AURORA FOODS INC /DE/, 424B3, 1998-07-30

AURORA FOODS INC /DE/
424B3, 1998-07-30
GRAIN MILL PRODUCTS

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<PAGE>
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-59531

PROSPECTUS

AURORA FOODS INC.

OFFER TO EXCHANGE
8 3/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2008
FOR ALL OUTSTANDING 8 3/4% SENIOR SUBORDINATED NOTES DUE 2008

THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON AUGUST 28, 1998, UNLESS EXTENDED
---------------------

Aurora Foods Inc., a Delaware corporation (the "Company"), hereby offers,
upon the terms and subject to conditions set forth in this Prospectus (the
"Prospectus") and the accompanying Letter of Transmittal (the "Letter of
Transmittal"; together with the Prospectus, the "Exchange Offer"), to exchange
up to an aggregate principal amount of $200,000,000 of its 8 3/4% Series B
Senior Subordinated Notes due 2008 (the "New Notes") for up to an aggregate
principal amount of $200,000,000 of its outstanding 8 3/4% Senior Subordinated
Notes due 2008 (the "Old Notes"). The proceeds from the issuance of the Old
Notes were used to pay a portion of the outstanding indebtedness under the
Aurora Senior Bank Facilities (as defined) and to pay related fees and expenses.
The terms of the New Notes are identical in all material respects to those of
the Old Notes, except for certain transfer restrictions, registration rights and
liquidated damages relating to the Old Notes. The New Notes will be issued
pursuant to, and entitled to the benefits of, the Indenture (as defined)
governing the Old Notes. The New Notes and the Old Notes are sometimes referred
to collectively as the "Notes."

Interest on the New Notes is payable semi-annually on January 1 and July 1
of each year, commencing on January 1, 1999. The New Notes will mature on July
1, 2008. Except as described below, the Company may not redeem the New Notes
prior to July 1, 2003. On or after such date, the Company may redeem the New
Notes, in whole or in part, at any time at the redemption prices set forth
herein, together with accrued and unpaid interest, if any, to the date of
redemption. In addition, at any time and from time to time on or prior to July
1, 2001, the Company may, subject to certain requirements, redeem up to $70.0
million of the aggregate principal amount of the Notes with the cash proceeds
received from one or more Subsequent Equity Offerings (as defined) at a
redemption price equal to 108.75% of the principal amount to be redeemed,
together with accrued and unpaid interest, if any, to the date of redemption,
provided that at least $130.0 million of the aggregate principal amount of the
Notes remain outstanding immediately after each such redemption. The Notes will
not be subject to any sinking fund requirement. Upon the occurrence of a Change
of Control (as defined), (i) the Company will have the option, at any time on or
prior to July 1, 2003, to redeem the New Notes in whole but not in part at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium (as defined) plus accrued and unpaid interest to the date of
redemption, and (ii) if the Company does not so redeem the New Notes or if such
Change of Control occurs after July 1, 2003, the Company will be required to
make an offer to repurchase the New Notes at a price equal to 101% of the
principal amount thereof, together with accrued and unpaid interest, if any, to
the date of repurchase. See "Description of Notes -- Optional Redemption".

The New Notes will be unsecured and will be subordinated to all existing and
future Senior Indebtedness (as defined) of the Company and will be effectively
subordinated to all obligations of any subsidiaries of the Company as may exist
from time to time. On the date of issuance of the New Notes, the Company will
not have any subsidiaries; however neither the Existing Indentures (as defined)
nor the Indenture will restrict the ability of the Company to create, acquire or
capitalize subsidiaries in the future. The New Notes will rank PARI PASSU with
the Existing Notes (as defined) and with any future Senior Subordinated
Indebtedness (as defined) of the Company and will rank senior to all other
subordinated indebtedness of the Company. As of March 28, 1998, on a pro forma
basis after giving effect to the Equity Offerings (as defined) and Refinancings
(as defined), the Company would have had $306.8 million of Senior Indebtedness
outstanding (excluding unused revolving credit commitments of $93.2 million) and
the Company would have had $202.4 million of Senior Subordinated Indebtedness
outstanding other than the Notes. See "Description of Notes -- Ranking".

(CONTINUED ON NEXT PAGE)
------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
<PAGE>
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------

THE DATE OF THIS PROSPECTUS IS JULY 29, 1998.
<PAGE>
(CONTINUED FROM COVER)

The Old Notes were originally issued and sold on July 1, 1998 (the "Issue
Date") in a transaction not registered under the Securities Act of 1933, as
amended (the "Securities Act"), in reliance upon the exemptions provided in Rule
144A and Regulation S under the Securities Act. Accordingly, the Old Notes may
not be reoffered, resold or otherwise pledged, hypothecated or transferred in
the United States unless so registered or unless an applicable exemption from
the registration requirements of the Securities Act is available.

The Company will accept for exchange any and all Old Notes which are
properly tendered in the Exchange Offer prior to 5:00 p.m., New York City time,
on August 28, 1998, unless extended by the Company in its sole discretion (the
"Expiration Date"). The Expiration Date will not in any event be extended to a
date later than September 4, 1998. Tenders of Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time, on the Expiration Date. In the
event the Company terminates the Exchange Offer and does not accept for exchange
any Old Notes with respect to the Exchange Offer, the Company will promptly
return the Old Notes to the holders thereof. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered for
exchange, but is otherwise subject to certain customary conditions. The Old
Notes may be tendered only in integral multiples of $1,000.

The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company contained in the Exchange and Registration Rights
Agreement dated as of July 1, 1998 (the "Exchange and Registration Rights
Agreement") by and between the Company and Chase Securities Inc., Goldman Sachs
& Co. and NatWest Capital Markets Limited, as initial purchasers (each an
"Initial Purchaser" and collectively, the "Initial Purchasers"), with respect to
the initial sale of the Old Notes. Based on interpretations by the staff of the
Securities and Exchange Commission (the "Commission") rendered to third parties
in similar transactions, the New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold and otherwise
transferred by respective holders thereof (other than any such holder which is
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that the New Notes are acquired in
the ordinary course of such holder's business and such holder has no arrangement
with any person to participate in the distribution of such New Notes and is not
engaged in and does not intend to engage in a distribution of the New Notes.
Only broker-dealers who acquired the Old Notes as a result of market-making
activities or other trading activities may participate in the Exchange Offer.
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of the New Notes received in
exchange for Old Notes if such New Notes were acquired by such broker-dealer as
a result of market-making activities or other trading activities. The Company
has agreed that, for a period of 180 days after the Expiration Date, it will
make this Prospectus available to any broker-dealer for use in connection with
any such resale. See "Plan of Distribution".

There has not previously been any public market for the New Notes. The
Company does not intend to list the New Notes on any securities exchange or to
seek approval for quotation through any automated quotation system. There can be
no assurance that an active market for the New Notes will develop. To the extent
that an active market for the New Notes does develop, the market value of the
New Notes will depend on market conditions (such as yields on alternative
investments), general economic conditions, the Company's financial condition,
and other factors. Such conditions might cause the New Notes, to the extent that
they are actively traded, to trade at a significant discount from face value.
See "Risk Factors -- Absence of Public Market".

ii
<PAGE>
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to pay the expenses incident to the Exchange Offer.

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THE PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE NEW NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION TO SUCH PERSON.
------------------------

Until October 27, 1998 (90 days after commencement of this offering), all
dealers effecting transactions in the New Notes, whether or not participating in
this offering, may be required to deliver a Prospectus.

AVAILABLE INFORMATION

The Company has filed with the Commission a registration statement on Form
S-4 (the "Registration Statement") under the Securities Act, with respect to the
New Notes. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement, certain items of which are contained in schedules and exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. Items of information omitted from this Prospectus but contained in
the Registration Statement may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at the following regional offices of
the Commission: Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and 7 World Trade Center, 13th Floor, New York, New
York 10048. Copies of such material can be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549 at prescribed rates. Electronic filings filed through the
Commission's Electronic Data Gathering, Analysis and Retrieval system ("EDGAR")
are publicly available through the Commission's home page on the Internet at
http://www.sec.gov.

The Company is subject to the periodic reporting and other informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). In the event that the Company ceases to be subject to the informational
requirements of the Exchange Act, the Company has agreed to file with the
Commission and provide to the Trustee and the holders of Notes annual reports
and the information, documents and other reports otherwise required pursuant to
Sections 13 and 15(d) of the Exchange Act. See "Description of Notes -- Certain
Covenants -- SEC Reports".

DUNCAN HINES-Registered Trademark-, LOG CABIN-Registered Trademark-, MRS.
BUTTERWORTH'S-Registered Trademark-, AUNT JEMIMA-Registered Trademark-, COUNTRY
KITCHEN-Registered Trademark-, WIGWAM-Registered Trademark-, VAN DE
KAMP'S-Registered Trademark-, MRS. PAUL'S-Registered Trademark-, and
CELESTE-Registered Trademark- are registered trademarks of the Company. The Aunt
Jemima trademark is licensed from The Quaker Oats Company ("Quaker Oats"). This
Prospectus also includes trademarks of companies other than the Company.

iii
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS AND
NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. AS USED IN THIS
PROSPECTUS, THE "COMPANY" REFERS TO AURORA FOODS INC., A DELAWARE CORPORATION,
AND ITS PREDECESSORS. EXCEPT AS OTHERWISE INDICATED, ALL REFERENCES TO CATEGORY
AND SEGMENT SALES AND SHARE PERCENTAGES AND POSITIONS ARE BASED ON U.S. RETAIL
SUPERMARKET SALES DOLLARS FOR THE 52-WEEK PERIOD IN THE CASE OF SYRUPS, ENDED
APRIL 18, 1998, AND IN THE CASE OF BAKING MIXES, ENDED APRIL 11, 1998, AS
GATHERED AND PUBLISHED BY A.C. NIELSEN COMPANY ("NIELSEN") AND, IN THE CASE OF
FROZEN CONVENIENCE FOODS, ENDED APRIL 19, 1998, AS GATHERED AND PUBLISHED BY
INFORMATION RESOURCES INCORPORATED ("IRI").

THE COMPANY

The Company is a leading producer and marketer of premium branded food
products including DUNCAN HINES baking mixes, LOG CABIN and MRS. BUTTERWORTH'S
syrup, VAN DE KAMP'S and MRS. PAUL'S frozen seafood, AUNT JEMIMA frozen
breakfast products and CELESTE frozen pizza. The Company's brands are among the
most widely recognized food brands in the United States, have leading market
positions and participate in some of the fastest growing categories in the
supermarket. LOG CABIN and MRS. BUTTERWORTH'S have a leading 34.0% share of the
syrup category, VAN DE KAMP'S and MRS. PAUL'S have a leading 28.1% share of the
frozen seafood category, DUNCAN HINES is the #2 cake mix with a 36.3% share and
CELESTE is the #3 brand of frozen pizza in the Northeast. In 1997, dollar sales
of frozen pizza, frozen seafood and frozen waffles grew at annual rates of 8.5%,
9.5% and 7.8%, respectively. For the year ended December 27, 1997, the Company's
pro forma net sales were $874.2 million and the Company's pro forma Adjusted
EBITDA was $154.6 million (see Note 1 to the "Unaudited Pro Forma Statement of
Operations for the year ended December 27, 1997").

The Company was formed by Dartford Partnership L.L.C. ("Dartford"), Fenway
Partners, Inc. and McCown De Leeuw & Co., Inc. ("MDC") to serve as a platform
upon which to build a leading branded grocery products company through both
strategic acquisitions and internal growth. The Company has been built through
six separate acquisitions over the last three years. The Company seeks to
acquire well-recognized brands which have become non-core businesses to their
corporate parents, but which retain strong brand equities and long-term growth
potential. The Company's objective is to revitalize the brands it acquires and
renew their growth by providing them with the strategic direction, dedicated
management and marketing focus they lacked under prior owners.

Under the direction of CEO Ian R. Wilson and Dartford, each of the brands
owned by the Company for more than one year has experienced significant growth.
The following table sets forth (i) the growth rates of the brands for the twelve
months prior to the date of acquisition, and (ii) the annual growth rate as
measured eighteen months after the date of acquisition, in each case based on
dollar sales data provided by IRI and Nielsen.

<TABLE>
<CAPTION>
DATE
OF GROWTH PRIOR GROWTH
BRAND PRIOR OWNER ACQUISITION TO ACQUISITION AFTER ACQUISITION
- --------------------- ----------------- ------------- --------------- -------------------
<S> <C> <C> <C> <C>
VAN DE KAMP'S Pillsbury Sept. 1995 -2.5% +5.0%
MRS. PAUL'S Campbell Soup May 1996 -9.2 +7.1
AUNT JEMIMA Quaker Oats July 1996 -8.9 +10.5
CELESTE Quaker Oats July 1996 -16.8 +8.6
MRS. BUTTERWORTH'S Unilever Dec. 1996 0.0 +3.1
LOG CABIN Kraft July 1997 -6.0 n/a
DUNCAN HINES Procter & Gamble Jan. 1998 -5.0 n/a
</TABLE>

The Company has renewed the growth of its brands by providing them with
experienced management, refocusing marketing support, reformulating and
repackaging outdated products, developing and launching new products and
expanding distribution. The Company has also realized significant cost savings
by consolidating and improving the efficiency of its manufacturing operations,
outsourcing the production of certain products and eliminating redundant
administrative functions. The Company believes that the growth exhibited by the
brands it acquired in 1995 and 1996, combined with expected growth from its most
recent acquisitions and additional cost savings opportunities, have positioned
it to achieve superior long-term sales and earnings growth.

1
<PAGE>
BUSINESS STRATEGY

The Company's objective is to continue to generate sales and earnings growth
by (i) sustaining the growth of the brands it acquired in 1995 and 1996, (ii)
achieving similar results for its recently acquired brands, and (iii) continuing
to acquire brands with strong equities and long-term growth potential. The
Company's strategy is to revitalize its brands, reduce costs and continue to
make strategic acquisitions.

REVITALIZE BRANDS. To revitalize the brands it has acquired and stimulate
growth, the Company (i) provides experienced management, (ii) refocuses
marketing support, (iii) reformulates and repackages outdated products, (iv)
develops and launches new products, and (v) expands distribution of its
products.

PROVIDE EXPERIENCED MANAGEMENT. The Company has assembled a dedicated
sales, marketing and administrative infrastructure by recruiting experienced
managers from a wide variety of food and consumer products companies. The
Company believes that it significantly improves the performance of its
brands by taking them out of large organizations where they have not been a
priority and providing them with experienced, dedicated management.

EXPAND DISTRIBUTION. The Company expands distribution of its products by
(i) improving the selection of its products on the shelf, (ii) increasing
penetration in established markets, (iii) broadening the geographic
distribution of its products, and (iv) improving its presence in selected
channels of distribution including club stores and foodservice.

REDUCE COSTS. The Company has reduced costs of the acquired businesses by
approximately $49.9 million since their respective acquisitions. To achieve
these cost reductions, the Company has (i) consolidated the manufacture of MRS.
PAUL'S frozen seafood products into the Van de Kamp's facilities, (ii)
outsourced the production of syrup, (iii) reduced fixed costs and improved the
efficiency of its manufacturing facilities, and (iv) eliminated redundant
administrative functions of the acquired businesses. The Company believes that
there are further opportunities to reduce costs, which include outsourcing the
production of baking mixes and further consolidating its brokerage and
administrative functions. No assurances can be given, however, that these cost
reductions can be realized.

MAKE STRATEGIC ACQUISITIONS. The Company has a proven track record of
successfully acquiring and integrating food businesses. The Company's
acquisition strategy is to acquire established, well-recognized food brands that
can leverage off of the infrastructure it has developed. The Company will
continue to look for opportunities where strong but non-core brands would
benefit from the renewed focus and experienced management it brings to its
acquisitions. Management believes that these opportunities will continue to
arise as a result of large food companies continuing their recent trend of
divesting non-core businesses.

2
<PAGE>
OWNERSHIP

Fenway Partners Capital Fund, L.P. and certain of its affiliates
(collectively, "Fenway") beneficially own 24.8%, affiliates of MDC beneficially
own 24.4%, Dartford beneficially owns 10.9%, and divisional management
beneficially owns 5.1% of the outstanding shares of the Company's common stock,
par value $.01 per share (the "Common Stock"). See "Principal Stockholders".

CONFLICTS OF INTEREST. MDC, Fenway and their professional staffs are not
restricted from acquiring or managing other companies in the food business,
including companies that may be competitive with the Company. In addition,
certain directors of the Company affiliated with Fenway or MDC also serve as
officers or directors of other portfolio companies of Fenway or MDC.

MANAGEMENT INCENTIVE PLANS

Certain officers and other employees of the Company are participants in
incentive plans sponsored by MBW Investors LLC and VDK Foods LLC whereby they
were given an opportunity to participate in the appreciation in value of Aurora
Foods Holdings Inc. ("Aurora") or VDK Holdings, Inc. ("VDK"). Amounts due under
the Aurora Plan (as defined) and the VDK Plan (as defined) became fully vested
on July 1, 1998 as a result of the completion of the sale by the Company and
certain of the Company's shareholders (the "Equity Offerings", collectively with
the Offering, the "Offerings") of 14,500,000 shares of the Company's Common
Stock and the final value of all classes of Management Units (as defined) were
determined prior to the closing of the Equity Offerings based on the initial
public offering price of the Common Stock. The sponsors of such plans will
satisfy the amounts due by distributing to the plans a fixed number of shares of
Common Stock of the Company, currently estimated at 7,742,210 shares in the
aggregate. There are 87 employees that are participants in such plans. After
giving effect to the completion of the Equity Offerings and after aggregating
the shares to be distributed under such plans with those shares already owned by
such employees, employees of the Company will own 16.0% of the outstanding
shares of Common Stock of the Company. For the quarter ended March 1998, Aurora
and VDK recorded $60.0 million and $69.0 million, respectively, of non-cash
incentive plan expense relating to those plans based on estimated valuations of
each company. No additional incentive plan expense will be recorded under the
plans after the completion of the Equity Offerings. See "Management--Aurora
Incentive Plan" and "--VDK Incentive Plan".

After giving effect to pro forma adjustments based on the completion of the
Equity Offerings (at a price of $21.00 per share) and the Refinancings, for the
quarter ended March 28, 1998, pro forma as adjusted net loss per share of $1.43
included $1.53 net loss per share related to the incentive plan expense.

All employees of the Company are eligible to participate in the Company's
1998 Incentive Plan (as defined). See "Management--Executive Compensation",
"--1998 Long Term Incentive Plan" and "-- 1998 Employee Stock Purchase Plan".

3
<PAGE>
THE EXCHANGE OFFER

The New Notes....... The forms and terms of the New Notes are identical in all
material respects to the terms of the Old Notes for which
they may be exchanged pursuant to the Exchange Offer,
except for certain transfer restrictions, registration
rights and liquidated damages provisions relating to the
Old Notes described below under "Description of Notes" and
"Old Notes Exchange and Registration Rights Agreement".

The Exchange The Company is offering to exchange up to $200,000,000
Offer............. aggregate principal amount of the New Notes for up to
$200,000,000 aggregate principal amount of Old Notes. Old
Notes may be exchanged only in integral multiples of
$1,000.

Expiration Date; The Exchange Offer will expire at 5:00 p.m., New York City
Withdrawal of time, on August 28, 1998, or such later date and time to
Tender............ which it is extended by the Company (the "Expiration
Date"). The tender of Old Notes pursuant to the Exchange
Offer may be withdrawn at any time prior to the Expiration
Date. The Expiration Date will not in any event be
extended to a date later than September 4, 1998. Any Old
Notes not accepted for exchange for any reason will be
returned without expense to the tendering holder thereof
as promptly as practicable after the expiration or
termination of the Exchange Offer.

Certain Conditions
to the Exchange
Offer............. The Exchange Offer is subject to customary conditions,
which may be waived by the Company. See "The Exchange
Offer -- Certain Conditions to the Exchange Offer".

Procedures for Each holder of Old Notes wishing to accept the Exchange
Tendering Old Offer must complete, sign and date the Letter of
Notes............. Transmittal, or a facsimile thereof, in accordance with
the instructions contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal, or such
facsimile, together with such Old Notes and any other
required documentation to the Exchange Agent at the
address set forth herein. By executing the Letter of
Transmittal, each holder will represent to the Company
that, among other things, (i) any New Notes to be received
by it will be acquired in the ordinary course of its
business, (ii) it has no arrangement with any person to
participate in the distribution of the New Notes and (iii)
it is not an "affiliate," as defined in Rule 405 of the
Securities Act, of the Company or, if it is an affiliate,
it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent
applicable. Each Holder whose Old Notes are held through
DTC and wishes to participate in the Exchange Offer may do
so through DTC's Automated Tender Offer Program ("ATOP")
by which each tendering participant will agree to be bound
by the Letter of Transmittal as though each Holder had
executed such Letter of Transmittal.

4
<PAGE>

<TABLE>
<S> <C>
Interest on the New Interest on the New Notes will accrue from the date of
Notes............. issuance (the "New Note Issue Date") at the rate of 8 3/4%
per annum, and will be payable semi-annually in arrears on
each January 1 and July 1, commencing on January 1, 1999.
Holders of the New Notes will also on January 1, 1999
receive an amount equal to the accrued interest on the Old
Notes. Interest on the Old Notes accepted for exchange
will cease to accrue upon issuance of the New Notes.

Special Procedures
for Beneficial
Owners............ Any beneficial owner whose Old Notes are registered in the
name of a broker, dealer, commercial bank, trust company
or other nominee and who wishes to tender such Old Notes
in the Exchange Offer should contact such registered
holder promptly and instruct such registered holder to
tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own
behalf, such owner must, prior to completing and executing
the Letter of Transmittal and delivering his Old Notes,
either make appropriate arrangements to register ownership
of the Old Notes in such owner's name or obtain a properly
completed bond power from the registered holder. The
transfer of registered ownership may take considerable
time and may not be able to be completed prior to the
Expiration Date.

Guaranteed Delivery Holders of Notes who wish to tender their Old Notes and
Procedure......... whose Old Notes are not immediately available or who
cannot deliver their Old Notes, the Letter of Transmittal
or any other documents required by the Letter of
Transmittal to the Exchange Agent, prior to the Expiration
Date, must tender their Old Notes according to the
guaranteed delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures".

Registration The Company has agreed to use its best efforts to
Requirements...... consummate on or prior to 165 days after the date of
original issuance of the Old Notes (the "Issue Date") the
registered Exchange Offer pursuant to which holders of the
Old Notes will be offered an opportunity to exchange their
Old Notes for the New Notes which will be issued without
legends restricting the transfer thereof. In the event
that applicable interpretations of the staff of the
Commission do not permit the Company to effect the
Exchange Offer or in certain other circumstances, the
Company has agreed to file a Shelf Registration Statement
covering resales of the Old Notes and to use its best
efforts to cause such Shelf Registration Statement to be
declared effective under the Securities Act and, subject
to certain exceptions, keep such Shelf Registration
Statement effective until two years after the Issue Date.
If the Company fails to consummate the Exchange Offer on
or prior to 165 days after the Issue Date or, in the event
that the Company is not in compliance with certain
obligations under the Exchange and Registration
</TABLE>

5
<PAGE>

<TABLE>
<S> <C>
Rights Agreement, the Company shall be obligated to pay
liquidated damages to holders of the Old Notes. See "Old
Notes Exchange and Registration Rights Agreement".

Certain Federal Tax
Considerations.... For a discussion of certain federal income tax
considerations relating to the exchange of the New Notes
for the Old Notes, see "Certain United States Federal Tax
Considerations".

Use of Proceeds..... There will be no proceeds to the Company from the exchange
of Notes pursuant to the Exchange Offer.

Exchange Agent...... Wilmington Trust Company is the Exchange Agent. The
address and telephone number of the Exchange Agent are set
forth in "The Exchange Offer -- Exchange Agent".
</TABLE>

TERMS OF THE NOTES

The form and terms of the New Notes are substantially the same as the form
and terms of the Old Notes except that the New Notes are registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof and will not contain the registration rights and liquidated damages
provisions relating to the Old Notes. See "Description of Notes" and "Old Notes
Exchange and Registration Rights Agreement".

RISK FACTORS

See "Risk Factors" for a discussion of certain factors that should be
considered by participants in the Exchange Offer.

6
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

The following table sets forth summary historical and unaudited pro forma
financial data of the Company for the periods ended and as of the dates
indicated. Pro forma as adjusted net loss per share for the three months ended
March 28, 1998 of $1.43 per share included $1.53 net loss per share related to
the non-cash incentive plan expense. This expense relates to incentive plans
(the Aurora Plan and the VDK Plan) for which the final value was determined and
all rights vested as a result of the completion of the Equity Offerings.
Therefore, no additional incentive plan expense will be recorded under the plans
after the completion of the Equity Offerings.

The summary historical statement of operations data for the year ended
December 27, 1997 and the summary historical balance sheet data as of December
27, 1997 are derived from audited financial statements of the Company included
elsewhere in this Prospectus. The summary historical statement of operations
data for the three months ended March 28, 1998 and the summary historical
balance sheet data as of March 28, 1998 are derived from the unaudited financial
statements of the Company included elsewhere in this Prospectus which, in the
opinion of management, include all normal recurring adjustments. The summary
unaudited pro forma and pro forma as adjusted statement of operations data
reflect adjustments, where appropriate, to the historical financial data of the
Company to give effect to (i) the acquisition of the LOG CABIN business, the
DUNCAN HINES business and VDK, (ii) the Desserts Sale (as defined), (iii) the
Equity Offerings and (iv) the Refinancings, as if each had occurred on January
1, 1997. The summary unaudited pro forma and pro forma as adjusted balance sheet
data reflect adjustments, where appropriate, to the historical financial data
for the Company to give effect to (i) the acquisition of VDK, (ii) the Desserts
Sale, (iii) the Equity Offerings and (iv) the Refinancings as if each had
occurred on March 28, 1998. This information should be read in conjunction with
the Company's unaudited pro forma and historical financial statements, and
related notes thereto, each appearing elsewhere in this Prospectus and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".

<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 27, 1997 March 28, 1998
----------------------------------- -----------------------------------
Pro Forma Pro Forma
(in thousands, except per share data) Actual Pro Forma As Adjusted Actual Pro Forma As Adjusted
--------- ----------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................ $ 143,020 $ 874,231 $ 874,231 $ 89,385 $ 240,337 $ 240,337
Cost of goods sold....................... 45,729 373,101 373,101 37,734 95,111 95,111
--------- ----------- ----------- --------- ----------- -----------
Gross profit........................... 97,291 501,130 501,130 51,651 145,226 145,226
--------- ----------- ----------- --------- ----------- -----------
Brokerage, distribution and marketing
expenses:
Brokerage and distribution............. 17,096 88,188 88,188 9,355 23,544 23,544
Trade promotions....................... 26,075 172,487 172,487 15,568 57,737 57,737
Consumer marketing..................... 15,142 65,717 65,717 7,997 21,057 21,057
--------- ----------- ----------- --------- ----------- -----------
Total brokerage, distribution and
marketing expenses..................... 58,313 326,392 326,392 32,920 102,338 102,338
Amortization of goodwill and other
intangibles............................ 5,938 33,424 33,424 4,597 8,356 8,356
Selling, general and administrative
expenses............................... 5,229 34,427 34,427 2,346 7,084 7,084
Incentive plan expense................... 2,300 2,300 2,300 60,000 129,000 121,323(1)
Transition expenses...................... 2,113 3,405 3,405 1,926 1,926 1,926
--------- ----------- ----------- --------- ----------- -----------
Total operating expenses................. 73,893 399,948 399,948 101,789 248,704 241,027
--------- ----------- ----------- --------- ----------- -----------
Operating income (loss)................ 23,398 101,182 101,182 (50,138) (103,478) (95,801)
Interest income.......................... (151) (515) (515) (223) (253) (253)
Interest expense......................... 18,393 84,502 58,748 12,837 21,126 14,687
Amortization of deferred financing
expense................................ 3,059 4,575 1,491 513 1,144 373
Other bank and financing expenses........ 83 304 304 51 95 95
--------- ----------- ----------- --------- ----------- -----------
Income (loss) before income taxes and
extraordinary item................... 2,014 12,316 41,154 (63,316) (125,590) (110,703)
Income tax expense (benefit)............. 779 4,865 16,256 (360) (21,393) (14,843)
--------- ----------- ----------- --------- ----------- -----------
Net income (loss) before extraordinary
item................................. $ 1,235 $ 7,451 $ 24,898 $ (62,956) $(104,197) $ (95,860)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Extraordinary loss on early
extinguishment of debt................. -- (1,876)
--------- ---------
Net income (loss)........................ $ 1,235 $ (64,832)
--------- ---------
--------- ---------
</TABLE>

7
<PAGE>

BALANCE SHEET DATA (END OF PERIOD):
Working capital (excluding current
portion of long-term debt)........... $ 6,524 $ 29,164 $ 54,548 $ 54,548
Total assets........................... 372,739 869,551 1,412,092 1,413,497
Long-term debt (including current
portion)............................. 279,919 652,377 937,136(6) 709,192
Stockholders' equity................... 65,223 154,029 337,498 583,975
</TABLE>

- ------------------------------

(1) Pro forma as adjusted incentive plan expense represents the expense incurred
under the VDK Plan and the Aurora Plan, which are described elsewhere in
this Prospectus. See "Management--VDK Incentive Plan" and
"Management--Aurora Incentive Plan".

(2) Pro forma basic and diluted earnings per share and the pro forma weighted
average number of shares outstanding gives effect to the acquisitions as
described in the notes to the Unaudited Pro Forma Financial Information.

(3) Pro forma as adjusted basic and diluted earnings per share and the pro forma
as adjusted weighted average number of shares outstanding gives effect to
the acquisitions and the Equity Offerings as described in the notes to the
Unaudited Pro Forma Financial Information.

(4) Adjusted EBITDA is defined as net income (loss) before interest expense,
taxes, depreciation, amortization, extraordinary items, incentive plan
expense (see (1) above) and transition expenses and is presented because it
is commonly used by certain investors and analysts to analyze and compare
companies on the basis of operating performance and to determine a company's
ability to service and incur debt. Adjusted EBITDA should not be considered
in isolation from or as a substitute for net income, cash flows from
operating activities or other consolidated income or cash flow statement
data prepared in accordance with generally accepted accounting principles or
as a measure of profitability or liquidity.

(5) Adjusted EBITDA of $154.6 million and $39.1 million for the year ended
December 27, 1997 and for the three months ended March 28, 1998,
respectively, would increase to $172.8 million and $40.8 million if cost
savings of $18.2 million and $1.7 million, respectively, were included. Cost
savings primarily reflect savings pursuant to long-term contract
manufacturing agreements the Company has entered into for its syrup and
baking mix products and the elimination of manufacturing and administrative
expenses allocated from prior owners. Cost savings represent an estimate and
there can be no assurance the cost savings will be realized. Actual results
could differ materially from those presented.

(6) Includes $15.0 million of revolving debt outstanding under the VDK Senior
Bank Facilities.

(7) Aurora Foods Inc., which was formed shortly before the Equity Offerings, is
the successor to Aurora. As such, Aurora Foods Inc. will assume the
historical financial statements of Aurora as its historical financial
statements. Therefore, the capital structure of Aurora Foods Inc. must be
applied to the historical capital structure and per share information of
Aurora. Immediately prior to the Equity Offerings, Aurora Foods Inc. had
54,090,628 shares of Common Stock outstanding. Based on these outstanding
shares and prior capital transactions of Aurora, outstanding shares as of
previous dates have been revised to be on an Aurora Foods Inc.

8
<PAGE>
capital structure basis. Earnings per share data as of previous dates have
been recomputed based on the revised outstanding share amounts.

(8) The ratio of Adjusted EBITDA to interest expense for the year ended December
27, 1997 and for the three months ended March 28, 1998 would increase to
3.0x and 2.8x if cost savings of $18.2 million and $1.7 million,
respectively, were included. Cost savings primarily reflect savings pursuant
to long term contract manufacturing agreements the Company has entered into
for its syrup and baking mix products and the elimination of manufacturing
and administrative expenses allocated from prior owners. Cost savings
represent an estimate and there can be no assurance the cost savings will be
realized. Actual results could differ materially from those presented.

(9) For purposes of determining the ratio of earnings to fixed charges, earnings
are defined as net income before provision for income taxes, plus fixed
charges. Fixed charges consist of interest expense on all indebtedness,
amortization of deferred financing fees and one-third of rental expense on
operating leases, representing that portion of rental expense deemed by the
Company to be attributable to interest.

(10) For the three months ended March 28, 1998, fixed charges exceeded earnings
before fixed charges by $110.7 million.

9
<PAGE>
RISK FACTORS

Prospective investors should carefully consider the following factors in
addition to the other information set forth in this Prospectus before
participating in the Exchange Offer.

SUBSTANTIAL LEVERAGE

Following the consummation of the Offering, the Company remains
significantly leveraged. At March 28, 1998, on a pro forma basis after giving
effect to the Equity Offerings and the Refinancings, the Company would have had
outstanding $709.2 million in aggregate principal amount of indebtedness
(excluding trade payables and other liabilities and unused revolving credit
commitments of $93.2 million). The degree to which the Company is leveraged
could have important consequences to holders of the Notes, including the
following: (i) the Company will have significant cash interest expense and
principal repayment obligations with respect to outstanding indebtedness,
including the Senior Credit Facilities, the Company's 9 7/8% Series B Senior
Subordinated Notes due 2007 (the "Aurora Series B Notes"), the Company's 9 7/8
Series D Senior Subordinated Notes due 2007 (the "Aurora Series D Notes",
collectively the "Aurora Notes"), and the Notes; (ii) the Company could be
vulnerable to changes in general economic conditions or increases in prevailing
interest rates; (iii) the Company's ability to obtain additional financing for
working capital, capital expenditures, acquisitions, general corporate purposes
or other purposes may be impaired; (iv) the Company may be substantially more
leveraged than certain of its competitors, which may place the Company at a
competitive disadvantage; (v) all of the indebtedness outstanding under the
Senior Credit Facilities will be secured by substantially all the assets of the
Company and matures prior to the maturity of the Notes; and (vi) the Company's
substantial degree of leverage may limit its flexibility to adjust to changing
market conditions, reduce its ability to withstand competitive pressures and
make it more vulnerable to a downturn in general economic conditions or its
business. See "Description of Other Indebtedness--Senior Credit Facilities",
"Description of Other Indebtedness--Existing Notes" and "Description of Notes".

The Company believes that its cash flow from operations will be sufficient
to meet its payment obligations under the Senior Credit Facilities and other
operational requirements. If the Company is unable to generate sufficient cash
flow from operations, it may be required to delay or forego its acquisition
strategy, reduce or delay planned product improvement initiatives or refinance
all or a portion of amounts outstanding under the Senior Credit Facilities at or
prior to their maturity, which is prior to the maturity of the Notes. Other
potential measures to raise cash include the sale of assets or equity. However,
the Company's ability to raise funds by selling assets is restricted by the
Senior Credit Facilities, and its ability to effect equity financings is
dependent on results of operations and market conditions. In the event that the
Company is unable to refinance such indebtedness or raise funds through asset
sales, sales of equity or otherwise, its ability to pay principal of, and
interest on, the Notes would be adversely affected.

RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS

The Indenture restricts, and the indenture (the "Series B Indenture")
pursuant to which the Series B Notes were issued and the indenture (the "Series
D Indenture", collectively with the Series B Indenture, the "Aurora Indentures")
pursuant to which the Series D Notes were issued, restrict, among other things,
the Company's ability to incur additional indebtedness, incur liens, pay
dividends or make certain other restricted payments, enter into certain
transactions with affiliates, impose restrictions on the ability of a subsidiary
to pay dividends or make certain payments to the Company, merge or consolidate
with any other person or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of the assets of the Company. In addition,
the Senior Credit Facilities contain other and more restrictive covenants and
prohibit the Company from prepaying its other indebtedness (including the
Notes). See "Description of Notes--Certain Covenants", "Description of Other
Indebtedness--Senior Credit Facilities" and "Description of Other
Indebtedness--Existing Notes". The Senior Credit Facilities require the Company
to maintain specified financial ratios and satisfy financial condition tests.
The Company's ability

10
<PAGE>
to meet those financial ratios and tests can be affected by events beyond its
control, and there can be no assurance that the Company will meet those tests. A
breach of any of these covenants could result in a default under the Senior
Credit Facilities and/or the Indenture and the Aurora Indentures. Upon the
occurrence of an event of default under the Senior Credit Facilities, the
lenders could elect to declare all amounts outstanding under the Senior Credit
Facilities, together with accrued interest, to be immediately due and payable.
If the Company were unable to repay those amounts, the lenders could proceed
against the collateral granted to them to secure that indebtedness. If the
lenders under the Senior Credit Facilities accelerate the payment of the
indebtedness, there can be no assurance that the assets of the Company would be
sufficient to repay in full such indebtedness and the other indebtedness of the
Company, including the Notes and the Existing Notes. See "Description of Other
Indebtedness--Senior Credit Facilities".

SUBORDINATION; ASSET ENCUMBRANCES

The Notes are subordinated in right of payment to all existing and future
Senior Indebtedness, including the principal of (and premium, if any) and
interest on and all other amounts due on or payable in connection with Senior
Indebtedness. As of March 28, 1998, on a pro forma basis after giving effect to
the Equity Offerings and the Refinancings, there would have been $306.8 million
of Senior Indebtedness outstanding (excluding unused revolving commitments of
$93.2 million). By reason of such subordination, in the event of the insolvency,
liquidation, reorganization, dissolution or other winding-up of the Company or
upon a default in payment with respect to, or the acceleration of, any Senior
Indebtedness, the holders of such Senior Indebtedness and any other creditors
who are holders of Senior Indebtedness and creditors of subsidiaries that are
not guarantors of the Notes must be paid in full before the Holders of the Notes
may be paid. The Company does not currently have any subsidiaries, however,
neither the Existing Indentures nor the Indenture restrict the ability of the
Company to create, acquire or capitalize subsidiaries in the future. The
Indenture permits subsidiaries of the Company to incur debt provided certain
conditions are met and such subsidiaries guarantee the Notes. The Notes rank
PARI PASSU with the Existing Notes, and Holders of the Notes will share ratably
with holders of the Existing Notes in any proceeds distributed in connection
with any insolvency, liquidation, reorganization, dissolution or other
winding-up of the Company. If the Company incurs any additional PARI PASSU debt,
the holders of such debt would be entitled to share ratably with the Holders of
the Notes and the holders of the Existing Notes in any proceeds distributed in
connection with any insolvency, liquidation, reorganization, dissolution or
other winding-up of the Company. This may have the effect of reducing the amount
of proceeds paid to Holders of the Notes. In addition, no payments may be made
with respect to the principal of (and premium, if any) or interest on the Notes
if a payment default exists with respect to Senior Indebtedness and, under
certain circumstances, no payments may be made with respect to the principal of
(and premium, if any) or interest on the Notes for a period of up to 179 days if
a non-payment default exists with respect to Senior Indebtedness. See
"Description of Notes".

The Company has granted the lenders under the Senior Credit Facilities
security interests in substantially all of the current and future assets of the
Company, including a pledge of all of the issued and outstanding shares of
capital stock of the Company's future domestic subsidiaries. In the event of a
default on such indebtedness (whether as a result of the failure to comply with
a payment or other covenant, a cross-default, or otherwise), the parties granted
such security interests will have a prior secured claim on the capital stock of
the Company and the assets of the Company and any guarantors under the Senior
Credit Facilities. If such parties should attempt to foreclose on their
collateral, the Company's financial condition and the value of the Notes would
be materially adversely affected. See "Description of Other Indebtedness--Senior
Credit Facilities".

11
<PAGE>
LIMITATION ON CHANGE OF CONTROL

The Indenture requires the Company, in the event of a Change of Control in
respect of which it has not elected to redeem the Notes, to repurchase any Notes
that holders thereof desire to have repurchased at 101% of the principal amount
thereof, plus accrued interest to the Change of Control repurchase date. See
"Description of Notes -- Change of Control".

The Change of Control purchase feature of the Notes may in certain
circumstances discourage or make more difficult a sale or takeover of the
Company. There can be no assurance that the Company will have funds available to
redeem or repurchase the Notes and the Existing Notes upon the occurrence of a
Change of Control. In particular, a Change of Control may cause an acceleration
of the Senior Credit Facilities and other indebtedness, if any, of the Company,
in which case such indebtedness would be required to be repaid in full before
redemption or repurchase of the Notes. See " Description of Notes -- Change of
Control" and "Description of Other Indebtedness--Senior Credit Facilities". The
occurrence of the events that would constitute a Change of Control would also
constitute a "Change of Control" under the Existing Indentures. In such a case,
the Company would be subject to the same obligations with respect to the
Existing Notes as the Company would be subject to with respect to the Notes. The
inability to repay such indebtedness, if accelerated, or to redeem or repurchase
all of the Notes and the Existing Notes upon the occurrence of a Change in
Control would constitute an event of default under the Indenture and the
Existing Indentures, respectively.

IMPLEMENTATION OF BUSINESS STRATEGY; LIMITED OPERATING HISTORY; STRATEGIC
ACQUISITIONS

The Company intends to pursue a business strategy of increasing sales and
earnings through revitalizing its brands and achieving operational cost savings.
No assurance can be given that the Company will be successful in implementing
this strategy. See "Business--Competition" and "Business". Van de Kamp's, Inc.
was incorporated in July 1995 and Aurora Foods was incorporated in December
1996. Accordingly, investors have a limited operating history upon which to base
an evaluation of the Company's performance and an investment in the Company.
Moreover, certain of the financial statements included herein represent the
operations of the various Acquired Businesses (as defined) by persons other than
the Company's management and may not be comparable with current operations or
indicative of future performance.

The Company also intends to pursue a business strategy of growth through
strategic acquisitions. The Company cannot predict whether it will be successful
in pursuing any acquisition opportunities or whether any acquisitions will be
successful. The Company continually evaluates potential strategic acquisitions;
however, the Company has no binding commitment to acquire any business or other
material assets. The Company's acquisition strategy involves numerous risks
including integration of the operations, systems, and management of acquired
businesses and the diversion of management's attention from other business
concerns. Depending on the nature, size, and timing of future acquisitions, the
Company may be required to raise additional financing. There can be no assurance
that the Credit Agreement, entered into by and between the Company and The Chase
Manhattan Bank (the "Senior Credit Facilities"), the Indenture, the indenture
(the "VDK Indenture", together with the Aurora Indentures, the "Existing
Indentures" and collectively the Indenture and the Existing Indentures, the
"Indentures") related to the 12% Senior Subordinated Notes due 2005 issued by
VDK (the "VDK Notes", collectively with the Aurora Notes, the "Existing Notes"),
the Aurora Indentures, and the Existing Notes and the Notes (collectively the
"Senior Subordinated Notes") or any other loan agreement to which the Company
may become a party will permit such additional financing or that any additional
financing will be available on terms acceptable to the Company.

12
<PAGE>
GENERAL RISKS OF FOOD INDUSTRY; COMPETITION

The Company is subject to the general risks of the food industry, and
particularly to the risk that a competitor gains a technological advantage such
as technology that flash freezes fish that is better tasting and has a higher
quality; evolving consumer preferences such as the current trend toward ethnic
foods; lack of attractiveness of a particular food product line after its
novelty has worn off; nutritional and health-related concerns; federal, state,
and local food processing controls; consumer product liability claims; the risk
of product tampering; mislabeling; and the availability and expense of
insurance. See "Business".

The food products business is highly competitive. Numerous brands and
products compete for shelf space and sales, with competition based primarily on
brand recognition and loyalty, price, quality, and convenience. The Company
competes with a significant number of companies of varying sizes, including
divisions or subsidiaries of larger companies. A number of these competitors
have broader product lines, substantially greater financial and other resources
available to them, lower fixed costs and/or longer operating histories than the
Company. There can be no assurance that the Company can compete successfully
with such other companies. Competitive pressures or other factors could cause
the Company's products to lose market share or result in significant price
erosion, which could have a material adverse effect on the Company. See
"Business".

PRODUCT LIABILITY; PRODUCT RECALLS

The Company may be subject to significant liability should the consumption
of any of its products cause injury, illness, or death and may be required to
recall certain of its products in the event of contamination, mislabeling or
damage to its products. There can be no assurance that product liability claims
will not be asserted against the Company or that the Company will not be
obligated to recall its products. A product liability judgment against the
Company or a product recall could have a material adverse effect on the
Company's business, financial condition, and results of operations.

GOVERNMENTAL REGULATION

The Company's operations are subject to extensive regulation by the United
States Food and Drug Administration ("FDA"), the United States Department of
Agriculture (the "USDA") and other state and local authorities regarding the
processing, packaging, storage, distribution, advertising, and labeling of the
Company's products, and environmental compliance. The material regulations to
which the Company is subject include regulations promulgated under the Federal
Food, Drug and Cosmetic Act, the Nutrition Labeling and Education Act, the
Federal Trade Commission Act and the Occupational Safety and Health Act, each as
amended. The Company seeks to comply with applicable regulations by a
combination of employing internal personnel to ensure quality assurance
compliance (for example, assuring that food packages contain only ingredients as
specified on the package labeling) and contracting with third-party laboratories
that conduct analyses of products for the nutritional labeling requirements (for
example, determining the percent or amount of specific ingredients and other
components of a food product). The Company's principal officers monitor
regulatory compliance within their functional areas and report to the president
of their division. The Company's manufacturing facilities and products are
subject to periodic inspection by federal, state, and local authorities. There
can be no assurance, however, that the Company is in compliance with such laws
and regulations or that it will be able to comply with any future laws and
regulations. Failure by the Company to comply with applicable laws and
regulations could subject the Company to civil remedies, including fines,
injunctions, recalls, or seizures, as well as potential criminal sanctions,
which could have a material adverse effect on the Company. See
"Business--Certain Legal and Regulatory Matters" and "--Environmental".

13
<PAGE>
TRADEMARKS

The Company believes that its trademarks and other proprietary rights are
important to its success and its competitive position. There can be no assurance
that the actions taken by the Company to establish and protect its trademarks
and other proprietary rights will be adequate to prevent imitation of its
products by others or to prevent others from seeking to block sales of the
Company's products as violative of the trademarks and proprietary rights of
others. Moreover, no assurance can be given that others will not assert rights
in, or ownership of, trademarks and other proprietary rights of the Company or
that the Company will be able to successfully resolve such conflicts. See
"Business--Trademarks".

DEPENDENCE ON RAW MATERIALS

The Company's primary raw materials are fish (primarily pollock), flour,
sugar, corn syrup, liquid sucrose, maple sugar, flavorings, cheeses, meat, eggs,
milk, and vegetable oil. The Company purchases fish from various North Pacific
suppliers and its other raw materials from the U.S. commodity market. While all
such materials are currently available from numerous independent suppliers,
commodity raw materials are subject to increases in price attributable to, among
other things, changes in crop size and federal and state agricultural programs.
Such increases could have a material adverse effect on the performance of the
Company. For example, if the federal government increases import or excise taxes
on imported sugar, domestic sugar suppliers could raise their prices. Such
increased prices could materially adversely affect the Company's profitability
for its products that use sugar, such as DUNCAN HINES baking mixes. See
"Business--Raw Materials".

CONTROL BY PRINCIPAL STOCKHOLDERS; CONSENT RIGHTS; AND ALLOCATION OF CORPORATE
OPPORTUNITIES

Fenway indirectly or directly beneficially owns approximately 24.8%,
affiliates of MDC beneficially own 24.4%, and the parties to the Securityholders
Agreement dated April 8, 1998 (the "Securityholders Agreement") by and among New
LLC, MBW Investors LLC, VDK Foods LLC, Fenway, MDC, Dartford, the California
Public Employees Retirement System ("CALPERS"), UBS Capital LLC ("UBS"), an
affiliate of Tiger Oats Limited ("Tiger Oats"), Sunapee Securities, Inc. and
Squam Lake Investors II, L.P., (collectively, "Sunapee"), certain divisional
management and other parties thereto (the "Stockholders") beneficially own, in
the aggregate, 78.4% of the outstanding shares of Common Stock. Pursuant to the
Securityholders Agreement, the Stockholders have agreed that until the
occurrence of certain events, the initial Board of Directors will consist of
three directors designated by Fenway, three directors designated by MDC, two
directors designated by Dartford, one director designated by UBS, and one
director designated by Tiger Oats. In addition, for a period not to exceed 30
months after the closing of the Equity Offerings, the affirmative consent of
Fenway and MDC is required for certain actions which could otherwise be approved
by a majority of the directors including certain acquisitions or divestitures by
the Company and the removal or termination of Ian R. Wilson or the employment or
termination of his successor as Chief Executive Officer of the Company. In
addition, under the Company's By-Laws, the majority of the Board of Directors
that authorizes the creation of any committee of the Board must include at least
one director designated by Fenway and one director designated by MDC until, with
respect to either Fenway or MDC, such time as it shall not beneficially own a
number of shares of Common Stock equal to at least 50% of the shares of Common
Stock beneficially owned by MDC (excluding any shares held by proxy) at the
closing of the Equity Offerings. The interests of Fenway and/or MDC in respect
of such matters may be different from, or conflict with, those of the Company
and with other stockholders of the Company. By reason of these consent rights
and the fact that if Fenway and MDC vote together, they have the right to
designate a majority of the directors, Fenway and MDC will be able to
practically determine the outcome of significant matters affecting the
management and business affairs of the Company. See "Principal
Stockholders--Securityholders Agreement" and "Certain Relationships and Related
Transactions".

14
<PAGE>
In addition, certain directors of the Company affiliated with Fenway or MDC
also serve as officers or directors of other portfolio companies of Fenway or
MDC. Service as a director of the Company and as a director or officer of
another company (other than a subsidiary of the Company) could create or appear
to create conflicts of interest when the director is faced with decisions that
could have different implications for the Company and such other company. A
conflict of interest could also exist with respect to allocation of the time and
attention of persons who are officers of both the Company and one or more other
companies. MDC, Fenway and their professional staffs are not restricted from
acquiring or managing other companies in the food business, including companies
that may be competitive with the Company. For example, Fenway controls Delimex
Holdings, Inc., a leading manufacturer and distributor of Mexican and other
ethnic frozen food. Each of Dartford, and its partners (Messrs. Ian R. Wilson,
James B. Ardrey, and Ray Chung, and Ms. M. Laurie Cummings) are restricted from
acquiring or managing companies other than the Company and Windy Hill Pet Food
Company, Inc. ("Windy Hill") for certain periods of time. If Dartford's
management services agreement with Windy Hill is terminated, Dartford may
acquire or manage another company in place of Windy Hill. On June 10, 1998 Windy
Hill entered into an Agreement and Plan of Merger with DPC Acquisition Corp.,
Doane Products Company and certain other parties. The closing of this Merger
Agreement is scheduled to occur in July, 1998 but is subject to a number of
regulatory and other conditions. Dartford's management services agreement with
Windy Hill will be terminated if and when this Merger Agreement closes. During
the period that Messrs. Wilson, Ardrey, and Chung and Ms. Cummings are subject
to non-compete covenants in their employment agreements, they are not permitted
to manage or acquire any additional company in the business of offering food
products (other than beverages) for human consumption. See
"Management--Employment Agreements", "Principal Stockholders--Securityholders
Agreement" and "Certain Relationships and Related Transactions".

INTEREST RATE SWAP AGREEMENTS

The Company in the ordinary course of business enters into interest rate
swap agreements with major financial institutions in order to reduce the impact
of changes in interest rates on its floating rate long-term debt. The Company's
principal risk under these agreements is that the financial institution
defaults. In such case, the Company would not receive a swap payment from the
financial institution that otherwise would have resulted in a reduction in net
interest expense. Management believes that any potential loss in future earnings
and cash flows attributable to its interest rate swap agreements would not be
material.

ABSENCE OF PUBLIC MARKET

There has not previously been any public market for the New Notes on the Old
Notes. The Company does not intend to apply for listing of the Notes on any
securities exchange or on any automated dealer quotation system. Although the
Initial Purchasers have informed the Company that they currently intend to make
a market in the New Notes, they are not obligated to do so and any such market
making may be discontinued at any time without notice. In addition, such market
making activity may be limited during the pendency of the Exchange Offer or the
effectiveness of a shelf registration statement in lieu thereof. Accordingly,
there can be no assurance as to the development or liquidity of any market for
the New Notes, the ability of holders to sell the New Notes, or the price at
which holders would be able to sell the New Notes. Future trading prices of the
New Notes will depend on many factors, including among other things, prevailing
interest rates, the Company's operating results and the market for similar
securities. Historically, the market for securities similar to the New Notes,
including non-investment grade debt, has been subject to disruptions that have
caused substantial volatility in the prices of such securities. There can be no
assurance that any market for the New Notes, if such market develops, will not
be subject to similar disruptions.

15
<PAGE>
EQUITY OFFERINGS

Concurrently with the Offering, the Company and certain of the Company's
shareholders offered 14,500,000 shares of the Company's common stock, par value
$.01 per share. The net proceeds to be received by the Company from the Equity
Offerings (after deducting the underwriting discounts and estimated offering
expenses) were approximately $250.2 million. The net proceeds will be used to
(i) redeem $35.0 million principal amount of the VDK Notes and pay the
associated redemption premium of $3.5 million pursuant to the VDK Indenture on
July 31, 1998, (ii) repay in full the outstanding indebtedness of approximately
$184.8 million under the Second Amended and Restated Credit and Guarantee
Agreement, dated as of July 9, 1996, among VDK, Van de Kamp's, Inc., the banks
and other financial institutions parties thereto and the Chase Manhattan Bank,
NA, as agent, as amended (the "VDK Senior Bank Facilities") and (iii) repay
indebtedness of approximately $26.9 million under the Second Amended and
Restated Credit Agreement, dated as of January 16, 1998, by and among Aurora
Foods, Aurora, the lenders listed therein, The Chase Manhattan Bank, The
National Westminister Bank PLC, and Swiss Bank Corporation (the "Aurora Senior
Bank Facilities").

REFINANCINGS

The outstanding indebtedness of approximately $184.8 million under the VDK
Senior Bank Facilities was repaid in full with the proceeds of the Equity
Offerings. In addition, the outstanding indebtedness of approximately $423.1
million under the Aurora Senior Bank Facilities was repaid in full with the
proceeds of the Refinancings and a portion of the proceeds of the Equity
Offerings.

Concurrently with the closing of the Offerings, the Company entered into the
Senior Credit Facilities. The repayment of the VDK Senior Bank Facilities and
the Aurora Senior Bank Facilities, the entering into of the Senior Credit
Facilities and the Offering are hereinafter referred to as the "Refinancings".
The Company plans to borrow under the Senior Credit Facilities to redeem $65.0
million principal amount of the VDK Notes and to pay the related redemption
premium of $11.0 million on August 1, 1998.

USE OF PROCEEDS OF THE NEW NOTES

This Exchange Offer is intended to satisfy obligations of the Company under
the Exchange and Registration Rights Agreement. The Company will not receive any
proceeds from the issuance of the New Notes offered hereby. In consideration for
issuing the New Notes as contemplated in this Prospectus, the Company will
receive, in exchange, Old Notes in like principal amount. The form and terms of
the New Notes are identical in all material respects to the form and terms of
the Old Notes except as otherwise described herein under "The Exchange
Offer--Terms of the Exchange Offer". The Old Notes surrendered in exchange for
the New Notes will be retired and cancelled and cannot be reissued. Accordingly,
issuance of the New Notes will not result in any increase in the outstanding
debt of the Company.

16
<PAGE>
BACKGROUND

Aurora Foods Inc. ("Aurora Foods"), a wholly-owned subsidiary of Aurora, was
incorporated in Delaware in December 1996 for the purpose of acquiring the MRS.
BUTTERWORTH'S syrup business from Conopco, Inc. (the "Predecessor"), a
subsidiary of Unilever United States, Inc. ("Unilever"). Aurora Foods then
acquired the LOG CABIN syrup business from Kraft Foods, Inc. ("Kraft") in July
1997 and the DUNCAN HINES baking mix business from The Procter & Gamble Company
("P&G") in January 1998.

Van de Kamp's, Inc., a wholly-owned subsidiary of VDK, was incorporated in
Delaware in July 1995 for the purpose of acquiring the VAN DE KAMP'S frozen
seafood business from the Pillsbury Company ("Pillsbury") in September 1995. Van
de Kamp's, Inc. then acquired the MRS. PAUL'S frozen seafood business from the
Campbell Soup Company ("Campbell Soup") in May 1996 and the AUNT JEMIMA frozen
breakfast and CELESTE frozen pizza businesses from Quaker Oats in July 1996. The
acquisitions consummated by Aurora Foods and Van de Kamp's, Inc., are
collectively referred to as the "Acquired Businesses".

On April 8, 1998, MBW Investors LLC and VDK Foods LLC formed Aurora/VDK LLC
("New LLC"). MBW Investors LLC contributed all of the capital stock of Aurora
and VDK Foods LLC contributed all of the capital stock of VDK to New LLC (the
"Contribution Transaction"). In return for those contributions, MBW Investors
LLC was issued 55.5% of the interests in New LLC plus a right to receive a
special $8.5 million priority distribution from New LLC, and VDK Foods LLC was
issued 44.5% of the interests in New LLC plus a right to receive a special $42.4
million priority distribution from New LLC. Each of UBS and Tiger Oats has
agreed to receive its $9.7 million portion of its priority distribution in
shares of Common Stock of the Company. The Company was incorporated on June 19,
1998, just prior to the Equity Offerings, New LLC contributed all of the issued
and outstanding stock of Aurora and VDK to it.

New LLC is a majority-owned subsidiary of MBW Investors LLC. New LLC and the
Company will account for the contribution of the ownership of Aurora at MBW
Investors LLC's historical cost and the contribution of the ownership of VDK
will be accounted for as an acquisition using the purchase method of accounting
at New LLC's cost.

Unless the context otherwise requires, discussion of the business of the
Company gives effect to acquisitions made by Aurora or VDK and to the merger of
Aurora, Aurora Foods, VDK, and Van de Kamp's, Inc. with and into the Company,
concurrently with the closing of the Equity Offerings (the "Merger"). All
references to the Company's historical financial statements are to the
historical financial statements of Aurora, to which the Company will be the
successor upon formation and after the Merger. The consummation of the Merger is
a condition to, and will close concurrently with, the closing of the Equity
Offerings.

New LLC sold 1,590,628 shares of Common Stock in the Equity Offerings and as
soon as practicable after the closing of the Equity Offerings, New LLC will be
dissolved.

The Company's principal executive offices are located at 456 Montgomery
Street, Suite 2200, San Francisco, California 94104, and the telephone number is
415-982-3019.

17
<PAGE>
CAPITALIZATION

The following table sets forth the historical capitalization of the Company
as of March 28, 1998 ("Actual"), the unaudited pro forma capitalization of the
Company after giving effect to the VDK acquisition and the Desserts Sale (as
defined) ("Pro Forma"), and the unaudited pro forma as adjusted capitalization
of the Company, after giving further effect to the Equity Offerings and
Refinancings and the application of the net proceeds therefrom ("Pro Forma As
Adjusted"). This table should be read in conjunction with the historical
financial statements of the Company, the unaudited pro forma financial
statements, the financial statements of the Acquired Businesses and the
Predecessor, and the related notes thereto included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
AS OF MARCH 28, 1998
-------------------------------------------------
ACTUAL PRO FORMA PRO FORMA AS ADJUSTED
--------- ----------- -------------------------
ONLY FOR FURTHER FOR
THE EQUITY THE
OFFERINGS REFINANCINGS
(IN MILLIONS)
<S> <C> <C> <C> <C>
Long-term debt (including current maturities):
Senior Credit Facilities.................... $ -- $ -- $ -- $ 306.8(1)
Aurora Senior Bank Facilities............... 450.0 450.0 423.1(2) --(2)
VDK Senior Bank Facilities.................. -- 184.8 --(2) --(2)
12% Senior Subordinated Notes due 2005...... -- 100.0 65.0 (2)
9 7/8% Series B Senior Subordinated Notes
due 2007.................................. 100.0 100.0 100.0 100.0
9 7/8% Series D Senior Subordinated Notes
due 2007.................................. 102.4 102.4 102.4 102.4
The Notes................................... -- -- -- 200.0
--------- ----------- ----------- ------------
Total long-term debt.................... 652.4 937.2 690.5 709.2
--------- ----------- ----------- ------------
Stockholders' equity:
Preferred stock (no shares issued and
outstanding).............................. -- -- -- --
Common stock................................ 0.3(3) 0.5(3) 0.7(2) 0.7(2)
Paid-in capital............................. 217.9 401.3 646.2(2) 646.2(2)
Promissory notes............................ (0.6) (0.7) (0.7) (0.7)
Accumulated deficit......................... (63.6) (63.6) (62.2)(2) (62.2)(2)
--------- ----------- ----------- ------------
Total stockholders' equity................ 154.0 337.5 584.0 584.0
--------- ----------- ----------- ------------
Total capitalization.................... $ 806.4 $ 1,274.7 $ 1,274.5 $ 1,293.2
--------- ----------- ----------- ------------
--------- ----------- ----------- ------------
</TABLE>

- ------------------------

(1) The Senior Credit Facilities provides for borrowings of up to $400.0
million. See "Description of Other Indebtedness".

(2) Pro Forma As Adjusted gives effect to the net proceeds to the Company from
the Equity Offerings and the Refinancings and other pro forma adjustments
(see Notes to Unaudited Pro Forma Balance Sheet as of March 28, 1998).

(3) Aurora Foods Inc., which was formed shortly before the Equity Offerings, is
the successor to Aurora. As such, Aurora Foods Inc. will assume the
historical financial statements of Aurora as its historical financial
statements. Therefore, the capital structure of Aurora Foods Inc. must be
applied to the historical capital structure and per share information of
Aurora. Immediately prior to the Equity Offerings, Aurora Foods Inc. had
54,090,628 shares of Common Stock outstanding. Based on these outstanding
shares and prior capital transactions of Aurora, outstanding shares as of
previous dates have been revised to be on an Aurora Foods Inc. capital
structure basis. Earnings per share data as of previous dates have been
recomputed based on the revised outstanding share amounts.

18
<PAGE>
THE EXCHANGE OFFER

PURPOSE AND EFFECT OF THE EXCHANGE OFFER

Pursuant to the Exchange and Registration Rights Agreement, the Company has
agreed to file a registration statement with respect to an offer to exchange the
Old Notes for senior subordinated debt securities of the Company with terms
substantially identical to the Old Notes (except that the New Notes will not
contain terms with respect to transfer restrictions, registration rights and
liquidated damages) on or prior to 45 days after the Issue Date and to use its
reasonable best efforts to cause such registration statement to become effective
under the Securities Act within 135 days after the Issue Date. The Old Notes
were issued on July 1, 1998. In the event that applicable interpretations of the
staff of the Commission do not permit the Company to effect the Exchange Offer
as contemplated thereby, or if certain holders of the Old Notes notify the
Company that they are not eligible to participate in, or would not receive
freely tradeable New Notes in exchange for tendered Old Notes pursuant to, the
Exchange Offer, the Company will use its reasonable best efforts to cause to
become effective a shelf registration statement (the "Shelf Registration
Statement") with respect to the resale of the Old Notes and to keep the Shelf
Registration Statement effective until two years after the Issue Date. In the
event that the Company is not in compliance with certain obligations under the
Exchange and Registration Rights Agreement, the Company shall be obligated to
pay liquidated damages to holders of the Old Notes. See "Old Notes Exchange and
Registration Rights Agreement".

Each holder of the Old Notes that wishes to exchange such Old Notes for New
Notes in the Exchange Offer will be required to make certain representations,
including representations that (i) any New Notes to be received by it will be
acquired in the ordinary course of its business, (ii) it has no arrangement with
any person to participate in the distribution of the New Notes and (iii) it is
not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company
or if it is an affiliate, that it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.

RESALE OF NEW NOTES

Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third-parties, the Company believes that, except as
described below, New Notes issued pursuant to the Exchange Offer in exchange for
Old Notes may be offered for resale, resold and otherwise transferred by any
holder thereof (other than a holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
holder's business and such holder does not intend to participate and has no
arrangement or understanding with any person to participate in the distribution
of such New Notes. Any holder who tenders in the Exchange Offer with the
intention or for the purpose of participating in a distribution of the New Notes
cannot rely on such interpretation by the staff of the Commission and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction. Unless an
exemption from registration is otherwise available, any such resale transaction
should be covered by an effective registration statement containing the selling
security holder's information required by Item 507 of Regulation S-K under the
Securities Act. This Prospectus may be used for an offer to resell, resale or
other retransfer of New Notes only as specifically set forth herein. Only
broker-dealers who acquired the Old Notes as a result of market-making
activities or other trading activities may participate in the Exchange Offer.
Each broker-dealer that receives New Notes for its own account in exchange for
Old Notes, where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
See "Plan of Distribution".

19
<PAGE>
TERMS OF THE EXCHANGE OFFER

Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept for exchange any and
all Old Notes properly tendered and not withdrawn prior to 5:00 p.m., New York
City time, on the Expiration Date. The Company will issue $1,000 principal
amount of New Notes in exchange for each $1,000 principal amount of outstanding
Old Notes surrendered pursuant to the Exchange Offer. Old Notes may be tendered
only in integral multiples of $1,000.

The form and terms of the New Notes will be the same as the form and terms
of the Old Notes except the New Notes will be registered under the Securities
Act and hence will not bear legends restricting the transfer thereof. The New
Notes will evidence the same debt as the Old Notes. The New Notes will be issued
under and entitled to the benefits of the Indenture, which also authorized the
issuance of the Old Notes, such that both series will be treated as a single
class of debt securities under the Indenture.

The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Old Notes being tendered for exchange.

As of the date of this Prospectus, $200.0 million aggregate principal amount
of the Old Notes are outstanding. This Prospectus, together with the Letter of
Transmittal, is being sent to all registered holders of Old Notes. There will be
no fixed record date for determining registered holders of Old Notes entitled to
participate in the Exchange Offer.

The Company intends to conduct the Exchange Offer in accordance with the
provisions of the Exchange and Registration Rights Agreement and the applicable
requirements of the Exchange Act, and the rules and regulations of the
Commission thereunder. Old Notes which are not tendered for exchange in the
Exchange Offer will remain outstanding and continue to accrue interest and will
be entitled to the rights and benefits such holders have under the Indenture and
the Exchange and Registration Rights Agreement.

The Company shall be deemed to have accepted for exchange properly tendered
Notes when, as and if the Company shall have given oral or written notice
thereof to the Exchange Agent and complied with the provisions of Section 1 of
the Exchange and Registration Rights Agreement. The Exchange Agent will act as
agent for the tendering holders for the purposes of receiving the New Notes from
the Company. The Company expressly reserves the right to amend or terminate the
Exchange Offer, and not to accept for exchange any Old Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions specified
below under "-- Certain Conditions to the Exchange Offer."

Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes described below, in connection with the
Exchange Offer. See "--Fees and Expenses."

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

The term "Expiration Date" shall mean 5:00 p.m., New York City time on
August 28, 1998, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.

In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
holders of Old Notes an announcement thereof, each prior to 9:00 a.m., New York
City time, on the next business day after the then Expiration Date.

The Company reserves the right, in its sole discretion, (i) to delay
accepting for exchange any Old Notes, to extend the Exchange Offer or to
terminate the Exchange Offer if any of the conditions set forth

20
<PAGE>
below under "--Certain Conditions to the Exchange Offer" shall not have been
satisfied, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent or (ii) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof to the registered holders of Old Notes. If the Exchange Offer is amended
in a manner determined by the Company to constitute a material change, the
Company will promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the registered holders, and the Company
will extend the Exchange Offer, depending upon the significance of the amendment
and the manner of disclosure to the registered holders, if the Exchange Offer
would otherwise expire during such period.

INTEREST ON THE NEW NOTES

The New Notes will bear interest at a rate of 8 3/4% per annum, payable
semi-annually, on January 1 and July 1 of each year, commencing on January 1,
1999. Holders of New Notes will receive interest on January 1, 1999 from the
date of initial issuance of the New Notes, plus an amount equal to the accrued
interest on the Old Notes. Interest on the Old Notes accepted for exchange will
cease to accrue upon issuance of the New Notes.

CERTAIN CONDITIONS TO THE EXCHANGE OFFER

Notwithstanding any other term of the Exchange Offer, the Company will not
be required to accept for exchange, or exchange any New Notes for, any Old
Notes, and may terminate the Exchange Offer as provided herein before the
acceptance of any Old Notes for exchange, if:

(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in the Company's reasonable judgment, might materially impair the
ability of the Company to proceed with the Exchange Offer; or

(b) any law, statute, rule or regulation is proposed, adopted or
enacted, or any existing law, statute, rule or regulation is interpreted by
the staff of the Commission, which, in the Company's reasonable judgment,
might materially impair the ability of the Company to proceed with the
Exchange Offer; or

(c) any governmental approval has not been obtained, which approval the
Company shall, in its reasonable discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.

The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Old Notes, by giving oral or
written notice of such extension to the holders thereof. During any such
extensions, all Old Notes previously tendered will remain subject to the
Exchange Offer and may be accepted for exchange by the Company. Any Old Notes
not accepted for exchange for any reason will be returned without expense to the
tendering holder thereof as promptly as practicable after the expiration or
termination of the Exchange Offer.

The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified above under "--Certain Conditions to the Exchange Offer." The Company
will give oral or written notice of any extension, amendment, non-acceptance or
termination to the holders of the Old Notes as promptly as practicable, such
notice in the case of any extension to be issued no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date.

The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the

21
<PAGE>
Company in whole or in part at any time and from time to time in its sole
discretion. The failure by the Company at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.

In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939 (the
"TIA").

PROCEDURES FOR TENDERING

Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or facsimile thereof, have the signature thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile to the Exchange Agent prior
to 5:00 p.m., New York City time, on the Expiration Date or, in the alternative,
comply with DTC's ATOP procedures described below. In addition, either (i) Old
Notes must be received by the Exchange Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of book-entry transfer (a "Book-Entry
Confirmation") of such Old Notes, if such procedure is available, into the
Exchange Agent's account at the Depository Trust Company (the "Book-Entry
Transfer Facility" or "DTC") pursuant to the procedure for book-entry transfer
described below or properly transmitted Agent's Message (as defined below) must
be received by the Exchange Agent prior to the Expiration Date, or (iii) the
holder must comply with the guaranteed delivery procedures described below. To
be tendered effectively, the Letter of Transmittal and other required documents
must be received by the Exchange Agent at the address set forth below under "The
Exchange Offer--Exchange Agent" prior to 5:00 p.m., New York City time, on the
Expiration Date.

The tender by a holder which is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.

THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
OTHER NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.

Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact the registered holder promptly and instruct such registered
holder of Old Notes to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering such
owner's Old Notes, either make appropriate arrangements to register ownership of
the Old Notes in such owner's name or obtain a properly completed bond power
from the registered holder of Old Notes. The transfer of registered ownership
may take considerable time and may not be able to be completed prior to the
Expiration Date.

Signatures on a Letter of Transmittal or a notice of withdrawal described
below, as the case be, must be guaranteed by an Eligible Institution (as defined
below) unless the Old Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the

22
<PAGE>
case may be, are required to be guaranteed, such guarantor must be a member firm
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Exchange Act which is a member of one of
the recognized signature guarantee programs identified in the Letter of
Transmittal (an "Eligible Institution").

If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered holder
as such registered holder's name appears on such Old Notes with the signature
thereon guaranteed by an Eligible Institution.

If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
provide evidence satisfactory to the Company of their authority to so act must
be submitted with the Letter of Transmittal.

The Exchange Agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may utilize DTC's ATOP to tender.
Accordingly, participants in DTC's ATOP may, in lieu of physically completing
and signing the Letter of Transmittal and delivering it to the Exchange Agent,
electronically transmit their acceptance of the Exchange Offer by causing the
Depositary to transfer the Old Notes to the Exchange Agent in accordance with
the Depositary's ATOP procedures for transfer. The Depositary will then send an
Agent's Message to the Exchange Agent.

The term "Agent's Message" means a message transmitted by DTC received by
the Exchange Agent and forming part of the Book-Entry Confirmation, which states
that the Depositary has received an express acknowledgement from a participant
in DTC's ATOP that is tendering Old Notes which are the subject of such book
entry confirmation, that such participant has received and agrees to be bound by
the terms of the Letter of Transmittal (or, in the case of an Agent's Message
relating to guaranteed delivery, that such participant has received and agrees
to be bound by the applicable Notice of Guaranteed Delivery), and that the
agreement may be enforced against such participant.

All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Old Notes. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in the Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Old Notes must be cured within such time as the Company shall determine.
Although the Company intends to notify holders of defects or irregularities with
respect to tenders of Old Notes, neither the Company, the Exchange Agent nor any
other person shall incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holder, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.

In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of Old Notes or a timely Book-Entry Confirmation of such
Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility,
a properly completed and duly executed Letter of Transmittal and all other
required documents. If any tendered Old Notes are not accepted for exchange for
any reason set forth in the terms

23
<PAGE>
and conditions of the Exchange Offer or if Old Notes are submitted for a greater
principal amount than the holder desires to exchange, such unaccepted or
non-exchanged Old Notes will be returned without expense to the tendering holder
thereof (or, in the case of Old Notes tendered by book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the
book-entry transfer procedures described below, such non-exchanged Notes will be
credited to an account maintained with such Book-Entry Transfer Facility) as
promptly as practicable after the expiration or termination of the Exchange
Offer.

BOOK-ENTRY TRANSFER

The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Notes may be effected through book-entry transfer at the Book-Entry
Transfer Facility, the Letter of Transmittal or facsimile thereof, with any
required signature guarantees and any other required documents, must, in any
case, be transmitted to and received by the Exchange Agent at the address set
forth below under "-- Exchange Agent" on or prior to the Expiration Date or, if
the guaranteed delivery procedures described below are to be complied with,
within the time period provided under such procedures. Delivery of documents to
the Book-Entry Transfer Facility does not constitute delivery to the Exchange
Agent.

GUARANTEED DELIVERY PROCEDURES

Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, may effect a tender if:

(a) The tender is made through an Eligible Institution;

(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the registered number(s)
of such Old Notes and the principal amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within three
(3) New York Stock Exchange trading days after the Expiration Date, the
Letter of Transmittal (or facsimile thereof) together with the Old Notes or
a Book-Entry Confirmation, as the case may be, and any other documents
required by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent; and

(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), or properly transmitted Agent's Message as well as all
tendered Old Notes in proper form for transfer or a Book-Entry Confirmation,
as the case may be, and all other documents required by the Letter of
Transmittal, are received by the Exchange Agent within three (3) New York
Stock Exchange trading days after the Expiration Date.

Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.

WITHDRAWAL OF TENDERS

Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.

24
<PAGE>
For a withdrawal to be effective, (i) a written notice of withdrawal must be
received by the Exchange Agent at one of the addresses set forth below under
"--Exchange Agent" or (ii) holders must comply with the appropriate procedures
of DTC's ATOP system. Any such notice of withdrawal must specify the name of the
person having tendered the Old Notes to be withdrawn, identify the Old Notes to
be withdrawn (including the principal amount of such Old Notes), and (where
certificates for Old Notes have been transmitted) specify the name in which such
Old Notes were registered, if different from that of the withdrawing holder. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates, the withdrawing
holder must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such holder is an Eligible Institution. If Old Notes
have been tendered pursuant to the procedure for book-entry transfer described
above, any notice of withdrawal must specify the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Old Notes
and otherwise comply with the procedures of such facility. All questions as to
the validity, form and eligibility (including time of receipt) of such notices
will be determined by the Company, whose determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the Exchange Offer. Any Old
Notes which have been tendered for exchange but which are not exchanged for any
reason will be returned to the holder thereof without cost to such holder (or,
in the case of Old Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described above, such Old Notes will be credited to an
account maintained with such Book-Entry Transfer Facility for the Old Notes) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following one
of the procedures described under "--Procedures for Tendering" above at any time
on or prior to the Expiration Date.

EXCHANGE AGENT

Wilmington Trust Company has been appointed as Exchange Agent of the
Exchange Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notice of Guaranteed Delivery should be directed to the Exchange Agent addressed
as follows:

<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL OR BY BY HAND:
OVERNIGHT COURIER:
Wilmington Trust Company Wilmington Trust Company
Attn: Kristin Long Attn: Corporate Trust Operations
Corporate Trust & Administration Window c/o Harris Trust Company of New York,
1100 North Market Street as Agent
Rodney Square North 75 Water Street
Wilmington, Delaware 19890-0001 New York, New York 10004

BY FACSIMILE:
Wilmington Trust Company
Corporate Trust Administration
Facsimile: (302) 651-1079
Confirm by Telephone: (302) 651-1562

</TABLE>

25
<PAGE>
FEES AND EXPENSES

The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.

The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to broker-dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.

The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$250,000. Such expenses include registration fees, fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs, and
related fees and expenses.

The Company will pay all transfer taxes, if any, applicable to the exchange
of Notes pursuant to the Exchange Offer. If, however, certificates representing
Old Notes for principal amounts not tendered or accepted for exchange are to be
delivered to, or are to be issued in the name of, any person other than the
registered holder of Notes tendered, or if tendered Notes are registered in the
name of any person other than the person signing the Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the exchange of Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering holder.

TRANSFER TAXES

Holders who tender their Old Notes for exchange will not be obligated to pay
any transfer taxes in connection therewith, except that holders who instruct the
Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.

CONSEQUENCES OF FAILURE TO EXCHANGE

Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes, as set forth (i) in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to the exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws and (ii) otherwise set forth in the
Offering Memorandum dated June 25, 1998 distributed in connection with the
Offering. In general, the Old Notes may not be offered or sold, unless
registered under the Securities Act, except pursuant to an exemption from, or in
a transaction not subject to, the Securities Act and applicable state securities
laws. The Company does not currently anticipate that it will register the Old
Notes under the Securities Act. Based on interpretations by the staff of the
Commission, New Notes issued pursuant to the Exchange Offer may be offered for
resale, resold or otherwise transferred by holders thereof (other than any such
holder which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holders' business and such
holders have no arrangement or understanding with respect to the distribution of
the New Notes to be acquired pursuant to the Exchange Offer. Any holder who
tenders in the Exchange Offer for the purpose of participating in a distribution
of the New Notes (i) could not rely on the applicable interpretations of the
staff of the Commission and (ii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. In addition, to comply with the securities laws of
certain jurisdictions, if applicable, the New Notes may not be offered or sold
unless they have been registered or such securities laws have been complied
with. The Company has agreed, pursuant to the Exchange and Registration Rights
Agreement and subject to certain specified limitations therein, to register or
qualify the New Notes for offer or sale under the securities or blue sky laws of
such jurisdictions as any holder of the New Notes may request in writing.

26
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma financial statements of the Company are
based on the audited and unaudited historical financial statements of (i) the
Company, (ii) the LOG CABIN business, acquired by the Company on July 1, 1997,
(iii) the DUNCAN HINES business, acquired by the Company on January 16, 1998,
and (iv) VDK, acquired by the Company on April 8, 1998. These audited and
unaudited historical financial statements are included elsewhere in this
Prospectus, except for the DUNCAN HINES stub period January 1, 1998 through
January 15, 1998, and the VDK business for the three months ended March 28,
1998, which are not included herein.

The unaudited pro forma statements of operations has been prepared to give
effect to (i) the acquisition of the LOG CABIN business, (ii) the acquisition of
the DUNCAN HINES business, (iii) the acquisition of VDK, (iv) the Desserts Sale
(as defined), (v) the Equity Offerings, and (vi) the Refinancings as if each had
occurred on January 1, 1997. The unaudited pro forma balance sheet has been
prepared to give effect to (i) the acquisition of VDK, (ii) the Desserts Sale,
(iii) the Equity Offerings, and (iv) the Refinancings as though each had
occurred as of March 28, 1998.

The unaudited pro forma adjustments are based upon available information and
certain assumptions that the Company believes are reasonable. The unaudited pro
forma financial statements and accompanying notes should be read in conjunction
with the historical financial statements of (i) the Company, (ii) the DUNCAN
HINES business, (iii) the LOG CABIN business and (iv) VDK and other financial
information pertaining to the Company, including "The Company",
"Capitalization", and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere herein. The unaudited
pro forma financial statements are not indicative of either future results of
operations or the results that might have occurred if the foregoing transactions
had been consummated on the indicated dates.

27
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 27, 1997
<TABLE>
<CAPTION>
DUNCAN HINES
TWELVE
LOG CABIN MONTHS
COMPANY SIX ENDED VDK
YEAR MONTHS DECEMBER 31, PRO PRO FORMA
ENDED ENDED 1997 FORMA ADJUSTMENTS
DECEMBER 27, JUNE 28, SEE SEE FOR COMPANY
(in thousands, except per share data) 1997 1997 TABLE 1 TABLE 2 ACQUISITIONS PRO FORMA
- -------------------------------------------- ------------ ----------- ------------ --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales................................... $ 143,020 $ 51,222 $ 233,150 $ 413,523 $ 33,316(a) $ 874,231
Cost of goods sold.......................... 45,729 18,067 160,577 162,248 (13,520)(b) 373,101(h)
------------ ----------- ------------ --------- ----------- -----------
Gross profit.............................. 97,291 33,155 72,573 251,275 46,836 501,130
------------ ----------- ------------ --------- ----------- -----------
Brokerage, distribution and marketing
expenses:
Brokerage and distribution................ 17,096 3,239 -- 39,110 28,743(c) 88,188
Trade promotions.......................... 26,075 9,457 -- 111,146 25,809(a) 172,487
Consumer marketing........................ 15,142 597 16,450 30,544 2,984(a) 65,717
------------ ----------- ------------ --------- ----------- -----------
Total brokerage, distribution and
marketing expenses...................... 58,313 13,293 16,450 180,800 57,536 326,392
Amortization of goodwill and other
intangibles............................... 5,938 675 -- 12,374 14,437(d) 33,424
Selling, general and administrative
expenses.................................. 5,229 3,637 7,995 17,566 -- 34,427(e)(h)
Allocated selling expense................... -- -- 4,215 -- (4,215)(c) --
Incentive plan expense...................... 2,300 -- -- -- -- 2,300
Transition expenses......................... 2,113 -- -- 1,292 -- 3,405
------------ ----------- ------------ --------- ----------- -----------
Total operating expenses.................. 73,893 17,605 28,660 212,032 67,758 399,948
------------ ----------- ------------ --------- ----------- -----------
Operating income.......................... 23,398 15,550 43,913 39,243 (20,922) 101,182
Interest income............................. (151) -- -- (364) -- (515)
Interest expense............................ 18,393 -- -- 29,672 36,437(f) 84,502
Amortization of deferred financing
expense................................... 3,059 -- -- 1,900 (384)(f) 4,575
Other bank and financing expenses........... 83 -- -- 221 -- 304
------------ ----------- ------------ --------- ----------- -----------
Income before income taxes................ 2,014 15,550 43,913 7,814 (56,975) 12,316
Income tax expense.......................... 779 6,376 -- 3,087 (5,377)(g) 4,865
------------ ----------- ------------ --------- ----------- -----------
Net income................................ $ 1,235 $ 9,174 $ 43,913 $ 4,727 $ (51,598) $ 7,451
------------ ----------- ------------ --------- ----------- -----------
------------ ----------- ------------ --------- ----------- -----------
Adjusted EBITDA.............................
Basic and diluted earnings per share........ $ 0.04(2)
------------
------------
Weighted average number of shares
outstanding............................... 29,053(2)
------------
------------
Pro forma basic and diluted earnings per
share $ 0.14(2)
-----------
-----------
Pro forma weighted average number of shares
outstanding............................... 54,091(2)
-----------
-----------
Pro forma as adjusted basic and diluted
earnings per share
Pro forma as adjusted weighted average
number of shares outstanding

PRO FORMA
ADJUSTMENTS
FOR EQUITY COMPANY
OFFERINGS PRO FORMA
AND AS
(in thousands, except per share data) REFINANCINGS ADJUSTED
- -------------------------------------------- ------------ -----------
<S> <C> <C>
Net sales................................... $ -- $ 874,231
Cost of goods sold.......................... -- 373,101
------------ -----------
Gross profit.............................. -- 501,130
------------ -----------
Brokerage, distribution and marketing
expenses:
Brokerage and distribution................ -- 88,188
Trade promotions.......................... -- 172,487
Consumer marketing........................ -- 65,717
------------ -----------
Total brokerage, distribution and
marketing expenses...................... -- 326,392
Amortization of goodwill and other
intangibles............................... -- 33,424
Selling, general and administrative
expenses.................................. -- 34,427
Allocated selling expense................... -- --
Incentive plan expense...................... -- 2,300
Transition expenses......................... -- 3,405
------------ -----------
Total operating expenses.................. -- 399,948
------------ -----------
Operating income.......................... -- 101,182
Interest income............................. -- (515)
Interest expense............................ (25,754)(i) 58,748
Amortization of deferred financing
expense................................... (3,084)(i) 1,491
Other bank and financing expenses........... -- 304
------------ -----------
Income before income taxes................ 28,838 41,154
Income tax expense.......................... 11,391(j) 16,256
------------ -----------
Net income................................ $ 17,447 $ 24,898
------------ -----------
------------ -----------
Adjusted EBITDA............................. $ 154,617(1)
-----------
-----------
Basic and diluted earnings per share........

Weighted average number of shares
outstanding...............................

Pro forma basic and diluted earnings per
share

Pro forma weighted average number of shares
outstanding...............................

Pro forma as adjusted basic and diluted
earnings per share $ 0.37
-----------
-----------
Pro forma as adjusted weighted average
number of shares outstanding 67,000
-----------
-----------
</TABLE>

See accompanying notes to the Unaudited Pro Forma Statement of Operations

- ------------------------------
(1) Adjusted EBITDA is defined as net income before interest expense, taxes,
depreciation, amortization, extraordinary items, incentive plan expense and
transition expenses and is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt. Adjusted EBITDA should not be considered in isolation from or as
a substitute for net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance with
generally accepted accounting principles or as a measure of profitability or
liquidity. Adjusted EBITDA does not include any of the cost savings
disclosed in the Notes to the Unaudited Pro Forma Statement of Operations.
(2) Aurora Foods Inc., which was formed shortly before the Equity Offerings, is
the successor to Aurora. As such, Aurora Foods Inc. will assume the
historical financial statements of Aurora as its historical financial
statements. Therefore, the capital structure of Aurora Foods Inc. must be
applied to the historical capital structure and per share information of
Aurora. Immediately prior to the Equity Offerings, Aurora Foods Inc. had
54,090,628 shares of Common Stock outstanding. Based on these outstanding
shares and prior capital transactions of Aurora, outstanding shares as of
previous dates have been revised to be on an Aurora Foods Inc. capital
structure basis. Earnings per share data as of previous dates have been
recomputed based on the revised outstanding share amounts.

28
<PAGE>
TABLE 1

The following table derives the statement of direct revenues, direct
expenses, and allocated selling expense of the DUNCAN HINES business for the
twelve months ended December 31, 1997, by deducting data for the six months
ended December 31, 1996, from the year ended June 30, 1997, and adding data for
the six months ended December 31, 1997. The DUNCAN HINES business was acquired
from P&G in January 1998. The historical statements of direct revenues and
direct expenses for the year ended June 30, 1997 and the six months ended
December 31, 1996 and 1997 are derived from the financial statements of the
DUNCAN HINES business included elsewhere in this Prospectus. The basis of
presentation of the statements of direct revenues and direct expenses is
disclosed in Note 1 to the DUNCAN HINES financial statements included elsewhere
in this Prospectus.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, TWELVE MONTHS
YEAR ENDED ---------------------- ENDED
(in thousands) JUNE 30, 1997 1996 1997 DECEMBER 31, 1997
- ------------------------------------------------------------- ------------- ---------- ---------- -----------------
<S> <C> <C> <C> <C>
Direct revenues:
Gross revenues............................................... $ 253,548 $ 146,124 $ 154,519 $ 261,943
Less: trade spending....................................... (19,646) (9,659) (15,822) (25,809)
Less: coupon expense....................................... (2,900) (2,110) (2,194) (2,984)
------------- ---------- ---------- --------
Net direct revenues...................................... 231,002 134,355 136,503 233,150

Cost of products sold:
Product costs.............................................. 144,261 80,361 85,139 149,039
Delivery costs............................................. 11,787 6,647 6,398 11,538
------------- ---------- ---------- --------
Total costs of products sold............................. 156,048 87,008 91,537 160,577
------------- ---------- ---------- --------
Gross margin................................................. 74,954 47,347 44,966 72,573

Direct marketing:
Consumer promotional expense............................... 3,376 1,226 1,184 3,334
Advertising expense........................................ 9,957 5,576 6,549 10,930
Other marketing expenses................................... 2,520 1,453 1,119 2,186
------------- ---------- ---------- --------
Total direct marketing expense........................... 15,853 8,255 8,852 16,450

Direct selling, administrative and other..................... 10,041 6,177 4,131 7,995
Allocated selling expense.................................... 4,750 3,297 2,762 4,215
------------- ---------- ---------- --------
Excess of direct revenues over direct expenses............... $ 44,310 $ 29,618 $ 29,221 $ 43,913
------------- ---------- ---------- --------
------------- ---------- ---------- --------
</TABLE>

See accompanying notes to the Unaudited Pro Forma Statement of Operations

29
<PAGE>
TABLE 2

On May 1, 1998, the Company completed the sale of the frozen desserts
product line of VDK (the "Desserts Sale") to Mrs. Smith's Bakeries, Inc., a
subsidiary of Flowers, Inc. The Company received approximately $28.0 million
from the sale of certain assets of the frozen desserts product line. The Company
plans to close the Chambersburg, Pennsylvania facility where the frozen desserts
were manufactured and has taken steps to eliminate certain corporate management
and administrative positions related to the desserts business. Machinery and
equipment related to the production of certain frozen seafood and vegetable
products, which is currently relocated at the Chambersburg facility, will be
relocated to the Company's Erie, Pennsylvania, and Jackson, Tennessee
manufacturing facilities. The impact of the Desserts Sale on the Company's
annual results of operations is not expected to be material and management
believes the Desserts Sale will not materially impact future results. The net
proceeds from the Desserts Sale were used to repay $25.0 million in indebtedness
under the VDK Senior Bank Facilities. Because VDK was acquired by the Company
shortly before the Desserts Sale, the Company will not recognize any gain or
loss as a result of the sale.

The following table sets forth the statements of operations for VDK for the
periods ended as indicated. The audited statements of operations for the year
ended June 30, 1997 and the unaudited statement of operations for the six months
ended December 31, 1996 and 1997 are derived from the VDK financial statements
included elsewhere in this Prospectus. The pro forma statement of operations is
based on the audited and unaudited historical financial statements of VDK
adjusted to reflect the Desserts Sale as if it occurred on January 1, 1997. This
table derives the statement of operations for VDK for the year ended December
31, 1997, by deducting data for the six months ended December 31, 1996, from the
year ended June 30, 1997, and adding data for the six months ended December 31,
1997.

<TABLE>
<CAPTION>
PRO FORMA
SIX MONTHS ENDED ADJUSTMENTS
DECEMBER 31, TWELVE FOR
YEAR ENDED ------------------------ MONTHS ENDED DESSERTS
(in thousands) JUNE 30, 1997 1996 1997 DECEMBER 31, 1997 SALE PRO FORMA
------------- ----------- ----------- ----------------- ----------- -----------
Net sales........................ $ 435,476 $ 193,046 $ 199,329 $ 441,759 $ (28,236)(k) $ 413,523
<S> <C> <C> <C> <C> <C> <C>
Cost of goods sold............... 180,941 83,581 79,575 176,935 (14,687)(k) 162,248
------------- ----------- ----------- -------- ----------- -----------
Gross profit................... 254,535 109,465 119,754 264,824 (13,549)(k) 251,275
------------- ----------- ----------- -------- ----------- -----------
Brokerage, distribution and
marketing expenses:
Brokerage and distribution..... 45,352 22,824 19,764 42,292 (3,182)(k) 39,110
Trade promotions............... 108,925 47,045 58,340 120,220 (9,074)(k) 111,146
Consumer marketing............. 29,524 10,040 12,443 31,927 (1,383)(k) 30,544
------------- ----------- ----------- -------- ----------- -----------
Total brokerage, distribution and
marketing expenses............. 183,801 79,909 90,547 194,439 (13,639) 180,800
Amortization of goodwill and
other intangibles.............. 13,142 6,760 6,792 13,174 (800)(l) 12,374
Selling, general and
administrative expenses........ 14,270 6,081 9,377 17,566 -- 17,566
Transition expenses.............. 2,885 1,593 -- 1,292 -- 1,292
------------- ----------- ----------- -------- ----------- -----------
Total operating expenses......... 214,098 94,343 106,716 226,471 (14,439) 212,032
------------- ----------- ----------- -------- ----------- -----------
Operating income............... 40,437 15,122 13,038 38,353 890 39,243
Interest income.................. (965) (632) (31) (364) -- (364)
Interest expense................. 32,499 16,603 15,839 31,735 (2,063)(m) 29,672
Amortization of deferred
financing expense.............. 2,108 1,047 1,080 2,141 (241)(n) 1,900
Other bank and financing
expenses....................... 265 132 88 221 -- 221
------------- ----------- ----------- -------- ----------- -----------
Income (loss) before income
tax.......................... 6,530 (2,028) (3,938) 4,620 3,194 7,814
Income tax expense benefit....... 2,377 (811) (1,439) 1,749 1,338 3,087
------------- ----------- ----------- -------- ----------- -----------
Net income (loss).............. $ 4,153 $ (1,217) $ (2,499) $ 2,871 $ 1,856 $ 4,727
------------- ----------- ----------- -------- ----------- -----------
------------- ----------- ----------- -------- ----------- -----------
</TABLE>

See accompanying notes to the Unaudited Pro Forma Statement of Operations

30
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 28, 1998
<TABLE>
<CAPTION>
COMPANY DUNCAN
THREE HINES PRO FORMA
MONTHS STUB PRO FORMA ADJUSTMENTS
ENDED PERIOD VDK ADJUSTMENTS FOR EQUITY
(in thousands, except per MARCH 28, JANUARY PRO FORMA FOR COMPANY OFFERINGS
share data) 1998 1-15, 1998 SEE TABLE 1 ACQUISITIONS PRO FORMA AND REFINANCINGS
- ------------------------------------ ----------- ----------- --------------- --------------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales........................... $ 89,385 $ 4,951 $ 145,267 $ 734(o) $ 240,337 $ --
Cost of goods sold.................. 37,734 3,322 54,371 (316)(p) 95,111(u) --
----------- ----------- --------------- --------------- ----------- -------
Gross profit...................... 51,651 1,629 90,896 1,050 145,226 --
----------- ----------- --------------- --------------- ----------- -------
Brokerage, distribution and
marketing expenses:
Brokerage and distribution........ 9,355 -- 13,542 647(q) 23,544 --
Trade promotions.................. 15,568 -- 41,621 548(o) 57,737 --
Consumer marketing................ 7,997 333 12,638 89(o) 21,057 --
----------- ----------- --------------- --------------- ----------- -------
Total brokerage, distribution and
marketing expenses................ 32,920 333 67,801 1,284 102,338 --
Amortization of goodwill and other
intangibles....................... 4,597 -- 3,202 557(r) 8,356 --
Selling, general and administrative
expenses.......................... 2,346 144 4,594 -- (e) 7,084(u) --
Incentive plan expense.............. 60,000 -- 69,000 -- 129,000 (7,677)(v,w)
Transition expenses................. 1,926 -- -- -- 1,926 --
----------- ----------- --------------- --------------- ----------- -------
Total operating expenses............ 101,789 477 144,597 1,841 248,704 (7,677)
----------- ----------- --------------- --------------- ----------- -------
Operating loss.................... (50,138) 1,152 (53,701) (791) (103,478) 7,677
Interest income..................... (223) -- (30) (253) --
Interest expense.................... 12,837 -- 7,279 1,010(s) 21,126 (6,439) (x)
Amortization of deferred financing
expense........................... 513 -- 472 159(s) 1,144 (771) (x)
Other bank and financing expenses... 51 -- 44 -- 95 --
----------- ----------- --------------- --------------- ----------- -------
Loss before income tax and
extraordinary item.............. (63,316) 1,152 (61,466) (1,960) (125,590) 14,887
Income tax (benefit)................ (360) -- (19,464) (1,569)(t) (21,393) 6,550(y)
----------- ----------- --------------- --------------- ----------- -------
Net (loss) income before
extraordinary item.............. $ (62,956) $ 1,152 $ (42,002) $ (391) $(104,197) $ 8,337
----------- ----------- --------------- --------------- ----------- -------
----------- ----------- --------------- --------------- ----------- -------

Adjusted EBITDA

Basic and diluted loss per share
before extraordinary item......... $ (2.17)(2)
-----------
-----------
Weighted average number of shares
outstanding....................... 29,053(2)
-----------
-----------
Pro forma basic and diluted loss per
share............................. $ (1.93)(2)
-----------
-----------
Pro forma weighted average number of
shares outstanding................ 54,091(2)
-----------
-----------
Pro forma as adjusted basic and
diluted loss per share............
Pro forma as adjusted weighted
average number of shares
outstanding.......................

COMPANY
(in thousands, except per PRO FORMA
share data) AS ADJUSTED
- ------------------------------------ ------------
<S> <C>
Net sales........................... $ 240,337
Cost of goods sold.................. 95,111
------------
Gross profit...................... 145,226
------------
Brokerage, distribution and
marketing expenses:
Brokerage and distribution........ 23,544
Trade promotions.................. 57,737
Consumer marketing................ 21,057
------------
Total brokerage, distribution and
marketing expenses................ 102,338
Amortization of goodwill and other
intangibles....................... 8,356
Selling, general and administrative
expenses.......................... 7,084
Incentive plan expense.............. 121,323
Transition expenses................. 1,926
------------
Total operating expenses............ 241,027
------------
Operating loss.................... (95,801)
Interest income..................... (253)
Interest expense.................... 14,687
Amortization of deferred financing
expense........................... 373
Other bank and financing expenses... 95
------------
Loss before income tax and
extraordinary item.............. (110,703)
Income tax (benefit)................ (14,843)
------------
Net (loss) income before
extraordinary item.............. $ (95,860)
------------
------------
Adjusted EBITDA $ 39,080(1)
------------
------------
Basic and diluted loss per share
before extraordinary item.........

Weighted average number of shares
outstanding.......................

Pro forma basic and diluted loss per
share.............................

Pro forma weighted average number of
shares outstanding................

Pro forma as adjusted basic and
diluted loss per share............ $ (1.43)
------------
------------
Pro forma as adjusted weighted
average number of shares
outstanding....................... 67,000
------------
------------
</TABLE>

See accompanying notes to the Unaudited Pro Forma Statement of Operations
- ------------------------------
(1) Adjusted EBITDA is defined as net income before interest expense, taxes,
depreciation, amortization, extraordinary items, incentive plan expense and
transition expenses and is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt. Adjusted EBITDA should not be considered in isolation from or as
a substitute for net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance with
generally accepted accounting principles or as a measure of profitability or
liquidity. Adjusted EBITDA does not include any of the cost savings
disclosed in the Notes to the Unaudited Pro Forma Statement of Operations.

(2) Aurora Foods Inc., which was formed shortly before the Equity Offerings, is
the successor to Aurora. As such, Aurora Foods Inc. will assume the
historical financial statements of Aurora as its historical financial
statements. Therefore, the capital structure of Aurora Foods Inc. must be
applied to the historical capital structure and per share information of
Aurora. Immediately prior to the Equity Offerings, Aurora Foods Inc. had
54,090,628 shares of Common Stock outstanding. Based on these outstanding
shares and prior capital transactions of Aurora, outstanding shares as of
previous dates have been revised to be on an Aurora Foods Inc. capital
structure basis. Earning per share data as of previous dates have been
recomputed based on the revised outstanding share amounts.

31
<PAGE>
TABLE 1

The following table sets forth the unaudited statement of operations for the
three months ended March 31, 1998, derived from the VDK financial statements not
included herein. The unaudited statement of operations has been adjusted to
reflect the Desserts Sale as if it occurred as of January 1, 1998.

<TABLE>
<CAPTION>
PRO FORMA
THREE MONTHS ADJUSTMENTS
ENDED FOR SALE OF
(in thousands) MARCH 31, 1998 DESSERTS PRO FORMA
- -------------------------------------------------------------- -------------- ----------- --------------
<S> <C> <C> <C>
Net sales..................................................... $ 148,959 $ (3,692)(z) $ 145,267
Cost of goods sold............................................ 56,202 (1,831)(z) 54,371
-------------- ----------- --------------
Gross profit................................................ 92,757 (1,861) 90,896
-------------- ----------- --------------

Brokerage, distribution and marketing expenses:
Brokerage and distribution.................................... 14,001 (459)(z) 13,542
Trade promotions.............................................. 43,194 (1,573)(z) 41,621
Consumer marketing............................................ 12,705 (67)(z) 12,638
-------------- ----------- --------------
Total brokerage, distribution and marketing expenses.......... 69,900 (2,099) 67,801

Amortization of goodwill and other intangibles................ 3,402 (200) aa) 3,202
Selling, general and administrative expenses.................. 4,594 -- 4,594
Incentive plan expense........................................ 69,000 -- 69,000
-------------- ----------- --------------
Total operating expenses...................................... 146,896 (2,299) 144,597
-------------- ----------- --------------

Operating income............................................ (54,139) 438 (53,701)

Interest income............................................... (30) -- (30)
Interest expense.............................................. 7,795 (516) bb) 7,279
Amortization of deferred financing expense.................... 532 (60) cc) 472
Other bank and financing expenses............................. 44 -- 44
-------------- ----------- --------------

Loss before income tax...................................... (62,480) 1,014 (61,466)
Income tax benefit............................................ (19,865) 401 (19,464)
-------------- ----------- --------------
Net loss.................................................... $ (42,615) $ 613 $ (42,002)
-------------- ----------- --------------
-------------- ----------- --------------
</TABLE>

32
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

Pro Forma Adjustments for the Acquisitions for the Year Ended December 27, 1997

(a) Adjustments to net sales reflect the following:

<TABLE>
<CAPTION>
(in
thousands)
<S> <C>
Reclassification of trade spending expense, netted against sales by P&G, to trade
promotions.................................................................................. $ 25,809
Reclassification of cash discounts, netted against sales by P&G, to brokerage and
distribution................................................................................ 4,523
Reclassification of coupon expense, netted against sales by P&G, to consumer marketing........ 2,984
-------------
$ 33,316
-------------
-------------
</TABLE>

(b) Adjustments to cost of goods sold reflect the following:

<TABLE>
<CAPTION>
(in
thousands)
<S> <C>
Adjustments to convert LOG CABIN cost of goods sold from a Last-in, First-out Inventory basis
for the six month period ended June 30, 1997, prior to July 1, 1997 acquisition by the
Company, to the First-in, First-out basis to be consistent with the inventory accounting
policy of the Company....................................................................... $ 9
Reclassification of warehousing and shipping expense, included in cost of goods sold by P&G,
to brokerage and distribution............................................................... (3,800)
Reclassification of delivery expense, included in cost of goods sold by P&G, to brokerage and
distribution................................................................................ (11,538)
Depreciation(1)............................................................................... 1,809
-------------
$ (13,520)
-------------
-------------
</TABLE>

- ------------------------

(1) Represents adjustment to reflect pro forma depreciation expense based on
acquired machinery and equipment at fair market value and estimated
remaining useful lives.

The Company entered into a co-pack agreement with the Red Wing Company,
Inc. ("Red Wing") on June 9, 1997, pursuant to which Red Wing contract
manufactures MRS. BUTTERWORTH'S syrup until November 19, 2002. In addition,
on November 19, 1997, the Company entered into a second co-pack agreement,
pursuant to which Red Wing also contract manufactures LOG CABIN syrup until
November 19, 2002. The Company commenced transferring production of LOG
CABIN syrup from Kraft to Red Wing in February 1998 and expects to complete
the transition by June 1998.

The Company has entered into a co-pack agreement with Glister-Mary Lee
Corporation, dated as of June 4, 1998 and expects in the future to enter
into co-pack agreements whereby third parties will contract manufacture the
DUNCAN HINES cake mix, frosting, brownies and specialty products.

The Company anticipates lower conversion costs pursuant to such co-pack
agreements. As a result, the Company anticipates lower costs than those
incurred by the prior owners in the annual amount of $12.4 million. The
adjustment related to the anticipated cost savings from the co-pack
agreements is not reflected in the pro forma statement of operations as it
is not viewed as being directly related to the acquisitions.

(c) Adjustments reflect (i) reclassifications of selling expenses of $4.2
million recorded to allocated selling expense, by P&G, to brokerage and
distribution by Company, and (ii) selling expenses related to brokerage
expense based on the contractual rates which the Company will be charged
under its existing contracts with its broker network for the sale of Duncan
Hines products, incremental to the amount in (i) above, plus (iii) brokerage
expense at the contractual rates which the Company will be charged under its
existing contracts with its broker network for the sale of LOG CABIN syrup
products, and (iv) the reclassification of cash discounts of $4.5 million,
warehousing and shipping expense of

33
<PAGE>
$3.8 million and delivery expense of $11.5 million from (a) and (b) above.
The Company anticipates a cost reduction in the amount of $0.7 million due
to the new contractual brokerage rates. In addition, the Company anticipates
lower annual warehousing and distribution costs of $3.8 million going
forward. The warehousing and distribution cost savings relate to allocations
made by the prior owner of the DUNCAN HINES business. However, as these
anticipated cost reductions are not viewed as being directly related to the
acquisitions, the pro forma cost savings are not included in the pro forma
statement of operations.

(d) Reflects goodwill and intangible amortization expense as a result of the
acquisitions. Goodwill will be amortized on a straight-line basis over a
forty year period and other intangibles will be amortized over periods
ranging from five to forty years.

(e) The Company has completed a thorough analysis of anticipated costs going
forward. Based on this analysis, the Company developed a detailed annual
operating budget which reflected approximately $33.1 million in factually
supportable selling, general and administrative costs, which is
approximately $1.3 million lower than the combined amounts previously
incurred to operate the business. A substantial portion of these savings is
attributable to a lower headcount relative to the headcount included in the
historical allocations from prior owners. These direct and indirect
allocations included multiple layers of management which the Company
believes it will not need to replicate. The table below reflects cost
reductions resulting from the new personnel infrastructure of the Company.
However, as these potential adjustments are not viewed as directly related
to the acquisitions, the pro forma cost savings are not included in the
unaudited pro forma statement of operations.

<TABLE>
<CAPTION>
(in
thousands)
<S> <C>
Selling, general and administrative expenses:
1997 pro forma expenses....................................................................... $ 34,427
-------------
Company's anticipated expenses:
Executive and finance....................................................................... 16,021
Division management and marketing........................................................... 9,641
Sales....................................................................................... 7,458
-------------
Total Company pro forma expense............................................................... 33,120
-------------
Difference.................................................................................... $ (1,307)
-------------
-------------
</TABLE>

(f) The adjustment to interest expense reflects the effect of the additional
financing incurred in connection with the acquisition of the DUNCAN HINES
business and the fair value adjustment to the VDK Notes. The adjustment to
the amortization of deferred financing costs reflects the effect of the
additional financing incurred in connection with the acquisition of the
DUNCAN HINES business, net of the write-off of Aurora's pre-DUNCAN HINES
indebtedness and the related costs thereof.

(g) Reflects an adjustment to the income tax provision to reflect an effective
rate of 39.5% based upon the Company's effective rate for the year ended
December 27, 1997.

(h) Pro forma depreciation expense for the Company included in cost of goods
sold for the year ended December 27, 1997 is $13.8 million. Pro forma
depreciation expense for the Company included in selling, general and
administrative expenses is $0.3 million.

34
<PAGE>
Pro Forma Adjustments for the Equity Offerings and Refinancings for the Year
Ended December 27, 1997

(i) Pro forma as adjusted interest expense has been calculated based upon pro
forma debt levels and the applicable interest rates after giving effect to
the Equity Offerings and the Refinancings and the application of the net
proceeds to the Company therefrom. The table below presents pro forma as
adjusted interest expense, noted with the respective interest rates or fee,
and pro forma as adjusted debt amortization of deferred financing costs:

<TABLE>
<CAPTION>
(in
thousands)
<S> <C>
Interest expense:
Aurora Series B Notes ($100.0 million at 9.875%).............................................. $ 9,875
Aurora Series D Notes ($100.0 million at 9.875%).............................................. 9,875
The Notes ($200.0 million at 8.75%)........................................................... 17,500
Senior Credit Facilities ($306.8 million estimated at 6.950%)................................. 21,323
Commitment fee on unused senior revolving facility............................................ 375
-------------
Cash interest expense....................................................................... 58,948
Less: bond premium amortization............................................................... (200)
-------------
Pro forma as adjusted interest expense.................................................... $ 58,748
-------------
-------------
Pro forma amortization of deferred financing costs............................................ $ 1,491
-------------
-------------
</TABLE>

(j) Reflects an adjustment to the income tax provision at an effective rate of
39.5%, based upon the Company's effective rate for the year ended December
27, 1997.

Pro Forma Adjustments for the Desserts Sale for the Year Ended December 27, 1997

(k) Reflects the elimination of sales and operating expenses of the business
sold in the Desserts Sale.

(l) Reflects the impact on amortization expense of the write-off of goodwill and
intangibles related to the Desserts Sale.

(m) Reflects the reduction in interest expense related to the repayment of VDK
Senior Bank Facilities with the net proceeds from the Desserts Sale ($25.0
million at an interest rate of 8.25%).

(n) Reflects the elimination of a portion of amortization of deferred financing
costs related to the repayment of $25.0 million of VDK Senior Bank
Facilities term debt with the net proceeds from the Desserts Sale.

35
<PAGE>
Pro Forma Adjustments for the Acquisitions for the Three Months Ended March 28,
1998

(o) Adjustments to net sales reflect the following:

<TABLE>
<CAPTION>
For the period January 1- January 15, 1998 (in thousands)
- ----------------------------------------------------------------------------------------
<S> <C>
Reclassification of trade spending expense, netted against sales by P&G, to trade
promotions............................................................................. $ 548
Reclassification of cash discounts, netted against sales by P&G, to brokerage and
distribution........................................................................... 97
Reclassification of coupon expense, netted against sales by P&G, to consumer
marketing.............................................................................. 89
-----
$ 734
-----
-----
</TABLE>

(p) Adjustments to cost of goods sold reflect the following:

<TABLE>
<CAPTION>
For the period January 1- January 15, 1998 (in thousands)
- ----------------------------------------------------------------------------------------
<S> <C>
Reclassification of warehousing and shipping expense, included in cost of goods sold by
P&G, to brokerage and distribution..................................................... $ (158)
Reclassification of delivery expense, included in cost of goods sold by P&G, to
brokerage and distribution............................................................. (233)
Depreciation(1)......................................................................... 75
-------
$ (316)
-------
-------
</TABLE>

- ------------------------

(1) Represents adjustment to reflect pro forma depreciation expense based
on acquired machinery and equipment at fair market value and estimated
remaining useful lives.

The Company anticipates lower conversion costs pursuant to its co-pack
agreements of $1.7 million for the quarter. The adjustment related to the
anticipated cost savings from the co-pack agreements is not reflected in the
pro forma statement of operations as it is not viewed as being directly
related to the acquisitions.

(q) Adjustment reflects (i) brokerage expense for the January 1- January 15,
1998 period at the contractual rates which the Company will be charged under
its existing contracts with its broker network for the sale of DUNCAN HINES
products, and (ii) the reclassification of cash discounts of $0.1 million,
warehousing and shipping expense of $0.2 million and delivery expense of
$0.2 million from (o) and (p) above.

(r) Reflects goodwill and intangible amortization expense as a result of the
acquisitions. Goodwill will be amortized on a straight-line basis over a
forty year period and other intangibles will be amortized over periods
ranging from five to forty years.

(s) The adjustment to interest expense reflects the effect of the additional
financing incurred in connection with the acquisition of the DUNCAN HINES
business and the fair value adjustment to the VDK Notes. The adjustment to
the amortization of deferred financing costs reflects the effect of the
additional financing incurred in connection with the acquisition of the
DUNCAN HINES business for the period January 1- January 15, 1998, net of the
write-off of Aurora's pre-DUNCAN HINES indebtedness and the related costs
thereof.

(t) Reflects an adjustment to the income tax provision to reflect an effective
rate of 39.5%, after taking into consideration the non-deductible portion of
incentive plan expense of $69.1 million.

(u) Pro forma depreciation expense for the Company included in cost of goods
sold for the three months ended March 28, 1998 is $2.9 million. Pro forma
depreciation expense for the Company included in selling, general and
administrative expenses is $0.2 million.

36
<PAGE>
Pro Forma Adjustments for the Equity Offerings and the Refinancings for the
Three Months Ended March 28, 1998

(v) Reflects an adjustment to incentive plan expense under the VDK Plan and the
Aurora Plan, which are described elsewhere in this Prospectus, based on the
value of the Company at the Equity Offerings. This expense reflects an
initial public offering price per share of $21.00 and based on acceleration
of vesting due to the Equity Offerings. See "Management--VDK Incentive Plan"
and "Management-- Aurora Incentive Plan." Note that all pro forma
adjustments for incentive plan expense have been recorded to the three month
period ended March 28, 1998.

(w) Reflects an adjustment to incentive plan expense for tax gross-up payments
due under the VDK Plan (see (h) in Unaudited Pro Forma Balance Sheet). See
"Management--VDK Incentive Plan".

(x) Pro forma as adjusted interest expense for the quarter has been calculated
based upon pro forma as adjusted debt levels and the applicable interest
rates after giving effect to the Equity Offerings and the Refinancings and
the application of the net proceeds to the Company therefrom. The table
below presents pro forma as adjusted interest expense and pro forma as
adjusted debt amortization of deferred financing costs:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
(IN THOUSANDS) MARCH 28, 1998
-------------------
<S> <C>
Interest expense:
Aurora Series B Notes................................................................... $ 2,469
Aurora Series D Notes................................................................... 2,469
The Notes............................................................................... 4,375
Senior Credit Facilities................................................................ 5,331
Commitment fee on unused senior debt.................................................... 93
-------
Cash interest expense................................................................. 14,737
Less: bond premium amortization......................................................... (50)
-------
Pro forma as adjusted interest expense.............................................. $ 14,687
-------
-------
Pro forma amortization of deferred financing costs...................................... $ 373
-------
-------
</TABLE>

(y) Reflects an adjustment to the income tax provision at an effective rate of
39.5%, after taking into consideration the $73.1 million non-deductible
portion of incentive plan expense.

Pro Forma Adjustments for the Desserts Sale for the Three Months Ended March 28,
1998

(z) Reflects the elimination of sales and operating expenses of the business
sold in the Desserts Sale.

(aa) Reflects the impact on amortization expense of the write-off of goodwill
and intangibles related to the Desserts Sale.

(bb) Reflects the reduction in interest expense related to the repayment of VDK
Senior Bank Facilities with the net proceeds from the Desserts Sale ($25.0
million at an interest rate of 8.25%).

(cc) Reflects the elimination of a portion of amortization of deferred financing
costs related to the repayment of $25.0 million of VDK Senior Bank
Facilities term debt with the net proceeds from the Desserts Sale.

37
<PAGE>
UNAUDITED PRO FORMA BALANCE SHEET
AS OF MARCH 28, 1998

<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
VDK PRO FORMA FOR EQUITY
PRO FORMA ADJUSTMENTS OFFERINGS COMPANY
SEE FOR COMPANY AND PRO FORMA
(in thousands) COMPANY TABLE 1 ACQUISITIONS PRO FORMA REFINANCINGS AS ADJUSTED(1)
- ----------------------------------------- --------- --------- ----------- -------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents................ $ 23,330 $ 53 $ -- $ 23,383 $ -- (f) $ 23,383
Accounts receivable, net................. 22,847 43,350 -- 66,197 -- 66,197
Inventories.............................. 24,851 33,825 -- 58,676 -- 58,676
Prepaid expenses and other assets........ 4,973 1,459 -- 6,432 -- 6,432
Current deferred tax assets.............. 8,537 12,397 (13,116)(d) 7,818 -- 7,818
--------- --------- ----------- -------------- ------------ ----------------
Total current assets................. 84,538 91,084 (13,116) 162,506 162,506
Property, plant and equipment, net....... 45,031 86,359 -- 131,390(3) -- 131,390(2)
Goodwill and other intangible assets,
net.................................... 717,956 306,548 49,103(a) 1,073,607 -- 1,073,607
Non-current deferred tax assets.......... -- 7,171 18,269(d) 25,440 (1,505)(g) 23,935
Other assets............................. 22,026 15,415 (18,292)(c) 19,149 2,910(h) 22,059
--------- --------- ----------- -------------- ------------ ----------------
Total assets......................... $ 869,551 $ 506,577 $ 35,964 $ 1,412,092 $ 1,405 $ 1,413,497
--------- --------- ----------- -------------- ------------ ----------------
--------- --------- ----------- -------------- ------------ ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current portion of long term debt........ $ 9,000 $ 16,978 $ -- $ 25,978 $ (15,978)(f) $ 10,000
Accounts payable and accrued
liabilities............................ 55,374 47,784 4,800(b) 107,958 -- 107,958
Senior secured revolving debt facility... -- 15,000 -- 15,000 (15,000)(f) --
--------- --------- ----------- -------------- ------------ ----------------
Total current liabilities............ 64,374 79,762 4,800 148,936 (30,978) 117,958
Senior term facility..................... 441,000 152,781 -- 593,781 (296,966)(f) 296,815
Senior subordinated notes................ 202,377 100,000 -- 302,377 100,000(f) 402,377
Other liabilities........................ -- 15,000 14,500(c) 29,500 (17,128)(i) 12,372
Deferred tax liabilities................. 7,771 -- (7,771)(d) -- -- --
--------- --------- ----------- -------------- ------------ ----------------
Total liabilities.................... 715,522 347,543 11,529 1,074,594 (245,072) 829,522
--------- --------- ----------- -------------- ------------ ----------------
Total stockholders' equity:
Common stock............................. 291(3) -- 250 )(3 541(3) 129(j) 670
Paid-in capital.......................... 217,900 198,635 (15,309)(e) 401,226 245,007(j) 646,233
Promissory notes......................... (565) (107) -- (672) -- (672)
Retained earnings........................ (63,597) (39,494) 39,494(e) (63,597) 1,341(k) (62,256)
--------- --------- ----------- -------------- ------------ ----------------
Stockholders' equity................. 154,029 159,034 24,435 337,498 246,477 583,975
--------- --------- ----------- -------------- ------------ ----------------
Total liabilities and stockholders'
equity............................. $ 869,551 $ 506,577 $ 35,964 $ 1,412,092 $ 1,405 $ 1,413,497
--------- --------- ----------- -------------- ------------ ----------------
--------- --------- ----------- -------------- ------------ ----------------
</TABLE>

See accompanying notes to Unaudited Pro Forma Balance Sheet
- ------------------------------

(1) Based on an initial public offering price of $21.00 per share of Common
Stock.

(2) Pro forma and pro forma as adjusted capital expenditures for the three
months ended March 28, 1998 totaled $4,253,000.

38
<PAGE>
TABLE 1

The following table sets forth the unaudited balance sheet as of March 31,
1998, derived from the VDK financial statements included elsewhere in this
Prospectus. The unaudited pro forma balance sheet has been adjusted to reflect
the Desserts Sale as if it occurred as of March 31, 1998.

<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C> <C>
PRO FORMA
ADJUSTMENTS VDK PRO FORMA
VDK AS OF FOR DESSERTS AS OF
MARCH 31, 1998 SALE MARCH 31, 1998
--------------- ------------- ---------------
ASSETS:
Cash and cash equivalents.................... $ 53 $ -- $ 53
Accounts receivable, net..................... 43,350 -- 43,350
Inventories.................................. 35,825 (2,000)(l) 33,825
Prepaid expenses............................. 1,459 -- 1,459
Current deferred tax assets.................. 11,989 408(m) 12,397
--------------- ------------- ---------------
Total current assets..................... 92,676 (1,592) 91,084
Property, plant and equipment, net........... 88,240 (1,881)(n) 86,359
Goodwill and other intangible
assets, net................................ 322,550 (16,002)(o) 306,548
Non-current deferred tax assets.............. 7,171 -- 7,171
Other assets................................. 16,434 (1,019)(m) 15,415
--------------- ------------- ---------------
Total assets............................. $ 527,071 $ (20,494) $ 506,577
--------------- ------------- ---------------
--------------- ------------- ---------------
LIABILITIES AND STOCKHOLDER'S EQUITY:
Current portion of long term debt............ $ 16,978 $ -- $ 16,978
Accounts payable and accrued liabilities..... 45,184 2,600(p) 47,784
Senior secured revolving debt facility....... 15,000 -- 15,000
--------------- ------------- ---------------
Total current liabilities................ 77,162 2,600 79,762
Senior term facility......................... 177,781 (25,000)(q) 152,781
Senior subordinated notes.................... 100,000 -- 100,000
Other liabilities............................ 15,000 -- 15,000
--------------- ------------- ---------------
Total liabilities........................ 369,943 (22,400) 347,543
--------------- ------------- ---------------
Stockholder's equity:
Common stock................................. -- -- --
Paid-in capital.............................. 198,635 -- 198,635
Promissory notes............................. (107) -- (107)
Retained earnings............................ (41,400) 1,906(m) 39,494
--------------- ------------- ---------------
Total stockholder's equity............... 157,128 1,906 159,034
--------------- ------------- ---------------
Total liabilities and stockholder's
equity................................. $ 527,071 $ (20,494) $ 506,577
--------------- ------------- ---------------
--------------- ------------- ---------------
</TABLE>

See accompanying notes to Unaudited Pro Forma Balance Sheet

39
<PAGE>
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
AS OF MARCH 28, 1998

Pro Forma Adjustments for the Acquisition of VDK.
(a) Reflects the excess of cost over the fair market value of the net assets
purchased in connection with the VDK acquisition. Goodwill will be amortized
on a straight-line basis over a forty year period and other intangibles will
be amortized over periods ranging from five to forty years. The Company will
evaluate the net realizable value of intangible assets on an ongoing basis
relying on a number of factors, including operating results and future
undiscounted cash flows.

(b) Reflects an accrual for acquisition costs related to the acquisition of VDK.

(d) Reflects the reclassification of non-current deferred tax assets originating
from net operating loss carryforwards of $13.1 million, plus the tax benefit
from the adjustment to record the VDK Notes and the VDK Senior Bank
Facilities to fair value of $8.0 million and $4.9 million, respectively,
(see (c) above).

(e) Represents the equity adjustments associated with the acquisition of VDK.

Pro Forma Adjustments for the Equity Offerings and Refinancings

(f) Reflects the proceeds to the Company from the Equity Offerings and the
Refinancings and the application of proceeds therefrom as follows:

<TABLE>
<CAPTION>
(in
millions)
-----------
<S> <C>
Gross proceeds to the Company from the Equity Offerings................. $ 271.1
Uses:
Repayment of Aurora Senior Bank Facilities............................ 26.9
Repayment of VDK Senior Bank Facilities............................... 184.8
Repayment of principal on VDK Notes................................... 35.0
Redemption premium on VDK Notes....................................... 3.5
Underwriting discounts, fees and expenses............................. 20.9
-----------
Remaining Cash........................................................ $ --
-----------

Gross proceeds to the Company from the Refinancings..................... 506.8
Uses:
Repayment of principal on VDK Notes................................... 65.0
Redemption premium on VDK Notes....................................... 11.0
Repayment of Aurora Senior Bank Facilities............................ 423.1
Fees and expenses..................................................... 7.7
-----------
Remaining cash........................................................ $ --
-----------
-----------
</TABLE>

(g) Reflects a $3.4 million adjustment reducing the tax benefit from the
deductible portion of incentive plan expense, partially offset by the tax
benefit of $1.9 million for the write-off of deferred financing costs
related to the repayment of Aurora Senior Bank Facilities.

(h) Reflects deferred financing costs related to the new Senior Credit
Facilities of $7.7 million partially offset by the write-off of deferred
financing costs of $4.8 million related to the repayment of Aurora Senior
Bank Facilities.

(i) Reflects (i) the payment of the $14.5 million of premiums on the VDK Notes
redemption and (ii) an adjustment of $2.6 million to the liability recorded
in connection with the incentive plan expense.

(j) Reflects the gross proceeds of the Equity Offerings of $271.1 million, net
of underwriting discounts, fees and expenses of $20.9 million, partially
offset by the adjustment to incentive plan expense of $5.1 million.

(k) Reflects the impact on retained earnings of the adjustment to incentive plan
expense, net of tax of $4.2 million partially offset the write-off of
deferred financing costs, net of tax, of $2.9 million related to the
repayment of the Aurora Senior Bank Facilities.

40
<PAGE>
Pro Forma Adjustments for the Desserts Sale

(l) Reflects the finished goods inventory included in the Desserts Sale.

(m) Reflects excess of liabilities over VDK assets associated with the Desserts
Sale.

(n) Reflects the book value of the machinery and equipment included in the
Desserts Sale.

(o) Reflects the write-off of the allocated goodwill and intangibles from the
Desserts Sale.

(p) Reflects costs related to the Desserts Sale to be paid subsequent to the
closing date of such sale.

(q) Reflects repayment of VDK Senior Bank Facilities from the proceeds of the
Desserts Sale.

41
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA

THE COMPANY

The following table sets forth selected historical financial and operating
information of the Predecessor and the Company for the periods ended and as of
the dates indicated. Statement of operations data for the years ended December
1994, 1995, and 1996 represents the operations of the MRS. BUTTERWORTH'S
business by the Predecessor while such data for the year ended December 27, 1997
includes the operations of the MRS. BUTTERWORTH'S business by the Company and
commencing July 1, 1997, the operations of the acquired LOG CABIN business, and
does not include the operations of VDK or the DUNCAN HINES business which were
acquired in 1998. Statement of operations data for the three months ended March
29, 1997 includes the operations of the MRS. BUTTERWORTH'S business by the
Company. Statement of Operations data for the three months ended March 28, 1998
includes the operations of the MRS. BUTTERWORTH'S and LOG CABIN businesses and
commencing January 16, 1998, the operations of the acquired DUNCAN HINES
business. The selected historical statements of operations data for the years
ended December 31, 1994, 1995, and 1996 are derived from the audited financial
statements of the Predecessor included elsewhere in this Prospectus for 1995 and
1996 and not included herein for 1994. The selected historical statement of
operations data and the historical balance sheet data for the year ended as of
December 27, 1997 are derived from the audited financial statements of the
Company included elsewhere in this Prospectus. The selected historical statement
of operations data for the three months ended March 29, 1997 and March 28, 1998
and the historical balance sheet data as of March 28, 1998 are derived from the
unaudited financial statements of the Company included elsewhere in this
Prospectus and which, in the opinion of management, include all normal recurring
adjustments. This table should be read in conjunction with the Predecessor's and
the Company's historical consolidated financial statements, the Company's
unaudited pro forma financial statements and related notes appearing elsewhere
in this Prospectus and with "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
<TABLE>
<CAPTION>
PREDECESSOR
---------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------
(in thousands) 1994 1995 1996
--------- --------- -----------
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales........................................................................... $ 96,729 $ 91,302 $ 89,541
Cost of goods sold.................................................................. 29,930 27,743 28,955
--------- --------- -----------
Gross profit...................................................................... 66,799 63,559 60,586
--------- --------- -----------
Brokerage, distribution and marketing expenses:
Brokerage and distribution........................................................ 8,662 7,583 8,140
Trade promotions.................................................................. 21,911 19,380 17,672
Consumer marketing................................................................ 15,297 13,291 10,835
--------- --------- -----------
Total brokerage, distribution and marketing expenses................................ 45,870 40,254 36,647
Amortization of goodwill and other intangibles...................................... -- -- --
Selling, general and administrative expenses........................................ 6,829 6,120 6,753
Incentive plan expense.............................................................. -- -- --
Transition expenses................................................................. -- -- --
--------- --------- -----------
Total operating expenses............................................................ 52,699 46,374 43,400
--------- --------- -----------
Operating income.................................................................. 14,100 17,185 17,186
Interest income..................................................................... -- -- --
Interest expense.................................................................... -- -- --
Amortization of deferred financing expense.......................................... -- -- --
Other bank and financing expenses................................................... -- -- --
--------- --------- -----------
Income (loss) before income taxes and extraordinary item.......................... 14,100 17,185 17,186
Income tax expense (benefit)........................................................ 5,429 6,616 6,616
--------- --------- -----------
Income (loss) before extraordinary item........................................... 8,671 10,569 10,570
Extraordinary loss on early extinguishment of debt, net of tax of $1,184.......... -- -- --
--------- --------- -----------
Net income (loss)................................................................. $ 8,671 $ 10,569 $ 10,570
--------- --------- -----------
--------- --------- -----------
Basic and diluted earnings (loss) per share before extraordinary item...............
Extraordinary item per share........................................................
Basic and diluted earnings (loss) per share.........................................
Weighted average number of shares outstanding.......................................
OPERATING AND OTHER DATA:
Adjusted EBITDA(1).................................................................. $ 14,315 $ 17,496 $ 17,463
Adjusted EBITDA margin(2)........................................................... 14.8% 19.2% 19.5%
Depreciation and amortization....................................................... $ 215 $ 311 $ 277
Capital expenditures................................................................
Ratio of earnings to fixed charges(4)...............................................
BALANCE SHEET DATA (END OF PERIOD):
Working capital (excluding current portion of long-term debt).......................
Total assets........................................................................
Long-term debt (including current portion)..........................................
Stockholder's equity................................................................

<CAPTION>
COMPANY
--------------------------------
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 27, ----------------
(in thousands) 1997 MARCH 29, 1997
-------------- ----------------
<S> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales........................................................................... $ 143,020 $ 21,253
Cost of goods sold.................................................................. 45,729 7,167
-------------- ----------------
Gross profit...................................................................... 97,291 14,086
-------------- ----------------
Brokerage, distribution and marketing expenses:
Brokerage and distribution........................................................ 17,096 2,279
Trade promotions.................................................................. 26,075 3,643
Consumer marketing................................................................ 15,142 1,331
-------------- ----------------
Total brokerage, distribution and marketing expenses................................ 58,313 7,253
Amortization of goodwill and other intangibles...................................... 5,938 828
Selling, general and administrative expenses........................................ 5,229 1,053
Incentive plan expense.............................................................. 2,300 --
Transition expenses................................................................. 2,113 126
-------------- ----------------
Total operating expenses............................................................ 73,893 9,260
-------------- ----------------
Operating income.................................................................. 23,398 4,826
Interest income..................................................................... (151) (32)
Interest expense.................................................................... 18,393 2,654
Amortization of deferred financing expense.......................................... 3,059 2,313
Other bank and financing expenses................................................... 83 9
-------------- ----------------
Income (loss) before income taxes and extraordinary item.......................... 2,014 (118)
Income tax expense (benefit)........................................................ 779 (47)
-------------- ----------------
Income (loss) before extraordinary item........................................... 1,235 (71)
Extraordinary loss on early extinguishment of debt, net of tax of $1,184.......... -- --
-------------- ----------------
Net income (loss)................................................................. $ 1,235 $ (71)
-------------- ----------------
-------------- ----------------
Basic and diluted earnings (loss) per share before extraordinary item............... $ 0.04(3) $ -- (3)
Extraordinary item per share........................................................ -- --
-------------- ----------------
Basic and diluted earnings (loss) per share......................................... 0.04(3) -- (3)
-------------- ----------------
-------------- ----------------
Weighted average number of shares outstanding....................................... 29,053(3) 29,053(3)
-------------- ----------------
-------------- ----------------
OPERATING AND OTHER DATA:
Adjusted EBITDA(1).................................................................. $ 34,796 $ 5,936
Adjusted EBITDA margin(2)........................................................... 24.3% 27.9%
Depreciation and amortization....................................................... $ 9,976 $ 3,274
Capital expenditures................................................................ 2,411 96
Ratio of earnings to fixed charges(4)............................................... 1.1x --
BALANCE SHEET DATA (END OF PERIOD):
Working capital (excluding current portion of long-term debt)....................... $ 6,524 $ 10,709
Total assets........................................................................ 372,739 140,942
Long-term debt (including current portion).......................................... 279,919 100,000
Stockholder's equity................................................................ 65,223 33,089

<CAPTION>
(in thousands) MARCH 28, 1998
----------------
STATEMENTS OF OPERATIONS DATA:
Net sales........................................................................... $ 89,385
Cost of goods sold.................................................................. 37,734
----------------
Gross profit...................................................................... 51,651
----------------
Brokerage, distribution and marketing expenses:
Brokerage and distribution........................................................ 9,355
Trade promotions.................................................................. 15,568
Consumer marketing................................................................ 7,997
----------------
Total brokerage, distribution and marketing expenses................................ 32,920
Amortization of goodwill and other intangibles...................................... 4,597
Selling, general and administrative expenses........................................ 2,346
Incentive plan expense.............................................................. 60,000
Transition expenses................................................................. 1,926
----------------
Total operating expenses............................................................ 101,789
----------------
Operating income.................................................................. (50,138)
Interest income..................................................................... (223)
Interest expense.................................................................... 12,837
Amortization of deferred financing expense.......................................... 513
Other bank and financing expenses................................................... 51
----------------
Income (loss) before income taxes and extraordinary item.......................... (63,316)
Income tax expense (benefit)........................................................ (360)
----------------
Income (loss) before extraordinary item........................................... (62,956)
Extraordinary loss on early extinguishment of debt, net of tax of $1,184.......... 1,876
----------------
Net income (loss)................................................................. $ (64,832)
----------------
----------------
Basic and diluted earnings (loss) per share before extraordinary item............... $ (2.17)(3)
Extraordinary item per share........................................................ (0.06)(3)
----------------
Basic and diluted earnings (loss) per share......................................... (2.23)(3)
----------------
----------------
Weighted average number of shares outstanding....................................... 29,053(3)
----------------
----------------
OPERATING AND OTHER DATA:
Adjusted EBITDA(1).................................................................. $ 17,587
Adjusted EBITDA margin(2)........................................................... 19.7%
Depreciation and amortization....................................................... $ 6,140
Capital expenditures................................................................ 1,511
Ratio of earnings to fixed charges(4)............................................... --
BALANCE SHEET DATA (END OF PERIOD):
Working capital (excluding current portion of long-term debt)....................... $ 29,164
Total assets........................................................................ 869,551
Long-term debt (including current portion).......................................... 652,377
Stockholder's equity................................................................ 154,029
</TABLE>

- ------------------------
(1) Adjusted EBITDA is defined as net income before interest expense, taxes,
depreciation, amortization, extraordinary items, incentive plan expense and
transition expenses and is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt. Adjusted EBITDA should not be considered in isolation from or as
a substitute for net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance with
generally accepted accounting principles or as a measure of profitability or
liquidity.
(2) Adjusted EBITDA margin is computed as Adjusted EBITDA as a percentage of net
sales.
(3) Aurora Foods Inc., which was formed shortly before the Equity Offerings, is
the successor to Aurora. As such, Aurora Foods Inc. will assume the
historical financial statements of Aurora as its historical financial
statements. Therefore, the capital structure of Aurora Foods Inc. must be
applied to the historical capital structure and per share information of
Aurora. Immediately prior to the Equity Offerings, Aurora Foods Inc. had
54,090,628 shares of Common Stock outstanding. Based on these outstanding
shares and prior capital transactions of Aurora, outstanding shares as of
previous dates have been revised to be on an Aurora Foods Inc. capital
structure basis. Earnings per share data as of previous dates have been
recomputed based on the revised outstanding share amounts.
(4) For purposes of determining the ratio of earnings to fixed charges, earnings
are defined as net income before provision for income taxes, plus fixed
charges. Fixed charges consist of interest expense on all indebtedness,
amortization of deferred finanding fees and one-third of rental expense on
operating leases, representing that portion of rental expense deemed by the
Company to be attributable to interest. Unilever did not allocate any fixed
charges to the MBW Predecessor. For the three months ended March 28, 1998
and March 29, 1997, fixed charges exceeded earnings before fixed charges by
$63.3 million and $0.1 million, respectively.

