UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Form 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 28, 2009 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number 0-20539 PRO-FAC COOPERATIVE, INC. (Exact Name of Registrant as Specified in its Charter)

	New York		16-6036816
	(State or other jurisdiction of		(IRS Employer
	incorporation or organization)		Identification Number)
	590 Willow Brook Office Park, Fairport, NY		14450
	(Address of Principal Executive Offices)		(Zip Code)

Form 10-Q

~~Issuer’s Telephone Number, Including Area Code~~ (~~585~~Mark One) ~~218-4210~~

~~(Former~~x ~~name,~~QUARTERLY ~~former~~REPORT PURSUANT ~~address~~TO ~~and~~SECTION ~~former~~13 ~~fiscal~~OR ~~year,~~15(d) ifOF ~~changed~~THE ~~since~~ SECURITIES ~~last~~EXCHANGE ~~report~~ACT OF 1934

~~Indicate~~For ~~by check mark whether~~ the ~~issuer~~quarterly ~~(1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter~~ period ~~that~~ ~~the~~ended ~~registrant~~September ~~was required to file such reports)~~26, ~~and (2) has been subject to such filing requirements for the past 90 days. Yes x No o~~2009

Indicate by check mark whether the issuer has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).* Yes o No oOR

* Theo TRANSITION REPORT ~~issuer~~PURSUANT ~~has~~TO ~~not~~SECTION ~~yet~~13 ~~been~~OR ~~phased~~15(d) ~~into~~OF ~~the~~THE ~~interactive~~ SECURITIES ~~data~~EXCHANGE ~~requirements~~ACT OF 1934

~~Indicate~~For ~~by check mark whether~~ the ~~issuer~~transition isperiod afrom ~~large accelerated filer, an accelerated filer, a~~__________ ~~non-accelerated~~to ~~filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):~~____________

Commission File Number 0-20539

PRO-FAC COOPERATIVE, INC.

(Exact Name of Registrant as Specified in its Charter)


New York		16-6036816
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)


	590 Willow Brook Office Park, Fairport, NY		14450
	(Address of Principal Executive Offices)		(Zip Code)

(585) 218-4210

(Registrant’s Telephone Number, Including Area Code)

(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 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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).* Yes o No o


*	The registrant has not yet been phased into the interactive data requirements.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the ~~issuer~~registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

~~APPLICABLE~~1,700,058 shares ~~ONLY~~of TOthe ~~CORPORATE~~registrant’s ~~ISSUERS~~common stock, par value $5.00, were outstanding as of October 31, 2009.

~~State~~FORM ~~the~~10-Q ~~number~~For ~~of shares outstanding of each of~~ the ~~issuer’s~~Quarterly ~~classes~~Period ofEnded ~~common~~September ~~stock~~26, as2009 ofPRO-FAC ~~the~~COOPERATIVE, ~~latest practicable date~~INC. AsTABLE ofOF ~~April 30, 2009.~~CONTENTS

Common Stock – 1,700,064


		PAGE

	PART I. FINANCIAL INFORMATION

ITEM 1.	Financial Statements	2

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	13

ITEM 4.	Controls and Procedures	13

	PART II. OTHER INFORMATION

ITEM 1.	Legal Proceedings	14

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14

ITEM 3.	Defaults Upon Senior Securities	14

ITEM 4.	Submission of Matters to a Vote of Security Holders	14

ITEM 5.	Other Information	14

ITEM 6.	Exhibits	14

FORM 10-Q For the Quarterly Period Ended March 28, 2009 PRO-FAC COOPERATIVE, INC. TABLE OF CONTENTS

		PAGE
	PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements	2
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	14
ITEM 4T.	Controls and Procedures	14
	PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	15
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15
ITEM 3.	Defaults Upon Senior Securities	15
ITEM 4.	Submission of Matters to a Vote of Security Holders	15
ITEM 5.	Other Information	16
ITEM 6.	Exhibits	16

PART I. FINANCIAL INFORMATION


ITEM 1.	FINANCIAL STATEMENTS

Unaudited condensed financial statements of Pro-Fac Cooperative, Inc. (“Pro-Fac” or “the Cooperative”) as of ~~March~~September 2826, 2009, and for the three ~~and nine~~ month periods ended ~~March~~September 2826, 2009 and ~~March~~September 2927, 2008, are presented on the following pages. The financial statements have been prepared in accordance with the Cooperative’s usual accounting policies, are based, in part, on estimates and reflect all normal and recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results of the ~~interim~~ interim periods.

This Part I also includes management’s discussion and analysis of the Cooperative’s financial condition as of ~~March~~September 2826, 2009, and its results of operations for the three ~~and nine~~ month ~~periods~~period ended ~~March~~September 2826, 2009.

Pro-Fac Cooperative, Inc.
Condensed Statements of Operations
(Unaudited)

(Dollars in Thousands)

	Three Months Ended						~~Nine Months Ended~~
	March 28, 2009			March 29, 2008			March 28, 2009			March 29, 2008
	September 26, 2009			September 27, 2008
Net sales	$	~~725~~132		$	11331		$	~~1,873~~		$	~~920~~
Cost of sales		(~~693~~101	)		(42340	)		~~(1,750~~	)		~~(954~~	)
Gross profit/(loss)		3231			(319	)		~~123~~			~~(34~~	)
Gain from transaction with Birds Eye Foods, Inc. and related agreements		0			0			0			1,200
Margin on delivered product		29			86
Margin on delivered product		17			98			341			227
Selling, administrative and general expense		(455	)		(454	)
Selling, administrative and general expense		(623	)		(520	)		(1,603	)		(1,384	)
Other income		9			22
Other income		44			35			72			52
Operating loss		(386	)		(355	)
Operating income/(loss)		(530	)		(418	)		(1,067	)		61
Investment income		8			156
Distribution from Holdings LLC		0			0			0			116,594
Loss before income taxes		(378	)		(199	)
Investment income		31			276			298			2,385
Income tax benefit		0			10
Interest expense		0			0			0			(3	)
Net loss	$	(378	)	$	(189	)
Income/(loss) before income taxes		(499	)		(142	)		(769	)		119,037
Income tax benefit		30			308			40			1,018
Net income/(loss)	$	(469	)	$	166		$	(729	)	$	120,055

The accompanying notes are an integral part of these condensed financial statements.

Pro-Fac Cooperative, Inc.
Condensed Balance Sheets
(Unaudited)

(Dollars in Thousands)

	March 28, 2009			June 28, 2008
ASSETS
ASSETS
	September 26, 2009				June 27, 2009
Current assets:
Cash and cash equivalents	$	1613,~~068~~657		$	~~30,397~~$	15,262
Investments		~~953~~1,553			0	2,612
Accounts receivable, trade, less reserve of $108 for uncollectable accounts at March 28, 2009		11,433			12,702
Accounts receivable, trade		17,395				13,256
Accounts receivable from Birds Eye Foods, Inc.		5,776			6,559
Accounts receivable from Birds Eye Group, Inc.		7,335				6,264
Due from Farm Fresh First, LLC		0			273
Income taxes receivable		0				1,025
Income taxes receivable		1,072			1,032
Inventory		465				536
Inventory		1,424			1,121
Prepaid expenses and other current assets		129				63
Prepaid expenses and other current assets		88			86
Total current assets		40,534				39,018
Total current assets		36,814			52,170
Fixed assets, net		7				7
Fixed assets, net		9			12
Investment in:
Account receivable from Birds Eye Foods, Inc., long-term		0			155
Birds Eye Holdings LLC (Note 1)		0				0
Investment in:
Farm Fresh First LLC		50				50
Birds Eye Holdings LLC (Note 1)		0			0
Total assets	$	40,591			$	39,075
Farm Fresh First LLC		50			50
LIABILITIES AND SHAREHOLDERS’ AND MEMBERS’ SURPLUS
Total assets	$	36,873		$	52,387
Current liabilities:
LIABILITIES AND SHAREHOLDERS’ AND MEMBERS’ SURPLUS
Accounts payable	$	228			$	298
Current liabilities:
Other accrued expenses		483				21
Accounts payable	$	494		$	383
Due to Farm Fresh First, LLC		18				18
Other accrued expenses		391			253
Amounts due members		24,215				22,437
Due to Farm Fresh First, LLC		1			0
Total current liabilities		24,944				22,774
Amounts due members		18,771			21,914
Commitments and contingencies (Note 5)
Total current liabilities		19,657			22,550
Common stock, par value $5, authorized - 5,000,000 shares; issued and outstanding 1,700,058 shares		8,500				8,500
Commitments and contingencies (Note 5)
Shareholders’ and members’ surplus:
Common stock, par value $5, authorized - 5,000,000 shares; issued and outstanding 1,700,064 shares		8,500			8,500
Class A cumulative preferred stock, liquidation preference $25 per share, authorized 10,000,000 shares; issued and outstanding 1,382,952 shares at September 26, 2009 and at June 27, 2009		34,574				34,574
Shareholders’ and members’ surplus:
Special membership interests		21,733				21,733
Class A cumulative preferred stock, liquidation preference $25 per share, authorized 10,000,000 shares; issued and outstanding 1,382,952 shares at March 28, 2009 and 1,773,839 shares at June 28, 2008		34,574			44,346
Accumulated deficit		(49,160	)			(48,506	)
Special membership interests		21,733			21,733
Total shareholders’ and members’ surplus		7,147				7,801
Accumulated deficit		(47,591	)		(44,742	)
Total liabilities and shareholders’ and members’ surplus	$	40,591			$	39,075
Total shareholders’ and members’ surplus		8,716			21,337
Total liabilities and shareholders’ and members’ surplus	$	36,873		$	52,387

The accompanying notes are an integral part of these condensed financial statements.

