of equipment to government
entities and national accounts, the Company's results of operations and
financial condition could be adversely affected

           DEERE INDEMNIFICATION AGREEMENT. Some time after the Company's
initial public offering, Deere advised the Company that it was requiring Deere
dealerships to sign an indemnification agreement before "going public". Deere
also informed the Company that it would not be willing to consider possible
future acquisitions of Deere dealerships by the Company unless and until the
Company signed such an agreement. After prolonged discussions and negotiations,
the Company signed an indemnification agreement in March 2000. In general, this
agreement provides that the Company will indemnify Deere (and its directors,
officers, employees and agents) from and against lawsuits and other proceedings
commenced by shareholders of the Company and by governmental agencies arising
from (a) the registration, listing, offer, sale, distribution or resale of any
security of the Company, (b) an untrue statement or omission, whether actual or
alleged, in connection with any security of the Company, or (c) an allegation
that Deere is a "controlling person" of the Company within the meaning of
federal securities


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laws. The Company will pay, or reimburse Deere for, any judgments, penalties,
expenses and other losses resulting from any such lawsuit or other proceeding.
The Company has no obligation to indemnify Deere with respect to any judgment
rendered against Deere as a result of Deere's own intentional or reckless
misconduct or as a result of an untrue written statement of fact signed by an
officer of Deere.

           RELEASE AND COVENANT NOT TO SUE. Related to the settlement of legal
proceedings with John Deere Construction Equipment Company. ("JDCEC") (see Item
3. "Legal Proceedings" of this Form 10-K), the Company signed a Release and
Covenant not to Sue agreement. The agreement states the Company and Mr. Offutt,
on behalf of themselves, their successors and assigns, and on behalf of any
person or entity claiming by, through, or on behalf of any of them, hereby:

           1. release and forever discharge JDCEC, its successors, and its
present, former and future assigns, directors, officers, agents, servants, and
employees, and all other persons or entities in any way affiliated with any of
them (the "Released Parties"), of and from any and all actions, claims, demands,
liabilities, rights, or causes of action, of whatsoever kind or nature, either
in law or in equity, whether known or unknown, discovered or undiscovered, which
the Company or Mr. Offutt may now have or which hereafter may arise, whether
from prior or from future conduct, in any way arising out of or pertaining to
the Market Potential Limitation (see part b. of "Certain Important Factors",
"Growth Through Acquisitions and Store Openings" of this Form 10-K, for
definition), including, without limitation, and disapproval or withholding of
approval, by JDCEC, of an acquisition, merger, or other transaction which would
result in noncompliance with the Market Potential Limitation; and

           2. covenant that they will not, collectively or individually, bring,
commence, maintain, or prosecute any action at law, proceeding in equity,
arbitration proceeding, or other legal proceeding whatsoever, or assist any
other person or entity in so doing, against any Released Party based in whole or
in part on any action, claim, demand, liability, right, or cause of action
released hereby.

           OTHER SUPPLIERS. The Company is an authorized dealer at various
stores for suppliers of other products. The terms of such arrangements vary, but
most of the dealership agreements contain termination provisions allowing the
supplier to terminate the agreement after a specified notice period (usually 180
days), upon a change of control, and in the event of Mr. Offutt's death.

INTELLECTUAL PROPERTY RIGHTS

           RDO Equipment Co. is a registered service mark owned by the Company.
John Deere is a registered trademark of Deere & Company, the Company's use of
which is authorized under the Deere dealership agreements. Trademarks and
tradenames with respect to new equipment and trucks obtained from manufacturers
other than Deere are licensed from their respective owners. The Company
historically has operated each of its dealerships under either the RDO Equipment
Co. service mark and tradename or, for purposes of continuity at a particular
store if there was strong local name recognition and customer loyalty, the name
historically used by the dealership in that location. Each dealership store is
generally identified as an authorized dealer or representative of the
manufacturer or manufacturers of the equipment, trucks or other products sold at
the store, and may also display signs of other suppliers.

ENVIRONMENTAL AND GOVERNMENTAL REGULATIONS

           The Company's operations are subject to numerous federal, state and
local rules and regulations, including laws and regulations designed to regulate
workplace health and safety, to protect the environment and to regulate the
discharge of materials into the environment, primarily relating to its service
operations. Based on current laws and regulations, the Company believes that it
is in compliance with such laws and regulations and that its policies, practices
and procedures are designed to prevent unreasonable risk of environmental damage
or violation of environmental laws and regulations and any


                                       10
<PAGE>


resulting material financial liability to the Company. The Company is not aware
of any federal, state or local laws or regulations that have been enacted or
adopted, the compliance with which would have a material adverse effect on the
Company's results of operations or would require the Company to make any
material capital expenditures. No assurance can be given that future changes in
such laws or regulations or changes in the nature of the Company's operations or
the effects of activities of prior occupants or activities at neighboring
facilities will not have an adverse impact on the Company's operations.

           The Company's truck operations are subject to the National Traffic
and Motor Vehicle Safety Act, Federal Motor Vehicle Safety standards promulgated
by the U.S. Department of Transportation and various state motor vehicle
regulatory agencies. State and local laws and regulations require each truck
dealership to obtain licenses to operate as a dealer in heavy-duty vehicles. The
Company believes that its truck operations are in compliance with all federal,
state and local laws and regulations and that it has obtained all necessary
licenses and permits.

           The Company's financial services operations are subject to laws and
regulations with respect to financing, commercial finance regulations that may
be similar to consumer finance regulations in some states, including those
governing interest rates and charges, maximum amounts and maturities of credit
and customer disclosure of transaction terms. The Company's insurance products
and services are subject to laws and regulations with respect to insurance,
licensing, insurance premiums, financing rates and insurance agencies. The
Company believes that it is in compliance with these laws and regulations.

EMPLOYEES

           As of January 31, 2001, the Company employed 1,429 full-time
employees. Of this number, 31 employees were located at the Company's corporate
offices and employed in corporate administration. The remaining employees were
involved in the Company's operations: 757 in construction operations, 244 in
truck operations, 365 in agriculture operations, and 32 in financing and related
services. None of the Company's employees are covered by a collective bargaining
agreement.

CERTAIN IMPORTANT FACTORS

           In addition to the matters discussed above or included from time to
time in filings with the Securities and Exchange Commission, there are important
factors that could cause the Company's future results to differ materially from
those anticipated or planned by the Company or which are reflected in any
forward-looking statement which may be made by or on behalf of the Company. Some
of these important factors (but not necessarily all important factors) include
the following:

           EFFECTS OF DOWNTURN IN GENERAL ECONOMIC CONDITIONS, CYCLICALITY,
SEASONALITY AND WEATHER. The Company's business, and particularly the sale of
new equipment and trucks, is dependent on a number of factors relating to
general economic conditions worldwide and locally. Such factors include
agricultural industry cycles, construction spending, federal, state and local
government spending on highways and other construction projects, housing starts,
interest rate fluctuations, fuel prices, economic recessions, customer business
cycles, and customer confidence in the economy. Accordingly, any general
downward economic pressures, or adverse cyclical trends may materially and
adversely affect the Company's financial condition and results of operations.

           The ability to finance affordable purchases, of which the interest
rate charged is a significant component, is an important part of a customer's
decision to purchase equipment or a truck. Interest rate increases may make
equipment and truck purchases less affordable for customers and, as a result,
the Company's revenues and profitability may decrease. To the extent the Company
cannot pass on to its customers the increased costs of its own inventory
financing resulting from increased interest rates, its net


                                       11
<PAGE>


income also may decrease. Similarly, the number of housing starts is especially
important to sales of construction equipment, and fuel prices can significantly
affect truck operations. As a result of the foregoing, the Company's results of
operations have fluctuated in the past and are expected to fluctuate in the
future.

           The Company generally experiences lower revenue levels during the
first and fourth quarters of each fiscal year due to the crop growing season,
winter weather conditions in the Midwest, and a general slowdown in construction
activity at the end of the calendar year. Typically, farmers purchase
agricultural equipment immediately prior to planting or harvesting crops, which
occurs during the Company's second and third fiscal quarters, especially in the
Midwest. As a result, sales of agricultural equipment may be somewhat lower in
the first and fourth fiscal quarters. Winter weather in the Midwest also limits
construction to some degree and, therefore, also typically results in lower
sales of construction equipment in the first and fourth fiscal quarters.

           The Company's results of operations have been and are expected to be
affected by weather. Climatic phenomena such as La Nina and El Nino, and severe
weather such as extreme cold and snowfall in the winter and major flooding in
the spring or summer, can adversely impact the agricultural and construction
activity. The results may include delayed delivery and servicing of equipment or
decreased demand for the Company's products and services and a corresponding
delay or loss in revenues. To the extent adverse weather occurs, the Company's
results of operations and financial condition could be adversely affected.

           DEPENDENCE ON DEERE. The Company is an authorized dealer of Deere
construction and agricultural equipment, consumer products and parts in its
Deere designated areas of responsibility and store locations. A substantial
portion of the Company's new equipment sales represents sales of new equipment
supplied by Deere and a substantial portion of the Company's sales from parts
and service also are directly related to Deere equipment. The Company depends on
Deere for floor plan financing to finance a substantial portion of its
inventory. In addition, Deere provides a significant percentage of the financing
used by the Company's customers to purchase Deere equipment from the Company.
Deere also provides incentive programs and discounts from time to time, which
enable the Company to price its products more competitively. In addition, Deere
conducts promotional and marketing activities on national, regional and local
levels. The Company believes its success depends, in significant part, on: (i)
the overall success of Deere; (ii) the availability and terms of floor plan
financing and customer financing from Deere; (iii) the incentive and discount
programs provided by Deere and its promotional and marketing efforts for its
construction and agricultural products; (iv) the goodwill associated with Deere
trademarks; (v) the introduction of new and innovative products by Deere; (vi)
the manufacture and delivery of competitively-priced, high-quality equipment and
parts by Deere in quantities sufficient to meet the requirements of the
Company's customers on a timely basis; and (vii) the quality, consistency and
management of the overall Deere dealership system. If Deere does not provide,
maintain or improve any of the foregoing, there could be a material adverse
effect on the Company's results of operations.

           DEERE TERMINATION RIGHTS. Under agreements with Deere, Deere has the
right to terminate the Company's dealer appointments immediately if Ronald D.
Offutt, the Company's Chairman, Chief Executive Officer and principal
stockholder, ceases to: (i) own or control a minimum percentage of the
outstanding voting power, 50 percent in relation to agricultural operations and
30 percent in relation to construction operations, or whatever greater
percentage is required to control corporate actions that require a stockholder
vote; and (ii) own Common Stock representing a minimum percentage of the
Company's shareholders' equity, 35 percent in relation to agricultural
operations and 30 percent in relation to construction operations. Deere also has
a right to terminate the Company's dealer appointments in the event of Mr.
Offutt's death; however, Deere cannot exercise this right to terminate if at
that time: (i) there is in place an ownership succession plan approved by Deere;
(ii) the Company and Deere have identified events which would thereafter
constitute changes of control of the Company entitling Deere to terminate


                                       12
<PAGE>


the dealer appointments; (iii) the Company and each of its Deere stores are
under continuing management acceptable to Deere; (iv) there is no existing
breach and no grounds for termination exist with respect to any of the Company's
agreements with Deere, including the ownership requirements; and (v) Deere in
its sole discretion has determined that each of the Company's Deere areas of
responsibility and store locations justifies the continuation of the Deere
appointment for such area or location.

           In the event of Mr. Offutt's death or change in control without
Deere's consent, Deere thereafter has the right to terminate the Company's
dealer appointments. A "change of control" is defined for these purposes as: (i)
the sale, lease, exchange or other transfer of substantially all of the
Company's assets; (ii) a merger, consolidation, reorganization or similar
transaction in which the Company's stockholders do not own more than 50 percent
of the voting power of the surviving entity (provided that if they own more than
50 percent but less than 80 percent of the voting power, the merger must be
approved by a majority of the directors who were directors at the time of Mr.
Offutt's death or subsequent directors whose election has been approved by
existing directors ("Continuity Directors")); (iii) a vote by the stockholders
to approve a transaction set forth in (i) or (ii), (iv) the acquisition by a
person other than Mr. Offutt or his heirs of 50 percent or more of the voting
power of the Company (20 percent if such acquisition has not been approved by a
majority of the Continuity Directors); (v) a change in the corporate executive
officers without Deere's approval; or (vi) if Continuity Directors cease to
constitute a majority of the Company's Board of Directors.

           In addition, Deere is entitled to terminate the Company's dealer
appointments on one year's notice if the equity-to-assets ratio of the Company,
the Company's construction operations, and the Company's agricultural
operations, is below 25 percent as calculated by Deere based on the Company's
fiscal year end audit. The Company has a right to cure such deficiency within
180 days of such fiscal year end.

           The Company's dealer appointments terminate immediately upon the
commencement of the dissolution or liquidation of the Company or a sale of a
substantial part of the business, change in the location of a dealership without
Deere's prior written consent, or a default under any security agreement with
Deere. The appointments also may be terminated upon the revocation or
discontinuance of any guaranty of Mr. Offutt or the Company to Deere, unless
replaced by a letter of credit acceptable to Deere.

         In addition, without regard to any subsequent attempts to cure, upon
one year's written notice Deere may terminate agricultural dealer appointments
for which the Company fails to submit acceptable business plans to Deere or to
make meaningful progress toward the objectives in the business plans. Also
without regard to any subsequent attempts to cure, upon 180 days written notice
JDCEC can terminate construction dealer appointments for which the Company fails
to make Meaningful Progress, as defined, with respect to a Performance
Criterion, as defined, in any fiscal or calendar year. Deere can also terminate
the Company's dealer appointments for cause or if Deere determines there is not
sufficient market potential to support a dealership in a particular location or
area of responsibility, may terminate upon prior written notice to the Company
of 180 days for agricultural dealerships and one year's notice for construction
dealerships.

           Any effort by Deere to terminate any of the Company's Deere dealer
appointments may be subject to various legal rights to which the Company is
entitled, including dealer protection statutes. Termination of certain or all of
the Company's Deere dealer appointments could have a material adverse effect on
the results of operations and financial condition of the Company. Any effort by
Deere to terminate any of the Company's Deere dealer appointments could also
have a material adverse effect on the results of operations and financial
condition of the Company whether or not the Company prevails in any resulting
lawsuit or other dispute resolution process.


                                       13
<PAGE>


           GROWTH BY ACQUISITIONS AND STORE OPENINGS. The Company's ability to
grow through acquisitions of additional dealerships, stores or other businesses
is dependent upon many important factors. Some of these important factors (but
not necessarily all important factors) are:

           a.         As discussed above, the Company cannot engage in
                      discussions to acquire other Deere dealerships without
                      Deere's prior written consent, which Deere can withhold in
                      its sole discretion. In addition, an acquisition of a
                      Deere dealership or the opening of a new Deere store
                      requires Deere's consent. From time to time since the
                      Company's formation in 1968, Deere has withheld its
                      consent to acquisitions proposed by the Company or by
                      other Deere dealers expressing an interest in being
                      acquired by the Company. There can be no assurance that
                      Deere will approve any future acquisitions or store
                      openings proposed by the Company.

           b.         Deere has informed the Company there are limits to
                      acceptable ownership concentration of Deere dealerships.
                      The current restriction for consolidation of JDCEC
                      dealerships with respect to the Company is 9.9% of the
                      total market potential for Deere construction products in
                      North America. Such market potential is measured as of the
                      12-month period ended January 31, 1997, or such other
                      limitation, but not less than 9.9%, as determined by JDCEC
                      in its sole discretion (Market Potential Limitation). The
                      Company believes Deere's current restriction for
                      consolidation by any one dealer of Deere agricultural
                      dealerships is two to three percent of Deere's market
                      potential in North America. Accordingly, there can be no
                      assurance that Deere will approve acquisitions or store
                      openings up to or beyond these levels.

           c.         The ability to grow the Company through acquisitions or
                      store openings is dependent upon (i) the availability of
                      suitable acquisition candidates at an acceptable cost,
                      (ii) receiving the manufacturer's approval of acquisitions
                      as required or appropriate, (iii) the Company's ability to
                      compete effectively for available acquisition candidates,
                      and (iv) the availability of capital to complete the
                      acquisitions. There can be no assurance the Company can
                      overcome these factors to complete future acquisitions or
                      store openings.

           d.         The Company could face risks commonly encountered with
                      growth through acquisitions. These risks include incurring
                      significantly higher than anticipated capital expenditures
                      and operating expenses, and failing to assimilate the
                      operations and personnel of acquired dealerships. Related
                      risks include disrupting the Company's ongoing business,
                      dissipating the Company's management resources, failing to
                      maintain uniform standards, controls and policies, and
                      impairing relationships with employees and customers as a
                      result of changes in management. Realization of the full
                      benefit of the Company's strategies, operating model and
                      systems as to an acquired dealership may take several
                      years. There can be no assurance that the Company will be
                      successful in overcoming these risks or any other problems
                      encountered with acquisitions. To the extent the Company
                      does not successfully avoid or overcome the risks or
                      problems related to acquisitions, the Company's results of
                      operations and financial condition could be adversely
                      affected. Acquisitions also could have a significant
                      impact on the Company's financial position and capital
                      needs, and could cause substantial fluctuations in the
                      Company's quarterly and yearly results of operations.
                      Acquisitions could include significant goodwill and
                      intangible assets, resulting in substantial amortization
                      charges to the Company that would reduce stated earnings.

           e.         The Company has grown significantly in recent years and
                      may continue to grow through acquisitions, opening new
                      stores and internal growth. Management has expended, and
                      may continue to expend, significant time and effort in
                      evaluating, completing and integrating acquisitions,
                      opening new stores, and supporting internal growth. There
                      can be no


                                       14
<PAGE>


                      assurance that the Company's systems, procedures and
                      controls will be adequate to support the Company's
                      operations as they may expand. Any future growth also will
                      impose significant added responsibilities on members of
                      senior management, including the need to identify, recruit
                      and integrate new senior level managers and executives.
                      There can be no assurance that such additional management
                      will be identified and retained by the Company. If the
                      Company is unable to manage its growth efficiently and
                      effectively, or is unable to attract and retain additional
                      qualified management, there could be a material adverse
                      effect on the Company's financial condition and results of
                      operations.