42
<PAGE>
VDK

The following table sets forth selected historical financial and operating
information of the Predecessor to VDK and VDK for the periods ended and as of
the dates indicated. VDK commenced operations in September 1995, concurrent with
the acquisition of the VAN DE KAMP's business from Pillsbury. Commencing May
1996, the VDK statement of operations data includes the operations of the MRS.
PAUL'S business and commencing July 1996, it includes the operations of the AUNT
JEMIMA and CELESTE businesses. The selected historical statements of operations
data for the years ended June 30, 1993, 1994 and 1995 and for the operating
period July 1, 1995 through September 18, 1995 are derived from the audited
financial statements of the Predecessor to VDK included elsewhere in this
Prospectus for 1995 and the operating period July 1, 1995 through September 18,
1995 and from audited financial statements not included herein for 1993 and
1994. The selected historical statements of operations data for the operating
period September 19, 1995 through June 29, 1996 and for the year ended June 30,
1997 and the historical balance sheet data at June 29, 1996 and June 30, 1997
are derived from the audited financial statements of VDK included elsewhere in
this Prospectus. The selected historical statements of operations data and the
historical balance sheet data for the nine months ended and as of March 31, 1997
and 1998 are derived from the unaudited financial statements of VDK included
elsewhere in this Prospectus and which, in the opinion of management, include
all normal, recurring adjustments. This table should be read in conjunction with
VDK's historical financial statements appearing elsewhere in this Prospectus and
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations".
<TABLE>
<CAPTION>
PREDECESSOR TO VDK VDK
---------------------------------------------- ----------------------------
OPERATING
FOR THE YEARS ENDED JULY 1, 1995 PERIOD YEAR ENDED
JUNE 30, THROUGH SEPTEMBER 19, JUNE 30,
------------------------------- SEPTEMBER 18, 1995 THROUGH -----------
(in thousands) 1993 1994 1995 1995 JUNE 29, 1996 1997
--------- --------- --------- ------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales......................................... $ 159,004 $ 153,314 $ 149,359 $ 20,545 $ 143,296 $ 435,476
Cost of goods sold................................ 77,387 67,881 66,111 10,978 60,367 180,941
--------- --------- --------- ------------- --------------- -----------
Gross profit.................................... 81,617 85,433 83,248 9,567 82,929 254,535
--------- --------- --------- ------------- --------------- -----------
Brokerage, distribution and marketing expenses:
Brokerage and distribution...................... 11,695 11,671 11,376 1,616 15,901 45,352
Trade promotions................................ 33,964 33,304 34,530 3,699 32,517 108,925
Consumer marketing.............................. 6,586 9,852 8,260 1,919 11,336 29,524
--------- --------- --------- ------------- --------------- -----------
Total brokerage, distribution and marketing
expenses........................................ 52,245 54,827 54,166 7,234 59,754 183,801
Amortization of goodwill and other intangibles.... 3,305 3,305 3,305 689 4,223 13,142
Selling, general and administrative expenses...... 9,518 8,682 9,789 1,370 5,267 14,270
Incentive plan expense............................ -- -- -- -- -- --
Transition expenses............................... -- -- -- -- 1,337 2,885
--------- --------- --------- ------------- --------------- -----------
Total operating expenses.......................... 65,068 66,814 67,260 9,293 70,581 214,098
--------- --------- --------- ------------- --------------- -----------
Operating income................................ 16,549 18,619 15,988 274 12,348 40,437
Interest income................................... -- -- -- -- (135) (965)
Interest expense.................................. -- -- -- -- 12,469 32,499
Amortization of deferred financing expense........ -- -- -- -- 607 2,108
Other bank and financing expenses................. -- -- -- -- 79 265
--------- --------- --------- ------------- --------------- -----------
Income (loss) before income taxes............... 16,549 18,619 15,988 274 (672) 6,530
Income tax expense (benefit)...................... 7,841 8,769 7,716 396 (233) 2,377
--------- --------- --------- ------------- --------------- -----------
Net income (loss) before cumulative effect of
accounting change............................. 8,708 9,850 8,272 (122) (439) 4,153
Cumulative effect of accounting change, net of
income taxes.................................... 222 -- -- -- -- --
--------- --------- --------- ------------- --------------- -----------
Net income (loss)................................. $ 8,486 $ 9,850 $ 8,272 $ (122) $ (439) $ 4,153
--------- --------- --------- ------------- --------------- -----------
--------- --------- --------- ------------- --------------- -----------
Basic and diluted earnings (loss) per share....... $ (4) $ 42
--------------- -----------
--------------- -----------
Weighted average number of shares outstanding..... 0.1 0.1
--------------- -----------
--------------- -----------

NINE MONTHS ENDED
MARCH 31,
---------------------------
(in thousands) 1997 1998
---------------- ---------
(UNAUDITED)
<S> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales......................................... $ 344,113 $ 348,288
Cost of goods sold................................ 143,522 135,777
-------- ---------
Gross profit.................................... 200,591 212,511
-------- ---------
Brokerage, distribution and marketing expenses:
Brokerage and distribution...................... 37,005 33,765
Trade promotions................................ 83,908 101,534
Consumer marketing.............................. 23,897 25,151
-------- ---------
Total brokerage, distribution and marketing
expenses........................................ 144,810 160,450
Amortization of goodwill and other intangibles.... 9,982 10,194
Selling, general and administrative expenses...... 9,825 13,968
Incentive plan expense............................ -- 69,000
Transition expenses............................... 2,073 --
-------- ---------
Total operating expenses.......................... 166,690 253,612
-------- ---------
Operating income................................ 33,901 (41,101)
Interest income................................... (939) (60)
Interest expense.................................. 24,762 23,634
Amortization of deferred financing expense........ 1,573 1,612
Other bank and financing expenses................. 215 131
-------- ---------
Income (loss) before income taxes............... 8,290 (66,418)
Income tax expense (benefit)...................... 3,316 (21,304)
-------- ---------
Net income (loss) before cumulative effect of
accounting change............................. 4,974 (45,114)
Cumulative effect of accounting change, net of
income taxes.................................... -- --
-------- ---------
Net income (loss)................................. $ 4,974 $ (45,114)
-------- ---------
-------- ---------
Basic and diluted earnings (loss) per share....... $ 50 $ (451)
-------- ---------
-------- ---------
Weighted average number of shares outstanding..... 0.1 0.1
-------- ---------
-------- ---------
</TABLE>

43
<PAGE>
<TABLE>
<CAPTION>
PREDECESSOR TO VDK VDK
---------------------------------------------- ----------------------------
OPERATING
FOR THE YEARS ENDED JULY 1, 1995 PERIOD YEAR ENDED
JUNE 30, THROUGH SEPTEMBER 19, JUNE 30,
------------------------------- SEPTEMBER 18, 1995 THROUGH -----------
(in thousands) 1993 1994 1995 1995 JUNE 29, 1996 1997
--------- --------- --------- ------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATING AND OTHER DATA:
Adjusted EBITDA(1)................................ $ 22,620 $ 24,826 $ 22,309 $ 1,616 $ 20,588 $ 64,231
Adjusted EBITDA margin(2)......................... 14.2% 16.2% 14.9% 7.9% 14.4% 14.8%
Depreciation and amortization..................... $ 6,071 $ 6,207 $ 6,321 $ 1,342 $ 7,454 $ 22,317
Capital expenditures.............................. 1,403 2,075 1,884 -- 2,204 14,379
Ratio of earnings to fixed charges(3)............. -- 1.2x
BALANCE SHEET DATA (END OF PERIOD):
Working capital (excluding current portion of
long-term debt)................................. $ 25,019 $ 37,921
Total assets...................................... 305,499 509,591
Long term debt (including current portion)........ 188,750 312,856
Stockholder's equity.............................. 83,676 147,921

<CAPTION>
NINE MONTHS ENDED
MARCH 31,
---------------------------
(in thousands) 1997 1998
---------------- ---------
(UNAUDITED)
<S> <C> <C>
OPERATING AND OTHER DATA:
Adjusted EBITDA(1)................................ $ 51,897 $ 43,699
Adjusted EBITDA margin(2)......................... 15.1% 12.6%
Depreciation and amortization..................... $ 16,772 $ 17,483
Capital expenditures.............................. 12,717 7,524
Ratio of earnings to fixed charges(3)............. 1.3x --
BALANCE SHEET DATA (END OF PERIOD):
Working capital (excluding current portion of
long-term debt)................................. $ 37,958 $ 47,492
Total assets...................................... 521,406 527,071
Long term debt (including current portion)........ 321,856 309,759
Stockholder's equity.............................. 148,742 157,128
</TABLE>

- ------------------------

(1) Adjusted EBITDA is defined as net income (loss) before interest expense,
taxes, depreciation, amortization, extraordinary items, incentive plan
expense, and transition expenses and is presented because it is commonly
used by certain investors and analysts to analyze and compare companies on
the basis of operating performance and to determine a company's ability to
service and incur debt. Adjusted EBITDA should not be considered in
isolation from or as a substitute for net income, cash flows from operating
activities or other consolidated income or cash flow statement data prepared
in accordance with generally accepted accounting principles or as a measure
of profitability or liquidity.

(2) Adjusted EBITDA margin is computed as Adjusted EBITDA as a percentage of net
sales.

(3) For purposes of determining the ratio of earnings to fixed charges, earnings
are defined as net income before provision for income taxes, plus fixed
charges. Fixed charges consist of interest expense on all indebtedness,
amortization of deferred financing fees and one-third of rental expense on
operating leases, representing that portion of rental expense deemed by the
Company to be attributable to interest. Pillsbury did not allocate any fixed
charges to the Predecessor to VDK. For the nine months ended March 31, 1998,
and the operating period September 19, 1995 through June 29, 1996, fixed
charges exceeded earnings before fixed charges by $66.4 million and $0.7
million, respectively.

44
<PAGE>
DUNCAN HINES

The following table sets forth selected historical financial data of the
DUNCAN HINES business for the periods ended as indicated. The Company acquired
the DUNCAN HINES business in January 1998. All statement of direct revenues,
direct expenses, and allocated selling expense, operating and other data
presented below represent the DUNCAN HINES business while under the management
of P&G. The selected historical statements of direct revenues and direct
expenses for the years ended June 30, 1995, 1996 and 1997 are derived from the
audited financial statements of the DUNCAN HINES business included elsewhere in
this Prospectus. The selected historical statements of direct revenues, direct
expenses, and allocated selling expense for the six months ended December 31,
1996 and 1997 are derived from the unaudited financial statements of the DUNCAN
HINES business included elsewhere in this Prospectus and which, in the opinion
of management, include all normal, recurring adjustments. Certain amounts have
been reclassified to conform to the Company's presentation. This table should be
read in conjunction with the DUNCAN HINES business historical financial
statements and related notes thereto included elsewhere in this Prospectus and
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations".

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30, DECEMBER 31,
------------------------------- --------------------
(in thousands) 1995 1996 1997 1996 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
STATEMENTS OF DIRECT REVENUES, DIRECT EXPENSES, AND ALLOCATED SELLING
EXPENSE:
Net sales(1)............................................................. $ 286,167 $ 282,525 $ 257,932 $ 148,652 $ 157,191
Cost of goods sold....................................................... 153,015 153,791 144,261 80,361 85,139
--------- --------- --------- --------- ---------
Gross profit........................................................... 133,152 128,734 113,671 68,291 72,052
--------- --------- --------- --------- ---------
Brokerage, distribution and marketing expenses:
Brokerage and distribution(1).......................................... 25,560 24,565 20,921 12,472 11,832
Trade promotions....................................................... 14,775 16,357 19,646 9,659 15,822
Consumer marketing..................................................... 25,407 26,411 18,753 10,365 11,046
--------- --------- --------- --------- ---------
Total brokerage, distribution and marketing expenses................. 65,742 67,333 59,320 32,496 38,700
Selling, general and administrative expenses............................. 9,962 10,791 10,041 6,177 4,131
--------- --------- --------- --------- ---------
Total expenses....................................................... 75,704 78,124 69,361 38,673 42,831
--------- --------- --------- --------- ---------
Excess of Direct Revenues over Direct Expenses and Allocated Selling
Expense.............................................................. $ 57,448 $ 50,610 $ 44,310 $ 29,618 $ 29,221
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

OPERATING AND OTHER DATA:
EBITDA(2)................................................................ $ 61,048 $ 54,310 $ 48,110 $ 31,518 $ 31,171
EBITDA margin(3)......................................................... 21.3% 19.2% 18.7% 21.2% 19.8%
Depreciation and amortization (unaudited)................................ $ 3,600 $ 3,700 $ 3,800 $ 1,900 $ 1,950
Ratio of earnings to fixed charges(4).................................... N/A N/A N/A N/A N/A
</TABLE>

- ------------------------
(1) Cash discounts of $4,864, $4,804, $4,384, $2,528, and $2,672 for the years
ended June 30, 1995, 1996, and 1997 and the six-month periods ended December
31, 1996 and 1997, respectively, have been reclassified from net sales to
brokerage and distribution expenses to provide consistency with the
Company's presentation and accounting policy. Allocated selling expense of
$6,429, $6,373, $4,750, $3,297 and $2,762 for the years ended June 30, 1995,
1996 and 1997 and the six-month periods ended December 31, 1997 and 1996
have been included in brokerage and distribution to be consistent with the
Company's presentation and accounting policy.

(2) EBITDA is defined as the excess of direct revenues over direct expenses and
allocated selling expense before interest expense, taxes, depreciation,
amortization, and extraordinary items and is presented because it is
commonly used by certain investors and analysts to analyze and compare
companies on the basis of operating performance and to determine a company's
ability to service and incur debt. EBITDA should not be considered in
isolation from or as a substitute for net income, cash flows from operating
activities or other consolidated income or cash flow statement data prepared
in accordance with generally accepted accounting principles or as a measure
of profitability or liquidity.

(3) EBITDA margin is computed as EBITDA as a percentage of net sales.

(4) P&G did not allocate any fixed charges to the DUNCAN HINES business.

45
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE COMPANY AND PREDECESSOR

The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the historical
financial information of the Company and the Predecessor included in the
financial statements and notes to the financial statements. Unless otherwise
noted, fiscal years in this discussion refer to the Company's fiscal year ended
December 27 or December 31, as the case may be.

STATEMENTS OF OPERATIONS

The following table sets forth for the periods indicated the percentage
which the items in the Statements of Operations bear to net sales. Certain
amounts from prior years have been reclassified to conform to the Company's
current year presentation. The Statements of Operations columns for the years
ended December 31, 1995 and 1996 are that of the Predecessor.
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
---------
PREDECESSOR
---------------------------------------------- COMPANY
----------------------
YEARS ENDED DECEMBER 31,
---------------------------------------------- YEAR ENDED
DECEMBER 27, MARCH 29,
1995 1996 1997 1997
---------------------- ---------------------- ---------------------- ---------
% OF % OF % OF
(in thousands) AMOUNT NET SALES AMOUNT NET SALES AMOUNT NET SALES
--------- ----------- --------- ----------- --------- -----------
AMOUNT
---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS:
Net sales................................. $ 93,382(1) 100.0% $ 91,581(1) 100.0% $ 143,020 100.0% $ 21,253
Cost of goods sold........................ 27,743 29.7 28,955 31.6 45,729 32.0 7,167
--------- ----- --------- ----- --------- ----- ---------
Gross profit............................ 65,639 70.3 62,626 68.4 97,291 68.0 14,086
--------- ----- --------- ----- --------- ----- ---------
Brokerage, distribution and marketing
expenses:
Brokerage and distribution.............. 9,663(1) 10.3 10,180(1) 11.1 17,096 12.0 2,279
Trade promotions........................ 19,380 20.8 17,672 19.3 26,075 18.2 3,643
Consumer marketing...................... 13,291 14.2 10,835 11.8 15,142 10.6 1,331
--------- ----- --------- ----- --------- ----- ---------
Total brokerage, distribution and
marketing expenses...................... 42,334 45.3 38,687 42.2 58,313 40.8 7,253
Amortization of goodwill and other
intangibles............................. -- -- -- -- 5,938 4.1 828
Selling, general and administrative
expenses................................ 6,120 6.6 6,753 7.4 5,229 3.6 1,053
Incentive plan expense.................... -- -- -- -- 2,300 1.6 --
Transition expenses....................... -- -- -- -- 2,113 1.5 126
--------- ----- --------- ----- --------- ----- ---------
Total operating expenses.................. 48,454 51.9 45,440 49.6 73,893 51.6 9,260
--------- ----- --------- ----- --------- ----- ---------
Operating income (loss)................. 17,185 18.4 17,186 18.8 23,398 16.4 4,826
Interest income........................... -- -- -- -- (151) (0.1) (32)
Interest expense.......................... -- -- -- -- 18,393 12.9 2,654
Amortization of deferred financing
expense................................. -- -- -- -- 3,059 2.1 2,313
Other bank and financing expenses......... -- -- -- -- 83 0.1 9
--------- ----- --------- ----- --------- ----- ---------
Income (loss) before income taxes and
extraordinary item.................... 17,185 18.4 17,186 18.8 2,014 1.4 (118)
Income tax expense (benefit).............. 6,616 7.1 6,616 7.2 779 0.5 (47)
--------- ----- --------- ----- --------- ----- ---------
Income (loss) before extraordinary item... 10,569 11.3 10,570 11.6 1,235 0.9 (71)
Extraordinary loss on early extinguishment
of debt, net of tax of $1,184........... -- -- -- -- -- -- --
--------- ----- --------- ----- --------- ----- ---------
Net income (loss)......................... $ 10,569 11.3% $ 10,570 11.6% $ 1,235 0.9% $ (71)
--------- ----- --------- ----- --------- ----- ---------
--------- ----- --------- ----- --------- ----- ---------

<CAPTION>
MARCH 28,
1998
----------------------
% OF % OF
(in thousands) NET SALES AMOUNT NET SALES
----------- --------- -----------
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS:
Net sales................................. 100.0% $ 89,385 100.0%
Cost of goods sold........................ 33.7 37,734 42.2
----- --------- -----
Gross profit............................ 66.3 51,651 57.8
----- --------- -----
Brokerage, distribution and marketing
expenses:
Brokerage and distribution.............. 10.7 9,355 10.5
Trade promotions........................ 17.1 15,568 17.4
Consumer marketing...................... 6.3 7,997 8.9
----- --------- -----
Total brokerage, distribution and
marketing expenses...................... 34.1 32,920 36.8
Amortization of goodwill and other
intangibles............................. 3.9 4,597 5.2
Selling, general and administrative
expenses................................ 5.0 2,346 2.6
Incentive plan expense.................... -- 60,000 67.1
Transition expenses....................... 0.6 1,926 2.2
----- --------- -----
Total operating expenses.................. 43.6 101,789 113.9
----- --------- -----
Operating income (loss)................. 22.7 (50,138) (56.1)
Interest income........................... (0.1) (223) (0.3)
Interest expense.......................... 12.5 12,837 14.4
Amortization of deferred financing
expense................................. 10.9 513 0.5
Other bank and financing expenses......... -- 51 0.1
----- --------- -----
Income (loss) before income taxes and
extraordinary item.................... (0.6) (63,316) (70.8)
Income tax expense (benefit).............. (0.2) (360) (0.4)
----- --------- -----
Income (loss) before extraordinary item... (0.4) (62,956) (70.4 )
Extraordinary loss on early extinguishment
of debt, net of tax of $1,184........... -- 1,876 2.1
----- --------- -----
Net income (loss)......................... (0.4)% $ (64,832) (72.5)%
----- --------- -----
----- --------- -----
</TABLE>

- ------------------------
(1) Cash discounts of the Predecessor of $2,080 and $2,040 for the years ended
December 31, 1995 and 1996, respectively, have been reclassified from net
sales to brokerage and distribution expense to provide consistency with the
Company's presentation and accounting policy, and to facilitate comparison
between periods.

46
<PAGE>
THREE MONTHS ENDED MARCH 28, 1998 COMPARED TO THREE MONTHS ENDED MARCH 29, 1997

NET SALES. Net sales for the three months ended March 28, 1998 were $89.4
million, which was an increase of $68.1 million compared to sales in the prior
year's quarter of $21.3 million. The increase was the result of the acquisitions
of LOG CABIN and DUNCAN HINES, which provided $25.9 and $42.7 million in net
sales, respectively. Net dollar sales for MRS. BUTTERWORTH'S branded products
were down slightly for the three months ended March 28, 1998 at $20.8 million.
However, sales volume increased 4.5% for the three months ended March 28, 1998.

Syrup net sales of $44.8 million increased $26.2 million, of which $25.9
million was attributable to the LOG CABIN acquisition. Net sales for MRS.
BUTTERWORTH'S syrup products increased $0.3 million compared to the 1997 period
while MRS. BUTTERWORTH'S syrup case volume increased by 10.8% from 788,000
standard cases in the 1997 period to 874,000 standard cases in 1998. The growth
in MRS. BUTTERWORTH'S syrup volume was attributable to increased sales of lower
revenue per case products sold to the club store and foodservice markets.

MRS. BUTTERWORTH'S pancake mix sales were $1.9 million overall in the 1998
period compared to $2.7 million in the 1997 period. The decrease was due to a
decline in the overall pancake mix category and a retail inventory build up
during the first quarter of 1997 in anticipation of a consumer event that
occurred in the second quarter of 1997.

Net sales for the Company's DUNCAN HINES baking mix products were $42.7
million for the three months ended March 28, 1998 and included results of
operations from January 16, 1998, the date of acquisition. Including results for
the stub period (January 1 to January 15), sales would have been $47.8 million,
which was a decrease of 10.1% from the prior year period. Sales of DUNCAN HINES
products were negatively impacted in January and February by a case load into
retail channels initiated by P&G in the latter part of 1997 which resulted in
volume increases in December 1997 relative to December 1996 for cake mix and
ready-to-spread frosting of 118.3% and 129.5%, respectively. Monthly sales
volumes since February have returned to prior year levels.

GROSS PROFIT. Gross profit as a percentage of net sales was 57.8% for the
three months ended March 28, 1998 as compared to 66.3% for the corresponding
1997 period. The gross margin was affected by the inclusion of sales of DUNCAN
HINES baking mix products, which have lower gross margins than syrup and pancake
mix products. The syrup and pancake mix products had a gross margin of 67.2% in
the current quarter, a 0.9% increase compared to the 1997 period. The
improvement was attributable to lower manufacturing expense resulting from the
Company's long-term contract manufacturing agreements and lower corn syrup
costs.

BROKERAGE, DISTRIBUTION AND MARKETING EXPENSES. Brokerage, distribution and
marketing expenses for the three months ended March 28, 1998 were 36.8% as a
percentage of net sales compared to 34.1% in the 1997 period. The increase was
primarily the result of the implementation of new advertising programs for all
of the Company's brands where none existed during the prior year period.

AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES. Amortization of goodwill
and other intangibles of $4.6 million was attributable to the acquisitions of
the MRS. BUTTERWORTH'S business on December 31, 1996, LOG CABIN on July 1, 1997
and DUNCAN HINES on January 16, 1998.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses of $2.3 million were 2.6% as a percentage of net sales,
as compared to 5.0% for the same period in 1997. The favorable variance
represents the efficiencies realized from the increased size of the Company.

INCENTIVE PLAN EXPENSE. For the three months ended March 28, 1998, the
Company recorded non-cash incentive plan expense of $60.0 million based on the
estimated current valuation of the Company and in accordance with the Aurora
Plan contained in the Amended and Restated Limited Liability Company Agreement
of MBW Investors LLC. The previous estimated valuation of the Company for the
year ended December 27, 1997 resulted in recording $2.3 million of incentive
plan expense. The current estimated valuation of the Company has increased
significantly and has resulted in significant incentive plan expense.

47
<PAGE>
In addition, most rights under the Aurora Plan are fully vested. The expense has
been recorded as a liability of MBW Investors LLC as the sponsor of the Aurora
Plan. However, because the Aurora Plan is for the benefit of employees of the
Company, expense recognized under the Aurora Plan has been pushed down to the
Company, and has been recorded by the Company as incentive plan expense and as
additional paid-in capital from its parent. See "Management--Aurora Incentive
Plan."

TRANSITION EXPENSES. Transition expenses consist of one-time costs incurred
to establish the Company's operations and integrate the acquired businesses,
including relocation expenses, recruiting fees, sales support and other unique
transitional expenses. The increase for the 1998 period of $1.8 million as
compared to 1997 was due to the LOG CABIN and DUNCAN HINES acquisitions. The
1997 period included transition expenses for the MRS. BUTTERWORTH'S business
only.

OPERATING (LOSS) INCOME. Operating loss for the three months ended March
28, 1998 was $50.1 million as compared to operating income of $4.8 million for
the prior year period. Excluding the effect of the recognition of non-cash
incentive plan expense of $60.0 million, operating profit was $9.9 million,
which was an increase of $5.0 million compared to the same period in 1997. The
operating income margin, excluding (i) incentive plan expense, (ii) higher
goodwill amortization (5.2% versus 3.9% as a percentage of net sales in 1997),
and (iii) higher transition related expenses (2.2% versus 0.6% as a percentage
of net sales) associated with the acquisitions of LOG CABIN and DUNCAN HINES,
would have been 18.5%, as compared to 22.7% in the prior year's quarter. The
margin decrease was due to lower gross margins and incremental marketing costs
for advertising associated with reestablishing media programs for the MRS.
BUTTERWORTH'S and LOG CABIN syrup brands and ongoing media support for the
DUNCAN HINES brand.

INTEREST EXPENSE AND AMORTIZATION OF DEFERRED FINANCING EXPENSE. The
aggregate of net interest expense and amortization of deferred financing expense
was $13.1 million in the three months ended March 28, 1998. The increased
expenses were related to the financing of the acquisitions of LOG CABIN and
DUNCAN HINES.

INCOME TAX BENEFIT. The effective tax rate was lower than the statutory
rate due to the effect of non-deductible incentive plan expense.

NET LOSS. Net loss was $64.8 million for the three months ended March 28,
1998. Excluding the effect of non-cash incentive plan expense, the net loss of
$4.8 million was greater than the net loss incurred in the same period in 1997
due to higher interest expense and amortization of deferred financing expense.

LIQUIDITY AND CAPITAL RESOURCES

For the three months ended March 28, 1998, and the year ended December 27,
1997 cash provided by operations was $14.4 million and $23.0 million,
respectively. Net income (loss) plus non-cash charges provided $2.8 million and
$14.3 million, respectively, of operating cash flow. A decrease in net working
capital generated an additional $11.5 million in cash from operations for the
three months ended March 28, 1998. The decrease in net working capital was
primarily the result of the timing of working capital commitments associated
with the Company's transition agreements with prior owners of the LOG CABIN and
DUNCAN HINES businesses. The transition agreements resulted in minimal working
capital commitments for the Company during the transition period due to a
monthly settlement procedure by which the Company remitted payments subsequent
to the receipt of finished goods. At March 28, 1998 current assets, excluding
cash and current deferred tax assets, increased $30.0 million as compared to
December 27, 1997 and current liabilities, excluding current maturities of
senior secured term debt, increased $31.5 million as compared to December 27,
1997. The increase in both current assets and current liabilities was the result
of three factors: (1) inclusion of all items of working capital related to the
LOG CABIN business, which had previously been accounted for on the prior owner's
books through the transition period and recorded on the Company's books as a
monthly net cash settlement, (2) addition of inventory balances of DUNCAN HINES
products which were assumed in March 1998 as part of the transition process from
P&G, and (3) receivable balance due from P&G to cover reimbursable costs
incurred in connection with the relocation of manufacturing equipment from P&G
to the Company's contract manufacturers' production facilities.

48
<PAGE>
Net cash used in investing activities was $449.4 million and $229.2 million
for the three months ended March 28, 1998 and the year ended December 27, 1997,
respectively. In addition to the acquisition of DUNCAN HINES, the Company spent
$1.5 million on capital expenditures and $0.1 million on furniture and fixtures
during the three months ended March 28, 1998. In addition to the acquisition of
LOG CABIN, the Company spent $2.4 million on capital expenditures and $0.8
million on software to establish a management information computer system for
the Company during the year ended December 27, 1997. The capital expenditures
were incurred to relocate and install acquired manufacturing equipment at the
Company's contract manufacturers' production facilities. In addition, the
Company disposed of surplus production equipment and received proceeds of $0.3
million from the dispositions. The Company expects to spend approximately $10.7
million on capital expenditures in 1998 for the Aurora Division and anticipates
that these expenditures will be funded from internal cash flow. As of March 28,
1998, the Company had no commitments for any other material capital expenditures
for the current operations for the Aurora Division.

During the three months ended March 28, 1998, and the year ended December
27, 1998 financing activities provided cash of $453.6 million and $202.2
million, respectively. To finance the acquisition of DUNCAN HINES and related
expenses, the Company incurred an early extinguishment of its existing senior
secured term debt and senior secured revolving debt facility, which totaled
$76.5 million. The Company borrowed $450 million of senior secured bank debt
under the Aurora Senior Bank Facilities. During 1997, the Company received
$202.5 million from issuances of senior subordinated notes and $90.0 million
from borrowings under the senior secured term debt and a senior secured
revolving debt facilities under the Aurora Senior Bank Facilities. In addition,
the Company received a capital contribution from MBW Investors LLC in the amount
of $28.5 million. The proceeds from the notes and debt facilities were used to
repay senior secured debt and a senior subordinated note, together totaling
$95.0 million, existing from the acquisition of MRS. BUTTERWORTH'S on December
31, 1996, and to fund the $222.0 million acquisition of LOG CABIN on July 1,
1997. The Company's Senior Credit Facilities have a final maturity date of June
30, 2005, and will amortize in quarterly payments of $5.0 million, beginning
December 31, 1998, through June 30, 2000, increasing thereafter to $7.5 million
per quarter through June 30, 2002, increasing thereafter to $10.0 million per
quarter through June 30, 2004 and increasing to $12.5 million per quarter
thereafter until the final maturity date. The Company's Aurora Series B Notes
and Aurora Series D Notes mature in 2007 and the Notes mature in 2008, with
semi-annual interest payments totalling $37.0 million annually.

At March 28, 1998, the Company had $23.3 million of cash and cash
equivalents and an unused commitment of $75.0 million on its revolving debt
facility. The Company's primary sources of liquidity are cash flows from
operations and available borrowings under the $75.0 million revolving debt
facility. Management believes the available borrowing capacity under the
revolving debt facility combined with cash provided by operations will provide
the Company with sufficient cash to fund operations as well as to meet existing
obligations.

INFLATION

The Company does not believe that inflation has had a material impact on its
financial position or results of operations during the years ended December
1995, 1996, and 1997.

YEAR 2000

The Company is aware of the risks associated with the Year 2000 issue
relative to computerized information systems of the Company and others. In
connection with the Company's recent formation and subsequent acquisitions, it
has modified and/or replaced all of its key computer information systems.
Accordingly, management believes that the Company's key computerized information
systems are Year 2000 compliant. Therefore, the Company, prospectively, does not
expect to incur any material remediation costs for Year 2000 solutions of its
existing information systems. The Company continues to assess the Year 2000
issue relative to its key vendors and other third parties having significant
relationships with the Company. Although no assurance can be given with respect
to vendors' and other third parties' computerized information systems being Year
2000 compliant, the Company believes other independent providers of

49
<PAGE>
similar goods and services can be secured without any material adverse effect on
the future operating results and cash flows of the Company.

OTHER INFORMATION

On January 16, 1998, during the Company's quarter ended March 28, 1998, the
Company acquired all the assets of the DUNCAN HINES business from P&G for
approximately $445.0 million. The Company financed the acquisition of the DUNCAN
HINES business and related costs with a capital contribution by MBW Investors
LLC of $93.6 million and with additional senior secured bank borrowings totaling
approximately $373.5 million. The additional senior secured bank borrowings were
incurred under the Aurora Senior Bank Facility.

The Contribution Transaction occurred on April 8, 1998. New LLC is a
majority owned subsidiary of MBW Investors LLC. New LLC and the Company will
account for the contribution of the ownership of Aurora at MBW Investors LLC's
historical cost and the contribution of the ownership of VDK will be accounted
for as an acquisition using the purchase method of accounting at New LLC's cost.
On June 19, 1998, the Company was incorporated and just prior to the Equity
Offerings, New LLC contributed all of the issued and outstanding stock of Aurora
and VDK to it.

The Company expects to spend $23.0 million on capital expenditures in 1998
for both the Aurora Division and the VDK Division. As of June 22, 1998 the
Company had no commitments for any other material capital expenditures for its
current operations. Capital expenditures include the expansion of production
capacity for frozen breakfast products and routine maintenance and cost saving
projects. In addition, the Company anticipates one time expenditures of
approximately $5.0 million in excess of relocation costs for which it will be
reimbursed by P&G to relocate and install DUNCAN HINES machinery and equipment
into the Company's contract manufacturers, and expenditures of approximately
$5.0 million to relocate and install syrup machinery and equipment into Red Wing
manufacturing facilities.

In conjunction with the closing of the Offerings, the Company refinanced its
Aurora Senior Bank Facilities and VDK Senior Bank Facilities. The new Senior
Credit Facilities consist of $225.0 million of senior secured term loans and
$175.0 million under a senior secured revolving credit facility. In addition,
the Company has outstanding $200.0 million of Senior Subordinated Notes under
the Aurora Indentures (see "Description of Other Indebtedness") and has issued
$200.0 million of Notes under the Indenture. The Senior Credit Facilities and
each of the Indentures contain a number of significant negative covenants. Under
the Indentures, the negative covenants (i) limit the amount of indebtedness the
Company may incur; (ii) limit the Company's ability to make certain payments;
(iii) restrict distributions from the Company's subsidiaries; (iv) place
limitations on sales of assets by the Company and its subsidiaries; (v) limit
transactions with affiliates of the Company; (vi) limit the sale of the capital
stock of the Company's subsidiaries; (vii) limit the lines of businesses the
Company may engage in; and (viii) limit the Company's ability to merge or
consolidate or transfer all or substantially all of the assets of the Company.
The Senior Credit Facilities also contain other restrictive covenants which
require the Company to maintain specified financial ratios and satisfy financial
condition tests including a minimum interest coverage ratio, a maximum leverage
ratio, a minimum fixed charge ratio and a maximum level of capital expenditure
amounts.

YEAR ENDED DECEMBER 27, 1997 FOR THE COMPANY COMPARED TO THE YEAR ENDED DECEMBER
31, 1996 FOR THE PREDECESSOR

NET SALES. Net sales for the period increased $51.4 million versus the
prior year to $143.0 million. The increase was due primarily to the acquisition
of LOG CABIN on July 1, 1997, which added $50.4 million in net sales. Net dollar
sales for all of MRS. BUTTERWORTH'S branded products increased 1.1% to $92.6
million for the year ended December 27, 1997 from $91.6 million for the 1996
period, while case volume increased 5.1% to 4.1 million cases.

Syrup sales increased $52.1 million to $133.2 million in 1997 from $81.1
million in 1996. The increase was due primarily to the LOG CABIN acquisition,
which added $50.4 million in sales during 1997. MRS. BUTTERWORTH'S syrup dollar
sales increased $1.7 million, or 2.1%, to $82.8 million in 1997. MRS.

50
<PAGE>
BUTTERWORTH'S syrup case volume increased 7.6% to 3.5 million cases in 1997 from
3.3 million cases in 1996. The percentage increase in MRS. BUTTERWORTH'S syrup
case volume exceeded the percentage increase in dollar sales because the
Predecessor adopted a value pricing strategy in mid-1996, which lowered the list
price on 90% of its retail syrup volume by 10%. The increase in syrup volume was
attributable to increases in the Company's MRS. BUTTERWORTH'S Original brand and
foodservice and club store sales. The volume increase was partially offset by a
decrease in sales of MRS. BUTTERWORTH'S Country Best Recipe and MRS.
BUTTERWORTH'S Lite brands. MRS. BUTTERWORTH'S Lite has been reformulated and was
introduced in December 1997.

MRS. BUTTERWORTH'S pancake mix sales of $9.8 million in 1997 were down by
$0.7 million as compared to the 1996 period, and pancake mix volume decreased 7%
to 0.6 million cases. The overall pancake mix category was down approximately 4%
in 1997 from the prior year.

The Company's pro forma 1997 net sales after giving effect to the
acquisition of LOG CABIN were $194.2 million, which was $1.8 million less than
the combined sales of MRS. BUTTERWORTH'S and LOG CABIN of $196.0 million for the
year ended December 31, 1996. The decline in sales was attributable to softness
in the LOG CABIN business.

GROSS PROFIT. Gross profit as a percentage of net sales was 68.0% for the
1997 period as compared to 68.4% for the 1996 period. The gross margin
percentage in the 1996 period was impacted by the value pricing strategy
implemented by the Predecessor in mid-year 1996. The change to value pricing
caused net revenues and gross profits to be reduced in 1997 relative to the
prior year, which only included a partial year impact of value pricing.

BROKERAGE, DISTRIBUTION AND MARKETING EXPENSES. Brokerage, distribution and
marketing expenses for 1997 were 40.8% of net sales as compared to 42.2% for
1996. The improvement was due to lower trade promotions as a percentage of net
sales in 1997 as a result of the value pricing strategy as well as a reduction
in high redemption value coupons compared to 1996.

AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES. Amortization of goodwill
and other intangibles of $5.9 million in 1997 was attributable to amortization
of goodwill associated with the acquisitions of MRS. BUTTERWORTH'S on December
31, 1996 and LOG CABIN on July 1, 1997.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses of $5.2 million for 1997 were $1.6 million less than the
$6.8 million of expense incurred for 1996. The favorable variance was due to
lower overhead spending associated with the Company's stand-alone structure as
compared to amounts allocated to MRS. BUTTERWORTH'S during the Predecessor's
ownership period.

INCENTIVE PLAN EXPENSE. Incentive plan expense was recorded under the
Aurora Plan based on the estimated valuation of the Company. See Note 15 to the
Company's 1997 financial statements included elsewhere in this Prospectus.

TRANSITION EXPENSES. Transition expenses of $2.1 million in 1997 consist of
one-time costs incurred to establish the Company's operations and integrate the
acquired businesses of MRS. BUTTERWORTH'S and LOG CABIN, including relocation
expenses, recruiting fees, sales support and other unique transitional expenses.

OPERATING INCOME. Operating income as a percentage of net sales was 16.4%
for 1997 as compared to 18.8% for 1996. The decrease in the Company's operating
profit margin was primarily due to amortization of goodwill and other
intangibles (4.1% of net sales), incentive compensation expense (1.6% of net
sales) and transition expenses (1.5% of net sales), which were not incurred
under the Predecessor's ownership. Excluding the impact of these expenses, the
operating margin increased to 23.6% of net sales because trade promotions,
consumer marketing and selling, general and administrative expenses as a
percentage of net sales were lower than the prior year. Overall, operating
income increased $6.2 million, or 36.1%, to $23.4 million as compared to $17.2
million in 1996.

INTEREST EXPENSE AND AMORTIZATION OF DEFERRED FINANCING EXPENSE. Net
interest expense and amortization of deferred financing expense was $21.3
million in 1997. These expenses were related to the financing

51
<PAGE>
of the acquired businesses. The Predecessor did not separately allocate these
respective costs to MRS. BUTTERWORTH'S.

INCOME TAX PROVISION. The Company has a combined federal and state tax rate
of approximately 38.7% in 1997 as compared to the Predecessor's effective rate
in 1996 of 38.5%.

NET INCOME. Net income was $1.2 million in 1997, which was $9.3 million
lower than the prior year. The decline in net income was attributable to the
interest expense and amortization of deferred financing expense incurred during
1997.

YEAR ENDED DECEMBER 31, 1996 FOR THE PREDECESSOR COMPARED TO YEAR ENDED DECEMBER
31, 1995 FOR THE PREDECESSOR

NET SALES. Net sales declined 1.9% to $91.6 million for the year ended
December 31, 1996 as compared to $93.4 million for the year ended December 31,
1995. Sales volume increased 2.6% to 3.9 million cases in 1996 from 3.8 million
cases in 1995.

Syrup sales decreased $1.8 million to $81.1 million in 1996 from $82.9
million in 1995. Syrup volume increased 3.1% to 3.3 million cases in 1996 from
3.2 million cases in 1995. In May 1996, the Predecessor adopted a value pricing
strategy to position its MRS. BUTTERWORTH'S brand as the best value among the
three national syrup brands. This value pricing strategy benefited the brand
through higher volumes and savings on consumer marketing expenses, but resulted
in a net decrease in syrup dollar sales in 1996.

MRS. BUTTERWORTH'S pancake mix sales remained constant at $10.5 million in
1996, the same as in 1995. Pancake mix volume was flat at 0.6 million cases in
1996, which was the same volume achieved in 1995.

GROSS PROFIT. Gross profit was 68.4% in 1996, as compared to 70.3% in 1995.
The decrease in the gross profit margin was primarily due to lower list prices
related to the Predecessor's value pricing strategy.

BROKERAGE, DISTRIBUTION AND MARKETING EXPENSES. Brokerage, distribution and
marketing expenses for 1996 were 42.2% as a percentage of net sales as compared
to 45.3% for 1995. The favorable variance was the result of lower trade
promotion and consumer marketing expenses attributable to the Predecessor's
value pricing strategy.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses of $6.8 million for 1996 were $0.7 million more than
expenses of $6.1 million in 1995.

OPERATING INCOME. Operating income as a percentage of net sales improved to
18.8% for the year ended December 31, 1996 as compared to 18.4% for the year
ended December 31, 1995. The operating margin improvement was primarily the
result of a reduction in consumer marketing expense as a percentage of net sales
to 11.8% in 1996 from 14.2% in 1995 due to a reduction in costly
buy-one-get-one-free promotions.

INTEREST EXPENSE AND AMORTIZATION OF DEFERRED FINANCING EXPENSE. The
Predecessor did not allocate interest expense or amortization of deferred
financing expense to MRS. BUTTERWORTH'S.

INCOME TAX PROVISION. The provision for income taxes of $6.6 million in
1996 represented an effective tax rate of 38.5%, the same rate as in 1995.

NET INCOME. Net income was $10.6 million in 1995 and 1996 due to the
factors discussed above.

52
<PAGE>
VDK

The following discussion and analysis of VDK's financial condition and
statements of operations should be read in conjunction with the historical
financial information included in the financial statements. Unless otherwise
noted, years (1997, 1996, etc.) in this discussion refer to VDK's fiscal years
ended June 30 or June 29, as applicable.

STATEMENTS OF OPERATIONS

(in thousands)

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED MARCH 31,
----------------------------------------- -------------------------------------------
JUNE 29, 1996 JUNE 30, 1997 1997 1998
------------------- ------------------- ------------------- ---------------------
(UNAUDITED)
% OF % OF % OF % OF
STATEMENTS OF OPERATIONS: AMOUNT NET SALES AMOUNT NET SALES AMOUNT NET SALES AMOUNT NET SALES
-------- --------- -------- --------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............................... $163,841 100.0% $435,476 100.0% $344,113 100.0% $348,288 100.0%
Cost of goods sold...................... 71,345 43.5 180,941 41.6 143,522 41.7 135,777 39.0
-------- --------- -------- --------- -------- --------- -------- -----------
Gross profit............................ 92,496 56.5 254,535 58.4 200,591 58.3 212,511 61.0
-------- --------- -------- --------- -------- --------- -------- -----------
Brokerage, distribution and marketing
expenses:
Brokerage and distribution............ 17,517 10.7 45,352 10.4 37,005 10.8 33,765 9.7
Trade promotions...................... 36,216 22.1 108,925 25.0 83,908 24.4 101,534 29.2
Consumer marketing.................... 13,255 8.1 29,524 6.8 23,897 6.9 25,151 7.2
-------- --------- -------- --------- -------- --------- -------- -----------
Total brokerage, distribution and
marketing expenses.................... 66,988 40.9 183,801 42.2 144,810 42.1 160,450 46.1
Amortization of goodwill and other
intangibles........................... 4,912 3.0 13,142 3.0 9,982 2.9 10,194 2.9
General and administrative expenses..... 6,637 4.1 14,270 3.3 9,825 2.8 13,968 4.0
Incentive plan expense.................. -- -- -- -- -- -- 69,000 19.8
Transition expenses..................... 1,337 0.8 2,885 0.7 2,073 0.6 -- --
-------- --------- -------- --------- -------- --------- -------- -----------
Total operating expenses................ 79,874 48.8 214,098 49.2 166,690 48.4 253,612 72.8
-------- --------- -------- --------- -------- --------- -------- -----------
Operating income (loss)................. 12,622 7.7 40,437 9.3 33,901 9.9 (41,101) (11.8)
Interest income......................... (135) (0.1) (965) (0.2) (939) (0.3) (60) --
Interest expense........................ 12,469 7.6 32,499 7.5 24,762 7.2 23,634 6.8
Amortization of deferred financing
expense............................... 607 0.4 2,108 0.5 1,573 0.5 1,612 0.5
Other bank and financing expenses....... 79 -- 265 0.1 215 0.1 131 --
-------- --------- -------- --------- -------- --------- -------- -----------
Income (loss) before income tax expense
(benefit)............................. (398) (0.2) 6,530 1.5 8,290 2.4 (66,418) (19.1)
Income tax expense (benefit)............ 163 0.1 2,377 0.5 3,316 1.0 (21,304) (6.1)
-------- --------- -------- --------- -------- --------- -------- -----------
Net income (loss)....................... $ (561) (0.3)% $ 4,153 1.0% $ 4,974 1.4% $(45,114) (13.0)%
-------- --------- -------- --------- -------- --------- -------- -----------
-------- --------- -------- --------- -------- --------- -------- -----------
</TABLE>

53
<PAGE>
NINE MONTHS ENDED MARCH 31, 1998 COMPARED TO
NINE MONTHS ENDED MARCH 31, 1997

NET SALES. Net sales for the nine month period were $348.3 million, which
was 1.2% higher than net sales during the prior nine month period of $344.1
million. Excluding the impact in both years of (i) sales of the desserts product
line, which was divested on May 1, 1998, and (ii) sales of whipped topping
product lines, which was divested in February 1997, sales increased $11.7
million, or 3.7%. AUNT JEMIMA sales increased by $5.0 million, or 8.4%, as a
result of increased trade promotion spending and consumer marketing support.
CELESTE pizza sales increased by $5.9 million, or 10.6%, due to the introduction
of MAMA CELESTE Fresh Baked Rising Crust Pizza and increased sales of CELESTE
Pizza For One products. Frozen seafood sales decreased 0.8% versus the same
period last year primarily because the current period included two fewer weeks
of high volume Lenten season sales than the prior year period (Lent began on
February 25 in 1998 compared to February 12 in 1997), which affected the
Company's sales as well as overall seafood category volume. Foodservice sales
increased $2.2 million, or 9.1%, versus 1997 due to higher frozen breakfast
volumes and a price increase of approximately 3.0% taken in July 1997.

GROSS PROFIT. Gross profit increased from 58.3% as a percentage of net
sales to 61.0%. The increase reflected favorable packaging and raw material
costs, improved manufacturing and distribution efficiencies, and the impact of
the divestiture of the less profitable whipped topping product line in February
1997.

BROKERAGE, DISTRIBUTION AND MARKETING EXPENSES. Brokerage, distribution and
marketing expenses increased from 42.1% as a percentage of net sales in 1997 to
46.1% in the current period. Lower brokerage and distribution expenses were
offset by higher trade promotion and consumer marketing expenses.

Brokerage and distribution expenses declined as a percentage of net sales
compared to last year as a result of operational efficiencies within VDK's
distribution system and favorable freight rates. Trade promotion spending
increased to support the introduction of new products in the frozen seafood and
frozen pizza product lines and in response to competitive activity in the frozen
seafood and breakfast categories. Management believes that certain of the
Company's trade spending programs in the current period were not sufficiently
productive and has implemented programs to improve the efficiency of the
Company's trade spending. Increased coupon support and new media programs for
VDK's frozen pizza and frozen breakfast product lines resulted in higher
consumer marketing spending versus 1997.

AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES. Amortization of goodwill
and intangibles was unchanged as a percentage of net sales versus the same
period in the prior year.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $4.1 million to 4.0% as a percentage of net sales versus 2.8% in the
prior year. The increase reflected higher staffing levels required to support
the acquired business and the incremental cost of a foodservice sales
organization. In the prior year period, Quaker Oats managed the VDK foodservice
sales function for a fee of $1.3 million, which was classified as a selling and
distribution expense.

INCENTIVE PLAN EXPENSE. For the nine months ended March 31, 1998, VDK
recorded non-cash incentive plan expense of $69.0 million based on the estimated
current valuation of VDK and in accordance with the VDK Plan. In addition, most
rights under the VDK Plan are vested. Included in incentive plan expense was a
tax gross up amount of $15.0 million, which relates to certain distributions as
provided for in the VDK Plan. Valuations prior to the 1998 nine month period did
not result in incentive plan expense under the VDK Plan. The expense has been
recorded as a liability of VDK Foods LLC as the sponsor of the VDK Plan.
However, because the VDK Plan is for the benefit of key personnel of VDK,
expense recognized under the VDK Plan has been pushed down to VDK, and has been
recorded by VDK as incentive plan expense and as additional paid in capital from
its parent. See "Management--VDK Incentive Plan". In addition, the tax benefit
related to the tax gross up element of incentive plan expense had been recorded
to income tax expense and as a deferred tax asset. The Company will receive the
tax benefit associated with the tax gross up amount, and the Company expects
that the tax benefit will approximate the amount of the tax gross up payments.
The tax gross up amount has been recorded as incentive plan expense and as an
other liability. See "Management--VDK Incentive Plan."

54
<PAGE>
OPERATING (LOSS) INCOME. Operating loss for the nine month period was $41.1
million as compared to operating income of $33.9 million for the prior nine
month period. Excluding the effect of the recognition of non-cash incentive plan
expense of $69.0 million, operating profit was $27.9 million, which was $6.0
million lower than the prior year period. VDK's operating income margin,
excluding the effect of incentive plan expense, was 8.0% as a percentage of net
sales in 1998 as compared to 9.9% during the same period in 1997. The decrease
in VDK's operating income, excluding the effect of incentive plan expense, was
primarily due to increased promotional spending in support of VDK's new product
offerings and in response to competitive activity and higher general and
administrative expenses.

INTEREST EXPENSE (INCOME). Interest expense decreased $1.2 million versus
the same period in the prior year due to scheduled repayments of VDK's Senior
Bank Facility. The decrease in interest expense was partially offset by
additional borrowings versus last year on the VDK Senior Bank Facility. Interest
income decreased $0.9 million in the current nine month period. In the prior
nine month period, VDK earned interest income on an escrow account which held a
$20.0 million senior secured convertible loan which was repaid in February 1997.

INCOME TAX (BENEFIT) EXPENSE. VDK's combined effective federal and state
tax rate for the current period was approximately 32.1%. The rate was lower than
the rate experienced in the same period last year because a portion of incentive
plan expense was not deductible, which generated a greater book loss than tax
loss and commensurate lower income tax benefit benefit for tax purposes.

NET INCOME (LOSS). VDK incurred a net loss of $45.1 million as compared to
net income of $5.0 million for the same period last year. Excluding the effect
of non-cash incentive plan expense, the net income of $1.3 million was lower
than the net income in the 1997 period due to lower operating income.

YEAR ENDED JUNE 30, 1997 COMPARED TO THE YEAR ENDED JUNE 29, 1996

NET SALES. Net sales for the year increased $271.6 million over the prior
year to $435.5 million. MRS. PAUL'S seafood, which was acquired from Campbell
Soup on May 6, 1996, generated $85.8 million in the first full year of
ownership. CELESTE/AUNT JEMIMA, which was acquired from Quaker Oats on July 9,
1996, added $184.1 million in sales following the acquisition. VAN DE KAMP'S
seafood sales increased $10.5 million, or 8.7% versus the prior year, largely
due to the successful introduction of flavored baked and grilled fillet
products. Desserts sales decreased $1.0 million versus 1996 due to lower whipped
topping sales volume resulting from the divestiture of the whipped topping
product line in February 1997. Excluding the impact of whipped topping sales in
both years, desserts sales grew $5.7 million, or 26.4%, due to increased
promotional efforts and new product introductions.

Compared to 1996 pro forma sales of $401.5 million, sales increased $34.0
million, or 8.5%. MRS. PAUL'S sales increased by $4.7 million, or 5.8%, due to
new product introductions which were supported by advertising and increased
promotional activity. CELESTE pizza sales increased by $4.1 million, or 6%,
behind focused promotional programs and more effective trade spending. AUNT
JEMIMA sales increased by $11.6 million, or 16.7%, due to increased consumer
marketing and trade promotion spending. Foodservice sales increased $4.1
million, or 15.8% versus the prior year, due to a focused selling effort on
frozen breakfast products.

GROSS PROFIT. Gross profit increased from 56.5% as a percentage of net
sales in 1996 to 58.4% in 1997. The improvement was caused primarily by lower
seafood manufacturing costs stemming from the integration of MRS. PAUL'S seafood
production in the Erie, Pennsylvania facility and the effect of the sale of the
lower margin private label whipped topping product line in February 1997.

BROKERAGE, DISTRIBUTION AND MARKETING EXPENSES. Brokerage, distribution and
marketing expenses increased from 40.9% as a percentage of net sales in the
prior year to 42.2% in 1997. The increase was due to an increase in trade
promotion expense, which was partially offset by lower selling and distribution
expense and lower consumer marketing expense.

55
<PAGE>
The increase in trade promotion spending was caused by (i) higher spending
levels to support new product introductions under the VAN DE KAMP'S and MRS.
PAUL'S brands, and (ii) the inclusion in 1997 of the CELESTE pizza business
which has a higher rate of trade spending than the seafood product lines.
Brokerage and distribution expenses declined from 10.7% as a percentage of net
sales in 1996 to 10.4% as a percentage of sales in 1997 due to the development
of a lower cost distribution network than the prior owner and distribution
efficiencies resulting from the MRS. PAUL'S and CELESTE/AUNT JEMIMA
acquisitions. Consumer marketing decreased as a percentage of net sales because
the spending rate was lower for the CELESTE pizza and AUNT JEMIMA breakfast
products than for VDK's other product lines. The lower CELESTE/ AUNT JEMIMA
spending rate was partially offset by increased consumer spending to support the
introduction of new seafood and dessert products during 1997.

AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES. Amortization of goodwill
and intangibles increased $8.2 million from 1996 to 1997 due to the increase in
intangibles resulting from the acquisitions of VAN DE KAMP'S in the first
quarter of 1996, MRS. PAUL'S in the fourth quarter of 1996, and CELESTE/AUNT
JEMIMA in the first quarter of 1997.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $7.6 million from 1996 to 1997 due to management of the businesses
acquired during calendar 1996. However, general and administrative expenses
decreased from 1996 to 1997 from 4.1% as a percentage of net sales to 3.3%
during this period due to delays in reaching full staffing levels following the
MRS. PAUL'S and CELESTE/AUNT JEMIMA acquisitions, and lower overhead spending
associated with VDK's organizational structure as compared to amounts allocated
to the business during the Pillsbury ownership period.

TRANSITION EXPENSES. Transition expenses of $2.9 million in 1997 and $1.3
million in 1996 consist of what management believes to be one-time costs
incurred to establish operations and integrate acquired businesses, including
relocation expenses, recruiting fees, sales training, broker conversions and
orientations, computer systems conversion, and other unique transitional
expenses. The increase in transition related costs was mainly attributable to
the CELESTE/AUNT JEMIMA acquisition and additional MRS. PAUL'S costs not
incurred in 1996.

INTEREST EXPENSE. Interest expense increased versus the prior year due to
additional debt incurred to complete the acquisition of CELESTE/AUNT JEMIMA and
the inclusion of a full year of interest and debt resulting from the
acquisitions of the VAN DE KAMP'S and MRS. PAUL'S businesses.

INCOME BEFORE INCOME TAXES. Income before income taxes increased $6.9
million due to the increased size, and therefore operating income of VDK, as
well as the operating improvements described previously.

PROVISION FOR INCOME TAXES. VDK's combined effective federal and state tax
rate for 1997 was 36.4%. This rate was lower than the rate experienced by
Pillsbury, primarily because VDK's amortization of goodwill is deductible for
income tax purposes.

NET INCOME. Net income of $4.2 million in 1997 was higher than the $0.6
million loss experienced in 1996. The increase in size of VDK resulting from the
acquisitions, combined with improvements in the gross profit margin, contributed
to the increase in net income.

56
<PAGE>
DUNCAN HINES

The following discussion and analysis of DUNCAN HINES financial condition
and results of operations should be read in conjunction with the historical
financial information included in the financial statements. The Company acquired
the DUNCAN HINES business from P&G in January 1998. Accordingly, all of the
information presented below represents the operations of the DUNCAN HINES
business by P&G. Unless otherwise noted, years (1997, 1996, etc.) in this
discussion refer to DUNCAN HINES fiscal years ended June 30.

STATEMENTS OF DIRECT REVENUES, DIRECT EXPENSES, AND ALLOCATED SELLING EXPENSE

The following table sets forth for the periods indicated the percentage
which the items in the statements of direct revenues, direct expenses, and
allocated selling expense bear to net sales. Certain amounts from prior periods
have been reclassified to conform to the Company's presentation. The basis of
presentation of the statements of direct revenues, direct expenses, and
allocated selling expense is disclosed in Note 1 to the financial statements
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
DECEMBER
YEAR ENDED JUNE 30, 31,
---------------------------------------------------------------------- ---------
(IN THOUSANDS) 1995 1996 1997 1996
- -------------------------------------- ---------------------- ---------------------- ---------------------- ---------
% OF % OF % OF
NET NET NET
AMOUNT SALES AMOUNT SALES AMOUNT SALES AMOUNT
--------- ----- --------- ----- --------- ----- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF DIRECT
REVENUES, DIRECT EXPENSES, AND
ALLOCATED SELLING EXPENSE:
Net sales(1).......................... $ 286,167 100.0% $ 282,525 100.0% $ 257,932 100.0% $ 148,652
Cost of
goods sold.......................... 153,015 53.5 153,791 54.4 144,261 55.9 80,361
--------- ----- --------- ----- --------- ----- ---------
Gross profit........................ 133,152 46.5 128,734 45.6 113,671 44.1 68,291
--------- ----- --------- ----- --------- ----- ---------
Brokerage, distribution and marketing
expenses:
Brokerage and distribution(1)....... 25,560 8.9 24,565 8.7 20,921 8.1 12,472
Trade promotions.................... 14,775 5.1 16,357 5.8 19,646 7.6 9,659
Consumer marketing.................. 25,407 8.9 26,411 9.4 18,753 7.3 10,365
--------- ----- --------- ----- --------- ----- ---------
Total brokerage, distribution and
marketing expenses.................. 65,742 22.9 67,333 23.9 59,320 23.0 32,496
Selling, general and administrative
expenses............................ 9,962 3.5 10,791 3.8 10,041 3.9 6,177
--------- ----- --------- ----- --------- ----- ---------
Total operating expenses.......... 75,704 26.4 78,124 27.7 69,361 26.9 38,673
--------- ----- --------- ----- --------- ----- ---------
Excess of direct revenues, over
direct expenses and allocated
selling expense................. $ 57,448 20.1% $ 50,610 17.9% $ 44,310 17.2% $ 29,618
--------- ----- --------- ----- --------- ----- ---------
--------- ----- --------- ----- --------- ----- ---------

(IN THOUSANDS) 1997
- -------------------------------------- ----------------------
% OF % OF
NET NET
SALES AMOUNT SALES
----- --------- -----

<S> <C> <C> <C>
STATEMENTS OF DIRECT
REVENUES, DIRECT EXPENSES, AND
ALLOCATED SELLING EXPENSE:
Net sales(1).......................... 100.0% $ 157,191 100.0%
Cost of
goods sold.......................... 54.1 85,139 54.2
----- --------- -----
Gross profit........................ 45.9 72,052 45.8
----- --------- -----
Brokerage, distribution and marketing
expenses:
Brokerage and distribution(1)....... 8.4 11,832 7.5
Trade promotions.................... 6.5 15,822 10.1
Consumer marketing.................. 7.0 11,046 7.0
----- --------- -----
Total brokerage, distribution and
marketing expenses.................. 21.9 38,700 24.6
Selling, general and administrative
expenses............................ 4.1 4,131 2.6
----- --------- -----
Total operating expenses.......... 26.0 42,831 27.2
----- --------- -----
Excess of direct revenues, over
direct expenses and allocated
selling expense................. 19.9% $ 29,221 18.6%
----- --------- -----
----- --------- -----
</TABLE>

- ------------------------

(1) Cash discounts of $4,864, $4,804, $4,384, $2,528, and $2,672 for the years
ended June 30, 1995, 1996, and 1997 and the six-month periods ended December
31, 1996 and 1997, respectively, have been reclassified from net sales to
brokerage and distribution expenses to provide consistency with the
Company's presentation and accounting policy.

SIX MONTHS ENDED DECEMBER 31, 1997 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
1996

NET SALES. Net sales for the six months ended December 31, 1997 of $157.2
million were 5.7% higher than net sales of $148.7 million for the same six month
period in 1996. During 1997, P&G instituted in some markets a modified everyday
low pricing strategy ("EDLP"). In 1994, P&G converted its entire portfolio of
products to an EDLP strategy, including the DUNCAN HINES business. The EDLP
strategy had a detrimental effect on volumes as the baking mix category responds
well to promotion and merchandising activity in contrast to an EDLP strategy. As
trade activity was increased in certain markets during the six

57
<PAGE>
months ended December 31, 1997, the brand responded as characteristic in the
category, and sales increased for the first time in over two years.

GROSS PROFIT. Gross profit as a percentage of net sales in 1997 of 45.8%
was flat as compared to the gross profit margin of 45.9% in 1996.

BROKERAGE, DISTRIBUTION AND MARKETING EXPENSE. Brokerage, distribution and
marketing expenses were $6.2 million higher during the six month period in 1997
versus the comparable period in 1996. As a percentage of net sales, brokerage,
distribution and marketing expenses were 24.6% in 1997, or 2.7% higher than
1996. The increase was attributable to higher trade promotions, which were $6.2
million above the prior year period. As a percentage of net sales, trade
promotions in 1997 increased to 10.1% from 6.5% in 1996. The increase in trade
promotion was attributable to the modified EDLP strategy undertaken in certain
markets. Brokerage and distribution expenses were 1.1% lower than the prior year
while consumer marketing expenses were flat as compared to 1996.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $4.1 million in 1997 or $2.1 million lower than
expenses of $6.2 million in 1996.

EXCESS OF DIRECT REVENUES, DIRECT EXPENSES, AND ALLOCATED SELLING
EXPENSE. Excess of direct revenues, over direct expenses, and allocated selling
expense was $29.2 million for the six months ended December 31, 1997, as
compared to $29.6 million for the same six month period in 1996. The decrease of
$0.4 million was due to higher trade promotions and was partially mitigated by
lower selling, general and administrative expenses and increased gross profit.

YEAR ENDED JUNE 30, 1997 COMPARED TO YEAR ENDED JUNE 30, 1996

NET SALES. Net sales of $257.9 million in 1997 decreased 8.7% from net
sales of $282.5 million in 1996. The decrease in net sales was the result of
volume declines caused by the suspension of the variety strategy implemented by
P&G in 1994 and the reduction in corporate resources allocated to the DUNCAN
HINES business by P&G. The variety strategy was initiated to meet trade and
consumer demand for increased product variety. P&G introduced 50 new flavors,
which brought initial strong volume and a peak in sales in fiscal 1995. However,
the increase in sales proved unsustainable as a significant number of flavors
failed to generate repeat purchases and often cannibalized and crowded out the
brand's more popular product offerings. P&G suspended the variety strategy
during 1997.

The volume declines were also the result of a reduction in corporate
resources devoted to the business. P&G had shifted its sales efforts to other
more strategic and core brands. In addition, the EDLP strategy had a negative
effect on volumes as competitors within the baking mix category continued to
actively promote and merchandise while the DUNCAN HINES brand was left out of
the promotional cycle.