Pro-Fac Cooperative, Inc.
Condensed Statements of Cash Flows
(Unaudited)

(Dollars in Thousands)

	Nine Months Ended
	Three Months Ended
	March 28, 2009			March 29, 2008
	September 26, 2009				September 27, 2008
Cash Flows from Operating Activities:
Net income/(loss)	$	(729	)	$	120,055
Net loss	$	(378	)		$	(189	)
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Adjustments to reconcile net loss to net cash provided by/(used in) operating activities:
Depreciation		30			4	1
Provision for bad debts		108			0
Change in assets and liabilities:
Gain from transaction with Birds Eye Foods, Inc. and related agreements		0			(1,200	)
Investments		1,059				(9,710	)
Change in assets and liabilities:
Accounts receivable		(5,210	)			(11,729	)
Investments		(953	)		(4,894	)
Inventory		71				(1,378	)
Accounts receivable		2,372			4,430
Accounts payable and other accrued expenses		392				521
Inventory		(303	)		(1,794	)
Accrued income taxes		1,025				(10	)
Accounts payable and other accrued expenses		250			315
Amounts due members		1,778				12,092
Accrued income taxes		(40	)		(1,440	)
Other assets		(66	)			(131	)
Accrued interest expense		0			(88	)
Net cash provided by/(used in) operating activities		(1,329	)			(10,533	)
Amounts due members		(3,143	)		(4,270	)
Cash Flows from Financing Activities:
Other assets		(2	)		(99	)
Cash dividends paid		(276	)			(762	)
Net cash provided by/(used in) operating activities		(2,437	)		111,019
Net cash used in financing activities		(276	)			(762	)
Cash Flows from Investing Activities:
Net change in cash and cash equivalents		(1,605	)			(11,295	)
Proceeds from Termination Agreement with Birds Eye Foods, Inc.		0			2,000
Cash and cash equivalents at beginning of period		15,262				30,397
Distribution from Holdings LLC classified as a return of capital		0			3,524
Cash and cash equivalents at end of period	$	13,657			$	19,102
Net cash provided by investing activities		0			5,524
Cash Flows from Financing Activities:
Repayment of long-term debt		0			(1,000	)
Redemption of retained earnings allocated to members		0			(6,771	)
Cash dividends paid		(2,120	)		(8,275	)
Redemption of preferred stock		(9,772	)		(79,576	)
Net cash used in financing activities		(11,892	)		(95,622	)
Net change in cash and cash equivalents		(14,329	)		20,921
Cash and cash equivalents at beginning of period		30,397			4,582
Cash and cash equivalents at end of period	$	16,068		$	25,503

The accompanying notes are an integral part of these condensed financial statements.

PRO-FAC COOPERATIVE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS


NOTE 1.	DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business: Pro-Fac Cooperative, Inc. (“Pro-Fac” or the “Cooperative”) is a New York agricultural cooperative corporation operating in one segment, the marketing of crops grown by its members.

Basis of Presentation: The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information required by GAAP for complete annual financial statement presentation.

In the opinion of management, all adjustments (consisting only of normal and recurring adjustments) necessary for a fair presentation of the results of operations have been included in the accompanying unaudited condensed financial statements. Operating results for the interim period ended September ~~March 28~~26, 2009, are not necessarily indicative of the results to be expected for other interim periods or the full fiscal year. These financial statements should be read in conjunction with the consolidated financial statements and accompanying notes contained in the Pro-Fac Cooperative, Inc. Form 10-K for the fiscal year ended June 2827, ~~2008~~2009.

~~Cash~~In ~~and~~preparing ~~Cash Equivalents:~~these ~~Cash~~financial ~~and cash equivalents include short-term investments~~statements, ~~including money~~the ~~market~~Cooperative ~~accounts~~has ~~and commercial paper, with original maturities of three~~evaluated ~~months~~events ~~or less. The Cooperative maintains its cash~~ and ~~cash~~transactions ~~equivalents~~for ~~in accounts,~~potential ~~which,~~recognition ~~at times, may exceed federally insured limits~~ or ~~may not be federally insured~~disclosure. ~~The Company has not experienced any losses in such accounts~~Subsequent ~~and~~events ~~believes~~have itbeen isevaluated ~~not~~through ~~exposed~~November to6, ~~any significant credit risk with respect to cash and cash equivalents~~2009.

Cash and Cash Equivalents: Cash and cash equivalents include short-term investments, including money market accounts and commercial paper, with original maturities of three months or less. The Cooperative maintains its cash and cash equivalents in accounts, which, at times, may exceed federally insured limits or may not be federally insured. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk with respect to cash and cash equivalents. Cash and cash equivalents consisted of:

(Dollars in Thousands)	~~March~~September 2826, 2009		~~June 28, 2008~~	June 27, 2009
Checking accounts	$	$ 2,~~371~~409	$	~~4,149~~$	3,801
Money market accounts		1311,~~697~~248		~~26,248~~	11,461
	$	16,068	$	30,397
		$ 13,657		$	15,262

Investments: The Cooperative invests in commercial paper and bonds that are bought and held principally for the purpose of selling them in the near future. These investments are classified as trading securities and are recorded in current assets at fair value as determined from quoted prices in active markets for identical assets (Level 1) on the balance sheet date. The change in fair value during the period is included in investment income in the Cooperative’s condensed statement of operations. Investments are summarized as follows at September 26, 2009:

Investments are summarized as follows at March 28, 2009:


(Dollars in Thousands)	Cost		Unrealized Gain	Fair Value

Bonds	$	1,552	$ 1	$	1,553

(Dollars in Thousands)		Cost			Unrealized Loss			Fair Value
Bonds		$	954		$	(1	)	$	953

Investment in Birds Eye Holdings LLC: The Cooperative accounts for its investment in Birds Eye Holdings LLC (“Holdings LLC”), a Delaware limited liability company and indirect parent company of Birds Eye Group, Inc., f/k/a Birds Eye Foods, Inc. (“Birds Eye”) under the cost method of accounting. Under the cost method, distributions of earnings are reported as income and distributions that represent a return of capital reduce the carrying value of the investment, but not below zero. As a result of a $120.1 million distribution received from Holdings LLC during the first quarter of fiscal year 2008, Pro-Fac’s recorded investment in Holdings LLC was reduced to zero. However, Pro-Fac continues to own an approximate 40% interest in Holdings LLC through its ownership of Class B common units.

Investment in ~~Birds~~Farm ~~Eye~~Fresh ~~Holdings~~First, LLC: ~~The~~Pro-Fac ~~Cooperative~~owns ~~accounts~~a ~~for~~5.55% ~~its~~membership ~~investment~~interest in ~~Birds~~Farm ~~Eye~~Fresh ~~Holdings~~First, LLC (“~~Holdings~~Farm ~~LLC~~Fresh”), aand ~~Delaware~~has ~~limited~~entered ~~liability~~into ~~company~~an ~~and~~agricultural services ~~indirect~~agreement ~~parent~~with ~~company~~Farm ofFresh. ~~Birds~~Under ~~Eye~~the ~~Foods~~services agreement, ~~Inc.~~Farm ~~(“Birds~~Fresh ~~Eye Foods”) under the~~provides ~~cost~~Pro-Fac ~~method~~with ofagricultural ~~accounting.~~and ~~Under~~administrative ~~the~~services ~~cost~~and ~~method,~~acts ~~distributions~~as ~~of earnings are~~Pro-Fac’s ~~reported~~exclusive assales ~~income~~agent ~~and~~for ~~distributions~~the ~~that~~sale ~~represent~~of aagricultural ~~return~~products ofgrown ~~capital~~by ~~reduce~~Pro-Fac ~~the~~member-growers ~~carrying~~located ~~value~~in ofNew ~~the~~York ~~investment~~State, ~~but~~which are not ~~below~~subject ~~zero~~to existing supply agreements. AsCertain amembers ~~result~~of Pro-Fac own the majority of athe ~~$120.1~~membership ~~million~~interests ~~distribution~~of ~~received~~Farm ~~from~~Fresh. ~~Holdings~~Pro-Fac ~~LLC~~accounts ~~during~~for ~~the~~this ~~first~~investment ~~quarter~~using ofthe ~~fiscal~~cost ~~year~~method. ~~2008~~Accordingly, ~~Pro-Fac’s~~distributions ~~recorded~~of ~~investment~~earnings inare ~~Holdings~~reported ~~LLC~~as ~~was reduced~~income toand ~~zero.~~distributions ~~However,~~that ~~Pro-Fac~~represent ~~continues~~a toreturn ~~own~~of ancapital ~~approximate~~reduce ~~40%~~the ~~interest~~carrying invalue ~~Holdings~~of ~~LLC~~the ~~through~~related ~~its~~investment. ~~ownership~~No distributions were received in the first quarter of ~~Class~~either B2010 ~~common~~or ~~units~~2009.

Investment in Farm Fresh First, LLC: Pro-Fac owns a 5.55% membership interest in Farm Fresh First, LLC (“Farm Fresh”) and has entered into an agricultural services agreement with Farm Fresh. Under the services agreement, Farm Fresh provides Pro-Fac with agricultural and administrative services and acts as Pro-Fac’s exclusive sales agent for the sale of agricultural products grown by Pro-Fac member-growers located in New York State, which are not subject to existing supply agreements. Certain members of Pro-Fac own the majority of the membership interests of Farm Fresh either directly or indirectly through entities owned or controlled by them, including three members of Pro-Fac’s Board of Directors who serve as directors on the Farm Fresh Board of Directors. Pro-Fac accounts for this investment using the cost method. Accordingly, distributions of earnings are reported as income and distributions that represent a return of capital reduce the carrying value of the related investment. Pro-Fac received a $35,000 distribution from Farm Fresh during the first nine months of fiscal year 2009. Pro-Fac received $20,000 in distributions from Farm Fresh during the first nine months of fiscal year 2008. These distributions were reported as income in both years.

Income Taxes: ~~The~~Through fiscal year 2008, the Cooperative ~~qualifies~~had qualified for tax exempt status as a farmers’ cooperative under Section 521 of the Internal Revenue Code. Exempt cooperatives are permitted to reduce or eliminate taxable income through the use of special deductions for dividends paid on ~~its~~their common and preferred stock and distributions of patronage income. The Cooperative ~~intends~~will to surrender its tax exempt status effective for fiscal year 2009 and the Board of Directors adopted resolutions to this effect on August 19, 2009. This action is not expected to have a material impact on Pro-Fac’s operations or income tax liabilities.

~~During~~The ~~the first~~Cooperative’s ~~quarter~~tax basis of ~~fiscal~~its ~~year~~investment ~~2008,~~in ~~Pro-Fac~~Holdings ~~received~~LLC aat June 27, 2009 was $~~120~~76.14 million ~~distribution~~. ~~from~~A ~~Holdings~~deferred ~~LLC~~income ~~pursuant~~tax toasset has not been recognized on the ~~terms~~estimated excess of the ~~Limited~~tax ~~Liability Company~~basis ~~Agreement.~~over ~~Approximately~~the ~~$10.1~~financial ~~million~~statement carrying value of ~~the~~Pro-Fac’s ~~amount~~investment ~~received~~in ~~was~~Holdings ~~a taxable~~LLC ~~dividend~~at September 26, ~~subject~~2009. toThis asset would only be realized upon the ~~qualified~~sale ~~dividends~~of ~~received~~Pro-Fac’s ~~deduction,~~investment ~~with~~ based on the proceeds ~~remaining~~received ~~amount~~or receipt of a distribution representing a return of capital which was not considered probable at September 26, 2009 or June 27, 2009.