           SUBSTANTIAL INVENTORY FINANCING REQUIREMENTS, AND LENDING INDUSTRY
CHANGES. The sale of equipment, trucks and parts requires substantial
inventories to be maintained in order to facilitate sales to customers on a
timely basis. As the Company grows, whether through acquisitions, opening new
stores or internal growth, its inventory requirements will increase and, as a
result, the Company's financing requirements also will increase. In the event
that the Company's available financing sources are not sufficient to satisfy its
future requirements, the Company would be required to obtain additional
financing from other sources. While the Company believes that it could obtain
additional financing or alternative financing if required, there can be no
assurance that such financing could be obtained on commercially reasonable
terms. To the extent such additional financing cannot be obtained on
commercially reasonable terms, the Company's growth and results of operations
could be adversely affected. In addition, consolidation among key lenders to the
equipment industry and changes in such lenders directions could adversely affect
the availability and pricing of funding for the Company's inventory financing
needs.

           AVAILABLE FINANCING FOR CUSTOMERS. The sale of equipment, trucks and
parts requires the availability of financing for customers. The Company has
established multiple sources of financing for the customer, including the
Company's finance subsidiary, RDO Financial Services Co., manufacturer-sponsored
finance companies (e.g., Deere Credit and Volvo Finance) and major independent
finance companies (e.g., The Associates). To the extent such financing cannot be
obtained on reasonable terms, the Company's revenues and results of operations
could be adversely affected.

           COMPETITION. The Company anticipates that its operations will
continue to face strong, and perhaps increasing, competition. Some of these
competitors may be larger and have substantially greater capital resources than
the Company. The Company's Deere stores also compete to a degree with other
Deere dealerships. Competition among distributors can be intense and is
primarily based on the price, value, reputation, quality and design of the
products offered by the dealer, the customer service and product support
provided by the dealer, and the accessibility of stores. Although the Company
believes that it is competitive in all of these categories, there can be no
assurance that the Company will remain competitive in general or in any
particular area in which the Company has operations. To the extent competitors
of the Company's suppliers provide their distributors with more innovative
and/or higher quality products, better pricing or more favorable customer
financing, or have more effective marketing efforts, the Company's ability to
compete and its financial condition and results of operations could be adversely
affected. In addition, to the extent products sold by the Company are not as
competitive or in demand as those of suppliers not used by the Company, the
Company's results of operations could be adversely affected.

           Economic conditions worldwide can impact competition in the
geographic areas where the Company does business. For example, a downturn in the
economies of foreign countries could result in an increased supply of equipment
in U.S. markets with a corresponding increase in competitive pressures such as
lower equipment prices. To the extent the Company experiences increased
competition, the Company's results of operations and financial condition could
be adversely affected.

           DEPENDENCE ON INFORMATION TECHNOLOGY SYSTEMS. Our ability to monitor
and control our operations depends to a large extent on the proper functioning
of our information technology systems.


                                       15
<PAGE>


Any disruption in these systems or the failure of these systems to operate as
expected could, depending on the magnitude and duration of the problem,
adversely affect our business.

           DEPENDENCE UPON KEY PERSONNEL. The Company believes its success
depends upon the continued services of Mr. Offutt. The loss of Mr. Offutt could
materially and adversely affect the Company. The Company does not maintain key
person life insurance on Mr. Offutt.

           THE FOREGOING FACTORS ARE NOT EXHAUSTIVE AND NEW FACTORS MAY EMERGE,
OR CHANGES TO THE FOREGOING FACTORS MAY OCCUR, WHICH WOULD IMPACT THE COMPANY'S
BUSINESS. THE COMPANY MAKES NO COMMITMENT TO REVISE FORWARD-LOOKING STATEMENTS,
OR TO DISCLOSE SUBSEQUENT FACTS, EVENTS OR CIRCUMSTANCES THAT MAY BEAR UPON
FORWARD-LOOKING STATEMENTS.

ITEM 2.    PROPERTIES.

           As of the end of fiscal 2001, the Company owned the real estate for
seven of its stores and leased its executive offices, real estate for a
potential dealership site and 21 stores from an Offutt Entity (as defined in
Item 4A below). The Company also leased two administrative offices and 25 stores
from unrelated third parties. Lease terms range from one to twelve years and
some leases include an option to purchase the leased property. The Company
believes that all of its facilities are in good operating condition.

           The Company's retail stores are located in the following states:

             -----------------------------------------
             Arizona                    7
             California                 6
             Minnesota                  8
             Montana                    2
             Nebraska                   3
             North Dakota              13
             South Dakota               4
             Texas                      8
             Washington                 2
             -----------------------------------------
             TOTAL LOCATIONS           53
             =========================================


ITEM 3.    LEGAL PROCEEDINGS.

           In late June 2000, the Company received written notice from JDCEC
that, effective June 21, 2001, JDCEC would terminate the Company's dealership
agreements for the Burnsville, Minnesota and Phoenix, Arizona areas of
responsibility for the sale and warranty servicing of Deere construction,
utility and forestry equipment. In the termination notice, JDCEC cited its view
that the Company was in violation of certain market penetration requirements in
the dealership agreements. On the same date, JDCEC also filed an arbitration
demand with the American Arbitration Association in Chicago that sought
confirmation of its allegations that the Company's construction equipment
dealerships could be terminated because the Company allegedly violated these
agreements. Such a termination would have resulted in the


                                       16
<PAGE>


Company losing its JDCEC dealership agreements for the Southwest and most of the
Midwest regions. The termination would not affect the Company's Montana or Texas
construction dealerships or its John Deere agricultural dealerships. The Company
denied JDCEC's contention that it could terminate its dealership agreements and
it filed a counterclaim in the arbitration, asserting a number of statutory,
contract and tort claims.

           On July 18, 2000, the Company and several affiliates filed suit in
the Fourth Judicial District Court, State of Minnesota against JDCEC, Credit
Suisse First Boston Equity Partners, L.P. and Nortrax, L.L.C. ("Nortrax"). The
suit alleged those companies had violated the Minnesota Heavy and Utility
Equipment Manufacturers and Dealers Act and had intentionally and
inappropriately interfered and conspired to interfere with the Company's John
Deere construction equipment dealership agreements. On August 1, 2000, the
parties were ordered by the Minnesota trial court judge to arbitrate these
claims.

           On October 23, 2000, the Company and its construction equipment
division filed suit in United States District Court, District of North Dakota,
against Credit Suisse First Boston Corporation and Credit Suisse First Boston
Equity Partners, L.P. (individually and collectively "CSFB"). This suit alleged
CSFB violated Section 1 of the Sherman Act by conspiring with JDCEC and Nortrax
to unreasonably restrain trade in the purchase of John Deere Construction
equipment dealerships. The suit also alleged CSFB breached its fiduciary duty as
lead underwriter and financial advisor to RDO, and intentionally and improperly
interfered and conspired to interfere with RDO's prospective business
relationships. The suit alleged CSFB conspired with JDCEC and Nortrax to commit
unfair competition, and engaged in a civil conspiracy with these same parties to
commit unlawful acts or lawful acts by unlawful means, thereby injuring RDO. The
suit sought unspecified damages.

           On December 28, 2000, JDCEC and affiliates, RDO Equipment Co. and
affiliates, Nortrax and affiliates, and CSFB entered into a comprehensive
settlement agreement resolving the above disputes. JDCEC revoked its dealership
termination notices to the Company and dismissed all claims pending in
arbitration with the Company. The Company also dismissed all claims in the
arbitration and all claims filed in federal court against CSFB. As part of the
resolution, the Company's wholly owned subsidiary, RDO Construction Equipment
Co., signed new dealership agreements with JDCEC.

           On February 4, 2000, John Deere Company - a division of Deere, filed
an arbitration demand with the American Arbitration Association in Chicago. The
demand alleged the Company had violated the terms of the dealership agreements'
authorized locations clause by selling and renting John Deere agriculture
equipment out of a store located in Salinas, California. In the demand, John
Deere Company cited its view that the Company was in violation of the authorized
locations clause and sought to have an order enjoining the Company and its
affiliates from selling, renting and leasing John Deere agriculture equipment
from the store in Salinas, California.

           On March 6, 2001, John Deere Company and affiliates, and RDO
Equipment Co. and affiliates entered into a comprehensive settlement agreement
and mutual release resolving the arbitration proceedings described above, and
all claims pending in arbitration with the Company were dismissed.

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

           None.


                                       17
<PAGE>


ITEM 4A.   EXECUTIVE OFFICERS OF THE REGISTRANT.

           The executive officers of the Company, their ages and offices held as
of March 31, 2001, are as follows:

NAME                      AGE     OFFICE
----                      ---     ------

Ronald D. Offutt          58      Chairman of the Board, Chief Executive Officer
                                  and President

Allan F. Knoll            57      Secretary

Christi J. Offutt         31      Chief Operating Officer

Thomas K. Espel           42      Chief Financial Officer and Treasurer

Kenneth J. Horner, Jr.    37      Executive Vice President - Project/Process
                                  Management


           RONALD D. OFFUTT is the Company's founder, President, Chairman, Chief
Executive Officer and principal stockholder. He has served as the Company's
President since December 2000. He has served as a member of the Company's Office
of the Chairman from December 1998 to December 2000, and served as President of
the Company from its formation in 1968 until August 1996. Mr. Offutt also serves
as Chief Executive Officer and Chairman of the Board of R.D. Offutt Company
("Offutt Co.") and other entities he owns, controls or manages (collectively,
"Offutt Entities"). The Offutt Entities are engaged in a variety of businesses
such as farming, food processing, auto dealerships and agricultural financing
activities, some of which transact business with the Company. See Item 13 of
this Form 10-K "Certain Relationships and Related Transactions." Mr. Offutt
spent approximately one-fourth of his time on the business of the Company during
fiscal 2001. He is Former Chairman of the Board of Regents of Concordia College
of Moorhead and is a graduate of Concordia College of Moorhead with a degree in
Economics. Mr. Offutt is the father of Christi J. Offutt, Chief Operating
Officer.

           ALLAN F. KNOLL has served as Secretary and a director of the Company
since 1974. Mr. Knoll also served as a member of the Company's Office of the
Chairman from December 1998 to December 2000. He served as Chief Financial
Officer of the Company from 1974 through January 1999. Mr. Knoll also serves as
Chief Financial Officer and Secretary of Offutt Co., and serves as a director
and officer and is a beneficial stockholder of many of the Offutt Entities. Mr.
Knoll spent approximately one-fourth of his time on the business of the Company
during fiscal 2001. Mr. Knoll is a graduate of Moorhead State University with
degrees in Business Administration and Accounting.

           CHRISTI J. OFFUTT has served as Chief Operating Officer since January
2001. She previously served as Senior Vice President - Midwest Agriculture from
June 1999 to January 2001 and as Vice President - Strategic Planning from
December 1998 until June 1999, and as Legal Counsel of Offutt Co. from January
1997 until December 1998. Ms. Offutt is a graduate of University of Puget Sound
with degrees in politics and government and in business administration, and
received her law degree in May 1996 from Boston University. She is the daughter
of Ronald D. Offutt, Chairman and Chief Executive Officer.

           THOMAS K. ESPEL has served as Chief Financial Officer since February
1999 and as Treasurer since March 2000. He previously served as Executive Vice
President - Finance from August 1998 until February 1999. Prior to joining the
Company, he served as manager of Ag Capital Company ("Ag Capital") since its
inception in 1989 and continues to serve as a member of its Board of Directors.
Under his direction, Ag Capital, an Offutt entity, grew to more than $450
million in assets managed. RDO


                                       18
<PAGE>


Financial Services Co., a subsidiary of the Company, was formed from the retail
credit activities of Ag Capital. From 1981 through 1988, Mr. Espel held various
lending positions at St. Paul Bank for Cooperatives, a $4 billion institution
located in St. Paul, Minnesota. He has a bachelor's degree from the University
of Illinois and a master's degree from Michigan State University, both in
Agricultural Economics - Finance.

           KENNETH J. HORNER, JR. has served as Executive Vice President -
Project/Process Management since February 2001. He previously served as
Executive Vice President - Construction Equipment from June 1999 to February
2001 and Vice President - Business Practices from July 1998 until June 1999.
Prior to joining the Company, Mr. Horner was Vice President and General Counsel
for Prairieland Foods Corporation, a restaurant management company, and
Executive Vice President of Cross Country Courier, Inc., a regional freight
carrier. He is a graduate of University of Mary with a degree in accounting, and
received his law degree from the University of North Dakota.


                                     PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
           MATTERS.

           The Class A common stock of RDO Equipment Co. is traded on the New
York Stock Exchange under the symbol "RDO". The quarterly high and low reported
sales prices on the New York Stock Exchange during the Company's two most recent
fiscal years were:

                        FIRST        SECOND          THIRD       FOURTH
                      QUARTER       QUARTER        QUARTER      QUARTER
FISCAL 2001
     High              $  6.06      $   6.44       $  4.44       $  4.56
     Low               $  4.75      $   4.31       $  2.75       $  2.00

FISCAL 2000
     High              $  9.19      $  10.38       $  9.00       $  6.69
     Low               $  5.50      $   8.63       $  5.88       $  5.50

           As of April 20, 2001, the Company had 240 record holders and
approximately 2,500 beneficial holders of its Class A Common Stock, and one
holder of its Class B Common Stock. The Company did not have any unregistered
sales of equity securities during fiscal 2001.

           The Company intends to retain the earnings of the Company to support
the Company's operations and to finance expansion and growth, and it does not
intend to pay cash dividends in the foreseeable future. Payment of dividends
rests within the discretion of the Board of Directors and will depend upon,
among other factors, the Company's earnings, capital requirements, financial
condition, and any dividend restrictions under its dealership and credit
agreements.


