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, 1997
The Grist Mill Co.
Employees Retirement Savings Plan and Trust
Grist Mill Co.
P.O. Box 430
21340 Hayes Avenue
Lakeville, Minnesota 55044
<PAGE>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
Financial Statements and Schedules
Years ended May 31, 1997 and 1996
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
<PAGE>
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, 1997 and 1996, 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, 1997 and 1996, 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, 1997 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 1997 financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
1997 financial statements taken as a whole.
/s/ Ernst & Young LLP
September 22, 1997
<PAGE>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
Statement of Net Assets Available for Benefits
May 31, 1997
<TABLE>
<CAPTION>
GRIST MILL MONEY FIXED COMMON INTER-
CO. MARKET INCOME STOCK NATIONAL LOAN
TOTAL STOCK FUND FUND FUND FUND FUND FUND
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments--at market value:
Cash equivalents $ 20,417 $ 2 $ - $ - $ - $ - $ 20,415
Common stock of employer 1,391,257 1,391,257 - - - - -
Mutual funds 3,350,430 - 555,610 522,375 1,787,343 485,102 -
Grist Mill Company Loan Fund 321,384 - - - - - 321,384
--------------------------------------------------------------------------------------
5,083,488 1,391,259 555,610 522,375 1,787,343 485,102 341,799
Contributions and other receivables 113,817 14,898 13,936 11,710 43,763 16,398 13,112
Pending interfund transfers - 10,085 5,772 4,068 10,394 3,208 (33,527)
--------------------------------------------------------------------------------------
Net assets available for benefits $5,197,305 $1,416,242 $575,318 $538,153 $1,841,500 $504,708 $321,384
======================================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
Statement of Net Assets Available for Benefits
May 31, 1996
<TABLE>
<CAPTION>
GRIST MILL MONEY FIXED COMMON INTER-
CO. MARKET INCOME STOCK NATIONAL LOAN
TOTAL STOCK FUND FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments--at market value:
Cash equivalents $ 101,909 $ 27,359 $ 14,592 $ 8,210 $ 21,758 $ 9,868 $ 20,122
Common stock of employer 1,120,067 1,120,067 - - - - -
Mutual funds 2,607,449 - 544,499 473,291 1,328,993 260,666 -
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
===================================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
Statement of Changes in Net Assets Available for Benefits
Year ended May 31, 1997
<TABLE>
<CAPTION>
GRIST MILL MONEY FIXED COMMON INTER-
CO. MARKET INCOME STOCK NATIONAL LOAN
TOTAL STOCK FUND FUND FUND FUND FUND FUND
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions:
Employee contributions $ 751,603 $ 170,626 $ 105,359 $ 89,176 $ 281,291 $105,151 $ -
Employer contributions 175,910 40,742 25,127 21,834 63,652 24,555 -
Employee rollovers 2,611 185 1,220 83 675 448 -
Interest and dividend income 189,478 8,150 25,247 33,173 93,411 29,497 -
------------------------------------------------------------------------------------------
1,119,602 219,703 156,953 144,266 439,029 159,651 -
Deductions:
Benefit payments (373,171) (86,743) (17,314) (44,701) (195,290) (16,950) (12,173)
------------------------------------------------------------------------------------------
(373,171) (86,743) (17,314) (44,701) (195,290) (16,950) (12,173)
Net interfund transfers - 92,798 (144,504) (58,691) (38,729) 32,483 116,643
Net realized and unrealized
appreciation in market value
of investments 297,458 3,874 - 1,802 246,476 45,306 -
------------------------------------------------------------------------------------------
Net additions (deductions) 1,043,889 229,632 (4,865) 42,676 451,486 220,490 104,470
Net assets available for
benefits at beginning of year 4,153,416 1,186,610 580,183 495,477 1,390,014 284,218 216,914
------------------------------------------------------------------------------------------
Net assets available for
benefits at end of year $5,197,305 $1,416,242 $ 575,318 $538,153 $1,841,500 $504,708 $321,384
==========================================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
Statement of Changes in Net Assets Available for Benefits
Year ended May 31, 1996
<TABLE>
<CAPTION>
GRIST MILL MONEY FIXED COMMON INTER-
CO. MARKET INCOME STOCK NATIONAL LOAN
TOTAL STOCK 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)
Net interfund transfers - (96,523) 3,694 (45,271) 70,661 7,099 60,340
Net realized and unrealized
(depreciation) appreciation
in market value of (147,658) (336,591) - (9,842) 177,175 21,600 -
investments
----------------------------------------------------------------------------------------
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
========================================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
Notes to Financial Statements
May 31, 1997
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.
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.
RECLASSIFICATION
Certain May 31, 1996 amounts have been reclassified to conform to the May 31,
1997 presentation.
<PAGE>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN
Employees who meet certain eligibility requirements (based primarily on age and
length of employment) can participate in The Grist Mill Co. Employees Retirement
Savings Plan and Trust. Union employees of the Company's subsidiary, Grist Mill
Confections, Inc., are ineligible to participate in 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 matching and employee deferral contributions fully vest at the time of
contribution. Employer discretionary contributions are fully vested after five
years of service.
