<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
--------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------- -------------------
Commission File Number: 0-15638
-----------
MICHAEL FOODS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-0498850
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Suite 324, Park National Bank Building
5353 Wayzata Boulevard
Minneapolis, MN 55416
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(612) 546-1500
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [ X ]Yes [ ]No
The number of shares outstanding of the registrant's Common Stock, $.01
par value, as of May 9, 1997 was 21,278,264 shares.
1
<PAGE> 2
PART I - FINANCIAL INFORMATION
MICHAEL FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1997 1996
- ------ ------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 10,127,000 $ 2,585,000
Accounts receivable, less allowances 98,496,000 51,394,000
Inventories 65,036,000 58,976,000
Prepaid expenses and other 4,001,000 2,976,000
------------ ------------
Total current assets 177,660,000 115,931,000
PROPERTY, PLANT AND EQUIPMENT-AT COST
Land 4,208,000 4,110,000
Buildings and improvements 102,867,000 97,470,000
Machinery and equipment 257,330,000 225,215,000
------------ ------------
364,405,000 326,795,000
Less accumulated depreciation 150,428,000 144,556,000
------------ ------------
213,977,000 182,239,000
OTHER ASSETS
Goodwill, net 116,533,000 53,602,000
Other 7,281,000 12,887,000
------------ ------------
123,814,000 66,489,000
------------ ------------
$515,451,000 $364,659,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
Current maturities of long-term debt $ 8,676,000 $ 8,410,000
Accounts payable 46,607,000 28,412,000
Accrued compensation 4,272,000 4,604,000
Accrued insurance 6,347,000 6,471,000
Other accrued expenses 27,125,000 11,357,000
------------ ------------
Total current liabilities 93,027,000 59,254,000
LONG-TERM DEBT, less current maturities 196,726,000 104,491,000
DEFERRED INCOME TAXES 31,829,000 26,872,000
CONTINGENCIES -- --
SHAREHOLDERS' EQUITY
Common stock, $.01 par value, 40,000,000 shares authorized,
shares issued 21,042,322 at March 31, 1997 and 19,459,731 at
December 31, 1996 210,000 195,000
Additional paid-in capital 130,091,000 113,268,000
Retained earnings 63,568,000 60,579,000
------------ ------------
193,869,000 174,042,000
------------ ------------
$515,451,000 $364,659,000
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE> 3
MICHAEL FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended March 31, (Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Net sales $195,418,000 $143,872,000
Cost of sales 171,689,000 124,959,000
------------ ------------
Gross profit 23,729,000 18,913,000
Selling, general and administrative expenses 14,669,000 11,525,000
------------ ------------
Operating profit 9,060,000 7,388,000
Other expense
Interest expense, net 2,278,000 1,920,000
------------ ------------
Earnings before income taxes 6,782,000 5,468,000
Income tax expense 2,820,000 2,190,000
------------ ------------
NET EARNINGS $ 3,962,000 $ 3,278,000
============ ============
NET EARNINGS PER SHARE $ .20 $ .17
============ ============
DIVIDENDS PER SHARE $ .05 $ .05
============ ============
Weighted average shares outstanding 20,091,000 19,353,000
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
MICHAEL FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, (Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Net cash provided by operating activities $ 8,487,000 $ 3,435,000
Cash flows from investing activities:
Capital expenditures (6,629,000) (6,265,000)
Business acquisitions, net of cash acquired, and other assets (43,322,000) 875,000
------------ ------------
Net cash used in investing activities (49,951,000) (5,390,000)
Cash flows from financing activities:
Payments on notes payable and long-term debt (118,434,000) (30,295,000)
Proceeds from notes payable and long-term debt 166,706,000 31,700,000
Proceeds from issuance of common stock 1,707,000 -
Cash dividends (973,000) (967,000)
------------ ------------
Net cash provided by financing activities 49,006,000 438,000
------------ ------------
Net increase (decrease) in cash and cash equivalents 7,542,000 (1,517,000)
Cash and cash equivalents at beginning of year 2,585,000 1,921,000
------------ ------------
Cash and cash equivalents at end of period $ 10,127,000 $ 404,000
============ ============
NON-CASH INVESTING AND FINANCING TRANSACTIONS
Acquisition:
Cash paid, net of cash acquired $ 42,720,000
Stock issued 38,859,000
Fair value of assets acquired (86,334,000)
Liabilities assumed 68,223,000
------------
Purchase price in excess of net assets acquired $ 63,468,000
============
In connection with the merger with North Star Universal, Inc., Michael Foods, Inc. (the "Company") assumed
$21,250,000 of net indebtedness and effectively repurchased 1,782,961 share Inc., of its common stock (see note D).
