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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[x] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the fiscal year ended December 31, 1996, 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 0-19075
THE MORNINGSTAR GROUP INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2217488
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5956 SHERRY LANE, SUITE 1500
DALLAS, TEXAS 75225-6522
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 360-4777
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of Common Stock held by non-affiliates of the
Registrant based on the closing price of the Common Stock on the NASDAQ Stock
Market on February 28, 1997 was approximately $299.0 million which value,
solely for the purpose of this calculation, excludes shares held by the
Registrant's executive officers and directors. Such exclusion should not be
deemed a determination by the Registrant that all such individuals are, in
fact, affiliates of the Registrant.
February 28, 1997, the number of outstanding shares of common stock was:
Common Stock, $.01 par value: 14,548,443 shares
DOCUMENTS INCORPORATED BY REFERENCE
Part I and Part II of this Form 10-K incorporate information from the
Registrant's Annual Report to Stockholders for the year ended December 31,
1996. Part III of this Form 10-K incorporates information from the Registrant's
definitive Proxy Statement relating to the Registrant's annual meeting of stock
holders to be held on April 24, 1997.
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PART I
ITEM 1. BUSINESS.
THE COMPANY
The Morningstar Group Inc., a Delaware corporation ("Morningstar" or
the "Company"), is a national manufacturer and marketer of refrigerated,
non-refrigerated and frozen specialty food products that include: (i) branded
products and (ii) other specialty, dairy based and non-dairy based
ultrapasteurized ("UHT") and cultured products. These two major product
categories comprise the Company's continuing operations ("Continuing
Operations").
The Company was formed in 1988 to acquire several regional dairies,
novelty/ice cream operations and specialty food operations. Shortly after these
acquisitions, significant increases in bulk milk prices adversely affected the
Company's operating performance and ability to service its highly leveraged
capital structure. In 1989, Morningstar shifted its emphasis to refrigerated
specialty food products by reorganizing its operations, introducing its branded
product lines and commencing the divestiture of its regional dairy and
novelty/ice cream operations. In March 1991, Hicks, Muse & Co. Incorporated,
now Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse"), together with
certain other investors, recapitalized the Company through a transaction that
reduced the Company's leverage (the "Financial Restructuring"). Prior to this
transaction, the Company is referred to as "Predecessor"; after this
transaction, the Company is referred to as "Successor". In April 1992, the
Company completed a public offering of 6,215,000 shares of common stock,
consisting of 5,000,000 newly issued shares and 1,215,000 shares from existing
stockholders. The net proceeds to the Company from this offering of
approximately $50.0 million, together with the proceeds from new senior loans,
were used to redeem all of the Company's outstanding 15% preferred stock and to
purchase $34.0 million in principal amount of its 13% senior subordinated
debentures (the "Debentures") at a premium, reducing the Company's interest
expense and eliminating the future payment of preferred stock dividends.
On January 6, 1994, the Company announced a restructuring plan designed
to sharpen its focus on the faster-growing segments of its core specialty food
products business, while reorganizing its operations to increase efficiency.
The plan, which resulted in a $9.0 million charge in the fourth quarter of
1993, included provisions for reductions in workforce, relocation of the
manufacturing for certain product lines to gain operating efficiencies and the
abandonment of other product lines. Included within the $9.0 million charge was
$1.9 million for reserves established for certain supply agreements and
promissory notes received as part of the sale of certain of the Company's
regional dairies in 1991 and 1992. The $9.0 million charge included non-cash
expenses of $4.4 million and cash expenses of $4.6 million. The majority of the
cash expenditures were paid during 1994.
The Company suspended the payment of dividends on its common stock
immediately following the $.0375 per share payment in the first quarter of 1994
to holders of record as of December 31, 1993.
ACQUISITIONS
Presto Food Products, Inc. Acquisition
On December 3, 1996, the Company acquired all of the issued and
outstanding shares of capital stock of Presto Food Products, Inc. ("Presto"), a
California corporation, from the shareholders of Presto pursuant to a stock
purchase agreement dated as of October 20, 1996, by and among the Company,
Presto and the Presto shareholders. Presto's sales for the year ended December
31, 1995, were approximately $139.5 million. Presto is a national manufacturer,
marketer and distributor of non-diary and dairy products, such as Mocha Mix
non-dairy coffee creamers, Jon Donaire desserts and ice cream cakes, aerosols,
bakery toppings and icings, and frozen pre-whipped toppings and creamers,
serving customers throughout the United States since 1937. The Company paid
approximately $133.5 million in cash for the stock acquired and assumed
approximately $37.4 million in related liabilities. The allocation of the
purchase price was based on preliminary estimates of fair value. The final
allocation may be revised if the appraised values are significantly different
from the preliminary estimates. Included in the assumed liabilities is
approximately $3.2 million related to costs associated with the involuntary
termination and/or relocation of certain employees of the acquired company. The
terminated employees represent redundant and excess personnel in the operations,
marketing, selling, and general and administrative areas. This termination plan
will likely be completed by the second quarter of 1997. In conjunction with the
consummation of the Presto acquisition, the Company renegotiated its credit
agreement. Funds provided by the renegotiated Senior Credit Agreement ("Senior
Credit Agreement") were utilized to retire existing senior debt of approximately
$44.8 million, to acquire the capital stock of Presto for $123.5 million and to
pay approximately $2.1 million in fees and expenses
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associated with the Presto acquisition. The Company accounted for the
acquisition as a purchase and accordingly, Presto's results are included in the
1996 Consolidated Statement of Operations for the period December 3, 1996,
through December 31, 1996.
Cream Products Acquisition
On July 31, 1996, the Company completed the purchase of substantially
all of the assets of Cream Products Company ("Cream Products"), located in
Chicago, Illinois. Cream Products' sales for the year ended December 31, 1995,
were approximately $24.6 million. Cream Products is a manufacturer and
distributor of dairy and non-dairy products primarily supplying food makers and
food service customers throughout the United States, since 1938. The Company
paid approximately $5.9 million in cash for the assets acquired, and assumed
approximately $2.3 million in related liabilities. Funds for this acquisition
were provided by the Company's operations in conjunction with its revolving
credit facility. The Company accounted for the acquisition as a purchase and
accordingly, Cream Product's results are included in the 1996 Consolidated
Statement of Operations for the period August 1, 1996, through December 31,
1996.