GROSS PROFIT. Gross profit as a percentage of net sales was 44.1%, which
was lower than the gross profit margin of 45.6% in 1996. The decrease of 1.5
percentage points was due to higher flour and sugar costs experienced in the
1997 period and lower absorption of fixed manufacturing costs resulting from the
lower sales levels.

BROKERAGE, DISTRIBUTION AND MARKETING EXPENSES. Brokerage, distribution and
marketing expenses were $8.0 million lower in 1997 as compared to 1996. As a
percentage of net sales, brokerage, distribution and marketing expenses were
23.0% in 1997 or 0.9 percentage points lower than 1996. The decrease in expenses
was attributable to lower brokerage and distribution, and consumer marketing
expenses. Consumer marketing expenses decreased $7.7 million, or 29%, as
allocations of corporate marketing resources were reduced. Trade promotions
increased to 7.6% as a percentage of sales from 5.8% in 1996.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $10.0 million in 1997 or $0.8 million lower than
expenses of $10.8 million in 1996.

58
<PAGE>
EXCESS OF DIRECT REVENUES, OVER DIRECT EXPENSES, AND ALLOCATED SELLING
EXPENSE. Excess of direct revenues over direct expenses, and allocated selling
expense in 1997 of $44.3 million was $6.3 million lower than the prior year
amount of $50.6 million. The decrease was due to lower sales and a decline in
the gross profit margin.

YEAR ENDED JUNE 30, 1996 COMPARED TO YEAR ENDED JUNE 30, 1995

NET SALES. Net sales in 1996 of $282.5 million were 1.3% below net sales of
$286.2 million in 1995. The sales decline in 1996 was the first indication that
the variety strategy, which generated record sales in 1995, was causing a
deterioration in sales volumes of core DUNCAN HINES products. The new flavors
were not generating repeat purchases and the unproductive flavors introduced in
1994 remained on the retailers' shelves and crowded out the brand's higher
turnover product offerings.

GROSS PROFIT. Gross profit as a percentage of net sales was 45.6% in 1996,
which was lower than the gross profit margin of 46.5% in 1995. The decrease of
0.9 percentage points was primarily due to higher flour and sugar costs.

BROKERAGE, DISTRIBUTION AND MARKETING EXPENSES. Brokerage, distribution and
marketing expenses were $67.3 million or 2.4% higher than the prior year. As a
percentage of net sales, brokerage, distribution and marketing expenses were
23.9% in 1996, or 1.0 percentage points higher than in 1995. Trade promotions
and consumer marketing expenses were 10.7% and 4.0%, respectively, higher than
such expenses in 1995. The increase in marketing expenses was due to the
requisite marketing support of the variety strategy and the introduction of the
multiple new flavor product offerings. The increase in marketing expenses was
somewhat offset by a 3.9% decrease in brokerage and distribution expenses.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $10.8 million in 1996 or $0.8 million higher than
expenses of $10.0 million in 1995.

EXCESS OF DIRECT REVENUES, OVER DIRECT EXPENSES, AND ALLOCATED SELLING
EXPENSE. Excess of direct revenues over direct expenses in 1996 of $50.6
million was $6.8 million lower than the prior year amount of $57.5 million. The
decrease was due to lower sales and gross profit margin and higher marketing
expenses.

59
<PAGE>
BUSINESS

The Company is a leading producer and marketer of premium branded food
products including DUNCAN HINES baking mixes, LOG CABIN and MRS. BUTTERWORTH'S
syrup, VAN DE KAMP'S and MRS. PAUL'S frozen seafood, AUNT JEMIMA frozen
breakfast products and CELESTE frozen pizza. The Company's brands are among the
most widely recognized food brands in the United States, have leading market
positions and participate in some of the fastest growing categories in the
supermarket. LOG CABIN and MRS. BUTTERWORTH'S have a leading 34.0% share of the
syrup category, VAN DE KAMP'S and MRS. PAUL'S have a leading 28.2% share of the
frozen seafood category, DUNCAN HINES is the #2 cake mix with a 35.8% share and
CELESTE is the #3 brand of frozen pizza in the Northeast. In 1997, dollar sales
of frozen pizza, frozen seafood and frozen waffles grew at annual rates of 8.5%,
9.5% and 7.8%, respectively. For the year ended December 27, 1997, the Company's
pro forma net sales were $874.2 million and the Company's pro forma as adjusted
EBITDA was $154.6 million.

The Company was formed by Dartford, Fenway and MDC to serve as a platform
upon which to build a leading branded grocery products company through both
strategic acquisitions and internal growth. The Company has been built through
six separate acquisitions over the last three years. The Company seeks to
acquire well-recognized brands which have become non-core businesses to their
corporate parents, but which retain strong brand equities and long-term growth
potential. The Company's objective is to revitalize the brands it acquires and
renew their growth by providing them with the strategic direction, dedicated
management and marketing focus they lacked under prior owners.

<TABLE>
<CAPTION>
DATE GROWTH PRIOR GROWTH
BRAND PRIOR OWNER OF ACQUISITION TO ACQUISITION AFTER ACQUISITION
- --------------------- --------------------- ---------------- ---------------- ---------------------
<S> <C> <C> <C> <C>
VAN DE KAMP'S Pillsbury Sept. 1995 -2.5% +5.0%
MRS. PAUL'S Campbell Soup May 1996 -9.2 +7.1
AUNT JEMIMA Quaker Oats July 1996 -8.9 +10.5
CELESTE Quaker Oats July 1996 -16.8 +8.6
MRS. BUTTERWORTH'S Unilever Dec. 1996 0.0 +3.1
LOG CABIN Kraft July 1997 -6.0 n/a
DUNCAN HINES Procter & Gamble Jan. 1998 -5.0 n/a
</TABLE>

The Company has renewed the growth of its brands by providing them with
experienced management, refocusing marketing support, reformulating and
repackaging outdated products, developing and launching new products and
expanding distribution. The Company has also realized significant cost savings
by consolidating and improving the efficiency of its manufacturing operations,
outsourcing the production of certain products and eliminating redundant
administrative functions. The Company believes that the growth exhibited by the
brands it acquired in 1995 and 1996, combined with expected growth from its most
recent acquisitions and additional cost savings opportunities, has positioned it
to achieve superior long-term sales and earnings growth.

BUSINESS STRATEGY

60
<PAGE>
REVITALIZE BRANDS. To revitalize the brands it has acquired and stimulate
growth, the Company (i) provides experienced management, (ii) refocuses
marketing support, (iii) reformulates and repackages outdated products, (iv)
develops and launches new products, and (v) expands distribution of its
products.

REFOCUS MARKETING SUPPORT. The Company refocuses and broadens marketing
support for its brands by rationalizing product lines, refreshing
advertising campaigns and adjusting the mix of its marketing programs. The
Company increases media advertising and consumer promotional events
(coupons) and generally reduces price discounting. The Company has increased
media advertising in order to increase brand awareness and introduce new or
reformulated products. Focused consumer promotional support, including
point-of-sale and in-store coupons and cross promotions with other food
products, has also been increased to generate trial and repeat purchases of
the Company's products. In many circumstances, trade spending levels have
been reduced while the quality of the merchandising support for the
Company's brands has improved.

REFORMULATE AND REPACKAGE PRODUCTS. To reinvigorate its brands, the Company
reformulates and repackages outdated products. For example, the Company has
reformulated MRS. BUTTERWORTH'S Lite syrup and certain AUNT JEMIMA frozen
breakfast products, resulting in significant increases in unit volumes for
both product lines. The Company has recently launched reformulated DUNCAN
HINES brownie mixes and plans to introduce reformulated LOG CABIN Lite syrup
in the second half of 1998. The Company has also redesigned the packaging of
its AUNT JEMIMA and MRS. PAUL'S product lines and plans to introduce new
packaging for CELESTE Pizza for One and LOG CABIN syrup in the summer of
1998.

DEVELOP AND LAUNCH NEW PRODUCTS. The Company has successfully developed and
launched more than 25 new products. New product successes include grilled
and premium fish fillets marketed under both the VAN DE KAMP'S and MRS.
PAUL'S brands and MAMA CELESTE Fresh Baked Rising Crust pizza. The Company
has developed and is preparing to launch additional new products for its
frozen breakfast, frozen seafood and syrup product lines.

REDUCE COSTS. The Company has reduced costs of the acquired businesses by
approximately $49.9 million since their respective acquisitions. To achieve
these cost reductions, the Company has (i) consolidated the manufacture of MRS.
PAUL'S frozen seafood products into the Van de Kamp's, Inc.'s facilities, (ii)
outsourced the production of syrup, (iii) reduced fixed costs and improved the
efficiency of its manufacturing facilities, and (iv) eliminated redundant
administrative functions of the acquired businesses. The Company believes that
there are further opportunities to reduce costs, which include outsourcing the
production of baking mixes and further consolidating its brokerage and
administrative functions. No assurances can be given, however, that these cost
reductions can be realized.

61
<PAGE>
management it brings to its acquisitions. Management believes that these
opportunities will continue to arise as a result of large food companies
continuing their recent trend of divesting non-core businesses.

INDUSTRY

The U.S. food industry is relatively stable with growth based on modest
price and population increases. Over the last ten years, there has been industry
consolidation and food companies have been divesting non-core business lines and
making strategic acquisitions.

The desire for nutrition and convenience strongly affects consumer demand
for food products. Increasingly, consumers want nutritious food that is
convenient to prepare and can be served as a meal occasion. The Company targets
consumers between the ages of 18 and 48 and particularly households with
children. There are approximately 39 million children between the ages of 5 and
14 which represent a growing target market for the Company.

The Company competes in the dry grocery and frozen convenience food
categories of the food industry. The Company is becoming increasingly
competitive in the foodservice markets which offer further opportunities.

PRODUCTS AND MARKETS

The Company manufactures and markets popular branded food products that are
leaders within their respective markets. The Company groups its brands into two
general categories: dry grocery products and frozen convenience food products.
The dry grocery category includes DUNCAN HINES brand baking mix products and
MRS. BUTTERWORTH'S and LOG CABIN brand syrup products. The frozen convenience
food category includes VAN DE KAMP'S and MRS. PAUL'S brand frozen seafood
products, AUNT JEMIMA brand frozen breakfast products, and CELESTE brand frozen
pizza products. The following table sets forth aggregate pro forma net sales and
related information for each of the brands within these two categories for the
periods indicated.(1)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
27, 1997
----------------------
<S> <C> <C>
AMOUNT % TOTAL
--------- -----------

<CAPTION>
(IN MILLIONS)
<S> <C> <C>
DRY GROCERY
DUNCAN HINES baking mixes.............................................. $ 266.5 30.5%
LOG CABIN and MRS. BUTTERWORTH'S syrups................................ 194.2 22.2
--------- -----
TOTAL DRY GROCERY.................................................... 460.7 52.7
--------- -----

FROZEN CONVENIENCE
VAN DE KAMP'S and MRS. PAUL'S frozen seafood........................... 218.0 25.0
AUNT JEMIMA frozen breakfast........................................... 85.6 9.8
CELESTE frozen pizza................................................... 78.0 8.9
Foodservice............................................................ 31.9 3.6
--------- -----
TOTAL FROZEN CONVENIENCE............................................. 413.5 47.3
--------- -----
AGGREGATE PRO FORMA NET SALES.............................................. $ 874.2 100.0%
--------- -----
--------- -----
</TABLE>

- ------------------------

(1) Aggregate pro forma net sales include sales of the Company as well as sales
of the prior owners for each of the periods shown.

62
<PAGE>
DUNCAN HINES BAKING MIXES (30.5% of 1997 Aggregate Pro Forma Net Sales)

For over 40 years, the DUNCAN HINES brand has represented excellence in
baking mixes. The DUNCAN HINES product line consists of cake mix,
ready-to-spread ("RTS") frosting, brownie mix, muffin mix, and cookie and other
specialty mixes. The DUNCAN HINES trademark is among the most recognized in the
U.S. with 92% unaided brand awareness and 100% all commodity volume ("ACV")
distribution for DUNCAN HINES cake mix. DUNCAN HINES baking mixes enjoy consumer
satisfaction ratings which are superior to those of its principal competitors,
BETTY CROCKER and PILLSBURY. Consumer test results show the DUNCAN HINES brand
appeals to the consumer who wants to bake a "quality, good as homemade" product.

The Company's products compete in the $1.3 billion baking mix category,
which has grown at a compound annual rate of 3.7% over the last four years. Four
products (layer cake, frosting, brownies, and muffin mixes) account for
approximately 85% of the U.S. baking mix sales volume. The remaining 15% is
comprised of several smaller items including specialty cake, dessert bar, and
cookie mixes. Management believes there will be stable growth at historic rates
in the baking mix category as consumers continue to purchase baking mix products
which they perceive to be an easy, convenient, "quality" alternative to scratch
baking.

The following table indicates that the baking mix category is led by three
brands, DUNCAN HINES, BETTY CROCKER, and PILLSBURY, with the remainder in
regional brands and private label.

<TABLE>
<CAPTION>
SHARE
----------------------------------------------------------
$ SALES DUNCAN BETTY REGIONAL/
SEGMENT (MM) HINES CROCKER PILLSBURY PRIVATE LABEL
- --------------------------------------------------- --------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Cake mix........................................... $ 315.0 36.3% 36.4% 22.1% 5.2%
Frosting........................................... 244.7 18.9 49.4 26.0 5.7
Brownie mix........................................ 198.8 16.4 47.2 26.2 10.2
Muffin mix......................................... 145.0 12.8 34.5 24.9 27.8
Cookie mix......................................... 37.2 27.9 68.8 1.0 2.3
</TABLE>

The DUNCAN HINES brand has been built on the strength of its cake mix.
Introduced in 1956, DUNCAN HINES has the #1 and #2 selling stock keeping units
("SKU's") in the cake mix segment (yellow and devil's food cake mixes). Cake
mixes accounted for approximately 55% of DUNCAN HINES total sales for the year
ended December 27, 1997.

To complement its cake mixes, DUNCAN HINES offers RTS frostings. DUNCAN
HINES frostings have received consumer satisfaction scores that are among the
highest in its segment relative to its competitors. Popular DUNCAN HINES
frostings include homestyle vanilla and chocolate flavors.

DUNCAN HINES offers two tiers of brownie mixes, plain and premium. DUNCAN
HINES brownie mixes have received the highest overall consumer satisfaction
ratings relative to its competitors and ranked highest among consumers in key
product attributes such as "tastes as good as homemade," "rich and fudgey," and
"chewy." To capitalize on such key attributes, the Company has recently launched
a new, improved, "thicker, moister" reformulated brownie mix. DUNCAN HINES
brownies compete primarily in the premium tier of brownie mixes and include
product offerings such as Double Fudge and Milk Chocolate Chunk.

Other DUNCAN HINES products include muffin, cookie, and fruit bar mixes.
Similar to its other products, DUNCAN HINES muffin mixes enjoy superior consumer
satisfaction ratings.

Management believes that sales of DUNCAN HINES products have suffered over
the last several years as a result of two strategies pursued by its prior owner.
First, DUNCAN HINES products were sold on an every day low price basis that was
inconsistent with category dynamics. Industry studies show that over 50% of
consumers make their purchase decision regarding baking mixes on impulse in the
supermarket aisle. Every day low pricing placed DUNCAN HINES at a disadvantage
because it was unable to promote its

63
<PAGE>
products as frequently as its competitors. Second, a variety strategy was
launched in 1994 which involved the introduction of more than 50 new flavors
such as key lime cake mix and grape bubble gum frosting. This initiative was not
successful, as the new flavors failed to generate repeat purchases and caused
core SKU's to be crowded off the retail shelf. The variety strategy was
discontinued in 1997.

The Company plans to stimulate sales of DUNCAN HINES products by
reestablishing a high-low pricing and merchandising strategy, co-promoting the
brand's products and increasing consumer promotions to stimulate trial
purchases. Management has recently restored a high-low pricing strategy to its
baking mix products by increasing the list price on DUNCAN HINES cake mix and
frosting products, which will provide the Company with funds to more than double
the frequency of its quality merchandising events--the number of times its
products are featured or displayed by a retailer. While DUNCAN HINES cake mix is
the cornerstone of the trademark with a 36.3% share, other DUNCAN HINES products
have a weighted average share of approximately 15%. Management intends to
increase sales of DUNCAN HINES brownie mixes and RTS frosting by co-promoting
DUNCAN HINES RTS frosting with its cake mixes and highlighting the "new news" of
the reformulated brownie mix through couponing and television advertising.
Management intends to continue to build DUNCAN HINES brand equity by maintaining
the brand's media advertising expenditures.

LOG CABIN AND MRS. BUTTERWORTH'S SYRUPS (22.2% of 1997 Aggregate Pro Forma Net
Sales)

MRS. BUTTERWORTH'S and LOG CABIN syrup products together have a leading 34%
share of the syrup category. MRS BUTTERWORTH'S Original and LOG CABIN 24 ounce
bottles are the #1 and #2 selling SKU's, respectively, in the syrup category.
Different consumer perceptions of these two brands offer unique opportunities
for consumer targeting. MRS. BUTTERWORTH'S distinctive, grandmother-shaped
bottle represents a fun image to the family with children. The strong heritage
of LOG CABIN, which dates back to 1888, represents an authentic, rich maple
brand targeted more to traditional "warm, cozy" breakfast occasions. The Company
also sells LOG CABIN'S COUNTRY KITCHEN, a value priced syrup, to target the
economy segment. Introduced in 1954, COUNTRY KITCHEN has the highest share in
the economy segment. The Company's products are also sold to the club store
channel. The Company sells foodservice products under the LOG CABIN, LOG CABIN
Lite, and WIGWAM labels and under private label arrangements to the restaurant
and institutional channels. MRS. BUTTERWORTH'S, LOG CABIN, and COUNTRY KITCHEN
are offered in regular and lite versions. The Company also sells pancake mixes
under the MRS. BUTTERWORTH'S brand, which accounted for less than 1% of the
Company's 1997 aggregate pro forma net sales.

The U.S. retail syrup category is $469.3 million and has grown at a compound
annual rate of approximately 2% over the last three years. The category is
comprised of three segments: regular (approximately 60% of sales), lite
(approximately 27% of sales), and pure maple/diet/specialty (approximately 13%
of sales). Regular syrup is a full-calorie corn syrup based product. Lite syrup
is also a corn syrup based product, but has only half the calories of regular
syrup. Pure maple, diet, and other specialty syrups are all non-corn syrup based
products which occupy market niches that are not currently offered by any of the
major national syrup manufacturers. The Company competes in the regular and lite
segments and plans to launch a LOG CABIN sugar-free diet syrup to capitalize on
the strength of the LOG CABIN brand equity.

64
<PAGE>
The Company is the leader in both the regular and lite segments of the syrup
category as indicated in the table below:
<TABLE>
<CAPTION>
SHARE
------------------------------------------------------------------------------
$
SALES MRS. COUNTRY TOTAL AUNT HUNGRY
SEGMENT (MM) BUTTERWORTH'S LOG CABIN KITCHEN COMPANY JEMIMA JACK
- -------------------------------- --------- ------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Regular......................... $ 279.5 17.0% 16.0% 4.6% 37.6% 13.8% 6.4%
Lite............................ 126.1 15.9 15.5 4.6 36.0 31.9 8.4
Specialty/ Pure Maple........... 63.7 -- -- -- -- -- --
---------
Total........................... $ 469.3 15.0% 13.7% 5.3% 34.0% 18.1% 6.1%
-- --
-- --
--------- --- --- --- ---
--------- --- --- --- ---

<CAPTION>
REGIONAL/
PRIVATE
SEGMENT LABEL
- -------------------------------- -----------
<S> <C>
Regular......................... 42.2%
Lite............................ 23.7
Specialty/ Pure Maple........... 100.0
Total........................... 41.8%
-----
-----
</TABLE>

As non-core brands to their prior owners, both the MRS. BUTTERWORTH'S and
LOG CABIN brands lacked sufficient marketing and brand management resources,
resulting in share erosion. To revitalize the LOG CABIN brand, management
recently introduced a new television advertising campaign featuring the slogan,
"In the heart of every home, there's a little Log Cabin". New packaging has been
developed which replicates a log cabin and will be introduced in the second half
of 1998. To compete against AUNT JEMIMA Lite, the Company introduced a new,
reformulated MRS. BUTTERWORTH'S Lite product in December 1997. The Company also
plans to reformulate its LOG CABIN Lite product.

VAN DE KAMP'S AND MRS. PAUL'S FROZEN SEAFOOD (25.0% of 1997 Aggregate Pro Forma
Net Sales)

Marketed under the VAN DE KAMP'S and MRS. PAUL'S brands, the Company
manufactures and markets a variety of frozen seafood products including breaded
and battered fish sticks and fish fillets, grilled and plain fish fillets,
"healthy" breaded fish, and specialty seafood items. The Company's dual brand
strategy emphasizes both the brands' respective regional strengths (VAN DE
KAMP'S is stronger in the West and Central U.S. while MRS. PAUL'S is stronger in
the Northeast and Southeast) and brand positioning (VAN DE KAMP'S targets
families with children while MRS. PAUL'S targets adults). The VAN DE KAMP'S
trademark dates back over 40 years and is recognized as a fun, "contemporary"
image that appeals to families with children. The MRS. PAUL'S franchise began in
the mid-1940's with the introduction of deviled crab cakes and has grown to
include a wide range of specialty seafood items which target the adult consumer.

The $869.0 million frozen seafood category has two segments: fin and
non-fin. Fin products are fish whereas non-fin products are other seafood such
as shrimp and clams. The frozen seafood category has experienced a compound
annual growth rate of 6.7% over the last three years due to the introduction of
new premium and healthy fillet products and increased advertising support by the
Company and GORTON'S. VAN DE KAMP'S introduced a 97% fat-free product under its
"Crisp and Healthy" label in 1992 and is the only major retail competitor to
offer a line of "healthy" breaded fish products. The Company has introduced over
the last two years 14 different premium and grilled products under the VAN DE
KAMP'S and MRS. PAUL'S brands including salmon with creamy dill sauce, teriyaki
tuna, and grilled lemon pepper and garlic herb fillets. The Company also offers
a variety of specialty seafood products including shrimp, fried clams, and
deviled crab cakes.

65
<PAGE>
As the table below indicates, the Company has a leading 28.1% share of the
frozen seafood category. GORTON'S has the number two position with a 20.7%
share, and the remainder of the category is comprised of a multitude of other
regional brands and private label. According to IRI, the #1 and #2 selling
frozen seafood SKU's are VAN DE KAMP'S 44 Breaded Fish Sticks and VAN DE KAMP'S
Battered Fillets, respectively.

<TABLE>
<CAPTION>
SHARE
-----------------------------------------------------------------
$
SALES VAN DE TOTAL OTHER/
SEGMENT (MM) KAMP'S MRS. PAUL'S COMPANY GORTON'S PRIVATE LABEL
- ----------------------- --------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Fin.................... $ 557.5 25.0% 15.2% 40.2% 30.5% 29.3%
Non-fin................ 311.5 2.4 4.0 6.4 3.1 90.5
---------
Total.................. $ 869.0 16.9% 11.2% 28.1% 20.7% 51.2%
--------- --- --- --- --- ---
--------- --- --- --- --- ---

GRILLED FIN(1)......... $ 68.1 11.7% 29.4% 41.1% 42.8% 16.1%
</TABLE>

- ------------------------

(1) Included in fin segment.

The Company has revitalized both the VAN DE KAMP'S and MRS. PAUL'S brands by
introducing new products and increasing marketing support for the brands. For
example, annual sales of VAN DE KAMP'S frozen seafood have increased from $112.8
million at acquisition (year ended June 1995) to $132.8 million in year ended
1997. The Company continuously builds VAN DE KAMP'S and MRS. PAUL'S brand equity
through television and print advertising and consumer promotions.
Cross-promoting is used to focus on the target consumer. For example, VAN DE
KAMP'S products are cross-promoted with KRAFT macaroni and cheese to target
children. Another example of cross-promoting is including in-pack samples of
HEINZ cocktail sauce with VAN DE KAMP'S fish sticks.

As the category leader in frozen seafood, the Company has begun a program of
rationalizing SKU's between its two brands on a market-by-market basis. The
program involves eliminating redundant and slower-moving SKU's and replacing
them with new product offerings. Management believes that while this program
will slow the sales growth of the Company's frozen seafood business, it should
result in a more profitable mix of business for the Company and its retail
customers. See "Business--Marketing, Sales and Distribution".

AUNT JEMIMA FROZEN BREAKFAST PRODUCTS (9.8% of 1997 Aggregate Pro Forma Net
Sales)

AUNT JEMIMA was established as a brand over 100 years ago. AUNT JEMIMA
frozen breakfast products are offered in three segments: waffles, pancakes
(including frozen pancake batter), and french toast. AUNT JEMIMA is the only
national brand represented across all three segments of the frozen syrup carrier
segment. AUNT JEMIMA'S waffle and pancake products are offered in four
varieties, original, blueberry, buttermilk, and lowfat. The french toast product
is offered in two flavors, regular and cinnamon.

The Company's frozen breakfast products compete in the frozen syrup carrier
segment of the $1.3 billion frozen breakfast foods category. The frozen
breakfast foods category has three segments: frozen syrup carriers
(approximately 51% of total sales), breakfast entrees (approximately 28% of
total sales), and frozen bagels (approximately 21% of total sales). The frozen
syrup carrier segment consists of waffles (approximately 85% of total frozen
syrup carrier sales), pancakes (approximately 9% of total frozen syrup carrier
sales), and french toast (approximately 6% of total frozen syrup carrier sales).
The frozen syrup carrier segment has grown faster than any other frozen
breakfast product offering over the last ten years due to consumers' demand for
quick, convenient, and nutritious foods. Annual per capita consumption of frozen
syrup carriers has grown at a 7.5% compound average growth rate over the last
three years.

66
<PAGE>
As the table below indicates, AUNT JEMIMA is the number three brand in the
frozen syrup carrier category. AUNT JEMIMA is strongest in the Northeast and
holds the number one national share in french toast.

<TABLE>
<CAPTION>
SHARE
$ ------------------------------------------------------
SIZE AUNT HUNGRY REGIONAL/
SEGMENT (MM) JEMIMA EGGO JACK PRIVATE LABEL
- -------------------------------------------------- --------- ----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Waffles........................................... $ 577.1 9.2% 64.4% 16.4% 10.0%
Pancakes and Pancake Batter....................... 68.4 21.6 8.9 50.1 19.4
French Toast...................................... 42.8 51.8 -- -- 48.2
--------- --- --- --- ---
Total............................................. $ 688.3 13.1% 54.9% 19.9% 12.1%
--------- --- --- --- ---
--------- --- --- --- ---
</TABLE>

The Company has increased sales of AUNT JEMIMA by expanding distribution and
introducing AUNT JEMIMA to children through a series of print and television ads
on the NICKELODEON television network. Annual sales of AUNT JEMIMA products have
increased from $70.6 million in 1996 to $85.6 million in 1997. Management plans
to increase further AUNT JEMIMA sales through a series of focused marketing
initiatives. At the start of 1998, management redesigned AUNT JEMIMA's
packaging, changing the color from white, which had a very low visual impact in
the freezer case, to red, which has a strong visual impact. Management plans to
or is in the process of (i) expanding distribution of current items, (ii)
launching a reformulated "more homemade taste" pancake product, (iii)
introducing new products in core markets that have proven successful in the
category such as mini pancakes and french toast sticks, and (iv) expanding its
foodservice and private label business.

CELESTE FROZEN PIZZA (8.9% of 1997 Aggregate Pro Forma Net Sales)

For over 36 years CELESTE frozen pizza has been a prominent regional brand
in the Northeast. CELESTE frozen pizzas are offered in small and large sizes and
a rising crust pizza is offered under the MAMA CELESTE label. CELESTE'S small
pizzas (marketed as CELESTE Pizza for One) and large pizzas are economy priced
while the MAMA CELESTE Fresh Baked Rising Crust pizza is premium priced.
Introduced in November 1997, MAMA CELESTE Fresh Baked Rising Crust pizza has
performed well in consumer testing and has achieved an 8.5% share in CELESTE
markets (as defined) for the 12 weeks ended April 19, 1998.

Frozen pizza is a $2.0 billion category which has grown at a compound annual
rate of 10.8% over the last two years. The category is comprised of three
segments: large (46.5% total sales), small (33.7% total sales), and a new
entrant, rising crust (19.8% of total sales). Rising crust pizzas have been a
very successful line extension and have been the primary driver of growth within
the frozen pizza category. Rising crust pizzas rise as they bake in the
consumers' oven and offer a pizza comparable in quality to a restaurant or home
delivered pizza.

CELESTE is the number one brand in unit sales in the markets in which it
competes. As indicated in the table below, CELESTE is the number three brand in
dollar sales in the markets in which it competes and the number eight brand
nationally. CELESTE products are primarily sold in the Northeast, Florida, and
California. In the markets in which it competes, CELESTE Pizza for One is the
leading brand of small pizzas. The frozen pizza category is highly fragmented
with numerous regional brands such as CELESTE.

<TABLE>
<CAPTION>
$ SHARE
SIZE ------------------------------------------------------
(MM) CELESTE TOMBSTONE DI GIORNO ALL OTHER
--------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
National................................ $ 2,078 3.9% 17.1% 11.6% 67.4%
CELESTE markets......................... 671 10.6 15.4 11.6 62.9
</TABLE>

Sales of CELESTE frozen pizza products have increased from $67.8 million in
1996 to $78.0 million in 1997. Management believes the CELESTE brand is in a
solid position to further grow sales in its core markets due to its strong brand
image. Management intends to expand distribution of its MAMA CELESTE Fresh

67
<PAGE>
Baked Rising Crust pizza and its Pizza For One by offering more items in
existing accounts and increasing its geographic distribution. Management is also
in the process of redesigning its Pizza For One packaging to update and
contemporize its brand image.

FOODSERVICE (3.6% of 1997 Aggregate Pro Forma Net Sales)

The Company's foodservice product line consist primarily of AUNT JEMIMA
frozen breakfast products.

Sales of frozen syrup carrier products in the foodservice channel are
growing rapidly due to increased consumption of breakfasts away from home.
Customers in this area include schools, colleges, businesses, and fast food
chains. Management believes that significant opportunities exist for sales
growth of frozen syrup carrier products as well as other frozen product lines.
Management also believes the growth in the syrup carrier segment will drive
foodservice opportunities for MRS. BUTTERWORTH'S and LOG CABIN syrup products.

MARKETING, SALES, AND DISTRIBUTION

Management believes that a focused, consistent marketing strategy is
critical to the successful merchandising and growth of the Company's brands.
Television and print advertising is considered to be a key component to its
marketing strategy. The Company's television and print advertising acts both as
a builder of brand equity by emphasizing the heritage and characteristics of its
product offerings and as a promoter of "new news" for new products within the
brand segments. Consumer promotions include targeted couponing to generate trial
usage and increase purchase frequency. The Company's trade promotions focus on
obtaining retail display support, achieving key price points, and securing
retail shelf space.

The leading positions of the Company's brands has enabled it to practice
category management and enter into alliances and co-marketing arrangements with
leading manufacturers of complementary food products. As the category leader in
syrups and frozen seafood, the Company can practice category management, which
is a cooperative effort between the category leader and the retailer aimed at
increasing shelf space profitability for the retail store by rationalizing
product offerings in the category. The category leader generally benefits from
category management because its products are usually featured more prominently
and accorded more shelf space and it can maximize distribution efficiencies.
Successful examples of co-marketing are coupon events for the VAN DE KAMP'S
frozen seafood products with Kraft macaroni and cheese (the most frequently
purchased item in the grocery store) and in-pack samples of Heinz cocktail
sauce.

The Company sells its dry grocery and frozen food products through two
separate sales forces: broker networks and distribution systems. The dry grocery
division has a sales force of 13 people which manages approximately 63
independent food brokers and 40 foodservice brokers. Dry grocery products are
shipped either directly to the customer or to one of five independent,
regionally located warehouses, which provides national coverage. The frozen
convenience food division has a sales force of 16 people which manages
approximately 57 independent frozen food brokers and 49 independent food service
brokers. Frozen food products are shipped either directly to the customer or to
one of four independent, regionally located warehouses, which provides national
coverage. The Company's customers include most of the major supermarkets and
chains in the U.S. None of the Company's customers or group of customers account
for more than 10% of the Company's sales.

RAW MATERIALS

The Company purchases its raw materials, all of which are widely available,
from numerous independent suppliers throughout the year. The principal raw
material of VAN DE KAMP'S and MRS. PAUL'S brand fish products is Alaskan
pollock.

68
<PAGE>
The Company procures its annual Alaskan pollock fillet requirements from
various North Pacific suppliers. The key fishing season is in January through
April with a second season in September through October. In late May or early
June, the Company contracts to purchase pollock fillet requirements for the
following 10 to 12 months. This enables the Company to project reasonably
accurately its production costs for the fall and Lent seasonal peaks in frozen
seafood sales. The Company does not purchase the frozen fillets until delivery
to ports in the United States, which occurs in stages as needed, over the course
of 10 to 12 months. This arrangement minimizes the investment required in
inventory.

The Company's other primary raw materials are flour, sugar, corn syrup,
liquid sucrose, maple sugar, flavorings, cheeses, meat, eggs, milk, and
vegetable oil, which are generally sourced from the U.S. commodity market. The
Company also utilizes significant quantities of glass, plastic, and cardboard
for its packaging requirements. Supplies of raw materials and packaging
requirements are readily available from a number of sources. Purchases are based
on price and quality. Major purchases are made through a bidding process.

COMPETITION

SEASONALITY

The Company does not experience any material effects of seasonality in its
business. There are no material backlogs.

RESEARCH AND DEVELOPMENT

The Company maintains its primary research and development departments for
its Aurora Division in Columbus, Ohio and for its VDK Division in St. Louis,
Missouri. The departments are responsible for nearly all of the food research
and product development for the Company. The Company uses food technology
consultants where appropriate. The Company's research and development resources
are focused on new product development, product enhancement, process design and
improvement, packaging, and exploratory research in new business areas.

PRODUCTION AND FACILITIES

The Company owns and operates two manufacturing facilities for its frozen
food products described in the following table. The Company also owns a
manufacturing facility and the real estate underlying such facility located in
Chambersburg, Pennsylvania, comprising approximately 180,000 square feet, where
the Company manufactured certain frozen desserts products lines which it sold on
May 1, 1998. The Company plans to sell the Chambersburg, Pennsylvania
manufacturing facility and real estate. The Company's headquarters are leased by
Dartford pursuant to a lease that expires February 2002. See "Certain
Relationships and Related Transactions". The VDK Division's corporate offices
lease will expire in September 2000, subject to one five-year renewal option.
The Aurora Division's corporate offices lease will

69
<PAGE>
expire in May 2002. The Company's facilities, equipment and offices are subject
to security interests granted to its lenders:

<TABLE>
<CAPTION>
APPROXIMATE
LOCATION PRINCIPAL USE SQUARE FOOTAGE OWNED/LEASED
- ---------------------------------------- ---------------------------------------- -------------- -------------
<S> <C> <C> <C>
Jackson, TN............................. Frozen Breakfast, Frozen Pizza and 302,000 Owned
Grilled Fish
Erie, PA................................ Frozen Seafood 116,000 Owned
St. Louis, MO........................... VDK Division Corporate Offices 12,000 Leased
Columbus, OH............................ Aurora Division Corporate Offices 10,500 Leased
San Francisco, CA....................... Company Headquarters 7,000 Leased
</TABLE>

BAKING MIXES

DUNCAN HINES products are contract manufactured and distributed by P&G
pursuant to a co-pack agreement for the following periods: until July 16, 1998
for specialty mixes, until October 16, 1998 for frosting, and until April 16,
1999 for cake mixes. The Company entered into and expects to enter into long-
term co-pack agreements for its DUNCAN HINES cake mixes and frosting and
specialty mixes with contract manufacturers and will transition the DUNCAN HINES
manufacturing assets from P&G's Jackson, Tennessee plant to production
facilities owned or leased by such contract manufacturers. The terms of the
long-term co-pack agreements are five years with an automatic one-year renewal.

SYRUPS

The Company's syrup products are produced by contract manufacturers at four
manufacturing facilities pursuant to syrup co-pack agreements with terms of five
years and automatic renewal for one year unless cancelled by the other party.
All of the Company's syrup production equipment, including batching, filling,
and case-packing equipment, is or will be located at one of the contract
manufacturers.

FROZEN CONVENIENCE FOODS

The Company manufactures its VAN DE KAMP'S and MRS. PAUL'S frozen seafood
products at its Erie, Pennsylvania and Jackson, Tennessee facilities. The Erie
plant currently operates at 59% of capacity (based on 3 shifts, 5 days a week).
Annual capacity of the plant is approximately 9.2 million cases. Certain
specialty seafood items such as shrimp and clams are contract manufactured by
third parties. The Company produces AUNT JEMIMA and CELESTE products at its
Jackson facility. The plant currently operates at a weighted average of
approximately 70% of capacity (based on 3 shifts, 5 days a week).

TRADEMARKS

The Company's principal trademarks are DUNCAN HINES, LOG CABIN, MRS.
BUTTERWORTH'S, VAN DE KAMP'S, MRS. PAUL'S, CELESTE, and MAMA CELESTE. The
Company licenses the AUNT JEMIMA trademark pursuant to a perpetual,
royalty-free, license agreement which requires the Company to obtain the
approval of Quaker Oats for any material change to any labels, packaging,
advertising, and promotional materials bearing the AUNT JEMIMA trademark. Quaker
Oats can only withhold approval if such proposed use violates such license
agreement. The registrations for the Company's trademarks expire from time to
time and the Company renews them in the ordinary course of business prior to the
expiration dates. See "Risk Factors-- Trademarks".

EMPLOYEES

As of June 1, 1998, the Company had a total of approximately 1,017
employees, none of whom are represented by unions. Management of the Company
believes it has good relations with its employees.

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CERTAIN LEGAL AND REGULATORY MATTERS

LITIGATION

The Company, in the ordinary course of business, is involved in various
legal proceedings. The Company does not believe the outcome of these proceedings
will have a material adverse effect on the Company's financial position or
results of operation.

PUBLIC HEALTH

The Company is subject to the Federal Food, Drug and Cosmetic Act and
regulations promulgated thereunder by the FDA. This comprehensive regulatory
program 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 and specifies the "recipes", called
standards of identity, for certain foods. In addition, the Nutrition Labeling
and Education Act of 1990, as amended, prescribes the format and content of
certain information required to appear on the labels of food products. The
Company is subject to regulation by certain other governmental agencies,
including the USDA.

The operations and the products of the Company are also subject to state and
local regulation through such measures as licensing of plants, enforcement by
state health agencies of various state standards and inspection of the
facilities. Enforcement actions for violations of federal, state, and local
regulations may include seizure and condemnation of violative products, cease
and desist orders, injunctions and/or monetary penalties. Management believes
that the Company's facilities and practices are sufficient to maintain
compliance with applicable government regulations, although there can be no
assurances in this regard.

FEDERAL TRADE COMMISSION

The Company is subject to certain regulations by the Federal Trade
Commission ("FTC"). Advertising of the Company's products is subject to
regulation by the FTC pursuant to the Federal Trade Commission Act and the
regulations promulgated thereunder.

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

The past and present business operations of, and ownership and operation of
real property by, the Company are subject to extensive and changing federal,
state, local, and foreign environmental laws and regulations pertaining to the
discharge of materials into the environment and the handling and disposition of
wastes (including solid and hazardous wastes) or otherwise relating to
protection of the environment. Compliance with such laws and regulations is not
expected to have a material impact on the Company's capital expenditures,
earnings, or competitive position. No assurance can be given, however, that
additional environmental issues relating to presently known matters or
identified sites or to other matters or sites will not require additional,
currently unanticipated investigation, assessment, or expenditures.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table provides information concerning the directors and
executive officers of the Company each of whom has served in the capacities
indicated below since its incorporation on June 19, 1998.

<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- --------------------------------------------------- --- ---------------------------------------------------
<S> <C> <C>
Ian R. Wilson...................................... 68 Chairman of the Board and Chief Executive Officer
James B. Ardrey.................................... 40 Vice Chairman and Director
Ray Chung.......................................... 50 Executive Vice President
M. Laurie Cummings................................. 34 Chief Financial Officer and Secretary
Thomas O. Ellinwood................................ 44 President, VDK Division
Thomas J. Ferraro.................................. 50 President, Aurora Division
Anthony A. Bevilacqua.............................. 43 Executive Vice President--Sales and Marketing, VDK
Division
C. Gary Willett.................................... 42 Executive Vice President, Aurora Division
Clive A. Apsey..................................... 49 Director
Charles Ayres...................................... 38 Director
David E. De Leeuw.................................. 53 Director
Charles J. Delaney................................. 37 Director
Richard C. Dresdale................................ 42 Director
Andrea Geisser..................................... 55 Director
Peter Lamm......................................... 46 Director
Tyler T. Zachem.................................... 32 Director
</TABLE>

Each director will hold office until the next annual meeting of stockholders
or until his or her successor has been elected and qualified. See "Principal
Stockholders--Securityholders Agreement" for a discussion of the election of
directors. Executive officers of the Company are appointed by, and serve at the
pleasure of, the Board of Directors. A brief biography of each director and
executive officer follows:

IAN R. WILSON--CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER. Mr.
Wilson has served as Chairman of Aurora Foods Inc. since December 1996 and
Chairman of Van de Kamp's, Inc. since September 1995. Mr. Wilson is the Managing
Partner of Dartford Partnership L.L.C., a private partnership focused on the
food and beverage industries. From 1989 through 1995, Mr. Wilson was Chairman
and Chief Executive Officer of Windmill Holdings Corporation, a leading
specialty miller and supplier of branded food products. From 1985 through 1989,
Mr. Wilson was Chairman and Chief Executive Officer of Wyndham Foods, Inc., a
major cookie company he founded and positioned as a leading popular priced
cookie company in the United States. From 1983 to 1984, Mr. Wilson was the
Chairman and Chief Executive Officer of Castle & Cooke, Inc. (now known as Dole
Food Company, Inc.), an international food and real estate concern. Prior to
Castle & Cooke, Inc., Mr. Wilson spent 25 years with The Coca-Cola Company,
serving in a series of international operating management positions. Ultimately,
Mr. Wilson served as Vice Chairman of The Coca-Cola Company and President of the
Pacific Group. Mr. Wilson's past service as a director includes membership on
the boards of Novell, Inc., Revlon, Inc., Crown Zellerbach Corporation, and
Castle & Cooke, Inc. Mr. Wilson currently serves as Chairman of Windy Hill Pet
Food Company, Inc.

JAMES B. ARDREY--VICE CHAIRMAN AND DIRECTOR. Mr. Ardrey has served as
Executive Vice President and Director of Aurora Foods Inc. since December 1996
and Executive Vice President and Director of Van de Kamp's, Inc. since September
1995. Mr. Ardrey is a partner of Dartford Partnership L.L.C. From 1993 to 1995,
Mr. Ardrey was a consultant to Windmill Holdings Corporation, conducting its
divestiture

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program. From 1984 to 1992, Mr. Ardrey was an investment banker with PaineWebber
Incorporated, serving as Managing Director from 1990 to 1992. Prior to joining
PaineWebber, Mr. Ardrey was a consultant with Booz, Allen & Hamilton. Mr. Ardrey
currently serves as Executive Vice President of Windy Hill Pet Food Company,
Inc.

RAY CHUNG--EXECUTIVE VICE PRESIDENT. Mr. Chung has served as Executive Vice
President and Director of Aurora Foods Inc. since December 1996 and Executive
Vice President of Van de Kamp's, Inc. and Director of VDK Holdings, Inc. since
September 1995. Mr. Chung is a founding partner of Dartford Partnership L.L.C.
Mr. Chung has previously served as a Director, Executive Vice President and
Chief Financial Officer of Windmill Holdings Corporation from 1989 to 1995 and
as a Director, Executive Vice President and Chief Financial Officer of Wyndham
Foods, Inc. from 1985 to 1990. From May 1984 to September 1985, Mr. Chung served
as Vice President--Finance for the Kendall Company (Colgate-Palmolive). Between
1981 and 1984, Mr. Chung served as Vice President--Finance for Riviana Foods,
Inc. Mr. Chung currently serves as Executive Vice President and Director of
Windy Hill Pet Food Company, Inc.

M. LAURIE CUMMINGS--CHIEF FINANCIAL OFFICER AND SECRETARY. Ms. Cummings has
served as Vice President and Secretary of Aurora Foods Inc. since December 1996
and Vice President and Secretary of Van de Kamp's, Inc. since September 1995.
Ms. Cummings has been a partner in Dartford Partnership L.L.C. since 1994. Ms.
Cummings was Vice President, Controller and Treasurer of Windmill Holdings
Corporation from 1989 to 1995. Between 1987 and 1990, Ms. Cummings was the
Controller and Assistant Treasurer of Wyndham Foods, Inc. Ms. Cummings currently
serves as Vice President and Secretary of Windy Hill Pet Food Company, Inc.

THOMAS O. ELLINWOOD--PRESIDENT OF THE VDK DIVISION. Mr. Ellinwood has been
with Van de Kamp's, Inc. since 1995. Mr. Ellinwood has been responsible for the
management of VAN DE KAMP'S since Pet Incorporated acquired VAN DE KAMP'S from
Grand Metropolitan, PLC in October 1989, when he headed the acquisition and
integration team as Director/Marketing Manager. Mr. Ellinwood was Vice President
and General Manager of Pet Incorporated from March 1992 until Van de Kamp's,
Inc. bought the VAN DE KAMP'S business in 1995. Between 1990 and 1992, Mr.
Ellinwood held the position of Vice President, Marketing. Prior to Pet's
acquisition of VAN DE KAMP'S, from 1986 to 1989, Mr. Ellinwood held various
positions of increasing responsibility with Pet's sales and marketing
departments. Mr. Ellinwood served as General Manager of Omar, Inc., a privately
owned aerospace manufacturing company, from 1983 to 1986.

THOMAS J. FERRARO--PRESIDENT OF THE AURORA DIVISION. Prior to joining
Aurora Foods Inc. in 1996, from September 1994 to June 1996, Mr. Ferraro served
as President of Campfire, Inc., which merged into International Home Foods, Inc.
Prior to joining Campfire, Inc., he was, from 1991 to 1994, Vice President of
Sales for the Niche Grocery division of Borden, Inc. Mr. Ferraro's experience
with niche grocery products extends back to his early career with RJR Nabisco
Inc. and Dracket products, a division of Bristol-Meyers Squibb Company, where he
held a variety of marketing and sales positions.

ANTHONY A. BEVILACQUA--EXECUTIVE VICE PRESIDENT, SALES AND MARKETING, VDK
DIVISION. Mr. Bevilacqua joined Van de Kamp's, Inc. in February 1998 and is
responsible for the development, direction and implementation of Van de Kamp's,
Inc. go-to-market strategy across all aspects of the Company's customer and
consumer value strategy. Prior to joining Van de Kamp's, Inc., Mr. Bevilacqua
was Senior Vice President at Aramark's Spectrum Healthcare Services from
September 1994 to December 1997. Between 1980 and 1994, Mr. Bevilacqua held
various positions of increasing responsibilities in sales and marketing with
Ralston Purina Company ("Ralston"). In 1992, he was promoted to Vice President
of Marketing at Ralston's Eveready Battery Canadian division.

C. GARY WILLETT--EXECUTIVE VICE PRESIDENT, AURORA DIVISION. Mr. Willett
joined Aurora Foods Inc. in December 1996. From August 1995 to September 1996,
he served as Executive Vice President/General Manager of Campfire, Inc., which
merged into International Home Foods, Inc. Prior to joining Campfire,

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Inc., Mr. Willett spent 12 years with Borden, Inc., from June 1983 to August
1995, in a series of marketing and general management positions, most recently
as Vice President/General Manager of Elmer's, a division of Borden, Inc.

CLIVE A. APSEY--DIRECTOR. Mr. Apsey has served as a director of Van de
Kamp's, Inc. since September 1995. Mr. Apsey has been an Executive Director of
Tiger Oats Ltd. since 1987 and currently serves as Executive Chairman of the
International Division of Tiger Oats Ltd. Tiger Oats Ltd. is a major public food
company in Southern Africa. Mr. Apsey's past and present service as a director
includes membership on the boards of the following companies: Tiger Milling &
Feeds Ltd., Tiger Foods Ltd., Tiger Oats, Langeberg Foods, Ltd., Langeberg
Holdings Ltd., Beacon Sweets and Chocolates (Pty) Ltd. and Durban Confectionery
Works (Pty) Ltd.

CHARLES AYRES--DIRECTOR. Mr. Ayres has served as a director of Aurora Foods
Inc. since December 1996. Mr. Ayres is a managing director of McCown De Leeuw &
Co., Inc. Mr. Ayres has been associated with McCown De Leeuw & Co. since 1991.
Prior to joining McCown De Leeuw & Co., Mr. Ayres was a founding partner of HMA
Investments, Inc., a private investment firm focused on middle market management
buyouts. Mr. Ayres began his career as an investment banker with Lazard Freres &
Co. He currently serves as a director of Nimbus CD International, Inc. and The
Brown Schools, Inc.

DAVID E. DE LEEUW--DIRECTOR. Mr. De Leeuw has served as a director of
Aurora Foods Inc. since December 1996. Mr. De Leeuw is a managing director of
McCown De Leeuw & Co., Inc. Prior to founding McCown De Leeuw & Co. with George
E. McCown in 1984, Mr. De Leeuw was Manager of the Leveraged Acquisition Unit
and Vice President in the Capital Markets Group at Citibank, N.A. Mr. De Leeuw
also worked with W.R. Grace & Co. where he was Assistant Treasurer and Manager
of Corporate Finance. Mr. De Leeuw began his career as an investment banker with
Paine Webber Incorporated. He currently serves as a director of Vans, Inc.,
Nimbus CD International, Inc., AmeriComm Holdings, Inc., Outsourcing Solutions
Inc. and American Residential Investment Trust.

CHARLES J. DELANEY--DIRECTOR. Mr. Delaney has served as a director of Van
de Kamp's, Inc. since September 1995. Mr. Delaney has been President of UBS
Capital LLC since January 1993 and Managing Director in charge of the Leveraged
Finance Group of the Corporate Banking Division of Union Bank of Switzerland
since May 1989. Mr. Delaney is also a director of Cinnabon International, Inc.
and Peoples Telephone Company, Inc.

RICHARD C. DRESDALE--DIRECTOR. Mr. Dresdale has served as a director of
Aurora Foods Inc. since December 1996. Mr. Dresdale has been a Managing Director
of Fenway Partners, Inc. since the firm's founding in 1994. Fenway is a New
York-based private equity firm for institutional investors with a primary
objective of acquiring leading middle-market companies. Prior to founding Fenway
with Messrs. Lamm and Geisser, Mr. Dresdale was employed by Clayton, Dubilier
and Rice, Inc. from June 1985 to March 1994, most recently as a Principal. Mr.
Dresdale serves as a director of a number of Fenway's portfolio companies,
including Blue Capital Management, LLC, Central Tractor Farm & Country, Inc. and
Delimex Holdings, Inc. Mr. Dresdale is also a director of Remington Arms
Company, Inc., a designer, manufacturer and seller of sporting goods products
for the hunting, shooting sports and fishing markets.

ANDREA GEISSER--DIRECTOR. Mr. Geisser has served as a director of Van de
Kamp's, Inc. since September 1995. Mr. Geisser has been a Managing Director of
Fenway Partners, Inc. since the firm's founding in 1994. Prior to founding
Fenway with Messrs. Lamm and Dresdale, Mr. Geisser was employed by Butler
Capital Corporation ("BCC") from February 1989 to June 1994, most recently as
Managing Director and General Partner of each of the management partnerships of
the investment partnerships sponsored by BCC. From 1986 to 1989, Mr. Geisser was
a Managing Director of Onex Investment Corporation, the largest Canadian
leveraged buyout company, and prior to that started the U.S. operations of
IFINT, a European investment company, where he was a Senior Vice President and
Director.

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Mr. Geisser serves as a director of a number of Fenway's portfolio companies,
including Decorative Concepts, Inc., Delimex Holdings, Inc., Iron Age
Corporation and Valley Recreation Products, Inc.

PETER LAMM--DIRECTOR. Mr. Lamm has served as a director of Van de Kamp's,
Inc. since September 1995 and as a director of Aurora Foods Inc. since December
1996. Mr. Lamm has been President of Fenway Partners, Inc. since the firm's
founding in 1994. Prior to founding Fenway with Messrs. Dresdale and Geisser,
Mr. Lamm was employed by BCC from February 1982 to April 1994, most recently as
Managing Director and General Partner of each of the management partnerships of
the investment partnerships sponsored by BCC. Mr. Lamm serves as a director of a
number of Fenway's portfolio companies, including Blue Capital Management, LLC,
Central Tractor Farm & Country, Inc., Delimex Holdings, Inc., Iron Age
Corporation and National School Supply Company.

TYLER T. ZACHEM--DIRECTOR. Mr. Zachem has served as a director of Aurora
Foods Inc. since December 1996. Mr. Zachem is a managing director of McCown De
Leeuw & Co., Inc. Mr. Zachem has been associated with McCown De Leeuw & Co.
since July 1993. Mr. Zachem previously worked as a consultant with McKinsey &
Co. and as an investment banker with McDonald & Company. He currently serves as
a director of Outsourcing Solutions Inc., RSP Manufacturing Corporation, The
Brown Schools, Inc. and Papa Gino's, Inc.

There is no family relationship between any of the executive officers or
directors of the Company.

ELECTION AND COMMITTEES OF THE BOARD OF DIRECTORS

The election of directors is effectively governed by the terms of the
Securityholders Agreement. See "Principal Stockholders--Securityholders
Agreement".

The Board of Directors of the Company has a compensation committee which
determines the compensation of executive officers, including bonuses, and
administers the Company's 1998 Incentive Plan and the 1998 Employee Stock
Purchase Plan. The compensation committee consists of Messrs. Lamm, Ayres, and
Dresdale. The Chairman of the Board is an EX-OFFICIO member of the compensation
committee. The Board of Directors of the Company intends to appoint an Audit
Committee within three months of the closing of the Equity Offerings comprised
solely of independent directors. The Audit Committee's functions will include
recommending to the Board of Directors the engagement of the Company's
independent public accountants and reviewing with such accountants the plans
for, and the result and scope of, their auditing engagement.

EXECUTIVE COMPENSATION

The Company paid Dartford a fee of $768,000 in 1997 for serving in the role
of the Company's executive office. Mr. Ian R. Wilson serves as Chief Executive
Officer, Mr. James B. Ardrey serves as Vice Chairman, Mr. Ray Chung serves as
Executive Vice President, and Ms. M. Laurie Cummings serves as Chief Financial
Officer and Secretary of the Company pursuant to employment agreements. Messrs.
Thomas J. Ferraro and Thomas O. Ellinwood serve as President of the Aurora
Division and VDK Division, respectively, pursuant to employment agreements. In
1997, Mr. Ferraro earned $175,000 in salary, $143,000 in bonus, and $6,000 in
the form of Company contributions on his behalf to profit sharing and savings
plans and other related benefits. In 1997, Mr. Ellinwood earned $225,000 in
salary, $112,500 in bonus, and $19,375 in contributions made by the VDK on his
behalf to profit sharing and savings plans. Messrs. Ferraro and Ellinwood were
each recently granted, contingent upon closing of the Equity Offerings, 175,000
options for shares of Common Stock of the Company under the 1998 Incentive Plan
at an exercise price equal to the initial public offering price in the Equity
Offerings. See "Management-- Employment Agreements" and "Certain Relationships
and Related Transactions".

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EMPLOYMENT AGREEMENTS

Mr. Ian R. Wilson serves as the Chairman of the Board and the Chief
Executive Officer of the Company pursuant to an employment agreement which
became effective upon the closing of the Equity Offerings. Mr. Wilson receives
an annual base salary of $1.0 million during the term of the agreement and is
eligible to receive a bonus of up to 80% of his base salary based on certain
earnings criteria. The employment agreement provides for a term of two years and
a non-compete covenant for the term of his employment and thereafter, if
applicable, until the earlier of the second anniversary of the closing of the
Equity Offerings or the first anniversary of employing a Chief Executive Officer
other than Mr. Ian R. Wilson. Upon termination by the Company other than for
cause (as defined in the employment agreement), Mr. Wilson shall receive his
salary and shall be eligible to receive his bonus through the remaining term of
the non-compete period. In addition, a termination of Mr. Wilson by the Company
other than for cause shall also constitute a termination of Messrs. Ardrey and
Chung and Ms. Cummings other than for cause under the employment agreements
described below.

Mr. James B. Ardrey serves as the Vice Chairman of the Company pursuant to
an employment agreement which became effective upon the closing of the Equity
Offerings. Mr. Ardrey receives an annual base salary of $600,000 during the term
of the agreement and is eligible to receive a bonus of up to 80% of his base
salary based on certain earnings criteria. The employment agreement provides for
a term of two years and a non-compete covenant for the term of his employment
and thereafter, if applicable, until the earlier of the second anniversary of
the closing of the Equity Offerings or the first anniversary of employing a
Chief Executive Officer other than Mr. Ian R. Wilson. Upon termination by the
Company of Mr. Ardrey or Mr. Wilson other than for cause, Mr. Ardrey shall
receive his salary and shall be eligible to receive his bonus through the
remaining term of the non-compete period.

Mr. Ray Chung serves as the Executive Vice President of the Company pursuant
to an employment agreement which became effective upon the closing of the Equity
Offerings. Mr. Chung receives an annual base salary of $350,000 during the term
of the agreement and is eligible to receive a bonus of up to 80% of his base
salary based on certain earnings criteria. The employment agreement provides for
a term of two years and a non-compete covenant for the term of his employment
and thereafter, if applicable, until the earlier of the second anniversary of
the closing of the Equity Offerings or the first anniversary of employing a
Chief Executive Officer other than Mr. Ian R. Wilson. Upon termination by the
Company of Mr. Chung or Mr. Wilson other than for cause, Mr. Chung shall receive
his salary and shall be eligible to receive his bonus through the remaining term
of the non-compete period.

Ms. M. Laurie Cummings serves as the Chief Financial Officer and Secretary
of the Company pursuant to an employment agreement which became effective upon
the closing of the Equity Offerings. Ms. Cummings receives an annual base salary
of $250,000 during the term of the agreement and is eligible to receive a bonus
of up to 80% of her base salary based on certain earnings criteria. The
employment agreement provides for a term of two years and a non-compete covenant
for the term of her employment and thereafter, if applicable, until the earlier
of the second anniversary of the closing of the Equity Offerings or the first
anniversary of employing a Chief Executive Officer other than Mr. Ian R. Wilson.
Upon termination by the Company of Ms. Cummings or Mr. Wilson other than for
cause, Ms. Cummings shall receive her salary and shall be eligible to receive
her bonus through the remaining term of the non-compete period.

Mr. Thomas J. Ferraro serves as the President of the Aurora Division
pursuant to an employment agreement, dated as of December 31, 1996, as amended
(the "Ferraro Employment Agreement"). He receives a base salary of $275,000 per
year and is eligible to receive a bonus of up to 80% of his base salary based
upon certain earnings criteria. The Ferraro Employment Agreement provides for a
two-year term ending December 31, 2000; however, on each December 31st, the term
automatically extends for one additional year so that the term ends three years
after such December 31st unless notice by either the Company or Mr. Ferraro to
terminate is given 30 days prior to the automatic extension. If the Company

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terminates Mr. Ferraro's employment without cause, the Ferraro Employment
Agreement requires the Company to pay him an amount equal to the base salary he
would have been entitled to receive through the end of the current term of his
employment agreement. Mr. Ferraro is also entitled to receive any bonus for the
preceding fiscal year which has not been paid as of the date of his termination
plus a pro rata portion of any base and supplemental bonus with respect to such
fiscal year based upon the actual number of days the Company employed Mr.
Ferraro during such fiscal year. Mr. Ferraro may not compete with or solicit
employees from the Company until the later of the first anniversary of his
termination and the end of the current term of his employment agreement.

Mr. Thomas O. Ellinwood serves as the President of the VDK Division pursuant
to an employment agreement, dated as of March 1, 1997 as amended (the "Ellinwood
Employment Agreement"). The Ellinwood Employment Agreement provides for a
three-year term; however, on each September 30th, the term automatically extends
for one additional year so that the term ends three years after such September
30th unless notice by either the Company or Mr. Ellinwood to terminate is given
30 days prior to the automatic extension. Mr. Ellinwood receives an annual base
salary of $275,000 (subject to annual adjustment) during the term of the
agreement and is eligible to receive a bonus of up to 80% of his base salary
based upon certain earnings criteria. If the Company terminates Mr. Ellinwood's
employment without cause before a change of control (as defined in the
agreement), the Company is required to pay him the greater of (i) 200% of his
base salary then in effect or (ii) the base salary he would have been entitled
to receive through the end of the current term of the employment agreement plus
his base bonus pro rated according to the actual number of days the Company
employed him for such fiscal year. If the Company terminates Mr. Ellinwood's
employment without cause after a change of control (as defined in the agreement)
or Mr. Ellinwood terminates his employment with the Company for "Good Reason"
(as defined in the agreement) after a change of control, the Company must pay
him the sum of 200% of his base salary then in effect plus his bonus pro rated
according to the actual number of days the Company employed him for such fiscal
year. The pro rated portion of his bonus is payable as if the Company's
financial results equal exactly 100% of the EBITDA target for that year. Mr.
Ellinwood's employment agreement also provides that for one year following his
termination of employment with the Company (other than a termination by the
Company without cause), Mr. Ellinwood may not compete with or solicit employees
from the Company.

AURORA INCENTIVE PLAN

The Amended and Restated Limited Liability Company Agreement of MBW
Investors LLC contained an incentive plan (the "Aurora Plan") as a means by
which certain key employees and other specifically designated persons ("Aurora
Covered Employees") of Aurora and/or affiliated with Aurora, were given an
opportunity to benefit from appreciation in the value of Aurora. Under the
Aurora Plan, Aurora Covered Employees were issued a specific class of limited
liability company member units ("Management Units"), at a nominal value, as a
means to participate in the appreciation of the equity value of Aurora. The
Management Units were subject to vesting requirements based on terms of
employment or other factors.

Prior to the closing of the Equity Offerings, the final value of all classes
of Management Units was determined based on the valuation of the Common Stock
held indirectly by MBW Investors LLC, and upon the closing of the Equity
Offerings all unvested Management Units became fully vested. The aggregate value
of all Management Units is $58.9 million. Through December 27, 1997, Aurora had
recorded estimated incentive plan expense of $2.3 million based on the estimated
valuation of the Company at that time. Additional incentive plan expense of
$56.6 million was recorded in the first and second quarters of 1998. The
incentive plan expense has been recorded as a liability of MBW Investors LLC as
sponsor of the Aurora Plan. However, because the Aurora Plan was for the benefit
of Aurora Covered Employees, expense recognized under the Aurora Plan has been
pushed down to the Company as

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incentive plan expense and as additional paid-in capital from its parent. After
the closing of the Equity Offerings, no additional compensation expense will be
recorded under the Aurora Plan.

MBW Investors LLC will satisfy its liability under the Aurora Plan by
distributing 4,154,014 shares of Common Stock of the Company based on the
valuation of the Management Units at the initial public offering price of the
Company's Common Stock on the dissolution of MBW Investors LLC. See "Certain
Relationships and Related Transactions".

Pursuant to the Aurora Plan, Dartford, Thomas J. Ferraro, and C. Gary
Willett were entitled to receive 2,700,109, 429,197, and 268,248 shares of
Common Stock, respectively, effective on the closing of the Equity Offerings in
respect of the Aurora Plan. In addition, 56 other employees are entitled to
receive an aggregate of 756,460 shares pursuant to the Aurora Plan.

VDK INCENTIVE PLAN

VDK Foods LLC provided a compensation arrangement (the "VDK Plan") as a
means by which certain key employees, and other specifically designated persons
("VDK Covered Employees") of VDK and/or affiliated with VDK, were given an
opportunity to benefit from appreciation in the equity value of VDK. Under the
VDK Plan, VDK Covered Employees were issued a specific class of limited
liability company member units and/or performance-based units (collectively,
"VDK Management Units"), at a nominal value, as a means to participate in the
appreciation of the equity value of VDK. The VDK Management Units were subject
to vesting requirement based on terms of employment or other factors.

Prior to the closing of the Equity Offerings, the final value of all classes
of VDK Management Units was determined based on the valuation of the shares of
the Company held indirectly by VDK Foods LLC, and upon the closing of the Equity
Offerings all unvested VDK Management Units became fully vested. The aggregate
value of all VDK Management Units is $64.7 million. Through December 31, 1997,
no incentive plan expense had been recorded by VDK based on the estimated
valuation of VDK at that time. Incentive plan expense of $64.7 million was
recorded in the first and second quarters of 1998. The incentive plan expense
has been recorded as a liability of VDK Foods LLC as sponsor of the VDK Plan.
However, because the VDK Plan was for the benefit of VDK Covered Employees,
expense recognized under the VDK Plan has been pushed down to the Company as
incentive plan expense and as additional paid-in capital from its parent. After
the closing of the Equity Offerings, no additional incentive plan expense will
be recorded under the VDK Plan.

VDK Foods LLC (or the Company as described below) will distribute a fixed
number of shares of Common Stock of the Company upon the dissolution of VDK
Foods LLC, based on the valuation of the VDK Management Units at the initial
public offering price of the Company's Common Stock. See "Certain Relationships
and Related Transactions".

The VDK Plan provides for tax gross-up payments on certain distributions.
Because the Company will receive the tax benefit of such distributions and
related tax gross-up payments, and because the tax benefit is expected to exceed
the amount of the tax gross-up payments, the Company will bear the liability for
any such tax gross-up payments due. The estimated tax gross-up payment is $12.4
million and has been recorded as additional incentive plan expense and other
liabilities. The tax benefit of the tax gross-up payment and related
distributions of $19.0 million, which more than offsets the gross-up payments,
has been recorded to income tax expense and as a deferred tax asset.

To facilitate payment of the tax gross-up obligation and recognition of
related tax benefits, VDK adopted a new incentive plan (the "New VDK Plan" and,
together with the VDK Plan, the "VDK Plans"), which was assumed by the Company
in connection with the Contribution Transaction. Under the New VDK Plan, the
Company is obligated to distribute no later than the first anniversary of the
closing of the Equity Offerings 3,588,196 shares of the Company's Common Stock
to VDK Covered Employees who were granted certain types of VDK Management Units
under the VDK Plan. The issuance of such shares

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(the "MC Shares") will not increase the number of outstanding shares of Common
Stock because the Company's obligations to issue the MC Shares is contingent
upon the Company's receiving from VDK Foods LLC, as a contribution, a number of
shares of the Company's Common Stock owned by VDK Foods LLC equal to the number
of MC Shares. The Company will have no obligation to issue MC Shares unless it
receives a contribution of an equal number of shares from VDK Foods LLC. VDK
Foods LLC is obligated to contribute such shares to the Company after the
closing of the Equity Offerings. The Company's obligation to make the tax gross
up payments referred to above is subject to the Company being allowed a
deduction for federal income tax purposes with respect to the payment of the MC
Shares and tax gross up payment.

