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

FORM 10-Q

/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

/x/		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended October 31, 2000
or
/ /		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended April 30, 2000

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 33-99834

DAKOTA GROWERS PASTA COMPANY
(Exact name of registrant as specified in its charter)

North Dakota
(State of incorporation)

45-0423511
(IRS Employer Identification No.)

One Pasta Avenue, P.O. Box 21, Carrington, ND 58421-0021
(Address of principal executive offices including zip code)

(701) 652-2855
(Registrant's telephone number, including area code)

NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)

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. Yes /x/ No / /

The number of shares outstanding of the Registrant's classes of common stock were 1,~~158~~156 shares of membership stock, par value $125.00, and 11,253,121 of equity stock, par value $2.50, as of ~~June~~December 1215, 2000.

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DAKOTA GROWERS PASTA COMPANY CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share Information)

CONSOLIDATED BALANCE SHEETS

					October 31, 2000			July 31, 2000
					(Unaudited)
ASSETS
CURRENT ASSETS
	Cash and cash equivalents				$	2,949		$	1,725
	Short-term investments (restricted)					1,974			1,974
	Trade accounts receivable, less allowance for cash discounts and doubtful accounts of $428 and $348, respectively					11,835			12,890
	Other receivables					597			593
	Inventories					20,736			21,781
	Prepaid expenses					1,489			1,603

			Total current assets			39,580			40,566

PROPERTY AND EQUIPMENT
	In service					110,275			110,021
	Construction in process					2,991			2,560

						113,266			112,581
		Less accumulated depreciation				(28,731	)		(27,009	)

			Net property and equipment			84,535			85,572

INVESTMENT IN COOPERATIVE BANKS						2,037			2,037

OTHER ASSETS						3,307			3,682

					$	129,459		$	131,857

LIABILITIES AND MEMBERS' INVESTMENT
CURRENT LIABILITIES
	Notes payable and current portion of long-term debt				$	3,734		$	4,979
	Accounts payable					6,180			4,104
	Dividends payable					4,477			—
	Accrued grower payments					1,178			1,287
	Accrued liabilities					5,065			5,107

			Total current liabilities			20,634			15,477
COMMITMENTS AND CONTINGENCIES
LONG-TERM DEBT, net of current portion						49,733			51,626
DEFERRED INCOME TAXES						4,016			4,095

			Total liabilities			74,383			71,198

REDEEMABLE PREFERRED STOCK
	Series A, 6% non-cumulative, $100 par value, issued 700 and 733 shares, respectively					70			73
	Series B, 2% non-cumulative, $100 par value, issued 525 shares					53			53

			Total preferred stock			123			126

MEMBERS' INVESTMENT
	Convertible preferred stock Series C, 6% non-cumulative, $100 par value, issued 924 shares					92			92
	Membership stock, $125 par value, issued 1,156 and 1,158 shares, respectively					145			145
	Equity stock, $2.50 par value, issued 11,253,121 shares					28,133			28,133
	Additional paid-in capital					22,876			22,876
	Accumulated allocated earnings					4,596			1,931
	Accumulated unallocated earnings (deficit)					(889	)		7,356

			Total members' investment			54,953			60,533

				Total liabilities and members' investment	$	129,459		$	131,857

See ~~(In~~Notes ~~Thousands,~~to ~~Except~~Consolidated ~~Share~~Financial ~~Information)~~ Statements

ASSETS

				(Unaudited) April 30, 2000			July 31, 1999
CURRENT ASSETS
	Cash and cash equivalents			$	58		$	3,425
	Short-term investments (restricted)				1,974			513
	Receivables
		Trade accounts receviable, less allowance for cash discounts and doubtful accounts of $308 and $193, respectively			13,118			15,843
		Other receivables			484			1,751
					13,602			17,594
	Short-term note receivable				—			1,884
	Inventories				23,012			18,681
	Prepaid expenses				997			1,790
		Total current assets			39,643			43,887
PROPERTY AND EQUIPMENT
	In service				109,135			107,151
	Construction in process				2,924			547
					112,059			107,698
		Less accumulated depreciation			(25,973	)		(20,529	)
			Net property and equipment		86,086			87,169
INVESTMENT IN COOPERATIVE BANKS					2,037			2,073
OTHER ASSETS					2,741			2,744
				$	130,507		$	135,873

(continued on next page)

~~LIABILITIES~~ DAKOTA ~~AND~~GROWERS ~~MEMBERS'~~PASTA ~~INVESTMENT~~ COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Amounts) (Unaudited)

					(Unaudited) April 30, 2000			July 31, 1999
				Three Months Ended October 31,
CURRENT LIABILITIES
				2000			1999
	Notes payable and current portion of long-term debt				$	6,350		$	3,194
Net revenues (net of discounts and allowances of $4,864 and $5,514, respectively)				$	33,283		$	35,565
	Excess outstanding checks over cash on deposit					1,193			—
Cost of product sold					30,803			28,785
	Accounts payable					2,655			3,860
Gross proceeds					2,480			6,780
	Accrued grower payments					300			1,119
Marketing, general and administrative expenses					2,747			2,729
	Accrued liabilities					3,659			4,563
Operating proceeds (loss)					(267	)		4,051
	Deferred income taxes					—			86
Other income (expense)
		Total current liabilities				14,157			12,822
	Interest and other income				139			192
COMMITMENTS AND CONTINGENCIES
	Interest expense, net				(1,053	)		(1,199	)
LONG-TERM DEBT, net of current portion						52,317			59,116
Income (loss) before income taxes					(1,181	)		3,044
DEFERRED INCOME TAXES						4,175			4,900
Income tax benefit					79			—
		Total liabilities				70,649			76,838
Net income (loss) from patronage and non-patronage business					(1,102	)		3,044
PREFERRED STOCK
Dividends on preferred stock					12			1
	Redeemable preferred stock
Net earnings (loss) from patronage and non-patronage business available for members				$	(1,114	)	$	3,043
		Series A, 6% non-cumulative, $100 par value, issued 767 shares as of April 30, 2000				77			—
Average equity shares outstanding					11,253			11,097
		Series B, 2% non-cumulative, $100 par value, issued 525 shares				53			53
Net earnings (loss) from patronage and non-patronage business per average equity share outstanding
			Total preferred stock			130			53
	Basic			$	(0.10	)	$	0.27
MEMBERS' INVESTMENT
	Convertible preferred stock
		Series C, 6% non-cumulative, $100 par value, issued 924 shares as of April 30, 2000				92			—
	Membership stock, $125 par value, issued 1,158 and 1,152 shares as of April 30, 2000 and July 31, 1999, respectively					145			144
	Equity stock, $2.50 par value, issued 11,253,121 and 11,097,409 shares as of April 30, 2000 and July 31, 1999, respectively					28,133			27,743
	Additional paid-in capital					22,876			22,074
	Accumulated allocated earnings					1,931			4,896
	Accumulated unallocated earnings					6,551			4,125
		Total members' investment				59,728			58,982
			Total liabilities and members' investment		$	130,507		$	135,873