DISCONTINUED OPERATIONS
The Company has made significant divestitures since its inception and
as a result, the size and scope of the Company's operations have changed
significantly. During 1990, the Company divested Oak Farms Inc. ("Oak Farms")
and Cabell's Dairy Inc. ("Cabell's") regional dairy operations located in
Texas, and Adohr Farms Inc. ("Adohr") in California. During 1991, the Company
divested a novelty/ice cream operation in Texas and a milk distribution
location in Pennsylvania. The Company also closed a novelty operation located
in Kansas City, Missouri in October 1991. During 1992, the Company divested
Embassy Dairy Inc., a regional dairy in Waldorf, Maryland and East Coast Ice
Cream, a novelty/ice cream operation located in Laurel, Maryland. In January
1994, the Company divested its plastic packaging operation located in Dallas,
Texas. On April 13, 1994, the Company completed the divestiture of its
Florida-based fluid milk operation Velda Farms, Inc. ("Velda"), for
approximately $51.0 million, consisting of $48.0 million in cash after working
capital adjustments and $3.0 million in 9% Series A Preferred Stock (the
"Preferred Stock"). The Company deferred the recognition of the gain on the
Preferred Stock pending realization of the gain. The majority of the cash
proceeds were used to pay down existing bank debt and to fund federal and state
taxes generated by the gain on the sale. The sale of Velda concluded the
divestiture of the Company's regional dairies which were considered a major and
distinct segment of its business. As such, the operations of the regional
dairies and other divested operations have been restated and presented in the
consolidated financial statements in the 1996 Annual Report to Stockholders
(See Item 8, Footnote No.4) to conform with discontinued operations treatment
("Discontinued Operations").
On March 31, 1995, the Preferred Stock was redeemed by its issuer at
face value plus accrued dividends. The $3.0 million gain on the stock, less
applicable taxes and other reserves of $2.3 million, was reflected in
Discontinued Operations in the Consolidated Statements of Operations during the
first quarter of 1995. The Company also recognized $268,000 in dividends,
related to the Preferred Stock, during the first quarter of 1995 which was
recorded in Continuing Operations. The Company recorded an additional loss from
Discontinued Operations of approximately $0.5 million, net of tax benefits,
during the second quarter of 1995, related to Discontinued Operations reserves
and other liabilities.
Net sales of the Discontinued Operations were $38.6 million in 1994.
Interest expense of $0.4 million was allocated to Discontinued Operations
during 1994. The allocation method was based upon the ratio of net assets of
Discontinued Operations to the sum of consolidated net assets plus consolidated
debt, less debt specifically allocated to certain of the Company's
subsidiaries.
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PRODUCTS
The following table sets forth sales percentage information by product
and business category.
Percent of Net Sales from Continuing Operations
Year Ended December 31,
------------------------------------------------------
Product Category/Business 1992 1993 1994 1995 1996
------------------------- ---- ---- ---- ---- ----
Branded specialty food products 29.3% 30.1% 34.9% 38.4% 38.4%
----- ----- ----- ----- -----
Other specialty products:
UHT 30.1% 25.0% 22.6% 25.0% 28.6%
Cultured & other 40.6% 44.9% 42.5% 36.6% 33.0%
----- ----- ----- ----- -----
Total other specialty 70.7% 69.9% 65.1% 61.6% 61.6%
----- ----- ----- ----- -----
Total 100.0% 100.0% 100.0% 100.0% 100.0%
====== ====== ====== ====== ======
BRANDED SPECIALTY FOOD PRODUCTS
The Company's branded product business consists of seven product lines:
International Delight(R), Mocha Mix(R), Second Nature(R), Naturally Yours(TM),
Jon Donaire(R), Wacky Willie(R), and Lactaid(R). In the development of its
branded product lines, the Company has targeted growing market niches and
acquired or developed products to meet the specific consumer demands.
International Delight. International Delight is a gourmet flavored
coffee creamer that is marketed in several regular and fat-free flavors. In
1995, the Company completed the installation of its second 1/2 ounce aseptic
production line. This aseptic product requires no refrigeration and is marketed
in several flavors.
International Delight was originally introduced on a regional basis in
1973 and was repackaged, reformulated and marketed as a national brand in 1989.
The product is sold in 1/2 ounce single serving, pint and quart sizes to
supermarkets, food service outlets, club stores and convenience stores. The
non-aseptic International Delight is a non-dairy product that is manufactured
using the UHT process and, as a result, has an extended shelf life. The Company
encounters competition in this product line from various regional and national
competitors.
Mocha Mix. Mocha Mix is a non-dairy coffee creamer that is marketed in
regular, lite and fat free varieties. Mocha Mix is comparable to the rich,
creamy taste of half & half but is low in saturated fat and has no cholesterol.
This product is available in various package sizes such as individual servings
(portion control), 4 oz., quarts and half gallons. This product was acquired in
conjunction with the acquisition of Presto.
Second Nature. Second Nature is a pasteurized, fat-free, no cholesterol
egg product. The primary ingredient of Second Nature is egg whites. The product
was the first refrigerated alternative to whole eggs to provide the equivalent
nutritional value of whole eggs. Second Nature is another product that was
first marketed by the Company as a national brand in 1989. Second Nature was
reformulated in a fat-free variety and introduced nationally during 1993 in a
twin pack containing two eight-ounce containers. In 1995, the Company
introduced a four-ounce twin pack container to complement its other sizes.
Second Nature is typically sold in the fresh egg section of supermarkets,
encountering competition from several other national and regional competitors
both in the refrigerated format and in the frozen format.
