STOKELY USA INC, S-1/A, 1994-11-08

STOKELY USA INC
S-1/A, 1994-11-08
CANNED, FRUITS, VEG, PRESERVES, JAMS & JELLIES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 8, 1994

REGISTRATION NO. 33-55447
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

AMENDMENT NO. 2

TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

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STOKELY USA, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
WISCONSIN 2033 39-0513230
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
Industry Classification Code
incorporation or organization) Number) Identification No.)
</TABLE>

1055 CORPORATE CENTER DRIVE
OCONOMOWOC, WISCONSIN 53066
(414) 569-1800
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)

MR. VERNON L. WIERSMA, PRESIDENT
1055 CORPORATE CENTER DRIVE
OCONOMOWOC, WISCONSIN 53066
(414) 569-1800
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

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

COPIES TO:

FRANK J. PELISEK, ESQ. LARRY A. BARDEN, ESQ.
KATE M. FLEMING, ESQ. SIDLEY & AUSTIN
MICHAEL BEST & FRIEDRICH ONE FIRST NATIONAL PLAZA
100 EAST WISCONSIN AVENUE CHICAGO, ILLINOIS 60603
MILWAUKEE, WISCONSIN 53202

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

STOKELY USA, INC.

CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
FORM S-1 NUMBER AND CAPTION LOCATION IN PROSPECTUS
---------------------------------------- ----------------------------------------------
<S> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of
the Prospectus.......................... Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus..................... Inside Front Cover of Prospectus; Outside Back
Cover of Prospectus
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges...... Prospectus Summary; Risk Factors
4. Use of Proceeds......................... Use of Proceeds
5. Determination of Offering Price......... Underwriting
6. Dilution................................ Dilution
7. Selling Security Holders................ Not Applicable
8. Plan of Distribution.................... Underwriting
9. Description of Securities to be
Registered.............................. Description of Capital Stock
10. Interests of Named Experts and
Counsel................................. Legal Matters
11. Information with Respect to
the Registrant.......................... Prospectus Summary; Risk Factors;
Capitalization; Price Range of Common Stock;
Dividend Policy; Selected Consolidated
Financial Data; Management's Discussion and
Analysis of Financial Condition and Results of
Operations; Business; Management; Certain
Transactions; Principal Shareholders;
Consolidated Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Not Applicable
</TABLE>

<PAGE> 3

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities
laws of any such State.

SUBJECT TO COMPLETION, DATED NOVEMBER 8, 1994

PROSPECTUS

3,000,000 SHARES

STOKELY, USA, INC.
COMMON STOCK

All of the shares of Common Stock offered hereby are being sold by Stokely
USA, Inc. ("Stokely" or the "Company"). The Company's Common Stock is traded in
the over-the-counter market and quoted on the Nasdaq National Market under the
symbol "STKY." On November , 1994, the closing sale price of the Common Stock
as reported by Nasdaq was $ per share. See "Price Range of Common Stock."

SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OF COMMON STOCK OFFERED
HEREBY.

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

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

<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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Per Share................................ $ $ $
Total(3)................................. $ $ $
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including certain liabilities under the Securities Act of 1933,
as amended. See "Underwriting."

(2) Before deducting expenses payable by the Company estimated at $425,000.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
an additional 450,000 shares of Common Stock solely to cover
over-allotments, if any. See "Underwriting." If all such shares
are purchased, the total Price to Public, Underwriting Discount and
Proceeds to Company will be $ , $ and $ ,
respectively.

The shares of Common Stock are being offered by the several Underwriters
when, as and if delivered to and accepted by them and subject to their right to
reject orders in whole or in part. It is expected that delivery of the
certificates for the shares of Common Stock will be made on or about
, 1994.

WILLIAM BLAIR & COMPANY DAIN BOSWORTH
INCORPORATED
THE DATE OF THIS PROSPECTUS IS , 1994
<PAGE> 4

[PICTURES]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON
STOCK ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10b-6A UNDER THE
SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."

2
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus. Except as otherwise indicated, the information contained in
this Prospectus assumes the Underwriters' over-allotment option is not
exercised. See "Underwriting."

THE COMPANY

Stokely USA, Inc. is a leading domestic producer of canned and frozen
vegetables. The Company processes, markets and sells a broad range of vegetables
under customer private labels and under the Stokely's Finest(R) label, Stokely's
Gold(TM) label and other brand labels through the retail, foodservice and
industrial channels of distribution. The Company believes it is the largest
processor of private label canned vegetables in the United States, selling to
most major supermarket chains, including Winn Dixie, Kroger, A&P, Aldi and
Safeway, and to major food wholesalers, including Super Valu and Fleming
Companies, Inc. The Company is also a leading United States exporter of canned
vegetables to Europe and Asia. The Company believes the breadth and mix of its
product lines, including both basic and specialty vegetables, enhance its
competitive position by allowing it to market its products to many different
distribution channels and consumer markets. In 1993, the processed vegetable
industry represented approximately $3.0 billion in annual sales of canned
vegetables and approximately $2.1 billion in annual sales of frozen vegetables.

During fiscal 1993, the Company began to implement a new business strategy
designed to enhance its leadership position in certain markets and products, and
to facilitate the Company's ability to achieve a higher and more consistent
level of earnings. The key elements of the strategy are as follows:

- FOCUS ON CORE PRODUCT LINES. The Company has narrowed its product focus
to product lines in which it has significant market share -- corn, green
beans, peas and root crops -- and has eliminated several unprofitable
non-core lines. This focus has allowed the Company to significantly reduce
its fixed manufacturing and administrative expenses and to reduce its
variable cost per unit in an industry generally characterized by a high
ratio of variable to fixed costs.

- EMPHASIZE THE PRIVATE LABEL CHANNEL OF DISTRIBUTION. Since fiscal 1993,
the Company has placed significant emphasis on expanding its presence in
the private label channel of distribution. This channel accounts for
approximately 35% of the canned vegetable industry's total retail sales
and is currently experiencing market share growth. In addition, the
Company's operating margins in private label are higher than margins
achieved in its brand products business because of lower selling and
support expenses. Currently, the Company believes its three largest
competitors in the vegetable processing industry focus primarily on brand
products.

- MAINTAIN THE COMPANY'S BRAND MARKET SHARE WHILE PURSUING CHANGES IN
PRODUCT MIX. The Stokely's Finest(R) brand is one of the major brands in
its primary brand geographic area of distribution, the southeastern United
States. The Company has maintained its brand position while rationalizing
its brand product line, including a 25% reduction in the number of SKUs
over the last two years. In addition, the Company seeks to enhance
consumer recognition of its brand names and selectively expand its brand
product line by developing new brand specialty products, such as its
specialty line of premium products sold under the Stokely's Gold(TM)
label. Sales volume of the Stokely's Gold(TM) label product line has
doubled from fiscal 1992 to fiscal 1994.

3
<PAGE> 6

- IMPROVE EFFECTIVENESS AND EFFICIENCY OF FROZEN VEGETABLE BUSINESS. In
order to increase its profit margins in the frozen vegetable business, the
Company has downsized its frozen vegetable operations following a period
of rapid expansion and redirected most of its sales to industrial
customers. The Company generally has been able to generate higher margins
on its industrial sales due to decreased packaging and promotional
expenses associated with sales of frozen products in bulk. The Company
plans to continue to increase its presence in this channel through the
addition of new customers, and to increase its leading position in certain
higher margin specialty products, while remaining one of the major players
in frozen corn production, the leading category item in the frozen
vegetable market.

Prior to fiscal 1993, the Company's principal business strategy had been to
increase its revenues by expanding sales of its brand products and by
developing, through acquisitions, a significant frozen vegetable business. At
the time, the Company believed that the brand vegetable market and frozen
vegetable market tended to have higher margins than the Company's private label
canned business and would help smooth out the price fluctuations inherent in the
vegetable processing industry. This strategy, however, significantly increased
the Company's operating expenses and as a result its operating margins began to
deteriorate in fiscal 1991. Furthermore, the Company's acquisitions and capital
expenditures were funded primarily by debt, which increased the Company's
leverage and interest expense. This strategy, together with unfavorable market
conditions in the vegetable processing industry, culminated in net losses
(after-tax) for fiscal 1992 and 1993 of $9.9 million and $31.1 million
(including a restructuring charge of $14.7 million), respectively.

Commencing in June of 1992, the Company made significant management changes
and adopted a major restructuring program allowing it to implement its new
strategy. The primary elements of the restructuring program implemented in
fiscal 1993 and 1994 were as follows: ELIMINATION OF UNPROFITABLE PRODUCTS - the
Company eliminated or greatly reduced its capacity for several low margin or
unprofitable products, including the elimination of frozen broccoli, frozen
okra, frozen cauliflower, tomato products, various fruit products and other
items; PLANT CLOSINGS - to increase manufacturing efficiencies, lower operating
costs and reduce working capital needs, the Company closed six plants, four of
which have been sold, and downsized two other facilities. Fixed manufacturing
overhead has been reduced by $12.8 million, or 24.7%, for fiscal 1994 compared
to fiscal 1992; REDUCTION OF FIXED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
- - with an increased focus on core products, the Company has been able to operate
with a lower cost structure. Fixed selling, general and administrative expenses
have been reduced by $5.7 million, or 37.5%, for fiscal 1994 compared to fiscal
1992; and DEBT REDUCTION - by focusing on its core business and liquidating
non-essential assets, the Company has reduced total debt by $29.5 million, or
22.4%, since fiscal 1992 to $102.3 million at the end of fiscal 1994.
Principally as a result of these restructuring efforts, the Company has achieved
net profits in each of its last five fiscal quarters.

THE OFFERING

<TABLE>
<S> <C>
Shares Offered by the Company....................... 3,000,000
Shares Outstanding Immediately After the
Offering(1)....................................... 11,324,645
Use of Proceeds to the Company...................... Reduce indebtedness
Nasdaq National Market Symbol....................... STKY
</TABLE>

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(1) Excludes 223,300 shares of Common Stock reserved for issuance pursuant to
currently outstanding options, 400,000 shares of Common Stock reserved for
issuance pursuant to options available for grant under an existing option
plan and 90,000 shares of Common Stock reserved for issuance pursuant to
currently outstanding warrants which are not expected to be exercised in
connection with this Offering.

4
<PAGE> 7

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SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FISCAL YEAR ENDED MARCH 31, SEPTEMBER 30,
---------------------------------------------------- ------------------
1990 1991 1992 1993 1994 1993 1994
-------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $271,963 $257,520 $280,368 $281,382 $256,145 $127,505 $97,131
Other revenue...................... (436) 1,090 676 2,145 4,691 4,600 99
-------- -------- -------- -------- -------- -------- -------
Total revenues................. 271,527 258,610 281,044 283,527 260,836 132,105 97,230
Cost of products sold.............. 193,454 204,922 238,804 249,982 216,392 113,592 74,148
Selling, general and administrative
expenses......................... 44,461 40,902 48,481 42,139 36,476 18,016 13,464
Nonrecurring charge(1)............. -- -- -- 21,145 -- -- --
-------- -------- -------- -------- -------- -------- -------
Operating earnings (loss).......... 33,612 12,786 (6,241) (29,739) 7,968 497 9,618
Interest expense................... 4,721 7,082 8,592 12,721 12,710 6,482 4,914
-------- -------- -------- -------- -------- -------- -------
Earnings (loss) before income taxes
and cumulative effect of change
in accounting principle.......... 28,891 5,704 (14,833) (42,460) (4,742) (5,985) 4,704
Income taxes (credit).............. 11,156 1,888 (4,931) (12,983) (2,527) (718) 946
-------- -------- -------- -------- -------- -------- -------
Earnings (loss) before cumulative
effect of change in accounting
principle........................ 17,735 3,816 (9,902) (29,477) (2,215) (5,267) 3,758
Cumulative effect of change in
accounting principle(2).......... -- -- -- (1,650) -- -- --
-------- -------- -------- -------- -------- -------- -------
Net earnings (loss)................ $ 17,735 $ 3,816 $ (9,902) $(31,127) $ (2,215) $ (5,267) $ 3,758
========= ========= ========= ========= ========= ========= ========
Net earnings (loss) per share(2)... $2.15 $0.46 $(1.19) $(3.75) $(0.27) $(0.63) $0.45
Pro forma earnings (loss) per
share(3)......................... $(0.10) $0.41
Weighted average shares
outstanding...................... 8,260 8,287 8,288 8,302 8,320 8,316 8,325
Dividends per share................ $0.26 $0.20 $0.20 -- -- -- --
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1994
--------------------------
ACTUAL AS ADJUSTED(3)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................................. $ 46,057 $ 56,832
Total assets................................................................ 232,780 232,780
Total debt.................................................................. 118,204 90,429
Shareholders' equity........................................................ 36,398 64,173
</TABLE>

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

(1) In connection with the Company's restructuring plan, the Company sold,
closed or downsized certain processing facilities, resulting in a
nonrecurring charge during the fiscal year ended March 31, 1993 from
the write-down of such processing facilities, equipment and
inventories to their estimated net realizable value and from
provisions for severance, consolidation costs and plant closing costs.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
(2) On April 1, 1992, the Company adopted Statement of Financial
Accounting Standard No. 106 ("SFAS No. 106"), "Employers' Accounting
for Postretirement Benefits Other than Pensions." The Company
recognized as expense in fiscal 1993 the accumulated postretirement
benefit obligation aggregating $1.7 million, after taxes of $850,000.
The net loss per share for the fiscal year ended March 31, 1993
includes a $0.20 per share loss due to the adoption of SFAS No. 106.

(3) The pro forma earnings (loss) per share data assumes that the Offering
had occurred at the beginning of each period presented and gives
effect to the reduction in interest expense resulting from the
application of the net proceeds therefrom to reduce indebtedness. As
Adjusted reflects the sale of 3,000,000 shares of Common Stock being
offered by the Company at an assumed public offering price of $10.00
per share, after deducting the underwriting discount and estimated
Offering expenses, and the application of the estimated net proceeds
therefrom. See "Use of Proceeds" and "Capitalization."

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The Company was incorporated in Wisconsin in 1920 under the name
"Oconomowoc Canning and Products Company" and has been engaged in the food
processing business since that time. The Company changed its name to "Stokely
USA, Inc." in January 1985. The Company's most significant wholly-owned
subsidiary is Oconomowoc Canning Company, Inc., a Wisconsin corporation. Unless
otherwise indicated, all references in this Prospectus to the "Company" or
"Stokely" refer to Stokely USA, Inc. and its subsidiaries. Stokely's principal
executive offices are located at 1055 Corporate Center Drive, Oconomowoc,
Wisconsin 53066-0248. The Company's telephone number is (414) 569-1800.

5
<PAGE> 8

STOKELY RESTRUCTURING PROGRAM

Prior to fiscal 1993, the Company's principal business strategy had been to
increase revenues by expanding sales of its brand products and by developing,
through acquisitions, a significant frozen vegetable business. At the time, the
Company believed that the brand vegetable market and frozen vegetable market
tended to have higher margins than the Company's private label business and
would help smooth out the price fluctuations inherent in the vegetable
processing industry. This strategy, however, significantly increased the
Company's operating expenses and as a result its operating margins began to
deteriorate in fiscal 1991. Furthermore, the Company's acquisitions and capital
expenditures were funded primarily by debt, which increased the Company's
leverage and interest expense. In the early 1990s, average selling prices in the
processed vegetable industry declined dramatically. The Company experienced a
7.8% selling price decline in fiscal 1991, an 8.5% decline in fiscal 1992 and a
5.9% decline in fiscal 1993. Stokely's strategy at that time, together with
unfavorable market conditions, resulted in net losses (after-tax) for fiscal
1992 and 1993 of $9.9 million and $31.1 million (including a restructuring
charge of $14.7 million), respectively. Commencing in June of 1992, the Board of
Directors of the Company made significant management changes and adopted a new
strategy designed to return the Company to profitability. The new management
team determined that in order to implement the new strategy and return the
Company to profitability, restructuring was necessary.

Under the direction of the new management team, the Company undertook a
number of restructuring measures, including consolidating production at larger,
more efficient facilities, eliminating certain low margin or unprofitable
product lines, reducing operating overhead and lowering interest expense through
debt reduction. As part of such restructuring, the Company recorded in fiscal
1993 a non-recurring restructuring charge of $14.7 million ($21.1 million
pre-tax) relating to the write-down of the eight processing plants to be sold,
closed or downsized and the costs associated therewith, including provisions for
severance, consolidation costs and plant closing costs, and the write-down of
inventory of discontinued product lines. In particular, the Company redefined
its core products as corn, green beans, peas and root crops produced in the
Midwest and Northwest, and exited the canned tomato and fruit product lines and
southern frozen vegetable lines, including frozen broccoli, okra and
cauliflower. Stokely also eliminated certain marginally contributing channels of
distribution and facilities in its frozen vegetable business. Finally, the
Company's general and administrative workforce was reduced by 25% between the
end of fiscal 1992 and the end of fiscal 1994. During fiscal 1994, the Company
completed the major portion of its restructuring plan by (i) selling two canning
plants and two freezing plants; (ii) closing and consolidating the operations of
an additional canning plant with an existing plant; (iii) closing a freezing
plant that focused on retail products; and (iv) downsizing two other plants. The
Company intends to sell its two remaining closed plants.

As a result of these restructuring initiatives, fixed manufacturing
overhead was reduced 24.7%, from $51.9 million for fiscal 1992 to $39.1 million
for fiscal 1994, while direct manufacturing costs on a per unit basis were
reduced by 1.8% during this same two-year period. In addition, the Company's
fixed selling, general and administrative expenses were reduced 37.5%, from
$15.2 million for fiscal 1992 to $9.5 million for fiscal 1994. From the
beginning of fiscal 1992 to October 1994, the Company's full-time employee
workforce has been reduced by approximately 250 employees, primarily due to the
restructuring initiatives, and the Company's seasonal workforce has been reduced
by approximately 1,000 employees due to the closing or downsizing of processing
plants affected by the restructuring initiatives.

The net proceeds from the sale of plants and liquidation of discontinued
inventories were used to pay down outstanding debt. The Company's total debt was
reduced $29.5 million, from $131.8 million at March 31, 1992 to $102.3 million
at March 31, 1994. The Company intends to further reduce its debt with the
proceeds from this Offering. See "Use of Proceeds."

At September 30, 1994, the Company had remaining restructure reserves
aggregating $6.1 million for the disposal of plant facilities and related
inventories. Based on the Company's current review and evaluation, these
reserves are considered adequate to complete the restructuring plan in fiscal
1995. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

6
<PAGE> 9

RISK FACTORS

INDUSTRY CONDITIONS AND PRICE AND VOLUME FLUCTUATIONS

The Company's financial performance and growth are related to conditions in
the vegetable processing industry. The United States vegetable processing
industry is a mature industry, with a relatively modest 1.8% compounded annual
growth rate from 1988 to 1993. The Company's net sales are a function of product
availability and market pricing. In the vegetable processing industry, product
availability and market prices tend to have an inverse relationship: market
prices tend to decrease as more product is available, whereas if less product is
available, market prices tend to increase. Product availability is a direct
result of plantings, growing conditions, crop yields and inventories, all of
which vary from year to year. In addition, price can be affected by the
planting, inventory level and individual pricing decisions of the three or four
largest processors in the industry. Generally, the market prices in the
vegetable processing industry tend to adjust more quickly to variations in
product availability than an individual processor can adjust its cost structure;
thus, in an over-supply situation, a processor's margins likely will weaken, as
suppliers generally are not able to adjust their cost structure as rapidly as
market prices adjust for the over-supply. The Company typically has experienced
lower margins during times of industry over-supply. There can be no assurance
the Company's margins will improve in response to favorable market conditions or
that the Company will be able to operate profitably during depressed market
conditions.

RECENT OPERATING LOSSES; IMPLEMENTATION OF RESTRUCTURING PROGRAM; LEVERAGE
CONSIDERATIONS

The Company reported net losses (after-tax) of $9.9 million, $31.1 million
(which includes the effect of a restructuring charge of $14.7 million) and $2.2
million for the fiscal years ended March 31, 1992, 1993 and 1994, respectively.
In fiscal 1993, the Company's business faced continuing depressed vegetable
market conditions caused primarily by over-supply and excess capacity. In
response to these net losses and market conditions, the Company implemented
restructuring measures designed to return the Company to profitability. See
"Stokely Restructuring Program." Although the Company believes the restructuring
program has contributed to the Company's ability to achieve favorable operating
results during the last five fiscal quarters, there can be no assurance the
Company will be able to sustain such results. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business --
Business Strategy."

The terms and conditions of the Company's multi-year credit facility with
various lenders and the other indebtedness of the Company currently impose
restrictions that affect, among other things, the ability of the Company to
incur debt, pay dividends, make acquisitions, create liens and make capital
expenditures. Terms of the Company's indebtedness also require it to satisfy
certain financial covenants on a monthly basis. The ability of the Company to
make cash payments to satisfy its indebtedness and to comply with such financial
or similar covenants that may be contained in future agreements will depend upon
its future operating performance, which is subject to prevailing economic
conditions, and to financial, business and other factors beyond the Company's
control. In addition, the Company's debt service obligations and related
financial and operating covenants could limit its ability to withstand
competitive pressures or a downturn in its business or in the economy. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

SEASONALITY AND QUARTERLY FLUCTUATIONS

The Company's operations are affected by the growing cycle of the
vegetables it processes. Most of the Company's production occurs during the
second quarter of each fiscal year (due to the timing of crop production and
climate conditions) and a majority of sales occurs during the third and fourth
quarter of each fiscal year (due to seasonal consumption patterns for its
products). Accordingly, inventory levels are highest during the second and third
quarters, and accounts receivable levels are highest during the fourth quarter.
Net sales generated during the third and fourth quarter of each fiscal year have
a significant impact on the Company's results of operations. Because of seasonal
fluctuations, there can be no assurance that the results of any particular
quarter will be indicative of results for the full year or for future years. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

7
<PAGE> 10

COMPETITION

All of the Company's products compete with those of other national, major
and smaller regional food processing companies under highly competitive
conditions. Three of the Company's major competitors, Del Monte, Green Giant and
Dean Foods, are larger and have greater financial and marketing resources than
the Company. In addition, many of the Company's major competitors in the
international export market are larger and have greater financial and marketing
resources than the Company. Continued industry consolidation also may increase
the market strength of the Company's larger competitors. See "Business --
Competition."

As a result of recent plant reduction and consolidation in the vegetable
processing industry, many of the Company's principal national competitors have
narrowed their business focus to specific product lines and channels of
distribution. To date, the Company believes its major competitors have not
placed significant emphasis on the private label channel of distribution. Del
Monte has focused on brand label canned products, with a limited emphasis on the
private label canned business. Both Green Giant and Dean Foods have significant
frozen vegetable operations. However, should such competitors in the future
increase their emphasis on the private label channel of distribution, the
Company's results of operations may be adversely affected.

DEPENDENCE ON KEY PERSONNEL

In connection with the Company's restructuring program, the Company's
management team was substantially changed. The Company's success is dependent to
a great extent on its current management team and other key personnel, the loss
of one or more of whom could have a material adverse effect on the Company. The
Company does not maintain key man life insurance policies on any of its
executive officers. See "Management."

EXPORT SALES

The Company derived 8.1%, 8.6% and 7.4% of its net sales for the fiscal
years ended March 31, 1992, 1993 and 1994, respectively, from export sales. The
Company intends to increase its emphasis on export sales. International sales
are subject to various risks, including exposure to currency fluctuations,
political and economic instability, the greater difficulty of administering
business abroad and the need to comply with a wide variety of international and
domestic export laws and regulatory requirements. There can be no assurance the
Company will be able to successfully expand its export sales, or that the
Company's export sales will be profitable. See "Business."

REGULATION

United States and foreign governmental laws, regulations and policies
directly affect the agricultural industry and the vegetable processing industry.
The Company is subject to regulation by the Food and Drug Administration, the
United States Department of Agriculture, the Federal Trade Commission, the
Environmental Protection Agency and various state agencies with respect to the
production, packaging, labeling and distribution of its food products. In
addition, the disposal of solid and liquid vegetable waste material resulting
from the preparation and processing of foods is subject to various federal,
state and local laws and regulations relating to the protection of the
environment. In some international markets, there are regulations and policies
designed to discourage the importation of agricultural commodities. The
application or modification of existing, or the adoption of new, laws,
regulations or policies could have an adverse effect on the Company's business
and results of operations. See "Business-Regulations."

POSSIBLE VOLATILITY OF STOCK PRICE

The stock market has from time to time experienced significant price and
volume fluctuations that may be unrelated to the operating performance of
particular companies. General business, economic and other external factors, as
well as period-to-period fluctuations in Stokely's financial results or changes
in earnings estimates by analysts, may have a significant impact on the market
price of the shares of Common Stock.

8
<PAGE> 11

CERTAIN ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Articles of Incorporation and By-Laws
and certain statutes and regulations assist the Company in maintaining its
status as an independent publicly-owned corporation, and could have the effect
of preventing or delaying a person from acquiring or seeking to acquire a
substantial equity interest in, or control of, the Company. These provisions
provide for, among other things, staggered board of directors' terms, a fair
price requirement for certain business combinations and shareholder repurchase
rights in certain circumstances. See "Description of Capital Stock."

DILUTION

Purchasers of shares of Common Stock in the Offering will experience
immediate and substantial dilution in the net tangible book value of the shares
of Common Stock of $4.55 per share, and current shareholders will receive an
increase in the book value of their shares of Common Stock of $1.37 per share.
Additional dilution to purchasers of shares of Common Stock will occur upon the
exercise of outstanding options and warrants. See "Dilution."

NO DIVIDENDS

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of shares of Common Stock by existing shareholders pursuant to
Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"),
could adversely affect the price of the shares of Common Stock of the Company.
Upon completion of the Offering, approximately 11,324,645 shares of Common Stock
will be outstanding. All of these shares of Common Stock will be freely
transferable without restriction under the Securities Act, unless held by an
affiliate of the Company. The Company's executive officers and directors
beneficially own 594,833 shares of Common Stock. See "Principal Shareholders."
Each of the Company and the executive officers and directors of the Company will
agree, for a period of 90 days after the date of this Prospectus, not to sell or
otherwise dispose of any shares of Common Stock, or any rights or warrants to
acquire shares of Common Stock, without the prior written consent of the
Representatives of the Underwriters. Holders of warrants of the Company
(entitling the holders to purchase an aggregate of 90,000 shares of Common
Stock, subject to certain adjustments) were granted rights entitling them, under
specified circumstances, to include shares of Common Stock received by them
pursuant to the exercise of the warrants in any registered public offering of
shares of Common Stock. See "Certain Transactions." No prediction can be made as
to the effect, if any, that future sales of shares of Common Stock or the
availability of shares of Common Stock for future sale will have on the market
price of the shares of Common Stock prevailing from time to time. Sales of
substantial amounts of shares of Common Stock in the public market following the
Offering, or the perception that such sales could occur, may adversely affect
prevailing market prices of the shares of Common Stock.

9
<PAGE> 12

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common Stock
being sold by the Company are estimated to be approximately $27.8 million
(approximately $32.0 million if the over-allotment option is exercised in full),
after deducting the underwriting discount and estimated offering expenses. The
Company intends to use all of the net proceeds to repay a portion of the
borrowings under its revolving credit agreement. The Company has a multi-year
revolving credit facility with various lenders (the "Revolver"), providing for
maximum borrowings of $100.0 million, of which $52.9 million was outstanding at
September 30, 1994. Borrowings under the Revolver bear interest at 2.25% over a
bank's specified reference rate on the first $40.0 million of borrowings and
1.25% over the reference rate on borrowings in excess of $40.0 million. The
Revolver expires May 31, 1995. The Company has received proposals from various
lenders to provide funds under a new credit agreement (the "New Credit
Agreement"), which it intends to enter into during fiscal 1995. Due to the
decreased working capital needs of the Company at the present time, the Company
anticipates that the New Credit Agreement will provide a smaller working capital
facility, and will have a lower interest rate and less restrictive financial and
operating covenants than the existing Revolver. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "STKY." The following table sets forth the range of high and low sale
prices per share for the Common Stock for the periods indicated, as reported on
the Nasdaq National Market.

<TABLE>
<CAPTION>
PRICE RANGE
-------------
HIGH LOW
---- ---

<S> <C> <C>
FISCAL YEAR ENDED MARCH 31, 1993:
First Quarter............................................... $ 9 $5 1/4
Second Quarter.............................................. 7 1/2 6 1/8
Third Quarter............................................... 8 3/4 5 5/8
Fourth Quarter.............................................. 11 3/8 6 5/8
FISCAL YEAR ENDED MARCH 31, 1994:
First Quarter............................................... $10 1/8 $5 3/4
Second Quarter.............................................. 9 3/4 7 3/4
Third Quarter............................................... 9 5/8 7 3/4
Fourth Quarter.............................................. 8 3/4 6 7/8
FISCAL YEAR ENDING MARCH 31, 1995:
First Quarter............................................... $10 1/2 $7 7/8
Second Quarter.............................................. 12 1/4 9 1/4
Third Quarter (through November , 1994)...................
</TABLE>

On November , 1994, the last reported sale price of the Company's Common
Stock, as reported by the Nasdaq National Market, was $ per share. As of
November 7, 1994, there were 1,065 holders of record of the Common Stock.

10
<PAGE> 13

DIVIDEND POLICY

The Company discontinued the payment of quarterly dividends during the
first quarter of the fiscal year ended March 31, 1993. Since that time, the
Company has not declared or paid any cash dividends on its shares of Common
Stock, and does not anticipate paying such dividends in the foreseeable future.
Earnings and other cash resources of the Company will be retained by the
Company. The Revolver restricts the payment of dividends without lender
permission. Any future determination to pay cash dividends will be at the
discretion of the Company's Board of Directors and will be dependent upon the
Company's results of operations, financial condition, contractual restrictions
and other factors deemed relevant by the Board of Directors. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

DILUTION

The net tangible book value of Stokely at September 30, 1994 was $33.9
million or $4.08 per share of Common Stock. "Net tangible book value" per share
represents the amount of total tangible assets of the Company reduced by the
amount of its total liabilities, divided by the number of shares of Common Stock
outstanding. After giving effect to the estimated net proceeds from the sale of
3,000,000 shares of Common Stock offered by the Company, the pro forma net
tangible book value of the Company at September 30, 1994 would have been
approximately $61.7 million, or $5.45 per share of Common Stock. This represents
an immediate increase in net tangible book value of $1.37 per share to existing
shareholders and an immediate dilution of $4.55 per share to new investors. The
following table illustrates the per share dilution in net tangible book value to
new investors at September 30, 1994:

<TABLE>
<S> <C> <C>
Public offering price per share.............................................. $10.00
Net tangible book value per share before Offering.......................... $4.08
Increase per share attributable to new investors........................... $1.37
-----
Pro forma net tangible book value per share after Offering................... $ 5.45
------
Dilution per share to new investors.......................................... $ 4.55
======
</TABLE>

The above table excludes an aggregate of 223,300 shares of Common Stock
reserved for issuance pursuant to currently outstanding options, 400,000 shares
of Common Stock reserved for issuance pursuant to options available for grant
under the Executive Stock Option Plan, and 90,000 shares of Common Stock
reserved for issuance pursuant to currently outstanding warrants which are not
expected to be exercised in connection with this Offering. To the extent that
outstanding options and warrants are exercised, there may be further dilution to
new investors.

11
<PAGE> 14

CAPITALIZATION

The following table sets forth the short-term debt and capitalization of
the Company at September 30, 1994, and as adjusted to reflect the sale of
3,000,000 shares of Common Stock being offered by the Company at an assumed
public offering price of $10.00 per share after deducting the underwriting
discount and estimated Offering expenses, and the application of the net
proceeds as described under "Use of Proceeds."

<TABLE>
<CAPTION>
SEPTEMBER 30, 1994
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt(1):
Notes payable........................................................ $ 35,875 $ 25,100
Current maturities of long-term debt................................. 2,458 2,458
-------- -----------
Total short-term debt............................................. $ 38,333 $ 27,558
======== =========
Long-term debt, net of current portion(1):
Senior notes......................................................... $ 35,852 $ 35,852
Revolving credit notes............................................... 17,000 --
Industrial revenue bonds............................................. 27,019 27,019
-------- -----------
Total long-term liabilities....................................... 79,871 62,871
-------- -----------
Shareholders' equity(2):
Preferred stock, no par value, authorized 1,000,000 shares, none
issued............................................................ -- --
Common stock, par value $0.05 per share; authorized 20,000,000
shares; outstanding 8,324,645 (outstanding as adjusted,
11,324,645)....................................................... 422 572
Additional paid-in capital........................................... 18,665 46,290
Retained earnings.................................................... 17,939 17,939
Treasury stock (at cost)............................................. (628) (628)
-------- -----------
Total shareholders' equity........................................ 36,398 64,173
-------- -----------
Total capitalization............................................ $116,269 $ 127,044
======== =========
</TABLE>

- -------------------------
(1) See Note F of Notes to Consolidated Financial Statements.

(2) Excludes 223,300 shares of Common Stock issuable pursuant to stock options
outstanding at September 30, 1994 (all of which options were then
exercisable at a weighted average exercise price of $8.42 per share), 90,000
shares of Common Stock issuable pursuant to warrants outstanding at
September 30, 1994 (all of which warrants were then exercisable at a
weighted average exercise price of $7.88 per share), and 400,000 shares of
Common Stock reserved for issuance under the Executive Stock Option Plan.
See "Management -- Stock Option Plans."

12
<PAGE> 15

SELECTED CONSOLIDATED FINANCIAL DATA

The following sets forth selected consolidated financial data for the
Company at and for each of the five years in the period ended March 31, 1994.
The statement of operations data in the table for the three years ended March
31, 1994, and the balance sheet data as of March 31, 1993 and 1994, have been
derived from the Company's consolidated financial statements appearing elsewhere
herein, which have been audited by Deloitte & Touche LLP, independent auditors,
and should be read in conjunction with the consolidated financial statements and
the notes thereto. The statement of operations data in the table for the two
years ended March 31, 1991, and the balance sheet data as of March 31, 1990,
1991 and 1992, have been derived from the Company's audited consolidated
financial statements which are not included herein. The selected consolidated
financial data presented at and for the six months ended September 30, 1993 and
1994 have been derived from the Company's unaudited consolidated financial
statements. In the opinion of management, the unaudited consolidated financial
statements for such periods include all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of the consolidated
financial position and results of operations for these periods. For interim
reporting purposes, certain expenses are based on estimates rather than expenses
actually incurred. The results of operations for the six months ended September
30, 1994 should not be regarded as indicative of the results that may be
expected for the full year. The following data should be read in conjunction
with the Company's consolidated financial statements, the related notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED MARCH 31, ENDED SEPTEMBER 30,
---------------------------------------------------- -------------------
1990 1991 1992 1993 1994 1993 1994
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................. $271,963 $257,520 $280,368 $281,382 $256,145 $127,505 $ 97,131
Other revenue......................... (436) 1,090 676 2,145 4,691 4,600 99
-------- -------- -------- -------- -------- -------- --------
Total revenue....................... 271,527 258,610 281,044 283,527 260,836 132,105 97,230
Cost of products sold................. 193,454 204,922 238,804 249,982 216,392 113,592 74,148
Selling, general and administrative
expenses............................ 44,461 40,902 48,481 42,139 36,476 18,016 13,464
Nonrecurring charge(1)................ -- -- -- 21,145 -- -- --
Interest expense...................... 4,721 7,082 8,592 12,721 12,710 6,482 4,914
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) before income taxes
and cumulative effect of change in
accounting principle................ 28,891 5,704 (14,833) (42,460) (4,742) (5,985) 4,704
Income taxes (credit)................. 11,156 1,888 (4,931) (12,983) (2,527) (718) 946
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) before cumulative
effect of change in accounting
principle........................... 17,735 3,816 (9,902) (29,477) (2,215) (5,267) 3,758
Cumulative effect of change in
accounting principle(2)............. -- -- -- (1,650) -- -- --
-------- -------- -------- -------- -------- -------- --------
Net earnings (loss)................... $ 17,735 $ 3,816 $ (9,902) $(31,127) $ (2,215) $ (5,267) $ 3,758
========= ========= ========= ========= ========= ========= =========
Net earnings (loss) per share(2)...... $ 2.15 $ 0.46 $ (1.19) $ (3.75) $ (0.27) $ (0.63) $ 0.45
========= ========= ========= ========= ========= ========= =========
Weighted average shares outstanding... 8,260 8,287 8,288 8,302 8,320 8,316 8,325
Dividends per share................... $ 0.26 $ 0.20 $ 0.20 -- -- -- --
BALANCE SHEET DATA (AT PERIOD END):
Working capital....................... $ 70,631 $ 84,584 $ 80,064 $ 40,626 $ 42,071 $ 34,310 $ 46,057
Total assets.......................... 169,892 213,067 233,737 232,843 158,535 226,203 232,780
Total debt............................ 54,563 104,216 131,826 142,566 102,298 132,158 118,204
Shareholders' equity.................. 75,100 77,266 65,761 34,777 32,640 29,516 36,398
OTHER DATA:
Capital expenditures.................. $ 15,927 $ 18,033 $ 21,666 $ 10,367 $ 4,736 $ 3,957 $ 4,292
Depreciation.......................... 5,099 6,835 8,461 9,286 7,230 4,947 3,754
</TABLE>

- -------------------------
(1) In connection with the Company's restructuring plan, the Company sold,
closed or downsized certain processing facilities, resulting in a
nonrecurring charge during the fiscal year ended March 31, 1993 from the
write-down of such processing facilities, equipment and inventories to their
estimated net realizable value and from provisions for severance,
consolidation costs and plant closing costs. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

(2) On April 1, 1992, the Company adopted Statement of Financial Accounting
Standard No. 106 ("SFAS No. 106"), "Employers' Accounting for Postretirement
Benefits Other than Pensions." The Company recognized as expense in fiscal
1993 the accumulated postretirement benefit obligation aggregating $1.7
million, after taxes of $850,000. The net loss per share for the fiscal year
ended March 31, 1993 includes a $0.20 per share loss due to the adoption of
SFAS No. 106.

