<PAGE>

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

                                    FORM 10-Q

[x]  Quarterly report pursuant to Section 13 or 15 (d) of the Securities
     Exchange Act of 1934

                 For the quarterly period ended July 15, 2001
                                      or

[_]  Transition report pursuant to Section 13 or 15 (d) of the Securities
     Exchange Act of 1934

                   For the transition period from ___ to ___

                       Commission file number: 333-76569

                                Luigino's, Inc.
            (Exact name of registrant as specified in its charter)

          Minnesota                   2038                    59-3015985
(State of other jurisdiction    (Primary Standard          (I.R.S. Employer
       of incorporation      Industrial Classification    Identification No.)
       or organization)               Code)


                             525 Lake Avenue South
                               Duluth, MN 55802
                                (218) 723-5555

  (Address, including zip code, and telephone number, including area code, of
                  registrant's principal executive offices.)

Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.

Yes  X    No ___
     ----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

             Common                                         1,000
-----------------------------------         ------------------------------------
             (Class)                            (Outstanding at August 20, 2001)
<PAGE>

                         LUIGINO'S, INC AND SUBSIDIARY
                                     INDEX


<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION                                                            PAGE NO.
                                                                                          --------
<S>                                                                                       <C>
Item 1.       Consolidated Financial Statements (Unaudited)

              Consolidated Balance Sheets as of July 15, 2001 (Unaudited)
              and December 31, 2000....................................................         3

              Consolidated Statements of Operations for the second fiscal
              quarter ended and 28 weeks ended July 15, 2001 (Unaudited) and
              July 16, 2000 (Unaudited)................................................         4

              Consolidated Statements of Cash Flows for 28 weeks ended July
              15, 2001 (Unaudited) and July 16, 2000 (Unaudited).......................         5

              Notes to Financial Statements (Unaudited)................................         6

Item 2.       Management's Discussion and Analysis of Financial Condition and
                     Results of Operations.............................................         8

Item 3.       Quantitative and Qualitative Disclosures About Market Risk...............        13

PART II - OTHER INFORMATION

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

Item 5.       Other Information........................................................        14

Item 6.       Exhibits and Reports on Form 8-K.........................................        14
</TABLE>

                                       2
<PAGE>

                        LUIGINO'S, INC. AND SUBSIDIARY
                          Consolidated Balance Sheets
                (In Thousands, Except Share and Per Share Data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                       July 15,    December 31,
                                                                                         2001          2000
                                                                                      ---------    ------------
<S>                                                                                   <C>          <C>
ASSETS
Current Assets:
      Cash and cash equivalents...................................................    $   1,048    $     313
      Receivables, net of allowance for doubtful accounts of $145 and $145........       23,593       26,441
      Inventories.................................................................       19,554       19,066
      Prepaid expenses and other..................................................        2,187        2,163
                                                                                      ---------    ---------
           Total current assets...................................................       46,382       47,983
                                                                                      ---------    ---------

Property, Plant and Equipment:
      Land........................................................................           22           22
      Buildings and improvements..................................................       16,831       16,818
      Machinery and equipment.....................................................      114,904      111,390
      Office equipment and leasehold improvements.................................        5,756        5,566
      Construction in progress....................................................        1,636        1,552
      Less - - Accumulated depreciation...........................................      (52,013)     (45,550)
                                                                                      ---------    ---------
           Net property, plant and equipment......................................       87,136       89,798
                                                                                      ---------    ---------

Other Assets:
      Receivables from stockholders...............................................        5,391        5,891
      Deferred costs, principally debt issuance costs.............................        6,355        4,587
      Restricted cash.............................................................          672          709
      Goodwill and other intangibles, net of amortization of $3,981...............       72,200         --
                                                                                      ---------    ---------
           Total other assets.....................................................       84,618       11,187
                                                                                      ---------    ---------
Total Assets......................................................................    $ 218,136    $ 148,968
                                                                                      =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
      Current maturities of long-term debt........................................    $  12,137    $   2,450
      Accounts payable............................................................       15,551       16,461
      Accrued expenses - -
           Accrued payroll and benefits...........................................        2,626        4,798
           Accrued interest.......................................................        4,689        4,465
           Accrued promotions and other...........................................       10,992        4,594
                                                                                      ---------    ---------
           Total current liabilities..............................................       45,995       32,768

Long-Term Debt, less current maturities...........................................      162,432      116,948
Deferred Taxes....................................................................        9,379         --
                                                                                      ---------    ---------
           Total liabilities......................................................      217,806      149,716
                                                                                      ---------    ---------
Commitments and Contingencies (Notes 6 and 7)

Stockholders' Equity (Deficit):
      Common stocks - -
           Voting, $1 stated par value, 600 shares authorized;
             100 shares issued and outstanding............................                 --           --
           Nonvoting, $1 stated par value, 900 shares authorized;
             900 shares issued and outstanding............................                    1            1
      Additional paid-in capital..........................................                  655          655
      Accumulated deficit.................................................                 (326)      (1,404)
                                                                                      ---------    ---------
           Total stockholders' equity (deficit)...........................                  330         (748)
                                                                                      ---------    ---------
Total Liabilities and Stockholders' Equity (Deficit)......................            $ 218,136    $ 148,968
                                                                                      =========    =========
</TABLE>

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

                                       3
<PAGE>

                        LUIGINO'S, INC. AND SUBSIDIARY
                     Consolidated Statements of Operations
                                (In Thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                  Second Fiscal Quarter Ended               28 Weeks Ended
                                               ----------------------------------  ----------------------------------
                                                July 15, 2001     July 16, 2000     July 15, 2001     July 16, 2000
                                               ----------------  ----------------  ----------------  ----------------
<S>                                            <C>               <C>               <C>               <C>
Net Sales..................................     $        80,409   $        57,543   $       184,132   $       137,826
Cost of Goods Sold.........................              49,679            33,435           110,204            82,586
                                               ----------------  ----------------  ----------------  ----------------
         Gross profit......................              30,730            24,108            73,928            55,240
                                               ----------------  ----------------  ----------------  ----------------

Operating Expenses:
         Selling and promotional...........              15,240            15,607            44,668            35,696
         General and administrative........               8,869             5,224            18,807            12,600
                                               ----------------  ----------------  ----------------  ----------------
         Total operating expenses..........              24,109            20,831            63,475            48,296
                                               ----------------  ----------------  ----------------  ----------------

         Operating income..................               6,621             3,277            10,453             6,944

Other Income (Expense):
         Interest expense..................              (3,772)           (3,179)           (9,288)           (7,348)
         Interest income...................                  92                85               223               204
         Other, net........................                (178)              210              (310)              128
                                               ----------------  ----------------  ----------------  ----------------
         Total other expense...............              (3,858)           (2,884)           (9,375)           (7,016)
                                               ----------------  ----------------  ----------------  ----------------

Net Income (Loss)..........................     $         2,763   $           393   $         1,078   $           (72)
                                               ================  ================  ================  ================
</TABLE>

   The accompanying notes are an integral part of these financial statements

                                       4
<PAGE>

                        LUIGINO'S, INC. AND SUBSIDIARY
                     Consolidated Statements of Cash Flows
                                (In Thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                                   28 Weeks Ended
                                                                                   ---------------------------------------------
                                                                                           July 15, 2001           July 16, 2000
                                                                                   ---------------------    --------------------
<S>                                                                                <C>                      <C>
Operating Activities:
   Net Income (loss)............................................................     $             1,078      $              (72)
   Adjustments to net loss provided by (used in)
   operating activites -
       Depreciation and amortization............................................                  11,265                   6,747
       Changes in operating assets and liabilities:
            Receivables.........................................................                   2,848                   1,047
            Inventories.........................................................                    (488)                  2,707
            Prepaid expenses and other..........................................                     (24)                   (343)
            Accounts payable and accrued expenses...............................                   3,319                 (15,318)
                                                                                   ---------------------    --------------------
               Net cash provided by (used in) operating activities..............                  17,998                  (5,232)
                                                                                   ---------------------    --------------------

Investing Activities:
   Purchases of property, plant and equipment...................................                  (3,800)                 (4,317)
   Purchases of other assets....................................................                    (685)                   (519)
   Business acquisition.........................................................                 (66,581)                     --
                                                                                   ---------------------    --------------------
               Net cash used in investing activities............................                 (71,066)                 (4,836)
                                                                                   ---------------------    --------------------

Financing Activities:
   Borrowings on revolving credit agreement.....................................                  49,112                  42,100
   Payments on revolving credit agreement.......................................                 (49,900)                (31,000)
   Proceeds from debt...........................................................                 (60,000)                     --
   Repayments of debt...........................................................                  (4,041)                 (1,574)
   Decrease (increase) in deferred financing costs..............................                  (1,905)                    349
   Decrease in restricted cash..................................................                      37                      38
   Decrease in notes receivable.................................................                     500                     250
                                                                                   ---------------------    --------------------
               Net cash provided by financing activities........................                  53,803                  10,163
                                                                                   ---------------------    --------------------


Increase in cash and cash equivalents...........................................                     735                      95
Cash and cash equivalents, beginning of period..................................                     313                     105
                                                                                   ---------------------    --------------------
Cash and cash equivalents, end of period........................................     $             1,048      $              200
                                                                                   =====================    ====================

Supplemental Information:
           Interest paid........................................................     $             8,709      $            6,588
                                                                                   =====================    ====================
</TABLE>

   The accompanying notes are an integral part of these financial statements

                                       5
<PAGE>

                        LUIGINO'S, INC. AND SUBSIDIARY

                         Notes to Financial Statements
                            (Dollars in Thousands)
                                  (Unaudited)

1.       Operations:

Luigino's, Inc. and Subsidiary (the "Company"), a Minnesota corporation, markets
food products primarily under the Michelina's and Budget Gourmet name brands.
The Michelina's label is manufactured at production facilities located in
Minnesota and Ohio. The Budget Gourmet label is sourced through a co-pack
agreement with Heinz Frozen Food Company (HFF). The Company's products,
distributed predominately in the North American market, are sold through
independent and chain store retail grocery outlets.