Naturally Yours. Naturally Yours fat-free sour cream was introduced
nationally during 1993 following a test market in the last half of 1992.
Naturally Yours contains 67% less calories than full fat sour cream while
delivering similar taste and texture characteristics. During 1995, the Company
introduced a regular sour cream under this label to expand the product line.
The Company also introduced several fat-free flavored snack dips in 1995
including salsa, ranch and french onion. Naturally Yours competes with numerous
national and regional competitors in the fat-free and regular sour cream
categories.
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Jon Donaire. Jon Donaire is a line of frozen cheesecakes, mousse cakes
and ice cream cakes that was acquired in conjunction with the purchase of
Presto. These desserts are sold to national and regional restaurant operators,
quick service restaurants, coffee shops, club stores, in-store bakeries and a
variety of other food service operators. Desserts are sold in both full cake
and single portion packed sizes, as well as custom variations for large
national accounts.
Wacky Willie. This trademark and the boyish cartoon character spokesman
were purchased in October 1996. Currently, the Company is marketing Killer
Shake under this umbrella brand. Killer Shake is a low-fat flavored milk with
the taste and "mouthfeel" of a real dairy shake. Killer Shake is currently
offered in four flavors: Totally Chocolate, Radically Vanilla, Bodacious
Bananaberry and Crankin' Cappucino and is sold in convenience stores and club
stores.
Lactaid. Lactaid is a line of lactose-reduced and lactose-free UHT
fluid milks produced by the Company under a license arrangement with McNeil
Consumer Products Company ("McNeil"), an affiliate of Johnson & Johnson. See
"Intellectual Property". Lactose intolerance afflicts millions of individuals
and Lactaid products bring such individuals back into the market for dairy
products. Lactaid is available in 1/2 pint, quart and half gallon containers.
Lactaid has been sold by the Company in the western two-thirds of the United
States since September 1991.
OTHER SPECIALTY PRODUCTS
The Company manufactures and distributes other dairy based and
non-dairy based specialty food products, including (i) UHT products, such as
whipping cream, aerosol toppings, half & half and coffee creamers, and (ii)
cultured products, such as cottage cheese, sour cream, snack dips and yogurt.
These products are sold under customers' brand names, in a wide variety of food
service packages as well as under the Company's own regional brand names such
as Avoset(R) (creams), Bancroft(R) (cottage cheese and sour cream), Naturally
Yours(R) (yogurt), Qwip(R) (aerosol toppings) and Trimline(R) (cottage cheese
and other low fat products). The Company sells its UHT and cultured products to
food service distributors, regional dairies and retail grocery warehouses. The
Company encounters competition from several other regional UHT and cultured
product manufacturers.
UHT. Certain of the Company's branded products and a number of its
other specialty products are produced using the UHT process. The UHT process
involves heating products to extremely high temperatures to eliminate all
living organisms and then rapidly cooling the products. This process results in
product shelf lives in excess of 45 days allowing these products to be shipped
relatively long distances and to be distributed through warehouses.
The UHT product category includes several products such as whipping
cream, half & half, heavy whipping cream, bavarian style cream, light cream,
pastry topping, baker's cream, coffee cream, flavored milks and various
non-dairy formulas of creams and creamers. The Company packages its UHT
products in a wide variety of sizes and packages to facilitate serving the
various needs of its diverse customer base. These packages include: 1/2 ounce
and 3/8 ounce portion control creamers; half-pint, pint, and quart pure-pak
containers; aerosol cans; glass bottles; metal cans; and various multi-gallon
containers.
Cultured. Cultured products are derived from milk that is pasteurized,
inoculated with beneficial bacterial cultures, cooled and then, in some
instances, mixed with other ingredients to provide flavor. The culturing
process provides unique flavor and texture characteristics and extends shelf
life. The Company's cultured products have shelf lives from 30 to 60 days
allowing distribution through warehouse systems.
The cultured products category includes: cottage cheese, sour cream,
snack dips and yogurt. Each of these basic products has numerous formula
variations primarily related to varying levels of fat content and flavoring
options. These products are generally packaged in plastic containers ranging in
size from four ounces to 35 pounds.
PRODUCTION AND DISTRIBUTION
Refrigerated and frozen specialty food products are manufactured at
eleven plants located in California (6), Wisconsin (2), Tennessee (1), Texas
(1), and Maryland (1). UHT products are manufactured in six of the plants and
cultured products are manufactured in four of the plants.
The Company distributes products from its eleven plants to more than
3,200 customers in 50 states and to more than 20 foreign countries using common
carriers as well as a number of leased refrigerated vehicles. Certain customers
pick up products at the Company's manufacturing facilities.
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MARKETING AND CUSTOMERS
Branded Specialty Products. The Company develops consumer awareness of
its branded products through media advertising of such products, primarily
through cooperative advertising with the stores in which its branded specialty
products are sold and with manufacturers of products that complement the
Company's branded specialty products. The Company also utilizes television
advertising, radio advertising, coupon redemption, free-standing inserts and
in-store demonstrations to develop consumer awareness.
Branded specialty products are primarily sold to grocery warehouses
serving the major supermarket chains and are primarily sold through the
Company's network of independent food brokers and nationwide sales force. The
typical broker used by the Company generally works exclusively on commission.
The broker is responsible for placing the sale of the Company's branded
products and for ensuring that the product is appropriately stocked, priced and
positioned in supermarkets.
The Company also ships its branded products internationally, currently
serving Canada and several countries in the Pacific Rim, Aruba, Australia,
Bermuda, the islands of the Caribbean, Chile, Mexico, Puerto Rico, Saipan, and
Saudi Arabia, among others.
Other Specialty Products. The Company markets its other specialty
products directly to dairy companies, supermarket wholesalers, grocery
warehouses, food service outlets and food manufacturers. The primary market for
the Company's other specialty products is the United States. The Company also
markets certain UHT products in the Pacific Rim, primarily in Hong Kong, Taiwan
and Singapore.