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
MICHAEL FOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with Regulation S-X pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although management believes
that the disclosures are adequate to make the information presented not
misleading.
The Company utilizes a fiscal year consisting of either 52 or 53 weeks, ending
on the Saturday nearest to December 31 each year. The quarters ended March 31,
1997 and March 31, 1996 each include thirteen weeks of operations. For clarity
of presentation, the Company has described all periods presented as if the
quarter ended on March 31.
In the opinion of management, the unaudited condensed consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position as of March 31,
1997 and the results of operations and cash flows for the three month periods
ended March 31, 1997 and 1996. The results of operations for the three months
ended March 31, 1997 are not necessarily indicative of the results for the full
year.
NOTE B - NEW ACCOUNTING PRONOUNCEMENT
The FASB has issued Statement of Financial Accounting Standards No. 128,
Earnings Per Share, which is effective for periods ended after December 15,
1997. Early adoption of the new standard is not permitted. The new standard
eliminates primary and fully diluted earnings per share disclosure and requires
presentation of basic and diluted earnings per share, together with disclosure
of how the per share amounts were computed. Basic earnings per share excludes
dilution and is computed by dividing income available to common shareholders by
the weighted-average common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised and
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. The pro forma effect of adopting
the new standard would not have an impact on the reported net earnings per
share for the three month periods ended March 31, 1997 and 1996 for both basic
and diluted earnings per share.
NOTE C - INVENTORIES
Inventories other than flocks, raw potatoes, and potato products are stated at
the lower of cost (determined on a first-in, first-out basis) or market. Flock
inventory represents the cost of purchasing and raising flocks to laying
maturity, at which time their cost is amortized to operations over their
expected useful life of generally one to two years, assuming no salvage value.
Raw potatoes and potato products are stated at the lower of average cost for
the year in which produced or at market. Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- -----------
<S> <C> <C>
Raw materials and supplies $15,376,000 $11,065,000
Finished goods 28,731,000 21,235,000
Flocks 20,929,000 26,676,000
----------- -----------
$65,036,000 $58,976,000
=========== ===========
</TABLE>
5
<PAGE> 6
MICHAEL FOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
================================================================================
(Unaudited)
NOTE D - ACQUISITION OF PAPETTI'S AND MERGER WITH NORTH STAR UNIVERSAL
On February 26, 1997, the Company completed the acquisition of Papetti's
Hygrade Egg Products, Inc. and affiliated entities (collectively "Papetti's").
The acquisition has been accounted for as a purchase. Total consideration of
$83,174,000, together with the assumption of $22,825,000 of notes payable and
long-term debt, was delivered through the issuance of 3,195,455 shares of newly
issued common stock valued at $38,859,000, and $44,315,000 in cash and closing
costs. The total consideration delivered exceeded the fair value of the net
assets acquired by $63,468,000, which has been recorded as goodwill and will be
amortized on a straight line basis over 40 years. The Papetti's results of
operations have been included in the Company's operating results since the
date of acquisition.
On February 28, 1997, Michael Foods, Inc., a Delaware corporation, merged into
North Star Universal, Inc. ("NSU") with NSU immediately distributing NSU's
subsidiary, ENStar Inc., in a tax-free distribution to the former shareholders
of NSU. At the time of the merger, NSU changed its name to Michael Foods, Inc.
and the management and operations of the continuing entity are those of the
Company. The merger has been accounted for as a reverse acquisition utilizing
the purchase method of accounting. The effect of the merger is that the Company
assumed $21,250,000 of net subordinated indebtedness and effectively retired
1,782,961 shares of the Company's common stock of approximately equal value.
The following unaudited pro forma statement of earnings information has been
prepared assuming the Papetti's acquisition, the merger with NSU and the
refinancing of the Company's debt described in Note E had occurred on January
1, 1997 and 1996:
<TABLE>
<CAPTION>
For the three months ended March 31, 1997 1996
- ----------------------------------------------------------------------------
<S> <C> <C>
Net sales $244,013,000 $224,359,000
Net earnings $ 4,515,000 $ 2,642,000
Net earnings per share $ .22 $ .13
============ ============
Weighted average shares outstanding 20,940,000 20,765,000
============ ============
</TABLE>
This unaudited pro forma information is not necessarily indicative of the
combined results of operations that would have occurred had the acquisition,
merger and refinancing occurred on the respective dates, nor are they
indicative of the results which may occur in the future.