See Notes to Consolidated Financial Statements

DAKOTA GROWERS PASTA COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited)

CONSOLIDATED STATEMENTS OF OPERATIONS

			Three Months Ended October 31,
			2000			1999
OPERATING ACTIVITIES
	Net income (loss)		$	(1,102	)	$	3,044
	Add (deduct) non-cash items
		Depreciation and amortization		2,211			2,339
		Non-cash portion of patronage dividends		—			(40	)
		Deferred income taxes		(79	)		—
	Changes in assets and liabilities
		Trade receivables		1,055			205
		Other receivables		(4	)		(457	)
		Inventories		1,045			504
		Prepaid expenses		72			441
		Other assets		1			(674	)
		Accounts payable		2,076			(43	)
		Grower payables		(109	)		(41	)
		Other accrued liabilities		(42	)		186

NET CASH FROM OPERATING ACTIVITIES				5,124			5,464

INVESTING ACTIVITIES
	Purchases of property and equipment			(685	)		(2,437	)
	Receipts on note receivable			—			1,884
	Payments for package design costs			(73	)		(133	)

NET CASH USED IN INVESTING ACTIVITIES				(758	)		(686	)

FINANCING ACTIVITIES
	Net change in short-term debt			(1,875	)		—
	Payments on long-term debt			(1,263	)		(1,222	)
	Preferred stock retirements			(3	)		—
	Dividends paid on preferred stock			(1	)		—
	Memberships issued, net			—			2

NET CASH USED IN FINANCING ACTIVITIES				(3,142	)		(1,220	)

NET CHANGE IN CASH AND CASH EQUIVALENTS				1,224			3,558
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD				1,725			3,425

CASH AND CASH EQUIVALENTS, END OF PERIOD			$	2,949		$	6,983

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
	Cash payments for
		Interest	$	1,539		$	676

		Income taxes	$	2		$	475

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
	Declaration of patronage distribution		$	4,466		$	5,787
	Declaration of dividends on equity stock			—			1,110
	Declaration of dividends on preferred stock			11			1

			$	4,477		$	6,898

(In Thousands, Except Share Information)

(Unaudited)

			Three Months Ended April 30,
			2000			1999
Net revenues (net of discounts and allowances of $3,927 and $4,672, respectively)			$	35,209		$	31,907
Cost of product sold				30,185			27,325
Gross proceeds				5,024			4,582
Marketing, general and administrative expenses				2,827			1,910
Operating proceeds				2,197			2,672
Other income (expense)
	Interest and other income			109			286
	Loss on sale of property and equipment			(45	)		—
	Interest expense, net			(1,067	)		(1,708	)
Income before income taxes				1,194			1,250
Income tax benefit				742			—
Net income from patronage and non-patronage business				1,936			1,250
Dividends on preferred stock				1			78
Net earnings from patronage and non-patronage business available for members			$	1,935		$	1,172
Average equity shares outstanding				11,183			8,603
Net earnings from patronage and non-patronage business per average equity share outstanding
		Basic	$	0.17		$	0.14

See Notes to Consolidated Financial Statements

DAKOTA GROWERS PASTA COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The ~~CONSOLIDATED~~following ~~STATEMENTS~~notes OFshould ~~OPERATIONS~~ be read in conjunction with the notes to the financial statements for the year ended July 31, 2000 as filed in the Company's Form 10-K.

(In Thousands, Except Share Information) (Unaudited)

				Nine Months Ended April 30,
				2000			1999
Net revenues (net of discounts and allowances of $13,507 and $14,195, respectively)				$	104,873		$	93,340
Cost of product sold					88,416			76,891
Gross proceeds					16,457			16,449
Marketing, general and administrative expenses					7,781			6,621
Operating proceeds					8,676			9,828
Other income (expense)
	Interest and other income				392			331
	Loss on sale of property and equipment				(36	)		—
	Interest expense, net				(3,453	)		(4,243	)
Income before income taxes					5,579			5,916
Income tax benefit					1,242			—
Income before cumulative effect of change in accounting principle					6,821			5,916
Cumulative effect on prior years (to July 31, 1998) of changing to a different inventory valuation method					—			(3,429	)
Net income from patronage and non-patronage business					6,821			2,487
Dividends on preferred stock					2			143
Net earnings from patronage and non-patronage business available for members				$	6,819		$	2,344
Average equity shares outstanding					11,137			7,772
Net earnings from patronage and non-patronage business per average equity share outstanding
		Basic, before cumulative effect of accounting change		$	0.61		$	0.74
		Cumulative effect of accounting change			—			(0.44	)
			Basic	$	0.61		$	0.30

See Notes to Consolidated Financial Statements

DAKOTA GROWERS PASTA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands) (Unaudited)

			Nine Months Ended April 30,
			2000			1999
OPERATING ACTIVITIES
	Net income		$	6,821		$	2,487
	Add (deduct) non-cash items
		Cumulative effect of changing to a different inventory valuation method		—			3,429
		Depreciation and amortization		5,995			5,303
		Non-cash portion of patronage dividends		18			288
		Cooperative bank stock valuation adjustment		36			—
		Loss on sale of property and equipment		36			—
		Deferred income taxes		(811	)		—
	Changes in assets and liabilities
		Trade receivables		2,725			400
		Other receivables		1,267			(215	)
		Inventories		(4,331	)		(3,145	)
		Prepaid expenses		793			372
		Other assets		72			18
		Accounts payable		(1,205	)		(1,061	)
		Excess outstanding checks over cash deposits		1,193			(2,336	)
		Grower payables		(819	)		(231	)
		Other accrued liabilities		(904	)		3,664
NET CASH FROM OPERATING ACTIVITIES				10,886			8,973
INVESTING ACTIVITIES
	Purchases of property and equipment			(4,735	)		(11,790	)
	Proceeds from sale of property and equipment			127			—
	Receipts on note receivable			1,884			—
	Net purchase of short-term investments			(1,461	)		—
	Payments for package design costs			(427	)		—
NET CASH USED IN INVESTING ACTIVITIES				(4,612	)		(11,790	)
FINANCING ACTIVITIES
	Net change in short-term debt			3,875			—
	Payments on long-term debt			(7,518	)		(3,069	)
	Preferred stock issued			58			—
	Preferred stock retirements			(3	)		(2,792	)
	Dividends paid on preferred stock			(2	)		(143	)
	Memberships issued (retired), net			1			6
	Equity stock issued			—			27,539
	Options exercised			1,306			—
	Patronage distributions			(7,358	)		(7,338	)
NET CASH FROM (USED IN) FINANCING ACTIVITIES				(9,641	)		14,203
NET CHANGE IN CASH AND CASH EQUIVALENTS				(3,367	)		11,386
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD				3,425			182
CASH AND CASH EQUIVALENTS, END OF PERIOD			$	58		$	11,568
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
	Cash payments for
		Interest	$	3,007		$	3,646
		Income taxes	$	546

See Notes to Consolidated Financial Statements

DAKOTA GROWERS PASTA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following notes should be read in conjunction with the notes to the financial statements for the year ended July 31, 1999 as filed in the Company's Form 10-K.