RESEARCH AND DEVELOPMENT
The development of new products and the processes under which they are
manufactured has been an important part of the Company's growing emphasis on
branded specialty products. In addition to the Company's full-time research
technicians, all employees, both at the operating and management levels, are
encouraged to play an active role in the development of products and their
manufacturing processes. The Company's senior management is closely involved in
the identification and development of branded products. The Company utilizes
consumer research to test new products prior to market introduction. While the
research and development function is important to the Company's operations, the
total expenditures related to this function are not material to the Company's
Consolidated Statements of Operations.
One of the achievements of this research and development effort was the
reformulation of Second Nature(R) to deliver the equivalent nutritional value
of whole eggs. More recently Second Nature(R) was reformulated to be a fat-free
product. This research effort also developed Naturally Yours(TM), a fat-free
sour cream made from real dairy ingredients and a fat-free version of
International Delight. In 1996, the Company developed and launched an aseptic,
half and half dairy coffee creamer product to be sold under the International
Delight(R) brand name. Also in 1996, the Company developed and launched a
non-dairy coffee whitener named International Delight(R) Creme Supreme
available in pint and quart containers.
INTELLECTUAL PROPERTY
GENERAL
The Company's business involves the use of patents, trademarks and
trade secrets and licenses granted both to and by the Company. The Company's
most important trademarks include International Delight(R), Second Nature(R),
Naturally Yours(TM), Mocha Mix(R), Jon Donaire(R), Wacky Willie(R), Trimline,
Avoset, Bancroft, Carnation Smooth 'n Creamy (under license from Nestle) and
the Company's star logo. The Company has also permitted third parties to use
its trademarks pursuant to licenses granted by the Company, typically in
connection with its divestitures. See "Discontinued Operations".
LICENSE AGREEMENT WITH AGRIFOODS INTERNATIONAL COOPERATIVE LTD.
The Company has entered into a license agreement with AgriFoods, a
Canadian Cooperative association whereby the Company granted to AgriFoods an
exclusive license to manufacture, market and distribute International
Delight(R) liquid flavored coffee creamer products in Canada and to use the
trademark, International Delight(R) on said products. The agreement provides
for a royalty to be paid to the Company based on the number of cases of product
sold on a monthly basis.
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LACTAID LICENSE ARRANGEMENT
Lactaid is produced under two Lactaid License Agreements (collectively
the "Lactaid License") with McNeil. Under the terms of the Lactaid License,
McNeil granted the Company the exclusive right to manufacture, produce and
package Lactaid modified milk products in the western two-thirds of the United
States and in certain countries around the Pacific Rim. The Lactaid License
provides for payment of a license fee to McNeil based on the volume of Lactaid
modified milk products sold by the Company.
DIVESTITURES
The purchasers of Adohr Farms entered into a Requirements and
Distribution Agreement with the Company (herein so called) pursuant to which
they agreed to purchase a minimum of 75% of their UHT and cultured products
requirements from the Company for a period of seven years ending in 1997.
The purchasers of Velda Farms, L.P. entered into an agreement pursuant
to which they agreed to purchase their requirements of certain UHT and cultured
products from the Company for a period of ten years ending in 2004.
The Company has agreed to indemnify the purchasers of certain of its
divested operations with regard to certain potential liabilities arising out of
the acquisition of such operations. In connection therewith, the Company has
indemnified Southern Foods, the purchaser of the Oak Farms and Cabell's dairy
subsidiaries, against claims related to compliance with environmental
regulations and fair trade practices arising out of the prior operation of Oak
Farms and Cabell's through March 2000.
SUPPLIERS AND RAW MATERIALS
The Company purchases its primary raw material, bulk milk, from farm
marketing cooperatives, individual farmers and other dairy companies. The
supply and cost of bulk milk are influenced by many factors, including consumer
demand, government regulation and seasonality. The Company has not experienced
any longstanding supply shortages and expects that bulk milk will continue to
be available in sufficient quantities to supply its processing requirements.
Certain other raw materials, such as cream, vegetable oils, non-dairy
powder, sweeteners, flavorings and various packaging supplies, are generally
available from a wide variety of sources.
CUSTOMERS
The Company markets products to a broad range of customers including
convenience stores, gas stores, supermarkets, grocery warehouses, independent
distributors, other dairies, club stores and food service customers such as
hotels, in-store bakeries, restaurants, nursing homes, schools, and theme
parks. The Company sells to customers nationwide and a certain percentage of
its products are distributed in foreign countries, primarily in Canada, Mexico
and the Pacific Rim. No customer of the Company accounted for more than 10% of
the Company's net sales for the year ended December 31, 1996.
SEASONALITY
Sales of the Company's refrigerated and frozen specialty food products
exhibit modest seasonality with products such as whipping cream, aerosol
toppings, prewhipped toppings, sour cream and International Delight(R), among
others, experiencing higher sales in the fourth quarter.
EMPLOYEES
As of December 31, 1996 the Company employed approximately 1,403 people
of which approximately 778 were represented by unions under collective
bargaining agreements. These agreements cover employees at the following
locations: Fullerton, Gustine, City of Industry, Santa Fe Springs and Tulare,
California, Sulphur Springs, Texas and Madison, Wisconsin. The Company will
from time to time be negotiating new agreements with the various unions
representing these employees and it expects that it will enter into agreements
with such unions which are satisfactory to the Company. Two contracts were
negotiated in the last 12 months. One contract is being negotiated at the
present time. The Company has had no recent work stoppages and considers its
relations with its employees to be satisfactory.
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GOVERNMENT REGULATION
PUBLIC HEALTH
As a manufacturer and distributor of food products, the Company is
subject to the Federal Food, Drug, and Cosmetic Act and regulations promulgated
thereunder by the Food and Drug Administration ( the "FDA"). This comprehensive
regulatory scheme governs, among other things, the manufacturing, composition
and ingredients, labeling, packaging, and safety of food. For example, the FDA
regulates manufacturing practices for foods through its current good
manufacturing practices regulations, specifies the "recipes," called standards
of identity, for certain foods, including many of the kinds of products
marketed by the Company (e.g., sour cream, half & half, and yogurt), and
prescribes the format and content of certain information required to appear on
the labels of food products.