Pursuant to the VDK Plan, Dartford, Thomas O. Ellinwood, and Anthony A.
Bevilacqua are entitled to receive 2,271,196, 243,279, and 91,458 shares of
Common Stock, respectively, under the VDK Plans no later than the first
anniversary of the closing of the Equity Offerings. In addition, 27 employees
are entitled to receive an aggregate of 982,263 shares pursuant to the VDK Plans
no later than the first anniversary of the closing of the Equity Offerings.

1998 LONG TERM INCENTIVE PLAN

Prior to the Equity Offerings, the Board of Directors adopted the 1998
Incentive Plan and the sole stockholder approved such plan. The Company filed a
Registration Statement on Form S-8 on June 30, 1998 to register with the
Securities and Exchange Commission the shares issuable pursuant to the 1998
Incentive Plan.

The following summary of the 1998 Incentive Plan is qualified in its
entirety by reference to the complete text of the 1998 Incentive Plan, which is
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. Capitalized terms not separately defined below have the meanings set forth
in the 1998 Incentive Plan.

The purpose of the 1998 Incentive Plan is to foster and promote the
long-term financial success and interests of the Company and materially increase
the value of equity interests in the Company by: (a) encouraging the long-term
commitment of selected key employees, (b) motivating superior performance of key
employees by means of long-term performance related incentives, (c) encouraging
and providing key employees with a formal program for obtaining an ownership
interest in the Company, (d) attracting and retaining outstanding key employees
by providing incentive compensation opportunities competitive with other major
companies, and (e) enabling participation by key employees in the long-term
growth and financial success of the Company. Under the 1998 Incentive Plan, the
Compensation Committee has the authority to grant to key employees and
consultants of the Company the following types of awards: (i) stock options in
the form of incentive stock options qualified under Section 422 of the Code
("Incentive Options"), or nonqualified stock options ("Nonqualified Options," or
collectively with the Incentive Options "Options"), or both; (ii) stock
appreciation rights ("SARs"); (iii) restricted stock (the "Restricted Stock");
(iv) performance-based awards; and (v) supplemental payments dedicated to
payment of any federal income taxes that may be payable in conjunction with the
1998 Incentive Plan (collectively referred to as "Incentive Awards"). All
employees of the Company are eligible to participate in the 1998 Incentive Plan.
3,500,000 shares of Common Stock have been reserved for grants of Incentive
Awards under the 1998 Incentive Plan.

The 1998 Incentive Plan is administered by the Company's Compensation
Committee which must consist of at least two members of the Board of Directors,
each of whom is a nonemployee director. The 1998 Incentive Plan provides that
the Compensation Committee may make adjustments to the number of shares and to
the exercise price of all or any Incentive Awards. The Compensation Committee's
determinations and interpretations under the 1998 Incentive Plan are final,
binding and conclusive on all participants and need not be uniform and may be
made by the compensation committee selectively among persons who receive, or are
eligible to receive, grants and awards under the 1998 Incentive Plan.

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The Compensation Committee may limit an optionee's right to exercise all or
any portion of an Option until one or more dates subsequent to the date of
grant. The Compensation Committee also has the right, exercisable in its sole
discretion, to accelerate the date on which all or any portion of an Option may
be exercised. The 1998 Incentive Plan also provides that, under certain
circumstances, if any employee is terminated within two years after a "Change of
Control", each Option or SAR then outstanding shall immediately become vested
and be immediately exercisable in full, all restrictions and conditions of all
Restricted Stock then outstanding shall be deemed satisfied and the restriction
period to have expired, and all Performance Shares (as defined below) and
Performance Units (as defined below) shall vest, and be deemed earned in full
and properly paid. In the event of a change in control, however, the
Compensation Committee may, after notice to the Grantee, require the Grantee to
"cash out" his rights by transferring them to the Company in exchange for their
equivalent "cash value".

If an employee's employment by the Company is terminated for any reason
whatsoever other than death, disability, retirement, involuntary termination or
termination for good reason, any Incentive Award outstanding at the time and all
rights thereunder shall wholly and completely terminate, and unless otherwise
established by the Compensation Committee, no further vesting shall occur and
the Grantee shall be entitled to exercise his rights (if any) with respect to
the portion of the Incentive Award vested as of the date of termination for a
period of 30 calendar days after such termination date; provided, however, that
if an employee is terminated for cause, such employee's right to exercise his
rights (if any) with respect to the vested portion of his or her Incentive Award
shall terminate as of the date of termination of employment. In the event of
termination for death, disability, retirement, or in connection with a change in
control, an Incentive Award may be only exercised as provided in an individual's
incentive agreement, or as determined by the Compensation Committee.

OPTIONS

No Incentive Option may be granted with an exercise price per share less
than the fair market value of the Common Stock at the date of grant.
Nonqualified Options may be granted at any exercise price. The exercise price of
an Option may be paid in cash, by an equivalent method acceptable to the
Compensation Committee, or, at the Compensation Committee's discretion, by
delivery of already owned shares of Common Stock having a fair market value
equal to the exercise price, or, at the Compensation Committee's discretion, by
delivery of a combination of cash and already owned shares of Common Stock.
However, if the optionee acquired the stock to be surrendered directly or
indirectly from the Company, he must have owned the stock to be surrendered for
at least six months prior to tendering such stock for the exercise of an Option.

An eligible employee (a "Grantee") may receive more than one Incentive
Option, but the maximum aggregate fair market value of the Common Stock
(determined when the Incentive Option is granted) with respect to which
Incentive Options are exercisable by such employee in any calendar year cannot
exceed $100,000. In addition, no Incentive Option may be granted to an employee
owning directly or indirectly stock possessing more than 10% of the total
combined voting power of all classes of capital stock of the Company (a
"Ten-Percent Stockholder"), unless the exercise price is not less than 110% of
the fair market value of the shares subject to such Incentive Option on the date
of grant. Awards of Nonqualified Options are not subject to these special
limitations.

Except as otherwise provided by the Compensation Committee, awards under the
1998 Incentive Plan are not transferable other than as designated by the Grantee
by will or by the laws of descent and distribution. The expiration date of an
Incentive Option is determined by the Compensation Committee at the time of the
grant, but in no event may an Incentive Option be exercisable after the
expiration of 10 years from the date of grant of the Incentive Option (five
years in the case of an Incentive Option granted to a Ten-Percent Stockholder).

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STOCK APPRECIATION RIGHTS

SARs may be granted under the 1998 Incentive Plan in conjunction with all or
part of an Option, or separately. The exercise price of the SAR generally will
not be less than the fair market value of the Common Stock on the date of the
grant. An SAR granted in conjunction with an option will be exercisable only
when the underlying Option is exercisable and once an SAR has been exercised,
the related portion of the Option underlying the SAR will terminate. Upon the
exercise of an SAR, the Company will pay to the Grantee in cash, Common Stock,
or a combination thereof (the method of payment to be at the discretion of the
Compensation Committee), an amount equal to the excess of the fair market value
of the Common Stock on the exercise date over the exercise price, multiplied by
the number of SARs being exercised.

The Compensation Committee, either at the time of grant or at the time of
exercise of any Nonqualified Option or SAR, may provide for a supplemental
payment (a "Supplemental Payment") by the Company to the Grantee with respect to
the exercise of any Nonqualified Option or SAR, in an amount specified by the
Compensation Committee, but which shall not exceed the amount necessary to pay
the federal income tax payable with respect to both the exercise of the
Nonqualified Option and/or SAR and the receipt of the Supplemental Payment,
based on the assumption that the stockholder is taxed at the maximum effective
federal income tax rate on such amounts. The Compensation Committee shall have
the discretion to grant Supplemental Payments that are payable in cash, Common
Stock, or a combination of both, as determined by the Compensation Committee at
the time of payment.

RESTRICTED STOCK

Restricted Stock awards may be granted under the 1998 Incentive Plan, and
the provisions attendant to a grant of Restricted Stock may vary among
participants. In making an award of Restricted Stock, the Compensation Committee
will determine the periods during which the Restricted Stock is subject to
forfeiture. During the restriction period, as set forth in the grant of the
Restricted Stock, the Grantee may not sell, transfer, pledge or assign the
Restricted Stock, but will be entitled to vote the Restricted Stock.

The Compensation Committee, at the time of vesting of Restricted Stock, may
provide for a Supplemental Payment by the Company to the Grantee in an amount
specified by the Compensation Committee that shall not exceed the amount
necessary to pay the federal income tax payable with respect to both the vesting
of the Restricted Stock and receipt of the Supplemental Payment, based on the
assumption that the employee is taxed at the maximum effective federal income
tax rate on such amount.

PERFORMANCE UNITS

The Compensation Committee may grant Incentive Awards representing a
contingent right to receive cash ("Performance Units") or shares of Common Stock
("Performance Shares") at the end of a performance period. The Compensation
Committee may grant Performance Units and Performance Shares in such a manner
that more than one performance period is in progress concurrently. For each
performance period, the Compensation Committee shall establish the number of
Performance Units or Performance Shares and the contingent value of any
Performance Units or Performance Shares, which may vary depending on the degree
to which performance objectives established by the Compensation Committee are
met. The Compensation Committee may modify the performance measures and
objectives as it deems appropriate.

The basis for payment of Performance Units or Performance Shares for a given
performance period shall be the achievement of those financial and nonfinancial
performance objectives determined by the Compensation Committee at the beginning
of the performance period. If minimum performance is not achieved for a
performance period, no payment shall be made and all contingent rights shall
cease. If minimum performance is achieved or exceeded, the value of a
Performance Unit or Performance Share shall be based on the degree to which
actual performance exceeded the pre-established minimum performance standards,
as determined by the Compensation Committee. The amount of payment shall be

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determined by multiplying the number of Performance Units or Performance Shares
granted at the beginning of the performance period by the final Performance Unit
or Performance Share value. Payments shall be made, in the discretion of the
Compensation Committee, solely in cash or Common Stock, or a combination of cash
and Common Stock, following the close of the applicable performance period.

The Compensation Committee, at the date of payment with respect to such
Performance Units or Performance Shares, may provide for a Supplemental Payment
by the Company to the Grantee in an amount specified by the Compensation
Committee, which shall not exceed the amount necessary to pay the federal income
tax payable with respect to the amount of payment made with respect to such
Performance Units or Performance Shares and receipt of the Supplemental Payment,
based on the assumption that the Grantee is taxed at the maximum effective
federal income tax rate on such amount.

SECTION 162(M) LIMITATIONS

In general, under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), compensation expense deductions of publicly-held
corporations may be limited to the extent total compensation (including base
salary, annual bonus, stock option exercises and non-qualified benefits paid)
for certain executive officers exceeds $1.0 million in any one year. However,
under Section 162(m), the deduction limit does not apply to certain
"performance-based compensation" established by an independent compensation
committee which is adequately disclosed to, and approved by, stockholders. Under
a Section 162(m) transition rule for compensation plans of corporations which
are privately held and which become publicly held in an initial public offering,
the individual compensation plan will not be subject to Section 162(m) until the
"Transition Date" which is defined as the earliest of (i) the expiration of the
compensation plan, (ii) the material modification of the compensation plan;
(iii) the issuance of all Common Stock and other compensation that has been
allocated under the compensation plan; or (iv) the first meeting of stockholders
at which directors are to be elected that occurs after December 31, 2001. After
the Transition Date, compensation paid under the compensation plan, will not
qualify as "performance-based compensation" for purposes of Section 162(m)
unless such compensation is based upon preestablished objective performance
goals, the material terms of which are disclosed to and approved by the
stockholders of the Company.

The Company has attempted to structure its executive compensation plan and
its 1998 Incentive Plan in such a manner that, after the Transition Date,
subject to obtaining stockholder approval of the compensation, the remuneration
attributable to such plans which meet the other requirements of Code Section
162(m) will not be subject to the $1.0 million limitation. The Company has not,
however, requested a ruling from the IRS or an opinion of counsel regarding this
issue.

1998 EMPLOYEE STOCK PURCHASE PLAN

Prior to the Equity Offerings, the Board of Directors adopted the 1998
Employee Stock Purchase Plan (the "Purchase Plan") and the sole stockholder
approved such plan covering an aggregate of 200,000 shares of Common Stock. The
Company filed a Registration Statement on Form S-8 on June 30, 1998 to register
with the Securities and Exchange Commission the shares issuable pursuant to the
Purchase Plan.

The following summary of the Purchase Plan is qualified in its entirety by
reference to the complete text of the Purchase Plan, which is filed as an
exhibit to the Registration Statement of which this Prospectus is a part.
Capitalized terms not separately defined below have the meanings set forth in
the Purchase Plan.

The primary purpose of the Purchase Plan is to attract and retain key
employees by offering such persons a greater personal interest in the Company's
business through stock ownership. The Purchase Plan is intended to qualify as an
employee stock purchase plan within the meaning of Section 423 of the Code. All
employees of the Company or a Subsidiary, who are employed by the Company or a
Subsidiary at least 20 hours per week and five months per year are eligible to
participate in the Purchase Plan. Under the

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Purchase Plan, employees eligible to participate in the Purchase Plan will have
the right to purchase up to the number of shares of Common Stock purchasable
with 15% of such employee's earnings withheld pursuant to the Purchase Plan and
applied, on specified dates determined by the Compensation Committee, to the
purchase of shares of Common Stock. The purchase price per share under the
Purchase Plan shall be equal to 85% of the lower of the fair market value of the
Common Stock on the commencement date of each offering period and the relevant
purchase date.

DIRECTOR COMPENSATION

Directors who are officers, employees, or otherwise affiliates of the
Company do not receive compensation for their services as directors.
Non-employee directors receive an annual retainer of $20,000, plus $2,000 for
attending each committee meeting of the Board of Directors and $5,000 per annum
for serving as a Chairman of any committee of the Board of Directors. Directors
of the Company are entitled to reimbursement of their reasonable out-of-pocket
expenses in connection with their travel to and attendance at meetings of the
Board of Directors or committees thereof.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board of Directors has appointed Messrs. Lamm, Ayres, and Dresdale as
members of its Compensation Committee. The Chairman of the Board is an EX
OFFICIO member of the Compensation Committee. Mr. Wilson is the Chairman of the
Board and Chief Executive Officer of the Company.

Mr. Wilson is also the Chairman of the Board of Directors and Chief
Executive Officer of Windy Hill Pet Food Company, Inc. ("Windy Hill") and
managing director of Dartford. Mr. Ardrey, Vice Chairman of the Company, is also
an Executive Vice President of Windy Hill and a partner of Dartford. Pursuant to
an agreement, dated September 19, 1995 and terminated on or prior to the
Offerings, Dartford provided management oversight on financial and operational
matters to the Company with respect to Van de Kamp's, Inc. Dartford received
$631,000, and $1,800,000 for 1996 and 1997, respectively, under such agreement.
Further, pursuant to an agreement with the Company, dated December 31, 1996 and
terminated on or prior to the Offerings, Dartford provided management oversight
to the Company with respect to Aurora Foods. Dartford received $768,000 for 1997
under such agreement.

From December 31, 1996 through January 16, 1998, the Company paid Dartford
$1,250,000 in fees for services rendered in connection with the acquisitions of
the MRS. BUTTERWORTH'S business, the LOG CABIN business, and the DUNCAN HINES
business. Also, from September 1995 through July 9, 1996, the Company paid
Dartford $1,950,000 in fees for services rendered in connection with
acquisitions by the Company and related financings of VDK's acquisitions.

Pursuant to an agreement with Windy Hill, dated as of September 5, 1995, the
Company paid $198,000 in 1996 and 1997 for computer support services. Dartford
and its partners own 14.2% of Windy Hill. Also, Dartford earned $1,500,000 in
fees in connection with the Contribution Transaction.

The Company has entered into agreements pursuant to which it agreed to pay
transaction fees to each of Dartford, MDC, and Fenway of 0.333% of the
acquisition price for future acquisitions by the Company.

The Company has agreed to pay Dartford $800,000 per year as reimbursement of
corporate headquarters expenses which include staff salaries, miscellaneous
office expenses related to the administration of the Company's corporate
headquarters, and rent for the space leased by Dartford and used by the Company
as its corporate headquarters for a term ending the earlier of the second
anniversary of the closing of the Equity Offerings and the date that Mr. Wilson
is no longer Chairman or Chief Executive Officer of the Company. See "Certain
Relationships and Related Transactions".

Mr. Ayres is a general partner of MDC. Pursuant to an agreement, dated
December 31, 1996 and terminated on or prior to the Offerings, MDC Management
Company III, L.P., an affiliate of MDC, a beneficial owner of the Company,
advised the Company as to the structuring of the Company's bank

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financing and the capital structure of the Company, identification and financing
of future acquisitions, and general management advice relating to the overall
strategy and positioning of the Company. MDC received $293,000 for 1997 under
such agreement. From December 31, 1996 through January 16, 1998 the Company paid
MDC $5,700,000 in fees for services rendered in connection with the acquisitions
of the MRS. BUTTERWORTH'S business, the LOG CABIN business, and the DUNCAN HINES
business. Also, MDC earned $1,500,000 in fees in connection with the
Contribution Transaction.

Messrs. Dresdale and Lamm are partners of Fenway. From December 31, 1996
through January 16, 1998, the Company paid Fenway $1,500,000 in fees for
services rendered in connection with the acquisitions of the MRS. BUTTERWORTH'S
business, the LOG CABIN business, and the DUNCAN HINES business. Also, from
September 1995 through July 9, 1996, the Company paid Fenway $1,474,000 in fees
for services rendered in connection with acquisitions by the Company and related
financings of VDK's acquisitions. Fenway earned $1,500,000 in fees in connection
with the Contribution Transaction.

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PRINCIPAL STOCKHOLDERS

The following table sets forth, as of July 1, 1998, certain information
regarding the beneficial ownership of the Company's Common Stock (after giving
effect to the sale of the shares of Common Stock pursuant to the Equity
Offerings) by (a) each person who is known to the Company to be the beneficial
owner of more than five percent of the Company's Common Stock, (b) each director
and executive officer of the Company and (c) all directors and executive
officers of the Company as a group. Except as otherwise indicated, the Company
believes that the persons or entities listed below have sole voting and
investment power with respect to all shares of Common Stock beneficially owned
by them, except to the extent such power may be shared with a spouse.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER EQUITY
OFFERINGS(1)
NAME AND ------------------------
ADDRESS OF OWNER NUMBER PERCENT
- ---------------------------------------------------------------------- ----------- -----------
<S> <C> <C>

Aurora/VDK LLC(2)..................................................... 52,500,000.0 78.4%
VDK Foods LLC(2)...................................................... 23,877,882 35.6%
Fenway Partners Capital Fund, L.P.(3)................................. 16,617,701 24.8%
McCown De Leeuw & Co. entities(4)(5).................................. 16,376,896 24.4%
California Public Employees Retirement System(5)...................... 3,751,713 5.6%
Dartford Partnership L.L.C.(6)........................................ 7,294,261 10.9%
Tiger Oats Limited(7)................................................. 4,235,014 6.3%
UBS Capital LLC(8).................................................... 4,235,014 6.3%

OFFICERS AND DIRECTORS:
Ian R. Wilson(6)...................................................... 7,294,261 10.9%
James B. Ardrey(6).................................................... 7,294,261 10.9%
Ray Chung(6).......................................................... 7,294,261 10.9%
M. Laurie Cummings(6)................................................. 7,294,261 10.9%
Thomas J. Ferraro(9).................................................. 488,420 *
Thomas O. Ellinwood(10)............................................... 279,336 *
Clive A. Apsey(7)..................................................... 4,235,014 6.3%
Charles Ayres(4)...................................................... 16,376,896 24.4%
David E. De Leeuw(4).................................................. 16,376,896 24.4%
Charles J. Delaney(8)................................................. 4,235,014 6.3%
Richard C. Dresdale(3)................................................ 16,617,701 24.8%
Andrea Geisser(3)..................................................... 16,617,701 24.8%
Peter Lamm(3)......................................................... 16,617,701 24.8%
Tyler T. Zachem(4).................................................... 16,376,896 24.4%

All directors and executive officers of the Company as a group (14
persons)............................................................ 49,526,642 73.9%
</TABLE>

- ------------------------
* Less than 1%.

(1) As used in this table, beneficial ownership means the sole or shared power
to vote, or to direct the voting of a security, or the sole or shared power
to dispose, or direct the disposition of, a security. The table above
assumes that immediately prior to the Equity Offerings, Aurora/VDK LLC, MBW
Investors LLC, and VDK Foods LLC were dissolved and 52,500,000 shares of
Common Stock were distributed to the members of VDK Foods LLC and MBW
Investors LLC and were valued based upon the initial public offering price
of the Common Stock. It is currently expected that VDK Foods LLC will not
dissolve until some time after the Equity Offerings and not later than the
one year anniversary thereof.

(2) Immediately prior to the closing of the Equity Offerings, Aurora/VDK LLC was
the sole stockholder of the Company. As soon as practicable after such
closing, Aurora/VDK LLC will be dissolved and its shares of Common Stock
will be distributed to MBW Investors LLC and VDK Foods LLC, its sole
members. MBW Investors LLC will also be dissolved soon after the dissolution
of Aurora/VDK LLC and its shares of Common Stock will be distributed to its
members including McCown De Leeuw & Co., Fenway Partners Capital Fund, L.P.,
Dartford Partnership L.L.C., CALPERS, Sunapee, and certain divisional
management. Each of these beneficial owners is party to the Securityholders

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Agreement. See "--Securityholders Agreement". The address of Aurora/VDK LLC
and VDK Foods LLC is c/o Dartford Partnership L.L.C., 456 Montgomery Street,
Suite 2200, San Francisco, CA 94104.

(3) Includes 16,293,996.5, 193,972.0 and 129,732.5 shares of Common Stock owned
directly or indirectly by Fenway Partners Capital Fund, L.P. (the "Fenway
Fund"), FPIP, LLC and FPIP Trust, LLC, respectively (assuming the
liquidation of Aurora/VDK LLC, MBW Investors LLC and VDK Foods LLC). Does
not include shares of Common Stock to be directly owned by VDK Foods LLC
upon the dissolution of Aurora/VDK LLC in respect of which Fenway does not
have an economic interest and as to which Fenway disclaims beneficial
ownership. In the event the Underwriters exercise the overallotment option,
Fenway will beneficially own, directly or indirectly, 15,753,502.3, or
23.5%, of the shares of Common Stock outstanding. The Fenway Fund holds a
majority of the voting interests of VDK Foods LLC, and as such may be deemed
to have the power to vote or dispose of the shares of Common Stock held
directly by VDK Foods LLC. FPIP, LLC and FPIP Trust, LLC are entities formed
by the investment professionals of Fenway Partners, Inc. to make
co-investments alongside the Fenway Fund. The managing member of each of
FPIP, LLC, and FPIP Trust, LLC is Fenway Partners, Inc. The general partner
of the Fenway Fund is Fenway Partners, L.P., a Delaware limited partnership,
whose general partner is Fenway Partners Management, Inc., a Delaware
corporation. Peter Lamm, Richard Dresdale, and Andrea Geisser are directors
and officers of each of Fenway Partners Management, Inc. and Fenway
Partners, Inc., and as such may be deemed to have or share the power to vote
or dispose of the shares of Common Stock held by the Fenway Fund, FPIP, LLC
and FPIP Trust, LLC. Each of Messrs. Lamm, Dresdale, and Geisser has no
direct ownership of any shares of the Common Stock and disclaims beneficial
ownership of any of such shares except to the extent of their direct or
indirect partnership or membership interests in the Fenway Fund, FPIP, LLC
and FPIP Trust, LLC. The address of Fenway is 152 West 57th Street, New
York, New York 10019.

(4) Includes 6,036,572 shares of Common Stock owned by McCown De Leeuw & Co.
III, L.P., an investment partnership whose general partner is MDC Management
Company III, L.P. ("MDC III"), 428,553 shares of Common Stock owned by
McCown De Leeuw & Co. III (Europe), L.P., an investment partnership whose
general partner is MDC III, 100,433 shares of Common Stock owned by McCown
De Leeuw & Co. III (Asia), L.P., an investment partnership whose general
partner is MDC Management Company IIIA, L.P. ("MDC IIIA"), 130,579 shares of
Common Stock owned by Gamma Fund LLC, a California limited liability
company, 5,715,591 shares of Common Stock owned by McCown De Leeuw & Co. IV,
L.P., an investment partnership whose general partner is MDC Management
Company IV, LLC ("MDC IV"), 91,977 shares of Common Stock owned by Delta
Fund LLC, a California limited liability company and 121,478 shares of
Common Stock owned by McCown De Leeuw & Co. IV Associates, L.P., an
investment partnership whose general partner is MDC IV. In addition,
includes shares of Common Stock held by California Public Employees
Retirement System for which McCown De Leeuw & Co. III, L.P. has an
irrevocable proxy which provides the power to vote all of the securities
held by California Public Employees Retirement System. In the event the
Underwriters exercise the overallotment option, the MDC entities will
beneficially own 15,525,222.1, or 23.1% of the shares of Common Stock
outstanding, including shares held by California Public Employees Retirement
System. The voting members of Gamma Fund LLC and Delta Fund LLC are George
E. McCown, David E. De Leeuw, David E. King, Robert B. Hellman, Jr., Charles
Ayres, and Steven A. Zuckerman, who are also the only general partners of
MDC III and MDC IIIA and the only managing members of MDC IV. Voting and
dispositive decisions regarding the securities are made by Mr. McCown and
Mr. De Leeuw, as Managing General Partners of each of MDC III and MDC IIIA
who together have more than the required two-thirds-in-interest vote of the
Managing General Partners necessary to effect such decision on behalf of
such entity and by a vote or consent of all of the managing members of MDC
IV. Voting and dispositive decisions regarding securities owned by Delta
Fund LLC and Gamma Fund LLC are made by a vote or consent of a majority in
number of the voting members of Gamma Fund LLC and Delta Fund LLC. Messrs.
McCown, De Leeuw, King, Hellman, Ayres and Zuckerman have no direct
ownership of any securities and disclaim beneficial ownership of such shares
except, in the case of Gamma Fund LLC and Delta Fund LLC, to the extent of
their proportionate membership interests. The address of each of the above
referenced entities is c/ o McCown De Leeuw & Co., 3000 Sand Hill Road,
Building 3, Suite 290, Menlo Park, CA 94025.

(5) Under an irrevocable proxy, California Public Employees Retirement System
has granted McCown De Leeuw & Co. III, L.P. the right to vote all of the
shares of Common Stock it holds. Includes 3,751,713 shares of Common Stock
to be distributed upon the dissolution of MBW Investors LLC. The address of
California Public Employees Retirement System is Lincoln Plaza, 400 P
Street, Sacramento, CA 95814. In the event the Underwriters exercise the
over-allotment option, California Public Employees Retirement System will
beneficially own 3,556,605.5, or 5.3%, of the shares of Common Stock
outstanding.

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(6) Includes 3,923,171.4 shares of Common Stock owned by Dartford to be
distributed upon the dissolution of MBW Investors LLC, 1,099,820 shares of
Common Stock held directly by VDK Foods LLC, and 2,271,196.5 shares of
Common Stock to be distributed to Dartford under the VDK Plan no later than
the first anniversary of the closing of the Equity Offerings. Also includes
152,881 shares of Common Stock transferred to a trust for the benefit of
certain family members of Ian R. Wilson, an aggregate of 120,086 shares of
Common Stock transferred to trusts for the benefit of certain family members
of Ray Chung, and 38,993 shares of Common Stock transferred to certain
family members and trusts for the benefit of certain family members of James
B. Ardrey. Pursuant to the Securityholders Agreement, such permitted
transferees of Dartford are included for the purpose of determining the
number of persons Dartford may designate to the Board of Directors of the
Company. Mr. Ian R. Wilson is the managing partner, and Messrs. James B.
Ardrey and Ray Chung and Ms. M. Laurie Cummings are partners, of Dartford
and, as such, they may be deemed to have or share the power to vote or
dispose of the Company's Common Stock. Each of Messrs. Wilson, Ardrey, and
Chung and Ms. Cummings has no direct ownership of any shares of the
Company's Common Stock and disclaims beneficial ownership of any such
shares. Does not include shares of Common Stock to be directly owned by VDK
Foods LLC upon the dissolution of Aurora/VDK LLC in respect of which
Dartford does not have an economic interest. Dartford is a member manager of
VDK Foods LLC, together with UBS, Gloriande, and Fenway and as such, may be
deemed to have the shared power to vote or dispose of such shares. Dartford
disclaims beneficial ownership of any such shares. The address of Dartford
is 456 Montgomery Street, Suite 2200, San Francisco, CA 94104.

(7) Includes 464,309 shares of Common Stock which will be distributed to Tiger
Oats in connection with the Equity Offerings and 3,770,706 shares held
directly by VDK Foods LLC. In the event the Underwriters exercise the
over-allotment option, Tiger Oats will beneficially own 4,014,773.6, or 6.0%
of the shares of Common Stock outstanding. Tiger Oats's shares are held by
Gloriande (Luxembourg) SarL, a corporation organized under the laws of
Luxembourg ("Gloriande"), which is the record owner of the Company's Common
Stock. Gloriande is an indirect wholly-owned subsidiary of Tiger Oats. The
shares of capital stock of Tiger Oats are traded publicly on the
Johannesburg Stock Exchange. Mr. Clive A. Apsey is a director of Tiger Oats
and as such may be deemed to have the power to vote or dispose of the
Company's Common Stock held by Tiger Oats. Mr. Apsey disclaims beneficial
ownership of any such shares. Does not include shares to be directly owned
by VDK Foods LLC upon the dissolution of Aurora/VDK LLC in respect of which
Tiger Oats does not have an economic interest. Gloriande is a member manager
of VDK Foods LLC, together with Dartford, UBS and Fenway and as such may be
deemed to have or share the power to vote or dispose of the Company's Common
Stock to be distributed just prior to the dissolution of Aurora/VDK LLC to
VDK Foods LLC. Gloriande disclaims beneficial ownership of any such shares.
The address of Tiger Oats Limited is 85 Bute Lane, Sandown, Sandton 2196,
Republic of South Africa.

(8) Includes 464,309 shares of Common Stock which will be distributed to UBS in
connection with the Equity Offerings and 3,770,706 shares held directly by
VDK Foods LLC. In the event the Underwriters exercise the over-allotment
option, UBS will beneficially own 4,014,773.6, or 6.0%, of the shares of
Common Stock outstanding. UBS is a member manager of VDK Foods LLC, together
with Dartford, Gloriande, and Fenway and as such may be deemed to have or
share the power to vote or dispose of the Company's Common Stock to be
distributed upon the dissolution of Aurora/VDK LLC to VDK Foods LLC. UBS
disclaims beneficial ownership of any such shares. UBS is a wholly-owned
indirect subsidiary of Union Bank of Switzerland. Does not include shares to
be directly owned by VDK Foods LLC upon the dissolution of Aurora/VDK LLC in
respect of which UBS does not have an economic interest and UBS disclaims
any beneficial ownership as to such shares. The shares of capital stock of
Union Bank of Switzerland are publicly held. Mr. Charles J. Delaney, a
director of the Company, is the president of UBS and disclaims beneficial
ownership of the Company's Common Stock held by UBS. The address of UBS is
299 Park Avenue, 34th Floor, New York, NY 10171.

(9) Includes 128,759 shares of Common Stock to be distributed to Mr. Ferraro
under the Aurora Plan. Mr. Ferraro disclaims beneficial ownership as to
128,759 of such shares, which were transferred to a trust for the benefit of
certain of his family members.

(10) Includes 243,279 shares of Common Stock to be distributed to Mr. Ellinwood
under the VDK Plan no later than the first anniversary of the closing of the
Equity Offerings. Mr. Ellinwood disclaims beneficial ownership as to any
such shares.

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The following charts illustrate the organization and ownership of the
Company immediately preceding the Equity Offerings and immediately after
consummation of the Equity Offerings.

IMMEDIATELY PRIOR TO EQUITY OFFERINGS

The first chart illustrates the ownership of the Company immediately prior
to the Equity Offerings as follows. The Company owns all of the issued and
outstanding shares of stock of Aurora Foods Holdings Inc. and VDK Holdings,
Inc., which in turn own all of the issued and outstanding shares of stock of
Aurora Foods Inc. and Van de Kamp's, Inc., respectively. The issuer is a
wholly-owned subsidiary of Aurora/VDK LLC, the voting interests of which are
55.5% owned by MBW Investors LLC and 44.5% owned by VDK Foods LLC. The following
investors own the interests of MBW Investors LLC: MDC, Fenway, CALPERS,
Dartford, Management, and Sunapee. The following investors own the interests of
VDK Foods LLC: Fenway, Tiger Oats Ltd., UBS, Dartford, and Management.

IMMEDIATELY AFTER EQUITY OFFERINGS

The second chart illustrates the ownership of the Company immediately after
the offerings. The Company has no subsidiaries. The following investors own all
of the issued and outstanding stock of the Company: the public (through the
acquisition of shares of Common Stock issued in the Equity Offerings), MDC,
Fenway, CALPERS, Dartford, Management, Sunapee, and VDK Foods LLC (the interests
of which are owned by Fenway, Tiger Oats Ltd., UBS, Dartford, and Management).
- ------------------------
* Certain management of Aurora Foods Inc. or the Auroa Division, as the case
may be.
** Certain management of Van de Kamp's, Inc. or the VDK Division, as the case
may be.

SECURITYHOLDERS AGREEMENT

In connection with the formation of New LLC and the Contribution, New LLC,
MBW Investors LLC, VDK Foods LLC and substantially all of the members (based on
percentage interests) of MBW Investors LLC and VDK Foods LLC entered into the
Securityholders Agreement, which sets forth certain rights and obligations of
the Stockholders and New LLC and its subsidiaries, including the Company. The
following discussion summarizes the terms of the Securityholders Agreement. The
summary is qualified in its entirety by reference to the full text of the
Securityholders Agreement, which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part.

The Securityholders Agreement provides that the Board of Directors of the
Company shall initially consist of ten members, of which Fenway will designate
three (each a "Fenway Designee" and collectively, the "Fenway Designees"), MDC
will designate three (each an "MDC Designee" and collectively, the "MDC
Designees"), Dartford will designate two (each a "Dartford Designee" and
collectively, the "Dartford Designees"), UBS will designate one (the "UBS
Designee") and Tiger Oats will designate one (the "Tiger Designee"). For so long
as Ian R. Wilson is Chairman and Chief Executive Officer of the Company, Mr.
Wilson will be one of the Dartford Designees. Upon the election of an
independent director to the Board who is mutually acceptable to two of the three
of Fenway, MDC, and Dartford, the number of directors on the Board will be
increased to 11. Upon the election of a second independent director to the Board
who is mutually acceptable to two of the three of Fenway, MDC, and Dartford, the
UBS Designee will resign from the Board and thereafter UBS will not be entitled
to have any designee elected to the Board. Upon the appointment of a new Chief
Executive Officer other than Ian R. Wilson to the Board, the Tiger Designee will
resign from the Board and thereafter Tiger Oats will not be entitled to have any
designee elected to the Board.

The number of Fenway Designees or MDC Designees will (i) decrease to two if
the number of shares of Common Stock beneficially owned by Fenway or MDC, as the
case may be, is less than 50% of the total

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number of shares of Common Stock beneficially owned by MDC on the closing of the
Equity Offerings (excluding any shares held under a proxy), (ii) decrease to one
if the number of shares of Common Stock beneficially owned by Fenway or MDC, as
the case may be, is less than 5% of the total number of shares of Common Stock
outstanding at the closing of the Equity Offerings, and (iii) decrease to zero
if the number of shares of Common Stock beneficially owned by Fenway or MDC, as
the case may be, is equal to zero. The number of Dartford Designees will (i)
decrease to one if the number of shares of Common Stock beneficially owned by
Dartford is less than 5% of the total number of shares of Common Stock
outstanding at the closing of the Equity Offerings and (ii) decrease to zero if
the number of shares of Common Stock beneficially owned by Dartford is equal to
zero.

Until the earlier of (i) the date that is 30 months after the closing of the
Equity Offerings or (ii) with respect to either Fenway or MDC, such time as it
shall not beneficially own a number of shares of Common Stock equal to at least
50% of the shares of Common Stock beneficially owned by MDC (excluding any
shares held under a proxy) at the closing of the Equity Offerings (the "Consent
Period"), the affirmative consent of Fenway and MDC is required for the
following actions: (a) issuance by the Company or any subsidiary of additional
equity, including by way of a public offering, or the approval or adoption of
any option or equity incentive plan or any material non-equity incentive plan;
(b) merger, consolidation, recapitalization, liquidation or other reorganization
with respect to the Company or any subsidiary, or any sale of any business
representing at least 50% of the pre-transaction consolidated revenues, assets,
or EBITDA of the Company for the most recently completed four fiscal quarters;
(c) acquisition of stock or assets by the Company or a subsidiary where the
revenues, assets or EBITDA of the business to be acquired represents more than
50% of the pre-transaction consolidated revenues, assets or EBITDA of the
Company for the most recently completed four fiscal quarters; and (d) removal or
termination of Ian R. Wilson as Chief Executive Officer or the hiring or
termination of any subsequent Chief Executive Officer.

The Securityholders Agreement prohibits the Stockholders from transferring
their shares of Common Stock prior to the second anniversary of the Equity
Offerings without the consent of MDC and Fenway except transfers (i) to
permitted transferees (including certain family members, affiliates and in the
case of a partnership or limited liability company, to their respective partners
in such partnership or members of such limited liability company), (ii) pursuant
to the demand and piggyback registration rights described below and (iii) by
UBS, CALPERS, Tiger Oats, and Sunapee pursuant to Rule 144 after the first
anniversary of the closing of the Equity Offerings. After the second anniversary
of the closing of the Equity Offerings, each Stockholder has the right to sell
its shares of Common Stock privately or under Rule 144 to the extent permitted
by applicable law but subject to certain lock-up periods relating to any
underwritten equity offerings by the Company.

The Securityholders Agreement provides for the following demand registration
rights ("Demand Rights"): (a) prior to the second anniversary of the closing of
the Equity Offerings, MDC and Fenway, acting together, will have demand
registration rights with respect to their Registrable Securities (as defined
below) in the Company; (b) from and after the second anniversary of the closing
of the Equity Offerings, MDC, Fenway and Dartford will each have four demand
registration rights with respect to their Registrable Securities in the Company;
(c) after the resignation or removal of the UBS Designee from the Board of the
Company and prior to the second anniversary of the closing of the Equity
Offerings, each of UBS and CALPERS will have one individual right to request a
demand registration with respect to its Registrable Securities in the Company;
(d) after the resignation or removal of the Tiger Designee from the Board of the
Company and prior to the second anniversary of the closing of the Equity
Offerings, Tiger Oats will have one individual right to request a demand
registration with respect to its Registrable Securities in the Company; and (e)
from and after the second anniversary of the closing of the Equity Offerings,
each of UBS and CALPERS will have individual rights to request a demand
registration (two for UBS and one for CALPERS) with respect to their Registrable
Securities in the Company. The Company shall not be required to effect more than
two demand registrations on behalf of Stockholders prior to the second
anniversary of the closing of the Equity Offerings without the approval of the
Board. The Company's

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obligations to effect a registration will include an obligation to use its best
efforts to cause such shares to be so registered, subject to the following: (i)
no demand registration may be required unless the gross proceeds of the offering
to which such registration statement applies are reasonably expected to exceed
$25 million, (ii) no registration may be required within 180 days immediately
following the effective date of a registration statement for an underwritten
public offering of securities of the Company (other than a registration on Form
S-4 pursuant to Rule 145 or related solely to employee benefit plans), and (iii)
the Board can postpone a demand registration for not more than 120 days if, in
the good faith judgment of the Board, the registration would be detrimental to
the Company or its stockholders. There can only be one such postponement with
respect to any demanding Stockholder in any nine-month period. The Company's
obligations to effect demand registrations terminates on the date ten years
after the closing of the Equity Offerings.

Pursuant to the Securityholders Agreement, upon certain proposed
registrations of equity securities by the Company for sale to the public
(whether for the account of the Company or any Stockholder, and including
without limitation upon the exercise of a demand registration right), parties to
the Securityholders Agreement who hold Registrable Securities will have the
right to cause the Company to use its reasonable efforts to include in such
registration statement all Registrable Securities which they request the Company
to include ("Piggyback Rights"). No Stockholder will have Piggyback Rights on a
registration of equity securities by the Company relating to the acquisition or
merger by the Company or its Subsidiaries of or with any other business or
solely relating to employee benefit plans or in the Equity Offerings.

"Registrable Securities" that a Stockholder may elect to include in a
registration by exercise of Demand Rights or Piggyback Rights are any shares of
Common Stock in the Company that have been received as a result of holding an
interest in MBW Investors LLC or VDK Foods LLC (except that, with respect to
shares of Common Stock held by stockholders who are employees of the Company
other than Messrs. Wilson, Chung, and Ardrey and Ms. Cummings, Registrable
Securities are any shares of Common Stock received as a result of holding an
interest in MBW Investors LLC or VDK Foods LLC held by such stockholders so long
as they remain employees of the Company) and that are not then eligible to be
sold without restriction pursuant to Rule 144(k), provided that the limitation
regarding Rule 144(k) shall not be applicable to holdings of more than 2% of the
outstanding Common Stock of the Company.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to an agreement, dated September 19, 1995 and terminated on or
prior to the Offerings, Dartford, a beneficial owner of the Company, provided
management oversight on financial and operational matters to the Company with
respect to Van de Kamp's, Inc. Dartford received $631,000, and $1,800,000 for
1996 and 1997, respectively, under such agreement.

Pursuant to an agreement with the Company, dated December 31, 1996 and
terminated on or prior to the Offerings, Dartford, a beneficial owner of the
Company, provided management oversight to the Company with respect to Aurora
Foods. Dartford received $768,000 for 1997 under such agreement.

Pursuant to an agreement, dated December 31, 1996 and terminated on or prior
to the Offerings, MDC Management Company III, L.P., an affiliate of MDC, a
beneficial owner of the Company, advised the Company as to the structuring of
the Company's bank financing and the capital structure of the Company,
identification and financing of future acquisitions, and general management
advice relating to the overall strategy and positioning of the Company. MDC
received $293,000 for 1997, under such agreement.

From December 31, 1996 through January 16, 1998, the Company paid the
following fees for services rendered in connection with the acquisitions of the
MRS. BUTTERWORTH'S business, the LOG CABIN business, and the DUNCAN HINES
business: $1,250,000 to Dartford, whose partners, Messrs. Wilson, Ardrey, and
Chung, and Ms. Cummings are executive officers and directors of the Company;
$184,000 to Mr. Ferraro (President of the Aurora Division) and $75,000 to Mr.
Willett (Executive Vice President of the Aurora Division); $5,700,000 to MDC,
whose general partners and principal include Messrs. De Leeuw, Ayres and Zachem
(all directors of the Company); and $1,500,000 was paid to Fenway, whose
partners include Messrs. Lamm, Dresdale, and Geisser (all directors of the
Company). Services provided in connection with such fees included the
identification and analysis of the acquisition opportunity, the negotiation of
the acquisition and the raising of financing for such acquisition. Fees of
$1,500,000, $2,925,000, and $4,025,000, in the aggregate were paid in connection
with the acquisitions of MRS. BUTTERWORTH'S, LOG CABIN and, DUNCAN HINES,
respectively.

Also, from September 1995 through July 9, 1996, the Company paid the
following fees for services rendered in connection with acquisitions and related
financings of VDK's acquisitions: $1,950,000 to Dartford; $1,474,000 to Fenway;
$294,000 to National Sun Industries Inc., an indirect wholly-owned subsidiary of
Tiger Oats, whose director is Mr. Apsey (a director of the Company); and
$294,000 to UBS, whose president is Mr. Delaney (a director of the Company).
Services provided in connection with such fees included the identification and
analysis of the acquisition opportunity, the negotiation of the acquisition and
the raising of financing for such acquisition. Fees of $1,012,500, $950,000, and
$2,050,000 in the aggregate were paid in connection with the acquisitions of Van
de Kamp's, Inc., MRS. PAUL'S, and the Quaker Oats frozen business, respectively.

Pursuant to an agreement with Windy Hill, dated as of September 5, 1995, the
Company paid $198,000 in 1996 and 1997 for computer support services. Dartford
(of which Mr. Wilson is the managing partner) and its partners own 14.2% of
Windy Hill. Mr. Wilson is the Chairman of the Board and Chief Executive Officer
of the Company and Windy Hill.

Each of Fenway, MDC, and Dartford earned $1,500,000, UBS earned $150,000,
and each of Tiger Oats and CALPERS earned $75,000 in fees in connection with the
Contribution Transaction.

The Company has entered into agreements pursuant to which it agreed to pay
transaction fees to each of Fenway, MDC, and Dartford of 0.333% of the
acquisition price for future acquisitions by the Company. Acquisition price is
the sum of (i) the cash purchase price actually received by the seller, (ii) the
fair market value of any equity securities issued by the seller, (iii) the face
value of any debt securities issued to the seller less any discounts, (iv) the
amount of liabilities assumed by the Company plus, (v) the fair market

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value of any other property or consideration paid in connection with the
acquisition, with installment or deferred payments to be calculated using the
present value thereof.

The Company and the Stockholders have entered into the Securityholders
Agreement which provides for certain rights, including registration rights of
the Stockholders. See "Principal Stockholders--Securityholders Agreement".

On September 19, 1995, Mr. Thomas O. Ellinwood, the President of the VDK
Division, executed a promissory note in the amount of $125,000 in favor of the
Company to evidence monies borrowed to assist in the capitalization of his
limited liability company interests held in VDK Foods LLC. The promissory note
matures September 30, 1998 with required annual payments. Interest is due and
payable quarterly at the rate of 8.5% per annum. The balance outstanding on his
promissory note as of fiscal year end June 30, 1996 was $125,000, $83,333 as of
June 30, 1997, and $41,666 as of March 31, 1998.

On December 31, 1996 and January 16, 1998, Mr. Thomas J. Ferraro, the
President of the Aurora Division, executed promissory notes in the amount of
$60,000 and $131,000, respectively, in favor of the Company to evidence monies
borrowed to assist in the capitalization of his limited liability company
interests held in MBW Investors LLC. The promissory notes mature December 31,
1999 and January 16, 2001. Interest is due and payable quarterly at the rate of
8% per annum and there are required annual principal payments. The balance
outstanding on his promissory note as of fiscal year end December 27, 1997 was
$40,000 and as of March 31, 1998 was $171,000.

Pursuant to the Aurora Plan, Dartford, Thomas J. Ferraro, and C. Gary
Willett were entitled to receive 2,700,109, 429,197, and 268,248 shares of
Common Stock effective on the closing of the Equity Offerings. See
"Management--Aurora Incentive Plan".

Pursuant to the VDK Plans, Dartford, Thomas O. Ellinwood, and Anthony A.
Bevilacqua are entitled to receive 2,271,196, 243,279, and 91,458 shares of
Common Stock, respectively, no later than the first anniversary of the closing
of the Equity Offerings. See "Management--VDK Incentive Plan".

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DESCRIPTION OF CAPITAL STOCK

The following description of the capital stock of the Company and certain
provisions of the Certificate of Incorporation and By-Laws is a summary and is
qualified in its entirety by the provisions of the Certificate of Incorporation
and By-Laws, copies of which have been filed as exhibits to the Registration
Statement of which this Prospectus is a part.

As of July 1, 1998, the authorized capital stock of the Company consisted of
(i) 250,000,000 shares of Common Stock, par value $0.01 per share, of which
67,000,000 shares will be outstanding, and (ii) 25,000,000 shares of Preferred
Stock, par value $0.01 per share, of which no shares will be outstanding.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share on all matters to
be voted on by the stockholders of the Company and do not have cumulative voting
rights and the rights of holders of Common Stock are identical in all respects.
Pursuant to the Securityholders Agreement, the affirmative consent of Fenway and
MDC is required for certain actions by the Company which could otherwise be
approved by a majority of the directors including acquisitions of a certain size
by the Company and the removal or termination of Ian R. Wilson as Chief
Executive Officer of the Company or of his successor. In addition, Fenway, MDC,
Dartford, UBS, and Tiger Oats and the Company have agreed to elect a certain
number of directors designated by each of them, including the initial Board of
Directors, subject to certain conditions. See "Principal
Stockholders--Securityholders Agreement" and "Certain Relationships and Related
Transactions".

Subject to preferences that may be applicable to any Preferred Stock
outstanding at the time, holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared, from time to time by the Board of
Directors out of funds legally available therefor. In the event of liquidation,
dissolution, or winding up of the Company, holders of Common Stock are entitled
to share ratably in all assets remaining after payment of the Company's
liabilities and the liquidation preference, if any, of any outstanding Preferred
Stock. Holders of shares of Common Stock have no preemptive, subscription,
redemption, or conversion rights. There are no redemption or sinking fund
provisions applicable to the Common Stock. All of the outstanding shares of
Common Stock are, and the shares offered by the Company and certain of the
Company's shareholders in the Equity Offerings will be, when issued and paid for
as provided herein, validly issued, fully paid and non-assessable. The rights,
preferences, and privileges of holders of Common Stock are subject to, and may
be adversely affected by, the rights of the holders of shares of any series of
Preferred Stock which the Company may designate and issue in the future.

The Common Stock is traded on the New York Stock Exchange and on the Pacific
Exchange under the symbol "AOR".

PREFERRED STOCK

The Board of Directors is authorized to issue from time to time shares of
Preferred Stock in one or more series, and to fix the rights, designations,
powers, preferences, qualifications, limitations and restrictions thereof,
including dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption, redemption prices, liquidation preferences and the number
of shares constituting any series, all without stockholder approval. The ability
of the Board of Directors to issue Preferred Stock could have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring or making a proposal to acquire, the Company or the
majority of the outstanding stock of the Company. The rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights of
holders of Preferred Stock that may be issued in the future.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

The Company has elected in the Certificate of Incorporation to not be
subject to the provisions of section 203 ("Section 203") of the Delaware General
Corporation Law. In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. A "business combination"
includes a merger, asset sale or other transaction resulting in a financial
benefit to the interested stockholder. An "interested stockholder" is a person
who, together with affiliates and associates, owns (or, in certain cases, within
three years prior, did own) 15% or more of the corporation's voting stock.

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DESCRIPTION OF OTHER INDEBTEDNESS

SENIOR CREDIT FACILITIES

The description set forth below is qualified in its entirety by reference to
certain agreements setting forth the principal terms and conditions of the
Company's Senior Credit Facilities, a copy of which is filed as an exhibit to
the Registration Statement of which this Prospectus is a part. Capitalized terms
used herein and not otherwise defined have the meanings set forth in the Senior
Credit Facilities.

The Company entered into a Third Amended and Restated Credit Agreement dated
as of July 1, 1998 with The Chase Manhattan Bank ("Chase") and various lenders
providing for senior secured credit facilities. In connection with such
financing, Chase acts as Administrative Agent, Chase Securities Inc. acted as
Arranging Agent, National Westminster Bank PLC acts as Syndication Agent and
Swiss Bank Corporation acts as Documentation Agent. The Senior Credit Facilities
provide as follows:

The Senior Credit Facilities consist of (i) a senior secured Term Facility
in a principal amount of $225.0 million and (ii) a senior secured Revolving
Facility providing for revolving loans to the Company and the issuance of
letters of credit for the account of the Company, in an aggregate principal and
stated amount at any time not to exceed $175.0 million.

Loans and letters of credit under the Revolving Facility will be available
at any time through the final maturity date on June 30, 2005. The Term Facility
will have a final maturity date of June 30, 2005, and will amortize in quarterly
payments of $5.0 million per quarter beginning December 31, 1998 through June
30, 2000, increasing thereafter to $7.5 million per quarter through June 30,
2002, increasing thereafter to $10.0 million per quarter through June 30, 2004,
increasing to $12.5 million per quarter thereafter until the final maturity
date.

The Company is required to make mandatory prepayments on the Senior Credit
Facilities under certain circumstances, including upon certain asset sales,
issuance of debt securities or issuance of equity securities to persons. The
Company will also be required under certain circumstances to make prepayments on
the Senior Credit Facilities and permanently reduce commitments under the
Revolving Facility in an amount equal to a specified percentage of the Company's
annual trailing Consolidated Excess Cash Flow commencing with the fiscal year
ending December 31, 1998 and thereafter and upon receipt of cash proceeds from
property and casualty insurance or condemnation awards. At the Company's option,
subject to certain requirements, loans may be prepaid, and revolving credit
commitments or letters of credit may be permanently reduced, in whole or in part
at any time without premium or penalty.

At the Company's option the interest rate per annum applicable to loans
under the Senior Credit Facilities will be either the rate (grossed-up for
maximum statutory reserve requirements for eurocurrency liabilities) at which
eurodollar deposits for one, two, three or six months (as selected by the
Company) are offered to Chase in the interbank eurodollar market in the
approximate amount of Chase's share of the relevant Loan (the "Adjusted
Eurodollar Rate") plus a margin ranging from 2.25% to 0.875% (the "Applicable
Eurodollar Rate Margin") or the Base Rate plus a margin ranging from 1.25% to
0.00%. The margin is based upon the Company's ratio of consolidated total debt
to consolidated EBITDA. The Base Rate is the higher of (i) the rate of interest
publicly announced by Chase as its prime rate in effect at its principal office
in New York City, (ii) the federal funds effective rate plus 0.50% and (iii) the
secondary market rate for certificates of deposit (grossed up for maximum
statutory reserve requirements) plus 1.00%.

The Company pays a per annum fee ranging from 0.50% to 0.30% on the undrawn
portion of the commitments in respect of the Revolving Facility and a per annum
fee on the face amount of all outstanding letters of credit equal to the
Applicable Eurodollar Rate Margin then in effect with respect to loans under the
Revolving Facility bearing interest based upon the Eurodollar Rate. The per
annum fee is also based upon the Company's ratio of consolidated total debt to
consolidated EBITDA.

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The Senior Credit Facilities contain a number of significant covenants that,
among other things, restrict the ability of the Company to dispose of assets,
incur additional indebtedness, repay other indebtedness or amend other debt
instruments, pay dividends, create liens on assets, enter into leases,
guarantees, investments or acquisitions, engage in mergers or consolidations,
make capital expenditures, or engage in certain transactions with subsidiaries
and affiliates and otherwise restrict corporate activities. In addition, under
the Senior Credit Facilities, the Company is required to comply with specified
ratios and tests, including minimum interest coverage, minimum fixed charge
coverage and maximum leverage ratios and a limitation on capital expenditures.

An event of default under the Senior Credit Facilities will occur (i) if the
Company fails to make payments under the Senior Credit Facilities or, in certain
circumstances, under other outstanding indebtedness; (ii) if the Company
breaches the financial covenants contained in the Senior Credit Facilities;
(iii) if the Company breaches the warranties contained in the Senior Credit
Facilities; (iv) in the event of the bankruptcy, insolvency or reorganization of
the Company; (v) if any judgment or attachment involving, in an individual case
an amount in excess of $2,500,000 or, in the aggregate in excess of $5,000,000,
shall be entered against the Company and shall remain undischarged on unstayed
for a period of 60 days; (vi) if any judgment or decree of dissolution is
entered against the Company; (vii) if there occurs certain specified ERISA
events; (viii) if the Company undergoes a "change in control" as described
below; (ix) if the Company breaches certain transitional agreements; (x) if
there is a failure to comply with the subordination provisions contained in the
Senior Credit Facilities; or (xi) under certain other circumstances customary
for a transaction of this type. An Event of Default under the Existing
Indentures will occur if any of the above occur and an amount in excess of $5.0
million is accelerated under the terms of the Senior Credit Facilities and such
default is not cured or rescinded within a 10 day period. An Event of Default
under the Indenture will occur if any of the above occur and an amount in excess
of $10.0 million is accelerated under the terms of the Senior Credit Facilities
and such default is not rescinded within a 10 day period. As noted above, an
event of default under the Senior Credit Facilities will occur if there is a
change in control in the Company.

A change in control will be deemed to have occured if any person (other than
MDC and certain of its affiliates (the "MDC Entities"), Dartford, Fenway,
CALPERS, UBS and Tiger Oats), including a "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange Act) which includes such person,
shall purchase or otherwise acquire, directly or indirectly, beneficial
ownership of securities of the Company and, as a result of such purchase or
acquisition, any person (together with its associates and affiliates) shall
directly or indirectly beneficially own in the aggregate securities representing
more than 35% of the combined voting power of the Company's voting securities.

The Senior Credit Facilities also contain provisions that prohibit any
modification of the Indentures in any manner adverse to the banks, financial
institutions and other entities under the Senior Credit Facilities and that
limit the Company's ability to refinance the Notes or the Aurora Notes without
the consent of such Lenders.

THE EXISTING NOTES

The description set forth below does not purport to be complete and is
qualified in its entirety by reference to certain agreements setting forth the
principal terms and conditions of the VDK Notes, Aurora Series B Notes and the
Aurora Series D Notes each of which have been filed as exhibits to the
Registration Statement of which this Prospectus is a part.

THE VDK NOTES

The VDK Notes were issued under an Indenture, dated as of September 15, 1995
(the "VDK Indenture"), between the Company and Harris Trust and Savings Bank, as
Trustee (the "VDK Trustee"). The terms and conditions of the VDK Notes include
those stated in the VDK Indenture and those made

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part of the VDK Indenture by reference to the Trust Indenture Act of 1939.
Capitalized terms used in this "The VDK Notes" section and not otherwise defined
have the meanings set forth in the VDK Indenture.

The VDK Notes are unsecured senior subordinated obligations of the Company,
limited to $100.0 million aggregate principal amount, and will mature on
September 15, 2005. Each VDK Note bears interest at the rate of 12% per annum,
payable semiannually on March 15 and September 15 of each year which commenced
March 15, 1996 to holders of record at the close of business on the February 28
or August 31 immediately preceding the interest payment date. The Company has
notified the VDK Trustee and the holders of the VDK Notes that (i) on July 31,
1998, the Company will redeem $35.0 million of principal of the VDK Notes with
proceeds received from the Equity Offerings and (ii) on August 1, 1998, the
Company will redeem the remaining $65.0 million of principal of the VDK Notes in
connection with the Change of Control resulting from the Contribution
Transaction.

THE AURORA NOTES

In addition to the VDK Notes, the Company has outstanding: (i) the 9 7/8%
Series B Senior Subordinated Notes due 2007 (the "Aurora Series B Notes") issued
under an Indenture, dated as of February 10, 1997 (the "Series B Indenture")
between the Company and Wilmington Trust Company, as Trustee (the "Trustee"), in
connection with the MRS. BUTTERWORTH'S acquisition and (ii) the 9 7/8% Series D
Senior Subordinated Notes due 2007 (the "Aurora Series D Notes", together with
the Aurora Series B Notes, the "Aurora Notes") issued under an Indenture dated
as of July 1, 1997 (the "Series D Indenture", together with the Series B
Indenture, the "Aurora Indentures") between the Company and the Trustee in
connection with the LOG CABIN acquisition. The terms and conditions of the
Aurora Notes include those stated in each of the Aurora Indentures and those
made part of the Aurora Indentures by reference to the Trust Indenture Act of
1939 as in effect on the date of each of the Aurora Indentures. Capitalized
terms used in this "--The Aurora Notes" section and not otherwise defined have
the meanings set forth in the Aurora Indentures which have been filed as
exhibits to the Registration Statement of which this Prospectus is a part.

The Aurora Notes are unsecured senior subordinated obligations of the
Company, limited to $200.0 million aggregate principal amount, and will mature
on February 15, 2007. Each Note bears interest at the rate of 9 7/8% per annum
from the date of issuance, or from the most recent date to which interest has
been paid or provided for, payable semi-annually on February 15 and August 15 of
each year to holders of record at the close of business on the February 1 or
August 1 immediately preceding the interest payment date.

OPTIONAL REDEMPTION. Except as set forth below, the Aurora Notes are not
redeemable at the option of the Company prior to February 15, 2002. On and after
such date, the Aurora Notes will be redeemable, at the Company's option, in
whole or in part, at any time upon not less than 30 nor more than 60 days prior
notice mailed by first-class mail to the registered address of each holder of
Aurora Notes to be redeemed, at the following redemption prices (expressed in
percentages of principal amount), plus accrued and unpaid interest to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date):

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If redeemed during the 12-month period commencing on February 15 of the
years set forth below:

<TABLE>
<CAPTION>
Period Redemption Price
- ------------------------------------------ ----------------
<S> <C>

2002...................................... 104.9375%

2003...................................... 103.2917%

2004...................................... 101.6458%

2005 and thereafter....................... 100.0000%
</TABLE>

In addition, at any time and from time to time prior to February 15, 2000,
the Company may redeem up to $35.0 million of the aggregate principal amount of
the Aurora Series B Notes and up to $35.0 million of the aggregate principal
amount of the Aurora Series D Notes with the cash proceeds of one or more Equity
Offerings (as defined in the Aurora Indentures) received by, or invested in, the
Company at a redemption price (expressed as a percentage of principal amount) of
109.875%, plus accrued and unpaid interest, if any, to the redemption date
(subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date); PROVIDED, HOWEVER,
that at least $65.0 million of the aggregate principal amount of each of the
Aurora Series B Notes and Aurora Series D Notes remain outstanding after each
such redemption.

At any time on or prior to February 15, 2002, each of the Aurora Series B
Notes and Aurora Series D Notes may also be redeemed as a whole at the option of
the Company upon the occurrence of a Change of Control upon not less than 30
days or no more than 60 days prior notice (but in no event more than 90 days
after the occurance of such Change of Control) mailed by first-class mail to
each holder's registered address, at a redemption price equal to 100% of the
principal amount thereof plus the Applicable Premium as of, and accrued and
unpaid interest, if any, to, the date of redemption (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date).

RANKING. The payment of Indebtedness evidenced by, and all other
obligations in respect of, the Aurora Notes is subordinated in right of payment,
as set forth in the Aurora Indentures, to the prior payment in full in cash or
Cash Equivalents when due of all Senior Indebtedness of the Company. The Aurora
Indentures provide that in the event of an Asset Disposition by the Company, the
proceeds of the Asset Disposition will be applied to repurchase the Aurora
Series B Notes prior to any repurchase of the Aurora Series D Notes. Although
the Aurora Indentures contain limitations on the amount of additional
Indebtedness that the Company may incur, under certain circumstances the amount
of such Indebtedness could be substantial and, in any case, such Indebtedness
may be Senior Indebtedness.

Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the Aurora Notes in accordance with the provisions of the Aurora
Indentures. The Aurora Notes will in all respects rank PARI PASSU with all other
Senior Subordinated Indebtedness of the Company. The Company has agreed in the
Aurora Indentures that it will not Incur, directly or indirectly, any
indebtedness, that is subordinate or junior in ranking in any respect to Senior
Indebtedness, unless such Indebtedness is Senior Subordinated Indebtedness, or
is expressly subordinated in right of payment to Senior Subordinated
Indebtedness.

CHANGE OF CONTROL. Upon the occurrence of a Change of Control each holder
of the Aurora Notes will have the right to require the Company to repurchase all
or any part of such holder's Aurora Notes at a purchase price in cash equal to
101% of the principal amount thereof plus accrued and unpaid interest, if any,
to the date of purchase (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date).

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CERTAIN COVENANTS. The Aurora Indentures impose certain affirmative
covenants and other requirements on the Company, including the reporting of
financial and other information to the Trustee.

The Aurora Indentures also contain certain negative covenants that include,
among others things: (i) limitations on the amount of Indebtedness the Company
and its Subsidiaries may incur, (ii) limitations on certain payments the Company
and its Subsidiaries may make, (iii) limitations on restrictions on
distributions from Subsidiaries, (iv) limitations on sales of assets by the
Company and its Subsidiaries, (v) limitations on Affiliate Transactions, (vi)
limitations on the sale of Subsidiary Capital Stock, (vii) limitations on the
lines of business the Company and its Subsidiaries may engage in, and (viii)
limitations on the Company's ability to merge or consolidate or transfer all or
substantially all of the assets of the Company.

EVENTS OF DEFAULT. An Event of Default under the Aurora Indentures includes
among other things (i) a default in any payment of interest on any Note when
due, continued for 30 days, (ii) a default in the payment of principal of any
Note when due at its Stated Maturity, upon optional redemption, upon required
repurchase, upon declaration or otherwise, (iii) the failure by the Company to
comply with its obligations with respect to mergers, consolidations, and
transfers of all or substantially all of the assets of the Company under
"--Certain Covenants" above, (iv) the failure by the Company to comply for 30
days after notice with any of its obligations under the Change of Control
provisions contained in the Aurora Indentures or under covenants described under
"Certain Covenants" above (in each case, other than a failure to purchase Aurora
Notes which shall constitute an Event of Default under clause (ii) above), (v)
the failure by the Company to comply for 60 days after notice with its other
agreements contained in the Aurora Indentures, (vi) Indebtedness of the Company
or any Subsidiary is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $5 million and
such default shall not have been cured or such acceleration rescinded within a
10-day period, (vii) certain events of bankruptcy, insolvency or reorganization
of the Company or a Significant Subsidiary, (viii) any judgment or decree for
the payment of money in excess of $5 million (to the extent not covered by
insurance) is rendered against the Company or a Significant Subsidiary and such
judgment or decree shall remain undischarged or unstayed for a period of 60 days
after such judgment becomes final and non-appealable, or (ix) the failure of any
Security Guarantee to be in full force and effect (except as contemplated by the
terms thereof) or the denial or disaffirmation by any Security Guarantor of its
obligations under the Aurora Indentures or any Security Guarantee if such
default continues for 10 days. However, a default under clauses (iv) and (v)
will not constitute an Event of Default under the Series B Indenture or the
Series D Indenture until the Trustee or the holders of at least 25% in principal
amount of the outstanding Aurora Series B Notes or Aurora Series D Notes, as the
case may be, notify the Company of the default and the Company does not cure
such default within the time specified in clauses (iv) and (v) hereof after
receipt of such notice.

If an Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the outstanding Aurora Series B Notes or
Aurora Series D Notes, as the case may be, may declare by notice to the Company
the principal of and accrued and unpaid interest on all the Aurora Series B
Notes or Aurora Series D Notes, as the case may be, to be due and payable. Upon
such a declaration, such principal and accrued and unpaid interest shall be due
and payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company occurs and is
continuing, the principal of and accrued and unpaid interest on all the Aurora
Notes will become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any holders. Under certain
circumstances, the holders of a majority in principal amount of the outstanding
Aurora Series B Notes or Aurora Series D Notes, as the case may be, may rescind
any such acceleration with respect to the Aurora Notes and its consequences.

