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Dakota Growers Pasta Company Completes Conversion
July 2, 2002
Dakota Growers Pasta Company received notice today that its
conversion from a cooperative to a corporation has been completed
effective Monday, July 1, 2002. The conversion comes upon
acceptance of the necessary merger filings by the secretaries
of state of North Dakota and Colorado.
The corporate conversion allows the general public to own
Common Stock in Dakota Growers. Shares of the Common Stock
are not listed yet on any exchange, but management continues
to explore options to enhance liquidity and facilitate the
purchase and sale of Dakota Growers Common Stock. People who
are interested in purchasing stock from existing stockholders
may contact their broker
In order to keep its important ties to the durum growers
and maintain its high quality standards, Dakota Growers created
Series D Delivery Preferred Stock that has durum delivery
privileges. Holders of Series D Delivery Preferred Stock will
have a first-come, first-served privilege to deliver durum
for processing into pasta whenever Dakota Growers gives notice
that it requires durum. Premium programs, including identity
preserved and organic, are growing as Dakota Growers continues
to expand its marketing efforts for organic pasta and other
source-verified products. Dakota Growers is the only pasta
manufacturer with an identity preserved program controlling
quality and food safety from the field to the plate.
Dakota Growers expects to send information statements to
its stockholders later this week.
Originally organized in 1991 as a cooperative of durum wheat
growers, Dakota Growers Pasta Company, Inc. continues as the
third largest producer of dry pasta products in North America.
Dakota Growers is the leading supplier of retail store brand
pasta and a leader in the foodservice and ingredient pasta
markets. Processing plants are located in Carrington, North
Dakota and New Hope, Minnesota. The company employs approximately
435 people.
Certain information included herein and other
Company reports, SEC filings, statements and presentations
contain discussion of some of our expectations regarding Dakota
Growers Pasta Company's future performance. These forward-looking
statements are based on our current views and assumptions.
Actual results could differ materially from these current
expectations and projections, and from historical performance.
For example, our future results could be affected by such
factors as: the competitive dynamics in the U.S. pasta market,
the rate of our unit volume growth and our product mix, and
fluctuations in the cost and availability of supply-chain
resources. Our 2001 Form 10-K contains further discussions
of these matters, and can be found through the Securities
and Exchange Commission's Electronic Data Gathering and Retrieval
(EDGAR) system at www.SEC.gov.
Dakota Growers Pasta Company Members
Approve Corporate Change
May 23, 2002
Members of the Dakota Growers Pasta Company, the nation's
leading supplier of store brand pasta, widely approved changing
the grower-owned cooperative to a common stock corporation.
The approval allows the conversion of cooperative shares to
common stock that will be available for public trading.
"Dakota Growers Pasta Company has evolved quickly during
our first decade of existence, and this is one more important
transitional change for us," said Chairman Jack Dalrymple.
"Moving forward, we will work hard at developing a market
for the original grower-members and potential new stockholders
to trade their stock," added Dalrymple. "We intend
to diligently develop the market through the pink sheets or
over-the-counter stock transactions. Additionally, we will
be talking to strategic investment equity partners."
The dynamics of the pasta industry have changed dramatically
from 10 years ago when Dakota Growers entered the market.
"We missed out on some very appealing opportunities this
past year, especially when Borden Foods exited the pasta business
entirely. Under the corporate business structure, we are now
in position to attract new investors and additional capital."
Dalrymple continued, "It's important that Dakota Growers
continue to make operational investments to remain competitive."
Third Quarter Profits Rise Sharply
Net earnings were $2.2 million for the third quarter ended
April 30, 2002, up sharply compared to the $1.0 million net
loss incurred for the same period in the prior year. Dakota
Grower's improved performance resulted from revenue growth
combined with operational improvements, which reduced operating
costs and increased supply chain efficiencies. Revenues for
the quarter totaled $37.7 million compared to $34.1 million
for the same period last year, primarily due to volume growth.
Net earnings for the nine months ended April 30, 2002 were
$6.5 million; a $10.4 million increase over the $3.9 million
net loss incurred for the nine months ended April 30, 2001.
Revenues increased 13.3% to $112.2 million compared with $99.0
million last year.
Drivers for Success
Today, Dakota Growers Pasta Company is the third largest pasta
manufacturer in North America, processing about 1.5 million
pounds of pasta daily. Three fundamental core values have
elevated the company from a start-up venture in 1994 into
a leader in manufacturing pasta for retail store brands and
the foodservice industry.
First, the customer. Dakota Growers has always firmly believed
that superior service is the foundation to customer satisfaction.
"We have constructed our facilities to be flexible and
adaptable to changing market needs," stated Tim Dodd,
chief executive officer.