Additionally, the FDA is responsible for enforcement of the Public
Health Service Act and regulations issued thereunder, which authorize
regulatory activity necessary to prevent the introduction, transmission or
spread of communicable diseases. These regulations require, for example,
pasteurization of milk and milk products.
The FDA has enacted extensive regulations pursuant to the Nutrition
Labeling and Education Act of 1990. The regulations, which took effect in August
1994, require nutritional labeling on all foods that are a meaningful source of
nutrition, including certain of the Company's products. Limitations have been
placed on the use of certain labeling terms while the use of other terms is
required. The Company has revised the labeling of its products to conform to the
final regulations.
In addition to FDA regulation of the Company's products, the Company's
advertising is subject to regulation by the Federal Trade Commission pursuant
to the Federal Trade Commission Act and regulations issued thereunder.
The Company and its products are also subject to state regulation
through such measures as licensing of the Company's plants, enforcement by
state health agencies of state standards for the Company's products, inspection
of the Company's facilities, and regulation of the Company's trade practices in
connection with the sale of the dairy products.
Enforcement actions for violations of federal and state regulations may
include seizure and condemnation of violative products, cease and desist
orders, injunctions and/or monetary penalties.
The Company maintains quality control laboratories at each of its food
processing facilities to test bulk milk and other ingredients as well as
finished products. In addition, the Company has developed and administers
Hazard Analysis of Critical Control Point programs designed to detect hazardous
levels of bacteria and other contamination that may have occurred during
manufacturing. The Company believes that its facilities and practices are
sufficient to maintain its compliance with applicable government regulations,
although there can be no assurances in this regard.
INTERSTATE COMMERCE COMMISSION
The Company's interstate trucking services to the public in connection
with its backhaul operations are subject to regulation by the Interstate
Commerce Commission (the "ICC"). In order to provide backhaul services, the
Company obtained a license from the ICC and must comply with certain safety and
insurance requirements promulgated by the ICC on a continuing basis.
EMPLOYEE SAFETY REGULATIONS
The Company is subject to certain health and safety regulations
including regulations issued pursuant to the Occupational Safety and Health
Act. These regulations require the Company to comply with certain
manufacturing, health and safety standards to protect its employees from
accidents.
ENVIRONMENTAL REGULATIONS
The Company is subject to certain federal, state and local
environmental regulations. Certain of the Company's facilities discharge
biodegradable wastewater into municipal waste treatment facilities in excess of
levels permitted under local regulations. In such circumstances, the Company
generally pays wastewater surcharges to municipal water treatment authorities.
However, such authorities may require the Company to comply with such
regulations and construct pre-treatment facilities or to take other action to
reduce effluent discharge.
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The Company maintains underground fuel storage tanks to service its
vehicles. All such tanks are periodically inspected to determine compliance
with applicable regulations. In connection with these inspections, the Company
may, at times, need to make certain expenditures in order to maintain
compliance.
Environmental compliance with federal, state or local authorities is
not expected to have a material impact on the Company's capital expenditures,
earnings or competitive position.
DAIRY SUPPORT PROGRAM
The minimum prices paid for grade-A bulk milk and cream in the United
States are controlled in most areas by Federal Milk Marketing Orders or state
regulatory agencies. In most areas, the prices paid for bulk milk and cream by
processors are higher than these minimums due to premiums charged by suppliers
and shippers. The Company has long, established relationships with bulk milk
and cream suppliers, primarily milk cooperatives in each of its markets and has
not experienced any longstanding shortages in its supply of fresh bulk milk and
cream. The Company's requirements for bulk milk have decreased since the
divestiture of Velda in April 1994.
ITEM 2. PROPERTIES.
The Company currently operates processing facilities in the following
locations:
Approximate
Square
Location Products Footage
-------- -------- -------
Fullerton, California Cultured Products, UHT 84,000
Frederick, Maryland Cultured Products, UHT 69,000
Gustine, California UHT, Juices 114,000
Madison, Wisconsin Cultured Products, UHT 84,000
Bristol, Wisconsin Cold Packed Cheese 82,000
Sulphur Springs, Texas UHT, Juices 70,000
Tulare, California Cultured Products, UHT 39,000
Cypress, California (leased) Ice Cream Cakes/Sheet Cakes 6,000
Santa Fe Springs, California Cheesecakes, Desserts 100,000
City of Industry, California Toppings, Non-dairy creamers, aerosol 108,000
Arlington, Tennessee UHT creamers, toppings 142,000
The Company's executive offices are located in approximately 17,000
square feet of leased office space located at 5956 Sherry Lane, Suite 1500,
Dallas, Texas 75225-6522. The lease for this property expires on February 28,
2002. All of the Company's processing facilities which are owned are held as
collateral pursuant the Company's Senior Credit Agreement.
The Company believes that its facilities are well maintained and
adequate to meet its current needs. The Company expects to expand the capacity
of its existing facilities in order to service future growth.
8
10
ITEM 3. LEGAL PROCEEDINGS.
From time to time the Company is subject to litigation in the ordinary
course of its business. In connection with the divestitures of certain of the
Company's operations, the Company assumed certain obligations of
indemnification, none of which is believed to be material to the Company. The
Company maintains insurance in respect of certain losses that may result from
its current or future operations. The Company believes that the outcome of any
existing litigation, after considering the indemnities and insurance related to
such litigation, would not have a material impact on its business, financial
condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the stockholders during the
fourth quarter of 1996.