13
<PAGE> 16

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Company's financial performance and growth are directly related to
certain characteristics and trends in the vegetable processing industry. The
United States vegetable processing industry is a mature industry, with a
relatively modest 1.8% compounded annual growth rate from 1988 to 1993.
Therefore, any significant sales growth that may be experienced by the Company
likely would come at the expense of the loss of market share by another
processor, but also may occur through efforts designed to promote increased
consumption, such as through the introduction of new or improved products, or
through increased sales internationally, where the processed vegetable market is
currently growing.

The Company's net sales are affected by product availability and market
pricing. In the vegetable processing industry, product availability and market
prices tend to have an inverse relationship: market prices tend to decrease as
more product is available, whereas if less product is available, market prices
tend to increase. Product availability is a direct result of plantings, growing
conditions, crop yields and inventories, all of which may vary from year to
year. In addition, price can be affected by the planting, inventory level and
individual pricing decisions of the three or four largest processors in the
industry.

Increased plantings and improved growing conditions caused over-supply in
the processed vegetable market during fiscal 1992 and 1993, forcing industry
prices and profit margins down. During the latter part of fiscal 1994, market
prices rebounded because of an undersupply of products due to reduced plantings,
poor growing conditions and reduced carryover inventory. These favorable market
price conditions continued during the first quarter of fiscal 1995, but industry
prices have declined during the second quarter of fiscal 1995 due to increased
plantings and improved growing conditions.

In addition to the effects of vegetable processing industry conditions and
trends, the Company's restructuring initiatives commenced in fiscal 1993 have
impacted its financial performance in fiscal 1993 and fiscal 1994. The
restructuring initiatives included consolidating production at larger, more
efficient facilities, eliminating marginally profitable and unprofitable product
lines, reducing operating overhead and lowering interest expense through debt
reduction. Primarily as a result of the restructuring program, the Company's
cost of products sold and fixed selling, general and administrative expenses
have declined from levels experienced in fiscal 1992. In addition, from the
beginning of fiscal 1992 to October 1994, the Company's full-time employee
workforce has been reduced by approximately 250 employees, primarily due to the
restructuring initiatives, and the Company's seasonal workforce has been reduced
by approximately 1,000 employees due to the closing or downsizing of processing
plants affected by the restructuring initiatives. See "Stokely Restructuring
Program." As a result, the Company recorded in fiscal 1993 a non-recurring
restructuring charge of $14.7 million ($21.1 million pre-tax) relating to the
write-down of the eight processing plants to be sold, closed or downsized and
the costs associated therewith, including provisions for severance,
consolidation costs and plant closing costs, and the write-down of inventory of
discontinued product lines.

The table below sets forth the balances, on a pre-tax basis, of the major
categories of the restructure reserves provided in fiscal 1993 to September 30,
1994. The reserve amounts for property, plant and equipment and inventory are
non-cash write-offs of recorded assets. The amounts for other reserves are for
future cash outflows for costs and expenses related to consolidation of
facilities and plant carrying costs.

<TABLE>
<CAPTION>
RESTRUCTURE RESERVES
-------------------------------------------
PROPERTY,
PLANT &
EQUIPMENT INVENTORY OTHER TOTAL
--------- --------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Originally provided..................................... $12,700 $ 2,600 $5,800 $21,100
Balance at March 31, 1993............................... 12,700 2,600 5,400 20,700
Balance at March 31, 1994............................... 3,900 3,000 300 7,200
Balance at September 30, 1994........................... 3,900 2,000 200 6,100
</TABLE>

During fiscal 1994, the Company completed the sale of four of the eight
processing plants identified in the restructuring initiatives. Generally, the
net proceeds from these plant sales exceeded original estimates;

14
<PAGE> 17

however, the proceeds from the sale of related discontinued products inventory
were over-estimated, due primarily to the sale of certain frozen southern
vegetable products at less than anticipated prices. Accordingly, a portion of
the property, plant and equipment restructure reserve was reclassified for use
in the liquidation of inventory. Based on the Company's current review and
evaluation, the remaining reserves are considered adequate to complete the
restructuring plan in fiscal 1995.

The cost savings associated with these restructuring initiatives were
largely realized by the end of fiscal 1994. The Company anticipates its fixed
manufacturing expenses will increase during fiscal 1995 due primarily to an
anticipated increase in production volume; however, fixed manufacturing expense
per unit is expected to decline. The Company also expects that its fixed
selling, general and administrative expenses will increase during fiscal 1995,
primarily due to the reinstatement of certain employee wage increases and
related benefits. The Company expects that its interest expense will decrease
during fiscal 1995, primarily due to a lower level of borrowings.

In fiscal 1992, 1993 and 1994, the effective tax rates used for calculating
tax credits for the Company were 33.2%, 30.6%, and 53.3%, respectively, and
differed from statutory rates due primarily to allowable tax benefits from net
operating losses and tax credit carryforwards and adjustments of prior year tax
accruals. At March 31, 1994, the Company had net operating loss carryforwards of
$23.3 million and tax credit carryforwards of $2.9 million, which are expected
to continue to reduce and/or offset tax liabilities in future years.

During the fourth quarter of fiscal 1994, the Company changed its method of
valuing its inventories from the last-in, first-out method to the average cost
method. Management believes that the average cost method provides a more
meaningful presentation of the Company's financial position and related
financial ratios. In accordance with generally accepted accounting principles,
the prior years' financial statements have been retroactively adjusted to
reflect this change. The effect of this restatement was to increase the net loss
in fiscal 1993 by $784,000 or $0.09 per share and reduce the net loss in fiscal
1992 by $842,000 or $0.11 per share. In addition, the effect of the restatement
was to increase retained earnings at April 1, 1991 by $5.3 million.

In fiscal 1993, the Company adopted Statement of Financial Accounting
Standard No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." This statement established accounting standards for employers'
accounting for postretirement benefits other than pensions, particularly
postretirement health care benefits. The Company elected to recognize as expense
during fiscal 1993 the entire accumulated postretirement benefit obligation
(transition obligation) aggregating $1.7 million, net of related tax benefits as
of April 1, 1992 of $850,000.

Effective April 1, 1993, the Company adopted Statement of Financial
Accounting Standard No. 109 ("SFAS No. 109"), "Accounting for Income Taxes."
This statement requires the recognition of the tax consequences in future years
of events which have been recognized in the financial statements. There was no
material cumulative effect of adoption of SFAS No. 109 on the financial position
or results of operations of the Company.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 112 ("SFAS No. 112"), "Employers' Accounting for
Postemployment Benefits." This statement requires the accrual for postemployment
benefits during the years an employee provides services. SFAS No. 112 must be
adopted during the fiscal year ending March 31, 1995. The impact of adoption of
SFAS No. 112 is not material.

15
<PAGE> 18

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain items
from the Company's consolidated statements of operations, each expressed as a
percentage of net sales.

<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
----------------------------------------------
SIX MONTHS
FISCAL YEAR ENDED ENDED
MARCH 31, SEPTEMBER 30,
------------------------- ---------------
1992 1993 1994 1993 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales(1)....................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of products sold.............................. 85.2 88.8 84.5 89.1 76.3
----- ----- ----- ----- -----
Gross profit....................................... 14.8 11.2 15.5 10.9 23.7
Selling, general and administrative expenses....... 17.3 15.0 14.2 14.1 13.9
Nonrecurring charge................................ -- 7.5 -- -- --
Other revenue...................................... (0.2) (0.7) (1.8) (3.6) (0.1)
Interest expense(2)................................ 3.0 4.5 5.0 5.1 5.1
----- ----- ----- ----- -----
Earnings (loss) before income taxes and cumulative
effect of change in accounting principle......... (5.3) (15.1) (1.9) (4.7) 4.8
Income taxes....................................... (1.8) (4.6) (1.0) (0.6) 0.9
----- ----- ----- ----- -----
Earnings (loss) before cumulative effect of change
in accounting principle.......................... (3.5) (10.5) (0.9) (4.1) 3.9
Cumulative effect of change in accounting
principle........................................ -- (0.6) -- -- --
----- ----- ----- ----- -----
Net earnings (loss)................................ (3.5)% (11.1)% (0.9)% (4.1)% 3.9%
===== ===== ===== ===== =====
</TABLE>

- -------------------------
(1) Net sales does not include other revenue.

(2) Lower net sales for the fiscal year ended March 31, 1994 and for the six
months ended September 30, 1994 caused percentage rate increases in
interest expense, although the actual expense amount declined from
comparative prior periods.

SIX MONTHS ENDED SEPTEMBER 30, 1994 COMPARED TO SIX MONTHS ENDED SEPTEMBER 30,
1993

NET SALES. Net sales decreased $30.4 million, or 23.8%, to $97.1 million
for the six months ended September 30, 1994 compared to $127.5 million for the
six months ended September 30, 1993. The reduction in sales was primarily the
result of lower available canned inventories at the beginning of fiscal 1995
caused by a poor growing season during fiscal 1994 and the elimination of
certain low margin or unprofitable products in both the canned and frozen
divisions.

Total canned vegetable sales decreased $19.7 million, or 22.1%, to $69.5
million for the six months ended September 30, 1994 compared to $89.2 million
for the six months ended September 30, 1993. The decline in total canned
vegetable sales was the result of a $29.2 million reduction in sales volume
partially offset by a $9.5 million increase in sales due to improved pricing. Of
the net decrease in sales of $19.7 million, $5.9 million was due to a reduction
in sales of discontinued canned products and $13.8 million was due to a decrease
in sales of continued products due to lower available inventories. Sales of
private label canned products declined $13.0 million, or 20.8%, to $49.6 million
for the six months ended September 30, 1994, compared to $62.6 million for the
six months ended September 30, 1993. The decline in private label canned sales
was the result of an approximate $21.7 million reduction in sales volume,
partially offset by an approximate $8.7 million increase in sales due to
improved pricing. Sales of brand label canned products declined $6.7 million, or
25.3%, to $19.9 million compared to $26.6 million for the six months ended
September 30, 1993. Substantially all the decline in brand label sales was due
to lower sales volume primarily due to lower available canned inventories.

Total frozen sales declined $10.7 million, or 27.9%, to $27.6 million for
the six months ended September 30, 1994 compared to $38.3 million for the six
months ended September 30, 1993. This reduction in sales was due primarily to
the elimination of certain low margin or unprofitable frozen products. Sales of
discontinued frozen products decreased $8.7 million, or 76.3%, to $2.7 million
for the six months ended September 30, 1994 compared to $11.4 million for the
six months ended September 30, 1993.

16
<PAGE> 19

COST OF PRODUCTS SOLD. Cost of products sold decreased $39.5 million, or
34.8%, to $74.1 million for the six months ended September 30, 1994 from $113.6
million for the six months ended September 30, 1993. The decrease in cost of
products sold was due primarily to lower sales volume in both the canned and
frozen divisions. Cost of products sold as a percentage of net sales decreased
to 76.3% for the six months ended September 30, 1994 compared to 89.1% for the
six months ended September 30, 1993. Of this 12.8% decrease, 6.3% was due to
non-restructuring-related cost reduction efforts, 4.9% was due to higher selling
prices, 1.3% was due to cost reductions from the Company's restructuring
efforts, and 0.3% was due to the elimination of certain low margin or
unprofitable products.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses declined by $4.5 million, or 25.0%, to $13.5 million for
the six months ended September 30, 1994 from $18.0 million for the six months
ended September 30, 1993. This reduction was primarily the result of lower
variable selling expenses associated with lower brand label sales volume.
Selling, general and administrative expenses as a percentage of net sales
declined to 13.9% for the six months ended September 30, 1994 from 14.1% for the
six months ended September 30, 1993 due to lower variable selling expenses.

INTEREST EXPENSE. Interest expense decreased $1.6 million, or 24.6%, to
$4.9 million for the six months ended September 30, 1994 compared to $6.5
million for the six months ended September 30, 1993. This reduction was
primarily the result of lower short-term borrowings resulting from lower working
capital requirements and the payment of long-term debt from the proceeds of
sales of closed plants, partially offset by increases in short-term interest
rates and higher financing expenses associated with the June 1993 amendment of
the Revolver.

INCOME TAXES. The effective income tax rate for the six months ended
September 30, 1994 was 20% compared to the 12% used for calculating tax credits
for the six months ended September 30, 1993. Each of the effective tax rates
differ from the statutory rates due to recognition of allowable tax benefits
from net operating loss carryforwards.

NET EARNINGS (LOSS). Net earnings for the six months ended September 30,
1994 were $3.8 million compared to the net loss of $5.3 million for the six
months ended September 30, 1993.

FISCAL YEAR ENDED MARCH 31, 1994 COMPARED TO FISCAL YEAR ENDED MARCH 31, 1993

NET SALES. Net sales in fiscal 1994 decreased $25.3 million, or 9.0%, to
$256.1 million from $281.4 million in fiscal 1993. Limited supplies of available
canned finished goods inventory caused by a poor growing season was the primary
reason for the decline. This volume shortfall was only partially offset by a
modest improvement in pricing.

Total canned vegetable sales decreased $22.7 million, or 11.4%, to $175.7
million in fiscal 1994 from $198.4 million in fiscal 1993. The decline in sales
in fiscal 1994 was substantially due to lower available inventory of canned
vegetables caused by a poor growing season in fiscal 1994, partially offset by a
3.3% improvement in canned division pricing. In fiscal 1994, sales of
discontinued canned vegetables totaled $8.8 million. Sales of private label
canned products declined $10.6 million, or 7.7%, to $126.5 million in fiscal
1994 compared to $137.1 million in fiscal 1993. The decline in private label
sales was a result of an $18.8 million, or 13.7%, reduction in sales due to
lower sales volume, partially offset by an $8.2 million, or 6.0%, increase in
sales due to improved pricing experienced in the second half of fiscal 1994.
Sales of brand label canned products declined by $12.1 million, or 19.7%, to
$49.2 million in fiscal 1994 compared to $61.3 million in fiscal 1993. The
decline in brand label sales was a result of an $11.0 million, or 17.9%,
reduction in sales due to lower sales volume, and a $1.1 million, or 1.8%,
decrease in sales due to lower prices.

Total frozen sales declined $2.6 million, or 3.1%, to $80.4 million in
fiscal 1994 compared to $83.0 million in fiscal 1993. This reduction in frozen
sales was primarily the result of a 3.7% decrease in pricing related to
elimination of higher priced but marginally unprofitable products and the sale
of related inventories. In fiscal 1994, sales of discontinued frozen vegetables
totaled $17.8 million.

17
<PAGE> 20

OTHER REVENUE. Other revenue of $4.7 million in fiscal 1994 included
revenues of $4.1 million resulting from insurance claim proceeds related to
reconstruction costs at the Company's fire damaged Hoopeston, Illinois facility.
See Note K of Notes to Consolidated Financial Statements.

COST OF PRODUCTS SOLD. Cost of products sold decreased $33.6 million, or
13.4%, to $216.4 million in fiscal 1994 from $250.0 million in fiscal 1993. The
decrease in cost of products sold was due primarily to lower sales volume. Cost
of products sold as a percentage of net sales declined to 84.5% in fiscal 1994
compared to 88.8% in fiscal 1993. This decline resulted primarily from the
elimination of low margin product lines. Average variable manufacturing costs
remained relatively flat in fiscal 1994 compared to fiscal 1993 despite adverse
weather-related production conditions.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Total selling, general and
administrative expenses decreased $7.7 million, or 18.3%, to $34.4 million,
excluding a charge of $2.1 million relating to the settlement of a product
liability claim in fiscal 1994, from $42.1 million in fiscal 1993. This decrease
was in part due to a $4.1 million decrease in sales promotions related primarily
to lower canned brand label sales in fiscal 1994. Other administrative expenses
decreased $3.6 million in fiscal 1994 due to cost reduction and other expense
control programs instituted by the Company. Selling, general and administrative
expenses as a percentage of net sales declined to 14.2% in fiscal 1994 compared
to 15.0% in fiscal 1993 primarily due to restructuring initiatives which lowered
fixed general and administrative expenses. The product liability claim in fiscal
1994 relates to an acquired business and predates the Company's acquisition of
such business. Had the $2.1 million product liability charge not occurred,
selling, general and administrative expenses as a percentage of net sales in
fiscal 1994 would have been 13.4% rather than 14.2%.

INTEREST EXPENSE. Interest expense totalled $12.7 million in fiscal 1994
and $12.7 million in fiscal 1993. Interest expense remained flat in fiscal 1994
despite a reduction in average short-term debt because of an increase in
short-term interest rates and higher financing expenses resulting from a June
1993 amendment to the Revolver.

INCOME TAXES. The effective income tax rates for calculating tax credits
were 53.3% for fiscal 1994 and 30.6% for fiscal 1993. The effective tax rate
differs from the statutory rates due to recognition of allowable tax benefits
from net operating loss carrybacks and adjustment to prior year accruals
relating primarily to tax refunds received in excess of amounts accrued in the
prior fiscal year. See Note G of Notes to Consolidated Financial Statements.

NET EARNINGS (LOSS). The net loss for fiscal 1994 was $2.2 million compared
to a net loss of $31.1 million in fiscal 1993. The fiscal 1993 loss included a
non-recurring restructuring charge of $14.7 million ($21.1 million pre-tax) and
the cumulative effect of adoption of SFAS No. 106 on postretirement benefits of
$1.7 million ($2.5 million pre-tax).

FISCAL YEAR ENDED MARCH 31, 1993 COMPARED TO FISCAL YEAR ENDED MARCH 31, 1992

NET SALES. Net sales increased $1.0 million, or 0.4%, to $281.4 million in
fiscal 1993 from $280.4 million in fiscal 1992. The Company experienced an
increase in sales volume of $17.5 million, or 6.2%, in fiscal 1993 primarily in
the private label canned and frozen businesses. These volume increases were
partially offset by a decline in sales of $16.5 million, or 5.9%, due to a
decline in prices.

Total canned vegetable sales decreased $12.0 million, or 5.7%, to $198.4
million in fiscal 1993 compared to $210.4 million in fiscal 1992. Lower prices
caused a decline in sales of $16.1 million, or 7.7%, in fiscal 1993 compared to
fiscal 1992, partially offset by volume increases accounting for $4.1 million or
a 1.9% increase in sales. Excess production of canned vegetables in fiscal 1993
combined with a large fiscal 1992 carryover inventory created downward pressure
on the Company's pricing of all canned vegetable products. Per unit pricing also
was adversely affected by a lower proportion of brand label sales to total
canned sales.

Sales of private label canned products increased $3.2 million, or 2.4%, to
$137.1 million in fiscal 1993 compared to $133.9 million in fiscal 1992,
reflecting an increased emphasis on private label business. The increase in
private label sales included an $8.0 million or 6.0% increase in sales due to
higher volume, offset by a $4.8 million or 3.6% decrease in sales due to lower
pricing. Sales of brand label canned products declined by $15.2 million, or
19.9%, to $61.3 million in fiscal 1993 compared to $76.5 million in fiscal 1992.
The decline in brand label sales was a result of a $7.2 million or 9.4%
reduction in sales due to lower volume and an $8.0 million or 10.5% decrease in
sales due to lower prices.

18
<PAGE> 21

Total frozen sales increased $13.0 million, or 18.6%, to $83.0 million in
fiscal 1993 compared to $70.0 million in fiscal 1992 as a result of the emphasis
on increased sales volume and higher unit priced repackaged goods. This increase
in frozen sales included $10.5 million, or 15.1%, due to volume increases and
$2.5 million, or 3.5%, due to price increases. The price increase for frozen
products was due primarily to an increase in sales of higher unit-priced
repackaged products in relation to total frozen sales.

OTHER REVENUE. Other revenue of $2.1 million in fiscal 1993 included
revenue of $1.6 million resulting from insurance claim proceeds for business
interruption due to a fire at the Company's Hoopeston, Illinois facility. That
revenue represented recovery of lost profit margin due to a shortage of finished
goods normally produced at that plant and recovery of costs incurred as a result
of the fire. Other revenue of $676,000 in fiscal 1992 primarily consisted of a
gain on the disposal of an investment and a gain on sale of assets, partially
offset by a write-down of obsolete equipment.

COST OF PRODUCTS SOLD. Cost of products sold increased $11.2 million, or
4.7%, to $250.0 million in fiscal 1993 from $238.8 million in fiscal 1992,
primarily due to an increase of 15.1% in frozen product sales volume. Cost of
products sold as a percentage of net sales was 88.8% in fiscal 1993 and 85.2% in
fiscal 1992. The increase in cost of products sold as a percentage of net sales
in fiscal 1993 as compared to fiscal 1992 was due primarily to lower selling
prices and an increase in frozen product sales, which carry a lower margin, as a
percentage of total net sales.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Total selling, general and
administrative expenses decreased $6.4 million, or 13.2%, to $42.1 million in
fiscal 1993 from $48.5 million in fiscal 1992. This decrease was primarily due
to a $4.3 million decrease in variable selling expenses related to lower brand
label canned sales in fiscal 1993. Administrative expenses were reduced $2.1
million due to cost reduction initiatives implemented during fiscal 1993.
Selling, general and administrative expenses as a percentage of net sales
decreased to 15.0% in fiscal 1993 from 17.3% in fiscal 1992, due primarily to
reduced canned sales promotion expenses and lower fixed general and
administrative expenses resulting primarily from the restructuring initiatives.

NONRECURRING CHARGE. In fiscal 1993, the Company recorded a one-time,
non-cash charge of $14.7 million ($21.1 million pre-tax) relating to the
write-down of eight plants to be sold, closed or downsized and the costs
associated with disposing of them.

INTEREST EXPENSE. Interest expense increased $4.1 million, or 47.7%, to
$12.7 million in fiscal 1993 from $8.6 million in fiscal 1992. The increase in
interest expense in fiscal 1993 was the result of higher interest rates and
higher borrowing levels. In fiscal 1993, the Revolver carried interest rates
which were higher than a bank's reference rate. In fiscal 1992, the Company was
able to borrow at or below a bank's reference rate via revolving debt and
commercial paper. Average total borrowings were higher in fiscal 1993 due to
higher inventory levels and reduced profitability.

INCOME TAXES. The effective tax rates for calculating tax credits were
30.6% for fiscal 1993 and 33.2% for fiscal 1992. The lower effective tax rate in
fiscal 1993 reflected a reduction in the amount of tax benefit that was
recognized because the alternative minimum tax limited the amount of currently
refundable taxes available from net operating loss carrybacks.

NET EARNINGS (LOSS). The net loss for fiscal 1993 was $31.1 million,
compared to a net loss of $9.9 million in fiscal 1992. The fiscal 1993 loss
included a non-recurring restructuring charge of $14.7 million ($21.1 million
pre-tax) and the cumulative effect of adoption of SFAS No. 106 on postretirement
benefits of $1.7 million ($2.5 million pre-tax).

19
<PAGE> 22
SELECTED QUARTERLY OPERATING RESULTS

The following table sets forth certain unaudited quarterly results of
operations for fiscal 1993 and 1994 and for the first two quarters of fiscal
1995. In management's opinion, this unaudited consolidated condensed information
has been prepared on the same basis as the annual financial statements and
includes all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the information for the quarters presented,
when read in conjunction with the consolidated financial statements and notes
thereto included elsewhere in this Prospectus. The operating results for any
previous quarter are not necessarily indicative of results for any future
period.

<TABLE>
<CAPTION>
QUARTER
QUARTER ENDED QUARTER ENDED ENDED
------------------------------------------------ --------------------------------------------------- --------
JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1992 1992 1992 1993(1) 1993 1993 1993 1994 1994(2)
-------- ------------- ------------ --------- -------- ------------- ------------ --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales(3).... $ 59,188 $62,798 $ 78,910 $ 80,486 $ 56,357 $71,148 $ 71,983 $56,657 $ 38,818
Gross
profit(4)..... 9,128 8,833 12,494 945 5,205 8,708 12,166 13,674 8,575
Net earnings
(loss)........ (3,959) (2,370) (707) (24,091) (5,385) 118 226 2,826 407

QUARTER ENDED
SEPTEMBER 30,
1994(2)
-------------

<S> <C>
Net sales(3).... $58,313
Gross
profit(4)..... 14,408
Net earnings
(loss)........ 3,351
</TABLE>

- -------------------------
(1) During the fourth quarter of 1993, the Company recorded a one-time, noncash
charge of $14.7 million ($21.1 million pre-tax), which related to the
write-down of eight plants to be sold, closed or downsized and the costs
associated with disposing of them. See "Stokely Restructuring Program."

(2) For interim reporting purposes, certain expenses are based on estimates
rather than expenses actually incurred.

(3) Net sales does not include other revenue.

(4) Gross profit is defined as net sales less cost of products sold.

The Company's operations are seasonally affected by the growing cycle of
the vegetables it processes. Most of the Company's production occurs during the
second quarter of each fiscal year (due to the timing of crop production and
climate conditions) and a majority of sales occurs during the third and fourth
quarter of each fiscal year (due to seasonal consumption patterns for its
products). Accordingly, inventory levels are highest during the second and third
quarters, and accounts receivable levels are highest during the fourth quarter.
Net sales generated during the third and fourth quarter of each fiscal year have
a significant impact on the Company's results of operations. However, the
Company's quarterly operating results for fiscal 1993 and 1994 shown above do
not fully reflect this seasonality, due primarily to the impact of the Company's
restructuring program as well as the effects of industry market conditions (in
terms of price and supply).

The Company's cost and expense reduction programs began to have a greater
impact as fiscal 1994 progressed. The sale or closing of various plants
identified in the restructuring plan reduced fixed manufacturing expenses while
staff reductions affecting most other areas of the Company reduced general and
administrative expenses. The increasing impact of cost reduction programs and
the upward trend in selling prices is evident in the improvement in the
Company's gross margin (sales less cost of products sold) by quarter. Gross
margin increased from 9.2% in the first quarter of fiscal 1994 to 12.2% in the
second, 16.9% in the third and 24.1% in the fourth and gross margin was 22.1% in
the first quarter of fiscal 1995 and 24.7% in the second.

20
<PAGE> 23

LIQUIDITY AND CAPITAL RESOURCES

GENERAL

Due to the seasonal production nature of the canned and frozen vegetable
processing business, the Company must maintain substantial inventories of
processed vegetables throughout the year. The working capital requirements
associated with producing and maintaining such inventories are financed
primarily through short-term borrowings and deferred payment terms with major
raw product and container suppliers. The Company's Revolver provides for
borrowings up to $100.0 million as revolving credit loans. The Revolver matures
on May 31, 1995. The Company believes that the Revolver is adequate to meet the
Company's seasonal borrowing needs. Borrowings under the Revolver were $52.9
million at September 30, 1994 and are projected to peak at less than $60.0
million during fiscal 1995. The maximum amount borrowed in fiscal 1994 was $68.9
million under the Revolver compared to $97.5 million in fiscal 1993 under the
Revolver and $88.0 million in fiscal 1992 under various short-term credit
facilities. The decrease of $28.6 million in maximum borrowings from fiscal 1993
to fiscal 1994 was due primarily to the Company's restructuring initiatives
resulting in lower inventory levels and operating costs.

From fiscal 1988 to fiscal 1992, the Company funded its acquisitions and
capital expenditures primarily through debt. In addition, during fiscal 1991 and
1992, high production levels led to inventory accumulation which also was
primarily funded through short-term borrowings. As part of the restructuring
plan, the Company reduced its outstanding debt by $29.5 million, from $131.8
million at March 31, 1992 to $102.3 million at March 31, 1994, and intends to
further reduce its outstanding debt with the proceeds from this Offering. For
fiscal 1991 and 1992, the Company's average interest rates paid on its
short-term credit facilities were 8.8% and 5.8%, respectively, and the Company
was able to utilize short-term commercial paper borrowings to fund a portion of
its working capital needs. However, during fiscal 1993, the expanded working
capital requirements and the Company's inability to obtain commercial paper
financing caused the Company to enter into the Revolver, which bears interest at
2.25% over a specified bank's reference rate on the first $40.0 million and
1.25% over a specified bank's reference rate on borrowings in excess of $40.0
million. As a result, for fiscal 1993 and 1994, the Company's average interest
rate on short-term debt (including commercial paper in fiscal 1993 and a portion
of the Revolver) was 7.3% and 8.4%, respectively. The Company has received
proposals from various lenders to provide funds under a New Credit Agreement,
which it intends to enter into in fiscal 1995. Due to the decreased working
capital needs of the Company at the present time, the Company anticipates that
the New Credit Agreement will provide a smaller working capital facility, and
also will have a lower interest rate and less restrictive financial and
operating covenants than the existing Revolver.

In addition to the Revolver, the Company has various long-term debt
obligations, which aggregated $79.9 million at September 30, 1994, excluding
current maturities of $2.5 million. Included in the long-term debt obligations
at September 30, 1994 were two senior notes totaling $35.9 million, various
Industrial Development Revenue Bonds totaling $27.0 million, and $17.0 million
of revolving credit notes classified as long-term. The two senior notes had
long-term principal amounts of $21.0 million and $14.9 million at September 30,
1994, respectively, bear interest at fixed rates of 9.37% and 9.74%,
respectively, and mature in the years 2000 and 2001, respectively. At September
30, 1994, the majority of the Industrial Development Revenue Bonds were fixed
rate bonds with aggregate long-term principal amounts of $24.2 million,
excluding current maturities. These fixed rate bonds have scheduled maturities
through the year 2005 and bear interest at fixed interest rates ranging from
7.38% to 8.88%. The remainder of the Industrial Development Revenue Bonds
consist of variable rate bonds which totaled $2.8 million at September 30, 1994,
exclusive of current maturities, have scheduled maturities through the year 2011
and bear interest at rates which ranged from 3.88% to 6.82% at September 30,
1994. The $17.0 million principal amount long-term notes payable at September
30, 1994 consist of that portion of the Revolver which is not expected to be
repaid currently. See Note F of Notes to Consolidated Financial Statements.

During fiscal 1993, certain long-term Industrial Development Revenue Bond
issues were classified as current liabilities because the Company was in
technical default of certain financial ratio covenants. During fiscal 1994,
financial covenants in all affected issues, except a $1.4 million Paulding, Ohio
bond, were amended by the bondholders, such that the Company was again in
compliance. Accordingly, the amended bonds were again classified as long-term
debt at March 31, 1994. The Paulding, Ohio facility was sold in fiscal 1994 and
the proceeds were used to repay the bonds in July 1994. At September 30, 1994,
the Company was in compliance with all material debt and financial ratio
covenants set forth in all of its debt agreements.

21
<PAGE> 24

CASH FLOWS FROM OPERATING ACTIVITIES

Cash used in operations during the six months ended September 30, 1994
totaled $13.5 million. Of the total cash used, changes in operating assets and
liabilities used cash of $22.2 million primarily due to an increase in inventory
of $74.7 million and an increase in accounts receivable of $4.5 million,
partially offset by an increase of $52.8 million in accounts payable.

During fiscal 1994, the Company realized significant improvements in cash
flow from operating activities and applied such cash flow primarily to reduce
short-term debt and accounts payable. Net cash provided by operations improved
$36.7 million to $38.1 million in fiscal 1994 from $1.4 million in fiscal 1993.
The increase in cash provided by operations is partially attributable to reduced
net losses (net of a nonrecurring restructuring charge in fiscal 1993) in fiscal
1994 compared to fiscal 1993. Additionally, cash provided by changes in
operating assets and liabilities increased $23.3 million primarily from the
benefits of inventory and accounts receivable reductions of $45.3 million and
$21.0 million, respectively, offset in part by a reduction in accounts payable
of $25.3 million. The Company's aggressive inventory reduction programs in the
first quarter of fiscal 1994, combined with the elimination of certain product
lines and the adverse growing and harvesting conditions during fiscal 1994, were
the primary reasons for the Company's reduced inventories.

CASH FLOWS FROM INVESTING ACTIVITIES

Net cash provided by (used in) investing activities during the six months
ended September 30, 1994 and during fiscal 1994, 1993 and 1992 were ($4.1
million), $3.8 million, ($7.3 million) and ($33.5 million), respectively.
Purchase of property, plant and equipment was $4.3 million, $5.2 million, $12.9
million and $21.7 million during the six months ended September 30, 1994, and
during fiscal 1994, 1993 and 1992, respectively.

Capital expenditures during the six months ended September 30, 1994 were
primarily related to the capacity consolidation at the Waunakee, Wisconsin
facility and investment in product quality control equipment at several
processing plants. Capital expenditures in fiscal 1994 were focused on improved
plant efficiency and ongoing compliance with environmental regulations.
Expenditures in fiscal 1994 included capacity consolidation and operation
efficiency projects at the Pickett, Wisconsin, and Waunakee, Wisconsin,
facilities, and improvements to a wastewater disposal system in Walla Walla,
Washington. These capital expenditures were financed through cash flow from
operations. There were also capital expenditures to complete the reconstruction
of the Company's Hoopeston, Illinois, facility damaged by fire in fiscal 1993,
which were financed with insurance proceeds.

In fiscal 1994, the Company generated $9.1 million in additional cash flow
from the sale of four processing facilities and other miscellaneous assets as
part of the Company's restructuring program. Proceeds from the plant sales were
used primarily to pay down long-term debt.

Capital expenditures for fiscal 1993 and 1994 were below the amount of
depreciation. In these years, the Company intentionally limited its level of
capital expenditures to short-term pay back and necessary quality and
environmental projects, but plans to increase capital expenditures to the level
of annual depreciation in future years. Capital expenditures budgeted for fiscal
1995 total $4.0 million, primarily for product quality improvements and the
initial phase of a new management information system.

Capital expenditures in fiscal 1993 included expansion of corn capacity at
the Wells, Minnesota, facility, installation of wastewater disposal systems at
the Paulding, Ohio, and Scottville, Michigan, facilities and completion of the
corporate offices in Oconomowoc, Wisconsin. The capital expenditures were
financed through short-term debt. Capital expenditures also were made to begin
rebuilding the Company's Hoopeston, Illinois, facility that was damaged by fire.
These expenditures were financed by insurance proceeds. In fiscal 1992, the
Company acquired the assets of Americana Packing and Distribution of McAllen,
Texas, a frozen vegetable processing company, for $9.3 million.

22
<PAGE> 25

CASH FLOWS FROM FINANCING ACTIVITIES

During the six months ended September 30, 1994, the Company increased its
borrowings under the Revolver by $17.9 million to $52.9 million. This increase
was due primarily to the use of cash to fund expected seasonal increases in
inventory levels.