NOTE 1—ORGANIZATION

Dakota Growers Pasta Company ("Dakota Growers", "the Company" or "the Cooperative") is organized as a farmers' cooperative for purposes of manufacturing food for human consumption from durum and other grain products. Net proceeds are allocated to patrons who are members on the basis of their participation in the Cooperative.

The ownership of membership stock, which signifies membership in the Cooperative, is restricted to producers of agricultural products. The ownership of equity stock is restricted to members of the Cooperative. Preferred stock may be held by persons who are not members of the Cooperative.

NOTE 2—~~FINANCIAL~~BASIS ~~STATEMENT~~OF PRESENTATION

The unaudited consolidated financial ~~information~~statements included herein as of ~~April~~October 3031, 2000 and for the three ~~and~~months ~~nine month periods~~ ended ~~April~~October 3031, 2000 and 1999, is ~~unaudited~~have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, inthey do not include all the information and footnotes required by generally accepted accounting principles. In the opinion of management, ~~reflects~~ all adjustments (consisting ~~only~~ of normal recurring accruals) considered necessary for a fair presentation ofhave ~~financial~~been ~~position and results of operations for the interim periods presented~~included. Operating results for the three ~~and~~months ~~nine month periods~~ ended ~~April~~October 3031, 2000 are not necessarily indicative of the results that may be expected for the year ended July 31, ~~2000~~2001. The information included in this Form 10-Q should be read in conjunction with Management's Discussion and Analysis and the consolidated financial statements and footnotes included in the Company's Form 10-K for the year ended July 31, ~~1999~~2000. The information contained in the balance sheet as of July 31, ~~1999~~2000 was derived from the Company's audited annual report for fiscal ~~1999~~2000. Reclassifications ~~may~~ have been made to facilitate comparability with current presentation. Such reclassifications have no effect on the net results of operations.

The financial information presented herein includes the consolidated balances and results of operations of Dakota Growers Pasta Company and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated.

NOTE 3—~~CHANGE IN INVENTORY VALUATION METHOD~~INVENTORIES

InInventories ~~the~~are ~~third~~valued ~~quarter~~at ~~of fiscal year 1999, the method of computing inventory valuations was changed from the net realizable value method used in prior years to~~ lower of cost or market,. ~~determined~~Inventories onas aof ~~FIFO basis~~October 31, ~~using~~2000 ~~product~~include ~~specific~~raw ~~standard~~materials ~~costs.~~of As$4,053,000 ~~required~~and byfinished ~~generally~~goods ~~accepted accounting principles~~of $16,683,000. ~~the~~Inventories ~~impact~~at ~~of this change on prior years (~~July 31, ~~1998)~~2000 include raw materials of $35,~~429~~329,000 isand ~~included~~finished asgoods aof ~~charge against income for the nine months ended April 30~~$16, ~~1999 presented herein~~452,000.

NOTE 4—~~CASH~~LOAN ~~AND CASH EQUIVALENTS~~AGREEMENT

~~Cash~~The ~~and~~Company ~~cash~~was ~~equivalents~~not ~~include~~in compliance with the consolidated funded debt to consolidated cash onflow ~~hand~~ratio ~~and~~set forth in ~~financial~~the ~~institutions~~original note agreement with institutional investors. The Company obtained a waiver as of October 31, ~~and~~2000 ~~investments~~for this event along with ~~maturities~~an amendment to the original note agreement. The amendment requires that the ratio of ~~less~~consolidated funded ~~than~~debt 90to ~~days~~consolidated cash flow not exceed 3.50 to 1 for the period from August 1, 2000 to October 31, 2000, 3.40 to 1 for the period from November 1, 2000 to January 31, 2001, and 3.00 to 1 at all times thereafter, in each case determined as of the end of each fiscal quarter for the immediately preceding four fiscal quarters, treating such period of four fiscal quarters as a single accounting period.

~~NOTE~~ 5~~—SHORT-TERM INVESTMENTS (RESTRICTED)~~

~~Short-term~~NOTE ~~investments~~5—INCOME ~~(restricted) represent certificates of deposit, which are pledged as security for loans made by a financial institution to officers of the Company to exercise stock options.~~ TAXES

NOTE 6—INVENTORIES

Inventories are valued at lower of cost or market. Inventories as of April 30, 2000 include raw materials of $4,419,000 and finished goods of $18,593,000. Inventories at July 31, 1999 include raw materials of $5,435,000 and finished goods of $13,246,000.

NOTE 7—INVESTMENTS IN COOPERATIVE BANKS

Investments in cooperative banks are stated at cost, plus unredeemed patronage refunds received in the form of capital stock.

The Company was notified of reductions in the Company's estimated patronage refunds from CoBank as well as the Company's investment in CoBank during the second quarter of fiscal 2000. The Company has recorded a charge against income for the adjustment of its estimated patronage refund and a write down in the value of its investment in CoBank totaling $59,000 for the nine months ended April 30, 2000. In the three months ended April 30, 1999, the Company recorded an adjustment of its estimated patronage refund and write down of the value of its investment in St. Paul Bank for Cooperatives, which is now part of CoBank, totaling $597,000.

NOTE 8—LOAN AGREEMENT

In November 1999, the Company renewed its $15 million seasonal line of credit with CoBank. The seasonal loan has a variable interest rate and matures on December 31, 2000. It is secured by property, equipment, and current assets of the Company. The balance outstanding on the line of credit totaled $3,875,000 as of April 30, 2000.

NOTE 9—STOCK OPTIONS

During the second quarter of fiscal year 2000, the Board of Directors rescinded certain qualified stock options on 3,697 shares of Class C convertible preferred stock with a total exercise price of $585,000. The Board approved the issuance of nonqualified stock options for 5,046 shares of Class C preferred stock with a total exercise price of $908,000.

The Company's officers have exercised stock options on 7,412 shares of Class C preferred stock, of which 6,488 shares were converted into 155,712 shares of equity stock, during fiscal 2000. The Company realized proceeds totaling $1,305,000 from the exercise of these options.

