Form 11-K
Securities and Exchange Commission
Washington, D.C. 20549
Annual Report
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year ended May 31, 1996
The Grist Mill Co.
Employees Retirement Savings Plan and Trust
Grist Mill Co.
P.O. Box 430
21340 Hayes Avenue
Lakeville, Minnesota 55044
The Grist Mill Co. Employees Retirement Savings Plan and Trust
Financial Statements and Schedules
Years ended May 31, 1996 and 1995
CONTENTS
Report of Independent Auditors.................................................1
Financial Statements and Schedules
Statements of Net Assets Available for Benefits................................2
Statements of Changes in Net Assets Available for Benefits.....................4
Notes to Financial Statements..................................................6
Item 27(a) - Schedule of Assets Held for Investment Purposes..................10
Item 27(d) - Schedule of Reportable Transactions..............................11
Report of Independent Auditors
Board of Directors
Grist Mill Co.
We have audited the accompanying statements of net assets available for benefits
of The Grist Mill Co. Employees Retirement Savings Plan and Trust as of May 31,
1996 and 1995, and the related statements of changes in net assets available for
benefits for each of the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial 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 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, information regarding the Plan's net assets available for
benefits at May 31, 1996 and 1995, and the changes in its net assets available
for benefits for each of the years then ended, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of May 31, 1996 and reportable transactions for
the year then ended, are presented for purposes of complying with the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974, and are not a required part of the
financial statements. The supplemental schedules have been subjected to the
auditing procedures applied in our audit of the 1996 financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
1996 financial statements taken as a whole.
/s/ Ernst & Young LLP
September 11, 1996
<TABLE>
<CAPTION>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
Statement of Net Assets Available for Benefits
May 31, 1996
GRIST MILL
CO. MONEY FIXED COMMON INTER-
STOCK MARKET INCOME STOCK NATIONAL LOAN
TOTAL FUND FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments--at market value:
Cash equivalents $ 646,408 $ 27,359 $559,091 $ 8,210 $ 21,758 $ 9,868 $ 20,122
Common stock of employer 1,120,067 1,120,067
Other common stock 1,589,659 1,328,993 260,666
Corporate and other bonds 473,291 473,291
Grist Mill Company Loan Fund 216,914 216,914
-----------------------------------------------------------------------------------------------
4,046,339 1,147,426 559,091 481,501 1,350,751 270,534 237,036
Contributions and other
receivables 107,077 24,864 14,700 10,954 33,206 12,057 11,296
Interfund transfers and
adjustments 14,320 6,392 3,022 6,057 1,627 (31,418)
-----------------------------------------------------------------------------------------------
Net assets available for benefits $4,153,416 $1,186,610 $580,183 $495,477 $1,390,014 $284,218 $216,914
===============================================================================================
SEE ACCOMPANYING NOTES.
</TABLE>
<TABLE>
<CAPTION>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
Statement of Net Assets Available for Benefits
May 31, 1995
GRIST MILL
CO. MONEY FIXED COMMON INTER-
STOCK MARKET INCOME STOCK NATIONAL LOAN
TOTAL FUND FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments--at market value:
Cash equivalents $ 494,850 $ 109 $478,548 $ 23 $ 85 $ 54 $ 16,031
Common stock of employer 1,612,701 1,612,701
Other common stock 992,658 847,190 145,468
Corporate and other bonds 437,480 437,480
Grist Mill Company Loan Fund 183,125 183,125
-----------------------------------------------------------------------------------------------
3,720,814 1,612,810 478,548 437,503 847,275 145,522 199,156
Contributions and other
receivables 58,768 16,359 8,725 6,462 14,516 5,974 6,732
Interfund transfers and
adjustments 6,907 6,325 3,239 5,211 1,081 (22,763)
-----------------------------------------------------------------------------------------------
Net assets available for benefits $3,779,582 $1,636,076 $493,598 $447,204 $867,002 $152,577 $183,125
===============================================================================================
SEE ACCOMPANYING NOTES.