At March 31, 1994, the Company had $35.0 million of borrowings under the
Revolver, of which $17.0 million was classified as long-term and $18.0 million
was classified as short-term. At March 31, 1993, the Company had $66.3 million
of borrowings under the Revolver, of which $35.0 million was classified as long-
term and $31.3 million was classified as short-term. During fiscal 1994, the
Company decreased its borrowings under the Revolver by $31.3 million through
planned cash flow improvements from the reduction in accounts receivable and
inventories.

In fiscal 1992, the Company issued new long-term debt consisting of a $20.0
million private placement and a $3.0 million Industrial Development Revenue
Bond. In fiscal 1992, $20.0 million of commercial paper borrowings were
classified as long-term debt.

IMPACT OF INFLATION

Current financial statements are prepared in accordance with generally
accepted accounting principles and report operating results in terms of
historical costs. They provide a reasonable, objective, quantifiable statement
of financial results but do not evaluate the impact of inflation. Competitive
conditions permitting, the Company modifies its selling prices to recognize cost
changes as incurred. Management believes the impact of inflation does not
distort the Company's financial statements since prices are determined by supply
and demand.

23
<PAGE> 26

BUSINESS

GENERAL

THE VEGETABLE PROCESSING INDUSTRY

The processed canned and frozen vegetable industry in the United States
currently accounts for an estimated $5.1 billion in sales per year and is
estimated to be growing at a rate of 1.8% per year. In addition, an estimated
98% of households in the United States purchased canned vegetables in 1989. The
canned vegetable market, the Company's primary market, represented an estimated
$3.0 billion in annual sales in 1993. Of the canned vegetable market, the
private label channel of distribution accounts for approximately 35% of the
canned vegetable industry's total retail sales, and is currently experiencing
market share growth.

The vegetable processing industry is characterized by several large
producers, but also includes a number of smaller independently owned producers.
In general, the canned and frozen processed vegetable industry is mature and
capital intensive, and, as such, there have been few entrants into the market in
recent years. Over the past ten years, the Company believes the industry has
been characterized by plant reduction and consolidation.

The pricing structure in the canned and frozen vegetable processing
industry is dependent upon the supply of agricultural products and is subject to
the variable nature of agricultural production. Selling prices of canned and
frozen products are a direct result of industry product supply, which correlate
to plantings, growing conditions and inventories. A year of high supply
generally results from two critical factors. First, inventory carryover levels
provide processors with an indication of which markets might be short on product
and, therefore, might hold the best promise for favorable price trends.
Declining carryovers typically encourage processors to expand acreage devoted to
a particular crop in anticipation of higher prices. Second, weather impacts
total production through its influence on yield per acre. Favorable growing
conditions typically boost yield per acre and, therefore, total production.
Unfavorable growing conditions have the opposite effect. Weather impacts not
only crop size, but also crop quality.

Increased plantings and improved growing conditions caused over-supply in
the vegetable market during fiscal 1992 and 1993, forcing industry prices and
margins downward. During the latter part of fiscal 1993 and continuing into
fiscal 1994, market prices improved due to reduced plantings, unfavorable
growing conditions and the consequential effects on supply and pricing. These
favorable market price conditions continued during the first quarter of fiscal
1995, but industry prices declined during the second quarter of fiscal 1995 due
to increased plantings and improved growing conditions.

24
<PAGE> 27

BUSINESS STRATEGY

In fiscal 1993, the Company began to implement a new business strategy
designed to enhance its leadership position in certain markets and products and
to facilitate the Company's ability to achieve a higher level and consistency of
earnings over time. The key elements of the strategy are as follows:

- FOCUS ON CORE PRODUCT LINES. The Company has narrowed its product focus
to product lines in which it has significant market share -- corn, green beans,
peas and root crops -- and eliminated several unprofitable non-core lines,
including the canned tomato and fruit product lines and southern frozen
vegetables. This focus has allowed the Company to significantly reduce its fixed
manufacturing and administrative expenses and its variable costs per unit in an
industry generally characterized by a high ratio of variable to fixed costs.
Fixed manufacturing expenses for the canned portion of the business were reduced
24.7% for fiscal 1994 compared to fiscal 1992. During the same period, fixed
selling, general and administrative expenses were reduced 37.5%.

- EMPHASIZE THE PRIVATE LABEL CHANNEL OF DISTRIBUTION. Since fiscal 1992,
the Company has placed significant emphasis on its presence in the private label
channel of distribution. Private label has been the Company's primary
distribution channel since it was established in 1920, and the Company currently
holds a leading market share in this channel. Customers include major national
supermarket chains such as Winn Dixie, Kroger, A&P, Aldi and Safeway. In
addition, the Company does not believe the three largest industry suppliers
currently are emphasizing the private label channel of distribution. The
Company's operating margins in private label are generally higher than the
margins realized in its brand products business because of lower selling and
support expenses. Other advantages of increasing its share position in the
private label market in addition to sales growth include greater operating
efficiency, supplier leverage, channel influence and cross-selling
opportunities.

The Company believes that opportunities exist to achieve share growth in
this channel on an internal basis and through selective mergers or acquisitions.
The Company's competitive advantages in this channel include: (1) the Company's
74 years of experience as a private label processor/marketer has enabled the
Company to develop substantial expertise in agriculture operations, plant
operations, distribution, marketing, sales and customer service; (2) the Company
is the largest producer of corn, the leading category item, for the private
label channel of distribution which the Company believes gives it supplier
leverage and channel influence; (3) the Company is a large producer of root and
specialty crops, relatively stable margin items for the Company which are
demanded by the private label channel of distribution and are not produced on a
full-line basis by many of Stokely's competitors; (4) the Company can leverage
its brand marketing expertise and private label market share to participate in
the emerging upscale private label market; (5) the Company has the ability to
combine brand and private label shipments to a single destination, thereby
reducing costs for its customers; and (6) the Company believes it has a
recognized level of service responsiveness and innovation.

The Company believes that opportunities exist to enhance consumer
recognition of its brand names and to selectively expand its brand product lines
by developing new brand specialty products. For example, the Company has
introduced a line of value-added specialty products sold under the Stokely's
Gold(TM) label which utilizes specialty varieties and upscale packaging. The
Company believes these products have not only provided the Company with a
competitive advantage, but also have improved profit margins in Stokely's brand
business. Sales volume of the Stokely's Gold(TM) label product line has doubled
from fiscal 1992 to fiscal 1994, and the Company sees additional growth
potential for this line. In fiscal 1994, the Stokely's Gold(TM) label products
consisted of 14 different products, and accounted for 7% of the Company's brand
sales. Because of their uniqueness, sales of these products do not overly
cannibalize the Stokely's Finest(R) brand.

25
<PAGE> 28

- PURSUE GROWTH OPPORTUNITIES IN FOREIGN MARKETS. Exports of processed
vegetables represent a growing channel of distribution in the processed
vegetable industry. For the past five years, the volume of total canned corn
exported by U.S. processors, the major component of U.S. exported processed
vegetables, has grown at a compound annual rate of 15%. The Company believes
that its strengths as a leading U.S. canned corn producer and a major exporter
create opportunities for the Company to expand its export sales. The Company has
achieved a significant market share in exports to Germany and Scandinavia and
intends to increase its emphasis on expanding export sales to Eastern Europe,
Asia, Canada and Mexico. The Company's marketing approach to the export markets
varies from its North American competition. The Company prefers to establish
direct selling relationships with customers rather than the conventional
practice of dealing through export traders and brokers, and thereby attempt to
reduce its variable selling expenses.

- IMPROVE EFFECTIVENESS AND EFFICIENCY OF FROZEN VEGETABLE BUSINESS. In
order to increase its profit margins in the frozen vegetable business, the
Company has downsized its frozen vegetable operations following a period of
rapid expansion and redirected its sales to industrial customers. The Company
generally has been able to generate higher margins on its industrial sales due
to decreased packaging and promotional expenses associated with sales of frozen
products in bulk. The Company plans to continue to increase its presence in this
channel through the addition of new customers, and to increase its leading
position in certain higher margin specialty products, while remaining one of the
major players in frozen corn production, the leading category item in the frozen
vegetable market.

PRODUCTS

GENERAL

The Company cans, freezes and sells a variety of vegetables. Its principal
products are corn, green beans, peas and root crops, including carrots, beets,
mixed vegetables and potatoes. Other products processed and marketed by the
Company include sauerkraut, processed dry beans and pumpkin, supplemented by
purchased items such as asparagus, which is packed for Stokely by others under
contractual co-pack arrangements. The following table shows, for each of the
last three fiscal years, the amount and percentage of net sales for each of the
Company's principal raw product groups.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31,
-----------------------------------------------------------------
1992 1993 1994
------------------- ------------------- -------------------
NET NET NET
SALES PERCENT SALES PERCENT SALES PERCENT
-------- ------- -------- ------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CANNED VEGETABLES:
Corn................................. $ 70,200 25.0% $ 78,400 27.8% $ 67,400 26.3%
Green beans.......................... 40,200 14.4 35,800 12.7 41,500 16.2
Peas................................. 23,000 8.2 23,100 8.2 20,100 7.9
Root crops........................... 15,200 5.4 13,900 5.0 14,700 5.7
Other................................ 61,800 22.0 47,200 16.8 32,000 12.5
-------- ------- -------- ------- -------- -------
Total canned vegetables........... 210,400 75.0 198,400 70.5 175,700 68.6
-------- ------- -------- ------- -------- -------
FROZEN VEGETABLES:
Corn................................. 18,000 6.4 19,600 7.0 24,700 9.7
Peas................................. 19,000 6.8 8,100 2.9 13,400 5.2
Other................................ 33,000 11.8 55,300 19.6 42,300 16.5
-------- ------- -------- ------- -------- -------
Total frozen vegetables........... 70,000 25.0 83,000 29.5 80,400 31.4
-------- ------- -------- ------- -------- -------
Total canned and frozen
vegetables................... $280,400 100.0% $281,400 100.0% $256,100 100.0%
======== ===== ======== ===== ======== =====
</TABLE>

26
<PAGE> 29

CANNED VEGETABLES

The Company produces ten different canned vegetable products, each in
numerous varieties, styles and quality grades, and utilizes seven different can
sizes and three different glass jar sizes. Each vegetable product is produced
and sold in three to seven quality grades, which are mainly defined by maturity
of the raw product. The highest grades typically are used for premium private
label products and Stokely's Gold(TM) brand label products. The lower grades
typically are used by customers who emphasize price value. The Company uses a
white-lined can for most of its brand products, which the Company believes
favorably impacts quality perceptions among consumers.

By supplying all major can sizes in all major Midwest-type vegetables in a
variety of styles, mixtures and features, as well as supplying certain other
vegetables purchased for resale as accommodation items, the Company is a
"full-line" or "turn" supplier to its customers. "Turn" business refers to
supplying a broad line of products to a retailer on a regular basis principally
in single shipments, to support that retailer's everyday needs. "Turn" business
typically is sold at higher prices than "promotion" business, which usually
consists of a large quantity of various items.

The Company's product development efforts are designed to respond to
customer needs and emerging markets and to create more demand for its vegetable
products by focusing on new varieties, styles and mixtures. The Company produces
to order for certain customers based on their product specification demands. In
addition, in recent years, the Company has developed and now offers no-salt
versions of many of its vegetable products. The Company also has introduced new
mixtures and varieties.

Corn. Corn is the Company's leading product, as measured by both sales
dollars and volume. Based on industry data, in 1993, the Company was one of the
largest producers of canned corn products in the United States, producing
approximately 13% of all canned corn sold by United States processors. The
Company's canned corn consists of various varieties (super sweet, Gold'n White,
Shoepeg White Corn and traditional) and styles (whole kernel, cream style,
mixtures and no-salt versions). During fiscal 1994, approximately 61% of the
Company's canned corn was sold to the private label industry, 22% was sold under
the Company's brand label, with an emphasis on special varieties for the
Stokely's Gold(TM) label, and 17% was sold to the foodservice industry. Recent
canned corn product introductions include Stokely's Gold Fiesta Corn(TM),
Stokely's Gold'n White Corn and Stokely's Crisp'n Sweet Corn(TM). The Company's
corn for canned products is grown primarily in Wisconsin, Minnesota, Illinois
and Iowa.

Green Beans. Green beans are the Company's second highest volume product.
Based on industry data, in 1993, the Company was one of the larger producers of
canned green bean products in the United States, producing approximately 10% of
all canned green beans sold by United States processors. The Company's canned
green beans consist of various varieties (Italian flat pod beans and European
slender whole green beans) and styles (cut, french style and whole). During
fiscal 1994, approximately 42% of the Company's canned green beans were sold to
the private label industry, 30% were sold to the foodservice industry and 28%
were sold under the Company's brand labels. Recent canned green bean product
introductions include Stokely's Gold European Whole Green Beans and Stokely's
Gold Italian Flat Green Beans. The Company's green beans are grown primarily in
Wisconsin and Michigan.

Peas. Based on industry data, in 1993, the Company was one of the larger
producers of canned peas in the United States, producing approximately 15% of
all canned peas sold by United States processors. The Company's canned peas
consist of various varieties (early maturing, small berry, large berry and
various mixtures) and styles, including no-salt versions. During fiscal 1994,
approximately 65% of the Company's canned peas were sold to the private label
industry, 20% were sold under the Company's brand labels and 15% were sold to
the foodservice industry. Recent canned pea product introductions include
varieties such as Stokely's Gold Tiny Party Peas & Petite & Sweet Baby Carrots.
The Company's peas are grown primarily in Wisconsin and Minnesota.

27
<PAGE> 30

Root Crop Vegetables. The Company's root crop vegetables consist of
carrots, beets, mixed vegetables and potatoes, all of which are grown primarily
in Wisconsin. The Company occasionally will source root crop vegetables from
various Southern states, to assure the Company has a continuous supply. Based on
industry data, in 1993, the Company sold approximately 10% of all canned root
crop vegetables sold by United States processors. The Company's root crop
vegetable products consist of various varieties (based on count and mix) and
styles (whole, sliced, crinkled slices and waffle slices). During fiscal 1994,
approximately 47% of the Company's canned root crop vegetables were sold to the
private label industry, 31% were sold to the foodservice industry and 22% were
sold under the Company's brand labels. Recent canned root crop vegetable product
introductions include Petite & Sweet Baby Carrots.

Other Vegetables. The Company also cans and sells various other vegetables,
including pumpkin, processed dry beans (pinto, kidney, pork'n beans and garbanzo
beans) and sauerkraut. During fiscal 1994, approximately 60% of the Company's
other vegetables were sold to the foodservice industry, 31% were sold to the
private label industry and 9% were sold under the Company's brand labels. The
Company has a major share of private label pumpkin sales in both retail and
foodservice markets. The Company's sauerkraut business utilizes brands, private
label retail and foodservice to create an efficient manufacturing base. In
addition to the Stokely's Finest(R) brand, its Meeter's Sauerkraut(R) has a
strong presence in various markets. The Stokely's Finest(R) brand was the first
to introduce Bavarian Sauerkraut(R), now a major category item. In fiscal 1992,
Stokely's Finest Sweet & Sour Kraut(R) was introduced in regional markets.
Processed dry beans, such as canned kidney beans, pork'n beans, pinto beans and
garbanzo beans, are processed year-round, and have a consumption pattern
counter-seasonal to traditional Midwest items.

FROZEN VEGETABLES

Most of the Company's frozen vegetable products are sold through the
industrial channel of distribution in bulk quantities. The Company also sells a
small amount of its frozen vegetable products to the private label industry, the
foodservice industry and as exports. Because of the Company's emphasis on the
industrial channel of distribution for its frozen vegetable products, new
product development is not actively pursued.

Each frozen vegetable is produced, frozen and sold in three to eight
quality grades, which are mainly defined by maturity of the raw product. The
frozen vegetable products sold through the industrial channel of distribution
are sold primarily in bulk size quantities, while sales to the private label,
foodservice and export markets are packaged in bulk and in individual boxes and
bags. The Company's vegetables for its frozen products are grown primarily in
Washington.

Corn. The Company's frozen corn consists of various varieties (super sweet,
jubilee and white) and styles (cob corn, cut corn and blends). During fiscal
1994, approximately 74% of the Company's frozen corn was sold through the
industrial channel of distribution, 16% was sold to the private label industry
and 10% was sold to the foodservice industry.

Peas. The Company's frozen peas consist of various varieties (regular size
and petite) and styles. During fiscal 1994, approximately 79% of the Company's
frozen peas were sold through the industrial channel of distribution, 13% were
sold to the private label industry and 8% were sold to the foodservice industry.

Other Vegetables. The Company also freezes and sells various other
vegetables, including sugar snap peas, carrots, pearl onions and lima beans. The
Company is a leading United States producer of frozen sugar snap peas. These
other vegetables are sold in different varieties and styles. During fiscal 1994,
approximately 67% of the Company's sales of other frozen vegetables were sold
through the industrial channel of distribution, 18% were sold to the private
label industry and 15% were sold to the foodservice industry.

28
<PAGE> 31

CUSTOMERS, MARKETING AND SALES

GENERAL

The Company markets and sells its canned and frozen vegetable products
under private labels and its brand labels for home use, and also to the
foodservice industry, including restaurants, fast food chains, hospitals,
schools and the military, and to industrial accounts. The Company is a leading
processor of private label canned vegetables in the United States, and sells to
many major supermarket chains and other food distributors who market the
products under their own label. The Company also processes and markets its
vegetable products under the Stokely's Finest(R), Stokely's Gold(TM) and other
brand labels to grocery wholesalers and grocery chain stores. The Company's
foodservice sales involve sales, generally in large containers, directly to or
through foodservice distributors, to purchasers of food products such as the
United States government, fast food chains, restaurants and hospitals. The
Company also sells its vegetable products to industrial customers who either
blend, repack or use the Company's vegetable products as an ingredient.

The following table shows the net sales and percentage of total net sales
contributed by the Company's brand label, private label, foodservice and frozen
sales accounts for each of the last three fiscal years.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31,
---------------------------------------------------------------
1992 1993 1994
------------------ ------------------ -------------------
NET NET NET
SALES PERCENT SALES PERCENT SALES PERCENT
-------- ------- -------- ------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Private label(1)...................... $ 91,700 32.7% $ 89,400 31.8% $ 82,700 32.3%
Brand label(2)........................ 76,500 27.3 61,100 21.7 49,100 19.2
Foodservice(3)........................ 42,200 15.0 47,900 17.0 43,900 17.1
Frozen (industrial and other)(4)...... 70,000 25.0 83,000 29.5 80,400 31.4
-------- ------- -------- ------- -------- -------
Total............................... $280,400 100.0% $281,400 100.0% $256,100 100.0%
======== ===== ======== ===== ======== =====
</TABLE>

- -------------------------
(1) Of the Company's total private label sales shown above, export sales
totalled $17.0 million, $16.5 million and $13.6 million for fiscal 1992,
1993 and 1994, respectively.

(2) Of the Company's total brand label sales shown above, export sales totalled
$2.3 million, $2.2 million and $1.0 million and U.S. government sales
(including sales through military commissaries) totalled $9.5 million, $6.9
million and $6.1 million for fiscal 1992, 1993 and 1994, respectively.

(3) Of the Company's total foodservice sales shown above, U.S. government sales
totalled $12.8 million and $9.7 million for fiscal 1993 and 1994,
respectively.

(4) Sales to industrial accounts accounted for $58.0 million and $57.0 million
of total frozen sales shown for fiscal 1993 and 1994.

For the fiscal year ended March 31, 1994, no single customer accounted for
more than 10% of the Company's total sales.

PRIVATE LABEL SALES

The Company's private label sales involve sales to major supermarket chains
and other food distributors who market the products under their own labels.
Major private label customers of the Company include Kroger, Winn Dixie, A&P,
Meijer, Aldi, HEB, Associated Grocers, Roundy's, Shaws, Supermarkets General,
Grand Union and Super Valu. Most of the Company's private label sales are canned
vegetable products, although the Company also sells a limited amount of frozen
private label products. The Company is the leading supplier of Midwest-type
canned vegetables (such as corn, green beans, peas and root crops) to the
grocery private label industry, with significant private label canned corn
sales.

Private label sales are made through the Company's wholly-owned subsidiary,
Oconomowoc Canning Company, Inc. Approximately 80% of private label sales are
made through commissioned brokerage representatives, while the remaining 20% are
made direct to the customer. The Company's private label division's primary
responsibilities include selling private label products, ensuring customer
satisfaction, managing inventories and gaining new customers and distribution.
The division includes four sales managers and a national sales manager who is
the Vice President of Oconomowoc Canning Company, Inc.

29
<PAGE> 32

Customers include most major grocery wholesalers and chains. Customer and
market development efforts focus primarily on helping customers lower costs of
buying, receiving and merchandising canned vegetables through a combined
"partnering" approach which involves the Company's sales force meeting with key
customer representatives from various divisions within the customer's
organization to develop a joint logistic plan. Development efforts also include
increasing profitability by targeting higher price/quality-seeking customers in
an attempt to benefit from the emerging upscale private label market. The
Company's implementation of and experience with the Stokely's Gold(TM) brand
label products provide an opportunity to increase private label sales through
the development of customer labels for premium private label lines. For example,
the Company is promoting private label sales of flat pod green beans and slender
whole green beans, two canned items recently introduced under the Stokely's
Gold(TM) program.

BRAND LABEL SALES

The Company's brand label division sells brand canned vegetables to grocery
wholesalers and chains. Major customers include Kroger, Food Lion, HEB, Grocers
Supply, Bi-Lo, Marsh, Piggly Wiggly, Super Valu, Roundy's, Fleming Companies,
Inc. and Walmart. The products primarily include a complete line of Midwest-type
vegetables sold under the Stokely's Finest(R) brand name, and also include
products sold under the premium Stokely's Gold(TM) brand and other regional
labels. Products sold under Stokely's brand labels are marketed through
independent food brokers who sell on a commission basis and provide local
marketing and service support to their distributors. The Company's sales of
brand label products have declined from $76.5 million, or 27.3%, of total sales
during fiscal 1992 to $49.1 million, or 19.2%, of total sales during fiscal
1994. The decline was due primarily to the discontinuance of certain low margin
or unprofitable product lines as part of the Company's restructuring program.

The Stokely's Finest(R) brand label sales accounted for approximately 10%
of total industry brand canned sales in the Midwest and Southeast United States
in 1993, the Company's primary brand geographic area of distribution. Sales
volume under the Stokely's Gold(TM) program, a premium line of unique vegetable
varieties such as Crisp'n Sweet Corn, European Slender Whole Green Beans, and
two new items (Fiesta Corn and Tiny Party Peas & Petite & Sweet Baby Carrots),
has doubled from fiscal 1992 to fiscal 1994.

The Company sells its brand label products through a broker network under
the direction of Stokely's regional sales manager. Approximately 40 independent
food brokers operate in Stokely's major metropolitan markets. This broker
network focuses upon gaining display, advertising and other retailer support, in
addition to ensuring customer satisfaction and developing the customer base.
Marketing efforts include television advertising and print media-delivered
promotions in major markets. Initiatives that help customers increase their
category profitability include the Stokely's Gold(TM) program (with the
principal advantage of higher margins for both the Company and its customers)
and joint brand-private label shipping options (with the competitive selling
point of higher inventory turns and lower average inventories for the customer).
These initiatives are instrumental in maintaining shelf presence and customer
support.

FOODSERVICE SALES

Foodservice sales are made, generally in larger containers, directly to or
through foodservice distributors, to purchasers of food products such as the
United States government, fast food chains, restaurants and hospitals. Most
foodservice sales are made through commissioned brokerage organizations. Sales
efforts are managed by a Director of Foodservice Sales who is supported by three
sales managers for the commercial market. The Company's largest single customer
in foodservice sales is the U.S. government.

Approximately 75% of the Company's canned foodservice sales are private
label, primarily to large corporate distributors (such as Sysco, US Foodservice,
Rykoff Sexton, Gordon's Foodservice) and large buying groups (such as Pocahontas
and PYA/Monarch). Foodservice distributors then sell to restaurants, schools and
hospitals. Contact with foodservice distributors also cultivates relationships
with national chain restaurant accounts, a growing part of the Company's
foodservice business. The Company's sales to national chain restaurants include
Chi Chi's, Grandy's and Golden Corral. The Company has a strong position in corn
(accounting for foodservice sales of $11.1 million in fiscal 1994, which would
have been approximately 13% of estimated total industry foodservice sales in
1993), a growing position in canned pumpkin, and a growing position as a
supplier to national chain restaurant accounts.

30
<PAGE> 33

FROZEN SALES

The Company's frozen sales principally involve sales to industrial
customers that either blend, repack or use the vegetable products as an
ingredient. National restaurant chains are another large customer in frozen
sales. The frozen sales division of the Company has been restructured and
downsized to emphasize profitable products and channels. Frozen product sales
are managed by the Director of Frozen Sales. The frozen product sales team
focuses on industrial and national chain foodservice business, with a smaller
presence in export sales and retail sales that can be efficiently serviced from
the Company's Northwest operations. The sales group emphasizes direct sales,
without broker commissions, to large corporate bulk customers, such as Con Agra,
Campbells, and Simplot, and national chain restaurants, such as Denny's, Chi
Chi's and Morrisons Cafeterias.

EXPORT SALES

Exports of processed vegetables represent a growing channel of
distribution. From 1988 to 1993, total canned corn exports, the major component
of exported processed vegetables, have grown at a compound annual rate of 15%.
The Company's export sales principally involve sales of private label canned
vegetables. The Company believes it is the leading exporter of canned corn to
Germany and Scandinavia. The Company's export sales accounted for 8.1%, 8.6% and
7.4% of total canned sales for fiscal 1992, 1993 and 1994, respectively. The
decline in fiscal 1994 was primarily due to the low yield of the corn crop that
year and thus the reduced availability of corn products to export. The Company
intends to continue to emphasize export sales in future years. The Company's
international sales organization is based in Oconomowoc, Wisconsin and sells
through agents, commissioned brokers and direct sales. In fiscal 1994, export
sales accounted for 20% of the Company's total canned corn sales. The Company
sees additional opportunities to increase exports to Eastern Europe, Asia,
Canada and Mexico primarily because these markets are becoming more open to
United States exports generally, and because canned vegetables are perceived as
a specialty and convenience item in these areas.

ADVERTISING, PROMOTION AND CUSTOMER SERVICE

The Company's marketing effort is led by a marketing group that also is
responsible for new product development, new label and package initiatives and
other customer focused innovation projects in all sales divisions. The customer
service and inventory management team also support sales by ensuring customer
orders are filled smoothly and inventory at various distribution centers remain
at adequate levels.

The Company emphasizes responsiveness to customer needs, and the Company
has invested in technology to support its Efficient Customer Response
initiatives. In addition, the Company has developed modular pallets that allow
customers to avoid storage costs by "cross-docking" the pallet directly to the
retail outlet, allowing customers to avoid set-up labor costs when the product
arrives at the retail location. The marketing team supports all marketing
requirements for brand label products, and also assists other sales groups in
supporting customer driven innovation in services.

The Company supports its brand marketing efforts with regional media
advertising programs, including radio and television commercials, coupon
circulation and newspaper advertisements, in addition to strong emphasis on
in-store point-of-sale promotions. Media advertising is employed to support the
Company's brand sales and is focused in the Midwest and Southeast United States
geographic markets. Private label, foodservice and industrial sales are not
supported by Company media advertising because the Company produces and labels
the product for direct end-user marketing by the customer.

SOURCES OF SUPPLY

The Company acquires its raw agricultural products for processing from
independent growers who operate under annual contracts with the Company. Most
raw agricultural production is contracted before the growing season with farmers
who agree to plant and cultivate the crops. This method of securing raw product
has been satisfactory to the Company and its growers, and the Company has not
experienced difficulty in contracting for raw agricultural products. Contracts
are negotiated in late winter for the upcoming processing season. Contracts
specify, among other things, the type and quantity of raw product to be supplied
as well as the price. The Company has an established base of experienced growers
and has experienced only modest turnover from year to year.

31
<PAGE> 34

The Company attempts to reduce the agricultural risk of unfavorable growing
conditions by utilizing greater geographic diversity and a higher proportion of
irrigated acreage than its competitors. The Company currently contracts
approximately 110,000 acres in Wisconsin, Minnesota, Iowa, Illinois, Michigan
and Washington, with irrigated acres accounting for approximately 40% of the
total. Contracted acreage is in close proximity to producing plants due to the
perishable nature of the raw product. Processing generally is performed within
several hours of harvest to assure the best possible product quality.

Stokely field personnel are involved in all phases of crop production. The
Company works closely with major seed companies in the testing of improved
varieties. Desirable traits include superior flavor and color retention, pest
and disease resistance, yield improvement and drought resistance. Field
personnel provide the proper seed variety to the grower and instruct them on the
precise time to plant. This is important to assure harvest schedules that result
in sufficient supplies of raw product to capture operating efficiencies
associated with maximum plant output. The Company conducts periodic inspections
of crops during the growing cycle and generally performs the actual harvesting
for the growers.

The Company utilizes integrated pest management techniques to assure
maximum control of damaging insects while minimizing the use of chemical control
methods. Such techniques include field location selection for specific crops,
rotation patterns, census activity during the growing season and chemical
control only when necessary based on census data. This results in minimizing
insect related damage problems while keeping chemical control usage well below
allowable levels.

Stokely agricultural personnel monitor crop maturation rates utilizing
sophisticated harvest management practices. Maturity is a primary determinant of
product quality and the maturity "window" to meet a required specification is
very narrow. To assure that product is harvested within this window, the Company
directs all harvesting operations utilizing its own equipment and personnel. In
this manner, the Company maintains proper supplies of raw product entering the
processing facilities at the desired maturity level while minimizing unharvested
acreage.

Cans are a major component in the final product cost for the Company's
canned business, representing approximately one-third of total direct
manufacturing cost. Cans are sourced principally from Ball Corporation, American
National Can and Crown Cork & Seal under contract supply agreements. The Company
has excellent working relationships with its can vendors and has not experienced
difficulty in obtaining adequate supplies of cans for production. The Company's
size allows it to source cans at a competitive price, which is a significant
factor given the importance of the container cost component to the overall cost
structure.

PRODUCTION AND DISTRIBUTION

The Company operates twelve processing plants, nine of which are dedicated
to canned vegetables and three of which are dedicated to frozen vegetables. Most
of the Company's raw products must be processed within hours of harvesting to
maintain desired product quality, so plants are located in close proximity to
the Company's principal growing areas. Following harvesting, raw products are
transported to the processing facility where they are sorted, sized, cut or
trimmed, washed, inspected and then canned and cooked or individually quick
frozen. In addition to visual inspection, the Company increasingly relies on
electronic inspection machinery that recognizes and rejects any off-color or
blemished product. The Company's high emphasis on quality assurance during the
production process also includes the grading and inspection of raw products,
inspection of incoming cans, sampling and laboratory testing of products during
production and inspection of finished goods on a sample basis prior to shipment.
Monitoring systems continuously record cooking times and temperatures as well as
freezing temperatures so that each product is processed according to the precise
method proven to yield consistent quality results and ensure maximum retention
of flavor and texture. The Company employs quality control inspectors at each
facility and four food technologists supervised by the Director of Quality
Management, whose primary responsibilities include quality assurance and
compliance. Technologists also run tests to ensure that all standards for food
safety are met or exceeded.

32
<PAGE> 35

The Company recognizes that consistent product quality is crucial to the
success of its business and has a formal program in place utilizing Total
Quality Management ("TQM") techniques. These techniques employ statistical
analysis that enable employees to identify problems, gather and prioritize data,
evaluate solutions and implement them. An essential part of the TQM process
relating to production is attribute grading, which is a statistical product
evaluation technique utilized at all of the Company's plants. From thousands of
non-destructive samples taken, quality assurance personnel are able to observe
potentially troublesome trends developing. Supervisors are alerted who then
trace problems to sources such as seed varieties, growing conditions, bird or
insect damage, harvesting or handling.

Finished products are carefully monitored throughout the handling and
storage process. Frozen vegetables are stored in 1,500 pound bulk containers and
held in temperature controlled warehouses. Packaging of frozen product into
other size containers takes place as orders are received. Finished canned goods
for the Stokely brand are labeled prior to storage. Private label retail and
foodservice finished goods are stored unlabeled until orders are received. The
appropriate customer label is affixed at that time and the order shipped. The
Company maintains a large inventory of customer-owned can labels to assure rapid
order fulfillment.

In addition to producing quality products, careful storage and efficient
distribution are vital to success. The Company distributes its products through
its two state-of-the-art distribution centers in Wisconsin and through a network
of rented forward warehouses, the largest of which are in Chattanooga,
Tennessee; Indianapolis, Indiana; Orange County, California; and Tampa, Florida.
The Company also ships full loads directly from its processing facilities. The
Company's transportation personnel are responsible for routing goods from
production plants to regional and consolidating warehouses and finally to
customers. Depending on quantities and distance, finished goods are shipped by
rail or truck, whichever is most cost-effective. The Company's transportation
personnel have negotiated special rail rates for shipments of canned products to
forward distribution centers. As a result, the Company is able to compete
effectively in the large Southern California markets with processors based in
the Northwest region of the United States.

MANAGEMENT INFORMATION SYSTEMS

The Company depends upon the accuracy, quality and proper utilization of
its management information systems to effectively manage its business. The
Company has installed both customized and purchased management information
systems operating on an IBM AS/400 computer that allow for centralized data
collection and management of key functions such as inventory control, accounts
receivable, order processing, production control, sales and distribution, and
general accounting. These systems provide concise and timely information
critical to business operations and are adequate to support current operations.
Currently approximately 80% of the Company's sales are ordered through
electronic means.

The Company is seeking to use service innovation as a point of competitive
differentiation. As it develops increasingly sophisticated programs to bring
value to its customers, new demands will be placed on its information systems.
In order to prepare for this, the Company recently completed an extensive
evaluation of its current systems and business processes and has targeted phased
implementation of new core processing systems beginning in fiscal 1996. The new
systems will be more flexible and are intended to yield greater fact based
analysis and decision making throughout all levels of the Company. This added
analytical capability and flexibility will assist the Company in meeting the
increasingly complex and rapidly evolving needs of its customers. These needs
include vendor managed inventory programs, Executive Information Systems,
improved customer and market region sales management, and additional Electronic
Data Interchange services. Customer service, order entry and distribution system
improvements are the priority for the initial implementation phase of the new
systems.

COMPETITION

All of the Company's products compete with those of other national, major
and smaller regional food processing companies under highly competitive
conditions. The principal factors of competition in the brand and private label
canned vegetable business are price and product quality, availability of a broad
line of products, timely delivery, and customer service and satisfaction. An
additional competitive factor for the Company's brand canned products is
consumer demand as developed through expenditures on advertising, sales
promotion and maintenance of retail shelf space. The principal factors of
competition in the Company's frozen vegetable business, which primarily involves
sales to industrial customers, are price, product quality differentiation and
customer service.

33
<PAGE> 36

Three of the Company's major competitors on the national level, Del Monte,
Green Giant and Dean Foods, have greater financial and marketing resources than
the Company. The Company believes it can compete effectively in the canned
vegetable business by focusing on private label retail sales and core brand
products, delivering consistent product quality, meeting customer service
expectations, continuing to improve the Company's cost structure and focusing
capital expenditures on quality and service innovations.

As a result of recent plant reduction and consolidation in the vegetable
processing industry, many of the Company's principal national competitors have
narrowed their business focus to specific product categories and channels of
distribution. Del Monte has focused on brand label canned products, with a
limited emphasis on the private label canned business. Both Green Giant and Dean
Foods (through the Birdseye and Freshlike brands) have placed emphasis on the
frozen vegetable market. The Company's principal competitors in the private
label canned business are major and smaller regional companies, including Friday
Canning Co., owned by Chiquita Brands. The Company's major competitors in the
international export market are Friday Canning Co., Green Giant and Dean Foods,
most of whom are larger and have greater resources than the Company.