NOTE 10—INCOME TAXES

The Company is a non-exempt cooperative as defined by Section 1381(a)(2) of the Internal Revenue Code ("Code"). Accordingly, net margins from business transacted with its member patrons which are allocated, qualified, and paid as prescribed in Section 1382 of the Code will be taxable to the members and not to the Company. Net margins and member allocations are determined on the basis of accounting used for financial reporting purposes. To the extent that net margins are not allocated and paid as stated above or arise from business done with non-members, the Company shall have taxable income subject to corporate income tax rates. Cooperative organizations have 8¹/2 months after their fiscal year end to make such allocations in the form of written notices of allocation or cash.

8 The Company has recorded an income tax benefit of $79,000 for the three months ending October 31, 2000 resulting from reductions in deferred tax liabilities associated with differences between the book and tax basis of property and equipment.

~~The~~NOTE ~~Company~~6—PATRONAGE ~~has recorded an income tax benefit of $742,000 for the three months ending April 30, 2000 and $1,242,000 for the nine months ended April 30, 2000.~~ BUSINESS

~~Income~~The Company's business is conducted on a cooperative basis. The Company calculates income from patronage sources based on income derived from bushels of durum ~~tax~~delivered ~~benefit~~by ~~for~~members. Non-patronage income is derived from the ~~nine~~resale ~~months~~of spring wheat flour purchased from non-members and blended with other flours, the resale of pasta purchased from non-members, the resale of semolina purchased from non-members, certain amounts of interest income, rental income from Company assets and any income taxes assessed on non-member business. For the three months ended ~~April~~October 3031, 2000, ~~consists~~the net loss allocable to patronage business totaled $913,000. This compares to $3,153,000 of net earnings allocable to patronage business for the ~~following~~three ~~(in~~months ~~thousands):~~ended October 31, 1999.

Current income tax benefit		$	431
Deferred income taxes			811
	Income tax benefit	$	1,242

NOTE 7—EARNINGS (LOSS) PER SHARE

The ~~current~~ ~~income~~Company ~~tax~~allocates ~~benefit~~its ~~relates~~earnings to(loss) aand ~~reclassification~~patronage ofdistributions ~~approximately~~based ~~$2,000,000~~on ofpatronage ~~income~~business ~~from~~(bushels ~~nonpatronage~~of todurum ~~patronage~~delivered, ~~for~~which ~~the~~approximates ~~year~~one ~~ended~~bushel ~~July 31, 1999. The~~of ~~reclassification~~durum ~~was~~per ~~based~~equity onshare). ~~cooperative~~For ~~income~~presentation ~~tax~~purposes, ~~developments~~it ~~taking~~has ~~place~~calculated inbasic ~~the~~net ~~second~~earnings ~~quarter~~(loss) ofper ~~fiscal~~share ~~year~~by ~~2000.~~dividing ~~The~~earnings ~~deferred~~(loss) ~~income~~from ~~tax~~patronage ~~benefit~~and ~~relates~~non-patronage ~~primarily~~business toavailable for ~~reductions~~members in(net ~~deferred tax~~income ~~liabilities~~(loss) ~~associated~~less ~~with~~preferred ~~differences~~dividends) ~~between~~by the ~~book~~weighted ~~and~~average ~~tax~~number ~~basis~~ of ~~property~~equity shares effective and ~~equipment~~outstanding during the period.

~~NOTE~~ The Company ~~11—PATRONAGE~~had ~~BUSINESS~~ convertible preferred stock and stock options for convertible preferred stock outstanding during the periods presented. Fully diluted earnings (loss) per share are calculated for the assumed conversion of these dilutive securities. As the Company's stock is only traded in a small secondary market through private transactions, the Company has assumed the proceeds from the exercise of stock options would reduce debt and, thus, interest expense. Fully diluted earnings (loss) per share are not presented, as the dilutive effect of outstanding convertible preferred stock and stock options is not material for the periods presented.

~~The~~NOTE Company's business is conducted on a cooperative basis. The Company calculates income from patronage sources based on income derived from bushels of durum delivered by members. Non-patronage income is derived from the resale of spring wheat flour purchased from non-members and blended with other flours, the resale of pasta purchased from non-members, the resale of semolina purchased from non-members, certain amounts of interest income, rental income from Company assets and any income taxes assessed on non-member business. For the nine months ended April 30, 2000, net earnings allocable to patronage business totaled $6,317,000. This compares to $5,755,000 of earnings before the cumulative effect of a change in accounting method and $2,326,000 after the effect of this change allocable to patronage business last year. 8—DIVIDENDS

~~NOTE~~ The ~~12—EARNINGS~~Board ~~PER~~of ~~SHARE~~ Directors authorized a qualified patronage allocation of $4,466,000 ($.4284 per bushel acquired or $.40 per average outstanding equity share) for fiscal year 2000 at its November 2000 meeting. The total qualified patronage allocation was paid in cash on November 30, 2000. The Board also voted to allocate, on a non-qualified basis, the remainder of the fiscal 2000 patronage earnings totaling $2,665,000.

The Company allocates its earnings and patronage distributions based on patronage business (bushels of durum delivered, which approximates one bushel of durum per equity share). For presentation purposes, it has calculated basic net earnings per share by dividing earnings from patronage and non-patronage business available for members (net income less preferred dividends) by the weighted average number of equity shares effective and outstanding during the period. 6

~~The~~ ~~Company~~In ~~had~~taking ~~convertible~~these ~~preferred~~actions, ~~stock~~the ~~and~~Board ~~stock~~of ~~options~~Director ~~for~~rescinded ~~convertible preferred stock outstanding during~~ the ~~periods~~patronage ~~presented.~~allocations ~~Fully~~authorized ~~diluted~~at ~~earnings per share are calculated for~~ the ~~assumed~~October 2000 ~~conversion~~meeting ofas ~~these~~reported ~~dilutive~~in ~~securities. As~~ the Company's ~~stock~~Form 10-K isfor ~~only traded in a small secondary market through private transactions,~~ the ~~Company has assumed the proceeds from the~~year ~~exercise~~ended ~~of stock options would reduce debt and~~July 31, ~~thus, interest expense~~2000. ~~Fully diluted earnings per share are not presented, as the dilutive effect of outstanding convertible preferred stock and stock options is not material for the periods presented.~~

NOTE 9—COMMITMENTS

~~NOTE~~ The ~~13—DIVIDENDS~~ Company forward contracts for a certain portion of its future durum wheat requirements. The Company had outstanding commitments for grain purchases totaling $1,632,000 at October 31, 2000.