</TABLE>
<TABLE>
<CAPTION>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
Statement of Changes in Net Assets Available for Benefits
Year ended May 31, 1996
GRIST MILL
CO. MONEY FIXED COMMON INTER-
STOCK MARKET INCOME STOCK NATIONAL LOAN
TOTAL FUND FUND FUND FUND FUND FUND
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions:
Employee contributions $ 623,613 $ 166,094 $101,973 $ 80,187 $ 199,668 $ 75,691
Employer contributions 151,923 42,088 24,778 19,535 47,206 18,316
Employee rollovers 213 106 107
Interest and dividend income 168,013 9,318 32,304 34,461 79,720 12,210
---------------------------------------------------------------------------------------------
943,762 217,500 159,161 134,290 326,594 106,217
Deductions:
Benefit payments (422,270) (233,852) (76,270) (30,904) (51,418) (3,275) $(26,551)
---------------------------------------------------------------------------------------------
(422,270) (233,852) (76,270) (30,904) (51,418) (3,275) (26,551)
Interfund transfers:
Participant loans (58,792) (34,174) (20,135) (33,644) (2,640) 149,385
Investment elections (68,374) 16,615 (36,743) 83,300 5,202
Loan payments 30,643 21,253 11,607 21,005 4,537 (89,045)
---------------------------------------------------------------------------------------------
(96,523) 3,694 (45,271) 70,661 7,099 60,340
Net realized and unrealized
(depreciation) appreciation in
market value of investments (147,658) (336,591) (9,842) 177,175 21,600
---------------------------------------------------------------------------------------------
Net additions (deductions) 373,834 (449,466) 86,585 48,273 523,012 131,641 33,789
Net assets available for benefits
at beginning of year 3,779,582 1,636,076 493,598 447,204 867,002 152,577 183,125
---------------------------------------------------------------------------------------------
Net assets available for benefits
at end of year $4,153,416 $1,186,610 $580,183 $495,477 $1,390,014 $284,218 $216,914
=============================================================================================
SEE ACCOMPANYING NOTES.
</TABLE>
<TABLE>
<CAPTION>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
Statement of Changes in Net Assets Available for Benefits
Year ended May 31, 1995
GRIST MILL
CO. MONEY FIXED COMMON INTER-
STOCK MARKET INCOME STOCK NATIONAL LOAN
TOTAL FUND FUND FUND FUND FUND FUND
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions:
Employee contributions $ 549,328 $ 181,043 $ 95,558 $ 70,917 $151,290 $ 50,520
Employer contributions 128,975 39,650 23,994 17,550 36,144 11,637
Employer rollovers 24,337 21,759 51 1,260 1,267
Interest and dividend income 87,346 6,882 25,372 29,227 23,993 1,872
---------------------------------------------------------------------------------------------
789,986 249,334 144,975 118,954 212,694 64,029
Deductions:
Benefit payments (272,721) (54,496) (59,465) (23,005) (102,906) (22,854) $ (9,995)
---------------------------------------------------------------------------------------------
(272,721) (54,496) (59,465) (23,005) (102,906) (22,854) (9,995)
Interfund transfers:
Participant loans (13,604) (54,486) (11,723) (48,502) 128,315
Investment elections 192,497 (53,275) (75,527) (169,264) 105,569
Loan payments 24,138 33,224 11,141 21,058 2,201 (91,762)
---------------------------------------------------------------------------------------------
203,031 (74,537) (76,109) (196,708) 107,770 36,553
Net realized and unrealized
appreciation in market value
of investments 663,125 569,804 5,139 84,550 3,632
---------------------------------------------------------------------------------------------
Net additions (deductions) 1,180,390 967,673 10,973 24,979 (2,370) 152,577 26,558
Net assets available for benefits
at beginning of year 2,599,192 668,403 482,625 422,225 869,372 156,567
---------------------------------------------------------------------------------------------
Net assets available for benefits
at end of year $3,779,582 $1,636,076 $493,598 $447,204 $867,002 $152,577 $183,125
=============================================================================================
SEE ACCOMPANYING NOTES.