PROPERTIES

Stokely's principal facilities are described below:

<TABLE>
<CAPTION>
PLANT AND
LOCATION WAREHOUSE SIZE PRINCIPAL PRODUCTS
- ------------------------------ -------------- --------------------------------------
(SQ. FT.)
<S> <C> <C>
CANNED VEGETABLE PRODUCTION
AND DISTRIBUTION:
Ackley, Iowa.................. 199,000 Whole kernel corn; canned dry pack
beans
Cobb, Wisconsin............... 65,000 Warehouse
DeForest, Wisconsin........... 538,000 Warehouse and distribution center;
field department office
Hoopeston, Illinois........... 240,000 Golden whole kernel corn; pumpkin
Merrill, Wisconsin............ 56,000 Green, wax and romano beans
Pickett, Wisconsin............ 145,000 Peas; whole kernel corn
Poynette, Wisconsin........... 345,000 Green and wax beans; sauerkraut;
warehouse and distribution center
Scottville, Michigan.......... 238,000 Green, shellie and romano beans
Sun Prairie, Wisconsin........ 108,000 Peas; peas and carrots; golden and
white whole kernel corn; mixed
vegetables; beets; carrots
Waunakee, Wisconsin........... 181,000 Peas; peas and carrots; whole kernel
corn; beets; carrots; potatoes; mixed
vegetables
Wells, Minnesota.............. 103,000 Peas and cream style corn

FROZEN VEGETABLE PRODUCTION:
Grandview, Washington......... 86,000 Sugar snap peas; corn
Green Bay, Wisconsin.......... 76,000 Peas; whole kernel corn; green beans;
carrots
Walla Walla, Washington....... 199,000 Peas; green zucchini; carrots; lima
beans; onions; squash

CORPORATE HEADQUARTERS:
Oconomowoc, Wisconsin......... 52,000 General offices

CLOSED FACILITIES(1):
Appleton, Wisconsin........... 121,000 Peas; canned and glass-packed beets;
potatoes; carrots
Jefferson, Wisconsin.......... 28,000 Frozen vegetable repackaging
---------
Total.................... 2,780,000
=========
</TABLE>

- -------------------------
(1) These facilities were closed during fiscal 1994 as part of the Company's
restructuring plan and are being held for sale.

34
<PAGE> 37

All of the facilities and related real estate are owned by the Company,
subject to mortgage and collateral assignments under loan agreements with
Stokely's lenders. See Note F of Notes to Consolidated Financial Statements.
Stokely's facilities operate at or near capacity during the processing season.
Except for Poynette's sauerkraut operation and the Ackley plant, which run
year-round, the Company utilizes its production facilities principally from June
through November, as is customary in the vegetable processing industry. Certain
distribution and repackaging facilities also operate year-round. The Company
believes all of its plants are in good condition and adequate for current
processing needs and will be able to meet presently anticipated future needs
with these facilities. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

TRADEMARKS

In the course of its business, the Company uses various trademarks, trade
names and service marks in the packaging and advertising of its products.
"Stokely's Finest(R)" is a registered United States trademark and is significant
to the Company. Stokely's ability to compete in the brand product vegetable
market depends in part upon having a nationally recognized trademark. Some of
the Company's other registered United States trademarks include "School
Days(R)," "Chef's Best(R)," "Hart(R)," "Our Favorite(R)," "Shellie(R)," "Sweet &
Sour Kraut(TM)" and "Meeter's Sauerkraut(R)." "Stokely's Crisp'n Sweet Corn(TM)"
and "Stokely's Gold(TM)" are registered United States trademarks on an
intent-to-use basis, and Stokely has common law rights to "Bavarian Style(R)."
While important, none of these other trademarks are as significant to the
Company's business as "Stokely's Finest(R)."

REGULATIONS

The Company is subject to regulation by the Food and Drug Administration,
the United States Department of Agriculture, the Federal Trade Commission, the
Environmental Protection Agency and various state agencies with respect to the
production, packaging, labeling and distribution of its food products, and
believes it is in material compliance with all applicable rules and regulations
of such federal and state agencies. The principal federal laws that regulate the
Company with respect to the production, packaging, labeling and distribution of
its food products include: (i) the Food, Drug and Cosmetic Act of 1938, which
ensures that foods are produced under sanitary conditions and are properly
labeled; (ii) the Federal Insecticide, Fungicide and Rodenticide Act, which
ensures that pesticides used on food are registered with and approved by the
Environmental Protection Agency; (iii) the Fair Packaging and Labeling Act,
which regulates trade practices and requires that consumers receive accurate
information regarding the quality and value of products; (iv) the National Label
Education Act, which regulates information which must be included in food
labels; and (v) the Federal Trade Commission Act, which regulates methods of
competition, advertising and trade practices.

The disposal of solid and liquid vegetable waste material resulting from
the preparation and processing of foods is subject to various federal, state and
local laws and regulations relating to the protection of the environment. While
the Company cannot predict with certainty the effect of any proposed or future
environmental legislation or regulations on its processing operations, Stokely
believes the waste disposal systems which are now in operation or which are
being constructed and designed for Stokely are sufficient to comply with all
currently applicable environmental laws and regulations. Expenditures for
facilities related to protection of the environment are made pursuant to the
Company's capital budget and have not had, nor are they expected to have, a
material effect on the earnings of the Company.

35
<PAGE> 38

EMPLOYEES

At peak employment periods during the processing season, the Company
employs approximately 4,060 employees, of which approximately 3,100 are seasonal
and part-time production personnel, 850 are full-time, year-round production
personnel, and 110 are management, sales and administration personnel.
Approximately 1,670 regular hourly and seasonal employees belong to labor
unions. Stokely's eight union contracts are generally three years in length and
provide for average wage increases of 4.0% during fiscal 1995. During fiscal
1995, three union contracts will expire: a labor union contract covering some of
the employees at Stokely's Waunakee and Poynette, Wisconsin facilities will
expire on December 31, 1994; a labor union contract covering some of the
employees at Stokely's Walla Walla, Washington facility will expire on January
1, 1995; and a labor union contract covering some of the employees at Stokely's
Deforest, Wisconsin facility will expire on March 31, 1995. Stokely anticipates
entering into new union contracts covering these employees on or before the
expiration date of the existing union contracts. Stokely recruits migrant
workers for seasonal employment at its seasonal plants and maintains migrant
housing facilities in Sun Prairie, Wisconsin, Pickett, Wisconsin and Hoopeston,
Illinois to accommodate those employees. The Company believes that relationships
with its employees are good.

LEGAL PROCEEDINGS

The Company is not a party to any material litigation and is not aware of
any threatened litigation that would be expected to have a material adverse
effect on its business.

36
<PAGE> 39

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH THE COMPANY
- ----------------------------------- --- ----------------------------------------------
<S> <C> <C>
Frank J. Pelisek(1)(3)(4).......... 64 Chairman of the Board and Director
Vernon L. Wiersma(1)(4)............ 44 President, Chief Executive Officer and
Director
Stephen W. Theobald(1)............. 48 Vice Chairman, Treasurer and Director
Russell J. Trunk................... 54 Senior Vice President, Operations
Leslie J. Wilson................... 50 Vice President, Finance and Chief Financial
and Accounting Officer
Robert M. Brill.................... 46 Vice President, General Counsel and Secretary
Robert Cook........................ 44 Vice President, Operations
Eddie W. Foster.................... 56 Vice President, National Sales Manager
Kenneth C. Murray.................. 36 Vice President, Canned Sales and Marketing
Michael A. Wilkes.................. 39 Vice President, Human Resources
Orren J. Bradley(2)................ 69 Director
Russell W. Britt(1)(2)(4).......... 68 Director
Charles J. Carey(3)................ 69 Director
James H. DeWees(2)................. 65 Director
Ody J. Fish(1)(3)(4)............... 69 Director
Carol Ward Knox(3)................. 43 Director
Thomas W. Mount(1)................. 63 Director
Joseph B. Weix..................... 67 Director
</TABLE>

- -------------------------
(1) Member of the Executive Committee of the Board of Directors.

(2) Member of the Audit Committee of the Board of Directors.

(3) Member of the Compensation Committee of the Board of Directors.

(4) Member of the Nominating Committee of the Board of Directors.

Frank J. Pelisek has been Chairman of the Board of the Company since June
1992, and has been a member of the Board of Directors of the Company since 1983.
Mr. Pelisek served as Chief Executive Officer of the Company from June 1992 to
August 1993. Mr. Pelisek has been a partner with Michael Best & Friedrich (legal
counsel to the Company) since 1965, and serves as a member of the Board of
Directors of various privately held corporations.

Vernon L. Wiersma has been Chief Executive Officer of the Company since
August 1993 and President since June 1992. He has been a member of the Board of
Directors of the Company since 1982. Mr. Wiersma was Executive Vice President of
Operations of the Company from 1985 to 1992, Vice President of Operations from
1983 to 1985 and Controller from 1975 to 1983. Mr. Wiersma joined the Company in
1973.

Stephen W. Theobald has been Vice Chairman and Treasurer of the Company
since June 1992. He previously was Vice President, Administration since joining
the Company in 1985. Mr. Theobald has been a member of the Board of Directors of
the Company since 1980. From 1972 to 1985, Mr. Theobald held various financial
and managerial positions at Morgan Stanley & Co. Incorporated, an investment
banking firm, and Harris Trust and Savings Bank, a commercial bank.

37
<PAGE> 40

Russell J. Trunk has been Senior Vice President, Operations of the Company
since August 1992. He also was the General Manager of the Company's Texas/Mexico
operations from 1991 to 1992. Mr. Trunk joined the Company in 1991. From 1964 to
1991, Mr. Trunk held various financial and operational positions with Green
Giant Company.

Leslie J. Wilson has been Vice President, Finance and Chief Financial and
Accounting Officer since June 1992, when he joined the Company. Mr. Wilson
previously served as Vice President and General Manager of Packaging
Specialties, Inc., a wholesale distributor of shrink wrap equipment and film,
from 1990 to 1992, and was Vice President of Finance and Administration of
Duetz-Allis Credit, an agricultural equipment finance company, from 1976 to
1990.

Robert M. Brill has been Vice President and General Counsel of the Company
since joining the Company in 1989, and has been Secretary since 1990. Mr. Brill
was a Senior Partner at Brill and Eustice, S.C. from 1986 to 1989. He also
serves as a member of the Board of Directors of a privately held corporation.

Robert Cook has been Director of Operations of the Company since 1989 and
Vice President, Operations since 1990. Mr. Cook joined the Company in 1985 and
served as plant manager until 1990. From 1977 to 1985, Mr. Cook held various
supervisory operations and management positions at Green Giant Company.

Eddie W. Foster has been Vice President, National Sales Manager of the
Company since 1991. Mr. Foster was President of Merchandise Warehouse, Inc., a
general warehousing company, from 1990 to 1991, and was President of LVS Food
Distributors from 1989 to 1990. Mr. Foster previously served as Vice President
of Brand Marketing and Sales of the Company from 1985 to 1989.

Kenneth C. Murray has been Vice President, Canned Sales and Marketing of
the Company since December 1992. Mr. Murray joined the Company in 1990 as the
Director of Marketing and Business Development. Prior to joining the Company,
Mr. Murray held various sales and marketing management positions at S.C. Johnson
Wax & Son, Inc., a manufacturer of cleaners, insecticides and personal care
products, from 1981 to 1990.

Michael A. Wilkes has been Vice President, Human Resources of the Company
since August 1993. He was Director of Total Quality Management for the Company
from 1991 to 1993. Mr. Wilkes previously served as Manager, Management and
Organization Development at Northrop Corporation, an aerospace and military
aircraft design and manufacturing company, from 1983 to 1991.

Orren J. Bradley has been a member of the Board of Directors of the Company
since 1985. Mr. Bradley has been Senior Vice President of the Laub Group, Inc.,
an insurance operations company, since 1985. He also served as Chairman, Boston
Store Division of Federated Department Stores, Inc., from 1967 to 1985. Mr.
Bradley is a director of various Northwestern Mutual Life Insurance Investment
Funds and Oshkosh B'Gosh, Inc., an apparel manufacturer.

Russell W. Britt has been a member of the Board of Directors of the Company
since 1985. Mr. Britt served as President, Chief Operating Officer and Director
of Wisconsin Energy Corp., a utility service company, from 1987 to 1991, and
Vice President from 1981 to 1987. He also served as an executive officer and a
director of Wisconsin Electric Power Co. and Wisconsin Natural Gas Co.,
subsidiaries of Wisconsin Energy Corp., from 1982 to 1991. Mr. Britt is a
director of Bank One Wisconsin Trust Company, N.A.

Charles J. Carey has been a member of the Board of Directors of the Company
since 1989. He has been an independent consultant since 1989. Mr. Carey served
as President and Chief Executive Officer of National Food Processors
Association, a trade association, from 1972 to 1989.

James H. DeWees has been a member of the Board of Directors of the Company
since August 1994. Mr. DeWees served as President and Chief Executive Officer of
Godfrey Company, a division of Fleming Companies, Inc., a wholesale food
distributor, from 1984 to 1994, and also as Vice President of Fleming Companies,
Inc. from 1987 to 1994.

38
<PAGE> 41

Ody J. Fish has been a member of the Board of Directors of the Company
since 1985. He served as President of Pal-O-Pak Insulation Co., Inc., an
insulation manufacturing company, from 1951 to 1986. Mr. Fish is a director of
all of the funds included in the Marshall Family of Mutual Funds.

Carol Ward Knox has been a member of the Board of Directors of the Company
since 1993. She has been a principal at Morgan & Myers, Inc., a public relations
consulting company, since 1982.

Thomas W. Mount has been a member of the Board of Directors of the Company
since 1966. Mr. Mount served as Chairman of the Board of the Company from 1992
to 1993, and President and Chief Operating Officer of the Company from 1975 to
1992. He is a director of the Fiduciary Capital Growth Fund, Inc. and the
Fiduciary Total Return Fund, Inc.

Joseph B. Weix has been a member of the Board of Directors of the Company
since 1963. Mr. Weix served as Chairman of the Board and Chief Executive Officer
of the Company from 1975 to 1992.

With the exception of Messrs. Mount and Weix who are cousins, there are no
family relationships among the executive officers and directors, and there are
no arrangements or understandings pursuant to which any of them were elected as
executive officers and/or directors. However Mr. Wilson has an employment
agreement with the Company. See "-- Employment Agreements."

BOARD TERMS AND COMMITTEES

The directors of the Company are divided into three classes, with directors
holding office for staggered terms of three years, in each case until their
successors are elected and qualified. The members of the Board of Directors
whose terms of office expire in 1995 are Messrs. Britt, Fish, Theobald and
Wiersma. The members whose terms of office expire in 1996 are Messrs. Carey,
Pelisek and Weix. The members whose terms expire in 1997 are Messrs. Bradley,
DeWees and Mount, and Ms. Knox.

The Board of Directors of the Company has standing Executive, Audit,
Compensation and Nominating Committees. The Executive Committee has the
authority during intervals between Board meetings to exercise the powers of the
Board, except for certain powers reserved exclusively for the Board. The
Executive Committee consists of Messrs. Pelisek (Chairman), Britt, Fish, Mount,
Theobald and Wiersma. The Audit Committee reviews the scope and timing of the
audit of the Company's financial statements by the Company's independent public
accountants and reviews with the independent public accountants the Company's
management policies and procedures with respect to auditing and accounting
controls. The Audit Committee also reviews and evaluates the independence of the
Company's accountants, approves services rendered by such accountants and
recommends to the Board the engagement, continuation or discharge of the
Company's accountants. Deloitte & Touche LLP has served as the Company's
independent auditors for the past 15 years. The Audit Committee consists of
Messrs. Britt (Chairman), Bradley and DeWees. The Compensation Committee is
responsible for overseeing the management of human resources activities of the
Company, including compensation for directors and executive officers, and the
establishment and operation of employee pension investment plans. The
Compensation Committee also is responsible for determining the recipients and
terms of stock options granted under the Incentive Stock Option Plan and the
Executive Stock Option Plan. The Compensation Committee consists of Messrs. Fish
(Chairman), Carey and Pelisek, and Ms. Knox. The Nominating Committee selects
nominees for directors to stand for election at the Company's annual meetings,
and consists of Messrs. Pelisek (Chairman), Britt, Fish and Wiersma.

DIRECTOR COMPENSATION

Non-employee directors receive compensation of $6,000 per year of service
on the Board plus $500 for each Board or Committee meeting attended. Directors
may defer all or any portion of such compensation under a Directors' Deferred
Compensation Plan adopted in 1985. Deferred compensation is credited to the
account of a participating director in the form of "phantom stock" of the
Company based on the market price at the time of each quarterly credit. Shares
credited to the accounts of directors electing to participate in the Directors'
Deferred Compensation Plan during the fiscal year ended March 31, 1994, were as
follows: Mr. Bradley, 1,816 shares; Mr. Britt, 7,471 shares; Mr. Carey, 2,407
shares; and Mr. Fish, 7,512 shares. Directors who have served two full terms
(six years) and are Board members upon attaining the age of 65 become eligible
for retirement compensation of $500 per month upon completion of service.

39
<PAGE> 42

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Frank J. Pelisek served as Chief Executive Officer of the Company from June
1992 to August 1993, and currently serves as a member of the Compensation
Committee of the Board of Directors of the Company. Mr. Pelisek is a partner
with Michael Best & Friedrich, legal counsel to the Company.

EXECUTIVE COMPENSATION

The following table summarizes the total compensation earned by the
Company's Chief Executive Officer and the next four highest compensated
executive officers.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION(1) ------------
------------------------------ NUMBER OF
FISCAL OPTION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(2) COMPENSATION(3)
- --------------------------------------- ------ -------- ------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Vernon L. Wiersma...................... 1994 $162,167 $70,000 -- $ 7,496
President and Chief Executive Officer 1993 136,500 -- -- 15,556
1992 136,500 -- -- --

Stephen W. Theobald.................... 1994 $128,333 $56,000 -- $ 9,891
Vice Chairman and Treasurer 1993 105,000 -- -- 13,653
1992 105,000 -- -- --

Kenneth C. Murray...................... 1994 $100,000 $20,000 -- $ 926
Vice President, Canned Sales and 1993 94,333(4) -- 6,000 4,681
Marketing 1992 88,200 -- 5,000 --

Russell J. Trunk....................... 1994 $100,000 $20,000 -- $16,963
Senior Vice President, Operations 1993 104,667 -- -- 22,626
1992 99,744 -- 4,000 --

Leslie J. Wilson....................... 1994 $100,000 $20,000 -- $ 9,864
Vice President, Finance and Chief 1993 78,889(4) -- 10,000 14,072
Financial and Accounting Officer
</TABLE>

- -------------------------
(1) Perquisites provided to the named executive officers by the Company did not
exceed 10% of each named executive officer's total annual salary and bonus
during fiscal 1992, 1993 and 1994.

(2) Amounts shown represent the total number of options awarded under the 1985
Incentive Stock Option Plan during the fiscal year indicated.

(3) Amounts shown in this column represent contributions by the Company for the
benefit of the named individuals pursuant to the Stokely USA, Inc.
Retirement Savings Profit Sharing Plan and the Split Dollar Life Insurance
Plan (the "Split Dollar Plan") in the form of premium payments on behalf of
the named executive officers during the fiscal year indicated.

(4) Each of Mr. Murray's and Mr. Wilson's annualized compensation during fiscal
1993 was $100,000. Mr. Murray received an increase to that level in December
1992 when he was promoted to his present position. Mr. Wilson joined the
Company in June 1992.

40
<PAGE> 43

EMPLOYMENT AGREEMENTS

In 1992, the Company entered into Change of Control Contingent Employment
Agreements with Messrs. Wiersma, Theobald, Murray, Trunk and Wilson
(collectively, the "Contingent Employment Agreements"). Under the Contingent
Employment Agreements, if a change of control occurs, the Company will continue
to employ Messrs. Wiersma and Theobald for three years, Mr. Wilson for two years
and Messrs. Murray and Trunk for one year, following the date of the change of
control. "Change of Control," as defined in the Contingent Employment
Agreements, includes the acquisition of 20% or more of the Company's Common
Stock, a merger, consolidation or reorganization, the sale of substantially all
of the Company's assets or a significant change in the composition of the Board
of Directors of the Company. In the event of a Change of Control, the employee
shall be employed by the Company for the applicable number of years and shall
receive a salary equal to his salary on the date of the Change of Control,
subject to annual upward adjustments commensurate with increases awarded to
other officers and employees. If, after a Change of Control, the Company
terminates the employee for any reason other than for cause or if the employee
elects to terminate his employment, he shall continue to be paid monthly an
amount equal to his then current monthly base salary plus a certain amount of
incentive payments and shall continue to be entitled to receive all other
employee benefits and perquisites made available to other employees of
comparable status until the end of his employment term. If the Company
terminates the employee for "cause" (as defined in the Contingent Employment
Agreements), the employee is entitled to receive only his compensation through
the date of termination. For purposes of the Contingent Employment Agreements,
the current base salary for Mr. Wiersma is $205,000, Mr. Theobald is $160,400,
Messrs. Murray and Trunk is $118,000, and Mr. Wilson is $114,500. The amount of
the base salary and any incentive payments are reviewed regularly by the
Compensation Committee of the Board of Directors. The Company also has entered
into similar Contingent Employment Agreements with other key officers of the
Company.

In June 1992, the Company entered into an employment agreement (the
"Employment Agreement") with Mr. Wilson for a two-year term which automatically
is extended for a period of one year on each anniversary date unless the Company
or Mr. Wilson provides notice of nonrenewal within 30 days prior to the date
thereof. For purposes of the Employment Agreement, the current base salary for
Mr. Wilson is $114,500. In addition to base salary, the Employment Agreement
provides for payments from other Company incentive compensation plans, and
provides for other benefits, including participation in any group health, life,
disability or similar insurance program and in any pension, profit-sharing,
deferred compensation, 401(k) or other retirement plans maintained by the
Company. The Employment Agreement also provides for participation in any
stock-based incentive programs made available to executive officers of the
Company. The Employment Agreement will terminate in the event the Company ceases
operations and may be terminated by the Company in the event of Mr. Wilson's
disability or retirement, or for "cause" (as defined in the Employment
Agreement) at any time.

DEFERRED COMPENSATION AGREEMENTS

In 1990, the Company entered into deferred compensation agreements (the
"Deferred Compensation Agreements") with Messrs. Thomas W. Mount, former
President and Chairman of the Board of Directors of the Company, and Joseph B.
Weix, former Chairman of the Board of Directors of the Company. Under the
Deferred Compensation Agreements, the Company is obligated to pay Messrs. Mount
and Weix deferred compensation in monthly installments of $7,500 each for a
period of 120 consecutive months (or at their election in one lump sum based
upon a present value calculation outlined in the Deferred Compensation
Agreements) following their death, disability or retirement. In the event of the
death of Messrs. Mount or Weix, their designated beneficiaries shall receive the
deferred compensation payments over the stated period, or at the Company's
election, such payments may be paid in one lump sum based upon a present value
calculation outlined in the Deferred Compensation Agreements. The Deferred
Compensation Agreements are non-tax qualified, unfunded deferred compensation
plans. Mr. Mount retired in April 1993, and Mr. Weix retired in June 1992, and
the Company commenced the monthly installment payments at these times.

41
<PAGE> 44

ANNUAL INCENTIVE PLAN AND STOCK OWNERSHIP REQUIREMENTS

The Company's Annual Incentive Plan (the "Incentive Plan") was developed to
recognize and reward performance and provide a total annual cash bonus
consistent with the Company's executive compensation strategy. Under the
Incentive Plan, executives earn incentive compensation if the Company achieves
various targets set for profits (defined as income before taxes and before
profit-sharing expense) as a percent of sales. Incentive compensation earned is
established as a percentage of each officer's base salary, and the applicable
percentage is dependent upon the individual's base salary amount. If the
financial performance of the Company falls below the threshold level, no awards
will be earned. If threshold levels of the performance indicators are achieved,
the Incentive Plan provides for payment of incentive compensation in amounts
ranging from 10% to 25% of an individual's base salary. If target levels are
achieved by the Company, the Incentive Plan provides for payment of incentive
compensation in amounts ranging from 20% to 50% of an individual's base salary.
Incentive compensation may exceed 50% of an individual's base salary if the
Company surpasses target levels, but may not exceed 75% of an individual's base
salary. Prior to payment of incentive compensation after completion of the
Company's financial audit, the Compensation Committee certifies that the
performance objectives of the Incentive Plan have been met.

The Compensation Committee believes that aligning the financial interests
of management more closely with those of the shareholders influences the
creation of shareholder value. Therefore, the Compensation Committee has
required certain executive stock ownership levels for certain of its executive
officers. For Messrs. Wiersma and Theobald, the requirement is stock ownership
representing a value at least two times their annual salary, and for Messrs.
Murray, Trunk and Wilson, the stock ownership requirement is value representing
at least one times their annual salary. Executives are required to use a portion
of any annual cash bonus received to purchase shares of Common Stock until the
ownership requirement is met.

BENEFITS

SPLIT DOLLAR PLAN

The Company established the Split Dollar Life Insurance Plan, effective
February 1, 1990 (the "Split Dollar Plan"), in which Messrs. Wiersma, Theobald,
Murray, Trunk and Wilson participate. The life insurance benefit is equal to
four times the executive's salary. The executive pays the economic value of the
insurance and the Company pays the balance of the premium. Upon the executive's
death or the retirement of the executive, the Company will receive all premiums
paid by it on behalf of the executive and the executive will receive the
remainder of the death benefit or the cash surrender value.

RETIREMENT SAVINGS PLAN

The Company maintains a retirement savings plan, the Stokely USA, Inc.
Retirement Savings Profit Sharing Plan (the "Retirement Savings Plan"), covering
all of its eligible employees. Employees are eligible to participate after
completing a twelve-month period of 1,000 or more hours of employment. The
Retirement Savings Plan involves a Company Profit Sharing Contribution account,
a Voluntary Contribution account and a 401(k) Salary Deferral account. Subject
to the Company's operating results, the Company may make contributions up to 8%
of pre-tax profits to the Profit Sharing Contribution account which would be
allocated to participants pro rata based upon their eligible compensation.
Participants become 20% vested in the profit sharing contributions credited to
their accounts and the earnings thereon after three years of credited service,
and 20% per year thereafter until 100% vested after seven years. Participants
also become 100% vested upon death, disability and attainment of age 62. The
Voluntary Contribution account permits participants to make voluntary after-tax
savings contributions in amounts between 2% and 10% of their annual
compensation. Participants in the Voluntary Contribution account are 100% vested
in their contributions and the earnings thereon. Under the Retirement Savings
Plan, through the 401(k) Salary Deferral account, participants are permitted,
subject to the limitations imposed by Section 401(k) of the Internal Revenue
Code of 1986, as amended (the "Internal Revenue Code"), to make voluntary
tax-deferred contributions in amounts between 1% and 10% of their annual
compensation. The Company may make a matching contribution to the 401(k) Salary
Deferral account in an amount up to 25% of the first 6% of compensation deferred
by the participant for participants who meet all eligibility and participant
requirements. Participants in the 401(k) Salary Deferral account are 100% vested
in their contributions, the Company's matching contribution and the earnings
thereon. Under the Retirement Savings Plan, a separate account is maintained for
each type of account and each participating employee. Participating employees
direct the Retirement Savings Plan trustee with respect to the investment of
assets held in their accounts among up to six investment options made available
by the trustee.

42
<PAGE> 45

STOCK OPTION PLANS

INCENTIVE STOCK OPTION PLAN

The Company established the 1985 Incentive Stock Option Plan (the
"Incentive Stock Option Plan") in which key employees of the Company and its
subsidiaries, as determined by the Compensation Committee, are eligible to
participate. The Incentive Stock Option Plan authorizes the grant of options to
purchase shares of Common Stock intended to qualify as incentive stock options
under Section 422A of the Internal Revenue Code. The Compensation Committee of
the Board administers the Incentive Stock Option Plan. As of September 30, 1994,
options to purchase 175,800 shares of Common Stock were outstanding under the
Incentive Stock Option Plan and a total of 49,750 shares of Common Stock were
available for granting under the Incentive Stock Option Plan. However, in August
1994 the Board of Directors of the Company decided not to grant any additional
options under the Incentive Stock Option Plan. There were no individual grants
of stock options under the Incentive Stock Option Plan to any of the named
executive officers in the Summary Compensation Table during fiscal 1994.

No options issued under the Incentive Stock Option Plan were exercised by
any of the named executive officers in the Summary Compensation Table during
fiscal 1994. The number and total value of unexercised in-the-money options at
March 31, 1994 are shown in the following table:

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
NUMBER OF OPTIONS AT FISCAL YEAR END FISCAL YEAR END(1)
SHARES ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Vernon L. Wiersma......... 0 $0 30,000 0 $55,250 $ 0
Stephen W. Theobald....... 0 0 15,000 0 21,630 0
Kenneth L. Murray......... 0 0 8,000 3,000 0 0
Russell J. Trunk.......... 0 0 4,000 0 0 0
Leslie J. Wilson.......... 0 0 10,000 0 16,250 0
</TABLE>

- -------------------------
(1) The value of unexercised in-the-money options is based upon the difference
between the fair market value of the securities underlying the options of
$8.00 at March 31, 1994 and the exercise price of the options as follows:
$5.83 for Mr. Wiersma, $6.56 for Mr. Theobald, $10.72 for Mr. Murray,
$10.00 for Mr. Trunk, and $6.38 for Mr. Wilson.

EXECUTIVE STOCK OPTION PLAN

On June 3, 1994, the Board of Directors of the Company adopted the Stokely
USA, Inc. 1994 Executive Stock Option Plan (the "Executive Stock Option Plan").
The Executive Stock Option Plan was ratified by the shareholders of the Company
at the Annual Meeting of Shareholders held on August 26, 1994. All key full-time
employees of the Company and its subsidiaries are eligible to participate in the
Executive Stock Option Plan. The Executive Stock Option Plan provides for the
granting of (i) incentive stock options ("ISOs"), (ii) non-qualified stock
options ("NSOs"), and (iii) stock appreciation rights ("SARs"). Options for a
total of 400,000 shares of Common Stock are available for granting to eligible
participants under the Executive Stock Option Plan. Under the Executive Stock
Option Plan, the maximum number of shares for which grants may be made to any
eligible employee may not exceed 50,000 shares. As of the date hereof, no option
grants have been made under the Executive Stock Option Plan.

43
<PAGE> 46

The Compensation Committee of the Board, or such other committee appointed
by the Board (the "Committee") will administer the Executive Stock Option Plan.
The Committee will consist of at least three members of the Board, and a
majority of the Committee shall be "disinterested persons," as defined under
applicable federal law, at the time any ISOs, NSOs, or SARs are granted under
the Executive Stock Option Plan. The Committee also will have the power, subject
to the express provisions of the Executive Stock Option Plan, to: (i) determine
the recipients and the terms of options granted; (ii) construe and interpret the
Executive Stock Option Plan and options granted thereunder; and (iii) establish,
amend, and revoke rules and regulations for Executive Stock Option Plan
administration as necessary or expedient to make the Executive Stock Option Plan
fully effective and in the best interests of the Company. The Committee will
determine the maximum number of options which may be exercisable in any year.

CERTAIN TRANSACTIONS

WARRANTS TO PURCHASE SHARES OF COMMON STOCK

In June 1993, the Company requested amendments to certain provisions of the
agreements pursuant to which the Company previously had issued senior notes in
the aggregate principal amount of $45.0 million to Nationwide Life Insurance
Company ("NLIC"), Employers Life Insurance Company of Wisconsin ("ELIC"), West
Coast Life Insurance Company ("WCLIC") and the State of Wisconsin Investment
Board ("SWIB") (collectively, the "Warrant Holders"). In connection with such
amendments, the Company issued Warrants to Purchase Shares of Common Stock (the
"Warrants") to NLIC, ELIC, WCLIC and SWIB, evidencing the right to purchase
41,000, 6,000, 3,000 and 40,000 shares of Common Stock, respectively, at an
exercise price of $7.88 per share (subject to adjustments to protect the Warrant
Holders against dilution in certain circumstances). The Warrant Holders have the
option to pay the exercise price in cash or by surrendering for cancellation all
or a portion of the senior notes held by them, designating the appropriate
unpaid principal amount thereof representing the exercise price. All of the
Warrants are immediately exercisable. The Warrants issued to NLIC, ELIC and
WCLIC expire on January 15, 2000, and the Warrant issued to SWIB expires on
December 15, 2001. Pursuant to the provisions of the Warrants, whenever the
Company proposes to register its securities under the Securities Act, the
Warrant Holders may require the Company, subject to certain limitations, to
include in such registration all or a part of the shares issued upon exercise of
the Warrants. None of the Warrant Holders have decided to include all or a part
of the shares of Common Stock issuable upon exercise of the Warrants in this
Offering.

44
<PAGE> 47

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of September 30, 1994, and as
adjusted to reflect the sale of the shares of Common Stock offered hereby, (i)
by each person who is known to the Company to own beneficially more than 5% of
the shares of Common Stock, (ii) by each of the executive officers of the
Company, (iii) by each director of the Company, and (iv) by all directors and
executive officers as a group.

<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
NUMBER OF SHARES OF SHARES OF
SHARES OF COMMON STOCK COMMON STOCK
COMMON STOCK BENEFICIALLY OWNED BENEFICIALLY OWNED
NAME BENEFICIALLY OWNED(1) PRIOR TO OFFERING(2) AFTER OFFERING(2)
- ------------------------------------------ --------------------- -------------------- ------------------
<S> <C> <C> <C>
Winogene Kile(3)(4)....................... 741,000 8.7% 6.4%
Vernon L. Wiersma(5)...................... 33,000 * *
Stephen W. Theobald(6).................... 266,297 3.1 2.3
Russell J. Trunk(7)....................... 4,000 * *
Leslie J. Wilson(8)....................... 10,000 * *
Robert M. Brill(9)........................ 10,000 * *
Robert Cook(10)........................... 4,500 * *
Eddie W. Foster(11)....................... 5,000 * *
Kenneth C. Murray(12)..................... 8,000 * *
Michael A. Wilkes......................... 0 -- --
Frank J. Pelisek.......................... 1,400 * *
Orren J. Bradley.......................... 500 * *
Russell W. Britt.......................... 200 * *
Charles J. Carey.......................... 200 * *
James H. DeWees........................... 0 -- --
Ody J. Fish............................... 1,000 * *
Carol Ward Knox........................... 1,000 * *
Thomas W. Mount........................... 179,256 2.1 1.6
Joseph B. Weix(13)........................ 70,480 * *
All directors and executive officers as a
group (18 persons)...................... 594,833 7.0% 5.2%
</TABLE>

- -------------------------
* Amount represents less than 1% of the total shares of Common Stock
outstanding.

(1) Unless otherwise indicated, includes shares of Common Stock held directly
by the individuals as well as by members of such individual's immediate
family who share the same household, shares held in trust and other
indirect forms of ownership over which shares the individuals exercise sole
or shared voting and/or dispositive power.

(2) The number of shares of Common Stock deemed outstanding prior to the
Offering consists of (i) 8,324,645 shares of Common Stock outstanding as of
September 30, 1994, (ii) 90,000 shares of Common Stock issuable pursuant to
the exercise of warrants, and (iii) 86,500 shares of Common Stock issuable
pursuant to options held by the respective person or group which may be
exercised within 60 days after September 30, 1994 ("presently exercisable
stock options"), as set forth below. The number of shares of Common Stock
deemed outstanding after the Offering includes an additional 3,000,000
shares of Common Stock which are being offered for sale by the Company in
the Offering.

(3) Winogene Kile's address is P. O. Box 592, Oconomowoc, Wisconsin 53066.

(4) Includes 50,000 shares of Common Stock held indirectly by Mrs. Kile's
husband, as trustee, and 40,000 shares of Common Stock held by Mrs. Kile's
husband and a son of Mr. Weix as co-trustees, as to which she disclaims any
beneficial ownership.

(5) Includes 30,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.

(6) Includes 162,191 shares of Common Stock held by Mr. Theobald as co-trustee
for which he has shared dispositive and voting power with The First
National Bank of Chicago, 88,106 shares of Common Stock held by Mr.
Theobald as co-trustee for which he has shared dispositive and voting power
with Bank One Wisconsin Trust Company, N.A., and as to which he disclaims
any beneficial interest, and 15,000 shares of Common Stock issuable
pursuant to presently exercisable stock options.

45
<PAGE> 48

(7) Includes 4,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.

(8) Includes 10,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.

(9) Includes 10,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.

(10) Includes 4,500 shares of Common Stock issuable pursuant to presently
exercisable stock options.

(11) Includes 5,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.

(12) Includes 8,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.