The Company ~~qualified~~has ~~patronage~~pledged ~~allocation of~~ $5500,~~787,~~000 ~~($.70~~to ~~per~~The ~~bushel~~Culinary ~~patronage)~~Institute ~~and~~of $America.10 ~~per~~Dakota ~~share~~Growers ~~dividend~~is ~~authorized by~~ the ~~Board~~benefactor of ~~Directors in October 2000 were rescinded at~~ the ~~January 2000~~Marketplace/Lounge ~~Board meeting. This was done~~ in ~~response to~~ the ~~reclassification~~Colavita ofCenter ~~$2,000,000 of income from nonpatronage to patronage~~ for ~~the~~Italian ~~year~~Food ~~ended July 31,~~and ~~1999 described in Note 10~~Wine. The pledge ~~Board~~is ~~then voted~~ to ~~qualify~~be ~~and allocate $7,358,000 ($.89 per bushel acquired or $.86 per average outstanding equity share) of the revised core patronage income for fiscal year 1999. The total qualified patronage allocation was~~ paid in ~~cash,~~quarterly ainstallments ~~portion~~ of which was paid in November 1999 and the remainder in January 2000. The Board also voted to allocate, on a non-qualified basis, the remainder of the fiscal 1999 patronage earnings before cumulative effect of the change in accounting principle, which totaled $~~464~~25,000. ~~The~~beginning ~~Board~~in ~~had previously voted, at the~~ October ~~meeting,~~2000 toand ~~allocate~~continuing ~~the~~over ~~$3,429,000 cumulative effect of~~ the ~~change~~next infive ~~accounting principle proportionately against prior non-qualified, allocated accumulated earnings~~years.

107

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The following discussion contains forward-looking statements. Such statements are based on assumptions by the Company's management, as of the date of this Quarterly Report, and are subject to risks and uncertainties, including those discussed in the Company's ~~1999~~2000 Form 10-K under "Risk Factors", that could cause actual results to differ materially from those anticipated. The Company cautions readers not to place undue reliance on such forward-looking statements. The Company will not update any forward-looking statements in the Quarterly Report to reflect future events or developments.

Summary

~~For the third quarter ended April 30, 2000,~~ Dakota Growers ~~realized~~incurred a net ~~earnings~~loss of $1.~~9 million, or $.17 per share, compared to $~~1.2 million, orfor ~~$.14 per share, last year. Before~~ the ~~positive~~quarter ~~impact~~ended ~~from income taxes~~October 31, ~~net income was $1.2 million~~2000, ~~essentially~~down ~~unchanged~~considerably from ~~last~~net ~~year.~~earnings ~~Revenues grew 10.4% to~~ of $353.2 0 million. ~~For~~for the ~~nine~~corresponding ~~months~~period ~~ended April 30,~~of ~~2000,~~the ~~revenues~~prior ~~are up 12~~year.~~4%.~~ The ~~Company~~net ~~has~~loss ~~experienced~~resulted ~~steady~~from ~~growth~~lower ~~in pasta~~ sales volumes ~~during~~and ~~the~~competitive ~~current~~pricing ~~fiscal~~within ~~year.~~the ~~Profits~~dry ~~normally~~pasta ~~derived~~industry ascombined ~~the~~with ~~result~~increasing ~~of volume~~raw ~~increases~~material, ~~have~~freight, ~~been~~and ~~partially~~utility ~~offset~~costs. byThe ~~lower~~Company ~~average~~is ~~selling~~projecting ~~prices~~a ~~due~~net toloss ~~competitive~~for ~~pressures~~the ~~within~~second ~~the~~quarter ~~dry~~of ~~pasta~~fiscal ~~industry~~2001 as well.

The ~~Company~~Cooperative ~~will~~is ~~continue~~attempting to ~~aggressively~~increase ~~pursue~~prices ~~opportunities in all segments of the pasta market. It is committed~~ to ~~maintaining~~cover ~~its~~higher ~~current~~input ~~customer~~costs ~~base~~ while ~~continually exploring~~continuing ~~new~~to ~~business~~explore ~~opportunities~~cost ~~and~~reduction ~~improving production and distribution efficiencies~~opportunities. ~~The~~With ~~Company~~excess ~~anticipates~~capacity ~~approximately~~available ~~a 12 percent incremental annual increase~~ in ~~retail~~the ~~sales volumes due~~pasta toindustry, the ~~addition~~Company ofhas ~~significant~~encountered ~~retail~~some ~~customers.~~resistance ~~Shipments~~ to ~~these customers are expected to begin in~~ the ~~first quarter of fiscal 2001. Focus on cost analysis and reduction programs continues within the Company~~increases, and ~~benefits~~has ~~derived~~been asunable ato ~~result~~implement ~~will~~price beincreases ~~realized~~to asfully ~~early~~cover ashigher ~~the~~costs ~~fourth~~on ~~quarter~~a oftimely ~~fiscal 2000~~basis. ~~The~~There ~~implementation~~have ofalso ~~new~~been ~~rail programs has begun to reduce freight costs. A new pasta~~instances ~~line~~whereby ~~scheduled~~a tomajor becompetitor ~~installed~~has byoffered ~~mid~~pricing ~~fiscal~~below ~~year 2001 in~~ the ~~New~~Cooperative's ~~Hope,~~current ~~Minnesota facility will significantly reduce the~~ cost of ~~producing lasagna products~~production.

AThe ~~certified~~Company ~~organic~~is ~~program~~unable ~~has~~to ~~also~~predict ~~been~~with ~~implemented~~certainty ~~and~~the ~~customer~~impacts ~~shipments~~ of ~~organic~~durum ~~pasta~~prices ~~began~~and inmarket conditions for the ~~fourth~~latter ~~quarter~~portions of fiscal ~~2000.~~2001; ~~In addition to marketing organic pasta through its Dakota Growers Pasta Co.™ retail label~~however, the Company isdoes ~~also~~anticipate ~~selling~~the impact ~~organic~~of ~~pasta~~price inincreases ~~the~~it is ~~private~~able ~~label~~to ~~retail~~achieve, ~~foodservice,~~along ~~and~~with ~~ingredient~~volume ~~segments~~roll ofouts ~~the~~to ~~pasta~~new ~~market.~~customers Asand ~~a result~~implementation of ~~the~~cost ~~design~~reduction ~~of its Carrington~~projects, ~~North~~to ~~Dakota~~return ~~facilities,~~the ~~Dakota~~Cooperative ~~Growers is also able~~ to ~~isolate~~profitability ~~organic~~during ~~by-products of~~ the ~~milling~~third ~~process,~~quarter ~~and~~of isfiscal ~~pursuing opportunities to market certified organic feed products~~2001.