~~The~~Disclosures About ~~Cooperative’s~~Fair ~~tax~~Value ~~basis~~ of ~~its~~Financial ~~investment in Holdings LLC at June 28, 2008 was~~Instruments: ~~$76.4~~The ~~million.~~following Amethods ~~deferred~~and ~~income~~assumptions ~~tax~~were ~~asset~~used ~~has~~by ~~not been recognized on~~ the ~~estimated~~ ~~excess~~Cooperative ~~of the tax basis over the recorded financial statement value of Pro-Fac’s investment~~ in ~~Holdings LLC at March 28, 2009. This asset would~~ ~~only~~estimating beits ~~realized~~fair ~~upon~~value ~~the~~disclosures ~~sale~~for offinancial ~~Pro-Fac’s~~instruments: ~~investment based on the proceeds received or receipt of a distribution representing a return of capital, neither of which was expected to occur in the foreseeable future.~~

~~New~~Cash Accounting Pronouncements: In September 2006, the FASB issued SFAS No. 157 (“SFAS 157”), “Fair Value Measurements.” SFAS 157, as amended, defines fair value, establishes a framework for measuring fair value and ~~expands~~Cash disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for fiscal years beginning after November 15Equivalents, ~~2007.~~Accounts ~~However,~~Receivable ~~on December 14, 2007, the FASB issued proposed FSP FAS 157-2 which delays the effective date of SFAS 157 for all nonfinancial assets~~ and ~~nonfinancial liabilities,~~Accounts ~~except~~Payable: those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008. Accordingly, the Cooperative’s adoption of this standard in the first quarter of fiscal year 2009 was limited to financial assets and liabilities and did not have a material effect on the Cooperative’s financial condition or results of operations. The ~~assets~~carrying ~~affected~~amount byapproximates ~~the adoption of SFAS 157 were investments which had a~~ fair value ofbecause ~~$1.0 million at March 28, 2009. The Cooperative is currently evaluating the impact~~ of ~~this standard with respect to its effect on nonfinancial assets and liabilities and has not yet determined~~ the ~~impact,~~short ifmaturity ~~any, that it will have on the financial statements upon full adoption in the first quarter~~ of ~~fiscal~~these ~~year 2010~~instruments.

InNew ~~October~~Accounting ~~2008~~Pronouncements: In September 2006, the FASB issued ~~and~~SFAS ~~made~~No. ~~effective~~157 ~~FASB~~(“SFAS ~~Staff~~157”), ~~Position~~“Fair ~~(FSP)~~Value Measurements.” SFAS 157-3, now Accounting Standards Codification (“~~Determining~~ASC”) ~~the~~820, ~~Fair~~as ~~Value~~amended, ofdefines fair value, establishes a ~~Financial~~framework ~~Asset~~for ~~when~~measuring ~~the~~fair ~~Market~~value and expands disclosures regarding fair value measurements. ASC 820 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. ASC 820 was effective for ~~That~~fiscal ~~Asset~~years isbeginning ~~Not~~after ~~Active~~November 15, 2007.” However, on December 14, 2007, the FASB issued proposed FSP FAS 157-~~3 clarifies~~2 which delayed the ~~application~~effective date of ~~SFAS~~ASC ~~No.~~820 ~~157~~for all innonfinancial aassets ~~market~~and nonfinancial liabilities, except those that isare recognized ~~not~~or ~~active~~disclosed ~~and~~at fair value in the financial statements on a ~~provides~~recurring anbasis ~~example~~(at least annually), to ~~illustrate~~fiscal ~~key~~years ~~considerations~~beginning inafter ~~determining~~November 15, 2008. Accordingly, the ~~fair value~~Cooperative’s adoption of athis ~~financial~~standard ~~asset~~in ~~when~~ the ~~market~~first quarter ~~for~~of ~~that~~fiscal year 2009 was limited to financial ~~asset~~assets isand liabilities and did not have a material effect on the Cooperative’s financial condition or ~~active~~results of operations. The adoption of ~~FSP~~the ~~157-3~~portion of this statement related to nonfinancial assets and liabilities in the first quarter of 2010 did not have a material effect on the ~~Company~~ Cooperative’s financial statements.

In ~~February 2007~~June 2009, the ~~Financial~~FASB issued SFAS 168 (“SFAS 168”), “The FASB Accounting Standards ~~Board~~Codification ~~issued~~and ~~Statement~~the Hierarchy of ~~Financial~~Generally Accepted Accounting ~~Standards No~~Principles.” ~~159~~SFAS 168, ~~“The~~now ~~Fair~~ASC ~~Value~~105, ~~Option~~became ~~for~~the ~~Financial~~source ~~Assets and~~of ~~Financial~~authoritative ~~Liabilities” (“SFAS No~~U. ~~159”)~~S. ~~SFAS~~generally ~~No.~~accepted ~~159~~accounting ~~permits~~principles ~~companies~~(GAAP) torecognized ~~elect~~by tothe ~~follow~~FASB ~~fair~~to ~~value~~be ~~accounting~~applied ~~for~~by ~~certain~~nongovernmental ~~financial~~entities. ~~assets~~Rules and interpretive ~~liabilities~~releases inof anthe ~~effort~~Securities toand ~~mitigate~~Exchange ~~volatility~~Commission in(“SEC”) ~~earnings~~under ~~without~~authority ~~having to~~of ~~apply~~federal ~~complex~~securities ~~hedge~~law ~~accounting~~are ~~provisions.~~also ~~The~~sources ~~standard~~of ~~also~~authoritative ~~establishes~~GAAP for SEC ~~presentation~~registrants. ~~and~~The ~~disclosure~~Codification ~~requirements~~superseded ~~designed~~all tothen-existing ~~facilitate~~non-SEC ~~comparison~~accounting ~~between~~and ~~entities~~reporting ~~that~~standards. ~~choose~~All ~~different~~other ~~measurement~~nongrandfathered ~~attributes~~non-SEC ~~for similar types~~accounting ofliterature ~~assets~~not ~~and~~included ~~liabilities.~~in ~~SFAS~~the ~~No.~~Codification ~~159~~will isbecome ~~effective~~nonauthoritative. ~~for~~The adoption ~~fiscal~~of ~~years~~ASC ~~beginning on~~105 orin ~~after~~the ~~November~~first ~~15,~~quarter ~~2007.~~of ~~The~~fiscal ~~Cooperative~~year ~~has~~2010 did not ~~elected~~have toan impact ~~adopt~~on the ~~fair~~ ~~value~~Cooperative’s ~~option~~results ~~method~~of ~~permitted~~operations, byfinancial ~~SFAS~~condition ~~No.~~or ~~159~~cash flows.

In April 2009, the FASB issued FSP No. 107-1 and APB 28-1, “Interim Disclosures About Fair Value of Financial Instruments”, now ASC 825, which require disclosures about fair value of financial instruments for interim reporting periods. This guidance was effective for reporting periods ending after June 15, 2009. The adoption of ASC 825 during the first quarter of 2010 did not have a material impact on the Cooperative’s financial statements.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events”, now ASC 855, to incorporate accounting guidance that originated in auditing standards into the body of authoritative literature issued by the FASB. ASC 855 requires the evaluation of subsequent events through the date the financial statements are issued or are available for issue and the disclosure of the date through which subsequent events were evaluated. The Cooperative adopted the requirements of ASC 855 for the period ended September 26, 2009. The adoption of ASC 855 did not have a significant impact on the Cooperative’s results of operating financial position or cash flows.

NOTE 2. AGREEMENTS WITH BIRDS EYE ~~FOODS~~

Until August 2002, Birds Eye ~~Foods, Inc. (“Birds Eye”)~~ was a wholly-owned subsidiary of Pro-Fac. In August 2002, Vestar/~~Agrlink~~Agrilink Holdings LLC and certain co-investors (collectively “Vestar”), together with Pro-Fac, acquired indirect control of Birds Eye (the “Transaction”). Holdings LLC currently owns 100% of the stock of Birds Eye through Holdings LLC’s direct, wholly-owned subsidiary, Birds Eye Foods, Inc. (“Birds Eye Foods”), and Birds Eye Holdings, Inc., a direct, wholly-owned subsidiary of Birds Eye Foods. Vestar has a voting majority of all common units of ~~the~~Holdings ~~ownership~~LLC ~~entity~~ and Pro-Fac ~~retains~~holds aan indirect minority interest in Birds Eye through its ownership interest in Holdings LLC. In connection with the Transaction, Birds Eye ~~Foods~~ and Pro-Fac entered into several agreements, including the following:

~~Termination~~Amended and Restated Marketing and Facilitation Agreement: Birds Eye, a significant Pro-Fac ~~and~~customer, ~~Birds~~buys ~~Eye~~mainly ~~Foods~~fruits ~~entered into~~from ~~the~~Pro-Fac ~~Termination Agreement,~~ pursuant to ~~which~~the terms of the ~~1994~~Amended ~~marketing~~and Restated Marketing and Facilitation Agreement dated ~~facilitation~~August ~~agreement~~19, 2002 between Pro-Fac and Birds Eye. ~~Foods~~Birds ~~was~~Eye ~~terminated~~pays ~~and,~~Pro-Fac the incommercial ~~consideration~~market value (“CMV”) of ~~such~~the ~~termination,~~crops supplied to Birds Eye ~~Foods~~in installments ~~agreed~~corresponding to ~~pay~~the dates payment is made by Pro-Fac ato its ~~termination~~members ~~fee~~for ofthe ~~$10~~delivered crops.0 ~~million~~Birds ~~per~~Eye ~~year~~also ~~for~~provides ~~five~~Pro-Fac ~~years.~~services ~~The~~under the ~~final~~Amended ~~installment was~~and ~~received~~Restated onMarketing ~~July~~and 3Facilitation Agreement relating to planning, ~~2007~~consulting, sourcing and harvesting crops from Pro-Fac members.

~~Amended~~Limited Liability Company Agreement of Holdings LLC: Pro-Fac and ~~Restated~~Vestar are parties to the ~~Marketing~~Limited ~~and~~Liability ~~Facilitation~~Company Agreement: ~~Birds~~of Holdings LLC dated August 19, 2002 (the “Limited Liability Company Agreement”). While Birds Eye ~~Foods,~~is not a ~~significant~~party ~~Pro-Fac~~to ~~customer~~the Limited Liability Company Agreement, ~~buys~~the ~~mainly~~agreement ~~fruits~~contains ~~from~~terms ~~Pro-Fac~~and ~~pursuant~~conditions relating to the ~~terms~~management of Holdings LLC and its subsidiaries (including Birds Eye), the ~~Amended~~distribution of profits and ~~Restated~~losses ~~Marketing~~and the rights and ~~Facilitation~~limitations of members of Holdings LLC. The Limited Liability Company Agreement ~~dated~~provides, ~~August~~among 19other things, ~~2002~~that ~~between~~Holdings ~~Pro-Fac~~LLC’s ~~and~~distributable assets, ~~Birds~~which ~~Eye~~include ~~Foods.~~cash ~~Birds~~receipts ~~Eye~~from operations, investing and financing, ~~Foods~~net ~~pays~~of ~~Pro-Fac~~expenses, ~~the~~will ~~commercial~~be ~~market~~distributed ~~value~~to ~~(“CMV”)~~Holdings ofLLC’s members as determined by Holdings LLC’s management committee. Further, the ~~crops~~Limited ~~supplied~~Liability Company Agreement provides that, subject to restrictions contained in any financing arrangements of Holdings LLC or its subsidiaries (including Birds Eye), ~~Foods~~after inAugust ~~installments~~19, 2007 ~~corresponding~~and prior to ~~the~~a ~~dates~~sale ~~payment~~(or isdissolution) ~~made~~of ~~by Pro-Fac~~Holdings toLLC, ~~its~~Holdings ~~members~~LLC ~~for~~will use ~~the~~commercially ~~delivered~~reasonable ~~crops.~~efforts to cause Birds Eye ~~Foods~~to ~~also~~distribute ~~provides~~annually ~~Pro-Fac~~to ~~services~~Holdings ~~under~~LLC ~~the~~up ~~Amended~~to ~~and~~$24.8 ~~Restated~~million ~~Marketing~~of ~~and~~cash ~~Facilitation Agreement~~flow ~~relating~~from tothe ~~planning,~~operations ~~consulting~~of Birds Eye, ~~sourcing~~which ~~and~~Holdings ~~harvesting~~LLC ~~crops~~would ~~from~~then distribute to the holders of its common units, including Pro-Fac ~~members~~.