                                       19
<PAGE>


ITEM 6.    SELECTED FINANCIAL DATA

RDO EQUIPMENT CO. AND SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                                                FISCAL YEARS ENDED JANUARY 31,
-------------------------------------------------------------------------------------------------------------------------------
[in thousands, except store and per share data]        2001          2000          1999         1998         1997         1996
-------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>           <C>           <C>          <C>          <C>          <C>
INCOME STATEMENT DATA
Revenues:
     Equipment and truck sales                    $ 484,727     $ 476,773     $ 404,093    $ 301,684    $ 224,094    $ 164,054
     Parts and service                              181,173       173,336       143,335      113,268       75,820       58,998
     Rental                                           8,706        32,178        26,208       14,451        2,499          505
     Financial services                               5,772         6,683         4,988           --           --           --
-------------------------------------------------------------------------------------------------------------------------------
              Total revenues                        680,378       688,970       578,624      429,403      302,413      223,557
Cost of revenues (1)                                581,583       566,877       479,275      340,987      245,287      180,839
-------------------------------------------------------------------------------------------------------------------------------
Gross profit                                         98,795       122,093        99,349       88,416       57,126       42,718
Selling, general and administrative expenses        106,918        97,431        81,682       60,382       41,275       31,655
Loss on sale, restructuring charges
     and asset impairment                            11,200            --         2,200           --           --           --
-------------------------------------------------------------------------------------------------------------------------------
Operating income (loss)                             (19,323)       24,662        15,467       28,034       15,851       11,063
Gain on sale of RDO Rental Co.                           --           786            --           --           --           --
Interest expense, net                               (11,961)      (13,719)      (12,427)      (5,538)      (5,046)      (2,994)
-------------------------------------------------------------------------------------------------------------------------------
Income (loss) before taxes                          (31,284)       11,729         3,040       22,496       10,805        8,069
Provision for (benefit from) income taxes (2)       (12,733)        5,252         1,237        9,156        4,322        3,228
Minority interest                                        11           (60)          135           89           --           --
===============================================================================================================================
Net income (loss)                                 $ (18,562)    $   6,537     $   1,668    $  13,251    $   6,483    $   4,841
===============================================================================================================================
Net income (loss) per share - basic and diluted   $   (1.41)    $    0.50     $    0.13    $    1.00    $    0.77    $    0.58
===============================================================================================================================

SELECTED OPERATING DATA
Comparable store revenues increase (decrease)            (2)%          (2)%           5%          11%          26%          11
Stores open at beginning of year                         56            64            50           32           26           22
   Stores opened                                         --            --             6            3            1            2
   Stores acquired                                       --             5            10           16            5            2
   Stores consolidated/closed/sold                       (3)          (13)           (2)          (1)          --           --
-------------------------------------------------------------------------------------------------------------------------------
Stores open at end of year                               53            56            64           50           32           26
-------------------------------------------------------------------------------------------------------------------------------
Net purchases of rental equipment                 $   2,118     $     485     $  19,769    $  14,185    $   1,519    $   6,342
Net purchases of property and equipment               2,357         3,409         5,132        3,766        2,137        3,651
Depreciation and amortization                         7,465        12,950        10,506        5,308        2,606        1,326

As of January 31,
-------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
Working capital                                   $  49,842     $  64,225     $  36,739    $  69,265    $  72,744    $  26,596
Inventories                                         169,090       217,556       208,368      220,841      130,955      115,616
Total assets                                        305,988       361,997       379,220      319,432      181,551      148,093
Floor plan payables (3)                             149,191       190,242       191,030      163,988       64,331       91,614
Total debt                                           20,417        26,604        55,533       31,353       14,409       10,638
Stockholders' equity                                 90,713       109,275       102,738      101,070       87,795       34,284
</TABLE>

(1) Fiscal 1999 included a non-recurring $15 million inventory charge.

(2) Prior to January 20, 1997, the Company elected to be treated as an S
    corporation under the Internal Revenue Code. A pro forma provision for
    income taxes was computed as if the Company were subject to corporate income
    taxes based on the tax laws in effect during these fiscal years.

(3) Includes interest-bearing and noninterest-bearing liabilities incurred in
    connection with inventory financing.


                                       20
<PAGE>


ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS.

           The Company specializes in the distribution, sale, service, rental
and finance of equipment and trucks to the agricultural, construction,
manufacturing, transportation and warehousing industries, including units of
state, local and federal government and utility companies. The Company's stores
are located in Arizona, California, Minnesota, Montana, Nebraska, North Dakota,
South Dakota, Texas and Washington. The Company's largest supplier is Deere.

           The Company generates its revenues from sales of new and used
equipment and trucks, sales of parts and service, rental of equipment, customer
financing and related products and services. In addition to outright sales of
new and used equipment, sales include equipment purchased under rent-to-purchase
agreements. Generally under such agreements, the customer is given a period of
up to six months to exercise the option to purchase the rented equipment and is
allowed to apply a portion of the rental payments to the purchase price. This
rent-to-purchase equipment is included in the Company's inventory until the
option is exercised and the equipment is purchased.

           The Company's finance subsidiary, RDO Financial Services Co.,
provides equipment and truck loans and leases to the customers of the Company's
retail network. This subsidiary also provides additional products and services
and acts as an agent to extend warranties, credit life insurance and casualty
insurance.

           The Company's highest gross margins have historically been generated
from its parts and service and rental revenues. One of the Company's operating
strategies is to increase the demand for parts and service by establishing, and
then increasing, the base of equipment and trucks held by its customers. Due to
product warranty time frames and usage patterns by customers, there generally is
a time lag between equipment and truck sales and the generation of significant
parts and service revenues from such sales. As a result of this time lag,
increases in parts and service revenues do not necessarily coincide with
increases in equipment and truck sales. In addition, due to differences in gross
margins between equipment and truck sales and parts and service and rental
revenues, gross margin percentages may decline as the Company builds market
share.

           The Company generally experiences lower revenue levels during its
first and fourth quarters primarily due to the crop-growing season, winter
weather conditions in the Midwest and a general slowdown in construction
activity at the end of the calendar year. See "Seasonality" below.

           Price increases by suppliers of the Company's products have not
historically had a significant impact on the Company's results of operations.
See "Effects of Inflation" below.

           The Company requires cash primarily for financing its inventories of
equipment, trucks and replacement parts, acquisitions and openings of additional
retail locations, rental equipment and capital expenditures. Historically, the
Company has met these liquidity requirements primarily through cash flow
generated from operating activities, floor plan financing, and borrowings under
credit agreements. See "Liquidity and Capital Resources" below.

           During fiscal 2001, the Company was affected by various economic
conditions in all operating segments. The Company's agricultural operations,
adversely affected by a deteriorating agricultural economic climate during
fiscal 2000, showed signs of stability, particularly in the Midwest. The Company
expects the general agricultural economic climate to remain stable into the
beginning of fiscal 2002. During fiscal 2001, the Company's construction
operations were affected by higher interest rates and a general economic
slowdown, particularly in the second half of the year. These conditions provided
for increased


                                       21
<PAGE>


competitive pressures and a decline in unit market potential in the Company's
operating regions. The Company expects these competitive pressures to continue
into fiscal 2002 despite the current climate of easing interest rates. During
the third and fourth quarters of fiscal 2001, the Company reduced the work force
of its construction operations to correlate with the anticipated level of
construction operations for fiscal 2002. The Company's truck operations were
adversely affected by higher fuel prices, interest rates and inventory levels of
used trucks in the industry. During the fourth quarter of fiscal 2001, the
Company approved a comprehensive plan to restructure management and to divest
itself of its entire truck division except for its North Dakota stores that have
been consistently profitable through the years. These actions will allow the
Company to narrow its focus to its core business lines. The Company recognized
restructuring charges of $11.2 million in the fourth quarter, which reflected
the estimated costs the Company will incur.

           During the third quarter of fiscal 1999, primarily as a result of
adverse conditions in the Midwest farm economy, the Company initiated a number
of corporate actions designed to generate cash, fund growth opportunities,
discontinue non-strategic operations and achieve more cost efficient operations.
These initiatives were undertaken after the Company assessed industry and
financial market conditions, primarily of the agricultural economy, that were
projected to impact the Company's business. The Company also reviewed industry
outlooks from manufacturers, forecasts and surveys by economists, investment
analysts and governmental units, and the status of capital markets for raising
equity and debt. The initiatives included one-time, non-recurring charges
related to inventory and asset writedowns, reserves and severance costs. A $15.0
million inventory charge enabled the Company to initiate a new, more aggressive
pricing strategy with respect to equipment sales in the agricultural equipment
business segment. This charge is included in cost of revenues. In addition, the
Company recorded a restructuring charge of $2.2 million in connection with asset
writedowns and severance costs, which included exiting the agricultural
irrigation equipment business.

           In fiscal 2001, the Company purchased the remaining 15% minority
interest in Hall GMC, Inc. and Hall Truck Center, Inc. as well as approximately
3% of the minority interest in Salinas Equipment Distributors, Inc. In
connection with the Company's plan to divest itself of the majority of its truck
division, the truck dealership located in Roseville, Minnesota was sold. The
Company consolidated the Volvo dealership location in Long Beach, California
into the Company's Riverside, California location. The Long Beach market is
being serviced through the Company's Riverside truck dealership. The
Barnesville, Minnesota agricultural retail store was consolidated with the
Fargo, North Dakota agricultural operations. In fiscal 2000, the Company
purchased five heavy-duty truck retail stores and commenced truck operations in
its Waco, Texas location. The Company also closed one construction equipment
rental store and sold its 80 percent interest in a construction equipment rental
operation located in the southwestern United States. In fiscal 1999, the Company
purchased four heavy-duty truck retail stores, four material handling equipment
retail stores, an agricultural equipment rental store and a construction
equipment rental store. Four construction equipment rental stores, a
construction equipment retail store and a material handling equipment retail
store were opened in fiscal 1999. The results of operations from acquisitions
and divestitures are included in the Company's results only for the periods
before or after their acquisition, sold or closed dates.


                                       22
<PAGE>


RESULTS OF OPERATIONS

         The following table sets forth, for the periods indicated, certain
financial data:

<TABLE>
<CAPTION>
                                            FOR FISCAL YEARS ENDED JANUARY 31,
                                           2001          2000         1999
------------------------------------------------------------------------------
<S>                                      <C>           <C>          <C>
REVENUE DATA (IN MILLIONS):
Total revenues                           $680.4        $689.0       $578.6
    Construction                           46.5%         48.9%        53.9%
    Truck                                  27.5%         25.9%        13.0%
    Agricultural                           25.1%         20.2%        28.1%
    Rental                                   --           4.0%         4.1%
    Financial                               0.9%          1.0%         0.9%

Construction revenues                    $316.6        $337.0       $312.2
    Equipment sales                        68.8%         70.8%        74.0%
    Parts and service                      30.1%         28.1%        25.3%
    Rental                                  1.1%          1.1%         0.7%

Truck revenues                           $187.1        $178.8       $ 75.1
    Truck sales                            77.9%         80.1%        76.1%
    Parts and service                      22.1%         19.9%        23.9%

Agricultural revenues                    $170.9        $139.2       $162.4
    Equipment sales                        71.0%         66.3%        69.9%
    Parts and service                      26.0%         30.3%        28.2%
    Rental                                  3.0%          3.4%         1.9%

Rental revenues                          $   --        $ 27.3       $ 23.9
    Equipment sales                          --          10.0%        10.1%
    Parts and service                        --           3.6%         2.4%
    Rental                                   --          86.4%        87.5%

STATEMENT OF OPERATIONS DATA (AS A PERCENTAGE OF REVENUES):
Revenues
    Equipment and truck sales              71.2%         69.2%        69.8%
    Parts and service                      26.6          25.1         24.8
    Rental                                  1.3           4.7          4.5
    Financial services                      0.9           1.0          0.9
------------------------------------------------------------------------------
Total revenues                            100.0%        100.0%       100.0%
------------------------------------------------------------------------------
Gross profit                               14.5%         17.7%        17.2%(1)
Selling, general and
    administrative expenses                15.7          14.1         14.1
Loss on sale, restructuring charges
    and asset impairment                    1.6            --          0.4
------------------------------------------------------------------------------
Operating income (loss)                    (2.8)          3.6          2.7
Gain on sale of RDO Rental Co.               --           0.1           --
Interest expense, net                       1.8           2.0          2.2
Provision for (benefit from) taxes         (1.9)          0.8          0.2
------------------------------------------------------------------------------
Net income (loss)                          (2.7)%         0.9%         0.3%
------------------------------------------------------------------------------
</TABLE>

(1) Reflects a non-recurring $15.0 million inventory charge in fiscal 1999.


                                       23
<PAGE>


FISCAL YEAR ENDED JANUARY 31, 2001 COMPARED
TO FISCAL YEAR ENDED JANUARY 31, 2000

REVENUES

         Revenues decreased approximately $8.6 million, or 1.3%, from $689.0
million for fiscal 2000, to $680.4 million for fiscal 2001. Construction, truck,
agricultural and financial services operations represented approximately $316.6
million, $187.1 million, $170.9 million and $5.8 million of revenues,
respectively. Truck and agricultural operations had revenue increases of
approximately $8.3 million and $31.7 million, respectively. Agricultural
revenues increased in all areas primarily attributable to the Company's gains in
market share and a stabilizing agricultural economy, particularly in the
Midwest. Construction revenues decreased approximately $20.4 million due to
continuing competitive pressures and overall declining unit market potential;
these factors were offset to some extent by the Company's gains in market share.
Financial services revenues decreased approximately $900,000 primarily
attributable to lower loan and lease originations due to lower construction
revenues, along with increased interest rates and a tightening credit
environment. Total revenues decreased approximately $27.3 million as a result of
the sale of the Company's construction equipment rental operations.

         Equipment and truck sales increased approximately $7.9 million, or
1.7%, from $476.8 million for fiscal 2000 to $484.7 million for fiscal 2001.
Truck operations contributed approximately $2.4 million to the total sales
increase, with truck sales increasing 1.7% to $145.7 million. Agricultural
operations contributed approximately $29.0 million of this increase, with
equipment sales increasing 31.4% to $121.3 million. Construction equipment sales
decreased approximately $20.8 million, or 8.7% to $217.7 million. The
construction equipment rental operations had equipment sales of approximately
$2.7 million in fiscal 2000.

         Parts and service revenues increased approximately $7.9 million, or
4.6%, from $173.3 million for fiscal 2000 to $181.2 million for fiscal 2001.
Construction operations contributed approximately $600,000 of the increase as
sales grew 0.6% to $95.3 million. Truck operations contributed approximately
$5.9 million of the increase as sales grew 16.6% to $41.4 million. Parts and
service revenues from agricultural operations increased approximately $2.3
million, or 5.5%, to $44.5 million. The construction equipment rental operations
had parts and service revenues of approximately $900,000 in fiscal 2000.

         Rental revenues were approximately $8.7 million in fiscal 2001 compared
to $32.2 million in fiscal 2000, a decrease of $23.5 million, or 73.0%,
primarily attributable to the sale of the Company's construction equipment
rental operations.

         Financial services revenues of approximately $5.8 million were
generated in fiscal 2001 compared to $6.7 million in fiscal 2000, a decrease of
13.4%. Financial services revenues are comprised primarily of earnings from
interest rate additions on retail installment contracts, and finance charges
from revolving credit accounts available to a portion of the Company's
customers.

GROSS PROFIT

         Gross profit for fiscal 2001 was approximately $98.8 million, or 14.5%
of total revenues, compared to $122.1 million, or 17.7% of total revenues in
fiscal 2000, a decrease of $23.3 million, or 19.1%. Gross profit is affected by
the contribution of revenues by business segment, by the mix of revenues within
each business segment and by competition. Revenues from construction, rental and
financial services operations generally provide the Company with higher gross
margins than do agricultural and truck operations. The Company's highest gross
margins are generally derived from its parts and service, rental and financial
services revenues. During fiscal 2001, construction margins declined due to
competitive pressures as the Company, along with competitors, attempted to
capture a share of a declining market potential. Truck margins also declined
during fiscal 2001, related to competitive pressures due to high used truck
inventory


                                       24
<PAGE>


levels throughout the industry and declining demand primarily attributable to
higher fuel prices, driver shortages and higher interest rates. Both
construction and truck margins were affected by wholesale sales to reduce
inventory levels to correlate to the current market environments. Financial
services experienced margin declines due to higher interest rates and a
tightening credit environment. The sale of the construction equipment rental
operations was another contributing factor to the decrease in gross profit from
fiscal 2000 to 2001.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling, general and administrative (SG&A) expenses as a percent of
total revenues for fiscal 2001 and 2000 were 15.7% and 14.1%, respectively.
Total SG&A expenses increased approximately $9.5 million, from $97.4 million for
fiscal 2000 to $106.9 million for fiscal 2001. SG&A expenses are affected by the
contribution of revenues by business segment and by the mix of revenues within
each business segment. As a percentage of revenues, SG&A expenses are generally
higher for construction and financial services operations than for agricultural,
truck and rental operations and lower for equipment and truck sales than for
parts and service and rental revenues. The increase in SG&A is primarily
attributable to operating the Riverside, California truck location for a full
year, increased legal fees (see Item 3 of this Form 10-K) and higher than normal
levels of SG&A expenses related to the consolidation and integration of the
Company's acquired truck dealerships. SG&A as percent of total revenues was
higher in fiscal 2001 due to SG&A levels in construction and truck operations
not adjusting as rapidly as revenues declined.