2.       Basis of Presentation:

The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. In the opinion of
management, all adjustments consisting solely of normal recurring items
considered necessary for a fair presentation have been included.

Operating results for 28 weeks ended July 15, 2001 are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 30, 2001. Certain amounts in the financial statements for the prior
quarter have been reclassified to conform with the current period's
presentation. Those reclassifications had no effect on stockholders' equity
(deficit) or net income (loss).

For further information, refer to the audited financial statements and footnotes
thereto included in the Company's Form 10-K for the fiscal year ended December
31, 2000, filed on March 26, 2001 with the Securities and Exchange Commission.

3.       Recent Accounting Pronouncements:

Effective January 1, 2001, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities (SFAS No. 133)", as amended. SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability measured at its
fair value. SFAS No. 133 requires that changes in the derivatives' fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. The adoption of SFAS No. 133 did not have a material impact on the
Company's consolidated financial statements.

In April 2001, the FASB Emerging Issues Task Force (EITF) reached final
consensus on Issue 00-14, "Accounting for Certain Sales Incentives", which
addresses the recognition, measurement and income statement classification for
certain sales incentives (e.g. coupons) and Issue 00-25, "Accounting for
Consideration from a Vendor to a Retailer in Connection with the Purchase or
Promotion of Vendor's Products", which addresses the income statement
classification of consideration from a vendor to a retailer. These guidelines
will be effective for the Company beginning in the first quarter of 2002. The
implementation of these guidelines will require the Company to make
reclassifications between selling, general and administrative expenses and
sales, the amounts of which have not yet been determined.

On June 29, 2001, the Financial Accounting Standards Board (FASB) approved for
issuance Statement of Financial Accounting Standards (SFAS) 141, Business
Combinations, and SFAS 142, Goodwill and Intangible Assets. Major provisions of
these Statements are as follows: all business combinations initiated after June
30, 2001 must use the purchase accounting method of accounting; the pooling of
interest method of accounting is prohibited except for transactions initiated
before July 1, 2001; intangible assets acquired in a business combination must
be recorded separately from goodwill if they arise from

                                       6
<PAGE>

contractual or other legal rights or are separable from the acquired entity and
can be sold, transferred, licensed, rented or exchanged, either individually or
as part of a related contract, asset or liability; goodwill and intangible
assets with indefinite lives are not amortized but tested for impairment
annually, except in certain circumstances, and whenever there is an impairment
indicator; all acquired goodwill must be assigned to reporting units for
purposes of impairment testing and segment reporting; effective January 1, 2002,
goodwill will no longer be subject to amortization. Management is currently
reviewing the provision of these Statements and their impact on the Company's
results of operations.

4.       Fiscal Year:

The Company has elected a 52/53 week fiscal year which ends on the Sunday
closest to December 31. The Company's fiscal year includes a 16-week first
fiscal quarter, 12-week second and third fiscal quarters and a 12 or 13 week
fourth fiscal quarter.

5.       Inventories:

Inventories are stated at the lower of first-in, first-out cost or market and
consisted of the following:

<TABLE>
<CAPTION>
                                                       July 15, 2001         December 31, 2000
                                                      --------------         -----------------
         <S>                                          <C>                    <C>
         Finished Goods....................           $         9,364        $            7,176
         Raw Materials.....................                     7,380                     8,971
         Packaging Supplies................                     2,810                     2,919
                                                      ---------------        ------------------
                                                      $        19,554        $           19,066
                                                      ===============        ==================
</TABLE>

6.       Acquisition of The All American Gourmet Company:

On February 9, 2001, the Company acquired all of the outstanding capital stock
of The All-American Gourmet Company, a Delaware Corporation (AAG) pursuant to a
Purchase Agreement by and between the Company and HFF, a Delaware Corporation
and the parent of AAG. At the date of closing, the only assets owned by AAG were
intangible assets consisting of trademarks, logos, patent licenses, product
formulas, quality specifications, customer lists, and marketing materials. The
Company also agreed to purchase certain finished goods inventory from the former
parent HFF, over a six-month period following closing. The Company entered into
a two-year co-pack agreement with HFF, whereby the Company has agreed to
purchase a minimum of 8 million and 6 million cases in fiscal years 2001 and
2002, respectively.

The Company's acquisition was accounted for by using the purchase method. The
purchase price was allocated to the acquired assets and assumed liabilities
based on a preliminary determination of the fair values of the assets purchased
and liabilities assumed. The purchase price and related acquisition costs
exceeded the preliminary fair values assigned to tangible assets by
approximately $76,181, which excess may be amortized over periods ranging from
two to twenty years on a straight-line basis.

                                       7
<PAGE>

The following unaudited pro forma condensed results of operations for the
periods ended July 15, 2001 and July 16, 2000 have been prepared as if the
transaction occurred on January 1, 2001 and January 3, 2000, respectively.

<TABLE>
<CAPTION>
                                          Second Fiscal Quarter Ended                    28 Weeks Ended
                                      July 15, 2001         July 16, 2000        July 15, 2001      July 16, 2000
                                    ----------------      ----------------      ---------------    ---------------

<S>                                 <C>                   <C>                   <C>                <C>
Net Sales.....................      $          80,409     $         83,440      $       194,887    $       206,381
Income from Operations........      $           6,621     $          4,109      $        12,398    $         9,852
Net Income (Loss).............      $           2,763     $            (51)     $         2,346    $          (369)
</TABLE>

The financial information does not purport to represent results which would have
been obtained if the acquisition had been in effect on January 2, 2001 and
January 3, 2000 or any future results which may in fact be realized.

The Company is organized as a Subchapter S corporation. Accordingly, all tax
liabilities are the responsibility of individual shareholders. Deferred tax
assets and liabilities become the responsibility of the Company if and when the
Subchapter S corporation structure is converted to a C-Corporation. The
Company's subsidiary, AAG, is a C-Corporation. As such, AAG will be responsible
for federal, state and foreign taxes. As a part of the acquisition of AAG, the
Company recorded a $9.6 million deferred tax liability and corresponding
increase to goodwill due to financial reporting and tax reporting basis
differences.

7.       Debt:

The Company funded the purchase price of the AAG acquisition through a $100,000
credit facility which replaced its existing revolving credit facility. The
credit facility includes (a) a $60,000 term loan with maturity for each of the
five years subsequent to December 31, 2000 of $7,500, $10,000, $13,250, $13,250
and $16,000, and (b) a $40,000 revolving credit facility expiring on December
31, 2005, subject to certain borrowing base limitations. The initial net
proceeds of the credit facility were used to finance the acquisition of AAG,
refinance the existing bank indebtedness of the Company, and pay related fees
and expenses.

Borrowings under the term loan and revolving credit facility bear interest at
2.25% to 3.25% over the rate offered to major banks in the London Interbank
Eurodollar market ("Eurodollar Rate"), based on a leverage ratio calculated on a
quarterly basis. Advances through October 2, 2001 will bear the interest at the
Eurodollar Rate plus 3.25% (7.09% at July 15, 2001). The Company also pays a fee
of 0.375% to 0.50% on the unused daily balance of the revolver based on a
leverage ratio calculated on a quarterly basis.

The credit facility contains various restrictive covenants, which among other
matters, requires the Company to maintain a minimum fixed charge coverage ratio,
a maximum total leverage ratio, a maximum senior leverage ratio and a minimum
EBITDA, all as defined in the credit agreement. The credit agreement also limits
additional indebtedness, capital expenditures and cash dividends. At July 15,
2001, the Company was in compliance with all covenants in the credit agreement.


Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

The following discussion of the financial condition and results of operations of
Luigino's, Inc. and Subsidiary (the "Company" or "Luigino's") should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto.

Results of Operations

On February 9, 2001, the Company acquired all of the outstanding capital stock
of The All American Gourmet Company, ("AAG") pursuant to a Purchase Agreement by
and among the Company and Heinz Frozen Food Company ("HFF"), and the parent
company of AAG. The Company obtained all of AAG's intellectual property rights,
including logos, trademarks, patent licenses, product formulas, quality

                                       8
<PAGE>

specifications, customer lists and marketing materials. The aggregate
consideration for the acquisition of AAG was $65 million in cash, of which $10
million was payable as a non-competition fee under a co-pack agreement entered
into on the same date between the Company and HFF. The cash used in the
acquisition came from borrowings under a five-year $100 million senior credit
facility entered into as of the closing date among the Company, Bank One, NA and
U.S. Bank National Association. In addition, the Company agreed to purchase
certain finished goods inventory from HFF for a six-month period following the
closing date and certain finished goods inventory remaining at the conclusion of
the six-month period. The Company also entered into a two-year co-pack agreement
with HFF, whereby the Company has agreed to purchase a minimum of 8 million and
6 million cases in fiscal 2001 and 2002, respectively. As a result of this
acquisition, the Company began to market and distribute the Budget Gourmet
frozen entree product lines.