Employees select how their contributions will be invested from among five
investment options. The options are stock of the employer, a fixed income 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. The maximum amount of the loan
is the lesser of $50,000 or one-half of the vested account balance. The loan
must be repaid within a five-year period unless the loan is used to purchase a
principal residence.
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.
<PAGE>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
Notes to Financial Statements (continued)
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) appreciated (depreciated) $297,458 and $(147,658) for the years ended May
31, 1997 and 1996, respectively. During 1997 and 1996, the Plan's investments
appreciated (depreciated) in fair value as follows:
NET
APPRECIATION
(DEPRECIATION)
IN MARKET VALUE
DURING PERIOD
---------------
Year ended May 31, 1997:
Grist Mill Co. Common stock $ 3,874
Mutual funds 293,584
---------
$ 297,458
=========
Year ended May 31, 1996:
Grist Mill Co. Common stock $(336,591)
Mutual funds 188,933
---------
$(147,658)
=========
The fair value of individual investments that represent 5% or more of net assets
is as follows:
MAY 31
1997 1996
------------------------
Investment Company of America $1,787,343 $1,328,993
Grist Mill Co. Common Stock 1,391,257 1,120,067
Cash Management Trust of America 555,610 544,499
Intermediate Bond Fund of America 522,375 473,291
EuroPacific Growth Fund 485,102 260,666
Grist Mill Company-401(k) Master Promissory Note 321,384 216,914
<PAGE>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
Notes to Financial Statements (continued)
4. TRANSACTIONS WITH PARTIES-IN-INTEREST
Certain legal and accounting fees, and 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, the Plan
has had no agreements or transactions with any parties-in-interest.
5. TAX STATUS
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 administrator is
not aware of any course of action or series of events that have occurred that
might adversely affect the Plan's qualified status.
6. SUBSEQUENT EVENT
The Plan year end of The Grist Mill Co. Employees Retirement Savings Plan and
Trust has changed to December 31. This will result in a short plan year of June
1, 1997 through December 31, 1997. The Plan will also switch to the daily method
of valuation effective January 1, 1998.
<PAGE>
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, 1997
<TABLE>
<CAPTION>
IDENTITY OF ISSUE, BORROWER, DESCRIPTION OF CURRENT
LESSOR OR SIMILAR PARTY INVESTMENT COST VALUE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Grist Mill Co. Common Stock* 210,001 units $1,344,144 $1,391,257
American Funds*:
Cash Management Trust of America 555,610 units 555,610 555,610
Intermediate Bond Fund of America 39,188 units 543,186 522,375
Investment Company of America 65,375 units 1,306,886 1,787,343
EuroPacific Growth Fund 17,608 units 426,171 485,102
First American Institutional Money Fund
20,417 units 20,417 20,417
Grist Mill Company*-401(k) Master Promissory Interest rates
Note (1) ranging from
7-10% - 321,384
-------------------------
$4,196,414 $5,083,488
=========================
</TABLE>
* Indicates party-in-interest to the Plan.
<PAGE>
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, 1997
<TABLE>
<CAPTION>
CURRENT VALUE
OF ASSET ON
PURCHASE SELLING COST OF TRANSACTION NET GAIN
IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE ASSET DATE OR (LOSS)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CATEGORY (iii)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
American Funds:
First American Institutional Purchased 2,035,436 units in
Money Fund 252 transactions $2,035,436 $2,035,436 $2,035,436
Sold 2,117,887 units in
156 transactions $2,117,887 2,117,887 2,117,887 $ -
Intermediate Bond Fund Purchased 13,881 units in
of America 27 transactions 185,596 185,596 185,596
Sold 10,359 units in
10 transactions 138,314 135,594 138,314 2,720
Cash Management Trust Purchased 171,788 units in
of America 27 transactions 171,788 171,788 171,788
Sold 160,677 units in
10 transactions 160,677 160,677 160,677 -
</TABLE>
<PAGE>
The Grist Mill Co. Employees Retirement Savings Plan and Trust
EIN: 41-0974681
Plan #001
Item 27(d) - Schedule of Reportable Transactions (continued)
<TABLE>
<CAPTION>
CURRENT VALUE
OF ASSET ON
PURCHASE SELLING COST OF TRANSACTION NET GAIN
IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE ASSET DATE OR (LOSS)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CATEGORY (iii)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS (CONTINUED)
American Funds (continued):
EuroPacific Growth Fund Purchased 10,741 units in
26 transactions $ 271,113 $ 271,113 $ 271,113
Sold 3,751 units in
4 transactions $ 91,983 85,102 91,983 $ 6,881
Investment Company of America Purchased 16,882 units in
23 transactions 413,444 413,444 413,444
Sold 8,594 units in
12 transactions 201,570 157,198 201,570 44,372
Grist Mill Co. Common Stock Purchased 75,319 units in
22 transactions 469,487 469,487 469,487
Sold 36,351 units in
13 transactions 202,172 234,815 202,172 (32,643)
</TABLE>
There were no category (i), (ii) or (iv) transactions for the year ended May 31,
1997.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Dated: November 13, 1997 GRIST MILL CO.
By: /s/ Daniel J. Kinsella
Daniel J. Kinsella
Vice President and Chief Financial
Officer
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 22, 1997, 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, 1997.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
November 10, 1997