9
11
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The information required by this item is included in the Registrant's
Annual Report to Stockholders for the year ended December 31, 1996 on pages
54-56 under the caption "Quarterly Financial Information" and is incorporated
herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this item is included in the Registrant's
Annual Report to Stockholders for the year ended December 31, 1996 on page 55
under the caption "Selected Financial Data" and is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
The information required by this item is included in the Registrant's
Annual Report to Stockholders for the year ended December 31, 1996 on pages 30
through 33, under the caption "Management's Discussion and Analysis of Results
of Operations and Financial Condition" and is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item is included in the Registrant's
Annual Report to Stockholders for the year ended December 31, 1996 on pages 34
through 55 and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
10
12
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this item is included in the Registrant's
definitive Proxy Statement relating to its annual meeting of stockholders to be
held on April 24, 1997 under the captions "Directors and Officers", "Proposal
for the Election of Directors" and "Section 16(a) Reporting" and is
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is included in the Registrant's
definitive Proxy Statement relating to its annual meeting of stockholders to be
held on April 24, 1997 under the caption "Executive Management and Director
Compensation" and is incorporated herein by reference. The foregoing
incorporation by reference specifically excludes the discussion under "Executive
Management and Director Compensation - Report of the Compensation Committee on
Executive Compensation" and "The Morningstar Group Inc. Stock Performance".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item is included in the Registrant's
definitive Proxy Statement relating to its annual meeting of stockholders to be
held on April 24, 1997 under the caption "Voting Securities Outstanding,
Security Ownership of Management and Principal Stockholders" and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is included in the Registrant's
definitive Proxy Statement under the captions "Executive Management and
Director Compensation - Compensation Committee Interlocks and Insider
Participation" and "Related Party Transactions" and is incorporated herein by
reference.
11
13
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this Report. The page
number, if any, listed opposite a document indicates the page number in
the sequential number system in the manually signed original of this
Report where such document can be found.
Page Number
-----------
(1) Financial Statements
See Item 8 on page 9
(2) Index to Financial Statement Schedule
Report of independent public accountants on
financial statement schedules..........................17
Schedule II - Allowance for doubtful accounts.............18
All other schedules have been omitted because they are not
applicable, not required, or because the required information
is shown in the consolidated financial statements or notes
thereto.
(3) Exhibits required by Item 601 of Regulation S-K.
Exhibit
Number Description
------ -----------
3(a) -- Restated Certificate of Incorporation of
the Company. (Incorporated by reference to
Exhibit 3(a) to the Registrant's Annual
Report on Form 10-K of the Registrant for
the fiscal year ended December 31, 1992.)*
3(b) -- Amended and Restated By-laws of the
Company. (Incorporated by reference to
Exhibit 3(b) to the Registrant's Annual
Report on Form 10-K of the Registrant for
the fiscal year ended December 31, 1992.)*
4(a) -- Stockholders' Agreement dated February
5, 1992 among the Company and certain
stockholders. (Incorporated by reference to
Exhibit 4(d) to the Registrant's Annual
Report on Form 10-K of the Registrant for
the fiscal year ended December 31, 1992.)*
10(a) -- Dairy Products Purchase Agreement dated
April 1, 1988, between the Company and
Southland (without exhibits). (Incorporated
by reference to Exhibit 10(a) to the
Registrant's Registration Statement on Form
S-1, as amended, registration No.
33-21790.)*
10(b) -- Employees' Savings and Profit Sharing
Plan dated April 1, 1988. (Incorporated by
reference to Exhibit 10(g) to the
Registrant's Annual Report on Form 10-K of
the Registrant for the fiscal year ended
December 31, 1988.)*
10(c) -- MorningStar Foods, Inc. 1991 Incentive
and Nonstatutory Stock Option Plan.**
10(d) -- The Morningstar Group Inc. 1992
Incentive and Nonstatutory Option Plan.**
10(e) -- Licensing Agreement to produce Lactaid
Brand Lactose Reduced Milk (Confidential
treatment has been granted with respect to
portions of this exhibit).**
12
14
Exhibit
Number Description
------ -----------
10(f) -- Amendment No. 2 to Lactaid Licensing
Agreement and to Distribution Agreement
(Confidential treatment has been granted
with respect to portions of this
exhibit).***
10(g) -- Agreement dated June 1, 1993 between
McNeil Consumer Products Company, a
division of McNeil - PPC, Inc. and The
Morningstar Group Inc. (Confidential
treatment has been granted with respect to
portions of this exhibit). (Incorporated by
reference to Exhibit 10(a) to the
Registrant's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1993.)*
10(h) -- Letter Agreement dated June 1, 1993
between McNeil Consumer Products Company, a
division of McNeil - PPC, Inc. and The
Morningstar Group Inc. and Avoset Food
Corporation. (Confidential treatment has
been granted with respect to portions of
this exhibit). (Incorporated by reference
to Exhibit 10(b) to the Registrant's
Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993.)*
10(i) -- Agreement and Plan of Merger dated
February 17, 1994 by and among Engles Dairy
Acquisition, Inc., Velda Farms Inc. and The
Morningstar Group Inc.****
10(j) -- Form of Dairy Products Supply Agreement
by and among The Morningstar Group Inc.,
its named subsidiaries and Velda Farms
Inc.****
10(k) -- The Morningstar Group Inc. Employees
Savings and Profit Sharing Plan, revised
effective April 1, 1988.****
10(l) -- License agreement entered into as of
October 1, 1994 between The Morningstar
Group Inc. and AgriFoods International
Cooperative LTD. (Confidential treatment
has been granted with respect to portions
of this exhibit).****
10(m) -- The Morningstar Group Inc. 1994
Incentive and Nonstatutory Stock Option
Plan. (Incorporated by reference to Exhibit
4.2 to the Registration Statement on Form
S-8 (Registration No. 33-53975) filed by
the Registrant on June 6, 1994.)*
10(n) -- Stock Option Agreement dated as of April
14, 1994 by and between The Morningstar
Group Inc. and C. Dean Metropoulos.
(Incorporated by reference to Exhibit
4.3 to the Registration Statement on Form
S-8 (Registration No. 33-53975) filed by
the Registrant on June 6, 1994.)*
10(o) -- The Morningstar Group Inc. 1996 Director
Stock Option Plan.#
10(p) -- Amendment No. 1 to The Morningstar Group
Inc. 1994 Incentive and Nonstatutory Stock
Option Plan.#
10(q) -- Employment Agreement dated as of
October 1, 1995 by and between The
Morningstar Group Inc. and Michael J.