The following table sets forth, for the periods indicated, the major components
of Luigino's statements of operations expressed as a percentage of net sales:

<TABLE>
<CAPTION>
                                           Second Fiscal Quarter Ended               28 Weeks Ended
                                         -------------------------------    -------------------------------
                                          July 15, 2001    July 16, 2000     July 15, 2001    July 16, 2000
                                         --------------   --------------    --------------   --------------
<S>                                      <C>              <C>               <C>              <C>
Net Sales.............................            100.0 %          100.0 %           100.0 %          100.0 %
Cost of Goods Sold....................             61.8             58.1              59.9             59.9
                                         --------------   --------------    --------------   --------------
     Gross profit.....................             38.2             41.9              40.1             40.1

Operating Expenses:
     Selling and promotional..........             19.0             27.1              24.2             25.9
     General and administrative.......             11.0              9.1              10.2              9.1
                                         --------------   --------------    --------------   --------------
     Total operating expenses.........             30.0             36.2              34.4             35.0

     Operating income.................              8.2              5.7               5.7              5.1

Other Income (Expense):
     Interest expense.................             (4.7)            (5.5)             (5.0)            (5.3)
     Interest income..................              0.1              0.1               0.1              0.1
     Other, net.......................             (0.2)             0.4              (0.2)             0.1
                                         --------------   --------------    --------------   --------------
         Total other expense..........             (4.8)            (5.0)             (5.1)            (5.1)
                                         --------------   --------------    --------------   --------------
Net Income (Loss).....................              3.4 %            0.7 %             0.6 %           (0.0)%
                                         ==============   ==============    ==============   ==============
</TABLE>

Second Fiscal Quarter 2001 compared to Second Fiscal Quarter 2000

Net Sales. The following table sets forth the Company's net sales by product
line and the percentage change from the prior period:


                           Second Fiscal Quarter Ended     Percentage
                         -------------------------------
                          July 15, 2001    July 16, 2000     Change
                         --------------   --------------  ------------
                               (Dollars in thousands)

Popular................   $      47,967    $      38,050          26.1 %
Economy................          19,683            7,302         169.6
Signature..............           4,456            7,090         (37.2)
Snacks.................           3,026            3,082          (1.8)
Kids...................           5,277            2,019         161.4
                         --------------   --------------  ------------
                          $      80,409    $      57,543          39.7 %
                         ==============   ==============  ============

Total net sales for the second fiscal quarter ended July 15, 2001 increased
$22.9 million or 39.7% to $80.4 million from $57.5 million for the comparable
quarter in 2000. Net sales, in the second fiscal quarter of 2001, attributable
to the acquisition of AAG from HFF were $21.9 million. Net sales in the

                                       9
<PAGE>

Popular and Economy segments increased $9.9 million and $12.4 million,
respectively, due primarily to the acquisition of AAG. Signature net sales
declined $2.6 million, due to decreased distribution. Snacks net sales also
decreased by $0.1 million. The Kids product line continued to show increases in
net sales, up $3.3 million over the comparable quarter in 2000, due to
distribution gains.

Canadian net sales contributed 12.1% or $9.7 million of net sales for the second
fiscal quarter of 2001 compared to 8.7% or $5.0 million for the second fiscal
quarter in 2000. Factors contributing to this increase in net sales were: (i)
timing of promotional activity, (ii) introduction of the Kids product line as
well as new items within the Popular and Snack product lines; (iii) increased
sales in advance of the August 1, 2001 price increase; (iv) and timing of
distribution loading.

Total volume increased 48.4% due primarily to the acquisition of AAG. Excluding
sales of AAG units, the volume increased 2.8% due primarily to the growth of
Kids product line, offset somewhat by the decline in Signature volume.

Gross Profit. Gross profit in the second fiscal quarter of 2001 increased $6.6
million to $30.7 million from $24.1 million for the comparable quarter in 2000.
The acquisition of AAG contributed $9.0 million. The gross margin decreased to
38.2% of net sales from 41.9% for the comparable quarter in 2000. The decreases
in core product gross profit and gross margin are related to unfavorable product
mix, higher dairy and beef commodity costs, and increased overhead costs.

Selling and Promotional Expenses. Selling and promotional expenses for the
second fiscal quarter of 2001 decreased $0.4 million or 2.4% from the comparable
quarter in 2000. This decrease resulted primarily from a $2.4 million decrease
in slotting expense, a $0.6 million decrease in advertising, offset somewhat by
a $2.6 million increase in promotional spending, primarily for products related
to the acquisition of AAG.

General and Administrative Expenses. General and administrative expenses for the
second fiscal quarter of 2001 increased $3.7 million or 69.8% to $8.9 million as
compared to $5.2 million in the same fiscal quarter last year. The increase was
due to higher amortization of $2.5 million on intangible assets associated with
the acquisition of AAG; $0.4 million of increased spending to support the
integration of the AAG acquisition; and a $0.8 million increase in general
spending.

Operating Income. Operating income for the second fiscal quarter of 2001
increased 102.0% to $6.6 million from $3.3 million in the comparable fiscal
quarter of 2000. This increase is the result of the $6.6 million increase in
gross profit, plus the $0.4 million decrease in selling and promotional
expenses, net of the $3.7 million increase in general and administrative
expenses. As a percentage of net sales, operating income increased to 8.2% of
net sales in the second fiscal quarter of 2001 as compared to 5.7% in the
comparable fiscal quarter of 2000.

Interest Expense. Interest expense for the second fiscal quarter 2001 increased
18.7% to $3.8 million from $3.2 million in 2000. This increase was the result of
higher senior debt levels due to the acquisition of AAG.

Interest Income. Interest income was $0.1 million for both the second fiscal
quarter of 2001 and 2000.

Other, Net. Other expense was $0.1 million for the second fiscal quarter 2001 as
compared with $0.2 million of other income for the comparable fiscal quarter in
2000.

Net Income. For the reasons stated above, net income for the second quarter of
2001 increased $2.4 million to $2.8 million as compared to $0.4 million in the
comparable quarter 2000.

                                       10
<PAGE>

The 28 Weeks Ended July 15, 2001 compared to the 28 weeks ended July 16, 2000

Net Sales. The following table sets forth the Company's net sales by product
line and the percentage change from prior period.

<TABLE>
<CAPTION>
                                              28 Weeks Ended              Percentage
                                              --------------
                                    July 15, 2001      July 16, 2000        Change
                                    -------------      -------------      ----------
                                          (Dollars in thousands)
<S>                                 <C>                <C>                <C>
Popular ........................      $  115,634          $   92,185          25.4 %
Economy ........................          39,360              16,656         136.3
Signature ......................          10,397              18,472         (43.7)
Snacks .........................           6,875               8,083         (14.9)
Kids ...........................          11,866               2,430         388.3
                                      ----------          ----------      --------
                                      $  184,132          $  137,826          33.6 %
                                      ==========          ==========      ========
</TABLE>


Total net sales for the 28 weeks ended July 15, 2001 increased $46.3 million or
33.6% to $184.1 million from $137.8 million for the comparable period in 2000.
Net sales attributed to the acquisition of AAG were $47.0 million. Net sales in
the Popular and Economy product lines increased $23.5 million and $22.7 million,
respectively, due primarily to the acquisition of AAG. Signature and Snacks net
sales decreased $8.1 million and $1.2 million respectively, due to decreased
distribution. Net sales in the Kids product line increased $9.4 million due to
distribution gains on the product line which was launched in the first quarter
of 2000.

Canadian net sales contributed 12.4% or $22.8 million to net sales for the 28
weeks ended July 15, 2001, compared to 14.2% or $19.5 million for the comparable
period in 2000. This increase is primarily the result of the continued growth of
all product labels and the introduction of the Kids product line in Canada.

Total volume increased 34.2% due primarily to the acquisition of AAG. Excluding
sales of AAG units, the volume declined 2.5% due primarily to decreased
distribution on Signature and Snacks product lines.

Gross Profit. Gross profit for the 28 weeks ended July 15, 2001 increased $18.7
million to $73.9 million from $55.2 million for the comparable 28 weeks in 2000.
The acquisition of AAG accounted for $19.8 million of incremental gross profit
in the first 28 weeks of 2001. The gross margin was 40.1% for both periods.

Selling and Promotional Expenses. Selling and promotional expenses increased
$9.0 million or 25.1% to $44.7 million in the 28 week period ended July 15,
2001. This increase resulted primarily from the promotional expenses on products
related to the acquisition of AAG, $10.3 million, less a $1.3 million reduction
in advertising expense.

General and Administrative Expenses. General and administrative expenses for the
28 weeks ended July 15, 2001 increased $6.2 million or 49.3% over the comparable
period last year to $18.8 million. Factors contributing to the increase were:
(i) higher amortization of $4.3 million on intangible assets, primarily
associated with the acquisition of AAG; (ii) increased spending of $0.7 million
to support the integration of the AAG acquisition, (iii) and a $1.2 million
increase in general spending.