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DESCRIPTION OF NOTES

GENERAL

The New Notes will be be issued, and the Old Notes were issued, under an
Indenture, to be dated as of July 1, 1998 (the "Indenture"), between the Company
and Wilmington Trust Company, as Trustee (the "Trustee"), a copy of which has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part. Capitalized terms used herein and not otherwise defined have the
meanings set forth in "--Certain Definitions".

Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of the
Company in the Borough of Manhattan, The City of New York, except that, at the
option of the Company, payment of interest may be made by check mailed to the
address of the holders as such address appears in the Note Register. Any Old
Notes that remain outstanding after the completion of the Exchange Offer,
together with the New Notes issued in connection with the Exchange Offer, will
be treated as a single class of securities under the Indenture. See "The
Exchange Offer" and "Old Notes Exchange and Registration Rights Agreement."

The New Notes will be issued only in fully registered form, without coupons,
in denominations of $1,000 and any integral multiple of $1,000. No service
charge will be made for any registration of transfer or exchange of Notes, but
the Company may require payment of a sum sufficient to cover any transfer tax or
other similar governmental charge payable in connection therewith.

TERMS OF NOTES

The Notes are unsecured senior subordinated obligations of the Company,
limited to $200.0 million aggregate principal amount, and will mature on July 1,
2008. Each Note will bear interest at the rate per annum shown on the front
cover of this Prospectus from the date of issuance, or from the most recent date
to which interest has been paid or provided for, payable semi-annually on
January 1 and July 1 of each year commencing January 1, 1999 to holders of
record at the close of business on the December 15 or June 15 immediately
preceding the interest payment date.

OPTIONAL REDEMPTION

Except as set forth below, the Notes are not redeemable at the option of the
Company prior to July 1, 2003. On and after such date, the Notes are redeemable,
at the Company's option, in whole or in part, at any time upon not less than 30
nor more than 60 days prior notice mailed by first-class mail to the registered
address of each holder of Notes to be redeemed, at the following redemption
prices (expressed in percentages of principal amount), plus accrued and unpaid
interest to the redemption date (subject to the right of holders of record on
the relevant record date to receive interest due on the relevant interest
payment date):

If redeemed during the 12 month period commencing on July 1 of the years
set forth below:

<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
- -------------------------------------------------------------------------------- ----------------
<S> <C>
2003............................................................................ 104.375%
2004............................................................................ 102.917%
2005............................................................................ 101.458%
2006 and thereafter............................................................. 100.0000%
</TABLE>

In addition, at any time and from time to time prior to July 1, 2001, the
Company may redeem up to $70.0 million of the aggregate principal amount of
Notes with the cash proceeds of one or more Subsequent Equity Offerings received
by, or invested in, the Company at a redemption price (expressed as a percentage
of principal amount) of 108.75%, plus accrued and unpaid interest, if any, to
the redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the

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relevant interest payment date); provided, however, that at least $130.0 million
of the aggregate principal amount of the Notes remain outstanding after each
such redemption, provided, further, that each such redemption occurs within 90
days of the date of closing of each such Subsequent Equity Offering.

At any time on or prior to July 1, 2003, the Notes may also be redeemed as a
whole at the option of the Company upon the occurrence of a Change of Control,
upon not less than 30 nor more than 60 days prior notice (but in no event more
than 90 days after the occurrence of such Change of Control) mailed by
first-class mail to each holder's registered address, at a redemption price
equal to 100% of the principal amount thereof plus the Applicable Premium as of,
and accrued and unpaid interest, if any, to, the date of redemption (the
"Redemption Date") (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date).

"Applicable Premium" means, with respect to a Note at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess
of (A) the present value at such time of (1) the redemption price of such Note
at July 1, 2003 (such redemption price being described under "--Optional
Redemption") plus (2) all required interest payments due on such Note through
July 1, 2003, computed using a discount rate equal to the Treasury Rate plus 50
basis points over (B) the principal amount of such Note.

"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the
period from the Redemption Date to July 1, 2003; provided, however, that if the
period from the Redemption Date to July 1, 2003 is less than one year, the
weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.

In the case of any partial redemption, selection of the Notes for redemption
will be made by the Trustee on a pro rata basis, by lot or by such other method
as the Trustee in its sole discretion shall deem to be fair and appropriate,
although no Note of $1,000 in original principal amount or less will be redeemed
in part. If any Note is to be redeemed in part only, the notice of redemption
relating to such Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the holder thereof upon cancellation of
the original Note.

RANKING

The payment of Indebtedness evidenced by, and all other obligations in
respect of, the Notes is subordinated in right of payment, as set forth in the
Indenture, to the prior payment in full in cash or Cash Equivalents when due of
all Senior Indebtedness of the Company. However, payment from the money or the
proceeds of U.S. Government Obligations held in any defeasance trust described
under "Defeasance" below is not subordinate to any Senior Indebtedness or
subject to the restrictions described herein. At March 28, 1998 on a pro forma
basis after giving effect to the Equity Offerings and the Refinancings, the
Company would have $306.8 million of Senior Indebtedness outstanding (excluding
unused revolving credit commitments of $93.2 million under the Senior Credit
Facilities). Although the Indenture contains limitations on the amount of
additional Indebtedness that the Company may Incur, under certain circumstances
the amount of such Indebtedness could be substantial and, in any case, such
Indebtedness may be Senior Indebtedness. See "--Certain Covenants--Limitation on
Indebtedness".

"Senior Indebtedness" means the principal of, premium (if any), and interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization of the Company regardless of whether
post-filing interest is allowed in such proceeding) on, and fees and other
amounts owing in respect of, the Bank Indebtedness and all other Indebtedness of
the Company, whether

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outstanding on the Issue Date or thereafter issued, unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is provided that the obligations in respect of such Indebtedness are not
superior in right of payment to the Notes; provided, however, that Senior
Indebtedness will not include (i) any obligation of the Company to any
Subsidiary, (ii) any liability for Federal, state, foreign, local or other taxes
owed or owing by the Company, (iii) any accounts payable or other liability to
trade creditors arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities), (iv) any Indebtedness,
Guarantee or obligation of the Company that is expressly subordinate or junior
in right of payment to any other Indebtedness, Guarantee or obligation of the
Company, including any Senior Subordinated Indebtedness and any Subordinated
Obligations or (v) any Capital Stock.

Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the Notes in accordance with the provisions of the Indenture. The
Notes will in all respects rank PARI PASSU with the Existing Notes and all other
Senior Subordinated Indebtedness of the Company. The Company has agreed in the
Indenture that it will not Incur, directly or indirectly, any Indebtedness that
is subordinate or junior in ranking in any respect to Senior Indebtedness unless
such Indebtedness is Senior Subordinated Indebtedness or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness. Unsecured
Indebtedness is not deemed to be subordinate or junior to Secured Indebtedness
merely because it is unsecured.

The Company may not pay principal of, premium (if any), or interest on, or
liquidated damages with respect to, or make any payment on account of any other
obligations with respect to, the Notes or make any deposit pursuant to the
provisions described under "Defeasance" below and may not otherwise purchase or
retire any Notes (collectively, "pay the Notes") if (i) any Senior Indebtedness
is not paid when due in cash or Cash Equivalents or (ii) any other default on
Senior Indebtedness occurs and the maturity of such Senior Indebtedness is
accelerated in accordance with its terms unless, in either case, the default has
been cured or waived and any such acceleration has been rescinded or such Senior
Indebtedness has been paid in full in cash or Cash Equivalents. However, the
Company may pay any such amounts without regard to the foregoing if the Company
and the Trustee receive written notice approving such payment from the
Representative of the Designated Senior Indebtedness with respect to which
either of the events set forth in clause (i) or (ii) of the immediately
preceding sentence has occurred and is continuing. During the continuance of any
default (other than a default described in clause (i) or (ii) of the second
preceding sentence) with respect to any Designated Senior Indebtedness pursuant
to which the maturity thereof may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods, the Company may not pay any
amounts in respect of the Notes for a period (a "Payment Blockage Period")
commencing upon the receipt by the Trustee (with a copy to the Company) of
written notice (a "Blockage Notice") of such default from the Representative of
the holders of such Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter (or earlier if
such Payment Blockage Period is terminated (i) by written notice to the Trustee
and the Company from the Person or Persons who gave such Blockage Notice, (ii)
because the default giving rise to such Blockage Notice is no longer continuing
or (iii) because such Designated Senior Indebtedness has been repaid in full in
cash or Cash Equivalents). Notwithstanding the provisions described in the
immediately preceding sentence, unless the holders of such Designated Senior
Indebtedness or the Representative of such holders have accelerated the maturity
of such Designated Senior Indebtedness, the Company may resume payments on the
Notes after the end of such Payment Blockage Period. Not more than one Blockage
Notice may be given in any consecutive 360 day period, irrespective of the
number of defaults with respect to Designated Senior Indebtedness during such
period.

Upon any payment or distribution of the assets of the Company upon a total
or partial liquidation or dissolution or reorganization or bankruptcy of or
similar proceeding relating to the Company or its property, the holders of
Senior Indebtedness will be entitled to receive payment in full in cash or Cash

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Equivalents of the Senior Indebtedness before the holders of the Notes are
entitled to receive any payment, and until the Senior Indebtedness is paid in
full in cash or Cash Equivalents, any payment or distribution to which holders
would be entitled but for the subordination provisions of the Indenture will be
made to holders of the Senior Indebtedness as their interests may appear. If a
distribution is made to holders of the Notes that, due to the subordination
provisions, should not have been made to them, such holders are required to hold
it in trust for the holders of Senior Indebtedness and pay it over to them as
their interests may appear.

If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness or the Representative of such holders of the acceleration.
The Company may not pay the Notes until five Business Days after such holders or
the Representative of the Designated Senior Indebtedness receive notice of such
acceleration and, thereafter, may pay the Notes only if the subordination
provisions of the Indenture otherwise permit payment at that time.

By reason of such subordination provisions contained in the Indenture, in
the event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the Noteholders, and creditors of
the Company who are not holders of Senior Indebtedness or of Senior Subordinated
Indebtedness (including the Notes) may recover less, ratably, than holders of
Senior Indebtedness and may recover more, ratably, than the holders of Senior
Subordinated Indebtedness.

CHANGE OF CONTROL

Upon the occurrence of any of the following events (each a "Change of
Control"), each holder of the Notes will have the right to require the Company
to repurchase all or any part of such holder's Notes at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date of purchase (subject to the right of holders of record on
the relevant record date to receive interest due on the relevant interest
payment date): (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders, is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the total voting power of the Voting
Stock of the Company; provided that the Permitted Holders beneficially own (as
defined above), directly or indirectly, in the aggregate a lesser percentage of
the total voting power of the Voting Stock of the Company than such other person
and do not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the board of directors of the
Company (for purposes of this clause (i), such other person shall be deemed to
beneficially own any Voting Stock of a Person (the "specified corporation") held
by any other Person (the "parent corporation") if such other person
"beneficially owns" (as defined in this clause (i)), directly or indirectly,
more than 35% of the voting power of the Voting Stock of such parent corporation
and the Permitted Holders "beneficially own" (as defined in this clause (i)),
directly or indirectly, in the aggregate a lesser percentage of the voting power
of the Voting Stock of such parent corporation and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of such parent corporation); or
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together with any
new directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company was approved by a vote of a majority
of the directors of the Company then still in office who were either directors
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors then in office.

Within 30 days following any Change of Control, unless the Company has
mailed a redemption notice with respect to all the outstanding Notes in
connection with such Change of Control, the Company shall

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mail a notice to each holder of record of the Notes with a copy to the Trustee
stating: (i) that a Change of Control has occurred and that such holder has the
right to require the Company to purchase such holder's Notes at a purchase price
in cash equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of holders of
record on a record date to receive interest on the relevant interest payment
date); (ii) the circumstances and relevant facts and financial information
concerning such Change of Control; (iii) the repurchase date (which shall be no
earlier than 30 days nor later than 60 days from the date such notice is
mailed); and (iv) the procedures determined by the Company, consistent with the
Indenture, that a holder must follow in order to have its Notes purchased.

The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of the Indenture, the Company will comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations described in the Indenture by virtue thereof.

The occurrence of certain of the events that would constitute a Change of
Control would constitute a default under the Senior Credit Agreement. Future
Senior Indebtedness of the Company and its Subsidiaries may contain prohibitions
of certain events that would constitute a Change of Control or require such
Senior Indebtedness to be repurchased upon a Change of Control. The occurrence
of the events that would constitute a Change of Control would also constitute a
"Change of Control" under the Existing Indentures. In such a case, the Company
would be subject to the same obligations with respect to the Existing Notes as
the Company would be subject to with the Notes. Moreover, the exercise by the
holders of their right to require the Company to repurchase the Existing Notes
and the Notes could cause a default under such Senior Indebtedness, even if the
Change of Control itself does not, due to the financial effect of such
repurchase on the Company. Finally, the Company's ability to pay cash to the
holders upon a repurchase may be limited by the Company's then existing
financial resources. There can be no assurance that sufficient funds will be
available when necessary to make any required repurchases. Even if sufficient
funds were otherwise available, the terms of the Senior Credit Agreement
generally prohibit the Company's prepayment of the Existing Notes and the Notes
prior to their scheduled maturity. Consequently, if the Company is not able to
prepay the Bank Indebtedness and any other Senior Indebtedness containing
similar restrictions or obtain requisite consents or waivers, as described
above, the Company will be unable to fulfill its repurchase obligations if
holders of the Existing Notes and the Notes exercise their repurchase rights
following a Change of Control, thereby resulting in a default under the
Indenture.

CERTAIN COVENANTS

The Indenture contains certain covenants including, among others, the
following:

LIMITATION ON INDEBTEDNESS. (a) The Company shall not, and shall not permit
any of its Subsidiaries to, Incur any Indebtedness; provided, however, that the
Company and any of its Subsidiaries may Incur Indebtedness if on the date
thereof the Consolidated Coverage Ratio would be greater than 2.00:1.00.

(b) Notwithstanding the foregoing paragraph (a), the Company and its
Subsidiaries may Incur the following Indebtedness: (i) Bank Indebtedness;
provided that the aggregate principal amount of Indebtedness Incurred pursuant
to this clause (i) does not exceed an amount outstanding at any time equal to
$400 million less the aggregate amount of permanent reductions of commitments to
extend credit thereunder and repayments of principal thereof (without
duplication of repayments required as a result of such reductions of
commitments); (ii) Indebtedness (A) of the Company to any Wholly-Owned
Subsidiary and (B) of any Subsidiary to the Company or any Wholly-Owned
Subsidiary; (iii) Indebtedness represented by the Notes, any Indebtedness (other
than the Indebtedness described in clauses (i)-(ii) above) outstanding on the
date of the Indenture (including, without limitation, the Existing Notes) and
any Refinancing

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Indebtedness Incurred in respect of any Indebtedness described in this clause
(iii) or this paragraph (b); (iv) Indebtedness represented by the Note
Guarantees and Guarantees of Indebtedness Incurred pursuant to clause (i) above;
(v) Indebtedness under Currency Agreements and Interest Rate Agreements which
are entered into for bona fide hedging purposes of the Company or its
Subsidiaries (as determined in good faith by the Board of Directors or senior
management of the Company) and correspond in terms of notional amount, duration,
currencies and interest rates, as applicable, to Indebtedness of the Company or
its Subsidiaries Incurred without violation of the Indenture or to business
transactions of the Company or its Subsidiaries on customary terms entered into
in the ordinary course of business; (vi) Indebtedness of the Company
attributable to Capitalized Lease Obligations, or Incurred to finance the
acquisition, construction or improvement of fixed or capital assets, or
constituting Attributable Indebtedness in respect of Sale/Leaseback
Transactions, in an aggregate principal amount at any one time outstanding not
in excess of $10.0 million; and (vii) Indebtedness of the Company or any of its
Subsidiaries (which may comprise Bank Indebtedness) in an aggregate principal
amount at any time outstanding not in excess of $15.0 million.

(c) Notwithstanding any other provision of this covenant, the Company shall
not Incur any Indebtedness (i) pursuant to paragraph (b) above if the proceeds
thereof are used, directly or indirectly, to repay, prepay, redeem, defease,
retire, refund or refinance any Subordinated Obligations unless such
Indebtedness shall be subordinated to the Notes to at least the same extent as
such Subordinated Obligations or (ii) pursuant to paragraph (a) or (b) if such
Indebtedness is subordinate or junior in ranking in any respect to any Senior
Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is
expressly subordinated in right of payment to Senior Subordinated Indebtedness.

(d) The Company shall not Incur any Secured Indebtedness which is not Senior
Indebtedness unless contemporaneously therewith effective provision is made to
secure the Notes equally and ratably with such Secured Indebtedness for so long
as such Secured Indebtedness is secured by a Lien.

LIMITATION ON RESTRICTED PAYMENTS. (a) The Company shall not, and shall not
permit any Subsidiary, directly or indirectly, to (i) declare or pay any
dividend or make any distribution on or in respect of its Capital Stock
(including any payment in connection with any merger or consolidation involving
the Company) except (A) dividends or distributions payable in its Capital Stock
(other than Disqualified Stock) and (B) dividends or distributions payable to
the Company or another Subsidiary (and, if such Subsidiary is not a Wholly-Owned
Subsidiary, to its other stockholders on a pro rata basis), (ii) purchase,
redeem, retire or otherwise acquire for value any Capital Stock of the Company
or any Subsidiary held by Persons other than the Company or another Subsidiary,
(iii) purchase, repurchase, redeem, defease or otherwise acquire or retire for
value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment, any Subordinated Obligations (other than the purchase, repurchase
or other acquisition of Subordinated Obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of acquisition) or (iv) make any
Investment (other than a Permitted Investment) in any Person (any such dividend,
distribution, purchase, redemption, repurchase, defeasance, other acquisition,
retirement or Investment being herein referred to as a "Restricted Payment"), if
at the time the Company or such Subsidiary makes such Restricted Payment: (1) a
Default shall have occurred and be continuing (or would result therefrom); or
(2) the Company could not Incur at least an additional $1.00 of Indebtedness
pursuant to paragraph (a) under "Limitation on Indebtedness"; or (3) the
aggregate amount of such Restricted Payment and all other Restricted Payments
declared (the amount so expended, if other than in cash, to be determined in
good faith by the Board of Directors, whose determination shall be conclusive
and evidenced by a resolution of the Board of Directors) or made subsequent to
the Issue Date would exceed the sum of: (A) 50% of the Consolidated Net Income
accrued during the period (treated as one accounting period) from the Issue Date
to the end of the most recent fiscal quarter ending prior to the date of such
Restricted Payment as to which financial results are available (but in no event
more than 135 days prior to the date of such Restricted Payment) (or, in case
such Consolidated Net Income shall be a deficit, minus 100% of such

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deficit); (B) the aggregate Net Cash Proceeds received by the Company from the
issue or sale of its Capital Stock (other than Disqualified Stock) or other cash
contributions to its capital on or subsequent to the Issue Date (other than an
issuance or sale to a Subsidiary of the Company or an employee stock ownership
plan or other trust established by the Company or any of its Subsidiaries); (C)
aggregate Net Cash Proceeds from the issue or sale of its Capital Stock to an
employee stock ownership plan or similar trust, provided, however, that if such
plan or trust Incurs any Indebtedness to or Guaranteed by the Company to finance
the acquisition of such Capital Stock, such aggregate amount shall be limited to
any increase in the Consolidated Net Worth of the Company resulting from
principal repayments made by such plan or trust with respect to Indebtedness
Incurred by it to finance the purchase of such Capital Stock; and (D) the amount
by which Indebtedness of the Company or its Subsidiaries is reduced on the
Company's balance sheet upon the conversion or exchange (other than by a
Subsidiary) subsequent to the Issue Date of any Indebtedness of the Company or
its Subsidiaries convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of the Company (less the amount of any cash, or other
property, distributed by the Company or any Subsidiary upon such conversion or
exchange).

(b) The provisions of paragraph (a) shall not prohibit: (i) any purchase or
redemption of Capital Stock or Subordinated Obligations of the Company made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Capital Stock of the Company (other than Disqualified Stock and other than
Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan
or other trust established by the Company or any of its Subsidiaries); provided,
however, that (A) such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds
from such sale shall be excluded from clause (3)(B) of paragraph (a); (ii) any
purchase or redemption of Subordinated Obligations of the Company made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Subordinated Obligations of the Company; provided, however, that such purchase
or redemption shall be excluded in the calculation of the amount of Restricted
Payments; (iii) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted under "Limitation on Sales of Assets and
Subsidiary Stock" below; provided, however, that such purchase or redemption
shall be excluded in the calculation of the amount of Restricted Payments; (iv)
dividends paid within 60 days after the date of declaration if at such date of
declaration such dividend would have complied with this provision; provided,
however, that such dividend shall be included in the calculation of the amount
of Restricted Payments; (v) amounts expended by the Company to repurchase
Capital Stock of the Company owned by employees (including former employees) of
the Company or its Subsidiaries or their assigns, estates and heirs; provided
that the aggregate amount paid, loaned or advanced pursuant to this clause (v)
shall not, in the aggregate, exceed the sum of $5.0 million plus any amounts
received by the Company as a result of resales of such repurchased shares of
Capital Stock; or (vi) any repurchase of equity interest deemed to occur upon
exercise of stock options if such equity interests represent a portion of the
exercise price of such options.

LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM SUBSIDIARIES. The Company
shall not, and shall not permit any of its Subsidiaries to, create or permit to
exist or become effective any consensual encumbrance or restriction on the
ability of any such Subsidiary to (i) pay dividends or make any other
distributions on its Capital Stock or pay any Indebtedness or other obligation
owed to the Company, (ii) make any loans or advances to the Company or (iii)
transfer any of its property or assets to the Company; except: (A) any
encumbrance or restriction pursuant to an agreement in effect on the Issue Date,
including those arising under the Senior Credit Documents; (B) any encumbrance
or restriction with respect to a Subsidiary pursuant to an agreement relating to
any Indebtedness Incurred by a Subsidiary prior to the date on which such
Subsidiary was acquired by the Company (other than Indebtedness Incurred as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Subsidiary was acquired by the Company); (C)
any encumbrance or restriction with respect to a Subsidiary pursuant to an
agreement effecting a refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clauses (A) or (B) or this clause (C) or contained in
any amendment, supplement or modification (including an amendment and
restatement) to

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an agreement referred to in clauses (A) or (B) or this clause (C); provided,
however, that the encumbrances and restrictions contained in any such
refinancing agreement or amendment taken as a whole are no less favorable to the
holders of the Notes in any material respect than encumbrances and restrictions
contained in such agreements; (D) in the case of clause (iii), any encumbrance
or restriction (1) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject to a lease,
license, or similar contract, (2) by virtue of any transfer of, agreement to
transfer, option or right with respect to, or Lien on, any property or assets of
the Company or any Subsidiary not otherwise prohibited by the Indenture, or (3)
contained in security agreements securing Indebtedness of a Subsidiary to the
extent such encumbrance or restrictions restrict the transfer of the property
subject to such security agreements; (E) any such restriction imposed by
applicable law; (F) any restriction with respect to a Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Subsidiary pending the
closing of such sale or disposition; and (G) purchase obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (iii) above on the property so acquired.

LIMITATION ON SALES OF ASSETS. (a) The Company shall not, and shall not
permit any Subsidiary to, make any Asset Disposition unless (i) the Company or
such Subsidiary receives consideration (including by way of relief from, or by
any other Person assuming sole responsibility for, any liabilities, contingent
or otherwise) at the time of such Asset Disposition at least equal to the fair
market value of the shares and assets subject to such Asset Disposition, (ii) at
least 85% of the consideration thereof received by the Company or such
Subsidiary is in the form of cash and (iii) an amount equal to 100% of the Net
Available Cash from such Asset Disposition is applied by the Company (or such
Subsidiary, as the case may be) (A) first, to the extent the Company elects (or
is required by the terms of any Senior Indebtedness or Indebtedness (other than
Preferred Stock) of a Wholly-Owned Subsidiary), to prepay, repay or purchase
Senior Indebtedness or such Indebtedness (other than Preferred Stock) of a
Wholly-Owned Subsidiary (in each case other than Indebtedness owed to the
Company or an Affiliate of the Company) within one year after the later of the
date of such Asset Disposition or the receipt of such Net Available Cash; (B)
second, to the extent of the balance of Net Available Cash after application in
accordance with clause (A), to the extent the Company or such Subsidiary elects,
to reinvest in Additional Assets (including by means of an Investment in
Additional Assets by a Subsidiary with Net Available Cash received by the
Company or another Subsidiary) within one year after the later of the date of
such Asset Disposition or the receipt of such Net Available Cash; (C) third, to
the extent of the balance of such Net Available Cash after application in
accordance with clauses (A) and (B), to make an offer to purchase the Existing
Notes pursuant and subject to the conditions of the Existing Indentures to the
noteholders thereof at a purchase price of 100% of the principal amount thereof
plus accrued and unpaid interest to the purchase date; (D) fourth, to the extent
of the balance of such Net Available Cash after application in accordance with
clauses (A), (B) and (C), to make an offer to purchase the Notes and other
Senior Subordinated Indebtedness (other than the Existing Notes) at the time
outstanding with similar provisions requiring the Company to make an offer to
purchase such Indebtedness with the proceeds from any Asset Disposition ("Pari
Passu Notes") at 100% of the principal amount thereof (or 100% of the accreted
value of such Pari Passu Notes if such Pari Passu Notes were issued at a
discount) plus accrued and unpaid interest, if any, to the date of purchase; and
(E) fifth, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A), (B), (C) and (D), to (x) acquire
Additional Assets (other than Indebtedness and Capital Stock) or (y) prepay,
repay or purchase Indebtedness of the Company (other than Indebtedness owed to
an Affiliate of the Company and other than Disqualified Stock of the Company) or
Indebtedness of any Subsidiary (other than Indebtedness owed to the Company or
an Affiliate of the Company), in each case described in this clause (E) within
one year from the receipt of such Net Available Cash or, if the Company has made
an Offer pursuant to clause (D), six months from the date such Offer is
consummated; provided, however, that, in connection with any prepayment,
repayment or purchase of Indebtedness pursuant to clause (A), (C), (D) or (E)
above, the Company or such Subsidiary shall retire such Indebtedness and shall
cause the related loan commitment (if any) to be

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permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased. Notwithstanding the foregoing provisions, the Company and
its Subsidiaries shall not be required to apply any Net Available Cash in
accordance herewith except to the extent that the aggregate Net Available Cash
from all Asset Dispositions which are not applied in accordance with this
covenant at any time exceed $5.0 million. The Company shall not be required to
make an offer for Notes and Pari Passu Notes pursuant to this covenant if the
Net Available Cash available therefor (after application of the proceeds as
provided in clauses (A), (B) and (C)) is less than $10.0 million for any
particular Asset Disposition (which lesser amounts shall be carried forward for
purposes of determining whether an offer is required with respect to the Net
Available Cash from any subsequent Asset Disposition).

For the purposes of this covenant, the following will be deemed to be cash:
(x) the assumption of Indebtedness (other than Disqualified Stock) of the
Company or any Subsidiary and the release of the Company or such Subsidiary from
all liability on such Indebtedness in connection with such Asset Disposition and
(y) securities received by the Company or any Subsidiary of the Company from the
transferee that are promptly converted by the Company or such Subsidiary into
cash.

(b) In the event of an Asset Disposition that requires the purchase of Notes
and Pari Passu Notes pursuant to clause (a)(iii)(D), the Company will be
required to apply the Net Available Cash available therefor to the purchase of
the Notes and any Pari Passu Notes as follows: (A) the Company will make an
offer to purchase (an "Offer") from all holders of the Notes in accordance with
the procedures set forth in the Indenture in the maximum principal amount
(expressed as a multiple of $1,000) of Notes that may be purchased out of an
amount (the "Note Amount") equal to the product of such Net Available Cash
multiplied by a fraction, the numerator of which is the outstanding principal
amount of the Notes and the denominator of which is the sum of the outstanding
principal amount of the Notes and the outstanding principal amount (or accreted
value, as the case may be) of the Pari Passu Notes at a purchase price of 100%
of the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase and (B) the Company will make an offer to purchase any Pari
Passu Notes (a "Pari Passu Offer") in an amount equal to the excess of such Net
Available Cash over the Note Amount at a purchase price of 100% of the principal
amount (or accreted value, as the case may be) thereof plus accrued and unpaid
interest, if any, to the date of purchase in accordance with the procedures
(including prorating in the event of oversubscription) set forth in the
documentation governing such Pari Passu Notes with respect to the Pari Passu
Offer. If the aggregate purchase price of the Notes and Pari Passu Notes
tendered pursuant to the Offer and the Pari Passu Offer is less than such Net
Available Cash, the Company will apply the remaining Net Available Cash in
accordance with clause (a)(iii)(E) above.

(c) The Company will comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Notes pursuant to the
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under the Indenture by virtue thereof.

LIMITATION ON AFFILIATE TRANSACTIONS. (a) The Company will not, and will
not permit any Subsidiary to, directly or indirectly, enter into or conduct any
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of the Company (an "Affiliate
Transaction") unless: (i) the terms of such Affiliate Transaction are no less
favorable to the Company or such Subsidiary, as the case may be, than those that
could be obtained at the time of such transaction in arm's-length dealings with
a Person who is not such an Affiliate; (ii) in the event such Affiliate
Transaction involves an aggregate amount in excess of $2.5 million, the terms of
such transaction have been approved by a majority of the members of the Board of
Directors of the Company and by a majority of the disinterested members of such
Board, if any (and such majority or majorities, as the case may be, determines
that such Affiliate Transaction satisfies the criteria in (i) above); and (iii)
in the event such Affiliate Transaction involves an aggregate amount in excess
of $10.0 million, the Company has received a written opinion from an independent
investment banking firm of nationally recognized standing that such

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Affiliate Transaction is fair to the Company or such Subsidiary, as the case may
be, from a financial point of view.

(b) The provisions of the foregoing paragraph (a) will not prohibit (i) any
Restricted Payment permitted to be paid pursuant to the covenant described under
"--Limitation on Restricted Payments" (and in the case of Permitted Investments,
only those described in clauses (v), (vi) and (ix) of the definition of
Permitted Investments), (ii) the performance of the Company's or Subsidiary's
obligations under any employment contract, collective bargaining agreement,
employee benefit plan, related trust agreement or any other similar arrangement
heretofore or hereafter entered into in the ordinary course of business, (iii)
payment of compensation to, and indemnity provided on behalf of, employees,
officers, directors or consultants in the ordinary course of business, (iv)
maintenance in the ordinary course of business of benefit programs or
arrangements for employees, officers or directors, including vacation plans,
health and life insurance plans, deferred compensation plans, and retirement or
savings plans and similar plans, (v) any transaction between the Company and a
Wholly-Owned Subsidiary or between Wholly-Owned Subsidiaries, (vi) the payment
of fees under the Agreements dated as of April 8, 1998 between the Company and
Dartford Partnership L.L.C., Fenway Partners, Inc. and an affiliate of McCown De
Leeuw & Co., respectively, as in effect on the Issue Date and (vii) payments of
up to $800,000 per year to Dartford Partnership L.L.C. as reimbursement of
corporate headquarters expenses and rent for space leased by Dartford
Partnership L.L.C. and used by the Company as corporate headquarters.

LIMITATION ON SALE OF SUBSIDIARY CAPITAL STOCK. The Company (i) will not,
and will not permit any Subsidiary to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Subsidiary to any Person (other
than to the Company or a Wholly-Owned Subsidiary) and (ii) will not permit any
Subsidiary to issue any of its Capital Stock (other than, if necessary, shares
of its Capital Stock constituting directors' qualifying shares) to any Person
other than to the Company or a Wholly-Owned Subsidiary; provided, however, that
the foregoing shall not prohibit such conveyance, sale, lease or other
disposition of all the Capital Stock of a Subsidiary if the net cash proceeds
from such transfer, conveyance, sale, lease, other disposition or issuance are
applied in accordance with the covenant described above under "--Limitation on
Sales of Assets".

SEC REPORTS. Notwithstanding that the Company may not be required to remain
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the Commission, and within 15 days after such
reports are filed, provide the Trustee and the holders (at their addresses as
set forth in the register of Notes) with the annual reports and the information,
documents and other reports which are otherwise required pursuant to Section 13
and 15(d) of the Exchange Act, for so long as the Notes are outstanding the
Company shall furnish to the Trustee and the holders, promptly upon their
becoming available, copies of the Company's annual report to stockholders and
any other information provided by the Company to its public stockholders
generally.

FUTURE NOTE GUARANTORS. The Company will cause each Subsidiary which Incurs
Indebtedness or which is a guarantor of Indebtedness Incurred pursuant to clause
(b)(i) of the covenant described under "--Limitation on Indebtedness" to execute
and deliver to the Trustee a Note Guarantee pursuant to which such Subsidiary
will Guarantee, jointly and severally, to the holders and the Trustee, subject
to subordination provisions substantially the same as those described above, the
full and prompt payment of the Notes in the Indenture. Each Note Guarantee will
be limited in amount to an amount not to exceed the maximum amount that can be
Guaranteed by that Subsidiary without rendering the Note Guarantee, as it
relates to such Subsidiary, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally. The Existing Indentures contain similar provisions with
respect to the Existing Notes.

LIMITATION ON LINES OF BUSINESS. The Company will not, and will not permit
any Subsidiary to, engage in any business, other than the food business and such
other business activities which are incidental or related thereto.

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MERGER AND CONSOLIDATION. The Company shall not consolidate with or merge
with or into, or convey, transfer or lease all or substantially all its assets
to, any Person, unless: (i) the resulting, surviving or transferee Person (the
"Successor Company") is a corporation organized and existing under the laws of
the United States of America, any State thereof or the District of Columbia and
the Successor Company (if not the Company) expressly assumes, by supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company under the Notes and the Indenture;
(ii) immediately after giving effect to such transaction (and treating any
Indebtedness that becomes an obligation of the Successor Company or any
Subsidiary of the Successor Company as a result of such transaction as having
been Incurred by the Successor Company or such Subsidiary at the time of such
transaction), no Default shall have occurred and be continuing; (iii)
immediately after giving effect to such transaction, the Successor Company would
be able to Incur at least an additional $1.00 of Indebtedness pursuant to
paragraph (a) of "--Limitation on Indebtedness"; (iv) immediately after giving
effect to such transaction, the Successor Company will have Consolidated Net
Worth in an amount which is not less than the Consolidated Net Worth of the
Company immediately prior to such transaction; and (v) the Company shall have
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and such supplemental
indenture (if any) comply with the Indenture.

The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture, but the
predecessor, the Company, in the case of a lease of all or substantially all its
assets will not be released from the obligation to pay the principal of and
interest on the Notes.

Notwithstanding the foregoing clauses (ii), (iii) and (iv), (1) any
Subsidiary of the Company may consolidate with, merge into or transfer all or
part of its properties and assets to the Company or another Wholly-Owned
Subsidiary of the Company and (2) the Company may merge with an Affiliate
incorporated solely for the purpose of reincorporating the Company in another
jurisdiction to realize tax or other benefits.

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EVENTS OF DEFAULT

An Event of Default is defined in the Indenture as (i) a default in any
payment of interest on any Note when due, continued for 30 days, (ii) a default
in the payment of principal of any Note when due at its Stated Maturity, upon
optional redemption, upon required repurchase, upon declaration or otherwise,
(iii) the failure by the Company to comply with its obligations under "--Merger
and Consolidation" above, (iv) the failure by the Company to comply for 30 days
after notice with any of its obligations under the covenants described under
"Change of Control" above or under covenants described under "Certain Covenants"
above (in each case, other than a failure to purchase Notes which shall
constitute an Event of Default under clause (ii) above), other than "--Merger
and Consolidation", (v) the failure by the Company to comply for 60 days after
notice with its other agreements contained in the Indenture, (vi) Indebtedness
of the Company or any Subsidiary is not paid within any applicable grace period
after final maturity or is accelerated by the holders thereof because of a
default and the total amount of such Indebtedness unpaid or accelerated exceeds
$10.0 million and such default shall not have been cured or such acceleration
rescinded within a 10-day period (the "cross acceleration provision"), (vii)
certain events of bankruptcy, insolvency or reorganization of the Company or a
Significant Subsidiary (the "bankruptcy provisions"), (viii) any judgment or
decree for the payment of money in excess of $10.0 million (to the extent not
covered by insurance) is rendered against the Company or a Significant
Subsidiary and such judgment or decree shall remain undischarged or unstayed for
a period of 60 days after such judgment becomes final and non-appealable (the
"judgment default provision") or (ix) the failure of any Note Guarantee to be in
full force and effect (except as contemplated by the terms thereof) or the
denial or disaffirmation by any Note Guarantor of its obligations under the
Indenture or any Note Guarantee if such default continues for 10 days. However,
a default under clauses (iv) and (v) will not constitute an Event of Default
until the Trustee or the holders of at least 25% in principal amount of the
outstanding Notes notify the Company of the default and the Company does not
cure such default within the time specified in clauses (iv) and (v) hereof after
receipt of such notice.

If an Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the outstanding Notes by notice to the
Company may declare the principal of and accrued and unpaid interest on all the
Notes to be due and payable. Upon such a declaration, such principal and accrued
and unpaid interest shall be due and payable immediately. If an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of the
Company occurs and is continuing, the principal of and accrued and unpaid
interest on all the Notes will become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any holders. Under
certain circumstances, the holders of a majority in principal amount of the
outstanding Notes may rescind any such acceleration with respect to the Notes
and its consequences.

Subject to the provisions of the Indenture relating to the duties of the
Trustee, if an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the holders unless such holders have
offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such holder has
previously given the Trustee notice that an Event of Default is continuing, (ii)
holders of at least 25% in principal amount of the outstanding Notes have
requested the Trustee to pursue the remedy, (iii) such holders have offered the
Trustee reasonable security or indemnity against any loss, liability or expense,
(iv) the Trustee has not complied with such request within 60 days after the
receipt of the request and the offer of security or indemnity and (v) the
holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction that, in the opinion of the Trustee, is
inconsistent with such request within such 60 day period. Subject to certain
restrictions, the holders of a majority in principal amount of the outstanding
Notes are given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the Trustee

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determines is unduly prejudicial to the rights of any other holder or that would
involve the Trustee in personal liability. Prior to taking any action under the
Indenture, the Trustee shall be entitled to indemnification satisfactory to it
in its sole discretion against all losses and expenses caused by taking or not
taking such action.

The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder notice of the Default
within 90 days after it occurs. Except in the case of a Default in the payment
of principal of, premium (if any) or interest on any Note, the Trustee may
withhold notice if and so long as a committee of its Trust officers in good
faith determines that withholding notice is in the interests of the Noteholders.
In addition, the Company is required to deliver to the Trustee, within 120 days
after the end of each fiscal year, a certificate indicating whether the signers
thereof know of any Default that occurred during the previous year. The Company
also is required to deliver to the Trustee, within 30 days after the occurrence
thereof, written notice of any events which would constitute certain Defaults,
their status and what action the Company is taking or proposes to take in
respect thereof.

AMENDMENTS AND WAIVERS

Subject to certain exceptions, the Indenture may be amended with the consent
of the holders of a majority in principal amount of the Notes then outstanding
and any past default or compliance with any provisions may be waived with the
consent of the holders of a majority in principal amount of the Notes then
outstanding. However, without the consent of each holder of an outstanding Note
affected, no amendment may, among other things, (i) reduce the amount of Notes
whose holders must consent to an amendment, (ii) reduce the rate of or extend
the time for payment of interest on any Note, (iii) reduce the principal of or
extend the Stated Maturity of any Note, (iv) reduce the premium payable upon the
redemption or repurchase of any Note or change the time at which any Note may be
redeemed as described under "Optional Redemption" above, (v) make any Note
payable in money other than that stated in the Note, (vi) make any change to the
subordination provisions of the Indenture that adversely affects the rights of
any holder of the Notes, (vii) impair the right of any holder to receive payment
of principal of and interest on such holder's Notes on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with
respect to such holder's Notes or (viii) make any change in the amendment
provisions which require each holder's consent or in the waiver provisions.

Without the consent of any holder, the Company and the Trustee may amend the
Indenture to cure any ambiguity, omission, defect or inconsistency, to provide
for the assumption by a successor corporation of the obligations of the Company
under the Indenture, to provide for uncertificated Notes in addition to or in
place of certificated Notes (provided that the uncertificated Notes are issued
in registered form for purposes of Section 163(f) of the Code, or in a manner
such that the uncertificated Notes are described in Section 163(f) (2) (B) of
the Code), to add Guarantees with respect to the Notes, to secure the Notes, to
add to the covenants of the Company for the benefit of the Noteholders or to
surrender any right or power conferred upon the Company, to make any change that
does not adversely affect the rights of any holder or to comply with any
requirement of the Commission in connection with the qualification of the
Indenture under the Trust Indenture Act. However, no amendment may be made to
the subordination provisions of the Indenture that adversely affects the rights
of any holder of Senior Indebtedness then outstanding unless the holders of such
Senior Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.

The consent of the holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.

After an amendment under the Indenture becomes effective, the Company is
required to mail to the holders a notice briefly describing such amendment.
However, the failure to give such notice to all the holders, or any defect
therein, will not impair or affect the validity of the amendment.

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DEFEASANCE

The Company at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Company at any time may terminate its obligations under covenants
described under "Certain Covenants" (other than "Merger and Consolidation"), the
operation of the cross acceleration provision, the bankruptcy provisions with
respect to Subsidiaries and the judgment default provision described under
"Events of Default" above and the limitations contained in clauses (iii) and
(iv) under "Certain Covenants--Merger and Consolidation" above ("covenant
defeasance").

The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iv), (vi), (vii) (with respect only to
Subsidiaries), (viii) or (ix) under "Events of Default" above or because of the
failure of the Company to comply with clause (iii) or (iv) under "Certain
Covenants--Merger and Consolidation" above.

In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium (if any) and
interest on the Notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including delivery to the Trustee of an
Opinion of Counsel to the effect that holders of the Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit
and defeasance and will be subject to Federal income tax on the same amount and
in the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred (and, in the case of legal defeasance
only, such Opinion of Counsel must be based on a ruling of the Internal Revenue
Service or other change in applicable Federal income tax law).

CONCERNING THE TRUSTEE

Wilmington Trust Company is the Trustee under the Indenture and has been
appointed by the Company as Registrar and Paying Agent with regard to the Notes.

GOVERNING LAW

The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.

CERTAIN DEFINITIONS

"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Subsidiary in a
Related Business; (ii) the Capital Stock of a Person that becomes a Subsidiary
as a result of the acquisition of such Capital Stock by the Company or another
Subsidiary; or (iii) Capital Stock constituting a minority interest in any
Person that at such time is a Subsidiary; provided, however, that, in the case
of clauses (ii) and (iii), such Subsidiary is primarily engaged in a Related
Business.

"Affiliate" of any specified Person means (i) any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person or (ii) any Person who is a director or
officer (a) of such Person, (b) of any Subsidiary of such Person or (c) of any
Person described in clause (i) above. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly,

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whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of the covenants described under "Certain
Covenants--Limitation on Sales of Assets and Subsidiary Stock", "--Limitation on
Restricted Payments" and "--Limitation on Affiliate Transactions" only,
"Affiliate" shall also mean any beneficial owner of shares representing 5% or
more of the total voting power of the Voting Stock (on a fully diluted basis) of
the Company or of rights or warrants to purchase such Voting Stock (whether or
not currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.

"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of a
Subsidiary (other than directors' qualifying shares), property or other assets
(each referred to for the purposes of this definition as a "disposition") by the
Company or any of its Subsidiaries (including any disposition by means of a
merger, consolidation or similar transaction) other than (i) a disposition by a
Subsidiary to the Company or a Wholly-Owned Subsidiary or by the Company or a
Subsidiary to a Wholly-Owned Subsidiary, (ii) a disposition of inventory or
Temporary Cash Investments in the ordinary course of business, (iii) a
disposition of obsolete equipment or equipment that is no longer useful in the
conduct of the business of the Company and its Subsidiaries and that is disposed
of in each case in the ordinary course of business, (iv) the sale of other
assets so long as the fair market value of the assets disposed of pursuant to
this clause (iv) does not exceed $2.5 million in the aggregate in any fiscal
year, (v) for the purposes of the covenant described under "Certain
Covenants--Limitation on Sales of Assets" only, a disposition subject to the
covenant described under "--Limitation on Restricted Payments" and (vi) the
disposition of all or substantially all of the assets of the Company in the
manner permitted pursuant to the provisions described under the caption
"--Merger and Consolidation" or any disposition that constitutes a Change of
Control pursuant to the Indenture.

"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Notes, compounded annually) of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale/Leaseback Transaction (including any period for which such
lease has been extended).

"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to Preferred Stock multiplied by the
amount of such payment by (ii) the sum of all such payments.

"Bank Indebtedness" means any and all amounts payable under or in respect of
the Senior Credit Documents and any Indebtedness that is incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any defeasance
or discharge mechanism) Indebtedness under such Senior Credit Documents
including Indebtedness that refinances such Indebtedness, as amended from time
to time, including principal, premium (if any), interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company whether or not a claim for postfiling
interest is allowed in such proceedings), fees, charges, expenses, reimbursement
obligations, guarantees and all other amounts payable thereunder or in respect
thereof (including, without limitation, cash collateralization of letters of
credit).

"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.

"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.

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"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) equity of such Person, including any Preferred Stock,
but excluding any debt securities convertible into such equity.

"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP, and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date such lease may be terminated without penalty.

"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States Government, or any agency or
instrumentality thereof, having maturities of not more than one year from the
date of acquisition; (ii) marketable general obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition thereof, having a credit
rating of "A" or better from either Standard & Poor's Ratings Group or Moody's
Investors Service, Inc.; (iii) certificates of deposit, time deposits,
eurodollar time deposits, overnight bank deposits or bankers' acceptances having
maturities of not more than one year from the date of acquisition thereof issued
by any domestic commercial bank the long-term debt of which is rated at the time
of acquisition thereof at least "A" or the equivalent thereof by Standard &
Poor's Ratings Group, or "A" or the equivalent thereof by Moody's Investors
Service, Inc., and having capital and surplus in excess of $500.0 million; (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (i), (ii) and (iii) entered into
with any bank meeting the qualifications specified in clause (iii) above; (v)
commercial paper rated at the time of acquisition thereof at least "A-2" or the
equivalent thereof by Standard & Poor's Ratings Group or "P-2" or the equivalent
thereof by Moody's Investors Service, Inc., or carrying an equivalent rating by
a nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of investments, and in either case maturing within 270
days after the date of acquisition thereof; and (vi) interests in any investment
company which invests solely in instruments of the type specified in clauses (i)
through (v) above.

"Code" means the Internal Revenue Code of 1986, as amended.

"Consolidated Cash Flow" for any period means the Consolidated Net Income
for such period, plus, to the extent deducted in calculating such Consolidated
Net Income, (i) income tax expense, (ii) Consolidated Interest Expense, (iii)
depreciation expense, (iv) amortization expense, in each case for such period,
(v) other non-cash charges reducing Consolidated Net Income (excluding any such
non-cash charge to the extent that it represents an accrual of or reserve for
cash charges in any future period or amortization of a prepaid cash expense that
was paid in a prior period), and (vi) for the period ending on the first
anniversary of the Issue Date only, non-recurring relocation and start-up
expenses not in excess of $16.5 million, in each case for such period, and
minus, to the extent not already deducted in calculating Consolidated Net
Income, (i) the aggregate amount of "earnout" payments paid in cash during such
period in connection with acquisitions previously made by the Company and (ii)
non-cash items increasing Consolidated Net Income for such period.

"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated Cash Flow for the period of
the most recent four consecutive fiscal quarters ending prior to the date of
such determination to (ii) Consolidated Interest Expense for such four fiscal
quarters; provided, however, that (1) if the Company or any of its Subsidiaries
has Incurred any Indebtedness since the beginning of such period that remains
outstanding or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to such Indebtedness as
if such Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise

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discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period, (2) if since the beginning of such
period the Company or any of its Subsidiaries shall have made any Asset
Disposition, Consolidated Cash Flow for such period shall be reduced by an
amount equal to the Consolidated Cash Flow (if positive) attributable to the
assets which are the subject of such Asset Disposition for such period or
increased by an amount equal to the Consolidated Cash Flow (if negative)
attributable thereto for such period, and Consolidated Interest Expense for such
period shall be reduced by an amount equal to the Consolidated Interest Expense
attributable to any Indebtedness of the Company or any of its Subsidiaries
repaid, repurchased, defeased or otherwise discharged with respect to the
Company and its continuing Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Subsidiary of the
Company is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Subsidiary to the extent the Company
and its continuing Subsidiaries are no longer liable for such Indebtedness after
such sale), (3) if since the beginning of such period the Company or any of its
Subsidiaries (by merger or otherwise) shall have made an Investment in any
Subsidiary of the Company (or any Person which becomes a Subsidiary of the
Company) or an acquisition of assets, including any Investment in a Subsidiary
of the Company or any acquisition of assets occurring in connection with a
transaction causing a calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto (including the Incurrence of any Indebtedness and
including pro forma expenses and cost reductions) as if such Investment or
acquisition occurred on the first day of such period and (4) if since the
beginning of such period any Person (that subsequently became a Subsidiary of
the Company or was merged with or into the Company or any Subsidiary of the
Company since the beginning of such period) shall have made any Asset
Disposition or any Investment or acquisition of assets that would have required
an adjustment pursuant to clause (2) or (3) above if made by the Company or a
Subsidiary of the Company during such period, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Asset Disposition, Investment or acquisition
occurred on the first day of such period. For purposes of this definition,
whenever pro forma effect is to be given to an acquisition of assets, the amount
of income or earnings relating thereto and the amount of Consolidated Interest
Expense associated with any Indebtedness Incurred in connection therewith, the
pro forma calculations shall be determined in good faith by a responsible
financial or accounting Officer of the Company. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness shall be calculated as if the rate in effect on the
date of determination had been the applicable rate for the entire period (taking
into account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term in excess of 12 months).

"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its Subsidiaries, plus, to the extent not included in
such interest expense, (i) interest expense attributable to Capitalized Lease
Obligations and imputed interest with respect to Attributable Indebtedness, (ii)
amortization of debt discount and debt issuance cost (other than those debt
discounts and debt issuance costs incurred on the Issue Date), (iii) capitalized
interest, (iv) non-cash interest expense, (v) commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing, (vi) interest actually paid by the Company or any such Subsidiary
under any Guarantee of Indebtedness or other obligation of any other Person,
(vii) net costs associated with Currency Agreements and Interest Rate Agreements
(including amortization of fees), (viii) the product of (A) all Preferred Stock
dividends in respect of all Preferred Stock of Subsidiaries of the Company and
Disqualified Stock of the Company held by Persons other than the Company or a
Wholly-Owned Subsidiary multiplied by (B) a fraction, the numerator of which is
one and the denominator of which is one minus the then current combined Federal,
state and local statutory tax rate of the Company, expressed as a decimal, in
each case, determined on a consolidated basis in accordance with GAAP and (ix)
the cash contributions to any employee stock ownership plan or similar trust to
the extent such contributions are used by such

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plan or trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust.

"Consolidated Net Income" means, for any period, the net income (loss) of
the Company and its consolidated Subsidiaries; provided, however, that there
shall not be included in such Consolidated Net Income: (i) any net income (loss)
of any Person if such Person is not a Subsidiary, except that (A) subject to the
limitations contained in clause (iv) below, the Company's equity in the net
income of any such Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed by such
Person during such period to the Company or a Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution to a
Subsidiary, to the limitations contained in clause (iii) below) and (B) the
Company's equity in a net loss of any such Person for such period shall be
included in determining such Consolidated Net Income; (ii) any net income (loss)
of any person acquired by the Company or a Subsidiary in a pooling of interests
transaction for any period prior to the date of such acquisition; (iii) any net
income (loss) of any Subsidiary if such Subsidiary is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of
distributions by such Subsidiary, directly or indirectly, to the Company, except
that (A) subject to the limitations contained in (iv) below, the Company's
equity in the net income of any such Subsidiary for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash that
could have been distributed by such Subsidiary during such period to the Company
or another Subsidiary as a dividend (subject, in the case of a dividend that
could have been made to another Subsidiary, to the limitation contained in this
clause) and (B) the Company's equity in a net loss of any such Subsidiary for
such period shall be included in determining such Consolidated Net Income; (iv)
any gain (but not loss) realized upon the sale or other disposition of any
assets of the Company or its consolidated Subsidiaries (including pursuant to
any Sale/Leaseback Transaction) which are not sold or otherwise disposed of in
the ordinary course of business and any gain or loss realized upon the sale or
other disposition of any Capital Stock of any Person; (v) any extraordinary gain
or loss; and (vi) the cumulative effect of a change in accounting principles.

"Consolidated Net Worth" means the total of the amounts shown on the balance
sheet of the Company and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending prior to the taking of any action for the
purpose of which the determination is being made as (i) the par or stated value
of all outstanding Capital Stock of the Company plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.

"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.

"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.

"Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii)
any other Senior Indebtedness which, at the date of determination, has an
aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof are committed to lend up to, at least $5.0
million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of the Indenture.

"Disqualified Stock" means, with respect to any Person, any Capital Stock of
such Person which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in each case on or prior to 123 days after the Stated
Maturity of the Notes.

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"Equity Investors" means Fenway Partners Capital Fund, L.P., McCown De Leeuw
& Co. III, L.P., McCown De Leeuw & Co. III (Europe), L.P., McCown De Leeuw & Co.
III (Asia), L.P. Gamma Fund LLC, McCown De Leeuw & Co. IV, L.P., McCown DeLeeuw
& Co. IV Associates, L.P., Delta Fund LLC, California Public Employees
Retirement System, Dartford Partnership L.L.C., Tiger Oats Limited and UBS
Capital LLC.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Existing Indentures" means the Indenture dated as of September 15, 1995
between the Company and Harris Trust and Savings Bank, as trustee, the Indenture
dated as of February 10, 1997 between the Company and Wilmington Trust Company,
as trustee, and the Indenture dated as of July 1, 1997 between the Company and
Wilmington Trust Company, as trustee, in each case, as the same may have been
and may from time to time be amended, modified or supplemented.

"Existing Notes" means the Company's 12% Senior Subordinated Notes due 2005,
9 7/8% Series B Senior Subordinated Noes due 2007 and 9 7/8% Series D Senior
Subordinated Notes due 2007.

"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, including those set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession.
All ratios and computations based on GAAP contained in the Indenture shall be
computed in conformity with GAAP as in effect on the Issue Date.

"Governmental Authority" means any nation or government, any state or other
political subdivision thereof or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of any other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.

"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary.

"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto) (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in clauses (i), (ii) and (v)) entered into in the ordinary
course of business of such Person to the extent that such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed
no later than the third business day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services (other than contingent or "earn-out" payment obligations
and Trade Payables

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and accrued expenses incurred in the ordinary course of business), which
purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services, (v) all Capitalized Lease Obligations and all Attributable
Indebtedness of such Person, (vi) all Indebtedness of other Persons secured by a
Lien on any asset of such Person, whether or not such Indebtedness is assumed by
such Person, provided, however, that the amount of Indebtedness of such Person
shall be the lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness of such other Persons,
(vii) all Indebtedness of other Persons to the extent Guaranteed by such Person,
(viii) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or, with
respect to any Subsidiary of the Company, any Preferred Stock (but excluding, in
each case, any accrued dividends) and (ix) to the extent not otherwise included
in this definition, obligations of such Person under Currency Agreements and
Interest Rate Agreements. The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of all unconditional obligations
as described above as such amount would be reflected on a balance sheet in
accordance with GAAP and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such
date.

"Interest Rate Agreement" means with respect to any Person any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.

"Investment" in any Person means any direct or indirect advance, loan (other
than advances to customers in the ordinary course of business that are recorded
as accounts receivable on the balance sheet of such Person) or other extension
of credit (including by way of Guarantee or similar arrangement, but excluding
any debt or extension of credit represented by a bank deposit other than a time
deposit) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition of Capital Stock, Indebtedness or
other similar instruments issued by such Person.

"Issue Date" means the date on which the Old Notes were originally issued.

"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).

"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other noncash form) therefrom, in each case net of (i) all
legal, title and recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, foreign and local taxes required to be paid or
accrued as a liability under GAAP, as a consequence of such Asset Disposition,
(ii) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any Lien upon
such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of the
proceeds from such Asset Disposition, (iii) all distributions and other payments
required to be made to any Person owning a beneficial interest in assets subject
to sale or minority interest holders in Subsidiaries or joint ventures as a
result of such Asset Disposition, (iv) the deduction of appropriate amounts to
be provided by the seller as a reserve, in accordance with GAAP, against any
liabilities associated with the assets disposed of in such Asset Disposition and
retained by the Company or any Subsidiary of the Company after such Asset
Disposition and (v) any portion of the purchase price from an Asset Disposition
placed in escrow (whether as a reserve for adjustment of the purchase price, for
satisfaction of indemnities in respect of such Asset Disposition or otherwise in
connection with such Asset Disposition) provided, however, that upon the
termination of such escrow, Net

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Available Cash shall be increased by any portion of funds therein released to
the Company or any Subsidiary.

"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock
or Indebtedness, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result of such issuance or sale.

"Note Guarantee" means any guarantee which may from time to time be executed
and delivered by a Subsidiary of the Company pursuant to the provisions of the
covenant described under "Certain Covenants --Future Note Guarantors." Each such
Note Guarantee will have subordination provisions equivalent to those contained
in the Indenture.

"Note Guarantor" means any Subsidiary that has issued a Note Guarantee.

"Officer" means the Chairman of the Board, Chief Executive Officer, the
President, the Vice Chairman, any Vice President, the Treasurer, the Chief
Financial Officer or the Secretary of the Company.

"Officers' Certificate" means a certificate signed by an Officer.

"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.

"Permitted Holders" means the Equity Investors and their respective
Affiliates.

"Permitted Investment" means (i) any Investment in a Subsidiary of the
Company or a Person which will, upon making such Investment, become a
Subsidiary; provided, however, that the primary business of such Subsidiary is a
Related Business; (ii) any Investment in another Person if as a result of such
Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or a
Subsidiary of the Company; provided, however, that such Person's primary
business is a Related Business; (iii) any Investment in Temporary Cash
Investments; (iv) receivables owing to the Company or any of its Subsidiaries,
if created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; (v) payroll, travel and
similar advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses for accounting purposes and that are made
in the ordinary course of business; (vi) loans or advances to employees made in
the ordinary course of business of the Company or such Subsidiary; (vii) stock,
obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Company or any of its Subsidiaries
or in satisfaction of judgments or claims; (viii) Investments the payment for
which consists exclusively of equity securities (exclusive of Disqualified
Stock) of the Company; (ix) loans or advances to employees and directors to
purchase equity securities of the Company; provided that the aggregate amount of
such loans and advances shall not exceed $5.0 million at any time outstanding;
(x) any Investment in another Person to the extent such Investment is received
by the Company or any Subsidiary as consideration for Asset Disposition effected
in compliance with the covenant under "Limitations on Sales of Assets"; (xi)
prepayment and other credits to suppliers made in the ordinary course of
business consistent with the past practices of the Company and its Subsidiaries;
(xii) Investments in connection with pledges, deposits, payments or performance
bonds made or given in the ordinary course of business in connection with or to
secure statutory, regulatory or similar obligations, including obligations under
health, safety or environmental obligations; and (xiii) any Investment in
another Person not to exceed in the aggregate $5.0 million at any one time
outstanding (measured as of the date made and without giving effect to
subsequent changes in value).

"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision hereof or any other entity.

"Preferred Stock," as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the

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distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such corporation, over shares of Capital Stock of any other class
of such corporation.

"principal" of a Note means the principal of the Note plus the premium, if
any, payable on the note which is due or overdue or is to become due at the
relevant time.

"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any defeasance
or discharge mechanism) (collectively, "refinances," and "refinanced" shall have
a correlative meaning) any Indebtedness existing on the date of the Indenture or
Incurred in compliance with the Indenture (including Indebtedness of the Company
that refinances Indebtedness of any Subsidiary and Indebtedness of any
Subsidiary that refinances Indebtedness of another Subsidiary) including
Indebtedness that refinances Refinancing Indebtedness, provided, however, that
(i) the Refinancing Indebtedness has a Stated Maturity no earlier than the
Stated Maturity of the Indebtedness being refinanced, (ii) the Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being refinanced and (iii) such Refinancing Indebtedness is Incurred in an
aggregate principal amount (or if issued with original issue discount, an
aggregate issue price) that is equal to or less than the sum of the aggregate
principal amount (or if issued with original issue discount, the aggregate
accreted value) then outstanding of the Indebtedness being refinanced (plus the
amount of any premium required to be paid in connection therewith and plus
reasonable fees and expenses in connection therewith); provided further that
Refinancing Indebtedness shall not include Indebtedness of a Subsidiary which
refinances Indebtedness of the Company.

"Related Business" means the food business and such other business
activities which are incidental or related thereto.

"Representative" means any trustee, agent or representative (if any) of an
issue of Senior Indebtedness.

"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Subsidiary transfers such
property to a Person and the Company or a Subsidiary leases it from such Person.

"SEC" or "Commission" means the Securities and Exchange Commission.

"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.

"Securities Act" means the Securities Act of 1933, as amended.

"Senior Credit Agreement" means the Credit Agreement dated as of July 1,
1998, among the Company, the lenders parties thereto, The Chase Manhattan Bank,
as administrative agent, Chase Securities Inc., as arranging agent, National
Westminster Bank PLC as syndication agent and Swiss Bank Corporation as
documentation agent.

"Senior Credit Documents" means the collective reference to the Senior
Credit Agreement, the notes issued pursuant thereto and the Subsidiary Guaranty,
the Security Agreement, the Pledge Agreement, the Collateral Account Agreement
and the Patent and Trademark Security Agreement (each as defined in the Senior
Credit Agreement) and each of the mortgages and other security agreements,
guarantees and other instruments and documents executed and delivered pursuant
to any of the foregoing or the Senior Credit Agreement, in each case as amended,
modified, renewed, refunded, replaced or refinanced from time to time, including
any agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amounts of available borrowing
thereunder provided that such increase in borrowing is permitted by the covenant
described under the caption "--Limitation on Indebtedness" or adding
Subsidiaries of the Company as additional borrowers or guarantors thereunder)
all or any portion of the Indebtedness under such agreement or any successor or
replacement agreement whether by the same or any other agent, lender or group of
lenders.

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"Senior Subordinated Indebtedness" means the Notes, the Existing Notes and
any other Indebtedness of the Company that ranks pari passu with the Notes in
right of payment and is not subordinated by its terms in right of payment to any
Indebtedness or other obligation of the Company which is not Senior
Indebtedness.

"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.

"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision.

"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the Notes pursuant to a written agreement.

"Subsequent Equity Offering" means any public or private sales of equity
securities (excluding Disqualified Stock) of the Company after the Issue Date.

"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person, (ii) such Person and one
or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such
Person. Unless otherwise specified herein, each reference to a Subsidiary shall
refer to a Subsidiary of the Company.

"Temporary Cash Investments" means any of the following: (i) any Investment
in direct obligations of the United States of America or any agency thereof or
obligations Guaranteed by the United States of America or any agency thereof,
(ii) Investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America having capital, surplus and undivided profits
aggregating in excess of $250.0 million (or the foreign currency equivalent
thereof) and whose long-term debt, or whose parent holding company's long-term
debt, is rated "A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule 436
under the Securities Act), (iii) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clause (i)
above entered into with a bank meeting the qualifications described in clause
(ii) above, (iv) Investments in commercial paper, maturing not more than 180
days after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any investment therein is made
of "P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or
higher) according to Standard and Poor's Ratings Group.

"Trade Payables" means, with respect to any Person, any accounts payable or
any indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by such Person arising in the ordinary course of business in
connection with the acquisition of goods or services.

"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.

"Voting Stock" of a Person means all classes of Capital Stock of such Person
then outstanding and normally entitled to vote in the election of directors or
managers.

"Wholly-Owned Subsidiary" means a Subsidiary of the Company, all of the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company or another Wholly-Owned Subsidiary.

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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS

In the opinion of White & Case LLP, special tax counsel to the Company, the
following is a description of the material U.S. federal income tax consequences
relating to the exchange of Old Notes for New Notes. This discussion is based
upon the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the Treasury Regulations promulgated thereunder and judicial and
administrative interpretations thereof, all as in effect and available as of the
date hereof and all of which are subject to change (possibly on a retroactive
basis) or different interpretation. The opinion of White & Case LLP, is not
binding on the Internal Revenue Service (the "Service") and there can be no
assurance that the Service will not challenge one or more of the tax
consequences described herein, and the Company has not obtained, nor does it
intend to obtain, a ruling from the Service with respect to the U.S. federal
income tax consequences of the Offering. This discussion does not purport to
address all aspects of U.S. federal income taxation that may be relevant to
particular holders in light of their personal circumstances, the U.S. federal
income tax consequences to certain types of holders subject to special treatment
under the Code (for example, life insurance companies, tax exempt organizations,
financial institutions, dealers or traders in securities or currencies, holders
subject to the alternative minimum tax, holders holding (or that will hold)
Notes as a part of a position in a "straddle" or as part of a "hedging,"
"conversion" or "integrated" transaction for U.S. federal income tax purposes,
or holders with a "functional currency" other than the U.S. dollar) or the
effect of any applicable U.S. federal estate and gift tax laws or state, local
or foreign tax laws. Moreover, this description addresses only the U.S. federal
income tax considerations of an initial purchaser that purchased Old Notes for
their original issue price and holds such Old Notes or capital assets and will
hold the New Notes as capital assets. INVESTORS ARE URGED TO CONSULT THEIR OWN
TAX ADVISOR TO DETERMINE THEIR PARTICULAR TAX CONSEQUENCES OF THE EXCHANGE OFFER
UNDER U.S. FEDERAL AND APPLICABLE STATE, LOCAL AND OTHER TAX LAWS.

For purposes of this summary, a "U.S. Holder" means a beneficial owner of
Notes that is for U.S. federal income tax purposes (i) a citizen or resident of
the United States, (ii) a corporation or partnership created or organized in or
under the laws of the United States or any State thereof (including the District
of Columbia), (iii) an estate the income of which is subject to U.S. federal
income taxation regardless of its source, (iv) a trust if (A) a court within the
United States is able to exercise primary supervision over the administration of
the trust and (B) one or more United States persons have the authority to
control all substantial decisions of the trust or (v) a person that otherwise is
subject to U.S. federal income tax on a net income basis with respect to the
Notes.