The Limited Liability Company Agreement ofrequires that Holdings LLC: provide Pro-Fac ~~and~~with ~~Vestar~~annual ~~are~~financial ~~parties~~statements ~~to the Limited Liability Company Agreement. While Birds Eye Foods is not a party to the Limited Liability Company Agreement, it contains terms and conditions relating to the management~~ of Holdings LLC ~~and~~within ~~its subsidiaries (including~~120 ~~Birds~~days ~~Eye~~after ~~Foods),~~ the ~~distribution~~close of ~~profits~~a ~~and~~fiscal ~~losses~~year and, to the ~~rights~~extent ~~and limitations~~received ofby ~~members of~~ Holdings ~~LLC. The Limited Liability Company Agreement~~ ~~provides, among other things, that Holdings~~ LLC~~’s distributable assets~~, ~~which include~~financial ~~cash~~statements ~~receipts~~of ~~from~~Birds ~~operations,~~Eye. ~~investing~~Any ~~and~~financial ~~financing,~~information ~~net of~~received ~~expenses,~~pursuant ~~will be distributed~~ to ~~Holdings LLC’s members as determined by Holdings LLC’s management committee. Further,~~ the Limited Liability Company Agreement ~~provides~~is ~~that,~~ subject to confidentiality ~~restrictions~~provisions ~~contained~~that inpreclude ~~any~~public ~~financing arrangements~~disclosure of ~~Holdings~~information ~~LLC or its subsidiaries (including Birds Eye Foods),~~not ~~after~~generally ~~August~~known ~~19, 2007 and prior~~ to athe ~~sale~~public. ~~(or dissolution) of~~ Holdings LLC~~, Holdings~~ ~~LLC~~is ~~will~~not ~~use~~a ~~commercially~~reporting ~~reasonable~~company ~~efforts to cause Birds Eye Foods~~under tothe ~~distribute~~Exchange ~~annually~~Act toand, ~~Holdings~~accordingly, ~~LLC~~does upnot tofile ~~$24.8~~annual ~~million~~reports ofon ~~cash~~Form ~~flow from~~10-K, ~~the~~quarterly ~~operations~~reports ofon ~~Birds~~Form ~~Eye~~10-Q ~~Foods,~~or ~~which~~other ~~Holdings~~periodic ~~LLC~~reports ~~would~~with ~~then~~the ~~distribute to~~SEC. ~~the~~Therefore, holders of ~~its~~shares ~~common~~of ~~units, including~~ Pro-Fac. ~~Under~~capital ~~the~~stock ~~Limited~~do ~~Liability Company~~not ~~Agreement,~~have ~~Holdings~~access ~~LLC is only required~~ to ~~provide Pro-Fac with annual~~ ~~financial~~information ~~statements~~about of Holdings LLC ~~within~~or ~~120~~its ~~days~~financial ~~after~~condition ~~the close of a fiscal year~~ and toresults ~~provide financial statements~~ of ~~Birds Eye Foods to the~~ ~~extent received~~operations. ~~Any financial information received is subject to confidentiality provisions that preclude public disclosure.~~

On October 8, 2009, Birds Eye Foods filed with the SEC a Registration Statement on Form S-1 containing financial information with respect to the operations of its indirect, wholly-owned subsidiary, Birds Eye. Other than information contained in that Registration Statement and in subsequent filings Birds Eye Foods may make with the SEC from time to time, the holders of shares of Pro-Fac capital stock do not have access to information about Birds Eye or its financial condition and results of operations. There can be no assurance that Birds Eye will make any such subsequent filings or any other public disclosure containing comparable information in the future.


NOTE 3.	DEBT

~~Credit~~Lines ~~Agreement~~of Credit: ~~Birds~~The ~~Eye~~Cooperative ~~Foods~~may borrow up to $2.0 million from Manufacturers and ~~Pro-Fac~~Traders Trust ~~entered~~Company ~~into~~(“M&T Bank”) under the terms of a line of credit ~~agreement,~~(“the M&T ~~dated~~Line ~~August~~of 19Credit”). As of September 26, ~~2002~~ 2009, ~~which~~no amount was ~~amended~~outstanding under onthe ~~March~~M&T ~~28,~~Line ~~2007~~of ~~(the “~~Credit. ~~Agreement”)~~Principal ~~and~~amounts ~~which~~borrowed bear interest at ~~expired~~75 onbasis ~~November~~points ~~27,~~above ~~2007.~~the Atprime ~~June~~rate ~~30,~~of ~~2007,~~M&T ~~Pro-Fac~~Bank ~~owed~~(prime $1rate was 3.125% ~~million~~at September 26, 2009) in effect on the day proceeds are disbursed. Interest is ~~including~~payable ~~accrued~~monthly. ~~interest,~~Amounts extended under the ~~Credit~~M&T ~~Agreement~~Line ~~with~~of ~~Birds~~Credit ~~Eye~~are ~~Foods.~~required ~~Pro-Fac~~to be repaid ~~this~~in ~~amount~~full during ~~the~~each ~~quarter~~year ~~ended~~by ~~September~~July 2915, ~~2007~~with further borrowings prohibited for a minimum of 60 consecutive days after such repayment. NoThe ~~amounts~~Cooperative’s obligations under the M&T Line of Credit are ~~owed~~secured by a security interest granted to ~~Birds~~M&T ~~Eye~~Bank ~~Foods~~in ~~and~~substantially noall ~~amounts~~of ~~can~~the beassets ~~borrowed~~of the ~~under~~Cooperative, excluding its Class B common units owned in Holdings LLC. The collateral does include any distributions made in respect of the Class B common ~~Credit~~units ~~Agreement~~or cash payments made by Birds Eye to the Cooperative.

~~Lines~~Pro-Fac ofis ~~Credit: The~~a ~~Cooperative~~member ~~may borrow up to $2.0 million from M&T Bank under the terms~~ of ~~the~~another ~~M&T~~cooperative ~~Line~~that ofmarkets ~~Credit~~cherries. As a member of ~~March~~the 28cooperative, ~~2009,~~Pro-Fac nohas ~~amount~~entered ~~was~~into ~~outstanding under~~a ~~the~~loan ~~M&T~~agreement ~~Line~~with ofthe cooperative ~~Credit.~~that ~~Principal~~allows ~~amounts~~Pro-Fac ~~borrowed~~to ~~bear~~borrow ~~interest at 75 basis points above~~ the ~~prime~~collateral ~~rate~~value of ~~M&T Bank (prime rate was 3.25% at~~inventory ~~March~~owned ~~28,~~by ~~2009)~~Pro-Fac inand ~~effect~~held onby the ~~day~~cooperative, ~~proceeds~~up ~~are~~to ~~disbursed~~$5.0 million. Interest is ~~payable~~charged ~~monthly.~~at ~~Amounts extended under~~ the ~~M&T Line of Credit are required to be repaid in full during each year by July 15, with further borrowings prohibited for a minimum of 60 consecutive days after such repayment. The Cooperative~~cooperative’s ~~obligations~~cost ~~under the M&T Line~~ of ~~Credit~~funds ~~are~~to ~~secured~~finance bycosts ~~a security~~related ~~interest granted~~ to ~~M&T Bank in substantially all of~~ the ~~assets of~~ ~~the~~cherry ~~Cooperative, excluding its Class B common units owned in Holdings LLC~~inventory. ~~The collateral~~At ~~does~~September ~~include~~26, ~~any~~2009, ~~distributions~~Pro-Fac ~~made~~had inborrowing ~~respect~~capacity of ~~the Class B common~~ ~~units~~approximately or$0.1 ~~cash~~million. ~~payments~~No ~~made~~amounts bywere ~~Birds Eye Foods to the Cooperative~~outstanding.

Pro-Fac is a member of another cooperative that markets cherries. As a member of the cooperative, Pro-Fac has entered into a loan agreement with the cooperative that allows Pro-Fac to borrow up to $5.0 million at the cooperative’s cost of funds to finance costs related to the cherry inventory including purchase, packing and processing costs. Any borrowing cannot exceed the collateral value of inventory owned by Pro-Fac held by the cooperative. At March 28, 2009, Pro-Fac had borrowing capacity of approximately $0.6 million; no amounts were outstanding.


NOTE 4.	COMMON STOCK AND CAPITALIZATION

The following table illustrates the Cooperative’s shares authorized, issued, and outstanding at ~~March~~September 2826, 2009. :

	Par Value		Shares Authorized		Shares Issued And Outstanding
Common Stock	$	5.00		5,000,000	1,700,058	~~1,700,064~~
Non-Cumulative Preferred Stock	$	25.00		5,000,000	0	0
Class A Cumulative Preferred Stock	$	1.00		10,000,000	1,382,952	~~1,382,952~~
Class B Cumulative Preferred Stock	$	1.00		9,500,000	0	0
Class B, Series I 10% Cumulative Redeemable Preferred Stock	$	1.00		500,000	0	0
Class C Cumulative Preferred Stock	$	1.00		10,000,000	0	0
Class D Cumulative Preferred Stock	$	1.00		10,000,000	0	0
Class E Cumulative Preferred Stock	$	1.00		10,000,000	0	0

In the event of liquidation, the relative preference of Pro-Fac’s outstanding securities is as follows: first retains (which are ~~described~~ described below), then cumulated dividends on the Cooperative’s Class A ~~cumulative~~ cumulative preferred stock, then all classes of preferred stock, pari passu (at a a liquidation preference of $25.00 per share), then common stock (at par value) and, finally, special membership interests (which are described below). While the Cooperative presently has no plans to liquidate, if liquidation were to occur, the order of redemption and the amount required to fully redeem each class outstanding, at September 26, 2009, is as follows:

While the Cooperative presently has no plans to liquidate, if liquidation were to occur, the order of redemption and the amount required to fully redeem each class outstanding, at March 28, 2009, is as follows:


(Dollars in Thousands)	Amount Required to Fully Redeem

Class A Cumulative Preferred Stock	$	34,574
Common Stock		8,500
Special Membership Interests		21,733


	$	64,807

Retained Earnings Allocated to Members (“Retains”): Retains arise from patronage income and are allocated to the accounts of members within 8 1/2 months of the end of each fiscal year. For the ~~nine~~three month periods ended ~~March~~September 2826, 2009 and ~~March~~September 2927, 2008, no patronage income was retained and no such retains were ~~are~~ outstanding at ~~March~~September 2826, 2009. Qualified retains are taxable income to the member in the year the allocation is made.