NOTE E - LONG-TERM DEBT
In February, 1997, the Company issued senior notes in the principal amount of
$125,000,000 to finance the cash portion of the acquisition of Papetti's, to
retire certain Company debt, and to refinance all or a portion of the debt
assumed in the Papetti's acquisition and the NSU merger. The senior notes bear
interest at 7.58% and are due in five equal annual payments beginning in 2005.
In addition, the Company also obtained a new $80,000,000 unsecured revolving
line of credit with its principal banks. The revolving line of credit will
mature in February, 2002 and bears interest at the banks' reference rate, or at
Eurodollar rates as defined, at the Company's option. Proceeds from the
revolving line of credit were used to retire the outstanding balance of the
preexisting line of credit and to assist with completing the acquisition of
Papetti's and the merger with NSU. At March 31, 1997, the Company had
$56,500,000 available under this revolving line of credit.
6
<PAGE> 7
MICHAEL FOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
================================================================================
(Unaudited)
NOTE F - CONTINGENCIES
Use of Estimates
In preparation of the Company's consolidated financial statements, management
is required to make estimates and assumptions that affect reported amounts of
assets and liabilities and related revenues and expenses. Actual results could
differ from the estimates used by management.
Patent Litigation
The Company has an exclusive license agreement for the production and sale of
extended shelf-life liquid egg products. Under the terms of this license
agreement the Company has the right to defend and prosecute infringement of the
patents which are the basis of the exclusive license agreement. The Company
can offset up to 50% of the required royalty payments under the agreement with
costs associated with the legal defense of the licensed patents. To the extent
defense costs exceed the required royalty payments, the agreement permits the
Company to defer the excess costs and apply them to future royalty payments.
At March 31, 1997 and December 31, 1996, the Company had prepaid royalty
payments of approximately $1,719,000 and $7,923,000 included in other assets
related to the defense of its licensed patent rights against several infringing
parties. In connection with the February 26, 1997 acquisition of Papetti's,
which was a defendant in one of these patent infringement cases, a settlement of
$6,000,000 was received by the Company. Under the terms of its license
agreement, the Company was required to apply this settlement as a reduction of
its prepaid royalty payments.
During 1996, the Company was informed by the U.S. Patent and Trademark Office
that a patent examiner rejected the claims under the four process patents which
are the subject of the license agreement. The Company and the holder of the
patents are appealing the decision of the examiner and the Company believes the
validity of the patents will ultimately be upheld. During the appeal process,
the patents remain valid and in full force and effect. There can be no
assurance that the Company will be able to fully recover its prepaid royalty
payments. If the patents are ultimately denied, the Company would continue to
produce and market the products currently subject to the license agreement
without incurring royalty cost.
Product Litigation
In the fall of 1994, a customer of the Company recalled product which was
potentially contaminated and the customer has settled claims with consumers who
became ill after eating the product. The customer had filed a suit, whereby
the Company was a co-defendant with other companies alleged to have supplied
contaminated product to the customer's plant. The customer sought damages for
losses incurred, as well as alleged loss of past and future profits. In May,
1997 the suit was settled within the Company's insurance coverage.
Other Litigation
The Company is also engaged in routine litigation incidental to its business,
which management believes will not have a material effect upon its consolidated
financial position, liquidity or results of operations.
NOTE G - RECLASSIFICATIONS
Certain 1996 amounts have been reclassified to conform with the 1997
presentation.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
================================================================================
THREE MONTHS ENDED MARCH 31, 1997 VS THREE MONTHS ENDED MARCH 31, 1996
RESULTS OF OPERATIONS
The Company completed the acquisition of Papetti's on February 26, 1997.
Papetti's results of operations since the date of acquisition are included in
the Company's Egg Products Division operating results.
The following table sets forth the percentage of net sales accounted for by
each of the Company's operating divisions for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
---- ----
<S> <C> <C>
Egg Products 56% 44%
Refrigerated Distribution 27 35
Potato Products 10 16
Dairy Products 10 12
Intercompany Sales (3) (7)
---- ----
TOTAL 100% 100%
==== ====
</TABLE>
The following table sets forth the percentage of divisional operating earnings
(before corporate, interest and income tax expenses) accounted for by each of
the Company's operating divisions for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
---- ----
<S> <C> <C>
Egg Products 82% 64%
Refrigerated Distribution 21 23
Potato Products (12) 2
Dairy Products 9 11
---- ----
TOTAL 100% 100%
==== ====
</TABLE>
The Egg Products Division had higher dollar sales and higher dollar earnings in
the period ended March 31, 1997, as compared to the results of the same period
in 1996. Feed costs, which typically represent roughly two-thirds of the cost
of producing an egg, were higher in the 1997 period than in the 1996 period, due
principally to higher prices for soybean meal. With the acquisition of
Papetti's, a substantially greater portion of the Company's egg needs will be
purchased in the open market relative to prices reported by Urner Barry
Publications - a widely quoted industry pricing service. Strong unit sales,
effective expense management and earnings contributions from the recently
acquired Papetti's operations, more than offset feed cost pressures. Sales were
particularly strong for certain value-added egg products, notably Easy Eggs(R)
and Table Ready(R) (extended shelf-life liquid whole eggs) and MicroFresh
(frozen omelets, patties and curds). Egg prices decreased approximately 5%
compared to first quarter 1996 levels, as reported by Urner Barry, although
pricing for egg products is not necessarily directly effected by changes in
shell egg pricing.