(13) Includes 50,000 shares of Common Stock held by Mr. Weix as co-trustee for
which he has shared dispositive and voting power, and as to which he
disclaims any beneficial interest.

DESCRIPTION OF CAPITAL STOCK

The Company is authorized to issue twenty million (20,000,000) shares of
common stock having a par value of $0.05 per share (the "Common Stock") and one
million (1,000,000) shares of Preferred Stock having no par value per share (the
"Preferred Stock"). The Company currently has 8,324,645 shares of Common Stock
issued and outstanding, and will have 11,324,645 shares of Common Stock
(11,774,645 shares assuming the Underwriters' over-allotment option is exercised
in full) issued and outstanding following completion of the Offering. No shares
of Preferred Stock are issued and outstanding.

COMMON STOCK

Subject to Section 180.1150(2) of the Wisconsin Business Corporation Law
(the "WBCL")(described below under "-- Restrictions on Acquisition of the
Company"), holders of Common Stock are entitled to one vote for each share of
Common Stock held by them on all matters properly presented to shareholders.
Subject to the prior rights of the holders of any shares of Preferred Stock that
are outstanding, the Board of Directors of the Company may in its discretion
declare and pay dividends on the Common Stock out of earnings or assets of the
Company legally available for the payment thereof. Subject to the prior rights
of the holders of any shares of Preferred Stock that are outstanding, in the
event the Company is liquidated, any amounts remaining after the discharge of
outstanding indebtedness will be paid pro rata to the holders of the Company's
Common Stock. The outstanding shares of Common Stock are, and the Common Stock
to be issued in this Offering will be, legally issued, fully paid and
nonassessable, except for certain statutory liabilities which may be imposed by
Section 180.0622 of the WBCL for unpaid employee wages. Holders of shares of
Common Stock have no statutory preemptive, subscription or conversion rights.

PREFERRED STOCK

None of the 1,000,000 shares of authorized Preferred Stock will be issued
in the Offering. The Company's Board of Directors is authorized to issue from
time to time, without shareholder authorization, in one or more designated
series, shares of Preferred Stock with such dividend, redemption, conversion and
exchange provisions as are provided in the particular series. No dividends or
other distributions are payable on the Common Stock unless dividends are paid in
full on the Preferred Stock and all sinking fund obligations for the Preferred
Stock, if any, are fully funded. In the event of a liquidation or dissolution of
the Company, the outstanding shares of Preferred Stock would have priority over
the Common Stock to receive the amount specified in each particular series out
of the remaining assets of the Company.

RESTRICTIONS ON ACQUISITION OF THE COMPANY

Acquisitions of control of the Company are subject to various state
statutory restrictions. In addition to these restrictions, there are various
provisions in the Company's Articles of Incorporation and By-laws which may be
deemed to restrict the ability of a person, firm or entity to acquire the
Company. These provisions provide for, among other things, staggered terms of
office for members of the Board of Directors and limits on the calling of
special meetings of shareholders. Such provisions will render the replacement of
the current Board of Directors more difficult. The issuance of Preferred Stock
by the Company also may have the effect of delaying or preventing a change of
control of the Company. All of these provisions may have the effect of

46
<PAGE> 49

discouraging a future takeover attempt which is not approved by the Board of
Directors but which shareholders of the Company may deem to be in their best
interests or in which shareholders may receive a substantial premium for their
shares over the then-current market price. As a result, shareholders who might
desire to participate in such a transaction might not have the opportunity to do
so. These provisions also could decrease the likelihood of temporary increases
in the price of the Common Stock, which frequently result from non-negotiated
takeover attempts, and may tend to perpetuate existing management. The
description of these provisions is necessarily general and reference should be
made to the actual law and to the Articles of Incorporation and By-laws of the
Company. See "Additional Information."

CERTAIN STATUTORY PROVISIONS

Section 180.1150(2) of the WBCL provides that the voting power of shares of
an "issuing public corporation," such as the Company, which are held by any
persons holding in excess of 20% of the voting power of the issuing public
corporation's shares, shall be limited to such 20% of the voting power plus 10%
of the voting power of such excess shares. This statute is a "scaled voting
rights/control share acquisition" statute and is designed to protect
corporations against uninvited take-over bids. This statutory voting restriction
is not applicable to shares of Common Stock acquired prior to April 22, 1986,
shares acquired directly from the Company and shares acquired in certain other
circumstances more fully described in Section 180.1150(3) of the WBCL.

Sections 180.1130 to 180.1134 of the WBCL provide that certain business
combinations not meeting specified adequacy-of-price standards set forth in the
statute must be approved by the vote of at least (i) 80% of the votes entitled
to be cast by shareholders, and (ii) two-thirds of the votes entitled to be cast
by holders of voting shares other than voting shares beneficially owned by a
"significant shareholder" or an affiliate or associate thereof who is a party to
the transaction. The term "business combination" is defined to include, subject
to certain exceptions, a merger or consolidation of an issuing public
corporation (or any subsidiary thereof), such as the Company, with, or the sale
or other disposition of substantially all assets of an issuing public
corporation to, any significant shareholder or affiliate thereof. "Significant
shareholder" is defined generally to include a person that is the beneficial
owner of 10% or more of the voting power of the shares of the issuing public
corporation.

Sections 180.1140 to 180.1145 of the WBCL provide that a "resident domestic
corporation," such as the Company, may not engaged in a "business combination"
with an "interested stockholder" (a person beneficially owning 10% or more of
the aggregate voting power of the stock of such corporation) for three years
after the date (the "stock acquisition date") the interested stockholder
acquired his or her 10% or greater interest, unless the business combination (or
the acquisition of the 10% or greater interest) was approved before the stock
acquisition date by such corporation's board of directors. After the three-year
period, a business combination that was not so approved may be consummated only
if it is approved by a majority of the outstanding voting shares not held by the
interested stockholder or is made at a specified formula price intended to
provide a fair price for the shares held by disinterested shareholders.

These statutory restrictions may have the effect of discouraging or making
it more difficult for a person to acquire a substantial equity interest in the
Company and may otherwise restrict the market for the purchase or sale of a
significant number of shares of Common Stock.

CERTAIN CHARTER AND BY-LAW PROVISIONS

The Company's Articles of Incorporation provide that if any person or
entity (the "Acquiring Person") who is the beneficial owner of 50% or more of
the outstanding shares of Common Stock of the Company and if any of such shares
of Common Stock were acquired pursuant to a tender offer not recommended by the
Board of Directors, then all holders of Common Stock (and holders of rights,
options, warrants and securities then exercisable or convertible into Common
Stock), with the exception of the Acquiring Person, shall have the right to have
their shares of Common Stock redeemed by the Company for cash ("Repurchase
Rights"). The Company is required to provide shareholders with notice of their
Repurchase Rights (the "Repurchase Notice") within 30 days of the date the
Company first receives notice that any person or entity has become an

47
<PAGE> 50

Acquiring Person. The repurchase price shall be the highest of: (i) the highest
price per share, including any commissions paid to brokers or dealers, at which
shares held by an Acquiring Person were acquired at any time pursuant to a
tender offer or in any market purchase within the 18-month period prior to the
date shareholders received a Repurchase Notice from the Company; (ii) the
highest sales price per share of Common Stock for any trading day during the
18-month period prior to the date shareholders received a Repurchase Notice from
the Company; or (iii) shareholders' equity per share of Common Stock as
reflected in any report published by the Company as of the fiscal quarter prior
to the date shareholders received a Repurchase Notice from the Company.

The Company's By-laws provide procedures by which shareholders may raise
matters at annual meetings and may call special meetings. These provisions also
establish the procedure for fixing a record date for special meetings called by
shareholders. The affirmative vote of either (i) holders of a majority of the
voting power of shares entitled to vote in the election of directors, or (ii) a
majority of the directors then in office, is required to amend, repeal or adopt
any provision inconsistent with the foregoing By-law provisions.

Under the Articles of Incorporation, the Board of Directors is divided into
three classes. One class is elected each year for a three-year term. In
addition, a director may be removed from office only by affirmative vote of at
least 80% of the outstanding shares entitled to vote for the election of such
director, and any vacancy so created may be filled by the affirmative vote of at
least 80% of such shares. The staggered board provisions and the provision
regarding the 80% vote required for removal of a director may only be amended by
the affirmative vote of shareholders possessing at least 80% of the outstanding
shares entitled to vote.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Bank One,
Indianapolis, N.A., Indianapolis, Indiana.

48
<PAGE> 51

UNDERWRITING

The underwriters named below (the "Underwriters"), for whom William Blair &
Company and Dain Bosworth Incorporated are acting as representatives (the
"Representatives"), have severally agreed, subject to the terms and conditions
set forth in the underwriting agreement between the Company and the Underwriters
(the "Underwriting Agreement"), to purchase from the Company, and the Company
has agreed to sell to the Underwriters, the respective number of shares of
Common Stock (excluding the over-allotment shares) set forth opposite each
Underwriter's name below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------------------------------------------------------------- ---------
<S> <C>
William Blair & Company............................................
Dain Bosworth Incorporated.........................................

---------
Total......................................................... 3,000,000
========
</TABLE>

The nature of the Underwriters' obligations under the Underwriting
Agreement is such that all shares of Common Stock being offered must be
purchased if any are purchased. In the event of a default by any Underwriter,
the Underwriting Agreement provides that, in certain circumstances, the purchase
commitments of the non-defaulting Underwriters under the Underwriting Agreement
may be increased or such Underwriting Agreement may be terminated.

The Underwriters have advised the Company that the Underwriters propose to
offer the shares of Common Stock directly to the public initially at the public
offering price set forth on the cover page of this Prospectus, and to selected
dealers at such price less a concession of not more than $ per share.
Additionally, the Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share to certain other dealers. After
the public offering of the Common Stock, the public offering price and other
selling terms may be changed by the Representatives.

The Company has granted the Underwriters an option, exercisable within 30
days after the date of this Prospectus, to purchase up to an additional 450,000
shares of Common Stock at the same price per share to be paid by the
Underwriters for the other shares offered hereby. If the Underwriters purchase
any of such additional shares pursuant to this option, each Underwriter will be
committed to purchase such additional shares in approximately the same
proportion as set forth in the table above. The Underwriters may exercise the
option only for the purpose of covering over-allotments, if any, made in
connection with the distribution of the Common Stock offered hereby.

The Company and all executive officers and directors of the Company have
agreed not to offer, sell, contract to sell or otherwise dispose of any shares
of Common Stock or any interest therein for a period of 90 days after the
effective date of the Registration Statement of which this Prospectus is a part
without the prior written consent of the Representatives.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments the Underwriters may be required to make in respect thereof.

In connection with this Offering, the Underwriters may engage in passive
market-making transactions in the Common Stock on Nasdaq immediately prior to
the commencement of the sale of shares in this Offering, in accordance with Rule
10b-6A under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Passive market-making consists of displaying bids on Nasdaq limited by
the bid prices of market-makers not connected with this Offering and purchases
limited by such prices and effected in response to order flow. Net purchases by
a passive market-maker on each day are limited in amount to a specified
percentage of the passive market-marker's average daily trading volume in the
Common Stock during a specified period prior to the filing with the Commission
of the Registration Statement of which this Prospectus is a part and must be
discontinued when such limit is reached. Passive market-making may stabilize the
market price of the Common Stock at a level above that which might otherwise
prevail and, if commenced, may be discontinued at any time.

49
<PAGE> 52

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Michael Best & Friedrich, Milwaukee, Wisconsin. Frank J.
Pelisek, a partner of Michael Best & Friedrich, is Chairman of the Board and a
director of the Company. Certain legal matters in connection with this Offering
will be passed upon for the Underwriters by Sidley & Austin, Chicago, Illinois.

EXPERTS

The consolidated financial statements as of March 31, 1993 and 1994, and
for each of the three years in the period ended March 31, 1994, included in this
Prospectus, the related consolidated financial statement schedules included
elsewhere in the Registration Statement, and the consolidated financial
statements from which the Selected Consolidated Financial Data as of March 31,
1993 and 1994 and for the three years then ended included in this Prospectus
have been derived, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing herein and elsewhere in the
Registration Statement, which reports express an unqualified opinion and include
explanatory paragraphs referring to the changes in the methods of valuing
inventories, accounting for postretirement benefits other than pensions and
accounting for income taxes. Such consolidated financial statements,
consolidated financial statement schedules, and Selected Consolidated Financial
Data have been included herein and elsewhere in the Registration Statement in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission
("Commission"), Washington, D.C. 20549, a Registration Statement on Form S-1
under the Securities Act with respect to the Common Stock offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto, certain of which have been
omitted in accordance with the rules and regulations of the Commission. The
omitted information may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C., and copies of such materials may be obtained from the public
reference section of the Commission, Washington, D.C. 20549, at prescribed
rates. For further information with respect to the Company and the shares of
Common Stock, reference is hereby made to such Registration Statement, exhibits
and schedules. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference.

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. Copies of such reports, proxy statements and
other information filed by the Company with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
regional offices located at 75 Park Place, New York, New York 10007 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
can be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.

50
<PAGE> 53

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

STOKELY USA, INC.

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.......................................................... F-2
Consolidated Balance Sheets at March 31, 1993 and 1994 and
September 30, 1994 (unaudited)...................................................... F-3
Consolidated Statements of Operations for the Years Ended
March 31, 1992, 1993 and 1994 and for the Six Months
Ended September 30, 1993 and 1994 (unaudited)....................................... F-5
Consolidated Statements of Stockholders' Equity for the
Years Ended March 31, 1992, 1993 and 1994 and for the
Six Months Ended September 30, 1994 (unaudited)..................................... F-6
Consolidated Statements of Cash Flows for the Years
Ended March 31, 1992, 1993 and 1994 and for the
Six Months Ended September 30, 1993 and 1994 (unaudited)............................ F-7
Notes to Consolidated Financial Statements............................................ F-8
</TABLE>

F-1
<PAGE> 54

INDEPENDENT AUDITORS' REPORT

The Stockholders and Board of Directors of
Stokely USA, Inc.:

We have audited the accompanying consolidated balance sheets of Stokely
USA, Inc. and subsidiaries as of March 31, 1993 and 1994 and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended March 31, 1994. 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 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, such consolidated financial statements present fairly, in
all material respects, the financial position of the companies as of March 31,
1993 and 1994 and the results of their operations and their cash flows for each
of the three years in the period ended March 31, 1994, in conformity with
generally accepted accounting principles.

As discussed in Note C to the consolidated financial statements, the
Company changed its method of valuing inventories from the last-in, first-out
method to the average cost method in 1994 and, retroactively, restated the 1993
and 1992 consolidated financial statements for the change.

As discussed in Notes E and G to the consolidated financial statements, the
Company changed its methods of accounting for postretirement benefits other than
pensions effective April 1, 1992 and accounting for income taxes effective April
1, 1993 to conform with Statement of Financial Accounting Standards No. 106 and
No. 109, respectively.

DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin
June 17, 1994

F-2
<PAGE> 55

STOKELY USA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS -- NOTE F

<TABLE>
<CAPTION>
MARCH 31,
-------------------- SEPTEMBER 30,
1993 1994 1994
-------- -------- -------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents -- Note A....................... $ 1,251 $ 2,898 $ 1,178
Accounts receivable, less allowance for losses ($670, $385
and
$372, respectively).................................... 41,515 20,817 25,369
Refundable income taxes -- Note G......................... 3,869 1,979 --
Inventories -- Notes A and C.............................. 100,591 55,256 129,927
Prepaid expenses.......................................... 1,555 1,983 1,354
-------- -------- ---------
TOTAL CURRENT ASSETS................................. 148,781 82,933 157,828
OTHER ASSETS:
Property held for disposition (net) -- Note B............. 9,419 3,541 2,986
Trademarks -- Note A...................................... 918 838 799
Other -- Note A........................................... 5,306 3,867 3,273
-------- -------- ---------
TOTAL OTHER ASSETS................................... 15,643 8,246 7,058
PROPERTY, PLANT AND EQUIPMENT, at cost -- Note A:
Land and land improvements................................ 2,932 3,184 3,202
Buildings................................................. 24,370 27,386 27,526
Machinery and equipment................................... 62,961 66,296 70,992
Construction in progress.................................. 1,637 562 --
-------- -------- ---------
91,900 97,428 101,720
Less accumulated depreciation............................. 23,481 30,072 33,826
-------- -------- ---------
68,419 67,356 67,894
-------- -------- ---------
TOTAL ASSETS......................................... $232,843 $158,535 $ 232,780
======== ======== =========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

F-3
<PAGE> 56

STOKELY USA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
MARCH 31,
------------------- SEPTEMBER 30,
1993 1994 1994
-------- -------- -------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
CURRENT LIABILITIES:
Notes payable -- Note F..................................... $ 31,258 $ 17,992 $ 35,875
Accounts payable............................................ 39,159 13,867 66,701
Accrued compensation and withholdings....................... 3,462 3,065 3,878
Other accrued liabilities................................... 5,291 1,840 1,978
Income taxes -- Note G...................................... 531 230 881
Current maturities on long-term debt........................ 2,259 3,868 2,458
-------- -------- ---------
81,960 40,862 111,771
Additional long-term debt classified as a current liability
-- Note F................................................ 26,195 -- --
-------- -------- ---------
TOTAL CURRENT LIABILITIES.............................. 108,155 40,862 111,771
LONG-TERM DEBT -- Less current maturities -- Note F........... 82,854 80,438 79,871
OTHER LIABILITIES -- Note D................................... 7,057 4,595 4,740
STOCKHOLDERS' EQUITY -- Notes F and H:
Preferred stock -- no par value, authorized 1,000,000
shares, none issued...................................... -- -- --
Common stock -- $0.05 par value, authorized 20,000,000
shares, issued 8,435,195 shares.......................... 422 422 422
Additional paid-in capital.................................. 18,636 18,661 18,665
Retained earnings........................................... 16,396 14,181 17,939
-------- -------- ---------
35,454 33,264 37,026
Less treasury stock at cost (119,500, 110,550 and 110,550
shares, respectively).................................... (677) (624) (628)
-------- -------- ---------
TOTAL.................................................. 34,777 32,640 36,398
COMMITMENTS AND CONTINGENCIES -- Note I....................... -- -- --
-------- -------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $232,843 $158,535 $ 232,780
======== ======== =========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

F-4
<PAGE> 57

STOKELY USA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED MARCH 31, SEPTEMBER 30,
--------------------------------- ---------------------
1992 1993 1994 1993 1994
--------- --------- --------- --------- ---------
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
REVENUES:
Net sales................................ $280,368 $281,382 $256,145 $127,505 $97,131
Other -- Note K.......................... 676 2,145 4,691 4,600 99
------- ------- ------- ------- ------
TOTAL REVENUES...................... 281,044 283,527 260,836 132,105 97,230
COSTS AND EXPENSES:
Cost of products sold.................... 238,804 249,982 216,392 113,592 74,148
Selling, general and administrative
expenses -- Note I.................... 48,481 42,139 36,476 18,016 13,464
Nonrecurring charge -- Note B............ -- 21,145 -- -- --
Interest................................. 8,592 12,721 12,710 6,482 4,914
------- ------- ------- ------- ------
TOTAL COSTS AND EXPENSES............ 295,877 325,987 265,578 138,090 92,526
EARNINGS (LOSS) BEFORE INCOME TAXES
(CREDIT) AND CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE.................. (14,833) (42,460) (4,742) (5,985) 4,704
INCOME TAXES (CREDIT) -- Note G............ (4,931) (12,983) (2,527) (718) 946
------- ------- ------- ------- ------
EARNINGS (LOSS) BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE........... (9,902) (29,477) (2,215) (5,267) 3,758
CUMULATIVE EFFECT OF CHANGE IN METHOD OF
ACCOUNTING FOR POSTRETIREMENT BENEFITS --
Note E (net of income tax benefit of
$850).................................... -- (1,650) -- -- --
------- ------- ------- ------- ------
NET EARNINGS (LOSS)........................ $ (9,902) $(31,127) $ (2,215) $ (5,267) $ 3,758
======= ======== ======= ======== =======
PER SHARE AMOUNTS:
Earnings (loss) per common share before
cumulative effect of a change in
accounting method..................... $ (1.19) $ (3.55) $ (0.27) $ (0.63) $ 0.45
Cumulative effect of a change in method
of accounting for postretirement
benefits -- Note E.................... -- $ (0.20) -- -- --
------- ------- ------- ------- ------
NET EARNINGS (LOSS) PER SHARE OF COMMON
STOCK.................................... $ (1.19) $ (3.75) $ (0.27) $ (0.63) $ 0.45
======= ======== ======== ======== =======
WEIGHTED AVERAGE SHARES OUTSTANDING........ 8,288,255 8,301,591 8,319,649 8,315,839 8,324,645
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

F-5
<PAGE> 58

STOKELY USA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TREASURY STOCK
--------------------- PAID-IN RETAINED -------------------
SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT
--------- -------- ---------- -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balances, April 1, 1991, as
previously reported............. 8,435,195 $422 $ 18,628 $ 53,742 152,700 $ (867)
Restatement for change in method
of valuing inventories -- Note
C............................... -- -- -- 5,341 -- --
--------- ------ -------- -------- ------- -------
Balances, as restated April 1,
1991............................ 8,435,195 422 18,628 59,083 152,700 (867)
Net loss.......................... -- -- -- (9,902) -- --
Cash dividends declared $0.20 a
share........................... -- -- -- (1,658) -- --
Exercise of stock options......... -- -- 6 -- (8,500) 49
--------- ------ -------- -------- ------- -------
Balances, March 31, 1992.......... 8,435,195 422 18,634 47,523 144,200 (818)
Net loss.......................... -- -- -- (31,127) -- --
Exercise of stock options......... -- -- 2 -- (24,700) 141
--------- ------ -------- -------- ------- -------
Balances, March 31, 1993.......... 8,435,195 422 18,636 16,396 119,500 (677)
Net loss.......................... -- -- -- (2,215) -- --
Stock warrants issued............. -- -- 23 -- -- --
Exercise of stock options......... -- -- 2 -- (8,950) 53
--------- ------ -------- -------- ------- -------
Balances, March 31, 1994.......... 8,435,195 422 18,661 14,181 110,550 (624)
Net earnings...................... -- -- -- 3,758 -- --
Reclassification.................. -- -- 4 -- -- (4)
--------- ------ -------- -------- ------- -------
Balances, September 30, 1994
(unaudited)..................... 8,435,195 $422 $ 18,665 $ 17,939 110,550 $ (628)
========= ====== ======== ======== ======= =======
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

F-6
<PAGE> 59

STOKELY USA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED MARCH 31, SEPTEMBER 30,
------------------------------ -------------------
1992 1993 1994 1993 1994
-------- -------- -------- -------- --------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)................................ $ (9,902) $(31,127) $ (2,215) $ (5,267) $ 3,758
Adjustments to net earnings (loss):
Depreciation..................................... 8,461 9,286 7,230 4,947 3,754
Nonrecurring charge.............................. -- 21,145 -- -- --
Deferred compensation and postretirement
benefits...................................... 62 2,713 (36) 59 145
Deferred income taxes............................ 734 (9,833) -- -- --
Amortization of trademarks....................... 96 82 80 41 39
Amortization of deferred debt issuance costs..... 131 887 1,637 688 960
Provision for equipment writedown................ 350 -- -- -- --
Provision for bad debts.......................... (70) 270 (285) (139) (13)
Gains on disposal of property, plant and
equipment..................................... (117) (693) (361) (363) --
-------- -------- -------- -------- --------
(255) (7,270) 6,050 5,233 4,885
Changes in operating assets and liabilities:
Accounts receivable.............................. 1,378 (14,824) 20,983 16,122 (4,539)
Refundable income taxes.......................... (3,765) 1,831 1,890 2,917 1,979
Inventories...................................... (5,587) (2,526) 45,335 (12,052) (74,671)
Prepaid expenses................................. 725 769 (428) 75 629
Accounts payable................................. 2,914 23,739 (25,292) 9,317 52,834
Accrued compensation and withholdings............ 1,069 307 (397) 1,586 813
Profit sharing contribution...................... (522) -- -- -- --
Income taxes..................................... (79) (135) (301) (89) 651
Other -- net..................................... 393 (448) (9,773) (7,945) 138
-------- -------- -------- -------- --------
(3,474) 8,713 32,017 9,931 (22,166)
-------- -------- -------- -------- --------
Net cash provided by (used in) operating
activities....................................... (3,729) 1,443 38,067 9,897 (13,523)
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment......... (21,713) (12,871) (5,174) (3,957) (4,292)
(Increase) decrease in construction funds held by
trustee.......................................... (560) 1,362 -- -- --
Proceeds from sales of property, plant and
equipment........................................ 164 3,197 9,143 4,846 555
Acquisition of business............................ (9,260) -- -- -- --
Other -- net....................................... (2,162) 1,034 (176) (224) (366)
-------- -------- -------- -------- --------
Net cash provided by (used in) investing
activities....................................... (33,531) (7,278) 3,793 665 (4,103)
-------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt (net).................... 6,609 13,036 (31,266) (7,273) 17,883
Proceeds from long-term debt....................... 23,000 -- -- -- --
Payments of long-term debt......................... (1,999) (2,296) (9,002) (3,135) (1,977)
Payments of cash dividends......................... (1,658) (415) -- -- --
Payments of deferred debt issuance costs........... (248) (3,436) -- -- --
Exercise of stock options.......................... 55 143 55 8 --
-------- -------- -------- -------- --------
Net cash provided by (used in) financing
activities....................................... 25,759 7,032 (40,213) (10,400) 15,906
-------- -------- -------- -------- --------
Net increase (decrease) in cash and cash
equivalents........................................ (11,501) 1,197 1,647 162 (1,720)
Cash and cash equivalents at beginning of year....... 11,555 54 1,251 1,251 2,898
-------- -------- -------- -------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR............... $ 54 $ 1,251 $ 2,898 $ 1,413 $ 1,178
======== ======== ======== ======== ========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

F-7
<PAGE> 60

STOKELY USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1992, 1993 AND 1994

(INFORMATION PERTAINING TO THE SIX MONTHS ENDED SEPTEMBER 30, 1993 AND 1994 IS
UNAUDITED.)

NOTE A -- DESCRIPTION OF COMPANY BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Stokely USA, Inc. and its subsidiaries (the "Company") are engaged
primarily in the processing, marketing and distribution of both branded and
private label canned and frozen vegetables, which management considers to be a
single segment.

Unaudited Six Month Periods -- Detailed footnote information for the six
month periods is not presented. In the opinion of management, the unaudited
interim financial information reflects all adjustments, consisting only of
normal recurring accruals, necessary for a fair presentation thereof. The
results of operations for the six months ended September 30, 1994 are not
necessarily indicative of results expected for the year ending March 31, 1995.

Consolidation -- The consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.

Cash Equivalents -- The Company considers all highly liquid investments
with purchased maturities of three months or less to be cash equivalents.

Inventories -- Inventories are stated at the lower of cost or market. Cost
has been determined using the average cost method (see Note C).

Deferred Debt Issuance Costs -- Included in Other Assets in the
consolidated balance sheets are unamortized deferred debt issuance costs of
$3,268,000 and $2,435,000 at March 31, 1993 and 1994, respectively. The debt
issuance costs are being amortized by the straight-line or interest method over
the life of the related debt issue. The accumulated amortization was $1,290,000
and $2,927,000, respectively, at March 31, 1993 and 1994.

Depreciation -- Depreciation of plant and equipment is provided over the
estimated useful lives of the respective assets on the straight-line method.

Trademarks -- Trademarks are being amortized on a straight-line basis
primarily over 20 years. Accumulated amortization was $691,000 and $771,000,
respectively, at March 31, 1993 and 1994.

NOTE B -- NONRECURRING CHARGE

During the fourth quarter of fiscal 1993, the Company recorded a
nonrecurring charge aggregating $21,145,000 related to its decision to sell,
close or downsize certain processing facilities. The nonrecurring charge
included the write-down of such processing facilities and related equipment to
their estimated net realizable or salvage value. Also included in the
nonrecurring charge are provisions for severance, consolidation costs, plant
carrying costs and the write-down of certain discontinued inventories to their
estimated net realizable value. At March 31, 1994, the property held for
disposition consists of three processing facilities and related equipment.

NOTE C -- INVENTORIES

Inventories (in thousands) consisted of the following:

<TABLE>
<CAPTION>
FINISHED MANUFACTURING
GOODS SUPPLIES TOTAL
-------- ------------- --------
<S> <C> <C> <C>
March 31, 1993.............................................. $ 93,656 $ 6,935 $100,591
March 31, 1994.............................................. 50,256 5,000 55,256
</TABLE>

F-8
<PAGE> 61

STOKELY USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE C -- INVENTORIES (CONTINUED)

During the fourth quarter of 1994, the Company changed its method of
valuing its inventories from the last-in, first-out ("LIFO") method to the
average cost method. Management believes that the average cost method provides a
more meaningful presentation of the Company's financial position and related
financial ratios. In accordance with generally accepted accounting principles,
the prior years' financial statements have been retroactively adjusted to
reflect this change. The effect of this restatement was to reduce the net loss
in 1992 by $842,000 or $0.11 per share and increase the net loss in 1993 by
$784,000 or $.09 per share. In addition, the effect of the restatement was to
increase retained earnings at April 1, 1991 by $5,341,000.

NOTE D -- OTHER LIABILITIES

Other liabilities (in thousands) consisted of the following:

<TABLE>
<CAPTION>
MARCH 31,
----------------
1993 1994
------ ------
<S> <C> <C>
Postretirement benefits..................................................... $2,719 $2,769
Accrued disposition costs................................................... 2,426 --
Deferred compensation....................................................... 1,912 1,826
------ ------
$7,057 $4,595
====== ======
</TABLE>

NOTE E -- EMPLOYEES' RETIREMENT PLAN AND OTHER BENEFIT PLANS

The Company provides certain postretirement health care benefits and life
insurance benefits to retired employees. The benefits and eligibility
requirements vary by location and various union agreements.

Generally, eligibility is attained at age 55 or 62 with minimum service
requirements. Employees hired currently by the Company are not entitled to
postretirement health care benefits. The medical benefits generally are subject
to lifetime maximum benefits of $750,000 and after age 65 are coordinated with
Medicare. During the year ended March 31, 1993, the Company adopted, effective
April 1, 1992, Statement of Financial Accounting Standard No. 106 ("SFAS No.
106"), "Employers' Accounting for Postretirement Benefits Other than Pensions."
The Company previously had provided for postretirement health care benefits on a
pay-as-you-go basis. In connection with the adoption of SFAS No. 106, the
Company elected to recognize as expense during 1993 the entire accumulated
postretirement benefit obligation (transition obligation) aggregating $2,500,000
as of April 1, 1992, rather than amortizing such amount to expense over a
20-year period. The Company continues to fund benefit costs on a pay-as-you-go
basis.

F-9
<PAGE> 62

STOKELY USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE E -- EMPLOYEES' RETIREMENT PLAN AND OTHER BENEFIT PLANS (CONTINUED)

The following table sets forth the plan's status reconciled with amounts
recognized in the balance sheet:

<TABLE>
<CAPTION>
MARCH 31,
----------------
1993 1994
------ ------
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.................................................................. $1,371 $1,377
Fully eligible active plan participants................................... 227 234
Other active plan participants............................................ 1,121 1,174
------ ------
2,719 2,785
Unrecognized net loss....................................................... -- 16
------ ------
Accrued postretirement benefit cost......................................... $2,719 $2,769
====== ======

<CAPTION>
YEAR ENDED
MARCH 31,
--------------
1993 1994
---- ----
<S> <C> <C>
Net periodic postretirement benefit cost included the following components:
Service cost -- benefits attributed to service during period.............. $122 $131
Interest cost on accumulated postretirement benefit obligation............ 193 206
Curtailment gain.......................................................... -- (71)
---- ----
Net periodic postretirement benefit cost.................................... $315 $266
==== ====
</TABLE>

The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 14% in 1994, gradually declining to 6% in
2001.

The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8% in 1993 and 7.5% in 1994.

If the health care cost trend assumptions were increased by 1%, the
accumulated postretirement benefit obligation as of March 31, 1994, would
increase by $230,000. The effect of this change on the aggregate of the service
cost and interest cost would be an additional charge to expense of approximately
$35,000 for the year ended March 31, 1994.

During 1994, the Company had a curtailment gain which represented the
accumulated postretirement benefit obligation of employees at operations
divested of during the year.

The Company has a profit sharing plan which covers substantially all
full-time employees who have completed one year (minimum of 1,000 hours) of
service and provides for Company contributions to a separate trust based upon 8%
of the profit sharing income base as defined in the plan. No profit sharing
contributions were required during the three years ended March 31, 1994.

In addition, the Company also has salary deferral profit sharing plans
(401(k) plans) and other defined contribution plans. Contributions under these
plans were $661,000, $670,000, and $337,000 in 1992, 1993 and 1994,
respectively.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 112 "Employers' Accounting for Postemployment
Benefits." This statement requires the accrual of postemployment benefits during
the years an employee provides services. The Statement must be adopted during
the year ending March 31, 1995. The impact of adoption of this Statement will
not be material.

F-10
<PAGE> 63

STOKELY USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE F -- NOTES PAYABLE AND LONG-TERM DEBT

<TABLE>
<CAPTION>
MARCH 31,
-------------------
1993 1994
-------- -------
(IN THOUSANDS)
<S> <C> <C>
9.37% senior notes due January 2000...................................... $ 25,000 $21,186
9.74% senior notes due December 2001..................................... 19,500 16,071
Revolving credit notes................................................... 35,000 17,000
Industrial Development Revenue Bonds:
7.00% to 8.88%......................................................... 27,748 26,569
5.28% (floating at 88% of prime)....................................... 850 600
4.32% (floating at 72% of prime)....................................... 360 180
4.05% Variable......................................................... 2,850 2,700
-------- -------
111,308 84,306
Less:
Current maturities on long-term debt................................... (2,259) (3,868)
Additional long-term debt classified as current liability.............. (26,195) --
-------- -------
$ 82,854 $80,438
======== =======
</TABLE>

On August 20, 1992, the Company entered into a loan and security agreement
with a commercial lender and various banks which provides for borrowings under
revolving credit loans and matures on May 31, 1995. The agreement, which was
amended on June 15, 1993, provides for maximum borrowings under revolving credit
loans of $100,000,000. Borrowings under the revolving credit loans bear interest
at 2.25% over a specified bank's reference rate on the first $40,000,000 of
loans and 1.25% over the reference rate on any borrowings in excess of
$40,000,000. The amended agreement generally restricts borrowings to an amount
equal to 85% of eligible accounts receivable plus 65% of eligible inventory
subject to an inventory sub-limit, as defined in the agreement, reduced by the
amount of any outstanding letters of credit and $8,140,000.

The amended agreement requires an agent's fee of .25% per annum times the
average daily used portion of the commitment, including outstanding letters of
credit. The amended agreement required the Company to pay a restructuring fee of
$600,000 in installments and provides for a fee equal to .25% per annum of the
unused portion of the commitment.

Covenants contained in the amended agreement require the Company to
maintain minimum levels of adjusted tangible net worth, net cash flow and
interest coverage. Other covenants place limitations on liens, capital
expenditures, leases, disposition of assets, dividends and the ability to incur
additional debt.

In addition to the covenants under the amended loan and security agreement,
the Company also has similar covenants under its various other agreements. At
March 31, 1994, all of the retained earnings are restricted as to the payment of
future cash dividends.

On June 15, 1993, the Company issued warrants to the holders of the 9.37%
and 9.74% senior notes in consideration for amending the applicable loan
agreement. The warrants entitle the holders to purchase an aggregate of 90,000
shares of common stock at a price of $7.88 per share through January 15, 2000.
The estimated fair market value of the warrants at June 15, 1993, aggregating
$22,500, has been credited to additional paid-in capital.

F-11
<PAGE> 64

STOKELY USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE F -- NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)

During 1993 certain Industrial Revenue Development Bond issues were
classified as current liabilities because the Company was in technical default
of certain financial ratio covenants. During 1994, all of the Industrial Revenue
Development Bond issues, with the exception of one issue aggregating $1,400,000,
were amended by the bondholders such that the Company was in compliance with the
related debt covenants and, accordingly, such amounts have been classified as
long-term debt at March 31, 1994. On June 13, 1994, the trustee of the
$1,400,000 Paulding, Ohio, bond issue declared these bonds immediately payable
due to events of default under the Indenture of Trust. Therefore, the bonds are
included in current maturities of long-term debt at March 31, 1994. The facility
related to the Paulding bond issue was sold during 1994, and proceeds from the
sale, aggregating $1,400,000, were placed in a segregated cash account in
anticipation of the acceleration notice from the Trustee.