INTEREST EXPENSE

         Interest expense decreased approximately $1.9 million, or 13.1%, from
$14.5 million for fiscal 2000 to $12.6 million for fiscal 2001. Interest expense
as a percent of total revenues decreased from 2.1% for fiscal 2000 to 1.9% for
fiscal 2001. Interest expense as a percentage of total revenues decreased,
despite higher interest rates, primarily due to a decrease in the level of
interest-bearing floorplan payables along with a lower level of long-term debt.
This debt reduction resulted primarily from the sale of the Company's
construction equipment rental operations.

INTEREST INCOME

         Interest income decreased approximately $200,000, or 25.0%, from fiscal
2000 to fiscal 2001. Interest income is primarily comprised of finance charges
from trade receivables excluding those related to the financial services
revolving credit accounts that are included in financial services revenues.

INCOME TAXES

         The estimated provision for (benefit from) income taxes as a percentage
of pretax income (loss) was (40.7%) and 44.8% for fiscal 2001 and 2000,
respectively. The higher provision for income taxes percentage in fiscal 2000 is
related to the Company's sale of its 80% owned subsidiary, RDO Rental Co.

NET INCOME (LOSS)

         The Company reported a net loss of $(18.6) million, or $(1.41) per
share for fiscal 2001 compared to net income of $6.5 million, or $0.50 per share
for fiscal 2000.


                                       25
<PAGE>


FISCAL YEAR ENDED JANUARY 31, 2000 COMPARED
TO FISCAL YEAR ENDED JANUARY 31, 1999

REVENUES

         Revenues increased approximately $110.4 million, or 19.1%, from $578.6
million for fiscal 1999, to $689.0 million for fiscal 2000. Construction,
agricultural, truck, rental and financial services operations represented
approximately $337.0 million, $139.2 million, $178.8 million, $27.3 million and
$6.7 million, respectively. $70.2 million, or 63.6%, of the increase in revenues
was due to the acquisition of five truck locations in California and Texas. In
addition, the Company commenced truck operations in its construction equipment
store in Waco, Texas. The balance of the increase, net of a 2% decrease in
comparable store revenues, is attributable to acquisitions and new store
openings in fiscal 1999.

         Equipment and truck sales increased approximately $72.7 million, or
18.0%, from $404.1 million for fiscal 1999 to $476.8 million for fiscal 2000.
Construction operations contributed approximately $7.5 million of this increase,
with equipment sales increasing 3.3% to $238.5 million. Truck operations
contributed approximately $86.1 million to the total sales increase, with truck
sales increasing from $57.2 million to $143.3 million. Acquisitions completed
during fiscal 2000 accounted for approximately $57.0 million of the increase in
truck sales. Rental operations contributed approximately $300,000 of the
increase, with sales increasing from $2.4 million to $2.7 million. Offsetting
the increase in equipment and truck sales, agricultural operations decreased
approximately $21.2 million, or 18.7%, to $92.3 million. The decrease in
agricultural revenues was primarily attributable to unfavorable conditions in
the agricultural economy and the Company's exit from the agricultural irrigation
equipment business in fiscal 1999.

         Parts and service revenues increased approximately $30.0 million, or
20.9%, from $143.3 million for fiscal 1999 to $173.3 million for fiscal 2000.
Construction operations contributed approximately $15.7 million of the increase
as sales grew 19.9% to $94.7 million. Truck operations contributed approximately
$17.6 million of the increase as sales grew from $17.9 million to $35.5 million.
Of this increase, $13.2 million was due to acquisitions completed during fiscal
2000. Rental operations contributed approximately $300,000 of the increase as
sales grew from $600,000 to $900,000. Parts and service revenues from
agricultural operations decreased approximately $3.6 million, or 7.9%, to $42.2
million, primarily attributable to unfavorable conditions in the agricultural
economy.

         Rental revenues increased approximately $6.0 million, or 22.9%, from
$26.2 million for fiscal 1999 to $32.2 million for fiscal 2000. Construction,
agricultural and rental operations all contributed to this increase.

         Financial services revenues of approximately $6.7 million were
generated in fiscal 2000 compared to $5.0 million in fiscal 1999, an increase of
34.0%. Financial services revenues are comprised primarily of earnings from
interest rate additions on retail installment contracts, gains and service fee
income from securitized loans and leases receivable, and finance charges from a
revolving credit facility available to a portion of the Company's customers. In
December 1999, the Company replaced its securitization financing structure in
favor of new financing arrangements.

GROSS PROFIT

         Gross profit increased approximately $22.8 million, or 23.0%, from
$99.3 million in fiscal 1999 to $122.1 million in fiscal 2000. Gross profit as a
percentage of total revenues for fiscal 2000 and 1999 was 17.7% and 17.2%,
respectively. Gross profit for fiscal 1999 before the $15.0 million
non-recurring inventory charge was 19.8%. Gross profit is affected by the
contribution of revenues by business segment and by the mix of revenues within
each business segment. Revenues from construction, rental and financial services
operations provide the Company with higher gross margins than do agricultural
and truck


                                       26
<PAGE>


operations. The Company's highest gross margins are derived from its parts and
service, rental and financial services revenues. Gross margins were adversely
affected by unfavorable conditions in agriculture and a more competitive and
price sensitive marketplace affecting the sale and rental of new and used
construction equipment. The expansion of truck revenues, which generally have
lower gross margins, also resulted in lower gross profit as a percentage of
total revenues.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling, general and administrative (SG&A) expenses as a percent of
total revenues were 14.1% for fiscal 2000 and 1999. Total SG&A expenses
increased approximately $15.7 million, from $81.7 million for fiscal 1999 to
$97.4 million for fiscal 2000. Approximately $7.3 million of the increase was
due to the operations of the Company's acquisitions completed during fiscal
2000. SG&A expenses are affected by the contribution of revenues within each
business segment. As a percentage of revenues, SG&A expenses are generally
higher for construction and financial services operations than for agricultural,
truck and rental operations and lower for equipment and truck sales than for
parts and service and rental revenues. The expansion of truck revenues, which
generally have lower levels of SG&A expenses as a percentage of total revenues,
was offset by lower sales of agricultural equipment resulting in comparable
levels of SG&A expenses as a percentage of total revenues.

INTEREST EXPENSE

         Interest expense increased approximately $1.4 million, or 10.7%, from
$13.1 million for fiscal 1999 to $14.5 million for fiscal 2000. Interest expense
as a percent of total revenues decreased from 2.3% for fiscal 1999 to 2.1% for
fiscal 2000. Interest expense as a percentage of total revenues declined due to
the planned reduction of construction and agricultural inventories.

INTEREST INCOME

         Interest income increased approximately $100,000, or 14.3%, from fiscal
1999 to fiscal 2000. Interest income is primarily comprised of finance charges
from trade receivables excluding those related to the financial services
revolving credit facility, which are included in financial services revenues.

INCOME TAXES

         The estimated provision for income taxes as a percentage of pretax
income was 44.8% and 40.7% for fiscal 2000 and 1999, respectively. The increase
in fiscal 2000 provision for income taxes percentage is related to the Company's
sale of its 80% owned subsidiary, RDO Rental Co.

NET INCOME

         The Company reported net income of $6.5 million, or $0.50 per share for
fiscal 2000 compared to net income of $1.7 million, or $0.13 per share for
fiscal 1999. Net income and net income per share for fiscal 1999 includes a
$15.0 million inventory charge and a $2.2 million restructuring charge.

LIQUIDITY AND CAPITAL RESOURCES

         The Company requires cash primarily for financing its inventories of
equipment, trucks and replacement parts, rental equipment and capital
expenditures, including acquisitions and openings of additional retail
locations. Historically, the Company has met these liquidity requirements
primarily through cash flow generated from operating activities, floor plan
financing, and borrowings under credit agreements with Deere, Deere Credit, Ag
Capital, Banc of America Leasing & Capital, LLC ("Bank of America"), Deutsche
Financial, Volvo Finance, GMAC, The Associates and commercial banks.


                                       27
<PAGE>


         During the third quarter, the Company's revolving credit facility with
Deere Credit was extended for one year maturing at the end of the Company's
third fiscal quarter of fiscal 2002. The Company also extended its credit
arrangements with Ag Capital for an additional year with a maturity date of
December 1, 2001. In addition to these extensions, Bank of America informed the
Company it was exiting the business of lending to equipment distributors and
therefore would not be renewing its commitment at the November 20, 2000
expiration date. In the fourth quarter, the Company received a 45 day extension
of this credit facility. Fiscal 2001 began with a commitment of $45 million on
the Bank of America facility, which the Company voluntarily reduced to $20
million in the third quarter and to $14 million in the fourth quarter. The
Company repaid the $9.5 million balance at the maturity date of January 5, 2001
by using other existing floor plan financing and credit agreements.

         Floor plan financing from Deere and Deere Credit represents the primary
source of financing for equipment inventories, particularly for equipment
supplied by Deere. Floor plan financing of truck inventories is primarily
supplied by Volvo Finance, GMAC and Associates. On- and off-balance sheet
financing of rental equipment is primarily provided by Deutsche Financial and
Deere Credit. Most lenders receive a security interest in the inventory
financed.

         Deere and Deere Credit offer floor plan financing to Deere dealers for
extended periods and with varying interest-free periods, depending on the type
of equipment, to enable dealers to carry representative inventories of equipment
and to encourage the purchase of goods by dealers in advance of seasonal retail
demand. Down payments are not required and interest may not be charged for a
substantial part of the period for which inventories are financed. Occasionally,
additional discounts may be available in lieu of interest-free periods. Variable
market rates of interest based on the prime rate are charged on balances
outstanding after any interest-free periods, which are currently four to twelve
months for agricultural equipment and four to nine months for construction
equipment. The interest-free periods may be longer depending on special
financing programs offered from time-to-time. Deere and Deere Credit also
provide financing to dealers on used equipment accepted in trade and approved
equipment from other suppliers. Deere Credit provides equipment floor plan
financing with variable market rates of interest based on the prime rate. Volvo
Finance, GMAC and The Associates provide truck floor plan financing with
variable market rates of interest based on the prime rate.

         The Company had at January 31, 2001 available lines of credit totaling
$20.0 million with varying maturity dates through July 1, 2001 and with variable
interest rates based on LIBOR and the prime rate. The Company had approximately
$9.1 million of unused availability relating to these lines of credit at January
31, 2001. In addition to floor plan financing supplied by manufacturers, the
Company had unused credit commitments related to floor plan financing and on-
and off-balance sheet financing of rental equipment of approximately $23.2
million at January 31, 2001. Although the Company's credit availability is lower
than past levels, the Company believes it has sufficient credit availability
from its manufacturers. The Company generally has not utilized manufacturer
financing, except for the interest-free terms, as financing from manufacturers
is generally at a higher cost of funds than the Company's current credit
commitments.

         The Company periodically reviews the terms of its financing with its
lenders, including the interest rate. In fiscal 2001, 2000 and 1999 the average
interest rate under interest-bearing floor plan financing was approximately
8.82%, 7.37% and 7.48%, respectively. As of January 31, 2001 the Company had
outstanding floor plan payables of approximately $162.8 million, of which $125.1
million was then interest-bearing. $13.6 million of the total interest-bearing
floor plan payables was included in liabilities associated with assets held for
sale on the Company's January 31, 2001 balance sheet. The average interest rates
on the Company's lines of credit during the fiscal years ended January 31, 2001,
2000 and 1999 were 9.03%, 7.92% and 8.13%, respectively.


                                       28
<PAGE>


         The Company's financing agreements contain various restrictive
covenants, which among other matters require the Company to maintain minimum
financial ratios, as defined, and place limits on certain activities. The
Company was in compliance with or obtained waiver letters for all debt covenants
as of January 31, 2001.

         Operating activities, including changes in inventories and related
floor-plan payables, provided net cash of $10.6 million, $20.2 million and $37.7
million for fiscal 2001, 2000 and 1999, respectively. The net cash provided by
operating activities for fiscal 2001 was after the truck sale and restructure.
The net cash provided by operating activities for fiscal 1999 was after the
inventory and restructuring charges. Contributing to cash from operations for
fiscal 1999 was the financing of inventory via floor plan lines previously paid
down by the proceeds from the Company's Initial Public Offering in January 1997.
The financing proceeds were used to make acquisitions.

         Cash used for investing activities in fiscal 2001, 2000 and 1999 was
$3.2 million, $4.9 million and $55.4 million, respectively. The cash used in
fiscal 2001 was primarily related to purchases of agricultural rental equipment,
purchases of property and equipment, the purchase of the remaining 15% minority
interest in Hall GMC, Inc. and Hall Truck Center Inc. and the purchase of
approximately 3% of the minority interest in Salinas Equipment Distributors,
Inc. The cash used in fiscal 2000 was primarily related to acquisitions and the
purchase of property and equipment for the Company's operations. The cash used
in fiscal 1999 was primarily related to acquisitions and the purchase of
construction equipment for the Company's rental operations. With fewer
acquisitions and less purchases of rental equipment in anticipation of the sale
of RDO Rental Co., fewer funds were expended during fiscal 2000. In fiscal 1999,
there was an additional use of cash related to the retained interest of loans
and leases securitized. In December 1999, the Company replaced the
securitization finance structure with a more favorable financing agreement,
which generated a source of cash for fiscal 2000.

         Cash used for financing activities amounted to $3.9 million and $11.1
million for fiscal 2001 and 2000, respectively. Net cash provided by financing
activities for fiscal 1999 was $17.7 million. Cash used for financing activities
in fiscal 2001 was primarily attributable to payment of long-term debt and net
payments of bank lines and short-term notes payable. Cash used for financing
activities in fiscal 2000 was primarily attributable to payment of long-term
debt associated with the construction equipment rental company. Cash provided by
financing activities in fiscal 1999 was primarily attributable to financing of
rental equipment for the Company's rental operations and net additional
borrowings on the Company's bank lines.

         The Company believes cash from operations, available cash and borrowing
capacity will be sufficient to fund its planned internal capital expenditures
and other cash needs for fiscal 2002. As various credit facilities approach
maturity, the Company believes it will be able to renew or extend these
facilities, or replace these facilities with other facilities.

EFFECTS OF INFLATION

         Inflation has not had a material impact upon operating results and the
Company does not expect it to have such an impact in the future. To date, in
those instances in which the Company has experienced cost increases, it has been
able to increase selling prices to offset such increases. There can be no
assurance, however, that the Company's business will not be affected by
inflation or that it can continue to increase its selling prices to offset
increased costs and remain competitive.

CYCLICALITY

         Sales of equipment and trucks, particularly new units, historically
have been cyclical, fluctuating with general economic cycles. During economic
downturns, equipment and truck retailers tend to


                                       29
<PAGE>


experience similar periods of decline and recession as the general economy. The
impact of an economic downturn on retailers is generally less than the impact on
manufacturers due to the sale of parts and service by retailers to maintain used
equipment and trucks. The Company believes that its businesses are influenced by
worldwide and local economic conditions (see "Safe Harbor Statement") and that
its geographic and business diversification will generally reduce the overall
impact of economic cycles on the Company's operations.

SEASONALITY

         The Company's agricultural operations, particularly in the Midwest,
generally experience a higher volume of equipment sales in the second and third
fiscal quarters due to the crop-growing season. Typically, farmers purchase
equipment prior to planting or harvesting crops. Winter weather conditions in
the Midwest limit equipment purchases during the Company's first and fourth
fiscal quarters. This seasonal effect can be diminished during periods of
significant and sustained weakness in the agricultural economy during which
farmers generally purchase less equipment.

         The Company's construction operations generally experience a higher
volume of equipment sales in the second and third fiscal quarters due to
favorable weather patterns, particularly in the Midwest. The general slowdown in
construction activity at the end of the calendar year influences the fourth
fiscal quarter. Further, winter weather conditions in parts of the Southwest and
South Central also limit construction activity to some degree, typically
resulting in lower sales and rentals of construction equipment.