The Company has negotiated a long-term agreement with the second largest Italian pasta manufacturer to become the exclusive seller and marketer of their food products within North America. The agreement covers branded and private label Italian imported pasta to be sold to North American retail, foodservice, and ingredient customers.

Effect of Accounting Change

As discussed in Note 3 to the financial statements, the Company changed its method of accounting for inventory valuation from the net realizable method to the lower of cost or market method, determined on a FIFO basis, using product specific standard costs in fiscal year 1999. The statements of operations for the three and nine months ended April 30, 1999 reflect the results using the new methodology. The impact of this change on prior years, to July 31, 1998, amounted to a reduction in

earnings of $3,429,000 which was reflected in the statement of operations for the nine months ended April 30, 1999.

Results of Operations

Comparison of the Three Months Ended ~~April~~October 3031, 2000 and 1999

Net Revenues. Total net revenues ~~increased~~decreased $32.3 million, or 106.4%, to $3533.2 3 million for the quarter ended ~~April~~October 3031, 2000. The ~~increase~~decrease was ~~primarily~~ due to ~~pasta~~lower average sales ~~volume~~prices ~~growth~~as ofwell ~~8.5%~~as ~~over~~lower ~~the~~sales ~~corresponding prior fiscal year period~~volumes. Average sales price per pound of pasta ~~declined~~ ~~slightly~~ declined by 24.53% due to ~~market~~highly ~~pressures~~competitive ~~related~~pricing ~~to competition~~ within the ~~dry~~ pasta industry. asPasta ~~well~~sales asvolumes ~~semolina~~declined ~~flour~~by ~~costing adjustments required under contract with certain customers~~2.3%.

Revenues from the retail segment ~~increased~~decreased by 52.35% while retail volumes increased 67.50%. Foodservice revenues ~~increased~~decreased by 810.23%, ~~primarily~~reflecting ~~due~~lower topricing, ~~increased~~while a 6.9% increase in sales ~~resulting~~volumes resulted from expansions and acquisitions made by several of the Company's current customers. Ingredient revenues ~~increased~~decreased by 314.59% ~~primarily~~as ~~due~~sales tovolumes ~~new~~declined ~~customers~~12.0%.

The Company markets semolina production in excess of its own requirements as well as by-products of durum milling. Revenues from ~~by-product~~semolina sales ~~increased~~dropped by 9245.68% due primarily to ana ~~increase in~~volume ~~durum~~decline. ~~grind,~~Revenues ~~resulting~~ from ~~the~~by-product ~~completion~~sales ofwere ~~the~~relatively ~~mill~~stable ~~expansion~~with ~~project~~a slight increase in ~~May 1999~~flour volume.

Cost of Product Sold. Cost of product sold increased 107.50% to $30.2 8 million. The $2.9 0 million increase ~~was~~resulted mainly ~~due~~from increases in raw material costs, packaging costs and, to ana ~~increase~~lesser indegree, ~~sales~~freight ~~volumes~~and utility costs. Gross margin as a percentage of net revenues decreased ~~essentially~~from ~~remained~~19.1% ~~unchanged~~to 7.5% as a result of these factors combined with lower average sales prices.

~~Marketing, General, and Administrative ("MG&A") Expenses. MG&A expenses increased $917,000, or 48%, from last year. MG&A as a percentage of net revenues increased to~~ 8.0% compared to 6.0% for the corresponding period in the prior year. The significant increase from prior year is due primarily to selling costs associated with higher revenues and consulting fees incurred in conjunction with an extensive study of strategic initiatives and capital structure options.

~~Interest~~Marketing, ~~Expense. A~~General, ~~patronage adjustment relating to a write-off of estimated patronage refunds receivable~~ and ~~write-down~~Administrative of("MG&A") ~~the investment in St~~Expenses. MG&A ~~Paul~~expenses ~~Bank~~remained ~~for Cooperatives totaling $597,000 is included in interest expense for the quarter ended April 30, 1999 accounting for a majority of~~essentially ~~the $641~~unchanged,~~000~~ ~~decrease~~increasing ~~from~~by ~~prior year~~0.7%. ~~Excluding~~MG&A ~~the~~expenses ~~patronage adjustment, interest expense decreased $44,000~~ as a ~~result~~percentage of ~~the~~net ~~decrease~~revenues inincreased ~~average~~slightly ~~outstanding~~from ~~debt~~7.7% to 8.3%.

~~Income~~Interest ~~Taxes~~Expense. ~~The~~Interest ~~Company~~expense ~~has~~decreased ~~recorded an income tax benefit of~~ $~~742~~146,000 ~~for~~as ~~the~~a ~~three~~result ~~months ending~~of ~~April 30,~~a ~~2000.~~decrease ~~The benefit relates primarily to the reduction~~ in ~~deferred~~average outstanding ~~tax liabilities associated with differences between the book and tax basis of property and equipment~~debt.

~~Net~~ Income Taxes. ~~Net~~The Company has recorded an income ~~increased~~tax bybenefit of $~~686~~79,000, ~~with~~for athe ~~majority~~quarter ofended October 31, ~~the~~2000 ~~increase~~ relating to the ~~income~~ reduction in deferred tax ~~benefit~~liabilities ~~described~~associated ~~above~~with differences between the book and tax basis of property and equipment.

~~Comparison~~ Net ofIncome. Net ~~the~~income ~~Nine~~decreased ~~Months~~by ~~Ended April~~$4.2 ~~30,~~million ~~2000~~mainly due to the decreases in sales volumes and ~~1999~~ prices combined with increases in input costs noted above.

Net Revenues. Net revenues increased $11.5 million, or 12.4%, during the nine months ended April 30, 2000 compared to the same period in the prior year. The increase was primarily due to volume growth of 14.7%, offset by lower average selling prices due to competition within the pasta industry and contractual adjustments relating to lower average raw material costs.

Revenues from the retail market increased 9.3%, while volumes were up 14.8%. Foodservice revenues increased by 16.0%, primarily due to expansions and acquisitions made by current customers. Ingredient revenues were up 13.2% primarily due to sales to new customers.

Revenues from milling by-product sales increased by 59.4% due to an increase in durum grind, resulting from the completion of the mill expansion project in May 1999.

Cost of Product Sold. Cost of product sold increased 15.0% to $88.4 million. A majority of the $11.5 million increase was due to sales volume growth. Gross margin as a percentage of net revenues decreased from 17.6% to 15.7% reflecting lower average sales prices.

Marketing, General, and Administrative ("MG&A") Expenses. MG&A expenses increased $1.2 million, or 17.5%, over last year. A majority of the increase was due to the enhancement of the Company's sales and sales support efforts to meet the needs of new and existing customers while pursuing continued growth. The Company also incurred increased consulting fees in conjunction with an extensive study of strategic initiatives and capital structure options in the nine months ended April 30, 2000. MG&A as a percentage of net revenues increased to 7.4% compared to 7.1% in the prior year.