Operating Income. Operating income for the 28 week period ended July 15, 2001
was $10.5 million, an increase of $3.5 million or 50.5% over the comparable
period last year. This increase was the net result of a $18.7 million increase
in gross profit, less the $9.0 million and $6.2 million increase in selling and
promotional expenses and general and administrative expenses, respectively. As a
percentage of net sales, operating income increased to 5.7% of net sales as
compared to 5.1% in 2000.

Interest Expense. Interest expense for the first 28 weeks of 2001 increased
25.7% or $1.9 million to $9.3 million as compared to $7.4 million for the first
28 weeks of 2000. The increase was the result of the increase in senior debt
associated with the acquisition of AAG.

                                      11

<PAGE>

Interest income. Interest income for the 28 weeks ended July 15, 2001 was $0.2
million as compared to $0.2 million in the same period in 2000.

Other, Net. Other expenses were ($0.3) million for the 28 weeks ended July 15,
2001 as compared to $0.1 million of other income for the 28 weeks ended July 16,
2000.

Net Income (Loss). For the reasons stated above, the net income for the 28 week
period ended July 15, 2001 was $1.1 million as compared to a $0.1 million loss
in 2000.

Liquidity and Capital Resources

At July 15, 2001, the Company had $6.2 million outstanding on a $40.0 million
line of senior revolving credit with Bank One, NA. At July 15, 2001, the Company
was in compliance with all covenants in the credit agreement with Bank One. The
cash and cash equivalents balance as of July 15, 2001 was $1.0 million, compared
to $0.3 million as of July 16, 2000.

Operating activities provided $18.0 million of cash in the first 28 weeks of
2001 compared to $5.2 million used for operating activities for the first 28
weeks of 2000. This $23.2 million improvement is the result of increased
depreciation and amortization of $4.5 million, and a $17.6 million decrease in
working capital requirements, and a $1.1 million increase in net income for the
first 28 weeks of 2001 compared to the first 28 weeks of 2000.

Investing activities used $71.0 million of cash for the first 28 weeks of 2001
and $4.8 million for the first 28 weeks of 2000. This $66.2 million increase in
investing activities is primarily the result of the acquisition of AAG.

Financing activities provided $53.8 million of cash in the first 28 weeks of
2001 as compared to $10.2 million for the first 28 weeks of 2000. The Company
obtained $68.6 million of cash primarily for the acquisition of AAG through
borrowings under the credit facility. The Company funded the purchase price of
the AAG acquisition through a $100.0 million credit facility which replaced its
existing revolving credit facility. The credit facility includes (a) a $60.0
million term loan with maturity for each of the five years subsequent to
December 31, 2000 of $7.5 million, $10.0 million, $13.25 million, $13.25 million
and $16.0 million, and (b) a $40.0 million revolving credit facility expiring on
December 31, 2005, subject to certain borrowing base limitations.

2001 Planned Expenditures. As a part of the Company's strategic growth plan, the
Company incurred approximately $7.0 million for slotting expenses for the first
28 weeks of 2001. The Company plans to spend an additional $2.3 million in
slotting expenses in 2001 to introduce new products and increase product
penetration. The Company also plans on spending approximately $12.0 million on
plant and equipment purchases in 2001, primarily to increase the production and
freezer capacity at its Jackson, Ohio plant.

The Company anticipates continuing to elect Subchapter S treatment under the
U.S. Internal Revenue Code. Consequently, the Company will continue to make
quarterly distributions to the shareholders based upon their estimated tax
liabilities. The Company's subsidiary, AAG, is a C-Corporation. As such, AAG
will be responsible for all tax liabilities including deferred taxes.

Luigino's ability to make scheduled payments of principal of, or to pay the
interest or premiums, if any, on, or to refinance its indebtedness or to fund
planned capital expenditures will depend on future performance, which, to a
certain extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond the Company's control.
Based upon the current level of operations, the Company believes that cash flow
from operations and available cash, together with available borrowings under the
credit agreement, will be adequate to meet the future liquidity needs for at
least the next several years. The Company may, however, need to refinance all or
a portion of the principal of the senior subordinated notes on or before
maturity. There can be no assurance that the business will generate sufficient
cash flow from operations, or that future borrowings will be available under the
credit agreement in an amount sufficient to enable the Company to service
indebtedness or to fund other liquidity needs. In addition, there can be no
assurance that the Company will be able to effect any such refinancing on
commercially reasonable terms or at all.

                                       12
<PAGE>

New Accounting Pronouncements

Effective January 1, 2001, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities (SFAS No. 133)", as amended. SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability measured at its
fair value. SFAS No. 133 requires that changes in the derivatives' fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. The adoption of SFAS No. 133 did not have a material impact on the
Company's consolidated financial statements.

In April 2001, the FASB Emerging Issues Task Force (EITF) reached final
consensus on Issue 00-14, "Accounting for Certain Sales Incentives", which
addresses the recognition, measurement and income statement classification for
certain sales incentives (e.g. coupons) and Issue 00-25, "Accounting for
Consideration from a Vendor to a Retailer in Connection with the Purchase or
Promotion of Vendor's Products", which addresses the income statement
classification of consideration from a vendor to a retailer. These guidelines
will be effective for the Company beginning in the first quarter of 2002. The
implementation of these guidelines will require the Company to make
reclassifications between selling, general and administrative expenses and
sales, the amounts of which have not yet been determined.

On June 29, 2001, the Financial Accounting Standards Board (FASB) approved for
issuance Statement of Financial Accounting Standards (SFAS) 141, Business
Combinations, and SFAS 142, Goodwill and Intangible Assets. Major provisions of
these Statements are as follows: all business combinations initiated after June
30, 2001 must use the purchase accounting method of accounting; the pooling of
interest method of accounting is prohibited except for transactions initiated
before July 1, 2001; intangible assets acquired in a business combination must
be recorded separately from goodwill if they arise from contractual or other
legal rights or are separable from the acquired entity and can be sold,
transferred, licensed, rented or exchanged, either individually or as part of a
related contract, asset or liability; goodwill and intangible assets with
indefinite lives are not amortized but tested for impairment annually, except in
certain circumstances, and whenever there is an impairment indicator; all
acquired goodwill must be assigned to reporting units for purposes of impairment
testing and segment reporting; effective January 1, 2002, goodwill will no
longer be subject to amortization. Management is currently reviewing the
provision of these Statements and their impact on the Company's results of
operations.

Cautionary Statement

This Form 10-Q contains forward-looking statements within the meaning of federal
securities laws. These statements include statements regarding intent, belief or
current expectations of the Company and its management. These forward-looking
statements are not guarantees of future performance and involve a number of
risks and uncertainties that may cause the Company's actual results to differ
materially from the results discussed in these statements. The Company's
forward-looking statements are subject to risks, uncertainties and assumptions
including, among other things: general economic and business conditions; the
Company's expectations and estimates concerning future financial performance,
financing plans and the impact of competition; anticipated trends in the
Company's industry; and other risks and uncertainties detailed from time to time
in the Company's filings with the Securities and Exchange Commission, including
Exhibit 99.1 to this Form 10-Q.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

Inflation

The Company believes that the relatively moderate rate of inflation over the
past few years has not had a significant impact on sales or profitability.


Market Risk Considerations

Credit Risk. Financial instruments which potentially subject Luigino's to
significant concentrations of credit risk consist primarily of cash and trade
accounts receivable. The Company maintains cash and cash

                                       13
<PAGE>

equivalents and other financial instruments with various financial institutions.
The Company's policy is to limit exposure to any one institution. When the
Company formulates its investment strategy, it considers periodic evaluations of
the relative credit standing of these financial institutions. The Company's
concentrations of credit risk for trade accounts receivable are limited due to
the large number of entities comprising the customer base. The Company has an
exclusive distribution agreement with J.M. Schneider Corporation in Canada,
which accounted for 12.4% of net sales for the 28 weeks ended July 15, 2001. The
Company does not currently foresee a credit risk with this distributor.

Interest Rate Risk. A portion of the Company's long-term debt obligation incurs
interest at floating rates, based on changes in U.S. Dollar LIBOR and prime rate
interest. Therefore, the Company has an exposure to changes in these interest
rates. At July 15, 2000, the Company had $63.7 million of long-term debt subject
to floating interest rates, with interest ranging from 7.1 to 8.75% with a
weighted average interest rate of 7.2%. A 10% increase in U.S. LIBOR and prime
interest rates would have increased interest expense for the second fiscal
quarter ended July 15, 2001 by $0.1 million.


PART II - OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders.

None.

Item 5.  Other Information

In connection with the "safe harbor" provisions of the Private Securities
Litigation and Reform Act of 1995, the Company is hereby filing cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in forward-looking statements of the
Company made by, or on behalf of the Company. See Exhibit 99.1 to this report.

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits

         Number                 Description
         ------                 -----------

         99.1                   Cautionary Statements for Purposes of the "Safe
                                Harbor" Provisions of the Private Securities
                                Litigation Reform Act of 1995

           (b)  Reports on Form 8-K

                  The Company filed a Report on Form 8-K/A on April 23, 2001 to
                  add certain financial information relating to the acquisition
                  of The All American Gourmet Company, previously reported on a
                  Form 8-K.

                                       14
<PAGE>

                                  SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                        LUIGINO'S, INC.