The amended loan and security agreement and the senior note agreements
contain cross-default provisions. Such cross-default provisions specify that a
default on any other debt agreement is also an event of default under the
agreement containing the cross-default provision. In addition, the amended loan
and security agreement and the senior note agreements contain acceleration
clauses which give the holders the right to accelerate the maturity date of the
obligation if any other obligation owed by the Company is accelerated or payment
is demanded other than in accordance with the stated maturity dates. The Company
has obtained waivers from the holders of the revolving credit notes and the
senior notes with respect to the cross-default provision and acceleration
clauses relating to the Paulding issue.

Substantially all of the assets of the Company are pledged as collateral
under the various loan agreements.

At March 31, 1994, $17,992,000 of revolving credit loans payable were
classified as short-term, reflecting the Company's intent to repay these
borrowings during 1995. The interest rate on the outstanding revolving credit
loans (including the amounts classified as long-term) at March 31, 1994, was
8.5%.

The stated aggregate amounts of scheduled maturities on long-term debt each
year for the five years subsequent to March 31, 1994, are as follows: 1995 --
$3,868,000; 1996 -- $19,536,000; 1997 -- $2,150,000; 1998 -- $2,650,000; and
1999 -- $7,215,000.

Revolving credit loans payable at March 31, 1994, under the Company's
amended loan and security agreement approximate estimated fair value as the
interest rate remained unchanged under the amended agreement on June 15, 1993.
The 9.37% and 9.74% senior notes are estimated to have an approximate fair value
of $22,296,217 and $16,695,826, respectively, at March 31, 1994, based on quoted
prices for similar issues for debt of the same maturities. Management of the
Company has estimated the fair value of the Industrial Development Revenue Bond
issues to be approximately $29,148,000.

NOTE G -- INCOME TAXES

Effective April 1, 1993, the Company adopted Statement of Financial
Accounting Standard No. 109 ("SFAS No. 109"). This statement requires that
deferred income taxes be calculated using an asset and liability method, which
generally requires the recognition of the tax consequences on future years of
events which have been recognized in financial statements. In addition, a
valuation allowance is to be recognized if it is more likely than not that some
or all of a deferred tax asset will not be realized. Due to the recent history
of operating losses, a valuation allowance has been established which reduces
the deferred tax assets to zero after giving effect to deferred tax liabilities.
There was no material cumulative effect of adoption of SFAS No. 109 on the
financial position or results of operations of the Company for the year ended
March 31, 1994.

F-12
<PAGE> 65

STOKELY USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE G -- INCOME TAXES (CONTINUED)

Income taxes consisted of the following:

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------------
1992 1993 1994
------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Currently payable (refundable):
Federal....................................................... $(5,765) $ (4,050) $(2,577)
State......................................................... 100 50 50
Deferred -- federal............................................. 734 (8,983) --
------- -------- -------
$(4,931) $(12,983) $(2,527)
======= ======== =======
</TABLE>

Total incomes tax credits differ from the amounts computed by applying the
federal income tax rate to loss before income taxes. The following table
provides a reconciliation between the United States statutory rate to the
effective tax rate reported:

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------------
1992 1993 1994
------ ------ ------
<S> <C> <C> <C>
U.S. statutory rate............................................ 34.0% 34.0% 34.0%
State income taxes net of federal income tax benefits.......... (0.6) (0.1) (1.1)
Effect of net operating loss carryback......................... -- (4.0) 3.6
Tax rate differential on carryback of product liability
claim........................................................ -- -- 5.2
Adjustment of prior years accrual.............................. -- -- 11.6
Other items -- net............................................. (0.2) 0.5 --
----- ----- -----
Effective tax rate............................................. 33.2% 30.6% 53.3%
===== ===== =====
</TABLE>

Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes, and (b) net
operating loss and tax credit carryforwards. Significant components of the
Company's net deferred tax liability as of March 31, 1994, are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Deferred tax assets:
Reserves not currently deductible............................................ $ 1,325
Provision for nonrecurring charge............................................ 2,451
Postretirement benefits...................................................... 942
Tax credit carryforwards..................................................... 2,921
Net operating loss carryforwards............................................. 7,922
Valuation allowance.......................................................... (4,520)
---------
Total deferred tax assets...................................................... 11,041
---------
Deferred tax liabilities:
Change in method of inventory valuation...................................... 1,530
Deferred casualty gain....................................................... 1,408
Tax over book depreciation................................................... 7,816
Other........................................................................ 287
---------
Total deferred tax liabilities................................................. 11,041
---------
Net deferred tax liability..................................................... $ 0
=========
</TABLE>

F-13
<PAGE> 66

STOKELY USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE G -- INCOME TAXES (CONTINUED)

Deferred income taxes for 1992 and 1993 resulted principally from
depreciation, provision for nonrecurring charges and inventory valuations. At
March 31, 1994, the Company had an alternative minimum tax credit carry-forward
of approximately $1,916,000, which may be carried forward indefinitely, and the
Company also had a general business credit carryforward of approximately
$1,005,000 which expires in various years through 2003 to 2008. At March 31,
1994, the Company had net operating loss carryforwards of approximately
$23,300,000 which expire in the year 2009.

NOTE H -- CAPITAL STOCK

In June 1989, the Company amended its Articles of Incorporation to grant,
in the event any person ("Acquiring Person") becomes the beneficial owner, as
defined, of 50% or more of the Company's common stock, any of which was acquired
pursuant to a tender offer, such holder of common stock other than the Acquiring
Person the right to have their shares repurchased for cash by the Company. The
repurchase price will be the highest of (i) the highest price paid by Acquiring
Person for those shares acquired within the prior 18 months, (ii) the highest
price on any trading day in the prior 18 months, or (iii) the per common share
amount of stockholders' equity as reflected in the previously completed quarter.

In 1985, the stockholders approved a 1985 Incentive Stock Option Plan
pursuant to which 320,000 shares of the Company's common stock were reserved for
the grant of options to executive officers and other key employees. Under the
Plan, stock grants may be made over a ten-year period at not less than 100% of
fair market value at the date of grant. One year after date of grant, 50% of the
options become exercisable with the remaining options exercisable after the
second year. No option granted under the Plan may be exercised more than ten
years after the date of grant. Changes in shares as to options are as follows:

<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
------------------------------------
OUTSTANDING
RESERVED OPTIONS AVAILABLE
-------- ----------- ---------
<S> <C> <C> <C>
Balances at April 1, 1991 ($5.125 to $16.25)................... 266,700 159,500 107,200
Granted ($10.50)............................................... -- 53,500 (53,500)
Expired ($16.25)............................................... -- (4,000) 4,000
Exercised ($5.125 to $6.875)................................... (8,500) (8,500) --
-------- --------- ---------
Balances at March 31, 1992 ($5.125 to $15.875)................. 258,200 200,500 57,700
Granted ($6.25 to $10.625)..................................... -- 19,600 (19,600)
Expired ($5.125 to $16.25)..................................... -- (36,200) 36,200
Exercised ($5.125 to $10.50)................................... (24,700) (24,700) --
-------- --------- ---------
Balances at March 31, 1993 ($5.125 to $15.875)................. 233,500 159,200 74,300
Granted ($6.125 to $8.625)..................................... -- 6,500 (6,500)
Expired ($6.25 to $15.125)..................................... -- (14,750) 14,750
Exercised ($5.125 to $6.875)................................... (8,950) (8,950) --
-------- --------- ---------
Balances at March 31, 1994..................................... 224,550 142,000 82,550
======= ========= =======
</TABLE>

At March 31, 1994, a total of 133,950 options were exercisable at $5.125 to
$15.875 per share.

In addition, during 1990 the Company granted options to purchase 17,500
shares of Common Stock at $10.00 per share to certain employees. These options
have substantially the same terms as the Incentive Stock Option Plan. During
1993, options for 15,000 of these shares expired.

F-14
<PAGE> 67

STOKELY USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE I -- COMMITMENTS AND CONTINGENCIES

The Company has operating leases covering primarily equipment and land. The
majority of the equipment leases are for terms of one year or less. The Company
does, however, in the normal course of business continue to lease the equipment
after the minimum lease period. Certain leases require payment of insurance and
maintenance costs.

Aggregate minimum rental commitments at March 31, 1994 under noncancellable
leases with terms of more than one year are immaterial.

Total rent expense aggregated approximately $3,268,000, $2,850,000 and
$1,900,000, respectively, during the years 1992, 1993 and 1994.

During fiscal 1994, the Company settled a product liability claim resulting
in a charge of $2,050,000. The product liability claim relates to an acquired
business and predates the acquisition of such business.

The Company is involved in various legal actions and claims primarily
arising in the normal course of its business. In the opinion of management of
the Company, the liability, if any, would not have a material effect on the
Company's financial condition or results of operations.

NOTE J -- SUPPLEMENTAL CASH FLOW DISCLOSURES

Cash payments for (refunds of) interest and income taxes were as follows:

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------
1992 1993 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest......................................................... $ 7,246 $11,607 $11,854
Income taxes -- net.............................................. (1,821) (5,695) (4,118)
</TABLE>

NOTE K -- INSURANCE CLAIM

During fiscal 1993, the Company had a boiler explosion and ensuing fire at
its Hoopeston, Illinois, processing facility. An initial claim was filed with
the insurance carrier relating to the property and equipment destroyed and the
estimated business interruption losses incurred. As of March 31, 1993, advances
had aggregated $5,000,000, of which $1,250,000 was received in cash and
$3,750,000 was included in accounts receivable. This advance was recorded to
write off $2,500,000 of property and equipment destroyed in the fire and to
record a gain of $2,500,000 relating to recovery of expenses incurred and lost
margin resulting from the fire.

During fiscal 1994, the Company received additional insurance proceeds from
the final settlement of this claim, resulting in a gain included in other
revenues of $4,118,000.

F-15
<PAGE> 68

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

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY STOKELY OR ANY OF THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Stokely Restructuring Program......... 6
Risk Factors.......................... 7
Use of Proceeds....................... 10
Price Range of Common Stock........... 10
Dividend Policy....................... 11
Dilution.............................. 11
Capitalization........................ 12
Selected Consolidated Financial
Data................................ 13
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 14
Business.............................. 24
Management............................ 37
Certain Transactions.................. 44
Principal Shareholders................ 45
Description of Capital Stock.......... 46
Underwriting.......................... 49
Legal Matters......................... 50
Experts............................... 50
Additional Information................ 50
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

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

3,000,000 SHARES

STOKELY, USA, INC.

COMMON STOCK

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

PROSPECTUS

, 1994
------------------------

WILLIAM BLAIR & COMPANY

DAIN BOSWORTH
INCORPORATED
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 69

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<TABLE>
<S> <C>
Registration Fee -- Securities and Exchange Commission............. $ 13,718
NASD Filing Fee.................................................... 4,478
NASDAQ Listing Fees................................................ 17,500
Printing and Engraving Expenses.................................... 150,000
Accounting Fees.................................................... 40,000
Transfer Agent Fees................................................ 10,000
Legal Fees and Expenses............................................ 150,000
Blue Sky Qualification Fees and Expenses (including Fees of
Counsel)......................................................... 10,000
Miscellaneous...................................................... 29,304
--------
Total......................................................... $425,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company is incorporated under the Wisconsin Business Corporation Law
("WBCL"). Under Section 180.0851(1) of the WBCL, the Company is required to
indemnify a director or officer, to the extent such person is successful on the
merits or otherwise in the defense of a proceeding, for all reasonable expenses
incurred in the proceeding if such person was a party because he or she was a
director or officer of the Company. In all other cases, the Company is required
by Section 180.0851(2) to indemnify a director or officer against liability
incurred in a proceeding to which such a person was a party because he or she
was a director or officer of the Company, unless it is determined that he or she
breached or failed to perform a duty owed to the Company and the breach or
failure to perform constitutes: (i) a willful failure to deal fairly with the
Company or its shareholders in connection with a matter in which the director or
officer has a material conflict of interest; (ii) a violation of criminal law,
unless the director or officer had reasonable cause to believe his or her
conduct was lawful or no reasonable cause to believe his or her conduct was
unlawful; (iii) a transaction from which the director or officer derived an
improper personal profit; or (iv) willful misconduct. Section 180.0858(1)
provides that, subject to certain limitations, the mandatory indemnification
provisions do not preclude any additional right to indemnification or allowance
of expenses that a director or officer may have under the company's articles of
incorporation, by-laws, a written agreement or a resolution of the Board of
Directors or shareholders.

Section 180.0859 of the WBCL provides that it is the public policy of the
state of Wisconsin to require or permit indemnification, allowance of expenses
and insurance to the extent required to be permitted under Sections 180.0850 to
180.0858 of the WBCL, for any liability incurred in connection with a proceeding
involving a federal or state statute, rule or regulation regulating the offer,
sale or purchase of securities.

Section 180.0828 of the WBCL provides that, with certain exceptions, a
director is not liable to a corporation, its shareholders, or any person
asserting rights on behalf of the corporation or its shareholders, for damages,
settlements, fees, fines, penalties or other monetary liabilities arising from a
breach of, or failure to perform, any duty resulting solely from his or her
status as a director, unless the person asserting liability proves that the
breach or failure to perform constitutes any of the four exceptions to mandatory
indemnification under Section 180.0851(2) referred to above.

II-1
<PAGE> 70

Under Article VII of the Company's By-laws, directors and officers are
indemnified against liability, in both derivative and nonderivative suits, which
they may incur in their capacities as such, subject to certain determinations by
the Board of Directors, independent legal counsel or the shareholders that the
applicable standards of conduct have been met. The scope of such indemnification
is substantially the same as permitted and described in Sections 180.0850 to
180.0858 of the WBCL.

Under Section 180.0833 of the WBCL, directors of the Company against whom
claims are asserted with respect to the declaration of improper dividends or
distributions to shareholders or certain other improper acts which they approved
are entitled to contribution from other directors who approved such actions and
from shareholders who knowingly accepted an improper dividend or distribution,
as provided therein.

The directors and officers of the Company and its subsidiaries are covered
by a directors' and officers' liability insurance policy. The insurance policy
provides that, subject to the applicable liability limits and retention amounts,
the insurer will reimburse directors and officers of the Company for a "loss"
(as defined in the policy) sustained by a director or officer resulting from any
"claim" (as defined in the policy) made against them for a "wrongful act" (as
defined in the policy), except for such a loss which the Company indemnifies (or
is required or permitted to indemnify) the director or officer. The policy also
provides that, subject to the applicable liability limits and retention amounts,
the insurer will reimburse the Company for a loss for which the Company has
lawfully indemnified (or is required or permitted by law to indemnify) a
director or officer resulting from any such claim. Subject to certain exclusions
set forth in the policy, "wrongful act" is defined in the policy to mean any
negligent act, error, omission, misstatement, misleading statement, or breach of
duty by the Company's directors or officers in the discharge of their duties
solely in their capacities as such directors or officers.

The Registrant will agree to indemnify, defend and hold harmless each of
the Underwriters and each person who controls any Underwriters from and against
any loss, expense, liability or claim under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, or otherwise which
arises out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or in the Prospectus,
or arises out of or is based upon any omission or alleged omission to state a
material fact required to be stated in either such Registration Statement or
such Prospectus or necessary to make the statements made therein not misleading.
These indemnification obligations will not extend to any such loss, expense,
liability or claim which arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in and in conformity with
information furnished in writing by any Underwriter through either or both of
the Managing Underwriters to the Registrant expressly for use with reference to
such Underwriter in such Registration Statement or such Prospectus, or which
arises out of or is based upon any omission or alleged omission to state a
material fact in connection with such information required to be stated in
either such Registration Statement or such Prospectus or necessary to make such
information not misleading.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

During the past three years, Registrant sold securities which were not
registered under the Securities Act of 1933, as amended, as described below. The
securities of Registrant were sold in reliance on the exemption

II-2
<PAGE> 71

from registration contained in Section 4(2) of the Securities Act of 1933, as
amended. No underwriters were involved in the sale of the securities and no
commissions were paid to any person.

<TABLE>
<CAPTION>
TITLE AND AMOUNT PRICE PER SHARE PURCHASER DATE OF SALE NATURE OF TRANSACTION
- --------------------------------------- ------------------- ------------ ------------------------
<S> <C> <C> <C> <C>
Warrants to purchase $7.88 Nationwide Life June 1993 Warrants issued in
41,000 shares of Common Insurance Company connection with
Stock amendments to a
promissory note, price
per share is exercise
price per warrant share
Warrants to purchase $7.88 State of Wisconsin June 1993 Warrants issued in
40,000 shares of Common Investment Board connection with
Stock amendments to a
promissory note, price
per share is exercise
price per warrant share
Warrants to purchase $7.88 Employers Life June 1993 Warrants issued in
6,000 shares of Common Insurance Company connection with
Stock of Wisconsin amendments to a
promissory note, price
per share is exercise
price per warrant share
Warrants to purchase $7.88 West Coast Life June 1993 Warrants issued in
3,000 shares of Common Insurance Company connection with
Stock amendments to a
promissory note, price
per share is exercise
price per warrant share
Options to purchase $8.50 Vernon L. Wiersma April 1994 Stock option grant,
30,000 shares of price per share is
Common Stock exercise price per
option share
Options to purchase $8.50 Stephen W. Theobald April 1994 Stock option grant,
15,000 shares of price per share is
Common Stock exercise price per
option share
</TABLE>

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

A. EXHIBITS:

<TABLE>
<S> <C>
1. Proposed Form of Underwriting Agreement, as amended(1).
3.1 Restated and Amended Articles of Incorporation of Registrant(3).
3.2 By-laws of Registrant, as amended(2)(3).
4.1 Specimen Common Stock Certificate(3).
5. Opinion of Michael Best & Friedrich Regarding Legality of Securities being
Issued(1).
10(a) No longer in effect.
10(b) Loan Agreement between the City of Green Bay, Wisconsin and Stokely USA, Inc.
dated December 1, 1988 with respect to $3,000,000 in principal amount of City of
Green Bay, Wisconsin Industrial Revenue Bonds (Stokely USA, Inc. Project),
relating to Stokely's Green Bay, Wisconsin facility(5).
10(c) Loan and Mortgage Agreement with respect to $6,000,000 in principal amount of
Industrial Development Bonds relating to Stokely's Poynette, Wisconsin sauerkraut
facility(5).
</TABLE>

II-3
<PAGE> 72
<TABLE>
<S> <C>
10(d) Note Agreement between Stokely USA, Inc. and Nationwide Life Insurance Company,
Employers Life Insurance Company of Wausau and West Coast Life Insurance Company
dated January 5, 1990 with respect to $25,000,000 in principal amount of 9.12%
Senior Notes due January 15, 2000(10).
10(e) No longer in effect.
10(f) Loan Agreement between the Village of Poynette, Wisconsin and Stokely USA, Inc.
dated December 1, 1989, with respect to $1,600,000 in principal amount of
Refunding Revenue Bonds (Stokely USA, Inc. Project) relating to Stokely's
Poynette, Wisconsin facility(6).
10(g) Loan Agreement between the Village of Waunakee, Wisconsin and Stokely USA, Inc.
dated June 1, 1989 with respect to $4,000,000 in principal amount of Industrial
Revenue Bonds (Stokely USA, Inc. Project) relating to Stokely's Waunakee,
Wisconsin facility(6).
10(h) Loan Agreement between the City of Ackley, Iowa and Stokely USA, Inc. dated July
1, 1989 with respect to $3,000,000 in principal amount of Industrial Development
Revenue Bonds (Stokely USA, Inc. Project) Series 1989 relating to Stokely's
Ackley, Iowa facility(6).
10(i) Executive Deferred Compensation Agreements between Stokely USA, Inc. and each of
Thomas W. Mount, Joseph B. Weix and Robert J. Whelan, Sr.(6).
10(j) 1985 Incentive Stock Option Plan(6).
10(k) Loan Agreement between the Town of Utica, Wisconsin and Stokely USA, Inc. dated
June 1, 1990 with respect to $3,000,000 in principal amount of Industrial Revenue
Bonds (Stokely USA, Inc. Project) relating to Stokely's Pickett, Wisconsin
facility(7).
10(l) Loan Agreement between Port of Walla Walla Public Corporation and Stokely USA,
Inc. dated September 1, 1990 with respect to $4,000,000 in principal amount of
Industrial Revenue Bonds, Series 1990 relating to Stokely's Walla Walla,
Washington facility(7).
10(m) Loan Agreement between City of Wells, Minnesota and Stokely USA, Inc. dated
December 1, 1991 with respect to $3,000,000 in principal amount of Industrial
Revenue Bonds (Stokely USA, Inc. Project) Series 1991 relating to Stokely's
Wells, Minnesota facility(8).
10(n) Note Agreement between the State of Wisconsin Investment Board and Stokely USA,
Inc. dated December 1, 1991 with respect to $20,000,000 in principal amount of
9.49% Senior Notes due December 15, 2001(8).
10(o) Loan and Security Agreement by and among Barclays Business Credit, Inc. as agent
and lender, various other lenders and Stokely USA, Inc. dated August 18, 1992
with respect to a $120,000,000 Credit Facility(11).
10(p) Restated Agreement for Purchase and Sale of Containers between Stokely USA, Inc.
and Heekin Can, Inc. dated January 1, 1992, and as amended on July 24, 1992(11).
10(q) Supply Agreement between Stokely USA, Inc. and American National Can Company
dated July 24, 1992 and as amended on June 11, 1993(11).
10(r) Amendment to Note Agreement dated August 18, 1992 regarding $25,000,000 Original
Principal Amount of 9.12% Senior Notes due January 15, 2000 (see Exhibit
10(d))(11).
10(s) Amendment to Note Agreement dated December 1, 1991 regarding $20,000,000 in
principal amount of 9.49% Senior Notes due December 15, 2000 (see Exhibit
10(n))(11).
10(t) Amendment to Revenue Agreement between Stokely USA, Inc. and the City of
Appleton, Wisconsin, dated December 1, 1988(9).
10(u) Reserved.
10(v) Second Amendment to Note Agreement dated June 11, 1993 regarding $20,000,000
Promissory Note (see Exhibit 10(n))(9).
10(w) Reserved.
10(x) First Amendment to Security Agreement dated June 1993 relating to the Credit
Facility (see Exhibit 10(o))(9).
10(y) Second Amendment to Note Agreement dated June 11, 1993 regarding $25,000,000
Original Principal Amount of 9.37% Senior Notes Due January 15, 2000 (see Exhibit
10(d))(9).
</TABLE>

II-4
<PAGE> 73
<TABLE>
<S> <C>
10(z) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued to
Nationwide Life Insurance Company dated June 1993(9).
10(aa) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued to EMPL
and Co. dated June 1993(9).
10(bb) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued to West
Coast Life Insurance Company dated June 1993(9).
10(cc) No longer applicable.
10(dd) First Amendment to Loan Agreement with the City of Ackley, Iowa (see Exhibit
10(h)), dated as of March 31, 1994, between Stokely USA, Inc. and Norwest Bank
Minnesota, N.A., as trustee(12).
10(ee) First Amendment to Loan Agreement with the Village of Poynette, Wisconsin (see
Exhibit 10(c)), dated as of March 31, 1994, between Stokely USA, Inc. and Norwest
Bank Minnesota, N.A., as trustee(12).
10(ff) First Amendment to Loan Agreement with the Village of Poynette, Wisconsin (see
Exhibit 10(f)), dated as of March 31, 1994, between Stokely USA, Inc. and
NationsBank of Virginia, N.A., as trustee(12).
10(gg) First Amendment to Loan Agreement with the Village of Waunakee, Wisconsin (see
Exhibit 10(g)), dated as of March 31, 1994, between Stokely USA, Inc. and
NationsBank of Virginia, N.A., as trustee(12).
10(hh) First Amendment to Loan Agreement with the City of Jefferson, Wisconsin, dated as
of June 17, 1994, between Stokely USA, Inc. and NationsBank of Virginia, N.A., as
trustee(12).
10(ii) First Amendment to Loan Agreement with the Port of Walla Walla, Washington Public
Corporation (see Exhibit 10(l)), dated as of June 17, 1994, between Stokely USA,
Inc. and NationsBank of Virginia, N.A., as trustee(12).
10(jj) First Amendment to Loan Agreement with the Town of Utica, Wisconsin (see Exhibit
10(k)), dated as of June 17, 1994, between Stokely USA, Inc. and NationsBank of
Virginia, N.A., as trustee(12).
10(kk) First Amendment to Loan Agreement with the City of Green Bay, Wisconsin (see Ex-
hibit 10(b)), dated as of June 17, 1994, between Stokely USA, Inc. and
NationsBank of Virginia, N.A., as trustee(12).
10(ll) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Vernon L. Wiersma dated October 16, 1992(2).
10(mm) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Stephen W. Theobald dated October 16, 1992(2).
10(nn) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Kenneth L. Murray dated January 27, 1993(2).
10(oo) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Russell J. Trunk dated October 16, 1992(2).
10(pp) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Leslie J. Wilson dated October 16, 1992(2).
10(qq) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Robert M. Brill dated October 16, 1992(2).
10(rr) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Michael A. Wilkes dated October 16, 1992(2).
10(ss) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Robert L. Cook dated October 16, 1992(2).
10(tt) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Eddie Foster dated October 16, 1992(2).
10(uu) Stokely USA, Inc. 1994 Executive Stock Option Plan(2).
10(vv) Stock Option Agreement between Stokely USA, Inc. and Kenneth C. Murray dated
March 13, 1990(2).
</TABLE>

II-5
<PAGE> 74

<TABLE>
<S> <C>
10(ww) Stock Option Agreement between Stokely USA, Inc. and Vernon L. Wiersma dated
April 8, 1994(2).
10(xx) Stock Option Agreement between Stokely USA, Inc. and Stephen Theobald dated April
8, 1994(2).
10(yy) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued to the
State of Wisconsin Investment Board dated June 1993(2).
10(zz) Employment Agreement by and between Stokely USA, Inc. and Leslie J. Wilson dated
June 17, 1992(2).
10(aaa) Loan Agreement between the City of Jefferson, Wisconsin and Stokely USA, Inc.
with respect to $6,500,000 in principal amount of Industrial Development Revenue
Bonds (Stokely USA, Inc. Project) relating to Stokely's Jefferson, Wisconsin
facility(4).
10(bbb) Loan Agreement between the Town of Windsor, Wisconsin and Stokely USA, Inc. with
respect to $1,500,000 in principal amount of Industrial Development Revenue Bonds
(Stokely USA, Inc. -- 1985 Project)(3).
10(ccc) Loan Agreement between the Michigan Job Development Authority and Stokely USA,
Inc. with respect to $1,800,000 in principal amount of Limited Obligation Revenue
Bonds (Oconomowoc Canning Company Project), Series A(3).
10(ddd) No longer applicable.
10(eee) Loan Agreement between the City of Appleton, Wisconsin and Stokely USA, Inc. with
respect to $1,000,000 in principal amount of Industrial Development Revenue Bonds
(Stokely USA, Inc. Project)(4).
10(fff) Second Amendment to Loan Documents dated October 13, 1992 regarding the Credit
Facility (see Exhibit 10(o))(2).
10(ggg) Third Amendment to Loan Documents dated December 16, 1992 regarding the Credit
Facility (see Exhibit 10(o))(2).
10(hhh) Fourth Amendment to Loan Documents dated June 11, 1993 regarding the Credit
Facility (see Exhibit 10(o))(2).
10(iii) Fifth Amendment to Loan Document dated March 24, 1994 regarding the Credit
Facility (see Exhibit 10(o))(2).
10(jjj) Summary Plan Description of Split Dollar Life Insurance Plan(2).
11. Statement regarding computation of per share earnings(2).
18. Letter regarding change in accounting principles(12).
22. List of subsidiaries(2).
23.1 Consent of Deloitte & Touche LLP(1).
23.2 Consent of Michael Best & Friedrich (included in opinion)(2).
24.1 Powers of Attorney for certain officers and directors (contained on the signature
page of the Registration Statement).
</TABLE>

- -------------------------
(1) Filed herewith.

(2) Previously filed as an exhibit to this Form S-1 Registration Statement.

(3) Incorporated by reference to exhibits filed with Registrant's Form S-1
Registration Statement declared effective on October 29, 1985 (Registration
Number 33-339).

(4) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1986.

(5) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1989.

(6) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1990.

(7) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1991.

II-6
<PAGE> 75

(8) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1992.

(9) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1993.

(10) Incorporated by reference to exhibits filed with Registrant's Form 10-Q for
the three months ended December 31, 1989.

(11) Incorporated by reference to exhibits filed with Registrant's Form 10-Q for
the three months ended September 30, 1992.

(12) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1994.

B. FINANCIAL STATEMENT SCHEDULES:

Report of Independent Auditors on Schedules

Schedule V
Schedule VI
Schedule VIII
Schedule IX
Schedule X

All other schedules are omitted because they are inapplicable or the
required information is shown in the financial statements or notes thereto.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant undertakes as follows:

(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers
and controlling persons of the Registrant, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act
of 1933, as amended, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933, as amended, and
will be governed by the final adjudication of such issue.

(b) For purposes of determining any liability under the Securities Act
of 1933, as amended the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933, as amended
shall be deemed to be part of this Registration Statement as of the time it
was declared effective.

(c) For the purpose of determining any liability under the Securities
Act of 1933, as amended, any post-effective amendment that contains a form
of prospectus shall be deemed to be a new Registration Statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.

II-7
<PAGE> 76

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Milwaukee,
and the State of Wisconsin, on the 7th day of November, 1994.

STOKELY USA, INC.

By: /s/ VERNON L. WIERSMA
------------------------------------
Vernon L. Wiersma
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the date indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ ------------------------------------ -----------------------
<S> <C> <C>
/s/ VERNON L. WIERSMA President, Chief Executive Officer
- ------------------------------ and Director
Vernon L. Wiersma

/s/ STEPHEN W. THEOBALD Vice Chairman, Treasurer and
- ------------------------------ Director
Stephen W. Theobald

/s/ LESLIE J. WILSON* Vice President and Chief Financial
- ------------------------------ and Accounting Officer
Leslie J. Wilson

/s/ FRANK J. PELISEK* Chairman of the Board and Director
- ------------------------------
Frank J. Pelisek
November 7, 1994
/s/ ORREN J. BRADLEY* Director
- ------------------------------
Orren J. Bradley

/s/ RUSSELL W. BRITT* Director
- ------------------------------
Russell W. Britt

/s/ CHARLES J. CAREY* Director
- ------------------------------
Charles J. Carey

/s/ JAMES H. DEWEES* Director
- ------------------------------
James H. DeWees
</TABLE>

II-8
<PAGE> 77

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ ------------------------------------ -----------------------
<S> <C> <C>
/s/ ODY J. FISH* Director
- ------------------------------
Ody J. Fish

/s/ CAROL WARD KNOX* Director
- ------------------------------
Carol Ward Knox
November 7, 1994
/s/ THOMAS W. MOUNT* Director
- ------------------------------
Thomas W. Mount

/s/ JOSEPH B. WEIX* Director
- ------------------------------
Joseph B. Weix

By: /s/ STEPHEN W. THEOBALD
------------------------------------
Stephen W. Theobald
Attorney-In-Fact
</TABLE>

- ---------------------------------------------------------------------
* Pursuant to authority granted by
power of attorney filed with the
Registration Statement.

II-9
<PAGE> 78

REPORT OF INDEPENDENT AUDITORS ON SCHEDULES

We have audited the consolidated financial statements of Stokely USA, Inc.
and subsidiaries as of March 31, 1993 and 1994, and for each of the three years
in the period ended March 31, 1994 and have issued our report thereon dated June
17, 1994 (included elsewhere in this Registration Statement). Our audits also
included the financial statement schedules listed in Item 16(b) of this
Registration Statement. These schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.

DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
June 17, 1994

II-10
<PAGE> 79

SCHEDULE V

STOKELY USA, INC. AND SUBSIDIARIES

SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED MARCH 31, 1994, 1993 AND 1992

<TABLE>
<CAPTION>
CLASSIFICATION
----------------------------------------------------------
LAND AND
LAND MACHINERY & CONSTRUCTION
IMPROVEMENT BUILDINGS EQUIPMENT IN PROGRESS TOTAL
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balances, April 1, 1991..... $ 2,206,000 $24,822,000 $ 65,675,000 $ 4,017,000 $ 96,720,000
Additions(1)................ 622,000 3,163,000 19,777,000 3,450,000 27,012,000
Retirements................. (3,000) (12,000) (1,880,000) -- (1,895,000)
----------- ----------- ------------ ------------ ------------
Balances, March 31, 1992.... 2,825,000 27,973,000 83,572,000 7,467,000 121,837,000
Additions................... 1,549,000 6,528,000 10,624,000 (5,830,000) 12,871,000
Retirements................. (3,000) (592,000) (9,758,000) -- (10,353,000)
Reclass & other
(deduct)(2)............... (1,439,000) (9,539,000) (21,477,000) -- (32,455,000)
----------- ----------- ------------ ------------ ------------
Balances, March 31, 1993.... 2,932,000 24,370,000 62,961,000 1,637,000 91,900,000
Additions................... 283,000 1,316,000 3,422,000 153,000 5,174,000
Retirements................. (56,000) (50,000) (543,000) -- (649,000)
Reclass & other
(deduct)(2)............... 25,000 1,750,000 456,000 (1,228,000) 1,003,000
----------- ----------- ------------ ------------ ------------
Balances, March 31, 1994.... $ 3,184,000 $27,386,000 $ 66,296,000 $ 562,000 $ 97,428,000
=========== =========== ============ ============ ============
</TABLE>

- -------------------------
(1) Additions include purchase of McAllen, Texas, and Monterrey, Mexico
facilities.

(2) Includes reclassification of assets held for disposition.

In general, the annual rates used for depreciation are as follows:

<TABLE>
<S> <C>
Land Improvements.............................................. 10%
Buildings...................................................... 2.50% to 5%
Machinery & Equipment.......................................... 8.33% to 33%
</TABLE>

II-11
<PAGE> 80

SCHEDULE VI

STOKELY USA, INC. AND SUBSIDIARIES

SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED MARCH 31, 1994, 1993 AND 1992

<TABLE>
<CAPTION>
LAND
AND LAND MACHINERY &
IMPROVEMENT BUILDINGS EQUIPMENT TOTAL
----------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Balances, April 1, 1991................... $ 246,000 $3,489,000 $ 21,709,000 $ 25,444,000
Additions charged to cost and expenses.... 73,000 765,000 7,623,000 8,461,000
Retirements............................... (3,000) (12,000) (1,485,000) (1,500,000)
----------- ---------- ------------ ------------
Balances, March 31, 1992.................. 316,000 4,242,000 27,847,000 32,405,000
Additions................................. 174,000 930,000 8,182,000 9,286,000
Retirements............................... (3,000) (250,000) (7,596,000) (7,849,000)
Reclass and other (deduct)(1)............. -- -- (10,361,000) (10,361,000)
----------- ---------- ------------ ------------
Balances, March 31, 1993.................. 487,000 4,922,000 18,072,000 23,481,000
Additions................................. 186,000 715,000 6,329,000 7,230,000
Retirements............................... (56,000) (50,000) (1,071,000) (1,177,000)
Reclass and other (deduct)................ (132,000) (530,000) 1,200,000 538,000
----------- ---------- ------------ ------------
Balances, March 31, 1994.................. $ 485,000 $5,057,000 $ 24,530,000 $ 30,072,000
========= ========== ============ ============
</TABLE>

- -------------------------
(1) Includes reclassification of assets held for disposition.