Interest Expense. Interest expense, including patronage adjustments, decreased by $790,000. The Company has recorded adjustment of its estimated patronage refund and a write down in the value of its investment in CoBank totaling $59,000 for the nine months ended April 30, 2000. In the three months ended April 30, 1999, the Company recorded an adjustment of its estimated patronage refund and write down of the value of its investment in St. Paul Bank for Cooperatives, which is now part of CoBank, totaling $597,000. Interest expense decreased $252,000 excluding the impact of patronage adjustments on both years reflecting a decrease in average outstanding debt compared to the prior year.

Income Taxes. The Company has recorded an income tax benefit of $1,242,000 for the nine months ending April 30, 2000. Of this amount, $431,000 relates to current income tax benefits and $811,000 relates to changes in deferred income taxes. The current income tax benefit relates to a reclassification of approximately $2,000,000 of income from nonpatronage to patronage for the year ended July 31, 1999. The reclassification was based on cooperative income tax developments taking place in the second quarter of fiscal year 2000. The deferred income tax benefit relates primarily to reductions in deferred tax liabilities associated with differences between the book and tax basis of property and equipment.

Net Income. Net income before the cumulative effect of the change in accounting increased by $905,000, or 15.3%, compared to the nine months ended April 30, 1999, with a majority of the increase resulting from the benefit from income taxes.

Liquidity and Capital Resources

The Company's liquidity requirements include the operation of manufacturing facilities and equipment and the expansion of working capital to meet its growth requirements, as well as providing a fair return to its members. The Company meets these liquidity requirements from cash provided by operations, short-term borrowings under its line of credit, sales of equities and outside debt financing.

The Company utilizes financing on a short-term basis to fund operations and capital projects until permanent financing is issued. The Company ~~renewed~~has ~~its~~a ~~short-term~~seasonal line of credit ~~for~~ for $15.0 million with CoBank, ACB ("the Bank"). inThere ~~November~~was ~~1999.~~no ~~The~~ balance outstanding on the line of credit ~~was $3,875,000~~ as of ~~April 30~~October 31, 2000. Cash, receivables and inventories secure borrowings ~~against~~ against the line of credit.

The Company's long-term financing is provided through various secured term loans and secured notes. Variable interest rates on term and seasonal loans are based on the lender's cost of funds, and are subject to an adjustment (increase or decrease) depending on the Company's financial condition. ~~The CoBank loan agreement was renewed in November 1999.~~

13 The various debt agreements with the Bank and institutional investors obligate the Company to maintain or achieve certain amounts of equity and certain financial ratios and impose certain restrictions on the Company. The Company was not in compliance with the consolidated funded debt to consolidated cash flow ratio set forth in the original note agreement with institutional investors. The Company obtained a waiver as of October 31, 2000 for this event along with an amendment to the original note agreement. The amendment requires that the ratio of consolidated funded debt to consolidated cash flow not exceed 3.50 to 1 for the period from August 1, 2000 to October 31, 2000, 3.40 to 1 for the period from November 1, 2000 to January 31, 2001, and 3.00 to 1 at all times thereafter, in each case determined as of the end of each fiscal quarter for the immediately preceding four fiscal quarters, treating such period of four fiscal quarters as a single accounting period. The Company is uncertain at this time if it will be in compliance with the amended ratio as of January 31, 2001 or April 30, 2001.

~~The~~Operations generated ~~various~~$5.1 million ~~debt~~of ~~agreements~~net ~~with~~cash ~~the~~flow ~~Bank~~for ~~and institutional investors obligate~~ the ~~Company~~three tomonths ~~maintain~~ended orOctober 31, ~~achieve~~2000 ~~certain~~compared ~~amounts~~to of$5.5 million ~~equity~~for ~~and certain financial ratios and impose certain restrictions on~~ the ~~Company.~~three Asmonths ~~of April~~ended October 3031, ~~2000,~~1999. ~~the~~The ~~Company~~decrease is in ~~compliance~~net ~~with~~cash ~~its~~provided ~~debt~~by ~~covenants,~~operations ~~and~~is ~~the~~primarily ~~Company~~due ~~does~~to ~~not~~a ~~anticipate~~decrease ~~any~~in ~~conditions~~net ~~that~~income ~~will~~offset ~~cause~~by ~~any non-compliance~~decreases in ~~the~~trade ~~foreseeable~~receivables ~~future,~~and ~~nor~~inventories ~~any~~and ~~limitations~~an onincrease ~~its~~in accounts ~~operations~~payable orfor ~~future~~the ~~plans~~corresponding periods.

~~Operations~~Net ~~generated~~cash ~~$10.9~~used ~~million~~in ~~for~~investing ~~the~~activities ~~nine~~relates ~~months~~primarily ~~ended April 30, 2000 compared~~ to ~~$9.0~~the ~~million~~construction ~~for~~and ~~the~~installation ~~nine~~of ~~months~~milling ~~ended~~and ~~April 30,~~pasta ~~1999~~equipment. ~~The~~Net ~~increase in net~~ cash ~~provided~~ byused ~~operations is primarily due to an increase~~ in ~~net~~financing ~~income~~activities ~~for~~totaled $0.8 million ~~the~~and ~~period~~$0.7 million ~~For~~for the ~~nine~~three months ~~ending~~ended ~~April~~October 3031, 2000, ~~earnings before interest, taxes, depreciation,~~ and ~~amortization~~1999, ~~commonly~~ ~~referred~~respectively. toA asmajority ~~EBITDA,~~of ~~decreased~~the ~~slightly~~Company's ~~from~~technology ~~$15.5~~assets ~~million~~are toplaced ~~$15.0~~under ~~million.~~lease ~~EBITDA~~agreements, which isallows athe ~~measure~~Company ofto ~~cash~~stay ~~flow~~relatively ~~provided~~current bywith ~~operations~~changing technologies.

~~Cash used in investing activities relates primarily to the construction and installation of milling and pasta equipment.~~ Net cash used in financing activities totaled $43.6 1 million ~~for the nine months ended April 30, 2000~~ and $111.8 2 million for the ~~nine~~three months ended ~~April~~October 3031, ~~1999. A significant portion of the expenditures for fiscal~~ 2000 ~~relate to the installation of the robotic palletizing system~~ and ~~the installation of a lasagna line in the New Hope~~1999, ~~Minnesota facility currently in progress~~respectively. ~~Most~~Substantially ~~of the expenditures for 1999 relate to the mill expansion project.~~all ~~A majority~~ of ~~the~~these ~~Company's~~amounts ~~technology~~related ~~assets are placed under lease agreements, which allows the Company~~ to ~~stay~~debt ~~relatively current with changing technologies~~payments. The

~~Net cash used in financing activities totaled $~~9.6 million for the nine months ended April 30, 2000. In January 2000, the Board of Directors declared a qualified patronage distribution of $7,358,000 ($.89 per bushel or $.86 per average outstanding equity share) after rescinding the qualified patronage distribution and dividend approved at the October 1999 meeting (See Note 13 of the financial statements). All of the qualified patronage distribution was paid in cash during the second quarter. Net cash from financing activities totaled $14.2 million for the nine months ended April 30, 1999. The net increase for 1999 resulted primarily from stock offering proceeds offset by patronage distributions paid.