Date:  August 20, 2001                  By: /s/ Thomas W. Knuesel
                                            -------------------------------
                                            Thomas W. Knuesel
                                            Chief Financial Officer (principal
                                            financial and accounting officer)

                                       15
<PAGE>

                                  EXHIBIT INDEX


         Number                Description
         ------                -----------

         99.1                 Cautionary Statements for Purposes of the "Safe
                              Harbor" Provisions of the Private Securities
                              Litigation Reform Act of 1995

                                       16
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{"company-data": {"conformed-name": "LUIGINOS INC", "cik": "0001083751", "assigned-sic": "2030", "irs-number": "593015985", "state-of-incorporation": "MN", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "333-76569", "film-number": "1719083"}, "business-address": {"street1": "524 LAKE AVENUE SOUTH", "city": "DULUTH", "state": "MN", "zip": "55802", "phone": "2187235555"}}
UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                    FORM 10-Q

[x]  Quarterly report pursuant to Section 13 or 15 (d) of the Securities
     Exchange Act of 1934

                 For the quarterly period ended July 15, 2001
                                      or

[_]  Transition report pursuant to Section 13 or 15 (d) of the Securities
     Exchange Act of 1934

                   For the transition period from ___ to ___

                       Commission file number: 333-76569

                                Luigino's, Inc.
            (Exact name of registrant as specified in its charter)

          Minnesota                   2038                    59-3015985
(State of other jurisdiction    (Primary Standard          (I.R.S. Employer
       of incorporation      Industrial Classification    Identification No.)
       or organization)               Code)

                             525 Lake Avenue South
                               Duluth, MN 55802
                                (218) 723-5555

  (Address, including zip code, and telephone number, including area code, of
                  registrant's principal executive offices.)

Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.

Yes  X    No ___
     ----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

             Common                                         1,000
-----------------------------------         ------------------------------------
             (Class)                            (Outstanding at August 20, 2001)
LUIGINO'S, INC AND SUBSIDIARY
                                     INDEX
PART I - FINANCIAL INFORMATION                                                            PAGE NO.
                                                                                          --------
Item 1.       Consolidated Financial Statements (Unaudited)

              Consolidated Balance Sheets as of July 15, 2001 (Unaudited)
              and December 31, 2000....................................................         3

              Consolidated Statements of Operations for the second fiscal
              quarter ended and 28 weeks ended July 15, 2001 (Unaudited) and
              July 16, 2000 (Unaudited)................................................         4

              Consolidated Statements of Cash Flows for 28 weeks ended July
              15, 2001 (Unaudited) and July 16, 2000 (Unaudited).......................         5

              Notes to Financial Statements (Unaudited)................................         6

Item 2.       Management's Discussion and Analysis of Financial Condition and
                     Results of Operations.............................................         8

Item 3.       Quantitative and Qualitative Disclosures About Market Risk...............        13

PART II - OTHER INFORMATION

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

Item 5.       Other Information........................................................        14

Item 6.       Exhibits and Reports on Form 8-K.........................................        14
2
LUIGINO'S, INC. AND SUBSIDIARY
                          Consolidated Balance Sheets
                (In Thousands, Except Share and Per Share Data)
                                  (Unaudited)
July 15,    December 31,
                                                                                         2001          2000
                                                                                      ---------    ------------
ASSETS
Current Assets:
      Cash and cash equivalents...................................................    $   1,048    $     313
      Receivables, net of allowance for doubtful accounts of $145 and $145........       23,593       26,441
      Inventories.................................................................       19,554       19,066
      Prepaid expenses and other..................................................        2,187        2,163
                                                                                      ---------    ---------
           Total current assets...................................................       46,382       47,983
                                                                                      ---------    ---------

Property, Plant and Equipment:
      Land........................................................................           22           22
      Buildings and improvements..................................................       16,831       16,818
      Machinery and equipment.....................................................      114,904      111,390
      Office equipment and leasehold improvements.................................        5,756        5,566
      Construction in progress....................................................        1,636        1,552
      Less - - Accumulated depreciation...........................................      (52,013)     (45,550)
                                                                                      ---------    ---------
           Net property, plant and equipment......................................       87,136       89,798
                                                                                      ---------    ---------

Other Assets:
      Receivables from stockholders...............................................        5,391        5,891
      Deferred costs, principally debt issuance costs.............................        6,355        4,587
      Restricted cash.............................................................          672          709
      Goodwill and other intangibles, net of amortization of $3,981...............       72,200         --
                                                                                      ---------    ---------
           Total other assets.....................................................       84,618       11,187
                                                                                      ---------    ---------
Total Assets......................................................................    $ 218,136    $ 148,968
                                                                                      =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
      Current maturities of long-term debt........................................    $  12,137    $   2,450
      Accounts payable............................................................       15,551       16,461
      Accrued expenses - -
           Accrued payroll and benefits...........................................        2,626        4,798
           Accrued interest.......................................................        4,689        4,465
           Accrued promotions and other...........................................       10,992        4,594
                                                                                      ---------    ---------
           Total current liabilities..............................................       45,995       32,768

Long-Term Debt, less current maturities...........................................      162,432      116,948
Deferred Taxes....................................................................        9,379         --
                                                                                      ---------    ---------
           Total liabilities......................................................      217,806      149,716
                                                                                      ---------    ---------
Commitments and Contingencies (Notes 6 and 7)

Stockholders' Equity (Deficit):
      Common stocks - -
           Voting, $1 stated par value, 600 shares authorized;
             100 shares issued and outstanding............................                 --           --
           Nonvoting, $1 stated par value, 900 shares authorized;
             900 shares issued and outstanding............................                    1            1
      Additional paid-in capital..........................................                  655          655
      Accumulated deficit.................................................                 (326)      (1,404)
                                                                                      ---------    ---------
           Total stockholders' equity (deficit)...........................                  330         (748)
                                                                                      ---------    ---------
Total Liabilities and Stockholders' Equity (Deficit)......................            $ 218,136    $ 148,968
                                                                                      =========    =========
The accompanying notes are an integral part of these financial statements.

                                       3
LUIGINO'S, INC. AND SUBSIDIARY
                     Consolidated Statements of Operations
                                (In Thousands)
                                  (Unaudited)
Second Fiscal Quarter Ended               28 Weeks Ended
                                               ----------------------------------  ----------------------------------
                                                July 15, 2001     July 16, 2000     July 15, 2001     July 16, 2000
                                               ----------------  ----------------  ----------------  ----------------
Net Sales..................................     $        80,409   $        57,543   $       184,132   $       137,826
Cost of Goods Sold.........................              49,679            33,435           110,204            82,586
                                               ----------------  ----------------  ----------------  ----------------
         Gross profit......................              30,730            24,108            73,928            55,240
                                               ----------------  ----------------  ----------------  ----------------

Operating Expenses:
         Selling and promotional...........              15,240            15,607            44,668            35,696
         General and administrative........               8,869             5,224            18,807            12,600
                                               ----------------  ----------------  ----------------  ----------------
         Total operating expenses..........              24,109            20,831            63,475            48,296
                                               ----------------  ----------------  ----------------  ----------------

         Operating income..................               6,621             3,277            10,453             6,944

Other Income (Expense):
         Interest expense..................              (3,772)           (3,179)           (9,288)           (7,348)
         Interest income...................                  92                85               223               204
         Other, net........................                (178)              210              (310)              128
                                               ----------------  ----------------  ----------------  ----------------
         Total other expense...............              (3,858)           (2,884)           (9,375)           (7,016)
                                               ----------------  ----------------  ----------------  ----------------

Net Income (Loss)..........................     $         2,763   $           393   $         1,078   $           (72)
                                               ================  ================  ================  ================
The accompanying notes are an integral part of these financial statements

                                       4
LUIGINO'S, INC. AND SUBSIDIARY
                     Consolidated Statements of Cash Flows
                                (In Thousands)
                                  (Unaudited)
28 Weeks Ended
                                                                                   ---------------------------------------------
                                                                                           July 15, 2001           July 16, 2000
                                                                                   ---------------------    --------------------
Operating Activities:
   Net Income (loss)............................................................     $             1,078      $              (72)
   Adjustments to net loss provided by (used in)
   operating activites -
       Depreciation and amortization............................................                  11,265                   6,747
       Changes in operating assets and liabilities:
            Receivables.........................................................                   2,848                   1,047
            Inventories.........................................................                    (488)                  2,707
            Prepaid expenses and other..........................................                     (24)                   (343)
            Accounts payable and accrued expenses...............................                   3,319                 (15,318)
                                                                                   ---------------------    --------------------
               Net cash provided by (used in) operating activities..............                  17,998                  (5,232)
                                                                                   ---------------------    --------------------

Investing Activities:
   Purchases of property, plant and equipment...................................                  (3,800)                 (4,317)
   Purchases of other assets....................................................                    (685)                   (519)
   Business acquisition.........................................................                 (66,581)                     --
                                                                                   ---------------------    --------------------
               Net cash used in investing activities............................                 (71,066)                 (4,836)
                                                                                   ---------------------    --------------------

Financing Activities:
   Borrowings on revolving credit agreement.....................................                  49,112                  42,100
   Payments on revolving credit agreement.......................................                 (49,900)                (31,000)
   Proceeds from debt...........................................................                 (60,000)                     --
   Repayments of debt...........................................................                  (4,041)                 (1,574)
   Decrease (increase) in deferred financing costs..............................                  (1,905)                    349
   Decrease in restricted cash..................................................                      37                      38
   Decrease in notes receivable.................................................                     500                     250
                                                                                   ---------------------    --------------------
               Net cash provided by financing activities........................                  53,803                  10,163
                                                                                   ---------------------    --------------------

Increase in cash and cash equivalents...........................................                     735                      95
Cash and cash equivalents, beginning of period..................................                     313                     105
                                                                                   ---------------------    --------------------
Cash and cash equivalents, end of period........................................     $             1,048      $              200
                                                                                   =====================    ====================

Supplemental Information:
           Interest paid........................................................     $             8,709      $            6,588
                                                                                   =====================    ====================
The accompanying notes are an integral part of these financial statements

                                       5
LUIGINO'S, INC. AND SUBSIDIARY

                         Notes to Financial Statements
                            (Dollars in Thousands)
                                  (Unaudited)

1.       Operations:

Luigino's, Inc. and Subsidiary (the "Company"), a Minnesota corporation, markets
food products primarily under the Michelina's and Budget Gourmet name brands.
The Michelina's label is manufactured at production facilities located in
Minnesota and Ohio. The Budget Gourmet label is sourced through a co-pack
agreement with Heinz Frozen Food Company (HFF). The Company's products,
distributed predominately in the North American market, are sold through
independent and chain store retail grocery outlets.