EXCHANGE OFFER

The exchange of Old Notes for New Notes pursuant to the Exchange Offer will
not constitute a taxable exchange for U.S. federal income tax purposes. A holder
will not recognize gain or loss upon the receipt of New Notes pursuant to the
Exchange Offer and a U.S. Holder will be required to include interest on the New
Notes in gross income in the manner and to the extent interest income was
includible under the Old Notes. A holder's holding period of the New Notes will
include the holding period of the Old Notes exchanged therefor, and such
holder's adjusted basis of the New Notes will be the same as the basis of the
Old Notes exchanged therefor immediately before the exchange.

THE FOREGOING DESCRIPTION IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY.
ACCORDINGLY, EACH HOLDER SHOULD CONSULT WITH ITS OWN TAX ADVISORS CONCERNING THE
TAX CONSEQUENCES OF THE EXCHANGE OFFER WITH RESPECT TO THEIR PARTICULAR
SITUATIONS, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN
INCOME AND OTHER TAX LAWS.

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OLD NOTES EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

The Company and the Initial Purchasers entered into the Exchange and
Registration Rights Agreement on July 1, 1998. Pursuant to the Exchange and
Registration Rights Agreement, the Company agreed to (i) file with the
Commission on or prior to 45 days after the date of issuance of the Notes (the
"Issue Date") a registration statement on Form S-1 or Form S-4, if the use of
such form is then available (the "Exchange Offer Registration Statement")
relating to a registered exchange offer (the "Exchange Offer") for the Notes
under the Securities Act and (ii) use its reasonable best efforts to cause the
Exchange Offer Registration Statement to be declared effective under the
Securities Act within 135 days after the Issue Date. As soon as practicable
after the effectiveness of the Exchange Offer Registration Statement, the
Company will offer to the holders of Transfer Restricted Securities (as defined
below) who are not prohibited by any law or policy of the Commission from
participating in the Exchange Offer the opportunity to exchange their Transfer
Restricted Securities for an issue of a second series of notes (the "New Notes")
that are identical in all material respects to the Notes (except that the
Exchange Notes will not contain terms with respect to transfer restrictions) and
that would be registered under the Securities Act. The Company will keep the
Exchange Offer open for not less than 30 days (or longer, if required by
applicable law) after the date on which notice of the Exchange Offer is mailed
to the holders of the Notes.

If (i) because of any change in law or applicable interpretations thereof by
the staff of the Commission, the Company is not permitted to effect the Exchange
Offer as contemplated hereby, (ii) any Securities validly tendered pursuant to
the Exchange Offer are not exchanged for Exchange Securities within 165 days
after the Issue Date, (iii) any Initial Purchaser so requests with respect to
Old Notes not eligible to be exchanged for New Notes in the Exchange Offer, (iv)
any applicable law or interpretations do not permit any holder of Notes to
participate in the Exchange Offer, (v) any holder of Old Notes that participates
in the Exchange Offer does not receive freely transferable New Notes in exchange
for tendered Old Notes, or (vi) the Company so elects, then the Company will
file with the Commission a shelf registration statement (the "Shelf Registration
Statement") to cover resales of Transfer Restricted Securities by such holders
who satisfy certain conditions relating to the provision of information in
connection with the Shelf Registration Statement. For purposes of the foregoing,
"Transfer Restricted Securities" means each Old Note until (i) the date on which
such Note has been exchanged for a freely transferable Exchange Note in the
Exchange Offer; (ii) the date on which such Note has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iii) the date on which such Note is distributed to
the public pursuant to Rule 144 under the Securities Act or is salable pursuant
to Rule 144(k) under the Securities Act.

The Company will use its reasonable best efforts to have the Exchange Offer
Registration Statement or, if applicable, the Shelf Registration Statement
(each, a "Registration Statement") declared effective by the Commission as
promptly as practicable after the filing thereof. Unless the Exchange Offer
would not be permitted by a policy of the Commission, the Company will commence
the Exchange Offer and will use its reasonable best efforts to consummate the
Exchange Offer as promptly as practicable, but in any event prior to 165 days
after the Issue Date. If applicable, the Company will use its reasonable best
efforts to keep the Shelf Registration Statement effective for a period of two
years after the Issue Date.

If (i) the applicable Registration Statement is not filed with the
Commission on or prior to 45 days after the Issue Date; (ii) the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
is not declared effective within 135 days after the Issue Date; (iii) the
Exchange Offer is not consummated on or prior to 165 days after the Issue Date
or (iv) the Shelf Registration Statement is filed and declared effective within
135 days after the Issue Date but shall thereafter cease to be effective (at any
time that the Company is obligated to maintain the effectiveness thereof)
without being succeeded within 45 days by an additional Registration Statement
filed and declared effective (each such event referred to in clauses (i) through
(iv), a "Registration Default"), the Company will be obligated to pay liquidated
damages to each holder of Transfer Restricted Securities, during the period of
one or more such Registration Defaults, in an amount equal to $0.192 per week
per $1,000 principal amount of the Notes

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constituting Transfer Restricted Securities held by such holder until the
applicable Registration Statement is filed, the Exchanged Offer Registration
Statement is declared effective and the Exchange Offer is consummated or the
Shelf Registration Statement is declared effective or again becomes effective,
as the case may be. All accrued liquidated damages shall be paid to holders in
the same manner as interest payments on the Notes on semi-annual payment dates
which correspond to interest payment dates for the Notes. Following the cure of
all Registration Defaults, the accrual of liquidated damages will cease.

The Exchange and Registration Rights Agreement also provides that the
Company (i) shall make available for a period of 180 days after the consummation
of the Exchange Offer a prospectus meeting the requirements of the Securities
Act to any broker-dealer for use in connection with any resale of any such New
Notes and (ii) shall pay all expenses incident to the Exchange Offer (including
the expense of one counsel to the holders of the Notes) and will indemnify
certain holders of the Notes (including any broker-dealer) against certain
liabilities, including liabilities under the Securities Act. A broker-dealer
which delivers such a prospectus to purchasers in connection with such resales
will be subject to certain of the civil liability provisions under the
Securities Act and will be bound by the provisions of the Exchange and
Registration Rights Agreement (including certain indemnification rights and
obligations).

Each holder of Old Notes who wishes to exchange such Notes for New Notes in
the Exchange Offer will be required to make certain representations, including
representations that (i) any New Notes to be received by it will be acquired in
the ordinary course of its business; (ii) it has no arrangement or understanding
with any person to participate in the distribution of the New Notes and (iii) it
is not an "affiliate" (as defined in Rule 405 under the Securities Act) of the
Company, or if it is an affiliate, that it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.

If the holder is not a broker-dealer, it will be required to represent that
it is not engaged in, and does not intend to engage in, the distribution of the
New Notes. If the holder is a broker-dealer that will receive New Notes for its
own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities (an "Exchanging Dealer"),
it will be required to acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes.

Holders of the Old Notes will be required to make certain representations to
the Company (as described above) in order to participate in the Exchange Offer
and will be required to deliver information to be used in connection with the
Shelf Registration Statement in order to have their Notes included in the Shelf
Registration Statement and benefit from the provisions regarding liquidated
damages set forth in the preceding paragraphs. A holder who sells Old Notes
pursuant to the Shelf Registration Statement generally will be required to be
named as a selling securityholder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connect with such sales and will be bound
by the provisions of the Exchange and Registration Rights Agreement which are
applicable to such a holder (including certain indemnification obligations).

For so long as the Notes are outstanding, the Company will continue to
provide to holders of the Notes and to prospective purchasers of the Notes the
information required by Rule 144A(d)(4) under the Securities Act.

The foregoing description of the Exchange and Registration Rights Agreement
is a summary only, does not purport to be complete and is qualified in its
entirety by reference to all provisions of the Exchange and Registration Rights
Agreement which is filed as an exhibit to the Registration Statement of which
this Prospectus is a part.

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BOOK-ENTRY; DELIVERY AND FORM

CERTAIN BOOK-ENTRY PROCEDURES FOR THE GLOBAL NOTE

Except as set forth below, the New Notes will be represented by one
permanent global registered note in global form, without interest coupons (the
"Global Note"). The Global Note will be deposited with, or on behalf of, The
Depository Trust Company ("DTC") and registered in the name of Cede & Co., as
nominee of DTC, or will remain in the custody of the Trustee pursuant to the
FAST Balance Certificate Agreement between DTC and the Trustee.

The descriptions of the operations and procedures of DTC, Euroclear and
Cedel set forth below are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to change by them from time to time. Neither
the Company nor the Initial Purchasers takes any responsibility for these
operations or procedures, and investors are urged to contact the relevant system
or its participants directly to discuss these matters.

DTC has advised the Company that it is (i) a limited purpose trust company
organized under the laws of the State of New York, (ii) a "banking organization"
within the meaning of the New York Banking Law, (iii) a member of the Federal
Reserve System, (iv) a "clearing corporation" within the meaning of the Uniform
Commercial Code, as amended, and (v) a "clearing agency" registered pursuant to
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants (collectively, the "Participants") and facilitates the clearance
and settlement of securities transactions between Participants through
electronic book-entry changes to the accounts of its Participants, thereby
eliminating the need for physical transfer and delivery of certificates. DTC's
Participants include securities brokers and dealers (including the Initial
Purchasers), banks and trust companies, clearing corporations and certain other
organizations. Indirect access to DTC's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants") that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly. Investors who are not
Participants may beneficially own securities held by or on behalf of DTC only
through Participants or Indirect Participants.

The Company expects that pursuant to procedures established by DTC (i) upon
deposit of the Global Note, DTC will credit the accounts of Participants
designated by the Initial Purchasers with an interest in the Global Note and
(ii) ownership of the Notes will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by DTC (with respect
to the interests of Participants) and the records of Participants and the
Indirect Participants (with respect to the interests of persons other than
Participants).

The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Accordingly, the ability to transfer interests in the Notes represented by the
Global Note to such persons may be limited. In addition, because DTC can act
only on behalf of its Participants, who in turn act on behalf of persons who
hold interests through Participants, the ability of a person having an interest
in Notes represented by the Global Note to pledge or transfer such interest to
persons or entities that do not participate in DTC's system, or to otherwise
take actions in respect of such interest, may be affected by the lack of a
physical definitive security in respect of such interest.

So long as DTC or its nominee is the registered owner of the Global Note,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the Notes represented by the Global Note for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in the
Global Note will not be entitled to have Notes represented by the Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of Certificated Notes, and will not be considered the owners or holders
thereof under the Indenture for any purpose, including with respect to the
giving of any direction, instruction or approval to the Trustee thereunder.
Accordingly, each holder owning a beneficial interest in the Global Note must
rely on the procedures of DTC and, if such holder is not a Participant or an
Indirect Participant, on the procedures of the Participant through which such
holder owns

125
<PAGE>
its interest, to exercise any rights of a holder of Notes under the Indenture or
the Global Note. The Company understands that under existing industry practice,
in the event that the Company requests any action of holders of Notes, or a
holder that is an owner of a beneficial interest in the Global Note desires to
take any action that DTC, as the holder of the Global Note, is entitled to take,
DTC would authorize the Participants to take such action and the Participants
would authorize holders owning through such Participants to take such action or
would otherwise act upon the instruction of such holders. Neither the Company
nor the Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of Notes by DTC, or for
maintaining, supervising or reviewing any records of DTC relating to such Notes.

Payments with respect to the principal of, and premium, if any, and interest
on, any Notes represented by the Global Note registered in the name of DTC or
its nominee on the applicable record date will be payable by the Trustee to or
at the direction of DTC or its nominee in its capacity as the registered holder
of the Global Note representing such Notes under the Indenture. Under the terms
of the Indenture, the Company and the Trustee may treat the persons in whose
names the Notes, including the Global Note, are registered as the owners thereof
for the purpose of receiving payment thereon and for any and all other purposes
whatsoever. Accordingly, neither the Company nor the Trustee has or will have
any responsibility or liability for the payment of such amounts to owners of
beneficial interests in a Global Note (including principal, premium, if any, and
interest). Payments by the Participants and the Indirect Participants to the
owners of beneficial interests in a Global Note will be governed by standing
instructions and customary industry practice and will be the responsibility of
the Participants or the Indirect Participants and DTC.

Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Cedel will be effected in the ordinary way in
accordance with their respective rules and operating procedures.

Subject to compliance with the transfer restrictions applicable to the
Notes, cross-market transfers between the Participants in DTC, on the one hand,
and Euroclear or Cedel participants, on the other hand, will be effected through
DTC in accordance with DTC's rules on behalf of Euroclear or Cedel, as the case
may be, by its respective depositary; however, such cross-market transactions
will require delivery of instructions to Euroclear or Cedel, as the case may be,
by the counterparty in such system in accordance with the rules and procedures
and within the established deadlines (Brussels time) of such system. Euroclear
or Cedel, as the case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its respective depositary to take action
to effect final settlement on its behalf by delivering or receiving interests in
the relevant Global Notes in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC.
Euroclear participants and Cedel participants may not deliver instructions
directly to the depositaries for Euroclear or Cedel.

Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in the Global Note from a Participant
in DTC will be credited, and any such crediting will be reported to the relevant
Euroclear or Cedel participant, during the securities settlement processing day
(which must be a business day for Euroclear and Cedel) immediately following the
settlement date of DTC. Cash received in Euroclear or Cedel as a result of sales
of interest in the Global Note by or through a Euroclear or Cedel participant to
a Participant in DTC will be received with value on the settlement date of DTC
but will be available in the relevant Euroclear or Cedel cash account only as of
the business day for Euroclear or Cedel following DTC's settlement date.

Although DTC, Euroclear and Cedel have agreed to the foregoing procedures to
facilitate transfers of interests in the Global Note among participants in DTC,
Euroclear and Cedel, they are under no obligation to perform or to continue to
perform such procedures, and such procedures may be discontinued at any time.
Neither the Company nor the Trustee will have any responsibility for the
performance by DTC, Euroclear or Cedel or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.

126
<PAGE>
CERTIFICATED NOTES

If (i) the Company notifies the Trustee in writing that DTC is no longer
willing or able to act as a depositary or DTC ceases to be registered as a
clearing agency under the Exchange Act and a successor depositary is not
appointed within 90 days of such notice or cessation, (ii) the Company, at its
option, notifies the Trustee in writing that it elects to cause the issuance of
Notes in definitive form under the Indenture or (iii) upon the occurrence of
certain other events as provided in the Indenture, then, upon surrender by DTC
of the Global Note, Certificated Notes will be issued to each person that DTC
identifies as the beneficial owner of the Notes represented by the Global Note.
Upon any such issuance, the Trustee is required to register such Certificated
Notes in the name of such person or persons (or the nominee of any thereof) and
cause the same to be delivered thereto.

Neither the Company nor the Trustee shall be liable for any delay by DTC or
any Participant or Indirect Participant in identifying the beneficial owners of
the related Notes and each such person may conclusively rely on, and shall be
protected in relying on, instructions from DTC for all purposes (including with
respect to the registration and delivery, and the respective principal amounts,
of the Notes to be issued).

PLAN OF DISTRIBUTION

Based on interpretations by the Commission set forth in no-action letters
issued to third parties, the Company believes that New Notes issued pursuant to
the Exchange Offer in exchange for the Old Notes may be offered for resale,
resold and otherwise transferred by holders thereof (other than any holder which
is (i) an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act, (ii) a broker-dealer who acquired Notes directly from the
Company or (iii) broker-dealers who acquired Notes as a result of market-making
or other trading activities) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that such New
Notes are acquired in the ordinary course of such holders' business, and such
holders are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a distribution
of such New Notes; provided that broker-dealers ("Participating Broker-Dealers")
receiving New Notes in the Exchange Offer will be subject to a prospectus
delivery requirement with respect to resales of such New Notes. To date, the
Commission has taken the position that Participating Broker-Dealers may fulfill
their prospectus delivery requirements with respect to transactions involving an
exchange of securities such as the exchange pursuant to the Exchange Offer
(other than a resale of an unsold allotment from the sale of the Old Notes to
the Initial Purchasers) with the Prospectus contained in the Exchange Offer
Registration Statement. Pursuant to the Exchange and Registration Rights
Agreement, the Company has agreed to permit Participating Broker-Dealers to use
this Prospectus in connection with the resale of such New Notes. The Company has
agreed that, for a period of 180 days after the Expiration Date, it will make
this Prospectus, and any amendment or supplement to this Prospectus, available
to any broker-dealer that requests such documents in the Letter of Transmittal.

Each holder of the Old Notes who wishes to exchange its Old Notes for New
Notes in the Exchange Offer will be required to make certain representations to
the Company as set forth in "The Exchange Offer--Purpose and Effect of the
Exchange Offer". In addition, each holder who is a broker-dealer and who
receives New Notes for its own account in exchange for Old Notes that were
acquired by it as a result of market-making activities or other trading
activities, will be required to acknowledge that it will deliver a prospectus in
connection with any resale by it of such New Notes.

The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any

127
<PAGE>
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer and/or the purchasers of any such New Notes. Any
broker-dealer that resells New Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.

The Company has agreed to pay all expenses incidental to the Exchange Offer
other than commissions and concessions of any brokers or dealers and will
indemnify holders of the Old Notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act, as set
forth in the Exchange and Registration Rights Agreement.

LEGAL MATTERS

The validity of the New Notes offered hereby will be passed upon for the
Company by White & Case LLP, New York, New York.

EXPERTS

The financial statements of the Company as of December 27, 1997 and December
31, 1996 and for the year ended December 27, 1997 included in this Prospectus
have been so included in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

The financial statements of the MRS. BUTTERWORTH'S Business as of December
31, 1996 and for each of the two years in the period ended December 31, 1996
included in this Prospectus have been so included in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.

The financial statements of VDK as of June 30, 1997 and June 29, 1996 and
for the period September 19, 1995 through June 29, 1996 and for the year ended
June 30, 1997 included in this Prospectus have been so included in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

The statements of equipment and goodwill as of June 30, 1997 and 1996 and
the statements of direct revenues, direct expenses, and allocated selling
expenses of the DUNCAN HINES Business of The Procter & Gamble Company for each
of the three years in the period ended June 30, 1997, included in this
Prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report appearing herein, and have been so included in reliance
on the report of such firm given on the authority of said firm as experts in
accounting and auditing.

The statements of assets to be acquired of the LOG CABIN Business, a
component of Kraft Foods, Inc. as of December 28, 1996 and December 30, 1995 and
the statements of operations for the years ended December 31, 1996, December 31,
1995 and December 31, 1994, included in this Prospectus have been so included in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of said firm as experts in auditing and accounting.

The combined statements of income of Van de Kamp's and Frozen Dessert
Product Lines of Pet Incorporated for the operating period July 1, 1995 through
September 18, 1995 and the year ended June 30, 1995, included in this Prospectus
have been so included in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

128
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
AURORA FOODS HOLDINGS INC.
Report of Independent Accountants...................................................................... F-3
Consolidated Balance Sheets as of December 31, 1996, December 27, 1997 and March 28, 1998
(unaudited)........................................................................................... F-4
Consolidated Statements of Operations for the year ended December 27, 1997 and for the three months
ended March 29, 1997 and March 28, 1998 (unaudited)................................................... F-5
Consolidated Statements of Changes in Stockholder's Equity for the year ended December 27, 1997 and for
the three months ended March 28, 1998 (unaudited)..................................................... F-6
Consolidated Statements of Cash Flows for the year ended December 27, 1997 and for the three months
ended March 29, 1997 and March 28, 1998 (unaudited)................................................... F-7
Notes to Consolidated Financial Statements............................................................. F-8

PREDECESSOR BUSINESS TO AURORA FOODS HOLDINGS INC.

MRS. BUTTERWORTH'S BUSINESS, A COMPONENT OF CONOPCO, INC.
Report of Independent Accountants...................................................................... F-23
Statement of Assets to be Acquired as of December 31, 1996............................................. F-24
Statements of Operations for the years ended December 31, 1995 and 1996................................ F-25
Notes of Financial Statements.......................................................................... F-26

ACQUIRED BUSINESSES

VDK HOLDINGS, INC.
Report of Independent Accountants...................................................................... F-30
Consolidated Balance Sheet as of June 29, 1996, June 30, 1997 and March 31, 1998 (unaudited)........... F-31
Consolidated Statements of Operations for the operating period September 19, 1995 through June 29,
1996, for the year ended June 30, 1997 and for the nine months ended March 31, 1997 and 1998
(unaudited)........................................................................................... F-32
Consolidated Statements of Changes in Stockholder's Equity for the period September 19,1995 through
June 29, 1996, for the year ended June 30, 1997 and for the nine months ended March 31, 1998
(unaudited)........................................................................................... F-33
Consolidated Statements of Cash Flows for the operating period September 19, 1995 through June 29,
1996, for the year ended June 30, 1997 and for the nine months ended March 31, 1997 and 1998
(unaudited)........................................................................................... F-34
Notes to Consolidated Financial Statements............................................................. F-35

DUNCAN HINES BUSINESS OF THE PROCTER & GAMBLE COMPANY
Independent Auditors' Report........................................................................... F-49
Statements of Equipment and Goodwill as of June 30, 1996 and 1997, and December 31, 1997 (unaudited)... F-50
Statements of Direct Revenues and Direct Expenses and Allocated Selling Expense for the years ended
June 30, 1997, 1996, and 1995 and for the six months ended December 31, 1997 and 1996 (unaudited)..... F-51
Notes to Financial Statements.......................................................................... F-52
</TABLE>

F-1
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
LOG CABIN SYRUP BUSINESS, A COMPONENT OF KRAFT FOODS, INC.
Report of Independent Accountants...................................................................... F-55
Statements of Assets to be Acquired as of December 28, 1996 and December 30, 1995...................... F-56
Statements of Operations for the years ended December 28, 1996, December 30, 1995 and December 31,
1994.................................................................................................. F-57
Notes to Financial Statements.......................................................................... F-58
Statement of Operations for the six months ended June 28, 1997 (unaudited) and June 29, 1996
(unaudited)........................................................................................... F-63

PREDECESSOR BUSINESS TO VDK HOLDINGS, INC.

VAN DE KAMP'S AND FROZEN DESSERT PRODUCT LINES OF PET INCORPORATED
Report of Independent Accountants...................................................................... F-64
Combined Statements of Income for the operating period July 1, 1995 through September 18, 1995 and for
the year ended June 30, 1995.......................................................................... F-65
Notes to Combined Statements of Income................................................................. F-66
</TABLE>

F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
of Aurora Foods Holdings Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statement of operations, of changes in stockholder's equity and of
cash flows present fairly, in all material respects, the financial position of
Aurora Foods Holdings Inc. and its subsidiary (the Company) at December 27, 1997
and December 31, 1996 (commencement of operations), and the results of their
operations and their cash flows for the year ended December 27, 1997 in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

Price Waterhouse LLP

San Francisco, California
March 18, 1998

F-3
<PAGE>
AURORA FOODS HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMENCEMENT
OF OPERATIONS
DECEMBER 27, DECEMBER 31,
1997 1996
MARCH 28, ------------- ---------------
1998
-----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS

Current assets:
Cash and cash equivalents....................... $ 23,330 $ 4,717 $ 8,666
Accounts receivable (net of $234 and $140
allowance, respectively)...................... 12,271 12,362 --
Accounts receivable--other (Note 4)............. 10,576 1,474 480
Inventories (Note 5)............................ 24,851 6,902 1,182
Prepaid expenses and other assets............... 4,973 1,955 9
Current deferred tax assets (Note 11)........... 8,537 2,966 --
----------- ------------- ---------------
Total current assets.......................... 84,538 30,376 10,337

Property, plant and equipment, net (Note 6)....... 45,031 14,075 5,206
Goodwill and other intangible assets, net (Note
7).............................................. 717,956 315,241 111,358
Other assets...................................... 22,026 13,047 3,995
----------- ------------- ---------------
Total assets.................................. $ 869,551 $ 372,739 $ 130,896
----------- ------------- ---------------
----------- ------------- ---------------

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
Current portion of long term debt (Note 9)...... $ 9,000 $ 4,375 $ --
Accounts payable................................ 26,267 6,443 --
Accrued liabilities (Note 8).................... 29,107 17,409 2,736
----------- ------------- ---------------
Total current liabilities..................... 64,374 28,227 2,736

Non-current deferred tax liabilities (Note 11).... 7,771 3,745 --
Senior secured revolving debt facility (Note 9)... -- 37,500 30,000
Senior secured term debt (Note 9)................. 441,000 35,625 15,000
Senior subordinated notes (Note 9)................ 202,377 202,419 50,000
----------- ------------- ---------------
Total liabilities............................. 715,522 307,516 97,736
----------- ------------- ---------------
Stockholder's equity:
Common stock, $0.01 par value; 3,000 shares
authorized; 1,000 shares issued and
outstanding................................... -- -- --
Paid-in capital................................. 218,191 64,203 33,270
Promissory notes (Note 14)...................... (565) (215) (110)
(Accumulated deficit) retained earnings......... (63,597) 1,235 --
----------- ------------- ---------------
Total stockholder's equity.................... 154,029 65,223 33,160
----------- ------------- ---------------

Commitments and contingencies (Notes 12 and 16)

Total liabilities and stockholder's equity.... $ 869,551 $ 372,739 $ 130,896
----------- ------------- ---------------
----------- ------------- ---------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>
AURORA FOODS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------ YEAR ENDED
MARCH 28, MARCH 29, DECEMBER 27,
1998 1997 1997
----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Net sales.............................................. $ 89,385 $ 21,253 $ 143,020
Cost of goods sold..................................... 37,734 7,167 45,729
----------- ----------- -------------

Gross profit......................................... 51,651 14,086 97,291
----------- ----------- -------------

Brokerage, distribution and marketing expenses:
Brokerage and distribution........................... 9,355 2,279 17,096
Trade promotions..................................... 15,568 3,643 26,075
Consumer marketing................................... 7,997 1,331 15,142
----------- ----------- -------------
Total brokerage, distribution and marketing expenses... 32,920 7,253 58,313

Amortization of goodwill and other intangibles......... 4,597 828 5,938
Selling, general and administrative expenses........... 2,346 1,053 5,229
Incentive plan expense (Note 15)....................... 60,000 -- 2,300
Transition expenses (Note 10).......................... 1,926 126 2,113
----------- ----------- -------------
Total operating expenses............................... 101,789 9,260 73,893
----------- ----------- -------------

Operating (loss) income............................ (50,138) 4,826 23,398

Interest income........................................ (223) (32) (151)
Interest expense....................................... 12,837 2,654 18,393
Amortization of deferred financing expense............. 513 2,313 3,059
Other bank and financing expenses...................... 51 9 83
----------- ----------- -------------

(Loss) income before income taxes.................. (63,316) (118) 2,014
Income tax (benefit) expense (Note 11)................. (360) (47) 779
----------- ----------- -------------
Net (loss) income before extraordinary item........ (62,956) (71) 1,235
Extraordinary loss on early extinguishment of debt, net
of tax of $1,184..................................... 1,876 -- --
----------- ----------- -------------
Net (loss) income...................................... $ (64,832) $ (71) $ 1,235
----------- ----------- -------------
----------- ----------- -------------
Basic and diluted (loss) earnings per share before
extraordinary item................................... $ (63) $ -- $ 1
Extraordinary item per share........................... (2) -- --
----------- ----------- -------------
Basic and diluted (loss) earnings per share............ $ (65) $ -- $ 1
----------- ----------- -------------
----------- ----------- -------------
Weighted average number of shares outstanding.......... 1 1 1
----------- ----------- -------------
----------- ----------- -------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>
AURORA FOODS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

(IN THOUSANDS)

<TABLE>
<CAPTION>
RETAINED
COMMON EARNINGS
STOCK PAID-IN PROMISSORY (ACCUMULATED
SHARES CAPITAL NOTES DEFICIT) TOTAL
----------- ----------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996..... 1,000 $ 33,270 $ (110) $ -- $ 33,160
Capital contribution............. -- 28,633 (125) -- 28,508
Payments on officer promissory
notes (Note 14)................ -- -- 20 -- 20
Incentive plan expense
(Note 15)...................... -- 2,300 -- -- 2,300
Net income....................... -- -- -- 1,235 1,235
----- ----------- ------ ------------- ---------
Balance at December 27, 1997..... 1,000 64,203 (215) 1,235 65,223
Capital contribution
(unaudited).................... -- 93,988 (366) -- 93,622
Payments on officer promissory
notes (Note 14) (unaudited).... -- -- 16 -- 16
Incentive plan expense
(unaudited).................... -- 60,000 -- -- 60,000
Net loss (unaudited)............. -- -- -- (64,832) (64,832)
----- ----------- ------ ------------- ---------
Balance at March 28, 1998
(unaudited).................... 1,000 $ 218,191 $ (565) $ (63,597) $ 154,029
----- ----------- ------ ------------- ---------
----- ----------- ------ ------------- ---------
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>
AURORA FOODS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------ YEAR ENDED
MARCH 28, MARCH 29, DECEMBER 27,
1998 1997 1997
----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income.................................... $ (64,832) $ (71) $ 1,235
Early extinguishment of debt, net of tax............. 1,876 -- --
Adjustments to reconcile net (loss) income to cash
provided by (used in) operating activities:
Depreciation and amortization...................... 6,140 3,274 10,057
Deferred income taxes.............................. (360) (177) 779
Incentive plan expense (Note 15)................... 60,000 -- 2,300
Change in assets and liabilities, net of effects of
businesses acquired:
Decrease (increase) in accounts receivable....... 91 (5,510) (12,362)
Decrease (increase) in accounts
receivable--other................................ 898 (3,183) (994)
(Increase) decrease in inventories............... (17,949) 18 2,975
Increase in prepaid expenses and other assets.... (3,018) (9) (1,946)
Increase in accounts payable..................... 19,824 -- 6,443
Increase in accrued liabilities.................. 11,698 5,117 14,624
----------- ----------- -------------
Net cash provided by (used in) operating activities.... 14,368 (541) 23,111
----------- ----------- -------------
Cash flows from investing activities:
Additions to property, plant and equipment........... (1,511) (96) (2,411)
Asset dispositions................................... 330 -- --
Additions to other non-current assets................ (90) (49) (925)
Payment for acquisition of businesses (Note 3)....... (448,121) -- (225,930)
----------- ----------- -------------
Net cash used in investing activities.................. (449,392) (145) (229,266)
----------- ----------- -------------
Cash flows from financing activities:
Proceeds from senior secured revolving and term debt
(Note 9)............................................. 450,000 -- 90,000
Proceeds from senior subordinated notes (Note 9)..... -- 100,000 202,500
Repayment of borrowings.............................. (77,500) (95,000) (107,500)
Capital contributions, net of officer promissory
notes................................................ 93,638 -- 28,500
Debt issuance costs.................................. (12,501) (4,951) (11,294)
----------- ----------- -------------
Net cash provided by financing activities.............. 453,637 49 202,206
----------- ----------- -------------
Increase (decrease) in cash and cash equivalents....... 18,613 (637) (3,949)
Cash and cash equivalents, beginning of period......... 4,717 8,666 8,666
----------- ----------- -------------
Cash and cash equivalents, end of period............... $ 23,330 $ 8,029 $ 4,717
----------- ----------- -------------
----------- ----------- -------------
Supplemental Cash Flow Disclosure:
Cash paid for interest............................... $ 11,154 $ 1,211 $ 10,091
----------- ----------- -------------
----------- ----------- -------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-7
<PAGE>
AURORA FOODS HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS)

NOTE 1--THE COMPANY

ORGANIZATION

Aurora Foods Holdings Inc. ("Holdings" and together with its subsidiary the
"Company"), a Delaware corporation, is a privately held food company. Holdings
owns 100% of its direct subsidiary, Aurora Foods Inc. ("Foods"), also a Delaware
corporation. Holdings is wholly-owned by MBW Investors LLC ("MBW LLC"), a
Delaware limited liability company. The Company commenced operations on December
31, 1996, when it acquired the Mrs. Butterworth's syrup and pancake business
("MBW") (Note 3) from Conopco, Inc., a subsidiary of Unilever United States,
Inc. ("Conopco" or the "Predecessor"). On July 1, 1997, the Company acquired
substantially all the assets of the Log Cabin syrup business ("LC") from Kraft
Foods, Inc. ("Kraft") (Note 3). Foods holds all of the Company's operations and
debt. Holdings has no assets other than its investment in Foods. See Subsequent
Events (Note 17).

OPERATIONS

The Company produces and markets syrup and pancake mix products that are
sold across the United States. The products are manufactured under temporary
co-packing agreements with Conopco and Kraft and under long-term co-packing
agreements with third parties. The Company's manufacturing equipment has been or
will be installed at certain facilities of these third parties. The principal
trademarks under which the products are sold are Mrs.
Butterworth's-Registered Trademark- and Log Cabin-Registered Trademark-.

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements include the accounts of Holdings and
its subsidiary. All significant intercompany transactions and balances have been
eliminated. The policies utilized by the Company in the preparation of the
financial statements conform to generally accepted accounting principles and
require management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues and expenses and the disclosure of
contingent assets and liabilities. Actual amounts could differ from these
estimates and assumptions. The Company uses the accrual basis of accounting in
the preparation of its financial statements.

FISCAL YEAR

The Company's fiscal year ends on the last Saturday of December.
Accordingly, the results of operations reflect activity for the period from
December 31, 1996 (commencement of operations) through December 27, 1997. The
balance sheet as of December 31, 1996 reflects the acquisition of the business
from Conopco as of that date but prior to the commencement of operations.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid financial instruments with original
maturities of three months or less to be cash equivalents.

INVENTORIES

Inventories are stated at the lower of cost or market value. Cost is
determined using the first-in first-out (FIFO) method. Inventories include the
cost of contract manufacturers' raw materials, packaging, labor and
manufacturing overhead.

F-8
<PAGE>
AURORA FOODS HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost less accumulated
depreciation.Depreciation is computed using the straight-line method over the
estimated useful lives of the individual assets ranging from three to fifteen
years. Costs which improve an asset or extend its useful life are capitalized,
while repairs and maintenance costs are expensed as incurred.

GOODWILL AND OTHER INTANGIBLE ASSETS

IMPAIRMENT OF LONG-LIVED ASSETS

Upon commencement of operations, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 121 ("SFAS 121"), "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of". SFAS 121 requires the Company to review long-lived assets and certain
identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The assessment of impairment is based on the estimated undiscounted
future cash flows from operating activities compared with the carrying value of
the assets. If the undiscounted future cash flows of an asset are less than the
carrying value, a write-down would be recorded, measured by the amount of the
difference between the carrying value of the asset and the fair value of the
asset. Management believes that there has been no impairment at December 27,
1997.

OTHER ASSETS

Other assets consist of deferred loan acquisition costs, systems software,
and other miscellaneous assets. Deferred loan acquisition costs of the senior
subordinated notes and senior secured term debt are being amortized using the
interest method over the terms of the respective notes and debt. Aggregate
amortization of deferred loan acquisition costs and other assets charged against
income in the year ended December 27, 1997 was $3.1 million.

DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

For purposes of financial reporting, the Company has determined that the
fair value of financial instruments, other than the senior subordinated notes,
approximates book value at December 27, 1997.The fair market value of the senior
subordinated notes at December 27, 1997, based on quoted market prices, was
$210.5 million.

CONCENTRATION OF CREDIT RISK

The Company sells its products to supermarkets and other retail channels.
The Company performs ongoing credit evaluations of its customers and generally
does not require collateral. The Company maintains reserves for potential credit
losses and had no significant concentration of credit risk at December 27, 1997.

F-9
<PAGE>
AURORA FOODS HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES

The Company records income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". This method of accounting for income taxes uses an asset and liability
approach which requires the recognition of deferred tax liabilities and assets
for the expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities.

ADVERTISING

Costs related to advertising the Company's products are expensed as
incurred, or expensed ratably over the fiscal year in relation to revenues
depending on the nature of such costs. Advertising expense for the year ended
December 27, 1997 was $4.1 million.

UNAUDITED INTERIM INFORMATION

The interim financial data as of March 28, 1998, and for the three months
ended March 28, 1998 and March 29, 1997 is unaudited; however, in the opinion of
the Company, the interim data includes all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the financial
position and operating results for the interim periods.

NOTE 3--BUSINESS ACQUISITIONS

MRS. BUTTERWORTH'S

At the close of business on December 31, 1996, the Company acquired
substantially all the assets of Mrs. Butterworth's syrup and pancake business
from Conopco.The Company manufactures its products under co-packing agreements
with third parties.

The Company acquired the inventories, manufacturing equipment and intangible
assets of MBW for a purchase price of $114.1 million. The purchase agreement
contains customary representations, warranties and covenants by each of Conopco
and the Company. The acquisition was accounted for by using the purchase method
of accounting.

The acquisition was financed by (i) a net capital contribution from MBW LLC
of approximately $33.2 million, (ii) term loans of $15.0 million and revolving
loans of $30.0 million borrowed under a $60.0 million senior secured debt
facility, and (iii) loans of $50.0 million borrowed under a senior subordinated
debt facility.On February 10, 1997, the senior subordinated debt facility of
$50.0 million and the senior secured facilities of $15.0 million of term debt
and $30.0 million of revolving debt were repaid with proceeds from a $100.0
million senior subordinated note offering.

F-10
<PAGE>
AURORA FOODS HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 3--BUSINESS ACQUISITIONS (CONTINUED)
The cost to acquire MBW has been allocated to tangible and intangible assets
acquired as follows:

<TABLE>
<S> <C>
Cash paid to acquire assets....................................................... $ 114,132
Other acquisition costs........................................................... 3,663
---------
117,795
Costs assigned to tangible assets................................................. (6,138)
---------
Cost attributable to intangible assets............................................ $ 111,657
---------
---------
</TABLE>

LOG CABIN

On July 1, 1997, the Company acquired substantially all the assets of the LC
syrup business from Kraft.The Company manufactures the products under co-packing
agreements with Kraft and a third party.

The Company acquired the inventories, certain manufacturing equipment and
intangible assets of LC for a purchase price of $222.0 million.The purchase
agreement contains customary representations, warranties and covenants by each
of Kraft and the Company.The acquisition was accounted for by using the purchase
method of accounting.The allocation of purchase price has not been finalized;
however, any changes are not expected to be material.

The acquisition was financed by (i) a capital contribution from MBW LLC of
approximately $28.6 million, (ii) term loans of $40.0 million and revolving
loans of $47.0 million borrowed under a senior secured debt facility, and (iii)
proceeds of $102.5 million received in an additional senior subordinated note
offering.

The cost to acquire LC has been allocated to tangible and intangible assets
acquired, as follows:

<TABLE>
<S> <C>
Cash paid to acquire assets....................................................... $ 221,995
Other acquisition costs........................................................... 3,636
---------
225,631
Costs assigned to tangible assets................................................. (16,163)
---------
Cost attributable to intangible assets............................................ $ 209,468
---------
---------
</TABLE>

Had the acquisition of LC taken place on January 1, 1997, the unaudited pro
forma net sales and net income for the year ended December 27, 1997 would have
been $194.2 million and $7.0 million, respectively.

F-11
<PAGE>
AURORA FOODS HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 4--ACCOUNTS RECEIVABLE--OTHER

Accounts receivable--other consist of the following:

<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 31,
1997 1996
--------------- ---------------
<S> <C> <C>
Conopco........................................................ $ 111 $ 480
Kraft.......................................................... 1,057 --
Other.......................................................... 306 --
------ -----
$ 1,474 $ 480
------ -----
------ -----
</TABLE>

The balances due as of December 27, 1997 from Conopco and Kraft were
comprised of accounts receivable collected by them on behalf of the Company.The
balance due as of December 31, 1996 from Conopco was a purchase price settlement
adjustment owed to the Company.

NOTE 5--INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 31,
1997 1996
--------------- ---------------
<S> <C> <C>
Raw materials.................................................. $ 270 $ 523
Finished goods................................................. 6,632 659
------ ------
$ 6,902 $ 1,182
------ ------
------ ------
</TABLE>

NOTE 6--PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 31,
1997 1996
------------- ---------------
<S> <C> <C>
Machinery and equipment........................................ $ 14,357 $ 5,206
Furniture and fixtures......................................... 416 --
Computer equipment............................................. 313 --
------------- ------
15,086 5,206
Less accumulated depreciation.............................. (1,011) --
------------- ------
$ 14,075 $ 5,206
------------- ------
------------- ------
</TABLE>

F-12
<PAGE>
AURORA FOODS HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 7--GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 31,
1997 1996
------------- -------------
<S> <C> <C>
Goodwill....................................................... $ 216,485 $ 64,518
Trademarks..................................................... 99,600 44,500
Other intangibles.............................................. 5,040 2,340
------------- -------------
321,125 111,358
Less accumulated amortization.............................. (5,884) --
------------- -------------
$ 315,241 $ 111,358
------------- -------------
------------- -------------
</TABLE>

NOTE 8--ACCRUED LIABILITIES

Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 31,
1997 1996
------------- ---------------
<S> <C> <C>
Accrued interest............................................... $ 8,383 $ --
Accrued trade promotions and consumer marketing................ 5,092 --
Other.......................................................... 3,934 2,736
------------- ------
$ 17,409 $ 2,736
------------- ------
------------- ------
</TABLE>

F-13
<PAGE>
AURORA FOODS HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 9--LONG TERM DEBT

Long term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 31,
1997 1996
------------- -------------
<S> <C> <C>
SENIOR SECURED DEBT

Senior secured term debt; weighted average interest rate of
8.0% at December 27, 1997; principal due in quarterly
installments through December 31, 2003; floating interest
rate at the prime rate plus 1.25% or, alternatively, the one,
two, three or six month Eurodollar rate plus 2.25% payable
quarterly or at the termination of the Eurodollar contract
interest period.............................................. $ 40,000 $ --

Senior secured revolving debt facility; interest rate of 8.0%
at December 27, 1997; principal due December 31, 2003;
floating interest rate at prime plus 1.25% or, alternatively,
the one, two, three, or six month Eurodollar rate plus 2.25%
payable quarterly or at the termination of the Eurodollar
contract period.............................................. 37,500 --

Senior secured revolving debt; interest rate of 9.50% at
December 31, 1996; principal due in quarterly installments
through December 15, 2001; floating interest rate at the
prime rate plus 1.25% or, alternatively, the one, three, or
sixth month Eurodollar rate plus 2.50% payable quarterly or
at the termination of the Eurodollar contract interest
period....................................................... -- 30,000

Senior secured term debt; interest rate of 10.0% at December
31, 1996; principal due in quarterly installments through
December 15, 2002; floating interest rate at the prime rate
plus 1.75% or, alternatively, the one, three, or six month
Eurodollar rate plus 3.00% payable quarterly or at the
termination of the Eurodollar contract interest period....... -- 15,000

SENIOR SUBORDINATED NOTES

Senior subordinated notes issued February 10, 1997 at par value
of $100,000; coupon interest rate of 9.875% with interest
payable each August 15 and February 15; matures on February
15, 2007..................................................... 100,000 --

Senior subordinated notes issued July 1, 1997 at par value of
$100,000 plus premium of $2,500; net of unamortized premium
of $2,419 at December 27, 1997; coupon interest rate of
9.875% with interest payable each August 15 and February 15;
matures on February 15, 2007................................. 100,000 --

Senior subordinated note; interest rate of 12.75% at December
31, 1996; floating interest rate at the prime rate plus (i)
4.50% through June 29, 1997, (ii) 5.50% for the period June
30, 1997 through September 29, 1997, and (iii) 6.00% for the
period September 30, 1997 through maturity; matures on
December 31, 2006............................................ -- 50,000
------------- -------------

277,500 95,000
</TABLE>

F-14
<PAGE>
AURORA FOODS HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 9--LONG TERM DEBT (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 31,
1997 1996
------------- -------------
<S> <C> <C>
Add: unamortized premium on senior subordinated notes.......... 2,419 --

Less: current portion of long term debt........................ (4,375) --
------------- -------------

Long term debt................................................. $ 275,544 $ 95,000
------------- -------------
------------- -------------
</TABLE>

Annual principal payments for the next five years and thereafter consist of
the following:

<TABLE>
<S> <C>
1998.............................................................. $ 4,375
1999.............................................................. 4,875
2000.............................................................. 5,750
2001.............................................................. 6,750
2002.............................................................. 7,750
Thereafter........................................................ 248,000
---------
$ 277,500
---------
---------
</TABLE>

SENIOR SECURED DEBT

On December 31, 1996, the Company entered into a Credit Agreement (the
"Agreement") with several banks for $15.0 million of senior secured term debt
and a $45.0 million senior secured revolving debt facility. The proceeds from
the senior secured term debt, a draw of $30.0 million from the senior secured
revolving debt facility, the $50.0 million senior subordinated note and capital
contributed from MBW LLC were used to acquire MBW from Conopco, pay fees and
expenses and fund working capital.

The Company amended the Agreement, dated as of July 1, 1997, to provide for
borrowings of $40.0 million of senior secured term debt and a $60.0 million
senior secured revolving debt facility. Together with a $100.0 million senior
subordinated note offering and capital contributed from MBW LLC, the Company
consummated the LC acquisition, paid fees and expenses and provided for the
working capital requirements related to the acquisition.

The $60.0 million senior secured revolving debt facility is subject to
limitations based on letters of credit. At December 27, 1997, the Company had
unused borrowing availability of $22.5 million. The Agreement requires a
commitment fee of 0.5% per annum payable quarterly on the unused portions of the
revolving debt facility.

The Agreement includes restrictive covenants, which limit additional
borrowing, cash dividends, and capital expenditures while also requiring the
Company to maintain certain financial ratios. The Company was in compliance with
these covenants at December 27, 1997.

SENIOR SUBORDINATED NOTES

On February 10, 1997, the Company issued $100.0 million of senior
subordinated notes (the "Old Notes"). The proceeds from the Old Notes were
primarily used to retire the $45.0 million of senior secured

F-15
<PAGE>
AURORA FOODS HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 9--LONG TERM DEBT (CONTINUED)
debt and the $50.0 million senior subordinated note incurred to finance the MBW
acquisition. On July 1, 1997, the Company issued $100.0 million of senior
subordinated notes (the "New Notes"). The New Notes were issued at a premium in
the amount of $2.5 million. The unamortized balance of the premium on the New
Notes at December 27, 1997 was $2.4 million. The proceeds from the New Notes
were primarily used to fund the acquisition of LC. (Together, the Old Notes and
New Notes are the "Notes".)

The Company may redeem the Notes at any time after February 15, 2002, at the
redemption price together with accrued and unpaid interest. In addition, the
Company may redeem $35.0 million of the Notes at any time prior to February 15,
2000 subject to certain requirements, with the cash proceeds received from one
or more Equity Offerings (as defined), at a redemption price of 109.875%
together with accrued and unpaid interest. Upon a Change in Control (as
defined), the Company has the option at any time prior to February 15, 2002 to
redeem the Notes at a redemption price of 100% plus the Applicable Premium (as
defined), together with accrued and unpaid interest. If the Company does not
redeem the Notes or if the Change of Control occurs after February 15, 2002, the
Company is required to offer to repurchase the Notes at a price equal to 101%
together with accrued and unpaid interest.

The indenture includes restrictive covenants, which limit additional
borrowings, cash dividends, sale of assets, mergers and the sale of stock. The
Company was in compliance with these covenants at December 27, 1997.

NOTE 10--TRANSITION EXPENSES

Transition expenses consist of one-time costs incurred to establish the
Company's operations and integrate the acquired businesses, including relocation
expenses, recruiting fees, sales support and other unique transitional expenses.
Transition expenses for the year ended December 27, 1997 were approximately $2.1
million.

F-16
<PAGE>
AURORA FOODS HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 11--INCOME TAXES

The Company files a consolidated federal income tax return. State income tax
returns are filed by the Company and Foods on a separate company basis or on a
combined basis depending on the particular rules in each state.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 27,
1997
---------------
<S> <C>
The provision for income taxes is summarized as follows:

Current tax expense:
Federal.............................................................. $ --
State................................................................ --
------
Total current provision...................................................... --
------
Deferred tax expense:
Federal.............................................................. 656
State................................................................ 123
------
Total deferred provision..................................................... 779
------
Total provision for income taxes............................................. $ 779
------
------

Deferred tax assets (liabilities) consist of the following:

Deferred tax assets--current:
Loss carryforwards................................................... $ 1,230
Coupon reserves...................................................... 844
Inventory............................................................ 325
Accrued expenses..................................................... 320
Other................................................................ 247
------
Total deferred tax assets--current........................................... 2,966
------
Deferred tax assets--non-current:
Incentive plan expense............................................... 873
Goodwill............................................................. 228
Depreciation......................................................... 20
------
Total deferred tax assets--non-current....................................... 1,121
------
Deferred tax liabilities--non-current:
Goodwill............................................................. (4,465)
Depreciation......................................................... (401)
------
Total deferred tax liabilities--non-current.................................. (4,866)
------
Net deferred tax liability................................................... $ (779)
------
------

Net deferred tax assets current.............................................. $ 2,966
Net deferred tax liabilities--non-current.................................... (3,745)
------
Net deferred tax liabilities................................................. $ (779)
------
------
</TABLE>

F-17
<PAGE>
AURORA FOODS HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 11--INCOME TAXES (CONTINUED)
The Company has not recorded a valuation allowance for its deferred tax
assets. Management believes the deferred tax assets are more likely than not to
be realized.

At December 27, 1997, the Company generated a federal net operating loss of
approximately $3.1 million. These losses can be used to offset future taxable
income through the year 2017. The Company is a loss corporation as defined in
section 382 of the Internal Revenue Code. Therefore, if certain substantial
changes of the Company's ownership should occur, there could be significant
annual limitations of the amount of net operating loss carryforwards which can
be utilized.

The provision for income taxes differs from the amount of income tax
determined by applying the applicable U.S. statutory federal income tax rate to
pretax income as a result of the following differences:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 27,
1997
---------------
<S> <C>
Provision for income taxes at U.S. statutory rate............................ $ 685
Increase in tax resulting from:
Nondeductible expenses..................................................... 13
State taxes, net of federal benefit........................................ 81
-----
$ 779
-----
-----
</TABLE>

NOTE 12--LEASES

The Company leases certain facilities, machinery and equipment under
operating lease agreements with varying terms and conditions. The leases are
noncancellable operating leases which expire on various dates through 2002.

Future annual minimum lease payments under these leases are summarized as
follows:

<TABLE>
<CAPTION>
MINIMUM
LEASE
YEARS ENDING DECEMBER 27, PAYMENTS
- ------------------------------------------------------------------------------- ---------------
<S> <C>
1998........................................................................... $ 115
1999........................................................................... 114
2000........................................................................... 124
2001........................................................................... 137
2002........................................................................... 59
Thereafter..................................................................... --
-----
$ 549
-----
-----
</TABLE>

Rent expense was $0.1 million for the year ended December 27, 1997.

F-18
<PAGE>
AURORA FOODS HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 13--SAVINGS AND BENEFIT PLANS

The Company offers a retirement savings plan to employees in the form of
401(k) and profit sharing plans. Under the 401(k) plan, employee contributions
up to 6% of total compensation are matched 50% by the Company, with vesting
occurring ratably over a five year period. Profit sharing contributions of 2% of
compensation are made on behalf of all employees on an annual basis. Profit
sharing contributions also vest ratably over a five year period. The Company's
contributions to the 401(k) and profit sharing plans for the fiscal year ending
December 27, 1997 were $0.1 million.

NOTE 14--RELATED PARTY TRANSACTIONS

Aurora Foods Inc. maintains business relationships and engages in certain
transactions as described below.

The Company entered into a Management Services Agreement with Dartford
Partnership, L.L.C. ("Dartford") pursuant to which Dartford provides management
oversight on financial and operational matters. The Company paid fees to
Dartford, a member of MBW LLC, in connection with this agreement totaling $768
in fiscal 1997. The annual management fee was $600 prior to the acquisition of
LC and $935 after the acquisition of LC.

The Company entered into an Advisory Services Agreement with McCown De Leeuw
& Co. III, L.P. ("MDC") pursuant to which MDC provides certain advisory
functions. The Company paid fees to MDC, a member of MBW LLC, in connection with
this agreement totaling $293 in fiscal 1997. The annual advisory fee was $250
prior to the acquisition of LC and $336 after the acquisition of LC.

In connection with the acquisitions of MBW and LC, the Company paid to
certain members of MBW LLC, who are also represented on the Board of Directors
or officers of the Company and beneficial owners, fees for services rendered in
connection with the acquisitions and related financings consummated in 1997. The
aggregate amount paid to certain members of MBW LLC was $4.7 million and was
funded by the proceeds of the financings. Of this amount, $1.3 million was paid
to Dartford, whose partners include Mr. Ian R. Wilson, Mr. Ray Chung, Mr. James
B. Ardrey and Ms. M. Laurie Cummings (all are directors and/or executive
officers of the Company); $259 in total was paid to Mr. Thomas J. Ferraro
(director and President of the Company) and Mr. C. Gary Willett (Executive Vice
President of the Company); $2.7 million was paid to MDC, whose general partners
and principal include Mr. David E. De Leeuw, Mr. Charles Ayres and Mr. Tyler T.
Zachem (all directors of the Company); and $481 was paid to Fenway Partners
Capital Fund, L.P., whose partners include Mr. Peter Lamm and Mr. Richard C.
Dresdale (both directors of the Company). The fee amounts were negotiated among
the equity investors.

On December 31, 1996, Mr. Thomas J. Ferraro, the President of the Company,
and Mr. C. Gary Willett, Executive Vice President of the Company and on July 1,
1997, Mr. Alan Mintz, Vice President Sales, and Mr. Dirk C. Grizzle, Chief
Financial Officer of the Company, executed promissory notes in favor of the
Company in exchange for monies borrowed to assist in the capitalization of their
limited liability company interests held in MBW LLC. The promissory notes mature
December 31, 1999 for Mr. Ferraro and Mr. Willett, and June 30, 2000 for Mr.
Mintz and Mr. Grizzle. Interest is due and payable quarterly at the rate of 8.0%
per annum and there are required annual principal payments. The aggregate

F-19
<PAGE>
AURORA FOODS HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 14--RELATED PARTY TRANSACTIONS (CONTINUED)
balances outstanding as of December 27, 1997 on the promissory notes were $215.
The outstanding balances are as follows:

<TABLE>
<S> <C>
Mr. Ferraro.......................................................................... $ 40
Mr. Willett.......................................................................... 50
Mr. Mintz............................................................................ 50
Mr. Grizzle.......................................................................... 75
---------
$ 215
---------
---------
</TABLE>

NOTE 15--INCENTIVE PLAN EXPENSE

The Amended and Restated Limited Liability Company Agreement (the "LLC
Agreement") of MBW LLC contains a management compensation arrangement (the
"Management Plan") as a means by which certain key employees and other
specifically designated persons ("Key Personnel") of the Company, and/ or
affiliated with the Company, may be given an opportunity to benefit from
appreciation in the value of the Company. Under the Management Plan, Key
Personnel are issued a specific class of limited liability company member units
("Management Units"), at a nominal value, as a means to participate in the
appreciation of the Company. The Management Units are subject to vesting
requirements based on terms of employment or other factors.

Upon a change of control or initial public offering ("IPO") of the Company's
stock, all Management Units will vest immediately, except for certain Management
Units issued after December 31, 1997 (see Note 17--Subsequent Events--Incentive
Plan Amendment), which will remain subject to normal vesting requirements under
the Management Plan. The holders of vested Management Units will be entitled to
certain payments or distributions based on the amounts paid or distributed to
the investors in MBW LLC. In general, there will be no payments to holders of
vested Management Units until the MBW LLC investors have received a designated
return on their investments. The type of payment will be cash or non-cash
consideration, depending on the type of triggering event and the type of
distribution received by MBW LLC and in any event, will be funded by MBW LLC.

The total amount due under the Management Plan, if any, is subject to the
vesting factors discussed above. Based on management and the Board of Directors'
assessment of the current valuation of the Company, compensation expense for the
year ended December 27, 1997 totaled $2.3 million. Should the Company appreciate
further in value, compensation expense to be recognized in future periods under
the Management Plan could be significant (see Note 17--Subsequent
Events--Incentive Plan Expense). The fiscal 1997 compensation expense has been
recorded as a liability of MBW LLC as the sponsor of the Management Plan.
However, because the Management Plan is for the benefit of Key Personnel of the
Company, expense recognized under the Management Plan has been pushed down to
the Company, and has been recorded by the Company as expense and as additional
paid in capital from its parent.

NOTE 16--COMMITMENTS AND CONTINGENCIES

The Company is subject to litigation in the ordinary course of business. In
the opinion of management, the ultimate outcome of any existing litigation would
not have a material adverse effect on the Company's financial condition or
results of operations.

F-20
<PAGE>
AURORA FOODS HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 16--COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company has entered into manufacturing contracts, which require minimum
annual production orders. The minimum annual production orders for all contracts
through the year 2003 are 3.3 million cases of product. This volume represents
substantially less than the Company's current production requirements.

NOTE 17--SUBSEQUENT EVENTS

ACQUISITION

On January 16, 1998, subsequent to the Company's fiscal year end, the
Company acquired all the assets of the Duncan Hines Business from the Procter &
Gamble Company ("P&G"). The assets acquired by the Company include (i) DUNCAN
HINES-REGISTERED TRADEMARK- and associated trademarks, (ii) substantially all of
the equipment for the manufacture of Duncan Hines products currently located in
P&G's Jackson, Tennessee facility, (iii) proprietary formulations for Duncan
Hines products, (iv) other product specifications and customer lists and (v)
rights under certain contracts, licenses, purchase orders and other arrangements
and permits. The Company intends to use the acquired assets in its operations of
the Duncan Hines Business. The purchase price of approximately $445.0 million
was based on an arm's length negotiation between the Company and P&G.

To finance the acquisition of the Duncan Hines Business and related costs,
the Company incurred an early extinguishment of its existing senior secured term
debt and senior secured revolving debt facility, borrowed $450.0 million of
senior secured bank debt under a Second Amended and Restated Credit Agreement,
and received a capital contribution from MBW LLC of $93.8 million. As a result
of the early extinguishment, the Company will record an extraordinary charge of
$1.8 million, net of income taxes of $1.2 million, for the write-off of deferred
loan acquisition costs in 1998.

The cost to acquire the Duncan Hines Business has been allocated to tangible
and intangible assets acquired as follows:

<TABLE>
<S> <C>
Cash paid to acquire assets....................................................... $ 445,000
Other acquisition costs........................................................... 3,121
---------
448,121
Costs assigned to tangible assets................................................. (40,953)
---------
Costs attributable to intangible assets........................................... $ 407,168
---------
---------
</TABLE>

The following unaudited pro forma combined results of operations of the
Company and the Duncan Hines Business, together with the other acquisitions made
by the Company for the year ended December 27, 1997, gives pro forma effect to
the acquisitions as though the acquisitions occurred as of January 1, 1997
(dollars in thousands):

<TABLE>
<S> <C>
Net sales......................................................................... $ 460,294
---------
---------
Net income........................................................................ $ 4,260
---------
---------
</TABLE>

F-21
<PAGE>
AURORA FOODS HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 17--SUBSEQUENT EVENTS (CONTINUED)
The foregoing unaudited pro forma results of operations reflect one year's
amortization of the goodwill and other intangibles resulting from the
acquisition of the assets of the Duncan Hines Business. The allocation of
purchase price has not been finalized; however, any changes are not expected to
be material.

INTEREST RATE SWAP AGREEMENT

The Company entered into an interest rate swap agreement (the "Swap") on
March 17, 1998, in order to reduce the impact of changes in interest rates on
its floating rate long term debt. The notional principal amount covered under
the Swap is $150.0 million and the term is three years. The effective current
swap rate is 5.81%. The applicable rate is set quarterly with the first reset
date on June 17, 1998. Amounts to be paid or received, if any, under the Swap
will be recognized as an increase or decrease, respectively, in interest
expense. The counterparty to the Company's Swap is a major financial
institution.

Under the Swap, the Company will make payments to the counterparty if the
three-month LIBOR rate is less than the swap rate and receive payments from the
counterparty if the three month LIBOR rate exceeds the swap rate. The payments
will be calculated based upon the notional principal amount. At the time the
Swap was entered into, the three-month LIBOR rate was 5.69%.

Risks associated with the Swap include those associated with changes in the
market value and interest rates. Management considers the potential loss in
future earnings and cash flows attributable to the Swap to not be material.

INCENTIVE PLAN AMENDMENT

In May 1998, the Company's Board of Directors approved an amendment to the
Management Plan. This amendment accelerated the vesting of all Management Units
issued after December 31, 1997 in the event of an initial public offering of the
Company's Common Stock. As a result, all of the outstanding Management Units are
fully vested in the event of an initial public offering of the Company's Common
Stock.

INCENTIVE PLAN EXPENSE

In the quarter ended March 28, 1998, the Company recognized a pre-tax charge
of $60.0 million for incentive plan expense under the Management Plan.

F-22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
of CONOPCO, Inc.

We have audited the accompanying statement of assets to be acquired as of
December 31, 1996 and the statements of operations for the years ended December
31, 1996 and 1995 of Mrs. Butterworth's Business, a component of CONOPCO, Inc.
(the "Business"). These financial statements are the responsibility of CONOPCO,
Inc.'s management. Our responsibility is to express an opinion on these
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

The accompanying financial statements were prepared to present the assets to be
acquired and the results of operations of the Business pursuant to the purchase
agreement between CONOPCO, Inc. and MBW Acquisition Corp. (the "Buyer") as
described in Note 1 and are not intended to be a complete presentation of the
Business's financial position and cash flows.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets to be acquired of the Business as of December
31, 1996 and the results of its operations for the years ended December 31, 1996
and 1995, pursuant to the purchase agreement referred to in Note 1, in
conformity with generally accepted accounting principles.

Price Waterhouse LLP
San Francisco, California
March 14, 1997

F-23
<PAGE>
MRS. BUTTERWORTH'S BUSINESS

(A COMPONENT OF CONOPCO, INC.)

STATEMENT OF ASSETS TO BE ACQUIRED
DECEMBER 31, 1996
(IN THOUSANDS)

<TABLE>
<S> <C>
Inventories......................................................................... $ 829
Machinery and equipment, net of accumulated depreciation of $1,791.................. 2,774
---------
Total assets.................................................................... $ 3,603
---------
---------
</TABLE>

The accompanying notes are an integral part of the financial statements

F-24
<PAGE>
MRS. BUTTERWORTH'S BUSINESS

(A COMPONENT OF CONOPCO, INC.)

STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
<S> <C> <C>
1996 1995
------------- -------------
Net sales....................................................... $ 89,541 $ 91,302
------------- -------------
Costs and expenses:
Cost of products sold......................................... 28,955 27,743
Brokerage and distribution.................................... 8,140 7,583
Trade promotions.............................................. 17,672 19,380
Consumer marketing............................................ 10,835 13,291
Selling, general and administrative........................... 6,753 6,120
------------- -------------

Total costs and expenses...................................... 72,355 74,117
------------- -------------
Net sales less direct and allocated expenses before taxes....... 17,186 17,185
Provision for income taxes.................................... 6,616 6,616
------------- -------------
Net sales less direct and allocated expenses.................... $ 10,570 $ 10,569
------------- -------------
------------- -------------
</TABLE>

The accompanying notes are an integral part of the financial statements

F-25
<PAGE>
MRS. BUTTERWORTH'S BUSINESS
(A COMPONENT OF CONOPCO, INC.)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996

(IN THOUSANDS)

1. DESCRIPTION OF BUSINESS

In December 1996, CONOPCO, Inc. ("CONOPCO" or the "Company"), a subsidiary
of Unilever United States, Inc., entered into an Asset Purchase Agreement (the
"Agreement") with MBW Acquisition Corp., the predecessor of MBW Foods Inc. (the
"Buyer"). The Agreement provides for the sale of certain assets of CONOPCO
pertaining to its Mrs. Butterworth's Business (the "Business") and the
assumption of certain liabilities relating to future commitments as defined (see
Note 7). The Business was operated as part of Van den Bergh Foods Company ("Van
den Bergh"), a division of the Company. The Business' products, which are
distributed on a national basis, consist of syrup and pancake mix. A significant
portion of the Business' net sales are with major retailers.

The sale was consummated on December 31, 1996, after the close of business
but before the end of the business day. Under the terms of the Agreement,
CONOPCO, Inc. sold to the Buyer certain assets exclusively used in the Business,
as defined in the Agreement, and retains the manufacturing plants, employees and
the retained liabilities of the Business, as defined in the Agreement.

Throughout the periods covered by the financial statements, the Business
operations were conducted and accounted for as a part of the Company. These
financial statements have been carved out from the Company's historical
accounting records.

Under the Company's centralized cash management system, cash requirements of
the Business were generally provided directly by the Company and cash generated
by the Business was generally remitted directly to the Company. Transaction
systems (e.g., payroll, employee benefits, accounts payable), used to record and
account for cash disbursements were provided by centralized company
organizations outside the defined scope of the Business. Most of these corporate
systems are not designed to track assets/ liabilities and receipts/payments on a
business specific basis. Given these constraints and the fact that only certain
assets of the Business were sold, statements of financial position and cash
flows could not be prepared.

The manufacturing and distribution operations of the Business are conducted
at sites where other Company manufacturing and distribution not included in the
Business are present. In addition, certain non-manufacturing operations of the
Business share facilities and space with other Company operations. At these
shared sites, only the assets of the Business (inventories and machinery and
equipment) are included in the Statement of Assets to be Acquired. The Statement
of Assets to be Acquired is as of the close of business on December 31, 1996,
immediately prior to the sale.

Net sales in the accompanying Statement of Operations represent net sales
directly attributable to the Business. Costs and expenses in the accompanying
statement of operations represent direct and allocated costs and expenses
related to the Business. Costs for certain functions and services performed by
centralized Company organizations outside the defined scope of the Business have
been allocated to the Business based on usage or sales of the Business, as
appropriate, compared to total Van Den Bergh usage or sales. The results of
operations include expense allocations for (1) costs for administrative
functions and services performed on behalf of the Business by centralized staff
groups within the Company, (2) research and development expense and (3)
CONOPCO's general corporate expenses including pension and certain other
postretirement benefits costs (see Note 2, 3 and 5 for a description of the
allocation methodologies

F-26
<PAGE>
MRS. BUTTERWORTH'S BUSINESS
(A COMPONENT OF CONOPCO, INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996

(IN THOUSANDS)

1. DESCRIPTION OF BUSINESS (CONTINUED)
employed). CONOPCO maintains all debt and notes payable on a consolidated basis
to fund and manage all of its operations. Debt and related interest expense were
not allocated to the Business.

All of the allocations and estimates in the Statements of Operations are
based on assumptions that Company management believes are reasonable under the
circumstances.However, these allocations and estimates are not necessarily
indicative of the costs and expenses that would have resulted if the Business
had been operated as a separate entity or future results of the Business.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INCOME RECOGNITION. Sales and related cost of products sold are included in
income and expense, respectively, when products are shipped to the customer.

INVENTORIES. Inventories are priced at the lower of cost or market with
cost determined by the last-in, first-out (LIFO) method.