During the first quarter of fiscal year 2008, the Cooperative redeemed all outstanding retains for approximately $6.8 million using proceeds of the $120.1 distribution received in July 2007 from Holdings LLC.

Preferred Stock: All preferred stock outstanding originated, directly or indirectly, from the conversion at par value of retains at the discretion of Pro-Fac’s Board of Directors. Preferred stock is generally non-voting, except that the holders of preferred stock are entitled to vote on those matters specifically required by law.

Pro-Fac’s Class A cumulative preferred stock is listed under the symbol PFACP on the Nasdaq Capital Market and has a dividend rate of $1.72 per share annually, payable in four quarterly installments of $.43 per share; cumulative, if not paid.

During the first ~~nine~~three months of fiscal year ~~2009~~2010, Pro-Fac paid cash dividends totaling $20.13 million on the Class A cumulative preferred stock. At September 26, 2009, cumulated undeclared dividends totaled approximately $0.3 million. On ~~April~~October 3031, 2009, the Cooperative paid a cash dividend of $0.4320 per share on the Class A cumulative preferred stock totaling approximately $0.6 3 million.

OnThe ~~October~~Board ~~31,~~of Directors periodically evaluates Pro-Fac’s business plan. ~~2008,~~There can be no assurances that Pro-Fac ~~redeemed~~will ~~390,887~~continue ~~shares~~to pay dividends and the declaration of ~~its~~any ~~Class~~future Adividends ~~cumulative~~is ~~preferred~~subject to Board action in advance of ~~shares~~any such declaration based upon all of the facts and circumstances at asuch time. ~~price~~On April 3, 2009, the Cooperative announced that future quarterly dividends, beginning with the July 31, 2009 dividend, if declared by its Board of Directors, were expected to be at the rate of $25.0020 per share. ~~for~~Any anfuture difference ~~aggregate~~between ~~redemption~~a ~~cost~~quarterly ofdividend payment and the full quarterly ~~approximately~~preferred dividend of $90.843 ~~million.~~per share must be paid in full before the payment of dividends on any other Pro-Fac equity and before the redemption of any Pro-Fac equity.

The Board of Directors periodically evaluates Pro-Fac’s business plan. There can be no assurances that Pro-Fac will continue to pay dividends and the declaration of any future dividends is subject to Board action in advance of any such declaration based upon all of the facts and circumstances at such time. On April 3, 2009, the Cooperative announced that future quarterly dividends, beginning with the July 31, 2009 dividend, if declared by its Board of Directors, are expected to be at the rate of $.20 per share. Any future difference between a quarterly dividend payment and the full quarterly preferred dividend of $0.43 per share must be paid in full before the payment of dividends on any other Pro-Fac equity and before the redemption of any Pro-Fac equity.

Common Stock: The Cooperative’s common stock is owned by its members based upon the quantity and type of crops to be marketed through Pro-Fac by the member-grower. If a member-grower ceases to be a producer of agricultural products that are marketed through the Cooperative, then the member-grower must sell its shares of Pro-Fac common stock to another grower that is acceptable to the Cooperative. Additionally, member-growers desiring to adjust quantities of crops marketed through Pro-Fac may either offer to sell or purchase shares of Pro-Fac common stock.

In January 2003, the Pro-Fac Board of Directors suspended the payment of dividends on the Cooperative’s common stock for an indefinite period of time. In January 2006, the Board placed a moratorium on Pro-Fac’s repurchase of shares of its common stock from its member-growers. Any repurchase by Pro-Fac of its common stock is subject to pre-approval by the Board.

Special Membership Interests: In conjunction with the Transaction, special membership interests in the aggregate amount of $21.7 million were allocated to the then current and former members of Pro-Fac who had made patronage deliveries to or on behalf of Pro-Fac in the six fiscal years ended June 29, 2002, in proportion to the patronage deliveries made by those members during that six fiscal year period.

Accumulated Deficit: Accumulated deficit consists of accumulated income and losses after distribution of earnings allocated to members and dividends.


NOTE 5.	OTHER MATTERS

Legal Matters: The Cooperative is party to legal proceedings from time to time in the ~~normal~~ normal course of its business. In the opinion of management, any liability that might be incurred upon the resolution of these proceedings will not, in the aggregate, have a material adverse effect on the Cooperative'’s business, financial condition, or results of operations. Further, no such proceedings are known to be contemplated by any governmental authorities. The Cooperative maintains general liability insurance coverage in amounts deemed to be adequate by its Board of Directors.

Indemnifications: From time to time, in the ordinary course of its business, Pro-Fac has, or may, enter into agreements with its customers, suppliers, service providers and business partners which contain indemnification provisions. Generally, such indemnification provisions require the Cooperative to indemnify and hold harmless the indemnified party(ies) and to reimburse the indemnified party(ies) for claims, actions, liabilities, losses and expenses in connection with any personal injuries or property damage resulting from any Pro-Fac products sold or services provided. Additionally, the Cooperative may from time to time agree to indemnify and hold harmless its providers of services from claims, actions, liabilities, losses and expenses relating to their services to Pro-Fac, except to the extent finally determined to have resulted from the fault of the provider of services relating to such services. The level of conduct constituting fault of the service provider will vary from agreement to agreement and may include conduct which is defined in terms of negligence, gross negligence, willful misconduct, omissions or other culpable behavior. The term of these indemnification provisions are generally not limited. The maximum potential future payments that the Cooperative could be required to make under these indemnification provisions are unlimited and are not determinable at this time, as any future payments would be dependent on the type and extent of the related claims, and all relevant defenses to the claims, which are not estimable. Historically, costs incurred to resolve claims related to these indemnification provisions have not been material to the Cooperative’s financial position, results of operations or cash flows.

The Cooperative has by-laws, policies, and agreements under which it ~~indemnifies~~ indemnifies its directors and officers from liability for certain events or ~~occurrences~~ occurrences while the directors or officers are, or were, serving at Pro-Fac'’s request in such capacities. Pro-Fac indemnifies its officers and directors to the fullest extent allowed by law. The maximum potential amount of future payments that the Cooperative could be required to make under these indemnification provisions is unlimited, but would be affected by all relevant defenses to the claims.

As part of the Transaction, Pro-Fac agreed to indemnify Birds Eye Foods for certain environmental liabilities. This obligation, however, is only triggered once the aggregate of all liabilities subject to indemnification under the Unit Purchase Agreement (including those unrelated to environmental matters) exceeds $10 million.

As of the date of this Report, Pro-Fac does not expect to be required to perform under the indemnifications described above.

Related Party Transactions: Substantially all crop purchases are from member-growers of the Cooperative. For fiscal year ~~2008~~2009, approximately 29 22 percent of all crops purchased by Pro-Fac from its members were sold to Birds Eye ~~Foods~~, an indirect subsidiary of Holdings LLC.

Pro-Fac is a party to an agricultural services agreement with Farm Fresh, a limited liability company, in which Pro-Fac owns a 5.55% membership interest. Under the services agreement, Farm Fresh provides Pro-Fac with agricultural and administrative services and acts as Pro-Fac’s exclusive sales agent for the sale of agricultural products grown by Pro-Fac member-growers located in New York State, which are not subject to existing supply agreements and Pro-Fac provides certain consulting services to Farm Fresh. Certain ~~members~~ members of Pro-Fac own the majority of the membership interests of Farm Fresh ~~either~~ either directly or indirectly through entities owned or controlled by them. Included are three members of Pro-Fac’s Board of Directors,: Peter Call, ~~president~~who ofalso serves as Pro-Fac’s President and Chairman of its Board of Directors, Kenneth Mattingly and James Vincent, who are each indirect owners of 5.55% of the ~~membership~~ membership interest of Farm Fresh (total 16.65%) through affiliated entities. Messrs. Call, Mattingly and Vincent serve on the Board of Directors of Farm Fresh, and Mr. Call serves as chairman.

During the ~~nine~~ three months ended ~~March~~September 2826, 2009 and ~~March~~September 2927, 2008, Pro-Fac paid Farm Fresh approximately $~~167~~59,000 and $~~157~~60,000, respectively, for services provided. Farm Fresh paid Pro-Fac $279,000 ~~and $27,000, respectively,~~ for consulting services provided by Pro-Fac during each of the same periods. At ~~March~~September 2826, 2009, ~~Pro-Fac~~and ~~owed~~at ~~approximately $1,000 to Farm Fresh. At~~ June 2827, ~~2008~~2009, ~~Farm Fresh owed~~ Pro-Fac owed Farm Fresh approximately $~~273~~18,000.

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS AND RISK FACTORS

From time to time, Pro-Fac or persons acting on behalf of Pro-Fac may make oral and written statements that may constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”) or by the ~~Securities~~ ~~and Exchange Commission (“~~SEC”) in its rules, regulations, and releases. The Cooperative desires to take advantage of the “safe harbor” provisions in the PSLRA for forward-looking statements made from time to time, including, but not limited to, the forward-looking information contained in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this Report and other statements made in this Report and in other filings with the SEC.