2.       Basis of Presentation:

The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. In the opinion of
management, all adjustments consisting solely of normal recurring items
considered necessary for a fair presentation have been included.

Operating results for 28 weeks ended July 15, 2001 are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 30, 2001. Certain amounts in the financial statements for the prior
quarter have been reclassified to conform with the current period's
presentation. Those reclassifications had no effect on stockholders' equity
(deficit) or net income (loss).

For further information, refer to the audited financial statements and footnotes
thereto included in the Company's Form 10-K for the fiscal year ended December
31, 2000, filed on March 26, 2001 with the Securities and Exchange Commission.

3.       Recent Accounting Pronouncements:

Effective January 1, 2001, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities (SFAS No. 133)", as amended. SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability measured at its
fair value. SFAS No. 133 requires that changes in the derivatives' fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. The adoption of SFAS No. 133 did not have a material impact on the
Company's consolidated financial statements.

In April 2001, the FASB Emerging Issues Task Force (EITF) reached final
consensus on Issue 00-14, "Accounting for Certain Sales Incentives", which
addresses the recognition, measurement and income statement classification for
certain sales incentives (e.g. coupons) and Issue 00-25, "Accounting for
Consideration from a Vendor to a Retailer in Connection with the Purchase or
Promotion of Vendor's Products", which addresses the income statement
classification of consideration from a vendor to a retailer. These guidelines
will be effective for the Company beginning in the first quarter of 2002. The
implementation of these guidelines will require the Company to make
reclassifications between selling, general and administrative expenses and
sales, the amounts of which have not yet been determined.

On June 29, 2001, the Financial Accounting Standards Board (FASB) approved for
issuance Statement of Financial Accounting Standards (SFAS) 141, Business
Combinations, and SFAS 142, Goodwill and Intangible Assets. Major provisions of
these Statements are as follows: all business combinations initiated after June
30, 2001 must use the purchase accounting method of accounting; the pooling of
interest method of accounting is prohibited except for transactions initiated
before July 1, 2001; intangible assets acquired in a business combination must
be recorded separately from goodwill if they arise from

                                       6
contractual or other legal rights or are separable from the acquired entity and
can be sold, transferred, licensed, rented or exchanged, either individually or
as part of a related contract, asset or liability; goodwill and intangible
assets with indefinite lives are not amortized but tested for impairment
annually, except in certain circumstances, and whenever there is an impairment
indicator; all acquired goodwill must be assigned to reporting units for
purposes of impairment testing and segment reporting; effective January 1, 2002,
goodwill will no longer be subject to amortization. Management is currently
reviewing the provision of these Statements and their impact on the Company's
results of operations.

4.       Fiscal Year:

The Company has elected a 52/53 week fiscal year which ends on the Sunday
closest to December 31. The Company's fiscal year includes a 16-week first
fiscal quarter, 12-week second and third fiscal quarters and a 12 or 13 week
fourth fiscal quarter.

5.       Inventories:

Inventories are stated at the lower of first-in, first-out cost or market and
consisted of the following:
July 15, 2001         December 31, 2000
                                                      --------------         -----------------
Finished Goods....................           $         9,364        $            7,176
         Raw Materials.....................                     7,380                     8,971
         Packaging Supplies................                     2,810                     2,919
                                                      ---------------        ------------------
                                                      $        19,554        $           19,066
                                                      ===============        ==================
6.       Acquisition of The All American Gourmet Company:

On February 9, 2001, the Company acquired all of the outstanding capital stock
of The All-American Gourmet Company, a Delaware Corporation (AAG) pursuant to a
Purchase Agreement by and between the Company and HFF, a Delaware Corporation
and the parent of AAG. At the date of closing, the only assets owned by AAG were
intangible assets consisting of trademarks, logos, patent licenses, product
formulas, quality specifications, customer lists, and marketing materials. The
Company also agreed to purchase certain finished goods inventory from the former
parent HFF, over a six-month period following closing. The Company entered into
a two-year co-pack agreement with HFF, whereby the Company has agreed to
purchase a minimum of 8 million and 6 million cases in fiscal years 2001 and
2002, respectively.

The Company's acquisition was accounted for by using the purchase method. The
purchase price was allocated to the acquired assets and assumed liabilities
based on a preliminary determination of the fair values of the assets purchased
and liabilities assumed. The purchase price and related acquisition costs
exceeded the preliminary fair values assigned to tangible assets by
approximately $76,181, which excess may be amortized over periods ranging from
two to twenty years on a straight-line basis.

                                       7
The following unaudited pro forma condensed results of operations for the
periods ended July 15, 2001 and July 16, 2000 have been prepared as if the
transaction occurred on January 1, 2001 and January 3, 2000, respectively.
Second Fiscal Quarter Ended                    28 Weeks Ended
                                      July 15, 2001         July 16, 2000        July 15, 2001      July 16, 2000
                                    ----------------      ----------------      ---------------    ---------------
Net Sales.....................      $          80,409     $         83,440      $       194,887    $       206,381
Income from Operations........      $           6,621     $          4,109      $        12,398    $         9,852
Net Income (Loss).............      $           2,763     $            (51)     $         2,346    $          (369)
The financial information does not purport to represent results which would have
been obtained if the acquisition had been in effect on January 2, 2001 and
January 3, 2000 or any future results which may in fact be realized.

The Company is organized as a Subchapter S corporation. Accordingly, all tax
liabilities are the responsibility of individual shareholders. Deferred tax
assets and liabilities become the responsibility of the Company if and when the
Subchapter S corporation structure is converted to a C-Corporation. The
Company's subsidiary, AAG, is a C-Corporation. As such, AAG will be responsible
for federal, state and foreign taxes. As a part of the acquisition of AAG, the
Company recorded a $9.6 million deferred tax liability and corresponding
increase to goodwill due to financial reporting and tax reporting basis
differences.

7.       Debt:

The Company funded the purchase price of the AAG acquisition through a $100,000
credit facility which replaced its existing revolving credit facility. The
credit facility includes (a) a $60,000 term loan with maturity for each of the
five years subsequent to December 31, 2000 of $7,500, $10,000, $13,250, $13,250
and $16,000, and (b) a $40,000 revolving credit facility expiring on December
31, 2005, subject to certain borrowing base limitations. The initial net
proceeds of the credit facility were used to finance the acquisition of AAG,
refinance the existing bank indebtedness of the Company, and pay related fees
and expenses.

Borrowings under the term loan and revolving credit facility bear interest at
2.25% to 3.25% over the rate offered to major banks in the London Interbank
Eurodollar market ("Eurodollar Rate"), based on a leverage ratio calculated on a
quarterly basis. Advances through October 2, 2001 will bear the interest at the
Eurodollar Rate plus 3.25% (7.09% at July 15, 2001). The Company also pays a fee
of 0.375% to 0.50% on the unused daily balance of the revolver based on a
leverage ratio calculated on a quarterly basis.

The credit facility contains various restrictive covenants, which among other
matters, requires the Company to maintain a minimum fixed charge coverage ratio,
a maximum total leverage ratio, a maximum senior leverage ratio and a minimum
EBITDA, all as defined in the credit agreement. The credit agreement also limits
additional indebtedness, capital expenditures and cash dividends. At July 15,
2001, the Company was in compliance with all covenants in the credit agreement.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

The following discussion of the financial condition and results of operations of
Luigino's, Inc. and Subsidiary (the "Company" or "Luigino's") should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto.

Results of Operations

On February 9, 2001, the Company acquired all of the outstanding capital stock
of The All American Gourmet Company, ("AAG") pursuant to a Purchase Agreement by
and among the Company and Heinz Frozen Food Company ("HFF"), and the parent
company of AAG. The Company obtained all of AAG's intellectual property rights,
including logos, trademarks, patent licenses, product formulas, quality

                                       8
specifications, customer lists and marketing materials. The aggregate
consideration for the acquisition of AAG was $65 million in cash, of which $10
million was payable as a non-competition fee under a co-pack agreement entered
into on the same date between the Company and HFF. The cash used in the
acquisition came from borrowings under a five-year $100 million senior credit
facility entered into as of the closing date among the Company, Bank One, NA and
U.S. Bank National Association. In addition, the Company agreed to purchase
certain finished goods inventory from HFF for a six-month period following the
closing date and certain finished goods inventory remaining at the conclusion of
the six-month period. The Company also entered into a two-year co-pack agreement
with HFF, whereby the Company has agreed to purchase a minimum of 8 million and
6 million cases in fiscal 2001 and 2002, respectively. As a result of this
acquisition, the Company began to market and distribute the Budget Gourmet
frozen entree product lines.