II-12
<PAGE> 81

SCHEDULE VIII

STOKELY USA, INC. AND SUBSIDIARIES

SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED MARCH 31, 1994, 1993 AND 1992

<TABLE>
<CAPTION>
DESCRIPTION
---------------------------------------------------------------------------------
VALUATION ASSETS VALUATION ASSETS VALUATION ASSETS
DEDUCTED FROM ASSETS- DEDUCTED FROM ASSETS- DEDUCTED FROM ASSETS-
ALLOWANCE FOR LOSSES RESTRUCTURING RESERVES: RESTRUCTURING RESERVES:
ON RECEIVABLES DISCONTINUED INVENTORY PROPERTY HELD FOR DISPOSITION
----------------------- ----------------------- -----------------------------
<S> <C> <C> <C>
Balance April 1, 1991................ $ 470,000 $ -- $ --
Additions charged to costs and
expenses........................... 152,000 -- --
Deductions........................... (222,000)(1) -- --
--------- ----------- -----------
Balance March 31, 1992............... 400,000 0 0
Additions charged to costs and
expenses........................... 747,000 2,642,000 12,675,000
Deductions........................... (477,000)(1) 0 0
--------- ----------- -----------
Balance March 31, 1993............... 670,000 2,642,000 12,675,000
Additions charged to other
accounts........................... 0 3,000,000(3) 0
Deductions........................... (285,000)(2) (2,642,000) (8,749,000)
--------- ----------- -----------
Balance March 31, 1994............... $ 385,000 $ 3,000,000 $ 3,926,000
========= =========== ===========
</TABLE>

- -------------------------
(1) Write off of bad debts.

(2) Uncollectible accounts written off, net of recoveries and reduction in bad
debt reserve.

(3) Reclassified from other restructure reserves.

II-13
<PAGE> 82

SCHEDULE IX

STOKELY USA, INC. AND SUBSIDIARIES
SCHEDULE IX -- SHORT-TERM BORROWINGS
YEARS ENDED MARCH 31, 1994, 1993 AND 1992

<TABLE>
<CAPTION>
MAX. AMOUNT AVG. AMOUNT WEIGHTED AVG.
BALANCE AT WEIGHTED AVG. OUTSTANDING OUTSTANDING DURING INTEREST RATE
END OF PERIOD INT. RATE DURING THE YEAR THE YEAR(1) DURING THE YEAR(2)
------------- -------------- --------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
March 31, 1994
Notes Payable....... $ 34,992,000 8.25% $68,872,000 $ 53,239,000 8.4%
March 31, 1993
Notes Payable....... $ 66,258,000 7.85% $97,495,000 $ 61,264,000 7.5%
Commercial Paper.... N/A N/A 40,271,000 4,261,000 4.5%
March 31, 1992
Notes Payable....... $ 46,408,000 5.58% $67,357,000 $ 33,325,000 5.8%
Commercial Paper.... N/A 4.54% 34,045,000 21,784,000 5.8%
</TABLE>

- -------------------------
(1) Average amount outstanding during the year is computed by dividing the total
of daily outstanding principal by 360 days.

(2) The weighted average interest rates were calculated by dividing the interest
expense for the year for such borrowings by the average amounts outstanding
during the period.

II-14
<PAGE> 83

SCHEDULE X

STOKELY USA, INC. AND SUBSIDIARIES
SCHEDULE X -- SUPPLEMENTARY EARNINGS STATEMENT AND INFORMATION
YEARS ENDED MARCH 31, 1994, 1993 AND 1992

<TABLE>
<CAPTION>
CHARGED TO COSTS AND EXPENSES
------------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Maintenance and repairs.............................. $5,363,000 $6,827,000 $7,844,000
Advertising.......................................... $ 688,000 $1,206,000 $2,269,000
</TABLE>

The amounts of royalties, taxes other than payroll and income taxes, and
amortization of intangible assets are not material.

II-15
<PAGE> 84

APPENDIX TO AMENDMENT NO. 2 TO

FORM S-1 REGISTRATION STATEMENT
OF

STOKELY USA, INC.

In accordance with Item 304(a) of Regulation S-T, the following is a
description of all graphic and image information to be contained in the Form S-1
Registration Statement:

INSIDE FRONT COVER PAGE: Color pictures depicting a collage of Stokely's
private label canned vegetable products and Stokely's industrial bulk
containers of vegetable products.

INSIDE BACK COVER PAGE: Color pictures depicting a collage of Stokely's
brand label canned vegetable products, including Stokely's Finest(R) items
and Stokely's Gold(TM) label items.
<PAGE> 85

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ---------------------------------------------------------------------- ------------

<S> <C> <C>
A. EXHIBITS:
1. Proposed Form of Underwriting Agreement, as amended(1).
3.1 Restated and Amended Articles of Incorporation of Registrant(3).
3.2 By-laws of Registrant, as amended(2)(3).
4.1 Specimen Common Stock Certificate(3).
5. Opinion of Michael Best & Friedrich Regarding Legality of Securities
being Issued(1).
10(a) No longer in effect.
10(b) Loan Agreement between the City of Green Bay, Wisconsin and Stokely
USA, Inc. dated December 1, 1988 with respect to $3,000,000 in
principal amount of City of Green Bay, Wisconsin Industrial Revenue
Bonds (Stokely USA, Inc. Project), relating to Stokely's Green Bay,
Wisconsin facility(5).
10(c) Loan and Mortgage Agreement with respect to $6,000,000 in principal
amount of Industrial Development Bonds relating to Stokely's Poynette,
Wisconsin sauerkraut facility(5).
10(d) Note Agreement between Stokely USA, Inc. and Nationwide Life Insurance
Company, Employers Life Insurance Company of Wausau and West Coast
Life Insurance Company dated January 5, 1990 with respect to
$25,000,000 in principal amount of 9.12% Senior Notes due January 15,
2000(10).
10(e) No longer in effect.
10(f) Loan Agreement between the Village of Poynette, Wisconsin and Stokely
USA, Inc. dated December 1, 1989, with respect to $1,600,000 in
principal amount of Refunding Revenue Bonds (Stokely USA, Inc.
Project) relating to Stokely's Poynette, Wisconsin facility(6).
10(g) Loan Agreement between the Village of Waunakee, Wisconsin and Stokely
USA, Inc. dated June 1, 1989 with respect to $4,000,000 in principal
amount of Industrial Revenue Bonds (Stokely USA, Inc. Project)
relating to Stokely's Waunakee, Wisconsin facility(6).
10(h) Loan Agreement between the City of Ackley, Iowa and Stokely USA, Inc.
dated July 1, 1989 with respect to $3,000,000 in principal amount of
Industrial Development Revenue Bonds (Stokely USA, Inc. Project)
Series 1989 relating to Stokely's Ackley, Iowa facility(6).
10(i) Executive Deferred Compensation Agreements between Stokely USA, Inc.
and each of Thomas W. Mount, Joseph B. Weix and Robert J. Whelan,
Sr.(6).
10(j) 1985 Incentive Stock Option Plan(6).
10(k) Loan Agreement between the Town of Utica, Wisconsin and Stokely USA,
Inc. dated June 1, 1990 with respect to $3,000,000 in principal amount
of Industrial Revenue Bonds (Stokely USA, Inc. Project) relating to
Stokely's Pickett, Wisconsin facility(7).
10(l) Loan Agreement between Port of Walla Walla Public Corporation and
Stokely USA, Inc. dated September 1, 1990 with respect to $4,000,000
in principal amount of Industrial Revenue Bonds, Series 1990 relating
to Stokely's Walla Walla, Washington facility(7).
</TABLE>

<PAGE> 86

<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ------------ ------------
<S> <C> <C>
10(m) Loan Agreement between City of Wells, Minnesota and Stokely USA, Inc.
dated December 1, 1991 with respect to $3,000,000 in principal amount
of Industrial Revenue Bonds (Stokely USA, Inc. Project) Series 1991
relating to Stokely's Wells, Minnesota facility(8).

10(n) Note Agreement between the State of Wisconsin Investment Board and
Stokely USA, Inc. dated December 1, 1991 with respect to $20,000,000
in principal amount of 9.49% Senior Notes due December 15, 2001(8).

10(o) Loan and Security Agreement by and among Barclays Business Credit,
Inc. as agent and lender, various other lenders and Stokely USA, Inc.
dated August 18, 1992 with respect to a $120,000,000 Credit
Facility(11).

10(p) Restated Agreement for Purchase and Sale of Containers between Stokely
USA, Inc. and Heekin Can, Inc. dated January 1, 1992, and as amended
on July 24, 1992(11).

10(q) Supply Agreement between Stokely USA, Inc. and American National Can
Company dated July 24, 1992 and as amended on June 11, 1993(11).

10(r) Amendment to Note Agreement dated August 18, 1992 regarding
$25,000,000 Original Principal Amount of 9.12% Senior Notes due
January 15, 2000 (see Exhibit 10(d))(11).

10(s) Amendment to Note Agreement dated December 1, 1991 regarding
$20,000,000 in principal amount of 9.49% Senior Notes due December 15,
2000 (see Exhibit 10(n))(11).

10(t) Amendment to Revenue Agreement between Stokely USA, Inc. and the City
of Appleton, Wisconsin, dated December 1, 1988(9).

10(u) Reserved.

10(v) Second Amendment to Note Agreement dated June 11, 1993 regarding
$20,000,000 Promissory Note (see Exhibit 10(n))(9).

10(w) Reserved.

10(x) First Amendment to Security Agreement dated June 1993 relating to the
Credit Facility (see Exhibit 10(o))(9).

10(y) Second Amendment to Note Agreement dated June 11, 1993 regarding
$25,000,000 Original Principal Amount of 9.37% Senior Notes Due
January 15, 2000 (see Exhibit 10(d))(9).

10(z) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued
to Nationwide Life Insurance Company dated June 1993(9).

10(aa) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued
to EMPL and Co. dated June 1993(9).

10(bb) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued
to West Coast Life Insurance Company dated June 1993(9).

10(cc) No longer applicable.

10(dd) First Amendment to Loan Agreement with the City of Ackley, Iowa (see
Exhibit 10(h)), dated as of March 31, 1994, between Stokely USA, Inc.
and Norwest Bank Minnesota, N.A., as trustee(12).

10(ee) First Amendment to Loan Agreement with the Village of Poynette,
Wisconsin (see Exhibit 10(c)), dated as of March 31, 1994, between
Stokely USA, Inc. and Norwest Bank Minnesota, N.A., as trustee(12).
</TABLE>
<PAGE> 87
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ------------ ------------
<S> <C> <C>
10(ff) First Amendment to Loan Agreement with the Village of Poynette,
Wisconsin (see Exhibit 10(f)), dated as of March 31, 1994, between
Stokely USA, Inc. and NationsBank of Virginia, N.A., as trustee(12).

10(gg) First Amendment to Loan Agreement with the Village of Waunakee,
Wisconsin (see Exhibit 10(g)), dated as of March 31, 1994, between
Stokely USA, Inc. and NationsBank of Virginia, N.A., as trustee(12).

10(hh) First Amendment to Loan Agreement with the City of Jefferson,
Wisconsin, dated as of June 17, 1994, between Stokely USA, Inc. and
NationsBank of Virginia, N.A., as trustee(12).

10(ii) First Amendment to Loan Agreement with the Port of Walla Walla,
Washington Public Corporation (see Exhibit 10(l)), dated as of June
17, 1994, between Stokely USA, Inc. and NationsBank of Virginia, N.A.,
as trustee(12).

10(jj) First Amendment to Loan Agreement with the Town of Utica, Wisconsin
(see Exhibit 10(k)), dated as of June 17, 1994, between Stokely USA,
Inc. and NationsBank of Virginia, N.A., as trustee(12).

10(kk) First Amendment to Loan Agreement with the City of Green Bay,
Wisconsin (see Exhibit 10(b)), dated as of June 17, 1994, between
Stokely USA, Inc. and NationsBank of Virginia, N.A., as trustee(12).

10(ll) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Vernon L. Wiersma dated October 16, 1992(2).

10(mm) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Stephen W. Theobald dated October 16, 1992(2).

10(nn) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Kenneth L. Murray dated January 27, 1993(2).

10(oo) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Russell J. Trunk dated October 16, 1992(2).

10(pp) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Leslie J. Wilson dated October 16, 1992(2).

10(qq) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Robert M. Brill dated October 16, 1992(2).

10(rr) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Michael A. Wilkes dated October 16, 1992(2).

10(ss) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Robert L. Cook dated October 16, 1992(2).

10(tt) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Eddie Foster dated October 16, 1992(2).

10(uu) Stokely USA, Inc. 1994 Executive Stock Option Plan(2).

10(vv) Stock Option Agreement between Stokely USA, Inc. and Kenneth C. Murray
dated March 13, 1990(2).

10(ww) Stock Option Agreement between Stokely USA, Inc. and Vernon L. Wiersma
dated April 8, 1994(2).

10(xx) Stock Option Agreement between Stokely USA, Inc. and Stephen Theobald
dated April 8, 1994(2).

10(yy) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued
to the State of Wisconsin Investment Board dated June 1993(2).
</TABLE>
<PAGE> 88

<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ---------------------------------------------------------------------- ------------
<S> <C> <C>
10(zz) Employment Agreement by and between Stokely USA, Inc. and Leslie J.
Wilson dated June 17, 1992(2).
10(aaa) Loan Agreement between the City of Jefferson, Wisconsin and Stokely
USA, Inc. with respect to $6,500,000 in principal amount of Industrial
Development Revenue Bonds (Stokely USA, Inc. Project) relating to
Stokely's Jefferson, Wisconsin facility(4).
10(bbb) Loan Agreement between the Town of Windsor, Wisconsin and Stokely USA,
Inc. with respect to $1,500,000 in principal amount of Industrial
Development Revenue Bonds (Stokely USA, Inc. -- 1985 Project)(3).
10(ccc) Loan Agreement between the Michigan Job Development Authority and
Stokely USA, Inc. with respect to $1,800,000 in principal amount of
Limited Obligation Revenue Bonds (Oconomowoc Canning Company Project),
Series A(3).
10(ddd) No longer applicable.
10(eee) Loan Agreement between the City of Appleton, Wisconsin and Stokely
USA, Inc. with respect to $1,000,000 in principal amount of Industrial
Development Revenue Bonds (Stokely USA, Inc. Project)(4).
10(fff) Second Amendment to Loan Documents dated October 13, 1992 regarding
the Credit Facility (see Exhibit 10(o))(2).
10(ggg) Third Amendment to Loan Documents dated December 16, 1992 regarding
the Credit Facility (see Exhibit 10(o))(2).
10(hhh) Fourth Amendment to Loan Documents dated June 11, 1993 regarding the
Credit Facility (see Exhibit 10(o))(2).
10(iii) Fifth Amendment to Loan Document dated March 24, 1994 regarding the
Credit Facility (see Exhibit 10(o))(2).
10(jjj) Summary Plan Description of Split Dollar Life Insurance Plan(2).
11. Statement regarding computation of per share earnings(2).
18. Letter regarding change in accounting principles(12).
22. List of subsidiaries(2).
23.1 Consent of Deloitte & Touche(1).
23.2 Consent of Michael Best & Friedrich (included in opinion)(2).
24.1 Powers of Attorney for certain officers and directors (contained on
the signature page of this Registration Statement).
</TABLE>

- -------------------------
(1) Filed herewith.

(2) Previously filed as an exhibit to this Form S-1 Registration Statement.

(3) Incorporated by reference to exhibits filed with Registrant's Form S-1
Registration Statement declared effective on October 29, 1985 (Registration
Number 33-339).

(4) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1986.

(5) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1989.

(6) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1990.

(7) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1991.
<PAGE> 89

(8) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1992.

(9) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1993.

(10) Incorporated by reference to exhibits filed with Registrant's Form 10-Q for
the three months ended December 31, 1989.

(11) Incorporated by reference to exhibits filed with Registrant's Form 10-Q for
the three months ended September 30, 1992.

(12) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1994.

B. FINANCIAL STATEMENT SCHEDULES:

Report of Independent Auditors on Schedules

Schedule V
Schedule VI
Schedule VIII
Schedule IX
Schedule X

All other schedules are omitted because they are inapplicable or the
required information is shown in the financial statements or notes thereto.

<PAGE> 1

STOKELY USA, INC.

3,000,000 SHARES COMMON STOCK*

UNDERWRITING AGREEMENT

November , 1994

William Blair & Company
Dain Bosworth Incorporated
As Representatives of the Several
Underwriters Named in Schedule A
c/o William Blair & Company
222 West Adams Street
Chicago, Illinois 60606

Ladies and Gentlemen:

SECTION 1. INTRODUCTION. Stokely USA, Inc. (the "Company"), a Wisconsin
corporation, has an authorized capital stock consisting of 1,000,000 shares, no
par value, of Preferred Stock, of which no shares will be outstanding as of the
date of the consummation of the transactions contemplated by this Agreement, and
20,000,000 shares, $0.05 par value per share, of Common Stock ("Common Stock"),
of which 11,324,645 shares will be outstanding as of such date. The Company
proposes, subject to the terms and conditions stated herein, to issue and sell
3,000,000 shares of its authorized but unissued Common Stock to the several
underwriters named in Schedule A, as it may be amended by the Pricing Agreement
as hereinafter defined ("Underwriters"), who are acting severally and not
jointly. Such 3,000,000 shares of Common Stock proposed to be sold by the
Company is hereinafter referred to as the "Firm Shares." In addition, the
Company proposes to grant to the Underwriters an option to purchase up to an
aggregate of 450,000 additional shares of Common Stock ("Option Shares") for the
purpose of covering over-allotments in connection with the sale of the Firm
Shares as provided in Section 4 hereof. The Firm Shares and, to the extent such
option is exercised, the Option Shares, are hereinafter collectively referred to
as the "Shares."

You have advised the Company that the Underwriters propose to make a public
offering of their respective portions of the Shares as soon as you deem
advisable after the registration statement hereinafter referred to becomes
effective, if as of the date hereof it has not yet become effective, and the
Pricing Agreement as hereinafter defined has been executed and delivered.

Prior to the purchase and public offering of the Shares by the several
Underwriters, the Company and the Representatives, acting on behalf of the
several Underwriters, shall enter into an agreement substantially in the form of
Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may take the
form of an exchange of any standard form of written telecommunication between
the Company and the Representatives and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Shares will
be governed by this Agreement, as supplemented by the Pricing Agreement. From
and after the date of the execution and delivery of the Pricing Agreement, this
Agreement shall be deemed to incorporate the Pricing Agreement. The subsidiaries
of the Company listed on Exhibit 22 to the Registration Statement (as
hereinafter defined) are referred to herein individually as a "Subsidiary" and
collectively as the "Subsidiaries."

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

* Plus an option to acquire up to 450,000 additional shares to cover
over-allotments.

<PAGE> 2

The Company hereby confirms its agreement with the Underwriters as follows:

SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the several Underwriters that:

(a) A registration statement on Form S-1 (File No. 33-55447) and a related
preliminary prospectus with respect to the Shares have been prepared and filed
with the Securities and Exchange Commission ("Commission") by the Company in
conformity in all material respects with the requirements of the Securities Act
of 1933, as amended, and the rules and regulations of the Commission thereunder
(collectively, the "1933 Act;" all references herein to specific rules are to
rules promulgated under the 1933 Act); and the Company has so prepared and has
filed such amendments thereto, if any, and such amended preliminary prospectuses
as may have been required to the date hereof. If the Company and the
Underwriters have elected not to rely upon Rule 430A, the Company has prepared
and will promptly file an amendment to the registration statement and an amended
prospectus. If the Company and the Underwriters have elected to rely upon Rule
430A, the Company will prepare and file a prospectus pursuant to Rule 424(b)
that discloses the information previously omitted from the prospectus in
reliance upon Rule 430A. There have been or will promptly be delivered to you
two signed copies of such registration statement and all amendments, and two
copies of each exhibit filed therewith, and conformed copies of such
registration statement and amendments (but without exhibits) and of the related
preliminary prospectus or prospectuses and final forms of prospectus for each of
the Underwriters.

The registration statement and prospectus, each as amended, on file with
the Commission at the time the registration statement became or becomes
effective, including the information deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A(b), if applicable,
are hereinafter called the "Registration Statement" and the "Prospectus,"
respectively, except that if the prospectus filed by the Company pursuant to
Rule 424(b) differs from the prospectus on file at the time the Registration
Statement became or becomes effective, the term "Prospectus" shall refer to the
Rule 424(b) prospectus from and after the time it is filed with the Commission
or transmitted to the Commission for filing. The Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder are
hereinafter collectively referred to as the "Exchange Act."

(b) The Commission has not issued any order preventing or suspending the
use of any preliminary prospectus, and each preliminary prospectus, at the time
of filing thereof, conformed in all material respects with the requirements of
the 1933 Act (except to the extent that, in conformity with the 1933 Act, such
preliminary prospectus is subject to completion), and, as of its date, did not
include any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; when the Registration Statement and
any amendment thereto became or becomes effective, and at all times subsequent
thereto, up to the First Closing Date or the Second Closing Date, each as
hereinafter defined, as the case may be, the Registration Statement, or such
amendment, including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b), if applicable,
and the Prospectus and any amendments or supplements thereto, contained or will
contain all statements that are required to be stated therein in accordance with
the 1933 Act and in all material respects conformed or will in all material
respects conform to the requirements of the 1933 Act, and neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, included or will include any untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company makes no representation or warranty as to information contained in
or omitted from any preliminary prospectus, the Registration Statement, the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Underwriter through the Representatives regarding the Underwriters
specifically for use in the preparation thereof.

(c) The Company and its Subsidiaries have been duly incorporated and are
validly existing as corporations in good standing under the laws of their
respective places of incorporation, with corporate power and authority to own or
lease their properties and conduct each of their businesses as described in the

2
<PAGE> 3

Prospectus; the Company and its Subsidiaries are duly qualified to do business
as foreign corporations under the corporation law of, and are in good standing
as such in, each jurisdiction in which they own or lease substantial properties,
have an office, or in which substantial business is conducted and such
qualification is required, except in any such case where the failure to so
qualify or be in good standing would not have a material adverse effect on the
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, taken as a whole; and, to the Company's knowledge, no
proceeding has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification.

(d) Except as disclosed in the Registration Statement, the Company owns
directly or indirectly 100 percent of the issued and outstanding capital stock
of each of the Subsidiaries, free and clear of any claims, liens, encumbrances
or security interests and all of such capital stock has been duly authorized and
validly issued and is fully paid and nonassessable (except for statutory
liability under Section 180.0622(2)(b) of the Wisconsin Business Corporation Law
("WBCL")).

(e) The issued and outstanding shares of capital stock of the Company as
set forth in the Prospectus have been duly authorized and validly issued, are
fully paid and nonassessable, except for statutory liability under Section
180.0622(2)(b) of the WBCL and except as described in the Prospectus, and
conform to the description thereof contained in the Prospectus and, except as
disclosed in the Registration Statement, there are no options, rights or
warrants for the purchase of Common Stock from the Company, or securities
convertible into Common Stock and there are no agreements with the Company with
respect thereto.

(f) The Shares to be sold by the Company have been duly authorized and when
issued, delivered and paid for pursuant to this Agreement, will be validly
issued, fully paid and nonassessable (except for statutory liability under
Section 180.0622(2)(b) of the WBCL), and will conform to the description thereof
contained in the Prospectus.

(g) The making and performance by the Company of this Agreement and the
Pricing Agreement have been duly authorized by all necessary corporate action
and (i) will not violate any provision of the Company's articles of
incorporation or bylaws and (ii) will not result in the breach, or be in
contravention, of any provision of any agreement, franchise, license, indenture,
mortgage, deed of trust or other instrument to which the Company or any
Subsidiary is a party or by which the Company, any Subsidiary or the property of
any of them may be bound or affected, or any order, rule or regulation
applicable to the Company or any Subsidiary of any court or regulatory body,
administrative agency or other governmental body having jurisdiction over the
Company or any Subsidiary or any of their respective properties, or any order of
any court or governmental agency or authority entered in any proceeding to which
the Company or any Subsidiary was or is now a party or by which it is bound,
except for violations, breaches or contraventions, which neither singly nor in
the aggregate are material to the Company and the Subsidiaries taken as a whole.
No consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body is required for the
execution and delivery of this Agreement or the Pricing Agreement or the
consummation of the transactions contemplated herein or therein, except for
those which have been obtained and except for compliance with the 1933 Act, the
1934 Act and blue sky laws applicable to the public offering of the Shares by
the several Underwriters and clearance of such offering with the National
Association of Securities Dealers, Inc. ("NASD"). This Agreement has been duly
executed and delivered by the Company.

(h) The accountants who have expressed their opinions with respect to
certain of the financial statements and schedules included in the Registration
Statement are independent accountants as required by the 1933 Act.

(i) The consolidated financial statements and schedules of the Company
included in the Registration Statement present fairly the consolidated financial
position of the Company as of the respective dates of such financial statements,
and the consolidated results of operations and cash flows of the Company for the
respective periods covered thereby, all in conformity with generally accepted
accounting principles consistently applied throughout the periods involved,
except as disclosed in the Prospectus, and the supporting schedules included in
the Registration Statement present fairly the information required to be stated
therein. The

3
<PAGE> 4

financial information set forth in the Prospectus under "Selected Consolidated
Financial Data" presents fairly on the basis stated in the Prospectus the
information set forth therein.

The pro forma financial statements and other pro forma information, if any,
included in the Prospectus present fairly the information shown therein, have
been prepared in accordance with generally accepted accounting principles and
the Commission's rules and guidelines with respect to pro forma financial
statements and other pro forma information, have been properly compiled on the
pro forma basis described therein, and, in the opinion of the Company, the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate under the circumstances.

(j) Neither the Company nor any Subsidiary is in violation of its charter
or bylaws or is in default under any consent decree, or order of any court or
administrative body or in default with respect to any material provision of any
material lease, loan agreement, franchise, license, permit or other contractual
obligation to which it is a party, and there does not exist any state of facts
which constitutes an event of default as defined in such documents or which,
with notice or lapse of time or both, would constitute such an event of default,
in each case, except for defaults which neither singly nor in the aggregate are
material to the Company and its Subsidiaries taken as a whole.

(k) There are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company or any Subsidiary is or may
be a party or of which property owned or leased by the Company or any
Subsidiaries is or may be the subject, or related to environmental or
discrimination matters which are required to be disclosed in the Prospectus and
are not so disclosed, or which question the validity of this Agreement or the
Pricing Agreement or any action taken or to be taken pursuant hereto or thereto.

(l) There are no holders of securities of the Company having rights,
contractual or otherwise, to cause registration thereof or preemptive rights to
purchase Common Stock except as disclosed in the Registration Statement. All
holders of registration rights have waived such rights with respect to the
offering being made by the Prospectus.

(m) The Company and each of its Subsidiaries have good and marketable title
to all the properties and assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Registration Statement), subject to
no lien, mortgage, pledge, charge, security interest or encumbrance of any kind
except those, if any, reflected in such financial statements (or elsewhere in
the Registration Statement), liens for taxes not yet due and payable, or such as
are not material to the Company and its Subsidiaries taken as a whole. The
Company and its Subsidiaries hold their respective leased properties which are
material to the Company and its Subsidiaries taken as a whole under valid and
binding leases, except to the extent that the enforceability of the rights and
remedies of the Company or such Subsidiary under any such lease may be limited
by bankruptcy, insolvency or similar laws generally affecting the rights of
creditors and by equitable principles limiting the right to specific performance
or other equitable relief, and except where such lack of validity and/or
defaults in the aggregate would not have a material adverse effect on the
Company and the Subsidiaries taken as a whole.

(n) The Company has not taken and will not take, directly or indirectly,
any action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares pursuant to the distribution
contemplated by this Agreement.

(o) Subsequent to the respective dates as of which information is given in
the Registration Statement and Prospectus, and except as set forth or
contemplated by the Prospectus, the Company and its Subsidiaries have not
entered into any material transactions not in the ordinary course of business
and there has not been any material adverse change in their condition (financial
or otherwise) or results of operations or any material change in the capital
stock, short-term debt or long-term debt in each case as to the Company and its
Subsidiaries, taken as a whole.

(p) The Company has obtained agreements from each of the Company's
executive officers and directors, in which each such person agrees not to (1)
sell, contract to sell or otherwise dispose of any Common Stock for a period of
90 days after the effective date of the Registration Statement without the prior
written consent

4
<PAGE> 5

of the Representatives or (2) announce an intent to sell any shares of the
Company's Common Stock, or exercise any registration rights with respect to
shares of the Company's Common Stock, for a period of 90 days after the
effective date of the Registration Statement without the prior written consent
of the Representatives.

(q) There is no material document of a character required to be described
in the Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement which is not described or filed as required.

(r) The Company, together with its Subsidiaries, owns and possesses all
right, title and interest in and to, or has duly licensed from third parties a
valid and enforceable right to use, all trademarks, copyrights, patents, trade
secrets and other proprietary rights material to the business of the Company and
its Subsidiaries taken as a whole ("Trade Rights"), whether such Trade Rights
are registered or unregistered. Neither the Company nor its Subsidiaries has
received any notice of infringement, misappropriation or conflict from any third
party as to such material Trade Rights which has not been resolved or disposed
of or the resolution of which would not have a material adverse effect on the
business of the Company and the Subsidiaries taken as a whole, and, to the
Company's knowledge, neither the Company nor its Subsidiaries have infringed,
misappropriated or otherwise conflicted with Trade Rights of any third parties,
which infringement, misappropriation or conflict would have a material adverse
effect upon the condition (financial or otherwise) or results of operations of
the Company and its Subsidiaries taken as a whole.

(s) The conduct of the business of the Company and each of its Subsidiaries
is in compliance in all respects with applicable federal, state, local and
foreign laws and regulations, except where the failure to be in compliance has
been fully cured or satisfied without recourse or would not have a material
adverse effect upon the condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole.

(t) The Company and its Subsidiaries have filed all necessary federal and
state income and franchise tax returns and have paid all taxes shown as due
thereon, except where the failure to file such returns or pay taxes would not
have a material adverse effect on the Company and the Subsidiaries taken as a
whole, and there is no tax deficiency that has been, or to the knowledge of the
Company might be, asserted against the Company, its Subsidiaries, or their
respective properties or assets that would or could be expected to adversely
affect the financial condition, assets, operations or prospects of the Company
and its Subsidiaries taken as a whole.

(u) A registration statement relating to the Common Stock was declared
effective by the Commission pursuant to the Securities Exchange Act of 1934, as
amended, in 1985, and the Common Stock is duly registered thereunder. The Shares
have been authorized for listing on the NASDAQ National Market ("NASDAQ/NM"),
subject to notice of issuance or sale of the Shares, as the case may be.

(v) The Company is in compliance with all provisions of Section 1 of Laws
of Florida, Chapter 92-198, An Act Relating to Disclosure of Doing Business with
Cuba, and the Company further agrees that if it commences engaging in business
with the government of Cuba or with any person or affiliate located in Cuba
after the date the Registration Statement becomes or has become effective with
the Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported in the
Prospectus, if any, concerning the Company's business with Cuba, or with any
person or affiliate located in Cuba, changes in any material way, the Company
will provide the Department notice of such business or change, as appropriate,
in a form acceptable to the Department.

(w) The Company and its Subsidiaries are not conducting their respective
businesses in a manner in which any of them would be an "investment company" as
defined in Section 3(a) of the Investment Company Act of 1940, as amended
("Investment Company Act").

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS. The
Representatives, on behalf of the several Underwriters, represent and warrant to
the Company that the information set forth (a) in the last paragraph on the
cover page of the Prospectus with respect to price, underwriting discount and
the terms of the Offering, (b) in the last two paragraphs on the second page of
the Prospectus concerning stabilization and market-making transactions and (c)
in the third paragraph under the caption "Underwriting" in the

5
<PAGE> 6

Prospectus concerning the terms of the Offering by the Underwriters is the only
information furnished to the Company by and on behalf of the Underwriters for
use in connection with the preparation of the Registration Statement and such
information is correct and complete in all material respects.

SECTION 4. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters named in Schedule A hereto, and the Underwriters agree, severally
and not jointly, to purchase from the Company 3,000,000 Firm Shares at the price
per share set forth in the Pricing Agreement. The obligation of each Underwriter
to the Company shall be to purchase from the Company that number of full shares
which (as nearly as practicable, as determined by you) bears to the number of
Firm Shares to be sold by the Company, the same proportion as the number of
Shares set forth opposite the name of such Underwriter in Schedule A hereto
bears to the total number of Firm Shares to be purchased by all Underwriters
under this Agreement. The initial public offering price and the purchase price
shall be set forth in the Pricing Agreement.

At 10:00 A.M., Chicago Time, on the fifth full business day after the
public offering of the Shares, or at such other time not later than nine full
business days after the public offering, as you and the Company may agree, the
Company will deliver to you at the offices of counsel for the Company or through
the facilities of The Depository Trust Company for the accounts of the several
Underwriters, certificates representing the Firm Shares to be sold by it against
payment of the purchase price therefor by certified or bank cashier's checks in
Chicago Clearing House funds (next-day funds) payable to the order of the
Company. Such time of delivery and payment is herein referred to as the "First
Closing Date." The certificates for the Firm Shares so to be delivered will be
in such denominations and registered in such names as you request by notice to
the Company prior to 10:00 A.M., Chicago Time, on the third full business day
preceding the First Closing Date, and will be made available at the Company's
expense for checking and packaging by the Representatives at 10:00 A.M., Chicago
Time, on the first full business day preceding the First Closing Date. Payment
for the Firm Shares so to be delivered shall be made at the time and in the
manner described above at the offices of counsel for the Company.

In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants an option to the several Underwriters to purchase up to an
aggregate of 450,000 Option Shares, at the same purchase price per share to be
paid for the Firm Shares, for use solely in covering any over-allotments made by
the Underwriters in the sale and distribution of the Firm Shares. The option
granted hereunder may be exercised at any time (but not more than once) within
30 days after the date of the public offering upon notice by you to the Company
and the Representatives setting forth the aggregate number of Option Shares as
to which the Underwriters are exercising the option, the names and denominations
in which the certificates for such shares are to be registered and the time and
place at which such certificates will be delivered. Such time of delivery (which
may not be earlier than the First Closing Date), being herein referred to as the
"Second Closing Date," shall be determined by you, but if at any time other than
the First Closing Date, shall not be earlier than three nor later than ten full
business days after delivery of such notice of exercise. The number of Option
Shares to be purchased by each Underwriter shall be determined by multiplying
the number of Option Shares to be sold by the Company pursuant to such notice of
exercise by a fraction, the numerator of which is the number of Firm Shares to
be purchased by such Underwriter as set forth opposite its name in Schedule A
and the denominator of which is the total number of Firm Shares (subject to such
adjustments to eliminate any fractional share purchases as you in your absolute
discretion may make). Certificates for the Option Shares will be made available
at the Company's expense for checking and packaging at 10:00 A.M., Chicago Time,
on the first full business day preceding the Second Closing Date. The manner of
payment for and delivery of the Option Shares shall be the same as for the Firm
Shares as specified in the preceding paragraph.

You have advised the Company that each Underwriter has authorized you to
accept delivery of its Shares, to make payment and to receipt therefor. You,
individually and not as the Representatives of the Underwriters, may make
payment for any Shares to be purchased by any Underwriter whose funds shall not
have been received by you by the First Closing Date or the Second Closing Date,
as the case may be, for the

6
<PAGE> 7
account of such Underwriter, but any such payment shall not relieve such
Underwriter from any obligation hereunder.

SECTION 5. COVENANTS OF THE COMPANY. The Company covenants and agrees that:

(a) The Company will advise you promptly of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or
of the institution of any proceedings for that purpose, or of any notification
of the suspension of qualification of the Shares for sale in any jurisdiction or
the initiation or threatening of any proceedings for that purpose, and will also
advise you promptly of any request of the Commission for amendment or supplement
of the Registration Statement, of any preliminary prospectus or of the
Prospectus, or for additional information, and will not file any amendment or
supplement to the Registration Statement, to any preliminary prospectus or of
the Prospectus of which you have not been furnished with a copy prior to such
filing or to which you reasonably object.

(b) If at any time when a prospectus relating to the Shares is required to
be delivered under the 1933 Act, any event occurs as a result of which the
Prospectus, including any amendments or supplements thereto, would include an
untrue statement of a material fact, or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus, including any amendments or
supplements thereto and including any revised prospectus which the Company
proposes for use by the Underwriters in connection with the offering of the
Shares which differs from the prospectus on file with the Commission at the time
of effectiveness of the Registration Statement, the Company promptly will advise
you thereof and will promptly prepare and file with the Commission an amendment
or supplement which will correct such statement or omission or an amendment
which will effect such compliance; and, in case any Underwriter is required to
deliver a prospectus nine months or more after the effective date of the
Registration Statement, the Company upon request, but at the expense of such
Underwriter, will prepare promptly such prospectus or prospectuses as may be
necessary to permit compliance with the requirements of Section 10(a)(3) of the
1933 Act.