The Cooperative cautions readers that any such forward-looking statements made by or on behalf of the Cooperative are based on management’s current expectations and beliefs, all of which could be affected by the uncertainties and risk factors described below. The Cooperative’s actual results could differ materially from those expressed or implied in the forward-looking statements. The risk factors that could impact the Cooperative include:

§	The Cooperative’s most significant asset is its investment in Holdings LLC. Holdings LLC is not a reporting company under the Securities Exchange Act of 1934 (the “1934 Act”) and, accordingly, does not file annual reports on Form 10-K, quarterly reports on Form 10-Q or other periodic reports with the SEC. Moreover, while the Limited Liability Company Agreement requires that Holdings LLC provide Pro-Fac with annual financial statements of Holdings LLC within 120 days after the close of a fiscal year and, to the extent received by Holdings LLC, financial statements of Birds Eye Foods, any financial information received pursuant to the Limited Liability Company Agreement is subject to confidentiality provisions that preclude public disclosure. Accordingly, the holders of shares of Pro-Fac capital stock do not have access to information about Holdings LLC or its indirect, wholly-owned subsidiary, Birds Eye Foods, their financial condition and results of operations.
§	The Cooperative’s ability to pay dividends is dependent upon available cash, capital surplus and its future earnings. The Cooperative’s principal use of available cash has been the payment of dividends on its preferred stock and the redemption of its securities. In recent years, the $10.0 million annual receipts under the Termination Agreement had been the principal source of cash for payment of dividends with the final $2.0 million installment received in July 2007. In July 2007, Pro-Fac received a $120.1 million cash distribution from Holdings LLC. Although Pro-Fac is a party to the Limited Liability Company Agreement and, as a member of Holdings LLC, is entitled to annual distributions, if made, Holdings LLC has advised Pro-Fac that it will not speculate as to whether further distributions will be made under the Limited Liability Company Agreement. As a minority owner of Holdings LLC, Pro-Fac has no control over the determination of whether such distributions will be made and operates under a business plan that assumes no further distributions will be made.
	Using proceeds of the July 2007 distribution from Holdings LLC, the Board of Directors declared and the Cooperative paid dividends on its preferred stock in July and October 2007; January, April, July and October 2008; and January and April, 2009. There can be no assurances that Pro-Fac will continue to pay dividends and the declaration of any future dividends is subject to Board action in advance of any such declaration based upon all of the facts and circumstances at such time. On April 3, 2009, the Cooperative announced that future quarterly dividends, beginning with the July 31, 2009 dividend, if declared by its Board of Directors, are expected to be at the rate of $.20 per share.
•	In marketing member crops, the Cooperative records accounts receivable from customers and amounts due to members. Contractual arrangements with customers that purchase a majority of member crops provide for customer payment at or before the time that payments are required to be made to members. At times, customer payments have not been received on a timely basis. To date, Pro-Fac has continued to make timely payments to members resulting in a short-term use of Pro-Fac’s cash and investments.
	Future variations in cash receipts and any uncollectible accounts receivable will impact Pro-Fac’s working capital. Pro-Fac’s ability to fund these cash requirements is dependent on available cash and investments and borrowing capacity under the terms of available lines-of-credit. Uncollectible accounts receivable, if any, would either be absorbed by Pro-Fac through its available cash and investments or by reducing expenditures or funded through a reduction in CMV paid to members.


	•	The Cooperative’s most significant asset is its investment in Holdings LLC. See “Note 2. Agreements with Birds Eye” in the “Notes to Condensed Financial Statements” included in Part I, Item 1 of this Report for a discussion of the limitations on the availability to Pro-Fac and the holders of its capital stock of financial information regarding Holdings LLC and Birds Eye.

	•	The Cooperative’s principal use of cash available after payment of normal operating expenses has been the payment of dividends on its preferred stock and the redemption of its securities. The Cooperative’s ability to pay dividends is dependent upon available cash, capital surplus and Pro-Fac’s future earnings. Through July 2007, when Pro-Fac received the final payment under the Termination Agreement with Birds Eye, Pro-Fac’s annual receipts under the Termination Agreement had been the Cooperative’s principal source of available cash. In July 2007, Pro-Fac received a $120.1 million cash distribution from Holdings LLC. However, Holdings LLC has advised Pro-Fac that it will not speculate as to whether further distributions will be made under the Limited Liability Company Agreement and, as a minority owner of Holdings LLC, Pro-Fac has no control over the determination of whether such distributions will be made and operates under a business plan that assumes no further distributions will be made. There can be no assurance that Pro-Fac will continue to declare and pay dividends. On April 3, 2009, the Cooperative announced that, beginning with the July 31, 2009 dividend, future quarterly dividends, if declared by its Board of Directors, on its Class A Cumulative Preferred Stock were expected to be at the rate of $0.20 per share. The difference between any dividends paid and the full quarterly preferred dividend of $0.43 per share must be paid in full before the payment of dividends on any other Pro-Fac equity and before the redemption of any Pro-Fac equity.

	•	In marketing member crops, the Cooperative records accounts receivable from customers and amounts due to members. Contractual arrangements with customers that purchase a majority of member crops provide for customer payment at or before the time that payments are required to be made to members. At times, customer payments have not been received on a timely basis. To date, Pro-Fac has continued to make timely payments to members resulting in a short-term use of Pro-Fac’s cash and investments.

		Future variations in cash receipts and any uncollectible accounts receivable will impact Pro-Fac’s working capital. Pro-Fac’s ability to fund these cash requirements is dependent on available cash and investments and borrowing capacity under the terms of available lines-of-credit. Uncollectible accounts receivable, if any, would either be absorbed by Pro-Fac through its available cash and investments or by reducing expenditures or funded through a reduction in CMV paid to members.


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

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The purpose of this discussion is to outline the reasons for material changes in Pro-Fac’s financial condition and results of operations in the ~~third quarter and~~ first ~~nine~~quarter ~~months~~ of fiscal ~~2009~~2010 as compared to the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2008~~2009. This ~~section~~ section should be read in conjunction with Part I, Item 1. Financial Statements, of this Report.

OVERVIEW

Since 1960, Pro-Fac has operated as an agricultural cooperative, owned and controlled by its members, to purchase, market, and sell crops grown by its member-growers, for the mutual benefit of its members. The Cooperative’s core business focus has not changed in 49 years and its current strategy is to continue its business of purchasing, marketing, and selling its member-grower crops to its customers.

~~One~~As discussed in greater detail in “Item 7. Management’s Discussion and Analysis of ~~the~~Financial Condition and Results of Operations - Liquidity and ~~challenges~~Capital Resources” in Pro-Fac’s ~~faces,~~Annual ~~which~~Report ison ~~discussed~~Form ~~below~~10-K ~~under~~for ~~“Liquidity~~the ~~and~~fiscal ~~Capital~~year ~~Resources”~~ended June 27, 2009, one of the challenges Pro-Fac faces, is the Cooperative’s source of available cash to fund its operations and pay its dividends. In recent years, Pro-Fac’s primary source of cash to fund its operations and pay dividends was the $10.0 million in payments it received annually under the Termination Agreement ~~described above,~~ with the final installment of $2.0 million received in July 2007. Currently, Pro-Fac’s primary sources of cash are cash on hand, gross profit and margin on certain sales, interest income and possible distributions, if any, made by Holdings LLC to Pro-Fac under the Limited Liability Company Agreement. As previously reported, Pro-Fac received such a distribution in the amount of $120.1 million in July 2007. However, because Pro-Fac has no control over the determination of whether any such distributions will be made, Pro-Fac operates under a business plan that assumes that no further distributions will be made under the Limited Liability Company Agreement.

InRESULTS ~~July~~OF ~~2007, Pro-Fac~~OPERATIONS ~~received a distribution of approximately $120.1 million from Holdings LLC. During the first quarter of fiscal year 2008, Pro~~-~~Fac~~ ~~used~~FIRST ~~this~~QUARTER ~~distribution: to redeem all retained earnings~~2010 ~~allocated~~COMPARED toTO ~~its~~FIRST ~~members~~QUARTER at a cost of approximately $6.8 million; to pay dividends on its non-cumulative preferred stock and its Class A cumulative preferred stock at a cost of approximately $5.4 million; and to repay principal and interest owed under its Credit Agreement with Birds Eye Foods in an amount equal to approximately $1.1 million. During the second quarter of fiscal year 2008, Pro-Fac used this distribution: to redeem all of Pro-Fac’s non-cumulative preferred stock at a price of $25.00 per share for an aggregate redemption cost of approximately $0.7 million; to redeem 3,155,433 shares of its Class A cumulative preferred stock at a price of $25.00 per share for an aggregate redemption cost of approximately $78.9 million; and to pay dividends on its preferred stock to the date of redemption at a cost of approximately $2.1 million. On October 31, 2008, Pro-Fac used this distribution to redeem 390,887 shares of Class A preferred stock at a price of $25.00 per share for an aggregate redemption cost of approximately $9.8 million. 2009

~~The~~Net ~~Board~~sales, cost of ~~Directors~~ ~~periodically~~sales ~~evaluates~~and ~~Pro-Fac’s~~gross ~~business~~profit: ~~plan~~Net sales decreased from $0.3 million in ~~consideration~~the ofquarter ended September 27, 2008 to ~~Pro-Fac’s~~$0.1 ~~receipt~~million ofin the ~~distribution~~quarter ended September 26, 2009, and cost of sales decreased from ~~Holdings~~$0.3 ~~LLC~~million in the ~~first~~quarter ended September 27, 2008 to $0.1 million in the quarter ofended September 26, 2009, as the Cooperative entered ~~fiscal~~into ~~year~~fewer ~~2008~~sales ~~and~~transactions ~~possible~~as ~~future~~a ~~events~~principal.

~~RESULTS~~Margin OFon ~~OPERATIONS~~delivered -product: The ~~THIRD~~Cooperative ~~QUARTER~~negotiates certain sales transactions on behalf of its members, which result in margin being earned by the Cooperative. The Cooperative earned $29,000 in margin during the quarter ended September 26, 2009 and $86,000 in ~~COMPARED~~margin TOduring ~~THIRD~~the ~~QUARTER~~quarter ended September 27, 2008. The decrease resulted from volume differences.

~~Net~~Selling, ~~sales~~administrative, ~~cost of sales~~ and ~~gross~~general ~~profit~~expense: ~~Net sales increased from $11~~Selling,~~000 in the quarter ended March 29, 2008 to $0.7~~ ~~million in the quarter ended March 28~~administrative, ~~2009,~~ and ~~cost~~general ofexpenses ~~sales~~totaled ~~increased from~~ $~~42,000 in the quarter ended March 29, 2008 to $~~0.75 million infor ~~the~~each ~~quarter~~of ~~ended March 28, 2009, as~~ the ~~Cooperative entered into more sales transactions as a~~ ~~principal.~~quarters ~~Volume and pricing differences resulted in a $68,000 increase in gross profit for the quarter~~ ended ~~March~~September 2826, 2009 ~~compared~~and toSeptember ~~the quarter ended March 29~~27, 2008.

~~Margin~~Investment ~~on delivered product~~income: ~~The~~Investment ~~Cooperative~~income ~~negotiates~~decreased ~~certain~~from ~~sales~~$0.2 ~~transactions~~million onfor ~~behalf~~the ofquarter ~~its~~ended September ~~members~~27, ~~which~~2008, ~~result~~to ~~in margin being earned by the Cooperative. The Cooperative earned~~ $178,000 infor ~~margin during~~ the quarter ended ~~March~~September 2826, 2009, due to lower invested balances and $0interest rates.1 ~~million~~Investment inincome ~~margin~~for ~~during~~ the ~~quarter~~ quarters ended September ~~March~~26, 292009 and September 27, 2008., ~~The~~included unrealized gains of ~~decrease~~approximately ~~resulted~~$1,000 ~~from~~and ~~volume~~$4,000, ~~differences~~respectively.