The following table sets forth, for the periods indicated, the major components
of Luigino's statements of operations expressed as a percentage of net sales:
Second Fiscal Quarter Ended               28 Weeks Ended
                                         -------------------------------    -------------------------------
                                          July 15, 2001    July 16, 2000     July 15, 2001    July 16, 2000
                                         --------------   --------------    --------------   --------------
Net Sales.............................            100.0 %          100.0 %           100.0 %          100.0 %
Cost of Goods Sold....................             61.8             58.1              59.9             59.9
                                         --------------   --------------    --------------   --------------
     Gross profit.....................             38.2             41.9              40.1             40.1

Operating Expenses:
     Selling and promotional..........             19.0             27.1              24.2             25.9
     General and administrative.......             11.0              9.1              10.2              9.1
                                         --------------   --------------    --------------   --------------
     Total operating expenses.........             30.0             36.2              34.4             35.0

     Operating income.................              8.2              5.7               5.7              5.1

Other Income (Expense):
     Interest expense.................             (4.7)            (5.5)             (5.0)            (5.3)
     Interest income..................              0.1              0.1               0.1              0.1
     Other, net.......................             (0.2)             0.4              (0.2)             0.1
                                         --------------   --------------    --------------   --------------
         Total other expense..........             (4.8)            (5.0)             (5.1)            (5.1)
                                         --------------   --------------    --------------   --------------
Net Income (Loss).....................              3.4 %            0.7 %             0.6 %           (0.0)%
                                         ==============   ==============    ==============   ==============
Second Fiscal Quarter 2001 compared to Second Fiscal Quarter 2000

Net Sales. The following table sets forth the Company's net sales by product
line and the percentage change from the prior period:

                           Second Fiscal Quarter Ended     Percentage
                         -------------------------------
                          July 15, 2001    July 16, 2000     Change
                         --------------   --------------  ------------
                               (Dollars in thousands)

Popular................   $      47,967    $      38,050          26.1 %
Economy................          19,683            7,302         169.6
Signature..............           4,456            7,090         (37.2)
Snacks.................           3,026            3,082          (1.8)
Kids...................           5,277            2,019         161.4
                         --------------   --------------  ------------
                          $      80,409    $      57,543          39.7 %
                         ==============   ==============  ============

Total net sales for the second fiscal quarter ended July 15, 2001 increased
$22.9 million or 39.7% to $80.4 million from $57.5 million for the comparable
quarter in 2000. Net sales, in the second fiscal quarter of 2001, attributable
to the acquisition of AAG from HFF were $21.9 million. Net sales in the

                                       9
Popular and Economy segments increased $9.9 million and $12.4 million,
respectively, due primarily to the acquisition of AAG. Signature net sales
declined $2.6 million, due to decreased distribution. Snacks net sales also
decreased by $0.1 million. The Kids product line continued to show increases in
net sales, up $3.3 million over the comparable quarter in 2000, due to
distribution gains.

Canadian net sales contributed 12.1% or $9.7 million of net sales for the second
fiscal quarter of 2001 compared to 8.7% or $5.0 million for the second fiscal
quarter in 2000. Factors contributing to this increase in net sales were: (i)
timing of promotional activity, (ii) introduction of the Kids product line as
well as new items within the Popular and Snack product lines; (iii) increased
sales in advance of the August 1, 2001 price increase; (iv) and timing of
distribution loading.

Total volume increased 48.4% due primarily to the acquisition of AAG. Excluding
sales of AAG units, the volume increased 2.8% due primarily to the growth of
Kids product line, offset somewhat by the decline in Signature volume.

Gross Profit. Gross profit in the second fiscal quarter of 2001 increased $6.6
million to $30.7 million from $24.1 million for the comparable quarter in 2000.
The acquisition of AAG contributed $9.0 million. The gross margin decreased to
38.2% of net sales from 41.9% for the comparable quarter in 2000. The decreases
in core product gross profit and gross margin are related to unfavorable product
mix, higher dairy and beef commodity costs, and increased overhead costs.

Selling and Promotional Expenses. Selling and promotional expenses for the
second fiscal quarter of 2001 decreased $0.4 million or 2.4% from the comparable
quarter in 2000. This decrease resulted primarily from a $2.4 million decrease
in slotting expense, a $0.6 million decrease in advertising, offset somewhat by
a $2.6 million increase in promotional spending, primarily for products related
to the acquisition of AAG.

General and Administrative Expenses. General and administrative expenses for the
second fiscal quarter of 2001 increased $3.7 million or 69.8% to $8.9 million as
compared to $5.2 million in the same fiscal quarter last year. The increase was
due to higher amortization of $2.5 million on intangible assets associated with
the acquisition of AAG; $0.4 million of increased spending to support the
integration of the AAG acquisition; and a $0.8 million increase in general
spending.

Operating Income. Operating income for the second fiscal quarter of 2001
increased 102.0% to $6.6 million from $3.3 million in the comparable fiscal
quarter of 2000. This increase is the result of the $6.6 million increase in
gross profit, plus the $0.4 million decrease in selling and promotional
expenses, net of the $3.7 million increase in general and administrative
expenses. As a percentage of net sales, operating income increased to 8.2% of
net sales in the second fiscal quarter of 2001 as compared to 5.7% in the
comparable fiscal quarter of 2000.

Interest Expense. Interest expense for the second fiscal quarter 2001 increased
18.7% to $3.8 million from $3.2 million in 2000. This increase was the result of
higher senior debt levels due to the acquisition of AAG.

Interest Income. Interest income was $0.1 million for both the second fiscal
quarter of 2001 and 2000.

Other, Net. Other expense was $0.1 million for the second fiscal quarter 2001 as
compared with $0.2 million of other income for the comparable fiscal quarter in
2000.

Net Income. For the reasons stated above, net income for the second quarter of
2001 increased $2.4 million to $2.8 million as compared to $0.4 million in the
comparable quarter 2000.

                                       10
The 28 Weeks Ended July 15, 2001 compared to the 28 weeks ended July 16, 2000

Net Sales. The following table sets forth the Company's net sales by product
line and the percentage change from prior period.
28 Weeks Ended              Percentage
                                              --------------
                                    July 15, 2001      July 16, 2000        Change
                                    -------------      -------------      ----------
                                          (Dollars in thousands)
Popular ........................      $  115,634          $   92,185          25.4 %
Economy ........................          39,360              16,656         136.3
Signature ......................          10,397              18,472         (43.7)
Snacks .........................           6,875               8,083         (14.9)
Kids ...........................          11,866               2,430         388.3
                                      ----------          ----------      --------
                                      $  184,132          $  137,826          33.6 %
                                      ==========          ==========      ========
Total net sales for the 28 weeks ended July 15, 2001 increased $46.3 million or
33.6% to $184.1 million from $137.8 million for the comparable period in 2000.
Net sales attributed to the acquisition of AAG were $47.0 million. Net sales in
the Popular and Economy product lines increased $23.5 million and $22.7 million,
respectively, due primarily to the acquisition of AAG. Signature and Snacks net
sales decreased $8.1 million and $1.2 million respectively, due to decreased
distribution. Net sales in the Kids product line increased $9.4 million due to
distribution gains on the product line which was launched in the first quarter
of 2000.

Canadian net sales contributed 12.4% or $22.8 million to net sales for the 28
weeks ended July 15, 2001, compared to 14.2% or $19.5 million for the comparable
period in 2000. This increase is primarily the result of the continued growth of
all product labels and the introduction of the Kids product line in Canada.

Total volume increased 34.2% due primarily to the acquisition of AAG. Excluding
sales of AAG units, the volume declined 2.5% due primarily to decreased
distribution on Signature and Snacks product lines.

Gross Profit. Gross profit for the 28 weeks ended July 15, 2001 increased $18.7
million to $73.9 million from $55.2 million for the comparable 28 weeks in 2000.
The acquisition of AAG accounted for $19.8 million of incremental gross profit
in the first 28 weeks of 2001. The gross margin was 40.1% for both periods.

Selling and Promotional Expenses. Selling and promotional expenses increased
$9.0 million or 25.1% to $44.7 million in the 28 week period ended July 15,
2001. This increase resulted primarily from the promotional expenses on products
related to the acquisition of AAG, $10.3 million, less a $1.3 million reduction
in advertising expense.

General and Administrative Expenses. General and administrative expenses for the
28 weeks ended July 15, 2001 increased $6.2 million or 49.3% over the comparable
period last year to $18.8 million. Factors contributing to the increase were:
(i) higher amortization of $4.3 million on intangible assets, primarily
associated with the acquisition of AAG; (ii) increased spending of $0.7 million
to support the integration of the AAG acquisition, (iii) and a $1.2 million
increase in general spending.

Operating Income. Operating income for the 28 week period ended July 15, 2001
was $10.5 million, an increase of $3.5 million or 50.5% over the comparable
period last year. This increase was the net result of a $18.7 million increase
in gross profit, less the $9.0 million and $6.2 million increase in selling and
promotional expenses and general and administrative expenses, respectively. As a
percentage of net sales, operating income increased to 5.7% of net sales as
compared to 5.1% in 2000.