The Refrigerated Distribution Division had higher dollar sales and higher
dollar earnings in the period ended March 31, 1997, as compared to the results
of the same period in 1996. Unit sales were higher for core refrigerated
grocery items, reflecting, in part, new customers and new product
introductions. This volume improvement allowed for divisional earnings growth.
The Potato Products Division had lower dollar sales and operated at a loss in
the period ended March 31, 1997, as compared to the profitable results of the
same period in 1996. Frozen french fry operations continued to generate losses
in the first quarter of 1997, totaling $0.03 per share. These losses were
comparable to those experienced in the first quarter of 1996. The Company has
previously announced it will exit the frozen french fry business in 1997, and
it expects to complete this process in the second quarter. Value-added
refrigerated potato product sales generated earnings in the first quarter of
1997, but at levels below those experienced in the first quarter of 1996. Unit
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED
================================================================================
THREE MONTHS ENDED MARCH 31, 1997 VS THREE MONTHS ENDED MARCH 31, 1996
RESULTS OF OPERATIONS, CONT.
sales declined for such products, resulting in a lower utilization of
refrigerated products production lines, which pressured margins.
The Dairy Products Division had higher dollar sales and higher dollar earnings
in the period ended March 31, 1997, as compared to the results of the same
period in 1996. Unit sales increased and were helped by promotional activity
with certain customers and by a growing coffee creamer business. Raw material
costs rose during the quarter due to increases in the pricing of certain
ingredients tied to the national butter fat market.
The decline in gross profit margin of the Company for the period ended March
31, 1997, as compared to the results of the same period in 1996, reflected the
factors discussed above, particularly the losses in the Potato Products
Division and higher ingredient costs in the Dairy Products Division.
Additionally, Papetti's operated at a lower gross profit margin than the
balance of the Company's operations. It is management's strategy to increase
value-added product sales as a percent of total sales over time, while
decreasing commodity-sensitive products' contribution to consolidated sales.
These efforts historically have been beneficial to gross profit margins in most
periods. Selling, general and administrative expenses decreased as a percent
of sales in the period ended March 31, 1997, as compared to the results of the
same period in 1996, due primarily to the significant sales increase and
effective management of operating expenses across the Company. Additionally,
Papetti's operated at a lower operating expense ratio than the balance of the
Company's operations.
GENERAL
Certain of the Company's products are sensitive to changes in commodity prices.
The Company's egg products operations derived approximately 8% of that
division's first quarter 1997 net sales from shell eggs, which are sensitive to
commodity price swings. The Easy Eggs(R) and Table Ready(R) product lines
accounted for approximately 35% of the Egg Products Division's first
quarter 1997 net sales. The remainder of Egg Products Division sales are
derived from the sale of other egg products, which vary from being
commodity-sensitive to being value-added. Gross profit from shell eggs is
primarily dependent upon the relationship between shell egg prices and the cost
of feed, both of which can fluctuate significantly. Shell egg pricing in the
first quarter of 1997 was approximately 5% below first quarter 1996 levels as
measured by a widely quoted pricing service. Gross profit margins for extended
shelf-life liquid whole eggs and specialty prepared egg products are less
sensitive to commodity price fluctuations than are other egg products or shell
eggs.
The Company's refrigerated distribution operations derive approximately 70% of
that division's net sales from refrigerated products produced by others,
thereby reducing the effect of commodity price swings. The balance of
refrigerated distribution sales are from shell eggs, which are partially
produced by the Egg Products Division and are sold on a distribution, or
non-commodity, basis by the Refrigerated Distribution Division.
The Potato Products Division derived approximately 65% of its first quarter
1997 net sales from the refrigerated potato products line. The Potato Products
Division typically purchases 80%-90% of its raw potatoes from contract
producers under annual contracts. The remainder is purchased at market prices
to satisfy short-term production requirements or to take advantage of market
prices when they are lower than contracted prices. Small variations in the
purchase price of raw materials or the selling
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED
================================================================================
GENERAL, CONT.
price per pound of end products can have a significant effect on Potato
Products Division operating results. The impact of raw material costs within
the Potato Products Division has been reduced in recent years due to
significant increases in higher value-added refrigerated potato products sales.