Selling, administrative, and general expense: Selling, administrative, and general expenses totaled $0.6 million and $0.5 million for the quarters ended March 28, 2009 and March 29, 2008, respectively. The increase relates to an increase of $0.1 million in the reserve for uncollectable accounts receivable recorded during the quarter ended March 28, 2009.

Investment income: Investment income decreased from $0.3 million for the quarter ended March 29, 2008, to $31,000 for the quarter ended March 28, 2009, due to use of the proceeds from the $120.1 million distribution from Holdings LLC in July 2007 to redeem equity interests in July and October 2007 and October 2008 and pay dividends. Investment income for the quarters ended March 28, 2009 and March 29, 2008, included unrealized gains/(losses) of approximately ($1,000) and $46,000, respectively.

Income Taxes: ~~The Cooperative qualifies for tax exempt~~ ~~status~~See as“Note a1. ~~farmers’~~Description ~~cooperative~~of ~~under~~Business ~~Section~~and ~~521~~Summary of ~~the~~Significant ~~Internal Revenue~~Accounting ~~Code.~~Policies” ~~Exempt~~in ~~cooperatives~~“Notes ~~are permitted~~ to ~~reduce~~Condensed orFinancial ~~eliminate~~Statements” ~~taxable income through the use of special deductions~~ for ~~dividends~~ ~~paid~~a ondiscussion ~~its common and preferred stock and distributions~~ of ~~patronage income.~~the ~~The~~ Cooperative ~~intends to~~’s ~~surrender its~~ tax exempt status ~~effective~~and ~~for~~the ~~fiscal~~tax ~~year~~basis ~~2009.~~of ~~This~~the ~~action is not expected to have a material impact on Pro-Fac~~Cooperative’s ~~operations~~investment orin ~~income tax liabilities~~Holdings LLC.

~~During~~For ~~the first quarter of~~ fiscal year ~~2008~~2010, ~~Pro-Fac~~the ~~received~~Cooperative aexpects ~~$120.1~~to ~~million~~generate a net ~~distribution~~operating ~~from~~loss ~~Holdings~~carry ~~LLC~~forward ~~pursuant~~for toincome ~~the~~tax ~~terms~~purposes. Realization of the ~~Limited Liability~~ ~~Company~~related ~~Agreement.~~deferred ~~Approximately~~tax ~~$10.1 million~~asset ofis ~~the~~not ~~amount~~assured. ~~received~~Accordingly, ~~was~~ a ~~taxable~~valuation ~~dividend,~~allowance has ~~subject~~been recorded to offset the ~~qualified dividends~~deferred ~~received~~tax ~~deduction~~asset, ~~with~~resulting in a reduction in the ~~remaining~~effective ~~amount~~rate. ~~representing~~The Cooperative also generated a ~~return~~loss for income tax ofpurposes ~~capital.~~in 2009.

The Cooperative’s tax basis of its investment in Holdings LLC at June 28, 2008 was $76.4 million. A deferred income tax asset has not been recognized on the estimated excess of the tax basis over the recorded financial statement value of Pro-Fac’s investment in Holdings LLC at March 28, 2009. This asset would only be realized upon the sale of Pro-Fac’s investment based on the proceeds received or receipt of a distribution representing a return of capital, neither of which is expected to occur in the foreseeable future.

The income tax benefit for the quarters ended March 28, 2009 and March 29, 2008 were based on the Cooperative’s estimated effective tax rates for the respective fiscal years applied to the respective quarters.

For fiscal year 2009, the Cooperative expects to generate a net operating loss carry forward for income tax purposes. Realization of the related deferred tax asset is not assured. Accordingly, a valuation allowance has been recorded to offset the deferred tax asset, resulting in a reduction in the effective rate The Cooperative also generated a loss for income tax purposes in 2008, all of which was carried back to generate refunds of taxes previously paid resulting in the income tax benefit recorded in the quarter ended March 29, 2008.

RESULTS OF OPERATIONS – FIRST NINE MONTHS 2009 COMPARED TO FIRST NINE MONTHS 2008

Net sales, cost of sales and gross profit: Net sales increased from $0.9 million in the nine months ended March 29, 2008 to $1.9 million in the nine months ended March 28, 2009, and cost of sales increased from $1.0 million in the nine months ended March 29, 2008 to $1.8 million in the nine months ended March 28, 2009, as the Cooperative entered into more sales transactions as a principal. Volume and pricing differences accounted for the majority of the $0.2 million improvement in gross profit for the nine months ended March 28, 2009 compared to the nine months ended March 29, 2008.

Gain from transaction with Birds Eye Foods and related agreements: In the first nine months of fiscal year 2008, Pro-Fac recognized, approximately $1.2 million, as additional gain from the receipt of the final termination payment under the Termination Agreement in July 2007.

Margin on delivered product: The Cooperative negotiates certain sales transactions on behalf of its members, which result in margin being earned by the Cooperative. The Cooperative earned $0.3 million in margin during the first nine months of fiscal 2009 and $0.2 million in margin during the first nine months of fiscal 2008. Volume and pricing differences accounted for the majority of the improvement in margin for the nine months ended March 28, 2009.

Selling, administrative, and general expense: Selling, administrative, and general expenses totaled $1.6 million and $1.4 million for the nine months ended March 28, 2009 and March 29, 2008, respectively. The increase relates to an increase of $0.1 million in the reserve for uncollectable accounts receivable recorded during the quarter ended March 28, 2009

Investment income: Investment income decreased from $2.4 million for the nine months ended March 29, 2008 to $0.3 million for the nine months ended March 28, 2009 due to use of the proceeds from the $120.1 million distributions from Holdings, LLC in July 2007 to redeem equity interests in July and October 2007 and October 2008 and pay dividends. Investment income for the nine months ended March 28, 2009 and March 29, 2008, included unrealized gains/(losses) of approximately ($1,000) and $46,000, respectively.

Distribution from Holdings LLC: During the first quarter of 2008, Pro-Fac received a distribution of approximately $120.1 million from Holdings LLC under the Limited Liability Agreement. In accordance with the cost method of accounting for the investment in Holdings LLC, Pro-Fac reduced its investment in Holdings LLC by $3.5 million to zero with the remaining $116.6 million of the distribution recorded as income.

Income taxes: The income tax benefit for the nine months ended March 28, 2009 is based on the Cooperative’s estimated effective tax rate for fiscal year 2009. The Cooperative does not expect to record a net deferred tax asset for any expected fiscal year 2009 net operating loss carry forward as realization is not reasonably assured. A valuation allowance has been recorded to offset the deferred tax asset. The Cooperative recorded a tax benefit of $1.0 million for the nine month period ended March 29, 2008 because the Cooperative expected to have a loss for tax purposes which would be carried back to recover taxes paid in prior periods.

CRITICAL ACCOUNTING POLICIES

“NOTE 1. Description of Business and Summary of ~~Accounting~~ Significant Accounting Policies” under “Notes to Condensed Financial Statements” included in Part I, Item 1 of this Report discusses the significant accounting policies of Pro-Fac. Pro-Fac’s discussion and analysis of its financial condition and results of operations are based upon its condensed financial statements, which have been prepared in accordance with ~~accounting~~ ~~principles generally accepted in the United States~~GAAP. The preparation of these financial ~~statements~~ statements requires Pro-Fac’s management to make estimates, judgments and assumptions that affect the reported amount of assets, liabilities, revenues and expenses. ~~On an ongoing basis,~~ Pro-Fac regularly evaluates its estimates.

Certain accounting policies deemed critical to Pro-Fac’s results of operations or financial position are discussed below.

The Cooperative accounts for its investment in Holdings LLC under the cost method of accounting. Under the cost method, distributions of earnings are reported as income and distributions that represent a return of capital reduce the carrying value of the investment, but not below zero. As a result of the $120.1 million distribution received from Holdings LLC during the first quarter of fiscal year 2008, Pro-Fac’s investment in Holdings LLC was reduced to zero. However, Pro-Fac continues to own an approximate 40% interest in Holdings LLC through its ownership of Class B common units.

A deferred income tax asset has not been recognized on the estimated excess of the tax basis over the recorded financial statement value of the investment in Holdings LLC at ~~March~~September 2826, 2009, of approximately $76.4 million. This potential asset would only be recognized upon the sale of the investment based on the proceeds received or receipt of a distribution representing a return of capital, which was not considered probable at September ~~March 28~~26, 2009.

Pro-Fac markets and sells its members’ crops to food processors. Under the provisions of Emerging Issues Task Force Issue No. 99-19, “Reporting Revenue Gross Versus Net as an Agent”, the Cooperative records activity among its customers, itself and its members on a net basis. For transactions in which Pro-Fac acts a principal rather than an agent, sales and cost of sales are reported.

LIQUIDITY AND CAPITAL RESOURCES

~~Historically,~~As discussed in further detail in Pro-Fac’s Annual Report on Form 10-K for the fiscal year ended June 27, 2009, Pro-Fac historically has had four sources or potential sources of available cash to fund its operating expenses and the payment of its quarterly dividends: (i) cash from its sale of raw products to its customers, (ii) payments received under the Termination Agreement with Birds Eye ~~Foods~~, (iii) cash distributions related to its investment in ~~Holdings~~ Holdings LLC, and (iv) borrowings.

~~Pro-Fac receives~~As ~~cash~~described ~~payments~~in ~~equal~~Note 3 to the ~~CMV~~Cooperative’s ofunaudited ~~crops sold to Birds Eye Foods,~~condensed ~~Allens,~~financial ~~Inc.~~statements ~~and~~included ~~other~~in ~~customers~~Part ~~pursuant to the Amended and Restated Marketing and Facilitation Agreement~~I, ~~the~~Item ~~Allens supply agreement and other supply agreements~~1. ~~Although~~Financial ~~CMV~~Statements, ~~payments are considered a potential source~~ of ~~cash to Pro-Fac~~this report, Pro-Fac ~~has~~may ~~typically~~borrow ~~paid 100~~up ~~percent of CMV~~ to ~~its~~$2.0 ~~member-growers~~million ~~for~~from ~~crops~~M&T ~~delivered~~Bank and ~~did so in fiscal~~ ~~years~~approximately ~~2008 and 2007~~$0.1 ~~Since~~million ~~CMV~~(limited ~~payments are~~by ~~approximately~~collateral) ~~equal to the cash Pro-Fac receives~~ from ~~its~~another ~~customers~~cooperative. ~~for its~~At ~~raw~~September ~~products~~26, ~~CMV~~2009, ~~payments are not a significant source of available cash from which~~ Pro-Fac ~~can~~had ~~pay~~no ~~operating~~outstanding ~~expenses~~borrowings ~~and~~under ~~quarterly~~either borrowing ~~dividends~~facility.