MACHINERY AND EQUIPMENT ("M&E"). M&E is stated at historical cost.
Alterations and major overhauls which extend the lives of its property or
increase the capacity of M&E are capitalized. The amounts for property disposals
are removed from M&E and accumulated depreciation accounts and any resultant
gain or loss is included in earnings. Ordinary repairs and maintenance are
charged to operating costs.

DEPRECIATION. Van Den Bergh calculates depreciation using the straight-line
method over the useful lives of its property and M&E. Depreciation provided in
costs and expenses is allocated to the Business based on sales of the Business
compared to total Van Den Bergh sales.

COST OF PRODUCTS SOLD. Cost of products sold includes direct costs of
materials, labor, and overhead and allocated costs for facilities, functions and
services used by the Business at shared sites. Overhead allocations are based on
estimated time spent by employees, relative use of facilities, estimated
consumption of supplies, and sales of the Business compared to total Van Den
Bergh sales.

BROKERAGE AND DISTRIBUTION. Brokerage and distribution includes costs of
the outside brokerage network and outbound freight.

TRADE PROMOTIONS. Trade promotions represents promotional incentives
offered to retailers.

CONSUMER MARKETING. Consumer marketing is comprised of all costs associated
with advertising coupons. Advertising expense is accrued as incurred. Production
costs are expensed on the initial use of the advertisement.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
consists solely of allocated selling, administration and research and
development expenses. The Business is allocated these expenses based on sales of
the Business compared to total Van den Bergh sales.

INCOME TAXES. The taxable income of the Business was included in the tax
returns of CONOPCO. As such, separate income tax returns were not prepared or
filed for the Business. The provision for income

F-27
<PAGE>
MRS. BUTTERWORTH'S BUSINESS
(A COMPONENT OF CONOPCO, INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996

(IN THOUSANDS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
taxes included in the accompanying statement of operations has been determined
based upon statutory rates applied to pre-tax income.

PENSIONS. The Company has noncontributory defined benefit plans covering
substantially all U.S. employees, including the employees of the Business. The
benefits for these plans are based primarily on employees' years of service and
employees' compensation during the last years of employment. It is the Company's
policy to fund at least the minimum amounts required by the Employee Retirement
Income Security Act of 1974. The Company maintains profit-sharing and savings
plans for full-time employees who meet certain eligibility requirements. The
costs allocated to the Business relative to the aforementioned plans are based
on sales of the Business.

OTHER POST RETIREMENT BENEFITS. The Company provides certain health care
and life insurance benefits (post retirement benefits) to substantially all
eligible retired U.S. employees and their dependents. These benefits are
accounted for as they are earned by active employees. The post retirement costs
allocated to the Business are based on sales of the Business.

ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates. Also, as
discussed in Note 1, these financial statements include allocations and
estimates that are not necessarily indicative of the costs and expenses that
would have resulted if the Business had been operated as a separate entity or
future results of the Business.

3. RELATED PARTY TRANSACTIONS

The statement of operations include significant allocations from other
Company organizations involving functions and services (such as finance and
accounting, management informations systems, research and development, legal,
human resources and purchasing) that were provided to the Business by
centralized CONOPCO organizations outside the defined scope of the Business. The
costs of these functions and services have been allocated to the Business using
methods that CONOPCO's management believes are reasonable. Such allocations are
not necessarily indicative of the costs that would have been incurred if the
Business had been a separate entity. Total cost of products sold includes $2,656
and $3,026 in allocated costs for the years ended December 31, 1996 and 1995,
respectively. Selling, general and administrative expenses include $6,753 and
$6,120 of allocated costs for the years ended December 31, 1996 and 1995,
respectively.

F-28
<PAGE>
MRS. BUTTERWORTH'S BUSINESS
(A COMPONENT OF CONOPCO, INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996

(IN THOUSANDS)

4. PROVISION FOR INCOME TAXES

Taxes computed at the U.S. statutory rates are summarized below:

<TABLE>
<CAPTION>
1996 1995
---------------------- ----------------------
<S> <C> <C> <C> <C>
AMOUNT % AMOUNT %
----------- --- ----------- ---
Federal...................................... $ 5,843 34.0 $ 5,843 34.0
State (net of federal tax benefit)........... 773 4.5 773 4.5
----------- --- ----------- ---
Provision for income taxes................... $ 6,616 38.5 $ 6,616 38.5
----------- --- ----------- ---
----------- --- ----------- ---
</TABLE>

5. INVENTORIES

<TABLE>
<CAPTION>
1996
---------
<S> <C>
Raw materials, packaging and supplies................................ $ 301
Finished products.................................................... 631
---------
932
Adjustment to LIFO basis............................................. (103)
---------
$ 829
---------
---------
</TABLE>

The Company's application of LIFO is not attributable to individual business
units. Accordingly, the results of applying LIFO have been allocated to the
Business based on relative inventory values. Management believes such
allocations are reasonable, but may not necessarily reflect the cost that would
have been incurred if LIFO had been applied on a business specific basis.

6. DEPRECIATION EXPENSE

Depreciation provided in costs and expenses was $277 in 1996 and $311 in
1995.

7. COMMITMENTS AND CONTINGENCIES

The Business is currently subject to certain lawsuits and claims with
respect to matters such as product liability and other actions arising in the
normal course of business. Such lawsuits and claims, as defined in the
Agreement, are the responsibility of CONOPCO.

In the normal course of its operations, the Business has informal agreements
with two suppliers to provide the Business with its glass bottle requirements.
These informal agreements contain no specified duration and are subject to price
adjustments. If these agreements were to terminate, the Company expects that the
Business would acquire any on-hand inventory of the suppliers.

F-29
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
of VDK Holdings, Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of changes in stockholder's equity and of
cash flows present fairly, in all material respects, the financial position of
VDK Holdings, Inc. and its subsidiary (the Company) at June 30, 1997, and June
29, 1996, and the results of their operations and their cash flows for the year
ended June 30, 1997 and the period September 19, 1995 through June 29, 1996 in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

Price Waterhouse LLP
San Francisco, California
September 23, 1997

F-30
<PAGE>
VDK HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
MARCH 31, JUNE 30, JUNE 29,
1998 1997 1996
----------- --------- ---------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS

Current assets:
Cash and cash equivalents.................................. $ 53 $ 308 $ 4,040
Accounts receivable (net of $420, $416 and $190 allowance,
respectively)............................................ 43,350 33,011 16,250
Accounts receivable--other (Note 5)........................ -- 9 506
Inventories (Note 6)....................................... 35,825 33,535 30,202
Prepaid expenses........................................... 1,459 1,208 724
Current deferred tax assets (Note 12)...................... 11,989 8,260 3,373
----------- --------- ---------
Total current assets..................................... 92,676 76,331 55,095

Property, plant and equipment, net (Note 7).................. 88,240 86,394 35,943
Non-current deferred tax assets.............................. 7,171 -- --
Goodwill and other intangible assets, net (Note 8)........... 322,550 331,013 203,736
Other assets................................................. 16,434 15,853 10,725
----------- --------- ---------
Total assets............................................. $ 527,071 $ 509,591 $ 305,499
----------- --------- ---------
----------- --------- ---------

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
Current portion of long term debt (Note 10)................ $ 16,978 $ 13,097 $ 5,000
Senior secured revolving debt facility..................... 15,000 5,000 --
Accounts payable........................................... 13,577 13,791 14,144
Accrued liabilities (Note 9)............................... 31,607 24,619 15,789
Current deferred tax liabilities (Note 12)................. -- -- 143
----------- --------- ---------
Total current liabilities................................ 77,162 56,507 35,076

Non-current deferred tax liabilities (Note 12)............... -- 10,404 2,997
Other liabilities (Note 16).................................. 15,000 -- --
Senior secured term debt (Note 10)........................... 177,781 194,759 83,750
Senior subordinated notes (Note 10).......................... 100,000 100,000 100,000
----------- --------- ---------
Total liabilities........................................ 369,943 361,670 221,823
----------- --------- ---------

Stockholder's equity:
Common stock, $1.00 par value; 3,000 shares authorized; 100
shares issued and outstanding............................ -- -- --
Paid-in capital............................................ 198,635 144,420 84,420
Promissory notes (Note 15)................................. (107) (213) (305)
(Accumulated deficit) retained earnings (Note 16).......... (41,400) 3,714 (439)
----------- --------- ---------
Total stockholder's equity............................... 157,128 147,921 83,676
----------- --------- ---------
Commitments and contingencies (Notes 6, 7, 13 and 17)

Total liabilities and stockholder's equity............... $ 527,071 $ 509,591 $ 305,499
----------- --------- ---------
----------- --------- ---------
</TABLE>

See accompanying notes to consolidated financial statements.

F-31
<PAGE>
VDK HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED OPERATING PERIOD
MARCH 31, YEAR ENDED SEPTEMBER 19,
-------------------- JUNE 30, 1995 THROUGH
1998 1997 1997 JUNE 29, 1996
--------- --------- ----------- ----------------
<S> <C> <C> <C> <C>
(UNAUDITED)
Net sales................................. $ 348,288 $ 344,113 $ 435,476 $ 143,296
Cost of goods sold........................ 135,777 143,522 180,941 60,367
--------- --------- ----------- --------

Gross profit.......................... 212,511 200,591 254,535 82,929
--------- --------- ----------- --------

Brokerage, distribution and marketing
expenses:
Brokerage and distribution............ 33,765 37,005 45,352 15,901
Trade promotions...................... 101,534 83,908 108,925 32,517
Consumer marketing.................... 25,151 23,897 29,524 11,336
--------- --------- ----------- --------
Total brokerage, distribution and
marketing expenses...................... 160,450 144,810 183,801 59,754

Amortization of goodwill and other
intangibles............................. 10,194 9,982 13,142 4,223
Selling, general and administrative
expenses................................ 13,968 9,825 14,270 5,267
Incentive plan expense (Note 16).......... 69,000 -- -- --
Transition expenses (Note 11)............. -- 2,073 2,885 1,337
--------- --------- ----------- --------
Total operating expenses.................. 253,612 166,690 214,098 70,581
--------- --------- ----------- --------

Operating (loss) income............... (41,101) 33,901 40,437 12,348

Interest income........................... (60) (939) (965) (135)
Interest expense.......................... 23,634 24,762 32,499 12,469
Amortization of deferred financing
expense................................. 1,612 1,573 2,108 607
Other bank and financing expenses......... 131 215 265 79
--------- --------- ----------- --------

(Loss) income before income taxes..... (66,418) 8,290 6,530 (672)

Income tax (benefit) expense.............. (21,304) 3,316 2,377 (233)
--------- --------- ----------- --------
Net (loss) income..................... $ (45,114) $ 4,974 $ 4,153 $ (439)
--------- --------- ----------- --------
--------- --------- ----------- --------
Basic and diluted (loss) earnings per
share................................... $ (451) $ 50 $ 42 $ (4)
--------- --------- ----------- --------
--------- --------- ----------- --------
Weighted average number of shares
outstanding............................. 0.1 0.1 0.1 0.1
--------- --------- ----------- --------
--------- --------- ----------- --------
</TABLE>

See accompanying notes to consolidated financial statements.

F-32
<PAGE>
VDK HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

(IN THOUSANDS)

Capital contribution............... -- 60,000 -- -- 60,000
Officer payments on promissory
notes (Note 15).................. -- -- 92 -- 92
Net income......................... -- -- -- 4,153 4,153
--- ----------- ----------- ------------- ---------

Balance at June 30, 1997........... 100 144,420 (213) 3,714 147,921
Capital contribution (unaudited)... -- 215 -- -- 215
Payments on officer promissory
notes (Note 15) (unaudited)...... -- -- 106 -- 106
Incentive plan expense
(unaudited)...................... -- 54,000 -- -- 54,000
Net loss (unaudited)............... -- -- -- (45,114) (45,114)
--- ----------- ----------- ------------- ---------
Balance at March 31, 1998
(unaudited)...................... 100 $ 198,635 $ (107) $ (41,400) $ 157,128
--- ----------- ----------- ------------- ---------
--- ----------- ----------- ------------- ---------
</TABLE>

See accompanying notes to consolidated financial statements.

F-33
<PAGE>
VDK HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED OPERATING PERIOD
MARCH 31, YEAR ENDED SEPTEMBER 19, 1995
-------------------- JUNE 30, THROUGH JUNE 29,
1998 1997 1997 1996
--------- --------- ----------- ------------------
<S> <C> <C> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net (loss) income................................. $ (45,114) $ 4,974 $ 4,153 $ (439)
Adjustments to reconcile net (loss) income to cash
provided by operating activities:
Depreciation and amortization................... 17,483 16,772 22,317 7,454
Deferred income taxes........................... (21,304) 1,808 2,377 (233)
Incentive plan expense.......................... 69,000 -- -- --
Change in assets and liabilities, net of effects
of businesses acquired:
Increase in accounts receivable............... (10,330) (27,950) (16,264) (16,756)
(Increase) decrease in inventories............ (2,290) (2,748) 402 (4,980)
(Increase) in prepaid expenses................ (251) (256) (484) (139)
(Decrease) increase in accounts payable....... (214) 2,273 (353) 14,144
Increase in accrued liabilities............... 6,988 10,895 6,396 13,366
Increase in income taxes payable.............. -- 1,456 -- --
Increase in other assets...................... (1,296) (484) (984) --
--------- --------- ----------- --------
Net cash provided by operating activities........... 12,672 6,740 17,560 12,417
--------- --------- ----------- --------

Cash flows from investing activities:
Additions to property, plant and equipment........ (7,524) (12,717) (14,379) (2,204)
Additions to other non-current assets............. (2,627) (1,267) (1,453) (316)
Proceeds from sale of assets...................... -- 6,192 6,192 --
Payment for acquisition of businesses (Note 3).... -- (190,222) (190,226) (268,035)
--------- --------- ----------- --------
Net cash used in investing activities............... (10,151) (198,014) (199,866) (270,555)
--------- --------- ----------- --------

Cash flows from financing activities:
Proceeds from senior secured revolving and term
debt............................................ 31,000 188,000 188,000 97,150
Proceeds from senior subordinated notes........... -- -- -- 100,000
Repayment of borrowings........................... (34,097) (54,894) (63,894) (8,400)
Capital contributions, net of officer promissory
notes (Note 17)................................. 321 60,092 60,092 84,115
Debt issuance costs............................... -- (5,631) (5,624) (10,687)
--------- --------- ----------- --------
Net cash (used in) provided by financing
activities........................................ (2,776) 187,567 178,574 262,178
--------- --------- ----------- --------

(Decrease) increase in cash and cash equivalents.... (255) (3,707) (3,732) 4,040

Cash and cash equivalents, beginning of period...... 308 4,040 4,040 --
--------- --------- ----------- --------

Cash and cash equivalents, end of period............ $ 53 $ 333 $ 308 $ 4,040
--------- --------- ----------- --------
--------- --------- ----------- --------

Supplemental Cash Flow Disclosure:

Cash paid for interest............................ $ 11,096 $ 11,229 $ 32,805 $ 7,738
--------- --------- ----------- --------
--------- --------- ----------- --------
</TABLE>

See accompanying notes to consolidated financial statements.

F-34
<PAGE>
VDK HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS)

NOTE 1--THE COMPANY

ORGANIZATION

VDK Holdings, Inc. ("Holdings" and together with its subsidiary the
"Company"), a Delaware corporation, is a privately held frozen food company.
Holdings owns 100% of its direct subsidiary, Van de Kamp's, Inc. ("VDK, Inc."),
also a Delaware corporation. Holdings is wholly owned by VDK Foods LLC ("VDK
LLC"), a Delaware limited liability company. The Company commenced operations on
September 19, 1995, when it acquired the frozen seafood and frozen dessert
businesses of The Pillsbury Company and PET Incorporated. On May 6, 1996, the
Company acquired substantially all the assets of the Mrs. Paul's frozen food
business from Campbell Soup Company ("CSC") (Note 3). On July 9, 1996,
substantially all of the assets of the frozen food division of The Quaker Oats
Company ("Quaker") were purchased by the Company (Note 3). VDK Inc. holds all of
the Company's operations and debt. Holdings has no assets other than its
investment in VDK Inc..

OPERATIONS

The Company produces and markets frozen seafood, frozen dessert products,
frozen vegetables, frozen pizza and frozen breakfast products which are sold
across the United States. The products are manufactured out of three
manufacturing facilities in Erie and Chambersburg, Pennsylvania and in Jackson,
Tennessee. The principal trademarks under which the products are sold are Van de
Kamp's-Registered Trademark-, Pet-Ritz-Registered Trademark-, Oronoque
Orchards-Registered Trademark-, Mrs. Paul's-Registered Trademark-,
Celeste-Registered Trademark-, and Aunt Jemima-Registered Trademark-.

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES

FISCAL YEAR

The Company's fiscal year ended June 30, 1997. The Company's prior fiscal
year ended on the last Saturday of June. Accordingly, the results of operations
reflect activity for the year ended June 30, 1997 and the period from September
19, 1995 (commencement of operations) through June 29, 1996. The Company has
presented balance sheets as of June 30, 1997 and June 29, 1996. The Company's
cash flows reflect activity for the year ended June 30, 1997 and the period from
September 19, 1995 to June 29, 1996. Certain prior year amounts have been
reclassified to conform with the current year's presentation.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid financial instruments with a
maturity of three months or less to be cash equivalents.

F-35
<PAGE>
VDK HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES

Inventories are stated at the lower of cost or market value. Cost is
determined using the first-in first-out (FIFO) method. Inventories include the
cost of raw materials, packaging, labor and manufacturing overhead.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost less accumulated
depreciation. Depreciation is computed using the straight-line method over the
estimated useful lives of the individual assets ranging from five to thirty
years (primarily machinery and equipment with useful lives of 10-15 years).
Costs which improve an asset or extend its useful life are capitalized, while
repairs and maintenance costs are expensed as incurred.

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets include goodwill, trademarks and
various identifiable intangible assets purchased by the Company. Goodwill is
being amortized over forty years using the straight-line method. Other
intangible assets are being amortized using the straight-line method over
periods ranging from five to forty years. Amortization of goodwill and other
intangible assets charged against income during the year ended June 30, 1997 was
$12,301 and for the period ended June 29, 1996 was $4,152.

IMPAIRMENT OF LONG-LIVED ASSETS

OTHER ASSETS

Other assets consist of deferred loan acquisition costs, systems development
costs, and other miscellaneous assets. Deferred loan acquisition costs of the
senior subordinated notes are being amortized using the interest method over the
term of the respective notes. Deferred loan acquisition costs of the senior
secured debt are being amortized using the straight-line method over the terms
of the related debt tranches. Aggregate amortization of deferred loan
acquisition costs and other assets charged against income in the year ended June
30, 1997 was $2,949 and in the period ended June 29, 1996 was $678.

F-36
<PAGE>
VDK HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

For purposes of financial reporting, the Company has determined that the
fair value of financial instruments approximates book value at June 30, 1997,
based on terms currently available to the Company in financial markets.

CONCENTRATION OF CREDIT RISK

INCOME TAXES

The Company records income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes". This method of accounting for income taxes uses an asset and liability
approach which requires the recognition of deferred tax liabilities and assets
for the expected future tax consequences of temporary differences between the
carrying amounts and the tax basis of assets and liabilities.

UNAUDITED INTERIM INFORMATION

The interim financial data as of December 31, 1997, and for the six months
ended December 31, 1997 and 1996 is unaudited; however, in the opinion of the
Company, the interim data includes all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the financial
position and operating results for the interim periods.

NOTE 3--BUSINESS ACQUISITIONS

VAN DE KAMP'S AND FROZEN DESSERT PRODUCT LINES

On September 19, 1995 (commencement of operations), the Company acquired the
assets of the frozen seafood business (which operated as Van de Kamp's) and the
frozen dessert product lines (together, the "Businesses") from The Pillsbury
Company and PET Incorporated (collectively, the "Sellers"). The Company
manufactures frozen seafood products out of its Erie, Pennsylvania production
facility and its frozen dessert product line is produced out of its
Chambersburg, Pennsylvania manufacturing facility.

The Company acquired the inventories, property, plant and equipment and
intangible assets of the Businesses for a purchase price of $190.0 million. The
Company paid The Pillsbury Company $2.0 million, a contractually agreed upon
amount, to retain all of the current liabilities of the Businesses. The purchase
agreement contains customary representations, warranties and covenants by each
of the Sellers and the Company. The acquisition was accounted for by using the
purchase method of accounting and the allocation of the purchase price has been
finalized.

The acquisition was financed by (i) an equity capital contribution from VDK
LLC of approximately $70.0 million, (ii) the proceeds from the issuance of
$100.0 million of senior subordinated notes (Note 10),

F-37
<PAGE>
VDK HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 3--BUSINESS ACQUISITIONS (CONTINUED)
and (iii) the borrowing by the Company of $30.0 million and $2.0 million of
senior secured tranche A debt and senior secured revolving debt, respectively,
under the senior secured bank facilities (Note 10).

The cost to acquire the Businesses has been allocated to tangible and
intangible assets acquired as follows:

<TABLE>
<S> <C>
Cash paid to acquire Businesses................................................... $ 190,000
Cash paid for disposition of current liabilities.................................. 2,000
Other acquisition costs........................................................... 2,543
---------
194,543
Costs assigned to tangible assets................................................. (50,407)
---------
Cost attributable to intangible assets............................................ $ 144,136
---------
---------
</TABLE>

MRS. PAUL'S

On May 6, 1996, the Company acquired substantially all the assets of the
Mrs. Paul's frozen food business from CSC. Mrs. Paul's frozen food business
includes frozen seafood and frozen vegetable products which are manufactured at
both of the Company's Pennsylvania production facilities.

The Company acquired the inventories, certain manufacturing equipment and
intangible assets from CSC. The manufacturing equipment was removed from a CSC
facility with certain production lines installed in each of the Company's Erie
and Chambersburg production plants. The purchase price was $73.2 million which
included a contractually agreed upon payment related to inventories. The
purchase agreement contains customary representations, warranties and covenants
by each of CSC and the Company. The acquisition was accounted for by using the
purchase method of accounting and the allocation of the purchase price has been
finalized.

The acquisition was financed by (i) an equity capital contribution from VDK
LLC of $15.0 million, and (ii) the borrowing by the Company of $20.0 million and
$40.0 million of senior secured tranche A debt and senior secured tranche B
debt, respectively, under the senior secured bank facilities (Note 10).

The cost to acquire Mrs. Paul's has been allocated to tangible and
intangible assets acquired, as follows:

<TABLE>
<S> <C>
Cash paid to acquire Businesses.................................... $ 73,203
Cash paid for disposition of current liabilities................... 3,326
---------
Other acquisition costs............................................ 76,529
Costs assigned to tangible assets.................................. (11,716)
---------
Cost attributable to intangible assets............................. $ 64,813
---------
---------
</TABLE>

QUAKER FROZEN FOOD BUSINESS

On July 9, 1996, substantially all of the assets of the frozen food division
of Quaker were purchased by the Company for $185.8 million. The Company
purchased the Celeste-Registered Trademark- trademark and was granted an

F-38
<PAGE>
VDK HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 3--BUSINESS ACQUISITIONS (CONTINUED)
exclusive perpetual, transferable, royalty-free license of the Aunt
Jemima-Registered Trademark- trademark for use in the frozen breakfast products
business. Also included in the acquisition were inventories and the
manufacturing facility located in Jackson, Tennessee, where the Company produces
both product lines. The purchase agreement contains customary representations,
warranties and covenants by each of Quaker and the Company. The acquisition was
accounted for by using the purchase method of accounting and the allocation of
the purchase price has been finalized.

The acquisition was financed by (i) an equity capital contribution from VDK
LLC of $60.0 million, and (ii) the borrowing by the Company of $45.0 million,
$40.0 million and $50.0 million of senior secured tranche A debt, senior secured
tranche B debt and senior secured tranche C debt, respectively, under the senior
secured bank facilities (Note 10).

The cost to acquire the Quaker Frozen Food Business has been allocated to
tangible and intangible assets acquired as follows:

<TABLE>
<S> <C>
Cash paid to acquire assets....................................... $ 185,800
Other acquisition costs........................................... 3,492
---------
189,292
Costs assigned to tangible assets................................. (49,356)
---------
Cost attributable to intangible assets............................ $ 139,936
---------
---------
</TABLE>

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The unaudited pro forma combined financial information reflects the
historical net sales and income before income taxes of the Company as if all
acquisitions had occurred on July 1, 1995. Had the acquisitions described in
this Note 3 taken place July 1, 1995, the unaudited pro forma net sales and
income before income taxes for the year ended June 30, 1997 would not have been
significantly different from those reflected in the Statement of Operations. For
the period ended June 29, 1996 the pro forma net sales were $401,522 and the
income before income taxes was $11,651.

NOTE 4--SALE OF ASSETS

On February 3, 1997, the Company sold substantially all of the assets of its
whipped topping product line, which was part of the frozen desserts business,
including inventory, certain manufacturing equipment, and intangible assets for
approximately $6.2 million in cash. The impact of the sale on current results
was not material, and the sale will not significantly impact future results. The
net proceeds from the sale, $5.5 million, were used to repay a portion of the
Company's senior secured term debt.

F-39
<PAGE>
VDK HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 5--ACCOUNTS RECEIVABLE--OTHER

Accounts Receivable--Other consist of the following:

<TABLE>
<CAPTION>
JUNE 30, JUNE 29,
1997 1996
----------- -----------
<S> <C> <C>
The Pillsbury Company................................... $ -- $ 320
Miscellaneous........................................... 9 186
----------- -----------
$ 9 $ 506
----------- -----------
----------- -----------
</TABLE>

The balance due from The Pillsbury Company was comprised of accounts
receivable collected by them on behalf of the Company.

NOTE 6--INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
JUNE 30, JUNE 29,
1997 1996
----------- -----------
<S> <C> <C>
Raw materials........................................... $ 12,556 $ 6,856
Packaging supplies...................................... 3,178 2,022
Finished goods.......................................... 17,801 21,324
----------- -----------
$ 33,535 $ 30,202
----------- -----------
----------- -----------
</TABLE>

At June 30, 1997 and June 29, 1996, the Company had commitments to purchase
raw materials aggregating approximately $7.0 million and $3.2 million,
respectively.

NOTE 7--PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>
JUNE 30, JUNE 29,
1997 1996
----------- -----------
<S> <C> <C>
Land.................................................... $ 2,342 $ 700
Machinery and equipment................................. 73,514 31,105
Buildings and improvements.............................. 18,637 5,155
Construction-in-progress................................ 1,241 1,607
----------- -----------
95,734 38,567
Less accumulated depreciation......................... (9,340) (2,624)
----------- -----------
$ 86,394 $ 35,943
----------- -----------
----------- -----------
</TABLE>

At June 30, 1997 and June 29, 1996, the Company had commitments for facility
construction and related machinery and equipment purchases aggregating
approximately $2.3 million and $0.5 million, respectively.

F-40
<PAGE>
VDK HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 8--GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets consist of the following:

<TABLE>
<CAPTION>
JUNE 30, JUNE 29,
1997 1996
--------- ---------
<S> <C> <C>
Goodwill................................................ $ 163,599 $ 103,553
Trademarks.............................................. 151,600 84,200
Other intangibles....................................... 32,105 20,135
--------- ---------
347,304 207,888
Less accumulated amortization......................... (16,291) (4,152)
--------- ---------
$ 331,013 $ 203,736
--------- ---------
--------- ---------
</TABLE>

NOTE 9--ACCRUED LIABILITIES

Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
JUNE 30, JUNE 29,
1997 1996
--------- ---------
<S> <C> <C>
Interest................................................ $ 4,425 $ 4,732
Trade promotion accruals................................ 12,478 4,781
Other................................................... 7,716 6,276
--------- ---------
$ 24,619 $ 15,789
--------- ---------
--------- ---------
</TABLE>

F-41
<PAGE>
VDK HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 10--LONG TERM DEBT

Long term debt consists of the following:

<TABLE>
<CAPTION>
JUNE 30, JUNE 29,
1997 1996
--------- ---------
<S> <C> <C>
SENIOR SECURED DEBT

Senior secured tranche A debt--interest rate of 8.3% at June 30, 1997;
principal due in semi-annual installments through September 19, 2001;
floating interest rate at the prime rate plus 1.5%, or alternatively,
the one, three or six month Euro dollar rate plus 2.5% payable
quarterly or at the termination of the Euro dollar contract interest
period............................................................... $ 83,192 $ 48,750

Senior secured tranche B debt--interest rate of 8.8% at June 30, 1997;
principal due in semi-annual installments through April 30, 2003;
floating interest rate at the prime rate plus 2.0% or, alternatively,
the one, three or six month Euro dollar rate plus 3.0% payable
quarterly or at the termination of the Euro dollar contract interest
period............................................................... 76,640 40,000

Senior secured tranche C debt--interest rate of 9.0% at June 30, 1997;
principal due in semi-annual installments through September 30, 2003;
floating interest rate at the prime rate plus 2.25% or,
alternatively, the one, three or six month Euro dollar rate plus
3.25% payable quarterly or at the termination of the Euro dollar
contract interest period............................................. 48,024 --

Revolving credit facility--interest rate of 10.0% at June 30, 1997;
principal due September 19, 2001; floating interest rate at the prime
rate plus 1.50% or, alternatively, the one, three, or six month Euro
dollar rate plus 2.50% payable quarterly or at the termination of the
Euro dollar contract period.......................................... 5,000 --

SENIOR SUBORDINATED NOTES

Senior subordinated notes issued September 15, 1995 at par value of
$100,000,000; coupon interest rate of 12.0% with interest payable
each March 15 and September 15; matures on September 15, 2005........ 100,000 100,000
--------- ---------
312,856 188,750
Less: current portion of long term debt (13,097) (5,000)
current portion of revolving credit facility......................... (5,000) --
--------- ---------
Long term debt......................................................... $ 294,759 $ 183,750
--------- ---------
--------- ---------
</TABLE>

Annual principal payments for the next five years and thereafter consist of
the following:

<TABLE>
<S> <C>
1998.............................................. $ 18,097
1999.............................................. 16,978
2000.............................................. 22,071
2001.............................................. 24,497
2002.............................................. 33,227
Thereafter........................................ 197,986
---------
$ 312,856
---------
---------
</TABLE>

F-42
<PAGE>
VDK HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 10--LONG TERM DEBT (CONTINUED)
SENIOR SECURED DEBT

On September 19, 1995, the Company entered into the VDK Holdings, Inc.
Credit and Guarantee Agreement (the "Agreement") with several banks for $30.0
million of senior secured term and revolving debt. The proceeds from the debt
were used to acquire the Businesses, pay fees and expenses and fund working
capital. The debt is guaranteed by the Company and its subsidiary. The Agreement
contains optional prepayment provisions with no premium. Substantially all
assets of the Company are pledged as collateral for the debt.

In conjunction with the Mrs. Paul's acquisition, the Company amended the
Agreement, dated as of May 6, 1996, to provide for additional borrowings of
$20.0 million under senior secured tranche A debt and $40.0 million of senior
secured tranche B debt. Proceeds from the additional borrowings were used to
acquire the Mrs. Paul's business, pay fees and expenses and to provide the
working capital requirements related to the Mrs. Paul's acquisition.

In conjunction with the acquisition of the Quaker Frozen Food Business, the
Company amended the Agreement, dated as of July 9, 1996 to provide for
additional borrowings of $45.0 million under senior secured tranche A debt, an
increase of $40.0 million to the senior secured tranche B debt and an increase
of $50.0 million to the senior secured tranche C debt. Proceeds from the
additional borrowings were used to acquire the business from Quaker, pay fees
and expenses and to provide the working capital requirements related to the
Celeste/Aunt Jemima acquisition.

The Agreement includes $25.0 million of available borrowing under a
revolving debt facility, subject to limitations based on letters of credit. At
June 30, 1997, the Company had unused borrowing availability of $19.6 million
after adjustment for previously issued letters of credit and an outstanding
balance of $5.0 million. The interest rate on the outstanding balance was 10.0%.
The Agreement requires a commitment fee of 0.5% per annum payable quarterly on
the unused portions of the revolving debt facility.

The Agreement includes restrictive covenants which limit additional
borrowing, cash dividends, and capital expenditures while also requiring the
Company to maintain certain financial ratios. The Company was in compliance with
these covenants at June 30, 1997.

SENIOR SUBORDINATED NOTES

On September 19, 1995, the Company issued $100.0 million of senior
subordinated notes (the "Notes") registered under the Securities Act of 1933.
The proceeds were used to fund the acquisition of the Businesses. The Notes may
be redeemed at any time prior to September 15, 2000. The prepayment redemption
price would be equal to 100% of the principal plus a premium equal to the
greater of (i) 1% of the principal amount or (ii) the excess of (a) present
value at time of redemption plus required interest payments due on the Notes
through September 15, 2000 over (b) principal amount of Notes. The indenture
includes restrictive covenants which limit additional borrowing, cash dividends,
the sale of assets, mergers and the sale of stock. The Company was in compliance
with these covenants at June 30, 1997.

INTEREST RATE COLLAR AGREEMENTS

The Company uses interest rate collar agreements (the "Agreements") to
reduce the impact of changes in interest rates on its floating rate term debt.
Premiums paid for such Agreements are being

F-43
<PAGE>
VDK HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 10--LONG TERM DEBT (CONTINUED)
amortized to interest expense over the terms of the Agreements. Unamortized
premiums are included in Other assets in the balance sheet. Amounts to be paid
or received, if any, under the Agreements are recognized as an increase or
decrease, respectively, in interest expense. The counterparty to the Company's
Agreements is a major financial institution.

At June 30, 1997, the Company was party to two Agreements. On August 22,
1996, the Company entered into a three year interest rate collar agreement with
a notional principal amount of $70.0 million, a cap rate of 7.5% (plus the
applicable margin) and a floor rate of 5.5% (plus the applicable margin). On
November 26, 1996, the Company entered into a three year interest rate collar
agreement with a notional principal amount of $50.0 million, a cap of 6.5% (plus
the applicable margin) and a floor rate of 5.75% (plus the applicable margin).
The aggregate premiums paid for the two Agreements was $0.1 million.

Under the Agreements, the Company would receive payments from the
counterparty if the three-month LIBOR rate exceeds the cap rates and make
payments to the counterparties if the three-month LIBOR rate falls below the
floor rates. The payments would be calculated based upon the respective notional
principal amount. During fiscal 1997 the Company made payments aggregating $0.1
million under the Agreements. At June 30, 1997, the three-month LIBOR rate was
5.94%.

Risk associated with the Agreements include those associated with changes in
market value and interest rates. At June 30, 1997, the fair value of the
Company's interest rate collars was immaterial and management considers the
potential loss in future earnings and cash flows attributable to such collars to
be immaterial.

NOTE 11--TRANSITION EXPENSES

Transition related costs consist of what management believes are one-time
costs incurred to establish the Company's operations, including expenditures to
regain distribution of products that had been discontinued during the transition
of the acquired Businesses, relocation expenses, recruiting fees, sales
training, computer systems training and other one-time transitional expenses.
Transition related costs for the year ended June 30, 1997 and the period ended
June 29, 1996 were approximately $2.9 million and $1.3 million, respectively.

F-44
<PAGE>
VDK HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 12--INCOME TAXES

The Company files a consolidated federal income tax return. State income tax
returns are filed by the Company and VDK Inc. on a separate company basis or on
a combined basis depending on the particular rules in each state.

<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
JUNE 30, JUNE 29,
1997 1996
----------- -------------
<S> <C> <C>
The provision (benefit) for income taxes is summarized as
follows:

Current tax expense:
Federal......................................................... $ -- $ --
State........................................................... -- --
----------- ------
Total current provision........................................... -- --
----------- ------
Deferred tax expense:
Federal......................................................... 1,989 (196)
State........................................................... 388 (37)
----------- ------
Total deferred provision.......................................... 2,377 (233)
----------- ------
Total provision (benefit) for income taxes........................ $ 2,377 $ (233)
----------- ------
----------- ------

Deferred tax assets (liabilities) consist of the following:

Deferred tax assets--current:
Loss carryforwards.............................................. $ 5,679 $ 1,697
Promotion reserves.............................................. 1,658 1,305
Other........................................................... 923 371
----------- ------
Total deferred tax assets--current............................ 8,260 3,373
----------- ------
Deferred tax liabilities--current:
Inventory reserves.............................................. -- (130)
Deferred state taxes............................................ -- (13)
----------- ------
Total deferred tax liabilities--current....................... -- (143)
----------- ------
Deferred tax liabilities--non-current:
Goodwill........................................................ (7,043) (1,961)
Depreciation.................................................... (3,361) (1,036)
----------- ------
Total deferred tax liabilities--non-current................... (10,404) (2,997)
----------- ------
Total deferred tax liabilities.............................. (10,404) (3,140)
----------- ------
Net deferred tax asset (liability).......................... $ (2,144) $ 233
----------- ------
----------- ------
</TABLE>

The Company has not recorded a valuation allowance for its deferred tax
assets. Management believes the deferred tax assets are more likely than not to
be realized.

At June 30, 1997, the Company has federal net operating loss carryforwards
of approximately $14.2 million. These losses can be used to offset future
taxable income through the year 2011. The Company is a

F-45
<PAGE>
VDK HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 12--INCOME TAXES (CONTINUED)
loss corporation as defined in section 382 of the Internal Revenue Code.
Therefore, if certain substantial changes of the Company's ownership should
occur, there could be significant annual limitations of the amount of net
operating loss carryforwards which can be utilized.

<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
JUNE 30, JUNE 29,
1997 1996
------------- ---------------
<S> <C> <C>
Provision for income taxes at U.S. statutory rate................. $ 2,220 $ (229)
Increase (decrease) in tax resulting from:
Nondeductible expenses............................................ 36 20
State taxes, net of federal benefit............................... 121 (24)
------ -----
$ 2,377 $ (233)
------ -----
------ -----
</TABLE>

NOTE 13--LEASES

Future annual minimum lease payments under these leases are summarized as
follows:

<TABLE>
<CAPTION>
MINIMUM
LEASE
YEARS ENDING JUNE 30, PAYMENTS
- ----------------------------------------------- -------------
<S> <C>
1998........................................... $ 753
1999........................................... 758
2000........................................... 728
2001........................................... 574
2002........................................... 143
Thereafter..................................... --
------
$ 2,956
------
------
</TABLE>

Rent expense was $0.5 million for the year ended June 30, 1997 and $0.2
million for the period ended June 29, 1996.

NOTE 14--SAVINGS AND BENEFIT PLANS

The Company offers a retirement savings plan to its nonunion employees in
the form of 401(k) and profit sharing plans. Under the 401(k) plan, employee
contributions up to 3% of total compensation are matched by the Company, with
vesting occurring ratably over a five year period. Profit sharing contributions
of 2% of compensation are made on behalf of all nonunion employees on an annual
basis. Profit sharing contributions also vest ratably over a five year period.
The Company's contributions to the 401(k)

F-46
<PAGE>
VDK HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 14--SAVINGS AND BENEFIT PLANS (CONTINUED)
plan for the year ended June 30, 1997 and the period ended June 29, 1996 were
$0.6 million and $0.1 million, respectively. The Company's contributions to the
profit sharing plan for the year ended June 30, 1997 and the period ended June
29, 1996 were $0.5 million and $0.1 million, respectively.

The Company also has a defined benefit retirement plan for unionized
employees in the Chambersburg plant. Benefits are based on years of credited
service and average compensation or stated amounts for each year of service. Net
pension expense for the defined benefit retirement plan totaled $0.1 million and
$0 for the year ended June 30, 1997 and the period ended June 29, 1996,
respectively. The funding policy is consistent with the requirements of federal
law and regulations.

NOTE 15--RELATED PARTY TRANSACTIONS

The Company has a Management Services Agreement with Dartford Partnership,
LLC ("Dartford") to provide consulting services and management oversight on
financial and operational matters. The Company paid fees totaling $1.8 million
to Dartford, a member of VDK LLC, during the year ended June 30, 1997 and $0.6
million during the period ended June 29, 1996. The annual management fee was
$0.7 million prior to the acquisition of Mrs. Paul's and $1.2 million prior to
the acquisition of the Quaker Frozen Food Business. The charge is included in
general and administrative expenses in the Statement of Operations.

The Company paid certain members of VDK LLC fees totaling $2.1 million
during the year ended June 30, 1997 and $2.0 million during the period ended
June 29, 1996. The fees were paid for services provided in identifying,
negotiating and consummating the Company's acquisitions. The fees were included
in the costs of the acquisitions.

On September 19, 1995, Mr. Thomas O. Ellinwood, the President of the
Company, and Mr. Thomas J. Youngerman, Mr. Olafur Gudmundsson and Ms. C. Renee
Sloan, Vice Presidents of the Company, executed promissory notes in favor of the
Company in exchange for monies borrowed to assist in the capitalization of their
limited liability company interests held with VDK LLC. The promissory notes
mature September 30, 1998 with required annual payments. Interest is due and
payable quarterly at the rate of 8.5% per annum. The aggregate balance
outstanding on the promissory notes was $213.3 and $305.0 at June 30, 1997 and
June 29, 1996, respectively. The net outstanding balance has been recorded as a
reduction to paid-in capital and is reflected as such on the Statement of
Changes in Stockholder's Equity.

NOTE 16--INCENTIVE PLAN EXPENSE

VDK LLC has implemented a Management Compensation Plan ("the Plan") as a
means by which Key Personnel (defined as employees and other specific designated
persons) of the Company, and/or affiliated with the Company, may be given an
opportunity to benefit from the appreciation in the value of the Company. The
Amended and Restated Limited Liability Company Agreement of VDK LLC, dated as of
September 19, 1995, was amended and restated as of May 22, 1997 to approve and
adopt the Plan. The effective date of the Plan is as of September 19, 1995.

Under the Plan, Key Personnel are issued various types of management
compensation units (the "Units") in the Plan as a means to participate in the
valuation of the Company, as determined based on certain formulae in the Plan
document. The Units are subject to forfeiture based on the failure to meet
vesting requirements, specified earnings targets, and/or rates of return targets
for certain investors in VDK

F-47
<PAGE>
VDK HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS)

NOTE 16--INCENTIVE PLAN EXPENSE (CONTINUED)
LLC. Pursuant to the Plan document, the Units will have special valuation and
payment provisions upon a change of control or initial public offering of the
Company's stock (an "IPO").

Upon a change of control or IPO, the Units will be valued and amounts will
be paid to Unit holders according to various factors, such as the type of
triggering event and the amount of proceeds paid to the VDK LLC's investors. In
general, there will be no payment on the Units until the VDK LLC's investors
have received a designated return on their investments. The payment to Unit
holders may be cash and/or non-cash securities, depending on the triggering
event and the type of distribution received by VDK LLC's investors. In addition,
the Plan will gross-up payments to the Unit holders in certain events relating
to (i) any excise tax due under federal income tax rules, and (ii) any tax on
the Units in excess of capital gains tax rates.

The total amount due under the Plan, if any, is subject to the rates of
return and forfeiture factors discussed above. Based on management and the Board
of Director's assessment of the current valuation of the Company, there is no
basis to record an accrual for incentive expense at this time. Should the
Company appreciate further in value, incentive expense to be recognized in
future periods could be significant. To the extent any amounts are deemed
accruable under the Plan in the future, such amounts will be a liability of VDK
LLC as the sponsor of the Plan. However, because the Plan is for the benefit of
Key Personnel of the Company, any expense to be recognized under the Plan will
be pushed down to the Company, and will be recorded by the Company as expense
and as additional paid in capital from its parent over the applicable vesting
periods. See Note 18--Subsequent Events.

NOTE 17--COMMITMENTS AND CONTINGENCIES

NOTE 18--SUBSEQUENT EVENTS--(UNAUDITED)

SALE OF COMPANY

On April 8, 1998, VDK LLC sold all of the outstanding common stock of the
Company to Aurora/ VDK LLC, a newly formed limited liability company, in
exchange for an interest in Aurora/VDK LLC. Following the sale transaction,
Aurora/VDK LLC is owned 44.5% by VDK LLC and 55.5% by MBW Investors LLC.

INCENTIVE PLAN EXPENSE

In the quarter ended March 31, 1998, the Company recognized a pre-tax charge
of $69.0 million for incentive plan expense under the Plan.

F-48
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Management of
The Procter & Gamble Company:

We have audited the accompanying statements of equipment and goodwill as of
June 30, 1997 and 1996 and statements of direct revenues, direct expenses, and
allocated selling expense of the Duncan Hines Business of The Procter & Gamble
Company ("Procter & Gamble") for the years ended June 30, 1997, 1996, and 1995
(collectively, the "statements"). These statements are the responsibility of
Procter & Gamble's management. Our responsibility is to express an opinion on
these statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements referred to above are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statements referred to above. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the statements referred to above. We believe that our audits provide a
reasonable basis for our opinion.

The assets and operations covered by the statements referred to above are a
part of The Procter & Gamble Company and have no separate legal status. As
described in Notes 1 and 2 to the statements, the statements referred to above
have been prepared from Procter & Gamble's consolidated financial records and
allocations of certain costs and expenses have been made. These allocations are
not necessarily indicative of the costs and expenses that would have been
incurred by the Duncan Hines Business on a stand-alone basis.

In our opinion, the statements referred to above present fairly, in all
material respects, the equipment and goodwill as of June 30, 1997 and 1996 and
the direct revenues, direct expenses, and allocated selling expense of the
Duncan Hines Business of The Procter & Gamble Company for the years ended June
30, 1997, 1996, and 1995 in conformity with generally accepted accounting
principles.

Deloitte & Touche LLP
June 9, 1998
Cincinnati, Ohio

F-49
<PAGE>
THE DUNCAN HINES BUSINESS OF
THE PROCTER & GAMBLE COMPANY

STATEMENTS OF EQUIPMENT AND GOODWILL
AS OF DECEMBER 31, 1997 AND JUNE 30, 1997 AND 1996

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, JUNE 30,
(IN THOUSANDS) 1997 1997 1996
------------ --------- ---------
<S> <C> <C> <C>
(UNAUDITED)
EQUIPMENT--NET............................................................... $ 18,065 $ 19,349 $ 20,502
GOODWILL..................................................................... 3,914 3,914 3,914
------------ --------- ---------
TOTAL........................................................................ $ 21,979 $ 23,263 $ 24,416
------------ --------- ---------
------------ --------- ---------
</TABLE>

See accompanying notes to the financial statements.

F-50
<PAGE>
THE DUNCAN HINES BUSINESS OF
THE PROCTER & GAMBLE COMPANY

STATEMENTS OF DIRECT REVENUES, DIRECT EXPENSES, AND ALLOCATED
SELLING EXPENSE FOR THE YEARS ENDED JUNE 30, 1997, 1996, AND 1995, AND FOR
THE SIX-MONTH PERIODS ENDED DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
SIX-MONTH PERIOD ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
---------------------- ----------------------------------
1997 1996 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS) (UNAUDITED)
DIRECT REVENUES:
Gross revenues..................................... $ 154,519 $ 146,124 $ 253,548 $ 277,721 $ 281,303
Less:
Trade spending................................... (15,822) (9,659) (19,646) (16,357) (14,775)
Coupon expense................................... (2,194) (2,110) (2,900) (3,378) (5,388)
---------- ---------- ---------- ---------- ----------
Net direct revenues............................ 136,503 134,355 231,002 257,986 261,140
---------- ---------- ---------- ---------- ----------

COSTS OF PRODUCTS SOLD:
Product costs...................................... 85,139 80,361 144,261 153,791 153,015
Delivery costs..................................... 6,398 6,647 11,787 13,388 14,267
---------- ---------- ---------- ---------- ----------
Total costs of products sold................... 91,537 87,008 156,048 167,179 167,282
---------- ---------- ---------- ---------- ----------

GROSS MARGIN......................................... 44,966 47,347 74,954 90,807 93,858
---------- ---------- ---------- ---------- ----------

DIRECT MARKETING:
Consumer promotional expense....................... 1,184 1,226 3,376 5,186 4,498
Advertising expense................................ 6,549 5,576 9,957 13,798 12,276
Other marketing expenses........................... 1,119 1,453 2,520 4,049 3,245
---------- ---------- ---------- ---------- ----------
Total direct marketing expenses................ 8,852 8,255 15,853 23,033 20,019
---------- ---------- ---------- ---------- ----------

DIRECT SELLING, ADMINISTRATIVE AND OTHER............. 4,131 6,177 10,041 10,791 9,962
ALLOCATED SELLING EXPENSE............................ 2,762 3,297 4,750 6,373 6,429
---------- ---------- ---------- ---------- ----------
EXCESS OF DIRECT REVENUES OVER DIRECT EXPENSES AND
ALLOCATED SELLING EXPENSE.......................... $ 29,221 $ 29,618 $ 44,310 $ 50,610 $ 57,448
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>

See accompanying notes to the financial statements.

F-51
<PAGE>
THE DUNCAN HINES BUSINESS OF
THE PROCTER & GAMBLE COMPANY
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS)

1. BASIS OF PRESENTATION

On January 16, 1998, The Procter & Gamble Company (Procter & Gamble) sold
certain assets and the related business of the Duncan Hines brand ("Duncan Hines
Business"). The Duncan Hines Business produces baking goods which are
manufactured at Procter & Gamble's Jackson, TN. plant, which also produces other
food products for Procter & Gamble that are unrelated to the Duncan Hines
Business. The accompanying statements present the equipment and goodwill that
Procter & Gamble sold as of December 31, 1997 and June 30, 1997 and 1996 and
direct revenues, costs of products sold, direct marketing expenses, direct
selling, administrative and other expenses, and allocated selling expense for
the years ended June 30, 1997, 1996, and 1995, the six-month periods ended
December 31, 1997 and 1996 for the Duncan Hines Business. Results of operations
for interim periods are not necessarily indicative of results to be expected for
an entire year.

Procter & Gamble did not account for the Duncan Hines Business as a separate
entity. Accordingly, the information included in the accompanying statements of
direct revenues, direct expenses, and allocated selling expense has been
obtained from Procter & Gamble's consolidated financial records. The statements
of direct revenues, direct expenses, and allocated selling expense include
allocations of certain Procter & Gamble selling, administrative, and other
expenses, as discussed in Note 2. Procter & Gamble management believes the
allocations are reasonable; however, these allocated expenses are not
necessarily indicative of expenses that would have been incurred by the Duncan
Hines Business on a stand-alone basis, since certain administrative and other
expenses are provided to the Duncan Hines Business that are not included in the
accompanying statements as discussed in Note 2.

In addition, the statements of direct revenues, direct expenses, and
allocated selling expense include allocations of certain Jackson Plant costs, as
discussed in Note 2. Procter & Gamble management believes these allocations are
reasonable; however, these allocated costs may not necessarily be indicative of
costs that would have been incurred by the Duncan Hines Business on a
stand-alone basis, since these allocated costs are based on the structure of the
Jackson Plant operations and related activities, as managed and operated by
Procter & Gamble.

Equipment and goodwill and direct revenues, direct expenses, and allocated
selling expense are presented in the accompanying statements in accordance with
generally accepted accounting principles. The unaudited information for the
six-month periods ended December 31, 1997 and 1996 contain all adjustments,
consisting only of normal recurring accruals, necessary for a consistent
presentation of the direct revenues, direct expenses, and allocated selling
expense for the six-month periods.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION--Revenue from the sale of products is recognized at the
time the products are shipped.

USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying disclosures. Although these estimates are based on management's
best knowledge of current events and actions Procter & Gamble may undertake in
the future, actual results ultimately may differ from the estimates.

F-52
<PAGE>
THE DUNCAN HINES BUSINESS OF
THE PROCTER & GAMBLE COMPANY
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS) (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EQUIPMENT--Equipment cost and the related accumulated depreciation were as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1997 JUNE 30, JUNE 30,
(UNAUDITED) 1997 1996
------------ --------- ---------
<S> <C> <C> <C>
Equipment cost............................................................... $ 51,604 $ 51,793 $ 50,038
Accumulated depreciation..................................................... 33,539 32,444 29,536
------------ --------- ---------
Net book value............................................................... $ 18,065 $ 19,349 $ 20,502
------------ --------- ---------
------------ --------- ---------
</TABLE>

Depreciation is computed using the straight-line method over the estimated
useful lives of the assets which primarily range from 4 to 19 years.

GOODWILL--Goodwill represents the cost of acquisition in excess of tangible
assets and identifiable intangible assets received. Since the goodwill was
acquired prior to November 1970 it is not being amortized.

COUPON EXPENSE--Coupon expense represents deductions from direct revenues
for coupons related to Duncan Hines products. The expense is based on expected
redemption rates of issued coupons based on historical data.

COSTS OF PRODUCTS SOLD--Inventories are valued at cost, which is not in
excess of current market. Cost is primarily determined by the average cost
method. The cost of products sold include allocations of costs to the Duncan
Hines Business activities, including warehousing, utilities, insurance, and
employee costs. These plant costs are allocated between the Duncan Hines
Business and other food products that are produced at the Jackson Plant based
primarily on number of employees, usage, and square footage.

DIRECT MARKETING--Direct marketing represents specifically identified
promotional, advertising, and other marketing expenses related to the Duncan
Hines Business.

DIRECT SELLING, ADMINISTRATIVE & OTHER--Certain selling, administrative and
other direct expenses are specifically identifiable and others are allocated to
the Duncan Hines Business based primarily on an estimate of actual time and
effort spent, number of employees, and square footage. Such allocated expenses
represent those charges that are attributable to the Duncan Hines Business and
include Procter & Gamble's Food and Beverage Sector and the Duncan Hines
Category related expenses such as human resources, public affairs, research and
development, finance and accounting, selling, and other general administrative
expenses. Certain administrative and other expenses are allocated to the Duncan
Hines Business by Procter & Gamble that are not directly attributable or
specifically identifiable to the Business and, therefore, are excluded from
direct selling, administrative, and other expenses in the accompanying
statements. Such expenses primarily include Procter & Gamble's Corporate and
North American Region related expenses such as human resources, executive
compensation, management systems, finance and accounting, research and
development, and general corporate expenses.

ALLOCATED SELLING EXPENSE--Selling expense is not specifically identifiable
to the Duncan Hines Business. Such expense is allocated to the Duncan Hines
Business based on the volume in relation to the total volume of the Duncan Hines
Business in relation to the total volume of the North American Region of Procter
& Gamble.

UNAUDITED INTERIM INFORMATION--The interim financial data as of December 31,
1997, and for the six months ended December 31, 1997 and 1996 is unaudited;
however, in the opinion of the Company, the

F-53
<PAGE>
THE DUNCAN HINES BUSINESS OF
THE PROCTER & GAMBLE COMPANY
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS) (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
interim data includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results for the interim
periods.

3. SUPPLEMENTAL FINANCIAL INFORMATION

The following table presents supplemental financial information:

<TABLE>
<CAPTION>
SIX-MONTH PERIOD ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
------------------------ -------------------------------
(IN THOUSANDS) 1997 1996 1997 1996 1995
----------- ----------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Depreciation and Amortization(1) $ 1,777 $ 1,863 $ 3,818 $ 3,689 $ 3,598
Cash Flows:
Capital Expenditures(1)........................................ 1,500 1,500 4,600 4,500 3,800
Changes in Inventory........................................... 1,313 (1,098) (3,162) 355 1,149
</TABLE>

- ------------------------------

(1) The amounts for Depreciation and Amortization and Capital Expenditures
include allocations of certain Jackson Plant costs, in addition to those
costs related to Equipment - Net presented in the accompanying statements of
equipment and goodwill. Amounts for Depreciation and Amortization are
included in Product costs in the accompanying statements of direct revenues,
direct expenses, and allocated selling expense. These amounts are not
necessarily indicative of the costs and expenses that would have been
incurred by the Duncan Hines Business on a stand-alone basis.

* * * * * *

F-54
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
Kraft Foods, Inc.

We have audited the accompanying statements of assets to be acquired of the
Log Cabin Syrup Business (the "Business"), a component of Kraft Foods, Inc. as
of December 28, 1996 and December 30, 1995, and the statements of operations of
the Business for the years ended December 28, 1996, December 30, 1995 and
December 31, 1994. These financial statements are the responsibility of Kraft
Foods, Inc.'s management. Our responsibility is to express an opinion on these
financial statements based on our audits.

The accompanying financial statements were prepared to present assets to be
acquired and the results of operations of the Business pursuant to the asset
purchase agreement between Kraft Foods, Inc. and MBW Foods, Inc. as described in
Note 1 and are not intended to be a complete presentation of the Business's
financial position and cash flows.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the assets to be acquired of the Business as of
December 28, 1996 and December 30, 1995 and the results of its operations for
the years ended December 28, 1996, December 30, 1995 and December 31, 1994, in
conformity with generally accepted accounting principles.

Coopers & Lybrand L.L.P.

Chicago, Illinois
August 20, 1997

F-55
<PAGE>
LOG CABIN SYRUP BUSINESS
(A COMPONENT OF KRAFT FOODS)
STATEMENTS OF ASSETS TO BE ACQUIRED
DECEMBER 28, 1996 AND DECEMBER 30, 1995
(IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 28, DECEMBER 30,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Inventories.......................................................................... $ 6,717 $ 6,661
Machinery and equipment, net of accumulated depreciation of $2,415 and $2,099,
respectively....................................................................... 8,238 8,976
------------ ------------
Total assets................................................................... $ 14,955 $ 15,637
------------ ------------
------------ ------------
</TABLE>

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

F-56
<PAGE>
LOG CABIN SYRUP BUSINESS
(A COMPONENT OF KRAFT FOODS, INC.)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 28, 1996,
DECEMBER 30, 1995 AND
DECEMBER 31, 1994
(IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 28, DECEMBER 30, DECEMBER 31,
1996 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Net sales..................................................... $ 104,466 $ 106,330 $ 115,894
Costs and expenses:
Cost of products sold....................................... 36,237 35,804 35,254
Freight and distribution.................................... 7,099 7,620 7,553
Trade promotions............................................ 21,355 23,239 20,898
Consumer marketing.......................................... 3,994 5,478 7,940
Selling, general and administrative......................... 7,388 7,738 7,863
Amortization of goodwill.................................... 1,350 1,350 1,350
--------------- --------------- ---------------
Total costs and expenses.................................. 77,423 81,229 80,858
--------------- --------------- ---------------
Net sales less direct and allocated expenses before taxes... 27,043 25,101 35,036
Provision for income taxes.................................... 11,229 10,461 14,391
--------------- --------------- ---------------
Net sales less direct and allocated expenses.................. $ 15,814 $ 14,640 $ 20,645
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>

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

F-57
<PAGE>
LOG CABIN SYRUP BUSINESS
(A COMPONENT OF KRAFT FOODS, INC.)
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS)

1. DESCRIPTION OF BUSINESS

On May 7, 1997, Kraft Foods, Inc. ("Kraft" or the "Company"), entered into
an Asset Purchase Agreement (the "Agreement") with MBW Foods Inc. (the "Buyer").
The Agreement provides for the sale of certain assets of Kraft pertaining to its
Log Cabin Syrup Business (the "Business"). Under the terms of the Agreement,
Kraft Foods, Inc. sold to the Buyer certain assets (inventory and machinery and
equipment) used in the Business, as defined in the Agreement, and retained the
manufacturing plants, employees and certain liabilities, as defined in the
Agreement, of the Business. The sale was consummated on July 1, 1997.

The Business's products, which are distributed on an international basis,
consist of retail and foodservice syrup products. A significant portion of the
Business's net sales are with major retailers. The accompanying financial
statements represent the results of operations and assets to be acquired of the
Business in the United States and Canada, including export sales, but
specifically excluding the Business in Mexico and the manufacture and sale of
syrups under the Kraft brand name pursuant to a distribution agreement with
Alliant Foodservice, a former indirect wholly-owned subsidiary of Kraft.
Throughout the periods covered by the financial statements, the Business's
operations were conducted and accounted for as part of the Company. These
financial statements have been carved out from the Company's historical
accounting records.

The manufacturing and distribution operations of the Business are conducted
at sites where other Company manufacturing and distribution operations not
included in the Business are present. In addition, certain nonmanufacturing
operations of the Business share facilities and space with other Company
operations. At these shared sites, only the assets of the Business (inventories
and machinery and equipment) are included in the statements of assets to be
acquired.

Under the Company's centralized cash management system, cash requirements of
the Business were generally provided directly by the Company and cash generated
by the Business was generally remitted directly to the Company. Transaction
systems (e.g., payroll, employee benefits, accounts payable) used to record and
account for cash disbursements were provided by centralized Kraft organizations
outside the defined scope of the Business. Most of these corporate systems are
not designed to track assets/liabilities and receipts/payments on a business
specific basis. Given these constraints and since only certain assets of the
Business were sold, statements of financial position and cash flows could not be
prepared.

Net sales in the accompanying statements of operations represent net sales
directly attributable to the Business. Costs and expenses in the accompanying
statements of operations represent direct and allocated costs and expenses
related to the Business. Costs for certain functions and services performed by
centralized Company organizations outside the defined scope of the Business have
been allocated to the Business based on usage or sales of the Business, as
appropriate, compared to total usage or sales. The results of operations include
expense allocations for (1) selling costs for sales and customer service
functions and services performed on behalf of the Business by the centralized
sales group within the Company, (2) fixed manufacturing and distribution costs
of the facilities that produce and store the products of the Business, (3)
research and development expense, (4) administrative costs of the marketing
division responsible for the Business, including finance and accounting, and (5)
certain Kraft marketing and corporate expenses attributable to the Business,
including human resources, systems, legal, and risk management (see Notes 2 and
4 for a description of the allocation methodologies employed). Kraft

F-58
<PAGE>
LOG CABIN SYRUP BUSINESS
(A COMPONENT OF KRAFT FOODS, INC.)
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS) (CONTINUED)

1. DESCRIPTION OF BUSINESS (CONTINUED)
maintains all debt and notes payable on a consolidated basis to fund and manage
all of its operations. Debt and related interest expense were not allocated to
the Business.

The statements of operations of the Business exclude allocations of certain
expenses, primarily related to certain Kraft general corporate expenses.
Expenses not allocated include, but are not limited to, general overhead costs
related to corporate accounting, human resources, legal, systems, and risk
management.

Total cost of products sold includes $2,398, $2,401, and $2,091 in allocated
costs for the years ended December 28, 1996, December 30, 1995 and December 31,
1994, respectively. Freight and distribution expenses include $2,369, $2,597 and
$2,801 of allocated costs for the years ended December 28, 1996, December 30,
1995 and December 31, 1994, respectively. Selling, general and administrative
expenses include $7,388, $7,738 and $7,863 of allocated costs for the years
ended December 28, 1996, December 30, 1995 and December 31, 1994, respectively.

All of the allocations and estimates in the statements of operations are
based on assumptions that Company management believes are reasonable under the
circumstances. However, these allocations and estimates are not necessarily
indicative of the costs and expenses that would have resulted if the Business
had been operated as a separate entity or the future operating results of the
Business.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FISCAL PERIODS

The Business's fiscal year consists of 52 or 53 weeks, ending on the last
Saturday in December. The year ended December 31, 1994 consisted of 53 weeks.
Each of the years ended December 30, 1995 and December 28, 1996 consisted of 52
weeks.

INCOME RECOGNITION

Sales and related cost of products sold are included in income and expense,
respectively, when products are shipped to the customer.

INVENTORIES

Finished goods inventories are directly attributable to the Business. Raw
materials, packaging and supplies have been allocated to the Business on the
basis of usage during the preceding year. Inventories are priced at the lower of
cost or market with cost determined on a last-in, first-out (LIFO) basis.
Certain distribution and fixed costs have been included in inventory in
accordance with the Uniform Capitalization Rules under the Tax Reform Act of
1986 ("UNICAP") rules.

MACHINERY AND EQUIPMENT

Machinery and equipment in the accompanying statements of assets to be
acquired (the "M&E") is stated at historical cost, net of accumulated
depreciation directly related to that machinery and equipment. Alterations and
major overhauls which extend the lives or increase the capacity of the M&E are

F-59
<PAGE>
LOG CABIN SYRUP BUSINESS
(A COMPONENT OF KRAFT FOODS, INC.)
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS) (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
capitalized. The amounts for property disposals are removed from the M&E and
accumulated depreciation accounts and any resultant gain or loss is included in
earnings. Ordinary repairs and maintenance are charged to operating costs.

Depreciation is calculated using the straight-line method over the useful
lives of the M&E. Depreciation expense provided in costs and expenses in the
accompanying statements of operations for the M&E is directly attributable to
the Business. Depreciation expense provided in costs and expenses in the
accompanying statements of operations for the shared facilities is allocated to
the Business based on usage or occupancy of the Business compared to total usage
or occupancy.

COST OF PRODUCTS SOLD

Cost of products sold includes direct costs of materials, labor and overhead
and allocated costs for facilities, functions and services used by the Business
at shared sites. Overhead allocations are based on estimated time spent by
employees, relative use of facilities, estimated consumption of common supplies,
and sales of the Business compared to total Kraft sales.

FREIGHT AND DISTRIBUTION

Freight and distribution expenses consisting of direct outbound freight and
direct and allocated costs related to the warehousing of products of the
Business are included in cost of products sold.

TRADE PROMOTIONS

Trade promotions are directly attributable to the Business and represent
promotional incentives offered to retailers, including both performance and
non-performance trade deals.

CONSUMER MARKETING

Consumer marketing is directly attributable to the Business and consists
primarily of advertising and coupons. Advertising and promotional costs are
generally expensed as incurred. Production costs are expensed on the initial use
of the advertisement or the initial drop of the coupons. Advertising expense was
$361, $23 and $1,594 for the years ended December 28, 1996, December 30, 1995
and December 31, 1994, respectively.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative consists solely of allocated selling,
administrative and research and development expenses. The Business has allocated
these expenses based on various measures relevant to the expense being
allocated.

F-60
<PAGE>
LOG CABIN SYRUP BUSINESS
(A COMPONENT OF KRAFT FOODS, INC.)
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS) (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
AMORTIZATION OF GOODWILL

Goodwill consists of an estimate of goodwill allocable to the Business
arising from Philip Morris's acquisition of General Foods, Inc. in 1985.
Goodwill is amortized over 40 years using the straight-line method.

INCOME TAXES

The taxable income of the Business was included in the tax returns of Philip
Morris. As such, separate income tax returns were not prepared or filed for the
Business. The provisions for income taxes included in the accompanying
statements of operations have been determined on a separate company basis. No
deferred income taxes have been attributed to the Business.

PENSIONS

The Company has noncontributory defined benefit plans covering substantially
all U.S. employees, including the employees of the Business. The benefits for
these plans are based primarily on employees' years of service and employees'
compensation during the last years of employment. It is the Company's policy to
fund at least the minimum amounts required by the Employee Retirement Income
Security Act of 1974. The Company maintains profit-sharing and savings plans for
full-time employees who meet certain eligibility requirements. The service and
interest costs allocated to the Business relative to the aforementioned plans
are based on pensionable earnings of employees directly attributable or
allocated to the Business.