(c) Neither the Company nor its Subsidiaries will, prior to the earlier of
the Second Closing Date or termination or expiration of the related option,
incur any liability or obligation, direct or contingent, or enter into any
material transaction, other than in the ordinary course of business, except as
contemplated by the Prospectus.

(d) Neither the Company nor its Subsidiaries will acquire any capital stock
of the Company prior to the earlier of the Second Closing Date or termination or
expiration of the related option nor will the Company declare or pay any
dividend or make any other distribution upon the Common Stock payable to
shareholders of record on a date prior to the earlier of the Second Closing Date
or termination or expiration of the related option, except in either case as
contemplated by the Prospectus.

(e) As soon as practicable, but in any event not later than March 31, 1996,
the Company will make generally available to its security holders an earnings
statement (which need not be audited) covering a period of at least twelve
months beginning after the effective date of the Registration Statement, which
will satisfy the provisions of the last paragraph of Section 11(a) of the 1933
Act.

(f) During such period as a prospectus is required by law to be delivered
in connection with offers and sales of the Shares by an Underwriter or dealer,
the Company will furnish to you at its expense, subject to the provisions of
subsection (b) hereof, copies of the Registration Statement, the Prospectus,
each preliminary prospectus and all amendments and supplements to any such
documents in each case as soon as available and in such quantities as you may
reasonably request, for the purposes contemplated by the 1933 Act.

(g) The Company will cooperate with the Underwriters in qualifying or
registering the Shares for sale under the blue sky laws of such jurisdictions as
you and the Company agree upon, and will continue such qualifications in effect
so long as reasonably required for the distribution of the Shares; provided,
however, that the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any such
jurisdiction where it is not currently qualified or would not be subject to
taxation and in which the Company is not currently so subject.

7
<PAGE> 8

(h) During the period of three years hereafter, the Company will furnish
you and the other Underwriters with a copy (i) as soon as practicable after the
filing thereof, of each report filed by the Company with the Commission, any
securities exchange or the NASD; and (ii) as soon as available, of each report
of the Company mailed to stockholders.

(i) The Company will use the net proceeds received by it from the sale of
the Shares being sold by it in the manner specified in the Prospectus.

(j) If, at the time of effectiveness of the Registration Statement, any
information shall have been omitted therefrom in reliance upon Rule 430A, then
immediately following the execution and delivery of the Pricing Agreement, the
Company will prepare, and file or transmit for filing with the Commission in
accordance with such Rule 430A and Rule 424(b), copies of an amended prospectus,
or, if required by such Rule 430A, a post-effective amendment to the
Registration Statement (including an amended prospectus), containing all
information so omitted.

(k) The Company will not sell, contract to sell or otherwise dispose of any
Common Stock or securities convertible into Common Stock (except Common Stock
issued pursuant to currently outstanding options, warrants or convertible
securities and except pursuant to reservations, agreements or employee benefit
plans described in the Registration Statement) for a period of 90 days after
this Agreement becomes effective without the prior written consent of the
Representatives. The Company has obtained similar agreements from each of its
executive officers and directors.

SECTION 6. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective as to
all of its provisions or is terminated, the Company agrees to pay (i) all costs,
fees and expenses (except legal fees and disbursements of counsel for the
Underwriters and the expenses incurred by the Underwriters other than those
contemplated by clause (ii) below) incurred in connection with the performance
of the Company's obligations hereunder, including without limiting the
generality of the foregoing, all fees and expenses of legal counsel for the
Company and of the Company's independent accountants, all costs and expenses
incurred in connection with the preparation, printing, filing, shipping and
distribution of the Registration Statement, each preliminary prospectus and the
Prospectus (including all exhibits and financial statements) and all amendments
and supplements provided for herein, this Agreement, the Pricing Agreement and
the Blue Sky Memorandum, (ii) all costs, fees and expenses (including reasonable
legal fees and disbursements of counsel for the Underwriters, not to exceed
$15,000) incurred by the Underwriters in connection with qualifying or
registering all or any part of the Shares for offer and sale under blue sky
laws, including the preparation of a blue sky memorandum relating to the Shares
and clearance of such offering with the NASD; and (iii) all fees and expenses of
the Company's transfer agent, printing of the certificates for the Shares and
all transfer taxes, if any, with respect to the sale and delivery of the Shares
to the several Underwriters.

SECTION 7. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Firm Shares
on the First Closing Date and the Option Shares on the Second Closing Date shall
be subject to the accuracy of the representations and warranties on the part of
the Company herein set forth as of the date hereof and as of the First Closing
Date or the Second Closing Date, as the case may be, to the accuracy of the
statements of officers of the Company made pursuant to the provisions hereof, to
the performance by the Company of any of its obligations hereunder, and to the
following additional conditions, unless waived by the Representatives.

(a) The Registration Statement shall have become effective either prior to
the execution of this Agreement or not later than 1:00 P.M., Chicago Time, on
the first full business day after the date of this Agreement, or such later time
as shall have been consented to by you but in no event later than 1:00 P.M.,
Chicago Time, on the third full business day following the date hereof; and
prior to the First Closing Date or the Second Closing Date, as the case may be,
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted
or shall be pending or, to the knowledge of the Company or you, shall be
contemplated by the Commission and there shall not have come to the attention of
the Representatives any facts that would cause them to believe that the
Prospectus, at the time it was required to be delivered to purchasers of the
Shares, contained any untrue

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<PAGE> 9

statement of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. If the Company and the Underwriters have
elected to rely upon Rule 430A, the information concerning the public offering
price of the Shares and price-related information shall have been properly
transmitted to the Commission for filing pursuant to Rule 424(b) within the
prescribed period and the Company will provide evidence satisfactory to the
Representatives of such timely filing (or a post-effective amendment providing
such information shall have been filed and declared effective in accordance with
the requirements of Rules 430A and 424(b)).

(b) The Shares shall have been qualified for sale under the blue sky laws
of such states as shall have been specified by the Representatives and the
Company.

(c) The legality and sufficiency of the authorization, issuance and sale or
transfer and sale of the Shares hereunder, the validity and form of the
certificates representing the Shares, the execution and delivery of this
Agreement and the Pricing Agreement, and all corporate proceedings and other
legal matters incident thereto, and the form of the Registration Statement and
the Prospectus (except financial statements and other financial data included
therein) shall have been approved by counsel for the Underwriters exercising
reasonable judgment.

(d) You shall not have advised the Company that the Registration Statement
or the Prospectus or any amendment or supplement thereto contains an untrue
statement of fact, which, in the opinion of counsel for the Underwriters, is
material or omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or necessary to make the
statements therein not misleading.

(e) Subsequent to the execution and delivery of this Agreement, there shall
not have occurred any change, or any development involving a prospective change,
in or affecting particularly the business or properties of the Company or its
Subsidiaries, whether or not arising in the ordinary course of business, which,
in the reasonable judgment of the Representatives, makes it impractical or
inadvisable to proceed with the public offering or purchase of the Shares as
contemplated hereby.

(f) There shall have been furnished to you, as Representatives of the
Underwriters, on the First Closing Date or the Second Closing Date, as the case
may be, except as otherwise expressly provided below:

(i) An opinion of Michael Best & Friedrich, counsel for the Company,
addressed to the Underwriters and dated the First Closing Date or the
Second Closing Date, as the case may be, to the effect that:

(1) the Company has been duly incorporated and is validly existing
as a corporation in active status under the laws of the State of
Wisconsin with corporate power and authority to own its properties and
conduct its business as described in the Prospectus; and the Company has
been duly qualified to do business as a foreign corporation under the
corporation law of, and is in good standing as such in, every
jurisdiction where the ownership or leasing of property, or the conduct
of its business requires such qualification except where the failure so
to qualify would not have a material adverse effect upon the condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole;

(2) an opinion to the same general effect as clause (1) of this
subparagraph (i) in respect of each Subsidiary of the Company;

(3) except as disclosed in the Registration Statement, all of the
issued and outstanding capital stock of the Subsidiaries of the Company
has been duly authorized, validly issued and is fully paid and
nonassessable (except for statutory liability under Section 180.0622 of
the WBCL), and, except as disclosed in the Registration Statement, to
such counsel's knowledge, the Company owns directly or indirectly 100
percent of the outstanding capital stock of each Subsidiary and such
stock is owned free and clear of any claims, liens, encumbrances or
security interests;

(4) the authorized capital stock of the Company, of which, to such
counsel's knowledge, there is outstanding the amount set forth in the
Registration Statement and Prospectus (except for subsequent issuances,
if any, pursuant to stock options described in the Prospectus), conforms
as to

9
<PAGE> 10

legal matters in all material respects to the description thereof in the
Registration Statement and Prospectus;

(5) except as disclosed in the Registration Statement, the issued
and outstanding capital stock of the Company has been duly authorized
and validly issued and is fully paid and nonassessable (except for
statutory liability under Section 180.0622 of the WBCL), and free of
preemptive rights;

(6) the certificates for the Shares to be delivered hereunder
conform to the requirements of the WBCL, and when duly countersigned by
the Company's transfer agent and delivered to you or upon your order
against payment of the agreed consideration therefor in accordance with
the provisions of this Agreement and the Pricing Agreement, the Shares
represented thereby will be duly authorized and validly issued, fully
paid and nonassessable (except for statutory liability under Section
180.0622 of the WBCL), except as disclosed in the Registration Statement
and free of preemptive rights and, to the knowledge of such counsel,
will be free of any pledge, lien, encumbrance or claim created or caused
to be created by the Company and, to such counsel's knowledge, there are
no contractual preemptive rights, rights of first refusal, rights of
co-sale or other similar rights which exist with respect to any of the
Shares or the issuance and sale thereof; and the Shares to be sold
hereunder have been qualified for inclusion on NASDAQ/NM, subject to
notice of issuance;

(7) the Registration Statement has become effective under the 1933
Act, and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the 1933 Act, and the Registration Statement
(including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b), if
applicable), the Prospectus and each amendment or supplement thereto
(except for the financial statements and notes thereto, the financial
statement schedules and other statistical or financial data included
therein as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the 1933 Act; to
such counsel's knowledge there are no legal or governmental proceedings
pending or threatened required to be described in the Prospectus which
are not described as required; and to such counsel's knowledge there are
no contracts or documents of a character required to be described in the
Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not described or filed, as required;

(8) this Agreement and the Pricing Agreement and the performance of
the Company's obligations hereunder and thereunder have been duly
authorized by all necessary corporate action and this Agreement and the
Pricing Agreement have been duly executed and delivered by and on behalf
of the Company, and are legal, valid and binding agreements of the
Company, except as enforceability of the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights and as may be limited by judicial discretion
in applying principles of equity and except as to those provisions
relating to indemnities and contribution for liabilities arising under
the 1933 Act as to which no opinion need be expressed; and, to such
counsel's knowledge, no approval, order, authorization or consent of any
public board, agency or instrumentality of the United States or of any
state or other jurisdiction is necessary in connection with the issue or
sale of the Shares by the Company pursuant to this Agreement (other than
under the 1933 Act, applicable blue sky laws and the rules of the NASD
and such as has been obtained or made) or the consummation of the
Company of any other transactions contemplated hereby;

(9) to such counsel's knowledge, the execution and performance of
this Agreement and the Pricing Agreement, the issue and sale of the
Shares, and the consummation of the transactions herein contemplated by
the Company, will not contravene, conflict with any of the provisions
of, or result in a breach or default under, any of the terms or
provisions of any agreement, franchise, license, indenture, mortgage,
deed of trust, note agreement or other agreement or instrument of the
Company or its Subsidiaries or by which the property of any of them is
bound and which contravention or default would be material to the
Company and its Subsidiaries taken as a whole; nor will such actions
violate any of the provisions of the charter or bylaws of the Company or
its

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<PAGE> 11

Subsidiaries or, to such counsel's knowledge, violate any statute,
order, rule or regulation of any court or regulatory or governmental
body having jurisdiction over the Company or its Subsidiaries, the
violation of which would have a material adverse effect on the Company
and the Subsidiaries taken as a whole;

(10) to such counsel's knowledge, except as disclosed in the
Registration Statement, no person has the right, contractual or
otherwise, to cause the Company to register pursuant to the 1933 Act any
shares of capital stock of the Company, upon the issue and sale of the
Shares to be sold by the Company to the Underwriters pursuant to this
Agreement; and

(11) the registration of the Company under the 1940 Act is not
required.

At the time of rendering such opinion, such counsel shall also state
that such counsel has participated in the preparation of the Registration
Statement and the Prospectus and nothing has come to the attention of such
counsel which causes such counsel to believe that (i) the Registration
Statement (including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b), if
applicable) as amended or supplemented (except for the financial statements
and notes thereto, the financial statement schedules and other statistical
or financial data included therein as to which such counsel need express no
opinion), as of its effective date, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or that
(ii) as of its date, the Prospectus or any amendment or supplement thereto
(except for the financial statements and notes thereto, the financial
statement schedules and other statistical or financial data included
therein as to which such counsel need express no opinion) contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, or that (iii) as of the First
Closing Date or the Second Closing Date, as the case may be, either the
Registration Statement or the Prospectus or any further amendment or
supplement thereto made by the Company prior to the First Closing Date or
the Second Closing Date, as the case may be (except for the financial
statements and notes thereto, the financial statement schedules and other
statistical or financial data included therein to which such counsel need
express no opinion) contained an untrue statement of a material fact or
omitted to state any material fact necessary to make the statements therein
not misleading in the light of the circumstances under which they were
made.

In rendering such opinion or statement, such counsel may state that
they are relying upon the certificate of officers of the Company as to
factual matters, the transfer agent for the Common Stock, as to the number
of shares of Common Stock at any time or times outstanding, and that
insofar as their statement described above relates to the accuracy and
completeness of the Prospectus and Registration Statement, it is based upon
a general review with the Company's representatives and independent
accountants of the information contained therein, without independent
verification by such counsel of the accuracy or completeness of such
information. Such counsel may also rely upon the opinions of other
competent counsel and, as to factual matters, on certificates of officers
of the Company and of state officials, in which case their opinion is to
state that they are so doing and copies of such opinions or certificates
are to be attached to the opinion unless such opinions or certificates (or,
in the case of certificates, the information therein) have been furnished
to the Representatives otherwise.

(ii) Such opinion or opinions of Sidley & Austin, counsel for the
Underwriters, dated the First Closing Date or the Second Closing Date, as
the case may be, with respect to the incorporation of the Company, the
validity of the Shares to be sold by the Company, the form of the
Registration Statement and the Prospectus and other related matters as you
may reasonably require, and the Company shall have furnished to such
counsel such documents and shall have exhibited to them such papers and
records as they reasonably request for the purpose of enabling them to pass
upon such matters.

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<PAGE> 12

(iii) A certificate of the chief executive officer and the principal
financial officer of the Company, dated the First Closing Date or the
Second Closing Date, as the case may be, to the effect that:

(1) the representations and warranties of the Company set forth in
Section 2 of this Agreement are true and correct as of the date of this
Agreement and as of the First Closing Date or the Second Closing Date,
as the case may be, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to such Closing Date; and

(2) the Commission has not issued an order preventing or suspending
the use of the Prospectus or any preliminary prospectus filed as a part
of the Registration Statement or any amendment thereto; no stop order
suspending the effectiveness of the Registration Statement has been
issued; and, to the best knowledge of the respective signers, no
proceedings for that purpose have been instituted or are pending or
contemplated under the 1933 Act.

The delivery of the certificate provided for in this subparagraph
shall be and constitute a representation and warranty of the Company as to
the facts required in the immediately foregoing clauses (1) and (2) of this
subparagraph to be set forth in said certificate.

(iv) Such further certificates and documents as you may reasonably
request.

(g) At the time the Pricing Agreement is executed and also on the First
Closing Date or the Second Closing Date, as the case may be, there shall be
delivered to you a letter addressed to you, as Representatives of the
Underwriters, from Deloitte & Touche, independent accountants, the first one to
be dated the date of the Pricing Agreement, the second one to be dated the First
Closing Date and the third one (in the event of a second closing) to be dated
the Second Closing Date, to the effect set forth in Schedule B. There shall not
have been any change or decrease specified in the letters referred to in this
subparagraph which makes it impractical or inadvisable in the reasonable
judgment of the Representatives to proceed with the public offering or purchase
of the Shares as contemplated hereby.

(h) At the time the Pricing Agreement is executed, there shall be delivered
to you agreements from each of the Company's executive officers and directors,
in which each such person agrees not to (1) sell, contract to sell or otherwise
dispose of any Common Stock for a period of 90 days after the date of
effectiveness of the Registration Statement without the prior written consent
the Representatives or (2) announce an intent to sell any shares of the
Company's Common Stock, or exercise any registration rights with respect to
shares of the Company's Common Stock, for a period of 90 days after the date of
the effectiveness of the Registration Statement without the prior written
consent of the Representatives.

All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and to Sidley & Austin, counsel for the Underwriters. The Company shall
furnish you with such manually signed or conformed copies of such opinions,
certificates, letters and documents as you reasonably request.

If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification to the Company without liability
on the part of any Underwriter or the Company, except for the expenses to be
paid or reimbursed by the Company pursuant to Sections 6 and 8 hereof and except
to the extent provided in Section 10 hereof.

SECTION 8. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale to the
Underwriters of the Shares on the First Closing Date is not consummated because
any condition of the Underwriters' obligations hereunder is not satisfied or
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or to comply with any provision hereof (unless such
failure to satisfy such condition or to comply with any provision hereof is due
to the default or omission of any Underwriter) the Company agrees to reimburse
you and the other Underwriters upon demand for all out-of-pocket expenses
(including reasonable fees and expenses of Sidley & Austin) that shall have been
reasonably incurred by you and them in connection with the proposed purchase and
the sale of the Shares. Any such termination shall be without

12
<PAGE> 13

liability of any party to any other party except that the provisions of this
Section, Section 6 and Section 10 shall at all times be effective and shall
continue to apply.

SECTION 9. EFFECTIVENESS OF REGISTRATION STATEMENT. You and the Company
will use your and its best efforts to cause the Registration Statement to become
effective, if it has not yet become effective, and to prevent the issuance of
any stop order suspending the effectiveness of the Registration Statement and,
if such stop order be issued, to obtain as soon as possible the lifting thereof.

SECTION 10. INDEMNIFICATION.

(a) The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of the 1933
Act or the Exchange Act against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject under the 1933 Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise (including in settlement
of any litigation if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
including the information deemed to be part of the Registration Statement at the
time of effectiveness pursuant to Rule 430A, if applicable, any preliminary
prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and will reimburse each Underwriter and each such
controlling person for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that (i) any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any preliminary prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives regarding the Underwriters and specifically for use therein;
or (ii) if such statement or omission was contained or made in any preliminary
prospectus and corrected in the Prospectus and (1) any such loss, claim, damage
or liability suffered or incurred by any Underwriter (or any person who controls
any Underwriter) resulted from an action, claim or suit by any person who
purchased Shares that are the subject thereof from such Underwriter in the
Offering and (2) such Underwriter failed to deliver or provide a copy of the
Prospectus to such person at or prior to the confirmation of the sale of such
Shares in any case where such delivery is required by the 1933 Act. In addition
to its other obligations under this Section 10(a), the Company agrees that, as
an interim measure during the pendency of any such claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in this Section 10(a),
it will reimburse the Underwriters on a monthly basis for all reasonable legal
and other expenses incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other proceeding, notwithstanding
the absence of a judicial determination as to the propriety and enforceability
of the Company's obligation to reimburse the Underwriters for such expenses and
the possibility that such payment might later be held to have been improper by a
court of competent jurisdiction. This indemnity agreement will be in addition to
any liability which the Company may otherwise have.

(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of the 1933 Act or the Exchange Act, against any losses, claims, damages or
liabilities to which the Company, or any such director, officer or controlling
person may become subject under the 1933 Act, the Exchange Act or other federal
or state statutory law or regulation, at common law or otherwise (including in
settlement of any litigation if such settlement is effected with the written
consent of such Underwriter), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained in the
Registration Statement, any preliminary prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated

13
<PAGE> 14

therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any preliminary prospectus, the Prospectus, or any amendment or
supplement thereto in reliance upon and in conformity with Section 4 of this
Agreement or any other written information furnished to the Company by such
Underwriter through the Representatives regarding the Underwriters and
specifically for use in the preparation thereof; and will reimburse any legal or
other expenses reasonably incurred by the Company, or any such director, officer
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action. In addition to their other obligations
under this Section 10(b), the Underwriters agree that, as an interim measure
during the pendency of any such claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this Section 10(b), they will
reimburse the Company on a monthly basis for all reasonable legal and other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. This indemnity agreement will be in addition to
any liability which such Underwriter may otherwise have.

(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party except to the extent that
the indemnifying party was prejudiced by such failure to notify. In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, or the indemnified and indemnifying parties
may have conflicting interests which would make it inappropriate for the same
counsel to represent both of them, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defense and otherwise
to participate in the defense of such action on behalf of such indemnified party
or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed such
counsel in connection with the assumption of legal defense in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Representatives in the case of paragraph (a)
representing all indemnified parties not having different or additional defenses
or potential conflicting interest among themselves who are parties to such
action), (ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability arising out
of such proceeding. It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in Section 10(a)
or (b) hereof, including the amount of any requested reimbursement payments, the
method of determining such amounts and the basis on which such amounts shall be
apportioned among the indemnifying parties, shall be settled by arbitration
conducted pursuant to the Code of Arbitration Procedure of the National
Association

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<PAGE> 15

of Securities Dealers, Inc. Any such arbitration must be commenced by service of
a written demand for arbitration or a written notice of intention, therein
electing the arbitration tribunal. In the event the party demanding arbitration
does not make such designation of an arbitration tribunal in such demand or
notice, then the party responding to said demand or notice is authorized to do
so. Any such arbitration will be limited to the operation of the interim
reimbursement provisions contained in Section 10(a) or (b) hereof and will not
resolve the ultimate propriety or enforceability of the obligation to indemnify
for expenses that are created by the provisions of such Section 10(a) or (b)
hereof.

(d) If the indemnification provided for in this Section is unavailable to
an indemnified party under paragraph (a) or (b) of this Section 10 in respect of
any losses, claims, damages or liabilities referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Underwriters from the offering of the Shares or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The respective relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion in the case of the
Company, as the total price paid to the Company for the Shares by the
Underwriters (net of underwriting discount but before deducting expenses), and
in the case of the Underwriters as the underwriting discount received by them
bears to the total of such amounts paid to the Company and received by the
Underwriters as underwriting discount in each case as contemplated by the
Prospectus. The relative fault of the Company and the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include any legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending any action or claim.

The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section were determined by pro rata
allocation, even if the Underwriters were considered as one person, or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section, no Underwriter shall be required
to contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were offered
to the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section are several in proportion to their respective underwriting commitments
and not joint.

(e) The provisions of this Section shall survive any termination of this
Agreement.

SECTION 11. DEFAULT OF UNDERWRITERS. It shall be a condition to the
agreement and obligation of the Company to sell and deliver the Shares
hereunder, and of each Underwriter to purchase the Shares hereunder, that,
except as hereinafter in this paragraph provided, each of the Underwriters shall
purchase and pay for all Shares agreed to be purchased by such Underwriter
hereunder upon tender to the Representatives of all such Shares in accordance
with the terms hereof. If any Underwriter or Underwriters default in their
obligations to purchase Shares hereunder on the First Closing Date and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10 percent of the total number of
Shares which the Underwriters are obligated to purchase on the First Closing
Date, the Representatives may make arrangements satisfactory to the Company for
the purchase of such Shares by other persons, including any of the Underwriters,
but if no such arrangements are made by such date the

15
<PAGE> 16

nondefaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Shares which such defaulting
Underwriters agreed but failed to purchase on such date. If any Underwriter or
Underwriters so default and the aggregate number of Shares with respect to which
such default or defaults occur is more than the above percentage and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Shares by other persons are not made within 36 hours after such
default, this Agreement will terminate without liability on the part of any
nondefaulting Underwriter or the Company, except for the expenses to be paid by
the Company pursuant to Section 6 hereof and except to the extent provided in
Section 10 hereof.

In the event that Shares to which a default relates are to be purchased by
the nondefaulting Underwriters or by another party or parties, the
Representatives or the Company shall have the right to postpone the First
Closing Date for not more than seven business days in order that the necessary
changes in the Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected. As used in this Agreement, the
term "Underwriters" includes any person substituted for an Underwriter under
this Section. Nothing herein will relieve a defaulting Underwriter from
liability for its default.

SECTION 12. EFFECTIVE DATE. This Agreement shall become effective
immediately as to Sections 6, 8, 10 and 13 and as to all other provisions at the
time at which the Pricing Agreement is executed and delivered, unless such a day
is a Saturday, Sunday or holiday (and in that event this Agreement shall become
effective at such hour on the business day next succeeding such Saturday, Sunday
or holiday); but this Agreement shall nevertheless become effective at such
earlier time after the Pricing Agreement is executed and delivered as you may
determine on and by notice to the Company or by release of any Shares for sale
to the public. For the purposes of this Section, the Shares shall be deemed to
have been so released upon the release for publication of any newspaper
advertisement relating to the Shares or upon the release by you of telegrams (i)
advising Underwriters that the Shares are released for public offering, or (ii)
offering the Shares for sale to securities dealers, whichever may occur first.

SECTION 13. TERMINATION. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:

(a) This Agreement may be terminated by the Company by notice to you or by
you by notice to the Company at any time prior to the time this Agreement shall
become effective as to all its provisions, and any such termination shall be
without liability on the part of the Company to any Underwriter (except for the
expenses to be paid or reimbursed pursuant to Section 6 hereof and except to the
extent provided in Section 10 hereof) or of any Underwriter to the Company.

(b) This Agreement may also be terminated by you prior to the First Closing
Date, and the option referred to in Section 4, if exercised, may be cancelled at
any time prior to the Second Closing Date, if (i) trading in securities on the
New York Stock Exchange shall have been suspended or minimum prices shall have
been established on such exchange, or (ii) a banking moratorium shall have been
declared by New York or United States authorities, or (iii) there shall have
been an outbreak of major armed hostilities between the United States and any
foreign power, any of which in the reasonable opinion of the Representatives
makes it impractical or inadvisable to offer or sell the Shares. Any termination
pursuant to this paragraph (b) shall be without liability on the part of any
Underwriter to the Company or on the part of the Company to any Underwriter
(except for expenses to be paid or reimbursed pursuant to Section 6 hereof and
except to the extent provided in Section 10 hereof).

SECTION 14. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Company or any of its or their partners, officers or directors or any
controlling person, as the case may be, and will survive delivery of and payment
for the Shares sold hereunder.

SECTION 15. NOTICES. All communications hereunder will be in writing and,
if sent to the Underwriters will be mailed, delivered or telegraphed and
confirmed to you c/o William Blair & Company, 222 West

16
<PAGE> 17

Adams Street, Chicago, Illinois 60606, with a copy to Larry A. Barden, Sidley &
Austin, One First National Plaza, Chicago, Illinois 60603; if sent to the
Company will be mailed, delivered or telegraphed and confirmed to the Company at
its corporate headquarters with a copy to Frank J. Pelisek, Michael Best &
Friedrich, 100 East Wisconsin Avenue, Milwaukee, Wisconsin 53202-4108.

SECTION 16. SUCCESSORS. This Agreement and the Pricing Agreement will inure
to the benefit of and be binding upon the parties hereto and their respective
successors, personal representatives and assigns, and to the benefit of the
officers and directors and controlling persons referred to in Section 10, and no
other person will have any right or obligation hereunder. The term "successors"
shall not include any purchaser of the Shares as such from any of the
Underwriters merely by reason of such purchase.

SECTION 17. REPRESENTATION OF UNDERWRITERS. You will act as Representatives
for the several Underwriters in connection with this financing, and any action
under or in respect of this Agreement taken by you will be binding upon all the
Underwriters.

SECTION 18. PARTIAL UNENFORCEABILITY. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.

SECTION 19. APPLICABLE LAW. THIS AGREEMENT AND THE PRICING AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS.

* * * * * *

If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company and the several Underwriters
including you, all in accordance with its terms.

Very truly yours,

STOKELY USA, INC.

By:
------------------------------------
Chief Executive Officer

The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
WILLIAM BLAIR & COMPANY
DAIN BOSWORTH INCORPORATED
Acting as Representatives of the
several Underwriters named in
Schedule A.
By William Blair & Company
By:
----------------------------------

17
<PAGE> 18

EXHIBIT A

STOKELY USA, INC.

3,000,000 SHARES COMMON STOCK*

PRICING AGREEMENT

November , 1994

William Blair & Company
Dain Bosworth Incorporated
As Representatives of the Several
Underwriters
c/o William Blair & Company
222 West Adams Street
Chicago, Illinois 60606

Ladies and Gentlemen:

Reference is made to the Underwriting Agreement dated , 1994
(the "Underwriting Agreement") relating to the sale by the Company and the
purchase by the several Underwriters for whom William Blair & Company and Dain
Bosworth Incorporated are acting as representatives (the "Representatives"), of
the above Shares. All terms herein shall have the definitions contained in the
Underwriting Agreement except as otherwise defined herein.

Pursuant to Section 4 of the Underwriting Agreement, the Company agrees
with the Representatives as follows:

1. The initial public offering price per share for the Shares shall be
$ .

2. The purchase price per share for the Shares to be paid by the several
Underwriters shall be $ , being an amount equal to the initial public
offering price set forth above less $ per share.

* * * * * *

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

* Plus an option to acquire up to 450,000 additional shares to cover
over-allotments.

<PAGE> 19

Very truly yours,

STOKELY USA, INC.

By: _________________________
Chief Executive Officer

By:_____________________________
Partner

2
<PAGE> 20

SCHEDULE A

<TABLE>
<CAPTION>
NUMBER OF
FIRM SHARES
TO BE
UNDERWRITER PURCHASED
- --------------------------------------------------------------------------------- -----------
<S> <C>
William Blair & Company..........................................................
Dain Bosworth Incorporated.......................................................

-----------
Total.................................................................. 3,000,000
=========
</TABLE>

<PAGE> 21

SCHEDULE B

COMFORT LETTER OF DELOITTE & TOUCHE

(1) They are independent public accountants with respect to the Company and
its Subsidiaries within the meaning of the 1933 Act.

(2) In their opinion the consolidated financial statements and schedules of
the Company, and the Company's Subsidiaries included in the Registration
Statement and the consolidated financial statements of the Company from which
the information presented under the caption "Selected Consolidated Financial
Data" has been derived which are stated therein to have been examined by them
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act.

(3) On the basis of specified procedures (but not an examination in
accordance with generally accepted auditing standards), including inquiries of
certain officers of the Company and its Subsidiaries responsible for financial
and accounting matters as to transactions and events subsequent to March 31,
1994, a reading of minutes of meetings of the stockholders and directors of the
Company and its Subsidiaries since March 31, 1994, a reading of the latest
available interim unaudited consolidated financial statements of the Company and
its Subsidiaries (with an indication of the date thereof) and other procedures
as specified in such letter, nothing came to their attention which caused them
to believe that (i) the unaudited consolidated financial statements of the
Company included in the Registration Statement do not comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act or
that such unaudited financial statements are not fairly presented in accordance
with generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Registration Statement; (ii) the amounts in "Selected Consolidated Financial
Data" and "Summary Financial Data" included in the Registration Statement and
Prospectus as of, and for the periods ended March 31, 1990, March 31, 1991,
March 31, 1992, March 31, 1993, June 30, 1993, March 31, 1994 and June 30, 1994
do not agree or are not derivable from the corresponding amounts in the audited
or unaudited, as the case may be, financial statements from which such amounts
were derived; (iii) the unaudited condensed financial statements of the Company,
from which the amounts in "Selected Financial and Operating Data" and "Summary
Financial and Operating Data" included in the Registration Statement and
Prospectus for the years ended, March 31, 1989, 1990, 1991, 1992 and 1993 were
derived, do not comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act, and such unaudited condensed financial
statements of the Company are not in conformity with generally accepted
accounting principles, applied on a basis consistent with that of the Company's
audited consolidated financial statements included in the Registration Statement
and Prospectus; (iv) the financial information contained under the caption
"Summary Financial Data," under the caption "Capitalization," under the caption
"Selected Consolidated Financial Data," under the caption "Management Discussion
and Analysis" and under the caption "Management" included in the Registration
Statement and the Prospectus do not comply as to form in all material respects
with the applicable requirements of the 1933 Act; and (v) at a specified date
not more than five days prior to the date thereof in the case of the first
letter and not more than two business days prior to the date thereof in the case
of the second and third letters, there was any change in the capital stock or
long-term debt or short-term debt (other than normal payments) of the Company
and its Subsidiaries on a consolidated basis or any decrease in consolidated net
current assets or consolidated stockholders' equity as compared with amounts
shown on the latest unaudited balance sheet of the Company included in the
Registration Statement or for the period from the date of such balance sheet to
a date not more than five days prior to the date thereof in the case of the
first letter and not more than two business days prior to the date thereof in
the case of the second and third letters, there were any decreases, as compared
with the corresponding period of the prior year, in consolidated net sales,
consolidated income before income taxes or in the total or per share amounts of
consolidated net income except, in all instances, for changes or decreases which
the Prospectus disclosed have occurred or may occur or which are set forth in
such letter.

(4) They have carried out specified procedures, which have been agreed to
by the Representatives, with respect to certain information in the Prospectus
specified by the Representatives, and on the basis of such procedures, they have
found such information to be in agreement with the general accounting records of
the Company and its Subsidiaries.

<PAGE> 1

EXHIBIT 5

[MICHAEL BEST & FRIEDRICH LETTERHEAD]

November 7, 1994

Stokely USA, Inc.
1055 Corporate Center Drive
Oconomowoc, Wisconsin 53066

Gentlemen:

We have served as your counsel in connection with the filing by you of
a registration statement on Form S-1 with the Securities and Exchange
Commission ("Commission") pursuant to the provisions of the Securities Act of
1933, as amended ("Act"), covering the registration of three million four
hundred fifty thousand (3,450,000) shares of common stock, $0.05 par value per
share ("Common Stock"), of Stokely USA, Inc. ("Stokely"). As your counsel, we
have examined such records and other documents as we deemed necessary for the
purposes of this opinion and considered such questions of law as we believe to
be involved. Based upon such examination and consideration, it is our opinion
that:

1. Stokely is validly incorporated and existing under the laws
of the State of Wisconsin and has the corporate power to carry on its
present business and is duly qualified to own its properties and
conduct its business in those states where such authorization is
presently required, except where failure to so qualify does not have a
material adverse effect on Stokely;

2. The total authorized capital stock of Stokely consists of
twenty million (20,000,000) shares of common stock having a par value
of $0.05 per share and one million (1,000,000) shares of preferred
stock having no par value per share; and

3. The Common Stock, assuming the issuance thereof following
and in compliance with the registration thereof with the Commission
and proper payment therefore, will be duly authorized and validly
issued, fully paid and nonassessable, except as provided by Section
180.0622 of the Wisconsin Statutes which may require further
assessment for unpaid wages to employees under certain circumstances.

Pursuant to the requirements of the Act, we hereby consent to the use of
this opinion in connection with the registration with the Commission the shares
of Common Stock.

Very truly yours,

MICHAEL BEST & FRIEDRICH

By: /s/ Frank J. Pelisek
-----------------------
Frank J. Pelisek

<PAGE> 1

CONSENT OF DELOITTE & TOUCHE LLP

To the Stockholders and Board of Directors
Stokely USA, Inc. and Subsidiaries
Oconomowoc, Wisconsin

We consent to the use in this Amendment No. 2 to Registration Statement No.
33-55447 of Stokely USA, Inc. and subsidiaries on Form S-1 of our report dated
June 17, 1994, appearing in the Prospectus, which is a part of this Registration
Statement and of our report dated June 17, 1994 relating to the consolidated
financial statement schedules appearing elsewhere in this Registration
Statement.

We also consent to the references to us under the headings "Selected
Consolidated Financial Data" and "Experts" in such Prospectus.

DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin

November 7, 1994