~~While~~A ~~Pro-Fac principally~~discussion ~~acts~~of as“Statement ~~agent for its member-growers in the marketing and sale~~ of ~~crops,~~ ~~Pro-Fac~~Cash ~~does~~Flows” ~~occasionally engage in crop sales transactions as a~~for ~~principal, resulting in gross profit or margin being earned by~~ the ~~Cooperative.~~ ~~Although~~three ~~the~~months ~~amounts earned~~ended ~~increased~~September ~~through fiscal year 2007~~26, ~~subsequent increases have not been significant and future increases are not expected to be significant. Net cash available to Pro-Fac~~2009, after payment of CMV to Pro-Fac’s member-growers, has historically been used to pay Pro-Fac’s operating expenses as well as its quarterly dividends on its preferred stock and to fund repurchases of its common stock. follows:

Net cash used in operating activities was $1.3 million for the first three months of fiscal year 2010 compared to cash used in operating activities of approximately $10.5 million in the first three months of fiscal year 2009. The ~~final~~change primarily represents a reduction in cash transferred to ~~installment~~investments, ~~payment~~reduced investment in inventory and changes in the timing of cash receipts from customers and related cash payments to ~~Pro~~member-~~Fac~~growers ~~under~~between the first ~~Termination~~three ~~Agreement~~months ~~was~~of ~~received~~fiscal inyear 2010 and the first three months of fiscal ~~July~~year ~~2007~~2009.

~~The~~Net ~~Limited Liability~~cash ~~Company~~used ~~Agreement provides that, subject to restrictions contained~~ in ~~any~~ financing ~~arrangements~~activities ~~of Holdings LLC or its subsidiaries (including Birds~~during ~~Eye~~the ~~Foods),~~first ~~Holdings~~three ~~LLC~~months ~~will~~of ~~use~~fiscal ~~commercially~~year ~~reasonable~~2010 ~~efforts~~consisted ~~to cause Birds Eye Foods to distribute annually to Holdings LLC up to $24.8 million~~ of ~~cash~~ ~~flow~~payment ~~from operations~~ of ~~Birds~~dividends ~~Eye Foods, which Holdings LLC will then distribute to the holders~~ of ~~its common units, including Pro-Fac. In July 2007, Pro-Fac received a~~ $~~120~~0.~~1 million~~3 ~~cash distribution from Holdings LLC~~million. ~~Holdings~~ ~~LLC~~During ~~has advised Pro-Fac that it will not speculate as to whether further distributions will be made under~~ the ~~Limited~~first ~~Liability~~three ~~Company Agreement~~months ~~and, as a minority owner~~ of ~~Holdings~~fiscal ~~LLC~~year 2009, ~~Pro-Fac~~net ~~has~~cash noused in ~~control~~financing ~~over the~~activities ~~determination~~consisted of ~~whether such distributions will be made~~$0.8 ~~Pro-Fac~~million isin ~~operating~~dividends ~~under a business plan that assumes no further distributions will be made under the Limited Liability Agreement~~paid.

13Based on the assumptions contained in Pro-Fac’s current business plan, the Board believes that Pro-Fac has sufficient sources of cash to fund its operations at least through the end of fiscal 2013.

As described in Note 3 to the Cooperative’s unaudited condensed financial statements included in Part I, Item 1. Financial Statements, of this report, Pro-Fac may borrow up to $2.0 million from M&T Bank and approximately $0.6 million (limited by collateral) from a cooperative. At March 28, 2009, Pro-Fac had no outstanding borrowings under either borrowing facility. 12

A discussion of “Statement of Cash Flows” for the nine months ended March 28, 2009, follows:

Net cash used in operating activities was $2.4 million for the first nine months of fiscal year 2009 compared to cash provided by operating activities of approximately $111.0 million in the first nine months of fiscal year 2008. The change primarily represents income from the receipt of the $120.1 million distribution from Holdings LLC in the first nine months of fiscal year 2008, changes in investments classified as trading securities and changes in the timing of cash receipts from customers other than Birds Eye Foods and related cash payments to member-growers between the first nine months of fiscal year 2009 and the first nine months of fiscal year 2008.

In the first nine months of fiscal year 2009, no cash was provided by investing activities. Cash provided by investing activities for the first nine months of fiscal year 2008 was $5.5 million related to the receipt of $2.0 million from Birds Eye Foods as the final payment under the Termination Agreement and the portion of the distribution from Holdings LLC classified as a return of capital, approximately $3.5 million.

Net cash used in financing activities during the first nine months of fiscal year 2009 included payment of dividends of $2.1 million and the redemption of preferred shares of $9.8 million. During the first nine months of fiscal year 2008, net cash used in financing activities included $1.0 million to repay amounts previously borrowed, $6.8 million to redeem all retained earnings allocated to members, $8.3 million in dividends paid and $79.6 million for the redemption of preferred shares.

In January 2003, the Pro-Fac Board of Directors suspended the payment of dividends on the Cooperative’s common stock for an indefinite period of time and, in January 2006, the Board placed a moratorium on Pro-Fac’s repurchase of shares of its common stock from its member-growers. Any repurchase by Pro-Fac of its common stock is subject to pre-approval by the Board.

Based on the assumptions contained in Pro-Fac’s business plan, the Board currently believes that Pro-Fac has sufficient sources of cash to fund its operations at least through the end of fiscal 2013.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, Pro-Fac is not required to provide information required by this item.

ITEM 4T4. CONTROLS AND PROCEDURES

Disclosure ~~Controls~~ Controls and Procedures: Pro-Fac’s Principal Executive Officer and Principal Financial Officer evaluated the effectiveness of the design and operation of Pro-Fac’s disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the ~~Securities~~ Exchange Act ~~of 1934, as amended (the “Exchange Act”~~)). Based on that evaluation, Pro-Fac’s Principal Executive and Principal Financial Officer concluded that Pro-Fac’s disclosure controls and procedures as of ~~March 28~~September 26, 2009 (the end of the period covered by this Report), have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by Pro-Fac in reports filed or submitted by it under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the ~~Securities and Exchange Commission~~SEC’s rules and forms, and that such information is accumulated and communicated to Pro-Fac’s management, including its Principal Executive and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting: There ~~were~~ were no changes in Pro-Fac’s internal control over financial reporting ~~identified~~ identified during the quarter ended ~~March~~September 2826, 2009, that materially affected, or are reasonably likely to materially affect, Pro-Fac’s internal control over financial reporting.

1413

PART II

ITEM 1.	LEGAL PROCEEDINGS
	The information called for by this Item is disclosed in NOTE 5. “Other Matters – Legal Matters” under “Notes to Condensed Financial Statements” in Part I, Item 1 of this Form 10-Q, and is incorporated herein by reference in answer to this Item.
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
	None
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES
	None
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a)	The regional annual membership meetings for the members of Pro-Fac were held as follows:
	None
ITEM 5.	OTHER INFORMATION
	None
ITEM 6.	EXHIBITS
	Exhibit Number	Description
	31.	Certification of the Principal Executive Officer and the Principal Financial Officer as required by Rule 13a-14 (a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
	32.	Certification of the Principal Executive Officer and the Principal Financial Officer as required by Rule 13a-14 (b) of the Securities Exchange Act of 1934 and pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (filed herewith).

Date	Region/District	City/State
February 13, 2009	I/1 and I/2	Pittsford, New York
February 24, 2009	III	Columbus, Nebraska
February 25, 2009	II/2	Havana, Illinois
March 3, 2009	I/3	Johnstown, Pennsylvania
March 4, 2009	II/1	Holland, Michigan

(b) Peter Call, Robert DeBadts, Allan Overhiser, Darell Sarf, and Steven Koinzan were re-elected to three-year terms on the Pro-Fac Board of Directors as a result of the elections at the regional meetings held in February and March, 2009. The following is a list of the remaining directors whose terms of office continued after the regional annual meetings.

Name	Term Expires
Charles Altemus	2010
Kenneth Dahlstedt	2010
Bruce Fox	2011
Joseph Herman	2010
Kenneth Mattingly	2011
Paul Roe	2011
James Vincent	2010

(c) The only matters submitted to the Cooperative’s members for action at the regional annual meetings were the election of directors and ratification of amendments to Pro-Fac’s Bylaws. Following are the voting results for members of the Board of Directors from the regional meetings:

The amendment to Pro-Fac’s Bylaws, which was approved by the Cooperative’s Board of Directors on January 31, 2008 and previously reported in its current report on Form 8-K filed March 10, 2009, further defines the events which trigger a capital gains distribution and was ratified by a vote of 192 in favor, 7 opposed and 35 not voting. Consistent with the Cooperative’s Bylaws, the Pro-Fac Board of Directors re-appointed directors Cornelius D. Harrington, Frank M. Stotz and William J. Lipinski to continue to serve as directors of the Cooperative for a one year term and until their successors are duly elected and qualified. Messrs, Harrington, Stotz, and Lipinski will continue to serve as members of the Cooperative’s Audit Committee, and Mr. Lipinski also continues to serve on the Executive and Compensation Committee.

ITEM 5.	OTHER INFORMATION
	None
ITEM 6.	EXHIBITS

Exhibit Number		Description
31.		Certification required by Rule 13a-14 (a) of the Securities Exchange Act of 1934 of the Principal Executive Officer and the Principal Financial Officer (filed herewith).
32.		Certification required by Rule 13a-14 (b) of the Securities Exchange Act of 1934 and pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, of the Principal Executive Officer and the Principal Financial Officer (filed herewith).

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			~~PRO-FAC COOPERATIVE, INC.~~		PRO-FAC COOPERATIVE, INC.
Date:	~~May~~November 86, 2009	~~BY:~~	~~/s/ Stephen R. Wright~~BY:	/s/	Stephen R. Wright
			~~General Manager, Chief Executive~~		General Manager, Chief Executive
			~~Officer, Chief Financial Officer~~		Officer, Chief Financial Officer
			~~and Secretary~~		and Secretary
			~~(On Behalf of the Registrant and as~~		(On Behalf of the Registrant and as
			~~Principal Executive Officer~~		Principal Executive Officer
			~~Principal Financial Officer, and~~		Principal Financial Officer, and
			~~Principal Accounting Officer)~~		Principal Accounting Officer)

1715

EXHIBIT INDEX


ITEM 6.	EXHIBITS

	Exhibit Number	Description


	31.	Certification of the Principal Executive Officer and the Principal Financial Officer as required by Rule 13a-14 (a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).

	32.	Certification of the Principal Executive Officer and the Principal Financial Officer as required by Rule 13a-14 (b) of the Securities Exchange Act of 1934 and pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (filed herewith).

Votes Cast For

Votes Cast Against

Not Voting

Peter Call

Robert DeBadts

Allan Overhiser

Darell Sarf

Steven Koinzan

Filing Compare · PRO-FAC COOPERATIVE INC