</TABLE>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
Notes to Financial Statements
May 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING METHOD
The accounting records of the Plan are maintained on the accrual basis.
INVESTMENTS
Investments are recorded at current value. Securities which are traded on a
national securities exchange are valued at the last reported sales price of the
year. The market value of the units of participation in mutual funds is based on
the fair market value of the underlying investments. Cost of investments sold is
determined on an average cost basis. Investments in the Loan Fund are valued at
the amount of the participant loan net of principal repayments.
FEDERAL INCOME TAXES
Participants are not taxed currently on the employer's contributions to the Plan
or on income earned by the Plan. Distributions of benefits to participants,
their estates or beneficiaries generally are subject to federal income tax. The
Plan has received a determination letter, dated September 13, 1994, from the
Internal Revenue Service stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (IRC) and is, therefore, not subject to tax under
present income tax laws. Once qualified, the Plan is required to operate in
conformity with the IRC to maintain its qualification. The plan administration
is not aware of any course of action or series of events that have occurred that
might adversely affect the Plan's qualified status.
EXPENSES
Grist Mill Co. pays all costs of maintaining and administering the Plan.
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 notes.
Actual results could differ from those estimates.
2. DESCRIPTION OF THE PLAN
Employees who meet certain eligibility requirements (based primarily on age and
length of employment) can join The Grist Mill Co. Employees Retirement Savings
Plan and Trust. Union employees of the Company's subsidiary, Grist Mill
Confections, Inc., are ineligible to join the Plan. Under the terms of the Plan,
the employer matches 30% of the first 7% of employee contributions and may, at
its discretion, contribute an additional amount. Employees can invest up to 15%
of their salaries or wages in the Plan on a before-tax basis.
Employer and employee contributions fully vest at the time of contribution.
Employees select how their contributions will be invested from among five
investment options. The options are stock of the employer, a bond mutual fund, a
common stock mutual fund, an international stock fund and a money market fund.
In addition, participants who meet certain criteria may obtain loans from the
Plan based on their cumulative contributions.
Allocation of income is in accordance with the provisions in the Plan document.
A copy of the Summary Plan Description may be obtained from Grist Mill Co.
Benefits are paid upon retirement, death, disability and termination of
employment. Advances in the event of a proven financial hardship are also
provided for by the Plan.
The employer has the right to terminate the Plan or completely discontinue its
contributions to the Plan at any time.
This note is intended to highlight the principal provisions of the Plan. A more
complete explanation of the technical requirements and definitions is contained
in the Summary Plan Description.
3. INVESTMENTS
The Plan's investments are held by a bank-administered trust fund. The Plan's
investments (including investments bought, sold, as well as held during the
year) (depreciated) appreciated $(147,658) and $663,125 for the years ended May
31, 1996 and 1995, respectively. During 1996 and 1995, the Plan's investments
(depreciated) appreciated in fair value as follows:
NET
(DEPRECIATION)
APPRECIATION
IN MARKET VALUE
DURING PERIOD
----------------
Year ended May 31, 1996:
Common stocks:
Grist Mill Co. $(336,591)
Other 198,775
Corporate and other bonds (9,842)
---------
$(147,658)
=========
Year ended May 31, 1995:
Common stocks:
Grist Mill Co. $ 569,804
Other 3,632
Corporate and other bonds 89,689
---------
$ 663,125
=========
<TABLE>
<CAPTION>
The fair value of individual investments that represent 5% or more of net assets
is as follows:
MAY 31
1996 1995
-----------------------------
<S> <C> <C>
Investment Company of America $1,328,993 $ 847,190
Grist Mill Co. Common Stock 1,120,067 1,612,701
Cash Equivalents 646,408 494,850
Cash Management Trust of America 544,499 478,508
Intermediate Bond Fund of America 473,291 437,480
EuroPacific Growth Fund 260,666 145,467
Grist Mill Company-401(k) Master Promissory Note 216,914 183,125
</TABLE>
4. TRANSACTIONS WITH PARTIES-IN-INTEREST
Certain legal and accounting fees, and certain administrative expenses relating
to the maintenance of participant eligibility records are absorbed by Grist Mill
Co. Other than as described above or pursuant to a certain trust agreement (see
Note 3), the Plan has had no agreements or transactions with any
parties-in-interest.