         Since the Company's truck operations are not generally affected by any
significant seasonality, during fiscal 2001 the overall impact of seasonality
has tended to decline as truck revenues became a greater percentage of total
revenues. If the Company acquires businesses in geographic areas other than
where it currently has operations, or disposes of certain businesses, it may be
affected more by the above mentioned or other seasonal and equipment buying
trends.

SAFE HARBOR STATEMENT

           This statement is made under the Private Securities Litigation Reform
Act of 1995. The future results of the Company, including results related to
forward-looking statements in this Report, involve a number of risks and
uncertainties. Important factors that will affect future results of the Company,
including factors that could cause actual results to differ materially from
those indicated by forward-looking statements, include, but may not be limited
to, those set forth under the caption "Certain Important Factors" in Item 1 of
this Form 10-K and in other filings with the Securities and Exchange Commission.
These factors, which are subject to change, include: general economic conditions
worldwide and locally; interest rates; housing starts; fuel prices; the many
interrelated factors that affect farmers' confidence, including farm cash
income, farmer debt levels, credit availability, worldwide demand for
agricultural products, world grain stocks, commodity prices, weather, animal and
plant diseases, crop pests, harvest yields, real estate values and government
farm programs; legislation, primarily legislation relating to agriculture, the
environment, commerce, transportation and government spending on infrastructure;
climatic phenomena such as La Nina and El Nino; pricing, product initiatives and
other actions of competitors in the various industries in which the Company
competes, including manufacturers and retailers; the levels of new and used
inventories in these industries; the Company's relationships with its suppliers;
production difficulties, including capacity and supply constraints experienced
by the Company's suppliers; practices by the Company's suppliers; changes in
governmental regulations; labor shortages; employee relations; currency exchange
rates; availability, sufficiency and cost of insurance; financing arrangements
relating to the Company's financial services operations, including credit
availability and customer credit risks; dependence upon the Company's suppliers;
termination rights and other provisions which the Company's suppliers have under
dealer and other agreements; risks associated with growth,


                                       30
<PAGE>


expansion and acquisitions; the positions of the Company's suppliers and other
manufacturers with respect to publicly-traded dealers, dealer consolidation and
specific acquisition opportunities; the Company's acquisition strategies and the
integration and successful operation of acquired businesses; capital needs and
capital market conditions; operating and financial systems to manage rapidly
growing operations; dependence upon key personnel; accounting standards;
technological difficulties, especially involving the Company's suppliers and
other third parties which could cause the Company to be unable to process
customer orders, deliver products or services, or perform other essential
functions; and other risks and uncertainties. The Company's forward-looking
statements are based upon assumptions relating to these factors. These
assumptions are sometimes based upon estimates, data, communications and other
information from suppliers, government agencies and other sources, which are
often revised. The Company makes no commitment to revise forward-looking
statements, or to disclose subsequent facts, events or circumstances that may
bear upon forward-looking statements.


ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

           The Company is exposed to market risk from changes in interest rates.
Market risk is the potential loss arising from adverse changes in market rates
and prices such as interest rates. For fixed rate debt, interest rate changes
affect the fair value of financial instruments but do not impact earnings or
cash flows. Conversely for floating rate debt, interest rate changes generally
do not affect the fair market value but do impact future earnings and cash
flows, assuming other factors are held constant. A one percentage point increase
in interest rates would result in a net increase to the unrealized fair market
value of the fixed rate debt by approximately $8,000. At January 31, 2001, the
Company had variable rate floor plan payables, notes payable and long-term debt
of $145.0 million and fixed rate notes payable and long-term debt of $600,000.
Holding other variables constant, the pre-tax earnings and cash flow impact for
the next year resulting from a one percentage point increase in interest rates
would be approximately $1.5 million.

           The Company's policy is not to enter into derivatives or other
financial instruments for trading or speculative purposes. Consistent with this
policy, the Company's finance subsidiary RDO Financial Services Co. originates
fixed rate loan and fixed payment leases. On a daily basis, these loans and
leases are sold, thus eliminating interest risk.


ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                       31
<PAGE>


RDO EQUIPMENT CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                      FOR THE YEARS ENDED JANUARY 31,
-----------------------------------------------------------------------------------------------------
[in thousands, except per share amounts]                              2001         2000         1999
-----------------------------------------------------------------------------------------------------
<S>                                                              <C>          <C>          <C>
REVENUES
       Equipment and truck sales                                 $ 484,727    $ 476,773    $ 404,093
       Parts and service                                           181,173      173,336      143,335
       Rental                                                        8,706       32,178       26,208
       Financial services                                            5,772        6,683        4,988
-----------------------------------------------------------------------------------------------------
             Total revenues                                        680,378      688,970      578,624
COST OF REVENUES (Note 3)                                          581,583      566,877      479,275
-----------------------------------------------------------------------------------------------------
GROSS PROFIT                                                        98,795      122,093       99,349
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                       106,918       97,431       81,682
LOSS ON SALE, RESTRUCTURING CHARGES
       AND ASSET IMPAIRMENT (Note 3)                                11,200           --        2,200
-----------------------------------------------------------------------------------------------------
       Operating income (loss)                                     (19,323)      24,662       15,467
INTEREST EXPENSE                                                   (12,578)     (14,536)     (13,138)
INTEREST INCOME                                                        617          817          711
GAIN ON SALE OF RDO RENTAL CO                                           --          786           --
-----------------------------------------------------------------------------------------------------
       Income (loss) before income taxes and minority interest     (31,284)      11,729        3,040
INCOME TAX PROVISION (BENEFIT)                                     (12,733)       5,252        1,237
-----------------------------------------------------------------------------------------------------
       Income (loss) before minority interest                      (18,551)       6,477        1,803
MINORITY INTEREST                                                       11          (60)         135
-----------------------------------------------------------------------------------------------------

NET INCOME (LOSS)                                                $ (18,562)   $   6,537    $   1,668
=====================================================================================================

       Basic and diluted net income (loss) per share             $   (1.41)   $    0.50    $    0.13
=====================================================================================================
       Weighted average shares outstanding - basic                  13,182       13,182       13,182
       Weighted average shares outstanding - diluted                13,182       13,184       13,201
=====================================================================================================
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       32
<PAGE>


RDO EQUIPMENT CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                 AS OF JANUARY 31,
------------------------------------------------------------------------------------------------------------------
[in thousands]                                                                                 2001          2000
------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>           <C>
ASSETS
CURRENT ASSETS:
      Cash and cash equivalents                                                           $   7,635     $   4,207
      Accounts receivable (less allowance for doubtful accounts of $2,476 and $1,874)        41,612        75,536
      Income tax receivable                                                                   8,143            --
      Receivables from affiliates                                                               114            31
      Inventories                                                                           169,090       217,556
      Prepaid expenses                                                                        1,499           573
      Assets held for sale                                                                   22,987            --
      Deferred income tax asset                                                               7,000         4,910
------------------------------------------------------------------------------------------------------------------
           Total current assets                                                             258,080       302,813
PROPERTY AND EQUIPMENT, NET                                                                  18,716        21,944
OTHER ASSETS:
      Goodwill and other, net of accumulated amortization of $3,686 and $3,246               25,619        36,205
      Deferred income tax asset                                                               2,400            --
      Deposits                                                                                1,173         1,035
------------------------------------------------------------------------------------------------------------------
           Total assets                                                                   $ 305,988     $ 361,997
==================================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
      Floor plan payables                                                                 $ 149,191     $ 190,242
      Notes payable                                                                          10,923        12,330
      Current maturities of long-term debt                                                    2,876         2,791
      Accounts payable                                                                        4,764         6,169
      Accrued liabilities                                                                    18,233        23,490
      Liabilities associated with assets held for sale                                       17,615            --
      Customer advance deposits                                                               3,905         2,824
      Dividends payable (Note 10)                                                               731           742
------------------------------------------------------------------------------------------------------------------
           Total current liabilities                                                        208,238       238,588

LONG-TERM DEBT, net of current maturities                                                     6,618        11,483
DEFERRED INCOME TAXES                                                                            --         1,460
------------------------------------------------------------------------------------------------------------------
           Total liabilities                                                                214,856       251,531
------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Notes 8 and 11)
MINORITY INTEREST                                                                               419         1,191
STOCKHOLDERS' EQUITY (Note 10):
      Preferred stock                                                                            --            --
      Common stocks-
           Class A                                                                               57            57
           Class B                                                                               75            75
      Additional paid-in-capital                                                             84,471        84,471
      Retained earnings                                                                       6,110        24,672
------------------------------------------------------------------------------------------------------------------
           Total stockholders' equity                                                        90,713       109,275
------------------------------------------------------------------------------------------------------------------
           Total liabilities and stockholders' equity                                     $ 305,988     $ 361,997
==================================================================================================================
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       33
<PAGE>


RDO EQUIPMENT CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                FOR THE YEARS ENDED JANUARY 31, 2001, 2000 AND 1999
-------------------------------------------------------------------------------------------------------------------

                                                 COMMON STOCK
                                            ---------------------       TOTAL  ADDITIONAL
                                             CLASS A     CLASS B       COMMON     PAID-IN    RETAINED
[in thousands, except share amounts]          SHARES      SHARES        STOCK     CAPITAL    EARNINGS        TOTAL
-------------------------------------------------------------------------------------------------------------------
<S>                                         <C>         <C>         <C>         <C>         <C>          <C>
BALANCE, JANUARY 31, 1998                   5,731,008   7,450,492   $     132   $  84,471   $  16,467    $ 101,070
Net income                                         --          --          --          --       1,668        1,668
-------------------------------------------------------------------------------------------------------------------

BALANCE, JANUARY 31, 1999                   5,731,008   7,450,492         132      84,471      18,135      102,738
Net income                                         --          --          --          --       6,537        6,537
-------------------------------------------------------------------------------------------------------------------

BALANCE, JANUARY 31, 2000                   5,731,008   7,450,492         132      84,471      24,672      109,275
Net loss                                           --          --          --          --     (18,562)     (18,562)
-------------------------------------------------------------------------------------------------------------------

BALANCE, JANUARY 31, 2001                   5,731,008   7,450,492   $     132   $  84,471   $   6,110    $  90,713
===================================================================================================================
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       34
<PAGE>


RDO EQUIPMENT CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                   FOR THE YEARS ENDED JANUARY 31,
------------------------------------------------------------------------------------------------------------------
[in thousands]                                                                 2001           2000           1999
------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>            <C>            <C>
OPERATING ACTIVITIES
Net income (loss)                                                         $ (18,562)     $   6,537      $   1,668
Adjustments to reconcile net income (loss) to net
  cash provided by operating activities:
       Depreciation and amortization                                          7,465         12,950         10,506
       Deferred taxes                                                        (5,950)        (2,980)          (428)
       Minority interest                                                         11            (60)           135
       Loss on sale of irrigation division assets                                --             --          1,360
       Gain on sale of RDO Rental Co.                                            --           (786)            --
       Loss on sale, restructuring charges and asset impairment              11,200             --             --
       Change in operating assets and liabilities:
            Accounts receivable                                               5,790           (972)       (14,519)
            Inventories                                                      20,756          8,098         25,719
            Prepaid expenses                                                   (984)           524           (667)
            Deposits                                                           (236)            57            792
            Floor plan payables                                              (6,301)       (11,987)        14,056
            Accounts payable and accrued liabilities                         (5,002)         8,093           (188)
            Customer advance deposits                                         2,382            702           (747)
------------------------------------------------------------------------------------------------------------------
                 Net cash provided by operating activities                   10,569         20,176         37,687
------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Net purchases of rental equipment                                            (2,118)          (485)       (19,769)
Net purchase of property and equipment                                       (2,357)        (3,409)        (5,132)
Net assets of acquisitions                                                   (1,495)        (4,404)       (25,455)
Proceeds on sale of dealership                                                2,687             --             --
Retained investment and service fee on securitized receivables                   --          3,813         (3,813)
Other, net                                                                       42           (389)        (1,240)
------------------------------------------------------------------------------------------------------------------
                 Net cash used for investing activities                      (3,241)        (4,874)       (55,409)
------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Proceeds from issuance of long-term debt                                         89          7,322         15,505
Payments on long-term debt                                                   (2,582)       (15,403)        (9,330)
Net proceeds (payments) of bank lines and short-term notes payable           (1,407)        (3,065)        11,561
------------------------------------------------------------------------------------------------------------------
                 Net cash provided by (used for) financing activities        (3,900)       (11,146)        17,736
------------------------------------------------------------------------------------------------------------------

INCREASE IN CASH AND CASH EQUIVALENTS                                         3,428          4,156             14
CASH AND CASH EQUIVALENTS, beginning of year                                  4,207             51             37
------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of year                                    $   7,635      $   4,207      $      51
==================================================================================================================
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       35
<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS:

PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements include the results of RDO
Equipment Co., a C corporation ("RDO") and its wholly-owned subsidiaries, RDO
Construction Equipment Co., RDO Agriculture Equipment Co., RDO Truck Center Co.,
RDO Financial Services Co., RDO Material Handling Co., Minnesota Valley
Irrigation, Inc. ("MVI"), Hall GMC, Inc., Hall Truck Center, Inc., and its
majority-owned subsidiaries Salinas Equipment Distributors, Inc. ("SED") (92%)
and RDO Rental Co. (80%). In November 1998, the assets of MVI were sold to a
related party (see Notes 3 and 12). In January 2000, RDO sold all of its shares
of RDO Rental Co. (see Note 4). Subsequent to January 31, 2001, the Company
purchased the remaining minority interest in SED (see Note 4). RDO and its
consolidated subsidiaries are referred to herein as the Company.

BUSINESS

         As a specialty retailer, the Company distributes, sells, services,
rents and finances equipment and trucks to the agricultural, construction,
manufacturing, transportation and warehousing industries, including units of
state, local and federal government and utility companies. Accordingly, the
Company's results of operations can be significantly impacted by the general
economic health of these industries. The Company's stores are located in
Arizona, California, Minnesota, Montana, Nebraska, North Dakota, South Dakota,
Texas and Washington.

         The Company's major suppliers of new equipment, trucks and parts for
sale are Deere and Volvo. The percentage of the Company's revenues generated
from these major suppliers' products are as follows:

                                          2001          2000          1999
--------------------------------------------------------------------------------
Deere & Company                            36%           35%           43%
Volvo AB                                    9%           10%            2%
================================================================================

         No other suppliers' products accounted for more than 10% of the
Company's total revenues.

         As discussed in Note 12, the Company has significant transactions with
related parties, primarily related to financing arrangements.

DEERE DEALERSHIP AGREEMENTS

         The Company has agreements with Deere, which authorize the Company to
act as an authorized dealer of Deere construction and agricultural equipment.
The dealer agreements continue until terminated by Deere or the Company in
accordance with the specified provisions.

         The Company is required to meet certain performance criteria and equity
ratios, maintain suitable facilities, actively promote the sale of Deere
equipment, fulfill warranty obligations and maintain stores only in the
authorized locations. Ronald D. Offutt is also required to maintain certain
voting control and ownership interests. The agreements also contain certain
provisions that must be complied with in order to retain the Company's
dealership agreements in the event of the death of Ronald D. Offutt and a


                                       36
<PAGE>


subsequent change in control, as defined. The Company was in compliance with the
terms of the Deere agreements at January 31, 2001.

         Deere is obligated to make floor plan and other financing programs
available to the Company that it offers to other dealers, provide promotional
and marketing materials, and authorize the Company to use Deere trademarks and
trade names.

2. SIGNIFICANT ACCOUNTING POLICIES:

USE OF ESTIMATES

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses during the reporting period and disclosure of
contingent assets and liabilities. The ultimate results could differ from those
estimates. Estimates are used for such items as valuation of used equipment and
truck inventory, depreciable lives of property and equipment, allowance for
uncollectible accounts, cash flows on securitized transactions, guarantees,
inventory, self-insurance reserves, restructuring charges and asset impairment
charges. As better information becomes available or as actual amounts are
determinable, the recorded estimates are revised.

CASH AND CASH EQUIVALENTS

         The Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash equivalents.

CONCENTRATION OF CREDIT RISK

         Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of temporary cash investments
in financial institutions in excess of federally insured limits and accounts
receivable. Temporary cash investments are held with financial institutions,
which the Company believes subject it to minimal risk. The Company monitors its
customers' financial condition to minimize its risks associated with accounts
receivable, but does not require collateral on all receivables from its
customers.

INVENTORIES

         All inventories are valued at the lower of cost or market. Cost is
determined using the first-in, first-out method for new equipment, trucks and
parts inventory. The specific identification method is used to determine cost
for used equipment and trucks.