"Our service levels are the best in the industry,"
Dodd said. "Even with minimal lead-times, our customers
experience an order fill rate in excess of 99 percent. Additionally,
we offer flexibility to provide specialized formulas and unique
package configurations that help our customers differentiate
themselves."
As a result, Dakota Growers has been awarded, for the second
consecutive year, The Kroger Co. Corporate Brand Outstanding
Supplier Award. This prestigious award places Dakota Growers
among the top percentile of all grocery store brand suppliers
to Kroger, the nation's largest supermarket retailer.
"Secondly, Dakota Growers has developed a reputation
as a quality pasta manufacturer," Dodd said. "Our
direct link to the best durum growers in the world allows
us to control quality from the field to the plate. We are
pioneering an identity preservation program that will guarantee
our customers food safety, traceability and quality every
step of the way from the field to the plate."
Manufacturing and supply chain efficiencies are the third
pieces to success. Dakota Grower's strategic location near
the source of North America's premium quality durum wheat
and the company's total vertical integration through milling,
processing and supply chain creates a synergistic and cost
effective system. "We have the most efficient durum mill
and vertically integrated pasta manufacturing facility in
the world. Our Minnesota facility is aligned directly to the
Carrington facility on the Canadian Pacific rail line, allowing
us to control our durum sourcing and milling operations under
one system."
"Our supply chain specialist has developed an efficient
network of forward warehouses utilizing box cars on mainline
railroads, further reducing our transportation costs and increasing
our customer service levels." Dodd continued, "The
cost-reduction innovations that our operations team has implemented
have made Dakota Growers a much more efficient company, better
able to compete in today's competitive pasta market. Advanced
durum cleaning and milling technologies, packaging automation
and sophisticated logistic programs have contributed to our
earnings turnaround."
Dakota Growers will continue to focus on these strengths
in the future. "Retail store brand continues to be a
growing volume market," Dodd said. Year-ending IRI data
reports that store brand market share grew 12 percent while
branded pasta lost six percent market share. "We are
strategically aligned with three of most aggressive supermarket
chains in the United States. We are an innovative leader in
the club store industry, developing multi-unit, high-impact
display pallets. We continue to grow other niche retail markets
like dollar stores and organic."
Foodservice will be a targeted growth market for Dakota Growers.
"We are partnered with the fastest-growing foodservice
distributor in the world and have some very aggressive programs
in place to promote growth," said Dodd. Diversification
within the ingredient market will continue to play an important
role in total sales.
Series D Delivery Preferred Stock Shares Connect Durum
Farmers to Pasta
As part of the company's transition to a corporation, Dakota
Growers will maintain its important ties with the northern
plains premium durum producers through Series D Delivery Preferred
Stock, which gives its holders delivery rights for high-quality
durum wheat. In the new corporate structure, current members
will have their ownership converted into Common Stock and
Series D Delivery Preferred Stock.
"Consumers have become more concerned about food safety
since the terrorist attacks on September 11. Our direct link
to the farmers allows Dakota Growers to trace durum and pasta
quality safely throughout the entire system, thus guaranteeing
food safety and quality to our customers."
Dakota Growers has already implemented an identity preservation
program for one of its major customers. "Logistically,
the system is working smoothly. More importantly, we have
produced premium quality pasta that far exceeds any other
pasta available in the market," commented Dodd.
The identity preservation program fits hand-in-hand with
organic processing already in place. "We currently manufacture
100 percent certified organic pastas and the food traceability
system we have implemented into our factories is a natural
progression in providing customers with safe, quality food."
Organized in 1991 as a cooperative of durum wheat growers,
Dakota Growers Pasta Company is the third largest producer
of dry pasta products in North America. They are the leading
supplier of retail store brand pasta in this market and a
leader in the foodservice and ingredient pasta markets. They
are the only pasta manufacturer with an identity preserve
program controlling quality and food safety from the field
to the plate. Their plants are located in Carrington, North
Dakota and New Hope, Minnesota. The company employs approximately
415 people.
Certain
information included herein and other Company reports, SEC
filings, statements and presentations contain discussion of
some of our expectations regarding Dakota Growers Pasta Company's
future performance. These forward-looking statements are based
on our current views and assumptions. Actual results could
differ materially from these current expectations and projections,
and from historical performance. For example, our future results
could be affected by such factors as: the competitive dynamics
in the U.S. pasta market, the rate of our unit volume growth
and our product mix, and fluctuations in the cost and availability
of supply-chain resources. Our 2001 Form 10-K contains further
discussions of these matters, and can be found through the
Securities and Exchange Commission's Electronic Data Gathering
and Retrieval (EDGAR) system at www.SEC.gov
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