Cramer.#
13
15
Exhibit
Number Description
------ -----------
10(r) -- Change-in-control Arrangement dated as
of September 18, 1996 by and between The
Morningstar Group Inc. and Darron K. Ash.#
10(s) -- Employment Agreement dated as of October
1, 1996 by and between The Morningstar
Group Inc. and C. Dean Metropoulos.
(Incorporated by reference to Exhibit 10.1
to the Current Report on Form 8-K filed
with the Securities and Exchange Commission
on December 18, 1996.)*
10(t) -- Change-in-Control Arrangement dated as
of October 14, 1996 by and between The
Morningstar Group Inc. and Joseph B.
Armes.#
10(u) -- Severance Arrangement by and between The
Morningstar Group Inc. and L. Hollis
Jones.#
10(v) -- Credit Agreement dated as of December 2,
1996 by and among The Morningstar Group
Inc., NationsBank of Texas, N.A. and the
lenders named therein. (Incorporated by
reference to Exhibit 2.2 to the Current
Report on Form 8-K filed with the
Securities and Exchange Commission on
December 18, 1996.)*
10(w) -- Stock Purchase Agreement dated as of
October 20, 1996 by and among Presto Food
Products, Inc., the shareholders of Presto
Food Products, Inc. signatory thereto and
The Morningstar Group Inc. (Incorporated by
reference to Exhibit 2.1 to the Current
Report on Form 8-K filed with the
Securities and Exchange Commission on
December 18, 1996.)*
13(a) -- The Morningstar Group Inc. Annual Report
to Stockholders for the year ended December
31, 1996 (except for the pages and
information thereof expressly incorporated
by reference in this Form 10-K, the annual
report is provided solely for the
information of the Securities and Exchange
Commission and is not to be deemed "filed"
as part of this Form 10-K).#
14
16
Exhibit
Number Description
------ -----------
21 -- Subsidiaries.#
23.1 -- Consent of Arthur Andersen LLP.#
27 -- Financial Data Schedule.#
(b) Reports on Form 8-K
Current Report on Form 8-K dated as of December 3, 1996
regarding the acquisition of Presto Food Products, Inc.
- --------------------
* Incorporated by reference as indicated.
** Incorporated by reference to the corresponding exhibit to the
Registration Statement on Form S-1 (Registration No. 33-45805)
filed by the Registrant on February 19, 1992.
*** Incorporated by reference to the corresponding exhibit to the
Registration Statement on Form S-1 (Registration No. 33-45805), as
Amended by the Registrant on April 22, 1992.
**** Incorporated by reference to the corresponding exhibit to the
Registrant's Annual Report on Form 10-K of the Registrant for the
year ended December 31, 1994.
# Filed herewith.
15
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
THE MORNINGSTAR GROUP INC.
By /s/ DARRON K. ASH
----------------------------------------
Darron K. Ash
(Vice President, Chief Financial Officer)
Date: March 28, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ C. DEAN METROPOULOS Director and Chief Executive Officer March 28, 1997
- ---------------------------------------
C. Dean Metropoulos
/s/ JACK W. EVANS Director March 28, 1997
- ---------------------------------------
Jack W. Evans
/s/ JOHN R. MUSE Director March 28, 1997
- ---------------------------------------
John R. Muse
/s/ CHARLES W. TATE Director March 28, 1997
- ---------------------------------------
Charles W. Tate
/s/ JIM L. TURNER Director March 28, 1997
- ---------------------------------------
Jim L. Turner
/s/ L. HOLLIS JONES President and Chief Operating Officer March 28, 1997
- ---------------------------------------
L. Hollis Jones
/s/ DARRON K. ASH Vice President, Chief Financial Officer and March 28, 1997
- --------------------------------------- Principal Accounting Officer
Darron K. Ash
16
18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and
Board of Directors of
The Morningstar Group Inc.:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements of The Morningstar Group Inc.,
and subsidiaries included in the Annual Report to Stockholders incorporated by
reference in this Form 10-K and have issued our report thereon dated February
10, 1997. Our audits were made for the purpose of forming an opinion on those
statements taken as a whole. The schedule listed in the Index to Financial
Statement Schedules is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Dallas, Texas,
February 10, 1997
17
19
SCHEDULE II
THE MORNINGSTAR GROUP INC. AND SUBSIDIARIES
ALLOWANCE FOR DOUBTFUL ACCOUNTS
-------------------------------
(Dollars in Thousands)
Deductions Balance at
Beginning Charged to From End of
Period of Period Expense Reserves Acquisitions Period
------ --------- ------- -------- ------------ ------
Year Ended December 31, 1996 ......... $1,595 $3,681 $(165) $1,565 $6,676
Year Ended December 31, 1995 ......... 1,495 695 (595) -- 1,595
Year Ended December 31, 1994 ......... 974 622 (101) -- 1,495
18
20
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
3(a) -- Restated Certificate of Incorporation of
the Company. (Incorporated by reference to
Exhibit 3(a) to the Registrant's Annual
Report on Form 10-K of the Registrant for
the fiscal year ended December 31, 1992.)*
3(b) -- Amended and Restated By-laws of the
Company. (Incorporated by reference to
Exhibit 3(b) to the Registrant's Annual
Report on Form 10-K of the Registrant for
the fiscal year ended December 31, 1992.)*
4(a) -- Stockholders' Agreement dated February
5, 1992 among the Company and certain
stockholders. (Incorporated by reference to
Exhibit 4(d) to the Registrant's Annual
Report on Form 10-K of the Registrant for
the fiscal year ended December 31, 1992.)*
10(a) -- Dairy Products Purchase Agreement dated
April 1, 1988, between the Company and
Southland (without exhibits). (Incorporated
by reference to Exhibit 10(a) to the
Registrant's Registration Statement on Form
S-1, as amended, registration No.