Inventories consisted of the following as of January 31:

(IN THOUSANDS)                          2001           2000
-----------------------------------------------------------
New equipment and trucks           $ 112,190      $ 149,018
Used equipment and trucks             33,090         39,159
Parts and other                       23,810         29,379
-----------------------------------------------------------
Total                              $ 169,090      $ 217,556
===========================================================

PROPERTY AND EQUIPMENT

         Property and equipment are stated at cost. Maintenance and repairs are
charged to expense as incurred. Improvements which extend the useful life of the
related item are capitalized and depreciated.


                                       37
<PAGE>


Depreciation is provided for over the estimated useful lives of the individual
assets using accelerated and straight-line methods.

         The Company follows the guidelines of Statements of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed Of" in determining whether an
impairment of property and equipment or other long-lived assets has occurred.
Specifically, the Company's policy is to evaluate, at each balance sheet date,
whether events and circumstances have taken place to indicate the remaining book
value of the assets may not be recoverable.

         Property and equipment consisted of the following as of January 31:

(IN THOUSANDS)                                   2001          2000        LIVES
--------------------------------------------------------------------------------
Land                                         $    481      $    501           --
Buildings and improvements                      6,828         7,141       5-31.5
Equipment, furniture and fixtures              20,382        20,546          3-7
Rental equipment                                8,603         8,828          3-7
Construction in progress                          203           368           --
--------------------------------------------------------------------------------
     Total                                     36,497        37,384
Accumulated depreciation                      (17,781)      (15,440)
--------------------------------------------------------------------------------
Property and equipment, net                  $ 18,716      $ 21,944
================================================================================

INCOME TAXES

         Deferred tax assets and liabilities are recorded based on the
differences between the financial statement and tax bases of assets and
liabilities using the currently enacted marginal tax rate.

REVENUE RECOGNITION

         Revenue on equipment, truck and parts sales is recognized upon delivery
of product to customers. Rental and service revenue is recognized at the time
such services are provided. In addition to outright sales of new and used
equipment, sales include equipment purchased under rent-to-purchase agreements.
Customers may be given a period of up to six months to exercise the option to
purchase the rented equipment and may be allowed to apply a portion of the
rental payments to the purchase price. This rent-to-purchase equipment is
included in the Company's inventory until the option is exercised and the
equipment is purchased.

SECURITIZED RECEIVABLES

         During fiscal 2000 and 1999, certain loan and lease receivables were
securitized wherein they were sold to a special-purpose corporation which is a
related party. The Company retained a minimum investment in sold receivables,
limited to 10%. Upon sale, a gain was recognized on the receivables for the
difference between carrying values and the sales proceeds based on estimates of
future expected cash flows including adjustments for prepayments and credit
losses. The Company serviced the underlying receivables on behalf of the
special-purpose corporation in return for a fee. The Company sold approximately
$29.4 million and $57.1 million of loan and lease receivables during fiscal 2000
and 1999, respectively. Approximately $1.6 million and $2.2 million of gains on
sales and servicing fee income were recognized as financial service revenues in
the accompanying statement of operations during fiscal 2000 and 1999,
respectively. In December 1999, the Company replaced its securitization
financing structure in favor of new financing arrangements and incurred a
one-time loss of $399,000 reflected as a reduction of financial service
revenues.


                                       38
<PAGE>


FAIR VALUE OF FINANCIAL INSTRUMENTS

         Unless otherwise disclosed, the carrying amounts of financial
instruments, including cash and cash equivalents, receivables, accounts payable,
floor plan payables, and notes payable approximate fair value because of
relatively short terms or variable rates on these instruments.

NEW ACCOUNTING PRONOUNCEMENTS

         Effective February 1, 2000, the Company has adopted the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities", and SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities-Deferral of the Effective Date
of FASB Statement No. 133". SFAS No. 133 establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or a liability measured at its fair value. SFAS No. 133
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. The adoption of SFAS
No. 133 had no impact on the Company's consolidated financial statements.

         In December of 1999, the Securities and Exchange Commission staff
("SEC") released Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial Statements" ("SAB 101"). SAB 101, as amended, summarizes some of the
SEC's views in applying accounting principles generally accepted in the United
States to revenue recognition in financial statements. Effective February 1,
2000, the Company adopted SAB 101 and the adoption had no effect on the
Company's consolidated statements of operations.

3. LOSS ON SALE, RESTRUCTURING CHARGES AND ASSET IMPAIRMENT:

         During the fourth quarter of fiscal 2001, the Company approved a
comprehensive plan to restructure management and to divest itself of the
majority of its heavy-duty truck division to lower the Company's cost structure
and narrow its focus to its core business lines. The Company recognized charges
to operations of $11.2 million in the fourth quarter, which reflected the
estimated costs the Company will incur. These charges were developed based on
management's best judgements and estimates.

         The $11.2 million of charges include a $3.0 million loss related to the
sale of the Company's truck business in Roseville, Minnesota, during the fourth
quarter; estimated losses on the anticipated sale of the Riverside, California,
and Dallas and Fort Worth, Texas truck businesses in the first half of fiscal
2002; severance related to employee terminations; and asset impairments. The
Company accrued approximately $800,000 of severance costs relating to the
elimination of approximately 11 salaried management positions. Through January
31, 2001, the Company had eliminated one of these management positions. The
asset impairments consist of long-lived assets, including fixed assets,
leasehold improvements and associated lease obligations; and goodwill relating
to the Company's truck division. Impairment was measured based on estimated
proceeds from the expected sales of the Company's truck businesses. The assets
associated with the truck businesses yet to be sold are classified as assets
held for sale on the balance sheet totaling approximately $23.0 million. These
assets are no longer being depreciated, as they are no longer being used in
operations. Liabilities associated with the assets held for sale totaled
approximately $17.6 million and were primarily comprised of truck floor plan
financing, trade payables and other current liabilities. Operating losses from
the truck dealership sold and the truck businesses to be sold totaling
approximately $13.3 million are included in the Company's truck segment (Note
14).

         Costs incurred and charged to reserves during the year ended January
31, 2001 amounted to approximately $7.2 million of asset impairment. As of
January 31, 2001, the remaining reserves consisted


                                       39
<PAGE>


of approximately $800,000 related to severance costs and approximately $200,000
related to lease and other obligations. The Company anticipates paying the
majority of these costs in fiscal 2002 with the exception of one two-year
severance contract.

         During the third quarter of fiscal 1999, the Company initiated
corporate actions designed to generate cash, fund growth opportunities,
discontinue non-strategic operations and achieve more cost efficient operations.
These initiatives were undertaken as the Company assessed current industry and
financial market conditions, primarily the financial problems in the
agricultural economy that were projected to impact the Company's future
business. These initiatives included one-time, non-recurring charges relating to
inventory and asset writedowns, reserves and severance costs. The Company took a
$15.0 million inventory charge, which is included in cost of revenues and a $2.2
million restructuring charge in connection with asset writedowns and severance
costs, which included exiting the agricultural irrigation equipment business.

4. BUSINESS COMBINATIONS:

         During fiscal 2000, the Company completed two acquisitions of
heavy-duty truck operations. These acquisitions were accounted for using the
purchase method of accounting and, accordingly, the assets acquired and
liabilities assumed have been recorded at their estimated fair values as of the
dates of acquisition. The excess purchase price over the fair value of the
assets acquired and liabilities assumed has been recorded as goodwill, amortized
over 30 years.

         The following summarizes the assets acquired, liabilities assumed and
cash purchase price of the acquisitions made during the fiscal years ended
January 31:

(IN THOUSANDS)                                                             2000
--------------------------------------------------------------------------------
Assets acquired                                                        $ 25,247
Less: liabilities assumed                                                20,843
--------------------------------------------------------------------------------
Cash purchase price                                                    $  4,404
================================================================================
Number of acquisitions                                                        2
================================================================================

         During the first quarter of fiscal 2001, the Company purchased the
remaining 15% minority interest in Hall GMC, Inc. and Hall Truck Center, Inc.
for a total purchase price of approximately $1.2 million. The Company also
purchased the remaining 11% minority interest in Salinas Equipment Distributors,
Inc. Approximately 3% of the minority interest was purchased during the fourth
quarter of fiscal 2001 and the remaining 8% was purchased subsequent to the end
of fiscal 2001. The net purchase price totaled approximately $300,000 and
$800,000, respectively.


                                       40
<PAGE>


         The accompanying unaudited pro forma results of operations for the
fiscal year ended January 31, 2000 give effect to the above acquisitions as if
they were completed at the beginning of fiscal 2000. The unaudited pro forma
financial information does not purport to represent what the Company's results
of operations would actually have been if such transactions in fact had occurred
at such date or to project the Company's results of future operations as of
January 31:

(IN THOUSANDS, EXCEPT PER SHARE DATA)                                      2000
--------------------------------------------------------------------------------
Revenues                                                              $ 717,183
================================================================================
Net income                                                              $ 6,312
================================================================================
Weighted average shares outstanding - basic                              13,182
================================================================================
Weighted average shares outstanding - diluted                            13,184
================================================================================
Basic and diluted net income per share                                  $  0.48
================================================================================

         On January 17, 2001, the Company sold the assets of its heavy-duty
truck dealership in Roseville, Minnesota. The net proceeds totaled approximately
$2.7 million. The Company recognized a loss of approximately $3.0 million on the
sale.

           On January 31, 2000, the Company sold its interest in its 80% owned
subsidiary RDO Rental Co. The gross proceeds, net of inter-company debt, were
approximately $6.2 million. The Company recognized a $786,000 gain on the sale.

5. FLOOR PLAN PAYABLES:

         Floor plan payables are financing arrangements for inventory. The terms
of these arrangements may include a one- to twelve-month interest-free term
followed by a term during which interest is charged. Payoff of the floor plan
payables generally occurs at the earlier of sale of the inventory or in
accordance with the terms of the financing arrangements. All amounts owed to
Deere are guaranteed by Ronald D. Offutt and are collateralized by inventory.


                                       41
<PAGE>


Floor plan payables consisted of the following as of January 31:

<TABLE>
<CAPTION>
(IN THOUSANDS)                                                                                 2001            2000
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                          <C>           <C>
INTEREST-BEARING:
   Deere Credit Services, Inc., revolving borrowing base facility, interest at
      8.75% at January 31, 2001, based on prime                                              $  73,900     $  56,550
   Ag Capital Company (affiliate), 10.22% at January 31, 2001, based on LIBOR                   24,000        13,509
   Volvo Commercial Finance LLC The Americas, 8.25% to 8.5% at January 31,
      2001, based on prime (included in liabilities associated with assets held for sale)       13,611        31,539
   Deere & Company, due as inventory is sold, 8.0% to 10.0% at January 31, 2001,
      based on prime                                                                             8,205         4,197
   General Motors Acceptance Corporation, 9.0% at January 31, 2001, based
      on prime                                                                                   4,068         7,358
   Associates Commercial Corporation, 9.0% at January 31, 2001, based on prime                     291         9,441
   Deere Credit Services, Inc., inventory notes, due as inventory is sold, interest at
      Various rates, 7.75% to 9.5% at January 31, 2001                                             283           951
   Other                                                                                           762         1,359
   Banc of America Leasing & Capital LLC credit facility paid off during the year                   --        32,500
   Amount included in liabilities associated with assets held for sale                         (13,611)           --
---------------------------------------------------------------------------------------------------------------------
                                                                                               111,509       157,404
---------------------------------------------------------------------------------------------------------------------
NONINTEREST-BEARING:
   Deere & Company                                                                              36,167        27,104
   Deere Credit Services, Inc.                                                                   1,515         4,813
   Other                                                                                            --           921
---------------------------------------------------------------------------------------------------------------------
                                                                                                37,682        32,838
---------------------------------------------------------------------------------------------------------------------
   Total                                                                                     $ 149,191     $ 190,242
=====================================================================================================================
</TABLE>

         The Company has certain floor plan financing agreements containing
various restrictive covenants, which, among other matters, require the Company
to maintain minimum financial ratios, as defined, and place limits on certain
activities. The Company was in compliance with or obtained waiver letters for
all floor plan covenants at January 31, 2001.

6. NOTES PAYABLE AND LONG-TERM DEBT:

NOTES PAYABLE

Notes payable consisted of the following as of January 31:

<TABLE>
<CAPTION>
(IN THOUSANDS)                                                                                  2001           2000
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                          <C>           <C>
Ag Capital Company (affiliate), operating lines                                              $10,923        $12,330
Bank operating lines                                                                              --             --
--------------------------------------------------------------------------------------------------------------------
Total notes payable                                                                          $10,923        $12,330
====================================================================================================================
</TABLE>

         The Company's operating lines of credit provide maximum borrowings
totaling $20.0 million and $25.0 million for fiscal 2001 and 2000, respectively.
These operating lines have varying maturity dates through July 1, 2001 with
variable interest rates based on LIBOR and prime. The highest balances
outstanding under these lines were $17.7 million and $23.0 million for fiscal
years ended January 31, 2001 and 2000, respectively. The weighted average
interest rates on these lines during such periods were 9.03% and 7.92%,
respectively.


                                       42
<PAGE>


LONG-TERM DEBT

Long-term debt consisted of the following as of January 31:

<TABLE>
<CAPTION>
(IN THOUSANDS)                                                                   2001          2000
----------------------------------------------------------------------------------------------------
<S>                                                                         <C>           <C>
Ag Capital Company (affiliate), due in various amounts through February
   2006, interest (fixed and variable 9.7% to 10.22%), collateralized by
   various receivables and fixed assets of the Company                      $   6,323     $   8,151
Volvo Trucks North America, Inc., due in various amounts through
   September 2004, 8.5% at January 31, 2001, based on prime, unsecured          2,640         2,640
Volvo Trucks North America, Inc., due in various amounts through
   September 2002, interest free, unsecured                                       114         2,400
Other                                                                             417         1,083
----------------------------------------------------------------------------------------------------
Total                                                                           9,494        14,274
Less current maturities of long-term debt                                      (2,876)       (2,791)
----------------------------------------------------------------------------------------------------
Total long-term debt, net of current maturities                             $   6,618     $  11,483
====================================================================================================
</TABLE>

Future long-term debt maturities as of January 31, 2001 are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------------------------------------------------------------------
<S>                                                               <C>
2002                                                              $ 2,876
2003                                                                4,611
2004                                                                  724
2005                                                                1,265
2006                                                                   18
Thereafter                                                             --
--------------------------------------------------------------------------
Total                                                             $ 9,494
==========================================================================
</TABLE>

         The Company has notes payable and long-term debt agreements containing
various restrictive covenants, which, among other matters, require the Company
to maintain minimum financial ratios, as defined, and place limits on certain
activities. The Company was in compliance with all notes payable and long-term
debt covenants at January 31, 2001.


                                       43
<PAGE>


7. EARNINGS PER SHARE:

         The following summarizes the computation of weighted average shares
outstanding and the net income (loss) per share for the fiscal years ended
January 31:

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)                                        2001          2000         1999
-----------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>           <C>          <C>
Net income (loss) available to common shareholders                          $ (18,562)    $   6,537    $   1,668
=================================================================================================================
Weighted average number of common shares outstanding - basic                   13,182        13,182       13,182
Dilutive effect of option plan                                                     --             2           19
-----------------------------------------------------------------------------------------------------------------
Common and potential common shares outstanding - diluted                       13,182        13,184       13,201
=================================================================================================================
Basic and diluted net income (loss) per share                               $   (1.41)    $    0.50    $    0.13
=================================================================================================================
</TABLE>

8. EMPLOYEE BENEFIT PLANS:

401(k) EMPLOYEE SAVINGS PLAN

         The Company's employees participate in a 401(k) employee savings plan,
which covers substantially all employees. The Company matches a portion of
employee contributions. Company contributions were $750,000, $643,000 and
$580,000 for the fiscal years ended January 31, 2001, 2000 and 1999,
respectively.

EMPLOYEE HEALTH BENEFIT TRUST

         The Company participates in a tax-exempt voluntary employee benefit
trust sponsored by an affiliate, which provides health and dental benefits for
full-time employees. In the event of a deficiency in the trust, additional
monthly premiums could be assessed to the Company. The maximum liability to the
Company is limited by stop-loss insurance to the lesser of $50,000 per employee
or 120% of expected claims for the year.