<TABLE>
<CAPTION>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
EIN: 41-0974681
Plan #001
Item 27(a) - Schedule of Assets Held for Investment Purposes
May 31, 1996
BALANCE HELD
IDENTITY OF ISSUE, BORROWER, AT CLOSE OF CURRENT
LESSOR OR SIMILAR PARTY PERIOD COST VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Grist Mill Co. Common Stock* (1) 172,318 units $1,116,577 $1,120,067
Cash Management Trust of America 544,499 units 544,499 544,499
Intermediate Bond Fund of America 35,666 units 493,183 473,291
Investment Company of America 57,087 units 1,050,641 1,328,993
EuroPacific Growth Fund 10,618 units 240,160 260,666
First American Institutional Money Fund 102,868 units 102,868 101,909
Grist Mill Company-401(k) Master
Promissory Note (1) 216,914
----------------------------
$3,547,928 $4,046,339
============================
* No dividends were paid or declared during the year.
(1) Indicates party-in-interest to the Plan.
</TABLE>
<TABLE>
<CAPTION>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
EIN: 41-0974681
Plan #001
Item 27(d) - Schedule of Reportable Transactions
Year ended May 31, 1996
CURRENT VALUE
OF ASSET ON
IDENTITY OF PARTY PURCHASE SELLING COST OF TRANSACTION NET GAIN
INVOLVED DESCRIPTION OF ASSETS PRICE PRICE ASSET DATE OR (LOSS)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CATEGORY (i)--INDIVIDUAL TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
First Trust NA Grist Mill Co. Common Stock:
Purchased 29,457 shares $ 196,994 $ 196,994 $ 196,994
First Trust NA First American Institutional Money Fund:
Purchased 213,875 units 213,875 213,875 213,875
Sold 213,875 units $ 213,875 213,875 213,875 $ --
Sold 196,994 units 196,994 196,994 196,994 --
CATEGORY (iii)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
First Trust NA First American Institutional Money Fund:
Purchased 1,925,358 units in 231 transactions 1,925,358 1,925,358 1,925,358
Sold 1,839,720 units in 128 transactions 1,839,720 1,839,720 1,839,720 --
First Trust NA Cash Management Trust of America:
Purchased 145,411 units in 20 transactions 145,411 145,411 145,411
Sold 79,420 units in 9 transactions 79,420 79,420 79,420 --
First Trust NA Grist Mill Co. Common Stock:
Purchased 50,407 units in 8 transactions 350,086 350,086 350,086
Sold 35,292 units in 9 transactions 332,152 224,016 332,152 108,136
First Trust NA Intermediate Bond Fund of America:
Purchased 9,113 units in 23 transactions $123,742 0 $123,742 $123,742 0
Sold 5,733 units in 7 transactions 0 $ 78,088 79,305 78,088 $(1,217)
First Trust NA Investment Company of America:
Purchased 18,767 units in 19 transactions 397,029 0 397,029 397,029 0
Sold 4,103 units in 5 transactions 0 92,400 101,380 92,400 (8,980)
There were no reportable transactions of the following types for the period
June 1, 1995 to May 31, 1996:
Category (ii)--A series of transactions other than securities transactions in
excess of 5% of plan assets.
Category (iv)--Transactions with a person or with respect to a security if
any prior or subsequent single transaction within the plan year with such
person with respect to securities exceeds 5% of plan assets.
</TABLE>
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-17317) pertaining to the Employees Retirement Savings Plan and Trust
of Grist Mill Co. of our report dated September 11, 1996, with respect to the
financial statements and schedules of The Grist Mill Co. Employees Retirement
Savings Plan and Trust included in this Annual Report (Form 11-K) for the year
ended May 31, 1996.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
November 14, 1996