Interest Expense. Interest expense for the first 28 weeks of 2001 increased
25.7% or $1.9 million to $9.3 million as compared to $7.4 million for the first
28 weeks of 2000. The increase was the result of the increase in senior debt
associated with the acquisition of AAG.

                                      11
Interest income. Interest income for the 28 weeks ended July 15, 2001 was $0.2
million as compared to $0.2 million in the same period in 2000.

Other, Net. Other expenses were ($0.3) million for the 28 weeks ended July 15,
2001 as compared to $0.1 million of other income for the 28 weeks ended July 16,
2000.

Net Income (Loss). For the reasons stated above, the net income for the 28 week
period ended July 15, 2001 was $1.1 million as compared to a $0.1 million loss
in 2000.

Liquidity and Capital Resources

At July 15, 2001, the Company had $6.2 million outstanding on a $40.0 million
line of senior revolving credit with Bank One, NA. At July 15, 2001, the Company
was in compliance with all covenants in the credit agreement with Bank One. The
cash and cash equivalents balance as of July 15, 2001 was $1.0 million, compared
to $0.3 million as of July 16, 2000.

Operating activities provided $18.0 million of cash in the first 28 weeks of
2001 compared to $5.2 million used for operating activities for the first 28
weeks of 2000. This $23.2 million improvement is the result of increased
depreciation and amortization of $4.5 million, and a $17.6 million decrease in
working capital requirements, and a $1.1 million increase in net income for the
first 28 weeks of 2001 compared to the first 28 weeks of 2000.

Investing activities used $71.0 million of cash for the first 28 weeks of 2001
and $4.8 million for the first 28 weeks of 2000. This $66.2 million increase in
investing activities is primarily the result of the acquisition of AAG.

Financing activities provided $53.8 million of cash in the first 28 weeks of
2001 as compared to $10.2 million for the first 28 weeks of 2000. The Company
obtained $68.6 million of cash primarily for the acquisition of AAG through
borrowings under the credit facility. The Company funded the purchase price of
the AAG acquisition through a $100.0 million credit facility which replaced its
existing revolving credit facility. The credit facility includes (a) a $60.0
million term loan with maturity for each of the five years subsequent to
December 31, 2000 of $7.5 million, $10.0 million, $13.25 million, $13.25 million
and $16.0 million, and (b) a $40.0 million revolving credit facility expiring on
December 31, 2005, subject to certain borrowing base limitations.

2001 Planned Expenditures. As a part of the Company's strategic growth plan, the
Company incurred approximately $7.0 million for slotting expenses for the first
28 weeks of 2001. The Company plans to spend an additional $2.3 million in
slotting expenses in 2001 to introduce new products and increase product
penetration. The Company also plans on spending approximately $12.0 million on
plant and equipment purchases in 2001, primarily to increase the production and
freezer capacity at its Jackson, Ohio plant.

The Company anticipates continuing to elect Subchapter S treatment under the
U.S. Internal Revenue Code. Consequently, the Company will continue to make
quarterly distributions to the shareholders based upon their estimated tax
liabilities. The Company's subsidiary, AAG, is a C-Corporation. As such, AAG
will be responsible for all tax liabilities including deferred taxes.

Luigino's ability to make scheduled payments of principal of, or to pay the
interest or premiums, if any, on, or to refinance its indebtedness or to fund
planned capital expenditures will depend on future performance, which, to a
certain extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond the Company's control.
Based upon the current level of operations, the Company believes that cash flow
from operations and available cash, together with available borrowings under the
credit agreement, will be adequate to meet the future liquidity needs for at
least the next several years. The Company may, however, need to refinance all or
a portion of the principal of the senior subordinated notes on or before
maturity. There can be no assurance that the business will generate sufficient
cash flow from operations, or that future borrowings will be available under the
credit agreement in an amount sufficient to enable the Company to service
indebtedness or to fund other liquidity needs. In addition, there can be no
assurance that the Company will be able to effect any such refinancing on
commercially reasonable terms or at all.

                                       12
New Accounting Pronouncements

Effective January 1, 2001, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities (SFAS No. 133)", as amended. SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability measured at its
fair value. SFAS No. 133 requires that changes in the derivatives' fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. The adoption of SFAS No. 133 did not have a material impact on the
Company's consolidated financial statements.

In April 2001, the FASB Emerging Issues Task Force (EITF) reached final
consensus on Issue 00-14, "Accounting for Certain Sales Incentives", which
addresses the recognition, measurement and income statement classification for
certain sales incentives (e.g. coupons) and Issue 00-25, "Accounting for
Consideration from a Vendor to a Retailer in Connection with the Purchase or
Promotion of Vendor's Products", which addresses the income statement
classification of consideration from a vendor to a retailer. These guidelines
will be effective for the Company beginning in the first quarter of 2002. The
implementation of these guidelines will require the Company to make
reclassifications between selling, general and administrative expenses and
sales, the amounts of which have not yet been determined.

On June 29, 2001, the Financial Accounting Standards Board (FASB) approved for
issuance Statement of Financial Accounting Standards (SFAS) 141, Business
Combinations, and SFAS 142, Goodwill and Intangible Assets. Major provisions of
these Statements are as follows: all business combinations initiated after June
30, 2001 must use the purchase accounting method of accounting; the pooling of
interest method of accounting is prohibited except for transactions initiated
before July 1, 2001; intangible assets acquired in a business combination must
be recorded separately from goodwill if they arise from contractual or other
legal rights or are separable from the acquired entity and can be sold,
transferred, licensed, rented or exchanged, either individually or as part of a
related contract, asset or liability; goodwill and intangible assets with
indefinite lives are not amortized but tested for impairment annually, except in
certain circumstances, and whenever there is an impairment indicator; all
acquired goodwill must be assigned to reporting units for purposes of impairment
testing and segment reporting; effective January 1, 2002, goodwill will no
longer be subject to amortization. Management is currently reviewing the
provision of these Statements and their impact on the Company's results of
operations.

Cautionary Statement

This Form 10-Q contains forward-looking statements within the meaning of federal
securities laws. These statements include statements regarding intent, belief or
current expectations of the Company and its management. These forward-looking
statements are not guarantees of future performance and involve a number of
risks and uncertainties that may cause the Company's actual results to differ
materially from the results discussed in these statements. The Company's
forward-looking statements are subject to risks, uncertainties and assumptions
including, among other things: general economic and business conditions; the
Company's expectations and estimates concerning future financial performance,
financing plans and the impact of competition; anticipated trends in the
Company's industry; and other risks and uncertainties detailed from time to time
in the Company's filings with the Securities and Exchange Commission, including
Exhibit 99.1 to this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Inflation

The Company believes that the relatively moderate rate of inflation over the
past few years has not had a significant impact on sales or profitability.

Market Risk Considerations

Credit Risk. Financial instruments which potentially subject Luigino's to
significant concentrations of credit risk consist primarily of cash and trade
accounts receivable. The Company maintains cash and cash

                                       13
equivalents and other financial instruments with various financial institutions.
The Company's policy is to limit exposure to any one institution. When the
Company formulates its investment strategy, it considers periodic evaluations of
the relative credit standing of these financial institutions. The Company's
concentrations of credit risk for trade accounts receivable are limited due to
the large number of entities comprising the customer base. The Company has an
exclusive distribution agreement with J.M. Schneider Corporation in Canada,
which accounted for 12.4% of net sales for the 28 weeks ended July 15, 2001. The
Company does not currently foresee a credit risk with this distributor.

Interest Rate Risk. A portion of the Company's long-term debt obligation incurs
interest at floating rates, based on changes in U.S. Dollar LIBOR and prime rate
interest. Therefore, the Company has an exposure to changes in these interest
rates. At July 15, 2000, the Company had $63.7 million of long-term debt subject
to floating interest rates, with interest ranging from 7.1 to 8.75% with a
weighted average interest rate of 7.2%. A 10% increase in U.S. LIBOR and prime
interest rates would have increased interest expense for the second fiscal
quarter ended July 15, 2001 by $0.1 million.

PART II - OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders.

None.

Item 5.  Other Information

In connection with the "safe harbor" provisions of the Private Securities
Litigation and Reform Act of 1995, the Company is hereby filing cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in forward-looking statements of the
Company made by, or on behalf of the Company. See Exhibit 99.1 to this report.

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits

         Number                 Description
         ------                 -----------

         99.1                   Cautionary Statements for Purposes of the "Safe
                                Harbor" Provisions of the Private Securities
                                Litigation Reform Act of 1995

           (b)  Reports on Form 8-K

                  The Company filed a Report on Form 8-K/A on April 23, 2001 to
                  add certain financial information relating to the acquisition
                  of The All American Gourmet Company, previously reported on a
                  Form 8-K.

                                       14
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        LUIGINO'S, INC.

Date:  August 20, 2001                  By: /s/ Thomas W. Knuesel
                                            -------------------------------
                                            Thomas W. Knuesel
                                            Chief Financial Officer (principal
                                            financial and accounting officer)

                                       15
EXHIBIT INDEX

         Number                Description
         ------                -----------

         99.1                 Cautionary Statements for Purposes of the "Safe
                              Harbor" Provisions of the Private Securities
                              Litigation Reform Act of 1995

                                       16