STOCK-BASED COMPENSATION PLAN

         The Company's 1996 Stock Incentive Plan (the Plan) provides incentives
to key employees, directors, advisors and consultants of the Company. The Plan,
which is administered by the Compensation Committee of the Board of Directors
(the Committee), provides for an authorization of shares of Class A common stock
for issuance thereunder limited to 10% of the total number of shares of common
stock issued and outstanding. Under the Plan, the Company may grant eligible
recipients incentive stock options, nonqualified stock options, restricted
stock, stock appreciation rights, stock awards, or any combination thereof. The
Committee establishes the exercise price, vesting schedule and expiration date
of any stock options granted under the Plan. Options outstanding at January 31,
2001 vest immediately or up to a five year schedule and expire two to ten years
after the date of grant.

         During fiscal 1999, the board of directors approved a repricing of all
outstanding stock options held by the Company's employees. Under the repricing,
its employees were given the option to exchange their current stock options for
35% fewer options with an exercise price of $10, which was slightly greater than
the fair market value ($9.0625) of the Company's common stock on that date. A
total of 468,500 options formerly priced at $15.50 to $17.25 were exchanged for
304,525 options priced at $10. The new options vest 20% per year starting on the
new date of grant.


                                       44
<PAGE>


Information regarding the Plan as of January 31, is as follows:

<TABLE>
<CAPTION>
                                                    2001                       2000                       1999
------------------------------------------------------------------------------------------------------------------------
                                                         WEIGHTED                   WEIGHTED                   WEIGHTED
                                                          AVERAGE                    AVERAGE                    AVERAGE
                                                         EXERCISE                   EXERCISE                   EXERCISE
                                            OPTIONS         PRICE      OPTIONS         PRICE      OPTIONS         PRICE
------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>         <C>            <C>         <C>            <C>         <C>
Outstanding, beginning of  year             829,250     $   10.35      696,525     $   11.74      578,500     $   15.50
Granted                                     121,834          5.33      220,000          5.95      629,025         11.75
Canceled                                   (364,110)         9.44      (87,275)        10.30     (511,000)        16.01
Exercised                                        --            --           --            --           --            --
------------------------------------------------------------------------------------------------------------------------
Outstanding, end of year                    586,974     $    9.88      829,250     $   10.35      696,525     $   11.74
========================================================================================================================
Exercisable, end of year                    359,094     $   10.19      406,010     $    9.68      169,905     $   13.23
========================================================================================================================
Weighted average fair value of
   options granted                                      $    2.27                  $    2.81                  $    4.99
========================================================================================================================
</TABLE>

         Options outstanding at January 31, 2001 have exercise prices ranging
from $4.00 to $15.50 and a weighted average remaining contractual life of 7.37
years.

         The Company accounts for the Plan under APB Opinion No. 25, under which
no compensation cost has been recognized for options granted to employees. Had
compensation cost for the Plan been determined consistent with Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123), the Company's pro forma net income (loss) and pro
forma net income (loss) per common share would have been as follows at January
31:

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)                                                   2001          2000         1999
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>           <C>          <C>
Net income (loss):
   As reported                                                                     $ (18,562)    $   6,537    $   1,668
=======================================================================================================================
   Pro forma                                                                       $ (19,083)    $   5,680    $     823
=======================================================================================================================
Basic and diluted net income (loss) per share:
   As reported                                                                     $   (1.41)    $    0.50    $    0.13
=======================================================================================================================
   Pro forma                                                                       $   (1.45)    $    0.43    $    0.06
=======================================================================================================================
</TABLE>


         In determining the pro forma compensation cost of the options granted
during fiscal 2001, 2000 and 1999, as specified by SFAS 123, the fair value of
each option grant was estimated on the date of grant using the Black-Scholes
option pricing model. The weighted average assumptions used in these
calculations are summarized below:

<TABLE>
<CAPTION>
                                                                          2001                2000            1999
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>                 <C>             <C>
Risk free interest rate                                                  6.30%               6.24%           4.99%
Expected life of options granted                                         3.28 years          4.60 years      4.90 years
Expected volatility of options granted                                  55.70%              46.29%          44.93%
=======================================================================================================================
</TABLE>


                                       45
<PAGE>


9. INCOME TAXES:

The components of the income tax provision (benefit) are summarized as follows
as of January 31:

<TABLE>
<CAPTION>
(IN THOUSANDS)                                                               2001          2000          1999
--------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>           <C>           <C>
Current:
   Federal                                                              $  (6,783)    $   7,080     $   1,425
   State                                                                       --         1,152           240
Deferred income tax provision (benefit)                                    (5,950)       (2,980)         (428)
--------------------------------------------------------------------------------------------------------------
Income tax provision (benefit)                                          $ (12,733)    $   5,252     $   1,237
==============================================================================================================
</TABLE>

         The current year components of the benefit from income taxes includes a
receivable of federal tax relating to the Internal Revenue Service allowing the
Company to carry back the current year net operating loss to recapture taxes
paid in previous years. The Company has recorded an income tax receivable of
$8.1 million. This receivable is comprised of the recapture of taxes and the
refund of tax deposits made by the Company during the first half of fiscal 2001.

         The primary difference between the federal statutory rate of 35%, 35%
and 34% for the fiscal years ended January 31, 2001, 2000 and 1999,
respectively, and the income tax provision (benefit) represents the impact of
state income taxes, net of the federal benefit. In addition, the fiscal 2000 tax
rate was affected by additional taxes relating to the structure of the sale of
RDO Rental Co.

         The net current deferred tax asset and the net long-term deferred tax
asset (liability) consisted of the following temporary differences between the
financial statement carrying amounts and the tax basis of assets and liabilities
at January 31:

<TABLE>
<CAPTION>
(IN THOUSANDS)                                                                            2001          2000
-------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>           <C>
Accruals and other reserves                                                          $   3,430     $   2,230
Inventory                                                                                2,530         2,120
Compensation accruals                                                                    1,040           560
-------------------------------------------------------------------------------------------------------------
   Net current deferred tax asset                                                        7,000         4,910
-------------------------------------------------------------------------------------------------------------
Property and equipment                                                                  (1,130)         (850)
Goodwill                                                                                 1,360          (880)
Credits and net operating loss carryforwards                                             2,050            --
Other                                                                                      120           270
-------------------------------------------------------------------------------------------------------------
   Net long-term deferred tax asset (liability)                                          2,400        (1,460)
-------------------------------------------------------------------------------------------------------------
   Total                                                                             $   9,400     $   3,450
=============================================================================================================
</TABLE>

10. CAPITAL STOCK AND DIVIDENDS PAYABLE:

CAPITAL STOCK

         The authorized capital stock of the Company consists of 20,000,000
shares of Class A common stock, 7,500,000 shares of Class B common stock and
500,000 shares of preferred stock, each with a par value of $0.01 per share. The
economic rights of each class of common stock are the same, but the voting
rights differ. Each share of Class A common stock is entitled to one vote per
share and each share of Class B common stock is entitled to four votes per
share. In addition, the shares of Class B common stock contain restrictions as
to transferability and are convertible into shares of Class A common stock on a
one-for-one basis.


                                       46
<PAGE>


DIVIDENDS PAYABLE

         Prior to the Company's initial public offering in January 1997, an S
corporation distribution was made in connection with the termination of the
Company's S corporation tax status. A portion of this distribution was retained
by the Company for any potential tax liabilities related to the previously filed
federal and state S corporation tax returns. The balance remaining to be
distributed as of January 31, 2001 was $731,000.

11. COMMITMENTS AND CONTINGENCIES:

OPERATING LEASES

         The Company leases retail space, vehicles and rental equipment under
various noncancelable operating leases. The leases have varying terms and expire
at various dates through 2012. Generally, the leases require the Company to pay
taxes, insurance and maintenance costs. Lease expense was $10.9 million, $13.7
million and $11.3 million for fiscal 2001, 2000 and 1999, respectively.

         Future minimum lease payments, by year, required under leases with
initial or remaining terms of one year or more consist of the following:

(IN THOUSANDS)
-----------------------------------------------------
2002                                         $11,483
2003                                           9,347
2004                                           7,595
2005                                           4,963
2006                                           3,766
Thereafter                                    15,834
-----------------------------------------------------
Total                                        $52,988
=====================================================

GUARANTEES

         Certain credit companies provide financing to the Company's customers.
A portion of this financing is with recourse to the Company. The contingent
liability relating to affiliate contracts is capped at 10% of the amount of the
aggregate outstanding contracts. Certain construction contracts with Deere
Credit are full recourse while agricultural contracts are limited to a cash
deposit amounting to 3% of the aggregate outstanding contracts. The Company also
factors certain accounts receivable to Deere Credit with recourse, which
therefore may be charged back to the Company. The contingent liability relating
to The Associates ranges from 5% to 10% of the individual contract's outstanding
balance. These customer notes are collateralized by the customer-owned
equipment.

As of January 31, 2001, the contingent liability and off-setting deposits are as
follows:

                                                                        FINANCE
                                                     GUARANTEED        DEPOSITS
(IN THOUSANDS)                                          AMOUNTS      RECEIVABLE
--------------------------------------------------------------------------------
Deere Credit Services, Inc.                            $  4,804           $ 857
Associates Commercial Corporation                         8,819              --
ACL Company, LLC (affiliate)                                326              --
Ag Capital Company (affiliate)                              253              --
Other                                                       632              --
--------------------------------------------------------------------------------
Total                                                  $ 14,834           $ 857
================================================================================


                                       47
<PAGE>


MINIMUM REPURCHASE GUARANTEES

         The Company has entered into sales agreements with certain customers,
which are subject to repurchase agreements. Pursuant to these agreements, the
Company, at the discretion of the customer, may be required to repurchase
equipment at specified future dates at specified repurchase prices. With respect
to these agreements, the Company believes the estimated future retail values of
the equipment equals or exceeds the guaranteed repurchase prices. The Company
accounts for significant transactions which have a guaranteed repurchase feature
as leases.

The Company's existing repurchase agreements as of January 31, 2001 expire as
follows:

(IN THOUSANDS)
-----------------------------------------------------
2002                                         $ 3,050
2003                                           2,374
2004                                           1,497
2005                                           1,398
2006                                           1,321
Thereafter                                       ---
-----------------------------------------------------
Total                                        $ 9,640
=====================================================

LITIGATION

         In June 2000, the Company received written notice from JDCEC, effective
June 21, 2001, JDCEC would terminate the Company's dealership agreements for the
Burnsville, Minnesota and Phoenix, Arizona areas of responsibility. JDCEC cited
the Company was allegedly in violation of certain market penetration
requirements in the Company's dealer agreements. JDCEC also filed an arbitration
demand that sought confirmation of its allegations. In July 2000, the Company
filed counter suits against JDCEC, CSFB, and Nortrax. In August 2000, the trial
court ordered the parties to arbitrate these claims. In October 2000, the
Company additionally filed an antitrust suit against CSFB. On December 28, 2000,
all parties entered into a comprehensive settlement agreement resolving these
disputes. As part of the resolution, the Company signed new dealership
agreements with JDCEC.

         In the normal course of business, the Company is subject to various
claims, legal actions, contract negotiations and disputes. Although the ultimate
outcome of such claims cannot be ascertained at this time, it is the opinion of
management, after consultation with counsel, that the resolution of such claims
will not have a material adverse effect on the results of operations and cash
flows of the Company.


                                       48
<PAGE>


12. RELATED-PARTY TRANSACTIONS:

         The Company's summary of significant related-party transactions is as
follows:

         a.       Ag Capital and ACL Company, LLC provide financing to customers
                  purchasing equipment, parts and repair service from the
                  Company. The Company is contingently liable to these related
                  parties on a portion of this customer financing as summarized
                  in Note 11.

         b.       In addition, the Company has floor plan payables, notes
                  payable and long-term debt owed to Ag Capital to finance
                  inventory, various receivables and fixed assets as summarized
                  in Notes 5 and 6. Interest expense paid to related parties
                  totaled $3.2 million, $3.6 million and $2.1 million in fiscal
                  2001, 2000 and 1999, respectively.

         c.       The Company had sales to related parties totaling $2.7
                  million, $2.2 million and $7.1 million in fiscal 2001, 2000
                  and 1999, respectively. The Company also leases certain retail
                  space and vehicles from related parties. Total lease expense
                  for these leases totaled $4.7 million, $6.2 million and $5.9
                  million in fiscal 2001, 2000 and 1999, respectively.

         d.       In fiscal 1999, the Company sold the assets of MVI, its
                  agricultural irrigation equipment business, to a related
                  party. The sales price was approximately $5.0 million
                  resulting in a loss of approximately $1.4 million.

13. SUPPLEMENTAL CASH FLOW DISCLOSURES:

Supplemental cash flow disclosures for the Company as of January 31 are as
follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)                                                              2001         2000         1999
-----------------------------------------------------------------------------------------------------------
<S>                                                                     <C>          <C>          <C>
Cash payments for interest                                              $ 13,230     $ 13,744     $ 13,692
===========================================================================================================
Cash payments for income taxes                                          $  4,663     $  2,444     $  6,730
===========================================================================================================
Supplemental disclosures of non-cash investing and financing
   activities:
      Increase in assets related to acquisitions through issuance
         and assumption of debt                                               --     $ 20,843     $ 25,577
      Decrease in assets related to sale of RDO Rental Co. stock              --     $ 39,217           --
      Increase in long-term debt related to refinancing
          of short-term debt                                                  --     $  5,000           --
      Sale of rental assets for purchaser's assumption of debt                --     $  2,526           --
      Decrease in assets related to sale of dealership assets
         through issuance of a receivable and purchaser's
         assumption of debt                                             $ 10,818           --     $  5,000
===========================================================================================================
</TABLE>


                                       49
<PAGE>


14. SEGMENT INFORMATION:

         The Company's operations are currently classified into four business
segments: construction, truck, agricultural and financial services and
corporate. In past reporting, a fifth business segment, rental, was designated
which included both construction equipment rental operations and agricultural
equipment rental operations. At the end of fiscal 2000, the construction
equipment rental operations were sold. To coincide with how management currently
views the Company's operations, current and future segment reporting will
include the agricultural equipment rental operations in the agricultural
segment. For historical comparisons only, the construction equipment rental
operations are included in the rental segment. Construction operations include
the sale, service and rental of construction and material handling equipment to
customers primarily in the construction, manufacturing, warehousing and utility
industries and to units of government. Truck operations include the sale and
service of heavy-duty and medium-duty trucks to customers primarily in the
transportation and construction industries and to units of government.
Agricultural operations include the sale, service and rental of agricultural
equipment primarily to customers in the agricultural industry. The financial
services operations primarily provide financing arrangements to customers of the
Company's other business segments, and these operations are therefore combined
with corporate activities.

         Identifiable assets are those used exclusively in the operations of
each business segment or which are allocated when used jointly. Corporate assets
are principally comprised of cash, certain property and equipment, and deferred
income taxes. Interest income and interest expense are included in revenues and
cost of revenues, respectively, for the financial services segment.


                                       50
<PAGE>


The following table shows the Company's business segments and related financial
information for fiscal 2001, 2000 and 1999:

<TABLE>
<CAPTION>
                                                                                                 FINANCIAL
                                                                                              SERVICES AND
(IN THOUSANDS)                    CONSTRUCTION          TRUCK   AGRICULTURAL         RENTAL      CORPORATE         TOTAL
-------------------------------------------------------------------------------------------------------------------------
2001:
-------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>            <C>            <C>            <C>           <C>
   Revenues from
      external customers             $ 316,577      $ 187,138      $ 170,891      $      --      $   5,772     $ 680,378
   Interest income                           2             53            562             --             --           617
   Interest expense                      6,506          4,013          2,059             --             --        12,578
   Depreciation and
     amortization                        2,530          1,205          2,697             --          1,033         7,465
   Income (loss) before income
     taxes and minority interest        (9,575)       (24,486)         1,385             --          1,392       (31,284)
   Identifiable assets                 153,512         42,746         69,131             --         40,599       305,988
   Capital expenditures                    786            268          1,856             --          1,565         4,475
=========================================================================================================================

2000:
-------------------------------------------------------------------------------------------------------------------------
   Revenues from                                                                        (1)            (1)
      external customers             $ 336,964      $ 178,774      $ 139,160      $  27,389      $   6,683     $ 688,970
   Interest income                          53            167            570             27             --           817
   Interest expense                      6,594          2,416          3,152          2,374             --        14,536
   Depreciation and
     amortization                        2,509            909          3,235          5,079          1,218        12,950
   Income (loss) before income
     taxes and minority interest         9,687           (223)         1,032         (1,185)         2,418        11,729
   Identifiable assets                 153,790         89,363         76,524             --         42,320       361,997
   Capital expenditures                   (383)           918           (341)         2,231          1,469         3,894
=========================================================================================================================

1999:
-------------------------------------------------------------------------------------------------------------------------
   Revenues from
      external customers             $ 312,194      $  75,119      $ 162,443      $  23,880      $   4,988     $ 578,624
   Interest income                          11             65            534            101             --           711
   Interest expense                      6,304            819          3,398          2,617             --        13,138
   Depreciation and
     amortization                        2,205            414          2,711          4,061          1,115        10,506
   Income (loss) before income
     taxes and minority interest         6,346          1,457         (6,911)           243          1,905         3,040
   Identifiable assets                 173,441         33,638        102,967         41,908         27,266       379,220
   Capital expenditures                  6,211            511          3,511         12,947          1,721        24,901
=========================================================================================================================
</TABLE>

         (1)The Company sold RDO Rental Co. January 31, 2000. The rental segment
includes the operations for RDO Rental Co. for a full year and identifiable
assets are net of the sale. The financial services and corporate segment
includes the receivable and gain on the sale.