~~The~~ ~~Company~~Board ~~has~~of ~~current~~Directors ~~commitments~~authorized ~~for~~a ~~$8.2~~qualified ~~million~~patronage inallocation ~~raw~~of ~~material purchases~~$4,466,000 ~~primarily~~($.4284 ~~durum~~per ~~purchase~~bushel ~~commitments~~acquired ~~from~~or ~~its members~~$.40 ~~The~~per ~~Company~~average ~~anticipates~~outstanding ~~capital~~equity ~~expenditures~~share) ~~to total~~for ~~$5.0 million in~~ fiscal year 2000. ~~These~~at ~~expenditures~~its ~~are~~November 2000 meeting. ~~primarily~~The ~~for~~total ~~cost~~qualified ~~reduction~~patronage ~~projects~~allocation ~~currently~~was ~~scheduled.~~paid ~~Commitments~~in ~~for~~cash ~~monthly~~on ~~operating~~November 30, ~~lease~~2000. ~~payments~~The ~~for~~Board ~~technology~~also ~~and~~voted ~~other assets~~to ~~total $3.3 million~~allocate, ofon ~~which~~a ~~$1.2~~non-qualified ~~million~~basis, isthe ~~due~~remainder inof the ~~twelve~~fiscal ~~months~~2000 patronage ~~ended~~earnings ~~April 30,~~totaling ~~2001.~~ $2,665,000.4 ~~million~~In oftaking ~~the total~~these ~~lease commitments~~actions, ~~and~~the ~~$.9~~Board ~~million~~ of ~~the~~Director ~~lease~~rescinded ~~commitments due in~~ the ~~next~~patronage ~~twelve~~allocations ~~months,~~authorized ~~are~~at ~~related~~the toOctober 2000 ~~leased~~meeting ~~warehouse~~as ~~facilities~~reported ~~for~~in ~~which~~ the Company ~~has a sublease agreement. The Company~~'s ~~currently~~Form 10-K ~~has~~for nothe ~~other~~year ~~material~~ended ~~commitments~~July 31, 2000.

The Company has current commitments for $1.6 million in raw material purchases, primarily durum purchase commitments from its members. The Company anticipates capital expenditures to total $3.5 million in fiscal year 2001. These expenditures are primarily for pasta line upgrades and cost reduction projects. Commitments for monthly operating lease payments for technology and other assets total $1.3 million, of which $0.7 million is due within one year. The Company has pledged $500,000 to The Culinary Institute of America. Dakota Growers is the benefactor of the Marketplace/Lounge in the Colavita Center for Italian Food and Wine. The pledge is to be paid in quarterly installments of $25,000 beginning in October 2000 and continuing over the next five years.

Management believes that net cash currently available and to be provided by operating activities, along with its available line of credit, will be sufficient to meet the Company's expected capital and liquidity requirements for the foreseeable future.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

InMarket ~~connection~~risk ~~with~~is the ~~acquisition~~risk of ~~durum~~loss ~~wheat~~to ~~for~~future ~~anticipated processing requirements~~earnings, ~~the~~to ~~Company~~fair ~~will,~~values ator ~~times,~~to ~~enter~~future ~~into~~cash ~~commodities~~flows ~~futures~~that ~~contracts as~~may ~~deemed~~result ~~appropriate~~from tochanges ~~reduce~~in the ~~effect of~~ price ~~fluctuations. In accordance with Statement~~ of ~~Financial~~a ~~Accounting~~financial ~~Standards No~~instrument. The ~~80,~~value ~~"Accounting~~of ~~for~~a ~~Futures~~financial ~~Contracts,"~~instrument ~~these~~may ~~futures~~change ~~meet~~as ~~the hedge~~a ~~criteria~~result ~~and~~of ~~are~~changes ~~accounted~~in ~~for~~interest asrates, ~~hedges.~~commodity ~~Accordingly~~prices, ~~gains~~exchange ~~and~~rates, ~~losses~~equity ~~are~~prices, ~~deferred~~ and ~~recognized~~other inmarket ~~cost of sales as part of the product cost~~changes. ~~The~~Market ~~Company~~risk ~~did~~is ~~not~~attributed ~~hold~~to ~~any futures contracts~~all asmarket-risk ofsensitive ~~April 30~~financial instruments, ~~2000~~including long-term debt.

14 The Company does not believe it is subject to any material market risk exposure with respect to interest rates, commodity prices, exchange rates, equity prices, or other market changes that would require disclosure under this item.

PART II—OTHER INFORMATION

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

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

4.1		Waiver and First Amendment to Note Purchase Agreements dated November 28, 2000.
27		Financial Data Schedule, which is submitted electronically to the Securities and Exchange Commission for information only and not filed.

Reports on Form 8-K

15 None.

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.

		DAKOTA GROWERS PASTA COMPANY
		By:		/s/ TIMOTHY J. DODD Timothy J. Dodd ~~President~~PRESIDENT ~~and~~AND ~~General~~GENERAL ~~Manager~~MANAGER, ~~and~~AND ~~Principal~~PRINCIPAL ~~Executive~~EXECUTIVE ~~Officer~~OFFICER
		Dated: June 12, 2000
		Dated: December 15, 2000

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

Signature	Title	Date
/s/ TIMOTHY J. DODD Timothy J. Dodd	General Manager (Principal Executive Officer)	~~June~~December 1215, 2000
/s/ THOMAS P. FRIEZEN Thomas P. Friezen	~~Vice-President—Finance~~Chief Financial Officer (Principal Financial ~~and Accounting~~ Officer)	~~June~~December 1215, 2000
/s/ EDWARD O. IRION Edward O. Irion	Vice President—Finance (Principal Accounting Officer)	December 15, 2000

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DAKOTA GROWERS PASTA COMPANY CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share Information)
DAKOTA GROWERS PASTA COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Amounts) (Unaudited)
DAKOTA GROWERS PASTA COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited)
DAKOTA GROWERS PASTA COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Summary

Results of Operations

Liquidity and Capital Resources

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

PART II—OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

Reports on Form 8-K

SIGNATURES

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