33-21790.)*
10(b) -- Employees' Savings and Profit Sharing
Plan dated April 1, 1988. (Incorporated by
reference to Exhibit 10(g) to the
Registrant's Annual Report on Form 10-K of
the Registrant for the fiscal year ended
December 31, 1988.)*
10(c) -- MorningStar Foods, Inc. 1991 Incentive
and Nonstatutory Stock Option Plan.**
10(d) -- The Morningstar Group Inc. 1992
Incentive and Nonstatutory Option Plan.**
10(e) -- Licensing Agreement to produce Lactaid
Brand Lactose Reduced Milk (Confidential
treatment has been granted with respect to
portions of this exhibit).**
21
Exhibit
Number Description
------ -----------
10(f) -- Amendment No. 2 to Lactaid Licensing
Agreement and to Distribution Agreement
(Confidential treatment has been granted
with respect to portions of this
exhibit).***
10(g) -- Agreement dated June 1, 1993 between
McNeil Consumer Products Company, a
division of McNeil - PPC, Inc. and The
Morningstar Group Inc. (Confidential
treatment has been granted with respect to
portions of this exhibit). (Incorporated by
reference to Exhibit 10(a) to the
Registrant's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1993.)*
10(h) -- Letter Agreement dated June 1, 1993
between McNeil Consumer Products Company, a
division of McNeil - PPC, Inc. and The
Morningstar Group Inc. and Avoset Food
Corporation. (Confidential treatment has
been granted with respect to portions of
this exhibit). (Incorporated by reference
to Exhibit 10(b) to the Registrant's
Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993.)*
10(i) -- Agreement and Plan of Merger dated
February 17, 1994 by and among Engles Dairy
Acquisition, Inc., Velda Farms Inc. and The
Morningstar Group Inc.****
10(j) -- Form of Dairy Products Supply Agreement
by and among The Morningstar Group Inc.,
its named subsidiaries and Velda Farms
Inc.****
10(k) -- The Morningstar Group Inc. Employees
Savings and Profit Sharing Plan, revised
effective April 1, 1988.****
10(l) -- License agreement entered into as of
October 1, 1994 between The Morningstar
Group Inc. and AgriFoods International
Cooperative LTD. (Confidential treatment
has been granted with respect to portions
of this exhibit).****
10(m) -- The Morningstar Group Inc. 1994
Incentive and Nonstatutory Stock Option
Plan. (Incorporated by reference to Exhibit
4.2 to the Registration Statement on Form
S-8 (Registration No. 33-53975) filed by
the Registrant on June 6, 1994.)*
10(n) -- Stock Option Agreement dated as of April
14, 1994 by and between The Morningstar
Group Inc. and C. Dean Metropoulos.
(Incorporated by reference to Exhibit 4.3
to the Registration Statement on Form S-8
(Registration No. 33-53975) filed by the
Registrant on June 6, 1994.)*
10(o) -- The Morningstar Group Inc. 1996 Director
Stock Option Plan.#
10(p) -- Amendment No. 1 to The Morningstar Group
Inc. 1994 Incentive and Nonstatutory Stock
Option Plan.#
10(q) -- Employment Agreement dated as of
October 1, 1995 by and between The
Morningstar Group Inc. and Michael J.
Cramer.#
22
Exhibit
Number Description
------ -----------
10(r) -- Change-in-Control Arrangement dated as
of September 18, 1996 by and between The
Morningstar Group Inc. and Darron K. Ash.#
10(s) -- Employment Agreement dated as of October
1, 1996 by and between The Morningstar
Group Inc. and C. Dean Metropoulos.
(Incorporated by reference to Exhibit 10.1
to the Current Report on Form 8-K filed
with the Securities and Exchange Commission
on December 18, 1996.)*
10(t) -- Change-in-Control Arrangement dated as
of October 14, 1996 by and between The
Morningstar Group Inc. and Joseph B.
Armes.#
10(u) -- Severance Arrangement by and between The
Morningstar Group Inc. and L. Hollis
Jones.#
10(v) -- Credit Agreement dated as of December 2,
1996 by and among The Morningstar Group
Inc., NationsBank of Texas, N.A. and the
lenders named therein. (Incorporated by
reference to Exhibit 2.2 to the Current
Report on Form 8-K filed with the
Securities and Exchange Commission on
December 18, 1996.)*
10(w) -- Stock Purchase Agreement dated as of
October 20, 1996 by and among Presto Food
Products, Inc., the shareholders of Presto
Food Products, Inc. signatory thereto and
The Morningstar Group Inc. (Incorporated by
reference to Exhibit 2.1 to the Current
Report on Form 8-K filed with the
Securities and Exchange Commission on
December 18, 1996.)*
13(a) -- The Morningstar Group Inc. Annual Report
to Stockholders for the year ended December
31, 1996 (except for the pages and
information thereof expressly incorporated
by reference in this Form 10-K, the annual
report is provided solely for the
information of the Securities and Exchange
Commission and is not to be deemed "filed"
as part of this Form 10-K).#
23
Exhibit
Number Description
------ -----------
21 -- Subsidiaries.#
23.1 -- Consent of Arthur Andersen LLP.#
27 -- Financial Data Schedule.#
(b) Reports on Form 8-K
Current Report on Form 8-K dated as of December 3, 1996
regarding the acquisition of Presto Food Products, Inc.
- ------------------------
* Incorporated by reference as indicated.
** Incorporated by reference to the corresponding exhibit to the
Registration Statement on Form S-1 (Registration No. 33-45805)
filed by the Registrant on February 19, 1992.
*** Incorporated by reference to the corresponding exhibit to the
Registration Statement on Form S-1 (Registration No. 33-45805), as
Amended by the Registrant on April 22, 1992.
**** Incorporated by reference to the corresponding exhibit to the
Registrant's Annual Report on Form 10-K of the Registrant for the
year ended December 31, 1994.
# Filed herewith.