                                       51
<PAGE>


15. UNAUDITED QUARTERLY FINANCIAL DATA:

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)    FIRST        SECOND          THIRD         FOURTH     TOTAL YEAR
----------------------------------------------------------------------------------------------------------
FISCAL 2001:
----------------------------------------------------------------------------------------------------------
<S>                                  <C>           <C>            <C>            <C>            <C>
   Total revenues                    $ 185,935     $ 183,452      $ 176,424      $ 134,567      $ 680,378
   Gross profit                         28,968        27,955         24,060         17,812         98,795
   Net income (loss)                       871        (1,297)        (4,171)       (13,965)       (18,562)
   Net income (loss) per share -
      basic and diluted                   0.07         (0.10)         (0.32)         (1.06)         (1.41)
==========================================================================================================

FISCAL 2000:
----------------------------------------------------------------------------------------------------------
   Total revenues                    $ 180,542     $ 177,211      $ 165,522      $ 165,695      $ 688,970
   Gross profit                         30,731        33,195         32,204         25,963        122,093
   Net income (loss)                     2,130         3,842          2,313         (1,748)         6,537
   Net income (loss) per share -
      basic and diluted                   0.16          0.29           0.18          (0.13)          0.50
==========================================================================================================
</TABLE>

See Note 3 for unusual and restructuring charges incurred during the fourth
quarter of fiscal 2001.


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To RDO Equipment Co.:

We have audited the accompanying consolidated balance sheets of RDO Equipment
Co. (a Delaware corporation) and Subsidiaries as of January 31, 2001 and 2000,
and the related consolidated statements of operations, stockholders' equity and
cash flows for each of the three years in the period ended January 31, 2001.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of RDO Equipment Co. and
Subsidiaries as of January 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
January 31, 2001 in conformity with accounting principles generally accepted in
the United States.

Arthur Andersen LLP

Minneapolis, Minnesota,
March 8, 2001


                                       52
<PAGE>


ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE.

           None.


                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

           The information regarding directors under the captions "Election of
Directors--Information About Nominees" and "Election of Directors--Other
Information about Nominees" in the Proxy Statement is incorporated herein by
reference. Information regarding executive officers is presented in Part I of
this Form 10-K as Item 4A.

           The information under the caption "Beneficial Ownership of Management
- Section 16(a) Beneficial Ownership Reporting Compliance" in the Proxy
Statement is incorporated herein by reference.

ITEM 11.   EXECUTIVE COMPENSATION.

           The information under the captions "Election of
Directors--Compensation of Directors" and "Executive Compensation and Other
Benefits" in the Proxy Statement is incorporated herein by reference.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

           The information under the captions "Principal Stockholders" and
"Beneficial Ownership of Management" in the Proxy Statement is incorporated
herein by reference.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

           The information under the caption "Election of Directors - Certain
Relationships and Related Transactions" in the Proxy Statement is incorporated
herein by reference.


                                     PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
           FORM 8-K.

           (a)(1)   FINANCIAL STATEMENTS.

                    None.

           (a)(2)   FINANCIAL STATEMENT SCHEDULES.

                    Schedule II, Valuation and Qualifying Accounts for the Year
           Ended January 31, 2001, is included in this Form 10-K at page 56,
           including Report of Independent Public Accountants.


                                       53
<PAGE>


                    All other financial statement schedules are omitted because
           of the absence of the conditions under which they are required or
           because the information required is included in the consolidated
           financial statements or notes thereto.

           (a)(3)   EXHIBITS.

                    The exhibits to this Form 10-K are listed in the Exhibit
           Index on pages 57, 58 and 59 below. Copies of these exhibits are
           available upon request to RDO Equipment Co., Stockholder Relations,
           P.O. Box 7160, Fargo, North Dakota 58106-7160 or to
           invest@rdoequipment.com.

           (b)   REPORTS ON FORM 8-K.

                    None.


                                       54
<PAGE>


                                   SIGNATURES

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

Date: April 30, 2001
                                 RDO EQUIPMENT CO.

                                 By: /s/ Ronald D. Offutt
                                     --------------------
                                     Ronald D. Offutt
                                     Chairman and Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on April 30, 2000 by the following persons on
behalf of the registrant and in the capacities indicated.

Signature                        Title
---------                        -----

/s/ Ronald D. Offutt             Chairman of the Board, Chief Executive Officer,
-----------------------------    President and Director (principal executive
Ronald D. Offutt                 officer)

/s/ Thomas K. Espel              Chief Financial Officer and Treasurer
-----------------------------    (principal financial officer)
Thomas K. Espel

/s/ David M. Horner              Director of Accounting and Reporting
-----------------------------    (principal accounting officer)
David M. Horner

/s/ Paul T. Horn                 Director
-----------------------------
Paul T. Horn

/s/ Allan F. Knoll               Secretary and Director
-----------------------------
Allan F. Knoll

/s/ Bradford M. Freeman          Director
-----------------------------
Bradford M. Freeman

/s/ Ray A. Goldberg              Director
-----------------------------
Ray A. Goldberg

/s/ Norman M. Jones              Director
-----------------------------
Norman M. Jones

/s/ James D. Watkins             Director
-----------------------------
James D. Watkins


                                       55
<PAGE>


                                   SCHEDULE II


                        VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED JANUARY 31, 2001, 2000, AND 1999

<TABLE>
<CAPTION>
                                  BALANCE AT          ADDITIONS                        BALANCE AT
                                   BEGINNING      CHARGED TO COSTS                       END OF
                                   OF PERIOD        AND EXPENSES        DEDUCTIONS       PERIOD
--------------------------------------------------------------------------------------------------
<S>                                <C>                <C>                <C>             <C>
January 31, 2001:
  Accrued Liabilities:
     Restructuring Reserve             --             $985,232              --          $985,232

January 31, 2000:
  Accrued Liabilities:
     Restructuring Reserve         $285,000              --              $285,000          --

January 31, 1999:
  Accrued Liabilities:
     Restructuring Reserve            --             $2,200,000         $1,915,000      $285,000
--------------------------------------------------------------------------------------------------
</TABLE>




              REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE


To RDO Equipment Co:


         We have audited, in accordance with auditing standards generally
accepted in the United States, the financial statements included in this Form
10-K, and have issued our report thereon dated March 8, 2001. Our audit was made
for the purpose of forming an opinion on those statements taken as a whole. The
schedule listed in Item 14(a)(2), is the responsibility of the Company's
management, is presented for purposes of complying with Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

Arthur Andersen LLP

Minneapolis, Minnesota,
March 8, 2001


                                       56
<PAGE>


              EXHIBIT INDEX FOR FISCAL YEAR ENDED JANUARY 31, 2001

<TABLE>
<CAPTION>
ITEM NO.         ITEM                                             METHOD OF FILING
--------         ----                                             ----------------
<S>              <C>                                              <C>
3.1              Certificate of Incorporation                     Incorporated by reference to Exhibit 3.1 to the
                                                                  Company's Registration Statement on Form S-1
                                                                  (File No. 333-13267).

3.2              Bylaws                                           Incorporated by reference to Exhibit 3.2 to the
                                                                  Company's Registration Statement on Form S-1
                                                                  (File No. 333-13267).

4.1              Specimen Form of the Company's Class A Common    Incorporated by reference to Exhibit 4.2 to the
                 Stock Certificate                                Company's Registration Statement on Form S-1
                                                                  (File No. 333-13267).

4.2              Specimen Form of the Company's Class B           Incorporated by reference to Exhibit 4.3 to the
                 Common Stock Certificate                         Company's Registration Statement on Form S-1
                                                                  (File No. 333-13267).

10.1             Agreement between Ronald D. Offutt, RDO          Incorporated by reference to Exhibit 10.1 to the
                 Equipment Co., John Deere Company and John       Company's Registration Statement on Form S-1
                 Deere Construction Equipment Company             (File No. 333-13267).

10.2             Agreement between RDO Equipment Co., John        Incorporated by reference to Exhibit 10.15 to
                 Deere Company and John Deere Construction        the Company's Registration Statement on Form S-1
                 Equipment Company                                (File No. 333-13267).

10.3             Form of Deere Agricultural Dealer Agreement      Incorporated by reference to Exhibit 10.2 to the
                 Package                                          Company's Registration Statement on Form S-1
                                                                  (File No. 333-13267).

10.4             Dealer Agreement dated December 28, 2000         Incorporated by reference to Exhibit 10.1 to the
                 between John Deere Construction Equipment        Company's Form 8-K dated December 29, 2001.
                 Company and RDO Construction Equipment Co.       (File No. 1-12641)

10.5             Form of Deere Construction Equipment Dealer      Incorporated by reference to Exhibit 10.17 to
                 Agreement for Special Products                   the Company's Annual Report on Form 10-K for the
                                                                  fiscal year ended January 31, 2000. (File No.
                                                                  1-12641)

10.6             Deere Agricultural Dealer Finance Agreement      Incorporated by reference to Exhibit 10.6 to the
                                                                  Company's Registration Statement on Form S-1
                                                                  (File No. 333-13267).

10.7             Deere Construction Dealer Finance Agreement      Incorporated by reference to Exhibit 10.7 to the
                                                                  Company's Registration Statement on Form S-1
                                                                  (File No. 333-13267).
</TABLE>


                                       57
<PAGE>


<TABLE>
<CAPTION>
ITEM NO.         ITEM                                             METHOD OF FILING
--------         ----                                             ----------------
<S>              <C>                                              <C>
10.8             Indemnification Agreement between RDO            Incorporated by reference to Exhibit 10.16 to
                 Equipment Co. and Deere & Company                the Company's Annual Report on Form 10-K for
                                                                  the fiscal year ended January 31, 2000. (File
                                                                  No. 1-12641)

10.9             Release and Covenant Not to Sue dated December   Incorporated by reference to Exhibit 10.2 to
                 28, 2000 by RDO Equipment Co., RDO               the Company's Form 8-K dated December 29, 2001.
                 Construction Equipment Co., and Ronald D.        (File No. 1-12641)
                 Offutt and accepted by John Deere
                 Construction Equipment Company

10.10            Settlement Agreement and Mutual Release          Filed herewith.
                 between and among Ronald D. Offutt, RDO
                 Equipment Co., its affiliates and
                 subsidiaries, John Deere Construction
                 Equipment Company, its affiliates and
                 subsidiaries and Nortrax, Inc., its
                 affiliates and subsidiaries

10.11            Settlement Agreement and Mutual Release          Filed herewith.
                 between and among RDO Equipment Co., its
                 affiliates and subsidiaries, including RDO
                 Agriculture Equipment Co. and Salinas
                 Equipment Distributors, Inc. and John Deere
                 Company - a Division of Deere & Company

10.12            Corporate Service Agreement between RDO          Incorporated by reference to Exhibit 10.10 to
                 Equipment Co. and R.D. Offutt Company, dated     the Company's Registration Statement on Form
                 as of November 1, 1996                           S-1 (File No. 333-13267).

10.13            Tax Agreement Relating to S Corporation          Incorporated by reference to Exhibit 10.14 to
                 Distribution, with Supplement                    the Company's Registration Statement on Form
                                                                  S-1 (File No. 333-13267).

10.14            RDO Equipment Co. 1996 Stock Incentive Plan,     Incorporated by reference to Exhibit 10.8 to
                 including forms of option agreements*            the Company's Annual Report on Form 10-K for
                                                                  the fiscal year ended January 31, 1997. (File
                                                                  No. 1-12641)

10.15            Form of Agreement re: Confidentiality,           Incorporated by reference to Exhibit 10.15 to
                 Assignment of Inventions and Non-Competition*    the Company's Annual Report on Form 10-K for
                                                                  the fiscal year ended January 31, 1997. (File
                                                                  No. 1-12641)

10.16            Form of Indemnification Agreement*               Incorporated by reference to Exhibit 10.9 to
                                                                  the Company's Registration Statement on Form
                                                                  S-1 (File No. 333-13267).

10.17            RDO Equipment Co. Credit Agreement with Ag       Incorporated by reference to Exhibit 10.2 to
                 Capital Company                                  the Company's Quarterly Report on Form 10-Q for
                                                                  the fiscal quarter ended October 31, 2000.
                                                                  (File No. 1-12641)
</TABLE>


                                       58
<PAGE>


<TABLE>
<CAPTION>
ITEM NO.         ITEM                                             METHOD OF FILING
--------         ----                                             ----------------
<S>              <C>                                              <C>
10.18            RDO Material Handling Co. Credit Agreement       Incorporated by reference to Exhibit 10.3 to
                 with Ag Capital Company                          the Company's Quarterly Report on Form 10-Q for
                                                                  the fiscal quarter ended October 31, 2000.
                                                                  (File No. 1-12641)

10.19            RDO Financial Services Co. Credit Agreement      Incorporated by reference to Exhibit 10.4 to
                 with Norwest Bank North Dakota, N.A. and Ag      the Company's Quarterly Report on Form 10-Q for
                 Capital Company                                  the fiscal quarter ended October 31, 2000.
                                                                  (File No. 1-12641)

10.20            First Amendment to RDO Financial Services Co.    Filed herewith.
                 Credit Agreement with Wells Fargo Bank North
                 Dakota, N.A., f/k/a Norwest Bank North Dakota,
                 National Association and Ag Capital Company

10.21            RDO Construction Equipment Co. and RDO           Incorporated by reference to Exhibit 10.1 to
                 Agriculture Equipment Co. amended and restated   the Company's Quarterly Report on Form 10-Q for
                 loan agreement with John Deere Construction      the fiscal quarter ended July 31, 2000. (File
                 Equipment Company, Deere Credit, Inc., and       No. 1-12641)
                 John Deere Company

10.22            RDO Construction Equipment Co. and RDO           Incorporated by reference to Exhibit 10.2 to
                 Agriculture Equipment Co. amended and restated   the Company's Quarterly Report on Form 10-Q for
                 security agreement with John Deere               the fiscal quarter ended July 31, 2000. (File
                 Construction Equipment Company, Deere Credit,    No. 1-12641)
                 Inc., and John Deere Company

10.23            RDO Construction Equipment Co. and RDO           Incorporated by reference to Exhibit 10.3 to
                 Agriculture Equipment Co. guaranty with John     the Company's Quarterly Report on Form 10-Q for
                 Deere Construction Equipment Company, Deere      the fiscal quarter ended July 31, 2000. (File
                 Credit, Inc., and John Deere Company             No. 1-12641)

10.24            RDO Agriculture Equipment Co. and RDO            Incorporated by reference to Exhibit 10.1 to
                 Construction Equipment Co. Addendum to Amended   the Company's Quarterly Report on Form 10-Q for
                 and Restated Loan Agreement with John Deere      the fiscal quarter ended October 31, 2000.
                 Construction Equipment Company, Deere Credit,    (File No. 1-12641)
                 Inc., and John Deere Company

21.1             Subsidiaries                                     Filed herewith.

23.1             Consent of Independent Public Accountants        Filed herewith.
</TABLE>

----------------------------------
*         Management contract or compensatory plan or arrangement filed as an
          exhibit pursuant to Item 14(c) of Form 10-K.


                                       59