The Dairy Products Division sells its products primarily on a cost-plus basis
and, therefore, the division's earnings are not typically affected greatly by
raw ingredient price fluctuations.
Inflation is not expected to have a significant impact on the Company's
business. The Company generally has been able to offset the impact of
inflation through a combination of productivity gains and price increases.
CAPITAL RESOURCES AND LIQUIDITY
Acquisitions and capital expenditures have been, and will likely continue to
be, a significant capital requirement. The Company plans to continue to invest
in state-of-the-art production facilities to enhance its competitive position,
although the annual rate of spending has declined in recent years.
Historically, the Company has financed its growth principally from internally
generated funds, bank borrowings, issuance of senior debt and the sale of
Common Stock. The Company believes that these financing alternatives will
continue to meet its anticipated needs.
The Company invested approximately $6,600,000 in capital expenditures during
the three months ended March 31, 1997. The Company plans to spend
approximately $50,000,000 in total capital expenditures in 1997.
The Company has an unsecured line of credit for $80,000,000 with its principal
banks. As of March 31, 1997, approximately $23,500,000 was borrowed under this
line of credit.
SEASONALITY
Consolidated quarterly operating results are affected by the seasonality of the
Company's net sales and operating profits. Specifically, shell egg prices
typically rise seasonally in the first and fourth quarters of the year due to
increased demand during holiday periods. Generally, refrigerated distribution
operations experience higher net sales and operating profits in the fourth
quarter. Operating profits from potato products are less seasonal, but tend to
be higher in the second half of the year coinciding with the potato harvest.
Net sales and operating profits from dairy operations typically are
significantly higher in the second and third quarters due to increased
consumption of ice milk and ice cream products during the summer months.
10
<PAGE> 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On February 26, 1997, the Company settled patent litigation between it and
Papetti's as part of the acquisition of Papetti's. The Company received
$6,000,000 under the settlement (see Note F - CONTINGENCIES - Patent
Litigation).
On May 13, 1997, the Company's Kohler Mix Specialties, Inc. subsidiary ("Kohler
Mix"), along with two other defendants, settled a lawsuit filed in May, 1995 by
Schwan's Sales Enterprises, Inc. ("Schwan's") (see Note F- CONTINGENCIES -
Product Litigation). As a result of the settlement, the suit was dismissed.
The terms of the settlement are confidential, although the Kohler Mix portion
of the settlement was within the Company's insurance coverage. There was no
determination of liability and no admission of guilt by any of the defendants.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit
27.1 Financial Data Schedule
(b) Reports on Form 8-K
On February 26, 1997 Michael Foods, Inc., a Delaware corporation, acquired
Papetti's and completed a private placement of senior notes; on February 28,
1997 Michael Foods, Inc., a Delaware corporation, completed the transactions
between it, North Star Universal, Inc. and NSU Merger Co. resulting in the
merger of Michael Foods, Inc., a Delaware corporation, with North Star
Universal, Inc. and completed a bank financing. (Form 8-K filed March 13, 1997)
11
<PAGE> 12
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
MICHAEL FOODS, INC.
--------------------------------------------------
(Registrant)
Date: May 13, 1997 By: /s/ Gregg A. Ostrander
------------------------------------------
Gregg A. Ostrander
(President and Chief Executive Officer)
Date: May 13, 1997 By: /s/ John D. Reedy
------------------------------------------
John D. Reedy
(Vice President - Finance, Treasurer,
Chief Financial Officer and Principal
Accounting Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF EARNINGS INCLUDED
HEREIN AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 10,127
<SECURITIES> 0
<RECEIVABLES> 100,310
<ALLOWANCES> 1,814
<INVENTORY> 65,036
<CURRENT-ASSETS> 177,660
<PP&E> 364,405
<DEPRECIATION> 150,428
<TOTAL-ASSETS> 515,451
<CURRENT-LIABILITIES> 93,027
<BONDS> 196,726
0
0
<COMMON> 210
<OTHER-SE> 193,659
<TOTAL-LIABILITY-AND-EQUITY> 515,451
<SALES> 195,418
<TOTAL-REVENUES> 195,418
<CGS> 171,689
<TOTAL-COSTS> 171,689
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,278
<INCOME-PRETAX> 6,782
<INCOME-TAX> 2,820
<INCOME-CONTINUING> 3,962
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,962
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
